On July 7, the Ministry of Defense launched DOT-Chain Defence in a pilot mode. Weʼve been talking about it for half a year, but Iʼll explain it anyway. This is a marketplace, that is, practically an online store, where brigades can directly order FPV drones. DPA will pay for everything. 10 brigades are participating in the pilot, their total budget is UAH 1 billion. One of the main tasks that you want to solve in this way is for the brigades to order exactly what they need and receive it quickly. But for this scheme to work, there must be a lot of ready-made necessary goods in the warehouses. Now, as I understand it, the manufacturers have not produced anything specifically for DOT-Chain, they will simply ship the leftovers, and this is a very limited assortment. The brigades will order everything else and wait for several months. This does not look like a conventional "Rozetka" with drones.
Look, on the one hand, we have a developing UAV market. On the other hand, if we talk about centralized procurement, there are almost no market mechanisms in this market. And centralized procurement is the lionʼs share in this industry. What is a market mechanism? This is when, on the one hand, there is consumer demand, and on the other hand, there is a manufacturer who understands this demand and plans its production for it.
And it does not depend on anyoneʼs decision — the General Staff or DPA — but only on real demand. That is, conscientious manufacturers who have a great product, focusing on real demand, will take reasonable risks and start working on the "shelf". When units enter the marketplace, they will see that the necessary product is in stock right now.
Those manufacturers who will wait for applications for production [of drones from DPA], and then spend several months assembling and shipping them, will obviously look less attractive.
But at the time of the platformʼs launch, it is about small remnants in warehouses.
Yes, manufacturers go to their online offices and show how much product they have ready to order and how long it will take to fulfill the order. And yes, at the first stage, the choice will not be very rich, because everyone is used to working to order, but the situation should change.
This system does not provide for prepayment from the state. Are producers willing to take risks and work on the "shelf" for their own?
It is not only white or black — either in stock or on order in three months. Manufacturers can specify certain quantities on order, but not in three months, for example, but in three weeks, or in a month.
They can plan the purchase of some components that are somehow unchanged — some parts for the hull, for engines. And those that depend on the situation on the front and often change, can be ordered for specific orders to speed up the process a little.
Letʼs return to the willingness of manufacturers to work without prepayment and buyback guarantees.
The state will pay for all orders placed. There is a risk of not ordering the manufactured goods if the manufacturer works on a warehouse basis, but this is a matter of confidence in their product.
As for prepayments, we are actually launching this system so that there are none. We are talking about short orders that we place every week, and the goods for which the manufacturers ship every week and receive money upon delivery, rather than waiting for months, as with long contracts.
If you have already mentioned long contracts for the purchase of drones, then almost all manufacturers complain that there is no predictability and systematization with them. That is, even those who receive long contracts say that they come to them and ask to close everything earlier — not in November, for example, but in June, because everything is on fire. Why does centralized procurement still look like we are putting out fires? Where is your responsibility here, and where is the General Staff, which forms the need?
Why wasn’t there long-term planning? Because the UAV market was actively developing. Two years ago, it had a completely different look, structure, and saturation. There were a significantly smaller number of manufacturers, a significantly smaller depth of localization, and a significantly smaller overall market capacity. Back then, it was important to move, let’s say, in short sprints so that manufacturers could show themselves and talented teams could realize their potential, which is what actually happened.
That is, the market developed, and its total capacity began to significantly exceed the state’s capacity to purchase these products. There is no longer a need to move in short sprints. Now, manufacturers are already interested in the market being fixed at the current quantity and in receiving long-term contracts — this is a normal desire for a more or less mature market.
In response to this demand, we are making our management decision — procurement through “Prozorro” based on clear tactical and technical characteristics (TTC). We have just recently convinced the General Staff that let’s stop purchasing according to the specification that you define — it’s some kind of long list of everything and no one understands why someone got on the list, someone didn’t, and why in such and such a quantity and not in another.
Procurement through “Prozorro” is about unification and long-term sustainability. Not in the first procedure, because it will be for July, but then we will hammer out the specification, and we will announce procedures with deliveries, for example, for October and November, so manufacturers will be able to plan production.
With the help of DOT-Chain Defence, DPA wants to bring together drone manufacturers and the military directly, without the mediation of the General Staff.
Next, we work with the General Staff so that they give us the requirements for 2026 back in 2025, so that we conclude contracts for standard unified positions in “Prozorro” for at least half a year, maybe even a year. So that manufacturers who are able to produce large volumes with good quality enter a normal production process with long-term planning.
You know, they say that the Russians don’t have, say, 33 drones, but they have some three or four — but they are working, and there are a lot of them. And this story is exactly about this, so that we can scale up successful products at adequate prices.
This should solve the current problem, when brigades have a bunch of unnecessary drones in their warehouses that they didnʼt order and that donʼt suit them, for example, because of the frequencies at which drones can no longer fly in their area? And the military themselves have to modify these drones at their own expense and wait a long time for spare parts from China.
Thatʼs right. For example, in DOT-Chain Defense, the unit sees the manufacturer from whom it orders something and can contact him directly. And if the manufacturer is smart, he will contact him himself and clarify how he can do it better. We direct the manufacturer to the fact that his client is not the General Staff, nor the Ministry of Defense, and certainly not DPA. Its real client is the unit, and he must satisfy its need.
And the rest of the purchases?
As for “Prozorro”, it’s a little more complicated. But there are some positive developments — these are changes to Government Resolution No. 1275, which made it possible to increase the price of UAVs if the order requires some technological or constructive changes.
What was the problem? Manufacturers said that they were ready to refine their products to meet the new requirements, but this is additional costs, and it is not profitable for them.
So now manufacturers, for example, will be able to change frequencies in already-made drones and you will cover these costs for them?
Yes, we will cover the difference that arises.
This story about unusable drones in warehouses is part of a non-working system. On the one hand, we have the “extreme” military, who supposedly form the need, because it all starts with them. On the other hand, there is DPA, which receives a ready-made list of what needs to be bought and cannot change it. And between you and me is the General Staff, which has to process the needs of the military, foresee everything and plan what will be at the front in three to six months. This is a super-complex task that we are not coping with. And when questions arise as to why, they say, “the military ordered this for us”. And this is nonsense, because the military cannot be held accountable for this either. How can we change this?
I look at it from my perspective. It seems to me that very often DPA, not the military, is called responsible for the fact that the front does not receive drones. And it is very easy, because DPA is in sight, it has a specific leader, it is very easy to blame him. And, on the one hand, this is, of course, unpleasant, but on the other, it gives an unexpected advantage.
When you argue somewhere at meetings in the Ministry of Defense or in the General Staff, and with the command of different levels, you say: “Well, dear ones, the way the system works now is not working for you at all. You are sitting somewhere in your offices, no one hears about you. You form this need, give us a specification with your own names, with quantities, but no one mentions you in the Telegram channels. Everyone mentions either the minister, or me, or both the minister and me.”
And that is why we are initiating changes. I understand that when we did this at the beginning of the year, because there was no time, we got involved and contracted as much as we could. Itʼs all being supplied. But now, please, letʼs switch to another system, where we have everything unified, at normal prices, on “Prozorro” or DOT-Chain Defense.
There was already one project on the drone market that had a different goal, but it was also supposed to provide units with the necessary drones quickly and directly. Iʼm talking about “ePoints”. The best units received points for effective drone work and could choose the drones they needed for these points. And I heard a lot of good feedback about it at the start, and then the commanders started talking about delays in deliveries, and most importantly, that the necessary drones, which are in high demand, are not available, and they are told the same thing as in centralized procurement — take what is available. Have you not investigated why this happened? Because, perhaps, these are your potential problems in DOT-Chain.
I canʼt comment on this. The only thing I can say is that these two systems will work in parallel, that is, both e-scores and funding from the Ministry of Defense budget. After some time, DPA will take care of “ePoints”.
The State Special Communications Service was responsible for the “e-Points”, are you taking them for yourself?
There is already a corresponding decision of the Cabinet of Ministers, and now our and other teams involved in this are working on the technical and interactive implementation of this process.
That is, will brigades in one system have the opportunity to order drones under the e-ball program and for the budget of DPA?
Yes, teams will order goods by choosing the account from which their order will be paid.
The ideologist of the “ePoints” system was Deputy Prime Minister Mykhailo Fedorov. He predicted that this approach would become a game-changer on the front.
You are counting on “Prozorro” bidding, and this system has performed well in civilian procurement, but weapons are another matter. Manufacturers with a good image in the market say that “Prozorro” is not difficult to “hack” — to supply components that meet the requirements, but are actually of poor quality, and this is critical for the drone’s combat operation. You know this problem. How to minimize the risks?
The issue of quality and “Prozorro” is an eternal issue. I remember when we started purchasing medicines, some people were also afraid that we would buy some junk. As you can see, everything works fine. The same here. The buyer must write out the quality requirements and confirm this quality. Here, there really is no limit to perfection.
If we understand that there is some loophole that this or that manufacturer took advantage of and supplied something of poor quality, then we will close this loophole in the next round. If another one appears, we will close it. In two or three iterations, we will refine the procedure, and this will be a quality product supplied at a competitive price.
For you, these two approaches, “Prozorro” and DOT-Chain Defence, I understand, are game changers — something that should fundamentally change the system. One manufacturer voiced an idea to me that could theoretically radically change the ideology of procurement: the state should buy not drones from manufacturers, but successfully completed missions. This would solve a bunch of problems. For example, manufacturers could not simply ship drones and forget about them, so that they would lie idle in the warehouse. Some manufacturers will not like this and will only work if they have direct access to the crews and, ideally, control the logistics so that their drones get to where they need to be in good condition.
Iʼll tell you this, in the corporate sector, where there is no pressure from law enforcement and regulatory agencies, we would probably have implemented this a long time ago, because such an approach really makes sense. It would be a rather difficult contract, but it is realistic to implement it.
In our realities, we, so to speak, approached this projectile and tried to assess the risks. It seems that right now, within the legal environment and legal culture in which we work, it is impossible to implement it. Or let me put it better — implementation takes more time.
You criticized and began to abandon the institution of military acceptance, when the quality of the product is controlled and guaranteed by a military representative from the Ministry of Defense.
Yes, the resolution has changed, which states that it is possible not to involve military representatives. We asked our contractors which of them need a military acceptance. And some, by the way, insist on having one. Why? Because quality control is a responsibility, and manufacturers want to share it. The very logic of not involving military representatives in acceptance is that quality should be guaranteed not by third parties, but by the manufacturers themselves.
This is the correct European approach. But this imposes certain obligations on the manufacturer. He must have a quality control system at his enterprise. As of today, some manufacturers are ready for this.
What does the control process look like without military representatives?
Previously, when manufacturers came to military units or warehouses of the Logistics Forces Command, they had to have a document signed by a military representative stating that it was a quality product. Now they must have a quality certificate, which they issue themselves, and with it they hand over the products to the brigades or warehouses of the Logistics Forces Command.
Manufacturers complain that DPA does not have time to sign acceptance documents and delays occur.
I donʼt have any information that we donʼt have time for. Right now we have simplified some accounting and bureaucratic processes, soon we will digitize them, then everything will be very simple.
I was told that the delays also apply to payments to producers. Itʼs a matter of several weeks, it used to be faster.
I have signals about this, we are reacting to them. We have two weeks to pay under our contracts. As I said, we have now changed the procedure a little to normalize this process.
These delays, as I know, are not least caused by personnel problems — people are leaving DPA for various reasons, and processes are slowing down. Do you have personnel problems?
Letʼs say, when I took this position, those people who witnessed the work of the previous management told me that "in general, you should fire everyone and hire new people". Because the corporate culture in the Agency was such that it was not focused on either the result or the military.
There were no quarterly or annual KPIs. I asked, how do you work then? I was told that "we work on orders". I translated it as "from the kick", that is, there is a kick, for example, from the Ministry of Defense — we flew there. There is no kick — we donʼt touch anything.
Letʼs not talk about predecessors anymore, they havenʼt been around for half a year.
Good. Itʼs normal for some people to leave. Some people leave, some people come. Itʼs impossible to implement new processes and a new culture that everyone fits 100 percent.
Now about a more popular topic — "destroyers of Shaheds". The higher military leadership previously privately, but now publicly, says that in the fall such interceptor drones should somehow solve the problem with "drones". If there should be a lot of them in the sky in the fall, then mass production is underway now, and you, accordingly, should have contracted a lot of them earlier.
Everything is correct.
We are clearly late with this technology, and I have heard, albeit unconfirmed information, that we are late with contracting as well. What figures can you provide for these contracts? Absolute, percentage, amounts spent?
I canʼt say anything. But we have definitely contracted and will contract more, we are in touch with the manufacturer. This is mass production.
Mass production is about how much of anti-Shaheds — a thousand or tens of thousands?
Tens of thousands. This is what we have already contracted, and we will continue to contract. Our contracting now, on the one hand, rests on the manufacturerʼs capacity, on the other hand, on the state budgetʼs capacity. We will definitely contract everything that the state budget is capable of.
If a delta arises and the manufacturer is able to produce more, there will be contracting either according to the Danish model, or directly with partner countries, so that these drones are transferred to us as international technical assistance.
At the end of last year, there was a heated discussion about the work of the Joint Stock Company with special arms importers. Mykhailo Tkach was investigating one of them, Spetstechnoexport (STE). We interviewed its then-head Oleksiy Petrov, who explained why the conclusions of the investigation were wrong. When we met last time in April, you confirmed that there is a large amount of receivables from special importers , which, as I understand, had accumulated even before Marina Bezrukova came to power.
No, actually during her tenure.
But under the contracts she inherited?
No, she signed them.
Letʼs talk about now. Have you started working less with special importers?
We definitely reduced our overdue receivables. That was our goal.
Did you shorten the previous one or are you already under your contracts?
There are no receivables under our contracts with special importers at all. And in general, I cannot say that special importers make up any significant percentage of what we contract. Whether this percentage is higher or lower than a year ago will be visible in the final calculations that we will be able to make closer to the end of the year.
We have no privileges or discrimination for special importers. If they have a commercial offer with a good price and terms, we have no reason to reject it. I understand that this is a very media-driven and well-demonetized story…
We just didnʼt demonize her.
Well, I also donʼt monitor interest rates on special importers separately every day.
STE was transferred from GUR to the Ministry of Defense. And before, the Ministry of Defense complained about the work of this company. Has anything changed now? Are they better at fulfilling contracts, not breaking deadlines?
Itʼs not ideal yet, but itʼs better. At least theyʼre taking action and moving towards normal results.