Yuriy Husyev, Head of UOP, with a working visit to zone of Joint Forces Operation

Yuriy Husyev, Head of UOP, with a working visit to zone of Joint Forces Operation Yuriy Husyev, Head of UOP, with a working visit to zone of Joint Forces Operation


UKROBORONPROM AND NABU WILL JOINTLY FIGHT CORRUPTION IN DEFENSE SECTOR UKROBORONPROM AND NABU WILL JOINTLY FIGHT CORRUPTION IN DEFENSE SECTOR Ukroboronprom State Company and the National Anti-Corruption Bureau of Ukraine will cooperate in the field of preventing and combating corruption, as well as other crimes under investigation by NABU, in the field of management of state-owned enterprises in the defense industry. The relevant Memorandum of Cooperation and Information Exchange between the institutions was signed by the Acting Director General of Ukroboronprom SC Ihor Fomenko and the Director of the National Anti-Corruption Bureau of Ukraine Artem Sytnyk. "We strive to make the defense sector, which has historically been considered one of the most corrupt in Ukraine, transparent and accountable. For us, the signing of the Memorandum with the NABU is a logical step in implementing the corporate security policy of Ukroboronprom, aimed at creating zero tolerance for law violations. During the year of our work, we have done a lot in this direction: Ukroboronprom’s Corruption Contacting Policy has been implemented; our purchases, as well as the sale and lease of the Concern's surplus assets have been proactively transferred to the Prozorro website. Our management team voluntarily passes polygraph once a year; we are also interested in involving NABU specialists in the selection of  the candidates for management positions at defense enterprises - with the use of the polygraph as well. Besides, the first pilot forensic audit of the Antonov Company has been recently completed and its results have been submitted to the NABU and Security Service of Ukraine. We break "schemes" in defense every day, and in response we receive a number of paid publications against us. This reaction is the best assessment of our work," said Acting General Director of Ukroboronprom Igor Fomenko. Artem Sytnyk stressed that NABU and Ukroboronprom have a common task - to prevent and combat corruption in the defense sector: "This is not the beginning, but a logical continuation of our cooperation, we hope that it will be systematic, because the work of anti-corruption bodies is still opposed. We are ready to identify the most problematic points in the work of Ukroboronprom, where an immediate response from law enforcement agencies is needed, and we will provide all possible support from our side," the NABU Director stressed. Thanks to the anti-corruption measures implemented in Ukroboronprom, the number of violations in the Concern has significantly decreased over the year, as evidenced by the statistics of open criminal proceedings. Thus, in 2019, 27 criminal proceedings for abuse of procurement were opened, in 2020 - only 5. In the field of foreign economic activity in 2019 - 39 criminal proceedings were opened, in 2020 - 29. In total, in 2019, all law enforcement agencies registered 248 proceedings, and in 2020 - 149. "We consider it our duty to provide all possible assistance to NABU in conducting pre-trial investigations. We expect that the agreements reached today will be an important step to improve the mechanism of bringing to justice those responsible for causing damage to defense companies, " Igor Fomenko added. Over the past year, Ukroboronprom has reset relations with law enforcement agencies, making them more transparent and effective. Thus, in November 2019, Ukroboronprom initiated the meeting with representatives of the law enforcement agencies of Ukraine (NABU, SIB, NPU, SSU, SFSU) to strengthen cooperation and assistance in the investigation of criminal and corruption violations during the previous years of the Company’s operation. Since then, Ukroboronprom has been cooperating with law enforcement agencies and proactively providing them with information on detected violations. [gallery ids="9233,9234,9232"]

Ukroboronprom named further steps of continuing the reform: adoption of a bill on transformation and non-interference in its operations

Ukroboronprom named further steps of continuing the reform: adoption of a bill on transformation and non-interference in its operations Ukroboronprom named further steps of continuing the reform: adoption of a bill on transformation and non-interference in its operations "We will oppose manual control and demand fair rules of the game" - the management of SC "Ukroboronprom" explained what they expect from the Ministry of Strategic Industries. The State Concern Ukroboronprom once again supported the existence of the Ministry of Strategic Industries, but warned against interfering in its own activities and against bias in the Ministry's assessments. This was discussed during a briefing of the Concern's top management, which took place on Friday. "We want to discuss the current situation honestly, openly and publicly. We do not blame anyone, we only present the facts. That is how we are taking the discussion about the situation that has developed with our transformation processes to a new level" stated the Igor Fomenko, the Acting Director General “For the last 2 weeks we have witnessed the black PR campaign against us. We see articles in different media where whole paragraphs are identical. Those who ordered them have crossed certain red lines. We were accused of breaking the law, of unprofessionalism and this referred to certain individuals in our team. I find this unacceptable - we will not allow anyone to insult or humiliate us. No one knows the processes that are taking place at Ukroboronprom's enterprises better than us. To state in public that we "don't know what's going on,"and that we've "lost touch," is a complete lie" - he added. Fomenko also stressed that the concern's management team helped the ministry since its establishment and it is ready to continue providing support in the future. "We support the Ministry of Strategy and Industry. We understand how important it is for Ukraine. It should set policies not only for the Ukroboronprom, but also for other strategic enterprises. There should be the same rules for everyone that should be defined. We support having a body that determines policy in the field of defence industry complex.. We fully support any action in this direction, but we are against interfering in our daily activities. " According to Fomenko, the Concern's team is ready to perform its work professionally and honestly and be accountable on the results. “Our current results tell us that the plans we set for ourselves will be fulfilled. We want to reach another level of both communications and the trust of our customers. But we want fair, open and public rules of the game. We want to be understood and perceived as a reliable, worthy partner who is responsible for every word he says. ” “We favour a systemic approach, we are against manual control. We stress that due to the fact that we cover 36% of the total state defense order, the reform of Ukroboronprom is not equal to the reform of the entire defense-industrial complex. We are only part of it. The reform we have developed applies only to those enterprises that are part of Ukroboronprom. Fomenko also noted that at the beginning of his work as Acting Director General of Ukroboronprom, jointly with the team, he defined the principles of cooperation and interaction. Oup principles are "Honesty, openness, teamwork, efficiency, zero tolerance to corruption, goal orientation, work for the state's benefit and absence of bias in decision-making. For us, this is not empty talk, this is what we follow every day. We are not going to engage in shadow deals and cabinet wars. We want to build a strong and independent Ukraine that abides by the law and justice. ” Acting Director General Igor Fomenko also named the conditions necessary to resume the process of reforming the state concern. "It is necessary that the reform process to resume. We want the debate on Bill 3822 to be resumed so that it can be adopted as soon as possible. This requires that the committee and the Verkhovna Rada be fully involved in the discussion and amendment process. ” Fomenko stressed that the Concern does not believe that the situation is deadlocked, and in order to to proceed you need to have an open discussion on the processes and conditions of reform, adoption of the Bill 3822, on the transformation of "Ukroboronprom" and non-interference in Ukroboronprom by the ministry . ”Ihor Fomenko summed up "We want the government to take special control of the transformation of the country's defense industry. We are ready to report on what we are doing. We want to hear objective criticism, but we do not want our job to be hindered. Since I was appointed Acting Director General I am personally responsible for everything that happens at Ukroboronprom. I will make my own decisions, including staff appointments, based on the basic principles: professionalism, law, work for the company, work for the state."


UKROBORONPROM: REFORM OF DEFENSE INDUSTRIAL COMPLEX IS UNDER THREAT OF CURTAILMENT UKROBORONPROM: REFORM OF DEFENSE INDUSTRIAL COMPLEX IS UNDER THREAT OF CURTAILMENT The State Concern "Ukroboronprom" (hereinafter – UOP or Ukroboronprom) is voicing its concern regarding the curtailment of Ukraine's defense industry reform and interference into its economic activities by the Ministry of Strategic Industries of Ukraine (hereinafter – the Ministry). A year ago, UOP's new management team received the mandate of confidence from President Volodymyr Zelensky to stabilize the work of Ukroboronprom and prepare a strategy for reforming it. Despite all the complications associated with the pandemic, during 1 year tenure in the office, management team has fulfilled all obligations under UOP’s existing contracts, kept Ukroboronprom financial performance at pre-crisis level and allowed no untransparent staff appointments, whereas the law enforcement bodies initiated no criminal proceedings against members of the new commands. The management team put forward the strategy for reforming Ukroboronprom, which was fully supported by the President of Ukraine, Verkhovna Rada of Ukraine, Prime Minister of Ukraine, National Security and Defense Council and international partners. In June of the current year, we filed a bill aimed at launching the groundbreaking reform for the country. The Ministry was established in July 2020, in pursuance of the Decree of the President of Ukraine №59/2020. Its task is to form and implement state policy in defense industry sector. The leadership of newly established Ministry has publicly committed itself to not interfere in the economic activities of state-owned enteprises, in particular, declared it to the Verkhovna Rada of Ukraine, President of Ukraine, National Security and Defense Council of Ukraine, as well as to representatives of the G7 countries. The Ministry publicly supported the reform concept proposed by the UOP's management team and familiarized themselves in detail with all strategic documents on the reform of Ukroboronprom. However, for the third month in a row, the Ministry has been systematically blocking the reform of Ukroboronprom and the defense industry complex as a whole. In particular: the preparation of the Strategy of the defense industry complex hasn’t started yet; Ukroboronprom’s Individual Ownership Policy, developed at the time of the establishment of the new Ministry and approved by the relevant state authorities, has not been approved; at the insistence of the Ministry, the consideration of bills necessary to start reforming public sector of the defense industry was suspended. At the same time, in four months, the Ministry has not put forward any alternative proposals or systematic comments on bills proposed by Ukrainian MPs; work has still not begun on the preparation of key regulations that are necessary for the implementation of new Law "On Defense Procurement", which is due to enter into force on January 1, 2021. This may pause a threat to stop the entire process of signing contracts with manufacturers of weapons and military equipment for the needs of Ukrainian Armed Forces and other customers; Ukroboronprom's repeated appeals to solve key producers’ problems with pricing, state guarantees, treasury accounts and others have not been studied and considered; the critical situation with the implementation of the State target program for the creation and development of production of ammunition and special chemicals has not been resolved. In addition, contrary to current legislation and in violation of state property management standards, from the first day of work, the Ministry, since its inception, interferes in the activities of Ukroboronprom in the form of verbal instructions and numerous insistences. In particular, we affirm that there are systematic demands and recommendations for the appointment of third persons as directors of UOP’s constituent companies, namely such companies as "Ukrspetsexport", "Spetstechnoexport", "Ukrobronservice", SE "Kyiv Armored Plant", PJSC "Kyiv Radar Plant", Ivano-Frankivsk boiler house-welding plant and enterprises in Lviv region, etc. On a separate issue, we draw attention to strong demands for the dismissal of Ukroboronprom employees responsible for security, exports, relations with state authorities and for transformation. Such methods directly contradict OECD Guidelines on Corporate Governance of State-Owned Enterprises, implementation of which was officially announced by Ukraine (in particular, by fixing them at the level of the Strategy for Improving the Efficiency of Public Sector entities), and may bear the signs of abuse of influence and conflict of interests that lead to corruption risks. It should be emphasized that according to the current legislation and the Charter of Ukroboronprom, the function of the owner in relation to Ukroboronprom can be performed only by the Cabinet of Ministers of Ukraine through appropriate supervision and control by the Supervisory Board. In accordance with its regulations, the Ministry performs only the function of formulating state policy and appropriate regulation in the defense industry. The Ministry does not have the authority to manage state-owned enterprises that do not belong to its sphere of management. We consider such actions inadmissible and undermining the credibility of the declared intentions, goals and objectives set before the Ministry, in accordance with the Program of Actions of the Cabinet of Ministers of Ukraine. We, therefore, address President of Ukraine Volodymyr Zelensky, Prime Minister Denis Shmygal, Secretary of the National Security and Defense Council Oleksiy Danilov, and Chairman of the Verkhovna Rada Committee on National Security, Defense and Intelligence Oleksandr Zavitnevych with a request to take into consideration the current situation around the reform of the defense industry complex. We hope for a balanced and active position of the state leadership to ensuring the defense capabilities of a country in war.

Management reshuffling of ANTONOV company to accelerate the reset of Ukraine’s aviation industry

Management reshuffling of ANTONOV company to accelerate the reset of Ukraine’s aviation industry Management reshuffling of ANTONOV company to accelerate the reset of Ukraine’s aviation industry June 9, 2020, the State Concern “UkrOboronProm”, which coordinates the activities of the largest state defense and aviation enterprises of Ukraine, has took decision to change the top-management of ANTONOV company.  Mr. Oleksandr Los, Antonov's Vice President and a head of design, has been appointed as an acting president of the company. The corresponding decision was signed by Mr. Aivaras Abromavicius, the Director General of the “UkrOboronProm”. “The top-management changes will not affect the operational work of ANTONOV company, which will continue to fulfill all its obligations to Ukrainian and foreign customers. The main purpose of this management transition is to accelerate the process of transformation of the state enterprise into a modern and powerful manufacturer of transport aircrafts. I am sure that a new, experienced manager with modern perspectives, we will be able to achieve it quickly,” – Mr. Aivaras Abromavicius, the General Director of “UkrOboronProm” said. 42-year Olexander Los is a representative of the new generation of ANTONOV company. During 18 years at ANTONOV he went his career path from engineer to chief aircraft designer and vice president of the company. His experience and knowledge in the aircraft industry will ensure the continuation of all design and production developments and processes of the company during the period of management reshuffling. In general, management transition at the state-owned company will allow to set transparent corporate governance processes and to accelerate the pace of AN-series aircraft production. It should be stated, that one of the main tasks set by the President of Ukraine Volodymyr Zelenskyy to the new management of “UkrOboronProm” is the development and implementation of a comprehensive strategy for the transformation of the defense industry, which includes aviation enterprises of Ukraine. The aim of the reform is to strengthen the defense sector qualitatively, increase the production of modern equipment, as well as to intensify a creation of innovative developments and to develop of heavy industry at whole. All branches of state power in Ukraine are involved in the implementation of the reform, and the President of Ukraine keeps its implementation under personal control. In general, at the first stage the reform, initiated by the new team of “UkrOboronProm”, provides the corporatization of state owned defense enterprises in accordance with the new legislation and their gradual introduction of international standards of corporate governance of state-owned companies. Within this particular stage, among other things, there are personnel changes of those managers who are unable to implement the necessary reforms at corporate level due to their ideological bias and prepossession. Thus, during the last 9 months “UkrOboronProm” has changed the management at 16 strategic defense enterprises. Totally, top-managers of 26 state owned enterprises of “UkrOboronProm” have been substituted. As part of the second stage of the reform, the “UkrOboronProm” enterprises will be consolidated into branch state holding companies. Currently, it is planned to create at least 6 state holding companies: aviation, aircraft repair, missile, armored, as well as radar and marine groups of companies (holdings or corporations). As of today, at its production facilities ANTONOV company has launched serial production of AN-178 aircraft, renewed serial production of AN-148 and AN-158, continues works on the development of the international AN-132 project and continues the project of research and development of an AN-188 medium transport aircraft. Recall, that ANTONOV company has a 74-year history. It is one of the few companies in the world, which performs the full cycle of producing of the modern aircraft - from pre-design research to construction, testing, certification, series production and after-sales service. ANTONOV company is a designer of more than 100 types and modifications of passenger, transport and specialized aircraft, produced in the volume of more than 22,000 units and exported to more than 70 countries. The carrying capacity of AN transport aircraft is from 1.5 to 250 tons. They work equally effectively in different climatic zones, in cold and heat, on the plains and in the highlands. The President of Ukraine also carries out his official flights with the AN-148 and AN-74 aircrafts manufactured by the ANTONOV company.



SE SPC Iskra has Provided Radar In-Depth Modernisation for MDU

SE SPC Iskra has Provided Radar In-Depth Modernisation for MDU SE SPC Iskra has Provided Radar In-Depth Modernisation for MDU SE SPC Iskra, which is the part of SC Ukroboronprom, has provided the capital repair and modernisation of 19Zh6 radar after which it receives the new index 35D6M and actually, became the new modern radar. The company noticed that the modernization was carried out as a part of the state defence order 2020. “The station has been operated in the Armed Forces of Ukraine for almost 30 years and has been serviced by the Iskra's specialists all this time. As a result of the latest deep modernization, the radar, in terms of its specifications, has in fact become a new, modern radar that meets all necessary requirements of today", said Yuri Pashchenko, director of Iskra. [gallery columns="2" size="medium" ids="8475,8476"] Such modernization has a significant export potential and may be of interest to foreign partners, the enterprise noticed. Today, a large number of such old models’ radars as 19Zh6, 36D6, with a service life of more than 20 years, are working all over the world. “36D6 radar has been in operation in the United States of America for more than 10 years, and two Iskra's radars were delivered to USA in the recent years. These radars should be repaired and modernized, and as a result, the customer receives the new modern radar. Therein, the cost of repair and modernization is much less than the purchase of new station. This is a promising area of the enterprise's activity and is of interest to foreign partners, as the stations have been able to perform their combat tasks for more than 20 years, even in difficult climatic conditions,” - summarized the director of Iskra. All assemblies and components with physical or moral wear were replaced, the protective and paint coating was renewed, the ability of the station to work in the stated climatic conditions were restored during radar repair and modernization. [gallery columns="2" size="medium" ids="8477,8478"] "The modernized radar has increasing range and coordinates detection accuracy, trajectory parameters are improved due to modern software solutions, expanded functionality and reduced maintenance costs," - said Yuri Pashchenko about the working details carried out by the company. The level of false plots, during the operation at the mountains, was decreased after the changing the probing signals shaper in the station. The radar cooling system has also been upgraded what made the possibility to increase the actual life of klystrons. “I'd like to make a pointed reference that the modernized radar displays information of meteorological phenomena location and intensity - these data are very useful in controlling the pilot's actions. We also paid considerable attention to the comfortable working conditions for radar crew - we have installed new workplaces, have equipped the indicator compartment with air conditioning and heater, "- said the director of the enterprise about the modernization features. Radar can be additionally equipped with four remote workplaces - this allows to control the station in full at a distance up to 300 meters. Radar can also be optionally equipped with equipment set for interaction directly with anti-aircraft missile complexes. SE SPC Iskra has many years of experience in the manufacturing and modernization of such radars as 19Zh6, 35D6, 36D6.Enterprise's specialists provide technical support for Radar operation throughout the life cycle of stations, both in Ukraine and far beyond its borders. This factor is very important for military equipment, which shall perform combat duty 24 hours and continuously and ensure the air control”, Yuriy Pashchenko pointed out. He added that the company's ability to provide technical support, modernization and software upgrades of products, which are in service abroad is highly valued by foreign partners in choosing reliable and efficient equipment.

Aivaras Abromavicius: How we are building a new UkrOboronProm

Aivaras Abromavicius: How we are building a new UkrOboronProm Aivaras Abromavicius: How we are building a new UkrOboronProm What really is UkrOboronProm, the largest holding of state-owned defense companies? Six months ago, we did not have an answer to that question. Society didn’t have it, the president didn’t have it, our military, partners and clients didn’t have it; the country didn’t have it. Six months ago, I joined UkrOboronProm to provide an answer to this question and to start structural changes — reforms that will help Ukraine obtain a modern, high-tech state company in the defense sector. Back in 2015, we in the Ministry of Economic Development and Trade initiated the corporatization of the largest state companies that are of strategic importance. UkrOboronProm was excluded from this process by a political decision of the country’s then-top leadership – it was too tempting not to benefit from illegal earnings in the super-profitable sphere, where everything is labeled as “top secret” and offers a vast field for abuse of office. None of the state enterprises had to wait to be reformed as long as UkrOboronProm. In 2019, I joined the supervisory board of UkrOboronProm to finally start the process of transforming this economic entity into a transparent and efficient company working for the state, not for those temporarily managing it. In order to stabilize its work and quickly prepare for necessary transformations, I accepted the president’s proposal to become the general director of UkrOboronProm, to form a team and start the process of reforms. During the last six months, we have started to change UkrOboronProm, and it will never be the same again. Here’s what we did so far: Hard reset of the team and relations with all regulators, including our number-one client – the Ministry of Defense; Audit of financial statements, including a comprehensive assessment of assets that in practice turned out to be liabilities; Established new procurement principles. Together with the team, we assessed the condition of UkrOboronProm, which previously no one had done so carefully and meticulously, developed a strategy of transformation and formed a support circuit from key partners in government. We expect the state to pay more attention to the transformation of UkrOboronProm, to support radical changes that will improve the capabilities of the entire defense industry. What is UkrOboronProm? The domestic heavy engineering industry is going through difficult times and needs systematic state support. This is particularly noticeable at UkrOboronProm, which consists of 137 enterprises, 21 of which are located in the occupied territories, 85 are financially unstable and eight are bankrupt. The group has 68,000 employees, but revenue per employee is 5% of the global average in the industry. Even with Hr 4.2 billion (more than $171 million) in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2018, 90% of the group’s profit is generated by only about 10 enterprises. Several thousand buildings and structures of UkrOboronProm are housed on 11.4 million square meters and 5,500 hectares of land, but most of this inheritance is excessive, costly and not involved in the production of military goods. While competitors from neighboring countries (Turkey, for example) annually invest up to 25% of their revenue in research and development, our enterprises, unfortunately, feel absolute investment hunger and a complete lack of state support. Due to the total lack of modernization and production influenced by the Soviet era, within a few years UkrOboronProm will lose competitiveness not only in foreign markets but also in Ukraine. In order to reduce the technological gap and significantly upgrade production facilities to develop new products, I believe it is necessary to invest at least 10% of revenue, or $100 million per year over 10 years. Some of these funds will have to be raised by ourselves, including through the sale of surplus and idle assets that have not been used. During the transformation period, the group urgently needs to write-off bad debts and introduce tax benefits, have a more flexible dividend policy, direct financial assistance and the opportunity to sell assets independently, freeing up and directing resources to modernization and new developments. No major state-owned company in Ukraine has managed to get out of the difficult situation without state support: Naftogaz did so by raising tariffs on the population, Ukrzaliznytsia (the state railway) by raising tariffs threefold, while Ukrposhta (the state postal service) received compensation for unprofitable delivery of parcels to rural areas. So what do we do in the meantime? In 150 days, we were able to prepare the group for transformation and launch changes. We helped develop a property policy following the example of OECD standards – the first strategic document that answers the question: “Why does Ukraine need a state defense concern and what are its tasks?” We are waiting for the adoption of this document by the Cabinet of Ministers. A bill to write off bad debts for Hr 4.4 billion has been developed and submitted to the Economy Ministry. This will help such enterprises as Malyshev Plant, Kharkiv Aviation Plant, Zirka and others to get out of a very difficult situation. We applied business triage, analyzing the condition of each enterprise, its significance and role for the country’s defense and looked at exports and intellectual potential. As a result, we have three groups of enterprises, and for each of them we have a clear understanding of what to invest and develop and what to return to the state. Only 27 companies in the concern have annual revenues exceeding $10 million. These companies generate 89% of total revenue. The overwhelming majority of the UkrOboronProm’s companies, huge factories in the distant past but quite small by today’s standards, will be more successful when consolidated around larger “colleagues.” The team The group is no longer a closed club of traders of national interests. The human resources transformation of UkrOboronProm is almost complete. We created conditions to attract professionals of a completely different level, quality and value. It is no longer a toxic place where no one wants to work. It is no longer a club exclusively for friends and relatives of the powerful. It is already an organization capable of attracting the former head of Microsoft in Ukraine and bringing top managers from Western Europe home, back to the country. The entire top management of UkrOboronProm has been updated, as have the heads of large exporters. There have been and will be many people willing to put their protégés in key positions. And among such candidates, there are definitely no graduates from Western universities. Such people want to earn money. Perhaps, by showing flexibility in this matter, the concern could get more support in certain circles. But neither I nor my team is ready to answer for such people. Some eight large enterprises received new directors. Thanks to an open selection process, about 40 candidates applied for one position! A transitional Supervisory Board was also formed, which approved the corporate strategy, the plan of financial rehabilitation of enterprises and the reform of exporters. Last year, the new team already managed to meet the demands of state defense orders and to win an important victory over a Russian subsidiary company, which through the courts tried to force one of the concern’s enterprises to pay off debt for military goods that were not delivered. Without reforms supported by the state, UkrOboronProm will continue to increase debts rather than engage in enterprise development and innovation. For example, without backing from the government, it is simply impossible to financially improve the enterprises. First of all, we have to deal with unpaid wages. During UkrOboronProm’s first year of existence, there were already 27 enterprises with debts to their employees. And since then, this number has always exceeded 30. The salary issue has been brought under control. Today, the number of debtor companies has been reduced from 43 to 35. Exports After several years of decline, the concern’s arms and services exports grew by 19% to $908 million in 2019, compared to $766 million in 2018. The top importers of our products are India, Saudi Arabia, Turkey and other countries in Asia and the Middle East. The most popular products are anti-tank missile systems, gas turbine engines and services such as repairs of Soviet equipment and modernization of aircraft. Our export growth can potentially reach 30% in 2020 according to negotiations with dynamic key players. A serious breakthrough in the export market is hindered by a modest list of modern products, a lack of financial instruments to stimulate exports as well as unhealthy competition among our own exporters. To resolve this issue, UkrOboronProm has initiated changes in the work of exporters, aimed at improving coordination and cooperation by establishing a clear division of responsibilities. During the transition period, four exporters will work on foreign markets instead of six, with no more than two in the same market. As a result of the changes, only two special exporters will remain in the long term with a rule: one country – one exporter. The work of exporters is one of the examples of changes already introduced by the new team. The effect will be visible by the end of the year. But UkrOboronProm also has made changes that one can experience right now. These are in procurement practices, traditionally considered the most corrupt.  We proved that it is achievable to save money on state procurement. At UkrOboronProm, the structure of procurement was transformed within several months. Since the beginning of 2020, procurements that exceed Hr 50,000 are now transferred to the Prozorro system. Previously they were held behind the closed doors. Today in the Prozorro system, we have 2,430 tenders worth a total of more than Hr 1 billion. Savings this year have already amounted to Hr 120 million. For the first time, there has been centralized procurement of electricity and gas for the enterprises as well as audit services. For the third centralized procurement we managed to save more than Hr 60 million. The figures clearly prove that Prozorro works if the system is implemented by a team with zero tolerance for corruption. State defense orders In 2019, the enterprises fulfilled 69 contracts for the development and manufacture of military equipment worth almost Hr 7 billion. The state order was 98% complete. The concern’s enterprises supplied almost 3,889 units of military equipment to the Ukrainian army and other security agencies, which is five percent more than in 2018. Only due to well-coordinated work between all levels of power and the UkrOboronProm’s team was it possible to unblock the contract on BTR-4E manufacture and delivery (The BTR-4E is the export version of the BTR-4, an 8×8 armored vehicle personnel carrier (APC) designed by the Ukrainian company Kharkiv Morozov Machine Building Design Bureau.) In addition, 1,048 units of repaired and modernized equipment were handed over to customers. The repair plan was 99% fulfilled. We are looking forward to 2020 state orders. Unfortunately, the planning system and the old approaches have not yet changed, and UkrOboronProm as the largest performer of the state defense order, has no official information about the state’s needs from our products in 2020-2022. From media reports, we learn that there is a lack of necessary financing for perspective rocket programs that are realized by UkrOboronProm, which is unacceptable! This is crucial for protecting Ukraine’s territorial integrity. Planning and systematic approaches are paramount in the production process. Without it, it is extremely difficult to plan anything, and it disrupts cooperation with co-executing companies. It should not be like this. At the beginning of the week, I visited one of the concern’s enterprises in Ivano-Frankivsk – called Karpaty. They produce wiring harnesses for the German car industry. The enterprise’s capacities have been used by the well-known American company Aptiv since 2007. Such cooperation allows the enterprise to estimate its workload until the end of 2026! And this provides stable work for its 3,600 employees. UkrOboronProm is anxiously waiting for the adoption of the new law on defense procurement, which will allow planning for production for a longer period of time and will change the Soviet approach to pricing, which at the moment does not contribute to cost reduction. UkrOboronProm’s new team managed to achieve these and many other results and small victories in six months. We were able to do all this without political interference or corruption scandals. This helped gain the support of partners from NATO countries and attract the best corporate governance and transformation consultants. Now this reform must be implemented at both political and legislative levels, and within the group itself, to make the changes irreversible. Aivaras Abromavicius is the general director of UkrOboronProm, a group of more than 100 state-owned defense companies producing military equipment, including advanced weapons systems. Translated from Ukrainian by Olena Goncharova, published at Kyiv Post on Feb. 26.2020