The Armed Forces of Ukraine will buy Ukrainian-made products: Parliament has expanded the localization requirement to defense procurement
27 May 17:10
The Verkhovna Rada of Ukraine has adopted a new law, “On Public Procurement”No. 11520, which represents an important step toward Ukraine’s European integration, according to "Komersant Ukrainian".
This law aims to modernize the public procurement system in line with European standards, which is essential for Ukraine’s accession to the European Union.
The document also introduces strict protectionism for domestic businesses: until December 31, 2032, all defense procurement of civilian goods for the needs of the Armed Forces will be conducted exclusively with a localization requirement. The new rules will radically change the military procurement market, close loopholes for imports, and significantly strengthen the powers of the State Audit Service.
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Key Provisions of the Law
The law provides for the creation of a modern, transparent, competitive, and effective public procurement system that will meet the state’s needs under martial law, during Ukraine’s post-war recovery, and in accordance with international obligations.
As noted in the statement, “the law is intended to become an effective tool for saving budget resources, strengthening the trust of international partners, and improving the efficiency of public funds.”
The Committee on Economic Development led the drafting of the public procurement bill. A total of 245 lawmakers voted in favor of the bill, demonstrating strong support among parliamentarians.
MP Yaroslav Zheleznyak noted that “this World Bank law will unlock $3.5 billion,” underscoring the document’s importance for the country’s economic development.
The provisions regarding the defense sector will take effect nine months after the law is officially published. This timeframe is given to the government to finalize subordinate legislation and reconfigure the Prozorro technical systems.
From now on, when procuring buses, light industrial products (including uniforms), trawls, or other civilian goods for the needs of the Armed Forces of Ukraine, there will be a mandatory requirement for a Ukrainian component. Additionally, body armor, helmets, and mechanized demining equipment have been officially added to the list of goods subject to localization requirements.
The Cabinet of Ministers, in agreement with the parliamentary committee on national security, defense, and intelligence, has been granted the authority to promptly expand this list to include other defense and dual-use goods.
READ ALSO: New Rules in Prozorro: Parliament Amends Requirements for Businesses in Government Tenders
Changes and Proposals
Prior to the second reading, amendments were proposed to the bill, specifically regarding granting state customers the right to officially engage professional procurement specialists under contract and improving legal provisions regarding appeals to the Antimonopoly Committee of Ukraine (AMCU).
As a reminder, the general localization requirement currently applies to rail and urban transport, municipal equipment, energy equipment, cable and wire products, and electrical equipment. Last year, Government Resolution No. 782 expanded this list by another 25 items to 128 goods. According to the legislation, the mandatory localization level will be 30% in 2026, rising to 35% in 2027 and reaching 40% in 2028.
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