The legal framework governing defense procurements (DP) in Ukraine is established through several laws enacted at different times and under different circumstances. The onset of the Russian-Ukrainian war and the implementation of martial law necessitated the alignment and adjustment of this mix of laws making up the Ukrainian DP system to the aid mechanisms employed by partner countries. However, this process is still underway and requires further enhancements for optimal effectiveness.

This article highlights the key features of Ukraine’s regulations regarding DP and identifies certain gaps and ways to improve the system, based on the role and capabilities of the Ministry of Defense of Ukraine.

Ukraine’s Laws and Resolutions Governing Defense Procurements
Four main issues (among many others) suggest the difficulties in harmonizing Ukraine’s internal regulations to meet the armaments needs of the fighting forces.

Issue 1. Laws superceded by resolutions, with gaps. The main regulations with regard to DP are the law "On Public Procurement" (LUPP), the law "On Defense Procurement" (LUDP), and the Resolution of the Cabinet of Ministers of Ukraine (CMU) "On the issues of defense procurement during the period of the legal regime of martial law" (Resolution 1275), according to which, under martial law, defense and public procurement of goods, works, and services are carried out without applying the procedures defined by the LUPP and LUDP, and the details of procurement are determined by the decision of state customers in the field of national defense.

Notably, according to Article 2.3(1) of the LUDP, that law shall not apply to organizations and programs listed in CMU Resolution 527 (which approves a list of international organizations engaged in DP). As of the time of writing three relevant programs had been listed: NATO Communications and Information Agency (NCIA), NATO Support and Procurement Agency (NSPA), and the U.S. Foreign Military Sales Program (FMS).

At the same time, the wording of the LUDP and CMU Resolution 527 does not contain references to Ukrainian national legislation that regulates the implementation of the listed programs.

Moreover, according to the latest reports, the U.S. implements jointly with Ukraine a number of top-priority programs in the field of security, in particular Foreign Military Financing (FMF), which is not listed in Resolution 527 and hence falls under the regime defined by Resolution 1275.

It should be noted that the crucial difference of the FMF is that through this program, the U.S. government finances the implementation of FMS programs or the conclusion of direct commercial contracts by third countries at the expense of grants or loans on a repayable or nonrepayable basis, which opens a number of opportunities to strengthen Ukraine's defense capabilities. Thus, for example, under the terms of the FMF, Ukraine could purchase arms and ammunition directly from Israel, Egypt, Jordan, Morocco, Tunisia, Turkey, Portugal, Pakistan, Yemen, and Greece, as authorized participants in the FMF program.

Issue 2. Status of the Armed Forces of Ukraine. The list of authorized state customers is determined by CMS Resolution 363, "Issues of defense procurement." These state customers include Ukraine’s Ministry of Defense, Ministry of Internal Affairs, Ministry of Economy, Ministry of Justice, the State Emergency Service, the Security Service, the Foreign Intelligence Service, the State Space Agency, the State Border Service Administration, the State Service for Special Communications and Information Protection, the main intelligence department of the Ministry of Defense, the Department of State Security, the National Anti-Corruption Bureau, the National Guard, the National Police, the State Special Service of Transport, the State Bureau of Investigation, the State Judicial Administration, and the Ministry of Strategic Industries.

The Armed Forces of Ukraine (AFU), however, are not legally designated a state customer (Article 3(1) of the law "On the Armed Forces"). Instead, they function as a military formation under the authority of the Ministry of Defense, and therefore lack independent legal means to achieve efficient and swift DP.

Issue 3. Duplicate regulations hindering efficiency. With regard to the DP mechanisms available to meet the needs of the AFU, the Ministry of Defense has the Department of Military-Technical Policy, Weapons Development, and Military Equipment (DMP). Additionally, in May 2023 the Ministry of Defense established the Defense Procurement Agency (DPA) as a state enterprise, with an objective of aligning Ukrainian DP procedures with the mechanisms employed by NATO member countries.

However, a comparative analysis of the legal framework governing the activities of the DMP and the DPA reveals a lack of distinct demarcation in the two entities’ respective responsibilities. This lack of clarity results in duplicate regulations within the DP process, thereby impeding the efficient supply of armaments.

Issue 4. The lack of DP audit standards. As a result of legal uncertainty and gaps in the legislative regulation of DP in Ukraine enacted while martial law was in force, it becomes critically important to observe the transparency of procedures and control at each stage of the process. As Minister Reznikov has rightly pointed out, abuse of the right to control the DP procedure can potentially turn into a pressure tool that ultimately affects Ukraine's defense capabilities. At the same time, control of spending in such a sensitive area is necessary to enhance the image of Ukraine as a credible state and potential member of NATO. 

Therefore, the first steps to create a balanced control of DP could be the incorporation of international DP audit standards into Ukraine’s national legislation, and the recognition of the results of inspections conducted by partner countries as appropriate and admissible evidence in the course of the investigation of corruption cases related to the DP and, authoritatively, a sufficient reason for the commencement of such investigations.

Steps to Boost the Weapons Supply
The crux of the discussion is Ukraine's effort to bolster its weapons supply, which necessitates tackling several internal challenges. In particular, these are (1) eliminating gaps in the legislation regarding the mechanisms for the implementation of DP programs; (2) implementing effective mechanisms of control; (3) streamlining the decision-making process by eliminating superfluous institutions and incorporating the AFU into the state customer list; and (4) developing a clear demarcation of powers of the bodies and state enterprises involved in DP.

Of course, that is not an exhaustive list of measures that could boost the supply of weapons Ukraine badly needs now. However, a purposeful political will and awareness of the need to create a procurement system that meets world standards should allow Ukraine to develop a transparent and effective DP architecture.

The opinions expressed in this article are those solely of the author and do not reflect the views of the Kennan Institute.