20 mai 2020 | International, Terrestre

Scandal-ridden Ukroboronprom seeks fresh start in ties with Western arms makers

By: Aaron Mehta

WASHINGTON — If Ukroboronprom is to continue as anything more than a local defense firm, the Ukrainian conglomerate will need to find industrial partners abroad, according to director general Aivaras Abromavicius.

And attracting those foreign investors will be nearly impossible without a set of needed reforms to the government-owned company, Abromavicius warned Tuesday— reforms he acknowledged seem to be stalling out at the government level.

“Western investors and Western companies are very sophisticated and they're very smart. You know, Ukroboronprom for years has had a tainted reputation,” Abromavicius said at an event hosted by the Atlantic Council. “So it is very clear that almost no Western company of any reputation and size is interested in directly acquiring any assets in the defense sector in Ukraine because of the reputational risks.”

That is one of the many reasons Abromavicius is pushing reforms of the company, whose questionable reputation was further damaged by a massive scandal in 2019 involving executives receiving kickbacks on parts smuggled in from Russia. The scandal rocked Ukrainian politics, with some arguing it was a major factor in the loss of the presidency by Petro Poroshenko.

President Volodymyr Zelenskiy, inaugurated in May 2019, launched an effort to clean up the mess, which included appointing Abromavicius, a former minister of economy and trade, to oversee a reorganization of the company.

Abromavicius, who is pushing a full financial audit of the company alongside a potential reorg of its business units, stressed that “we need to raise governance standards to completely different levels,” factoring in increased transparency, if the company is to have any hope of working with nations abroad. And, he said, Ukroboronprom needs partnerships to survive as anything other than a local, small concern.

“The way forward for us is to do joint ventures,” Abromavicius said. “Obviously the way forward is just to set up production facilities in Turkey, in India, you now, United Arab Emirates, whereby our [intellectual property] and their financial resources [combine] together to produce for the domestic and global needs.”

While acknowledging that U.S. firms are reluctant to work with Ukroboronprom given its history, such a tie-up would be cheap for any of the major American defense companies, said the Atlantic Council's Michael Carpenter. And, he warned, the American government may soon have a major geopolitical incentive to try and push a Lockheed Martin or Raytheon to work with the Ukrainians.

“With the economic chaos that's being wrought by the COVID-19 pandemic, I predict you will see China moving into a lot of countries in Eastern Europe and looking to buy up distressed assets at bargain prices, and it's going to be crucial that when Ukroboronprom looks for outside investors or looks for doing joint ventures, that U.S defense industry is poised to partner, and to invest,” Carpenter said.

“It's going to be very important for, I think, the U.S. government also to push our defense industry a little bit to look at this as an opportunity,” continued Carpenter. “It's going to be important from a sort of strategic sense not to allow this industrial base to get snapped up by Chinese or other countries that are going to be, frankly, operating in a predatory manner in the months ahead, and that we allow for that matchmaking, not just with U.S. firms but with European firms as well to go forward.”

While not directly tied to defense matters, Boeing is reportedly considering some sort of team up with Antonov on the cargo side, with the Ukranians pushing for a formal joint venture.

Beijing, meanwhile, has attempted major inroads in Ukraine, with Chinese aerospace firm Skyrizon attempting to purchase a controlling stake in engine manufacturer Motor Sich and the Tianjiao Aviation Industry Investment Company attempting to purchase a chunk of the Antonov facility which produced the An-225 Mriya. China has emerged as a major economic trading partner with Ukraine in the years since Kyiv cut off relations with Russia. (Antonov falls under the Ukroboronprom umbrella.)

Pentagon acquisition head Ellen Lord has warned several times since the COVID-19 pandemic began that the DoD needs to be keeping an eye on both the domestic and foreign defense industry, with the expectation China will attempt to use the economic downturn to its advantage.

“Western allies took a backseat, ignored the Ukrainian defense sector, and you know, [the] Chinese stepped in and snapped up the best of the private companies in this sector in Ukraine,” said Abromavicius. “So I would urge, obviously, our allies to take a better look at the defense sector which is being reformed right now in Ukraine. And, you know, show us, show more interest in doing things together.”

While Zelenskiy came into office promising major reforms to the country, activists have accused his government of stalling out on many of the promised efforts. Abromavicius “fully” acknowledged that the reorganization of Ukroboronprom has slowed recently, saying he hopes Western officials can “give it a kick” to get things moving again, but he expressed his hope that in the coming weeks there may be legislative action.

“So it is a bit too early to say that we have a full support, because I say that everybody and their dog has its own view of what Ukroboronprom reform should look like,” he said. “And I think overall, the Defense and Security Committee is a strong supporter, Ministry of the Economy is a strong supporter, I believe that president's offices as well. And I hope that Ministry of Defense is on our side” soon, he said.

https://www.defensenews.com/global/europe/2020/05/20/scandal-ridden-ukroboronprom-seeks-fresh-start-in-ties-with-western-arms-makers

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  • Contract Awards by US Department of Defense - September 5, 2019

    6 septembre 2019 | International, Aérospatial, Naval, Terrestre, C4ISR, Sécurité

    Contract Awards by US Department of Defense - September 5, 2019

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U.S. Army Contracting Command, Warren, Michigan, is the contracting activity (W56HZV-19-D-0082). MW Builders, Pflugerville, Texas, was awarded a $30,477,000 firm-fixed-price contract to construct a completed fully functional Tactical Equipment Maintenance Facility. Bids were solicited via the internet with five received. Work will be performed in Fort Hood, Texas, with an estimated completion date of June 4, 2021. Fiscal 2018 military construction funds in the amount of $30,477,000 were obligated at the time of the award. U.S. Army Corps of Engineers, Fort Worth, Texas, is the contracting activity (W9126G-19-C-0119). General Atomics Aeronautical Systems Inc., Poway, California, was awarded a $29,316,074 modification (P00016) to contract W58RGZ-19-C-0027 for performance based logistics support services for the MQ-1C Gray Eagle unmanned aircraft system. Work will be performed in Poway, California, with an estimated completion date of Sept. 4, 2020. Fiscal 2019 operations and maintenance, Army funds in the amount of $6,469,479 were obligated at the time of the award. U.S. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity. Ace Precision Machining Corp., Oconomowoc, Wisconsin, was awarded a $25,000,000 firm-fixed-price Foreign Military Sales (Kuwait and Saudi Arabia) contract for hot section parts for the Advanced Gas Turbine-1500 tank engine. Bids were solicited via the internet with one received. Work locations and funding will be determined with each order, with an estimated completion date of Sept. 4, 2024. U.S. Property and Fiscal Officer, Kansas, is the contracting activity (W912JC-19-D-5712). Nakasato Contracting LLC,* Honolulu, Hawaii, was awarded a $14,200,000 firm-fixed-price contract for the construction of an Operational Readiness Training Complex (Barracks) at Pohakuloa Training Area, Hawaii. Bids were solicited via the internet with six received. Work will be performed in Pohakuloa Training Area, Hawaii, with an estimated completion date of Dec. 1, 2021. Fiscal 2018 military construction funds in the amount of $14,200,000 were obligated at the time of the award. U.S. Army Corps of Engineers, Honolulu, Hawaii, is the contracting activity (W9128A-19-C-0006). GP Strategies Corp., Columbia, Maryland, was awarded a $12,693,583 cost-plus-fixed-fee contract for Life Cycle Logistics Support and Chemical Demilitarization Training Facility operations and maintenance in support of the U.S. Army Chemical Materials Activity, Recovered Chemical Materiel Directorate. Bids were solicited via the internet with one received. Work locations and funding will be determined with each order, with an estimated completion date of Sept. 23, 2020. U.S. Army Contracting Command, Rock Island Arsenal, Illinois, is the contracting activity (W52P1J-15-D-0087). General Dynamics Information Technology, Fairfax, Virginia, was awarded a $7,237,568 modification (P00017) to contract W81XWH-17-F-0078 for support services for the U.S. Army Medical Materiel Development Activity. Work will be performed in Fort Detrick, Maryland, with an estimated completion date of Sept. 30, 2022. Fiscal 2019 research, development, test and evaluation funds in the amount of $7,237,568 were obligated at the time of the award. U.S. Army Medical Materiel Development Activity, Fort Detrick, Maryland, is the contracting activity. NAVY Hexagon U.S. Federal Inc., Huntsville, Alabama, is being awarded a $107,067,910 firm-fixed-price, cost-plus-fixed-fee, and cost-only indefinite-delivery/indefinite-quantity (IDIQ) contract for surface ship Situational Awareness, Boundary Enforcement and Response (SABER) qualification testing and non-recurring engineering, computing hardware production, land-based site equipment, spare parts and engineering services. 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This modification procures 320 Generator Conversion Unit (GCU) G3 to G4 conversion retrofit kits; 547 GCU G4 units; wiring harnesses; and associated technical, financial and administrative data in support of F/A-18E/F and E/A-18G aircraft. Work will be performed Vandalia, Ohio, and is expected to be completed in January 2022. Fiscal 2019 aircraft procurement (Navy) funds in the amount of $56,594,358 will be obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity. PAE Applied Technologies LLC, Arlington, Virginia, is being awarded a $52,268,318 modification to previously awarded contract N66604-05-C-1277 to reinstate 6 month periods of performance and increase target cost for Atlantic Undersea Test and Evaluation Center. Atlantic Undersea Test and Evaluation Center (AUTEC) is the Navy's large-area, deep-water, undersea test and evaluation range. Underwater research, testing, and evaluation of anti-submarine weapons, sonar tracking and communications are the predominant activities conducted at AUTEC. The contractor performs services required to perform AUTEC range operations and maintenance of facilities and range systems. In addition, the contractor is responsible for operating a self-sufficient one square mile Navy outpost. This modification increases the value of the basic contract by $52,268,318. The new total value is $853,017,162. Work will be performed in Andros Island, Commonwealth of the Bahamas (80%); and West Palm Beach, Florida (20%), and is expected to be complete by March 2020. No funding will be obligated at time of this modification award. The Naval Undersea Warfare Center, Newport Division, Newport, Rhode Island, is the contracting activity. Pacific Shipyards International, Honolulu, Hawaii, is being awarded a $32,110,694 firm-fixed-price contract for the execution of USS Michael Murphy (DDG 112) fiscal 2020 selected restricted availability. This is a Chief of Naval Operations scheduled selected restricted availability. This availability will include a combination of maintenance, modernization and repair of USS Michael Murphy. The purpose is to maintain, modernize, and repair the USS Michael Murphy. This is a “short-term,” non-docking availability restricted to the vessel's homeport. Pacific Shipyards International will provide the facilities and human resources capable of completing, coordinating and integrating multiple areas of ship maintenance, repair, and modernization for USS Michael Murphy. Work will be performed in Pearl Harbor, Hawaii, and is expected to be complete by April 2020. This contract includes options which, if exercised, would bring the cumulative value to $36,916,612, and be complete by April 2020. 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