Thursday07 November 2024
kod-ua.com

"Breaking the system to avoid scandals over canned goods and cash in trunks." An interview with the head of the State Logistics Operator.

Arsen Zhumadilov referred to this interview as a "hard talk." However, he provided comprehensive answers to all the questions that have recently arisen regarding the State Rear Support Operator, one of the two procurement agencies of the Ministry of Defense.
«Разрушаем систему, чтобы избежать скандалов с тушенкой и наличными в багажниках». Интервью с руководителем Госоператора тыла.
Глава Государственного оператора тыла Арсен Жумадилов9

Arsen Jumadilov — a 39-year-old Crimean Tatar, born in Simferopol. He holds a Master's degree in Law and Political Science from Taras Shevchenko National University of Kyiv, as well as a Master's in Public Management and Administration from the London School of Economics. Since 2023, he has been the CEO of the State Back Office Operator. Prior to that, he led "Medical Procurements" for 4 years, during which the state reported savings of over 5 billion hryvnias. In 2022, Jumadilov was mobilized into the Medical Command of the Armed Forces of Ukraine.

“I asked if they would assign their people to me”

I will start with a recent story that caused quite a stir among those in the know when the Minister of Defense unexpectedly announced the merger of the Defense Procurement Agency and the State Back Office Operator into one institution. They argued that this was a move towards NATO standards, although, as it turned out, there were no such NATO recommendations during wartime at that time. Ultimately, this idea was dropped, but can you share your perspective on what this was all about?

I can explain how I saw it and how we reacted — without claiming to provide a comprehensive coverage of this story. Because the key body here is the Ministry of Defense.

In July, when I reported to the minister on the results of six months, we noted that our programs were being implemented quite effectively and efficiently, allowing us to say that we were ready to scale. We aimed to procure as a centralized buyer what is currently being procured by the structural units of the Ministry of Defense or units within the Armed Forces. For instance, solid fuel, IT (both software and hardware), and other areas. I requested that the ministry prioritize where exactly we needed to scale. Ultimately, that was where the conversation ended. The minister said, “Okay, I hear you.”

Then, around September, there was a conversation with the Deputy Minister (Dmytro Klimenkov — ed.) about the idea of merging AOZ and the State Back Office. This came as a surprise to me. We do not know the reasons behind such a decision. But we understand what we would have to do if it were made. We outlined the legal and management track. We were already working within the communication track — specifically, we verified with partners whether it was acceptable for us to also handle lethal nomenclature.

Глава Государственного оператора тыла Арсен Жумадилов0

So essentially, this was about the liquidation of the Defense Procurement Agency, although it clearly had a broader scope. What is the logic behind this merger based on the State Back Office rather than the AOZ?

This question is better directed to the ministry. But if you ask my opinion — the functionality of a centralized buyer is absolutely clear to me and my team. Because our team was the first to implement it in medical procurements back in 2019. Even before the launch of the AOZ, representatives from the defense sector studied our practices in healthcare around 2020. This isn't nuclear physics. These are certain complex processes that need to be understood. But they are not some magical knowledge that belongs to a limited circle of people.

So if such a decision were made — we would implement it. Although some friends from the public sector asked why I did not refuse.

I wanted to ask why?

Because there are certain red lines. For us, the red line is corruption. If we saw corruption risks — we would definitely oppose it. And if there is no corruption involved, then why should we oppose the decision of a governing body that probably had certain reasons for making it?

I did not see these red lines because I asked one simple question: “Are there expectations from the Ministry of Defense or other authorities that appointments in the merged agency will be coordinated with them or made entirely at their discretion?”

In other words, I asked if they would assign any of their people to me. Because if that were the case, I would certainly not have accepted this situation. After all, that would be an obvious signal that someone would want to pursue corrupt interests. And everyone who has worked with me for the last 10 years knows that I do not tolerate corruption in principle.

You mentioned a relevant conversation in September. At the same time, I know that the Defense Procurement Agency learned about this through the media and reacted quite harshly. What was the communication like between the agencies, is there still tension between you, and could it lead to any procurement issues?

No. It would take a very vivid imagination to envision that.

In general, there is tension around the topic, obviously. It’s hard not to notice. However, I hope there is no tension between the two agencies. The fact is that we hardly intersect. We have different programs, and we carry them out within absolutely different management tracks.

Глава Государственного оператора тыла Арсен Жумадилов1

Marina (head of the Defense Procurement Agency Marina Bezrukova — ed.) called me on the phone. She asked: “Arsen, why are you interacting with stakeholders when I’m not even aware that such a decision is being made?”

I replied: “Marina, I don’t know why this decision is being made, what the reasons are, etc., but in any case, it should be communicated to you by the Ministry of Defense, not by me.”

We are neither for nor against such a decision. If it had been made, we would have implemented it. It hasn’t been made — okay. We continue to execute our programs. We have work to do.

“After the scandals with eggs, we heard a call for integrity”

Despite everything, Ukrainian anti-corruption activists generally supported both the AOZ and your agency. What has been achieved in these 10 months of work, particularly in the fight against corruption, and what has not?

The societal demand was primarily for integrity. And after the scandals involving eggs, apples, jackets, this demand was heard by us. We integrated the principle of zero tolerance for corruption into all our processes.

And now we will be working towards obtaining a high anti-corruption standard ISO 37001. An international organization will audit us, and the results should come in early next year. So we are not just declaring a fight against corruption; we are ready to undergo an audit.

This has resulted in real savings of public funds. To date, we have saved 16.4 billion hryvnias compared to the prices at which various products were procured before us. These are absolutely real additional liters of diesel fuel, body armor, etc.
Глава Государственного оператора тыла Арсен Жумадилов2

There was also a demand that supplies for the Armed Forces not be perceived as a closed club of interests. That there is only a limited circle of suppliers who have insider knowledge of how tenders are conducted and only they can participate. We restructured this — both in food and in “stuff.” We restructured logistics. We can say that now any supplier who has the desire and organizational capacity definitely has no barriers to participate in tenders and start supplying to the Armed Forces.

We also managed to digitize key supply processes — from how requests are made to how acts are drawn up and signed.

Each week, the military alone in the food sector created over 30,000 paper documents: these were expense invoices and acts. We digitized all of this, and now the corresponding processes are being carried out several times faster.

You are obviously referring to the army's IT supply system DOT-Chain, which was presented just a month ago. Is this system already showing results? And is there any local resistance?

Well, there is some resistance. In a sense, that’s normal because systems always show some resistance to change. But I can’t say that the scale of this resistance is abnormal. We are working on it, conducting many briefings and training for military units and military management bodies, and we have a hotline.

A certain volume of documents is already being handled digitally. However, there are some military units that are still waiting for additional clarifications, orders, and instructions, and so forth. This is a culture that is quite bureaucratic and formal.

I have served in the Armed Forces, and I understand this culture, so I allow for the fact that this is not out of malice. Some sincerely want to have another paper document that will “cover” them in case of any issues. One way or another, we understand that for everyone to work digitally, a certain amount of time must pass.

But we already have consolidated data about what our military consumes, for example. Because when at the end of last year we asked the structural unit of the Ministry of Defense: “What and how much is being supplied?” — no one knew. Because no one consolidated this data, no one analyzed it, and based on that analysis, no decisions were made