Created: 11/1/1959

OCR scan of the original document, errors are possible






Manager tlon e

ormat ioo od the planning netbods

? the.USSR ln the large-scale produc-

?ra;ional advanced weapons

The description of the managerial techniques employed and of the interrelationships between the administrative, service, and fiscal organizations and the production units involved in the missile pro-gran is based on the combinationimited amount of direct evidence

ast amount ofSoviet economic planning, accounting, and managementfrom overt Soviet publications. It is useful to relateinformation to the specific problem of missilesuch evidence as is available indicates that highlyactivities in the USSR are usually planned and managed inthe same way as nonsensitive economic activities. Thedifferences lie in tbe security measures employed and inources *hich the sensitive activities

No documentation is included in this research aid, because of the multiplicity of documentary sources used and the difficulty ofgeneralized conclusions to particular sources.



Basic Organization of tbe Missile Progras Policy Planning Review and Decision .

Policy Proposal and Review B< Policy Decision and Planning

Production Planning


Financial PlanningPlanning

C. Summary of Policy Proposal and Planning

Planning and Control of Production andof Klssile Sys!

1 Production: Developmental Production atInstitute or Design Bureau



Supply .

Labor and

Other Relationships

B. Stage II Production: Serial Production Facility

Production Planning andinancial Planning and Accounting .

Supply and Sales


Labor and Wages

Other Administrative Relationships

Construction of Launching Sites and



Fixed and Mobile Ground Installatloo* - -

Construction of Mlaalle Launching Ships

Direct and Indirect Approaches


Approach . . . -


Following. Page

1. USSR: Probable Organization of the

State Committee for Guided Missiles . . .

re 2. USSR: Probable Organization of Policy

Decision-Waking end Staff Planning andfor Missile Systees

Figure 3- USSR: roduction of Operational ControlProduction FacilitiesMissile System

Figure *. USSR: roduction: andnformationFlowa

Figure >. USSR: Stage II Production: of Operational ControlProductionystem

FlffureSSR: Stage II Production:andnformationFlows



Primary responsibility for the missilen the USSR Is believed to resttate Committee for Guidedf the Council ofctingtaff either to the Presidium' or to the dominant member of the Soviet The missile program is in the immediate charge of either this dominant memberember of the Presidium. Most of the proposals toissile system come from the Ministry ofnd the "First Branca" ofs believed to serve as the principal staff agency vhlch translates policy proposals into production and construction programs and schedules. The proposals and the Gosplan staff worn are reviewed by the Missiles Committee, and the final decision Is taaen by either the Presidium or the dominant individual referred to aco/e. The Missiles Committee is primarily responsible for insuring that this final decision is executed.

* The estimates and conclusions in tblo research aid represent the best judgment of tblB Office as of

** The term mlcalle programls research aid refersumber of missile systems, each of which is designed toa specific Also referred to throughout this research aid as the Missiles Committee.

Ail-Union throughout this research aid unless specificallyto as republic.

t Because the same individuals almost invariably make up the Presidium of the Council of Ministers and the Presidium of theParty Central Committee, this research aid uses the term Presidium to denote the top decision-making group, with the implicit understanding that major decisions cay be madeominant individual.

tt It should be kept in mind that much of the organizationalposited in this research aid represents only the best hypothesis that car. be formed at this time with the information available. information whichifferent organizational stricture is fully as welcome as information confirming the structure descrioed herein. It should also be remembered that the present lack of positive evidence concerning the existencepecial State Committee for Guided Missiles by no means precludes the existence of such an

Developmental productionull-scale testing progran is carried out primarily in research institutes and design bureaus subordinate to tbe Missiles Committee or otner central organs. Although localand economic organs are largely cut off from tbe normal docuAent and information flovs on tbe production and financing of enterprisesIn developmental production, local organs nevertheless apparently receive production and financial Information in an aggregative form on an annual or semiannual basis. Some detail or. the labor force engaged in developmental production probably is availableimited number of people in the regional councils of tbe national economyhe local branch of tbe State Banknd the local office of tbe Central Statistical Administration.** reat deal of information or. material supplies coving into developmental production facilities and on shipment of finished products from the production unit is available in the railroad administration. Local Party and government officialsare largely cut off from the daily activitiesevelopmentalfacility, but tbey probably would be aware of cnanges in the level of activity, of tbe initiation and completion of projects, and of tbe relative success or failureroject.

Series or mass production of components for an operational system is carried out primarily In plants subordinate to tne sovnarkhozy. in great detail on all aspects of production, production costs, funding, supply, labor force, and wage bill is reported to tbe defense industry administration of tbe local sovnarkhoz and to tbe defenseof the Gosbank branch and tbe Central Statistical Administration. The railroads would have Information in great detail on supplies to, and shipments from, tbe producing plants. Local Party and governmentwould be quite aware of such production activity. Local trade union officials probably would have access to some details concerning the labor force and wage billlant engaged in series or massof missile systems components. Complete details, of course, are available in tbe files of the producing plant and of tbe centralin Moscow. Tbe republic Gosplan also would nave access to aamount of Information.

Information on construction of launching sites and other operational facilities is withheld from local organsanner analogous toproductionesearch Institute or design bureau. On the other hand, key people in tbe railroads may have greater knowledge about material supplies consigned to the construction site and the nature of tbe installation.

* Sovety narodnogo khozyaystva. ** Tsentral'noye Statistlcaeskoye 'Jpravleniye.

Current knowledge of tbe missile program in tbe USSR could begreatly if therearked improvement In the quantity and

Outside the central organs in Moscow, the most promising tragets for collection and analysis are the following: he republicof Ministers andhe railroad administration, (It) the local offices of GoabanX and of the Central Statisticalocal Party and government officials,ocal trade union organizations.

I. Introduction

uide to collection and analysis this research aid emphasizes where the desired information on the Soviet guided missile programmay be found in the Soviet state apparatus. Obviouslysought is in the hands of the people and the organizations which are directly involved In producing the major components and in operating the missile systems. 3ut there are many other parts of the statesuch as Gosplan, Gosbank, and the transportation organs, which in the normal course of events have access to all or major portions of the information desired.

The probable organizational structure of tbe guided nisslleprogram in tbe USSR is. Broad outline in II, below.

In III, below, thererief survey of tne probable initial planning of production, funding, and material supply for missileas well as tbe probable organizational skeleton of tne missile program. It deals with tbe locus of decision-making on tne size and nature of tne Soviet missile program, the planning of production and construction,unding (financing) of tee missile program, and the planning of material supplies. Essentially the discussion of these functions is by analogy to the manner in vnich decisions, production planning, funding, and supply planning are made and Implemented in tne USSR for other high-priority items, with adaptations of the analogy to allow for tne problems peculiar to missile programs.

In TV, below, an analysis is made ofelationships of anengaged in production of miBsiles witn other major components of tne Soviet state apparatus in order to determine the roles of these organizations in tne production and construction of missile systems and tne information they may have. An effort is made to distinguish between the Information available to local branches of sucti organizations and tbe information probably available only In tbe central offices in Moscow.

The relationships of the producing enterprises with fiscal, planning, and statistical organs are analyred for two levels of production. It is believed that enterprises engaged in experimental production offor developmental weapons syB;ems areifferent type from those engaged in line production for both test and operational use and that toe former have much more limited contacts with fiscal, planning, and statistical organs than the latter. Hence separate treatment is giver, to each level of production and its relationships with other organs in tbe state apparatus. Developmental production is designatednd line production is designated "Stage II."


II. Basic Organization ofissile rroprar;

Although there is no direct evidence, it is believedpecial State Committee (or Main Administration) for Guided Missiles of tee Council of Ministers is tee center of primary responsibility fordevelopment, and production of missile systems and construction of operational facilities in the USSR. In its daily operations ttis Missiles Committee is beadedermanent chairman who bas tne rank of Minister, and tne committee nay have one or more deputy chairmen who specialize in research and development or in production and construction problems. The chairman reports directly to the Presidium members in immediate charge of the missile program. It is believed that "ikita Khrushchev is personally overseeing the missile program at the present time. . Ustinov, whoeputy Chairman of the Council of Ministers, probably is the Chairman of the Missiles Committee. It is believed that the Missiles Committeeollegium consisting of the following Berbers ex officio: the Chief of the "First Branch" and of the "Secondf Gosplan; the Chief of the "Summary Branch for the Defense Industries'" of Gosplan; the Minister of Defense; and the Chairman of the Statefor Defense Technology, Construction, and Automationcehine Building (see

There axe two bases for positing the organizational structure in Figure 1. First, certain high-priority defense projects are known to have been administeredimilar manner; second, tne problems of coordinating and managing the manufacture of operational mlsaile eyste-in quantity by this nev industry would be so complex and day-to-day decisions would be so urgenttrong, centralized executive authority would be mandatory.


* The official table of organization of Gosplan listsunctional activity branches,f vaicb are concerned with branches of Industry such as ferrous metallurgy, fuels, machine building, and light The only overtly listed military branch is tne "Summary Branca for the Armamentshicn is believed to be responsible for planning the activities of industries producing more or lessweapons. The two remaining branches are listed simply as tne "First Branch" and the "Second Branch," The aviation industryof the chief of tne "First. Khrunicnev, suggests that the "First 3ranch" is the Gosplan organization primarilyfor the missile program. The "Second Branch" is believed to fce primarily responsible for the atomic energy program. Otter advanced weapons programs such aa that of nuclear-powered naval craft also may oe Included in the responsibilities of these two branches of josplan. Following p. 6.

ossible tbat the missile program is runess formally organized, but equally powerful, ad hoc group {suchCouncil for Cuided Missilet tne Presidium level and that tbe duties and responsibilities of tbe functional secretariat outlined in Figureould be divided among the various state committees vbose chairmen form tbe collegium posited in Figure 1. Tne important point here is that even if this should be the case, the functions and duties outlined must be performed by someone, and whether they are carried outpecial secretsrlatormal committee or by the various committees and organizations reportingess formal ad hoc Council isatter of administrative expediency. Thus, if evidence should become available whichasically different organizationalat the top level from tbat wnich is posited byhe discussion of what must be done and bow lt Is done in the Soviet system probably would remain valid.

The current information available on the functions of the overtly announced state committees Indicates tnat, unlike their ministerialthey have limited executive authority. These comralttees appear to have primarily advisory functions and perhaps responsibility for drafting long-range clans for their areas of activity. The State Committee for Guided Missiles, postulated in this research aid, would have considerably broader powers. Tbe somewhat Halted scope ofof tbe other committees is one reason for considering lt unlikely that any one of these committees would Itself be responsible for the missile program or that tbey would be likely to share executive functions in support of the missile program under tbe direction of an ad hoc missile Council. Regardless of whether tbe Missiles Coamittee is formal or ad hoc, it mustonsiderable amount of support rrom tbe other state committees. Therefore, these committees, and the senior personnel connected with them, necessarily are Important targets for the collection effort on tbe missile program.

The Missiles Committee shouldermanent secretariat composed of functional divisions which Include the following: planning andfinance, supply, technical research and development, cadres, construction, transport, and military liaison.

Following* Nauchno-IssledovateL'skly Institut. Proyektnoye Byuro/Xonstruktorskoye Byuro.

In additionermanent secretariat, the Missiles Committee may be expected toumber of scientific research institutesnd design bureausdirectly subordinate to it, but probably more of the former (for example,nd Mlhan of the latter (for example,t is common Soviet practice for researchto be limited to researcn and development, but there is evidence




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concerning the activities ofndhich suggests that, in the missile program, research Institutes may naveapability for experimental shop production of ma.lor missile systems components. Normally, the primary function of design bureaus is to provide the drawings and blueprints required by the production and tool design engineers. In the case of the mlasiie program, however, there is evidence to suggestesign bureau may have some experimental ahop facilities for production of components.

Part of the responsibility for research and development may be subcontracted to research institutes and design bureaus subordinate to the Ministry of Defense, but it is believed that toe bulk of the research and development as well as production for developmentalwill be handled by facilities directly subordinate to tneCommittee.

Through its functional divisions and research Institutes tneCommittee provides draft plans for production, construction costs, funding, and transport, together with technical documentation, of missile systems. These draft plansajor part of the necessary staff support to the Ministry of Defense for its proposals to the Presidium on the kind and scope of missile systens needed, and at the same time they serve as the primary working documents for Gosplan's planning, scheduling, and costing of the missile program. Within the Ministry of Defense the Main Artillery Administrations believed to be the principal organization engaged in planning the missile program. The GAU probably is responsible for working out the detailed capabilitiesissile system must have toesignated mission and the general technical requirements of theelements.

Glavnoye Artlllerlyskoye Upravlenlye. The GAU Is known to have these responsibilities for at least part of the ballistic missile program. If some other organization should be responsible for other missile systems, the scope of its responsibilities and its method of operation probably would be similar to that of the GAU. It is possiblepecial administration has been created within the Ministry of Defense tothe functions ascribed herein to the GAU. It is also possible that the Soviet General Staff plays an Important part in proposing the types of missile systems which should be produced and that the role of the Zkli is quite secondary to that of the General Staff as far as policyfor missile systems are concerned.

Given the Presidium's decision toisuile systeo and the completion of plans by Gosplan and the Ministry of Finance, theCommittee would normally have primary operational responsibility

for implementing tee plans for production, construction, and reat deal of toe production responsibility, of course, is subcontracted to sucb industries as tbe defense industry, tee radio-technical industry, and the chemical industry. In addition toits own production facilities for developmental systems, therefore, the Missiles Committee monitors the fulfillment of the subcontracted production responsibility for operational systems and will assist in solving any production, supply, labor, and financial problems that amy arise.

Tbe GAU, through the agency of plant representatives, probably is responsible for inspecting the final products at tbe producing plants

insure that tbe technical and quality specifications are met. Tne GAU probably is the agent of tbe Ministry of Defense which accepts the approved items.

III. Policy Planning Review and Decision

A. Policy Proposal and Pevlcv

Decisions as to which of several alternative missile systems are to be produced, tbe size and scope of the systems, and tne resource allocations (capital equipment, material, and manpower) to be devoted can be made only by tne top leadership cf tbe USSR. If the decision is not made by one man (currently Knrushchev, formerly Stalin), it is made by the small group of men who make up tbe Presidium of tne Council of Ministers.

Tbe first major step in deciding the kind and size of toe Soviet missile program is the Presidium's estimate of the internationalconfronting the USSR and what policy lines the USSR desires to This estimate is eobodiedesolution, or In some casesircular letter,imited distribution among top party,and military officials. Although these estimates routinelyto tbe period of the multiyear economic plansohorter term resolutions may be prepared in reaction to major external or internal events (for example, an international crisisajor change In Soviet leadership). Tbe Presidium's estimate indicates the relative share of national income to be devoted to investment, to the military, and to consumption andierarchy of priorities to those aspects of tbe total military posture (both offensive andof tne USSR which need to be strengthened In order to support tbe policies decided upon. Within these general limits and priorities the Ministry of Defense has primary responsibility for drawingraft program for missile and other weapons systems designed to achieve Soviet policy objectives. raft would consider the relative snares of total military procurement to be assigned to offensive and defensive

systems as well as between missile and other weapons systems. At this stage of policy proposals, the economic cost isirectbut tbe Ministry of Defense is guided by the Presidium'sthat defense expenditures should not exceed some given proportion of national int

When the Ministry of Defense has worked out its projections for the missile program, they are submitted to the Presidium for It is likely that tee Minister of Defense presents the proposed program, but there may be times when the Presidium member currently acting as overlord presents tbe proposals. If the technologicalof tbe various systems convince* the Presidium that theprovides the desired capabilities, and if at this stage thecost of the program appears to be within the desired generalhe program is referred to Gosplanrobably to the "Plrtturrently headed by Khruclchevetailed staff study of the costs of the various systems in terms of materials, manpower, and production facilities. This easy be characterized as toe policy proposal and review stage of the decision-making process for the missile program (see Figureor an outline of the policy proposal and review procedures).

It is likely that the Ministry of Finance and aoseone-wltr.experienceember of the Presidium with tne appropriate background or the Chairman of the State Committee forAffairswill participate in the staff study of the cost of the proposed ayatems. It Is likely that, before submission to the Presidium, the Ministry of Defense bas coordinated tbe cost of the various systems with Gosplan but only in general terms. Realistic planning requires Gosplan to analyze the cost of the entire missile program in detail because only Gosplan can work out the requirements of tbe various systems for material, plant, and manpower resources in conjunction with the demands on the same resources by other military programs; by the investment plans for Industry, transport, agriculture, and housing; and by foreign trade coasnltziects, and the like. In other words, Gosplan mustalance between the material and manpower resources available and the demands mad* on these resources. Ifreports that the proposed program li too costly, that there simply are not enough resources to go around, tbe Presidium is facedumber of difficult choices.

* Following

Suppose, for example, tbat it was proposed tofirst strike" intercontinental ballistic missile (ICBM) force (that is, one which could destroyercent or more of the US retaliatory capability if the USSR took thehe estimated cost of which might

puth the defense sector's share of national income well beyond tbe general limits desired by tbe Presidium. first strike" ICBM force would be very alluring to the Soviet leaders, but it hardly would be foolproof, and to undertakerogram might well require some cutback in other investment or in consumption, or both. Owing to its preoccupation wltfl long-run growtb, the Presidium is loatne to cut back investment, and consumption's snare of the national productIs quite low. Tbe Presidium also could cut back some otner part of tbe missile program or make compensatory cuts in other parts of tbe military establishment.

Tbe pattern of Soviet actions in tbe past Indicates no routine solution to this kind of squeeze. The Soviet military establishment by no means is forced within tbe limitsixed budget, but neither does it have unlimited resources at its disposal. It can only be assumed that, when faced with tbe hypothetical problem set forth above, the Soviet leaders would first cut back the growtb of already low living standards and then would proceed to reduce the less essential parts of the military and investment programs.

B. Policy Decision and Planning

If tbe proposed missile system promises toission required by over-all Soviet policy and if the initial staff review by Gooplan and others indicates that tbe cost of tbe program can be borne and that production ia feasible, tnemakes tbe decisions necessary in order to initiate pilot line production for full-scale testing of the system and to prepare for subsequent full-scale This may be characterised as tbe policy decision and planning stage of tbe Soviet missile production program.

1. Production Planning

Given the decision to test and buildnless full-scale tests belie prototype expectationsissile system, Oosplan and the Ministry of Finance have primary responsibility for scheduling construction and production programs, which arc incorporated into the general production, construction, supply, and financial plans. Tbe degree to which planning full-scale production and tbe construction of operational installations lag behind planning for pilot linefor full-scale testing depends upon tbe Presidium. Whether the Presidium decides to prepare for full-scale production almost siBultaneously with initiation of pilot line production dependson the urgency of acquiring an operational syntem and the seriousness of the problems which can be anticipated on the basis of prototype testing. But given the general time limits Imposed by the Presidium, tbe "First Branch" of Gosplan is primarily responsible for

proposols am*

planning ando( (unctiom

Ministry of Defense

H .

Slate Commitfite (or Guided Missiles fi


Slate Committee (or Construction Affairs

Minittry of Finance, USSR


Primary source ol policy proposals

Secondary source or polky proposals

Staff planning and review ol (unctions

Ihe arrows indicate the direction of ptimaiy document (lo.

m believed that the Main Artillery Administration th'ough the Ministry ofhe chief source of proposals for systems to fulfill the missions required by over al! policy devlMons. The State Committee, firr Guided Missiles will rV OH important, but secoiutary. source of systems proposals. The Slate Committee firr Guided< turf resptmsilile fur promising what systems should be produced but rather fl remptmaJtlte for tronxlalmn thrnf thr PresidiumeratUinal tuetrmi.

working out detailed production and construction scnedules. In so acting, Gosplan would play ltE normal role of drawing up production scnedules for any executive agency, basing its proposals, of course, on data submitted by tbe executive agency andood deal of coordination between Gosplan and tne agency concerned.

Tbe Ministry of Finance is responsibile for financing and budgeting tbe program. Otber agencies such as tne Ministry of Defense, the State Committee for Guided Missiles, and the State Committee for Construction Affairs are assigned support and coordination roles.

Within Gosplan tbe responsibility for working out theplans and schedules is believed to lie primarily with the "Firsteaded by Khrunichev, andesser extent with the "Summary Branch for the Defense Industries."

In planning production of missile system components,must survey the suitable plants In order to decide where thebe produced, where unutilized plant space may belant would be either necessary or desirable, andof new plant construction which has to take place. This mustnot only for assembly of tne final products but also for major

Gosplan then drawsetailed production scnedule assign* ing responsibility for production (according to tte appropriate technical specifications) of end items and components to various organizations and individual plants. Individual plants, of course, rarely receive specific production schedules earlier than the fourtb'quarter of tbe yeartbat in which production is scheduled to take place. Details of the production schedules of the final productime horizonears are retained In tbe upper echelons. onsiderable amount of preparation and tooling, however, mayears in advance of actual production. Furthermore, production of component parts for full-scale productionissile mustears in advance, and the final assembly plant probably has access to component supply plans possibly as muchonths in advance of production of the end item.

Construction of producing plants and launching installationsoteworthy exception to this limited time horizon forproduction plans. The current accountsonstruction organization as well as the initial documentationhe "titlendicate the total expenditures planned for tbe project from itsto completion. Thus, for example, the current account of aorganization engaged inaunching site or major storage and maintenance depot would provide not only Information on the current level of activity but also fairly complete information on

After the Input noma have been set, unit production costs estimated, mad initial prices assigned to component and final products, the material inputs required to produce tbe planned quantity of end items must be entered into the material balances and schedules forto tbe producing plants. Tbe material balances calculated by Gosplan arc roughly analogousystem of double entry bookkeeping. Planned production of materials and capital equipment appear on one side, Input requirements for planned production on the other. planningalance between supply and requirements, hence the capital equipment and materials required to produce thesystem components must be entered into tbe material balances of Gosplan. Furthermore, eachdistribution plan" is drawn up which includes, together with all other material flows In the economy, the specific quantities of materials and capital equipment which must be provided to tbe producers of missile system components inwith the producers production plan and the input norms.

Following similar procedures, Gosplan, with theof tbe State Committee for Construction Affairs and theof Defense, plans the cost of construction for all the installations, such as launching sites and storage and maintenance depots, which are required for operational ml3Sile systems. The material balances and tbe distribution plan, therefore, must Include not only the allocations of capital equipment and material Inputs to the production facilities but also the allocations of cement, steel, other building materials, and capital equipment to the construction sites of operational

The planning system described above is the-Soviet alternative to the price-market mechanism, an alternative which tbey have developed in response to the problems arising from the continuous Soviet drive for high growtb ratestrong military posture. Basically the Soviet allocmtlonal mechanismore highly developed version of the system of direct allocation of material resources which largely replaced the price-market mechanism In the West during World War II. Because the entire Soviet economy is planned and managed on this basis, and Is particularly adaptable to dealing with the problems ofproduction, it seems quite clear that the USSR would not seek, or be able to find, an alternative method for dealing with missile

It is recognised that all plans for the cost of constructingsites and the like are estimates In the sense that they refer to the future and in tbe sense that there may be radical changes In the nature of the Installations required between planning and completion. it is proper to speak of "plans" in this context because In the USSR the targets set by tbe central authorities are given tbe status of law and the organizations charged with ^footnote continued on

Although the Soviet planners attempt to set precise material, labor, and capital norms for large-scale production and for construction of new plants and launching sites, developmental production costs can be estimated only crudely. Because labor costsarger snare of developmental production costs and Because highly skilled people are involved, some serious attempt to estimate labor inputs might be made. Special tooling requirements also may be estimated with some degree of precisenass. But beyond this, developmental production costs areonly in the formlanned grant from tne budget to tne research institute or design bureau.

3. Financial Planning

After production and construction costs nave been estimated in terms of physical inputs and man-hours, the missile program must be Incorporated Into the financial plan. The Ministry of Finance musttbe funds required to expand existing production facilities, to build new plants, to construct launching and storage installations, and to provide any special transportation and cocnunications facilities These funds come from the budget allocations for capital The Ministry of Finance also must provide supplementary working capital from tne budget to production and constructionprovide financial allocations to those production organizations which are financed directly from the budget; and provide for wage,and other payments through tne banking system. Finally, the Ministry of Finance must budget the funds necessary to financeof the end Items by the military establishment. Suchhowever, probably is not paid for out of toe explicit defense budget.

V Transport Planning

Owing to special problems involved in the transport offuels, and other components, it is likelypecialplan has been worked out ir. dosplan with tbe participation of the transport branch of the State Committee for Guided Missiles and of the Ministry of Defense through Its military transport organizationn the railroad administration. In the case of transport planning, Gosplan will not take part in the supervision of movements bet will restrict Itself primarily to planning the cost of transport for the

implementing the plans rust obtain formal approval in detail from the central authorities for any changes ir. tne plan. Furthermore, theresources ore stretched to the point at which any changes In the plans which involve substantial resource shifts directly affect not only the area of activity in which the original change occurred but also many other areas of economic activity.

* Voyennyye SoobshCheniya.

- Ik .

missile program and to making tne necessary resource allocations. CI control over tne actual movement of missiles, fuels, and major system components will be exercised by the Missiles Committee and/'or tbe Mia istry of Defense through VCSO in tbe transport administrationail and or water. Because the transport plans for moving major missile system components are worked out in great detail and for as muchear in advance, security considerations dictate tnat the details of planned movements probably are passed*down to the operating divisions of the railroads (or of water transport)ew days in advance.

C. Summary of Policy Proposal and Planning

At this point tbe Presidium has decided what systems are to be brought into tbe developmental-testing stage and what missile systems are to go into the operational status. Tee second phase in tbe decision-making process is the Presidium's decision on tne-staff proposals to bring the systems into being, staff proposals prepared by Gosplan with the participation of the Missiles Committee and other organisations described above. The plans laid-fcefore the Presidium Include the following: ssignment of production responsibility to Individual plants, planned construction of new productionand planned construction of launching sites and otherrequired for operation of variousetailed cost estimates for production of principal components of the missileand for construction of new production facilities and ofinstallations, and rough estimates of developmental costs of systems still underlanned allocatione of funds from state budget to cover construction and developmental production outlays, and procurement of end items by the military establishment; and (U) special transport movements and facilities required.

Review and approval of these staff proposals is the final policy decision, and fulfillment of the assigned tasks is then oblige, tory for all subordinate organizations concerned. The next problem is to get tbe plans translated into end items and installations, which may be characterized as the third, or operational, phase of the decision-making process in the missile program.

IV. Operational Planning and Control of Production and Construction of Missile SgjSS

Tbe third phase of the decision-making process consists ofplanning and control of production, construction,procurement, and transport. As information on thesenecessarily much more widely diffused tnroughout the USSF,will be giver, to the details ofdav-to-day operationaland control in order to lllustrai misnllpprogram will


organizations with the planning, financial, statistical accounting, and other organizations of the Soviet economic apparatus as well as the relationships of plants and construction organizations to tnelr respective higher organs In the administrative chain of command. Plant relationships to other organizations will be grouped under fourheadings: production planning and reporting, financialsupply and shipment, and labor force and wage bill. This procedure will permit analysis of the amount of information aaout plant production and financing, for example, which is available to the local branches of the Gosbank and to the local organs of the Central Statistical

The objective of this section is to set forth the dally and con-tinuing relationships between producing plants and construction

- * Account

As indicated previously,elationships with other organs will be examined for two phases of production: experimental shop production for systems testingroduction) and series or mass production for an operational system (Stage II production). Construction offacilities and construction of launching and other installations required for operational use also will be discussed.

It Is believed tbat the State Committee for Guided Missiles makes the day-to-day decisions and exercises operational control overof missile system components at both the pilot line and full-scale stages." In fulfilling these functions the Missiles Committee has the

* It has longharacteristic of tbe Soviet system thatas highly placed as Presidium members become involved inat the lowest levelegree that is almost Incredible to an outside observer. The new system of territorial organization and the Increased authority of the republic organsove away from this time-honored Soviet practice. lgn-prlority activity, such as the missile program, where timely decisions would be mandatory,it is likely that the central authorities continue to be intimately involved in day-to-day decisions.


staff support from, and tne assistance of, tne State Committee forTechnology, Gosplan, the Ministry of Finance, and possibly others such as the State Committee for Construction Affairs. The probable organisational structure at Stage I, developmental production, is set forth In Figure As described here the State Committee for Guided Missiles is. Inpecial executive committee of toe Council of Ministers. As such its authority is far greater than that of tbe "State Committees" which have replaced previous ministries.

A. roduction: Developmental Productionnstitute or Design Bureau

Information on production of missile system componentsesearch institute or design bureau probably is very closely held, perhaps Known only to the State Committee for Guided Missiles, the "First Branch" and certain sections of the "Summary Defense Industry Branch" of Goaplan, the Presidium, and the Ministry of Defense. It is possible that tbe defense section of the Centralew people in the economic section of tbe CentralSecretariat have access to information on planned developmental production. Certainly the defense section of the Moscow office of the Central Statistical Administration receives detailed information of actual production at the end of each year, and of course those who nave access to the plan also would have access to actual production. But it is likely that the local offices of Gosplan, tbe Central Statisticaland Gosbank are cut off from Information on planned and actual production at the developmental production stage (see Figure

Tbe railroad administration at allas accessood deal of important information on planned and actual production of missiles, and probably other major componentsissile system, at any and all stages of production. Shipments of material supplies to the missile planta are included in the transport plan which specifies In detail the nature of tbe shipments, the weight, number and kind of rail cars, and the scheduled movements for each day. These plans are made up for quarterly periods, with monthly and daily breakdowns by


** The term railroad administration is used In this research aidroad sense which Includes all echelons of railroad management from the ministry down to the local yard. This broad definition is employed in order to indicate that relevant information exists al virtually all levels. Railroad administration as used herein, therefore, is not to be confused with the narrower Soviet term of glamoye upravleniye (translated as either Chief Directorate or Main Administration) which may be used in connectionarticular rail line or with amanagerial function.

plant. Normally the transport plan Is available in the railroadoffice and in tbe transport administration of the regionaleeks before tbe beginning of the quarter. Tbe plant receives tee coordinated copy of its transporteeks before the beginning of the quarter. It is likely that material supplieslant engaged In the missile program appear in the transport planore or less normal manner, although tbe specifications of the inputs probably are closely held In many cases. Material supplies consignedesearch institute or design Bureau noo not carryme of the lnstal-


of such"material1 input for Interrepublic Supply of Armaments and is subordinate to Gosplan.

of the finished productomewhat different problem. Large missiles require special cars, and even small ones may require special bandllng procedures in movement. Tbe-shipment of major, finished components from the plant is planned by Gosplan and monitored either by tbe State Committee for Guided Missiles or by the Ministry of Defense through its VOSO organization. Information on plannedof finished components and missiles probably is withheld from the railroad administration as long as possible, but the local railroad people almost certainly receive the Information on-scheduledays in advance. Morehe kinds,rq tflf li(|nn*JO

iistrat ion of tne sovnarknoz. Such records, of course, are bandied by special sections responsible for planning,and guarding the movement of sensitive cargoes, probably VOSO ir. the case of missile systems final components. Nevertheless, it is virtually impossible to conceal the nature and the quantity of the cargo or the location and designation of producer and consumerumber of people In the railroads as well as in river transport.

Truck transport probablyuch amaller role in missile production compared with rail transport but may be quite significant in tne deployment of operational systems. Owing to the decentralised organizational structure of truck transport, however, lt is unlikelylan for truck transport is worked out by the central planning authorities. The role of truck transport In the operationlant or construction organization is considered in C,elow.

Capital construction (expansion of plant and facilities)onesearch institute Is known to the local branch of the Construction 3ankSSR. The local branch of the Stroybank, however, probably knows only the total amount budgeted and spent for capital Investments without the normal detailed breakdown of the





CommlttM lor

Ortrnir- Icrli'inliiyy


criillrr lot MmiV:

Republic Council of Muviileri


Regions! Council*

of Ihe

onoeny (Sovnarkhoiy)


of Finonc< USSR, ond GOSBANK. USS*|



of FinOM*


Direct1 in- of command lor deciiioni on allol-1Indirect choln of command lor Hal plainingond financing ol the

Ike orrowi Mxliiale the direction of primary document

then the hietar,hV fnlhIheaiidofhrfHinrif of Minltterr. USSR. Cm plan Aoi hem .lejnrted im Ihe IM IrVfll a* fir offter fiinmitlre* ondrrrly J'* ii/ nli.iroI tnnence

... '

1. Production Goals

Production assignmentsesearch institute or design bureau would be made In two ways. In most cases the assignment of developmental production tasks would be assigned by the Presidium acting on recommendations by Gosplan and tbe State Committee for Guided Missiles. In some cases tbe research institute would submit proposals based upon some new or unforeseen development in its work. These proposals are reviewed by the Missiles Committee, Gosplan, and other central agencies as appropriate, and the Presidium's decision transmitted to the institute or design bureau. All productionare in tbe form of decrees of tbe Council of Ministers.

2. Funding

Tn moot instances, research institutes or design bureaus engaged in developmental production are budget-supported organisations rather than khozraschet (economic accountability) organizations. esearch instituteudget grant covering its totaland then returns all receipts to toe budget. hozrascheton the other band, normally is expected to cover all its operating expenses from Its income; lt pays profits and taxes to the budget but usually receives from the budget only funds for capital Investment. It is possible, however, that some research institutes and design bureaus arehozraschet basis rather than operating on the basis of budget grants. Furtnermore,udget-supported organization may behozraschet basis for certain special contract work which is auxiliary to Its principal production. In this case abudgct-supportedwould haveurrent account (tekushchyy scbet) and aaccount (raschetnyy scbet) with the local Gosbank.

The expendituresudget-supported organization are planned on the basis of an estimate (smeta) which specifies expenditures for: (a) wages, salaries, and social Insurance deductions; (b) material purchases; (c) administrative and overhead expenses; and (d) capital construction and repair of capital equipment. Estimates forother than labor are based on input norms valued at prevailing prices. Labor costs are estimated on the basis of the number of people to be employed and tbe wage and salary scale. meta is prepared by toe Institute each year and forwarded to Its superior organizations for review. Gosplan, and probably also the Ministry of Finance,in tbe review, when approved tbe smeta for each research institute is Incorporated into the financial section of the national economic plan and Into the Soviet budget. The Ministry of Finance directs Gosbank and the Stroybank to disburse the budgeted sums.

All expendituresudget-supported research institute producing missile system components are financed from the budget grant vhich is paid out through the institute's tekushchyy scbet at the local branch of Gosbank. Because budget-supported organizations,rganizations, normally do notaschetnyv schet, the bank does not have available toetailed breakdown of thetransactionshat is, the bank doe6 notecord of each purchase and sale showing quantity, price, purchaser, transport arrangements, and the like. The tekushchyy schet snows the grossand gross receipts of the institute, and it probably shows wage and salary payments separately from other expenditures, but nodetails. esearch Institute or design bureau may have its account chargedost box number in order to make identification difficult.

The tekushchyy schet is carriedpecial defenseof Gosbank which handles the accounts of all sensitive activities -other defense plants, state reserves, atomic energy, and probably the accounts of military and police organizations. These special sections exist at every level of Gosbank and the Stroybank as weU as in other similar organizations such as tne Central Statistical Administration, from the lowest field office to the central office in Moscow. Other than special section personnel, only the Director ^Deputy Director, and the Chief (Senior) Bookkeeper of eacn branch normally have access to the accounts of the special sectionield office. On the other hand, the senior people in other sections very likely know the total transactions of the bank as well as the totals for tbe nonsensltlve sectors; hence they probably couldood.estimate of the total turnover In the st

3. Material Supply

In the procurement of materialesearchengaged in output of missiles probably deals largely with the supply section in the secretariat of the State Committee for Guided Missiles. The latter has the material allocations approved by Gosplan and the Presidium for the institute's production program and probably is primarily responsible for arranging delivery of supplies. In this capacity tbe supply section, not the institute, deals with tneand makes all the necessary arrangements. Thus the supplycontracts for steel delivery witn the Main Administration forMetals Sales attached to the Gosplan of the republic in which the institute is located. The Metals Sales Administration in turn arranges


teel plant to cake tne requisite shipmentost box number which may represent either the supply section of the Missiles Committee or the research institute itself. In either case the Metals Sales Administration and the steel plant would know only the general xocation of the post boxthat is, which city it is in or nearnd tbat tbe consumer is connected with some kind of military production. of other material and fuel requirements would be candledimilar manner.

Procurement of highly fabricated components sucn asequipment probably shows some significant differences in pattern. As in the case of materials the research institute would channel its request to the supply section in the Missiles Committee which in turn would contact tbe Main Administration for Interrepublic Supply ofand Fadlotechnlcal Industries. Owing to tbe specialized nature of many components and the strict technological conditions imposed, however, the research Institute probably has direct contactersonal as well as via communicationsith the electronics plant. Whereas the shipment when lt leaves the electronics plant also isost boxumner of people at tbe electronics plant know the purpose for which the equipment is to be used. Personnel of the Maio Administration for Interrepubllc Supply of Armaments and Badiotechnlcal Industries probably are quite knowledgeable aoout man; aspects of the missile program,

u. Transport

As has been pointed out above, the special problems usually Involved in shipping missiles require speciallyouinaBjit

!nTCrmaTTononplanneilctual movement of rail cars froc plants to sites undoubtedly exists in tbe railroad administration

S. Labor and_Wages

As wage and salary payments constitute the bulkoviet enterprise's expenditures, which actually are made in cash, the tekushchyy achatesearch institute with the local Gosbank very likely Is

broken down to show wage payments as contrasted to all other Indeed, if only the wage and salary portion of this account wereair estimate of tae total economic activity of tbe institute could be made. It is also possible that the local trade union organization would have access to the labor force and wage bill figures for every installation in tne area.

roducing plant the value of output could be computed rather accurately if only the wage billiven period were known. If this degree of detail were withheld from the local trade union organization, lt Is still virtually certain that the trade union organ! zatlon would know tbe total labor force and wage bill for Its area and the subtotal for all_jionjtenj-ltijve enterprises,

6. Other Pelatlonsblps

It is likely that local Party organizations and local government organs (rayobkor. and rayispol'kom) would now have rather limited access to information concerning the activityesearch institute or design bureau engaged in developmental production of missile system components. Senior officials in the local Party and state organs probably would know what theproducingeneral way, and It is possible that senior Party officials would have access to production Information from time to time. It Is quite certain, however, tbat Party officials would be aware of changes in the tempo of activity,ew program started and an existingwas dropped, and would have some Information on the success or failurerogram.

Tbe Ministry of Finance, the Commission for Soviet Control, and the Central Statistical Administration normally carry outof enterprise operations and censuses of enterprise material lnven^ tories and capital stock. esearch Institute probably would not be exempt from such checks, but it is quite likely that the inspections would be madepecial team sent out from Moscow rather than by the local finance and statistical organs as is normally the case.

As has been pointed out above, the local offices of the Central Statistical Administration do notroductionin physical unitsesearch institute producing missileelements. Production data aggregated in value terms, however, are transmitted to the cblast branch, and full details are reported to the special section of the Central Statistical Administration in Mos-Thcse Information and document flows are outlined in



B. Stage II Froductloa: Serial Production Facility

Although all day-to-day decisions above the plant levelproduction, supply, funding, or labor force are believed to be In tbe bands of tbe State Cosmlttee for Guided Missiles forroduction, In tbe case of Stage II production the Missiles Committee operates primarily through the normal administrative chain of command aa set forth in Figurecontrast with) and deals directly with the producing plants only in exceptional, urgent matters.

Plants engaged in full-scale productionumber of chaxmcterlsties which are different from those of research institutes In general and research institutes subordinate to special committees attached to the Council of Ministers in particular. The first end most important difference is that the plants arehozraschet

A second major difference is the relationship of such plants to the sovnaricbozy. For those Industries where tbe ministry has been abolished or replacedommitteeor example, defensehe sovnaxichozyrimary administrative role. Research institutes subordinate to the State Committee for Guided Missiles, however, probably have only very nominal relationships with the local covnarKhozy. Furthermore, research institutes of this type tend to be concentrated In the Moscow and Leoingrad areas. Research Institutes and design bureaus in the aviation and defense Industries probably are directly subordinate to the respective State Committee in Moscow and have only nominal relationships with the sovnerkbotv.



Owing to their different characteristics, therefore,on planta engaged In series production of major missile systems elements Is available in many more places and Id greater detail than

1. Production Planning and Peportlng

Tne basic planning documenthozraachet enterprise la tbe so-called "technical-industrlal-flnanclalhlch specifies In great detail the planned production (in physical unite and in valuenit production costs, financial arrangements, material supply and efficiency In use thereof, labor force, labor productivity, wage bill, and technological Innovation. Planned construction activity appears in this planummary form; the primary documents foractivities are the so-called "estimate" of cost and the "title list" of activity.

Production planning for an item already being producedwith the proposed production schedule forwarded by the plant in Its technical-industrlal-flnanclal plan which is prepared each year. The proposed schedule, of course, follows closely tbe "control figures" previously circulated by higher authority. New products are assigned to the plant in the formroduction quota which the plant must fulfill unless lt can convince tbe higher echelons that toe assigned goals are beyond the plant's capabilities, in which case the higher authorities may provide for expansion of the plant's facilities orthe quota.

From tbe plant the technical-Industrial-financial plan is forwarded for review to the defense section of the sovnarsboz in which the plant is located. Following review andhich would beormality in tbe case of missile production, tbe plant plan is forwarded to the defense sections of the republic Gosplan andof Ministers. Tbe function of these regional and republic agencies with regard to the plans submitted by plants engaged In the missile program is primarily thatransmission belt to tbe center. They are listed here only to point out that the relevant documents pass through the classified sections of these intermediate agencies on the way to Moscow.

In Moscow tbe State Committee for Defense Technologyconsolidates the proposed plans for missile system elementfrom all subordinate plants and forwards the consolidated draft plan (probably with the technical-industrlal-flnanclal plans for each plant attached as appendixes) to the State Committee for Guidedfor review and presentation to the Presidium. At each level up to this point the plan has undergone some critical review, largely limited to paring material Inputs and to raising labor productivity goals. When the consolidated plan reaches the Missiles Committee, it is examined in detail by the Comrittee secretariat in closewith Gosplan. Here again the efficiency targets may be raised, but the production targets also may be changedither in accordance

Slate Commit I'-e for

Oelrme Technology

Slate Committee (or Guided Mliiilei

Slate Committee for

Contraction Affoirt



Mmnl'y of finance, USSR, and GOSBANK. USSR



_._ .. -

Republic Ministry

of Finance and GOSBANK

Republicof Mmiile



RerHlblic GOSP1AN






Direct chain of command for operational deciiiont on

Producing Plant Compaction of Production Foci tit iei

production oflyiterm componenti Indirect rlioin of command for itaff planning, financing, review, and control of productionb onawt indicate the direction of piimmy document Ho*

files muu lie fnunil in the mitireetumimniul fair rr ample, priiitnilim

the rcpubtte Gosptans protmNvhe mure lucrativeenflratHmthe tt-jmliliv Vminrih of Umi-Jrri.

with the decisions of the Presidium and/or the individual in charge of the missile program or on the basisecommendation of Gosplan and/or the State Committee for Guided Missiles. If the changes are substantial, the plant concerned usually is notified so that it may present its objections, and some negotiation takes place. After the plan review by the Missiles Committee and Gosplaninal decision by the Presidium, the plans ore passed back down to tbe appropriate lower organs and finally to the original plant, with one or possibly two copies remaining in Moscow.

Production goals for each plant are passed to the Central Statistical Administration and also appear in the information passed to the Ministry of Finance and to Gosbank. These organizations pass tne appropriate information for individual plants and installations to their respective local branches. The Ministry of Defense, of course, is Informed. Thus planned complete details on the production ofsystem elements are available in Moscow at the appropriate State Committee responsible for tbe industry to which the producing plants belong, tbe Presidium, the Ministry of Defense, the State Committee for Guided Missiles, Gosplan, the Central Statistical Administration, the Ministry of Finance, Gosbank, and possibly in the economic section of the Central Committee Secretariat.

Outside Moscow the information may be available in theCouncils of Ministers and the republic Cosplans and is available in the sovnarkhozy for plants and Installations located in each region. Tbe oblast branch of the Central Statistical Administration, tbe local Gosbank, and possibly the local branches of the Ministry of Finance willonsiderable volume of information but largely in value terms. Local organs of the Commission of Soviet Control would have access to all information concerning production in case ofroducing plant, and senior officials in the oblast Party committee might have access to the information. The lower levels, of course, have access to information concerning only the plans in their respective areas of Jurisdiction.

As bas been pointed out previously in the case of series production, the railroads, indirectly but unavoidably, have accessreat deal of information about production.

Production accounting would proceedimilar manner. Production reports normally are sent to the next higher echelon, which in turn transmits the information to the central organs and/or Council of Ministers everyays. In the case of missile system elements, production reports probably are telegraphed to Moscow dally either by the plant directly or by the defense section of the sovnarkhoz. Similar reports are made to the defense section of the oblast branch of the


Central Statistical Administration, which records the information ando the central office in Moscow. Reports passed to the oblast statistical office, however, apparently state only the ruble value of production but do not specify production In physical units. In the course of financial accounting, actual production data arein detail to the defense section of the local Gosbank branch which handles the accounts of the producing enterprises. All purchases, sales, wage payments, and tbe like are recorded in these accounts on the basisass of detailed accounting documents.

More detailed reports of production, costs, laborand the like are made monthly, quarterly, semiannually, and annually. These reports arc made tnrough the same hierarchy as the short-term reports, and again tne local Gosbank and statistical office are the principal recipients outside the direct chain of commandthe defense industry section in the sovnarkhoz. The republic Council of Ministers and the republic Gosplan very likely receive information froc the production reportsonth or more. Tne local office of the inspection administration of the Ministry of Finance as well as senior officials of the oblast Party Committee probably have access to actual production statistics from timeime, as would representatives of the Commission for Soviet Control In case of an inspection.

It should be remembered that for the most part the detailed information on missile production which is forwarded to the sovnarkhoz; and lo other local organs will receive special har.dllr

!neinforaation is available onlyew senior Goebank, statistical office, and tbe sovnarkhoz. Large numbers of personnel in nondefense sections, however, apparently have access to totals for tbe area and tne subtotals for the nondefense Industry sectors.

Planning and accounting of construction activity are handledore or less analogous manner. If construction Is being carried on to expand plant capacity, the "title list" forwarded to higher authorities provides detailed information about construction comparable to the production data In the technical-industrial-financial plan. the "title list" goes the technical-industrial-financial plan one better in tbat the latter is Haltedear, whereas the formera general picture of the cost and size of the entireproject from initiation to completion. As in the case of the technical-industrlal-flnanclal plan, tbe "title list" is handled by the defense sections of the sovnarkhozy, the republic Council ofthe republic Gosplan, and finally by Gosplan, USSR. Keyis extracted from the "title list" for the use of the defense


sectioos of tbe Statistical Administration, the branch, and supply organs.

and the sales

is likely that construction projects for major missile deployment Installations are carried on by special militaryorganizations directly subordinateentral organization in Moscow, either to the Ministry of Defense or tbe Ministry of Transport Construction in nost cases. In this case, it is possible that some of the lover and intermediate organs are cut out of tne information flow. Tbe Gosbank and tbe sales and supply organs, however, remain responsible for funding and for tbe delivery of material supplies to tbeorganizations. reat deal of information becomes available to tbe railroads (seeelovj.

?. Financial Planning and Accounting

The Soviet system relies very heavily on "control by the ruble" lo Insure that enterprises fulfill the production andassignments in accordance with tbe goals and means specified in the plan. "Control by the ruble"etailed, up-to-tne-nlnute, overlapping financial accounting of all activities of an enterprise which involve tbe acquisition and expenditure of resources and the sale of final product. Tbe most Important instruments for "control by tbe ruble" are the financial balances of tne enterprises and tne various accounts which tbe enterprise maintains in Gosbank and In tbe Stroybank.*

One of the most important instruments of financial control is the balance of income and expenditure which each enterprise must prepare monthly, quarterly, and yearly. These balances report allvalue of fixed capital, amortization, all purchases ofinputs, all sales of output, stocks of inputs, finished andproducts on hand, and the monetary balance of credit and debit accounts lo the banksincluding allocations from the budget. Each enterprise and organization engaged in production of missile system components presentsalance to (a) the immediately superior organization which In most cases la the regional sovnaxkboz. (b) the branch of Gosbank and/or the Stroybank where the enterprise bas its accounts, (c) the Central Statistical Administrationither local or republic branches as specified by the home office la Moscowndopy to Gosplan.

The sovnwrkaoz reviews the monthly and quarterly balances of all subordinate enterprises and organizations and presents an annual

* The Stroybank specializes In capital investment activities into the broad and generalized functions of Gosbank.

review to tne Council of Ministers of tne republic. Copies are sent to the republic Ministry of Finance and to tne republic Gosplan. For plants engaged in tbe nlssile program tbe sovnarkhoz almost certainlyopy to Gosplan.

For financial control of tbe day-to-daylant connected with tbe missile program, the principal instrument is the plant's raschetnyy sche^ in tbe local Gosbank. This account may be tnougbt of as divided into two parts (or. the debitorking capital for tbe purchase of materials, fuel, power, and the like and the wage account, whichosh account maintained primarily to cover wage payments. Working capital funds come primarily from the plant's own working capital fund,ertain amount comes from short-term credits from the bank and from budget grants. As holder of the working capital account and the source of short-term credit, Gosbank monitors and controls all direct agreements (for sales and purchases between tbe plant and various consumers) and the terms and purposes thereof. Tbe bank is equally responsible for monitoring wage payments.

On tbe credit side of the raschetnyy schet the banka copy of the invoiceshe "paymentnd records the payments received for the plant's output. Theseand accounts provide corr^lete detail on the auantlty, price, and location of purchaser for all sales by the plant. Thus the localcan and doesomplete audit of the activitiesissile plant from the information and documentation physically located in the plant's raschetnyy senct at the bank.

If tbe plant happens Zo be receiving subsidies from the State Budget, the local Gosbank branch Is the official disbursing agent.

Enterprises carrying out capital construction andorganizations are required to present to theonthly accounting of all funds expended on capital construction. Thespecifies the sources of the funds, which are (a) amortization accounts with the Stroybank into which the plantercentage of its fixed capital, (b) retained profits of the enterprise, and (c) grants from the Soviet budget. Furthermore, the "payment demands- and schet-faktura accompanying all materials and capital equipment destined for capital investment are stampedand are handled by the Stroybank. Thus tne Stroybankomplete record of all new construction activity.

Khozrsschet enterprises are required to pay profits and other taxes into the State Budget. Payments ere made through tbe Gosbank facilities, but the primary responsibility for assessing and


lnsuring collection rests with the rayon and city branch offices of the Ministry of Finance. Enterprises and organizations are obligated to sake an accounting to the financial organs for the established taxes and to make available to the financial organs all the documents necessary to determine the correctness of the sums calculated as owed to, and actually paid to, tbe budget. The financial organs arefor insuring that the amount of the taxes Is correct and that payment is made on time. This means tbat the local offices of the Ministry of Financeecord of all production andactivity of tbe plant in monetary terms.

Construction of missile system Installations carried out by construction units subordinate to the Ministry of Defense wouldtbe details of their activities to the Ministry of Defense, Cos-plan, and the Central Statistical Administration In Moscow. Localhowever, would receive data on tbe aggregate ruble value of the construction and the wage bill and probably some additional data on labor and material inputs.

In addition to the controls and checks exercised through the day-to-day services which the banks provide the plants, tneof Finance has an Inspection Administration with local branches for the purpose of periodic audits. The Inspection Administration audita not only the plant books but also the plant accounts with Cos-bank and with the Stroybank. From time to time, therefore, theAdministration has access to all pertinent information about the activitieslant engaged in the missile program.

Thus the numerous and detailed checks and controls of the financial activitiesroducing enterprise require that detailed information be made availableumber of organizations. TheIn the direct chain of command, from the plant engaged in the missile program, through the sovnarkhozy and the union republicand finally to Moscow, have the Information in the form of tbe technical-industrlal-flnanclal plan and in the periodic balances of Income and expenditures. Gosbank and tbe Stroybank acquire all the details in the course of providing services and simultaneously checking tbe activities of the plant. Finally, tbe Inspectionof the Ministry of Finance conducts periodic audits. As In the case of production planning and accounting, of course, theactivities of plants engaged in production of elements for missile systems are handled In special departments of these organizations.umber of people outside the special departments have someabout the totals. Other people most likely to have access to information about the financial activitylant are the senior officials in the oblast Party and government committees.

3. Supply and Sales

tbe Soviet system of economiclant's material Inputs are carefully rationed to it on tbe basis of itsobligations and technological coefficients of Input ofto output of final product. Tne plant must request allocations of specific amounts of each material in accordance vltb Its output goals, pass toe requests to the higher echelons for revlev and approval, and then procure the materials within the approved limits through, or with the approval of, specialised supply organs. Similarly, the plant's output is disposed of through, or with the approvalpecialized "sales" organization. Strict control, of course, la maintained for only the most important Inputs, but such is tne general scarcity of materials in the USSR that the mosteficit" oraterials usually constitute more than three-quarters of the plant's material purchases.

Vhen the plant prepares its technical-Industrial-financial plan, the section on material supplyist of requisitions (zayavKa) for each "funded" material, fuel, power, and type of capital equipment, when these requests axe finally approved, usually after each successive higher echelon has pared the requests down soaewnat, they are entered into the material balances of Gosplan and into the "plan for distribution" which Is an Integral part of tbe national economic plan. Within Gosplan, of course, the details of tbe work are carried on within the defense section, but the materialof the missile program must be entered into the material balances, and thiseparate section of Gosplan. Presumably the materialvhen transmitted by the-defense section to the material balance section are presentedufficiently aggregative form so tnat any direct estimate of missile production would be difficult to derive. Similarly, the material supply plan for the union republics would contain tht informationomparable aggregative form for all plants and construction organizations in the republic. The sameis repeated at the level of tbe sovnarkhosy.


The plan for distribution promulgated by Gosplan contains detailed allocations of material Inputs and capital equipment to each plant participating in the missile program. The documents specifying the allocations are transmitted to tbe appropriate specialized sales and supply organs as the basis for their relations with the producing enterprises. Under tbe new territorial organization of Sovietthe sales and supply organs remain very similar to tbe old sales and supply administrations of tbe abolished ministrieshat is, thereales-supply organ for each industry or group of industries, such as ferrous metals or fuel, and the specialized Mainfor Supply of Armaments and Radlotecbnlcal Industries. roup of

aboutalea-supply organizations is attached to Gosplan, and agroup to the republic Gosplana. Normally, if the transaction involves movement of supplies across the boundariesepublic, the transaction comes under the Jurisdiction of the Main Administration of loterrepubllc Supply of Armaments and Badiotechnical Industries, vhlcb is subordinate to Gosplan. If the supplier and consumer are located in the same republic, the sales-supply organs attached to tne republic Gosplan probably have Jurisdiction in most instances. On the basis of the material distribution plan of toe USSR and republic >os-plans, these sales-supply organs conclude general agreements covering anticipated monthly, quarterly, and yearly transactions vltn one another. Subsequently, the local sales-supply organs moke the specific agreements for shipments to and from each plant. In many instances the agreements may be mode directly between tbe supplier and the consumer, but toe sales-supply offices nave to approve such direct agreements which must be in accord with the limits approved In the technical-Industrial-flnancial plan. Plants engaged In mlasiie production normally wouldarge proportion of their supplies through direct agreements vlth the suppliers. In such cases the sales-supply organs woulda monitoring function on the basis of copies of tee directand detailed documentation of planned allocations.

Pinal products for the missile program probauly oredirectly from the plant to the Ministry of Defense. It is highly unlikelyales organ for miBsile systems exists. It is believed that tbe GAD acts as tbe agent of Ministry of Defense Representatives from the GAU Inspect the final products tothat technological specifications are met and instruct the local Gosbank to credit tbe plant's account and debit the account of the Ministry of Defense.

For ordinary material inputs the plants deal with tbe usual metale, fuel, and machinery sales-supply organs but with some deviations from normal procedures. Thus the allocations to plantsin the missile program do not carry the usual detail which specifies, among other things, the nature and quantity of the final product. In the case of these plants the supply organs also may be excused from some of their normal responsibilities which Include checking to sec if the plant is ualng new capital equipment for the purposes specified Id the plan. On tbe other nacd, tne available evidence suggestsissile plant is subjected to the usual periodic checks of Its material Inventories, checks carried out by the supply organs in conjunction with the local Gosbank and thestatistical office. The aggregate amount of materialn physical units and monetary termsfurnished to the plant is available in these organizations.

1*. Transport

The railroad administration has plans for shlcoent ofsupplieslant engaged lr. series production uponths before delivery. The railroad administration has completeon all supply shipments, including the nature and quantity of the supplies, the price, and tbe designation of the supplier.

Similarly, the railroads are primarily responsible for shipment of finished ccarpooents and for any special handling which may be required. Tbe rolling stock used may belong either to the

railroad or_


Fd by tne VOSO unit in the railroad administration, but tbe nature of the movements involved probably is known to many workers and officials outside tbe special section.

5. Labor and Wages

One of tne principal sections of the technical-industrial-flnanclal plan Is the section on planned number of workers, laborand wage bill. This Is an area being given Increasing attention by Soviet planners, and it can be assumed that the plant's proposals are reviewed carefully in eacn higher echelon. The number of workers, output per worker, and wage bill for all plants supporting the miaslle program probably are known only to the "First Branch'1 and the "Suamary Defense Industry Branch" of Gosplan. Most, but probably not all, of tbe information on labor force, wage bill, and output per worker is available la tbe State Committee for Defense Industry. Or. tbe other hand, personnel in the regular labor section of Gosplan have available the total number of people engaged in defense production, laborin defense industry, and the wage bill. Furthermore, the regular labor section very likely has some useful breakdown of these aggregates even if short of tbe specific figures for plantsin tbe missile program.

Comparable information exists in tbe defense and In the regular sections of Gosplan at the republic level, and again at the level of tbe sovnarkhozy. It Is possible, but by no means certain, that tbe Gosplan of the RSFSR and the Ukrainian SSR alsoFirst" and "Second'" Branch. At each of these levels, personnel In theindustries section would have all the detailed Informationby plant, whereas those working outside the defense section would have only more generalized data.

Distribution of tbe wage fund to the missile plants, of course, le handled by Gosbank; indeed, that is tbe principal purpose of the plant's cash account at GoBoenk. Here again only those working in the defense section of Gosbank would have all the details, but it lo likely tbat inumber of other people In any local office would know tbe total casharticular plant withdrew for wage payments.

It Is likely tbat the central trade union organizations in tbe union republic and lc Moscow would know what proportion of toe labor force is engaged In defense industry and construction but would not have such lo tbe wayetailed breakdown. Tbe same is true of the trade union organs at the oblast level. At the rayon and city level,rade union functionary might have more precisepurely by Indirect means. ayon or city functionary almost certainly would know tbe total industrial labor force and wage bill in the rayon or city and the subtotal for nondefense industries.

Figureutlines the data and document flows for Phase II production and may be contrasted with Figure

6. Other AdclnUtratlve Relationships

Local Party and government organs probably have accessood deal of detailed information concerning the activities of plante engaged in series or mass production of missile system components. Such officials certainly would be aware of the time when new products went into production and when products were phased out and of other changes in the tempo and naturelant's activities.

Following p. 3U. Followingbove.

C. Construction of Launching Sites and Operational Installations

Construction units engaged In building operationalfor ballistic or surface-to-air systems probably in most cases are special units subordinate to tbe Ministry of Defense. It is possible tbat some construction units nay be subordinate to theCommittee and to the Ministry of Transport Construction. Tbe relationships of such construction units with local administrative

Planning and cost estimating of the construction ofinstallations are carried out centrally by Gosplan with the consultation of the Missiles Committee, the State Committee forAffairs, and the Ministry of Defense. Local organs will not have access to these plans and detailed cost estimates, but thevalue of construction work performed each year apparentlypecial section for defense activities of the appropriaterkhoa. The once aggregative Information apparently also isto the oblast office of toe Central Statistical Administration. The detailed breakdown, however, probably exists only In the files of the construction organisation itself and in the central offices of Goaplan, the Missiles Committee, and the Central Statisticalin Moscow. Republic and local organs are limited to annual or ecmlannual reports on the volume of construction activities interms. These reports are, of course, handled by the classified sections of the local organs concerned.

Funding of construction of missile systems Installations probably is handledanner analogous to financing researchengaged in developmental production. Tbe constructionhas an account with the local Stroybank which shows the current allocations from the Soviet budget to the activity but which probably does not ehov the total expenditures from beginning to completion. The normal, detailed breakdown of construction expenditures also is lacking, although total wage payments may be broken out.

Construction units engaged In building installationslittle, If any, of their labor locally. Local trade unionhave only limited contacts with the trade unions of theunit. The total labor force of the construction unit, however, apparently is reported to the defense activities section of the local

scvr.arkhog on an annual or semiannual Oasis,imilar report proOa-bly is submitted to the oblast office of tbe Central Statistical

Local Party and government officials have only limitedof the launching facilities, but they certainly would be aware of the number of sites going Into their area, the dates of Initiation and completion, and to some extent the number of workers involved.

The local railroad office wouldreat deal ofon the volume and kind of materials going intoite, the location of the site, and the dates of initiation and completion. If the launching siteail siding designed for use by special trains which carry the missile and launchingarge number of people employed by the railroads wouldood deal about the installation. Construction of such facilities may be carried outonstruction unit subordinate to the Ministry ofor to the Ministry of Transport Construction.

Truck transport probably is not nearly as laDortant aa rail In tbe construction and operation of ballistic missile launching installations. For surface-to-air installations, however, truckhe quite important and in some cases may require feeof unusually good roads such as the extensive concrete road network laid around Moscow. Such construction of sidings and roads cannot be easily bidden,reat deal of Information about it is available to local people.

Construction of rail sidings and modern automobile roads for launching Installations Is susceptible of observation by legal travelers.

2- Construction of Missile Launching Ships

A shipyard engaged inissile launching ship operatesanner almost completely analogous to thatlant engaged In series production of missile system components. hio-yard has essentially the same relationships with the central and local organs, and the same pattern of Information flows,actory. The chief difference is that the production planning and accountingas well as the financial documents, for naval construction willuch longer time horlton, in tbat the total cost of the vessel as well as the expenditures to date are shown and in that the major planning and financial documents indicate whether the vessel is parteriesingle experimental unit.

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V. Direct and Indirect Approaches A. Direct Approach

The foregoing discussion has focused on the kind ofabout production of missile system elements which exists in the direct chain of production command and on the information which exists In those parts of tbe Soviet government which axe engaged in funding, supplying, and monitoring the activities of the producing enterprises, information onroductionevelopmental production of missiles for full-scale testingprobably can beonly from the producing organizations andimitedof central planning and administrative organs concentrated in Moscow: the Presidium, the Ministry of Defense, Gosplan, and the State Committee for Guided Missiles. Information on Stage IIfull-scale production for an operational systemxists in considerable detailumber of organizations in many parts of the USSR: Gosbank, the Stroybank, the Statistical Administration, the sales and supply organs, rail transport administration, and the sovnarkho2y. Each of these organizations, with tbe partial exception of the sales and supply offices, handles the information in special sections, strictly compartmentalized from the people dealing with ^lvi^ian^ln^ dustrial productif

The time horizon of the data varies considerably with the nature of the activity- As has been pointed out above, information on productionlant or research institute probably covers only the current period and the plan for the next calendar year. ear appears only in tbe files of the Ministry of Defense, the State Committee for Guided Missiles, and Gosplan, and

probably tbe State Committee for Defense Technology. All such plans probably are beld in tbe central offices of tnese organizations in

centraj. organs in Moscowomplete set of present and future plans as well is tbe actual progress of construction activity and organizations.

B. Indirect Approach

This research aid has concentrated on the location ofwhich directly concerns the missile program, information which is highly classified and which can be found only in classified files of the producing plants and other Soviet administrative and economic institutions. But information on the missile program can be obtained by more indirect meanshat Is, if knowledge of nonmilitaryactivities were sufficiently good, the military program would appearesidual. Furthermore, if knowledge of production of more or less conventional armaments were sufficiently good, theprogram and other advanced weapons systems would appearesidual.

A great deal of statistical information has been released by tbe Soviet government in the last few years, and Soviet officials now discuss matters previously forbidden. The problem with thedata is one of interpretation: many of the most Important and potentially useful data are difficult to interpret and usefull definitions of the data have not been published. On a


number of occasions, however, Soviet officials have been willing to discuss the published data and to provide definitions and valuable commentaries. reat deal of valuable information about the scale and cost of the Soviet military establishment could be derived frosi published data if we bad better understanding of tne definitions of terminology. Better information on the general scale of Sovietof conventional military hardware is needed to providecontrol totals for missile estimates and also to provide the necessary background for evaluating such information on missileas may be obtained.

Original document.

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