Delfin Design Bureau Penalized for Contract Frustration

Rubric: Russia, Industry

The Russian Defense Ministry called for a penalty to be imposed on the Delfin Central Research Institute due to frustration of defense contract for RD project Shanets-VMF. The deadlines were changed because of the military’s demand to replace imported enements with the Russian ones.

According to thge case materials, several months prior to the end of works, the customer decided to replace foreign static invertors with the Russian ones. The changes needed development of new design documentation, production of pilot samples and conducting of preliminary trials. The agreement for additional works was signed between the Delfin institute and defense ministry in December 2014, only two weeks before closing date of the contract.

Nuclear-powered strategic submarine Novomoskovsk (Project 667BDRM Delfin)

According to a source aware of the case materials, those invertors were made in Ukraine. "To replace them, the Delfin institute designed own invertors, namely, made documentation and pilot samples, as well as held appropriate trials. Currently, the institute is ready for batch production", he added.

The interviewee explained that Delfin could not change deadlines because of the need for import substitution. "All works funded by the budget are accepted by the government. Any material changes of the state order (such as prices or timelines) would entail revision of the entire contract, but it is impossible to make the governmental decree in such tight schedule", said the source.

Late in January, the defense ministry claimed for over 15 mln rubles from the Delfin institute for the failure to meet timelines of the Shanets-VMF project. The court sustained the claim only for 7.2 mln rubles. As for the judge, the institute actually failed to commence works before signing of the additional agreement that completely changed the scope and parameters of works two weeks before the contract end. The military agency brought the appeal; the hearing is scheduled on April 25.