Ukraine Joins NATO Procurement System

Ukraine joined NATO Support and Procurement Agency (NSPA) and made its first purchases through its system last year, opening a way for the country to buy legal weapons and other defense-related purchases directly from NATO suppliers, according to Defense Minister Andriy Zagorodnyuk.

“The ministry can now procure directly, without intermediaries, through NATO. This was not the case before,” Zagorodnyuk told Interfax-Ukraine agency.

According to the minister, Ukraine made its first purchase in December, after finishing all the procedures for joining the procurement agency. The nation originally joined NSPA in 2015, but did not complete the process to use the services.

NSPA is a logistics and procurement hub for NATO members that operates on a “no profit-no loss” basis. 

The minister said previous direct procurements through NSPA were blocked by vested interests, including the nation’s behemoth national arms holding UkrOboronProm, which acted as an intermediary in most defense purchases. Ukraine ended up paying double the price or more as a result of using intermediaries.

“In three months we unlocked it, removed all obstacles and made the first agreement, made payment. These were the first three test purchases,” the minister said. He did not reveal any more details about the December contract.

Ukraine spends $10 billion on defense and security  per year, about 5.4% of its GDP, but only $1.2 billion is earmarked for procurement this year.

Reuben F. Johnson, an analyst at Jane’s Defense Weekly, says joining the new platform is a big step for Ukraine:  “Getting people familiar with processes in NATO is always going to be good, and opens new possibilities.”

Johnson says it also means that Ukraine’s defense ministry has significantly improved its capacity: “Some time ago the Ministry of Defense was given authority to buy its own stuff, without [intermediaries], but there were only 5 people to do it. Now they staffed up.”

Johnson says Ukraine should also use the opportunity to become a better partner for NATO by increasing its role as a NATO supplier through NSPA – especially for Eastern European countries that have a lot of Russian-made weapons systems that need upgrading, and Ukraine is capable of doing it.

NSPA records show that Ukrainian companies do provide services to other NATO members. 

For example, NT Engineering supplied remediation services in the period between April and June 2019, worth 111,900 euro. System TR supplied a warehouse management software system to an undisclosed buyer worth 105,841 euro between July and September 2019, and Construction Machinery Ltd. provided two excavators worth 146,000 euro in the same period.

Ukraine has an aspiration to join NATO, which is written into the nation’s constitution. For the past six years it has also been at war with NATO’s long-term adversary Russia, after it illegally annexed Crimea and stoked war and separatism in Ukraine’s eastern provinces. 

Ukraine and NATO have what the alliance describes as  “the most substantial of NATO’s partnerships,” which has increased significantly since 2014. NATO assists Ukraine in defence and security sector reform, among other types of cooperation. Last year, NATO upped its presence in the Black Sea to keep Russia at bay.