A week ago, on December 25, 2023, russia ceremoniously commissioned the newest Admiral Golovko frigate, Project 22350, into the Northern Fleet. Even russian President Vladimir Putin was in attendance.
However, now multiple naval-themed russian media report that the Ministry of Defense of russia is suing the Severnaya Verf shipbuilding yard in St. Petersburg, where the frigate was constructed. This case reveals the gap between the contract value and actual cost of the ship, showcasing how chaotic russian pricing for military equipment can be.
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In short, the ministry sought a penalty for the delay in the ship's delivery schedule. Admiral Golovko, initially laid down in 2012, had at least four deadline extensions, finally delivered in December 2023.
And before we delve into financial matters, let's briefly outline what kind of ship is in question. The most important detail is that Admiral Golovko can carry up to 16 Kalibr or Zircon cruise missiles — double the capacity of Project 11356 frigates, which form the core of the Black Sea Fleet.
The frigate's specifications include a length of 135 meters, full load displacement of 5,400 tons, maximum speed of 29.5 knots, operational range and autonomy of 4,500 miles at 14 knots for 30 days, and a crew ranging from 186 to 210 personnel.
Its armaments include a vertical launcher with 16 silos for cruise missiles, a 130-mm A-192M cannon, a Poliment-Redut air defense system with capacity for 32 9M96E2 anti-aircraft missiles, a Paket-NK launcher loaded with eight anti-submarine torpedoes, and eight Verba MANPADS.
Details of the legal dispute reveal intriguing figures. The reported cost of building the ship under the 2012 contract is RUB 28.28 billion, equivalent to $316 million at current exchange rates. Note: this is the contract value.
However, the case files note that the Ministry of Defense underpaid 8 billion rubles from the contract value, leading to delays in delivery. Consequently, for the Ministry, the ship cost only $224 million, considering the amount actually paid.
On the other hand, the shipyard contends that the actual cost of building the Project 22350 series, including the Admiral Golovko, has increased by 19 billion rubles compared to the contract signed years ago. This suggests that the actual construction cost of the Golovko frigate could reach around $400 million.
The discrepancy raises questions about how to evaluate the ship when it comes to calculating, for example, the losses of russia in the war against Ukraine — quite a common practice, particularly for assessing the effectiveness of military operations and applied weapons in statistical terms.
Which value should be taken into consideration for such a powerful warship as Admiral Golovko, carrying 16 Kalibrs or Zircons: the $316 million, as in the contract; the actual cost production of $400 million; or the 224 million practically paid by the russian defense ministry, which decided to save some money yet was surprised why the ship was not delivered on time.
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