Ukraine has created a powerful domestic defense industry, which now produces thousands of artillery shells, armored vehicles, and drones. At the same time, the international publication The New York Times, citing internal government audits and expert assessments, writes about systemic problems in the field of state arms procurement, in particular, about cases of signing contracts not with the lowest bidders and about doubts about the transparency of some payments.
The total amount of discrepancies between the lowest bids and the contracts actually concluded, according to audit materials, amounted to at least UAH 5.4 billion (approximately $129 million). The auditors found no direct allegations of embezzlement, but a number of cases were referred to law enforcement agencies for additional verification.
Critics point to several problematic trends: the conclusion of contracts with companies that offered more expensive terms; advance payments for deliveries that were delayed or not completed in full; and the widespread involvement of intermediaries who received markups instead of direct purchases from manufacturers. Former agency advisor Tamerlan Vakhabov noted in an interview with the publication that “under martial law conditions, there is no political will to do everything right,” and that overpayments occurred “for unknown reasons.”
In response, the leadership of the Defense Procurement Agency emphasizes that lower offers were sometimes rejected due to non-compliance with quality requirements, delivery times or other criteria. The agency’s director, Arsen Zhumadilov, said that some of the problems prompted the agency to experiment with new procurement models, in particular, the creation of an online marketplace where commanders can order drones directly from suppliers “in one or two clicks.” According to the official, this should reduce bureaucracy and increase transparency of supplies.
The audits, which covered the period from early 2024 to March 2025, did not provide grounds for accusations of systematic theft, but revealed numerous procedural risks: the use of intermediaries in a large proportion of contracts, the lack of documented production capacities for some contractors, as well as cases of incomplete or delayed deliveries. Some purchases were made through intermediaries with a typical mark-up of about 3%, which also raised questions among the auditors.
Against the backdrop of the rapid growth of domestic armaments, it is important not only to scale up production, but also to strengthen control over procurement - to avoid wasteful spending and maintain the trust of donors and taxpayers. The introduction of an electronic market and other innovative procurement mechanisms is seen as a step in the right direction, but it is emphasized that the new tools must be accompanied by strict verification of suppliers and public reporting on spending.
