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1 July, 2021
The Law “On Public Procurement” Postponed Contrary to the Constitution
The Cabinet of Ministers of Ukraine and, more specifically, the Ministry for Strategic Industries of Ukraine (MSI), has decided to postpone the implementation of a new defence procurement system. This has become obvious after reviewing the decree of the Cabinet of Ministers which provides for the return to the former, ineffective, and corrupt procurement system. The revolutionary Law “On Defence Procurement,” adopted by the Verkhovna Rada (VRU) in 2020, aimed at reducing corruption in defence procurement and bringing Ukraine closer to Euro-Atlantic standards. Then, every ministry responsible for the implementation of the Law received 6 months to properly prepare the necessary regulatory acts. 
The law entered into force on January 1st, 2021. More than half a year has passed since then but the new system is far from being in force.
The major reason has been the inability of the responsible ministries to draft the required regulatory framework and provide all necessary preconditions for the launch of a new system.
These Ministries are the MSI and the Ministry of Defence. According to the Secretary of the specialized VRU Committee Roman Kostenko, the Ministry of Defence has concluded only one agreement under State Defence Order (SDO) since the beginning of 2021, while state defence conglomerate UkrOboronProm failed to conclude any agreements at all. The issue at hand is that the SDO agreements signed last year are only being executed now. However, “the true SDO crisis is going to happen in 2022. Then, you should expect the fulfillment of agreements which were not concluded in due time”, explained ex-Minister of Defence Andrii Zahorodniuk. The new MSI decree postpones implementation of the Law until the end of the year. By doing so, the governmental agency violates not only a series of laws but the Constitution of Ukraine as well. Till the beginning of 2022, all procurement will be conducted without any competition at a price unfavorable to public customers.
On June 30, the MPs of the Rada Committee on National Security, Defence, and Intelligence expressed their dissatisfaction with the level of implementation of the Law of Ukraine “On Defence Procurement”. At the session, they criticised the above-mentioned decree saying that the decree of the Cabinet of Ministers can not and must not shape the future of the Law. The MPs are planning to inform the Prime Minister of the outrageous stalling of the reform within a respective letter.
NAKO expressed multiple concerns about the slow implementation of the Law “On Defence Procurement”. Not only does the stagnation of the reform delay the implementation of NATO standards but also poses a risk of decline in production by Ukrainian manufacturers. The direct negative impact that the setback in the reform has on the planning and execution of procurement for Ukraine’s army is difficult to overestimate, too. We call upon the Ministry for Strategic Industries to comply with the Constitution and Laws of Ukraine and to unblock the reform of defence procurement.