The monitoring information is up-to-date as of 1 July 2024.
From 1 to 30 June 2024, the State Logistics Operator (DOT) announced 79 procurements (159 lots) on Prozorro e-platform with a total expected price of UAH 11.3 B.
A total of 86 companies took part in the tenders, with an average of almost of less than 3 bidders per tender. At the same time, 43% of the procedures were held with only one player.
In June, DOT signed 108 contracts totalling UAH 8.53 B based on the results of procurement initiated both in June and earlier. The largest sum was allocated to PJSC “Ukrnafta”, which will supply fuels and lubricants worth UAH 1.86 B. While the largest contract was signed with food supplier “Mit Prom” LLC for UAH 899.6 M. Also in June, for the first time, the agency purchased 500 shower units for the army for UAH 50.3 M (the average price is UAH 100,6 K per set).
StateWatch think tank analysed the largest DOT contracts and outlined the main challenges in the DOT procurement process in June 2024.
Considering that part of the DOT’s procurement is carried out under closed procedures or without the use of an electronic platform (defence procurement), the information on which is partly published on Prozorro, the monitoring covers only those procurements for which the data is available to the public.
Food supply
In June, DOT signed 14 contracts for the supply of 38.3 M food packs for a total of UAH 4.2 B. The average cost per pack was UAH 112. Notably, 9 deals worth UAH 1.67 B were concluded under a close procedure (defence procurement) for delivery by August 2024. One of these contracts worth UAH 3M was signed with the National Aviation University to provide food for cadets.
The remaining 5 contracts for the sum of UAH 2.54 B were concluded to provide food for the first quarter of 2025. One of these contracts, worth UAH 89 million, is for supplying food to the cadets at the National University of Taras Shevchenko.
Top Largest DOT Tenders for Other Product Categories
In addition to food, the largest contracts in June were concluded with PJSC “UKRNAFTA”. Specifically, diesel fuel was purchased for UAH 1.36 B (UAH 38,923 per ton), and gasoline for UAH 359.4 M (UAH 47,927 per ton). PJSC “OBOLON” was also among the top suppliers in June, contracted for the supply of drinking water worth UAH 858.8 M (at prices of UAH 3.38 and UAH 4.08 per 1.5 liters).
The top purchases also include a contract with “AK-INVESTPROM” LLC for the purchase of 10,000 modular bulletproof vests (set 1-5) for a total of UAH 307 million (UAH 30,700 per set) and a contract with “Talanlegprom” LLC for summer boots valued at UAH 235.2 million (UAH 2,352 per pair).
Of the 79 tenders announced in June:
Canceled and unsuccessful purchases
In June, 17 purchases (31 lots) worth UAH 3.2 B were deemed unsuccessful. For instance, the procurement of 105.2 thousand modular body armour sets, with an expected price of UAH 2.7 B, failed to secure contracts for 85% of the announced quantity. Specifically, 8 out of 9 lots in the tender for 90,200 body armour sets were canceled because no company participated in the bidding. The only successful lot was awarded to TEMP-3000 LLC, with whom DOT signed a contract for 15,000 kits. The lack of offers was due to the low expected price, which in this tender was set at UAH 26,000 per basic set with enhanced protection. According to StateWatch, this price aligns with the offer from only one of the five certified MOU suppliers “TEMP-3000” LLC. The prices from the other four companies exceeded this by approximately 20%. The low expected price was based on the indicative price, which U-MOD set in 2024 at UAH 27,772 per set. Additionally, the procurement of 20,000 covers for body armour, with an expected price of UAH 13,281.54 per set, also failed.
Furthermore, for the third consecutive month, tenders for the purchase of disposable tableware were canceled. This time, the procurement of 6 M sets of tableware (UAH 7.2 per set) was unsuccessful, as no offers were received, similar to previous auctions. According to StateWatch, DOT suppliers are not ready to compete in all agency lots due to limited production capacity and commitments under other contracts.
In June, the procurement of 176.3 thousand pairs of winter gloves, totaling UAH 98.63 M, was also unsuccessful, as no participants submitted offers.
Challenges
The DOT once again faced issues with food suppliers failing to meet contract terms. Specifically, “GRANPRI LTD” LLC contracted for the second half of the year to supply food kits to the Kirovohrad, Odesa, and Donetsk regions, did not pass the agency’s inspection. A repeated audit revealed that the company’s warehouses did not meet the requirements for supplying food to military units in Donbass. As a result, DOT re-announced a tender worth UAH 2.6 B for this region.
This is not the first time the agency has had to re-announce food tenders due to counterparty failures. Previously, “Tvii Hlib” LLC and “Cherkasy Meat Plant” LLC did not fulfill their obligations under a second-quarter agreement, leading to the termination of their contracts.
The issue of unsuccessful purchases due to a lack of proposals, particularly in the procurement of bulletproof vests and disposable tableware, remains unresolved. Potential national suppliers are hesitant to participate in open competitive bidding due to the low expected price or because their production capacities cannot meet all the needs of the Armed Forces.
Recommendations
U-MOD:
DOT:
DOT, which has been responsible for procuring fuel, uniforms, and food for the military since December 2023, was established as part of the anti-corruption procurement reform of the Ministry of Defence. The agency’s total annual budget is nearly UAH 95 B. Of this amount, the agency is supposed to receive a commission of 0.4% of the executed contracts (this should not exceed UAH 250 M per year). Procurements are carried out through the Prozorro e-system
The monitoring of DOT procurements is a part of the support programme led by the UK Special Defence Advisor Team (SDA), implemented by the EDGE Foundation and StateWatch.
