Time to bring transparency back to defence procurements

by Anastasiia Radina, originally published on UP

It is obvious that information of investigative journalist about inflated prices in procurements of food for the military cannot be left without civilized response.

According to the article, a dozen of eggs were procured by the Ministry of Defense at wholesale (!) price for 170 UAH, when they can be purchased at retail in any store for an average price of 70 UAH. One kilogram of potatoes costs 22 UAH instead of 12 UAH in the supermarket. One kilogram of beets costs 35 UAH instead of 11 UAH.

The Minister of Defense publicly explains the price for eggs as technical error. As it turned out, eggs are measured in kilograms for the first time in the history of procurements.

The investigation will determine where is the truth. The NABU has already reported that the investigation is ongoing, which the agency had started before the journalistic material was published.

Will explanation of the Ministry of Defence satisfy society? I am convinced that maintaining public trust in the state is the primary task of the state today. Nowadays, we no longer have the right to demand that people should understand the procurement of eggs in kilograms or the unit of measurement for chicken thighs, where one piece suddenly costs 120 UAH.

Instead, we must ensure the level of procurement transparency for the army that will prevent such scandals. Can this be done in a way that does not expose customers and suppliers to additional risks? Yes. 

Currently, there is a loophole in the legislation regarding defence procurements during the war. Since the introduction of martial law in Ukraine, the Ministry of Defence and other defence procuring entities have been entitled to make even “non-secret” procurements in private, outside the Prozorro system.

It is obvious that maximum efficiency and security of procurements of everything necessary for defence is the justified requirement in wartime. However, such component of procurement as purchase prices is also closed. And this applies not only to weapons procurements (which are justified), but also to all procurements for the needs of the military, namely from socks to buckwheat. Procuring entities are obliged to publish reports on these procurements only 90 days after the end of martial law. 

Thus, information on prices for defence procurements of military supplies has been closed for almost one year now. And not only for the public. The ability of controlling bodies to monitor procurement prices to identify problematic issues in timely manner is also significantly limited.

I asked the Ministry of Defence about the procurement of supplies for the army, and instead of information I received the blank response.

According to my information, few months ago the Ministry of Defence responded to the request of the specialized defence committee regarding defence procurements with proposal to involve the SBU and find out who writes such requests and why. The Accounting Chamber has not responded to the request to include the audit of defence procurements in the agency’s work plan in 2023. 

In response to the publication of journalistic investigation about 170 UAH for a dozen eggs, the Ministry of Defence also publicly stated that it was preparing the appeal to the SBU to check the author of the material for disseminating “knowingly false information” (just in case, I remind you that Ukraine has legislation to protect whistleblowers).

At the time of writing this article, the Ministry of Defence has not yet provided any public explanation regarding costs of procuring food for the military.

If journalists’ information is manipulation as the Ministry of Defence states, why was information about the real procurement prices concealed. It could have prevented the scandal and maintained the trust? The question looks rhetorical without explanation from the Ministry of Defence. 

It is currently known that as of October 1, 2022, the Ministry of Defence’s budget for logistics for the military amounted to almost 300 billion UAH; out of this amount contracts and commitments were made for the procurement of material property worth 48.5 billion UAH, and another 19.1 billion UAH were contracted for food for the military. Thus, “non-armed” defence procurements of the Ministry of Defence for the first 9 months of the war amounted to 68.2 billion UAH. 

Expenditures on security and defence in the budget for 2023 amount to 1 trillion 141 billion UAH (or almost 50% of all expenditures, which totals 2 trillion 640 billion UAH). 

Against the background of recent events, the Parliament should immediately introduce the safeguard to ensure the effective use of “defence” funds: to provide for the disclosure of purchase prices for “non-armed” defence procurements after conclusion of regarding contracts. 

Together with our colleagues, we registered the draft law No. 8381, which provides for mandatory publication in the Prozorro system of information on the cost of goods, works or services purchased for needs of the army (except for weapons) 10 days after the conclusion of contract or amendment to the contract.

We propose that such reports should contain only the subject of procurement and the cost per unit of goods, services or works. For food procured by the Ministry of Defence as the service, it will be necessary to publish the unit price of all goods included in the product catalog of such service.

During the martial law, there will be no requirement to disclose the volume of goods that could give the hint to the enemy about the number of personnel, name or location of the supplier, the place of performance of the contract, or details about works and services – solely for security reasons. 

This approach to disclosing information will not create security risks for either procuring entities or suppliers. However, it will create problems for those who may want to profit from Ukrainians during the war, and it will also allow to respond in time to inflated prices, if any, and prevent misuse of budget funds. 

I am convinced that such reports should be made public not only for future procurements, but also for all unclassified (“non-weapon”) procurements since February 24, 2022. The Ministry of Defence and other procurers have this data. They are obliged to keep procurement data and make it public after the end of martial law (according to the current law). 

Disclosure of information on procurement prices is important not only for efficient use of funds and prevention of corruption. It is also important to ensure trust of society that fights for the state. 

By the way, I initiated amendments to the law to make defence procurement prices public even before the end of martial law. Back in July-August 2022, together with my colleagues, I submitted similar amendments to the draft law №  7163. At that time, the Ministry of Defence strongly opposed amendments and they were rejected. 

If the Parliament had supported the disclosure of information on procurement prices for military supplies, the story about 170 UAH dozen eggs might not have happened.

I believe that nowadays the Ministry of Defence should be interested in supporting such changes to demonstrate to the public true zero tolerance for corruption. 

We are also obliged to provide the public with an opportunity to see prices at which clothes, food and other supplies are bought for our military, namely our relatives, friends, comrades and neighbours. 

We have no right to let any dishonest official hide behind martial law.

If the Ministry of Defence wants to continue the tradition of sending appeals to the SBU, this time to verify intentions or actions of authors of the draft law, I am ready to discuss the proposed norms with the SBU as well. 

In conclusion, I would like to emphasize that in order to maintain public and international partners’ trust in the state, it is vital not to sweep the dirt under the bed, but to conduct impartial investigation in accordance with the law and close the loophole in procurement legislation that could lead to such scandals happening again. 

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