Due to the relevance of the use of UAVs on the front, the number of companies ready to supply such systems for the needs of the state is growing. At the same time, the supply of UAVs to state customers has a number of features, which we will discuss in the article.
The UAV procurement procedure is regulated by the Procedure for the procurement of unmanned systems, tactical-level electronic warfare equipment of domestic production and their components, approved by Resolution of the Cabinet of Ministers of Ukraine No. 1275 of 11.11.2022 “Some issues of defense procurement for the period of the legal regime of martial law” (hereinafter referred to as the Procedure).
Below we will analyze the main provisions of this Procedure.
- What documents are required for procurement?
a) When concluding a government contract/agreement (except contracts/agreements with military units) Domestic UAV manufacturers must provide the state customer with:
Property valuation report and conclusion are valid for 6 months from the date of their issue.
We note that an expert opinion can only be obtained from specialized forensic institutions that have the right to issue such an opinion in accordance with the Law of Ukraine "On Forensic Expertise".
In turn, a property valuation report must be obtained exclusively from appraisers who carry out their activities in accordance with the Law of Ukraine "On Valuation of Property, Property Rights and Professional Appraisal Activities in Ukraine."
In addition to the above-mentioned price calculation and conclusion or report, UAV manufacturers must provide one of the following documents:
b) If the UAV manufacturer enters into a government contract/agreement with a military unit, the package of documents that must be presented to the customer depends on whether the manufacturer's unmanned system is codified or not (whether the UAV has a NATO Nomenclature Number (NSN)).
Note! Although military units are allowed to enter into contracts for the supply of uncoded UAVs, in practice they still prefer codified systems. The presence of a NATO nomenclature number indicates that the UAV is approved for operation in military formations and greatly simplifies their further use. Therefore, we recommend that manufacturers undergo the codification procedure in advance to increase the competitiveness of their products.
- Calculation of the price of unmanned systems
When concluding a contract/agreement for the supply of a manufacturer, it is important to correctly formulate the price.
It should include:
– all taxes and fees;
– general production, administrative, operational, and other costs directly related to the manufacture of UAVs.
One of the main points that must be taken into account when forming a price is the UAV manufacturer's profit restrictions: it cannot exceed 25% of the production cost of the products under the contract. At the same time, the calculation of the cost of production must be carried out on the basis of accounting data on production costs in accordance with National accounting regulations (standards).
It is also important that not all costs of a manufacturing enterprise can be included in the price of the product.
In particular, the state does not compensate for the costs of:
- participation in exhibitions, representation and organizational expenses, expenses for holding the company's annual meeting;
- business trips of employees of the enterprise's management staff who are not related to the performance of the contract or its control;
- property insurance and legal, audit, and valuation services not provided for by law or contract;
- costs of defects (except for technically unavoidable defects and costs of their correction);
- idle time;
- shortages of work in progress, shortages and costs from damage to material assets (unless otherwise provided for by the contract);
- bad debts, doubtful debts reserve;
- inventory depreciation;
- recognized fines, penalties, and forfeits;
- commissions to sellers, sales agents, and sales employees;
- advertising and marketing research;
- research and development work not related to the contract or performed prior to its conclusion (unless otherwise provided for by the contract);
- losses associated with the maintenance of social facilities (except for expenses for facilities with functions prescribed by law, such as first aid stations).
Please note that The state also does not reimburse the expert assessment of the estimated cost of the UAV., according to the results of which UAV manufacturers receive the conclusion or report referred to in paragraph 1 of this article from expert institutions or evaluators and submit them for the conclusion of an agreement/contract. That is, its cost is prohibited from being included in the calculation of the price of an unmanned system.
In other words, the price should be as transparent, justified, and tied to actual production as possible. Anything extra is at the manufacturer's expense.
Clarifying price calculation
In addition to the basic price calculation provided when concluding a contract for the supply of UAVs, the manufacturer is also obliged to provide a clarifying price calculation during its execution, but only if the delivery date (final delivery in the case of delivery in batches) exceeds 2 months from the date of conclusion of the contract.
Such a calculation is submitted to the state customer. 1 month before the end of the delivery period (final delivery)Only after this is the final settlement under the contract made.
The clarifying calculation is necessary so that the state customer can find out whether the composition and amount of the manufacturer's costs have changed, as well as whether the manufacturer's profit has become greater than 25% of the cost of the UAV in violation of the legislation.
- Specifics of the implementation of concluded contracts/agreements
a) Advance payment under the contract/agreement
If financing is required to start UAV production, the contract may provide for an advance payment.
However, the amount of the advance payment can only be set up to 70% of the total cost of delivery and for a period of up to 12 monthsSuch advance payment must be justified (for example, due to a long production cycle or the need to purchase components).
To receive advance payment under the contract, the UAV manufacturer needs to open special non-budgetary account in the bodies of the State Treasury Service of Ukraine.
The funds received can only be used for the purposes stipulated in the contract (e.g., purchase of materials, payment for production, etc.). To this end, the UAV manufacturer must provide the relevant body of the State Treasury Service of Ukraine with each payment:
– payment instruction with details of the government contract;
– a copy of the government contract for the execution of which the payment is being made.
b) Change in the essential terms of the contract/agreement
The general rule is this: After signing a government contract, its terms do not change until both parties fully fulfill their obligations. But there are exceptions to this rule. Therefore, you can change the contract if:
The presence of force majeure circumstances is confirmed by the conclusion of the Chamber of Commerce and Industry and other supporting documents. Such a conclusion makes it possible to extend the contract term. no more than 60 calendar days, but no more than 12 months from the date of advance payment.
If the parties nevertheless decided to change the terms of the contract and this led to a decrease in the price, then advance payment, which the UAV manufacturer has already received under the contract, not reviewed provided that it does not exceed the new contract price.
Conclusion: Supplying UAVs to government customers is not only about technological developments, but also about strict adherence to procedures. To avoid unnecessary risks, it is worth preparing the necessary documents in advance, correctly forming the price and, if possible, codifying the products. All this will help make cooperation with government customers more predictable and effective.
