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26Jul

Ukrainian Freedom Fund developed Draft Law of Ukraine to reduce the level of secrecy in defense procurement and to adapt and harmonize national legislation to the NATO security standards.

26 July, 2017

Corruption is a key threat to national security, with a synergistic effect on all other threats in the security and defense sector, contributes to the activities of the various forms of organized crime, increases social instability, decreases government’ ability to fulfill its functions, makes practically impossible economic development. Corruption in security and defense is a constraint for development in peacetime, but in terms of aggression from Russia  - it is a threat to the existence of the state.

According to the Security Service of Ukraine, the loss from corruption deals during all public procurement procedures was no less than 10-15 percent (USD 4,4 - 6,6 billion) from state spending each year. Much of the purchases in security and defense goes through non-competitive procedures (single-source contracts).

Ukraine has approved principles of the state anti-corruption policy for 2014-2017 years (Anti-Corruption Strategy, Law of Ukraine # 1699-VII dated  October 14, 2014). However, this Law doesn’t cover security and defense sector.

The current laws of Ukraine, which regulate State Defense Order (procurement plan for weapon, military equipment and all related services), give preference to over-classifying any information on the Armed Forces of Ukraine and other military formations but not to transparency; that deprives society of the right to control effectively the budget allocation in the defense sector.

However, excessive secrecy not only does not protect the national interests and does not enhance national security, but, on the contrary, creates the risk of corruption, which, in turn, weakens the military forces of Ukraine, harms national security and strengthens the enemy.

In the global ranking CPI (https://www.transparency.org/news/feature/corruption_perceptions_index_2016) in 2016, according to the «Transparency International» (https://ti-ukraine.org/en/research/cpi-2016/), Ukraine is ranked 131st of 176 countries. Such level with the index of 29 points we have shared with Kazakhstan, Russia, Nepal and Iran.

According to The Government Defence Anti-Corruption Index, which determines the level of risk of corruption in government defense sector of many countries, Ukraine’ place is in group D (http://government.defenceindex.org/countries/ukraine/), where the level of risk of corruption is about 18%. This group also includes Bosnia and Herzegovina, Kenya, Cyprus, Kuwait, India, Israel, Lebanon, Mexico, Nepal, UAE, Serbia, Singapore, Thailand and South Africa. Level “A” of the index means "the lowest level of corruption", and F - "critical level", which includes Algeria, Egypt, Libya, Syria and Yemen. So the level of Ukrainian corruption in defense sector is quite high.

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US defense budget (http://comptroller.defense.gov/) can be used as an example for Ukraine for IMPROVING PUBLIC TRANSPARENCY AND ACCOUNTABILITY.

Ukraine needs to simplify and standardize procedures for declassifying and accessing sensitive information. It is key to ensuring that the government cannot use the classification of information to obscure corruption, inefficiency, or errors.

Most weapons and equipment in Ukraine are procured through sole-source procurement contracts through the State Defense Order (SDO). Sole-source contracts tend to result in higher prices and lower quality. Proponents of the existing system of classified procurement argue that it is justified because the details of Ukraine’s military procurement could be used by its enemies. However, it is unlikely that procurement contracts would provide Ukraine’s enemies with actionable intelligence.

In most countries information on procurements of conventional weapons is publicly available. Because the costs of lack of transparency are so high, for most equipment and many weapons an open-procurement system would provide greater benefits than the current use of the classified State Defense Order.

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Considering all stated above UFF revised existing legal acts, which stipulate secrecy and contracting conditions, and developed changes to current legislation.

DRAFT LAW OF UKRAINE "On Amendments to Certain Legislative Acts on the Guaranteeing the Openness and Transparency of State Defense Order in order to reduce the level of corruption in the defense sphere and to adapt and harmonize national legislation to the current needs and NATO and EU security standards":

The draft law provides amendments to the Law of Ukraine "On State Secrets" in terms of reducing secrecy in the areas of defense, economy, science and technology, and external relations.

It is also expected that information about the procurement of goods, works and services for the Armed Forces of Ukraine and other military formations and law enforcement agencies, including the procurement in framework of State Defense Order (unless the information on procured product, work or service itself  doesn’t constitute state secrets) will be not related to the state secret.

The draft law provides changes in following laws of Ukraine  - "On State Defense Order", "The specifics of the procurement of goods, works and services in order to ensure the needs of defense" and "On public procurement" in terms of reducing secrecy of procurement on the State Defense Order.

In particular, it is assumed that procurement in framework of State Defense Order according to Law of Ukraine "On public procurement" does not apply only in cases where the product, work or service itself constitutes a state secret (e.g. purchase or creation of new technologically complexed samples of weapons or special equipment). At present, such procedures apply in all cases, and state customer (e.g. MoD) determines that the purchase itself refers to state secrets, no matter what customer purchase.

Also expected to oblige Ministry of Economy to publish on its web-site information about the Registry of manufacturers of products, works and services, which constitute state secret.

It is supposed to oblige state authorities to report on the results of procurement procedures, concluding and implementing contracts in framework of State Defense Order (in the part that does not contain state secrets), with publication of reports by the authorized body (Ministry of Economy ) on its web portal.

The draft law expected to change the Law of Ukraine "On access to public information" in order to reduce secrecy and to avoid undue restrictions on access to information (e.g. information with status "restricted" or “for internal use”) on the activities of central authorities in the field of defense and security.

In particular, can not be restricted access to information about:

the preparation, review and approval of budgets,
estimations of spendings and plans to use budget funds by the recipients of budget funds, and their real spending according to budget programs and disbursements  (except secret expenditures under Article 31 of the Budget Code of Ukraine),
using budget funds during planning, development, implementation and execution of procurement of goods, works and services, including the State Defense Order (except when the procured good, work and service itself constitute a state secret under the Law of Ukraine "On state secrets").

Owners of such information (state authorities)  will be obliged to disclose information mentioned above.

 

Our initiatives aimed at ensuring implementation of the following planning documents:

1) The concept of development of the security and defense sector of Ukraine, and

2) Strategic Defense Bulletin:

Objective 2.5.1. -  Amendments are developed to the legislative framework in order to expand the scope of public procurements of the Ministry of Defense covering the conventional weapons, to review the role of the state defense order as well as the list of weapons and equipment, possessing highly sensitive information Implementation of such changes depends on the political will of the national leadership (By the end of 2017     MoD, Ministry of Economic Development).

Also, this draft law supports and meets the priorities of the following documents:
1. The Strategy for Sustainable Development “Ukraine 2020",
2. Medium-Term Plan of Priority Actions for the Government until 2020,
3. Resolution of the CMU No. 175-р February 24, 2016  - "On the Strategy for the Reform of the Public Procurement System (Roadmap).

 

Full text of Draft Law you can find following the link:

https://issuu.com/viktorplakhuta/docs/170724_uff_secrecy_draft_law

https://www.slideshare.net/ViktorPlakhuta/170724-uff-secrecy-draft-law

Draft Law is ready to be registered in Parliament, to go through consideration of relative parliamentary committees and be adopted by Parliament. Please support this initiative.

 

Ukrainian Freedom Fund implements projects, which aim to eradicate government corruption, strengthen the rule of law and build democratic institutions. The publication of these materials should serve the promotion and support of major reforms in Ukraine.