NYT: Ukraine lost $1.2 billion due to problems in defense procurement
Ukraine in 2024 lost about $1.2 billion due to fraud, waste and inefficient management in weapons procurement, according to confidential audits of the State Audit Service and internal audit of the Ministry of Defence, reviewed by The New York Times.
The documents totalling more than 700 pages cover procurement in 2024 and 2025. They revealed recurring problems: overpayment for weapons, use of intermediaries instead of direct contracts with manufacturers, and entering into new agreements with companies that had previously failed to deliver.
The Defence Procurement Agency refused to comment on the audit findings to NYT.
Weapons were bought through more expensive intermediaries
One of the main criticisms of the auditors was procurement through trading intermediaries, who added their own markup. The audit for 2024 noted that a significant portion of procurement was carried out in this way, although in many cases the weapons could have been bought cheaper directly from the manufacturer.
Despite the auditors' observations, in early 2025 they again found contracts with intermediaries even though cheaper alternatives existed.
In particular, during the procurement of missiles worth hundreds of millions of dollars in 2024, the Defence Procurement Agency chose a Czech intermediary, although it had significantly cheaper offers for the same products, including a direct offer from the manufacturer.
Companies that failed to deliver still received contracts
Auditors also found that seven of the ten largest contractors of the Ministry of Defence received new orders despite failing to fulfil previous contracts or criminal proceedings against their management.
One supplier received a new contract while on bail in a corruption case.
In total, procurement officers signed deals with 18 companies that already had a history of contract failures. Six of them had not completely fulfilled any of their previous contracts, yet continued to receive new orders.
A striking example was a drone manufacturer. The company did not deliver any of the 600 specialised drones under one contract, after which it received an order for another 1,950 units. From the new batch, only 50 drones were delivered on time.
The audits themselves do not explain why companies with unfulfilled obligations continued to receive state contracts.
An untested missile damaged a Ukrainian Mi-8
Another case concerned the procurement of 70-mm unguided air-to-ground missiles through an intermediary who promised to supply products from Turkey.
According to the auditors, the Turkish manufacturer itself warned the Ukrainian side that it could not provide the volume claimed by the intermediary. Nevertheless, the contract was signed.
In addition, the weapons were purchased without confirmation of necessary tests being carried out. During combat use, one missile exploded inside the launcher and seriously damaged a Ukrainian Mi-8 helicopter. Investigation was launched by the Security Service of Ukraine.
Contractors increased their profits
NYT notes that against the backdrop of sharply increased defence spending, profits of a number of Ukrainian and foreign arms suppliers have risen significantly.
Among them, the publication names the European Czechoslovak Group, which reported to investors a very positive impact of sales to Ukraine on its business. The Pavlohrad Chemical Plant, which supplies explosives, was also able to move from years of losses to profitability thanks to military orders.
The former adviser to the Defence Procurement Agency, Tamerlan Vahadov, told NYT that overpayments directly affect the army's capabilities: less money remains for buying additional weapons and the necessary amount of ammunition.
Auditors estimated that in 2024 alone total state losses due to fraud, wasteful spending and problems with defence procurement management amounted to about $1.2 billion.
Based on materials from: The New York Times
