Moscow Defense Brief

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#1 (57), 2017


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Defense Industries

“We Are Ready to Work With All Kinds of Companies”

Interview with Andrey Grigoryev, director-general of the Advanced Research Foundation (ARF)

Andrey Grigoryev is the director-general of the Advanced Research Foundation and honorary professor of the Moscow Institute of Physics and Technology (MFTI). A retired Lieutenant General, he holds a doctorate in technical sciences. He was born in 1963, and graduated from the MFTI with a degree in aerophysics and space studies in 1986. After graduating from the Military Academy of Chemical Protection, he served with various MoD research centers. In 1995-1999 he held senior positions in the Department for the Environmental and Special Protection at the Russian MoD. In 1999-2012 he served with the Federal Service for Technical and Export Control. In November 2012 he was appointed member of the Commission for the Defense Industry under the Russian Cabinet, and in February 2013 as head of the Advanced Research Fund.

Q: It has been reported that the ARF will be financed to the tune of 2.3bn roubles (72m dollars) in 2013. Is that financing adequate to the tasks set before the fund? What are the research projects the ARF will finance with that money, and what is the future outlook?

A: The figure is correct, and it is quite sufficient for our purposes in 2013. The fund is, as they say, at the start-up stage at the moment. The most important tasks facing us now are organizational; we need to come up with a mechanism for a rational distribution of our resources between the various projects; improve our system of selecting and appraising these projects, etc. This is a difficult challenge. All these problems are only natural at such an early stage, but we are going to start working on the actual research projects in the near future.

Last July the ARF Science and Technology Council discussed the ARF research program. It will consist of the projects we are going to finance over the next three to four years. After that, the amount of financing will depend on the state of the Russian economy, on whether we can win support for our ideas from the Finance Ministry, and, most importantly, on the quality of the projects we are going to propose. Most of the money will be spent on developing and implementing those projects.

Q: It is said that the ARF has been modeled on America’s Defense Research Projects Agency (DARPA). What are the similarities between the ARF and DARPA, and what are the differences?

A: The only real thing we have in common is the planning horizon. The time frame of the ARF programs is 10, 15 or even 20 years. DARPA can also afford that kind of time frame. This enables the agency not to get bogged down in the current realities and problems the customer (i.e. the country and the government) faces at present. One of the reasons why there haven’t been many breakthrough research projects in Russia is that the customer wants the researchers to work on the problems that exist “here and now”. Every manager understands that he has to deliver here and now, that there are lots of problems that need to be resolved here and now, and it is these problems that are seen as the top priority. There is simply no time to think about the longer term. But there are also long-term problems that will emerge and become urgent in another 15 or 20 years. That seems like a long way off, so company managers and representatives of government customers are always forced to focus on the problems they are facing today, not 15 or 20 years from now.

That, essentially, is the only similarity between DARPA and the ARF. DARPA’s R&D projects can make use of the results of fundamental research financed via a hundred different channels and spending items that have nothing to do with DARPA. So the U.S. agency, with its financing, essentially picks the cream of the crop produced by other projects that have almost reached completion. A good example is the numerous DARPA competitions and challenges, with relatively small prize money at stake. That money is not enough to cover the actual R&D costs of the participating teams. The projects taking part in these DARPA competitions have already been financed by university research programs, grants, etc. In Russia, unfortunately, this is not possible. But we have already conducted successful negotiations with the Education and Science Ministry, and we are going to launch joint projects like these with that ministry.

The research infrastructure here and in the United States is also very different. If a group of people here in Russia actually manages to develop some new product or technology, they will inevitably get bogged down in such issues as where to manufacture their product, where to test it, etc. We are still lacking the complete research-to-commercialization cycle, which would mean that all the doors are open before the inventors, and that they are clear as to what to do with their invention. I believe that creating such an infrastructure is one of the objectives our fund must achieve.

Q: Were there any similar agencies in the Soviet Union?

A: There was the 13th Directorate at the MoD, which was in charge of advanced research. The directorate has been renamed several times, but it still exists within the Defense Ministry. Besides, every defense customer has a department in charge of advanced research. But the ARF will not duplicate these agencies and departments. First, we have a much longer planning horizon. And second, the ARF itself is an experimental platform that will be used to test new organizational approaches to breakthrough R&D, among other things.

Q: There was another attempt to set up a “Russian DARPA” back when Aleksey Moskovskiy was a deputy defense minister and head of the armaments department at the ministry. Money was allocated, projects were initiated, but when the time came to deliver, all we got was posters showing some old and slightly dusted off R&D projects. What is the situation these days?

A: We are facing a similar problem at the moment. We have received more than 600 proposals regarding various R&D projects - but there are still very few revolutionary and genuinely new ideas. Most of these proposals are old projects that have been gathering dust for many years. One of the main reasons for such a situation is an acute shortage of the generators of ideas in the defense industry. We need to foster a new generation of engineers, designers and developers. I am talking about young, creative, and to some extent even adventurous people. A lot has already been said by various officials, including very senior politicians, as to why the talented young people are reluctant to make a career in the defense industry these days. I firmly believe that financial and social security incentives are not enough to attract the young people to that industry; there must also be a clear moral incentive as well. The young specialists working in that industry must have a feeling that they are doing a truly important job, and working on advanced R&D projects. These days, however, university graduates are invited to work in obsolete labs and production facilities that manufacture products designed back in the 1970s and 1980s. How can we hope them to be truly enthusiastic about their work, and generate interesting new ideas and solutions?

I believe that we must start developing “a new defense industry” in the existing framework. The approach we have chosen to do that is to set up the so-called “fund laboratories”. They will serve as a platform for putting together new teams of developers, and they must be equipped with the latest and most advanced world-class technology. These laboratories do not necessarily have to be divisions of the ARF. They can work as divisions of large companies and corporations. The distinctive thing about them is that we will only give the go-ahead to R&D projects if the company in question agrees to set up a special division (a department, a laboratory, etc) to work specifically on our project. All the members of staff working in that division must work on our project, and nothing else. In addition to actually setting up that separate division, we must also make sure that it has all the required infrastructure (i.e. test benches and facilities, testing ranges, etc). That is the ARF’s job, to provide all the necessary infrastructure by signing an agreement to that effect with the company hosting the R&D facility.

Q: Are we talking about such giants as Rosnano, OAK (United Aircraft Corporation) and OSK (United Shipbuilding Corporation)? Or are you ready to work with smaller companies?

A: We are ready to work with all kinds of companies. Ideally, the mechanism we envisage is as follows. First comes the presentation of the R&D project and of the people that will lead it. Then we conduct a technical audit of the proposed host company to ascertain that it can provide all the necessary facilities. At this point, whether we like it or not, the list of the companies that can meet the requirements is not that long. We are talking about large defense companies that will be asked to host an ARF “cell”, if the project aims to develop some new hardware. In the case of software projects, however, we are ready to cooperate with companies on the condition that they agree to set up a separate legal entity within their holding to work specifically on our R&D project. In these cases we will conduct an audit of the specialists working for that company rather than the entire company itself.

Q: What is your vision of the mechanism of commercializing the ideas and R&D projects financed by the ARF?

A: That is a very topical question. There is an opinion, for example, that we should not focus on government customers because they will always keep ordering what they have always ordered, and criticize any ideas we believe to be truly groundbreaking. As part of that approach, the idea is that we should first create a demonstrator prototype, and only then try to prove the rationale for launching mass production. I believe that such an approach would be counterproductive. Unless we establish good working relations with our government customers, we will have to promote our products and technologies ourselves. In the meantime, the teams of developers will be sitting idle and twiddling their thumbs. After a short while, many of them will simply find themselves better things to do. So our objective is to organize our work in such a way that we have a clear outlook for the future of every individual project right from the planning stage, and to work in coordination with the potential customer. In other words, we must make sure that the customer takes into account the potential availability of this new technology we’re working on as they draw up their procurement and corporate development programs.

To illustrate, we have several projects with Rosatom. We have an agreement with the Rosatom leadership that if these projects deliver the expected results, the corporation will pick up those results and take them forward as part of its own investment projects. We are going to seek the same kind of relationship with the other government customers.

This, however, can only work when we’re talking about clear and obvious trends. But we can’t rule out some sudden and unpredictable revolution in technology. Not a single government customer will be prepared to take responsibility if a promising R&D project they have commissioned is suddenly made obsolete by some new technological breakthrough. That is why we will also have a number of projects where the ARF will assume all the risk and take all responsibility. And if in the end we achieve the results we had hoped for, we will have to make sure to put them to a good use. Incidentally, if the fund were to carry out some R&D projects that have not been commissioned by a specific customer, there will also be the possibility of attracting private-sector investors who recognize the potential of these projects and who can take them forward.

Q: Has the ARF already selected any teams of developers to work on specific projects?

A: The ARF Science and Technology Council is analyzing the proposed R&D projects at the moment. The areas we intend to focus on include robotics, IT (I believe that we have some promising breakthrough technologies of processing large amounts of information), and high-precision systems. We will also work on increasing the range of various weapons systems, from bullets to missiles.

Q: What is the procedure for the assessment and selection of projects at the ARF?

A: We have a system of expert assessment in various areas of science and technology. Teams of experts have been selected for each area – and it is not us who did the selection. We had submitted requests to 150 different organizations; the list of the specialties for which we seek expertise covers almost every area of science and technology. We also rely on the existing teams of experts, i.e. the central research institutes and industry-specific science and technology councils. The main objective at this stage of assessment is to categorize the proposals we have received into several groups, depending on how likely each of these projects is to reach commercialization.

The ideas and proposals are then submitted to the Science and Technology Council of the ARF. Half of the members of that council are representatives of government customers. The other half are renowned specialists in their individual fields of science and technology. They act not only as a jury but also as generators of new ideas.

The main requirement for the projects, however, is that they should be in line with our vision of the military and national security challenges and threats facing our country. The ARF spent the first two months of its work on identifying and categorizing these threats and the potential ways of countering them. That has enabled us to formulate the general outlines of the advanced warfare technologies we require.

To summarize, each project must meet two main criteria. It must hold the promise of delivering an effective instrument of countering the military and security threats we have identified; and the likelihood of that project reaching commercialization must be appreciably higher than zero.

Q: Under the terms of the law “On the Advanced Research Foundation”, the ARF is allowed to pursue international activities. Who can you work with on the international stage, realistically?

A: There are two aspects to this question. The first is active communication with foreign colleagues at various exhibitions, forums, and workshops. The second is pursing some international cooperation projects. The latter aspect appears fairly difficult to implement at this time, owing in part to the problem of intellectual property and protecting those property rights when pursuing international cooperation projects.

Q: What are the prospects for the ARF pursuing some commercial activities?

A: We are allowed to do that by the existing legislation, but it is not a priority for us. Successful commercial activities require relevant expertise and specialists. I am now busy hiring people who have spent all their lives pursuing innovative research and development projects, not commercial ventures.

Q: What do you think about the prospects for technologies being transferred from the civilian sector to the defense sector and vice versa in our country?

A: By way of an answer let me just tell you about a project that is now being discussed. There has been a lot of talk lately about protecting Russian interests in the Arctic. I firmly believe that to support our presence in that region we need not only military instruments but, even more importantly, we need the technologies for producing mineral resources from under the Arctic ice sheet. These mineral resources production technologies, which seem purely civilian at first sight, can be the very mechanism that will enable us to conquer the Arctic.

If this idea gains traction, the ARF could lay the first stone in its foundations by launching a pilot project, for example. This is, after all, an area that combines all the Russian technological strengths. I am talking about such technologies as advanced shipbuilding, nuclear reactors, and designing ice ships. We are already in preliminary consultations on this issue with Gazprom and Rosneft institutes; we are putting them in touch with the Rosatom institutes and with OSK divisions. So far, however, we have only managed to set up a kind of club to discuss this issue. But potentially this club can turn into something much bigger.

Some of the technologies in the civilian sector are already far more advanced than anything available in the defense sector. It is important to understand which of the civilian technologies can be successfully transplanted to the defense sector. Speaking about Russia, however, one has to recognize that we have never had any advanced and high-tech civilian industries, with the possible exception of IT.

Q: Looking at the high-tech industries, what are the areas where Russia remains internationally competitive, and in what areas is it lagging behind?

A: There is no easy answer to that question. Frankly speaking, it is difficult to speak of Russia remaining internationally competitive after a 20-year period when there was next to no financing of fundamental research in our country. Russia has been coasting along on the R&D assets accumulated over the previous decades. Arms exports are a good litmus test of competitiveness. In some areas our weaponry can still give foreign competitors a run for their money.

Our goal now is to create a proper system that facilitates advanced research; provide adequate resources for that research; and try to get ahead of our foreign partners in those areas where they still don’t have any advanced research projects.

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© Centre for Analysis of Strategies and Technologies, 2017