A defective mortar round is not merely an accounting failure. If it drops from a launch tube without exploding, a procurement decision made months earlier suddenly becomes a battlefield problem. The money has already been spent, the ammunition has already reached a unit, and the soldiers depending on it have no immediate substitute.
That connection between public spending and combat effectiveness lies at the center of growing concern over Ukraine’s military procurement system. Government audits, court proceedings and criminal investigations describe repeated cases in which suppliers failed to deliver, weapons proved defective, advances became difficult to recover and warning signs did not prevent companies from receiving further contracts.
Confidential government reviews covering 2024 and 2025 indicate that fraud, waste and weak management may have cost Ukraine roughly $1.2 billion in 2024 alone. Because the underlying classified reports are not publicly available in full, every component of that estimate cannot be independently reconstructed.
Public oversight findings nevertheless point in the same direction. Ukraine’s Accounting Chamber has identified large-scale irregularities across weapons procurement, including weaknesses in planning, pricing, quality control, contract management, advance payments and recovery of money from suppliers.
Daycom’s analysis of publicly available Ukrainian oversight material indicates that the central weakness is not one corrupt official or one failed arms deal. The deeper risk emerges when wartime urgency, secrecy, limited competition and large advance payments combine without an equally strong mechanism for identifying unreliable suppliers.
That distinction matters because headline figures can easily be misunderstood. Auditors may identify transactions worth hundreds of billions of hryvnias as affected by legal, procedural or management deficiencies, but that does not mean the entire amount was stolen or permanently lost.
Some violations concern paperwork or procurement procedure. Others involve excessive prices, late deliveries, defective products or advances that remain outstanding. Criminal corruption is another category altogether and requires evidence that money was deliberately misappropriated.
Even after those distinctions are made, the scale of exposure remains substantial. A large majority of defense purchases reviewed by Ukrainian auditors were conducted outside normal competitive procedures, reflecting the extraordinary conditions created by a full-scale war.
Closed procurement can be necessary when publishing quantities, specifications or delivery schedules would expose military vulnerabilities. But the same secrecy that protects operational information also removes many of the mechanisms that normally discipline prices and contractor behavior.
Competition is one of them. When several qualified suppliers are forced to compete openly, price differences become visible and weak bids can be challenged. When purchases are negotiated under restricted conditions, much more responsibility falls on internal procurement officials to prove that the chosen offer is reasonable.
Advance payments create a second vulnerability. Ukraine has committed very large sums to contractors before final delivery of weapons and military equipment. Where contracts are fulfilled, advances can accelerate production. Where they fail, state money can remain tied up for months or years.
By the beginning of 2026, hundreds of billions of hryvnias remained recorded as receivables under defense contracts, with tens of billions overdue. That does not mean all of the money will ultimately be lost, but it does mean the government has already transferred funds without receiving the contracted result on time.
For an army at war, that delay carries a cost beyond accounting. A payment locked inside a failed contract cannot easily be redirected to another manufacturer, while the brigade or artillery unit awaiting the equipment still has an unmet battlefield requirement.
The problem becomes more serious when a supplier’s previous failure does not automatically prevent another award. Internal reviews have identified companies that received additional military business despite earlier defaults or unresolved questions about their ability to deliver.
In several cases, contractors reportedly received new orders after failing to complete previous agreements. That raises a basic governance question: what consequences should follow when a company has already demonstrated that it cannot reliably provide the equipment the military ordered?
One of the clearest examples involves 120-millimeter mortar ammunition. Ukraine’s Defense Ministry publicly acknowledged widespread malfunctions in late 2024 after troops reported abnormal performance from domestically produced rounds.
Problematic batches were removed from service and an investigation was opened. Among the possible causes examined were deficiencies in propellant charges, production quality and storage conditions.
The episode became particularly serious because the defects were discovered not during laboratory testing but after ammunition had already reached combat units. In other words, the procurement and quality-control chain failed before the battlefield became the final inspection point.
Court materials and audit findings later raised questions about the scale of the defective production and about subsequent contracts involving the same state-owned manufacturer. The dispute has also led to criminal proceedings involving senior management.
The importance of the case extends beyond individual guilt or innocence. A functioning procurement system must be able to distinguish between a contractor experiencing an isolated technical failure and one whose record presents an unacceptable risk to soldiers.
That requires reliable performance data. Every contract should contribute to a supplier history showing whether deliveries were on time, whether products passed acceptance tests, whether advances were returned when agreements collapsed and how frequently penalties had to be imposed.
Without such a system, institutional memory can disappear between procurement cycles. A company may be treated as a new bidder even though another part of the defense bureaucracy already knows that it failed under an earlier agreement.
Pricing presents another challenge. Auditors have questioned cases in which Ukraine selected more expensive supply chains even when apparently cheaper routes were available for equivalent weapons.
One prominent example involved rockets manufactured in Turkey. Competing offers reportedly differed substantially in price despite referring to ammunition produced at the same factory.
The contract ultimately went through a European intermediary rather than directly through the manufacturer. The difference between the competing bids potentially added well over $100 million to the overall cost of the purchase.
There is no basis for assuming that the intermediary itself committed wrongdoing merely because its price was higher. The critical issue is whether the Ukrainian contracting authority had a documented and defensible reason for choosing the more expensive route.
Middlemen are not inherently unnecessary in international arms trading. A broker may obtain export permits, arrange financing, solve transport problems, manage political restrictions or gain access to inventories that a government cannot purchase directly.
During the first years of Russia’s full-scale invasion, those services were often essential. Ukraine was searching for Soviet-standard ammunition across multiple continents while governments, manufacturers and brokers competed for rapidly shrinking stocks.
The result was a wartime market unlike ordinary public procurement. Prices changed quickly, delivery routes were opaque, export permissions could collapse without notice and the cheapest theoretical offer was not always the one most likely to reach Ukrainian forces.
But exceptional conditions do not eliminate the need for justification. If the state pays a substantial premium to an intermediary, procurement records should show what additional value that intermediary provided and why a cheaper route was rejected.
Supplier capability is another recurring weakness. Some audits have questioned contracts awarded before companies demonstrated that they possessed the necessary production capacity, export authorization or established supply chain.
A guarantee that a supplier intends to obtain weapons is not the same as proof that the supplier controls them. In an international market crowded with brokers, letters of intent and overlapping claims over the same ammunition can create enormous risk.
Ukraine experienced this repeatedly during the scramble for shells, rockets and other Soviet-standard weapons. Companies promised stock that later proved unavailable, politically blocked or impossible to export.
The consequences were sometimes years of litigation. The government could win an arbitration case and still struggle to recover its advance because the contractor’s assets were abroad, concealed, disputed or insufficient to satisfy the judgment.
Official audits have highlighted exactly this weakness. A legal victory does not automatically restore money to the defense budget. International enforcement can take far longer than the battlefield can afford.
The drone sector illustrates a different side of the same challenge. Ukraine’s rapid expansion of unmanned systems has been one of the defining military innovations of the war, but the speed of that expansion has also strained traditional procurement controls.
Dozens and eventually hundreds of manufacturers entered the market. Some moved from prototypes to mass production in months. Requirements changed almost continuously as Russian electronic warfare adapted and Ukrainian units demanded new frequencies, navigation systems, payloads and ranges.
Traditional procurement systems are poorly designed for such technological velocity. By the time a long tender is completed, the drone specification itself may already be obsolete.
Ukraine therefore had strong reasons to accelerate contracting and tolerate greater risk. But rapid procurement creates its own danger if unsuccessful suppliers continue receiving larger orders without demonstrating that earlier problems were corrected.
The lesson is not that Ukraine should return to a slow peacetime bureaucracy. It is that wartime procurement requires a different form of discipline — faster decisions paired with faster performance tracking.
A supplier that delivers reliably should be able to scale quickly. A supplier that repeatedly defaults should lose access just as quickly. A product that fails frontline testing should trigger immediate review across all related contracts rather than a narrow response to one batch.
Ukraine has already begun building parts of such a system. Defense procurement institutions have expanded digital contract management, supplier verification, price analysis and claims against companies that fail to perform.
Auditors have also reported progress in reducing overdue receivables and recovering some funds. These improvements matter because procurement reform is not starting from zero; it is taking place inside a system that has already had to transform several times during the war.
The difficulty is institutional consistency. A control mechanism is only useful if its findings affect the next purchasing decision. An audit that identifies a defaulting supplier but does not change future contracting behavior becomes documentation rather than prevention.
The same applies to criminal investigations. Opening a case can establish individual responsibility, but it does not necessarily repair the process that allowed the underlying contract to be signed.
A functioning defense procurement system therefore needs several layers operating simultaneously: criminal enforcement for deliberate theft, financial recovery for failed contracts, administrative penalties for poor performance and procurement rules that reduce the chance of repetition.
Ukraine also faces a difficult balance between transparency and operational security. Publishing every contract would reveal information useful to Russia, including ammunition shortages, production capacity and potentially future military operations.
Total secrecy, however, creates its own vulnerability. The challenge is to build oversight that can operate behind classified barriers while still producing enough public evidence to demonstrate that abuses are detected and corrected.
Independent auditors, parliamentary oversight, anti-corruption agencies and specialized procurement bodies all have roles in that structure. None alone can provide sufficient control.
The issue has become increasingly important as Ukraine’s defense industry expands. The country is no longer merely an importer dependent on foreign stockpiles. It has become a major manufacturer of drones, missiles, ammunition, electronic warfare equipment and other systems.
That shift creates enormous strategic advantages. Domestic production shortens supply chains, allows rapid modification and reduces dependence on political decisions abroad.
It also means that procurement decisions increasingly shape the structure of an entire national industry. Contracts determine which companies grow, which technologies receive capital and which suppliers become dominant.
Poor procurement decisions can therefore distort more than one weapons purchase. They can reward inefficient producers, weaken competition and channel scarce industrial capacity toward companies with political or bureaucratic access rather than battlefield performance.
This is why the question of repeat contracts is particularly important. Wartime governments often cannot choose from dozens of manufacturers. Sometimes there may be only one plant capable of producing a specific caliber or explosive component.
In such cases, simply blacklisting a failing state manufacturer may be impossible. The military still needs the ammunition. The real policy challenge becomes how to keep production running while replacing management, tightening quality control or restructuring the contract.
That complexity is especially visible in legacy defense plants inherited from the Soviet industrial system. Some possess unique facilities and expertise but also carry decades of governance problems, outdated machinery and entrenched management structures.
Ukraine cannot rebuild that industrial base overnight. Yet the urgency of war also makes poor management more costly than ever.
Foreign contractors introduce another dimension. Ukraine has purchased weapons through companies across Europe, North America, the Middle East and elsewhere, creating legal relationships governed by multiple jurisdictions.
Recovering an advance from a domestic company is difficult enough. Recovering it from an overseas supplier can require arbitration, recognition of a judgment in another country and a search for assets that can actually be seized.
That means the best protection is often before the money leaves the treasury. Strong due diligence, realistic guarantees, staged payments and proof of inventory can prevent a bad contract more effectively than years of litigation afterward.
Ukraine’s partners also have an interest in the outcome. As European military support increasingly involves financing Ukrainian production and joint procurement rather than simply transferring weapons from existing stocks, confidence in the purchasing system becomes part of the international aid architecture.
That does not mean problems inside Ukraine’s domestic procurement system can be automatically extended to all Western military assistance. U.S. and European programs operate through multiple channels with separate oversight and accounting mechanisms.
The political spillover nevertheless matters. Every failed high-value contract can be used by opponents of continued assistance abroad as evidence that additional support should be reduced or subjected to tougher conditions.
For Kyiv, procurement integrity is therefore no longer solely an internal governance issue. It affects the credibility of requests for weapons and financing at a moment when Ukraine needs long-term commitments from its allies.
There is also a broader strategic question. Russia has a substantially larger population and industrial base. Ukraine cannot afford to compete by wasting comparable amounts of manpower or money.
Its advantage has often come from adaptability — using drones more creatively, redesigning weapons faster and allocating scarce resources more efficiently than a larger adversary.
Procurement failures cut directly against that advantage. Every unnecessary intermediary margin, undelivered drone or defective mortar round reduces the military value generated by a limited defense budget.
That is why the central measure of reform should not be the number of new regulations or investigations. It should be whether a greater share of defense spending produces functioning equipment at the front, at a defensible price and within the promised delivery window.
A defective mortar round, an overpriced rocket and an unrecovered advance may appear to be separate scandals. In practice, they all ask the same question of the state: why was this supplier trusted with public money, and what happened when that trust was broken?
Ukraine has already shown that it can rebuild parts of its military system under extreme pressure. Its procurement institutions now face the same test.
The objective is not to eliminate every failed contract — an impossible standard in a global arms market distorted by war. It is to ensure that failure produces consequences, information travels through the system and the same warning signs do not repeatedly lead to the same result.
For a country fighting for survival, procurement reform is ultimately not about administrative tidiness. It is about combat power.
The most important figure is not how much Ukraine allocates to defense, but how much of that money ultimately becomes reliable weapons, delivered on time, into the hands of the troops who need them.
