Let’s say you’re a small but competent Ukrainian company that wants to make long-range drones for your country’s deep strike campaign.
The demand is there. Attacking Russia’s lifepoints directly is perhaps one of the most cost-effective ways to grind down Moscow’s relentless war machine, to do as much damage as possible before more people die and Washington’s next mood swing.
Let’s say you have good ideas and a small starting team of smart, dedicated people willing to work weekends. Even so, the odds are against you. Euromaidan Press spoke to multiple companies and a military insider to paint the following picture. Almost all sources asked to not be identified by personal or company name.
First, there is the shortage of qualified personnel. Many of them have left Ukraine, others have been drafted, and the rest are likely working for companies who might be your competitors. Then there’s the issue of securing a grant — applications are reviewed behind closed doors and if you don’t pass, they won’t tell you why.
But if you do secure one, that is where the real problems begin. If you get a good relationship with a specific unit, and don’t mind making up to a few dozen hulls for them, that’s all well and good. But if you hope to expand and supply the military on a bigger scale — and don’t have friends in government — you might be facing a Sisyphean challenge.
"You can't just enter this market," a military weapons tester told Euromaidan Press, under condition of anonymity.
"You have to know someone. Not just know someone, but someone has to lobby for you to pass certain procedures, for someone to buy your output."
"Certain individuals who wear epaulettes have their own businesses," a long-range drone developer told Euromaidan Press. "And they sign contracts for their own units."
However, the situation isn’t hopeless. Contributing to the war effort while developing your business is possible, and reforms are on the way. In July, for the first time, the defense procurement agency bought up FPV drones based on tactical characteristics, instead of company names. Experts said there’s no reason why other weapon classes cannot see similar changes in the future.
“We are observing a transitional stage. On the one hand, the risks of corruption and lobbying remain due to excessive secrecy and procurement from ‘our own people.’ On the other hand, the precedent of July 2025… indicates an attempt by the state to switch to civilized rules of the game,” Oleksandr Veherzhynskyi, a researcher with the Independent Anti-Corruption Commission, told Euromaidan Press.
“The future of the industry depends on whether this practice becomes systemic.”
Securing skills and labor
Qualified manpower is at a premium in Ukraine.
At least a million people volunteered or conscripted into the military and many more fled overseas. The remaining engineers are snapped up quickly. A weapons developer may find that the qualified staff they need are already working for a competitor.
“It's very difficult to scale, you need good specialists there. Specialists are difficult to find. They're also being headhunted,” said one developer.
“Everyone wants to grow… it’s easier to just poach people away.”
Another long-range drone developer agreed it's the qualification that makes the difference. Some less-capable weapons, he said, are made by "ordinary guys who don't know the chemistry they should know; they don't know the physics they should know."
Then there’s the issue of money — salaries are one of the biggest expenditures for a company that hasn’t already secured many orders or reached a certain size.
Limited money in the pot
Money isn’t just about salaries. There aren’t enough orders to go around. Most companies are working at an average 50% of their possible capacity — some more, some less.
Weapons exports are meant to bring in the revenue to resolve this. But the legal infrastructure isn’t there yet and the government is moving slowly to build it.
Less money means less production and also less R&D to make weapons deadlier, smarter, and cheaper.
It takes at least the larger part of a year to develop a larger drone to the point where it’s ready for trials. And the demands of the war are constantly changing.
Analysts interviewed for this article said the Ukrainian arms ecosystem is both cooperative and competitive. Some said the competition is “healthy.” Others were less sanguine, and still others took a middle position.
“This environment is unique and combines all the elements you mentioned: cooperation for the sake of victory, tough business interests, and competition for limited resources,” Veherzhynskyi said.
“The authorities must take a statesmanlike position: to direct diverse initiatives into a single channel of defense capability,” he added. “The most logical model is the selection of samples solely on the basis of objective test results.”
“Objective test results”
Evaluation results are often difficult to gauge, because of military secrecy or general policy.
One of the drone developers interviewed for this story gave an example. The Brave1 defense cluster is renowned for giving grants to companies to produce military tech. To get a grant, one must apply for it. But lack of communication is a problem.
"When the supervisory board meets, it's closed and no one tells you at all whether you passed," the developer said. "You ask why, you're told sorry, the vote is private. And then you have to sit there and wonder why you didn't pass."
"Constructively, [we need to know] how maybe some parts didn't work like they wanted, maybe it's the speed, maybe it's the range, maybe something else. What should I work on, what should I come back with?"
The developer said they’d failed to secure a grant for a specific kind of UAV. Later, it turned out that other devs also tried to make similar machines, which also failed, as no one was able to solve the terminal guidance problem. There was no collaborative effort to solve it as such. "They don't engage,” the developer said. “It’s like ‘figure it out yourselves.’"
Natural selection
“At first, there were very many companies that wanted to [develop long-range weapons],” said the military tester. “Right now, there are maybe 35% of them left.”
Analysts agree that the whittling down comes down to both natural and administrative selection. Some companies simply couldn’t cut it, due to insufficient product quality, and were outcompeted by their peers.
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Having a limited number of players makes strategic and economic sense, according to Andriy Zemlianyi, a senior analyst at the Ukrainian Security and Cooperation Center. Ukraine has a whole “zoo” of different systems, which complicates combat and logistics.
“It's perfectly natural for the state to contract with manufacturers that have a large resource and production base, experience and reputation, and, most importantly, a proven track record of delivering contracts,” he said.
The effectiveness of weapons is shrouded by military secrecy, but there are sufficient testimonials that Ukraine’s long-range arsenal has been effective enough at hitting targets inside Russia. These weapons include Fire Point’s FP-1, Ukroboronprom's Liutyi, Ukrjet's UJ series, and others.
Need for connections
However, there are also testimonials that some companies were chosen, at least in part, for their connections.
“The peculiarities of procurement under martial law create a favorable environment for manufacturers with strong leverage,” Veherzhynskyi said.
Military secrecy is very important, to prevent the Russians from gaining valuable intel, or being able to target specific enterprises. It’s also important for Ukrainian companies to be competitive in the global marketplace, now that other countries are interested in their battle-tested products. But as a side effect, corruption becomes easier to hide.
“Information about the needs of the Defense Forces, the required tactical and technical characteristics and volumes are a state secret. Procurement is often carried out not according to unified characteristics, but according to specific product names through direct contracting,” Veherzhynskyi added.
“This creates a situation where the advantage goes to those who have access to decision-makers, and not necessarily those whose product is better.”
Gatekeeping the competition
Many manufacturers work directly with brigades and fulfill orders. Ukraine also launched the Dot Chain defense platform, where military units can acquire materiel, bypassing some of the bureaucracy of the center.
“But these are, well, limited-run items of which you produce maybe 100 per month,” the military tester said. “So, we're not talking about any kind of global production in this regard.”
Getting bigger government orders is harder. It requires certification and codification. These procedures “confirm if your piece of metal is suitable for us.”
“But this doesn't happen on its own. And it's not necessarily the case that really good things that work well can enter this market, because competitors might not let them in,” he added.
“As soon as you exceed a certain cap, a certain amount, you fall into the sights of a circle of people who are sort of in charge of this area, and that's it, they put a spoke in your wheel, and if you don't bend to them, then no one will buy from you… They simply won’t let you go through qualification and certification and you won’t get a big order.”
The tester said that even being a contractor for a larger firm is hard because they have their own production and don’t need the threat of competition.
A drone developer concurred: “This is a corrupt topic.”
“Doing it all by ourselves… would likely take a year and a half. Because every wall would need to be broken through, agreements would need to be made,” they said. “Unfortunately, there’s no way to do it, other than the usual way.”
Gradual reforms
Still, there are efforts to fight back against the worst tendencies of the system.
The National Anti-Corruption Bureau (NABU) investigated Fire Point, which fulfills over half of the state’s deep strike orders. The company was accused of price-gouging and making false claims over their technical specifications. Fire Point has denied malfeasance.
NABU is also investigating employees of the state’s Defense Procurement Agency and the State Service for Special Communications over the alleged price gouging.
In July, said Defense Procurement Agency procured FPV drones based on technology, rather than company names for the first time.
This doesn’t necessarily mean everything is above-board, but it is “an important precedent,” Veherzhynskyi said.
“For the previous 3.5 years, drones were purchased exclusively by entering specific [company] names in the Defense Procurement List of the Ministry of Defense, which limited competition and is not a normal practice for effective spending of budget funds.”
He said this late transition paves the way for more transparency.
Zemlianyi agreed that Ukraine has adopted measures to increase transparency recently — simplifying manufacturers’ access to government tenders, improving competitive bidding, and reducing intermediaries.
“Full transparency in some procurement processes is limited for security reasons, so opacity and corruption risks still remain,” he said.
“However, this area of defense is highly sensitive. The fight against corruption should not indirectly harm national security,” which means there is a balance to be struck.
