The article described the current situation in the Russian defense industry. This shows the importance of the considerable investment in the military industry. The effect of market mechanisms in the defense industry was researched, the prices for military goods were analyzed, the problems of placing the state defense order and download the defense industry civilian products were considered. In this article we propose measures to reduce the overhead of military goods, raising the competitiveness of defense enterprises, improve the quality of military products. The article proposes a transition to more modern methods of planning to meet the requirements of market economy.