The monitoring information is up to date as of 2 May 2024.
From 1 to 30 April 2024, the State Logistics Operator (the DOT, also known as the SLO) published 67 procurements (125 lots) on the Prozorro e-platform with a total expected value of UAH 4.2 billion.
A total of 97 companies participated in the DOT tenders, while the average number of bids was nearly four participants per tender. At the same time, more than 90% of tenders for the procurement of uniforms, fuel and lubricants were competitive. However, most procurements (61%) were announced under the simplified procurement procedure, i.e. with the possibility to attract at least one tenderer.
In April, the DOT signed 163 contracts worth a total of UAH 11.3 billion based on the results of procurements initiated in April and earlier. The largest contract was signed with Kontrakt Prodrezerv 5 LLC for the procurement of food packs for the Armed Forces of Ukraine, worth UAH 2 billion. This company will supply food packs at a price of UAH 125.28 to military units in Donetsk, Dnipro and Kyiv regions. In total, six new suppliers were contracted in April to supply the Armed Forces with food in the second quarter for nearly UAH 4 billion (the average price of a ration pack is UAH 118.35).
StateWatch think tank analysed the largest DOT contracts and outlined the main challenges in the DOT procurement process in April 2024.
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 6 signed contracts
It is not the first time that StateWatch analysts spot the largest amounts in the DOT contracts for the procurement of food, fuel, uniforms and body armour. In addition to the largest contract with Kontrakt Prodrezerv 5 LLC, the company which will supply UAH 2 billion worth of food, two contracts for the procurement of diesel fuel DP-L-Euro5-B0 worth UAH 829 million and UAH 694 million were signed with Ukrnafta PJSC (average price is nearly 41 thousand per tonne).
Also, the DOT procured 350,000 summer field suits for UAH 625 million (average price is UAH 1,800 per item) from four different manufacturers. In addition, scientific production enterprise TEMP-3000 was contracted to supply 24,410 items of Corsair M3 MP-6 modular body armour vests for UAH 614.8 million (UAH 25,190 per item), as well as 20,000 plate carriers for UAH 239 million (UAH 12,049 per item). The government procured 10,000 plate carriers of the same kind from UKRTAC.UA company at a slightly higher price of UAH 13890 per item.
Food procurements
In April, six new suppliers were contracted to supply ration packs for the Armed Forces of Ukraine under the Catalogue for almost UAH 4 billion (the average price of a pack is UAH 118.35). Besides Kontrakt Prodrezerv 5 LLC, the contracts were signed with Okhtyrka Miasoprodukt LLC, Meat Prom LLC, Asiks Group LLC, Adelin LLC, and UT Company LLC. Before that, two of the five previously contracted food suppliers, namely Tviy Hlib LLC and Cherkasy Meat Plant LLC, failed to fulfil their obligations, so cooperation with them was terminated. In total, since the start of its operation, the DOT has signed contracts for the supply of 71.6 million ration packs worth a total of UAH 8.9 billion.
It is worth noting that in April, for the first time since its launch, the DOT procured baked goods outside the Catalogue directly from producers. A total of eight suppliers were contracted to deliver UAH 457 million worth of goods. The price per kilogram of bread in the contracts did not exceed UAH 23,55. In doing so, DOT was able to save about UAH 100 million. Before the bread was procured together with other goods under the Catalogue, which includes 409 items and involves the procurement of all goods in one package. The successful removal of bread from the Catalogue allows for greater competition in the bidding process and the procurement of better quality goods at lower prices. So far, the DOT has only removed bread and water from the Catalogue, and separate procurements of other food categories are expected in the future.
Of the 67 tenders announced in April:
● 41 procurements (99 lots) were held under the simplified procedure,i.e. with the possibility to attract at least one tenderer;
● 10 procurements (10 lots) – under the direct contracting procedure;
● 10 procurements (10 lots) – under the defence procurement procedure, data on which is partly limited;
● 6 procurements (6 lots) – under the open tendering procedure with special features.
Cancelled and failed procurements
Among the 6 failed procurements in April, it is worth mentioning the tender for disposable tableware. Five out of six lots of this procurement, worth UAH 179,2 million, were cancelled due to the lack of offers. It is noteworthy that the previous UAH 200 million tender was also cancelled due to a lack of bids, back then one of the bidders reported a rise in the price of raw materials and a low expected value of the goods, which was about UAH 6 per item. After the expected cost was increased to UAH 7,17 per item at the next tender, the participants did not show up to the tender again. In addition, a procurement for rubber boots worth UAH 62 million was also cancelled. The bidders complained that the expected price was too low, at around UAH 300 per pair of boots, and eventually did not submit a bid.
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.
