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Problems with the construction of frigates of project 22350

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The published decisions of the Arbitration Court of the City of Moscow dated October 12, 2023 contain information of interest on the construction of frigates of Project 22350 (type "Admiral of the Fleet of the Soviet Union Gorshkov") for the Russian Navy. The decisions themselves were made regarding the claim of the Ministry of Defense of the Russian Federation against PJSC Shipbuilding Plant Severnaya Verf (St. Petersburg) for the recovery of a penalty in the amount of 240.363 million rubles (with a total claim amount of 4.227562 billion rubles) for the failure to meet the deadlines for the delivery of the third frigate Admiral Golovko (factory number 923) of project 22350. As a result, the claim was denied to the Ministry of Defense.

According to the text of the court's decision, the construction of three serial frigates with factory numbers 922, 923 and 924 ("Admiral of the Fleet Kasatonov", "Admiral Golovko" and "Admiral of the Fleet of the Soviet Union Isakov") is carried out by the Northern Shipyard under a state contract with the Russian Ministry of Defense dated October 25, 2010. The contract value of the frigate with the factory number 923 (Admiral Golovko) is 28.278 billion rubles. At the same time, the total amount of underfunding by the customer for all three ships of the contract is more than 18 billion rubles, and specifically for the order of 923 - 8.9 billion rubles. The difference in the real price of orders 922-924 compared to the contract is already 19 billion rubles.

Frigate Admiral Golovko (factory number 923) of project 22350 built by PJSC Shipbuilding Plant Severnaya Verf upon arrival in Severomorsk to undergo the main stages of State tests in the North, 03/31/2023 (c) Lev Fedoseev

The text of the court's decision, in particular, says:

As the defendant points out, the terms of the state contract provide for the construction of 3 (three) frigates, while the total amount of underfunding is more than 18 billion rubles, and specifically by order of 923 - 8.9 billion rubles.

In addition, the construction of the listed ships is carried out in conditions of incompleteness of the ROC on the head order of the head.№921.

By clauses 4.9. 8.1 of the state contract, the parties agreed on a condition on the price of ships to be registered for each order by year of delivery.

As of 10/25/2022 and to the present time, the price has not been revised by the state customer for any order, which entails the absence of a final payment for the delivery of order 922 and the debt of the head contractor to the co-executors

The state budget; the lack of an up-to-date financing schedule by the state customer and postponement of delivery dates for products and equipment with a long manufacturing cycle that do not correspond to the construction schedules of orders; the inability to attract credit funds, since credit organizations obviously lack profit of the head contractor, taking into account the irrelevant price of the state contract.

In addition, due to the change in the VAT rate from 01.01.2018, despite the already existing lack of funding, the state customer refused to increase the price by 2%.

Given the lack of its own funds, in order to fulfill its obligations, PJSC SZ Severnaya Verf was forced to conclude a loan agreement with PJSC Promsvyazbank dated 04/26/2019 to finance the construction of orders 922-924 of Project 22350.

In accordance with the Decree of the Government of the Russian Federation dated 08/01/2022 No. 1366 "On the introduction of special measures in the field of economics", the state customer, when transferring the price from the indicative (specified) to a fixed one, ensures the acceptance of reasonable actual costs of the head contractor, including in excess of the limits of budget allocations included in the State Budget, taking into account profitability in accordance with the PP No.1465 dated 02.12.2017

PJSC SZ Severnaya Verf was deprived of this measure of state support, despite active work since 2019 with the state customer to review the prices of frigates, including in order to obtain a final payment for the order 922 project 22350, the receipt of which will provide partial financing for the construction of the order 923 project 22350. Information about unpaid bills of co-executors, reduction of financing by the state customer unilaterally, prolonged absence of final payment for the order of 922 project 22350 and negative consequences repeatedly

They were brought to the authorities of the state customer, including by initiating meetings.

According to the minutes of the meeting of the Deputy Minister of Defense of the Russian Federation dated 17.02.2022, No. 18dsp issued an order to the Ministry of Defense of the Russian Federation to make an advance payment under a state contract in the amount of 90% of the contract price, excluding balances on individual accounts, by March 10, 2022.

As of 03/10/2022, the percentage of advance payment amounted to only 85.37% of the price of the state contract, the obligations of the state customer to provide the really necessary financing for the construction of the order have not been fulfilled.

Additional financing was received by PJSC NZ Severnaya Verf only in the last decade of 2022, which is confirmed by additional agreements No. 31 dated 08.08.2022 and No. 32 dated 12/26/2022 to the state contract.

Thus, the execution of the DOE of the Ministry of Defense of the Russian Federation paragraph of the protocol of the meeting of the Deputy Minister of Defense of the Russian Federation dated 02/17/2022 No. 18dsp is outside the area of responsibility of the head contractor, who took all measures depending on him to make a decision by the state customer to increase the amount of the advance payment under the state contract in the absence of a final payment for the order 922 project 22350.

The issue of increasing the price of orders and adjusting the schedule for the construction of orders was repeatedly discussed at meetings held by the state customer during 2019-2022. The Company and its parent company (JSC "USC") have submitted all the necessary materials on frigates No. 922-924 to the Ministry of Industry and Trade of the Russian Federation, including the conclusions of JSC "TSSC" for subsequent appeal to the Government of the Russian Federation. This issue was also submitted to the Military-Industrial Commission for consideration in order to form proposals on the tasks of the State Budget for 2022-2023.

In accordance with an extract from the minutes of the meeting with the First Deputy Chairman of the Board of the Military Industrial Commission of the Russian Federation No. TV-P22-14prsVPK dated 11/17/2022, the Ministry of Defense of the Russian Federation was instructed to provide for the following by 11/30/2022

formation of the state defense order for 2023 and for the planning period of 2024 and 2025, setting the deadline for the delivery of the frigate in 2023, order 923 of project 22350, taking into account the establishment of financing volumes in 2023. 2024. 2025. financing volumes of products 923-924. In accordance with paragraphs 10, 11 of the Regulations on the Military-Industrial Commission of the Russian Federation, approved by Decree of the President of the Russian Federation dated 09/10/2014 No. 627, the decisions of the Commission are formalized by a protocol, which is signed by the chairman of the Commission meeting. The decisions of the Commission taken within its competence are binding on the federal executive authorities. To implement the decisions of the Commission, decrees and orders may be issued, instructions and instructions from the President of the Russian Federation may be given.

As of 05/29/2023, the decision of the Military-Industrial Complex of the Russian Federation has not been fully executed by the state customer.

Thus, there is no fault of the head contractor in disrupting the ship's delivery time.

Moreover, this is confirmed by the high level of technical readiness of the ship, which is 93.32%.

In order to ensure the completion of construction and reduce deadlines, the lead contractor has timely prepared proposals for decision-making by the state customer.

The head contractor, in conditions of lack of funding, took measures to reduce the cost of the supplied equipment.

Thus, appeals were sent to the state customer about the absence of the possibility of concluding a supply contract in accordance with the delivery statement for the product "Ekran-CM" with an inflated cost. According to the order sheet, the manufacturer of this system is JSC "Research Institute of Television" - the production period is 18 months, the cost is 119.5 million rubles; (in accordance with

By the conclusion of the Research Institute of Ci In the Navy of the VUNTS of the Navy "VMA", the analog color television broadcasting system is to be replaced by a digital television system of the IP-TV type, including due to the use of components manufactured in the USA). The proposed alternative suppliers of JSC Eleprom - Systems and JSC Neptune Research Institute have been considered by various structural divisions of the state customer for more than a year.

The decision of the state customer, which allows to manufacture and supply the Ekran-CM product without the use of components manufactured in the USA, has not been made as of 10/25/2022.

The order 923 of project 22350, although not the main one, but its construction and testing are carried out in conditions of unfinished R&D. In particular, one of the main reasons for the failure of the ship's delivery date is the lack of positive test results of the Monument product.

ROC "5P-20" is performed by Granit-Electron JSC in accordance with a separate state contract dated 12.10.1992 No.ER-38-92, concluded by the product developer with the Ministry of Defense of the Russian Federation. The prototype of the 5P-20K product is installed on the lead frigate of project 22350 (order 921), but so far preliminary tests of the complex have not been completed by the developer due to the inconsistency of the prototype with the requirements of the tactical and technical specifications under state contract No. dated 12.10.1992, No. EP-38-92.

PJSC SZ Severnaya Verf has repeatedly appealed to the state customer with a request not to link the acceptance of order 923 of project 22350 with the results of preliminary tests of the 5P-20K product (similar to the lead ship), since the lead contractor cannot influence the timing of completion of this product, the design documentation of which

the letter "01" has not been assigned, without being its developer. The decision on the procedure for completing the tests and delivery of the 5P-20K complex by the state customer was made only on August 26, 2022.

The product of head No. 923 of project 22350 is being built by the plant in conditions of significant changes in its appearance (replacement of GTA, changes in the configuration of the main complexes in the context of import substitution, etc.). At the same time, the total volume of underfunding (exposed and unpaid bills) as of October 25, 2022 has already exceeded 9 billion rubles, and the difference in the real price of orders No. 922-924 amounts to almost 19 billion rubles. The most important weapon complex ZK-96, which determines its appearance of the product, despite the lack of funding and thanks to the activities carried out by the head contractor, was delivered to the plant on October 5, 2022. Under these conditions, the plant was able to ensure the installation and delivery of the product's equipment on time 3-4 times faster than the standard ones, completed mooring tests, and from November 26, 2022, the product entered sea trials. Ahead of all regulatory deadlines, the first stage of sea trials was conducted, 32 documents were closed,

shock weapons and air defense systems have been prepared and tested, the product has reached the completion of the first stage of sea trials in the landfills of the Baltic Sea. Currently, the product is located at landfills for the second, final stage of sea trials, state tests and delivery of equipment.

The Court also takes into account that due to the lack of provision by the state customer of the 9M100-1 product in parts of the Navy, approval of the decision "On the procedure for conducting tests" is necessary to complete the tests of order 923 of Project 22350

ZK96-2 products at the stage of state tests of project 22350, head No. 923, which has not been issued by the state customer to the present time.

Taking into account the above, taking into account the obvious lack of financing for the construction of a series of products of Head No. 922-924 of project 22350, the attraction of credit funds by the lead contractor and timely appeals to

the state customer on the allocation of financing in the amount and terms corresponding to the construction schedule of order 923 and 924 of project 22350, the decision of the Board of the Military Industrial Commission of the Russian Federation dated 11/17/2022 No.TV-P22-14prsVPK on the formation of

the state defense order for 2023 and for the planning period of 2024 and 2025, with the deadline for the delivery of the frigate in 2023, order 923 of project 22350, taking into account the establishment of financing volumes in 2023, 2024, 2025 and financing volumes of order 923-924 of project 22350, untimely consideration by the state customer of draft solutions to shorten the construction period of order 923 of the project 22350, the penalty is unjustified, since the violation of the deadline for the delivery of order 923 of project 22350 is due to the apparent inaction of the state customer, expressed in non-compliance with the decision of the Military-Industrial Complex of the Russian Federation, as well as the absence of the product 9M100-1 for testing.

In addition, the court takes into account the fulfillment by the defendant of 15 of the 17 stages of the contract, including the relocation of the crew, which is confirmed by the order of the commander of the military unit dated 04/25/2022, according to which the relocation of the crew is allowed.

As previously indicated by the court, due to the lack of provision by the state customer of the product 9M100-1, in order to complete the tests of order 923 of project 22350, approval of the decision "On the procedure for testing the product ZK96-2 at the stage

state tests of project 22350, head No. 923".

The documents presented in the case file confirm the impossibility of fulfilling the specified clause of the contract due to the absence of the product. So, on 06/27/2023, a decision was made to conduct conditional launches against an air target using products.

In addition, the case file contains correspondence between the customer and the contractor, from which it follows that the customer decided to include the cost of testing in the price of the state contract as part of the support work.

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