Information current as of 10 April 2026

– A shortage of Unmanned Ground Vehicles (UGVs) has emerged at the front owing to blocked deliveries following the reinstatement of VAT on robotic systems and other items in the Tax Code amendments.

– Since the start of the year, the agency has not concluded a single contract for armoured vehicles amid uncertainty surrounding the EUR 90 billion EU loan.

– Throughout March, tenders for petroleum, oil and lubricants (POL) worth UAH 3.7 billion were unsuccessful.

– The General Staff has transitioned to specifying UAV requirements by technical characteristics rather than by specific models. A procurement diversification approach has also been introduced whereby orders will be distributed across multiple suppliers to reduce the risk of supply disruption and lessen dependence on a limited pool of manufacturers.

– In March, contracts for the supply of 8,826 Chinese DJI Matrice UAVs were terminated due to violations of the delivery deadline.

Seven contracts worth UAH 4.9 billion were terminated following supply failures by CHERKASY MEAT PLANT LLC and YUSMAK LLC under their food ration pack contracts.

In March, the DOT Defence Procurement Agency (DOT) announced 99 tenders (247 lots) with an expected value of UAH 15.1 billion. Over half of this total (UAH 8.1 billion) comprised tenders for POL. Over 81% of all Prozorro procurements were initiated through the simplified procedure, with a further 19% conducted under a framework agreement exclusively for UAV procurement. A total of 62 companies participated in tenders, excluding drone procurements. The average number of bids per tender was 1.6. UAV procurement was the most competitive category, with an average of 2.7 bids per tender. 

In March, the DOT concluded 106 contracts totalling UAH 4.5 billion, resulting from tenders announced that month and in previous months. This represents a three-and-a-half-fold decrease compared to February (UAH 15.7 billion). This discrepancy is partly due to a series of unsuccessful and cancelled lots worth UAH 4.5 billion, predominantly for fuel (UAH 3.6 billion), which were driven by fluctuations in the oil price amid the conflict in the Middle East.

Of the contracts concluded in March, nearly UAH 500 million was spent on materiel. UAVs accounted for UAH 126.5 million; however, this figure excludes the agency’s undisclosed direct contracts and procurements conducted through DOT-Chain Defence. Lubricants were contracted for UAH 35.7 million, whilst no petroleum was procured.

UAVs

Key risks:

– contract terminations due to missed delivery deadlines

In March, 1,000 DJI Mavic 3E units were procured through Prozorro at an average price of UAH 126,460. Meanwhile, from the start of 2026 through to the end of April, 613,000 UAVs were contracted through the DOT-Chain Defence system, with the total amount of funds actually disbursed standing at UAH 14 billion.

However, during the same period, six contracts for 8,826 Chinese-manufactured UAVs, worth a combined UAH 1.4 billion, were terminated. A total of 5,326 DJI Matrice 4E units and 3,500 Matrice 4T units were not delivered. All contracts were terminated due to delivery deadline violations. The Mavic and Matrice models are widely used for reconnaissance, surveillance and fire adjustment. The Mavic is suited to rapid, short-range operations, whilst the Matrice is designed for longer-range, more technically demanding missions.

The terminated contracts are partly attributable to logistical difficulties linked to China’s policy, introduced in March 2025, of prohibiting the export of drones to Ukraine and other European countries where they could be used for military purposes. Certain DOT suppliers experienced difficulties in 2025 as a result of these restrictions, which affected contract delivery timelines.

A number of significant procedural innovations were also introduced during the month. The General Staff now formulates UAV requirements based on technical specifications (TS), rather than specific models or manufacturers. These requirements will be informed by battlefield data drawn from the digital Mission Control system. StateWatch previously highlighted the risks of contracting by product name in its research, recommending a shift to TS-based requirements to prevent preferences being granted to specific manufacturers. This is discussed in further detail in StateWatch’s February monitoring report.

In addition, the DOT has introduced a procurement diversification mechanism that covers, UAVs, UGVs and munitions. Where two or more acceptable bids are received, orders will be distributed across multiple suppliers. This measure is intended to stabilise the supply chain and reduce dependence on a limited pool of manufacturers.

Shortage of Unmanned Ground Vehicles

Key risks: blocked UGVs deliveries owing to amendments to the Tax Code

Since the beginning of 2026, there has been a shortage of UGVs at the front, which are critical for logistics, casualty evacuation and resupplying frontline units. This issue was initially reported by a TSN journalist, who cited data from military personnel operating in the Donetsk and Zaporizhzhia regions. The MoD subsequently acknowledged the issue.

Despite the General Staff submitting the UGV requirement in January, when some of the equipment had already been manufactured, the systems were not reaching units and remained in manufacturers’ warehouses. The cause lay in a change to tax legislation. In late 2025, the Verkhovna Rada repealed Clause 64, Sub-section 2, Section XX of the Transitional Provisions of the Tax Code, which had exempted electric vehicles from VAT until 2026. As UGVs are classified as electric vehicles, this exemption also applied to them.

Contracts concluded previously without VAT had to be renegotiated. Manufacturers began demanding additional funding to cover the tax differential, which led to a suspension in contract fulfilment.

Consequently, units have been forced to fulfil their UGV requirements using their own resources or with the help of volunteers.

In response, Mykhailo Fedorov stated that contracts would be unblocked through supplementary funding from the MoD. An interagency meeting was also convened in early February, at which the need for amendments to the Tax Code was endorsed. The agreed amendments have since been submitted to Parliament for consideration.

It is also known that 25,000 robotic systems are planned to be contracted in 2026 – double the figure for the previous year. The agency has already concluded 19 contracts with UGV manufacturers, totalling UAH 11 billion.

Risk of Armoured Vehicle Supply Disruption

Key risks: delays in determining the Requirement, blocking the conclusion of new contracts

Since the beginning of 2026, the agency has not concluded a single armoured vehicle contract – deliveries of equipment for the whole year are usually arranged during the first quarter of the year. Equipment is currently being delivered to units under two existing contracts. New contracts will only become possible once the General Staff provides data on the armoured vehicle requirement, which is not expected before the second half of the year.

Armoured vehicle supply contracts are usually finalised by March, enabling manufacturers to fulfil deliveries over the subsequent 9–12 months. The six-month pause in orders may therefore lead to a notable slowdown in delivery rates.

Manufacturers attribute the suspension of orders to a general reduction in defence spending, particularly due to uncertainty surrounding the EUR 90 billion EU loan programme, which Hungary had previously blocked. Under the plan, approximately EUR 60 billion of this total was to be directed towards military support in 2026–2027. However, following the victory of the opposition Tisza party in the Hungarian parliamentary elections, Hungary reversed its position and, in late April, the EU Council unblocked the support package. The first instalment is expected in May–June and will be directed towards weapons production and the procurement of lethal items not manufactured in Ukraine from partner countries.

Food and Water Procurement

Key risks: The conclusion of catalogue food set contracts at deflated prices, followed by the termination of several of these contracts.

The award of contracts to companies that have previously supplied substandard products.

In late 2025, the DOT procured food supplies for the entire year of 2026 for the first time; previously, such procurements had been conducted separately for each six-month period. However, in March and early April, three of the sixteen contracts were terminated due to suppliers’ failure to fulfil their obligations. This occurred against the backdrop of a significant price reduction during the tender process, from an expected value of UAH 172 per set to an actual contract price of UAH 122.

The agency terminated its contract with CHERKASY MEAT PLANT LLC for the supply of Catalogue food sets (worth UAH 1.2 billion), as well as two contracts with YUSMAK LLC (worth UAH 3.5 billion). Both companies failed to fulfil their contractual obligations and defaulted on their initial delivery batches.

Under the terms of its contract, CHERKASY MEAT PLANT LLC was to supply almost 10 million food sets by the end of 2026. The company had submitted the lowest bid in the tender at UAH 123.50 per set. YUSMAK LLC, for its part, was contracted to supply 27.4 million sets.

Notably, CHERKASY MEAT PLANT LLC’s contract volumes were reduced by almost 95% in 2024 – from UAH 3.13 billion to UAH 180 million – due to non-delivery.

YUSMAK LLC had also previously failed to deliver 334,500 combat rations under four contracts concluded in November 2025. Due to violations of the delivery deadline, the DOT terminated those contracts in March 2026.

In March, the DOT concluded 14 contracts for food and water supplies totalling UAH 3.66 billion, achieving savings of UAH 1.1 billion.

Catalogue food sets

In March, the DOT concluded four Catalogue contracts totalling UAH 2.8 billion to provide nearly 23 million food sets for military personnel. During the tender process, participants significantly reduced their bids again, with the average contract price per set standing at approximately UAH 122 – a quarter below the expected value. However, such a substantial price reduction creates a risk of repeated supply failures.

GRAND CONSULT LLC was awarded the largest share of Catalogue contracts, worth UAH 1.1 billion. The company is implicated in a criminal case known as the ‘UAH 17 eggs’ affair. Until November 2024, GRAND CONSULT LLC was owned by Tetiana Hlyniana, who is currently wanted by the National Anti-Corruption Bureau of Ukraine (NABU).

GRAND CONSULT LLC is the largest supplier of all Catalogue contracts concluded in 2026, totalling UAH 3.7 billion, having concluded three contracts worth UAH 1.67 billion.

Combat Rations

The DOT also concluded three contracts with KHODORIVSKYI MEAT PROCESSING PLANT LLC for 81,480 standard daily ration sets. The company manufactures approximately 25% of the components independently – including first and second courses such as borscht, soups, and meat porridges. The remaining components, from crackers and rusks to tea, coffee and condiments, are sourced from other manufacturers and distributors.

Meanwhile, 32 lots for the procurement of combat rations were unsuccessful, with a combined value of UAH 583.6 million. These had been intended to cover 1,402,394 daily ration sets, with an expected value of UAH 416.15 per unit. The tenders failed due to non-compliant proposals. GRAND CONSULT LLC participated in the process; however, its bid was rejected due to an absence of a certificate confirming that there were no bankruptcy proceedings.

Following the failed tenders of 2022, when batches of contracted combat rations were withdrawn due to non-compliance with quality standards, systematic procurement only commenced in late 2024. In 2025, 4.1 million rations were ordered, but only 453,000 were delivered. This is wholly insufficient given that each set is designed to feed one person for one day. A more detailed analysis of the market and supply challenges can be found in the StateWatch publication, ‘Combat Ration Procurement for the AFU: Causes of Supply Failures and Market Assessment – StateWatch Analysis’.

In total, six companies were awarded food and water supply contracts in March.

Materiel

Key risks:

– a discrepancy between established adaptive clothing issue norms and actual requirements

– a lack of coordination in the supply procedure for adaptive clothing to civilian healthcare facilities

In March, the DOT concluded 14 contracts for the supply of protective equipment, kit, and adaptive clothing, totalling UAH 499 million. Savings amounted to UAH 1.46 million.

Tactical earmuffs

The largest share of funding was allocated to the procurement of 40,000 earmuffs, manufactured by 3M’s Swedish subsidiary (3M Svenska AB) and valued at UAH 381.7 million (UAH 9,543 per unit). The contract was awarded to TOP-TEKS LLC, resulting in virtually no savings. Although other competitors offered lower prices, they failed to submit complete documentation packages. MIRAS-TRADE KO TRADING HOUSE LLC also proposed supplying the same earmuffs from the same manufacturer at a lower price, but the company did not provide all the required certificates. This participant had competed in 17 DOT tender lots in 2024 without winning any of them.

Uniforms and undergarments

A number of materiel procurements were unsuccessful due to a lack of bids. Specifically, the agency failed to procure the following items:

– 35,300 summer field suits worth UAH 65.7 million

– 15,600 pairs of summer boots worth UAH 34.7 million

– 17,600 polo shirts worth UAH 9.4 million

In addition, procurements of basic items were unsuccessful: 10,400 units of men’s underwear (UAH 1.2 million); 17,600 tube scarves (UAH 1.2 million); and 4,100 sets of women’s underwear (UAH 694,000).

Adaptive clothing

The agency concluded ten contracts for the supply of adaptive clothing totalling UAH 94.3 million. Specifically, they contracted for 100,000 pairs of shorts at UAH 42 million, 75,000 vests at UAH 22.2 million, 35,000 pairs of trousers at UAH 18.1 million and 30,000 short-sleeved sweatshirts at UAH 12.1 million.

It should be noted that adaptive clothing forms part of the ‘Wounded Personnel Package’. Designed with the needs of wounded and mobility-impaired individuals in mind, it features a loose fit and hook-and-loop or magnetic fasteners.

However, the provision of adaptive clothing is accompanied by a number of systemic problems. Resolution No. 1234 explicitly provides for the Wounded Personnel Package to be issued in both military and civilian hospitals where wounded personnel undergo extended treatment. In practice, however, this process has not been properly organised, meaning a significant proportion of wounded military personnel receiving treatment in civilian hospitals effectively fall outside the provision system. Meanwhile, adaptive clothing continues to be delivered to stabilisation points, even though there is often no urgent need for it at that stage. The formally established norm thus fails to ensure access to adaptive clothing in practice, creating a gap between declared policy and its implementation.

In total, 9 companies were awarded materiel contracts in March. 

Petroleum, Oil and Lubricants

Key risks:

– sharp fluctuations in global oil prices

– a reduction in contracted volumes, creating a risk of shortfall in the supply of essential fuel

In late February, an escalation of hostilities in the Middle East triggered a sharp rise in global oil prices. Whereas in February Brent crude stood at USD 72 per barrel, by the end of March it had surged by 64% to a peak of USD 118. Following the announcement of a ceasefire, prices began to ease gradually, standing at USD 94 by mid-April. This affected the Ukrainian market, including the DOT’s contracts.

UKRNAFTA JSC was due to deliver 31,727 tonnes of arctic diesel by the end of March, intended in all likelihood to cover April requirements. However, the actual delivery volume was reduced by 9.35% – from the originally planned 35,000 tonnes to 31,729 tonnes. The reduction was justified by a 10% price increase, which is permitted under Article 41, Part 5, Clause 2 of the Law of Ukraine “On Public Procurement”, as well as Cabinet of Ministers Resolutions No. 1178 and No. 1275, which govern the specific features of procurement under martial law.

In April, six lots worth UAH 2.3 billion for fuel were announced, which should help stabilise the situation.

Unsuccessful Procurements

Among the unsuccessful March procurements, the largest share fell within the POL category (UAH 3.74 billion). Specifically, the procurement of 35,000 tonnes of summer diesel (UAH 2.9 billion) was cancelled due to the inability to agree on pricing terms.

Under Sub-clause 7, Clause 19 of Cabinet of Ministers Resolution No. 1178, unit price increases are capped at no more than 10% at a time. A prospective participant noted, however, that diesel prices in March 2026 had risen by over 50% compared to February and remained volatile. Under such conditions, suppliers were unwilling to operate under a fixed price.

The company proposed a transition to formula-based pricing linked to the international Platts benchmark; however, amending the procurement terms proved impossible, and the tender was ultimately cancelled due to irreconcilable differences.

In late March, however, the agency re-announced equivalent tenders for the procurement of 35,000 tonnes of summer diesel (UAH 2.9 billion), this time incorporating formula-based pricing linked to the international Platts benchmark. This enabled pricing terms to be aligned with market conditions, and UKRNAFTA JSC subsequently concluded 17 contracts in April worth UAH 2.3 billion.

Also within this category, procurements of RT-grade jet fuel, various types of oils, and chemical fluids worth UAH 812.7 million were unsuccessful due to a lack of bidders.

Contracts concluded

Although the DOT did not purchase any diesel in March, it concluded seven contracts for the supply of lubricants and chemical fluids, totalling UAH 35.7 million and achieving savings of UAH 1.8 million. The largest contract, worth UAH 10.3 million, was awarded to ARIAN TECHNICAL OILS PLANT LLC for the supply of 30 tonnes of MGE-10A oil. Contracts for the supply of lubricants and oils were concluded with three companies in March.

Recommendations based on the analysis of challenges in March 2026: