Ukraine's Defense Ministry unveils State Rear Operator overhaul to streamline procurement

From December 2023, the State Rear Operator agency will handle the procurement of consumables for the army, Deputy Defense Minister Dmytro Klimenkov announced at a briefing on Wednesday.

Tenders for the purchase of food for the Armed Forces of Ukraine were announced today by the Ministry of Defense. Some changes have been introduced in the rules of these trades.

"The purpose of these changes is to ensure that there are no interruptions in the supply of food and, most importantly, to make corruption impossible. From December of this year, the State Rear Operator agency will handle all purchases of the Ministry of Defense. This is our new tool in procurement, which will completely take over the entire functionality," Klimenkov is quoted by news agency Interfax-Ukraine.

Agency employees will analyze the market, prices, communicate with suppliers directly, evaluate them, and analyze the work.

"They are already studying the market and preparing. As I mentioned, the procurement agency will be fully operational from December 1. As of today, they are de facto already forming a team," Klimenkov noted.

The Ministry of Defense expects the Cabinet of Ministers to adopt two resolutions in the near future, after which "de jure, the rear procurement agency will be 100% operational."

In addition, Klimenkov said that this time the Ministry of Defense is announcing food tenders not for six months, but for three months, that is, from January to March inclusive.

"And our goal is to radically change the very approach, the process in rear procurement. That is, it will be completely different procurements with a different logic," the deputy minister stated.

The Ministry of Defense announced the start of the rear procurement reform back in April. Then the department signed a three-year contract with Arsen Zhumadilov, the mobilized director of the State Enterprise Medical Procurement of Ukraine, who was entrusted with the implementation of the project from the beginning.

At the end of August, the then Minister of Defense Oleksii Reznikov appointed Arsen Zhumadilov as the head of the resource supply agency of the Armed Forces of Ukraine. At that time it existed only on paper.

At the beginning of September, Reznikov was dismissed from the post of Minister of Defense. Rustem Umerov was appointed in his place.

Klimenkov became the new deputy defense minister at the beginning of October. The priority areas of his work are procurement policy formation, soft and hard good procurement.

Previously, Klimenkov worked as a commercial director of JSC Ukrtransgaz, as well as at the State Property Fund, Ukraine International Airlines, and Ericsson.

At the end of 2022, the Ministry of Defense concluded ten agreements for food for soldiers in 2023 for UAH 42.05 billion ($1.16 billion).

After an investigation into overpricing, additional agreements were made to halve the prices of some products. That is, the products were delivered at the prices indicated in the additional agreements.

Then a law was passed to return soft good purchases of the Ministry of Defense to Prozorro state auction platform, and the prices of products were reduced once again.