The Ministry of Defense lost the price war for showers to border guards

The Ministry of Defense ordered showers for 91 million, rejecting cheaper companies for papers and signatures.

On October 26, the Ministry of Defense of Ukraine, based on the results of a simplified procurement, ordered showers to Yugstal LLC for UAH 91.12 million. This is reported in the Prozorro system.

By December 15, the manufacturer must supply 1,341 shower installations - high-speed water heating boilers in accordance with TS A01XJ.07148-259:2020 (01). Including 841 sets cost UAH 69,990, and 500 sets were ordered at a lower price - UAH 64,600.

Other companies also came to the auction, offering their showers at a price of around 52,000 hryvnia. But they were rejected (reasons below).

The total cost of contracts with the Yugstal company, UAH 91.12 million, turned out to be 10% lower than the expected purchase cost. If there were no shortcomings in the documents of the auction winners and contracts were concluded with them, then the total cost would have been UAH 70.23 million, which is 30% lower than the expected purchase cost. That is, the price would be at the level of the October purchase of border guards, who ordered showers for 50,599 UAH. But in the end, showers for the Ministry of Defense turned out to be a quarter more expensive - UAH 64,600-69,000 each.

On the left is the contract price of the Ministry of Defense without VAT, on the right is the border guard price with VAT:

Five firms came to the auction for each of the three lots. Four offered their own products - Yugstal, Krapt LLC, Felix Trading House LLC and S.S. Skafolding LLC. And the fifth participant of Yunistkom LLC was a dealer of Prolog Service LLC, which was mentioned in the NABU criminal case about the possible supply of plastic flasks to the Ministry of Defense at an inflated price.

At all auctions, other participants reduced prices to a third lower than Yugstal, but the customer rejected them for various reasons. For example, “Unistcom” fell by 34% for one lot. However, “Unistcom”, for reasons known only to it, did not upload the reduced price offer based on the results of the auction. The customer gave the company a day to correct the deficiency, but it never submitted an updated proposal, so it was rejected for non-compliance with the terms of the purchase. Therefore, the victory went to Yugstal, which reduced its offer at the auction significantly less - by 7-15%.

A common ground for other rejected bidders was that they did not indicate in their procurement certificates that the customer was given the opportunity to commission a review of the supplier's abilities. In addition, Krapt and Felix applied an enhanced electronic signature (ESS) to the tender proposals instead of the qualified electronic signature (QES) required by the customer. Other discrepancies are listed in the table below.

Last year, the Ministry of Defense ordered shower installations - high-speed water heating boilers for 97,600-99,900 UAH. The supplier and technical specifications were unknown because the procurement was for defense.

Last year, border guards also bought showers according to the technical specifications of the Ministry of Defense for 99 thousand hryvnia, and this year at an open auction in August they received a price of 64,000 UAH from the Krapt company (see “The Naked Truth about the Benefits of Open Bidding: The Story of Shower Cabins military"), and in October 2023 - from DRB Group LLC for a price of 50,559 UAH.

For reference. Zaporozhye LLC Yugstal is owned by Andrey Zaika and Oleg Mitrokhin, and the director is Valentin Subbota. According to the website, the company produces metal structures, engages in metal processing and sales of rolled metal products. In total, since 2016, it has received contracts worth UAH 767.55 million.