Contracted funding

In 2025, around 200 contracts worth about UAH 946 million were signed through Prozorro for the construction and furnishing of veteran hubs. The largest share — UAH 836 million — went to building veteran hubs from scratch. Another UAH 29 million covered the reconstruction of buildings, and UAH 42 million went to capital and current repairs. The remainder was spent on furniture, design documentation, and other related services.

By contract value, 94% of procurements were conducted through open tenders with special features, and only 6% through direct contracts. In practice, there was no competition — only one bidder submitted a bid in each tender.

State funding and unrealistic deadlines

Nearly half of all contracted funds came from the state budget. In summer 2025, the government allocated UAH 446 million in subventions for the development and construction of veteran hubs in seven regions of Ukraine. All these projects must follow a single architectural approach and shared operating principles. Veteran hubs are designed to be inclusive and accessible. The premises include shelters, ramps, facilities for people with disabilities, and assistive technologies. Projects could also be adjusted to local needs.

Funding was granted to Zhytomyr, Zakarpattia, Ivano-Frankivsk, and Kyiv regions, as well as the Kremenchuk, Lutsk, and Kryvyi Rih communities. Each received UAH 63.74 million, with the balance to be covered by local budgets. The subvention came with a number of conditions. Initially, the facilities were to be commissioned by December 1, 2025. As of that date, none had been completed. In most procurements, contracting authorities set unrealistic deadlines from the outset, apparently to formally meet the funding program’s requirements. In practice, these deadlines were impossible to meet, so the parties later signed additional agreements changing the due dates. In addition, on December 9 of last year, the terms of the subvention were also revised, extending the project deadlines to April 30, 2026.

How veteran hubs are being built: regional cases

DOZORRO analysts examined the seven most expensive tenders for veteran hub construction and identified potentially inflated prices for construction materials in six of them. The probable overpayment is UAH 37.3 million. The analysts sent their calculations to the contracting authorities and asked them to bring prices in line with the market.

Bucha

Ukraine’s most expensive veteran hub is being built in Bucha for UAH 140 million. In October last year, the Department of Regional Development of the Kyiv Regional State Administration signed the contract with the Construction Initiatives consortium. The contract price is dynamic. Works were initially to be completed by the end of 2026, but in March the deadline was already extended to the end of January 2027. The consortium was formed in summer 2025 and includes Systemgroup Plus, TK Lazurit, Drivebud, and BK M-Bud. The ultimate beneficiary is Denys Niunko.

The future veteran hub will consist of two blocks. The first will house a gym for physical recovery; the second and main block will house offices for psychological and social support, rooms for individual work, a coworking space, and conference rooms. The design also includes a cafe, a reception, a children’s area, changing rooms, showers, and restrooms.

A retaining wall, a foundation slab, and brick walls of the gym are already in place on the site, along with the foundation slab of the main building. Crews are currently digging the pit for the shelter, installing foundations for the entrance groups of the main building, and leveling the ground around the retaining wall. The department has already paid the consortium UAH 52 million for completed works.

Analysts did not identify significant potential overstatements in the estimate for this project. At the same time, some materials are listed in the documentation without detailed specifications. The analysts asked the procuring entity to clarify these data but received no response. Because of this, it is impossible to definitively assess potential overpayments for individual items. However, for the materials that could be identified, the analysts did not record significant deviations from market prices. The State Audit Service also found no violations during its monitoring of the procurement.

Kremenchuk

In Kremenchuk, the veteran hub is being built at the corner of Flotska and Velyka Naberezhna Streets. The UAH 132.9 million contract was signed in November last year by the executive committee of the Kremenchuk City Council with the private company Ukrekospetsproekt. The company is owned by Stanislav Savichev.

The hub is being built next to a lake, tennis courts, a football field, and a swimming pool — facilities planned to be integrated into the veterans’ physical and medical rehabilitation system. Inside, there will be rooms for seminars, lectures, and group and individual work, as well as a reception, changing rooms, restrooms, and a kitchen area. Adaptive sports will receive particular attention, with outdoor sports grounds also planned.

The initial timeline for construction was optimistic, to say the least. Works were to be completed by November 20 — ten days after the contract was signed. The parties later signed an additional agreement and extended the project to March 2026, and then to April. At what stage the works now stand is unknown, as the procuring entity did not respond to our inquiry. In December, however, it transferred UAH 54 million to Ukrekospetsproekt for the procurement of construction materials.

By the analysts’ estimates, the project’s estimate points to a possible overpayment of UAH 5.2 million. The procuring entity offered no explanation in response to our letter. However, the contract price is fixed, so without an additional agreement, Kremenchuk City Council will not be able to adjust the cost of materials in the work acceptance certificates.

The largest possible overpayments are on concrete, linoleum, and membrane. Questions also arose around the price of RKP-350B roofing ruberoid. It is listed in the estimate at UAH 187.20 per sq.m (all prices here and below include VAT). On the market, the same material sells for five times less. Kromizol, for example, offers it at UAH 35.40 per sq.m, and Cube at UAH 41.10 per sq.m. The Kremenchuk price for ruberoid is also the highest among the regions where veteran hubs are being built. For comparison, in Uzhhorod the contractor plans to supply it at UAH 38.53 per sq. m, and in Zhytomyr at UAH 94.24 per sq.m. 

The analysts also flagged excessive requirements in the tender documentation of the Kremenchuk City Council executive committee. It required numerous permits, declarations, and ISO 9001 certificates, some of which are not mandatory for this type of work. In practice, such conditions can hamper competition.

The State Audit Service also had questions about the procurement. It found that the Kremenchuk City Council executive committee should have rejected Ukrekospetsproekt’s bid but did not. The company’s documents had numerous issues — unconfirmed experience, missing mandatory documents, and violations of the goods localization requirements. The auditors ordered the procuring entity to terminate the contract. It disagreed and is challenging the decision in court.

Kryvyi Rih

In Kryvyi Rih, the veteran hub is being built in Pokrovskyi district, near the 44th quarter. In September, the Capital Construction Department of the Kryvyi Rih City Council executive committee signed a contract with Sapsan-KR LLC, owned by Bohdan Lymanskyi. The works are valued at UAH 132.2 million. The same pattern of deadline extensions driven by state-program funding applies here.

The project provides for offices for a psychologist and a social worker, a conference room, a gym, a children’s area, and a cafe. The contractor has already completed about half of the works: it has built the foundation, brick walls, reinforced concrete beams, and gym columns. Installation of the modular shelter is in its final stages, and engineering networks are being laid. The procuring entity has already paid the contractor UAH 55 million.

DOZORRO analysts reviewed the estimate and identified a potential overpayment of UAH 5.3 million, mostly on paving slabs and tactile paving. The contracting authority responded that the project had passed expert review and received a positive opinion, and that there were no grounds for an additional agreement. But expert organizations do not check prices for individual construction materials; they only assess the overall justification of costs within the project. At the same time, the contract price is dynamic, so it may still be adjusted during execution.

In the tender documentation, the analysts also noticed a potentially discriminatory requirement — the provision of a site inspection report to be signed by the procuring entity itself. Without that signature, a bidder is automatically unable to participate in the tender. Such a requirement makes it easy to screen out unwanted bidders. 

Uzhhorod

Another city building a veteran hub is Uzhhorod. UAH 129.5 million was contracted for its construction in October. The contract price is fixed. The Service for Local Roads and Infrastructure Development in Zakarpattia Region selected Experience M Factory LLC as the contractor. The company is owned by Nataliia Sapiolkina. The veteran hub will be built on Heroiv 128-i Bryhady Street, with a multifunctional stadium next to it for sports and active rehabilitation. Works were initially to be completed by the end of 2026 but were later extended to the end of January 2027.

Our analysis of this procurement points to a probable overpayment of UAH 11.5 million. The largest possible overpayments are on concrete and rebar. Responding to our letter, the Service for Local Roads and Infrastructure Development in Zakarpattia Region stated that the design documentation had passed expert review and received a positive opinion, and that it saw no grounds for reducing prices. DOZORRO filed a letter with the prosecutor’s office regarding a criminal offense, as the contractor has already been paid UAH 45 million for completed works.

In the procuring entity’s tender documentation, the analysts found a potentially discriminatory requirement — a mandatory site inspection report. The same condition as in Kryvyi Rih creates additional barriers to tender participation.

The State Audit Service also reviewed the procurement. Auditors found that the Service for Local Roads and Infrastructure Development in Zakarpattia Region had, without valid grounds, declared Experience M Factory LLC the winner, although its bid did not meet the requirements. The company failed to submit some mandatory documents, used “equivalent” equipment without confirming its specifications, and did not submit documents on the origin of goods. The auditors ordered the procuring entity to terminate the contract, but it refused and is challenging the decision in court.

Experience M Factory LLC has already completed the foundation and the shelter and has moved on to wall construction. Construction of the veteran hub in Uzhhorod. 

Ivano-Frankivsk

In Ivano-Frankivsk, the veteran hub is being built at 57 Bohdana Khmelnytskoho Street. In October, Budinvest, a municipal enterprise of the Ivano-Frankivsk Regional Council, signed a contract with Step-Solar LLC, which valued the works at UAH 111.27 million. The company is owned by Ivan Baranovych. The veteran hub was to be built by the end of 2026, but in February the deadline was already extended to the end of 2027. 

Later, on November 17, the procuring entity signed another contract — for UAH 6.28 million. That procurement was explained by the need to supply an additional scope of works from the same contractor.

The future center will include sports zones for physical rehabilitation and recovery, consultation rooms for psychological, legal, and social assistance, and children’s areas. The walls and columns have already been built, the administrative building’s roof is in place, windows have been installed, and the shelter and the gym’s metal frames have been assembled. Ventilation, heating, and air conditioning installation is being completed, and wall finishing is underway. About 75% of the works have been completed overall. The municipal enterprise has already paid Step-Solar LLC UAH 76 million for these works.

Most of the high-value items are listed in the estimate in general terms — ceramic tiles, linoleum, doors, and so on. Without precise specifications, their actual cost cannot be verified. As a result, the analysts were able to identify only UAH 1 million in probable overpayment in the main contract and about UAH 600,000 more in the additional one. At the same time, the price in both contracts is fixed, so it cannot simply be corrected in the acceptance certificates. We have sent a second letter to the procuring entity and are awaiting a reply. The first time, it extended the review period for our inquiry but never provided a response.

The State Audit Service reviewed this procurement as well. No violations were found during the tender, but problems emerged in the signed contract. The amount of inflation costs did not match the estimate, and the work schedule was not adjusted after the price change. As a result, the auditors ordered the procuring entity to bring the documents into compliance — Budinvest published an updated schedule.

Zhytomyr

Zhytomyr The veteran hub in Zhytomyr is being built at 101-a Chudnivska Street. The UAH 102.4 million contract was signed in September last year by the Department of Regional Development of the Zhytomyr Regional State Administration with Trading and Industrial Company Tsentr Komplekt LLC. The company is owned by Zhanna Opanasiuk.

The facility was initially to be handed over by the end of the year, but in December the deadline was extended — works are now to be completed by April 30, 2026.

The contractor has already installed external electricity, sewer, and water networks. The above-ground part is being completed, and installation of the shelter structures has begun. The contractor has so far been paid UAH 65 million for completed works.

The analysis of the construction tender points to a probable overpayment of UAH 6.4 million, in particular on concrete, rebar, and brick. In its reply to DOZORRO, the procuring entity stated that the design documentation had passed expert review and received a positive opinion. In addition, the contract price is dynamic. 

The State Audit Service did not skip this procurement either. Its monitoring found that the winner had not provided a proper manufacturer’s quality certificate (ISO), as required by the tender documentation. The department failed to notice this non-compliance and did not give the bidder a chance to correct it. The auditors ordered the Department of Regional Development of the Zhytomyr Regional State Administration to hold the responsible officials to disciplinary or financial liability — the procuring entity withheld the authorized person’s bonus for one month.

Lutsk

In October, the Capital Construction Department of the Lutsk City Council contracted the construction of a veteran hub to Volynekobud LLC. The contract value was UAH 81.8 million. The hub is being built on Koniakina Street, not far from the city district court. The contractor undertook to complete the building by November 20. Given the unrealistic timeline, however, the contract was extended to the end of April 2026.

The center will include a sports complex with a gym and a fitness room, rooms for veterans to meet, spaces for psychologists and legal support, and a small cafe. The walls have already been built and the roof structure assembled, the floors have been insulated, and a screed has been poured. Engineering networks are now being laid, and interior and exterior finishing works are underway. The Capital Construction Department has already paid Volynekobud LLC UAH 68 million for completed works. Volynekobud LLC is owned by Mykhailo Shypelyk and Andrii Hrynchuk. 

DOZORRO analysts’ review of the procurement points to a probable overpayment of UAH 7.3 million. At the same time, the contract price is dynamic. The largest overstatements relate to roofing panels, sand, and insulation. The procuring entity did not respond to our letter asking it to bring prices in line with the market.

The tender also contained potentially discriminatory requirements — only a bidder recognized as critical to the economy during a special period could win. Since this status is not established by law as a qualification criterion, such a condition restricts competition.

The State Audit Service reviewed the Lutsk City Council procurement — the contract had been signed with violations. The work schedule did not clearly set out stages or deadlines. As a result, the procuring entity was ordered to amend the contract, and it later published an updated schedule.

Brief conclusions

The analysis of veteran hub procurements points to systemic problems in the construction market. There was no competition in the seven largest tenders — a pattern typical of the industry in general, not only of this segment. In addition, the documentation contained potentially discriminatory requirements that narrowed the pool of potential contractors, as well as unrealistic work deadlines that were essentially impossible to meet. 

A significant share of the estimates also shows signs of inflated prices for construction materials. DOZORRO analysts estimate that, in the reviewed procurements alone, probable overpayments could reach UAH 37.3 million. Such inflated prices are not isolated cases but another recurring problem in construction projects. They stem from the absence of unified approaches to determining construction costs already at the design stage, as well as insufficient state oversight and transparency.

At the same time, individual cases show that procurement at market prices is possible. With realistic estimates and transparent tender procedures, overstatements can be avoided and budget funds spent efficiently.

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. 

In January 2026, the Education, Youth and Sports Department of Devladivka Village Council ordered fruits and vegetables from Ekofudtorg LLC at a contract value of UAH 201,000.

DOZORRO analysts reviewed the contract prices and identified a likely overpayment of UAH 59,000 — almost 30% of the total contract value.

The most glaring discrepancy involved white cabbage priced at UAH 60/kg — five times the market rate. According to Prozorro’s Market Price BI, the price in December stood at UAH 10/kg, rising to UAH 12.50/kg in January. State Statistics Service data confirms the same picture: the average nationwide price for white cabbage in December was UAH 10.07/kg. On this line item alone, the potential overpayment reached UAH 13,000.

Even more prominent was the case of bananas. The village council department planned to purchase them at UAH 200/kg — more than three times the going market rate. By comparison, bananas on Prozorro Market were priced at UAH 70–80/kg during the same period, while State Statistics Service figures for December put the average at UAH 61.61/kg. The potential overpayment on this item alone could have reached UAH 11,000.

In February, we wrote to the contracting authority requesting that prices be brought in line with market rates. That same month, the village council reported that it had conducted a review and contacted the supplier. In March, the parties signed a supplementary agreement reducing the contract amount without changing the delivery volumes. This prevented UAH 60,300 in ineffective spending.

Ekofudtorg LLC was registered in late 2024 in Kryvyi Rih. Its owner and director is Kostiantyn Moskalenko.

Criminal proceedings opened over rehabilitation equipment procurement

One of the most notable cases from March involves the procurement of rehabilitation equipment for the Yampil Territorial Hospital municipal non-commercial enterprise. In September 2025, the hospital signed a UAH 2.1 million contract with Oris Trade LLC, owned by Nataliia Bilokur.

In reviewing the cost estimate, DOZORRO analysts found significant price inflation risks. The total potential overpayment came to UAH 508,000 — approximately 24% of the contract value.

The single largest exposure was on the ZEPU-K2000B hand rehabilitation trainer, with a potential overpayment of UAH 435,000. Oris Trade LLC entered the unit price as UAH 820,050 VAT-inclusive, which included transportation and insurance, yet the same model is available on the market for at least half that amount. Oxydoc sells it for UAH 388,731; Rehamed for UAH 381,900; The Nine for UAH 380,000. Even accounting for additional costs, the gap with market prices is extraordinary.

Since the company had already received payment under the contract, influencing the situation through the contracting authority was not feasible. In March 2026, the DOZORRO team therefore referred the matter to the prosecutor’s office. Law enforcement responded by notifying us of an opened criminal proceeding. The UAH 508,000 figure has been counted as a prevention result in our March summary.

Contract terminated: UAH 4.1 million saved

Another case involves the reconstruction of a veterinary hospital building for use as a dormitory, contracted at UAH 37.6 million. In early 2025, Khotyn City Council’s City Development Agency municipal enterprise awarded the work to Mobile Mechanized Unit-47 LLC.

Analysis of this procurement identified a likely overpayment of UAH 4.1 million, or 11% of the contract value. In February of last year, the DOZORRO project contacted the contracting authority requesting a review of material resource prices. Since the contract price was fixed, this would have required a supplementary agreement. Instead, the City Development Agency responded that our calculations did not reflect market conditions. Notably, this is not the first time we have flagged potential overpayments in this institution’s procurements: back in March 2025, we reported a likely UAH 8.2 million overpayment across three reconstruction projects, including the dormitory conversion.

We returned to this case on multiple occasions — requesting acceptance certificates from the contracting authority and even approaching the prosecutor’s office — but received no response from law enforcement.

Ultimately, in early 2026, Khotyn City Council’s City Development Agency and Mobile Mechanized Unit-47 LLC terminated the contract. No new procurement has been announced to date. The termination prevented UAH 4.1 million in unnecessary expenditure.

Mobile Mechanized Unit-47 LLC was registered in Khotyn in 2020. The company’s owner is Mykhailo Biliaiev. 

Other notable cases from our Q1 2026 monitoring results are available in our February and January reports. 

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.

How much was contracted 

According to BI Prozorro public analytics module, procurements for warning system modernization announced in 2025 had a total estimated value of UAH 1.4 billion, with one additional procurement worth UAH 66 million still active. Actual contracted amounts total UAH 528 million. The gap is explained by the fact that 42% of competitive procurements by estimated value were unsuccessful or canceled, and another 5% are still ongoing. Of the 54% of procedures that resulted in signed contracts, 15% were subsequently terminated — in part following findings by the State Audit Service. Note that this article concerns contracted amounts, not funds actually disbursed.

By contract value, 90% of procurements were conducted through special open tenders; the remaining 10% were direct award contracts. According to BI Prozorro, successful warning system modernization tenders attracted an average of 1.3 bidders — pointing to a near-total absence of market competition.

The largest contracting volume in 2025 was recorded in Kyiv Region at UAH 139 million, followed by Cherkasy Region at UAH 124 million and Mykolaiv Region at UAH 89 million. Vinnytsia Region came in at UAH 51 million and Chernivtsi Region at UAH 45 million. Zakarpattia Region recorded the lowest procurement volume — approximately UAH 98,00

What the top regions have in common

In four of the five largest procurements, the winner of contracts to upgrade territorial automated warning systems was Ukrzaliznychavtomatyka LLC. The company is modernizing warning systems in Kyiv Region for UAH 133 million, in Cherkasy Region for UAH 120 million, in Mykolaiv Region for UAH 86 million, and in Vinnytsia for UAH 49 million. The only exception among the top five is Chernivtsi Region, where a UAH 44 million contract went to Meteor IT LLC. Notably, for both Kyiv and Cherkasy regions, the project documentation for the modernization was developed by Ukrzaliznychavtomatyka itself.

Project timelines vary: Kyiv Region is due to complete works by August 31, 2026; Cherkasy and Chernivtsi regions by end of 2027; Mykolaiv Region by October 31, 2026; and Vinnytsia by August 2027.

Beyond the notable differences in contract values, Kyiv and Cherkasy regions stand apart in another respect: their approach to contract publication. The Kyiv contracting authority did not publish the contract, citing a determination by the Civil Protection and Defense Department of the Kyiv Regional State Administration that the document constitutes restricted-access information whose disclosure could pose a threat to national security. In Cherkasy Region, the contract was initially withheld without any explanation, though it was eventually published as part of a contract amendment. Mykolaiv and Chernivtsi regions, as well as Vinnytsia, published their contracts promptly, finding no grounds for withholding them.

Ukrzaliznychavtomatyka and its likely ties to a fugitive MP

Ukrzaliznychavtomatyka LLC effectively dominates the centralized warning system modernization market. Total contracted value since 2023 stands at UAH 433 million, of which UAH 7.1 million covers project documentation development and revision. In addition to the contracts mentioned above, the company has been modernizing warning systems in the Kamianka and Lutsk communities since 2024. Its market share speaks for itself: in 2025, Ukrzaliznychavtomatyka accounted for 74% of the total value of all contracts for such services.  

The company is registered in Kyiv and serves as a distributor of Polish Digitex warning systems. It is owned by Oil and Gas Technologies LLC, whose ultimate beneficiary is listed as Oleksii Kolesnyk. Although the company was founded in 2010, its procurement success only began in the summer of 2023. Prior to the full-scale invasion, it held just three public contracts totaling approximately UAH 16,500.

The company’s sharp business growth coincided with a specific political moment. In 2023, MP Serhii Shakhov of the Dovira parliamentary group began publicly pushing the warning system modernization agenda. In late March 2023, the NABU announced Shakhov as a wanted person, charging him with submitting false asset declarations concealing over UAH 60 million. 

Around the same time, hromadske journalists published an investigation alleging that Shakhov had lobbied the government — including in letters to Prime Minister Denys Shmyhal — to advance warning system upgrades in order to benefit his own company, which also had Russian ties.  The journalists suggested that Shakhov was promoting Ukrzaliznychavtomatyka through his adviser Mykola Sambozuk, who had previously run a similar business in Russia and, according to their reporting, obtained Russian citizenship in 2007.

DOZORRO analysts flagged the monopolization risk as early as 2023, noting at the time that the company had not yet gained significant traction with contracting authorities. As we can now see, that has changed — and the forecast proved accurate.

Excessive requirements in every tender 

A common thread running through the tenders won by Ukrzaliznychavtomatyka: not one was completed on the first attempt. Auditor interventions forced contracting authorities to cancel or annul procurements and re-announce them. The State Audit Service found irregularities in both tender documentation and bidders’ proposals. Notably, in nearly every announced procurement, potential participants raised questions about discriminatory requirements — with some submissions specifically mentioning Ukrzaliznychavtomatyka. This prompted DOZORRO analysts to examine the tender documentation across these projects.

The analysis revealed a systemic pattern: tender documentation containing conditions that restrict competition. In most cases, Ukrzaliznychavtomatyka was the only bidder — and the winner. 

Contracting authorities applied a set of requirements that created significant barriers to participation, particularly for small and medium-sized businesses. Tenders in Kyiv, Cherkasy, Chernivtsi, and Mykolaiv regions all required a special permit for working with state secrets.

A separate barrier involved strict conditions on equivalent equipment — applied by contracting authorities in Vinnytsia, Kyiv, and Chernivtsi. Bidders offering alternative equipment had to demonstrate full compliance with the project specifications, leaving virtually no margin for error. In practice, a simple comparison table — which contracting authorities did request — should have sufficed. But they additionally required guarantee letters or other supporting documents, making the conditions excessively burdensome. As a result, companies are effectively pushed to offer the exact equipment specified in the project documentation — often tied to a specific manufacturer — to avoid the risk of disqualification. This substantially narrows competition.

Among the excessive requirements was a mandatory package of seven ISO or DSTU certificates, including highly specific standards such as ISO 50001 (energy management) and ISO 41001 (facility management). This requirement was applied by contracting authorities in Vinnytsia, Kyiv, Cherkasy, and Mykolaiv. Several of these standards have no direct relevance to the installation of technical systems and appear to function as an additional filter that screens out participants without substantial resources.

Similar requirements recurred across the tender documentation of multiple regions — Kyiv, Cherkasy, Mykolaiv, and Chernivtsi, suggesting the use of coordinated approaches to documentation preparation. File metadata may point in the same direction: documents from Kyiv, Cherkasy, and Mykolaiv regions list “ThinkPad” as the file owner, which may indicate the use of a common template or preparation of documentation outside the respective regional organizers.

Other potentially discriminatory conditions also appeared. The Chernivtsi procuring entity required a site visit certificate bearing the contracting authority’s signature — without which submitting a bid was effectively impossible. In Vinnytsia, the contracting authority required authorization letters from equipment manufacturer Digitex, making participation contingent on the goodwill of a third party — the manufacturer or its official representative. The same contracting authority also required proof that measuring instruments — a megohmmeter, ground resistance meter, and multifunction electrical measuring device — were in working order and had been verified, supported by calibration certificates from authorized bodies such as the state enterprise Ukrmetrteststandart.  Companies were further required to demonstrate their right to conduct such measurements through a certificate of recognized measurement capabilities with appendices. While such documentation may indeed be necessary at the work execution stage, demanding it at the proposal submission stage is excessive and narrows the pool of potential participants.

 

Requirement	Vinnytsia	Kyiv Region	Mykolaiv Region	Cherkasy Region	Chernivtsi Region
Set of 7 ISO certificates (9001, 14001, 45001, 50001, 8965, 41001, 22301)	YES	YES	YES	YES	NO
Strict Equivalent requirement (comparison table + guarantee letter or other documents)	YES	YES	NO	NO	YES
Authorization letter from manufacturer (Digitex)	YES	NO	NO	NO	NO
Site visit certificate	NO	NO	NO	NO	YES
Winner	Ukrzaliznychavtomatyka LLC	Ukrzaliznychavtomatyka LLC	Ukrzaliznychavtomatyka LLC	Ukrzaliznychavtomatyka LLC	Meteor IT LLC

Last year, Ukrzaliznychavtomatyka also attempted to enter the Zhytomyr Region market — without success. The contracting authority rejected its bid due to inaccuracies in resource documentation. DOZORRO analysts reviewed that tender and found no overt discriminatory requirements, with the exception of the state secrets permit requirement, which potentially narrows the field of participants.

Another large-scale tender is currently underway: the warning system upgrade in Kremenchuk. The Civil Protection and Defense Department of the Kremenchuk City Council plans to sign a UAH 61 million contract with Compass Engineering LLC, even though another participant offered to do the work at a lower price — a bid that was legitimately rejected for failing to meet the technical requirements of the tender documentation. Our analysis of that tender documentation found no discriminatory conditions.

Conclusion

The overall picture is troubling: the warning system modernization market is effectively consolidating around a single company — Ukrzaliznychavtomatyka LLC. Journalists flagged this risk back in 2023, and it now appears to be materializing. 

One contributing factor is the approach to tender documentation. Procuring entities have consistently written in complex and highly specific requirements — from extensive certificate packages to strict limitations on equivalent equipment and additional supporting documents. And crucially, these approaches recur across multiple regions. The result is competition that is largely formal: alternative suppliers have almost no real chance, and the winner is often predictable. The situation is further complicated by the fact that the same company frequently participates in developing the project documentation against which the works are subsequently tendered.

Taken together, this raises an uncomfortable but logical question: are we looking at a market that has organically consolidated around a strong player — or a system in which the conditions are being tailored to a specific company?

This material was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev.

The material was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

Summary

Over 14 months, contracting authorities concluded 257,000 above-threshold direct award contracts totaling UAH 401.7 billion. This represents approximately 6% of the total number of contracts in the system and nearly 28% of their aggregate value. While the number of such procurements is relatively modest, their financial scale is significant.

At the same time, almost half of the total value (43.3%) of above-threshold direct contracts relates to the procurement of natural gas by a contracting authority on which the government has imposed public service obligations. These are reports on the sale of gas within the Naftogaz group, which became mandatory in 2023. Such procurements may distort the statistics and overstate the problem of direct non-competitive awards in Prozorro, including in the eyes of international partners. 

Overall, the situation regarding non-competitive above-threshold procurement would be improved by reinstating the negotiated procedure. Excluding natural gas procurement within the Naftogaz group, approximately 70% of contract value currently consists of procurement conducted on grounds for which the negotiated procedure was previously required. The negotiated procedure provides for consultations with several suppliers where possible, and for a review mechanism, both of which reduce the risk of infringements and inefficient decisions.

Direct awards can be retained as exceptions for circumstances arising specifically from martial law — for example, where a contracting authority is located in an area of active hostilities. At the same time, a number of grounds should be reconsidered altogether — whether they are in fact necessary.

Volumes and dynamics of procurement

From July 30, 2024, to September 30, 2025, contracting authorities concluded 257,000 above-threshold direct award contracts. Their value at the time of the study stood at UAH 401.7 billion — nearly 28% of the aggregate current value of contracts concluded during that period. While their value share is significant, the number of such procurements is moderate, at 5.87% of the total.

Contracting authority activity is largely governed by the budgetary and planning cycle. A gradual increase in the number of lots and total contract value is observed through to January 2025, followed by a steady decline through March. This pattern mirrors the general trend across all procurement methods and may be explained by a combination of seasonal factors, the desire to use up budget appropriations before the year-end, and procurements for the new year. In the seasonality analysis, we excluded reports on natural gas procurement within the Naftogaz group, as they significantly distorted the statistics.

This means that the planning and management of budgetary resources in the direct award segment of procurement require heightened attention during the peak season, in order to prevent inefficient use of funds and potential procurement risks.

Grounds applied by contracting authorities

Over the 14 months under review, 84.4% of the value of above-threshold direct awards fell within the five most common grounds out of nearly three dozen. These were: 

1. Procurement of natural gas by an entity subject to public service obligations — 43.3%. In four such procurements totaling UAH 82.8 billion, the contracting authority indicated an incorrect ground in the electronic field; these were added manually on the basis of the justification document.
2. Absence of competition on technical grounds — 19.1%.
3. Protection of critical infrastructure and energy facilities — 8.1%.
4. Procurement on grounds of urgent need — 7.6%.
5. Open tendering canceled due to absence of tenders — 6.4%.

By number of lots, four grounds account for 78.1% of procurements:

1. Absence of competition on technical grounds — 29.9%.
2. Open tendering canceled due to the absence of tenders — 18.3%.
3. Procurement on grounds of urgent need — 15.7%.
4. Legal services — 14.2%.

Each of these grounds has its own application characteristics and associated risks.

On the ground of absence of competition on technical grounds, contracting authorities may conduct procurement from natural monopolies (where the absence of competition has been formally recognized by the Antimonopoly Committee) or in other circumstances. To roughly estimate the share of procurements conducted specifically from natural monopolies, we used the AMCU’s consolidated register of natural monopolies as of October 31, 2025. They account for 56.1% of procurements on the ground of absence of competition on technical grounds by number of lots, and 51.8% by value.

In other cases, the absence of competition may arise from vendor lock-in, where changing a contractor is disadvantageous or altogether impossible. In IT service procurement, for example, such dependency may arise from the architecture of the IT product, the absence of comprehensive technical documentation, or the use of niche programming languages. The effective monopolization by developers of the right to further develop solutions they have created can lead to rising service costs and reduced motivation for the contractor to innovate or improve quality in the absence of competition. This issue is examined in greater detail in the study on IT procurement in Prozorro. That said, not every restriction of competition is unambiguously negative or the result of bad faith on the part of the contracting authority or supplier. In a number of situations — in particular those relating to national security, defense capability, or the protection of critical infrastructure — the use of proprietary technical solutions, closed architectures, or a limited pool of contractors may be objectively justified and aimed at minimizing risks to the state. The same applies to other procurement subjects.

In direct contracts on grounds of urgent need, there is a risk that the need is not in fact genuinely urgent — or that it became urgent as a result of the contracting authority’s own actions in failing to procure earlier. The number of procurements on this ground increases toward the end of the budgetary year — between September and December, that number rises by approximately 50%. It is therefore most likely that contracting authorities also invoke this ground simply when they need to use up appropriations within the budgetary year. 

When a contracting authority concludes a direct contract because no one submitted a tender, the terms of that direct award must be identical to those of the original tender. However, whether contracting authorities comply with this in practice — for example, whether they require counterparties to provide all the certificates they requested from bidders in the failed competition — is difficult to verify, since only the contract itself is published in the system. There are instances where contracting authorities conclude several contracts instead of one. 

Among direct contracts for legal services, high-volume procurement of small amounts is combined with a number of large strategic contracts. 65% of total procurement value is concentrated among five contracting authorities: Ukrnafta JSC, National Joint Stock Company Naftogaz of Ukraine, Dnipro Metropolitan Municipal Enterprise, and the Eastern and South-Eastern Interregional Centers for the Provision of Free Legal Aid. By number of lots, however, nearly 97% belong to the last two legal aid centers, which systematically procure legal representation services for the provision of secondary free legal aid. We also investigated how other such inter-regional centers procure legal services. It emerged that they too conclude numerous small direct contracts en masse, but do not indicate the ground in the electronic field. In total, the number of such lots from legal aid centers over the period under review was nearly 73,000, totaling UAH 646 million. 

In the case of legal services, the question arises as to whether direct contracts should in fact be permitted at all for such services. Legal advisory and legal representation services, for example, are procured competitively. Similarly, competitive procedures are used to procure a range of other high-expertise services — such as consulting or audit.

What is being procured

Contracting authorities most frequently used above-threshold non-competitive procurement for the purchase of services. Services account for 57.47% of all such procurements — over 147,000 of the 257,000 lots. In monetary terms, however, services represent only 19.7% of the aggregate contract value. This indicates that the majority of service procurements are small in value but large in volume. 

The situation with goods is quite different. Although fewer in number than services — 40.15% of the total, or over 103,000 lots — goods account for nearly two-thirds of the total value of direct contracts, approximately UAH 255 billion.

Works have the smallest share — only 2.38% by number, or approximately 6,000 lots. In value terms, however, they account for 16.88% of all above-threshold non-competitive procurements (nearly UAH 68 billion). 

If one drills down into CPV codes, the value of direct awards is heavily concentrated in three categories, which together account for over 69% of total contract value. Certain categories generate a substantial share of contract value despite a relatively low number of lots.

Gaseous fuels (09120000-6) is the key category by financial volume. Despite its modest share of the total number of lots, gas accounts for the largest share of contract value. One reason is the obligation on Naftogaz Trading LLC, a gas supply company, to report on its procurement of natural gas from its own parent company and other entities within the group. This subsidiary of NAC Naftogaz of Ukraine conducts wholesale sales of natural gas to industrial consumers, budget institutions, and suppliers.

It is also worth noting that nearly 8,700 gas supply contracts were concluded via direct award following unsuccessful competitive tendering. During the period under review, only 8.3% of competitive procurements of this commodity were successfully completed.

Ukraine has committed to ensuring a free market for electricity and gaseous fuels. At the same time, the government has imposed public service obligations on Naftogaz Trading LLC — the company is required to supply natural gas to budget institutions at a preferential tariff. No separate rules have been established for this situation, so contracting authorities are required to launch open tendering, which no one participates in due to the low estimated value, and then conclude a direct contract with the Naftogaz company at a low price. Occasionally — in summer, for example, when the price of the commodity is lower — competitive tendering does succeed. Overall, however, considerable resources are expended on formal procedures.

Construction works (CPV 45000000-7): For the analysis of this sector, we consolidated all procurements by the second digit of the CPV code, since the procurement item here is defined by reference to the object rather than the classifier. Three grounds account for 75.7% of the total value of above-threshold direct awards in this sector, while together representing only 51.3% of the number of lots. These are: protection of critical infrastructure and energy facilities, urgent need, and the procurement of additional works under the main contract (up to 50%). The need to procure additional works indicates potential issues with the quality of project design and the accuracy of cost estimates at the planning stage, including owing to the complexity of such projects. 

Direct contracts on grounds of absence of any tender submission are high in number but account for a relatively small share of value. Insufficient competition in this sector may point to potential barriers to participation — for example, excessive requirements in tender documentation — or to a limited pool of contractors. 

Steam, hot water, and associated products (09320000-8) are characterized by a high share of procedures conducted on the ground of absence of competition on technical grounds. This is consistent with the nature of the market, where supply is often provided by local monopolies and the possibility of choosing an alternative supplier is limited.

Although the categories Electrical energy (09310000-5) and Distribution of electrical energy (65310000-9) belong to the same sector, they exhibit a different structure of grounds for above-threshold direct awards. In electricity procurement as a commodity, one ground dominates by a wide margin (approximately 70%), both by value and by number of procedures — namely the conclusion of a contract with a supplier of last resort or a universal service provider. A significant share (21%) also relates to absence of competition on technical grounds and cancellation of tendering due to absence of tenders. This structure indicates that in this category the use of direct contracts is substantially dependent on the quality of procurement planning and the level of market activity among suppliers.

By contrast, electrical energy distribution services within a given territory are provided by a single distribution system operator, and tariffs are set by the state regulator. In these circumstances, the predominance of the ground “absence of competition on technical grounds” — 95.5% by number and 97.6% by value of contracts — is objective in nature and results from the natural monopoly position of the relevant operators. 

Thus, despite their sectoral proximity, these two categories exhibit different models of non-competitive procurement and require different approaches to risk assessment.

Since some of the grounds for above-threshold non-competitive procurement are tied to the subject matter of the procurement, the presence of certain categories at the top was expected — for example, natural gas or legal services. Overall, the bulk of above-threshold direct contracts relates to the procurement of various energy carriers. 

In each category, a few principal grounds for direct contracts predominate. The choice of which to invoke may, however, be influenced by a variety of circumstances: technical constraints, absence of competitors, or urgent needs.

Contracting authorities do sometimes indicate incorrect grounds. For example, gaseous fuel was purchased under the ground for the procurement of hematopoietic stem cells. At the same time, among contracts for natural gas with suppliers subject to public service obligations, contracts for the supply of gas to schools do appear. However, such instances were not sufficiently widespread to have a material effect on overall statistics by value.

Helicopters, airplanes, spacecraft, and other motor-powered aircraft (34710000-7): Procurements in this category are primarily directed at meeting the urgent needs of the Armed Forces of Ukraine or are accounted for by contracting authorities located in areas of active hostilities.

Since some of the grounds for above-threshold non-competitive procurement are tied to the subject matter of the procurement, the presence of certain categories at the top was expected — for example, natural gas or legal services. Overall, the bulk of above-threshold direct contracts relates to the procurement of various energy carriers. 

In each category, a few principal grounds for direct contracts predominate. The choice of which to invoke may, however, be influenced by a variety of circumstances: technical constraints, absence of competitors, or urgent needs.

Contracting authorities do sometimes indicate incorrect grounds. For example, gaseous fuel was purchased under the ground for the procurement of hematopoietic stem cells. At the same time, among contracts for natural gas with suppliers subject to public service obligations, contracts for the supply of gas to schools do appear. However, such instances were not sufficiently widespread to have a material effect on overall statistics by value.

Monitoring of direct contracts

The State Audit Service covered 1,062 lots — 0.41% of above-threshold direct awards conducted during the period under review — through monitoring. In competitive procurement, monitoring coverage is nearly seven times higher, at 2.73% of the total number of procurements eligible for monitoring. The same trend is observed in value terms: monitoring covers only 2.3% of the aggregate value of above-threshold direct award contracts, compared with 20.9% in the competitive segment. Even excluding the value of natural gas procurement within the Naftogaz group, as well as procurements from natural monopolies, suppliers of last resort, and universal service providers, coverage reaches only 5% of the value of direct contracts. This gap relative to competitive procurement indicates that direct awards remain largely outside the monitoring focus. Yet they too require oversight, since they do not provide for competition or safeguards such as review before the AMCU. 

The largest monitoring volumes relate to the construction sector (CPV 45) and the energy sector (CPV 09), where contract values run into the billions of hryvnias. Overall, monitoring activity is concentrated in sectors with high financial exposure and an elevated risk of inefficient use of funds. Significant attention is also devoted to industrial machinery (CPV 42) and repair and maintenance services (CPV 50).

At the same time, the top three sectors by number of monitoring instances include accommodation, catering, and retail trade services (CPV 55), with a combined value of over UAH 90 million. In 98% of cases, these involve catering services for educational establishments. Such procurements were monitored primarily by the directorates of the Western Office of the State Audit Service, in particular in Khmelnytskyi and Ternopil regions, where they were examined three times more frequently than construction procurements. Violations found under this CPV related predominantly to the failure to publish, or untimely publication of, the justification for the procurement ground. Accordingly, most monitoring instances resulted in auditors requiring explanatory work and training of authorized persons to be carried out.

Overall, violations in above-threshold direct awards were identified by auditors during monitoring in 67.8% of cases. This figure is slightly higher than in competitive procurement, where it stands at 61.3%. While a gap of 6 percentage points is not critically large, it may indicate that direct non-competitive procurement carries elevated risks of non-compliance with legislation. It is important, however, to understand what types of violations auditors are actually identifying. Doing so comprehensively is difficult, since in the electronic field on Prozorro, the State Audit Service almost invariably classifies the type of violation as “Other violations of procurement legislation,” and details must be sought manually in the text of the audit finding. It would therefore be worthwhile to update the violation categories in the system and apply them consistently, so as to enable analysis of the problems arising in direct procurement.

In summary, above-threshold direct awards warrant greater monitoring coverage. The State Audit Service generally selects sectors for monitoring well — concentrating on construction, energy, and related sectors, where procurement volumes are largest and corruption risks are highest. The Western Office’s excessive focus on catering service procurements for educational establishments is questionable. Such procurements are not particularly widespread, are comparatively small in value, and the violations associated with them largely concern failure to publish or untimely publication of information. The Office would therefore benefit from refining its methodology for selecting above-threshold direct awards for monitoring.

Contract modifications

Modifications were made to contracts in 36,700 lots, representing over 14% of the total number of above-threshold direct award procurements. The aggregate value of modified contracts reached UAH 140 billion, or nearly 35% of the total value of all contracts in this segment. By comparison, in competitive procurement, modifications occurred more frequently: they affected 21.8% of lots and 44.7% of the total value of contracts over the corresponding period. The data indicate that while contract modifications in above-threshold direct awards are recorded less frequently than in competitive procurement, their financial scale remains significant. The majority of modified contracts relate to cases where the ground for using direct awards was absence of competition on technical grounds (41.81% of all modified contracts) or absence of tenders in open tendering (32.53% of all modified contracts). Their shares are high because these are overall the most common grounds for above-threshold direct awards. If one looks at what share of contracts were modified within each direct award ground, the leaders are as follows:

• Procurement of natural gas by an entity subject to public service obligations — modifications in 38.34% of contracts (41.2% for Naftogaz group procurements specifically)
• Procurement of additional works or services from the same economic operator, up to 50% of the price of the previous/existing contract — 28.11% of contracts
• No tender submitted — 25.38%.

In order to assess the justification for these modifications and the potential risk of abuse, it is necessary to conduct further in-depth analysis of their substance.

Comparison with the negotiated procedure 

The negotiated procedure was abandoned in the first year of the full-scale invasion in favor of an even more flexible mechanism. Under Resolution No. 1178, the grounds for the negotiated procedure became the grounds for direct awards. In the early period, such changes may have been justified to meet the needs of contracting authorities, in particular for defense, energy, and critical infrastructure. However, this expansion of contracting authority discretion creates risks of manipulation and circumvention of competitive procedures, whereby a portion of procurements are concluded as direct contracts without adequate scrutiny of the grounds invoked.

Over the comparable period from July 30, 2020, to September 30, 2021 — the years immediately preceding the full-scale invasion — contracting authorities conducted 100,600 negotiated procedures, under which contracts totaling UAH 101.7 billion were concluded. This amounts to an average of 7,200 contracts per month valued at UAH 7.3 billion. This is considerably lower than the current figure — during the period under review, an average of 18,400 above-threshold direct award contracts per month were concluded, valued at UAH 28.7 billion. In other words, the number of such lots has more than doubled overall, and the contract volume has increased nearly fourfold. Two factors should of course be taken into account:

• High inflation over recent years, and
• The increase in the number of grounds for above-threshold direct awards.

In both the negotiated procedure and the direct awards conducted under the wartime special rules, absence of competition on technical grounds remains the leading ground by number and by value of expenditure. Under the negotiated procedure, this ground accounts for nearly 52% of lots and over 50% of contract value. The same ground also ranks first in direct awards under the special rules — nearly 30% of contracts and 19% of total contract value. The list of the most common grounds under the negotiated procedure, which together account for 95.7% of contract value, is as follows: 

1. Absence of competition on technical grounds — UAH 51.8 billion (50.9%) by contract value and 52% by number of lots.
2. No tender submitted — UAH 21.4 billion (21%) and 30% of lots.
3. Need to carry out additional construction works — UAH 15.6 billion (15.3%) and 2.5% of lots.
4. Urgent need (across all sub-paragraphs of this ground in the Law) — UAH 6 billion (5.9%) and 3.9% of lots. 
5. Need to protect intellectual property rights — UAH 2.6 billion (2.6%) and 2.2% of lots.

By type of procurement subject, the distribution in negotiated procedures is similar to that in direct contracts. The only material difference was in the value of goods and services. Previously they accounted for 37% and 48% of contract value respectively, whereas now goods take a larger share — 63% versus 20%. 

The largest expenditure under the negotiated procedure was also concentrated in energy resources and construction. At that time, however, natural gas did not dominate contract values to nearly the same extent. Reporting on natural gas procurement within the Naftogaz group did not yet exist, and procurements from the supplier of last resort were also significantly smaller in volume.

Excluding gas procurement within the Naftogaz group, grounds on which contracting authorities previously conducted the negotiated procedure currently account for 70.2% of the value of above-threshold direct awards. This means that a substantial share of the direct procurement market could potentially have been channeled through a more controlled procedure that ensures transparency and competitiveness.

The application of the negotiated procedure offers significant institutional advantages: it allows for consultations with several potential suppliers prior to contract conclusion and provides a mechanism for the review of decisions. Even where review is rare — occurring in fewer than 1% of cases — the very existence of this instrument has a deterrent effect and reduces the risk of non-competitive procurement, including procurement justified by an alleged absence of competition.

Reinstating the negotiated procedure can thus serve as an effective mechanism for enhancing transparency and minimizing risks in the direct award segment, where oversight and competition are currently limited.

Conclusions

From July 30, 2024 to September 30, 2025, contracting authorities concluded 257,000 above-threshold direct award contracts totaling UAH 401.7 billion. This represents approximately 6% of the total number of contracts in the system and nearly 28% of their aggregate value. While the number of such procurements is relatively modest, their financial scale is significant.

Nearly half of the total value (43.3%) of above-threshold direct awards relates to natural gas procurement by a contracting authority on which the government has imposed public service obligations — that is, to reports on the sale of this commodity within the Naftogaz group. This raises the question of whether such reports on Prozorro are necessary at all: prior to 2023, they were not published.

A large volume of gas procurement — 8,700 contracts — is also concluded as direct awards following unsuccessful tendering. Contracting authorities succeeded in completing only 8.3% of such competitive procurements. A solution must be developed with the involvement of both the Ministry of Economy and the Ministry of Energy, since a quasi-free gas market has now taken shape in public procurement: contracting authorities nominally have the option of purchasing from any supplier, but are in practice compelled to conduct fruitless tendering.

Overall, the situation regarding non-competitive above-threshold procurement would be improved by reinstating the negotiated procedure. Excluding natural gas procurement within the Naftogaz group, approximately 70% of contract value currently consists of procurement conducted on grounds for which the negotiated procedure was previously required. The negotiated procedure provides for consultations with several suppliers where possible, and for a review mechanism, both of which reduce the risk of infringements and inefficient decisions.

Particular attention should also be paid to procurement on grounds of urgent need — the use of this ground increases by approximately 50% toward the end of the budgetary year. It is therefore likely that a portion of such procurements are conducted not so much because of genuinely urgent circumstances as because of budgetary management challenges. This, however, requires further investigation.

In addition, it would be advisable to technically link, within Prozorro, unsuccessful open tendering to the subsequent non-competitive procurement conducted as a result of its cancellation. This would enhance the transparency of such procurement and improve oversight of contracting authorities’ compliance with the terms of the original tender in the context of direct awards.

Direct awards can be retained as exceptions for circumstances arising specifically from martial law — for example, where a contracting authority is located in an area of active hostilities. At the same time, a number of grounds should be reconsidered altogether — whether they are in fact necessary. Some grounds have been indicated in the system in only a handful or a few dozen procurements. It would also be appropriate to explore alternative procurement methods for the purchase of free legal aid services — for example, framework agreements. 

For both the negotiated procedure and direct contracts to function effectively, it is important to train contracting authorities — in particular on how best to determine the value of such contracts and select a supplier.

Finally, above-threshold direct awards are currently subject to monitoring at a rate seven times lower than competitive procurement — only 2.26% of value compared with 20.9%. They require greater oversight, with a focus on higher-value procurements and material violations. 

This research was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev.

The research was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

This research was developed by

Team lead: 

Ivan Lakhtionov, Deputy Executive Director of TI Ukraine for Innovative Projects

Authors of the research:

Pavlo Dehtiariov, researcher of DOZORRO TI Ukraine project

Kateryna Rusina, Project Manager at DOZORRO

SUMMARY

More than half (55%) of the hard coal procurements checked contained unlawful requirements to provide additional documents and set extremely short deadlines for their submission — conditions that are potentially discriminatory. 

Draft contracts frequently also included provisions under which failure to submit documents within the short deadline was automatically treated as a written refusal to conclude a contract, resulting in the rejection of the tender and disqualification of the participant.

In the representative sample, winning tenders in procurements with unlawful requirements and disqualifications were on average nearly 40% more expensive than the lowest-priced tenders that contracting authorities had rejected.

This practice demonstrates that the simplified RFP procedure sometimes fails to function as intended and partially undermines the logic of the electronic catalog as a fast and accessible procurement tool. To enhance transparency in Prozorro Market procurement, the DOZORRO TI Ukraine project recommends the following:

1. Closing the hard coal category in Prozorro Market.
2. Introducing a mechanism for challenging procurement requirements, which would give businesses a means of protecting their interests and could significantly reduce the risk of abuse. 
3. Enabling monitoring of RFPs by the State Audit Service, to bring this procurement under oversight.
4. Granting the Ministry of Economy the authority to approve standard contracts for specific commodity categories, thereby simplifying their preparation and ensuring legislative compliance, and converting them into electronic contracts.
5. As electronic contracting develops, introducing automated pre-screening of draft contracts in the electronic catalog that, upon detecting potentially unlawful language, would generate alerts for supervisory authorities.
6. Developing guidance notes for authorized persons at contracting authorities, with recommendations on preparing and conducting procurement through the e-catalog.

Together, these measures can make Prozorro Market procurement more transparent, predictable, and user-friendly for both contracting authorities and market participants.

What makes Prozorro Market procurement distinctive

The specifics of procurement through the e-catalog (Prozorro Market) are governed by a separate Procedure for the Formation and Use of the Electronic Catalog (the Procedure), approved by Cabinet of Ministers Resolution No. 822 of September 14, 2020. The core idea behind this method is to simplify and expedite procurement. Qualification — that is, the verification of supplier documents — is handled by the catalog administrator. RFPs are not subject to auditor monitoring, and participants have no right to challenge either the terms or the decisions of contracting authorities. 

An RFP is generated by completing electronic forms in which the contracting authority specifies a limited set of details: the name of the procurement item, estimated value, quantity, delivery period and location, payment terms, and the deadline for submitting price proposals. 

When publishing an RFP, a contracting authority may only specify information on the specifications of the goods and their permissible values within the item specification set by the catalog administrator. The government recently amended the Procedure (Cabinet of Ministers Resolution No. 33 of 14 January 2026), further specifying the list of details that may be indicated. It was clarified that, in addition to the information already mentioned, a contracting authority may specify the delivery terms, the amount, type, period, and conditions for providing and returning contract performance security (where it requires such security to be provided), as well as a requirement that the country of origin may not be the Russian Federation, the Republic of Belarus, or the Islamic Republic of Iran.

The draft contract, which forms part of the RFP, must not conflict with the information the contracting authority has entered in the electronic fields, and may contain other conditions that are provided for by law in respect of such a contract and that the contracting authority considers necessary for the performance of the contract during its term. It is prohibited to include in an RFP requirements directed at the procurement participant or the selected winner, or to demand any additional documents not provided for by the Procedure. This is a prerequisite for the transparency of such procurement and allows potential suppliers to properly assess its terms and make an informed decision on whether to participate.

Hard coal procurement through RFPs

This study focuses on CPV class “Solid fuels” (code 09110000-3), with an additional targeted sample specifically of hard coal procurements conducted through RFPs on Prozorro Market. For the analysis, we selected procurements announced between September 1, 2024, and September 30, 2025. 

The total number of lots included in the analysis is 858.

For coal procurement, contracting authorities opt for the RFP method twice as often as for open tendering — Prozorro Market accounts for about 64% of such lots. The estimated value of RFP-based procurements is also twice as high, representing 62% of the value of competitive coal orders. Significantly more participants come forward for Prozorro Market procurements — an average of 6.58, compared with 2.04 in open tendering. However, the number of disqualifications is also much higher. 

Where contracting authorities reject 16.5% of tenders in open tendering, the corresponding figure in RFPs is approximately 55%. It is important to note in this context that in open tendering, approximately 22% of lots are accompanied by complaints, which underscores the significance of the review mechanism as an instrument for overseeing the transparency and openness of procurement.

All profiles in the coal category on Prozorro Market now require goods to comply with the DSTU 7146:2010 standard (the Standard). Under the Standard: 

• When concluding a coal supply contract for household needs, a certificate of genetic, technological, and quality characteristics must be presented (clause 7.10). In practice, however, the application of this provision of the Standard creates a conflict in law enforcement, since the Procedure expressly prohibits the demand for any additional documents under the RFP. 
• A coal consignment is considered accepted for dispatch once a composite commercial sample has been taken from it in accordance with DSTU 4096 and a quality certificate has been issued (clause 7.3). Accordingly, this certificate may be requested at the time of delivery.

The requirement to provide these additional documents occasionally appears in lot notes — in 6% of procurements. These are optional fields in which contracting authorities may include supplementary information about the procurement — for example, drawing potential suppliers’ attention to terms of particular importance to them. However, in addition to established documents, contracting authorities in 1.4% of lots also required additional documents not covered by the Standard. Notes carry no legal force, but this already reveals at this stage that some contracting authorities conducting coal procurement tend to impose excessive requirements on potential bidders that are not provided for by law.

 

Additional requirements in draft contracts 

For the detailed analysis, we randomly selected 270 lots from the full dataset of 858. The sample was calculated using a 95% confidence interval and a 5% margin of error. The sample is therefore representative and reflects the overall picture of coal procurement through Prozorro Market.

Under the legislation in force at the time of the procurements under review, an RFP must not contain requirements directed at the supplier or any documents not provided for by the Procedure. In the draft contract, as elsewhere, a contracting authority may specify only information on the characteristics of the goods and their permissible values within the item specification set by the administrator.

The Standard does not require any documents to be provided in respect of coal other than the certificate of genetic, technological, and quality characteristics at contract signing, and the quality certificate for the coal consignment at delivery. Accordingly, only the certificate of genetic, technological, and quality characteristics and contract performance security in the form of a bank guarantee may lawfully be required at the contract conclusion stage (Article 27(1) of the Law on Public Procurement). The right to require a bank guarantee is now also expressly provided for in the amended Procedure — the contracting authority may specify in the draft contract the amount, type, period, and conditions for providing and returning such security. Any other documents demanded from participants or the selected winner that are not provided for by law are unlawful.

The findings, however, point to systematic non-compliance with these requirements. The documents most frequently demanded by contracting authorities in draft coal supply contracts were as follows.

Overall, 55% of draft contracts (148) in the sample contained requirements to provide additional documents not provided for by either the Procedure or the Standard. In isolated cases, these were manifestly excessive and included documents with no functional connection to the subject matter of the procurement — for example, a certificate of proficiency in the state language, copies of the coal producer’s financial statements for prior years, or an expert market assessment. In the majority of procurements, however, the violations consisted in requirements to provide documents that formally relate to the supplier’s operations but do not affect the physical or quality characteristics of the goods and are not provided for by law, in particular, quality management system certificates, proof of experience in performing similar contracts, or extraction permits. This points to a systemic and uncontrolled expansion of supplier requirements. A full list of documents whose provision was recorded in the study is available via the table at the link.

In practice, contracting authorities are using the draft contract as a tool for introducing additional barriers to participation — contrary to the simplified nature of the RFP procedure and creating disproportionate and discriminatory conditions for suppliers. This eliminates competition, impedes access for bona fide participants, and undermines the logic of the e-catalog as a fast and transparent procurement tool.

 

When additional documents must be submitted

The review of draft contract terms also revealed that in 52% (141) of procurements, contracting authorities set extremely short deadlines — between 1 and 48 hours — for submitting an additional, sometimes excessive, list of documents required for contract conclusion.

Such tight timeframes place suppliers on an unequal footing, functioning as a barrier and a covert mechanism for selecting a predetermined winner while screening out those objectively unable to meet the requirements in time.

In this context, it is important to determine from what moment the clock actually starts running. The analysis shows that contracting authorities use one of two reference points: 

• the opening of proposals, which virtually coincides with the submission deadline;
• the determination of the selected winner (receipt of an automated system notification).

When publishing an RFP, a contracting authority may set the proposal submission deadline at its own discretion, subject to the minimum requirements of clause 57 of the Procedure — the deadline may not be less than two working days from the date of publication. Formally, this requirement may be satisfied even where the deadline falls on late evening, midnight, or a weekend. 

Particular concern is raised by the combination of nighttime proposal openings and extremely short deadlines. In 25% of lots with short deadlines, suppliers are given between 1 and 4 hours to provide additional documents after the opening of proposals or the determination of the winner. In half of those cases, the proposal submission deadline and automatic opening fall between 11:00 p.m. and 01:00 a.m. compelling suppliers to submit documents during nighttime hours when most responsible personnel are unavailable. 

As regards the moment of determining the selected winner, under clauses 61–62 of the Procedure the winner is determined automatically upon expiry of the submission deadline and evaluation by the electronic system. In practice, however, this long remained in a gray area, with two competing interpretations: immediately upon opening of proposals, or upon the contracting authority’s confirmation. This has now been resolved. Under the amended clause 62, the contracting authority determines the winner and records its intention to conclude a contract in a protocol that is automatically generated and published in the system. Notification of intent is sent automatically within one day of publication. The start of the compliance period is therefore now more transparent and clear to all suppliers.

Even so, where contracting authorities indicated that the winner would be determined “upon receipt of a system notification,” the combination of short deadlines and uncertainty about when that notification would arrive created additional pressure. Winners were compelled to await confirmation without being able to predict the precise start of the compliance period, making timely preparation of documents more difficult. In any case, requirements to provide excessive or unlawfully demanded documents remained unlawful regardless of how that moment was defined. 

Imposing additional requirements through the draft contract not only constitutes a procedural violation but also contradicts the fundamental principles of contract law and public procurement. Contract terms apply only to the parties that have actually concluded the contract. 

Equally legally incorrect is the widespread practice of including provisions such as: “In the event that the Contracting Authority is not provided with such documents (as defined in the draft contract), the Contracting Authority shall treat this as a written refusal by the participant to sign the contract, and shall accordingly reject such participant’s proposal pursuant to subclause 2 of clause 64 of Cabinet of Ministers Resolution No. 822 of September 14, 2020.”

Subclause 3 of clause 64 of the Procedure provides as a ground for rejection only the selected winner’s written refusal to sign the contract. Under Article 207 of the Civil Code, a legal transaction is considered to have been effected in writing if its content is recorded in document(s) exchanged by the parties, including through information and communication systems. A refusal to conclude a contract has legal force only if made in writing by a person with authority to sign it — the selected winner, not merely a procurement participant — and communicated to the other party. The failure of a participant or winner to take certain actions or submit documents, even if such actions are provided for in the draft contract, cannot therefore be treated as a written refusal to sign.

Such conditions create fertile ground for abuse. Formal procedural compliance combined with additional barriers at the contract conclusion stage creates the appearance of competitive tendering while in practice restricting participation to a narrow pool of suppliers who, in certain cases, may be connected, resulting in procurement at inflated prices and inefficient use of public funds.

For example, in February 2025, a gymnasium in Kirovohrad Region procured three types of coal. The draft contract required participants to submit over a dozen documents — including an underground mining permit and financial statements — within 24 hours of the opening of proposals. The contracting authority rejected 8 out of 9 proposals and concluded a contract at the highest price of UAH 299,700, while the lowest offer was UAH 182,000. In another case, the Vanchykivtsi Village Council’s coal procurement required a set of documents within 24 hours of the winner being determined. According to suppliers, proposals were rejected even where the documents were submitted. The contracting authority rejected 8 out of 9 proposals and concluded a contract for nearly UAH 2.6 million, against a lowest tender of UAH 1.5 million. 

Overall, in the analyzed sample, the gap between the lowest and winning tenders in procurements with unlawful requirements or short deadlines amounted to UAH 28.5 million — contracts ended up costing nearly 40% more than they could have.

Such violations have already drawn the attention of law enforcement and courts. A number of criminal proceedings have been opened for misappropriation of public funds in RFP procedures (case numbers 42024222140000071, 12025082210000241, 12025160000000217). A court judgment has also been handed down (No. 573/1300/25) finding that the contracting authority’s actions — in particular, setting a 1-hour deadline for an excessive list of documents — resulted in the rejection of the majority of economically advantageous proposals, contract conclusion at an inflated price, and inefficient use of public funds.

As part of the study, we spoke with suppliers about their direct experience practice of applying additional requirements and barriers at different stages of procurement. Some noted that in most procurements with additional requirements, contracting authorities either tailor conditions to a specific supplier or mechanically copy draft contracts from other RFPs. They also noted that contracting authorities sometimes justify excessive requirements by the desire to minimize their own risk in connection with potential post-delivery inspections. One supplier reported instances of pressure from competitors filing complaints with law enforcement, after which contracting authorities are required to justify the price-to-quality ratio of the coal delivered. 

We also approached individual contracting authorities for their perspective. Most said the primary purpose of such measures is to “play it safe” against the risk of receiving low-quality coal mid-heating-season or dealing with unreliable suppliers or fraudsters. They noted that even where contractual penalties exist, they often lack the resources for lengthy court proceedings. Regrettably, some contracting authorities, when their attention was drawn to potential violations, responded dismissively or claimed not to recall the details. It is also worth noting that some contracting authorities interpret certain legislative provisions at their own discretion — for example, taking the view that requiring documents and contract signature within 24 hours does not conflict with the statutory five-calendar-day deadline for concluding a contract.

Conclusions

55% of RFPs for coal procurement contain requirements to provide documents not provided for by law, and 52% set short submission deadlines.In the representative sample, winning tenders in procurements with unlawful requirements and disqualifications were on average nearly 40% more expensive than the rejected lowest-priced tenders.

These statistics relate exclusively to coal category procurements, not to all RFPs on Prozorro Market. The situation may vary by commodity, and there may be categories where this problem is not systemic. The study does, however, identify specific vulnerabilities in the RFP process and illustrates the potential scale of problems in certain categories.

• The most effective remedy would be a review mechanism in Prozorro Market, currently being developed under the draft new Law on Public Procurement. However, that process is lengthy and the new mechanism will not cover all RFP-based procurements. 
• The situation of unlawful rejections on grounds of alleged refusal to sign would improve with e-contracting, which is also yet to come. But these need not be the only solutions. 

It is therefore worth introducing a range of additional instruments to reduce abuse risks, enhance legal certainty, and strengthen contracting authority capacity.

• Enable monitoring of RFPs by the State Audit Service.

The State Audit Service does not currently monitor RFPs. Whether it has the legal authority to do so is disputed due to ambiguous wording in the procurement rules. It would therefore be advisable either to confirm formally that monitoring is permitted or to amend the legislation accordingly. Even selective monitoring and sanctioning of individual violators can deter future violations.

• Develop and introduce standard contracts.

The e-catalog currently has no mandatory contract templates for commodity categories, and the Ministry of Economy lacks the authority to approve them. The Ministry should be granted that authority and standard contracts approved that set out the permissible terms for coal procurement, leaving contracting authorities to fill in only the key parameters — delivery and payment terms and quantity. This would unify procurement terms, ensure legislative compliance, and simplify preparation without restricting contracting authorities from reflecting their specific needs. These should subsequently be introduced as e-contracts.

• Close the hard coal category in Prozorro Market.

Given that over 50% of procurements in this category contained unlawful requirements, coal procurement through RFPs should be restricted. Procurement would then take place through a method under which businesses may challenge discriminatory requirements and auditors may carry out monitoring. 

• Develop and introduce universal guidance notes for procurement through the electronic catalog.

Such notes will help authorized persons conduct RFPs correctly, apply legislative provisions accurately, and avoid excessive or discriminatory conditions — contributing to more transparent, predictable, and high-quality catalog procurement.

• As electronic contracting develops, introduce automated pre-screening of draft contracts in the e-catalog as a risk indicator for supervisory authorities.
  The algorithm could detect keywords and language conflicting with legislation and the Procedure — such as “certificate,” “declaration,” “permit,” “within X hours of the opening of tenders.” Where such indicators are found, the system could generate risk signals or reports for supervisory authorities. This will become technically feasible only once electronic contracting is in place, as the system currently cannot automatically read and analyze file contents.

These recommendations will help eliminate one method of circumventing the rules in coal procurement and more broadly improve the efficiency and transparency of RFP-based procurement. Efforts must also continue to find approaches that allow contracting authorities to minimize the risk of receiving substandard goods, while protecting bona fide participants from artificially created obstacles and bad-faith practices.

This research was made possible with the support of the MATRA program of the Embassy of the Kingdom of the Netherlands in Ukraine. Responsibility for the content lies with the author and does not necessarily reflect the official position of the Embassy.

This research was developed by

Team lead: 

Ivan Lakhtionov, Deputy Executive Director of TI Ukraine for Innovative Projects

Authors of the research:

Viktoriia Hermasheva, Projects Assistant, TI Ukraine

Kateryna Rusina, Project Manager at DOZORRO

Seven buildings from scratch

In 2024–2025, seven tenders for the construction of new apartment buildings in Borodianka were announced through the Prozorro system. They are to be built on the sites of residential buildings destroyed by the Russians and completed by the end of 2026. The contracting authorities for these projects are the Recovery and Infrastructure Development Service in Kyiv Region and the Department of Regional Development of the Kyiv Regional State Administration.

Of the seven sites, two are nine-story buildings located at 359 and 353 Tsentralna Street. Another, at 427-A Tsentralna Street, is eight stories high. Three seven-story buildings are being constructed at 371, 326, and 324 Tsentralna Street. The building with the fewest floors is a six-story one at 340 Tsentralna Street.

Together, these buildings are expected to provide housing for 421 families. The largest one, at 359 Tsentralna Street, is designed for 105 apartments, while the smallest, at 340 Tsentralna Street, will contain only 20 apartments.

The apartments are to be handed over to residents with basic finishing. Tile will be laid on the floors and walls in kitchens, hallways, and bathrooms, while living rooms will have laminate flooring and wallpaper. In addition, kitchens will be equipped with stoves and sinks, and bathrooms with toilets, washbasins, and bathtubs. All buildings will also include shelters.

Six of the seven projects include non-residential premises for public utilities and commercial facilities. For example, according to Suspilne, 869 square meters in the eight-story building at 427-A Tsentralna Street will be allocated, at the request of the Borodianka Settlement Council, for a social assistance center and two shops.

Cost per square meter

Why simple division does not work

At first, we planned to calculate the cost per square meter using the approach we normally apply: subtract the cost of the shelter and other project-specific components from the total construction cost, then divide the result by the total apartment area. This is the same methodology we previously used when analyzing the construction of social housing for internally displaced persons in Zhytomyr.

However, we ran into problems almost immediately. The design documentation did not include separate cost estimates for shelter construction. In addition, for one of the buildings—at 427-A Tsentralna Street—the total construction cost also included demolition work. As a result, we could not simply “subtract the extras” and apply that methodology.

To sort out the details, we began sending requests to the contracting authorities. We asked them to explain exactly how much shelter construction cost for each building and, in one case, to provide the demolition costs separately. This process turned out to be lengthy and, frankly, exhausting. Some of the responses were general in nature: the contracting authorities explained that the shelter was part of the building and that its cost had not been itemized separately in the estimate. In other cases, they provided a notional amount calculated as a certain percentage of the total project cost. However, our analysis was based on the actual prices in the signed contracts. That means the cost of shelters could have changed during the procurement process. Because there was no uniform approach in the documentation, we were ultimately unable to obtain equally precise data for all sites.

As a result, it became clear that calculating the cost per square meter using the methodology applied in the Zhytomyr case was simply impossible here. Despite all efforts to clarify figures and match the answers, received data remained too inconsistent.

In addition, almost all the buildings include substantial non-residential space, which directly affects the overall construction cost even though it is not housing. Because of this, the simple ratio of “total cost / residential area” inevitably distorts the real cost per square meter.

Address	Contract, UAH million	Adjusted contract, UAH million	Additional agreement, UAH million	Additional agreement, UAH million	Total construction cost, UAH million
359 Tseltralna	285.7				285.7
353 Tseltralna	258.5				258.5
427-A Tsentralna	396.9	315.5	122.4		437.9
371 Tseltralna	280.1	277.5	23.4		300.9
326 Tseltralna	123.2	122.7	30.4		153.1
324 Tseltralna	125.2		61.9		187.1
340 Tseltralna	81.9	16.8	11.9	77.2	105.9

 

A different formula, different results

That is why, for this analysis, we applied a different formula. It is not perfect, but it allows us to reduce these projects to a common denominator and at least approximately compare them with one another and with market indicators. To do this, we included not only the contracts for the direct construction of the buildings, but also other related agreements from Prozorro—for design, author’s supervision, technical supervision, and connection to utility networks. We combined all of these into one total project cost. We then compared that total with the apartment area to determine what share of the funds effectively went toward housing. After that, we divided the resulting figure by the total apartment area and thus calculated a notional cost per square meter.

Project cost * apartment area / Total area = Apartment cost

Address	Total project cost, UAH million	Floors	Apartments	Non-residential area, m²	Total area, m²	Apartment area, m²	Apartment cost, UAH million	Notional apartment cost per sq.m, UAH thousand
359 Tseltralna	290.8	9	105	1331	9777	6700	199	30
353 Tseltralna	264	9	103	1478	10567	6591	165	25
427-A Tsentralna	411.7	8	58	3872	9607	4402	189	43
371 Tseltralna	306.2	9	58	1670	7694	4243	169	40
326 Tseltralna	157	7	35	36	3807	2662	110	41
324 Tseltralna	193.5	7	42	0	3757	2816	145	51
340 Tseltralna	107.8	6	20	149	1914	1345	76	56

The table analysis shows a clear pattern: the fewer floors and apartments a building has, the more expensive each square meter of housing becomes. The lowest cost per square meter is found in the nine-story buildings. In the building at 353 Tsentralna Street, for example, a square meter costs UAH 25.03 thousand, while at 359 Tsentralna Street it costs UAH 29.77 thousand.

The reasons are purely economic. The costs of design, foundations, utility networks, and site improvement are spread across a much larger residential area. As a result, in buildings with more apartments, the cost of one square meter decreases.

The smallest building, by contrast—the six-story building at 340 Tsentralna Street—shows the opposite pattern. Because it includes only 20 apartments, the notional cost per square meter there is the highest, at UAH 56.38 thousand.

What do the estimates show? 

DOZORRO analysts reviewed the cost estimates under the contracts for the construction of seven new buildings. In the case of the apartment building at 353 Tsentralna Street, they identified a likely overpayment of UAH 13.7 million. The biggest concern was the price of 12 mm A-III rebar. The contractor, Ukrainian Construction Company LLC, plans to supply it at UAH 42,026.40 per ton. By contrast, Metinvest sells it at UAH 33,300 per ton, and Metal-Holding at UAH 34,005 per ton. This means the likely overpayment on rebar alone could reach UAH 3.9 million. It is also worth considering that construction materials for large projects are usually procured in bulk, so their price should be even lower than in retail outlets.

Another item with a noticeable markup is Knauf MP-75 plaster. In the estimate, it is priced at UAH 16.51 per kilogram. For comparison, Leroy Merlin Ukraine sells this plaster at UAH 11.96 per kilogram, while Interbudservice offers it at UAH 10.36 per kilogram. This item alone could involve another UAH 1.9 million in overpayment. At the same time, it should be borne in mind that contract prices are dynamic and may be adjusted during contract performance.

DOZORRO analysts also identified a likely overstatement of almost UAH 15 million for the project at 427-A Tsentralna Street. For example, the contractor, Ukrbudengineering, included 200 mm insulation in the estimate at UAH 947.63 per square meter—almost twice the market price. Novatorbud sells this material at UAH 498.36 per square meter, and Cube at UAH 325 per square meter. This line item alone could involve nearly UAH 1 million in overpayment. Later, however, the contracting authority amended the contract price and the list of materials, but never published the updated estimate in the system. It is also worth remembering that the contract price for this project is dynamic. We therefore plan to wait for the completion certificates in order to verify the actual prices of materials.

In two other cases—at 326 and 324 Tsentralna Street—the analysts were unable to objectively assess possible overpricing. The contracting authority also amended the contract prices in those cases, but again failed to publish the updated estimates in the system. In the other buildings, analysts either found no overpricing at all or only minor discrepancies relative to the overall cost of construction materials.

What is the price on the commercial market?

To understand how the cost-per-square-meter figures we obtained compare with the market, it is worth looking at commercial housing prices. According to dom.ria, in December 2025, the average price per square meter in the Kyiv region, excluding Kyiv, stood at $891 (nearly UAH 38,000). It is important to note that the new buildings in Borodianka are designed to be handed over with basic cosmetic finishing already completed.

Since there were no listings for newly built housing in Borodianka at the time of the analysis, we used the secondary market for comparison. This makes it possible to see the full price range depending on the condition of the property—from apartments requiring renovation to fully furnished units.

For example, a two-room apartment at 318 Tsentralna Street is listed at UAH 44,122 per square meter. It has a modern European-style renovation and comes fully furnished with appliances. Another two-room apartment on the same street, also furnished and equipped with appliances, is listed at UAH 48,928 per square meter.

Lower prices are seen in apartments without renovation. At 304 Tsentralna Street, for instance, a four-room apartment is listed at UAH 27,985 per square meter, and a two-room apartment at UAH 26,115 per square meter. Both units are in need of renovation or have no renovation at all, and the building itself is scheduled for repair.

Conclusions

Our analysis shows a direct correlation between a building’s height and the cost per square meter: the taller the building, the lower the average cost per square meter. The nine-story projects appear to be the most economically efficient, as fixed costs—design, foundations, utility networks, and site improvement—are spread across a larger residential area. Overall, the price level in these projects appears market-appropriate and does not indicate systematic overpricing. However, the sites have not yet been completed, so we will only be able to assess their final cost once they are commissioned and we can see all actual expenditures in the completion certificates.

Even where cost indicators appear market-appropriate, the efficiency of such projects depends heavily on how transparently they are implemented. Public access to documentation, the timely publication of updated cost estimates, and proper oversight of construction material prices remain essential conditions for maintaining trust in the reconstruction process and ensuring the rational use of budget funds.

At the same time, the debate over the feasibility of alternative compensation mechanisms, including housing certificates, does not eliminate the problem of destroyed development. Even if such tools may be more beneficial for the state in some cases, destroyed buildings do not simply disappear—they still need to be either restored or demolished and rebuilt. In practice, then, there is currently no real alternative to reconstruction: compensation alone does not solve the problem of destroyed infrastructure.

In this context, Borodianka demonstrates a compromise model of reconstruction, balancing cost savings, social function, and the political need to show results. That is why the key question here is not only how much a square meter costs, but also how consistently, reasonably, and openly the state spends money on recovery.

This material was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev.

The material was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

Summary

Accurately estimating the economic impact of these changes is virtually impossible at this stage. We are unlikely to see the real picture until at least the end of 2026, once the new rules have been in force for six months.

Presumably, the changes will further increase the share of procurements won by VAT-paying participants, who already account for wins in 68.16% of competitive lots by number and 92.14% by value. Cooperation conditions for small businesses are likely to worsen.

The largest impact will be on competitive procurements where VAT-paying participants compete directly with non-VAT-paying participants, approximately 21% of lots by number and less than 10% by value.

However, it is very difficult to forecast whether contracting authorities will actually pay more. The change in evaluation methodology alone is likely to have a limited economic effect. If VAT-exclusive bid evaluation had already been in place during the analyzed period (one year and five months), and participant strategies had remained unchanged, contracting authorities would have paid an additional UAH 250 million, which is less than 0.1% of total contract value.

By contrast, changes in expenditure planning and in setting estimated procurement value may have a more serious effect. Under a worst-case scenario—if all non-VAT-paying contracting authorities add 20% to estimated value as a safeguard—budget pressure could increase to more than UAH 60 billion. Even in that scenario, however, competition could still push actual spending downward. 

On top of this, we must account for likely changes in bidder behavior, which are even harder to predict.

Evaluating bids without VAT may also increase price transparency.

In practice, the most difficult adjustment, especially at the beginning, will be for contracting authorities, which will need to adapt mid-budget year. We expect the Ministry of Economy to issue clear guidance with practical instructions on how to calculate estimated value, launch procurement procedures, and conclude contracts under the new rules. 

That said, the most significant impact on the sector will likely come not from procurement-rule changes, but from tax reform—specifically, the draft law abolishing the separate upper VAT-liability threshold for individual entrepreneurs under the simplified taxation system. The current threshold is over UAH 9.3 million and may be reduced to UAH 1–4 million, in line with the rules applied to other entrepreneurs. 

How the new approach to setting estimated value will work

For now, the contracting authority determines how to announce a procurement—whether the estimated value is stated inclusive of VAT or exclusive of VAT. Bids are evaluated based on their total final price, which includes 20% VAT (or another applicable rate) if the bidder is a VAT payer.

If the changes take effect, the contracting authority will indicate the value inclusive of VAT in the procurement plan, but exclusive of VAT in the procurement notice itself. Bids will also be reviewed exclusive of VAT. If a VAT payer wins, the VAT amount will be added to the bid price at the contract-signing stage. In this way, the final contract value will increase, but it will not exceed the procurement value stated in the plan. 

Why exclude only VAT, given that it is not the only tax that differs across businesses? Most likely because VAT is an indirect tax—effectively paid (financed) by the buyer, while the business only administers and remits it to the budget. By contrast, most other taxes—including the single tax for individual entrepreneurs and corporate income tax—are direct taxes borne by the business itself.  

Do the proposals align with EU rules?

In the explanatory note to the draft government resolution, the government stated that the changes are consistent with the European approach to estimated-value setting and bid evaluation.

This claim cannot be fully endorsed. Directive 2014/24/EU, which regulates public procurement in the EU, states that contracting authorities must calculate estimated procurement value exclusive of VAT. At the same time, the directive does not regulate VAT treatment at the bid-evaluation stage. 

VAT payers among contracting authorities and participants

According to BI Prozorro and the YouControl analytical system, non-VAT payers predominate among contracting authorities, accounting for 78.47%. This is expected, since most of them are budget-funded institutions. The remaining 21.53% of contracting authorities are VAT payers—for example, state-owned enterprises. 

If we look at all market participants (in both direct and competitive procurement), the overall status split is similar:

• non-VAT payers — 74.76%
• VAT payers — 25.24%

Note: In further calculations, we excluded CPV 3300 Medical equipment, pharmaceuticals, and personal care products, because some medicines and medical devices are taxed at a 7% rate. Procurements in preferential categories were not excluded from calculations, since separating them requires manual processing.

In competitive procurement, 88.03% of procedures were announced inclusive of VAT. These procedures accounted for 79.56% of the total value.

In competitive lots, the share of VAT-paying participants rises to 50.56%. This can be explained by the fact that competitive procurements are higher in value, while companies and individual entrepreneurs become VAT payers once they reach a certain annual income threshold. VAT payers also win more often. Over the nearly one-and-a-half-year period we analyzed, they won 68.16% of competitive lots. By value, they accounted for 92.14% of contracts.

How competition may change

In previous years, VAT payers argued that they were at a disadvantage compared with non-VAT payers because they had to add VAT to their bid price. However, as noted above, in competitive procurement they already receive roughly two-thirds of contracts by number and 92% by value. Once the changes take effect, VAT payers will likely win more often, but a substantial increase in their contract share is unlikely. Much will also depend on their interest in smaller lots. 

The shift to VAT-exclusive bid evaluation will primarily affect tenders where non-VAT participants compete directly against VAT payers. During the study period, the distribution was as follows:

• • only non-VAT participants — 21.66%
  •  only VAT-paying participants — 57.01%
  • both participant types — 21.1%

It is also important to note that, when bids are evaluated exclusive of VAT, the balance may tilt in the opposite direction, with VAT payers gaining the advantage—because they may claim input VAT recovery on procurements they previously made with VAT included. As a result, even where the nominal price of goods is the same, VAT payers’ effective costs may be lower.  Under such conditions, there is a risk of small businesses being crowded out of public procurement.

Will non-VAT contracting authorities have to pay more?

This is a difficult question to answer. On the one hand, it is possible to estimate, at least approximately, the economic effect of harmonizing bid-evaluation methodology itself. On the other hand, potential changes in how contracting authorities plan expenditures and set estimated procurement value also need to be considered. Of course, bidder behavior will matter as well, and that behavior may also change. However, in the case of bidders, probable scenarios are significantly harder to forecast.

1. Contracting authorities evaluate bids exclusive of VAT: economic effect

Perhaps the main concern procurement practitioners raise about evaluating all bids exclusive of VAT is that, in the end, contracting authorities may overpay. 

Example. A contracting authority allocates UAH 120,000 in its annual plan for a procurement and announces the procedure exclusive of VAT—i.e., with an estimated value of UAH 100,000. Two bidders participate: a VAT payer with a bid of UAH 95,000 and a non-VAT payer with a bid of UAH 97,000. Under VAT-exclusive evaluation, the VAT payer wins. At the contract stage, 20% VAT is then added. As a result, the final contract value is UAH 114,000—which is UAH 17,000 more than it would have been if the authority had signed with the non-VAT payer.

For VAT-paying contracting authorities, this rule change is unlikely to have a material effect. It is already more advantageous for them to announce procurements exclusive of VAT, and they can do so under current rules. If a VAT payer wins, the additional VAT amount included in the contract can later be recovered through input tax credit. By contrast, the changes will affect non-VAT-paying contracting authorities (about four-fifths of all authorities): they cannot recover paid VAT, and the bid that appeared cheapest exclusive of VAT may become more expensive than others once 20% VAT is added.

We analyzed whether winner selection in past procurements would have changed if bids had been evaluated exclusive of VAT, and by how much contract totals would have increased. 

For procurements where VAT payers and non-VAT payers competed against each other, we converted bids to net amounts (exclusive of VAT), identified winners based on those net amounts, and added 20% tax if the winner was a VAT payer. We then calculated differences between the final bids of the simulated winners and the actual winners.

If, during the study period, non-VAT-paying contracting authorities had evaluated all bids exclusive of VAT, total contract value would have been UAH 250 million higher than it actually was.

At the national level, over nearly one and a half years, this is a relatively small amount—0.06% of the total value of contracts awarded by non-VAT-paying contracting authorities. This is because these two bidder types meet in tenders infrequently, in only about one-fifth of cases, and differences between their bids were usually minimal, sometimes even less than one hryvnia. Potentially, this gap in final bid value could widen if the new rules are introduced, because non-VAT participants would need to cut prices more aggressively to win tenders. 

2. To hedge risk, contracting authorities may plan estimated value and expenditures 20% higher

Because contracting authorities are concerned that they may have to pay more after the reform, they may plan for higher expected expenditures. Some may simply budget amounts 20% higher than before to remain on the safe side and ensure they can procure the required quantity.

The worst-case scenario is that all non-VAT-paying contracting authorities do this in all cases. In that event, demand for local and state budget expenditures could increase by UAH 61.78 billion per year. In practice, the scale will likely be smaller, and this pressure may be one-off: after the first year of VAT-exclusive bid evaluation, there will be actual data showing what costs what in Prozorro and how the reform has functioned. Even so, this underscores the need to support contracting authorities in setting estimated value—and not only to account for VAT correctly.

We will see higher-quality price statistics on Prozorro

Now, if a contracting authority announces a procurement inclusive of VAT, a non-VAT payer may submit a bid within the full estimated value. As a result, that bidder may receive funds that were originally set aside in case VAT had to be paid.

Example. A contracting authority announces a procurement with an estimated value of UAH 120,000 inclusive of VAT. Accordingly, UAH 20,000 of that estimated value is VAT, which would need to be included in the contract and paid if a VAT payer wins. Two bids are submitted: a VAT payer at UAH 119,000 and a non-VAT payer at UAH 118,000. The authority signs a contract without VAT at UAH 118,000. That is already UAH 18,000 higher than the estimated value of the procurement item exclusive of VAT.

In practice, because non-VAT-paying contracting authorities are generally indifferent as to which status of supplier they contract with, they usually have no reason to analyze item value exclusive of VAT. Their priority is to obtain the most economically advantageous bid. Therefore, they may mark the estimated value as “inclusive of VAT” simply to preserve the option of contracting with a VAT payer later.

We examined competitive VAT-inclusive procurements in which contracts were awarded to non-VAT payers. Specifically, we calculated estimated value exclusive of VAT and the gap between that figure and the signed contract amount.

In 70.75% of cases (93,500 lots out of 132,100), the contract value with a non-VAT payer exceeded estimated value exclusive of VAT. The total excess amounted to UAH 3.98 billion, or 7.95% of the initial total value of those agreements. 

Two interpretations are possible:

• either prices are higher than they could be, because non-VAT payers can submit bids up to the full estimated value in procurements where VAT is included;
• or estimated procurement value is understated, and the additional 20% set aside for VAT effectively brings it closer to market level.

We also identified a number of State Audit Service monitoring findings in which violations were recorded when a winning non-VAT bid exceeded the estimated procurement value net of VAT. For example, this occurred in a overhaul procurement for Kyiv City Clinical Hospital No. 1, where the contract was signed without VAT at UAH 59.1 million against an estimated value of UAH 61.1 million inclusive of VAT, and in a procurement for green-space maintenance in Vynohradiv, where the contract was UAH 1.67 million without VAT against an estimated value of UAH 1.69 million inclusive of VAT.

This practice is not widespread, and there are also monitoring cases in which auditors did not identify violations in similar circumstances.

In this context, VAT-exclusive bid evaluation may be beneficial: at a minimum, it can improve how market value is reflected in procurement pricing. At the same time, there is a possibility that the changes will also incentivize non-VAT participants to reduce prices.

Will these changes increase tax revenues?

A significant fiscal effect from procurement-rule changes alone should not be expected. Public procurement participants account for only 1.6% of all active business entities. Of course, part of the overall business-entity count consists of individual entrepreneurs who in practice operate under employment-like arrangements. But even if we compare procurement participants only with legal entities, their share is still below 5%. In addition, VAT payers already win 68% of contracts in competitive lots, which account for 92% of the total contract value in competitive procurement. 

In some cases, communities will indirectly finance the state budget, except where VAT is recoverable. This refers to situations in which a VAT payer’s final winning bid (after VAT is added) exceeds a non-VAT payer’s bid. As the calculations above show, however, these amounts are small.

What will change for VAT-paying contracting authorities?

For these organizers, it is more advantageous to announce procurement exclusive of VAT, because even if a VAT payer wins and VAT must be included in the contract value, the tax can later be recovered through input tax credit. In general, they can already announce procurement this way—but the data show this is done in only 13.38% of cases.

In 2024 and the first five months of 2025, VAT-paying contracting authorities signed UAH 25.7 billion in agreements with non-VAT participants. If they had evaluated bids exclusive of VAT, non-VAT participants would have won less often, and the total value of winning bids would have been UAH 600 million lower (accounting for input tax credit). Why this occurs requires additional research.

Contracting authorities can already announce procurement exclusive of VAT, but State Audit Service monitoring conclusions sometimes treat it as a violation when the final contract amount inclusive of VAT exceeds the estimated value stated exclusive of VAT.

For example, in January 2023, state enterprise Dobropilliavuhillia-Vydobutok ran a procurement for pipes. In the procurement plan, it stated an estimated value inclusive of VAT at UAH 7.8 million, but announced the tender itself exclusive of VAT at UAH 6.5 million. A VAT payer won with a bid of UAH 6.48 million exclusive of VAT; VAT was then added in the contract, bringing the final amount to UAH 7.78 million. Therefore, the contracting authority followed the steps the government now proposes to make mandatory. Nevertheless, the Chernivtsi Regional Office of the Western Office of the State Audit Service identified this as a violation, stating that the authority “did not reject the bidder’s tender proposal as one whose price exceeds the estimated procurement value determined by the contracting authority in the open-tender notice.” 

However, this is not a consistent agency practice, and opposite decisions also exist. For example, the Odesa branch of Ukrainian Sea Ports Authority, in its annual plan for territory-maintenance procurement, set the estimated value at UAH 7.8 million inclusive of VAT, while announcing the tender exclusive of VAT at UAH 6.5 million. A VAT payer won, and the contract value inclusive of VAT was UAH 6.54 million. During monitoring, the Eastern Office of the State Audit Service asked about the estimated-value overrun, but after the contracting authority’s explanations, found no violation on this point.

Conclusions

In summary, accurately estimating the economic impact of these changes is practically impossible at this point. We are unlikely to see the real picture until at least the end of 2026, once the new rules have been in force for six months.

What can be stated clearly is that the reform is unlikely to produce a major fiscal effect—it affects a very small share of businesses at the national level.

Presumably, the changes will further increase the share of procurements won by VAT-paying participants, who already account for wins in 68.16% of competitive lots by number and 92.14% by value. Cooperation conditions for small businesses are likely to worsen.

The largest impact will be on competitive procurements where VAT-paying participants compete directly with non-VAT-paying participants, approximately 21% of lots by number and less than 10% by value.

However, it is very difficult to forecast whether contracting authorities will actually pay more. The change in evaluation methodology alone is likely to have a limited economic effect. If VAT-exclusive bid evaluation had already been in place during the analyzed period (one year and five months), and participant strategies had remained unchanged, contracting authorities would have paid an additional UAH 250 million, which is less than 0.1% of total contract value.

By contrast, changes in expenditure planning and in setting estimated procurement value may have a more serious effect. Under a worst-case scenario—if all non-VAT-paying contracting authorities add 20% to estimated value as a safeguard—budget pressure could increase to more than UAH 60 billion. Even in that scenario, however, competition could still push actual spending downward. 

On top of this, we must account for likely changes in bidder behavior, which are even harder to predict.

Evaluating bids exclusive of VAT may also improve price transparency, because it allows comparison of the net cost of goods and services without the indirect-tax component. It may also help reduce prices offered by non-VAT participants.

In practice, the most difficult adjustment, especially at the beginning, will be for contracting authorities, which will need to adapt mid-budget year. We expect the Ministry of Economy to issue clear guidance with practical instructions on how to calculate estimated value, launch procurement procedures, and conclude contracts under the new rules. 

Ultimately, however, there is another major variable: the draft law abolishing the separate upper VAT-liability threshold for individual entrepreneurs under the simplified taxation system. The current threshold is over UAH 9.3 million and may be reduced to UAH 1–4 million, in line with the rules applied to other entrepreneurs. Tax changes may affect the sector more strongly than procurement-rule changes themselves. The number of non-VAT participants would naturally decline, as they would have to register as VAT payers. And VAT administration is fairly burdensome for entrepreneurs; unless it is simplified, this may affect both the number of businesses and the prices of their goods and services.

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. 

Research team

Project Lead:
Ivan Lakhtionov, Deputy Executive Director of Transparency International Ukraine for Innovative Projects

Author:
Kateryna Rusina, Senior Project Manager at Transparency International Ukraine

Co-authors:
Ivan Lakhtionov, Olha Nos, Liliia Lakhtionova, Anna Yuldashova

How it works in the EU

Since wider use of non-price criteria is a European approach, it makes sense to first understand how it works there. At the panel, we heard about this from Oleksandr Shatkovskyi, an expert with the EU4PFM project.

In general, European directives describe a broader approach. They are designed to set a framework that is then further regulated at the level of national legislation. 

The directive states, rather indirectly, that price may be the only criterion. Any criteria other than price must necessarily relate to the procurement item. At the same time, there are no limits on how the weights of evaluation criteria may be distributed. 

This might create the impression that in Europe procurements based solely on price are almost never conducted and that different evaluation criteria are always used. In reality, however, price-only procurements still make up the majority, on average, around 60%. The picture also varies widely from country to country. In Croatia, the figure is 95%, while in Slovakia and Cyprus it is below 10%.

By the way, Croatia’s high share of procurements using non-price criteria is explained by the fact that it introduced a legal cap on the weight of price: for certain procedures, price may not exceed 90%. The directive allows for such a restriction to be set at national level—and Croatia is so far the only country to have used this option.

Non-price criteria are a complex tool

During the discussion, Tetiana Mishta, Deputy Director of the Public Procurement Policy Department at the Ministry of Economy, made a spot-on point: 90% of Ukraine’s contracting authorities are small. Their authorized procurement officers (the people who run procurement procedures) usually combine these duties with their primary job, for example, working as an accountant. So, they simply do not have much time or capacity for “creative” approaches.

And non-price criteria are, in fact, a fairly creative and complex tool. First, you need to derive a formula for how you will evaluate bids across different criteria—in other words, you have to invent an algebra problem. You can find examples here. 

That is why most contracting authorities avoid non-price criteria: they do not really know how to use them and are not eager to figure it out. There is neither the time nor the resources. And most importantly, there is no real need.

Non-price criteria are most effective for evaluating bids in complex procurements, where nuances can matter a great deal and where it is difficult to set a single, clear-cut requirement from the outset. Not every contracting authority runs such procurements. They are most likely among the 10% of large buyers. Yet in Ukraine, the use of non-price criteria is not just below 10%—it is not even 1%. Why?

A requirement vs. a non-price criterion

Yurii Lytvynenko works with procurements at the Gas Transmission System Operator of Ukraine. During the discussion, speaking as a representative of a large contracting authority, he noted that they do have a need for, and plan to apply, non-price criteria related to environmental performance. They are currently studying European practice in order to do it properly. 

Lesia Kolesan, Director of the Procurement Department at the National Bank of Ukraine, spoke about a similar orientation toward environmental criteria. Her organization received an award at Prozorro Awards for using non-price criteria. They wanted to find a contractor capable of providing services without disruption, so they applied a non-price criterion related to the enterprise’s criticality. However, in that specific case the non-price criterion did not determine the outcome—the price advantage of the lowest bid ultimately prevailed. 

Yurii also explained that GTS Operator doesn’t rely on non-price criteria because they simply do not need them. For example, one relatively common non-price criterion in Ukraine is payment terms. But at the GTS Operator, payment terms are fixed—always up to 30 days. Delivery terms are also always set by schedule: they do not need faster delivery; they need delivery on time.

This, again, illustrates the difference in general approaches between Ukraine and the EU. European procurement tends to favor flexibility and openness, while Ukraine’s tends to favor clarity and predictability. There is no universally accepted line separating what should be treated as a non-price criterion and what should be a mandatory requirement. As a result, there is a high probability that where European contracting authorities might be willing to consider different options and evaluate a parameter as a non-price criterion, Ukrainian contracting authorities will instead specify exactly what they want upfront—and write it into the tender as a requirement.

Creativity vs. oversight

Beyond the lack of skills and the lack of need to use non-price criteria, we also raised a very simple factor during the discussion: fear. Fear that auditors, during monitoring, will treat the use of non-price criteria as a violation or that a company will file a complaint with the Antimonopoly Committee of Ukraine and the Committee will rule that your non-price criterion is discriminatory.

Oleksii Aleksandrov, Director of the Procurement Monitoring and Inspections Department at the State Audit Service, reassured contracting authorities about his institution’s approach. He explained that for auditors the key requirements are that non-price criteria must relate directly to the procurement item and must not contradict the law. In general, that means contracting authorities should not be afraid of auditors when using non-price criteria. Even if auditors initiate monitoring, the contracting authority simply needs to be prepared to explain why it applied that criterion. 

With the AMCU, however, things are not so rosy. This is primarily due to legal nuance. Most of the procurement community considers the list of non-price criteria in the current Law on Public Procurement to be non-exhaustive. The AMCU, by contrast, believes that only the criteria explicitly listed in the Law should be used. 

Yevhen Kostenko, Deputy Director of the Department handling appeals in the field of public procurement, noted that the AMCU generally believes non-price criteria should be used with great caution. He explained that 99% of the AMCU’s decisions on complaints about non-price criteria were in favor of businesses rather than contracting authorities, because complainants demonstrated that the criteria were discriminatory. 

So, the AMCU’s stance on non-price criteria is considerably stricter. 

Those who still try

Despite the risk of running into the AMCU, some contracting authorities still try to use this instrument. Overall, Prozorro recorded 927 procurements in 2025 marked as having non-price criteria. 

This year, Prozorro Awards wanted to introduce a nomination dedicated to non-price criteria. To do that, together with CEP KSE and Prozorro SE, we manually reviewed a sample of procurements where this tool had been used. But we could not identify a single case as an example worth following. 

Some contracting authorities use non-price criteria quite actively. Yet we still could not treat it as good practice. For example, one authority regularly used a non-price criterion that extended the payment period to 180 days. But in the contract, immediately after that clause, it stated that payment could also be made sooner. This looks very much like a convenient way to push through a “preferred” winner while scaring off everyone else—a kind of a “barrier” at the entrance. A recent scandal around this kind of scheme highlighted that it can be an effective mechanism for pressuring a contractor into paying kickbacks. And we do not want non-price criteria to spread only for them to become a tool for bad practices. 

How to promote sound non-price criteria

To me, this looks a bit like children learning, say, to ride a bike. Right now, we are in a situation where the children have simply been handed bicycles and told: here you go—ride them within the 30% limit. Some do not even go near them because they are afraid; some try at random and do not get very far; some watch the neighbors ride and try to imitate them. And of course, a few kids will figure out how to use bicycles to cause trouble. 

To fully comply with the European directive, Ukraine needs to “let go” of the weight of non-price criteria—that is, stop capping them at 30%, as we do now. But in a context where almost no one knows how to use this tool, removing the cap may either change nothing or turn into chaos, because it creates much more room for manipulation.

To harmonize Ukrainian legislation with European directives, the draft of a new Law on Public Procurement is currently being refined ahead of its second reading. The DOZORRO TI Ukraine team proposed that it should provide for a gradual transition to non-price criteria without any cap. Also, it proposed that the Ministry of Economy should develop a methodology for using non-price criteria that clearly explains how contracting authorities can apply this tool properly. Mandatory application of this methodology should be enshrined in the new Law. And the same Law should also revise the wording on the list of non-price criteria so that neither the AMCU nor anyone else treats it as exhaustive.

Such regulation would give us time and a more controlled environment for learning. But it is important to understand that genuine progress requires initiative from all participants in the process. The authorities, in broad terms, need to explain how this “bike” can be useful; contracting authorities need to find the courage to try; and oversight should not scare people away—it should guide them. 

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. 

UAH 20 billion under contract 

In 2025, UAH 20 billion was contracted through Prozorro to strengthen cities’ energy resilience. This funding covered equipment as well as installation and repair work and the development of design documentation. A year earlier, contracts for these needs totaled more than UAH 13 billion—meaning demand for energy autonomy increased by almost 1.5 times.

The largest share of contracts last year went to procurements aimed at ensuring heating—UAH 8.1 billion. Of this amount, UAH 3.4 billion involved agreements for modular boiler houses, while the rest related to cogeneration units, primarily work to install them. The most frequently ordered items last year were uninterrupted power solutions—batteries, inverters, charging stations, and related services. In addition, procuring entities purchased solar power plants, generators, and other equipment.

By contract value, 29% of procurements were conducted through special open tenders, 64% through direct contracts, 3% via request for price quotations, and another 4% via the simplified procurement procedure.

According to BI Prozorro’s public analytics module, an average of 2.4 companies submitted bids for procurements of goods, services, and works aimed at improving cities’ energy resilience.

Procurements totaling more than UAH 3.2 billion are still active. Among them is one of the year’s largest tenders, run by Kryvorizka Teplotsentral JSC. The company is procuring the construction of cogeneration gas piston units with a total electric capacity of 75.2 MW. The agreement is planned to be signed with Production-Commercial Enterprise Kotlogaz LLC, which estimated the cost of the works at UAH 1.3 billion.

In Sumy region, last year’s procurement of six block-type gas modular boiler houses is still ongoing. Contracts worth UAH 256 million are expected to be signed with Brovary Factory of Boiler Equipment Ardenz Additional Liability Company, and Atonmash LLC at the request of the Capital Construction Department of the Shostka City Council.

Leading regions 

The clear leader by the value of signed contracts was the Kyiv region—UAH 9.6 billion, nearly half of all funding. However, this does not mean the equipment purchased was intended exclusively for the capital region. Kyiv is home to major procuring entities that purchase and install expensive equipment that later benefits the country as a whole. Most notably, Gas Transmission System Operator of Ukraine LLC and Ukrhydroenergo PJSC. If these major procuring entities are excluded, the contracted amount in Kyiv region falls to approximately UAH 3.3 billion. The largest contracts specifically for local communities were signed for cogeneration units in the capital and for uninterrupted power supply equipment for the system that controls the safe movement of metro trains. 

Second in the ranking is Kharkiv region, where local procuring entities contracted nearly UAH 2.4 billion. Most of this amount consisted of contracts for district heating equipment. 

Next comes Mykolaiv region with UAH 1.9 billion, of which UAH 1.7 billion went toward securing heating in Mykolaiv. In fourth place is Dnipropetrovsk region with UAH 999 million, including almost UAH 200,000 allocated to solar power plants. Rounding out the top five is Sumy region with UAH 617 million; most contracts there related to ensuring heating in the city of Sumy.

Another UAH 1.3 billion falls under procurements where the region was not specified, meaning they could not be included in the regional analysis. Ninety-nine percent of those procurements were for defense needs.

Uninterrupted power supplies 

Last year, uninterrupted power supply (UPS) solutions were among the most common items in the Prozorro system. Batteries, inverters, and charging stations help keep critical systems running during emergency outages. A total of UAH 4.6 billion was contracted for these items and related services.

The largest value of contracts for this equipment was signed by PrivatBank—UAH 364 million. In November, the bank ordered Chinese LiFePo4 battery packs of various capacities for 6–20 kW inverters, as well as three inverters with installation. Delivery is scheduled by the end of 2026.

Kyivteleservice Specialized Municipal Enterprise also invested heavily in backup power. The company ensures the operation of television as well as wired, wireless, and satellite communications in the capital. In total, the company contracted UAH 133 million for backup power solutions. It procured 213 UPS systems with installation and related equipment, including batteries and solar inverters. It also purchased 172 UPS kits for Wi-Fi in educational institutions—systems that keep working during outages and allow equipment to be controlled remotely. In addition, the company ordered 95 anti-vandal UPS systems with remote monitoring and installation. All of this equipment was expected to be delivered by the end of 2025.

Backup power was also a major focus for the Kyiv Metro. In March, June, and October, Kyiv Metropolitan Municipal Enterprise contracted UAH 165 million for nine German-made BENNING UPS systems for railway automation devices. These systems keep signaling, interlocking, and track-blocking systems operating during emergency power outages. Six systems have already been delivered, and the remaining three are to be installed by the end of May.

What was procured for heating

To ensure Ukrainian cities could keep heat and electricity on even during attacks on the energy system, in 2025 they actively procured gas piston cogeneration units—also known as mini-CHP plants. These units produce electricity and heat simultaneously, run on gas, and provide autonomous heating and power supply.

In 2025, Prozorro recorded more than a thousand procurements related to purchasing and installing cogeneration units. The total contract value was about UAH 4.7 billion, with most of the funds directed specifically to installation. This is likely because many communities received cogeneration units free of charge from international partners. According to Ukraine’s Ministry for Communities and Territories Development, 566 cogeneration units, 368 modular boiler houses, and 28 gas turbine units were delivered to the country. Some of this equipment is already operating, while the rest is still being installed. 

Kharkiv Metro Municipal Enterprise was the only entity last year that purchased cogeneration units. The company signed three agreements with the Czech company RSE s.r.o. totaling UAH 628 million and procured 13 cogeneration units—five in January, three in April, and five in June. The units ordered in January and April were to be delivered by the end of the year, while those ordered in June are scheduled for delivery by June 2026.

The peak month by contract value for cogeneration installation was November (UAH 786 million), while the highest number of contracts was signed in December (157). 

The Kyiv region contracted the largest amount for installing cogeneration units and arranging protective infrastructure for them—more than UAH 1.9 billion. All these contracts were commissioned by Kyivteploenergo Municipal Enterprise. Some of the work was to be completed by the end of the year, with the rest scheduled for 2026.

Second place was Kharkiv region, with contracts worth UAH 1.6 billion. About a third of that amount was allocated by Kharkiv Heat Networks Municipal Enterprise to build and deploy modular gas cogeneration units across the city. Some were installed last year; others are to be built in 2026.

Third is Zaporizhzhia region—UAH 423 million. The largest project was commissioned by the Capital Construction Department of the Zaporizhzhia Regional State Administration. It involves reconstructing the district heating system with the installation of gas piston cogeneration units. The work was estimated at UAH 270 million, with completion planned for October 2026.

In addition, about UAH 3.4 billion was spent in 2025 on procuring block-modular boiler houses, as well as their installation and repair. The largest project is being implemented in Mykolaiv. The Department of Urban Planning, Architecture, Capital Construction, and Development Project Support of the Mykolaiv Regional State Administration contracted UAH 1.7 billion to build a distributed heat generation network and supply 18 block-modular boiler houses of various capacities for the city. Toward the end of last year, local media reported that installation work was nearing completion—the boiler houses are expected to keep the residential sector heated even during enemy strikes or disruptions at the CHP plant. 

In Sumy, the city council’s Infrastructure Department ordered 20 block-modular boiler houses in November for UAH 448 million. By December 25, 2025, 16 boiler houses were to be delivered by Brovary Factory of Boiler Equipment Ardenz Additional Liability Company, while the remaining four were to be supplied by Atonmash LLC. 

Generators: backup for critical infrastructure

Generators—gasoline, diesel, and gas—help maintain the operation of key facilities and emergency services. They were not only procured but also installed, serviced, and repaired. Generators were most commonly procured by municipal enterprises, Ukrhydroenergo PJSC, NAEC Energoatom SE, Gas Transmission System Operator of Ukraine LLC, as well as military units. As in 2024, demand in 2025 remained strong for turbogenerators—gas turbine generator sets that produce electricity by burning gas to spin a turbine. These units are used for autonomous or backup power supply for large facilities and entire segments of the power system, particularly in emergencies or during mass outages. 

The year’s largest procurement concerned gas turbine equipment. Ukrnafta JSC contracted UAH 1.9 billion for it with the German contractor Siemens Energy AB, with delivery expected in 2025.

Gas Transmission System Operator of Ukraine LLC was not far behind. The company signed two contracts to purchase seven gas turbine generator sets worth UAH 1.3 billion in total. The units were to be delivered last year. In addition, for UAH 603,000 the company ordered five gas turbine engines with a capacity of 6.5 MW each, together with an installation kit. One is expected to be received this year, and another five in 2027.

Among other major generator buyers is Kyivvodokanal PJSC, which ordered nine diesel generators worth UAH 243 million. Delivery is expected by the end of February 2026.

It is also important to remember that, alongside domestic procurement, international partners provided substantial assistance to supply medical and other critical facilities with electricity. The EU and Germany jointly financed the purchase of 143 generators, which were transferred to Ukraine’s Ministry of Health for more than 100 medical facilities across 20 regions.

Solar power plants

Last year, cities continued procuring solar power plants for schools, hospitals, and other institutions. 

The most active procuring entity was the Dnipro City Council. Its Department of Humanitarian Policy signed five agreements to purchase solar power plants of various capacities worth UAH 194 million—and they have already been installed. Another UAH 21.3 million for solar power plants to equip lyceums was contracted by the Centralized Procurement Organization Municipal Enterprise of the Dnipro City Council. 

All these procurements were carried out in cooperation with Synergy Installation and Construction LLC, with which contracts totaling more than UAH 200 million were signed. This is what made Dnipropetrovsk region the leader by the value of solar power procurement. 

The installation of solar power plants in municipal educational institutions is expected to continue. This is envisaged in the Safe Educational Environment Program for 2023–2027, approved by a decision of the Dnipro City Council.

The procurement analysis shows that Ukrainian cities did prepare for blackouts in 2025. And this was not the first year of such transactions: last year, the value of contracted energy equipment was 1.5 times higher than in 2024. Beyond Prozorro procurements, international partners also transferred a significant share of the equipment. Still, this is not enough to fully protect the country from the consequences of attacks on energy infrastructure. Could preparations have been stronger? Probably, yes. However, during cold and dark days, it is important to remember that responsibility lies with Russia, which strikes energy facilities almost daily. For our part, we should draw lessons from this year’s experience and invest in preparations for next winter already now—approaching the process in a more strategic and systematic way.

This material was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev. The material was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

Sweet procurements: volumes and value

In 2025 (as of December 20), nearly 1,800 agreements worth UAH 208.7 million had already been concluded for the purchase of confectionery, according to data from the BI Prozorro public analytics module. At that time, an additional 14 procurements with an estimated value of UAH 5.6 million were still ongoing. The peak of ordering occurred in October and November—these months saw the highest number of procurements announced and contracts concluded, totaling UAH 39 million and UAH 117 million respectively. Some contracting authorities concluded agreements for New Year’s sweets as early as spring or summer, but such cases were relatively rare.

This year, more than one million New Year’s gift sets and over three tonnes of loose confectionery were ordered—likely to be packaged manually by institutional staff. However, these figures may contain inaccuracies, as contracting authorities enter the data manually, and it is often incorrect or inconsistent. For example, in one procurement, the specification listed the quantity of gifts as “1 lot,” while the contract itself referred to 640 New Year’s gifts. There are also dozens of procurements worth hundreds of thousands of hryvnias where several different items were purchased simultaneously—for example, cocoa powder, New Year’s packages, and Roshetto Peanut wafer bars under a single agreement. Such transactions were excluded from our calculation of the number of New Year’s gift sets, as BI Prozorro did not allow us to automatically determine either the quantity of gift sets purchased or the volume of confectionery.

The total value of this year’s procurements has already exceeded pre-war levels: in 2021, UAH 171 million was contracted for New Year’s sweets. However, it is important to consider not only price growth but also the increase in the number of children for whom gifts are purchased—namely, internally displaced children and children of military personnel who have been killed, gone missing, or are in captivity. Compared to previous years, the total contract value has also increased. Last year, UAH 157 million was spent on sweets; in 2023—UAH 123 million; and in 2022—UAH 91 million.

By contract value, 36% of procurements were conducted via request for price quotations. Another 34% were carried out through special open bidding. In 30% of cases, contracting authorities concluded direct contracts, mostly for amounts below UAH 100,000. However, there were exceptions. Fourteen contracting authorities signed direct contracts exceeding this threshold. Eight of them operate in the Kharkiv, Dnipropetrovsk, and Donetsk regions and justified deviation from standard procedures by citing their location in areas of active hostilities. The same justification was used by a contracting authority from the Novhorod-Siverskyi community in Chernihiv region, which is included in the list of territories of active combat operations and is located approximately 40 km from the Russian border. An additional UAH 405,000 contract was concluded directly by the Department of Education of the Saksahanskyi District in Dnipropetrovsk region, citing urgent need and tight delivery deadlines. A contracting authority from Khmelnytskyi region also referred to compressed timelines. Other contracting authorities resorted to direct contracts because tenders failed due to the absence of bidders.

A separate issue worth emphasizing is the lack of detail in direct procurements. In most reports and contracts published in Prozorro, contracting authorities do not specify how many gift sets were purchased, which sweets are included and in what quantities, who the manufacturer is, or the total weight of each package.

Regional leaders 

In 2025, Kyiv region contracted the largest amount for the purchase of New Year’s gift sets. State and municipal contracting authorities in the region concluded 203 contracts worth UAH 44 million. The absolute leader among all contracting authorities by contract value was the Ukrzaliznytsia’s “Production Support Center” branch, which alone contracted UAH 13.4 million for sweet gift sets. 

Kharkiv region ranked second. Local institutions procured sweet gifts worth UAH 27 million through 84 contracts. The most expensive procurement in the region was carried out by the Municipal Children’s Food Processing Plant of the Kharkiv City Council, which concluded a contract worth UAH 12.2 million.

Next in the ranking is Odesa region, where 83 contracts worth UAH 17.8 million were concluded. The largest procurement in the region was carried out by the municipal institution Center for Financing and Economic Activities of Educational Institutions of Odesa’s Peresyp District, which contracted UAH 2.3 million.

Vinnytsia region ranked fourth, with 284 contracts totaling UAH 14.8 million. The largest contract in the region was concluded by the Department of Social and Youth Policy of the Regional State Administration, amounting to UAH 1.3 million. 

Rounding out the top five is Dnipropetrovsk region, where 97 contracts worth UAH 13.1 million were signed. The largest single contract in the region—UAH 1.1 million—was concluded by the Department for Family, Youth and Sports Affairs of the Executive Committee of the Kryvyi Rih City Council.

The smallest volumes of sweet procurements were recorded in Kherson region, part of which remains under occupation—only 8 contracts worth UAH 697,000. Luhansk region is also among those with the lowest procurement volumes, with 11 contracts totaling UAH 720,000.

According to BI Prozorro data, an average of three bidders participated in procurements for New Year’s gifts nationwide. The highest level of competition was observed in Chernivtsi and Rivne regions, with five bidders per procurement, while the lowest was in Kherson region, where only one bidder participated per procurement on average.

Top suppliers of New Year’s gifts in 2025

The leading supplier by total contract value is The Land of Free LLC. The company concluded 33 contracts worth UAH 20.5 million and is one of the most active participants in the sweet procurement market. The company’s largest order was awarded by Ukrnafta—UAH 4.9 million for the supply of 11,353 gift sets, each weighing 800 g and containing 50 confectionery items. The unit price was UAH 360.40 per set (excluding VAT). The gifts will be packaged in a plywood “Birdhouse Feeder” and supplemented with a greeting card and six three-dimensional stickers.

Second place went to Sweet Gifts Workshop LLC, which concluded 64 contracts totaling UAH 18.8 million. Its largest contract this year—UAH 1.6 million—was awarded by the Youth Policy and Children’s Affairs Department of the Bakhmut City Council. Under this contract, Sweet Gifts Workshop LLC will supply 3,821 gift sets, each weighing 840 g. Every set includes 53 confectionery items and a mandatory sticker pack. The price per set is UAH 431.28, including VAT.

Sweet Trader LLC ranks third, having concluded 46 contracts worth UAH 13.7 million. The company’s largest order was awarded by the Department of Youth and Sports of the Mykolaiv Regional State Administration, with a contract value of UAH 1.7 million. Under this contract, Sweet Trader LLC will supply 10,000 gift sets, each weighing 400 g. The unit price is UAH 165.66, including VAT. Each gift set contains 32 confectionery items—two of each type—from four manufacturers: ROSHEN, Kharkivianka, Ukrainian Confectioner, and Lucas. The range includes milk fondant, jelly, caramel, hard candy, and grillage confectionery. The packaging also has distinctive features: it is made of cardboard with a New Year’s design and includes a 3D game, which children can use for entertainment.

Fourth place went to Individual Entrepreneur Olha Mykolaivna Zaslavska. The entrepreneur concluded a single contract, which was nevertheless the largest New Year’s gift procurement in 2025—UAH 13.4 million—with the already mentioned Ukrzaliznytsia’s “Production Support Center” branch. Under the contract, 78,132 “New Year’s Miracle” gift sets, each weighing 705 g, were ordered. Each package contains 58 confectionery items produced by Roshen LLC, Zhytomyrski Lasoshchi Trading House, and Dominik TM. The unit price is UAH 171.96, including VAT.

Kharkiv Biscuit Factory PJSC rounds out the top five. The company concluded 11 contracts totaling UAH 12.7 million, of which UAH 12.2 million accounts for a single large contract with the already mentioned Municipal Children’s Food Processing Plant of the Kharkiv City Council. Under this agreement, the factory will supply 91,056 gift sets priced at UAH 133.98 per unit, including VAT. Each gift will include a greeting card mentioning Kharkiv Mayor Ihor Terekhov. The use of community funds to place personal political messaging appears questionable and may be interpreted as political promotion.

Special mention should be made of Scientific and Production Enterprise Argon LLC. Although the company does not rank among the top five by contract value, it is the leader by number of contracts, having concluded 105 agreements worth UAH 3.6 million. This indicates procurement in small lots, but in large quantities. The company primarily works with kindergartens and lyceums in Vinnytsia region.

Prices and composition of gift sets

New Year’s gifts for children were also procured via Prozorro Market, an electronic catalogue of goods and services that significantly simplifies business participation in public procurement. Because the catalogue specifies the number of gift sets purchased upfront, it allows for easier assessment of average market prices.

As of November 20, 35 procurements had been recorded. The price range of gift sets varied from UAH 69.72 to UAH 406.25. Through Prozorro Market, 181,269 packages of sweets were purchased for a total of UAH 31.9 million. The average price per gift set amounted to UAH 176.6. The most common gift weight was 500 g, the largest—1 kg, and the smallest—450 g.

The lowest price among all New Year’s sweet procurements in 2025 was recorded in the city of Oleksandriia in Poltava region. There, the Department of Culture and Tourism purchased 1,500 sweet gifts for UAH 11.8 thousand, or UAH 7 per unit. In response to our inquiry, the contracting authority explained that it had purchased chocolate and marmalade candies for children who participated in games during the Christmas tree lighting event in a local park.

Another example comes from educators of the Prolisne Settlement Council in Kharkiv region. They ordered 2,205 packs of “Do Kavy Pryazhene Moloko” biscuits, each weighing 185 g, from the Vinnytsia Confectionery Factory. The total contract value was UAH 43.3 thousand (UAH 19.62 per unit). The biscuits were intended for children during celebrations of Saint Nicholas Day, Christmas, and New Year’s events in December.

Among the most expensive New Year’s gifts this year are those procured by the Stanytsia Luhanska Settlement Military Administration of Luhansk region. The contracting authority purchased 50 gift sets packaged in a wooden box, branded “Milka & Kinder – A Gift for One Champion”, weighing 860 g each. The contract value was UAH 57.8 thousand, or UAH 1,155 per gift, which corresponds to the market price of such a set.

Even more expensive gift sets were ordered by the Department of Social Policy of the Nikopol City Council. For UAH 152 thousand, the authority purchased 105 gifts, priced at UAH 1,450 per unit, excluding VAT. These gifts were intended for children of military personnel who were killed in the war, went missing, or are held in captivity.

 

This material was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev. The material was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

Summary

Excessively long payment terms are generally not a very widespread practice on Prozorro. Payment terms longer than one month are used in about 15% of goods and services procurement, and only in works procurement does their share reach 31%.

Quick post-payment reduces financial risks for suppliers and makes participation in procurement more attractive. Conversely, excessively long post-payment periods may put off part of the business community. The data confirmed this: as payment terms increase, competition decreases. At the same time, abnormally long terms of more than one year that we identified are often linked to technical errors in filling in electronic fields on Prozorro, whereas the actual terms in the contracts themselves are significantly shorter.

As for the actual speed of payment in procurements with contractual payment terms of over three months, in those cases where it can be checked, approximately 91% of lots are paid earlier than the agreed deadline — on average 57% faster. However, these data cannot be treated as a representative sample for the system as a whole, since within the scope of this study we managed to obtain payment information for only 27.5% of all such transactions. The reason is that more than two third of such procurements fall on those financed from the income from commercial activities of municipal and state-owned enterprises. Data on these payments is not public.

Complaints about payment terms remain isolated, and the AMCU has so far not upheld them. 

What can be done to reduce the share of procurement transactions with long payment terms

• First of all, find out why the AMCU does not uphold complaints about long payment terms.
• Introducing e-contracting with automatic verification of payment terms in contracts would help prevent situations where long payment periods arise due to technical errors rather than reflecting the actual conditions.
• It is worth considering mandatory reporting on contract performance events within defined time limits — this would make both payment monitoring and contract implementation more effective and transparent.
• Consider making information on payments by municipal and state-owned enterprises public. At present, there is no information at all on how they make payments, even though these contracting authorities also operate public funds. 
• A more radical option could be considered — prohibiting excessively long payment terms in public procurement at the legislative level. However, this is a rather risky step that requires much deeper prior analysis and consultations. In some cases, longer terms may have objective reasons.

How contracting authorities specify payment terms when announcing a procurement

Payment terms under a contract (the procedure for settlements) are a key factor of a procurement’s attractiveness for businesses. 

On authorized Prozorro platforms, when creating a procurement, a contracting authority must select the following in the electronic fields:

• the event upon which payment under the contract will be made;
• the type of payment: advance or post-payment;
• the period (in days) within which payment will be made;
• the type of days: working, calendar, or banking;
• the payment amount — in such a way that the total amount across different types of payment equals 100%, which makes it possible to provide for combined payment formats.

Before the electronic fields on payment terms on Prozorro became mandatory, contracting authorities did not always enter the relevant information, so such tenders are marked as “Not specified.” At the same time, payment terms in any case had to be indicated in the draft contract uploaded with the notice and had to correspond to the parameters selected in the electronic fields, where applicable.

How often contracting authorities set unrealistic payment terms

Overall, from January 2023 through October 2025, contracting authorities successfully conducted 975,000 competitive procurement transactions on Prozorro with an estimated value of UAH 2 trillion. 

Of these, post-payment accounted for 82.9% of lots by number. At the same time, when looking at the distribution by contract value, post-payment accounted for 78.9% of the total amount, almost 3.3% for advance payments, and 15.6% for a combination of advance and post-payment.

Another 14.3% by number and 2.2% by value are lots where the form of settlement is not specified. These are predominantly requests for quotations on Prozorro Market.

Post-payment is the most common form of settlement regardless of the type of procurement item. However, while in goods and services advances and their combination with post-payment account for only a few percent of lots, in works their share is higher — 8.6% for the combined type of payment and another 0.2% for pure advance payment.

Thus, across all breakdowns, post-payment is the most widespread settlement form in contracts concluded as a result of procurements on Prozorro. Going forward, we focus specifically on this form. It should be recalled that, in the context of these data, we are talking about the settlement terms that contracting authorities manually entered into the system when announcing procurements.

Which type of days for payment terms is most often used by contracting authorities 

Contracting authorities use different approaches, but most often they choose calendar days — this option is specified in 45.4% of lots. Other types are used in roughly equal proportions: 28.7% banking days and 25.9% working days. At the same time, the difference between these types can be substantial, since the same number will correspond to different actual periods. For example, 10 working days do not equal 10 calendar days, but 14. That is 40% more. Therefore, to ensure data accuracy in this study, we recalculated payment terms expressed in banking and working days into calendar days. We also took into account the fact that, at the legislative level, from April 1, 2023, a banking day was effectively equated to a calendar day.

Which payment terms are most often set in contracts

After downloading the data from BI Prozorro, we grouped payment terms into the following ranges: up to 1 month, 1–2 months, 2–3 months, 3–6 months, and over 6 months.

The analysis showed that the vast majority of procurements — almost 85% by number and 78% by contract value — have payment terms of up to 1 month.

We also examined whether there are differences between the procurement of goods, services, and works. In the first two categories, the main share falls on procurement transactions with post-payment of up to 2 months — these periods cover more than 92% of all contracts.

In the category of works, a different trend is observed: the second most common option is post-payment in the range from 3 to 6 months. It accounts for almost 12% of the total number.

It is also worth noting that in the procurement of goods and services, payment terms increase in parallel with the growth of the average contract value, which may be a logical consequence of larger supply volumes or more complex performance conditions.

By contrast, no such correlation is observed for works. 

Thus, in general, the vast majority of procurement of goods provides for swift payment, which should promote competition — suppliers face lower financial risks. Longer payment terms (over two months) are not typical for such transactions. The same trend applies to service procurement: contracting authorities are generally ready for prompt post-payment, and longer payment periods are used only in isolated cases.

For works, longer payment terms are more typical, which may be linked to technological construction cycles and staged financing. At the same time, this creates risks for contractors, especially small businesses, due to the need for working capital.

Therefore, it can be concluded that excessively long payment terms are generally not a widespread practice on Prozorro. Payment terms longer than one month are used in about 15% of goods and services procurement, and only in works procurement does their share reach 31%.

Correlation between payment terms and competition 

The highest average level of competition is observed in the procurement of goods — 2.31 bidders per lot. For services, this figure stands at 1.52, and for works — at 1.35. 

At the same time, data on the average number of bidders in procurement correlate with payment terms. Although we cannot assess the strength of this factor’s impact as the level of competition depends on more than just payment conditions, faster post-payment is more attractive for businesses. In particular, quicker payment reduces financial risks for suppliers, whereas long post-payment periods may limit access for some of them due to the need for working capital.

In goods procurement, competition decreases steadily: from 2.41 bidders per lots with payment within one month, to 2.1 for a two-month term, and 1.92 for three months. Beyond that, this indicator remains at approximately 1.71. 

For services, the dynamics are similar — competition also declines gradually, though less sharply, as payment terms increase. Overall, it falls from 1.54 bidders per lot to 1.35. Only in transactions with payment terms exceeding six months does it suddenly rise to 1.49. Given the small number of such procurements, this average value is more likely driven by anomalous outliers rather than reflecting a general trend. A similar pattern is observed in works procurement: a gradual decrease from 1.42 to 1.13, followed by an increase to 1.22 in procurements with payment terms of over six months.

Thus, it can be stated that as payment terms exceed one month, competition gradually declines. At the same time, for post-payment exceeding three months, this decline slows down significantly. With this in mind, for the purposes of further analysis, we treat procurement transactions with post-payment of three months or more as having abnormally long post-payment periods and examine them in greater detail.

Analysis of procurement transactions with post-payment and payment terms exceeding 90 days

Distribution of payment terms

Most contracts fall within the ranges of 180–365 days (17.4 thousand lots) and 90–180 days (11.6 thousand lots). Together, these account for more than 96% of all cases, with a total contract value of UAH 2.1 billion. Lots with payment terms exceeding 365 days are relatively rare — only 1,137 lots (3.8%) — but they account for a rather large total contract value of UAH 1.5 billion.

Sectoral distribution

Long payment terms are most often applied in the construction sector. The largest shares of such contracts fall under the following CPV codes:

• 45450000-6 Final construction works — more than 10% of all lots;
• 45260000-7 Roofing and specialized works — 3.7%;
• 45230000-8 Construction of roads and utilities — 3.2%;
• 45310000-3 Electrical installation works — 2.3%;
• 44110000-4 Construction materials — 2.1%;
• 44160000-9 Mains, pipelines, pipes, casing pipes, tubing, and related products — 2.36%.

Beyond construction, the segment of petroleum product supplies (CPV 09130000-9) is also notable, accounting for more than 1.8% of procurements with long payment terms.

Procurement methods

The vast majority of procedures are special open bidding procedures (90%). Other methods are used far less frequently:

• Request for price quotations — 6.4%;
• Simplified procurement procedure — 3.7%;
• Standard open bidding — only 2 cases, which are likely due to errors in filling in the electronic fields.

Financing and actual payment terms

We also sought to analyze when contracting authorities actually make payments — that is, whether it indeed takes as long as originally provided for. However, it proved impossible to conduct a comprehensive analysis of such data.

The reason is that the overwhelming majority of lots with post-payment terms exceeding three months — namely, 57.2% of such procurements — are financed from the proceeds of commercial activities of municipal and state-owned enterprises. In value terms, this share is even higher — 68.6% of all funds fall within this category. These enterprises pay under contracts from their own bank accounts rather than via the State Treasury Service, and therefore information on the actual payment dates is not publicly available.

By contrast, procurement transactions financed exclusively from the state or local budgets account for approximately one third (33.9%) by number of lots and only one quarter (25.1%) by value. It is precisely for these procurements that real payments can be traced through the Treasury system, but they do not provide a full picture of the entire market.

In addition, payment reports on the Spending portal do not always indicate the identifier of the procurement to which a particular payment relates. The Fiscal Policy Research Center supported our analysis by extracting data on the date of the first payment for each procurement wherever possible. Ultimately, such data were obtained for only 27.5% of all transactions with long payment terms.

It should also be taken into account that, under Article 253(1) of the Civil Code of Ukraine, the calculation of a term begins on the day following the relevant calendar date or event specified by the contracting authority as the trigger for the start of the term. However, since information on such trigger dates is not publicly available, as contracting authorities are not required to report them, for the purposes of analyzing procurements with long post-payment terms we treat the contract publication date as the starting point.

The largest number of procurement transactions with payment terms exceeding 90 days were announced by Energoatom JSC and its 11 separate divisions. Together, they account for more than 20% of the total number of such procurements, with a total contract value of nearly UAH 20 billion. 

At the same time, a total of 18 regional electricity distribution companies of Ukraine also constitute a significant share of procurements — both by number of lots (8.58%) and by total value (UAH 36 billion). However, their presence in the market structure is fundamentally different from that of Energoatom. Some of these companies have common or cross-shareholding beneficiaries, their procurements are not concentrated in a single entity, and are instead distributed across various legal entities.

There are also contracting authorities from other sectors that frequently resort to setting long payment terms exceeding 90 days:

• Department of Humanitarian Policy of the Dnipro City Council — 4.4% of all lots, worth UAH 1.66 billion;
• Education Department of the Darnytskyi District State Administration of Kyiv — 2.2% of all lots, worth UAH 3.12 billion;
• Kharkiv Heating Networks Municipal Enterprise — 2.2% of all lots, worth UAH 3.1 billion.

The largest number of procurement transactions with payment terms exceeding 365 days, specifically, 62% — were announced by four contracting authorities, with a total value exceeding UAH 2 billion: 

• Vinnytsia City Council Municipal Enterprise “Vinnytsiamiskteploenerho” — 18.3% of lots;
• Municipal Enterprise “Management Company for Housing Maintenance of the Sviatoshynskyi District of Kyiv” — 17.6% of lots;
• Department of Infrastructure and Landscaping of the Chernivtsi City Council — 14.9% of lots;
• Chernivtsiteplokomunenerho Municipal Enterprise — 11.2% of lots.

The analysis shows that more than 91% of lots are paid faster than provided by the contract, even if the payment period is calculated from the date of contract publication — on average, by 57%. If, instead of the contract publication date, the countdown starts from the performance event, the actual payment period is even shorter. This points to a clear pattern: the payment terms published on Prozorro do not always reflect real financial practices. 

We interviewed several contracting authorities that set long payment terms to understand why they do so. Some explained that the reason lies in the funding cycle. For example, in district heating enterprises, expenses and revenues depend on seasonality — higher revenues in winter and increased maintenance costs in summer. As one such contracting authority told us, they fear penalties for late payment and therefore secure themselves by setting longer payment terms. In some cases, the decision to establish long terms is made not by the authorized procurement officer, but by the internal customer responsible for preparing the technical specifications. And sometimes long payment terms have simply become a routine practice that no one questions anymore.

Appeals to the AMCU

Since long payment terms may deter bidders from participating in procurement, we also analyzed AMCU practice to assess whether such terms are appealed — and if so, how successful such appeals are.

Procurements with long payment terms were challenged by bidders in only 2.7% of cases, which is the system-wide average among competitive tenders. However, not all such complaints concerned payment terms specifically, some related, for example, to lack of transparency or bias in determining the winner. At the same time, tenders conducted through the request for price quotations procedure are currently not subject to appeal at all. 

Procurements with complaints specifically about payment terms are difficult to identify, but of those we were able to find, the complaints were dismissed. For example, in two ongoing road repair service tenders in Mukachevo (UA-2025-03-10-008291-a and UA-2025-03-10-008888-a), the AMCU Commission rejected the complaints (decisions No. 6419 and No. 6430 of April 22, 2025, respectively), stating that the complainant failed to provide sufficient documentary evidence substantiating the need to amend the documentation, and that there was no proof that the established payment terms violated the bidder’s rights or legitimate interests. Similar refusals were found in at least 97 other AMCU decisions during 2024–2025. 

The very fact that such a large number of complaints are dismissed may discourage bidders from filing appeals, particularly when they encounter excessively long payment terms. They may decide that challenging such conditions is not worth the time, even when the contract terms appear unfair.

Anomalous cases and incorrect data

Some procurements feature extremely long payment terms — more than one year, sometimes even up to 1,000 days. The total contract value of such procurements during 2023–2025 reaches UAH 5 billion, accounting for 3.8% of all transactions. From the procurement announcement alone, it appears that suppliers would have to wait almost indefinitely for payment. Seeing such conditions, suppliers think twice before deciding whether to participate. However, once it comes to contract signing, the situation often changes: the actual payment terms specified in the contract itself frequently turn out to be much shorter.

In some cases, the reason lies not in an intention to delay payments, but in errors made when filling in electronic fields in the Prozorro system. 

For example, the Kyiv City Clinical Endocrinology Center (a municipal non-profit enterprise) procured 1,500 packs of paper towels for UAH 74,700. The electronic form specified post-payment within 1,000 days, although both the draft contract and the signed contract with the winner clearly stipulated 30 banking days from the date of delivery.

Another example concerns the procurement of lighting fixtures for Volynoblenergo PJSC worth UAH 717,000. The contracting authority entered a post-payment term of 888 days in the electronic field but did not specify any payment terms in the draft contract. After the contract was signed, it became clear that the actual term was 120 days, and the payment deferral had been included as a non-price evaluation criterion with options of 60, 90, and 120 days, meaning the exact term depended on the selected bid. In any case, entering 888 days in the electronic field was unjustified, even though formally the requirement of the Law (Article 37(1)(37)) to specify “payment terms” was met — payment was to be made after delivery of the goods. 

These examples show that extremely long payment terms sometimes do not reflect real practice and are merely the result of errors made by contracting authorities in Prozorro.

Although average competition in procurements with long payment terms is not always high, there are certain segments that remain fairly competitive, including cases where the number of bidders reaches 10–16 per lot. For example, in the procurement of medical supplies under CPV 33140000-3, some tenders achieved competition of more than 10 bidders with an average payment term of four months. Likewise, in electricity procurement under CPV 09310000-5, the average competition for the contracting authority Ukrprodcontract reaches 10 bidders with similar contract payment terms. Meanwhile, the state enterprise “Creative, Production and Research Center for the Development of Contemporary Art,” under the same CPV code, achieved competition among 16 bidders with a payment term of just over three months. 

Anomalous cases and incorrect data

Some procurements feature extremely long payment terms — more than one year, sometimes even up to 1,000 days. The total contract value of such procurements during 2023–2025 reaches UAH 5 billion, accounting for 3.8% of all transactions. From the procurement announcement alone, it appears that suppliers would have to wait almost indefinitely for payment. Seeing such conditions, suppliers think twice before deciding whether to participate. However, once it comes to contract signing, the situation often changes: the actual payment terms specified in the contract itself frequently turn out to be much shorter.

In some cases, the reason lies not in an intention to delay payments, but in errors made when filling in electronic fields in the Prozorro system. 

For example, the Kyiv City Clinical Endocrinology Center (a municipal non-profit enterprise) procured 1,500 packs of paper towels for UAH 74,700. The electronic form specified post-payment within 1,000 days, although both the draft contract and the signed contract with the winner clearly stipulated 30 banking days from the date of delivery.

Another example concerns the procurement of lighting fixtures for Volynoblenergo PJSC worth UAH 717,000. The contracting authority entered a post-payment term of 888 days in the electronic field but did not specify any payment terms in the draft contract. After the contract was signed, it became clear that the actual term was 120 days, and the payment deferral had been included as a non-price evaluation criterion with options of 60, 90, and 120 days, meaning the exact term depended on the selected bid. In any case, entering 888 days in the electronic field was unjustified, even though formally the requirement of the Law (Article 37(1)(37)) to specify “payment terms” was met — payment was to be made after delivery of the goods. 

These examples show that extremely long payment terms sometimes do not reflect real practice and are merely the result of errors made by contracting authorities in Prozorro.

Although average competition in procurements with long payment terms is not always high, there are certain segments that remain fairly competitive, including cases where the number of bidders reaches 10–16 per lot. For example, in the procurement of medical supplies under CPV 33140000-3, some tenders achieved competition of more than 10 bidders with an average payment term of four months. Likewise, in electricity procurement under CPV 09310000-5, the average competition for the contracting authority Ukrprodcontract reaches 10 bidders with similar contract payment terms. Meanwhile, the state enterprise “Creative, Production and Research Center for the Development of Contemporary Art,” under the same CPV code, achieved competition among 16 bidders with a payment term of just over three months. 

Kharkiv region: the capital of underground learning 

Kharkiv region is a pioneer in underground school construction and the leader by number of projects. This is hardly surprising, as the region lives under constant shelling threats. Since the beginning of 2025, we have counted 17 agreements within Kharkiv region for the construction of new protective structures at schools, totalling nearly UAH 2 billion. In virtually all procurements, only one company participated and emerged as the winner. The largest projects are being implemented in frontline communities: Chuhuiv, Slobozhanske, Staryi Saltiv, Balakliia, and Tsyrkuny.

The most expensive underground school in Kharkiv region is being built in Chuhuiv. A modern shelter for 400 people is being constructed for Lyceum No. 5 at a cost of UAH 182 million. The contract price is dynamic. The project provides for 20 rooms equipped with educational furniture, as well as a medical unit and a buffet. The contractor is Lehionbud LLC, owned by Yevhenii Chaplyhin. An analysis of this procurement revealed a probable overpayment of UAH 16 million for rebar, concrete, and insulation materials. Subsequently, the contracting authority signed an additional agreement and reduced the cost of works by UAH 7.6 million; however, this adjustment did not affect the inflated prices of construction materials. Since the contract price is dynamic, it may still be adjusted in the completion certificates. Had it been fixed, the contracting authority would have had to sign an additional agreement. 

Another underground school for 400 people is being built in the same city for Lyceum No. 8. The initial project cost was UAH 127.1 million. However, on the day the contract was signed, an additional agreement was executed reducing the amount to UAH 122.9 million. The works are being carried out by Drohon Eco LLC, owned by Artem Krasnov and Viacheslav Potiahailo. The contract price is dynamic. According to analysts’ calculations, the estimate for this project may contain an overpayment of more than UAH 7 million. 

Another major agreement concerns the construction of a protective structure for 500 people for Slobozhanske Lyceum No. 2. A UAH 158 million contract was signed with Project Alliance LLC. Football and basketball courts are planned on the roof of the shelter. The founder of the company is the Fortis Construction Group Closed Non-Diversified Venture Corporate Investment Fund, managed by Oleksandr Kashkarov, and the signatory is former Kharkiv Regional State Administration official and current city council member Andrii Kolos. The contract price is dynamic. DOZORRO reviewed the cost estimate of this procurement and identified a potential overpayment of UAH 24 million for concrete and rebar. The company did not indicate in the summary statement of resources the cost of material delivery or storage expenses. Therefore, part of the overpricing may be attributable to these costs.

In Staryi Saltiv, an underground school for 423 people is being built at a cost of UAH 144 million. The works are being performed by Slobozhanske Construction Company Sarhon LLC, owned by Ihor Kuprovskyi. This same company received a contract in 2023 to restore a lyceum damaged by Russian attacks, which was again destroyed by drones in April 2025. An analysis of the shelter construction procurement revealed a probable overpayment of UAH 17.7 million for concrete, rebar, and bricks. However, the contract price remains dynamic. 

Active construction is also underway in Kharkiv itself. We found five procurements whose descriptions match the characteristics of underground schools. These involve protective structures for Lyceums No. 24, No. 48, No. 91, No. 105, and No. 152. The tender documentation specifies that these facilities will include classrooms, restrooms, and ventilation systems. 

Zaporizhzhia: keeping pace

Following Kharkiv region, Zaporizhzhia region has also joined the active construction of underground schools. The main contracting authority for such works in the region is the State Enterprise “Local Roads of Zaporizhzhia Region,” which, prior to the full-scale invasion, was engaged exclusively in road repairs. Over the current year, the enterprise signed 12 contracts for the construction of protective structures totalling more than UAH 1.2 billion. Of these, nine are in Zaporizhzhia city and three in the region. 

All procurements were conducted through special open bidding, and in each case only one bidder participated, automatically becoming the winner. The lack of competition raises questions, given that the contract amounts are substantial and the projects are similar in scope and content. The contracts were awarded to the following companies: Vivat Bud LLC, Melcity LLC, Esko Zaporizhzhia LLC, Company Positive LLC, Kalmius LLC, Adonia Company LLC, and Metkom Invest LLC. Analysts noted that these companies have never competed against each other in the same tender, yet in their references on previous experience they cite one another. For example, Esko Zaporizhzhia and Vivat Bud indicated in their bids that they had previously acted as subcontractors for Melcity during the construction of shelters for Zaporizhzhia Academic Lyceum No. 46 and Gymnasium No. 107.

The most expensive underground school is being built for Zaporizhzhia Academic Lyceum No. 31. A contract with a dynamic price of UAH 115.2 million was signed with Esko Zaporizhzhia LLC, owned by Volodymyr Bondarenko. The protective structure is designed for 500 people. In peacetime, it can be used for education, extracurricular and sports activities, and leisure. According to analysts’ estimates, the project’s cost estimate likely contains an overpricing of UAH 7.6 million.

The same company also secured the second-most expensive contract — UAH 114.7 million for the construction of a shelter for 500 people for the Zaporizhzhia Boarding School Cossack Lyceum. In this procurement, analysts identified a likely overpricing of UAH 7.4 million. At the same time, the contract price is dynamic.

The top three most expensive procurements are completed by the underground school for Zakhysnyk Zaporizhzhia Regional Boarding Lyceum with Enhanced Military and Physical Training. The works will cost UAH 113.5 million — the contract price is dynamic. Construction is being carried out by Pozytyv Company LLC, owned by Maksym Haidai. The shelter is designed for 500 people and includes learning areas, restrooms, a medical unit, a buffet, ventilation and technical rooms. Analysts calculated a potential overpricing of UAH 8.3 million in the cost estimate for this procurement.

Dnipropetrovsk region: large-scale projects 

Underground schools are also being built in Dnipropetrovsk region. We found 13 contracts totalling more than UAH 1.2 billion that meet the characteristics of such facilities.

The largest project is located in Samar. Here, Contemporary Construction Architecture LLC will build a shelter on the premises of Lyceum No. 6 for UAH 175 million. The company is owned by Yuliia Rozhenok. The underground facility is designed to accommodate up to 500 people and will consist of more than 30 rooms: a medical unit, showers, restrooms, rooms for different age groups, food storage rooms, as well as technical zones with backup power sources. However, according to analysts’ calculations, the project’s estimate may contain overpricing of UAH 25.7 million. However, the contract price is dynamic.

In the city of Dnipro, a shelter will be built for Lyceum No. 144. The works will be carried out by Stroiinvest Construction Company LLC, owned by Denys Ostrovskyi, at a cost of UAH 174.8 million. The company is linked to former Head of the Regional State Administration Valentyn Reznichenko. In recent years, the company has repeatedly appeared in cases concerning the embezzlement of public funds during the Big Construction program and tax evasion by city council officials totaling more than UAH 15 billion. 

The underground school at Lyceum No. 144 is designed for 500 people. It will be equipped with heating, ventilation, water supply, sewage, electricity, video surveillance systems, fire and security alarms, communications and smoke control. It will also include a medical unit, showers, and rest rooms. We found a potential overpricing of UAH 3.4 million in this project’s estimate. The company did not specify delivery costs separately, so they are likely included in the material prices, which means the overpricing may be lower. In addition, the contract price is dynamic.

Another major contract was signed with Tekhbudresurs LLC — UAH 120.9 million for the construction of a shelter for 500 people for Dnipro Gymnasium No. 29. In this procurement, analysts identified a likely overpricing of UAH 2.3 million. Tekhbudresurs LLC is owned by Nataliia Nikolaivska. The company has previously been linked to suspected overpricing of works and is also known for its involvement in a document forgery scandal.

Sumy region

Underground schools are also being built in the Sumy region, although significantly fewer than in neighbouring Kharkiv region — only three contracts with a total value of UAH 133 million. In two of them, analysts found likely overpricing of construction materials. However, in both procurements the contract prices are dynamic. The most expensive facility is a protective structure on the grounds of Unikum Sumy Specialized School No. 30. A UAH 53 million contract was signed with Sumy-Service-Bud LLC, owned by Oleksandr Shevchenko. According to the design, the shelter for 200 people will include main shelter areas, food storage zones, water tanks, a diesel power plant, an electrical distribution room, ventilation equipment, restrooms, auxiliary rooms, and a sanitary post. According to analysts’ estimates, the project’s cost estimate likely contains an overpricing of UAH 5 million.

Another facility is being built in Sumy — a shelter for School No. 5 costing UAH 40.5 million. The contractor selected was Sumy-Service-Bud LLC owned by Oleksandr Shevchenko. The structure will accommodate 200 people and will include main shelter areas, zones for dirty clothing, food storage areas, water tanks, a diesel power plant, an electrical distribution room, ventilation, restrooms, auxiliary rooms and a sanitary post. According to analysts’ assessment, the estimate may contain overpricing of UAH 3 million.

The third most expensive project in the region is the underground school for Krolevets Lyceum No. 5. Works worth UAH 41.6 million will be performed by Progress-P PE, owned by Halyna Bornovalova, Oksana Komarova, and Vladyslav Kondratiuk. The shelter’s capacity is 432 people. 

Kherson and Mykolaiv regions: less active

Unlike Kharkiv and Zaporizhzhia regions, where the construction of underground schools is progressing more actively, Kherson and Mykolaiv regions are demonstrating significantly lower implementation rates this year. Last year, Kherson region concluded more than ten contracts worth over UAH 800 million, whereas this year only two contracts fell within the scope of our analysis — and one of them has already been terminated.

In Kherson region, the largest project this year is the protective structure for the Borozenske hub institution of complete general secondary education. Construction of the shelter was supposed to begin last year; however, the contract with the initial contractor was terminated. The contracting authority later signed an agreement with the Mahistral Plus consortium, which had been established only four months prior to the contract signing by Avtomahistral-Zakhid LLC and VALK Construction Company LLC. The ultimate beneficiary of the consortium is Serhii Yuzvishyn. The contract with a fixed price amounts to UAH 68.2 million, yet the procurement analysis indicates a likely overpricing of approximately UAH 12 million.

Another contract for the construction of an underground school in Kherson, worth UAH 56 million, was terminated because the contractor failed to meet the construction schedule. This concerns the school was hit by Russian airstrikes in October last year.

The construction of underground schools in Kherson is progressing slowly due to a combination of factors: the city lies on the frontline and is shelled daily; some contractors have lost contracts due to violations or questionable procurement procedures; and last year, local residents protested against the construction, linking the shelling to the works themselves. In the community’s view, such construction during wartime may be impractical and could even turn these facilities into potential targets for the Russian army. As of May 2025, only three underground schools have been completed. 

According to the Minister of Education and Science of Ukraine, Oksen Lisovyi, ten underground school shelters are planned in the Kherson region: three are fully completed, while seven more are at the final stage and will be commissioned in the first half of next year. 

As for the Mykolaiv region, we found only two procurements that match the characteristics of underground schools. In the village of Mykhailivka, a protective structure is being built for the local lyceum at a cost of UAH 46.6 million. The contract price is fixed. Despite the presence of two cheaper bids, the contract was awarded to Nikopolska-STK LLC, owned by Stanislav Pohan. In this procurement, journalists from Nashi Hroshi identified a likely overpricing of nearly UAH 2 million. 

Another educational space is being developed for a lyceum in the village of Oleksandrivka, Mykolaiv region. A contract worth UAH 43 million was signed with First Ukrsainian Construction LLC, which is linked to Oleksandr Kukuruza, a member of the Mykolaiv Regional Council from the Nash Krai party and recently appointed Head of the Voznesensk District State Administration. Subsequently, the cost of works was reduced to UAH 14 million. 

At the same time, it should be noted that last year the construction of underground schools in Mykolaiv region was significantly more active — we identified 11 such procurements totaling more than half a billion hryvnias.

Other regions

Underground schools are also being built in the Odesa region. One such project is a facility with radiation protection properties on the grounds of Maiaky Lyceum in the Odesa district. It will include a medical room, a buffet, food storage facilities, water reservoirs, and interchangeable life-support systems. After rejecting three cheaper bids, the contract was signed with SPK Flagman LLC for UAH 117.4 million. The contract price is dynamic. Construction is scheduled to be completed by March 31, 2026. An analysis of the cost estimate for this procurement revealed a potential overpricing of UAH 7.8 million.

Another underground school is being built in Podilsk. The contracting authority will pay Berezivkaahroshliakhbud LLC UAH 99.5 million to construct a civil defense protective structure on the grounds of local school No. 3. The company is owned by Kniaz Khachatrian, a member of the Odesa Regional Council. The same company also received contracts to build shelters for School No. 9 in Podilsk for UAH 78 million and for Kodyma Lyceum No. 1 for UAH 61.8 million. In these two procurements, the contract prices are fixed, and analysts calculated a combined likely overpricing of nearly UAH 11 million.

In the Chernihiv region, in Snovsk, a shelter costing UAH 67.7 million is being built by Firm MZhK-Service LLC.  The company is owned by Ihor Zheldak, a member of the Chernihiv Regional Council. In this procurement, analysts found a likely overpricing of UAH 4.9 million — the contract price is fixed. 

Kyiv has also joined the initiative to build underground schools, where several large-scale projects are being implemented simultaneously. For Lyceum No. 157, construction is being carried out by Tsentra-Bud LLC — the contract value reaches UAH 279 million. For School No. 181, works are being performed by Integral Bud-Standart LLC for UAH 207 million, and for Lyceum No. 186 — by Creator Company LLC, with a contract amount of UAH 196 million. These are only a few examples; in reality, protective structures are being built across a much larger number of regions.

Conclusion

Likely overpricing of materials in cost estimates is not a unique feature of shelter construction projects. It is a systemic problem in the construction sector, where, first and foremost, there is often a lack of unified approaches to determining construction costs at the design stage, as well as insufficient state oversight and transparency. Underground schools are no exception: precisely because of their substantial budgets, any inaccuracies or overpricing can amount to millions. 

This is exactly why Dozorro specialists closely monitor such projects, analyze procurements, and send formal inquiries to contracting authorities — and this produces tangible results. In many cases, after our letters, contracting authorities revise contract prices. For example, the Capital Construction and Road Management Department of the Sumy City Council reduced the contract price for the construction of a shelter for School No. 5 by UAH 2.5 million following our intervention. We hope to see similar actions from other contracting authorities, as most of the contracts in which we identified signs of overpricing were concluded with dynamic pricing. This means that during the construction of protective structures, their cost can be readily adjusted to market levels.

Public oversight does indeed yield results; however, to prevent such situations altogether, the state needs to amend legislation and ensure real supervision over the spending of public funds.

 

This material was prepared within the framework of the “Digitalization for Growth, Integrity, and Transparency” (UK DIGIT) project, implemented by the Eurasia Foundation and funded by UK Dev. The material was produced with the financial support of the UK Government’s International Development Assistance Programme. The contents of this material are the sole responsibility of Transparency International Ukraine; the views expressed do not necessarily reflect the official policy of the Government of the United Kingdom.

Legislation

Public procurement legislation remains partially aligned with EU Directives. Considerable expectations were attached to the adoption of a new framework law — Draft Law No. 11520 — which is still under revision and is not expected to reach the second reading in Parliament before the end of 2025.

In contrast, in summer the Verkhovna Rada adopted a new Law on Public-Private Partnerships (PPP), which also falls within the procurement chapter of the Association Agreement. However, the European Commission notes that the law shows significant divergences from EU standards, particularly as it does not ensure equal access for Ukrainian and European companies to PPP opportunities, and therefore requires amendment. TI Ukraine had earlier pointed to shortcomings in the draft, including insufficient transparency of procedures and excessive discretion of selection commissions.

Alignment of the legal framework on public procurement and public-private partnerships with the EU acquis remains among the key recommendations for the coming year.

Reform strategy

Some progress was noted in implementing the Strategy for Reforming the Public Procurement System for 2024-2026, mainly in professionalization and the further development of the Prozorro system. However, the Commission recommends that the Strategy and its Action Plan should be updated, particularly by better defining the strategic objectives and performance indicators. DOZORRO had similarly highlighted that several indicators currently measure processes rather than outcomes.

The European Commission also recalled that Ukraine still lacks a dedicated anti-corruption strategy for the procurement sector. It is expected that next year public procurement will feature as a separate component of the national Anti-Corruption Strategy, which is currently under development. TI Ukraine is preparing a study on the main corruption risks in procurement to serve as a basis for this section.

Control

The report places significant emphasis on procurement control, both internal and external, assessing it as limited in effectiveness, particularly at the early stages.

Regarding the State Audit Service, the Commission observed that the institution still initiates only a small proportion of its monitoring procedures based on new risk indicators, although the introduction of such indicators and methodologies was acknowledged as a positive step. The report stresses the need to strengthen the role and capacity of procurement monitoring, prioritizing preventive, risk-based audits and ensuring effective follow-up to detected violations — recommendations that had previously been voiced by TI Ukraine as well.

Defense procurement

The European Commission also referred to instances of political interference in the activities of organizations responsible for centralized procurement for the military — the State Rear Operator and the Defense Procurement Agency. This most likely concerns the scandal with leadership change at the Defense Procurement Agency in early 2025, when Arsen Zhumadilov was appointed to replace Maryna Bezrukova as head of the institution.

Overall, defense procurement received slightly greater attention in this year’s report. The Commission noted the introduction of the position of authorized procurement officers within brigades, a long-awaited reform. It also pointed out that legislation still lacks legal clarity related to the distinction between conventional and defense procurement.