1 November 2018

NAKO experts are working on the assessment of the current Law of Ukraine “On the State Defence Order” (DOZ). The results of this work will be provided in the brief, along with recommendations on how to improve the Law in order to reduce corruption risks.

The Law of Ukraine “On the State Defence Order” was introduced in 1999. Since its adoption, significant changes were made in 2003, 2005, 2010, 2011 and 2016. The illegal annexation of the Crimea and Russia’s military aggression in the east of Ukraine have led to significant structural changes in Ukraine’s defense industrial sector.

Firstly, the State Defence Order has increased substantially: from UAH 1.33 billion in 2014 to UAH 21.3 billion in 2018. Secondly, the share of private enterprises in the State Defence Order has considerably increased. If in 2014 most DOZ orders were carried out by state-owned enterprises, whereas in 2018 the share of private enterprises reached 69%.

These factors, along with other significant changes in the security and defence sector, resumed the discussions on the need of the new order for defence procurement. Thus, in May 2018 Ukroboronprom initiated a working group on drafting the new Law of Ukraine “On State Defence Order.” NAKO representatives were invited and thus joined this working group.