The monitoring information is up to date as of 1 March 2024.
Between 1 February and 29 February 2024, a state agency of Ukraine’s Defence Ministry, the State Logistics Operator (the SLO also known as the DOT) announced 67 procurements (145 lots) through the Prozorro e-platform for a total expected value of nearly UAH 30 billion.
A total of 113 companies took part in the DOT tenders, while the average number of offers was about six bidders per tender. It is noteworthy that more than 80% of procurements (54 out of 67 announced) were held under the simplified procedure, i.e. with the possibility of inviting at least one tenderer.
The largest tender was announced for the procurement of sets of food products worth over UAH 10.8 billion, but the procurement under open procedure failed twice. The first tender was cancelled, in part due to administrative lawsuits filed by participants; the re-announced procedure was declared invalid due to the withdrawal of proposals by the majority of participants. Eventually, in March, the DOT signed direct contracts with suppliers to ensure the continuity of food supplies to the Armed Forces of Ukraine.
In February, the DOT signed contracts (according to 94 lots) totalling UAH 3.2 billion based on the results of procurement initiated both in February and earlier. The largest contract was signed for the procurement of 20,000 modular body armours for over UAH 531 million.
The StateWatch think tank analysed the largest contracts concluded by the State Logistics Operator and outlined the main challenges in the DOT procurement process in February 2024.
Considering that some of the DOT procurements are closed or don’t involve the use of the e-platform (defence procurements), and information about them is published on Prozorro only in part, the monitoring lists only those procurements for which data is publicly available.
Top contracts signed by the DOT
In February, the largest contracts were signed for the procurement of uniforms. In particular, the Defence Ministry procured 20,000 modular body armours Corsair M3mp-6 (completeness 1-5) for UAH 531.4 million (UAH 26,570 per item), and 10,000 Corsair M3mp-6 (completeness 1-8) for UAH 344 million (UAH 3,407 per item). The winner of both tenders was Research and Production Enterprise TEMP-300 LLC. Uniforms were also among the largest DOT procurements in February. The DOT completed two procurements of summer suits: for UAH 314 million(UAH 4193 per item) and UAH 131 million(UAH 2007 per item), as well as summer pants for UAH 71 million (UAH 711 per item). In addition, the DOT procured tactical backpacks for nearly UAH 80 million (UAH 1,214 per item). Since the DOT was launched, already the second tender for the procurement of tactical headsets was successfully held in February. 15,000 Peltor Comtac 3M (UAH 15896 per item) will be supplied by Sewing Factory GALANT LLC, which won the tender based on the quality compliance factor rather than price criteria. Extrim-Tex LLC was contracted to supply the remaining 5,000 Sordin Hadbands (UAH 1,235 per item) under this tender. The agency also spent UAH 90 million on disposable tableware(UAH 6 per item) for the military.
The list of other successful February procurements also includes 60,000 load-bearing belts for nearly UAH 40 million (UAH 642 per item), 100,000 mess kits for UAH 44.5 million (UAH 444 per item), 410,000 t-shirts for UAH 56 million (average price of UAH 136 per item), and men’s underwear for over UAH 65 million in two tenders.
Among the 67 tenders with a total of 118 lots announced in January:
Cancelled and unsuccessful procurements
In February, the first 11 tender procedures for the procurement of food worth UAH 10.8 billion and the procurement of 40,000 ponchos for UAH 38 million were cancelled. Also, 4 procedures were declared invalid, including a repeated food tender for UAH 10.8 billion, as well as procurement of 25,000 modular body armours, 60,000 secure key information carriers (tokens) Almaz-1K and NEFRAS-S2-80/120 solvent.
The main reasons why the DOT procurements did not take place or were cancelled:
StateWatch analysts have identified the following challenges in February DOT procurements:
The 11 tender procedures for food procurement worth UAH 10.8 billion (UAH 139 per set of food products) initiated on 2 February were cancelled on 22 February, in particular, due to the Sixth Administrative Court of Appeal decision to satisfy the lawsuit filed by Trade Granite Invest LLC and recognize unlawful a number of the DOT requirements, including the obligation to use cash registers in at least 50% of the listed warehouses and the grounds for non-admission to the bidding due to non-fulfilment of obligations under previous MoD contracts. On 27 February, the DOT re-announced a similar procedure
The repeated procurement caused another wave of criticism from the participants due to excessively high penalties, the logistics organisation principles, and the possibility of the DOT auditing the suppliers’ activities. At the end of February, the bidders once again filed administrative lawsuits against the DOT demanding to remove a number of requirements for tender participants. Eventually, the Kyiv District Administrative Court dismissed one of the claims. After that, most participants withdrew their bids. As a result, the tender was declared unsuccessful. Already in March, the DOT announced the procurement for the third time, this time on the basis of direct contracting, i.e. without holding an auction and using the Prozorro e-platform, on the grounds of “urgent need.”
A safeguard in such situations may be the so-called “framework agreements”, which establish long-term cooperation between the parties. The framework agreement is concluded exclusively through open bidding and is published in English.
As for other DOT tenders, even though businesses actively participated in the auctions, when analysing the bids, StateWatch noted that companies submitted low-quality documentation. As a result, the DOT had to systematically ask the auction winner to correct the submitted documents. This resulted in a delay in the procedures and, consequently, a reduction in the delivery time.
StateWatch recommends to:
The 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 billion. Of this amount, the agency is supposed to receive a commission of 0.4% of the executed contracts (this should not exceed UAH 250 million per year). Procurement is carried out through the e-system Prozorro.
The monitoring of the DOT procurements is part of the support programme of the Special Defence Adviser of the UK Embassy in Ukraine, implemented by the EDGE Foundation and StateWatch.