Issue of profit in the price of defence goods must be resolved: Yuliia Svyrydenko on the adoption of amendments to the defence procurement law in the first reading

The Verkhovna Rada of Ukraine has approved in the first reading a draft law that addresses the issue of including the profit of enterprises working to meet the needs of security and defence in the price of goods and services supplied. Draft Law No. 10454, developed by a group of MPs with the participation of the Ministry of Economy, is retrospective. Therefore, its final adoption and entry into force will also resolve the issue of criminal cases initiated against defence companies due to inconsistencies in the regulatory framework and ambiguous interpretation of the provisions of the regulations.

“An important step has been taken towards resolving a legal conflict and establishing justice for Ukrainian producers. The final adoption of the draft law No. 10454 will allow us to terminate the proceedings in cases initiated due to inconsistencies in the legislation. I am grateful to the MPs who supported the decision. It is really important for businesses. In my recent meetings with defence companies, this was the most frequently raised issue. We have to understand that Ukrainian manufacturers and companies meeting the needs of the defence industry need funds to fulfil contracts and to develop. The idea that business can operate without profit is contrary to a market economy,” said Yuliia Svyrydenko, First Deputy Prime Minister and Minister of Economy of Ukraine.

Draft Law No. 10454 stipulates that in the case of procurement of goods, works and services for security and defence needs under a non-competitive procedure or without a procurement procedure, the level of profit may not exceed the profit margin set by the Government.

In cases where the profit level was not set by the Government, the price was to be determined in accordance with the contractor’s proposal, taking into account the contractor’s profit.

The amendments to the final and transitional provisions of the Law of Ukraine "On defence procurement" stipulate that the rules apply to all state defence procurement contracts concluded under a non-competitive procedure or without a procedure for the entire period of martial law.