United Shipbuilding Corporation (USC) and the Russian Defense Ministry have agreed on prices for the Yasen and Borey class nuclear-powered submarines, a defense industry source said on Tuesday.
The ministry and the USC have been wrangling over the prices of the Borey (Project 955) and Yasen (Project 885) submarines and other major contracts for several months.
“Today, at a meeting with [Deputy Prime Minister] Igor Sechin, an important compromise has been reached on arms procurement contracts between USC and the Defense Ministry for the current year,” the source said.
Future contracts between the USC and the Defense Ministry will be signed on the condition that the shipbuilder chooses its own subcontractors “whereas previously subcontractors were effectively chosen by the Defense Ministry,” he said.
In 2010, Russia launched an ambitious military modernization program, setting aside 20 trillion rubles (about $730 billion) for the next 10 years.
However, the program has stumbled over a number of setbacks in a price war between the Defense Ministry and arms manufacturers.
The situation came to a head in May when President Dmitry Medvedev scolded ministry officials for stalling the process. The military complained about "skyrocketing prices".