A pillbox across the throat: why food suppliers to the Armed Forces are blocking tenders under transparent rules

Regular players in the market of food supply for the armed forces of Ukraine are trying to block the tenders announced by the State Enterprise "State Logistics Operator" in various ways. In particular, through the courts. Why the suppliers challenge the terms of the tenders, which they had been fully satisfied with before, was explained by representatives of the State Logistics Department during a briefing, UNN reports.

According to Arsen Zhumadilov, CEO of the State Logistics Operator, the state-owned enterprise wants to make the system of supply and distribution of products to military units as transparent and controlled as possible. And it is this innovation that suppliers are fiercely resisting. By blocking the tenders announced by the DOT, suppliers want to preserve the old system.

"We will restructure our format of interaction with them (suppliers - ed.) so that we understand exactly what is ordered, what is included in the applications, so that we can further control the fact by comparing it with the plan. This seems to be an insignificant difference, but it finally gives us the basis for us, as a customer, to clearly understand in what volumes and in what assortment the supplier's obligations are fulfilled. 

So we understand that this is problematic for suppliers, because today they are not used to the fact that someone really understands what is being delivered, under what requests, in what volume, when exactly. This opens up a lot of room to negotiate on the ground about how not to supply something. Sometimes this is also due to the illegal benefits offered to representatives of military units. That is, they want to preserve the way this system works today, and they realize that they are not preserving it with us. They understand that they will keep it if they continue to contract with the Defense Ministry's Resource Support Department," Zhumadilov explained.

The DOT director general added that after the decision of the Kyiv District Administrative Court, which dismissed the claim of one of the suppliers in almost all re-announced tenders for food for the Armed Forces, the companies that had applied for them withdrew their applications. This indicates deliberate coordinated actions of the suppliers.

"The court did not satisfy the claim of one of the suppliers, and then in a rather interesting way, as we understand it, in a coordinated manner, for a significant number of lots - for 12 out of 13 such suppliers withdrew their offers. And today we realize that when the procedure is opened for most lots, we will not have any offers that we can accept for qualification," Zhumadilov added.

The paradox of the situation is that Cross Prime, which lost the case, challenged the standard terms of the contracts that had previously been acceptable to all suppliers. 

Moreover, in order to attract more potential bidders, the DOT even eased some conditions. 

"The company that filed this lawsuit three weeks ago in February 2024 submitted its price offer for the food procurement procedure. That is, according to the identical procedure announced by the Ministry of Defense, where the draft contract contained identical rules regarding inspections of the supplier's material and technical base to check how the products that will be supplied to the military are stored. It was stipulated that in case of critical need, the supplier could be involved in the supply of products to a different area than the one specified in the contract - directly to one or more areas for which they supply products. The penalty requirements were even stricter than the 100% penalty for non-fulfillment of the contract that we had envisaged. We have reduced (the fines - ed.) by half," said Oleksandr Fesenko, Head of the Legal Support Department of the State Enterprise for Defense of Ukraine.

Thus, the DOT is convinced that the issue is not the terms of tenders and contract clauses, but an attempt to keep the old system by blocking bidding.

"The conditions were as loyal as possible. They complain about the terms in their contracts, which they are. They sign and successfully fulfill them. The only thing they don't like about these contracts is that the customer is the State Enterprise for Public Utilities, which plans to control market operators and their obligations. But the obligations themselves have not changed, they have even become softer.

There are attempts to put us in a situation - we, primarily the DOT, and also to put some pressure on the MOD - where a configuration will be formed in which it will look logical to transfer this procurement back to the structural unit of the MOD that has been conducting these procurements in recent years, or to extend their current contracts," Zhumadilov summarized.

Context

After the State Logistics Operator announced the first tenders for the supply of food to the Armed Forces under the new rules, a "dirty" information campaign was launched against it and the new team of the Ministry of Defense, carried out by pseudo-experts who collaborated with the traitor Viktor Medvedchuk and other pro-Russian politicians.

Earlier, due to the decision of the Sixth Administrative Court of Appeal, which upheld the claims of Trade Granite Invest, the State Logistics Operator was forced to cancel 11 tenders for the supply of food for the Ukrainian army. 

This company could also have been involved in the information attack on the DOT.