State contracts of the Ministry of defence exempted from Treasury control

The Federal Treasury will maintain support state contracts state contracts, according to the government decree published on the official portal of legal information. The help notes that this decision “will allow to strengthen control over payments by the state defensive order and aimed at excluding non-target budget spending and unreasonable overestimate of the prices of defense products”.

The resolution takes the control of the Treasury government contracts in defence procurement, concluded by Ministry of defence. Also, according to the document, Treasury support are not subject the contracts entered into by contractors in the presence of Bank support, government contracts for the provision of foreign intelligence means intelligence activities, the FSB — means the counterintelligence activities of “Rosatom” — the goods, works, services related to nuclear weapons and warheads. For transactions for defense procurement is characterized by low payment discipline, there is corruption factors, says head of military economy laboratory of the Gaidar Institute Vasily Zatsepin. The system of Treasury maintenance fairly tough, and the release of government contracts from this control “will provide the freedom of hands”, he said.

“Now the Treasury and the Treasury will be able to control the movement of budgetary funds on such contracts only after the fact. Treasury support — it is the control mechanism for each payment order, each operation is controlled,” says Zatsepin. Exemption from state contracts control of the Treasury “lowers the barriers for the passage of money,” he explains.

The Ministry of Finance in 2016, introduced the mechanism of Treasury accompany all state contracts, advance payments are measured at the amount of 100 million rubles. According to the orders of the Ministry of Finance and Treasury all the performers of state contracts are required to open accounts in the Federal Treasury, to receive funds will be possible only after the query check. For expenditure on the state defence order, an exception was made, though with these costs the government raises the most problems. In February 2016, Finance Minister Anton Siluanov warned that the significant advances of the order of 1 trillion rubles for goods, works and services — has led to growth in balances of Federal budgetary and Autonomous institutions. “The main increase in advances provided through advance payments of the Ministry of defence,” — said the then Minister of Finance.

During the preparation of the law on the Federal budget for 2017-2019 years, the Ministry of Finance proposed to cut funding for military spending by 6%. Finance Minister Anton Siluanov, introducing in the State Duma the draft budget, noted that the cuts will not apply to the procurement of arms and military equipment, “despite all the difficulties.” As a result, the Federal budget expenditures in the direction of “national defense” for 2017 decreased to 2.84 trillion rubles.

On 16 February President of Russia Vladimir Putin, speaking at the Collegium of the FSB, called for “carefully” monitor the spending of funds that were allocated for defense procurement and major infrastructure projects as “the facts of theft and misuse of public funds are still many”. In December, the head of the Investigative Committee Alexander Bastrykin has proposed to tighten criminal penalties for crimes related to embezzlement and corruption in public procurement, including in the sphere of state defence order and military-industrial complex. The head of the TFR has proposed to amend the relevant Federal law note, which will identify the criteria under which the state order is considered executed properly, and any deviation from the scope and types of works under the contract are only allowed subject to the procedure prescribed by law.