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A meeting of the Ukraine-NATO working group was held at the beginning of March in Brussels at NATO Headquarters. Yuriy Brovchenko, Deputy Minister of Economic Development and Trade of Ukraine, chairman of the Interdepartmental Commission for Defense and Industrial Complex under the National Security and Defense Council, headed a Ukrainian delegation, consisting of General Director of the State Enterprise “Ukroboronprom” Pavel Bukin and Director of External Relations of the League of Defense Companies of Ukraine Ulia Vysotskaya. The initiator of the invitation to the Brussels representative of the association of private sector defense companies was the Mission of Ukraine to NATO. And this initiative was completely justified. According to the results of the meeting, as noted on the Mission’s website, the growing role of public-private partnership in defense-industrial cooperation caused great interest to NATO representatives.

In an interview with the Defense and Industrial Courier news agency, Ulia Vysotskaya gave a more detailed account of the results of the visit to NATO headquarters and shared his impressions of communicating with the Alliance.

– In his presentation, Yuri Brovchenko, who led our delegation, talked about the structure of the Ukrainian defense-industrial complex. In particular, he noted that over 200 private companies constituting the non-state sector of the defense industry, today execute more than 50% of the state defense order. Worldwide, trust in private business in the field of defense is high enough. It mainly holds on the defense industry of developed countries. Therefore, and to Ukrainian private persons at the NATO headquarters show a genuine interest.

OPK: – What was the main meeting room of your speech at NATO headquarters?

– Speaking in Brussels on behalf of representatives of the private sector of the defense industry of Ukraine, I said that I had come here not to ask for money. I contacted the Alliance for information, methodological and advisory support, and asked to share the experience in solving the problems that today have to be solved both for private producers and for our entire defense industry.

– What exactly were the problems?

– First, about the post-Soviet method of pricing the procurement of components and the implementation of ready-made models of IWT. Military acceptance is still interfering with the pricing of our products and restricts the legal rights of enterprises involved in the execution of the State Tax Inspectorate to receive profits not exceeding 20% and 1%, respectively. However, 20% is a profit from the production cost of own work, and 1% – from the components. In fact, the profit of the enterprise does not exceed 8 percent … Such restrictions in the commonwealth with the level of inflation, high rates on loans do not give the opportunity to make money to invest in the development of the enterprise.

On behalf of the League, I addressed the NATO Headquarters representatives with a request to hold a working meeting on pricing and procurement. It was agreed that during the conference, which will take place in May, this topic will be given attention.

OPK: – You mentioned purchases. What is the problem with them?

– There are two extremes here. Firstly, the State Defense Order is formed under the slogan “secret”. True, in this there are also positive moments – at least they accept (the customer) independent decisions, often more correct, than at open tenders, where the determining value is the price, not the quality of the product.

For this reason, ProZorro trading is the second extreme. Today, in the context of the fight against corruption, some purchases of stupidity (especially when it comes to complex technological projects) or because of fears of accusations of corrupt schemes are transferred to ProZorro. In addition, such openness generates falskampaniya for the breakdown of purchases and the outflow of information that should be closed. And with the current state of things, for example, we understand that a conditioned student from the Urals, Siberia or the Far East visiting ProZorro website can calmly find out how much and what has been purchased for Ukrainian power structures. I’m not talking about secret services anymore.

OPK: – What do you mean by fake campaigns?

– I will explain. Some losers and offended tenderers, most often intermediaries who themselves have no relation to production, are beginning to write complaints, to demand proceedings … As a result of such clarifications there is a delay of purchases, the real supplier-producer loses time and to the moment when the question is settled, he already , may not be ready at the price indicated in the original conditions and in those terms fulfill the terms of the contract. I think this is a matter of national security. Because such falskpampanyami can perfectly tear off purchases, as a result of which the SCU and our security forces do not add equipment and weapons.

The procurement of weapons, military equipment and special equipment for the needs of the Armed Forces of Ukraine and other military formations must combine both the price, the quality and the non-disclosure of information. And you need to start, first of all, with the qualification of tender participants.

According to many experts, the optimal solution to this issue may be the creation of an “internal ProZorro”. We are talking about open trades among qualified manufacturers, which will be conducted taking into account the requirements of national security and monitored by the public.

OPK: – What role can NATO play in combating corruption?

– First of all, enlightening. In Brussels, I requested that I provide methodological assistance in correcting such leaks in the procurement system. I would like to get advice on how similar issues were solved in NATO countries. After all, they have already passed this stage for a long time and can share their experience in creating an optimal defense procurement system.

OPK: – If we talk about the cooperation of private companies to participate in joint projects, such as ammunition storage depots (bases), what can the League learn from the Alliance?

– And I spoke about this, speaking at NATO headquarters on behalf of the association of private companies that work in different areas – from personal protection, unmanned aerial vehicles, armored vehicles to radio-electronic security, self-propelled missiles, and deep modernization of military aircraft. I drew attention to the fact that the League now discusses with the Ministry of Defense the possibility of implementing complex projects, including the construction of ammunition storage depots (bases) and the creation of a system for their protection. And in this direction, we would also like to receive from the Alliance methodological recommendations that would help the Ukrainian military to correctly formulate technical tasks for the implementation of such projects.

The same applies to mobile hospitals. This is a new topic for Ukraine. Everyone understands its importance. Military doctors and volunteers have a clear understanding of the functioning of hospitals, but there is no technical assignment for their production. We believe that in this important issue, as they say, there is no need to reinvent the bike. We expect NATO to help us by providing calculations and norms for the organization of work of mobile hospitals. And we can manage their production by cooperating with companies that are part of the League.

OPK: – By 2021, Ukraine should move to NATO standards in the production of IWT. Can Western partners help us in this process?

– In December last year, the director of the State Research Center of the Armed Forces of Ukraine, Vladimir Bashinsky, during his visit to the NATO headquarters, talked about the provision of equipment for certification to Ukraine according to NATO standards. In response, Western partners offered to buy him in special trust.

I, this time, spoke about the fact that private producers produce products according to strict standards, and are ready to switch to the NATO ones. But for this, in addition to special laboratories, we need methodology, training of our specialists and their accreditation. And in this matter, Allies can share experience in certifying defense products so that we do not go on their own in the way that they have long been through.

I will note that sooner or later Ukrainian manufacturers will have to certify their STANAG standards. Without this it will be impossible to sell products not only on the external, but also on the domestic market. By the way, now, in order for us to conduct laboratory ballistic tests of a model of armor in Europe, it is necessary to pay 50 thousand euros, and tests of the whole armored vehicle there will cost 900 thousand euros, not counting another million euros – the cost of three samples of the product, which should be irrevocably provided for such certification .

OPK: – The trend of liberalization of export of samples of military equipment and weapons produced by the private sector of the Ukrainian defense industry is now emerging. Is private lawyers willing to take advantage of the right to self-export without intermediaries? Was this perspective discussed at the NATO Headquarters meeting?

– If we do not change the pricing system, we will not allow producers to independently enter the external market without the participation of intermediaries in the form of special extraors, then the foreign investor, the owner of the technology will not be interested in the placement of production in Ukraine.

We are seriously studying this topic, we are consulting with state institutions, in particular the State Export Control Service, and foreign organizations. And we understand that international law on this issue is quite complicated and many Ukrainian producers of IWT, having been able to independently export their business, are at risk of getting into the legal collision network of the international arms market. And for violations of these rules and norms, a very severe punishment is imposed by penal sanctions. Speaking at NATO headquarters, I requested that Ukrainian private defense companies specialize in training, licence, legal expertise in the field of export activity. Indeed, without such knowledge, Ukrainian enterprises, entering the external markets, may unwittingly violate the rules in force there. And, as you know, ignorance of the law does not relieve the responsibility …

At the same time, we believe that the domestic institute of special exporters can not be abolished. Their specialists have vast experience and connections in the field of export business, which has come to fruition for years. Yes, many of our producers complain about the high percentage that special exporters take for mediation. But this fee is just for the legitimacy of the exporter’s actions in foreign markets.

The interview was arranged with courtesy consent IA «OPK»

«We do not ask for money from NATO, but we ask for information and methodological help» – Ulia Vysotskaya, Director for External Relations of the League

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