On September 28, 2026, the Cabinet of Ministers adopted Resolution No. 1181, which once again amended the Procurement Specifics approved by Resolution No. 1178. Most of the changes this time concern localization requirements, but the amendments also add new exemptions from competitive procedures.
The localization requirements needed updating mainly because a large part of them is set out in the Final and Transitional Provisions of the new Law of Ukraine No. 4888-IX on Public Procurement. The government therefore detailed these requirements in the Specifics and aligned them with the Law to make them clearer and workable in practice. The government was constrained to some extent by the wording of the new Law when drafting the amendments. In this article, we examine what has changed regarding localization, at which stages of procurement these changes must be taken into account, and which exemptions will be available.
Key takeaways:
- Aligned the requirements for production localization of certain goods worth UAH 1 million or more between the Specifics and Law No. 4888-IX. Overall, the detailed rules appear to be of higher quality than the localization provisions in Law No. 4888-IX itself. However, some provisions conflict with Procedure No. 822 with respect to procurement through the e-catalog, and many of them require technical implementation in Prozorro.
- Expanded the list of grounds for direct contracts.
- Expanded the grounds for the negotiated procedure. Most of the new exemptions appear justified, except the one for building shelters: this need can now be planned and anticipated. Going forward, it is worth considering procurement methods that would combine open competition with keeping technical specifications hidden from the general public.
Updated localization requirements in procurement terms
Overall, the amendments require contracting authorities to include localization requirements in the procurement terms and to reflect compliance with them in their reporting. Participants, and subsequently contractors, must provide the relevant supporting documents.
The requirements apply to procurements whose subject includes goods subject to localization requirements with a value of UAH 1 million or more. Since the exact value of the goods is not yet known when the procurement is announced, the estimated value should evidently serve as the reference point. It is important to remember that this covers not only procurement of goods as such but also procurement of services and works under which the contracting authority acquires goods.
The updates apply to open tendering, procurement in Prozorro Market, negotiated procedures, and direct contracts. In summary, the tender documentation, the request for suppliers’ proposals (RFP), and the notice of intent to conclude a contract under the negotiated procedure must now state that the procurement is specifically for localized goods and include the following requirements:
- Requirements for the degree of production localization under the Law (30% in 2026);
- Requirements for the participant (at the bid submission stage) and the supplier of goods/service provider/works contractor (at the contract performance stage) to provide a reference to the relevant product included in the list of localized products, or a document confirming that the goods originate from a “relevant country.” The latter refers to states party to international treaties (paragraph 3 of the Specifics) whose goods are exempt from localization requirements.
The report on the performance of the procurement contract must contain the same information and documents. This requirement also applies to the supplier of goods/works contractor/service provider when submitting a proposal for a direct contract, and the same reference or document must be included in the report on a procurement contract concluded without using the electronic procurement system.
As the government clarified, a reference to a product is the means by which information on the degree of its production localization (including for goods procured as part of works or services) and documents confirming that degree are published in Prozorro and/or provided by the participant/supplier.
A document confirming the country of origin of the goods may be a certificate of origin, a certified declaration of origin, a declaration of origin, or a certificate of regional name of goods. The amendments emphasize that origin must be confirmed by documents; the fact of origin alone is not sufficient.
3. Requirements for a participant/supplier/contractor that is not the manufacturer of the goods to provide the contracting authority with documents confirming the degree of production localization. Such documents must include information on all business entities involved in the supply chain between the manufacturer and the participant. If the business entities in the chain change, the supplier must notify the contracting authority before delivery and provide updated information and documents on them.
The Specifics separately set out what the information on business entities in the supply chain must include: the name, including the short name (if any), or the full name of the business entity; its USREOU identification code or individual taxpayer registration number (RNOKPP) (or passport number if it has no RNOKPP); and documents confirming its involvement in supplying the relevant goods (contracts, acceptance certificates, delivery notes, certificates, etc.).
The statement that the procurement is specifically for localized goods must also be included in the open tendering announcement.
As we can see, the requirement to provide a reference to a localized product or a document of origin applies to both the participant and the contractor. The requirement to confirm who is in the supply chain may initially seem to apply to one or the other (“participant/supplier/contractor”). Judging by the grounds for rejecting tender proposals, however, it should be interpreted as applying to both the participant and the contractor under the procurement contract: if a participant fails to provide this information, that is a ground for rejecting its tender proposal.
Rejection of proposals and cancellation of open tendering and RFPs
At present, the list of grounds for rejecting tender proposals does not explicitly mention violations of localization requirements. In such cases, the logical course would be to reject a proposal because it “does not meet the requirements set out in the tender documentation pursuant to the first paragraph of Article 22(3) of the Law.” For that, however, the contracting authority must actually have stated such requirements in the tender documentation, and the obligation to state them has only now been introduced. Nevertheless, the lawmaker evidently decided to play it safe and add violations of localization requirements as separate, standalone grounds for rejecting a tender proposal. New grounds have also been introduced for rejecting proposals submitted in response to RFPs. The list of grounds for rejection has thus been supplemented with several new ones:
- the participant indicated in its tender proposal a degree of localization that does not comply with the Law (or, in the case of an RFP, the degree of localization of the goods offered by the supplier does not comply with the Law);
- the participant failed to provide a reference to the relevant product included in the list of localized products, or a document confirming that the goods originate from a relevant country;
- a participant that is not the manufacturer of the goods failed to provide information on all business entities that will be involved in the supply chain between the manufacturer and the participant;
- the proposal lacks information on a product included in the list of localized products, or a document confirming that the goods originate from a relevant country;
- the proposal contains information on a localized product, but the product was included in the list of localized products based on an application filed not by the manufacturer named in the proposal but by another business entity.
A new ground for canceling special open tendering and RFPs arises where the State Audit Service has found that the contracting authority did not set requirements in the tender documentation/RFP for the degree of localization of goods that are subject to these requirements under the Law. For open tendering, this applies only before the contract is concluded.
Overall, this approach appears too radical, since the State Audit Service may detect this violation as early as the bid submission stage. In that case, it would make more sense to require the contracting authority to amend the tender documentation rather than cancel the procurement. However, this is precisely how the requirement is worded in Law No. 4888, and the Specifics did not depart from it. The government also clarified that the State Audit Service must monitor procurement with due regard to localization requirements. In our view, this clarification adds no value, since monitoring already involves analyzing compliance with all requirements of procurement legislation.
A few words on localization in Prozorro Market
Prozorro Market currently serves as an alternative to open tendering for above-threshold procurement of goods. Predictably, therefore, additional localization requirements were also set for RFPs. However, unlike in open tendering, a proposal submitted under an RFP does not involve a package of documents.
The electronic catalog is built on the premise that the participant’s qualifications have already been confirmed, the product is already registered in the catalog, and the supplier is not required to submit additional documents to take part in the selection. Thus, under paragraph 57 of Procedure No. 822, an RFP may not contain requirements for the supplier or the winner of the selection, or for other documents, that are not provided for by the Procedure. In other words, by requiring localization documents from suppliers, contracting authorities will automatically breach this restriction. Moreover, neither the Law nor the Specifics explicitly state in what form this information and these documents must be provided, whether through Prozorro or otherwise (except for the product reference, which will certainly be published in Prozorro). This approach departs somewhat from established practice for RFPs and requires, at a minimum, clarity on how it will work in practice, including a technical implementation that ensures adequate transparency.
In essence, the Specifics introduced additional requirements for the content of RFPs and suppliers’ proposals and additional grounds for rejecting them, alongside those already set out in Procedure No. 822. Given that localization requirements are not specific to individual contracting authorities, an alternative would have been to build this check into the process by which the administrator adds products to Prozorro Market, rather than requiring contracting authorities to verify compliance in each RFP.
Localization at the contract conclusion and performance stages
To track compliance with localization requirements at different stages of procurement, the drafters added requirements for, among other things, the contract performance stage and reporting on it.
At the contract performance stage, the contractor must provide information and documents confirming that the goods actually supplied or used match the information on the goods that the participant provided when submitting its proposal/tender proposal, and that it complied with the production localization requirements with respect to those goods.
It follows that the draft procurement contract and any directly concluded contract must list among the contractor’s obligations the above requirements and the deadlines for meeting them, although this is explicitly stated only in part, regarding the draft contract in an RFP. The same applies to the requirement that the contractor provide a reference to the relevant product included in the list of localized products, or a document confirming that the goods originate from a “relevant country,” as well as the requirement to provide documents on the degree of localization, including information on all business entities involved in the supply chain between the manufacturer and the participant.
Furthermore, a contracting authority’s conclusion of a procurement contract in breach of localization requirements is now one of the grounds for the contract’s nullity.
If a procurement is subject to localization requirements, performance reports will be required even for direct contracts concluded under paragraphs 9, 9-2, and 9-3 of the Specifics.
Exemptions from competitive procedures
In addition to detailing the localization requirements extensively, the September amendments to the Specifics introduced several new exemptions from competitive procedures, namely new grounds for direct contracts and new grounds for the negotiated procedure.
The following were added to the grounds for direct contracts in the natural gas supply, energy, rail, and sports sectors:
- Procurement of natural gas by contracting authorities from an entity on which the Cabinet of Ministers has imposed special obligations to ensure general public interest in this market, as well as procurement of natural gas by that entity itself to fulfill these special obligations. To use this exemption, contracting authorities must have consumer status under Article 12-1 of the Law of Ukraine on the Natural Gas Market.
This exemption appears logical: there is no room for competition when purchasing natural gas from such a supplier, and since the timely supply of natural gas depends on it, it is important to conclude a contract with this supplier without bureaucratic obstacles. The ground is framed as permissive, meaning that contracting authorities may choose to use it.
- Procurement by JSC Ukrzaliznytsia, until March 24, 2027, of railway traction rolling stock, including used rolling stock, as well as rolling stock lease services and services related to its acquisition, maintenance, transportation, delivery, and customs clearance.
It should be noted that the second exemption establishes not merely a right but a mandatory waiver of procedures (an obligation to conclude a direct contract). This makes it impossible to hold a procedure even when doing so would objectively be feasible. The exemption is evidently driven by Russian attacks on rolling stock and the company’s plans to purchase it abroad. At the same time, it does not distinguish procurement from foreign suppliers from procurement from domestic ones.
- The temporary above-threshold direct contracts (until the end of 2026) now include procurement of goods, works, and services needed to restore, reconstruct, or overhaul facilities of legal entities of the electric power sector destroyed or damaged as a result of the armed aggression of the Russian Federation, to ensure the reliable and uninterrupted operation of the integrated power system.
The exemption includes a safeguard against abuse: before concluding the contract, the contracting authority must confirm the damage to or destruction of the facility, the need for the procurement, and its volume with documents drawn up following an inspection and/or survey of the facility.
Amendments to such contracts will be published only after martial law ends, except where the contracts fall under the rules on publishing information on material resources in construction.
It should be noted that the exact term “legal entity of the electric power sector” is not defined in current Ukrainian legislation. In defining the range of facility owners, the drafters should therefore have relied on existing terminology, in particular from the Law of Ukraine on the Electricity Market. It would also have been useful to specify the functions of the facilities so that the exemption does not cover just any facility. However, the restrictions on purpose and the requirement for documentary confirmation should serve as safeguards against abuse of this ambiguity.
- Procurement of services needed to hold sports events and for Ukraine’s national teams to take part in international events and competitions. These procurements will also be conducted exclusively through direct contracts. The estimated value of the procurement for a single event may not exceed the equivalent of EUR 30,000 excluding VAT. The Specifics also set out rules for reporting on such procurements, requirements for publishing the contract and its annexes, for justifying the ground and having it approved, and for publishing information on the ultimate beneficial owner.
Overall, the exemption appears justified, since holding tenders to purchase services for sports events, especially abroad, is considerably more difficult and sometimes impossible. However, this issue is part of a broader one: the need for direct procurement for sports events abroad will always remain, while harmonization with EU directives does not allow for such an exemption.
In addition to direct contracts, new grounds have been added for the negotiated procedure, namely:
- Procurement by natural gas market participants of compressor, gas piston, and/or gas turbine gas pumping units, as well as services required to assess them. This provision may be applied only if the procurement is needed to restore the stable operation of facilities damaged or destroyed, and of technological processes disrupted, as a result of the armed aggression of the Russian Federation.
The safeguard against abuse in procuring used units is that the price may not exceed the amount set in the expert opinion (expert examination) or property valuation report.
- Procurement of goods, works, and services needed to protect critical infrastructure facilities, as well as to construct, create, and fit out facilities of the civil protection shelter stock. The negotiated procedure may be used provided that the procurement contract price does not exceed UAH 10 million and the contract performance period does not exceed 90 days from the date of its conclusion.
In our opinion, while the negotiated procedure may still be somewhat justified for protecting critical infrastructure, the ground appears unfounded for shelters. In the fifth year of the full-scale war, no one is building shelters that were needed yesterday; this can be planned, and even if an urgent need arises, there is already a separate ground for the negotiated procedure: urgent need.
If the reason for adding the new grounds is the confidentiality of sensitive information, the negotiated procedure does not solve this problem, since the contract and its annexes must still be published after the procedure. No exceptions on this point are provided for the newly added grounds. In general, taking procurement out of the competitive arena can no longer serve as a way to procure urgently or prevent information leaks. In the fifth year of the full-scale war, it is time to consider regulating competitive procedures that keep sensitive information from the public and disclose it only to procedure participants on equal terms.
- Procurement of goods, works, and services financed from the state budget reserve fund to ensure the creation and operation of a recovery reserve for an informatization asset of category I or II by impact of disruption of its functioning, as determined under legislation on digital development and digitalization, in order to ensure the continuous operation of the informatization asset and compliance with its backup and recovery requirements.
In simpler terms, this refers to procurement needed to preserve our state registers in cloud services and backup data storage sites.
The government also clarified that procurement for critical infrastructure covers, among other things, transportation, relocation, and storage of equipment needed to restore facilities destroyed or damaged as a result of Russia’s armed aggression.
In addition, the government clarified that during negotiations, participants need not be required to provide confirmations regarding the offering of remuneration and the relatedness of persons.
Contract amendments based on international price agency indicators
The ground for amending essential contract terms linked to international price agency indicators has undergone a minor change. Instead of being tied to Platts and ARGUS indicators, essential contract terms may now be amended when indicators change at international price agencies included in a list determined by the Cabinet of Ministers of Ukraine. On the one hand, this increases flexibility in responding to market realities; on the other, it effectively empowers the Cabinet of Ministers to determine the list through its own resolution.
Conclusions
The September amendments to Resolution No. 1178 aligned the production localization requirements between the Specifics and Law No. 4888-IX. Additional requirements were introduced for open tendering, procurement in Prozorro Market, negotiated procedures, and direct contracts, as well as for procurement contracts in general.
In essence, the rules mostly require the contracting authority to demand that the participant and the contractor:
- comply with the degree of production localization required by the Law;
- provide a reference to a localized product or a document confirming that the goods originate from a country exempt from localization requirements;
- provide information and documents on the business entities involved in the supply chain between the manufacturer and the supplier.
The rules also provide for rejecting tender proposals and RFP proposals that violate these requirements, nullity of contracts concluded in breach of localization requirements, and cancellation of the procurement if these requirements are missing from the tender documentation.
Overall, the detailed rules have proved to be of higher quality than the localization provisions in Law No. 4888-IX. However, some provisions conflict with Procedure No. 822 with respect to procurement through the electronic catalog, many require technical implementation in Prozorro, and some of the additions add no value because they duplicate existing rules.
The list of grounds for direct contracts has been expanded to include procurement of natural gas from the supplier of last resort; procurements by JSC Ukrzaliznytsia, until March 24, 2027, of railway traction rolling stock and related services; procurements, until the end of 2026, to restore, reconstruct, or overhaul electric power facilities; and procurements of services needed to hold sports events and take part in them at the international level.
The grounds for the negotiated procedure now include procurement of natural gas equipment to restore the sector after Russian attacks, procurement to protect critical infrastructure facilities, and procurement to create civil protection shelters and to back up state databases and registers in cloud resources.
Most of the new exemptions appear justified; however, we consider the exemption for building shelters unfounded in the fifth year of the full-scale war, as this need can now be planned and anticipated.
Moreover, the overarching question of how to balance the protection of sensitive information with competitive procedures remains open. In the fifth year of the full-scale war, the state is still trying to solve the problems of urgent and sensitive procurement by taking it out of competition. In some cases, this step appears illogical. For example, the requirements to publish the contract and its annexes remain in place, even for building shelters and protecting infrastructure under the new negotiated procedure grounds. It may be worth devising procurement methods in which open competition could be combined with keeping technical specifications hidden from the general public.
This material is funded by the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.
