Founding Director of Ukraine’s Defense Procurement Agency Tells Members of Congress: Come and See Our Procedures

It’s an impossible job, but Vladimir Picuzo volunteered for it.  He was the founding director of Ukraine’s Defense Procurement Agency.  Picuzo created the position—and the agency itself.  Even when the new Defense Minister brought with him a new director for the agency, Picuzo stayed on as deputy director to ensure the continuation of operations.  He has been tasked with an unparalleled challenge: building an efficient procurement infrastructure from scratch amidst the chaos of war and in a global industry rife with corruption.

In a candid interview, Picuzo sheds light on the agency’s strategic alignment with Ukraine’s national security imperatives. Born out of necessity in July 2022, the agency initially grappled with the daunting task of meeting the immediate needs of the Ukrainian Armed Forces. “We had neither the material nor the personnel to shape our own policies initially,” Picuzo recalls.

In fact, Ukraine’s procurement in February 2021 was in the hands of the state “special export enterprises” that were notorious for corruption, arms trafficking, and their connections with Russia.  Picuzo went to the then-Deputy Defense Minister Reznikov and suggested the Ministry create a professional procurement agency with transparent standards.

“I have extensive experience in the defense sector and have held leadership positions in both the arms industry and the arms trade. So when the invasion began, I used my knowledge to find weapons and secure supplies.  Some Ukrainians took up arms and began to kill enemies, others began to supply ammunition, others began to prepare food and clothes. Someone like me picked up the phone and said, ‘You are the owner of a warehouse with ammunition, this ammunition should be in Ukraine immediately because Russia attacked us.’ My first interview with Deputy Defense Minister Reznikov was about the fact that I consider the weapons procurement system to be ineffective.  That’s how I got to the ministry, and from there to the Defense Procurement Agency.”

The agency does not handle weapons from donor states; it is tasked with spending Ukrainian money to buy weapons on the world market.  It has evolved into a conduit between military planners and the global arms markets, with some costly lessons along the way.  Picuzo recounts the early challenges of navigating a market rife with inflated prices and opaque dealings. “We were working on dozens of contracts for the same product range, with prices varying wildly,” he explains. “In fact, in many cases, Ukraine’s MOD was trying to buy the same weapons systems that donor countries were trying to buy to donate to us.  It ended up driving up prices as we all competed for the same limited goods.”

“We didn’t have time to shop for bargains, however.  We had to buy what was available at the prices asked and get the weapons into the hands of our troops on the front lines.  We couldn’t look too closely at the quality of some of the used merchandise, either.  We bought the systems and then contracted with third parties to refurbish them.  We ended up with some bad deals and wasted money, but we kept our soldiers alive and fighting.”

Transparency and Fair Competition

Transparency International Ukraine flags potential vulnerabilities in the agency’s internal control mechanisms in their 2023 report, urging continued vigilance and stricter measures to prevent misuse of funds.

“The global arms trade is rife with corruption.  We battle it constantly.  Brokers, real and fake; corrupt managers; opaque markets; and enormous profit margins all contribute to the opportunity for corruption.  That is the environment we operate in.”  To combat the corruption, the agency implemented uniform rules for procurement, automated processes, and enhanced reporting mechanisms, fostering an environment of accountability and fair play.

Still, many suppliers that were remnants of the old procurement system of Yanukovich would resort to outright blackmail and the threat of defamation campaigns. “Play ball, or we will accuse you of corruption.”  For as little as $5,000, a blackmailer can create a media archive of accusations that are remembered long after they are proven false.

I asked Picuzo why he doesn’t make all procurement decisions completely public.  He replied that although tenders were made public, pricing had to be kept confidential during the procurement.

“We learned early in the process that prices in the market were constantly rising.  The concept of a fair price was completely ignored, because sellers knew we were desperate and the demand was unlimited.  Owners of systems and speculators took advantage of the situation to increase their prices by 300 to 400 percent.  If we held out for the lowest price, we would lose the sale.  And if we showed a high price, then immediately all suppliers would raise their prices to match it.  So we introduced uniform rules for submitting commercial proposals, automated the process of submitting and reviewing commercial proposals, and unified the terms of contracts as much as possible. All these rules can be found on the agency’s website.”

Quality Control and Product Standards

Balancing between urgency and quality, the agency faces tough decisions on product procurement. Picuzo acknowledges the challenges of procuring both timely and high-quality weapons amidst global shortages. “Sometimes, we must prioritize speed over perfection,” he admits. “But when your house is on fire, you don’t worry about water damage—you just want the fire extinguished.”

Picuzo has instituted stringent inspection processes and collaboration with technical experts to ensure that products meet operational standards and enhance Ukraine’s defense capabilities. Reports haven’t documented widespread issues with procured equipment, but experts advise closer scrutiny of quality-control processes, particularly when sourcing from unfamiliar suppliers under time pressure.

Weapons Being Diverted

We keep hearing stories in the West about Ukrainian corruption.  Picuzo echoed what Tony Blinken said: that 90% of the military aid to Ukraine goes to American defense contractors. Picuzo: “The military aid Ukraine receives comes in the form of weapons systems, not cash.  We don’t receive cash.” And many of those weapons systems are manufactured in the U.S., according to the Washington Post.

As far as weapons themselves being diverted from Ukraine to be sold into conflict zones elsewhere in the world, Picuzo laid out the delivery process for the weapons.  “They are not in our possession until they have been delivered to depots just over our border, in Poland, Romania, or Slovakia.  Until then, they are under control of the military logistics commands of the donor nations. After we receive the weapons, they are tracked closely by the donor nations, and there is a strict accounting for every piece.”

“The corruption in the global arms industry means higher prices for Ukraine. We are approached frequently by brokers who have arms that we need.  We strongly prefer to buy directly from the manufacturers, but in the face of overwhelming need, we have to buy where we can get it.”

“I really like telling one experience I had.  A representative of a large European supplier complained that agency employees demanded a kickback from him.  When asked who specifically demanded such a kickback, the supplier named two men—who are not employees of the agency.  Keep in mind that the supplier had previously received from us an official letter confirming the authority of other people who are real employees of the agency. When asked why he met with fake representatives and how he verified their credentials, the supplier said: ‘My friend told me that they really work for the agency, and they need to be listened to.’ In other words, when conducting official correspondence with the agency, the supplier’s representatives were guided by personal connections and not by official information.”

Building Trust and Credibility

Not everyone in the arms industry or even in Ukraine is happy with the agency’s commitment to transparency and integrity. “We have endured difficult moments to uphold our principles,” Picuzo says. But by eschewing major intermediaries in favor of direct contracts with manufacturers, the agency has fostered trust, forging partnerships with well-known companies and strengthening Ukraine’s defense infrastructure.

The agency’s direct partnerships with reputable manufacturers are a positive step. However, concerns remain about overreliance on a limited number of suppliers. Diversifying suppliers could foster greater competition, potentially lower prices, and mitigate the risks associated with overdependence on specific manufacturers.

The West Was Unprepared For War

Part of the problem Ukraine faces is that before Russia invaded Ukraine in 2022, most U.S. allies let their weapons manufacturing sectors decline.  “While the rest of the world relaxed, Iran, North Korea, Russia, and China were preparing for war.  South Korea was the only U.S. ally prepared for war, but they need their weapons for their own defense.”

“Iran has been preparing for warfare ever since 1979.  No country in the world is ready to launch mass production so quickly as Iran.  And when it comes to selling arms, Iran doesn’t care about ideology—they will sell to anyone.  And their drones are game changers—they are the most effective weapons on the battlefield.”

Vision for the Future 

As Picuzo looks to the horizon, he envisions a future where the agency plays a pivotal role in shaping Ukraine’s defense landscape. “Our impact goes beyond procurement; we are architects of security.”

Picuzo was recently replaced as director of the agency by Marina Bezrukova, an appointee of the new Defense Minister. He now serves as her deputy, ensuring continuity and guiding her. It’s not easy to step aside from leading a well-functioning agency that he built to allow someone completely new at the helm the best chance to improve it. But Vladimir Picuzo is loyal and puts the president’s policy and his nation’s interests above his ego.

I asked Picuzo what he would say to members of Congress who doubt the transparency of his operations.

“I would lock all doubting congressmen into quiet offices and give them this text to read. Then I would organize meetings of these congressmen not only with the Minister of Defense but also with his subordinates, so that they could explain the details of the mechanisms described here and answer all their questions. Ukraine has a very effective system for preventing corruption in defense procurement. Our task is to explain this to the people on whom our fate depends politically. And the most difficult thing is to get such people to listen to our information longer than it takes to read a newspaper headline. Unfortunately, the headline ‘Ukraine stole all the aid’ (5 words) is remembered better than the headline ‘Ukraine has created and continues to create conditions in which corruption and theft are difficult’ (15 words). The first headline is news in itself; the second headline implies the need to read and form your own opinion.”

In closing, Picuzo added, “We are willing to entertain questions from any member of Congress about the process or about corruption.  We have issued this invitation before, and we are issuing it again right now.  But they don’t ask us.”

Bart Marcois (@bmarcois on X) is a former career U.S. diplomat, and was the Principal Deputy Assistant Secretary of Energy for International Affairs. He is a frequent commentator on diplomatic and national security affairs.

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About Bart Marcois

Bart Marcois was the principal deputy assistant secretary of energy for international affairs during the George W. Bush administration. Marcois also served as a career foreign service officer with the State Department.

Photo: Conflict between Russia and Ukraine.