Localisation in Ukrainian Public Procurement: What Changed on 24 August 2026 — Part II

Complex law. Clear action.

Part II — updated and clarified

Reviewed by Oleksandr Sobovyi, Founder & CEO of CORVUS AI — editorial responsibility statement below

On 24 August 2026, the provisions of Law No. 4888-IX that substantially revise Ukraine’s localisation requirements in public procurement became applicable. The new Public Procurement Law itself will become applicable in full on 24 March 2027. Until then, contracting authorities and suppliers must navigate a transitional framework in which the substantive localisation rules have already changed, while some implementing measures and the electronic procurement system are still being adjusted.

This is not merely a technical implementation issue. It affects procurement planning, tender documentation, supply-chain evidence, contract enforceability and the market-entry structures available to European manufacturers.

The transitional framework

Law of Ukraine No. 4888-IX of 27 May 2026 entered into force on 24 June 2026 and is being introduced in stages. Its localisation provisions became applicable on 24 August 2026, whereas the Law as a whole will become applicable on 24 March 2027.

During this transitional period:

Law of Ukraine No. 922-VIII on Public Procurement remains in force until 24 March 2027;

the wartime procurement rules established by Cabinet of Ministers Resolution No. 1178 continue to apply until Law No. 4888-IX becomes applicable in full. If martial law is terminated or cancelled before 24 March 2027, Resolution No. 1178 will continue to apply for 90 days following that termination or cancellation;

the Ministry of Economy is working to align Resolution No. 1178 with the revised localisation provisions, while Prozorro is adapting the electronic procurement system and its required fields;

the fact that the implementing framework and electronic functionality are still being adjusted does not postpone the statutory obligations that became applicable on 24 August 2026.

The Ministry’s official clarification No. 3323-04/76414-06 of 17 August 2026 confirms both the staged application of the legislation and the continuing work on implementing measures and technical functionality.

Contracting authorities must therefore take localisation into account from the planning stage, even where the current electronic interface does not yet fully reflect the revised legal requirements. During this interim period, the defensibility of the authority’s documented legal assessment becomes especially important.

What has changed in the legal definition

The changes operate partly through amendments to the existing procurement legislation. In particular, point 29-1 of Article 1(1) of Law No. 922-VIII has been restated.

The degree of production localisation is now defined as the share of domestically produced raw materials, materials, units, assemblies, parts, components, works, services and other domestic inputs in the production cost of the relevant product. The definition applies irrespective of whether the product is procured as a standalone item or as part of works or services.

This removes an important area of uncertainty surrounding mixed contracts. Equipment cannot avoid the localisation analysis merely because its supply has been incorporated into a broader installation, construction or service contract.

The revised framework applies where the value of the procurement item — including a product procured as part of works or services — is at least UAH 1 million. The minimum degree of localisation is:

30% in 2026;

35% in 2027;

40% from 2028 until 31 December 2032.

The degree of localisation is calculated under the applicable formula and evidenced through inclusion of the product by its manufacturer in the list of products with a confirmed degree of localisation. The practical treatment of entries made before 24 August 2026 — including whether and when they must be updated or reconfirmed — should be assessed under the current instructions of the Ministry of Economy and Prozorro. Neither automatic continuity nor a universal obligation to re-register every product should be assumed without a specific legal or administrative basis.

Five points of legal risk

1. Procurement planning

From 24 August 2026, a contracting authority must reflect the application of localisation requirements in its annual procurement plan. For affected products, the plan must contain the CPV code, the Ukrainian Classification of Goods for Foreign Economic Activity code, expected quantities and/or value, and information on the application of localisation requirements.

Failure to address localisation at the planning stage may become the subject of monitoring or an order by the State Audit Service. Depending on the nature, stage and consequences of the infringement, it may also affect the legality of the subsequent procurement. It should not, however, be assumed that every planning defect automatically invalidates the procurement or the resulting contract.

Where a required electronic field is not yet technically available, the contracting authority should document its localisation assessment by the means available and monitor whether the annual plan must be updated once the system has been adjusted. A limitation in the electronic interface does not itself remove the statutory obligation.

2. Products embedded in works or services

The revised regime expressly covers products procured as part of works or services where the value of each relevant product position reaches the statutory threshold. A mixed contract involving equipment, installation and maintenance therefore requires the contracting authority to identify and assess the product component separately.

This exercise is more than a matter of drafting. An incorrect classification can alter the applicable procurement requirements, the evidence demanded from the bidder and the legality of the award.

3. Failure to identify an applicable localisation requirement

The revised framework expands the product categories subject to localisation and raises the applicable value threshold to UAH 1 million. It also introduces more detailed requirements relating to evidence, the supply chain and enforcement.

Where a contracting authority enters into a contract in breach of a statutory localisation requirement, the contract may be void where the specific conditions for nullity prescribed by law are met. This consequence must not be presented as automatic for every documentary or planning error: the particular infringement, the applicable statutory provision and its legal effect must be established in each case.

The framework also provides for rejection of non-compliant bids, cancellation of procurement in specified circumstances, removal of products from the localisation list, a register of non-compliant manufacturers and financial sanctions, including a penalty of 15% of the product value in the cases prescribed by law.

4. Technical changes during an ongoing procurement cycle

Authorities may have prepared annual plans or procurement documentation before the Prozorro functionality was updated. If new fields or evidence mechanisms become available later, authorities should assess whether the procurement documents or plan require amendment.

The legally safer approach is to maintain a contemporaneous record showing:

whether the product falls within the regulated categories;

whether the UAH 1 million threshold is met;

what evidence of localisation is required;

whether an international-treaty exception applies; and

how any technical limitation in the system was addressed.

5. Confusing national localisation with Ukraine Facility eligibility and origin rules

This is particularly important for European companies. Procurement conducted in connection with measures under the Ukraine Plan may be subject to the special rules in points 77–93 of Resolution No. 1178, adopted to implement the Framework Agreement between Ukraine and the European Union under the Ukraine Facility.

Those provisions establish a separate eligibility and origin regime. Depending on the applicable procurement, they may require suppliers, subcontractors and goods to have a connection with Ukraine, EU Member States or other eligible countries identified under the Ukraine Facility framework. Compliance with restrictive-measures requirements, including the relevant declarations generated through the EU Sanctions Map where required, is a separate part of that analysis and should not be treated as proof of product origin.

The Ukraine Facility rules and the national localisation regime must therefore be assessed separately, but they must not be presumed to apply cumulatively in every case.

The revised localisation rules contain exceptions for products originating in states covered by the WTO Agreement on Government Procurement and other relevant international agreements binding on Ukraine. EU Member States participate in the GPA through the European Union. Accordingly, a product of EU origin may fall outside the national localisation requirement where the relevant procurement and product are covered by the applicable international agreement and all conditions for the exception are satisfied.

The correct legal sequence is:

determine whether the procurement is connected with measures under the Ukraine Plan and whether the special Ukraine Facility rules apply;

establish the eligibility of the supplier and relevant subcontractors and the origin of the goods under that framework;

determine whether the product falls within the national localisation categories and meets the UAH 1 million threshold;

assess whether the GPA or another international-treaty exception removes the localisation requirement; and

only then determine whether both sets of requirements apply to the procurement concurrently.

Compliance with a Ukraine Facility origin rule does not by itself establish localisation. Conversely, compliance with localisation does not establish eligibility under the Ukraine Facility. In some procurements both regimes may apply; in others, an international-treaty exception may displace the national localisation requirement.

Why this matters for European companies

A European manufacturer considering production, assembly or a joint venture in Ukraine should not treat localisation as a percentage to be inserted into the contract at the end of negotiations. It is a legal design issue affecting the production model, sourcing of components, documentary chain, tender eligibility and allocation of regulatory risk between the parties.

The applicable calculation and evidence should be checked against the rules in force at the relevant stage of the procurement. Existing calculations may require review when the Cabinet of Ministers aligns the implementing framework with Law No. 4888-IX. This does not mean that no methodology currently exists; it means that the current implementing rules and the revised statutory framework must be read together during the transition.

For EU-origin goods, the first question may not be how to satisfy the Ukrainian localisation percentage, but whether the GPA or another international agreement excludes the requirement. For a product assembled in Ukraine using an international supply chain, the analysis may be different and should be carried out at product and procurement level.

This is where legal structuring must precede commercial commitment. Public procurement, localisation, EU manufacturing or joint-venture structures, supply-chain origin, recovery funding and defence-industrial integration form a connected legal chain. A weak assumption at any point can compromise the entire transaction.

Practical next step

Companies planning a manufacturing or assembly presence in Ukraine, or structuring an EU–Ukraine supply arrangement for Ukrainian public procurement, should address at least the following matters at the LOI or term-sheet stage:

a regulatory-change mechanism covering amendments to the localisation methodology, Resolution No. 1178 and the relevant Prozorro procedures;

a separate legal analysis of national localisation, GPA or treaty coverage, Ukraine Facility eligibility and product-origin requirements;

an audit of the contract’s product positions against the expanded localisation categories and the UAH 1 million threshold;

contractual responsibility for localisation calculations, manufacturer submissions, origin evidence and supply-chain documentation;

remedies and price-allocation mechanisms if a product loses eligibility or the applicable regulatory treatment changes before delivery.

What matters. What’s next.

Disclaimer

This article has been prepared by CORVUS AI for general informational and educational purposes only. It is intended to make complex legal and regulatory developments easier to understand.

It does not constitute legal advice and does not create a professional adviser–client relationship. The information should not be relied upon as a substitute for advice based on the specific facts, circumstances and applicable law relevant to your organisation or project.

The article reflects our understanding of the law and regulatory framework as of the date of publication. Legislation, case law, regulatory guidance and administrative practice may subsequently change. While reasonable care has been taken in preparing this article, CORVUS AI does not warrant that the information is complete or remains current after the date of publication. We do not undertake to update this content.

To the fullest extent permitted by applicable law, CORVUS AI excludes liability for loss arising from reliance on this article. Nothing in this article constitutes an offer or solicitation to provide regulated legal services in any jurisdiction where doing so would be unlawful.

AI-assisted preparation: This article was prepared with the assistance of AI tools. Its legal analysis, conclusions and final text were subject to human review and editorial control and were reviewed and approved prior to publication by Oleksandr Sobovyi, Founder & CEO of CORVUS AI. CORVUS AI retains editorial responsibility for the published content.

For advice tailored to your organisation, project or specific circumstances, please contact corvusai.eu.

Sources

Law of Ukraine No. 4888-IX on Public Procurement, 27 May 2026.

Law of Ukraine No. 922-VIII on Public Procurement, 25 December 2015.

Cabinet of Ministers of Ukraine Resolution No. 1178, 12 October 2022, as amended.

Ministry of Economy, Official Clarification No. 3323-04/76414-06 of 17 August 2026.

Ministry of Economy consultation on procurement planning and localisation, August 2026.

Framework Agreement between Ukraine and the European Union under the Ukraine Facility.