The monitoring information is up to date as of 1 November 2024.
In October 2024, the State Logistics Operator (the DOT, also known as the SLO) announced tenders worth UAH 6.7 billion. Contracts worth UAH 2.4 billion were signed based on the results of procurements announced both in October and earlier. However, the agency had to cancel tenders for UAH 234.3 million, mostly due to a lack of bids. StateWatch analyzed the effectiveness of October procurements conducted by the DOT and developed proposals for systemic improvement of the processes.
In October, the agency announced a total of 40 tenders (77 lots) with an expected value of UAH 6.7 billion. Most procurements – 58 lots worth UAH 5.4 billion – were conducted under a simplified procedure. A total of 50 companies participated in the bidding during the month, but the activity of the participants was low, with an average of 1.95 offers per tender.
In turn, the agency signed 50 contracts worth UAH 2.4 billion. For 70% of the contracted funds (UAH 1.68 billion), the DOT procured material support, including 39,000 modular body armour vests and 100,000 pairs of winter shoes. A quarter of the amount (UAH 606.7 million) was allocated for food contracts, and the remaining amount was spent on fuel (UAH 58.6 million) and other goods/services (UAH 45.65 million).
Considering that part of the DOT procurements are conducted under closed procedure or without the use of an electronic platform (defence procurements), information on which is published on Prozorro in part, the monitoring includes only those procurements the data for which is available to the public.
Top largest DOT contracts
In October, the State Logistics Operator signed the largest contract for the procurement of food under a closed framework agreement procedure. Under the contract worth UAH 606.7 million, 5.3 million ration packs will be supplied (UAH 113.70 per pack). Although the contract itself has not been published on Prozorro e-platform due to the peculiarities of the procedure, the agency disclosed the name of the supplier company, Trade Granite Invest LLC, shortly after the signing.
The next three largest contracts, totalling UAH 1.1 billion, were signed to procure the modular body armour vests. TEMP-3000 LLC will supply 15 thousand vests worth UAH 427.3 million, and UKRTAC.UA LLC will supply 24 thousand vests worth UAH 678.3 million. The average price per vest was UAH 28.3 thousand.
The top procurements also include a contract for the supply of special headsets, which will be supplied by MIK LLC in the amount of 26 thousand headsets worth UAH 304.1 million (UAH 11.7 thousand per headset). TALANLEGPROM LLC will supply 100 thousand pairs of winter boots for the military for a total sum of UAH 217.6 million (UAH 2,176 thousand per pair).
In addition, the DOT has contracted out the supply of 296.1 thousand tons of motor oil worth UAH 51.5 million to three companies: KSM-Trade LLC (UAH 17.5 million), ATP 929 LLC (UAH 16.5 million) and ARIAN TECHNICAL OIL PLANT LLC (UAH 17.4 million).
Cancelled procurements
In October, three tenders worth UAH 234.3 million were declared unsuccessful. The procurements were announced on October 14 and 10, 2024.
The largest cancelled procurement was a tender for the supply of plate carriers for modular body armour vests (complete set 1-5) with an expected value of UAH 232.9 million (UAH 15.5 thousand per item). The DOT planned to procure 15 thousand plate carriers under the simplified procedure. The procurement did not take place due to the lack of bids from participants.
In October, the procurement of lubricants, which included two lots and had a total expected value of UAH 1.4 million, failed. One of the lots included various types of lubricants with a total volume of 3.3 tons worth UAH 366.6 million, and the other had a total volume of 2 tons at a price of UAH 535.3 thousand per ton. Both procurements failed due to the lack of bids.
Challenges
The contract for the procurement of 5.3 million ration packs worth UAH 606.7 million, concluded under a closed framework agreement procedure, requires special attention. This procedure was carried out in two stages: first, the suppliers passed the qualification, and then a closed quotation request was conducted. Although this procedure involves control by the Antimonopoly Committee, the State Audit Service and law enforcement agencies, access to its data on the Prozorro e-platform is limited.
The situation requires additional analysis, as the winner of the procedure, Trade Granite Invest LLC, was banned from participating in tenders for up to one year in October. The reason was the use of an annulled test report for canned pork in another contract for the Donetsk region.
Besides, the only winner of all the lots for the procurement of 100 thousand pairs of winter boots is a company that shows signs of dominance – Talanlegprom LLC. Other participants did not submit their bids. Despite the elimination of technical specification requirements that restricted access to bidding for other players and the certification of the Valtex LLC sample, StateWatch assumes that the Talan group of companies still dominates the procurement of footwear.
In addition, one out of four lots in the procurement of modular body armour vests was unsuccessful. This time, the agency failed to contract 21.2 thousand body armour vests worth UAH 604.2 million due to the lack of bids. Earlier, StateWatch reported that procurements of body armour vests are being systematically cancelled due to the unwillingness of a number of market participants to participate in bidding with a low expected cost, which was set at UAH 28,500 per item. As a result, only two out of six certified suppliers, TEMP-3000 LLC and UKRTAC.UA LLC, participated in three lots, while no offers were submitted for the last lot.
Recommendations
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). Procurements are carried out through the Prozorro e-system.
The monitoring of the DOT procurements is part of the support programme of the Special Adviser on Defence of the UK Embassy in Ukraine, implemented by the EDGE Foundation and StateWatch.
