A contracting authority has already selected the successful bidder, signed the procurement contract and started its performance. The State Audit Service of Ukraine then conducts procurement monitoring and, in its conclusion, requires the identified violation to be remedied by terminating the contractual obligations. This creates a practical conflict for the contracting authority: the procurement procedure has effectively resulted in a contract, while the financial control authority requires a violation committed at an earlier stage to be corrected.
The fact that a contract has already been signed or partly performed does not automatically make a requirement to terminate it unlawful. At the same time, such a requirement does not become lawful merely because some error has been identified during the procurement procedure.
The Supreme Court’s 2026 case law reflects a more specific approach: it is necessary to assess the nature of the violation, its effect on the legality of selecting the successful bidder and entering into the contract, and how clearly the financial control authority has defined the required corrective measure.
What a State Audit Service conclusion must contain
Article 8 of the Law of Ukraine “On Public Procurement” provides that a conclusion issued following procurement monitoring must contain more than a description of the identified violation. The State Audit Service must also specify the obligation imposed to remedy that violation.
This matters because the conclusion creates specific legal consequences for the contracting authority. It is not enough to state that a particular action during the procurement procedure was incorrect. The contracting authority must be able to understand what conduct is expected by the state financial control authority and what will constitute compliance with the conclusion.
If the wording allows several fundamentally different courses of action and effectively leaves the contracting authority to decide for itself how the identified violation should be remedied, the legal certainty of such a requirement may become an issue.
This distinction is reflected in recent Supreme Court case law.
What the Supreme Court decided in case No. 420/21732/21
In its judgment of 25 February 2026 in case No. 420/21732/21, the Supreme Court considered a situation in which the contracting authority had not rejected a bidder’s proposal even though the State Audit Service identified non-compliance in the manner in which documents concerning tender security had been submitted under the tender documentation. By the time the monitoring issue arose, the successful bidder had already been selected and the contract had been signed.
The courts of first instance and appeal ruled in favour of the contracting authority. Among other things, they considered termination of the contract to be an excessive measure because no financial loss to the state had been established.
The Administrative Cassation Court of the Supreme Court reached a different conclusion.
For the Supreme Court, the decisive question was not limited to whether actual financial loss had occurred. The Court examined whether the violation could have affected the very possibility of lawfully selecting that bidder as the winner and entering into a contract with it. In the circumstances established in the case, the Court found that the violation prevented the procurement procedure from being properly completed and the contract from being lawfully concluded with that participant.
The Court therefore considered the requirement to take measures aimed at terminating the contractual obligations sufficiently specific and the selected corrective measure proportionate to the nature of the violation. The financial control authority’s cassation appeal was allowed, while the contracting authority’s claim seeking cancellation of the monitoring conclusion was dismissed.
The practical significance of this judgment is that the arguments “the contract has already been signed” or “no loss was caused to the budget” may, by themselves, be insufficient to have a monitoring conclusion cancelled.
When contract termination may be proportionate to the violation
This approach is even more apparent in the Supreme Court judgment of 3 February 2026 in case No. 160/4596/22.
In that case, the contracting authority did not reject a tender proposal that failed to meet an established qualification criterion, selected that participant as the successful bidder and entered into a contract with it. The contracting authority did not dispute the existence of the relevant violation itself.
The Supreme Court proceeded from the premise that, had the procurement rules been applied correctly, the legal relationship with that successful bidder should never have arisen and the contract would not have been signed.
The causal connection between the violation and the contract is therefore crucial.
A technical or formal deficiency that did not affect competition, the selection of the successful bidder or the possibility of entering into the contract is one situation. A violation that should have resulted in rejection of the bid, a different procurement outcome or the absence of contractual relations with that participant is another.
In the latter situation, it becomes significantly more difficult to argue that termination of the contract is disproportionate solely because it would cause adverse commercial consequences.
The Supreme Court also stressed that legal findings in public procurement disputes should not be transferred mechanically from one case to another without comparing the underlying facts.
How a specific requirement differs from an uncertain one
To understand the limits of the State Audit Service’s powers, it is useful to compare case No. 160/4596/22 with case No. 160/5890/22, decided by the Supreme Court in 2023.
In case No. 160/5890/22, the financial control authority required the contracting authority to terminate contractual obligations, including through the application of consequences associated with invalidity or nullity, but did not define with sufficient precision which specific actions the contracting authority was expected to take. The Supreme Court agreed that such wording created uncertainty.
In its judgment of 3 February 2026, the Supreme Court specifically explained why that position could not automatically be applied to a different procurement procedure. Where the conclusion makes clear what violation was identified, why it could not be corrected at the relevant stage and what result the contracting authority is required to achieve, the requirement may satisfy the standard of legal certainty even if its consequence is termination of the contract.
Accordingly, when challenging a monitoring conclusion, it is necessary to assess not merely the isolated wording “terminate the obligations”, but the conclusion as a whole: the description of the violation, its legal qualification, its connection with the contract already signed and the corrective measure formulated by the financial control authority.
Why older judicial wording cannot be copied literally into 2026 conclusions
There is another practical point.
Cases No. 420/21732/21 and No. 160/4596/22 concerned procurement procedures and State Audit Service conclusions from earlier periods. The materials in those cases therefore contain requirements to terminate obligations with references to both the Civil Code and the Commercial Code of Ukraine.
That wording should not be copied automatically into a new conclusion. The Commercial Code of Ukraine ceased to have effect on 28 August 2025 following the implementation of Law No. 4196-IX.
As of the date of this publication, the legal grounds and procedure for terminating a particular contract must be assessed under the legislation currently in force, including the Civil Code of Ukraine, special public procurement rules and the terms of the contract itself. The current Civil Code separately regulates the grounds, procedure and consequences of amendment and termination of contracts.
Therefore, if a recent conclusion issued by a financial control authority relies on a provision that is no longer in force or proposes a course of action that cannot be implemented under the current legal framework, this requires a separate legal assessment.
That fact alone does not predetermine the outcome of a court dispute, but it may be relevant when assessing the lawfulness, reasoning and legal certainty of the conclusion.
What to do immediately after publication of the conclusion
Once the monitoring conclusion has been published, the time available to formulate a response is limited by law.
The contracting authority may, within three business days, make a one-time request to the state financial control authority for clarification of the conclusion and the obligations specified in it.
Within five business days, the contracting authority must publish through the electronic procurement system one of the responses provided for by law: documents confirming that the violation has been remedied, reasoned objections to the conclusion, or information explaining why the violation cannot be remedied.
If the contracting authority disagrees with the conclusion, part ten of Article 8 of Law No. 922-VIII provides for the right to challenge it before a court within 10 business days from the date of publication. The law also requires relevant information concerning the court proceedings to be entered into the electronic procurement system.
The strategy should therefore not be postponed until the parties begin taking practical steps to terminate the contract. The immediate priorities are to control the procedural deadline and to record the contracting authority’s position in time.
Which documents matter for objections or a court claim
Assessing the prospects of a challenge requires more than reading the operative part of the monitoring conclusion. It is necessary to reconstruct the logic of the entire procurement procedure and determine whether the identified violation could genuinely have changed its outcome.
The working file should normally include the monitoring conclusion and related materials; documents on the basis of which monitoring was initiated; the version of the tender documentation applicable at the relevant time; the successful bidder’s tender proposal; protocols and decisions of the contracting authority; requests submitted by the State Audit Service and the explanations provided in response; the contract and any amendments to it; documents showing the stage of contract performance; notices and timestamps in the electronic procurement system; and other documents capable of confirming or disproving the particular violation.
A separate question should also be considered: what would have happened to the procurement if the contracting authority had acted from the outset in the manner the State Audit Service considers correct? Should the bidder have been rejected? Could the non-compliance have been corrected? Could the same bidder lawfully have remained the winner? Could the procedure still have resulted in the same contract?
The answers to these questions may be more important in a proportionality dispute than a general reference to the losses or operational difficulties that contract termination could cause.
How to build the court position
A court claim challenging a State Audit Service conclusion should not be based solely on the argument that termination of an existing contract is an excessively severe consequence. Following the Supreme Court judgments issued in 2026, that argument is significantly weaker if it is not accompanied by an analysis of the underlying violation.
The first issue is whether the State Audit Service correctly identified the violation and correctly applied the relevant legal rule. If there was no violation in the first place, the question of proportionality of the proposed corrective measure arises in a different legal context.
If a violation did occur, the next question is its significance for the outcome of the procurement. The more directly it relates to the unlawful admission of a bidder, selection of the winner or conclusion of the contract itself, the more difficult it becomes to argue that the contract should remain unaffected.
The mandatory part of the conclusion must also be examined separately. The contracting authority must be able to understand exactly what it is required to do. An unclear requirement that effectively forces the contracting authority to choose independently between different legal mechanisms producing different consequences may create legal uncertainty. However, that question must be assessed together with the facts of the particular procurement rather than solely by comparing the wording with other court cases.
If the conclusion already requires termination of the contract
A State Audit Service requirement to terminate a contract is a situation in which the procurement violation, the terms of the contract, the legally available method of termination and the very short deadline for judicial challenge must all be assessed at the same time. It is therefore advisable to review the conclusion before taking steps whose legal or commercial consequences may later be difficult to reverse.
If the State Audit Service has required termination of your procurement contract and you consider the alleged violation unfounded, the corrective measure insufficiently specific or disproportionate to the circumstances, the lawyers of Grandliga Law Firm can analyse the monitoring materials, current Supreme Court case law and the contract, prepare reasoned objections and, where legal grounds exist, provide representation in challenging a State Audit Service conclusion following procurement monitoring before the administrative courts.
