MOSCOW, April 8 (RIA Novosti) - Russian Defense Minister Sergei Shoigu on Monday criticized as totally unacceptable the existing practice of 100 percent prepayment for state defense contracts.
Paying up front leads to effective loss of control over defense orders on the part of the state's contracting authorities, resulting in unfinished construction projects, time overruns, and incomplete deliveries of arms and military equipment, he said.
“This situation can jeopardize the fulfilment of plans for the re-equipment of the forces,” Shoigu said.
He stressed the need to ensure every ruble of state cash be put to effective use and provide maximum effect in strengthening the country’s defense capability and security.
Russia has recently begun ordering foreign-made defense equipment for the first time in its post-Soviet history, in apparent dissatisfaction with the performance of domestic producers.
Russia’s defense sector has also been rocked over the past few months by a string of corruption scandals that led to the resignation in November of Defense Minister Anatoly Serdyukov.
Several people employed by the Oboronservis defense property services company were arrested late last year on suspicion of fraud totaling over 13 billion rubles ($430 million) involving the illegal sale of ministry property.
The Russian Federal Defense Contracts Service said in March that about 1,500 violations and infractions were uncovered in state defense spending in 2012, involving over 16 billion rubles ($533 million).
Over 2 billion rubles was returned to state coffers and over 3.5 billion rubles’ worth of damage was averted last year, the service said.
