What is Secret in Defense Purchases not Related to Weapons?

The Ministry of Defense of Ukraine should be a transparency and integrity leader

The recent scandal over the purchase prices of food for military units has highlighted numerous pressing questions about the risks of secrecy in defense contracts. The Minister of Defense is now discussing launching a Military Prozorro system for the department’s procurement, which should retain “certain restrictions” but ensure public trust. DOZORRO project by Transparency International Ukraine found out what the Ministry of Defense is buying and whether these are really secret purchases.

Armament and military equipment

Let’s start with the most classified purchases. Procurement of weapons and military equipment in Ukraine has traditionally been a secret behind seven seals. The state defense order has always been eyes only. Any information about weapons-related purchases was considered sensitive.

It could probably be accepted that secrecy is important in this procurement category, but in reality, this is far from always the case.

The fact is that in contemporary world it makes no sense to hide the very fact of development, production, or use of certain weapons. After all, one way or another, this information becomes available to the public.

For instance, it was no secret to anyone that Ukraine was developing the Neptune anti-ship complex. What’s more, the public has all the information about the stages of development and phase-in of this complex.

There are certain specialized media outlets that publish information about the number of weapons in each country, the latest developments, and trends in technological advancement.

The United States has already realized that the total secrecy approach of defense purchases makes no sense. It is crucial to keep secret the characteristics of the weapon, not its quantity.

Unlike the Ukrainian state defense order, anyone can freely visit the page of the US defense budget and see the weapons the Pentagon buys, their quantity and price. For example, we can see that in 2023 the USA plans to purchase 4,764 GMLRS for the HIMARS complexes at a price of USD 165,600 per piece (see Fig. 1). These are exactly the missiles that the Armed Forces use to destroy ammunition depots and enemy headquarters.

In reports on the US defense budget, we can even see information about the quantity and cost of ammunition purchased with taxpayer funds. In addition, the results of defense procurement audits are public. Thanks to this, the trust of taxpayers is formed – because they know that their money is spent efficiently.

Of course, in the conditions of a large-scale war, most of the purchases of weapons and military equipment really need to be hidden. After all, this can create a certain tactical advantage and provide an opportunity to accumulate reserves impossible for the enemy to consider.

Therefore, the reform of publicity in the field of arms procurement should probably be postponed until the end of the war. But what about everything else?

Purchases not related to weapons

Structures of the Ministry of Defense of Ukraine spend tens of billions of hryvnias on the purchase of military clothing, footwear, food, fuel and hundreds of different household products and systems – from generators and sleeping bags to trucks.

These purchases raised many questions before 2022 as well.

• For example, in 2021, the State Bureau of Investigation announced suspicion to an adviser to the Minister of Defense for lobbying the interests of one of the food suppliers, and accused him of causing losses to the state of UAH 720 million.
• In 2018, during the inspection, 180 tons of low-quality canned goods purchased for the army were discovered.
• For several years, the Ministry of Defense has been accused of lobbying the purchase of lubricant oils from MP Ponomaryov’s company.

This list of questionable purchases is very long.

It would be great if during the war corruption disappeared from defense offices, but it is difficult to believe that this is possible.

Many of the old personnel keep playing by the old rules. This is when the fate of contracts of the Ministry of Defense was decided not by the principle of competition between participants and the best price, but by backroom agreements, lobbying and orders from immediate leadership.

Since all procurements of the Ministry of Defense were hidden from the public in 2022, it was only a matter of time when the first corruption scandal would arise.

Therefore, lacking publicity, it is impossible to build trust in the efficiency of the use of taxpayers’ funds. The system itself is unlikely to change quickly if there is no public oversight.

What information about Ministry of Defense contracts may contain sensitive information

You should immediately understand when the information – and what kind of it – can really play into the hands of the enemy, and how dangerous its disclosure can be (see the table below). It should be noted that this is not about the procurement of weapons and military equipment, only about purchase of civilian goods.

The sensitivity of information in Ministry of Defense contracts

Type of information	When the information may be sensitive
Information about the supplier	When the information about the supplier clearly indicates the manufacturer and the place of production in Ukraine. The subject of procurement is goods that can be produced by a limited group of entrepreneurs and are critical for provision of the Armed Forces.
Place and terms of delivery of goods	When the place of delivery indicates the location of logistics or military facilities
Quantity of the goods	When the number of goods indicates the number of troops and, in combination with information about the place of delivery, makes it possible to determine the number of troops in a certain region
Product information (specifications)	If the characteristics of the product indicate the manufacturer and the conditions specified in the first paragraph hereof are met
Terms of payment	No risks
Price of the goods	No risks

To summarize, only information about the manufacturer and the place of delivery can be really sensitive. And even this is relevant in exceptional cases.

After all, it is clear that the Russians will not aim their missiles at producers of chicken eggs and canned fish in order to interfere with the MoD contract. These goods are not critical for the front, and alternatives can be quickly found on the market.

Such a risk is possible for manufacturers of more critical products and when there are not so many manufacturers on the market. For example, it can be vehicles for the transportation of personnel or military equipment, where there are only one or two manufacturers and there are real negative consequences for the Armed Forces in the event of a strike on production.

The place of delivery also causes a lot of controversy. But it can always be indicated incompletely so as not to expose a specific storage point to the enemy. For example, one can specify only the region, district, or city.

As for the number of military personnel, the total strength of the Armed Forces is not classified information. The Minister of Defense himself speaks openly about this. But information about the number of troops in a certain region can be sensitive. And if we talk about the number of canned food and eggs, then such information is unlikely to be used by the enemy. But, for example, the number of grocery sets, sleeping bags or ground pads can indicate the number of recipients of these goods.

Therefore, it is necessary to maintain a certain information thoughtfulness relating to the procurement of the Ministry of Defense. But in most cases, data on civilian procurement of the MoD will never help the enemy in any way.

Meanwhile, there are no objective reasons to hide information about prices and terms of payment (the latter is also important because it makes it possible to manipulate the price) at all. The cost of eggs, shoes and canned goods is of interest only to those who pay for them, i.e., citizens of Ukraine. The enemy does not benefit from this.

What the MPs and the government propose

After the scandal over the procurement of the Ministry of Defense, draft law No. 8381 was introduced to the Verkhovna Rada (the Ukrainian parliament). According to it, the deputies plan to introduce mandatory reporting within ten days from the date of execution of the contract by the Ministry of Defense (for purchases worth more than UAH 200,000). The report shall indicate the name of the customer, the name of the purchase item, and the price per product unit.

In this way, the public shall be able to find out information only about the prices of goods. But this does not give a complete understanding, because the price depends quite a lot on terms of payment, order of its revision, and terms of delivery.

The Ministry of Defense, rejecting accusations of corruption, referred in particular to the fact that the contract has certain conditions for price revision (they say that the price indicated in the contract is the maximum, not the actual price), and that the terms of supply are quite specific. Eventually, the public has never seen evidence of either the first or the second explanation. Still, it is absolutely obvious that just publishing the price will not remove all the questions.

On top of that, the mere fact of reporting does not tell us anything about how and why any supplier was chosen. An opaque way of selecting suppliers will negatively affect the confidence of market participants, and such purchases will never become effective.

The Ministry of Economy suggests expanding the scope of application of Resolution No. 1175 on the implementation of framework agreements for the purchase of military clothing. But this will cover only part of the purchases of civilian goods by units of the Ministry of Defense.

In addition, a framework agreement is better suited for systematic purchases that are carried out with a certain periodicity. It is not very effective for one-time or non-system purchases.

Why can’t all MoD purchases not related to weapons be transferred to Prozorro?

Very often we hear that Prozorro is not suitable for certain purchases. But this is manipulation. After all, Prozorro is only an electronic platform that implements the protocol of the procurement procedure, embodied in laws and government regulations.

Any procurement procedure looks the way it looks, because that is how it is described in a certain legal act.

In fact, nothing prevents the procurement of the Ministry of Defense through the Prozorro system. For the most part, these procurements do not contain sensitive information. And even if there is any, there are mechanisms and ways of conducting such purchases, in particular, bidding with an NDA contract. In this case, parts of the data are not published, however anyone can see the tender, enter into a non-disclosure agreement (NDA) with the customer and read the sensitive details of the contract.

In any case, it’s a matter of desire, not capabilities. And the Ministry of Defense of Ukraine should be a leader of transparency and integrity because the defense capability of our Armed Forces depends to the greatest extent on the efficiency of purchases by this particular customer.

The publication was prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.

Read this article in russian and Ukrainian.