The monitoring information is up-to-date as of June 2, 2024.
From 1 to 31 May 2024, the State Logistics Operator (DOT, also known as the SLO) published 73 procurements (157 lots) on the Prozorro e-platform with a total expected value of UAH 27 billion.
A total of 97 companies participated in the DOT tenders, with an average of almost four participants per tender.
In May, DOT signed 135 contracts worth a total of UAH 19.4 billion, based on the results of procurements initiated in May and earlier. The largest contract worth UAH 2,5 billion was signed with Meat Prom LLC for the procurement of ration packs for the Armed Forces of Ukraine for the second half of the year.
StateWatch think tank analysed the largest DOT contracts and outlined the main challenges in the DOT procurement process in May 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 procurements
For the second half of the year, DOT awarded contracts worth UAH 17.3 billion to suppliers of food for the military. The contracts were signed with seven companies for the supply of 158.4 million ration packs. The average price per unit is UAH 109.3. 16 out of 20 contracts worth UAH 14.8 billion were signed in May, and the remaining contracts worth UAH 2.5 billion were signed in early June. The largest contracts were signed with three suppliers: Meat Prom LLC – UAH 3.79 billion, Asiks Group LLC – UAH 3.58 billion, and Granpri LTD LLC – UAH 3.44 billion.
Overall, the prices per set in the contracts ranged from UAH 105.54 to UAH 112.98. The lowest price was offered by the Consortium «United Food Group» and the highest by Trade Granite Invest LLC, which had filed a lawsuit against DOT in previous food procurements, resulting in the cancellation of the February auction.
To increase competition in the bidding process, the procurement volumes were divided on a regional basis and split into 20 lots (3 procurements) with an expected value ranging from UAH 139 million to UAH 3.1 billion. This ensured high competition and savings of UAH 4.77 billion. Lots with an expected value of up to UAH 600 million were competed for by 3 to 10 companies, including many new businesses and individual entrepreneurs. In May, two companies, Granpri Ltd LLC and Consortium «United Food Group», which had not previously supplied food to the UMOD, won
contracts worth UAH 3.44 billion and UAH 2.86 billion respectively.
Other largest contracts signed by DOT in May
In addition to food, the largest contracts were signed with suppliers of uniforms, fuel and body armour. In particular, eight contracts worth UAH 1.2 billion were signed with Ukrnafta PJSC for the supply of gasoline and diesel. Among the eight contracts, the largest is for UAH 864.2 million (UAH 4,067.71 per tonne) for the supply of 21.2 thousand tonnes of diesel fuel DP-L-Euro5-B0. In addition, nine contracts worth UAH 939.2 million were signed with Talanlegprom LLC for the supply of footwear and heating products. Of these, the largest contract was for UAH 897.3 million (UAH 2,563.8 per pair) to supply winter boots for the military.
Tenders for modular body armour were also among the largest procurements. A contract worth UAH 364.4 million (UAH 30780 per item) was signed with Ukrtac.UA LLC for the supply of 11,840 basic kits. Meanwhile, Kharkiv Plant of Personal Protective Equipment LLC is to supply 20,000 body armour for a total of UAH 607.8 million (UAH 30390 per item). In May, for the first time, modular body armour was purchased at market prices using funds saved from equipment tenders.
TOP of the largest DOT tenders for fuel, uniforms and equipment
Of the 73 tenders announced in May:
Cancelled and failed procurements
Out of 14 failed lots (7 procurements), most of the procedures did not take place due to a lack of offers. In particular, 3 out of 9 lots of the tender for the purchase of drinking water worth UAH 313.3 million were left without bidders, while the remaining lots were awarded to Obolon PJSC, which is to be contracted soon. Tenders for winter gloves worth UAH 77.5 million (UAH 440 per item) and summer socks worth UAH 19.6 million (UAH 26.22 per item) also failed.
Challenges
In April and May, DOT faced a shortage of suppliers of modular enhanced protection body armour with basic configuration. Previously, the winner of the most of the agency’s procurements was Research and Production Enterprise TEMP-300 LLC. This is because the price offered by this company (UAH 26,570-27,720), which was lower than that of other certified competitors, was taken into account when determining the expected value at the time of the tender. Due to the inability of RPE TEMP-3000 LLC to meet all the needs of the Armed Forces for body armour, as reported by Nashi Hroshi (Our Money) publication citing DOT, some procurements failed. In particular, from January to April, procurements worth more than UAH 3 billion were not carried out, leading to disruptions in the supply of armour to military units. This forced DOT, with the approval of the UMOD, to increase the expected value and use the funds saved from equipment tenders. In the end, new contracts were signed at market prices with Ukrtac.UA LLC (UAH 30,780 per item) and Kharkiv Plant of Personal Protective Equipment LLC (UAH 30,390 per item).
It is noteworthy that the procurement of three sets of class 2 body armour at an expected value of UAH 23,700 per item, which was won by SPE TEMP-3000 LLC, also caused complaints from other bidders. The bidders complained about tight deadlines for submitting quality certificates, which are issued exclusively by the UMOD, and the inability to provide documents from other accredited ballistic testing laboratories, which in turn limits competition. Eventually, DOT assured that the tender documents would be amended in the near future, but this was not done, and SPE TEMP-3000 LLC was awarded the contract.
Recommendations for 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 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 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.
