As Ukraine strives to procure rapidly depleting stocks of weapons on the global market, its well-meaning allies are inadvertently driving up costs fivefold, while profiteers are capitalising on the situation. The new head of the country’s Defence Procurement Agency, Maryna Bezrukova, is trying to weed out corruption and bring prices down, reported The Kyiv Independent.

Volodymyr Pikuzo, a 38-year-old lawyer, has been at the forefront of this struggle, having founded Ukraine’s Defence Procurement Agency (DPA) shortly after President Vladimir Putin invaded his country. Pikuzo has been scouring the globe in search of weapons since then.

Western media often highlight the generosity of nations such as the UK and the US in supplying Ukraine with essential weapons and equipment. However, Pikuzo emphasised that the tens of billions of dollars in aid provided since February 2022 cover only a fraction of Ukraine’s needs. “The donated weapons are not enough for us,” he told The Southland Times in an interview, noting that during the initial months of Russia’s full invasion, about 60% of the weapons used on the battlefield were supplied by the West, with the remainder bought directly by Ukraine. This constituted only 10% of the actual requirements.

To turn the tide of the war, Pikuzo estimates that Ukraine will need to spend the equivalent of China’s $200bn defence budget “three or four times” over. This aligns with assessments from senior British military figures, who believe Ukraine requires another $300bn to match Russia’s output.

Prelude to war

Ukraine’s stockpile of Western weapons was severely limited when the war began. Many nations had imposed a “de facto” arms embargo following Russia’s annexation of Crimea in 2014, refusing to send meaningful supplies to Ukraine due to fears of provoking Russia and nuclear escalation. Pikuzo recalls failed negotiations in 2019 with Germany and Switzerland for the sale of manufacturing tools to make weapons domestically.

This situation changed in the second half of 2021, when US intelligence concluded an invasion was imminent, and the White House authorised the supply of Javelin anti-tank missiles. The UK followed suit, providing 2,000 NLAW shoulder-launched anti-tank weapons. However, the lack of large-scale supplies earlier was a significant factor in Russia’s invasion, according to Pikuzo. “They were sure that we wouldn’t be ready for such a fight – and we weren’t,” he told The Southland Times.

The DPA was created to streamline Ukraine’s cumbersome network of manufacturers, dealers and government agencies, using the defence budget to purchase additional weapons on the global market. Despite large quantities of Western arms, Kyiv remains highly reliant on Soviet-era weaponry, especially non-standard ammunition. The supply is finite, and the market is “dominated by middlemen and speculators,” with stocks depleting rapidly.

The problem is exacerbated by profiteers exploiting the war to drive weapon prices sky-high. Soviet-era 122mm Grad rockets, for instance, have risen in price from $900 per shell to $6,000, although Ukraine manages to procure them for $4,700.

Western support, while welcome, has sometimes been counterproductive due to poor coordination among allied intelligence services, leading to competition and inefficiencies in sourcing weapons for Ukraine. There are no immediate solutions, as Ukraine’s armed forces continue to modernise and remain dependent on Western support.

A fresh face

Maryna Bezrukova, who took over the DPA in January, is tasked with reforming the sector and cutting better deals with arms suppliers. She faces the same major challenges as her predecessor, including obstructive third-party traders and internal resistance from elements within the Security Service of Ukraine (SBU). Bezrukova left a comfortable position at state electricity grid operator Ukrenergo and was expecting challenges in the new role, reported The Kyiv Independent.

The reform efforts come at a critical time. Ukraine’s Ministry of Defence has faced a series of corruption scandals, leading to the dismissal of Defence Minister Oleksii Reznikov and his team last September. Under new Defence Minister Rustem Umerov the ministry aims to meet Nato standards, with the DPA focusing solely on lethal aid while a new agency, the State Rear Operator (DOT), handles non-lethal aid like food and clothing.

Bezrukova’s primary goal is to secure better deals with arms suppliers by eliminating unnecessary intermediaries. These third-party traders have historically sold weapons to the Defence Ministry at inflated prices, pocketing substantial profits. Often, contracts were paid for in full but the arms never arrived. According to Bezrukova, Ukraine has likely lost “tens of billions of hryvnia” on such deals.

However, Bezrukova faces significant obstacles, not only from profiteering intermediaries but also from within Ukraine’s own Security Service (SBU). Daria Kaleniuk, co-founder of the Kyiv-based NGO Anti-Corruption Action Centre (ANTAC), claims that shady third-party traders and employees within the SBU are obstructing the DPA's reforms. "There are units within the Security Service that try to continue robbing the country and [to] maintain a monopoly control over some sectors of the economy," Kaleniuk told The Kyiv Independent.

The SBU, responsible for counterintelligence, counterterrorism and the protection of national statehood, has a mixed reputation and has recently faced accusations of corruption, pressure on businesses and illegal surveillance of media. The agency denies obstructing the DPA's work, insisting it “acts exclusively within the limits of its powers and in the manner determined by the Constitution and laws of Ukraine.”

Bezrukova is cautious when discussing the exact sources of pressure but acknowledges that intermediaries are determined to preserve the status quo and their incomes. Some of these intermediary companies may be connected to law enforcement agencies, complicating efforts to reform the system.

The task is further complicated by the lack of public oversight of defence contracts, as martial law prevents the DPA from publicly declaring its weapons and ammunition contracts, making it vulnerable to misconduct. Bezrukova advocates for a supervisory board with international members to ensure fair procurement and protect against political pressure. The DPA is in the process of forming the board, but ANTAC still complains the process lacks transparency.

Resistance from the old guard

Bezrukova's efforts to reform the agency have made her a target. Since her appointment, she has received threatening messages, faced doxxing on Telegram and encountered obstacles in hiring new team members. The DPA is understaffed, with around 100 positions unfilled out of the 328 needed. Background checks for new hires, which previously took one or two days, now take one to four months, exacerbating the staffing shortage.

The persistence of the “old guard” connected to arms intermediaries within the DPA poses another challenge. Kaleniuk alleges that employees inside the SBU linked to the arms trade are deliberately sabotaging Bezrukova’s efforts to hire a new team. Despite these hurdles, Bezrukova is restructuring the agency to inspect manufacturers and sellers more rigorously before signing contracts, ensuring that payments are made only after products reach the border or Ukraine.

Signs of success

The DPA has already shown signs of progress, concluding more contracts in the first quarter of 2024 than in the whole of 2023. The agency has allocated 98% of its UAH216bn ($5.2bn) budget this year, with most payments made in advance to support production. However, Bezrukova plans to stop advance payments following her reforms.

Over 70% of funding this year has gone to Ukrainian companies, bolstering the domestic defence sector. While Ukraine remains dependent on foreign allies for state-of-the-art technologies, the country is making strides towards developing its own military industry. “You cannot win a war with imports, and we need to develop our own military industry,” said Klimenkov, a spokesperson for the Defence Ministry, in an interview with The Kyiv Independent.

Under Bezrukova’s leadership, the DPA is also prioritising drone procurement. Orders this year totalled UAH2.5bn ($61.8mn), saving UAH187mn ($4.6mn) through transparent and competitive bidding. Klimenkov praised the agency’s transformation efforts, highlighting increased competition and the adoption of international procurement standards.

If Bezrukova is ultimately able to succeed in her efforts, the DPA could become a critical institution for implementing Nato standards and ultimately aligning Ukraine’s manufacturers with Western supply chains.