The implementation status of state programs on reforms and development of the defence industry was only 9% as of October of this year. It is all about the development, adoption, and implementation of new technologies as well as an increase in the production capacities for defence-related products. The Ministry for Strategic Industries of Ukraine has announced the major reasons behind the situation. More details are provided in the official response to NAKO’s inquiry.

One of the major reasons was the delay in transferring the functions of the Government Customer from the Ministry for Economy to the Ministry for Strategic Industries. Further challenges appeared in the process of coordinating the operations and staffing of the agency.

The Ministry for Strategic Industries also referred to the COVID-19 pandemic restrictions and delays in coordinating the State Defence Order indicators for 2021-2023 by the Committee on National Security, Defence, and Intelligence. The official response also refers to challenges with receiving the permit documents for construction sites due to reforms in the State Architectural and Construction Inspectorate of Ukraine leading to an establishment of a new State Inspectorate for Architecture and Urban Planning.

The State Budget Program for 2021 provides for the allocation of 2.53 billion UAH in support of reforms and the development of the defence industry. Although, according to the State Treasury Service of Ukraine (in response to NAKO’s inquiry) only 221 million UAH have been spent as of October. The most recent official response of the Ministry for Strategic Industries of Ukraine claims the spending of 346.4 million UAH as of November 3. The Ministry for Strategic Industries does not exclude the possibility of spending the allocated budgetary funds by the end of the year. It claims to have analysed the status of programs, clarified the needs for funds, and submitted drafts of respective Resolutions to the Cabinet of Ministers in order to prolong the State Target Programs and adjust the State Defence Order indicators.

NAKO has repeatedly raised the issue of expediency behind the establishment of a new ministry, which bears the risk of introducing soviet approaches to defence industry management. We believed that the establishment of the Ministry for Strategic Industries would delay the reforms of the defence industry due to bureaucratic procedures, which is exactly the case at the present moment.