Independent expertise, audit can evaluate the success of any activity as nothing else. Therefore it would be appropriate to begin consideration of the issue of the defense department in the formation of the state defense order from trouble-spots, which were found by the Main Audit Department of Ukraine (MAD).
In June 2009 MAD had conducted a state financial audit of the budget programs which make up the majority of the state defense orders (SDO) in the Ministry of Defense of the Ukraine: “The purchase and modernization of armament and military equipment for the Ukrainian Armed Forces” and “Applied research in the field of military defense of the State”.
As a result of this there were identified several deficiencies that adversely affect the quality of these budget programs.
1. Imperfect formation of the state defense program.
The current regulatory framework for the formation of the main indicators of the state defense orders, definition of priorities in financing of the purchase and modernization of armament and military equipment is outdated and does not provide clear definition of responsibilities, interaction, work order, control and reporting of relevant units of Ministry of Defense and General Staff.
2. Deficiencies in provision of financing.
Main Audit Department recommendations on finance limitations are based on the lack of funding and its uneven disperse during the year and reduction of budgetary assignments for 2009.
3. Inconsistency of funding for the Armed Forces of Ukraine.
Among the factors that characterize the inconsistency of the state policy MAD identified following points:
State programs of rearmament were not specified for a long time;
State programs define a significant number of development areas that makes it impossible to concentrate available resources on a particular measure which is supposed to be implemented;
Postponement with the state programs;
The presence of a significant number of research and development works which were initiated long ago (more than a half - before 2002).
According to the audit group there is a necessity for substantial strengthening of the role of the General Staff in the formation and implementation of state defense orders, the essence of which is as follows:
Service commands of the Armed Forces of Ukraine, Force support Command and provision services submit their propositions to the General Staff on the formation of the state defense order;
Key indicators of the state defense order are formed by the General Staff which are approved by the Minister of Defense and only then they are submitted to the Cabinet;
After the Cabinet had approved the main indicators of the state defense orders, the General Staff forms and submits qualification requirements which are put forward for the executors of the SDO to the Tender Committee and the Expert Commission of the Ministry of Defence of Ukraine;
Tender Committee and the Expert Commission choose the executor of the state defense order and the result is submitted to the General Staff;
The General Staff signs state contracts with the executors of the state defense order and controls the execution of the contracts;
On the basis of adopted work acts approved by the General Staff, through the Department of Finance of Ministry of Defense the payment of goods and services is conducted.
At the same time the realization of Main Audit Department propositions needs some significant changes in the regulatory framework which deals with questions of formation and execution of state defense orders in the Ministry of Defense and in the Ukrainian Armed Forces.
The reasons for the development proposals listed above are obvious contradictions and shortcomings in planning, formulation and implementation of state defense order which we have up to this point.
Primarily contradictions between the General Staff, Service commands of the Armed Forces and the Ministry of Defense have to be pointed out.
Today, under the Law of Ukraine dated 03.03.99 # 464-XIV "About the state defense order" functions of government customers rely on the ministries, other central executive authorities and military units established under the laws of Ukraine, authorized by the Cabinet of Ministers Ukraine to sign government contracts for the supply (purchase) of products, works and services.
In accordance with the Terms of reference of the Ministry of Defense (Decree of the Cabinet dated 03.08.06 # 1080), Ministry of Defense is a customer for the state defense order.
The relevant orders of the Minister of Defence of Ukraine the functions of the Ministry of Defence as a customer for state defense orders are entrusted to the respective units of the Ministry of Defence and the General Staff.
This is the first contradiction.
General Staff as a separate entity has the right to execute the functions of another entity (the Ministry of Defence). Taking this into account the payment for the state defense orders for which the General Staff is responsible is conducted on the expense of budget programs of the Ministry of Defence, which are managed by the General Staff.
Units of the Ministry of Defence are basically excluded from the planning, development and implementation of the state defense orders although the responsibility for legal and financial commitments is precisely laid upon the Ministry of Defence (as a legal entity) with its head.
The second contradiction includes the planning of activities that must be a part of the state defense order.
In accordance with the Terms of reference of the General Staff (Decree of the President of Ukraine dated 21.09.06 # 769/2006) General Staff is supposed to determine the need of the Armed Forces of the Ukraine for armament and military equipment.
Meanwhile the formation of the state defense programs for the long-and medium-term development in the part of armament and military equipment is assigned to units of the Ministry of Defence; deadlines and funding of policy documents which are developed by the General Staff and the Ministry of Defence are not related and sometimes have a different direction in general.
This leads to the fact that during the formation of the figures of the defense order Ministry of Defense includes activities which are not planned by the General Staff and by the Armed Forces, the priority funding and implementation of defense order measures according to the needs of the General Staff is not observed.
The draft of the state defense order is submitted for signature of the Minister of Defence of Ukraine without the consent (elimination of identified remarks) of the General Staff.
Another important contradiction, which certainly affects the quality of the formation of the defense order, is a complete rejection of arguments of the interested sides during project development of indicators of the defense orders.
So the Department of Defense does not consider the priorities in providing the Armed Forces with armament and military equipment which are determined each year by the General Staff; events that are defined by the General Staff as obsolete and that require suspension of their execution are planned.
In turn the General Staff does not take into account the need to include to the indicators of defense orders measures that have been made as legal commitments by the Ministry of Defense.
Simultaneously with these contradictions there is a problem of determining the level of approval of the state defense order indices.
Based on outdated regulations (Order of the Minister of Defence of Ukraine dated 20 January 2003 # 13 “About the organization and control of research and development work of creation and modernization of armament and military equipment for the needs of the Armed Forces of Ukraine“), which does not meet the existing order of relations between the departments of General Staff, Armed Forces and the Ministry of Defense of Ukraine formation of indicators of the defense order by the departments of the Ministry of Defence of Ukraine is done with an agreement with the views of the Armed Forces, bypassing the approval of the General Staff.
Thus the fact that the General Staff is the military administration and the command for the Armed Forces and other types of units of the Armed Forces of Ukraine is ignored.
Solutions of the existing problems are:
Enhancement in the development and improvement of legal and organizational measures to ensure the integrated implementation of armament strategy;
The development of appropriate amendments to existing regulations concerning the procedure of forming of the state defense order, stating that its formation would be done by the General Staff;
Improving the mechanism of involving accomplices to the development works;
Review the feasibility of ending initiated developmental works that have lost their actuality.
S.Shynkariov, Colonel, Chief of Section, Directorate for Identification of Requirements and Organization of Sustainment, General Staff
