Ukroboronprom and Defence Procurement in the US Priority Reform List for Ukraine

The United States introduced Ukraine and its partners with a list of key reforms needed for Ukraine to receive the aid. Apart from the functioning of the anti-corruption institutions and the judiciary, the list includes several anti-corruption measures in defence and security.
The document, published in the media, defines numerous reform priorities within 18 months. Currently, it is only a working draft to discuss within the Ukraine Donor Coordination Platform (USA, EU, World Bank, EBRD etc.) If approved and implemented, the list is to be the guarantee of further assistance to Ukraine. 

Mainly, the list of reforms is far from principally new: the proposed measures have been emphasised by the civil society of Ukraine to one degree or another. Particularly, NAKO has been actively promoting many listed reforms to both the government and the key international partners since the very beginning of our existence. More importantly, these and other reforms NAKO has previously discussed with Secretary Blinken during his visit to Kyiv in September 2023.

In general, within the area of defence and security, the U.S. suggests concentrating on the following priorities: mitigating corruption, setting up an effective procurement system, and bringing the defence industry to the OECD standards while transferring to the NATO ones in the army. 

First, Ukraine will select and launch a new Supervisory Board in the newly-established Ukraine Defence Industry JSC. It is one of five conditions for the US to keep providing Ukraine with macro-financial assistance. We will remind you that earlier, the state conglomerate Ukroboronprom ceased to exist, transforming into a joint-stock company. It was a historic step for Ukraine’s defence industry. However, the transformation is insufficient for the whole industry to reform – an effective system of corporate governance is needed within the company itself. Therefore, the assignee of Ukroboronprom must implement the OECD standards, particularly in the area of the Supervisory Board, which is its main managing body. Notably, a part of its board members must consist of international experts in the field. 

During the year, the U.S. also suggest the Ministry of Defence to focus on the next steps:

• implement transparency, accountability and competition within the system of state procurement, particularly the defence ones (even taking into account the martial law requirements on secrecy); 
• enhance the democratic civil oversight and monitoring, modernise the command and transform the defence planning and the managing procedures in the AFU with an emphasis on fighting corruption; 
• modernise the personnel system and military education; 
• maintain the implementation of the “Women, Peace, Security” program.