The Defense Ministry of Ukraine has been embroiled in a procurement scandal, according to an investigation published by NGL Media on June 25, 2024. The state agency responsible for government procurement, the State Logistics Operator (DOT), established in December 2023, has been accused of overspending on plastic flasks for the Ukrainian Armed Forces.
In 2024 alone, DOT spent over 54 million hryvnias ($1.3 million) to purchase 153,000 one-liter plastic flasks from China. However, the investigation found that these flasks were procured at three times the market price. The same model of flask can be purchased for 120 hryvnias ($2.95) or similar varieties for as low as 72 hryvnias ($1.77), yet DOT paid 335 hryvnias ($8.24) per flask.
The investigation revealed that DOT signed contracts for the flask procurement with two companies, Coltrane LLC and Superform LLC, after rejecting significantly cheaper offers from other firms following auctions held in January and April 2024. Both Coltrane and Superform are relatively new companies, having been established within the past year, yet they were able to secure lucrative contracts worth millions of hryvnias.
Superform LLC, founded six months ago by a 27-year-old from Zaporizhzhia, has already secured five agreements with the Defense Ministry and National Guard totaling nearly 310 million hryvnias ($7.6 million) in the last two months. The company's founder, Vladyslav Lykoshenko, had previously established a company called Professional Equipment LLC, which went bankrupt a year later.
Coltrane LLC, on the other hand, was founded by Olga Chubenko and Lidiya Khomenko, both of whom have numerous other businesses registered in their names. Yuliya Kikot took over ownership of Coltrane in 2024, at which point the company began signing significant contracts.
DOT claimed that it rejected the cheaper offers because the products did not conform to the technical standards set by the Defense Ministry, which were based on the U.S. Army canteen. However, the investigation found that the flasks purchased from the Chinese manufacturer, Taizhou Huangyan Sigg Mould Co., Ltd., can be purchased on the Alibaba.com marketplace for 154 hryvnias ($3.85), with essentially identical models available for 100 hryvnias ($2.50).
The journalists estimate that the intermediary companies, Coltrane and Superform, will earn millions in profits from the flask contracts, with Coltrane's net profit estimated at 20-24 million hryvnias (nearly $600,000) and Superform's smaller contract at 10-11 million ($270,000).
This procurement scandal has raised concerns about the transparency and accountability of the Defense Ministry's procurement processes, as well as the potential for corruption and cronyism in the government's procurement practices.
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