Milliardth arms flows: why they want to dismantle DPA and dismiss Maryna Bezrukova
The Ministry of Defense is going to dismantle the Defense Procurement Agency (DPA) and transfer its functions to the State Logistics Operator. This idea is now being presented to the public as a NATO requirement, although it is not, and the point is that the head of the Defense Procurement Agency, Maryna Bezrukova, has proved to be out of line for the stakeholders.
Censor.NET looked into what is really behind the agency reform.
The reform of the agencies into one was announced in an interview with LB.ua by Defence Minister Rustem Umierov.
"Our strategy is to hold a strategic session and merge all agencies into one, according to NATO standards. A kind of Ukrainian Defense Forces Agency, which will have procurement, logistics, measurement contracts, and efficiency in accordance with NATO. We want to create separate agencies in accordance with NATO's strategy and unite them, so there should be a vertical of artillery, missiles, drones, etc.," the minister said.
In fact, the statements about some NATO requirements that some representatives of the Defense Ministry are now trying to present are not true.
In the recommendations for reforming defense procurement provided to Ukraine as part of the Strategic Review, the creation of a single agency is indeed mentioned. But this recommendation is made for the time after the end of martial law. At the same time, it does not recommend making such changes during the war in order not to disrupt the mechanisms of work. It is worth recalling that it took the Ministry of Defense 2 years to fully launch the Defense Procurement Agency, during which time DPA was only one of the special arms importers. The Agency has been fully operational only since last fall.
In addition, just this week, the author spoke with Patrick Turner, NATO representative in Ukraine, and he did not voice any peremptory position on the agency.
Moreover, a month ago, no NATO standards stopped the Ministry's leadership from creating a third agency that would be responsible for the procurement of UAVs.
And this cannot be attributed to unfounded rumors (although Deputy Minister Dmytro Klimenkov tried to convince the author of this a month ago). Because a potential head has even been selected for this Agency.
In the same interview with LB.UA, the minister himself admitted that the creation of the third agency was his idea.
"It was my idea. I'll explain why. However, looking ahead does not mean that we have already made a decision. We have a kind of culture of unculturedness: as soon as we start discussing it, everyone is running around and passing it on," Umerov was indignant.
In fact, this shift from three agencies to one gives us reason to believe that the reason for these actions around the DPA is not NATO's recommendations at all, but that someone wants to get control of certain flows.
But for this, let's remember how both agencies were actually created. Because they were created under the leadership of Oleksii Reznikov.
As early as May 2022, Western partners made it clear to Defense Minister Reznikov that it was unacceptable for Ukrainian special arms importers to run around factories in groups and inflate the price of shells. After that, the minister fired the heads of two special export companies, Ukrspetsexport and Spetstechnoexport, and announced the launch of two agencies by the example of NATO.
The Arms Procurement Agency was the first to be established, and for more than a year it worked as one of the special exporters, while the contracting remained in the hands of the Department of Military and Technical Policy. As a result, the media published more than one investigation into abuses in arms procurement. In addition to the scandals with the Lviv Arsenal and Polish Alfa contracts, members of the public anti-corruption council learned about the significant price difference that was allowed when purchasing the same ammunition in the same period, but from different companies.
For example, in March 2022, Spetstechnoexport signed a contract for 120 mm mortar rounds at a price of €310 per unit. On April 18, Ukrainian Armor signed its contracts with the MoD at prices of €265 and €290, depending on the manufacturer. Later in April, Ukrspetsexport signed a contract with a Romanian supplier with a price of €303 for a 120 mm mortar round. But the same Ukrspetsexport, in parallel, from another, more exotic supplier, began purchasing 120 mm rounds in April 2022 for €515 per unit. And then, in June, the Ministry of Defense signed import contracts at much higher prices - with the American company Global Ordnance of Mark Morales for $500, and the Polish company Alfa for 450 euros.
How did this happen? There were constant leaks in the Ministry of Defense, when one of the suppliers submitted its application, it was leaked to a competitor, who quickly negotiated with a plant in Bulgaria, Romania or elsewhere and re-contracted the batch for himself. As a result, this unhealthy competition led to a constant increase in prices.
This was also facilitated by the fact that European countries often bought the same batches of weapons under international technical assistance at a much higher price than Ukraine.
Around 2023, a special center consisting of representatives of the Ministry of Defense and the General Staff began operating in the Ministry, which reviewed proposals from various companies. But this did not solve the problem. Because at the same meeting, they could decide to buy some ammunition at a lower price from one company and some from another, a couple of dollars more expensive.
The full launch of the DPA should remove this problem of unhealthy competition. In addition, starting in January 2024, products from a Ukrainian manufacturer will be contacted.
In the winter, the new leadership of the Ministry of Defence replaced the head of the DPA because they suspected Volodymyr Pikuzo of working for the previous team.
The new head of the Arms Procurement Agency is Maryna Bezrukova, who previously worked as a procurement officer at Ukrenergo and received international awards for fighting corruption in energy procurement. Apart from Bezrukova, there were other candidates, but they decided not to drink from this "cup". The risks were too high.
Bezrukova agreed. "Perhaps the leadership of the Defense Ministry thought she was weak and would be manageable, but it turned out the other way around," the interlocutor of the publication said.
Bezrukova first showed her temper when she demanded from Deputy Minister Dmytro Klimenkov that his advisor Bohdana Yarova stop coming to her with her advice. The latter raised a row on Facebook that the public was excluded from the processes, but in fact the PACC at MoD (Public Anti-Corruption Council at the Ministry of Defense) was not allowed to do anything by this ministry leadership (except for Yarova).
Later, even representatives of various specialty importers agreed that the Defense Ministry leadership itself could not influence Bezrukova. Recently, the head of the Defense Ministry has directly demanded that Klimenkov put all his instructions to her in writing.
At the same time, Bezrukova managed to significantly change the balance in contracting.
For example, contracting of Ukrainian products was raised from 0% to 59%. At the same time, the share of special transporters in contracting fell from 69% to 18.1%. These figures alone are enough to make sure that there are plenty of people in this country interested in destroying Bezrukova.
But there are other nuances. Unlike Arsen Zhumadilov, who formed the DOT team from his like-minded people, most of whom he took from Medical Procurement, Bezrukova came to a "swamp of crocodiles" where almost every employee was somehow connected to some group of influence (special importers).
This led to the fact that the best offers from manufacturers were lost in the interests of intermediaries.
In the summer, Bezrukova reinforced her team with the first director of the NABU and former deputy head of the NACP, Artem Sytnyk.
The DPA has introduced a system where the submitted application must be answered within 3 days. This did not stop the leaks by 100%, but it significantly narrowed the field for maneuvering, the Agency assured.
In addition, the Agency has caught some special importers in falsifying documents, terminated billions of dollars in contracts with them, and filed a complaint against them with law enforcement agencies.
As a result, the special importers will not receive the money they wanted to cover their previous debts with, because the contracts have been terminated. This will not be loved.
Specialized importers accuse the Agency of this. Here is a consolidated list of claims collected from various sources:
-DPA contracts directly are more expensive than through intermediaries - it seems that they want contracts "at any price". Plus, with a later delivery date;
- have overdue contracts for more than UAH 160 billion;
- not a single hryvnia of compensated fines from external suppliers, unlike domestic suppliers;
- not a single contract has been advanced (not started) in three months;
- no payment terms under any contract have been fulfilled by the DPA over the past three months.
The author asked the DPA for a comprehensive comment on these claims.
To start with the 160 billion, the DPA stated that this is not true.
Regarding the accusation that the DPA charges more directly, the Agency said:
"We use every opportunity to make purchases directly from the owners of the goods with the least involvement of intermediaries. In order to " reserve" future production capacities for the future, we have to take into account that producers will take into account the growing demand and rising prices for raw materials when forming their offers for future supplies," the Agency said.
"In addition to the year of production, the price is also affected by the country of origin. The price of a well-known European manufacturer that ensures the high quality of its products will, of course, be higher," the Agency noted.
The accusation that not a single hryvnia of compensated fines from external suppliers, as opposed to domestic suppliers, is also not true, the Agency assures.
"As of today, foreign counterparties have paid the Agency EUR 57,249 and USD 10,384. At the same time, the litigation is lengthy, and cases totaling EUR 5.5 million and USD 566 thousand are currently pending in courts of various instances. The amount of executed decisions and claims against special importers is over UAH 3.9 billion. However, it is worth noting that it is the special importers who face the biggest delays in the execution of state contracts. Currently, the courts are considering cases on the recovery of penalties for more than UAH 2.2 billion," the Agency said in its response.
As for domestic producers, the amount of executed decisions and claims is UAH 16 million.
The Agency also rejects the accusation of advances. As well as accusations of non-payment under contracts. For example, one of the specialty importers has received advances of more than UAH 2 billion over the past three months.
"Recently, the Verkhovna Rada decided to allocate additional 76 billion hryvnias for the purchase of weapons, and we plan to receive financial obligations for those state contracts where we can ensure prompt delivery of critical items to the front," the Agency noted.
The author has a suspicion that it was the desire to "correctly" distribute 76 billion that prompted the "reform" of the DPA.
The fact is that a year ago, the author had the opportunity to observe the charade of 30 billion that existed between the DMTP (Department of Military and Technical Policy) and the Agency, which was headed by Volodymyr Pikuzo at that time. The DMTP contracted this money for its own needs, while Pikuzo contracted it actually on credit for the next year.
As a result, the Agency's work has recently been audited. And in addition to business trips (the Ministry of Defense did not like Bezrukova and Sytnyk traveling anywhere), as well as claims regarding the purchase of official Hyuindai Tucson for travel to acceptance and business trips for Agency employees, the current management is accused of having 25% of contracts with budgetary obligations for Spetstechnoexport. However, the lion's share of them (75%) were concluded during the period of the previous head of the Agency, Picuso, not Bezrukova.
But there is a possibility that it will be Bezrukova who will be declared guilty on Saturday.
Even if we accept the claims of the special transporters as absolute truth, it is unclear why the head of the Agency should not be replaced, but rather destroyed.
Why destroy it? Because for two weeks now, diplomatic institutions of European countries have been aware that they want to transfer arms purchases to the DOT. Sources in the DOT also confirmed that this option is being considered, in particular, the absorption of "an adequate part of the DPA staff."
In other words, it is the DOT that is being considered as the basis for the new agency, not the DPA. Even though the DPA is larger. Moreover, the creation of, for example, the so-called "highly classified site" takes six months. And it is not handed down like a pennant.
The arms market is even more specific than logistics.
But the DOT has a successful track record, you might say.
Not quite.
The biggest crisis of the DOT at the moment concerns the purchase of food for the army. In the spring, the supply of food to the army was disrupted for three weeks because of the war between the DOT and old suppliers. Despite the fact that supplies have now stabilized, most of the old suppliers are still operating on the market: Atomservice, Meat Prom as a new facade of the Hlyniana`s group, Kontrakt Proderezerv, Yug Prod Trade, Busk Canning Plant, which is associated with the Hrynkevych family.
At the same time, the failure of a significant number of new suppliers was due to the fact that they were not contracted by subcontractors who were blackmailed by old suppliers that they would not be paid back.
But that's not all. Even those companies that were suppliers for a short time still cannot get their money from the DOT. Those who have been supplying bread complain that they are in the red.
"We can't work without communicating with the food supply officers, because we need to have a supply forecast, and the DOT prohibits it. In addition, some products have a margin to cover the rest. But to create this margin, many people go to great lengths to reduce quality. For example, nowhere is there a chicken for 120 as in the catalog. What we can buy is a skin plumped with water," says one potential supplier.
The following year, the DOT announced a pilot project in some regions where goods would be purchased from producers designated by the DOT after informational bidding. In addition, Arsen Zhumadilov's team is launching the DOT-chain system for electronic document management.
"The fact that the old ones who have never worked legally are not able to use it is one thing. But we also can't yet assess whether we will be able to pull out the purchase of new software, and how to include it in the same catalog price," notes another potential supplier.
This is only what concerns food. And this is enough for DOT to remain in its niche.
Currently, the Ministry has two concepts for the situation: one is to pretend that the Agency will be merged someday, but the process has already begun. The other is to fight Bezrukova. What the Ministry has chosen will become clear tomorrow.
On Friday, the Defense Ministry gathered representatives of the G7 and tried to pretend that this was all a misunderstanding, and promised to "engage the teams of the Ministry of Justice of Ukraine, the Ministry of Foreign Affairs and our international partners from NATO in active cooperation in implementing the recommendations of the Review and their practical implementation."
At the same time, the Defense Ministry plans to make full use of the audit against Bezrukova.
Tetiana Nikolaienko, Censor. NET
