All contracts on Russia's 2012 state defense order will be signed by the end of this year, Defense Minister Anatoly Serdyukov said on Thursday.
The issue of next year's defense order is particularly important in light of possible complications from the 2011 state defense order due to soaring armament prices and delays in contract signing.
"We will sign contracts with all suppliers by the end of December for the first time in the entire history of state defense order," Serdyukov told journalists.
Serdyukov said his ministry has to complete work on the 2012 contracts by the end of September, adding that a budget commission has been established in the ministry to "look into the justification of the number of products being bought and their prices."
Russian President Dmitry Medvedev on Wednesday ordered Serdyukov to submit in three days a report on the implementation of the state defense order for 2011.
Leading missile designer Yury Solomonov said in an interview with Russia's Kommersant daily that the 2011 state defense order was in jeopardy partly because the Defense Ministry had delayed the signing of new defense contracts, especially on procurement of strategic nuclear armaments.
All defense contracts for 2011 should have been signed by April 15. Medvedev criticized on May 10 the defense industry for the delay and extended the deadline until the end of May. Medvedev also instructed the government to take adequate measures to improve the situation and punish those responsible.
Since Medvedev's orders, a number of military and defense industry officials have been fired and reprimanded for their poor performance in the implementation of the program.
Earlier Serdyukov told journalists that his ministry failed to conclude contracts worth around 18% (108 billion rubles) out of the overall 2011 state defense order, approved in the amount of 581.5 billion rubles ($20.7 bln), due to soaring prices for military products.
Serdyukov said on Thursday that the Defense Ministry is ready to pay 100% in advance to enterprises producing weapons and military hardware for the armed forces.
He also said his ministry is ready to buy military products from manufacturers, providing a 25%-plus profitability for them, following Prime Minister Vladimir Putin's statement in May that defense industry enterprises' profitability should not be less than 15% but that ready items should not be overcharged.
Serdyukov said it will be possible if defense enterprises channel their profit to equipment purchases, new product introduction and research. If the price the Defense Ministry pays for military products is not transparent and it is unclear where the profit goes, it will not pay extra money to arms manufacturers, he said.
Putin on Thursday urged officials to prevent any disruptions in state defense order financing.
Russia's ambitious 2011-2020 arms procurement program stipulates the upgrade of up to 11% of military equipment annually and will allow the country to increase the share of modern weaponry in the Armed Forces to 70% by 2020.