Ukraine’s military procurement online marketplace: Prozorro

BLUF: Using competitive, online auctions allows the state to save money through the procurement process; meanwhile businesses can participate in meeting the needs of the Defense Forces. 

In other news: The Ministry of Strategic Industries says it is working to fix weapon export issues that create major headaches for the Ukrainian miltech producers. Ark Robotics is developing software that would allow a single operator to control dozens of drones. And Russians are improving their kill-chain on the frontline with drones and better communication.

THE BIG STORY: Prozorro Market for military procurement

The 2015 launch of the electronic procurement system Prozorro (meaning ‘transparent’ in English) marks one of the most successful reforms in Ukrainian government procurement. It functions as a market platform: government agencies announce their tenders for goods and services, and public and private entities can compete for these contracts. 

The main goal behind Prozorro was to fight corruption: All the information about contractors, products, and prices is out in the open for the public to see. 

Prozorro extends beyond civilian projects and includes procurement for the Ukrainian army. At the beginning of the full-scale war, all procurement for the military was not disclosed to the public. 

But after a corruption scandal in 2023 involving inflated prices for egg purchases, Prozorro was reinstated, initially for non-lethal defense procurement and later with other types of equipment.

Since 2023, Prozorro has saved the military at least $61 million in defense procurement, according to the State Operator for Non-Lethal Acquisition (DOT) and Prozorro statistics.

The defense procurement sector is heavily regulated. Defense acquisitions are done in several ways, including:

• open, competitive, and transparent bidding; 

• framework agreements, between at least three competitors; and 

• closed procurement that does not involve publicity due to state secrets. 

The method depends on the type of products being purchased. For example, purchasing a tank or missiles through Prozorro is possible, but would be classified as a closed procurement due to state secrets.

Prozorro also allows authorized markets to be a part of procurement, where participants carry out all their actions. Currently, there are 13 such organizations, among them platforms like Zakupivli Pro, Public Bid, and Zakupki.ua.

Procurement oversight is handled by the Supervisory Boards of the DOT and the Defense Procurement Agency (DPA), which supplies lethal equipment. 

At the same time, the Ministry of Defense has a Public Anti-Corruption Council, a collegial advisory body tasked with assessing corruption risks within the department to develop anti-corruption measures. 

However, the MoD’s council lacks access to data about weapons procurement, Tetyana Nikolayenko, deputy head of the council, told Counteroffensive.Pro. It also lacks real leverage to stop suspicious procurements, she added. 

This means that media scrutiny is often the only way to shed light on potentially dubious procurements, according to Nikolayenko.

Types of goods available for purchase on Prozorro

Purchases are made on the Prozorro.Market and partnered platform. The following types of goods can be purchased:

• Defense procurement of goods, works, and services that involve state secrets;

• Weapons, military equipment, ammunition, and spare parts;

• Repair and modernization of armaments;

• Goods, works, and services for building fortifications; and

• Separately, the DPA and SCIP purchase drones through Prozorro.

Local authorities and brigades can also purchase drones for the Armed Forces. On April 23, for example, the Stanislavska village council in the Kherson region used Prozorro to order DJI Matrice quadcopters worth approximately USD $38,000.

Framework agreements in procurement

One type of procurement regulated by Cabinet of Ministers Resolution №1275 is the framework agreement on Prozorro. This procurement type involves contracting based on the results of candidate qualification screening, which includes checking licenses, experience, and financial condition. The framework agreement is most effective when bids are based on regular purchasing.

The procedure is faster than open bids because every next purchase demands only a bid. Qualification screening is performed only once.

The first stage of a framework agreement involves candidate selection, while the second stage involves the actual procurement. This second stage can take the form of open bidding or a request for proposals if dealing with specific items, such as drones.

It also requests at least three participants to reduce the risk of non-competitive bidding. 

Framework agreements ensure that only the bidders and the client know the details. After the bids end, information about the type of goods and the contract price becomes public. 

Currently, only the DPA and the Department of State Service for Special Communications and Information Protection (SCIP) can conduct framework agreements.

Features of online auctions on Prozorro

Online auctions must operate under competitive conditions. Price is the primary factor, with the system designed so that the supplier with the lowest price wins. However, the price cannot drop below 40 percent of the announced value in a tender, Nikolayenko explained.

“Traditionally, the supplier with the most cost-effective offer that meets all the criteria specified in the tender documentation is selected,” Mykyta Chichkan, the head of the procurement department at the State Operator for Non-Lethal Acquisition, told Counteroffensive.Pro.

The MoD must also structure procurement so that the direct service provider wins rather than an intermediary. If the latter occurs, the supplier may be fined, and the contract could be terminated, he said.

Who can become a supplier?

To supply the Defense Forces, a company has to select a Prozorro partner platform and prepare a set of documents:

• Confirmation of participant identity;

• Qualification documents – proven experience of fulfilling similar contracts, information about the material and technical base, licenses, and permits;

• Incorporation documents – extract on registration of a legal entity or sole proprietor, company status, contact information;

• Tender proposal;

• Confirmation of taxpayer status;

• Confirmation that there are no grounds for rejection in state tenders – the company is not in liquidation, has no tax debts, management has no convictions for corruption crimes, and it has not been excluded from tenders for non-fulfillment of contracts.

DOT also checks manufacturers for any violations of anti-corruption or anti-monopoly laws, as well as whether or not they have significant debt. It also may provide a questionnaire to manufacturers for further vetting if this is deemed necessary to reduce the risk of an unsuccessful purchase.

In February 2025, the DOT checked 1,603 potential contractors of the Ukrainian army for compliance with anti-corruption and sanctions legislation. 

Of these, two were rejected due to sanctions imposed by Ukraine’s Anti-Monopoly Committee, and one bidder was rejected due to tax debt, said Yevhen Yentis, head of the IT infrastructure support department at the DOT.

Foreign companies can participate in state tenders, but there are several restrictions in the defense sector. Procurement of goods with a classified status requires special permission. Some tenders may require a representative office or a partner in Ukraine. Payments can only be made in hryvnias through Ukrainian banks, so opening an account in Ukraine is necessary.

BUSINESS LUNCH TOPICS: What our reporting shows!

1. Ministry of Strategic Industries: The weapon export issue may be solved soon

The Ministry of Strategic Industries recognizes the weapon export problem and is doing a lot of work behind the scenes.  A solution may come soon, said Anna Gvozdiar, Deputy Minister, during a panel at the Invest in Bravery event moderated by Tim Mak.

Ukraine’s export control of military and dual-use goods is bogged down in a regulatory quagmire. There is no law or order banning such exports, but exporting drones or other systems is complicated. The main priority for producers is to supply the Ukrainian Defense Forces, which is the current ‘bottleneck’, explained Gvozdiar.

“I think this problem will be solved very soon. And we are now in dialogue with many more stakeholders. But we can’t be public with everything,” said Gvozdiar. She declined to specify any timeframe.

2. A new German drone was tested on the Ukrainian battlefield 

German startup STARK has demonstrated a new loitering munition called Virtus. This vertical take-off and landing drone (VTOL) has been tested on the battlefield in Ukraine. Developers tested systems in a real environment with real data, Philip Lockwood, managing director of STARK International, told Counteroffensive.Pro.

The drone's cruising speed is 120 km/h, and it can accelerate up to 250 km/h when it makes its final dive on a target. It can spend up to 60 minutes in the air, with a payload of up to 5 kg. Unlike fixed-wing drones, VTOL systems can go airborne without any additional infrastructure. 

“We have successfully tested swarm use of Virtus, in large part thanks to our mission operating system, ‘Minerva’, and the AI on board the system. This is decisive in environments like Ukraine, where there is a pressing need to break the ‘one operator, one vehicle’ model, which massively limits efficiency,” Lockwood said.

Ukraine’s combat environment and its unprecedented level of electronic warfare forced developers to improve the autonomy of systems and protection against electromagnetic threats, he added. 

3. How Russia’s kill-chain has evolved since February 2022

Russia has solved several significant problems that had slowed down the reaction time of its troops at the beginning of the full-scale war. Massive drone usage and production proved to be key, along with better data sharing, according to the study “Adaptation Under Fire: Mass, Speed and Accuracy Transform Russia’s Kill Chain in Ukraine.” (Read the full report here.) 

The Russian army had previously suffered from poor communication between units. Intelligence information reached artillery or missile forces with long delays, and there was a shortage of reconnaissance drones. And perhaps most importantly, the Ukrainian army had quickly adapted to Russia’s kill chain, or how long it took for Russian forces to go from finding a target to firing on it. In response, Russia integrated several solutions:

• Mass integration of reconnaissance drones like Orlan-10 and Eleron;

• Kamikaze drones to close the tactical sensor-to-shooter gap, the time between the appearance of a target to its engagement.

• More command centers created with live drone transmission, including Starlink terminals (read our article about Russian communications at the front here);

• The Russian defense industry ramped up mass production of drones and missiles despite Western sanctions. 

In the Russian military, decisions come from the top down to lower levels, Federico Borsari, a resident fellow with the Transatlantic Defense and Security Program at the Center for European Policy Analysis, told Counteroffensive.Pro. 

But grassroots initiatives have also appeared in the Russian army. 

“Now it’s a mix because we know also that in Russia there are a lot of initiatives from the bottom up, like volunteer organizations [that] fundraise drones. [Russians] are mimicking what Ukrainians did, and now we [have] reached parity in many areas,” Borsari said.

4. How to create autonomous drones and reduce the number of operators on the frontline

The Ukrainian-Estonian startup Ark Robotics is developing land drones and a software platform, Frontier OS. This software will allow a single operator to connect up to a dozen drones to one system. They can carry out operations independently, but each of the drones works on a pre-plan created by the operator, said the founder and CEO of Ark Robotics, who asked to be identified by his nickname, Achi Takagama, for security reasons. 

“Strategically, we are developing a ‘one-to-many’ system. That is, most of the piloting of any unmanned systems is now carried out in the mode of one pilot, one drone. Sometimes, even several people. You have an operator, an assistant, and one drone. What we're trying to create is one operator and many drones,” said Takagama.

Ark developers said they have enabled drones to perform logistics operations on pre-programmed missions, though they declined to provide further details. 

They are working to reach the next stages of autonomy, with the goal being collaborative autonomy. At this stage, drones are autonomous at the system level and are not pre-programmed. Ultimately, each drone will have its own mission, though they will all work together. 

Scout ground drones will be used to capture targets. Reconnaissance drones will find objects from the air. Then, kamikaze drones will hit the targets. Such a system is still under development, however.

Frontier platform may also be integrated into other drones, though special hardware will need to be integrated into the drone to connect it with the software.

Ukrainian orders/legislation we’re tracking: 

By: Oksana Zabolotna

Simplification of the Explosives Import Procedure 

Resolution of the Cabinet of Ministers of Ukraine No. 459 dated April 18, 2025 

Stage: Entered into force on April 18, 2025 

Initiator: Cabinet of Ministers of Ukraine

Proposals: Simplification of the import procedure for explosives, initiation devices, detonators, and equipment containing explosives for manufacturers who do not have active government contracts. 

Why It’s Important: 

Due to a global shortage of explosives and other ammunition components, simplifying the supply procedure and accelerating procurement is essential to increase the volume of ammunition production. 

Link to Defense Tech: 

This decision will enable private manufacturers to obtain materials more quickly for the development and production of ammunition, loitering munitions, drones, and other defense products. It will also support the growth of small enterprises that do not hold government contracts, helping them to enter the defense sector. Moreover, it will enhance the efficiency of defense procurement by increasing competition. 

The changes include: 

• a company intending to import such goods must be included in the Electronic Register of Selected and Authorized State Contract Executors. 

• a company must submit an application to the Ministry of Strategic Industries indicating: information about the applicant; the name and quantity of the explosive material or substance; information about the supplier; 

• within five business days, ministry staff review the documents and, if the outcome is positive, issue a confirmation to the State Service for Export Control; 

• The State Service for Export Control then grants or denies a one-time permit for the import of the specified goods.  

Latest Moves: Entered into force on April 22, 2025.

ON THE MOVE: Professional movement, promotions and industry news.

Know someone in the defense tech space who has made a professional move? Drop us a line at newstips@counteroffensive.pro! 

• Artem Romaniukov became a deputy minister in the Ministry of Strategic Industries. Previously, he headed the Directorate of Digital Transformation in the Defense Sector at the MoD.
  

• Kuninori Matsuda, Japan’s former ambassador to Ukraine, has joined the consulting company DataDriven as a senior advisor.
  

• Oleh Mozhnyi, a first deputy to Strategic Industries Minister Herman Smetanin, has left the ministry. It is not yet known if he will begin a new position in a different government body

30 SECOND ELEVATOR PITCH:

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“With very little funding, we have developed battle-proven tech and covered part of the active frontline in Ukraine… and are positioned for several demos in the EU. We are raising a seed round to speed up global scaling, bringing a new generation of acoustic sensory tech to the market and expansion into synergetic product lines,” said Denys Sobchyshak, CEO of Vidar Systems.

MUST READS:

• In a world first, a Magura V7 Ukrainian sea drone shot down two Russian Su-30 fighter jets using an AIM-9 missile, said Kyrylo Budanov, the head of Ukrainian military intelligence.

• Ukrainian tactical missile systems have been developed with two types of ballistic missiles: one with a diameter of 900 mm and a range of 500 km, and one with a diameter of 600 mm and a range up to 280 km. That’s according to court documents in the trial of a Ukrainian woman accused of passing classified intel to Russia, along with media reports. 

• Ukraine’s Defence Procurement Agency (DPA) has ordered approximately 8,000 ground drones. That’s over 13 times more than last year, said Serhii Prolubschikov, head of the ground vehicles office at DPA. 

• Europe can double Ukraine’s weapon supplies if it purchases from domestic producers, said Andrius Kubilius, the European Commissioner for Defence and Space.

• Germany’s Rheinmetall and America’s Lockheed Martin signed a memorandum to expand cooperation and increase the production of missiles and ammunition in Europe. The companies will establish a European center of excellence, operating primarily in Germany and other European countries.

• The U.S. Army plans to integrate drones into every division by the end of 2026. Each combat division will receive around 1,000 drones for logistics, surveillance, and attacking operations. 

• Ukraine’s experts from the MoD have joined the development of a new draft of the NATO Science and Technology Strategy. This became possible due to Ukraine’s membership in the NATO Science and Technology Organization.

• Ukraine and NATO announced a new NATO InnovationChallenge to find a solution against drones operating on optic fiber cables.

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