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Reform of "defense" as a key challenge to the new president

Valentin Badrak

Director of the Center for Army, Conversion and Disarmament Studies (CIACR)

BELOW THE ORIGINAL TEXT OF THE CIACR MANAGER, WITHOUT THE EDITOR'S RIGHT "THE WEEK OF THE WEEK", PUBLICATION OF 25.04.2019 BEFORE

Without exaggeration, the problem of operational change in the formula for the development of defense industry is one of the main fronts for the new head of state. Firstly, because of the success of the defense industry, the pace of build-up of the country's defense potential and the creation of a real shield of containment of the Kremlin's aggression depend. Secondly, the arrival of foreign investors and foreign technology in the country depends on the defense industrial design - and this is not only a matter of modern weapons, but a paradigm of survival and development of science-intensive industries, primarily of aircraft construction and space. Third, it was precisely OPK that became a graveyard for further presidential ambitions of Petro Poroshenko, whose management of the "defensive" in manual mode turned into a closed barrier for any investor. For Salomatin-Yanukovych, the blasphemous for the OPK, the scheme of Salamatin-Yanukovych was for President Poroshenko not only an unpredictable miscalculation, but a point of reference for accumulation of negative and irritation in a professional environment. Finally, given the extreme alertness of the military and defense industries to the new head of state, for him to quickly give light to the real reform of the Defense Forces could be a genuine step towards success. And still the horse is in the process of establishing bridges of cooperation with the parliament.

Now, sophisticated political algebra, parliamentarians are definitely going to take the initiative in their own hands. Speech is that a few days before the second round, the secretary of the Security Council Alexander Turchinov and the head of the profile committee of the Verkhovna Rada of Ukraine Sergey Pashinsky initiated the preparation and registration in the parliament of the draft Laws of Ukraine (ROM), which provides for "radical reform" of the country's defense industry.

About support in general: notes on the fields

During the presentation of the idea under the roof of the National Security and Defense Council, invited officials from the military department, the Ministry of Economic Development, the private defense industry and experts (all but the leadership of the Civil Corporation "Ukroboronprom") supported the legislative initiatives as a whole. It was not possible to support it: the attendees heard what most dreams were for the last five years. Among other things, the ROM provides for the deprivation of the functions of the government that are uncharacteristic to it, and the creation in the government of a central executive authority (CSOI) that will engage in state defense-industrial policy and coordination of defense industry activities. The formula for the formation of the State Defense Order (GOP), which will be based on the implementation of the relevant EU directive, has to change. "There will be radical changes to the Law" On Goshayne ", and in fact, 70% of the state defense order will not fall under the Law" On Goshayne ", - said S.Pashinsky several days later, April 22 on the agreement of the ROM in parliament, and then added," We we virtually cancel Yanukovych's law on the peculiarities of managing the enterprises of the military-industrial complex. Let me remind you that this law was passed by Yanukovych in 2011 year, from my point of view, solely for the purpose of coordinating corruption flows. "

I suggest to remember the last part of the statement of the head of the profile committee of the Verkhovna Rada. The parliamentarian de facto reported that the team of President Poroshenko had been engaged in "coordinating corruption flows" for five years.

ROM initiators hope to register this week. Of course, at first glance, the ROM looks revolutionary - to send the history of "manual control of the defensive" together with the one who for five years kept his finger on the remote control. But is everything so simple and unambiguous with the defense industry?

If to speak in essence, the center of management of all OPK as a business structure should really be in the structure of executive power. But, as far as military-technical cooperation (MTS) is concerned, it is unlikely that anyone will doubt that this sphere is part of the international cooperation of the state and, according to the Constitution, belongs to the sphere of authority of the President. It is likely that the head of state can "disconnect" from these tasks before implementing the intention to move the center of government by the state to parliament and completely reformat the mechanism of management of the defense industry and the military-industrial complex. Well, this or poorly, to assess in the current conditions of the transfer of presidential power is not yet possible - everything, as we always have, will depend on specific personalities. In other words, if the presidential vertical turns out to be strong enough, the conflict in this segment may flare up from any spark. This has happened more than once in Ukraine's recent history, and the situation has reached its apogee when Prime Minister Yulia Tymoshenko has tightened the government's guarantees for the largest in the history of Ukraine arms contract - with Iraq, at $ 2,4 billion. The international reputation of the state then resembled poplar fluff ...

But there are risks in the "content" section of the ROM. I propose to consider them in order of significance of risks.

TSOIV and "defense design"

If you take a closer look at the situation around the new ROM, you can confuse at least two nuances.

First, the creation of the ЦОИВ is not intended to be a separate ministry, but as an agency or state committee. Moreover, according to the comment of the secretary of the NSDC Turchinov, it is not supposed that the head of the Central Election Commission was the vice prime minister. Although Turchynov is convinced that the issues of the OPC's life will be, to a certain extent, coordinated by the first deputy prime minister. Such a blurred formulation raises questions.

CIAC experts from the outset insisted that, taking into account 16 available customers in the face of various ministries and departments, the leadership of such an authority can not be non-government. The beginning of the year 2018 turned out to be an excellent picture of multiplying the achievements of "defensive" lobbies by zero: when the entire "defense" celebrated a victory with regard to increasing the profit margin for manufactured weapons and military equipment (IWT), the defense minister abolished during the first meeting of the Cabinet of Ministers this situation and returned the situation to the old channel. Could the head of the profile department of the Ministry of Economic Development prevent the military minister, the question is rhetorical. There will be dozens of such issues in the future.

But even more makes the statement of S.Pashinsky in parliament in April 22 think: "According to the already adopted Law" On National Security ", the Cabinet of Ministers should establish a central executive authority for control, coordination, and all Oboronprom's enterprises by creating specialized, vertically integrated holdings coordinated according to the Constitution of the Cabinet of Ministers of Ukraine ". That is, if the words of the chairman of the parliamentary committee are interpreted in a literal way, it is a question of re-applying the Cabinet of Ministers only to the enterprises of "Ukroboronprom". But ... industrialists reasonably point out that the reform of the defense industry is far from just a reform of the "Ukroboronprom". Especially if we take into account that already a good couple of years private enterprises carry out around 60% GOs. Yes, and besides "Ukroboronprom" there are several dozen enterprises of other ministries and departments. In other words, there are real risks in the fact that the newly emerged TSOIV simply did not replace itself "Ukroboronprom". By the way, whether we want it or not, but "Ukroboronprom" from a sophisticated artificial formation in the years of the war turned into a domestic brand. He is bad or good, the question is to power.

Thus, the expectation that the TSOIV will assume the functions of determining which weapon Ukraine creates itself, what kind of partnership, and what it buys, may not be justified. The updated system risks being as unbalanced as existing ones. Moreover, ROM does not answer a series of extremely acute questions. How to create a mechanism for attracting to the mentioned holdings of private enterprises? How will the system of selection and financing of promising technologies be built? What kind of relationship will be with TSOIV with the defense enterprises of other departments?

In fact, the defense industry has long ago given its substantiated answers on how to ensure the development of a national military-industrial complex. Written below does not pretend to be an absolute truth, but it can be a starting point in the preparation of key decisions.

Defense industry Key principles of development

Credentials of TSOIV should apply to all enterprises of the country, regardless of the form of ownership, wishing to participate in the State Tax Inspectorate or engage in foreign economic activity. The level of leadership of the Central Election Commission is the first vice prime minister or deputy prime minister. The TSOIV is formed through the creation of the Ministry (which can be called the Ministry of Industrial Policy - MPS), in several stages. The main objective of the improvement of the system for the formation and implementation of the GOP should be to ensure the proper three-year planning of the needs and prospects of procurement on the basis of transparent competitive principles.

The formation of the SDIU can begin with the strengthening of the powers of the profile department of the Ministry of Economic Development and Trade, in part by empowering the implementation of the state defense and industrial policy. After obtaining the status of the Ministry, the planned reform of the "Ukroboronprom" CC is being implemented, during which the concern gets rid of administrative regulatory functions and completes the formation of specialized defense holding companies.

In order to separate the PTS and OPK GK Ukrspetsexport and other special exporters, they must be withdrawn from the GK "Ukroboronprom" and subordinated directly to the Deputy Prime Minister - Minister of WFP. However, decisions on the export of completed AWT systems, as well as the implementation of international projects or the creation of international structures are implemented within the framework of decrees of the President of Ukraine, after elaborating the decisions and recommendations of the Interdepartmental Commission for the policy of the PTS and export control under the President of Ukraine (within the NSDCU).

But this is not all. In order to harmonize the system of "branded enterprises" it is also meaningful to withdraw it from the "Ukroboronprom". This is primarily GP "Antonov". But, it's probably worth a closer look at the issue of companies such as Zorya-Mashproekt and GKKB Luch, whose brands are brighter than the concern itself.

In order to make key decisions that require a comprehensive study, substantiation and authoritative argumentation, it would be superfluous to create within the WFP the Scientific and Technical Committee (NTC), a structure that would replace the hard-earning idea of ​​the restoration of the Institute of General Designers. The MPC MPC should include leading scientists - project managers of fundamental research, well-known IWD designers, as well as heads of profile institutes of the Ministry of Defense and the General Staff of the SCU, and commissioners (that is, heads of parent companies responsible for the development and serial production of specific new IWTs). The transition from general designers to the commissioners is related not only to the lack of designers in the country across the spectrum of IWTs being developed, but also due to the sharp increase in the role of integration of components, systems and modules for IWT, the role of management as a whole.

The involvement of private capital (private defense enterprises) in the network of holdings or for the self-fulfillment of the GOs may be ensured by the following administrative decisions.

The first one. Improvement of pricing mechanisms for defense products, within which it will be possible for the enterprise to realize a realistic development strategy. Today, within the framework of the existing resolution of the CMU No 464 from 27.04.2011 of the year, this is 5% of the profit for the acquired components and 30% for the performed work.

The second one. Improvement of the mechanisms of granting state guarantees to the subjects of management of the defense industry of all forms of ownership.

Third Financing by the state of preparation of production at enterprises of all forms of ownership, participating in the GOs (for private enterprises - in the form of procurement and lease of equipment for production lines).

Fourth Liberalization of the rules of life of the defense industry. For example, by refusing calculating and calculating materials (RCMs) when turning on works in the GOC (however, leaving the procedure for preparing RCM for monopoly enterprises). The presence of RCM puts any foreign supplier above the domestic one - since it does not need to coordinate the volumes of settlements. Directly related to RCM is the need to improve the performance of military missions with the concentration of their efforts in controlling the quality of defense products instead of focusing on the control of the cost of airborne warfare. And to this point, the creation of "simplified conditions" for obtaining enterprises of the industrial complex of Ukraine of all forms of ownership of the right of foreign economic activity in the global arms market. Formally, this item is implemented, but extremely slowly.

Fifth Facilitating the future of the WFP, the Defense Ministry and the General Staff of the SCU in carrying out the tests of new IWTs, the provision of polygons and specialists, if at the start it is concluded that it is expedient for domestic customers to have similar IWTs in their arms.

Import of IWT

Unfortunately, when presenting ROMs, nothing was said about the policy of importing IWT. Nevertheless, taking into account the notoriously known (for the domestic producer) purchase point of the 55 of French helicopters for the Ministry of Internal Affairs, the CIACR called for legislation to reinforce the impossibility of purchasing foreign armaments and military equipment, as well as dual-use goods for military formations of the state in the presence of similar domestic technologies or developments . To this end, it should be added that, in order to ensure a competitive field, the tender should be conducted both in the case of the State Tax Inspectorate and in the ordinary procedure of public procurement.

However, without the STC MPP and work out the decisions of the NSDC itself can not do. It would be the same legislative act to secure the right of the SNSCO to recommend the head of state to purchase foreign IWT in special cases. For example, when it is required by the General Staff of the Armed Forces to provide operational security for national security, and with its conclusions, the NTC WFP and the above-mentioned Interagency Commission agree. For example, when there is not enough grouping of coast guard boats in Ukraine, and the first missile boat "Lan-LK" with domestic NPCs "Neptune" is expected in 2021 year. It seems that the purchase of the 4-8 in this case, British or French production boats, with the parallel development of the already developed Lan-LK would be justified. Of course, such a conclusion is preliminary because there is no such research and analytical support (conclusions of the NTC of the MPP or the specialized institutes of the Ministry of Defense and the General Staff).

In general, the examination should be mandatory in the preparation of any project with the import of IWT. A similar situation with the French helicopter project is taking place with the launch of Elbit Systems LTD, an Israeli company in Ukraine, to modernize the helicopter fleet of Ukraine. First, because without a tender. Secondly, without scientific and analytical expertise. Experts point out that decisions are made on the basis of emotional assurances from a foreign partner, without demonstration of the implemented technical solutions, without pilot-technicians. Well, and finally, at the peak of domestic developers who initially put out certain funds for the creation of such an IWT. Probably the Israeli technique is the best in the world. But if Ukraine creates a system, then any entry into its market should be based on uniform rules for all.

The offset component of the transaction should be an integral part of the import agreement. Failure to offset can only be in the special cases described above and based on the conclusions of the corresponding structures.

GARDA Development of the state system of development of defense technologies

To date, formally the State Agency for Advanced Studies, abbreviated to the American manner - GARDA, has been created. As a domestic analogue of the Defense Advanced Research Projects Agency (DARPA) Defense Forces Agency of the United States. Unfortunately, it is distinguished from the overseas fellow by two interrelated problems: the horrific deficit of government allocations and, as a consequence, the possibility of the Ukrainian structure only by analyzing and selecting the existing developments, and not by putting forward perspective tasks to the best developers, as is customary in the United States. However, for the beginning, this is the result. Taking into account that there was no inventory of defense development in the country.

"The main task today is to combine the capabilities of scientific and design developments in the field of security and defense with the needs of the military and other power departments, as well as the defense enterprises themselves," says the rector of NTUU "Kiev Polytechnic Institute named after Igor Sikorsky", academician Mikhail Zgurovsky, who, being the chairman of the Supervisory Board of GK "Ukroboronprom, issues the state system of technology development based on the experience of international cooperation of NTUU KPI, including within the framework of the organization tkrыtыh tenders technologies. So, on 14-15 on May 2019 year on the basis of NTUU KPI for the first time an open competition of defense technologies will be held. It is known that from the received 130 projects the expert commission (including, incidentally, scientists and managers of the private defense business) has selected for the 85 competition in the field of security and defense, and the main investors may be domestic customers of ВВТ and special exporters.

Nevertheless, in spite of efforts, the chances of state financing through the discovery of research work by government contractors are not high. More hopes for Ukrspetsexport and other special exporters are selling technologies, they can be developed to serial production, and then used for the needs of national defense. A new niche of technological growth is being developed: the interest of public or private enterprises in development, which can significantly increase the potential of those areas of development of the IWT, which have already become a priority. Probably, some technologies will be supported through the State Innovative Financial and Credit Institution (the founder of GIFC is a state represented by the Cabinet of Ministers of Ukraine). Mechanisms seem to be a lot, but to a well-established state innovation policy is not exactly close. It seems logical that technology development ideas should be supported by the state by integrating into the new TSOIV, WFP, in particular by introducing a clear mechanism for selecting and financing government development. That is, in the interests of all 16 customers. And the fact that they will not be able to use for the needs of national defense directly can move through the already well-known in the world NTUU KPI platform of the Sikorsky Challenge University (to this point there has been life around 30 defense projects).

The secret of the GOC. To what level reveal the secrets

It is also important for the company to have a planned partial disclosure of the State Tax Inspectorate. As expected, after the adoption of the announced ROM, the new developments in IWT, fundamental research, the content and tactical and technical characteristics of new research and development work will be considered. Having studied this area in detail, CIACR insists that, when illuminated by the GOC, only the quantity of IWT purchased but not mentioned in the nomenclature is indicated. Objectively, the disclosure of the nomenclature when compared with the cost will undermine Ukraine's capabilities in the global arms market. Whoever has been watching for him remembers well, what trouble caused the mention of the director of the factory-manufacturer of the cost for the internal customer of the popular "X-Mail" stations at the beginning of the radio-electronic intelligence "Kolchuga" - just at that moment Ukrspetsexport sold the batch of this technology to China, at five times more expensive than in the domestic market.

Instead of conclusions. The reform of the Defense Forces has matured for a long time, and the NBU and the VRU's profile committee are welcome to address it. But it is important not to forget the principal things. First, if we are to embark on a reform, it should concern the entire defense industry, not its part. Secondly, the reform should be as depoliticized as possible, and ideally, experts should be involved in its implementation. Including, in part, an independent peer review. Thirdly, changing the format of life of the defense industry as a whole and "Ukroboronprom" in particular should not weaken the level of national security and the potential of the PTS of Ukraine. On the contrary, reform must lead the industry to new levels of development. To start the reform, it is necessary to adopt and agree on the concept of this reform. Finally, the reform should prepare the next important stage of development - the privatization of the defense industry, and not only those enterprises that are incapable of participating in the GOC (as it is conceived nowadays).