Public Procurement in Ukraine under New Rules
The new Law on Public Procurement entered into force on 24 June 2026 and its main provisions will become operational on 24 March 2027, replacing the current law. Separate VAT rules have applied since 1 July 2026: expected values and tender prices are stated without VAT, while the contract treatment depends on the supplier’s VAT status and the nature of the transaction. Companies should review pricing, tender documents and preparations for the new EUR thresholds now.
This update is intended for foreign companies, suppliers, investors and legal teams participating in or considering Ukrainian public tenders through Prozorro.
1. Public procurement changes in 2026
2. Business impact for foreign suppliers
3. VAT rules from 1 July 2026
4. Non-price criteria and lifecycle cost
5. New procurement tools for suppliers
6. EUR thresholds for foreign suppliers
7. Checks for foreign bidders
Frequently asked questions
How DLF can help
1. Public procurement changes in 2026
| Change | Effective date | Status |
|---|---|---|
| Unified VAT rule — announcements, bids, and contracts | 1 July 2026 | In force |
| New Law on Public Procurement — full operation | 24 March 2027 | Transition period |
The VAT rules apply to procedures started from 1 July 2026. Tender prices are evaluated without VAT, while VAT is included in the contract only if the supplier is a registered VAT payer and the relevant supply is taxable.
The March 2027 transition covers EUR thresholds, new procurement instruments, price-quality evaluation.
2. Business impact for foreign suppliers
Ukraine’s procurement reform brings the legal framework closer to EU standards. The Verkhovna Rada announced the new law as an EU-integration measure aimed at a more transparent, competitive and efficient procurement system. The law also implements key elements of Directive 2014/24/EU.
For foreign companies and suppliers, the reform has three practical effects. First, EUR thresholds, framework agreements, dynamic purchasing systems and variants make the regulatory logic more familiar to EU suppliers. Second, the new lotting rules require contracting authorities to address whether certain procurements should be divided into lots and to explain a decision not to divide them where the law requires. Where lots are used, specialised suppliers can bid for a relevant part of a larger contract. Third, contracting authorities may use price together with quality or other non-price criteria, allowing technically stronger solutions to compete on value rather than price alone.
The Verkhovna Rada also highlighted the reconstruction dimension: significant volumes of state and international funds will flow through Ukrainian procurement in the coming years. For foreign companies involved in reconstruction or infrastructure projects with international financing, this makes the March 2027 transition a preparation horizon, not a distant deadline.
3. VAT rules from 1 July 2026
A government resolution effective from 1 July 2026 introduced a unified VAT approach for new procurement procedures. In practical terms, taxable procurement is planned with VAT, announcements and bids use VAT-exclusive values, and VAT is included in the contract only when the supplier is a VAT payer and the relevant supply is taxable.
The rule operates at four distinct points:
- Annual procurement plans: the expected value is stated with VAT where the supply operation is subject to VAT under Ukrainian tax law. This entry in the plan is based on the nature of the operation, not the supplier’s tax registration status.
- Tender announcements and bid requests: the expected procurement value is stated without VAT in all cases, regardless of whether the operation is taxable.
- Bid submission and evaluation: bid prices are submitted and compared on a VAT-exclusive basis. The electronic procurement system ranks proposals by their VAT-exclusive price, without regard to each bidder’s VAT registration status. The practical result: VAT-registered and non-VAT-registered suppliers bid on equal terms.
- Contract conclusion: VAT is added to the contract price only when two conditions are simultaneously met. The winning supplier must be a registered VAT payer under Ukrainian tax law, and the specific supply must be a taxable operation. If either condition is absent, the contract is signed without VAT. Where an operation is taxable at 0%, the contract states VAT at 0% — the line is not omitted.
Transitional rule: procurement procedures started on or before 30 June 2026 are completed under the rules that applied when they began. Only procedures opened from 1 July 2026 follow the updated VAT treatment.
For foreign suppliers: bid prices are compared without VAT. Whether the resulting contract includes VAT depends on the company’s Ukrainian VAT registration status and whether the specific supply is a taxable operation — not on the contracting authority’s VAT position. Companies evaluating bid strategy should assess their Ukrainian VAT status before submission.
4. Non-price criteria and lifecycle cost
The new law broadens the available award criteria. A contracting authority may identify the best tender by price, lifecycle cost, or price combined with other criteria. Price-quality evaluation is therefore available, but it is not mandatory for every procurement.
Under this framework, a contracting authority’s tender documentation may include quality criteria — such as technical merit, functional characteristics, and after-sales service — as evaluation factors. This is not automatic for every tender: contracting authorities set the criteria applicable to each procedure in their own documentation. Where non-price criteria are applied, companies offering technically stronger, more reliable, or functionally superior solutions have a direct mechanism to differentiate their bids beyond price alone.
The new law explicitly defines lifecycle cost — covering all sequential stages including development, production, use, and maintenance — as a concept relevant to procurement evaluation. This means that for relevant contract types, contracting authorities may assess not only the purchase price but the total cost of ownership over the product’s operational life. For companies in sectors where energy efficiency, long-term maintenance costs, or end-of-life considerations are commercially significant — technology, equipment, construction materials, energy systems — this creates scope for genuinely value-based competition.
The law also allows contracting authorities to take account of environmental or other socially significant advantages of the proposed solution where these criteria are set in the tender documentation. Their practical use will depend on the procurement and the applicable implementing rules. Companies in sectors where sustainability and environmental performance are relevant should monitor the criteria used by their target contracting authorities.
5. New procurement tools for suppliers
Several mechanisms in the new law directly expand supplier access and reduce procedural formalism. Most enter full operation on 24 March 2027 alongside EUR thresholds.
Lots and justification for non-division. The new law treats lotting as a separate tender-design issue. Above the relevant statutory values, a contracting authority that decides not to divide the procurement into lots must explain that decision in the tender documentation. Where lots are used, a specialised supplier may bid only for the relevant part of a larger contract.
Alternative proposals (variants). Where a contracting authority explicitly permits alternative proposals in its tender documentation, bidders may submit a technically superior or more cost-effective solution alongside or instead of the standard specification. This gives suppliers with more advanced, innovative, or efficient approaches a mechanism to make that case within the tender process, rather than being constrained by the narrowest specification. The right to submit an alternative proposal is not automatic — it must be provided for in the contracting authority’s documentation for each procedure.
Framework agreements. Framework agreements allow contracting authorities to establish pre-agreed terms with one or more suppliers for recurring supply or service needs, with individual call-off orders placed under the framework. For suppliers, this creates predictable access to government demand over the agreement’s duration without re-running full competitive procedures for each order.
Dynamic purchasing systems. An open electronic roster of pre-qualified suppliers from which orders are placed competitively. Suppliers may apply to join a dynamic system at any time during its period of operation, making this a flexible instrument for companies entering the market after initial procedures are run.
Innovative partnerships. A joint R&D-plus-procurement instrument for solutions not yet available on the market. A contracting authority identifies a need, selects partners through a competitive process, co-develops the solution, and may purchase the result without a separate tender. For technology, defence, or infrastructure suppliers with innovative capabilities, this is a new engagement channel.
Reserved contracts. Article 18 of the new law provides a mechanism for reserving participation for specified categories of economic operators. The eligibility and evidence requirements should be checked before relying on this mechanism.
6. EUR thresholds for foreign suppliers
From 24 March 2027, the procurement method and the applicable procedural requirements will depend on the estimated contract value measured against the EUR thresholds established by the new law. For foreign suppliers, the relevant threshold provides an initial indication of the scale, timetable and procedural complexity of a Ukrainian procurement.
For contracting authorities in categories 1 and 2, the threshold values for the relevant competitive procedures are EUR 10,000 for goods and services and EUR 40,000 for works. For category 3 contracting authorities, the corresponding values are EUR 20,000 for goods and services and EUR 110,000 for works.
A higher threshold level applies to procurement with an estimated value of at least EUR 140,000 for goods and services or EUR 5,404,000 for works. Procurement reaching these values is subject to the procedural requirements established by the new law. Foreign companies should therefore identify the applicable threshold before deciding on participation and preparing their qualification documents.
For threshold purposes, EUR amounts are converted into Ukrainian hryvnias at the official National Bank of Ukraine exchange rate applicable on 1 January of the year in which the procurement is announced or, where the electronic procurement system is not used, the contract is concluded. The relevant UAH equivalent may therefore differ from year to year.
Before preparing a bid, a foreign supplier should identify the contracting-authority category, confirm the applicable threshold and review the procurement method, submission deadlines, qualification requirements and contract conditions. The EUR-based structure facilitates an initial comparison of Ukrainian procurement opportunities, but the tender documentation remains decisive for the documents, technical requirements and participation conditions applicable to each procedure.
7. Checks for foreign bidders
VAT (immediately — applies from 1 July 2026):
- Confirm whether your company holds Ukrainian VAT registration and whether the specific supply is a taxable operation under Ukrainian tax law.
- Bid prices are compared without VAT from 1 July 2026. The contract’s VAT treatment is determined at signing based on your tax status and the nature of the supply.
- Procedures started before 1 July 2026 follow pre-July rules. Only procedures opened from 1 July 2026 apply the new VAT logic.
March 2027 transition — plan ahead:
- Identify the contracting-authority category and the applicable EUR threshold level, including the higher values of EUR 140,000 for goods and services and EUR 5,404,000 for works.
- Review whether the procurement is divided into lots and, where relevant, the contracting authority’s reasons for non-division.
- Alternative proposals become available where tender documentation permits: check each tender’s documentation before preparing your bid.
- Value-based evaluation (MEAT) may apply alongside price: in sectors with differentiated quality, lifecycle cost, or sustainability profiles, monitor contracting authorities’ evaluation criteria from March 2027.
Prozorro participation: Public procurement procedures are conducted through Prozorro in the cases prescribed by law. A non-resident legal entity may participate as a bidder. Establishing a Ukrainian subsidiary is not generally required solely to submit a bid, but platform registration, qualification documents and tender-specific conditions must be checked for the relevant procedure. Where contract performance in Ukraine is extended or substantive, the question of permanent establishment risk under Ukrainian tax law should be assessed. Foreign corporate documents may require authentication and Ukrainian translation before submission. The exact requirements depend on the document, issuing country, applicable treaty and tender documentation.
Related article: Apostille and Legalisation for Ukraine
Frequently asked questions
When do EUR thresholds and the new procurement instruments take effect?
The main operative date is 24 March 2027, nine months after the new law entered into force on 24 June 2026. Until then, the current UAH-denominated framework continues to apply. The VAT rule change is a separate measure already in force since 1 July 2026.
How does the 1 July 2026 VAT change work in practice?
Bids submitted after 1 July 2026 are compared on a VAT-exclusive basis. Annual procurement plans state the expected value with VAT (where taxable). Tender announcements state it without VAT. The contract includes VAT only if the winning supplier is a registered VAT payer and the specific supply is taxable under Ukrainian law.
Can bidders now submit alternative or technically superior proposals?
Yes, if the contracting authority explicitly permits alternative proposals in its tender documentation. Where permitted, a bidder may submit a technically superior or more cost-effective solution alongside or instead of the standard specification. This option must be provided for in each tender’s documentation — it is not automatic.
Can a foreign company participate in Ukrainian public tenders without a local entity?
A foreign legal entity may participate as a non-resident bidder and does not generally need to establish a Ukrainian subsidiary solely to submit a bid. Platform registration, qualification documents and tender-specific requirements must still be checked. Substantive or long-term performance in Ukraine may create permanent-establishment exposure, while foreign corporate documents may require authentication and Ukrainian translation.
How DLF can help
DLF attorneys-at-law supports foreign companies, investors and suppliers at every stage of participation in Ukrainian tenders. Through its public procurement practice, the firm reviews tender documentation and qualification packages, prepares clarification requests and complaints, assists with bid submission and contract review, and advises on challenges to procurement decisions. DLF also provides tax advice on Ukrainian VAT registration, bid pricing, contract structure and permanent-establishment exposure.
Iurii Dynys, Counsel, Attorney-at-law, DLF attorneys-at-law
Contacts: +380 44 384 24 54, info@dlf.ua
This material is intended for general information purposes. The application of the approaches described depends on the circumstances of the specific situation and requires a separate legal assessment.