In procurement of works and services, localization depends on the cost of each product, not the entire procurement — Supreme Court
During the procurement of works or services, the cost criterion is applied to each individual product, not by summing the cost of all products included in the procurement subject. If the works or services include the transfer to the customer of several products defined by paragraph 6-1 of section X "Final and Transitional Provisions" of the Law of Ukraine dated December 25, 2015 No. 922-VIII "On Public Procurement", but the cost of each such product separately does not exceed UAH 200,000, the requirements for confirming the degree of localization do not apply to such products.
On June 1, 2026, the Supreme Court, sitting as a panel of judges of the Cassation Administrative Court, considered the cassation appeal of the North-Eastern Office of the State Audit Service against the decision of the Kyiv District Administrative Court dated May 20, 2025, and the ruling of the Sixth Administrative Court of Appeal dated February 18, 2026, in case No. 320/60498/24 filed by the Communal Enterprise for Maintenance and Operation of the Special Purpose Housing Fund "Spetszhytlofond" against the North-Eastern Office of the State Audit Service, with a third party – LLC, regarding the recognition as unlawful and cancellation of the conclusion on the results of monitoring the procurement procedure.
CIRCUMSTANCES OF THE CASE
In support of the claims, the plaintiff stated that the conclusions of the North-Eastern Office of the State Audit Service regarding the presence of violations are not true, since the tender documentation was prepared in accordance with the norms of current Ukrainian legislation in the field of public procurement, and the tender proposal submitted by the procurement winner met its requirements, therefore there were no grounds for its rejection. The plaintiff indicated that the legislation in the field of public procurement does not impose an obligation on the customer to specify requirements for confirming the degree of localization in the tender documentation, so the absence of such requirements in the tender documentation does not indicate violations of the public procurement legislation. The plaintiff also noted that the requirements for confirming the degree of localization apply only if the performance of works involves the acquisition by the customer of ownership of products costing more than UAH 200,000. At the same time, within the disputed procurement procedure, the customer was not transferred products each costing more than the specified amount.
The decision of the court of first instance, upheld by the appellate court, satisfied the claim. The courts reasoned that the Law of Ukraine dated December 25, 2015 No. 922-VIII "On Public Procurement" (hereinafter – Law No. 922-VIII) does not impose an obligation on the customer to include requirements for confirming the degree of localization in the tender documentation, and the cost of each individual product did not exceed the statutory limit of UAH 200,000.
The Supreme Court partially satisfied the cassation appeal, canceled the decisions of the lower courts, and sent the case for a new trial to the court of first instance.
COURT’S ASSESSMENT
According to subparagraph 1 of paragraph 6-1 of section X of Law No. 922-VIII, temporarily, from 2022 for a period of 10 years, special features of procurement of certain products are established, according to which if the cost of the procurement subject equals or exceeds UAH 200,000, the customer procures products defined in subparagraph 2 of this paragraph only on the condition that the degree of localization of their production equals or exceeds the legally established indicator, in particular, in 2024 — 20 percent.
The provisions of part three of article 22 of Law No. 922-VIII should be understood as meaning that in cases where special legislation directly establishes mandatory procurement requirements, they must be mandatorily included in the tender documentation and not left to the discretion of the customer.
Analysis of paragraph 6-1 of section X "Final and Transitional Provisions" of Law No. 922-VIII and the third paragraph of point 3 of the Features of Public Procurement of Products, Works, and Services for Customers provided by the Law of Ukraine "On Public Procurement" during the legal regime of martial law in the country and for 90 days after its termination or cancellation, approved by the Cabinet of Ministers of Ukraine resolution dated October 12, 2022 No. 1178, leads to the conclusion that during the procurement of works or services, the cost criterion is applied to each individual product, not by summing the cost of all products included in the procurement subject.
The Supreme Court noted that the changes introduced by the Cabinet of Ministers of Ukraine resolution dated July 5, 2024 No. 782 confirm the legislator’s intention to define the cost criterion specifically for each individual product.
If the works or services include the transfer to the customer of several products defined by paragraph 6-1 of section X "Final and Transitional Provisions" of Law No. 922-VIII, but the cost of each such product separately does not exceed UAH 200,000, the requirements for confirming the degree of localization do not apply to such products. At the same time, in this case, the courts did not verify the defendant’s arguments regarding the presence of individual products costing more than the specified threshold, which made it impossible to properly resolve the dispute and became the basis for sending the case for a new trial.
More details and the text of the Supreme Court ruling dated June 1, 2026, in case No. 320/60498/24 can be found at this link.
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