17 July 2020

In the second reading, the Rada adopted the Law ‘On Defence Procurement’. The law was supported by 276 MPs. The law has to minimize corruption risks in Ukraine’s defence sector: it ensures transparency of defence procurement procedures, considerably increases the transparency of procurement planning, provides effective civil and democratic oversight and control. Due to this, budget funds for defence-related goods, services and works will be used more efficiently. Apart from that, the law also stipulates the opportunity to create for the MoD a Central Procurement Agency which will enable saving funds for the ministry and minimizing corruption risks.

By the second reading, NAKO provided 8 key recommendations, out of which 4 were partly included in the law. For instance, we have revealed contradictory moments which include: a vague subject of regulation and a vague definition, including the presence of several provisions which do not belong to the law scope. The other problem that we paid attention to and which was taken into consideration is a big number of the so-called blanket rules (those norms that refer to other norms).

Still, several important issues remained which require further elaboration. For instance, one of the important questions that we raised is the need to de-classify data about the plans, content and volume of financing of contracts that have been already implemented according to the Law ‘On State Defence Order’. We supported the idea to launch a special order of de-classification. Originally, it was supposed that a special inter-agency commission will deal with declassification. The commission was supposed to review all the executed contracts and define which of them could be de-classified without the damage to national security. However, the final version of the text includes the opportunity to de-classify contracts by both the commission and individual experts, without clear explanation who should do it. In our opinion, this brings serious risks of legal uncertainty.

Other contradictory questions that we paid attention to is removing from the text of the names of procurement organizations and increase of the National Defence and Security Council powers as for approval of procurement plans of the State Customers (which in our opinion can damage the checks and balance system defined by the Constitution).

For the first time ever the draft bill in Ukraine’s defence sector was developed involving all the key stakeholders including the relevant government bodies, state and private arms producers and the civil society. In particular, the participants included MPs, the representatives of the Ministry of Defence, the Ministry of Economy, Trade and Agriculture, the President’s Office, the Security Service of Ukraine, the state defence conglomerate Ukroboronprom, the League of Defence Enterprises of Ukraine, the Association of Producers of Arms and Military Equipment of Ukraine, the Association ‘Ukrainian Defence and Security Manufacturing’.

The Independent Defence Anti-Corruption Committee was actively involved in this legislative process as the coordinator of civil society and expert community. NAKO’s recommendations concerning minimizing corruption risks in the State Defence Order system presented in our report on SDO reform were also taken into consideration during the work on the project.