Military-Industrial Commission

By the start of 2006 a majority of Russia's military production sites and infrastructure facilities remained inadequate and out of date. A serious miscalculation of funding during the 2002-2006 reform program, coupled with the problems that had plagued the industry since the collapse of the Soviet Union, had left a significant portion of the country's defense firms bankrupt. Furthermore, over 70% of production remained geared towards sales with foreign countries and companies.

Due to the radical transformation of the geo-political climate and the steady upswing of Russia's economy, military officials began to argue for a major reform of the nation's defense program and military-industrial complex in order to ensure a significant increase in production, growth, and funding.

In an attempt to centralize and strengthen the operational management of the military-industrial complex the Military-Industrial Commission (MIC) was created as a permanently functioning institution on March 20, 2006. It would also act as a new state organization for unified supply and equipment procurement for all of the "power ministries" within the Russian Federation. The duties, parameters, and status of the MIC were formally announced at the end of April 2006. It was given responsibility for overseeing long-term strategy and planning and performing operational management of research and development procurement projects; introducing a strict monitoring mechanism on pricing of defense projects; and monitoring the overall restructuring of the military-industrial complex.

The MIC was authorized to prevent creation of monopolies of producers and R&D in the internal market by stimulating competition between the enterprises in the production of spare parts, but eliminate competition during the production stage of the completed item. The MIC was charged with defining the main parameters for state defense orders, including timing, pricing, and personnel policy in the defense enterprises.

The commission was formed in order to advance the development of the entire defense industry, from the production of arms and munitions to the supervision of imports and exports. Many government officials believed the new organization would significantly decrease corruption. In addition, the military hierarchy surmised that their forces would finally be provided with the necessary equipment they required in order to embark upon their reform programs.

In addition to making timely, rapid, and effective decisions concerning all aspects of the defense industrial sector, the MIC would also exercise control over elements of the civilian sector, such as the automotive and metallurgy industries. Talks ensued that the body would be granted a broad range of powers, including the ability to draft presidential decrees and government resolutions, and be allowed to oversee their enforcement. It was also asked to oversee the establishment of a single agency to oversee all purchases of military hardware and rear service property and logistics.

The commission held its first meeting in early May 2006. Sergei Ivanov was appointed to lead the commission, and Putin assigned Vladislav Putilin as Deputy Chairman with ministerial status. Igor Borovkov became Chief of Staff and was assigned the task of framing the Commission's decisions and monitoring their implementation. Alexander Goev, Vladimir Pospelov, and Alexander Bobryshev became permanent members of the Commission. They were ordered to resign from the posts they held and concentrate on monitoring and overseeing specific sectors of the defense industry. There were also 9 other officials added to the MIC.

The MIC was created as a permanent body outside of the regular government apparatus. As a result, it answered directly to the president and did not have the oversight of parliament or other legislative bodies.