How preferences in government procurement can support veteran entrepreneurship: the experience of the USA and Ukraine

Supporting the entrepreneurial activities of war veterans is a crucial area of focus for the Ukrainian state. In Ukraine, the legal framework regulating such entrepreneurial activities is still in its formative stages. Consequently, numerous challenges have emerged that require the development of effective resolution mechanisms. One such mechanism involves preferential treatment in government procurement, which serves as an efficient means of supporting veteran-owned businesses. In contrast, the United States has developed a robust legislative framework in this area over nearly three decades of implementation; examining this experience is, therefore, highly relevant for Ukraine. In Ukraine, the legal framework for supporting veteran entrepreneurship is still in the process of formation. The Law of Ukraine «On Veteran Entrepreneurship,» recently adopted by the Verkhovna Rada, has introduced the concept of a special economic support regime for veteran-owned businesses into the legal landscape, though it does not define its specific content in detail. In particular, the law does not include such an effective and internationally recognized support mechanism as preferences in government procurement (reserved contracts) within the scope of the special economic support regime for veteran-owned businesses; instead, it places this measure among the general directions of state policy regarding the creation of competitive advantages for the development and operation of veteran-owned enterprises—effectively deferring its implementation to an indefinite future. In turn, the Law of Ukraine «On Public Procurement» introduced the concept of «reserved contracts» for the first time. However, entities engaged in veteran entrepreneurship—as defined by the Law of Ukraine «On Veteran Entrepreneurship»—are not included among the parties eligible to participate in such contracts. This state of Ukrainian legislation indicates that preferences in government procurement are not currently being applied. Recommendations have been developed for improving Ukrainian legislation in this area. Conclusions. The experience of the United States demonstrates that preferences in government procurement for veteran-owned businesses—specifically, set-aside contracts—serve as an effective form of support. Incorporating such preferences for veteran-owned enterprises into Ukraine’s public procurement system would be a significant step toward building an inclusive economy, while also serving as a gesture of gratitude to war veterans for defending the nation. Currently, however, this mechanism is not included within the framework of the special economic support regime for veteran entrepreneurship, nor has it been incorporated into the relevant legislation governing public procurement. The current legal mechanism requires immediate refinement through amendments to the relevant legislation. To establish a functional model for reserved contracts, it is necessary to include veteran-owned businesses among the entities eligible for such contracts, transform the contracting authorities’ discretionary right to use these contracts into a mandatory obligation, establish a statutory quota based on the annual procurement volume of major budget fund administrators, and develop a mechanism for accountability in the event of failure to meet this quota.