Ukrainian government coordinates defence procurement through public electronic system

The Cabinet of Ministers of Ukraine has supported the decree of the Ministry of Economy that allows conducting defence procurements through the Prozorro system [a public electronic procurement system where state and municipal customers announce tenders to purchase goods for the opportunity to become a state supplier – ed.].

Source: the government’s website

Quote from Denys Shmyhal, Prime Minister of Ukraine: "We solve several issues at the same time. Firstly, we guarantee an uninterrupted, stable and guided supply of everything necessary for our army. Secondly, we establish transparent price formation when the state does not overpay but businesses still receive profit. Thirdly, we prevent information leaks that pose security risks."

Details: Shmyhal stressed that the issue of defence capability and supplying the army is the number one priority. This year, hundreds of billions of hryvnias will be allocated so that the Ukrainian troops are provided with everything they need.

Mykhailo Fedorov, Minister of Digital Transformation of Ukraine, added that the decree gives the suppliers of drones produced by foreign manufacturers, such as Mavic, Autel and Matrice, access to state contracts, and competition will allow reducing prices.

"We understand the degree of sensitivity of this information, so the deadlines and shipment locations are closed to the general public and unavailable to the Russians," Fedorov stressed.

How the system will operate. A commissioner who wants to purchase a drone publishes an announcement frame with the description of a needed drone on the Prozorro platform. Sellers register in this frame and then receive information about deadlines, delivery location and other information necessary for procurement. Then an auction will be held, and the seller with the most profitable offer will win.

In addition to this, the government approved the document about the deregulation of ammunition production. This project was launched last summer.

"With this goal, the government extended the circle of potential manufacturers, got rid of the bureaucracy and created clear algorithms – from production to commissioning. Over 10 manufacturers have been registered in six months, over 20 ammunition pieces entered into service, and 30 more are in different testing stages," Shmyhal reported.

Another decision of the Cabinet of Ministers concerns the pricing for drone production. The Ukrainian PM said that drone manufacturers from now on will specify the price calculation in the direction of reduction if the profit exceeds 25%.

"It will allow for the elimination of potential risks of overpayment and misuse of funds while conducting state drone procurement. Since the state is interested in honest and transparent contracts," Shmyhal stressed.

Background: Over 2023, Ukrainian drone production has been significantly scaled up throughout 2023. In total, over 200 Ukrainian companies are involved in the UAV sector, either assembling the finished vehicles or providing products and services to the drone industry.

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