The defense procurement reform in Ukraine began in November 2014 when the team of the Volunteer Landing Force and later the MoD Reform Project Office appeared in the Ministry of Defense. Over the years, the project team has continued to develop, studying the best international practices in defense procurement and promoting their implementation at the legislative level.
The main goal of the project is to reform the procurement system of the security and defense sector.
This initiative is a part of the support programme led by the UK Special Defence Advisor Team (SDA), funded from the British Government’s Integrated Security Fund (ISF) budget.
RESULTS:
Implementation of the Prozorro electronic procurement system in the Ministry of Defense of Ukraine.
- June 2015 – the introduction of the Prozorro electronic public procurement system in the Ministry of Defense was the first important step in reforming defense procurement, which at the time was a breakthrough that helped to provide the Armed Forces of Ukraine more effectively in the early years of the war.
NATO Support and Procurement Agency (NSPA)
Project experts have unique experience in implementing procurement through the NATO Support and Procurement Agency. Their work covered a wide range of issues, from the conclusion of international agreements, development of relevant amendments to Ukrainian legislation to practical procurement support.
- 2015 – Agreement on support cooperation between the Cabinet of Ministers of Ukraine and the NATO Support and Procurement Organization (NSPO)
- 2016 – Agreement on the establishment of relations in the field of purchase and sale No. UKR-04 in support of non-systemic brokerage services for the Armed Forces of Ukraine
- 2016 – Agreement between the Government of Ukraine and the NATO Support and Procurement Organization on a partnership to support the joint management of supplies
- 2019 – start of practical work on procurement through NSPA
- 2020 – the first successful procurement took place
LEGISLATIVE INITIATIVES:
- The Law of Ukraine «On Public Procurement» – project experts participated in the development of the law, and its adoption has radically changed the entire public procurement system.
- The Law of Ukraine «On Peculiarities of Making Procurement of Goods, Works and Services for Guaranteed Ensuring of the Defense Needs» – together with the introduction of the electronic procurement system in the Ministry of Defense, experts developed a law that would regulate the peculiarities of making procurement for defense needs. This law ensured the publicity of defense procurement, as it was more flexible in terms of the timing of procedures and qualifications of participants. Thus, after its successful implementation, some articles of this law were included in the Law of Ukraine «On Public Procurement». The Law of Ukraine «On defense procurement» was adopted to replace this law.
- The Law of Ukraine «On Defense Procurement» – in cooperation with the Ministry of Defense, the Ministry of Economy and the Verkhovna Rada Committee on National Security, Defence and Intelligence, a draft law «On Defense Procurement» was developed. Its adoption made it possible to distinguish between public and defense procurement, define the rules for defense procurement (one of Ukraine's commitments under the EU-Ukraine Association Agreement), and harmonize defense procurement rules with the standards of NATO and EU partner countries in terms of the Defense Directive 2009/81/ EC.
The Project team was also actively involved in the further implementation of the Law of Ukraine «On Defense Procurement» through the development of a subordinate legal framework. In cooperation with stakeholders, the team worked on about twenty government resolutions on the subject area, which were adopted by the Government.
The fundamental processes in the defense industry of Ukraine are monitored in terms of defense procurement.
The right of direct import for the Ministry of Defense of Ukraine
In 2019, the Ministry of Defense of Ukraine was the first among the security sector components to receive the right to make direct import purchases without intermediaries. This was the result of the fruitful work of the Project's experts and the Verkhovna Rada Committee on National Security and Defence, which was implemented in the Law of Ukraine «On Amendments to Certain Legislative Acts of Ukraine on the Procurement of Defense Products, Works and Services by Import».
State quality assurance
Project experts initiated approaches to establishing a state quality assurance system for defense products in Ukraine based on NATO principles and standards. The creation of this system is aimed at improving the quality of defense products, including exports and imports, ensuring mutual recognition of state quality assurance with other NATO countries and organizations, and changing general approaches to quality assurance of defense products. Relevant provisions allowing state customers to use this tool in procurement have been introduced into the Law of Ukraine «On Defense Procurement». Currently, in cooperation with the Ministry of Defense of Ukraine, a system of state quality assurance is being developed to implement the relevant NATO standards in the field of quality assurance and quality control.
Education
One of the project's areas of focus is the development and implementation of educational programs for procurers in the security and defense sector. For example, a week-long professional development course for procurement officers was developed and implemented at the National Defense University of Ukraine. Leading procurement experts were invited to teach the course.
Additionally, given the constant changes in defense procurement regulations, webinars on such changes are held on a regular basis.
Educational activities are an important part of the project. Over the years, a large community of military procurers has been created. Through this cooperation, it is possible to communicate effectively, identify gaps and weaknesses in the procurement system, and quickly resolve problematic issues.
Full-scale invasion
Since the start of Russia's full-scale invasion in February 2022, project experts have been actively assisting the security and defense sector. Among other things, they participated in the development of martial law procurement rules:
- The Law of Ukraine «On Amendments to the Law of Ukraine «On Public Procurement» and Other Legislative Acts of Ukraine on Defense and Public Procurement for the Period of Martial Law;
- The Law of Ukraine «On Amendments to the Law of Ukraine «On Defense Procurement» regarding the introduction of transparency in defense procurement (except for information on procurement of defense goods, works and services that constitute a state secret) with the protection of state customers from military threats for the period of martial law in Ukraine»;
- resolution of the Cabinet of Ministers of Ukraine dated February 28, 2022 No. 169 «Some issues of defense procurement of goods, works and services under martial law»;
- resolution of the Cabinet of Ministers of Ukraine dated November 11, 2022 No. 1275 «Some issues of defense procurement for the period of martial law»;
- amendments to the Tax Code of Ukraine regarding changes in the taxation of procurement of defense goods, works and services during the period of martial law in Ukraine (adopted by the Verkhovna Rada of Ukraine and signed by the President of Ukraine);
- proposals to the draft Law of Ukraine «On the Security of Classified Information» (to replace the Law «On State Secrets») and their further advocacy with stakeholders.
Comments and proposals to the State Anti-Corruption Program 2023-2025 – Defense Sector section were developed, which were accepted by the National Agency on Corruption Prevention and reflected in the SAP.