Perestroika and Change in Soviet Weapons ... - The Black Vault

44
Soviet weapons design approach is followed, the budgeting and cost
incentives lead to excess capacity and considerable hidden reserves.
Even with free-flowing resources and a cost-plus mentality, the
Soviet defense complex is still part of the Soviet economy and shares
many of the same problems. Yu. S. Valkov, a retired chief designer at
a defense plant, has decrbed many practices he observed that would
be quite familiar to a civilian manager. He related how a chief
engineer obtained supplies "by fair means or foul" to properly equip
the workshops and was issued with 18 ministerial reprimands in one
year for his heroic efforts. Valkov complained that all attention was
focused on producing basic combat equipment, with everything else left
to languish. He mentioned the seven years it took to place a screwcutting
lathe into production,18 and "God forbid that you invent something
new and have to introduce it. It's more trouble than its worth.
Imitations of foreign innovations began to enter the system-it was
left trouble.' 1 '
We are left with the question of whether the financial separation
between military buyer and producer, excesses of the cost-plus
approach, and other inefficiencies emanating from the incentive system
can be squeezed to free up resources for civilian output, and whether
defense enterprises can escape their cost-plus methods but still utilize
their conservative design ethic to produce efficiently for the civilian
market. The simple expedient of cutting defense procurement budgets
may induce greater cost consciousness of the buyer and producer alike,
depending on how it is implemented. But industry insiders such as
Isayev and Valkov identify profit orientation and competition as necessary
conditions for peater efficiency. With the introduction of
khoviehet in the beginning of 1989, the defense customer will face
greater pressure to pay the full cost of production, formerly often
buried in state subsidies and bank loans that covered enterprise losses
resulting from monopeonist pressured low prices and inefficient production.
When confronted with the fMil -costs of its demands under a
regime of tighter budgets, the military may take a second look at its
requirements. But if prices simply rise to cover the full costs of production,
the discipline of khorawchet will be negated.
Even if khozvahet is fully implemented, the continuing multiple
restrictions on enterprise behavior will cause dimished incentives for
internal efficiency. For one thing, the growing complexity of
8 1ntf vi by the uthor wih U.S, Sovae and BReat urapan mchn too po-
&aem in IM6 evead a 1.5-2 year peiod fom initia dlsp to fAt delivery for mmy
U. mmfactmr and 1-15 yea for the elal eom ie
3 Yu. VaihoV, "Tie Lat Tromp Card, I ig Indwaiya November 13,
1968, p. 2 (FB1S.SOV.-23, Decmber 5, 196, p. 122).