The Audit Chamber on logistical procurement for the Armed Forces of Ukraine: violations, losses, and low quality

Shortcomings in the logistics procurement system for the Armed Forces of Ukraine

The Audit Chamber has identified critical shortcomings in the logistics procurement system for the Armed Forces of Ukraine. The report highlights violations in tender documentation, low quality of supplies, and significant financial losses that raise concerns about the effectiveness of state budget expenditures.

According to the data, the State Enterprise 'State Logistics Operator' conducted 95% of procurement procedures through the electronic system. However, 100 lots, accounting for 7.2% of the total announced, were challenged and canceled. Additionally, 216 lots, or 15.5%, were deemed unsuccessful due to lack of proposals. A significant portion of contracts, namely 60% (429 out of 718), were deferred or reduced in scope, and 40 contracts were completely terminated.

Financial consequences and management issues

The financial consequences of these violations are also striking. The budget missed out on about 2 billion hryvnias in the form of imposed penalties. Purchases made without using the electronic system led to:

• an increase of 395 million hryvnias in 21 cases;
• a decrease of 112 million hryvnias in 11 cases.

The recorded instances of unlawful price increases in procurements by almost 98 million hryvnias indicate serious problems in financial management.

Moreover, the list and volumes of procurements were changed 48 times, resulting in incomplete fulfillment. The execution of the procurement list for food products was 81%, for fuel and lubricants – 89%, while for 21 nomenclature items of material assets – only 69%.

This data confirms the presence of systemic issues in the logistics procurement processes that require urgent solutions to improve the provision efficiency of the Armed Forces of Ukraine.

The identified shortcomings in the logistics procurement system may have serious repercussions for the country's defense capability, as the effectiveness of resource supply directly impacts the readiness of the Armed Forces of Ukraine.

It is important for the relevant authorities to take the necessary measures to address these issues, ensuring proper control over expenditures and compliance with procurement procedures, which, in turn, will contribute to optimizing the use of budget funds in the defense sector.