In 2023 alone, civilian publicly funded customers spent more than UAH 1.3 billion і The total amount spent by civilian customers on the purchase of drones, UAVs and copters through the Prozorro system is UAH 1,319,842.7 thousand, which is the sum total of all contracts concluded in 2023 (completed and active) on drones of various types through the Prozorro procurement system. This refers primarily to local governments that want to help the Armed Forces in this way. Unlike the military, private companies, or charitable foundations, they are obliged to conduct all procurement through the Prozorro platform.
Such a large-scale procurement market, as well as the obligation of customers to choose the cheapest supplier, has led to a situation where budget money is spent on drones of poor quality, which is usually revealed only at the frontline. Sometimes tenders are simply disrupted due to the inability to complete the order. Sometimes customers, realizing they are dealing with fraudsters, refuse to sign contracts with them. As a result, they have to wait for the AMCU to respond to complaints and then announce a new tender, which delays the procurement of much-needed UAVs for weeks and sometimes months.
NGL.media has investigated the UAV procurement market through Prozorro and found several rules that could make these purchases more efficient.
What is the problem?
There are no specific rules for the procurement of military goods through Prozorro – they are purchased in compliance with the same rules as potatoes for schools. However, while the most important criterion for potatoes is the price, for FPV drones it is reliability, flight range, video quality and dozens, if not hundreds, of other criteria.
As a rule, each procurer sets the tender conditions at its own discretion, but most still use a certain mechanism. Usually, they first consult with the military to find out their needs, because otherwise there is a risk of buying something unnecessary.
“Such tenders are drawn up together with the military. First, the city council receives a request from the military, and when it passes all the approvals, including the budget funding, the procurement is announced,” says Andrii Moskalenko, deputy mayor of Lviv. “We make any purchase of this kind only at the request of the military. If they want a specific model of Mavic, we don’t need to agree on additional details, but if it’s an FPV drone, we contact the military and agree on the technical specifications with them”.
However, there are cases when local governments make such purchases without coordinating with the military, to pull a PR stunt on social media. In cases like these, the quality of the drones or the specific units’ need, aren’t a given.
In general, there are problems with this type of procurement. Any negligence by the customer in the preparation of tender documents can lead to the military receiving not what they wanted or even products of poor quality altogether.
NGL.media found similar examples. The Hradyzk village council in Poltava region specified the characteristics of the intended FPV drones in very general terms. Other customers, on the other hand, are more diligent in their approach to defining the drone’s components – for example, the Myhiyivka village council in Mykolaiv region provided detailed description of all the FPV drones’ parts, specifying manufacturers, models, and characteristics.
The absence of serious penalties allows opportunistic participants not to be afraid of punishment for failing to fulfill their obligations or selling low-quality equipment. Myroslav Simka, Head of the Board of the Center for Public Monitoring and Research, says that the common sanctions, like fines or penalties, usually scare no one and are hardly used.
The method of determining the winner based on the price criterion is also not very suitable for procurement of such goods. This often results in the bidders, trying to save money, using cheaper components of dubious quality, which significantly affects the overall performance of the drones.
As a result, the military do not get what they want – for example, they want to get FPV drones with an 8400 mAh Molicel battery, but they are given drones with batteries of seemingly same capacity from an unknown manufacturer. Of course, on paper, the power of both batteries is the same, but in reality, the unknown battery will almost certainly be worse.
Due to this unfair competition, many reputable drone manufacturers simply cannot win the tender in terms of price because they cannot sell their products below prime cost.
“The problem with tenders is that the customer wants a cheap price, and most quality manufacturers do not qualify,” explains Bohdan Danyliv, head of FPV at the Serhii Prytula Foundation. – You can buy an FPV drone for 13 thousand UAH and 16 thousand UAH. But the more expensive one will cover longer distance and carry more explosives, while the cheaper drone will cover shorter distance and crash because it has cheaper components, a weak video transmitter, batteries, etc”.
In general, it is difficult for a publicly funded procurer to purchase a specific product requested by the military at an open tender, as tender legislation requires them to provide for the possibility of an equivalent. Such an option promotes competition and lower prices, but there are already cases when bidders use it for ulterior motives.
For instance, Group Intrade offered an equivalent in Lviv City Council’s tender for the purchase of anti-drone systems, but its technical characteristics were copied from the customer’s documentation. In such cases, doubts arise as to whether the proposed product is really an equivalent.
“We were approached by Group Intrade for this procurement of electronic warfare devices. They simply copied the characteristics from the technical documentation, but in this case, there could not be identical characteristics,” said Andrii Moskalenko, deputy mayor of Lviv. “Then we asked the military to communicate with this participant to find out what kind of product it was and whether they were ready to give a sample for testing. I don’t remember precisely, but back then the manufacturer refused to provide a sample or simply told the military that his EW would not work for them”.
In addition, there is a problem with ambiguous interpretations of technical specifications. For example, the maximum flight duration can mean the duration of a drone’s flight with or without a payload.
“Some of the functionality of FPV drones has not yet been fixed in proper terminology, so there may be two interpretations of even such well-known characteristics as communication range and video quality,” says Ilia Poperechnyi, a UAV instructor at the Come Back Alive Foundation.
Some bidders also create additional obstacles for procuring entities, such as far-fetched complaints to the AMCU, the winner’s refusal to sign the agreement, failure to fulfill obligations on the delivery time of goods, or the bidders’ completely copying the specifications from the procuring entity’s technical task.
Analyzing open procurements from publicly funded procuring entities, NGL.media found examples of such actions.
The tactics of Dnipro-based Group Intrade LLC, which is an active participant in tenders for the supply of military equipment, are particularly striking. For example, after the Lviv City Council rejected the company’s proposal for the FPV drones procurement because the documents did not contain all the necessary characteristics, Group Intrade filed a complaint with the AMCU to force the customer to sign the agreement. As a result, the military had to wait for FPV drones for several more weeks, as the customer could not sign a contract with the next winner until the AMCU made a decision on this complaint і The Antimonopoly Committee of Ukraine (AMCU) has 10 business days to consider the complaint and make a decision .
Some time later, in another procurement, Group Intrade simply refused to sign the contract after it was named the winner of the tender. The company named the blockade of the Ukrainian-Polish border as the reason for this decision, saying it would prevent it from fulfilling the order on time. It is worth noting that Polish carriers began blocking traffic on November 6, and the tender was announced on November 8, meaning that even at the stage of submitting documents for participation in the tender, Group Intrade was aware of its inability to complete the order.
Last December, the same company disrupted the already signed agreement with the Ternopil City Council for 1500 FPV drones, again citing the border blockade, although at that time one of the border crossing points was open and letting trucks through. In the end, the Ternopil City Council did buy the necessary drones, after losing more than a month.
What to do?
NGL.media interviewed procurers, experts and manufacturers of FPV drones to find out how publicly funded customers can improve the existing military procurement mechanism. We were looking for solutions using FPV drones as an example, but these mechanisms can be used in the procurement of almost any military equipment.
“First of all, it is important to understand that any tender should be drawn up on the direct need of the military, together with them. The procuring entity should ask the military to specify their exact needs and which precisely model of FPV drone they require, or let them specify the technical characteristics of each component of the product, either indicating the manufacturers or not,” explains Iaroslav Markevych, a drone manufacturer.
The customer should definitely demand warranty support for the products from the seller, says Ilia Poperechnyi from the Come Back Alive Foundation. The seller must indicate a working technical support number where the military could call and report that something is not working in the FPV drone.
“It would also be good if customers sent one sample from the batch to an independent organization to test compliance with the declared characteristics before they hand over the equipment to the Armed Forces,” says Poperechnyi. “There should be clear requirements for performance and, accordingly, field testing and warranty support. If any drone does not meet the declared specifications, the manufacturer should replace the components or the entire drone.”
If a customer wants to be on the safe side and get FPV drones with high-quality components, it is worth specifying a list of preferred manufacturers of each part.
“This can be done because there is no list of requirements that are called discriminatory. They are be discriminatory if they discriminate against anyone. Therefore, it is possible to specify each spare part with specific manufacturers in the FPV drone data sheet,” explains Myroslav Simka, Head of the Board of the Center for Public Monitoring and Research.
The customer can also demand certification from the Ministry of Defense to approve the use of products. Of course, this condition may narrow competition, also sifting out quality manufacturers, as Ukraine has not developed any clear rules for FPV drone certification yet. That’s why the procuring entity should find out whether the desired manufacturer has such certification before they include such a requirement in the tender conditions.
“The customer can specify that the FPV drone must be approved for operation by the Ministry of Defense, or the manufacturer should have recommendations from the military. It’s not that difficult to obtain this certificate,” says Bohdan Danyliv, head of FPV at the Serhii Prytula Foundation. “The manufacturer announces its tactical and technical characteristics (TTC), goes for testing, and if it meets all the TTC specified in the documentation during the tests, it receives certification from the Ministry of Defense і What is meant here is a certification issued by the State Research Institute for Testing and Certification of Arms and Military Equipment. .
A copy of a similar contract that has been executed and contains contact information about the previous customer can be another tool for checking the seller. Therefore, before signing a contract, the customer can contact the seller and find out whether the seller’s goods meet the characteristics specified in the documents.
However, experts interviewed by NGL.media believe that tough penalties will be the most effective protection against low-quality equipment and fraudsters. If an unscrupulous bidder finds them in the tender conditions, he or she will simply not participate in the tender.
The customer may additionally demand a bid security and contract performance security. The first condition stipulates that the bidder must invest a certain amount to participate in the tender, and if he refuses to sign the contract, he will lose this money, says Myroslav Simka of the Center for Public Monitoring and Research. The second condition stipulates that at the time of signing the contract, the participant deposits a certain amount of his own money in the bank, and in case of breach of the contract or nonconformity of the goods, he loses it.
The Prozorro electronic procurement system is quite suitable for procurement of military equipment, as it provides for transparency, which is a very important component. However, the negligence of some publicly funded customers and the desire to make money of dishonest participants have created problems in this system, which ultimately creates problems for the military.
In order to effectively help the army, publicly funded institutions should carefully and wisely approach the preparation of tender documentation. There is no stable template for drafting documentation, and each case must be approached individually. If the customer is asked to buy a simple Mavic of a specific model, then there is no need to reinvent the wheel. However, when it comes to more complex products such as FPV drones or anti-drone guns, the documentation should be prepared more carefully so that low-quality equipment does not get to the front line, and if it does, it can be quickly replaced. And to ensure that unscrupulous manufacturers and sellers suffer material and reputational losses.