The State Armaments Program: development methodology.

Today the scientific and administrative work on drawing up the State Armaments Program for the 2006-2015 (SAP-2015) has entered a critical phase: the preparation of organizational, practical, and methodological solutions called upon to finalize the program's drafting by the end of 2004.

The SAP-2015 will be Russia's third armaments program. The first--the State Armaments Program for 1996-2005 (SAP-2005), approved by the RF president in November 1996, has not been carried out on any of its basic indicators--the volume of funding, the deadlines for implementing R & D projects, or the volume of arms and military equipment supplied to the troops. There are several reasons for this.

First, the macroeconomic forecast by the RF Economic Development Ministry projecting 5 percent to 7 percent annual GDP growth, which was assumed as a base for the SAP-2005, did not materialize. In fact, the 1996-1997 period saw negative growth while in 1998-1999 the growth rate was about 2 percent.

Second, in the course of the SAP-2005's implementation, changes occurred in the "rules of the game." When the program was being developed, it was planned to allocate between 3.6 percent and 5.2 percent to the national defense budget (law enforcement, between 1.71 percent and 2.48 percent). Yet, in early 1998, under an RF presidential edict, the volume of funding was reduced to 3.5 percent (the actual funding was provided at a level of 2.3 percent to 2.8 percent with approximately 1.4 percent for law enforcement). As a result, the volume of funding for state defense contracts turned out to be two to three times less than planned.

Third, state defense contracts were actually funded at 50 percent to 30 percent of budget targets. The remaining funds were carried over into future state defense contracts as debt. Furthermore, financial settlements were oftentimes made with surrogate money (IOU notes, tax offsets, and so on) whose real value was in fact only 50 percent to 60 percent of its face value.

In this context, the attempts by developers to preserve the priorities set in the SAP-2005 resulted in a dispersal of funds, lags in the implementation of R & D programs, and deviation from the principle of balancing arms and military equipment provisions to T/O formations. Under-financing of R & D programs and reduction in government defense contracts had an extremely negative impact on defense industry enterprises as a whole.

The State Armaments Program for 2001-2010 (SAP-2010) was developed amid economic stabilization in the country. The underlying macroeconomic forecast turned out to be accurate enough (at least so far). The level of funding provided for government defense contracts in 2001-2003 on the whole corresponds with SAP-2010 indicators. The itemized lists of products, production deadlines, and funding volumes are, essentially, in accordance with plan. In other words, there is cause to say that the second SAP proved to be far more stable than the first one and can serve as a good base for annual government defense contract planning. In addition to the aforementioned economic stability in the country, this shows that all parties involved in SAP development and implementation have effectively dealt with complex organizational and economic problems and put in place a scientific/methodological procedure responding to a new economic and military-political reality.

The first and foremost problem whose resolution greatly enhanced the quality of implementation of the SAP-2010 is laying the organizational groundwork for transition to a unified contracting system. The general purpose unified AME order and delivery system for all power (i.e., defense, security, and law enforcement) ministries and departments is based on the consolidated AME order and delivery system of the RF Armed Forces, introduced in January 2002. As of 2002, the number of Defense Ministry general contractors was considerably reduced (more than halved), which facilitated the planning, administration, supervision, and fulfillment of government defense contracts.

The second problem--putting in place a scientific/methodological and material/technical base ensuring the substantiation of the SAP and government defense contracts in new military-political and economic conditions--also has on the whole been resolved by RF Defense Ministry scientific research organizations and agencies. It is necessary to further improve this base, taking into account the planned changes in the structure of a new SAP. To this end, in 2002, the head of the Armaments Directorate, who is also deputy defense minister of the Russian Federation, approved Procedure for Interaction between Defense Ministry Scientific Research Organizations in Substantiating Proposals for Arms and Military Equipment Development Plans and Documents Based on Short-, Medium- or Long-Term Forecasts.

The SAP-2015 is being developed in line with the fundamental principles of military-technical policy that were approved by the RF president in March 2003.

One major task related to the elaboration of the SAP-2015 is organization of input data as a starting point for decision making in the armaments development sphere. Input data are subdivided into the following categories: macroeconomic, operational/strategic, military/technical, and technical/economic.

With regard to macroeconomic data that are used as a basis for forecasting Russia's economic development as well as the volume of resources provided by the state budget to national defense programs, it is the Economic Development and Trade Ministry that plays a leading role here.*

Operational/strategic data are prepared under the direction of the General Staff of the RF Armed Forces. They reflect the sources of threats to Russia's national security and possible scenarios for their evolution as well as the tasks that the RF Armed Forces are to perform, the composition and principal armaments of a possible adversary, and the structure, composition, and numerical strength of the Armed Forces of the Russian Federation. Preparation of these data is entrusted to leading military organizations that deal with operational/strategic aspects of the employment of the Armed Forces as well as to "consumers"--i.e., military command and control agencies and Defense Ministry scientific research institutes that use these data in making and substantiating proposals for the SAP.

Military-technical data are prepared by the Office of the chief of the RF Armed Forces Armaments Directorate jointly with state contracting directorates of the RF Defense Ministry and scientific research institutes. These data include cost estimates for the deployment and maintenance of units and large combined units of the RF Armed Forces in combat readiness, guidelines for the development of new models of weapons and military equipment in the Russian Federation and abroad, and other information. A special emphasis here is placed on the assessment of the technical condition of arms and military equipment currently in service with line units. There are plenty of problems to be dealt with here. As a result of downsizing command and control agencies responsible for the technical support of troops, arms inventorying is not up to scratch while the information that comes in to the center contains mistakes and cannot be used without further updating and clarification in the decision making process, especially in so far as concerns decisions on technical and logistical support of troops. It is impossible to resolve these problems without automating information gathering, transfer, and processing. So a lot of effort is now being deployed to put in place an integrated automated network to collect data on the technical condition of arms and military equipment, based on automated command and control systems, and automated information collection and processing experiments are currently being conducted. It should, however, be noted that this work will only be successfully completed when all technical combat support agencies are equipped with automated work stations.

Technical/economic data, characterizing industrial capacity to develop, produce, and repair arms and military equipment, will be prepared by the Defense Ministry jointly with the RF Industry and Science Ministry, government agencies on the defense sectors of industry, and organizations and enterprises of the military industrial complex.

The content of a number of documents related to the SAP-2001 will be substantially reviewed and clarified, and the procedure and methodology for their preparation will be revised accordingly. In this context, it is essential to mention such a document as Basic Lines for the Development of Arms and Military Equipment. In addition to drawing up itemized lists of prospective weapon systems, military and special equipment, and their quantitative specifications, there is a need, together with government agencies for the defense sectors of industry and defense industry enterprises, to establish the extent to which the defense industry is technically and technologically ready to create such arms and military equipment, what technical and technological modernization problems are to be addressed, and what material and financial resources will be required for this. Some decisions concerning the development of arms and military equipment may need to be reviewed at the working level.

Another new feature of the SAP-2015 is that it takes into account the aggregate spending on arms and military equipment throughout their entire service life: development, production, operation, maintenance and repairs, and installation (dismantling is not included into the SAP, being part of the federal industrial disposal, recycling, and re-utilization program). This substantially affects the volume of organizational and technical activities involved in drawing up the program and requires the streamlining and upgrading of the existing scientific/methodological base.

It should be noted in this context that the inclusion into the SAP-2015 of activities and technical maintenance costs of the operation and servicing of arms and military equipment (AME) requires a review of many of the provisions in the existing system of planning, financial and economic substantiation, supervision, and target specific funding of AME operation and technical maintenance activities in the RF Armed Forces.

At present, AME operation and technical maintenance planning is done at armaments services of military units, combined units, large strategic formations, military districts, fleets, arms and branches of service, and the main and central directorates of the RF Defense Ministry and the General Staff of the RF Armed Forces. Planning is done on an annual (integrated) and long-term basis.

The problem is that these plans are not presented (as provided for under the current procedure for plan development and implementation) to the Office of the chief of the RF Armed Forces Armaments Directorate, which is the leading agency in developing the SAP. Furthermore, the cost outlays of AME operation and maintenance are funded via approximately two dozen Defense Ministry budget expenditure items (supplies of fuel and lubricants, spare parts, tools and accessories kits, documentation, personnel training, storage and park maintenance, and so forth). Today, the Office of the chief of the RF Armed Forces Armaments Directorate controls the distribution of funds on only one Defense Ministry budget expenditure item, which does not cover the entire needs in funding AME operation and technical maintenance activities. A viable mechanism of supervising the effective, target specific utilization of funds on this expenditure item has yet to be put in place and the formation of the methodological procedure for substantiating the needed volumes and the distribution of funding has not as yet been finalized.

So the inclusion of AME operation and technical maintenance costs into state armaments programs, effective substantiation of cost estimates, and supervision of target specific use of funds will hinge on reorganization, review of the entire planning regulatory base, substantiation and supervision of AME operation and technical maintenance plans, and elaboration of the needed scientific and methodological procedure.

To this end, the following needs to be done:

-- bring the Office of the chief of the RF Armed Forces Armaments Directorate into the system of planning, substantiating, and supervising the implementation of annual and long-term technical maintenance, operation, repairs, and personnel training plans;

-- review the existing procedure for classification of Defense Ministry spending on AME operation and technical maintenance, as established by a 1990 USSR Defense Ministry order, in the interest of ensuring the integration of all costs of AME operation and technical maintenance and a revision of the procedure for the distribution of funding on these expenditure items;

-- create within the Office of the chief of the RF Armed Forces Armaments Directorate an accounting system to monitor the availability, status, movement, and operation of AME models (types) according to itemized lists; data banks on the current prices of spare parts, tools and accessories kits, materiel, components, fuel and lubricants, maintenance, repairs, and transport movement; and a methodological procedure for keeping account of per unit annual maintenance costs of each AME model depending on its operation mode, including on cost components (fuel and lubricants, maintenance of buildings and structures, personnel training and maintenance, spare parts, tools and accessories kits, and so forth), and develop and introduce operating cost estimate automation facilities;

-- streamline the system of monitoring the supply level of technological and material assets, combat readiness, staffing levels, the production capacity of maintenance and repair units, and provision and echelonment of supplies of materials used for AME maintenance and repairs;

-- develop methodological procedure and software for short term and long term forecasting of the technical condition of the AME park (depending on AME technical maintenance, repairs, and operation mode options) in the interest of substantiating AME operation plans taking into account the current needs and the level of funding actually provided; and

-- elaborate effective organizational measures to control the implementation of planned activities and target specific use of funds provided.

The growing complexity of SAP development highlights the need of ensuring its high quality, especially in so far as concerns harmonization of itemized lists and volumes of AME development and production with the needs of the Armed Forces, balancing the development of strike and support assets, gearing AME technology to take into account prospective tasks in future wars, and so on.

To this end, a number of problems need to be addressed.

First, regulatory and methodological support of the SAP formulation procedure. Today, there is no normative, regulatory document laying down procedure for development of official documents concerning the military-technical provision of the Armed Forces and other power structures, including the SAP and government defense contracts. Such a document should be approved by the RF government. A draft has already been completed but requires further clarification following the adoption of the basic principles of RF military-technical policy. This document should become a basic component of the system of official enforceable legal documents pertaining to force development and military organization in the Russian Federation establishing the procedure for centralized target specific planning of technical support activities in ensuring RF defense and security and interaction between federal executive agencies in implementing it.

The RF Federal Law on Technical Regulation, adopted in December 2002 by the State Duma, superseded, as of the second half of 2003, the RF Laws On Standardization and On Certification of Products and Services. The new law considerably changes rules and procedures for regulating AME specifications as well as works and services provided within the framework of government defense contracts. The RF Defense Ministry and defense industry enterprises and organizations are in the very near future to address a number of complex problems concerning regulatory, organizational, and methodological support activities in this sphere.

The provisions, norms, and requirements of this law drastically change the organizational structure and principles of operation of the state standardization system, altering the status of official enforceable legal documents on standardization, and procedure for their maintenance, application, updating, and cancellation. At the first stage of the reorganization, amid a high level of uncertainty, there is a threat of a loss of some branch defense production standards as well as of a temporary deterioration in the quality of standardization work, especially in so far as concerns the launching of new AME models into series production and large scale modernization of the existing park of military equipment. To minimize said risks and to ensure implementation of the Law on Technical Regulation, the RF Defense Ministry should assume responsibility in formulating and following state policy as well as in organizing the work on military product standardization in the Russian Federation. The RF Defense Ministry should be empowered to approve and officially establish national military standards, rules, regulations, and recommendations to replace existing regulatory documents concerning standardization of defense related products (state nationwide standards, branch standards, etc.).

There is a need to place defense production standards documentation (state and branch standards for defense production established before July 1, 2003) under federal jurisdiction. The RF Defense Ministry, jointly with the organizations concerned, is currently preparing a list of documents pertaining to standardization of defense related products in the Russian Federation. This will make it possible, in the transition period (until 2007), to preserve the body of defense production standardization documents, subsequently upgrading them to national military standards, rules or recommendations concerning standardization of defense related products.

Another extremely important matter is regulatory/methodological support for pricing military purpose products. In the course of transition to a free market economy, the existing regulatory and methodological base became irrelevant in so far as the process of pricing raw materials and materials procured by defense contractors effectively slipped outside the control of federal executive agencies. Wages even at one and the same enterprise became sharply differentiated while at different enterprises they became directly contingent on the contract order portfolio, which in effect made useless the old methodological approach, based on stable norms and specifications. In this situation, in the absence of a methodological apparatus adapted to present day conditions, government contracting authorities oftentimes take guidance from evaluations provided by contractors, expert estimates, or even considerations of sheer economic viability of a particular enterprise. As a result, operating costs were unjustifiably hiked up or funding was slashed.

Efforts are already being deployed in this area. The Office of the chief of the RF Armed Forces Armaments Directorate has developed a number of methodologies on military product pricing and contracting that were duly approved and disseminated to military command and control agencies for subsequent use in their operation. This work will continue with a view to elaborating inter-agency methodologies for forecasting contract prices of defense products. This will require active interaction with the Economic Development and Trade Ministry and the Ministry of Science, Industry and Technology, especially at the coordination and approval stage.

Another step in forecasting military product prices is making up a catalogue of AME technical/economic and production specifications listing expected prices of new AME models and scientific/technical products that are procured, including averaged figures on AME types and categories with the breakdown by specific work stages.

Second, ensuring target specific, flexible maneuvering with resources in the course of implementing the SAP in the interest of enhancing the effectiveness of the implementation process. This can be done by putting in place a viable mechanism of establishing a reserve fund within the SAP as well as an insurance fund, in order to minimize risks in the course of SAP's implementation. This will require the elaboration of new regulations on the reserve and insurance funds formed in conformity with official enforceable legal documents on the development of armaments and military and special equipment. These regulations should be approved on the governmental level.

Third, adapting the Defense Ministry's testing facilities for comprehensive testing of new models of arms and military equipment created as a result of ongoing R & D projects. The equipment of the existing test sites is obsolete and does correspond to the complexity and specification of procedures required in testing new generation AME models. This problem is becoming a major impediment to the provision of new AME models to line units. It is necessary to optimize the testing network, modernize testing facilities on the basis of a unified technical policy, and put in place inter-branch testing sites. These measures should be planned within the framework of drafting a new program, in fact becoming an inherent part of this program.

In closing, it should be noted that the rapid obsolescence of arms and military equipment now in service and the need to maintain the AME system in combat readiness and to modernize the Armed Forces and other troops of the Russian Federation require difficult and responsible decisions. Their viability and effectiveness will hinge entirely on comprehensive scientific substantiation and all-round expert appraisal.

Maj. Gen. V.M. BURENOK

Doctor of Technical Sciences

Vassiliy Mikhailovich BURENOK, born on June 19, 1957, in Chernigov Oblast; the Kaliningrad Higher School of Engineering (1979), the Moscow Institute of Electronic Machine-Building (1984), the Military Academy of the General Staff of the RF Armed Forces (1997); held various positions at the 46th Central Scientific Research Institute, from junior to leading research associate; since March 2002, head of the 46th Central Scientific Research Institute of the RF Defense Ministry.

* The "old" names of ministries and government agencies are used in this issue.