The recent scandal over the prices for food procurement for military units has raised many pressing questions about the risks of secrecy of defense contracts. Now, the Minister of Defense is talking about the creation of Military Prozorro for the procurement of the agency, which should maintain “certain restrictions,” but ensure public confidence. The DOZORRO project of Transparency International Ukraine has found out what the Ministry of Defense is buying, and whether this procurement is really secret.
Weapons and military equipment
Let’s start with the most secret procurement. Procurement of weapons and military equipment in Ukraine has traditionally been a closely guarded secret. The state defense order (SDO) has always been classified. Any information about weapons-related procurement was considered sensitive.
You could probably agree that secrecy is important in this category of procurement, but in fact this is not always the case.
The fact is that in the modern world, there is no point in concealing the very fact of the development, production, or use of certain weapons. Either way, this information becomes public.
For example, it was no secret that Ukraine was developing the Neptune anti-ship system. Moreover, the information about the stages of development and adoption of this complex is public.
There are separate specialized publications that publish information about the number of weapons in each country, the latest developments and trends in technological development.
The United States has already realized that the approach of complete secrecy of defense procurement makes no sense. It is essential to keep the characteristics of the weapon secret, not its quantity.
Unlike the Ukrainian SDO, anyone can freely go to the page of the US defense budget and see what weapons the Pentagon purchases: how many and at what price. For example, we can see that in 2023, the United States plans to purchase 4,764 GMLRS missiles for HIMARS complexes at a price of USD 165,600 apiece. These are the missiles that the Armed Forces of Ukraine use to destroy ammunition depots and enemy headquarters.
You can even see information about the number and price of taxpayer-funded rounds in the US defense budget reports.
This contributes to forming the trust of taxpayers. They know that their money is spent efficiently.
Of course, in the conditions of a large-scale war, most procurement of weapons and military equipment must be concealed. After all, this can create a certain tactical advantage and allow accumulating reserves that the enemy does not expect.
Therefore, the reform of publicity in the field of weapon procurement should probably be postponed until the end of the war. But what about everything else?
Procurement not related to weapons
The structures of the Ministry of Defense of Ukraine spend tens of billions on procurement of military clothing, footwear, food, fuel, and hundreds of different household products and systems. From generators and sleeping bags to trucks.
These procurement transactions raised many questions before 2022 as well.
- For example, in 2021, the SBI served the advisor to the Minister of Defense with charges of lobbying the interests of one of the food suppliers and accused him of causing damage to the state for UAH 720 mln.
- In 2018, during the inspection, 180 tons of low-quality canned food purchased for the army were found.
- For several years, the Ministry of Defense has been accused of lobbying for the procurement of lubricants from the company of MP Ponomariov.
And this list of dubious procurement transactions is very long.
It would be good if during the war, corruption disappeared from the defense departments altogether, but it is difficult to believe that this is possible.
Many people still play by the old rules — when the fate of contracts was decided by the Ministry of Defense not by the principle of competition between participants and the best price, but by agreements behind closed doors, lobbying, and orders from above.
Since in 2022 all procurement transactions of the Ministry of Defense were hidden from the public, it was only a matter of time when the first corruption scandal would emerge.
Therefore, without publicity, it is impossible to build confidence in the effectiveness of the use of taxpayers’ funds. And the system itself is unlikely to change quickly if it is not publicly overseen.
What information about Ministry of Defense contracts may contain sensitive information?
Here, we should understand when and what information can really play into the hands of the enemy, and how dangerous its disclosure can be. We should note that this is not about the procurement of weapons and military equipment — only about civilian products.
|Type of information||When the information may be sensitive|
|Information on the supplier||If the information about the supplier clearly indicates the manufacturer and the place of production in Ukraine if the procurement item is a product that can be produced by a limited circle of entrepreneurs, and which is critical for providing the Armed Forces.|
|Place and terms of delivery of goods||When the place of delivery indicates the deployment of logistics or military facilities.|
|Quantity of goods||When the number of goods indicates the number of troops, and, in combination with information about the place of delivery, allows determining the number of troops in a particular region.|
|Information on the product (product characteristics)||If the characteristics of the product indicate the manufacturer and the conditions specified in the first case are met.|
|Terms of payment||—|
|Price of the product||—|
To summarize, only information about the manufacturer and the place of delivery can be truly sensitive. And only in exceptional cases.
After all, it is clear that russians will not target the producers of chicken eggs and canned fish with missiles to disrupt the contract of the Ministry of Defense. These products are not critical for the front, and alternatives can be quickly found on the market.
Such a risk is possible for manufacturers of more critical products, and in the case when there are not so many manufacturers on the market. For example, it can be vehicles for transporting personnel or military equipment, or in the case when there are only 1–2 manufacturers and there can be real negative consequences for the Armed Forces in case of an attack on production.
The place of delivery also causes a lot of discussion. But it can always be indicated not completely, so as not to expose a specific storage point for the enemy. For example, specify only an oblast, district, or city.
As for the number of servicemen, the total number of the Armed Forces is not classified information. The Minister of Defense himself openly speaks about this. But information about the number of troops in a particular region can be sensitive. And if we talk about the number of canned food and eggs, then such information can hardly be used by the enemy. However, for example, the number of grocery sets, sleeping bags, or sleeping mats may indicate the number of recipients of these goods.
Therefore, it is worth maintaining a certain information balance as far as the procurement of the Ministry of Defense is concerned. But in most cases, data on civilian procurement of the MoD will not help the enemy in any way.
At the same time, there are no objective reasons to hide information about prices and payment terms (the latter is also important as it allows manipulating the price) at all. The cost of eggs, shoes, and canned food interests only those who pay for them. That is, the citizens of Ukraine. The enemy has no benefit from this.
What do MPs and the government offer?
After the scandal around the procurement of the Ministry of Defense, draft law 8381 appeared in the Verkhovna Rada.
According to it, MPs plan to introduce mandatory reporting within 10 days from the conclusion of the contract by the Ministry of Defense (for procurement worth more than UAH 200,000). The report will indicate the name of the procuring entity, the name of the procurement item, the price per unit of goods.
In this way, the public will be able to find out information only about the prices for the goods. But this does not make it clear. After all, the price depends quite strongly on the terms of payment, the order of its revision, the terms of delivery.
The Ministry of Defense, rejecting allegations of corruption, in particular, referred to the fact that the contract has certain conditions for revising prices (saying that the price specified in the contract is maximum, not actual) and that the terms of supply are quite peculiar. In the end, society never saw evidence of either the first or the second. But it is quite obvious that the publication of the price alone will not remove all the issues.
In addition, the fact of reporting does not tell us anything about how and why a particular supplier was selected. An opaque way of selecting suppliers will affect the trust of market participants, and such procurement will never become effective.
The Ministry of Economy proposes to expand the scope of application of Resolution No. 1175 on conducting framework agreements for the procurement of military clothing. But this will cover only part of procurement of civilian products by units of the Ministry of Defense.
In addition, the framework agreement is better suited for systemic procurement, which is carried out with a certain frequency. It is not quite effective for one-time or non-systemic procurement.
Why can’t all MoD procurement transactions that are not related to weapons be transferred to Prozorro?
Quite often, we hear that Prozorro is not suitable for certain procurement transactions. But this is a manipulation. After all, Prozorro is only an electronic platform that implements the protocol of the procurement procedure, which was laid in it by law and government resolutions.
Any procurement procedure looks one way or another because this is how it is described in a certain regulatory act.
And in fact, nothing prevents the Ministry of Defense from procuring through procedures in the Prozorro system. For the most part, they do not contain sensitive information. And even if it exists, there are mechanisms and ways of conducting such procurement. In particular, bidding with the NDA agreement. Then some data are not published, but anyone can see the tender, enter into a non-disclosure agreement (NDA) with the procuring entity, and learn the sensitive details of the contract.
In any case, it’s a matter of desire, not ability. And the Ministry of Defense of Ukraine should be a leader in transparency and integrity because the defense capability of our armed forces most of all depends on the effectiveness of procurement of this particular procuring entity.
This publication was prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.