IGOR ARTEMIEV: DEFENCE INDUSTRY COMPLEX IS THE MAIN LOCOMOTIVE OF RUSSIAN ECONOMY AND WE MUST INCREASE ITS INVESTMENT POTENTIAL
“Supervision does not create strategies, and the President, the Government and the defence industry Collegium determined the vectors for developing the defence-industry sector”
Head of FAS Igor Artemiev took part in the plenary session of the II All-Russian Forum “Public Defence Procurement-2018” on 1 June 2018 in the Moscow Regional Government House.
The Forum focused on “Modern challenges in public defence procurement: restrictions and ways to overcome them”.
As the Head of a sector-controlling body, Igor Artemiev discussed regulation of defence orders, the results and new challenges.
He emphasized: “Increased prices – by 20 times – is one of the positive outcomes of FAS synergy to control defence procurement and pricing through the entire cooperation”.
FAS issued injunctions to transfer more than 1.2 billion RUB of unlawfully gained income to the budget, exposed 19 bid-rigging cartels in the defence sector for over 4.1 billion RUB and reduced prices on public contracts in the course of registration for over 13.9 billion RUB.
“We must complete electronification of pricing bids consideration. It will increase system transparency and prompt violations exposure by orders”, addedIgor Artemiev.
He pointed out: “The antimonopoly authority implemented the basic principles of control-and-supervision in public defence procurement: FAS is assigned the functions to protect public interests, bans are imposed on pricing and improper use of monetary assets, punishments for violations, and the investigation and inspection procedures are determined”.
Head of FAS discussed the pricing reform that introduces a motivational pricing model, prioritize the pricing methods and introduces a single methodology across the entire cooperation. He emphasized that benchmarking is used only in competitive segments.
“Every year an enterprise gets indexed for inflation, the rest it gets through cost-saving. Everything depends on how you build up this model for our production”, pointed out Igor Artemiev.
He reminded of a Presidential Order on the main direction of the state policy towards developing competition, that must be executed in the public defence procurement sector by optimizing the law on procurement by particular types of economic entities, eliminating administrative barriers for entry to the market of components for public defence procurement and improving the indicator system for state-run company management.
“The Order as place for public defence procurement. We have to devise a special plan what must be done to enhance efficiency and competition where it is possible”, said Head of the antimonopoly authority. Igor Artemiev added that there is no goal to artificially implant competition where it does not make sense.
Discussing the tasks in public defence procurement, he outlined goals on introducing “special treatment” in procurement of technologically complex non-standardized products, enabling procurement from several suppliers without tendering and audit of executors.
Administrative barriers that obstruct development of competition among component suppliers should be achieved through non-discriminatory access to documentation, reducing the testing costs and regulating actions of ordering parties.
It is necessary to introduce performance indicators for management of state companies that stimulate production optimization: price and costs movements by types of products and components, efficiency of the work with suppliers and reducing overheads.
Igor Artemiev proposed to form a special Working Group for cooperation in the field of defence-industry sector, which will be able to fully account the industry specifics.