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Reznikov reacts to journalists' publication on food procurement for Armed Forces

The minister explained the pricing and emphasized that the Ministry of Defence purchases a comprehensive catering service. That is, the delivery of a certain set of products to military units and, in some cases, cooking.

Reznikov reacts to journalists' publication on food procurement for Armed Forces
Photo: EPA/UPG

Defence Minister Oleksiy Reznikov commented on the information spread by journalists about the purchase of food for the Armed Forces allegedly at inflated prices.

On Facebook, he noted that he would present comprehensive information and documents to MPs at a meeting of the relevant committee with the participation of representatives of the National Anti-Corruption Bureau, the State Bureau of Investigation, and the Security Service of Ukraine.

Reznikov explained that tens of billions of hryvnyas would be spent on providing food for the military in 2023. This is a large market.

"A little over a year ago, this market was actually controlled by a monopoly. When I was appointed as Minister, I made a public commitment to demonopolize food services. And my team and I did it last winter. Although, there was a lot of resistance. Last year, the monopolist threatened to completely block food supplies to the army. It didn't work," he assured.

According to Reznikov, overcoming the monopoly made it possible to successfully organize the supply of food to the army, which had increased several times, despite all the difficulties of the active phase of the war.

Currently, the Ministry of Defence has contracts with 8 suppliers to provide catering services. Each of the suppliers is assigned a certain number of military units under the contract. The contracts stipulate that if one of the suppliers is unable to fulfil its obligations, the other suppliers will "cover" the military units according to a certain algorithm. The food supply will be guaranteed to be uninterrupted everywhere, no matter what happens.

"I would like to emphasize something else. The provision of catering services is based on the "food follows the soldiers" principle. If the permanent location of our paratroopers is, for example, in Lviv or Zhytomyr, or if the 128th Mountain Assault Brigade has a permanent location in Transcarpathia, and our soldiers perform combat missions in Kharkiv or Zaporizhzhya, the supplier guarantees food delivery wherever the subdivisions of a particular unit serve. Regardless of the number of locations and the number of people in them. These are the risks that a business assumes when entering into a contract. These are special requirements for logistics," he added.

Reznikov also explained that the MoD does not purchase individual products. The Defence Ministry purchases a comprehensive catering service. That is, the delivery of a certain set of products to military units and, in some cases, cooking, too.

The subject of the procurement is the cost of a daily ration for a serviceman. This ration has clear criteria for caloric content and other parameters. Suppliers guarantee to provide daily rations for a certain amount. Last year, this amount was UAH 120 per serviceman per day. This year, we received offers from suppliers ranging from UAH 151 to 162 per day.

As a result of the negotiations, the final cost of the service of providing meals for one soldier per day is UAH 145.8.

"The peculiarity of the Defence Ministry's contracts is that they are concluded with service providers for a year in advance at a fixed price. So these are also risks taken by business," the Defence Minister said.

Reznikov also explained that the contracting and commitment process consists of several stages. The Ministry of Defence announces its needs, businesses submit proposals, an external price evaluation is conducted, the contract is negotiated, an internal audit is conducted, the contract is signed, etc. The final part of this process is the registration of the signed contract with the State Treasury. Only after registration with the Treasury do financial obligations arise and payments can be made.

"Since 2016, military personnel have been fed on the basis of a catalogue of products that includes more than 400 items. Officials of military units (chief catering officers) choose the products from the catalogue to be provided by the supplier based on the ration. When MPs look at the contracts with 8 suppliers, they will see that the prices for the same products are different. Just as prices differ in retail chains, whether it's Silpo, ATB or Novus. It's just that each has its own specialization. They have their own production of a certain group of goods or exclusive conditions with producers. That's why some stores have cheaper meat, and some have cheaper fish, vegetables, or milk," he wrote.

Food prices are analyzed by special expert institutions, in particular, the Bokarius Institute of Forensic Expertise of the Ministry of Justice of Ukraine. They determine a certain range.

"There is a huge amount of distorted information about prices in the media. Dzerkalo Tyzhnia itself cut out several items with incorrect comparisons from its infographic, a day and a half after the publication, those that have already received the most publicity. Unfortunately, it did so without any explanation. Understanding the incorrectness of other positions will also come. After all, incomparable things are being compared. Prices for a can or bottle of packaged products with the price per kilogram. Prices per litre with the price per kilogram, net weight with the price per gross weight, etc. Even when analyzing the figures in the Dzerkalo Tyzhnia article, many noted that prices for a significant number of products are lower than in a neighbourhood store. Despite all the risks for business," he said.

What the Dzerkalo Tyzhnia publication calculated as 0.2% of the contract value is the supplier's cooking in several military units where external contractors cook for various reasons. This is not food delivery.

"This is another gross misconception," he said.

Regarding egg prices, the minister said that a document published in the media indicated an abnormal price, which was perceived as UAH 17 per egg.

"That's what they built a conspiracy theory on. In fact, it was a simple technical error made by the supplier. Eggs are the only category from the catalogue that is calculated in pieces in the appendix to the contract. The supplier quoted the price not for pieces, but for the weight of eggs when transferring data from one table, where everything was converted to a unit of measurement by weight, to another table," he assured.

According to the standards, a kilogram of eggs is about two dozen pieces, depending on the grade (the weight of an egg should be between 42 g and 60 g according to the standard). The price of 170 UAH per kilogram of eggs is 85 UAH per dozen. This is within the range of other suppliers and fully consistent with the market price. He added that the ministry does not buy eggs at UAH 17 per piece.

The Minister emphasized that as of now, additional internal checks are being completed for all contracts, military units are checking the catalogue, technical errors are being corrected, additional supply agreements are being prepared within the approved parameters of the state budget, etc. After that, the documents will be registered with the State Treasury.

"That is, de jure, the document published in the media does not yet exist. Not a single penny has been spent on it. Statements that the Ministry of Defence has "stolen" or "tried to steal" billions are complete nonsense," the minister said.

Reznikov noted that "the public spreading of information about the allegedly 2-3 times higher prices started in the middle of last week. That is, not after, but before Ramstein, when the agreements were being finalized."

"The person who handed over one of the contracts and annexes for public disclosure committed malfeasance, at the very least. This person will definitely be identified and brought to justice. The SBU has prepared relevant materials for this purpose. In particular, the motives will be clarified. Since there is no factual component to the claims, except for manipulation, the most obvious goal seems to be an attempt to undermine confidence in the Ministry of Defence at a very crucial time. And this is not just an official crime," he added.

Reznikov will propose to MPs to consider establishing a temporary investigative commission into the procurement process if they consider other instruments of parliamentary control insufficient.

On Saturday, journalists published data that the Ministry of Defence allegedly buys food for military personnel at two to three times the price of food in Kyiv stores.

Today, the Parliamentary Committee on National Defence and Intelligence will consider the procurement issue.

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