From Reznikov’s jackets to Umierov’s poncho: whether Defense Ministry will get rid of unscrupulous suppliers
Not so long ago, journalists revealed that the Kasai family likely purchased apartments in Dubai using proceeds from the sale of those infamous Turkish jackets to the Defense Ministry—an amount nearing one million dollars.
A year ago, the country found out about the Hrynkevych family, who forgot to supply ammunition to the army but did not forget to buy villas, hotels and a sand quarry.
None of these scandals would have occurred if the Defense Ministry had conducted proper background checks on its contractors. After all, at least two of the Hrynkevychs' companies were involved in construction work before signing contracts with the MoD to supply ammunition. They even purchased toilet paper holders for schools.
Kasai's relatives are not worth mentioning - his company had zero experience working with the MoD at all. Not to mention the production capacity.
It is not surprising that the NACP identified improper checking of contractors as one of the top 8 corruption risks in the procurement of the Ministry of Defense.
And what is most unfortunate is that this year, Umierov's team has already stepped on the same rake as Reznikov's team. As a result, the Ukrainian army may enter the winter without most of such clothing as ponchos.
Back in March 2024, the DOT held tenders for ponchos (storm clothes). The bidding was held in three lots. It was highly competitive. To give you some idea, while 4-8 companies typically participate in such tenders, this time, 14 and 15 companies competed. The first lot for the production of 100,000 ponchos was won by MIK.
And the other two lots - for 150 and 50 thousand - were won by Ukrspetstekstyl, registered in October 2022. Its director is Oleksii Slaboshpytskyi, and its founders are Vladyslav Kysh and Olena Zvychaina. The authorized capital of the company is UAH 2000.
2 tenders for ponchos from DOT is the company's first victory in public procurement on Prozorro.
At the same time, Ukrspetstekstyl was mentioned in the last year's report of the Accounting Chamber (AC), and was listed with two risks at once: as a company with a low authorized capital and an early registration period in relation to the contracts concluded. At the time of the AC audit, the company had direct contracts with the MoD for almost UAH 75 million.
In February 2024, the DOT had already canceled Ukrspetstekstyl's victory in the camouflage suit supply lot. At that time, the company did not submit documents confirming its experience in fulfilling similar contracts.
However, this did not prevent the company from participating in the next tender. However, the State Audit Service expressed a number of remarks regarding this tender. In particular, it asked for documents that would document the experience of the company. Among the documentation, there is only a certificate from the company itself that it has fulfilled 2 contracts with the MoD. Although, judging by the fact that the company was included in the Accounting Chamber's report, it is unlikely that it completed the work on time.
According to the contract with DOT, Ukrspetstekstyl was supposed to supply the Ministry of Defense with 200,000 ponchos. The delivery date was June 30.
But so far, no one has delivered a single poncho. At some point in following this story, the author heard a version that the company disrupted the first deliveries because it could not get fabric from a Ukrainian manufacturer. And they had to look for Turkish fabric. And allegedly, after consultations with the Logistics Forces Command (LFC), the parties agreed to postpone the deliveries until October. But as of October, the company had delivered as many as 22,000 ponchos.
Also in the fall, seamstresses began to resign from the company due to non-payment of wages, as they told the author of the article.
General table of deliveries:
As stated in the response of the Executive Director of DOT Andrii Sozanovskyi to the request of Censor.NET, on October 3, 2024, the State Enterprise "DOT" carried out an on-site inspection of the implementation of the Agreement, but UKSPETSTEKSTYL LLC did not allow representatives of DOT LLC and the Main Directorate for Defense Procurement Control (hereinafter - MDDPC) to enter the production "due to blocking access to the production facility."
"The representative of UKSPETSTEKSTYL LLC (a lawyer) informed about the possibility of inspecting other production facilities. On 15.10.2024, SE "DOT" as the customer sent a request to inspect other production facilities and warehouses of LLC "UKSPETSTEKSTYL", but no response was provided and there was a systematic evasion from organizing the inspection. On 01.11.2024, SE DOT, taking into account clause 8.3 of the Agreement, sent a written notice of unilateral refusal to accept the goods in respect of the July and August delivery dates," the DOT said in its response.
As a result, the State Logistics Operator terminated the contract and imposed penalties on the company. The only positive part of this story is that the DOT did not pay any preliminary payments to the company.
Unfortunately, the money saved does not solve all the problems.
After all, the ponchos were supposed to be delivered in May, and in mid-November, most of them had not been sewn. And their delivery is still in jeopardy.
On November 14, DOT announced a new tender for 13 lots. Six of them failed to attract any bids, so the auctions did not take place. For two more lots, the documents are still under review. As a result, only 50,000 ponchos were contracted, with delivery scheduled by December 13.
On November 20 and 21, the DOT announced two more tenders for 110 and 98 thousand ponchos for almost 160 million hryvnias.
While in the spring, the DOT accepted the proposals of MIK at UAH 735 and Ukrspetstektyl at UAH 693 and 570, now the winning companies will supply for UAH 710, 755 and 635, accordingly.
It is noteworthy that in May, the DOT held three tenders for ponchos, with only one bidder, the Lviv-based Green Moda Company, participating (out of 14 bidders in the previous bidding). The company agreed to supply 100,000 ponchos for UAH 470. An additional agreement extended the delivery date to October instead of August.
Unfortunately, the story with the poncho is not the only one. There are also contracts with Farminko Nord for the supply of jackets and protective suits. One of the largest suppliers, Oleh Mitrokhin, has already highlighted some of this situation. He said that in March, Farminko Nord, which has no sewing facilities in Ukraine, took over the entire production of camouflage suits at an extremely low price. As a result, it delivered only part of it, and now its product does not meet the technical specifications for the product.
The response of the DOT to the requests of Censor.NET and the Independent Anti-Corruption Committee on Defense stated that the company provided documents confirming the fulfillment of similar contracts (30% of the order). But in fact, the company had no production facilities in Ukraine and sewed clothes in Vietnam.
As a result, the company did not deliver 161,475 units of the ordered products. Not a single suit has been delivered in the last three batches.
That's not all, the same Farminko undertook to supply WWWJs (winter wind and waterproof jackets) (these are the same winter jackets you know from the story of Reznikov's jackets).
The company had to sew 75,000 jackets worth almost 173 million hryvnias. As a result, the Ministry of Defense received... 0 jackets on time.
"Farminko Nord LLC was contracted by the State Logistics Operator to supply 230 thousand winter camouflage suits (Type 2) and 75 thousand winter WW (wind and waterproof) jackets (Type 1). As of November 26, 2024, 112 thousand 480 suits (48.9%) were delivered. As of today, the winter WW jackets have not been delivered," Viktoriia Vynohradova, DOT Procurement Director, told Censor.NET.
Andrii Sozanovskyi, Executive Director of the DOT, noted that the DOT had no real opportunity to verify the information provided by the company in the documents.
"We would like to draw your attention to the fact that SE DOT does not have the appropriate authority to establish the authenticity, validity, etc. of the documents submitted as part of the bidders' proposals. In addition, the SE DOT does not have the ability to analyze tax information on procurement participants contained in the databases," the response reads.
Those tenders were attended by real manufacturers - from 4 to 8 participants. But thanks to the price collapse, Farminko Nord won. Its price was around 2200, while Textile Contact sold for 2900, Olteks for 3200, and Astra Lux for 2400.
As a result, military units are now buying the jackets themselves. No, fortunately, not in any large volumes. Very small batches - from 500 to 2000. Our interlocutors in the units assured us that the jackets are available. However, the military does not really want to take single-layer ones (they prefer double-layer ones), but that's another story.
In our situation, let's pay attention to the price - now the same Textile Contact sells jackets for 2166 UAH, and the Vyd factory sells them for 1991 UAH. As Oleksandr Sokolovskyi said in a conversation with Censor.NET, in the face of a price collapse, factories are forced to give away below cost what they have already sewn.
In response to Censor.NET's question whether such non-deliveries are critical for the front, Viktoriia Vynohradova, Director of Procurement Management at the State Enterprise "State Logistics Operator", assured that they are not.
However, in fact, the ponchos are put up for auction in identical volumes.
"The Logistics Forces Command confirmed that these items are not critical, as there are stocks for them. Therefore, it was decided to use the released financial resources to purchase bulletproof vests," Vynohradova said when asked by Censor.NET.
"It is important that the volume of contracts of FARMINCO NORD LLC is 2.06% of the total contracted volume of material property," Vynohradova added.
Both Sozanovskyi and Vynohradova emphasized that the production facilities of FARMINCO NORD LLC have been checked (the DOT team flew to Vietnam).
"The goods were being sewn and prepared for shipment. Since the delivery time was violated, the DOT imposed penalties on this supplier.
Therefore, given the fact that, according to the results of the informational bidding, the price of Ukrainian producers was on average 22% higher and the goods were really being prepared for shipment, there were no grounds to apply other sanctions other than fines," Vynohradova said in her response.
What is happening now between the DOT and Farminko?
"A letter has been sent with a request to eliminate the violation of the terms of the contracts in terms of the delivery date no later than November 30, 2024. Starting from 1.12.2024, the State Logistics Operator will apply an operational and economic sanction in the form of termination of the contract if the violations are not eliminated. Claims and lawsuits are underway to recover the amount of fines and penalties for the violations committed," Censor.NET said in a response.
What can be withdrawn from a company with a charter capital of UAH 10 thousand? This is a rhetorical question.
But that's not the whole story. Now there will be a cherry on the cake.
In August of this year, the presentation of the MoD Partner portal took place. But at the same time, it was the first meeting between the minister and manufacturers.
Then Oleksandr Sokolovskyi asked the Minister how he felt about the fact that companies without their own production facilities were participating in the tenders, bringing goods from abroad, and there were already cases when the goods did not meet the technical specifications. "And if we face these problems in the fall, it will be difficult to fix it by the end of the year. If they сock-up and don't supply..."
Sokolovskyi asked the minister about the situation with winter jackets.
This was the question behind the Farminko story, which had already been rumored in the market.
But Minister Umierov's answer to this question is more than interesting. And it is worth quoting again.
"First of all, I always support domestic. But this does not mean that all these small blocks are domestic... as it used to be before, when you go to deputies, to other people, and start to influence," the minister replied.
"I inherited a situation where guys and girls who came to me and said that we are over there, if not so, then so. I said: I accept your terms. Then let's put it this way: everyone has a plan until they get punched in the jaw. So in this regard, I inherited people who came and instead of communicating, they explained to me some things that they were so cool. Where I grew up, we were always responsible for ourselves. That's why I accepted the challenge," Umierov said.
Now the minister definitely has a question: why did he believe so much in a company without its own production, when everyone knew that they had only a part of the cut-out material?
Finally, after 4 months, this story shows that the DOT clearly needs to significantly revise the criteria for bidders. It's good that the state didn't spend millions and billions in this case, as in previous years, but no one will learn to sew jackets and ponchos in 2 weeks.
In response to Censor.NET's request, Vynohradova noted that in order to prevent the recurrence of such situations in 2025, the DOT is implementing the following measures:
- Localization of production
- Strengthening of qualification requirements:
- availability of material and technical base;
- availability of qualified employees;
- proven similar experience;
- financial capacity of the participants.
- Control of the production process:
A mandatory production schedule with clearly defined 8 control points is established. This will enable the DOT to monitor the fulfillment of contractual obligations at each stage.
In case of a delay of more than 5 business days in fulfilling each control point without objective reasons, operational measures may be taken, including partial or complete termination of the contract.
In fact, these high entry criteria - with high capacity and labour requirements - are much better for this market than a blacklist. At least because Trade Granit Invest had the sanction against it revoked through a court ruling.
Tetiana Nikolaienko, Censor.NET
