European credit
In early spring 2026, the then Defense Minister Mykhailo Fedorov reported that his team would reform the procurement system and gradually transfer them to transparent tender procedures. Behind the scenes, at the same time, the Defense Ministry was negotiating with Western partners on the terms of using part of the €90 billion loan that the EU was preparing for Ukraine.
According to a source familiar with the negotiations, the partners insisted that they would buy European weapons with the money for the defense industry, and the administration of the loan would be on their side.
The Defense Ministry insisted that the money would be spent in Ukraine, in particular on Ukrainian weapons. In the end, the parties agreed that the Defense Ministry would submit a product schedule to the Europeans, defend it in Brussels, and the partners would vote on each such list.
Since the administration of the money was given to Ukraine, it was important for the Europeans that the loan be distributed as transparently as possible. The Ministry of Defense promised that part of the money would be spent on tenders. Unlike direct purchases, where the General Staff forms the need and DPA selects the sellers, they minimize manual management and corruption.
The peculiarity of tenders is that in order to launch them, the Ministry of Defense, together with the General Staff, must prepare technical specifications, that is, develop and describe the tactical and technical characteristics of the products that will be put up for tender, and this is a long and difficult process.
A source for Babel in the Ministry of Defense says that the department understood the potential difficulties, so they planned to create a stock of the main categories of drones by October inclusive through direct contracts, and then they counted on tenders.
DPA and manufacturers
After Minister Fedorov was removed from his post and Yevhen Khmara was appointed acting minister, in early August the Agency prepared a certificate for him. Judging by the text available to Babel, the Agency predicted that it would not be possible to hold tenders on time and that there would be problems with the supply of weapons.
The certificate shows that in early June the Agency received from the Ministry of Defense a list of weapons that it was supposed to buy at tenders. The purchase amount is classified, but, according to Babelʼs sources in the defense sector, it is approximately half of last yearʼs budget of the Agency, that is, more than UAH 300 billion. The delivery date is the second half of 2026.
The list mainly includes drones and various types of ammunition for them. The Agency names the newly created Centers of Competence of the Ministry of Defense as responsible for the preparation of TTС. The certificate indicates that as of early August the Agency received specifications for only a few of the forty items.
And if the Ministry of Defense will submit the performance specifications for other items by mid-August, the first deliveries for almost all items will not be before the end of the year. Information from the report quickly reached deputies, the public sector, and weapons manufacturers.
The latter sounded the alarm. As one of the market participants tells Babel, in October last year, when they were planning purchases for 2026, after the next Rate, manufacturers were asked to increase their capacity so that they could meet the needs of the military, in particular, it was about middle and deep strikes. Many rented new premises, hired new workers, who, due to delays in tenders, could be left without work. The “Armorers’ Council” publicly stated about these risks on August 14.
In less than an hour, its executive director Ihor Fedirko wrote a detailed post about the situation. They simultaneously called on the Ministry of Defense to ensure the continuity of weapons contracting so that manufacturers could plan production and maintain teams. And Fedirko separately emphasized that during a war, one cannot stop one mechanism (direct purchases) and then launch a new one for months after that.
The Ministry of Defense
An informed source of Babel in the Ministry of Defense says that there are inaccuracies and contradictions in the DPA certificate and the conclusions that the manufacturers made from the information they had. In particular, the Ministry of Defense did not refuse or stop direct purchases, on the contrary. They are carried out in the first place.
"If the European loan had been in March-April, summer would have been a tender period, and so far itʼs time for direct (contracts)," says the interlocutor and reminds that the first money for weapons entered Ukraine at the end of June. And June actually fell out of the procurement schedule.
Also, according to him, the Agency did not receive the amount that the DPA mentions in the certificate immediately and had to gradually spend it not only on tenders, but also on direct contracts.
A separate problem is the performance characteristics for tenders, which, according to DPA and the director of the "Armoresʼ Council" Ihor Fedirko, were to be developed by the Centers of Competence of the Ministry of Defense. The creation of these centers was announced in March 2026 by Defense Minister Mykhailo Fedorov.
They were to work on each key area of war: Middle Strike, Deep Strike, artillery and others. The main task is to analyze the battlefield, technologies, determine the next steps for the development of defense capabilities and, accordingly, new requirements for production.
However, under Minister Fedorov, only one such center was launched, which deals with the implementation of AI in the defense sector. Fedorov explained the delay at a briefing after his resignation. According to him, the General Staff was hindering the creation of Competence Centers. It was the General Staff that de jure was supposed to develop the TTX. It did not allow people to be transferred there. Despite this, according to Babel’s interlocutor at the Ministry of Defense, who deals with the topic of centers, work on TTX, although slowly, was moving forward — people worked virtually without authority, “simply on horizontal connections.” According to the interlocutor, it looked like this: the Ministry of Defense gathered a group of experts on a specific type of weapons. This group developed and proposed a “draft” TTX. These developments and hypotheses were tested on the military — they were sent a questionnaire to understand whether the proposed characteristics corresponded to the real needs of the front. This feedback was then processed, the characteristics were adjusted if necessary, and the final document was sent for approval to the General Staff. After approval, the documents were returned to the Ministry of Defense, which sent them to the AOZ. This mechanism is still in operation today.
Dialogue
On Saturday morning, August 15, representatives of the Ministry met with weapons manufacturers. The meeting was attended by deputies of the acting Minister of Defense, including Oleksiy Vyskub. The meeting lasted almost three hours. Ihor Fedirko wrote publicly about its results. According to him, the Ministry of Defense had an “almost magical Saturday” — a day when many issues were resolved at once. According to Fedirko, representatives of the Ministry of Defense informed the manufacturers of the following:
- The vast majority of the technical specifications were agreed on literally on Friday evening and Saturday morning, August 14-15. After that, they were transferred to the AOZ to launch the procurement. At the time of the meeting, the AOZ was still waiting for the documents.
- Almost all Competence Centers have been created, but they are critically short of people. There are problems with appointing people, approving documents, and launching processes. According to the optimistic scenario, tangible movement should begin by the end of the month.
- Some direct contracts that had been waiting to be signed for a long time suddenly moved forward.
- Part of the funds are redistributed to direct purchases.
- To improve communication between manufacturers on the one hand and the Ministry of Defense and the AOZ on the other, we decided to launch an electronic interaction system. Manufacturers will be able to see at what stage their applications, tenders, contracts, or documents are. It is not yet known when the system will be operational.
According to one of the manufacturers who was at the meeting, most of the complaints that were publicly addressed to the Ministry of Defense regarding the tenders should actually have been voiced to the General Staff, which was slowing down the work on the performance characteristics. And perhaps the main problem of Fedorovʼs team was that it did not communicate the state of affairs well to the manufacturers. Fedirko also wrote about the poor communication with the manufacturers after the meeting.
After the meeting, Babel asked the Agency whether the Agency had received new TTX, and if so, what percentage of the total number of items or money was involved. The Agency confirmed that they had received new TTX, but did not specify any figures, citing that this was information for official use. According to Babel, this is less than half of the items, but TTX will still be received. For the rest, the General Staff will form lists for procurement under its own names and transfer them to the Ministry of Defense, and the ministry to the Agency. These are direct contracts between the Agency and manufacturers.
Also, after the meeting, sources at the Ministry of Defense reported to Babel that de jure Competence Centers have not yet been created. There are plans to launch several such centers: unmanned systems, air defense, electronic warfare, artillery, and the Cognitive Warfare Center.
As for tenders, the Ministry of Defense says that tenders for artillery and middlestrikes have already taken place. Tenders for deepstrikes, fiber-optic drones, and NRCs are to be announced this week — the General Staff approved their performance specifications last Friday. Tenders for conventional FPVs are also planned.
When asked whether we should expect a gap in weapons supplies to the front at the end of the year, Babelʼs interlocutor at the Ministry of Defense, who is involved in negotiations with the Europeans, says that we should worry not about the end of 2026, but about the first quarter of 2027: "The needs of the Defense Forces have increased significantly. In order for there to be no gap in supplies in the first months of next year, several hundred billion hryvnias will need to be allocated for weapons at the end of 2026. There is no such money in the budget, we can only count on a loan. That is, we will have to try to convince partners that we need to be given funding for 2027 earlier — this is a difficult task, most likely for the Ministry of Finance. The Ministry of Defense will bring the shells."
Another risk factor in procurement for the second half of 2026 will be a potential change in the management team of AOZ. According to Babel, the head of the agency, Arsen Zhumadilov, plans to terminate his contract early in the near future. He is to be replaced as program director by Artem Romanyukov, head of the Procurement Policy Directorate of the Ministry of Defense. It is planned that he will work until an open competition can be held for the position. AOZ has not yet commented on Zhumadilovʼs plans to leave. In his last interview with Babel, he said that he would stay until the end of the contract, that is, until March 2027.