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6 November, 2018
UoP tender updated to include feedback from bidders

Deadline moved to December 11, 2018

On 28 September 2018, Ukroboronprom (UoP) introduced a number of updates to its $4.5 million (US) tender, and announced a new deadline of December 11th. There are three components to the company’s procurement: 1) strategic consultancy, 2) a legal review/due diligence and corporate governance assessment, and 3) a financial audit according to international standards after consultations with the potential bidders. The updated version of the tender in Ukrainian is available at Prozorro (tender ID UA-2017-12-20-003453-c, in Ukrainian only). An English translation can be provided by the UOP tender committee upon request. NAKO is monitoring the tender process and providing technical advice to the company and its supervisory board. NAKO supports the effort to reform UOP, and believes that it is vital that credible companies are found, which have the required expertise to inform and support the implementation of this historic reform project. A full and independent financial and legal audit, conducted in accordance with international standards by a recognized firm, will help UOP gain trust not only from the Ukrainian people, but also among Western partners and investors. It will also help to set the framework for the structural reform of UOP, including partial corporatization and privatization of UOP companies. Under the updated documentation, in order to qualify for the tender, the bidder must demonstrate sufficient capacities and experience in the field. The tender is separated into three “lots”. For the strategic consultancy lot, the bidding organization must:
  • Belong to a network of consulting firms that has properly fitted offices in more than 10 (ten) countries on at least 3 (three) continents; or
  • Belong to a military and security agencies of a NATO state; or
  • Be a private or public organization with more than 7 (seven) years of experience in providing consulting services to complex defense companies.
The bidder’s team must include, as a minimum:
  • At least one person with MBA degree from one of the top business schools (top-25 business schools as rated by the Financial Times and/or The Economist, and/or The Times in the last 5 (five) periods when such ratings were created (for Business & Management); and
  • At least one person with experience in reforming defense industry enterprises or experience of working in leadership positions in NATO defense industry companies and/or in leadership positions in government in defense and/or economic and/or industrial sectors; and
  • At least one person with experience in reforming large enterprises, including holdings companies, company groups, corporations; and
  • At least one person with experience in corporate management, implementation of internal controls and risk management systems or anti-corruption mechanisms.
  The bidder must also possess demonstrated experience in performing service agreements to the defense industry actors, namely strategic consulting services, and/or restructuring and/or implementation of marketing strategies and/or increasing operational efficiency (at least one engagement). For Legal review/ due diligence and corporate governance assessment lot, the bidding organization must belong to a single network of firms represented on the international market of legal services as a whole and acting under one commercial brand, having properly fitted offices in at least 10 (ten) countries including one in Kyiv. The bidder’s team must include, as a minimum:
  • At least three persons with a higher legal education diploma (MA in law) issued in Ukraine; and
  • At least one person with a LLM degree from the Top-100 universities of the world as rated by "QS World University Rankings", "Academic Ranking of World Universities" or "Times Higher Education World University Rankings"; and
  • At least three persons with experience in providing legal review and diagnostics (due diligence) and/or corporate management and/or anti-corruption mechanisms and/or compliance; and
  • At least one person on the lists of "Chambers and Partners", "IFLR 1000" or "The Legal 500" in the last five years in corporate law/mergers and acquisitions and/or anti-corruption mechanisms and/or compliance.
The bidder must also possess demonstrated experience in performing services of legal review and diagnostics (due diligence) and/or corporate management and/or anti-corruption mechanisms and/or compliance (at least one agreement). For the international financial audit lot, the bidder must demonstrate the that it:
  • Belongs to a single international network of auditing firms that is in top-15 for income for the last five years according to the International Accounting Bulletin; and
  • Is included in the Ukrainian Register of Audit Firms and Auditors; and
  • Has at least 100 employees that are directly involved in provision of audit services and are employed full time and have a work contract. This should include at least five employees with certificates of qualifications to provide audition activities on the territory of Ukraine, and at least 15 employees that have at least one document proving they have completed full certification program issued by one of the member organizations of IFAC, ACCA, AICPA, or ICAEW (Please note that this requirement is aimed at demonstrating bidder’s overall capacities rather than specific team engaged in the project); and
  • Has third party liability insurance agreement (on reimbursement of possible damages associated with professional activity for the amount of not less than UAH 50 million) valid throughout the whole period of provision of services; and
  • Has sufficient financial capability (annual income for the last three years not less than UAH 30 million); and
  • Has documentary evidence that the audit firm (or the single network of audit firms that the firm is part of, including outside Ukraine) has experience in providing audit services to companies in the relevant field (at least two tasks of audit in the last three years).
All thee consultants will work in close cooperation with each other and the Ukroboronprom transformation team, which will be set up. The UOP Supervisory board is also in the process of setting up an Audit Committee, which will oversee the process of financial audit. The tender process for all three lots will be a competitive dialogue procedure. NAKO would invite all interested and qualified organizations to apply, and would be happy to answer to any inquiries regarding the tender and NAKO’s involvement. All such inquiries should be addressed to NAKO’s Secretary General Olena Tregub at . For reference. Ukroboronprom is a conglomerate comprising 139 state-owned producers of military equipment and related services. It was launched in 2010 with the aim of increasing effectiveness of Ukrainian military industry. Ukroboronprom has 80 thousand employees and is divided into six clusters, including aircraft industry and aircraft maintenance; shipbuilding and marine facilities; armored vehicles; precision weaponry and ammunition; radar, radio communication; special instrument engineering cluster; special exporters cluster. In 2017, Ukroboronprom has developed reform strategy which provides for, inter alia, international audit and corporatization. In parallel, Ukroboronprom has announced a tender for strategic, legal and international audit services to obtain expert advice and guidance in the reforming process.