Acquiring weapons should adhere to the regulations set by the weapons procurement law.
In a historic move, Germany is significantly increasing its defense spending, with the 2025 defense budget set at €62 billion and projected to reach 3.5% of GDP by 2029[1][3]. This marks a notable surge as part of a broader €500 billion infrastructure and climate plan, breaking post-war fiscal constraints and fueling a major rearmament effort across Europe.
The German government is also moving to speed up military procurement processes to support this spending increase. A draft bill approved in July 2025 aims to simplify procedures, allow higher thresholds for exempted contracts, and enable defense firms to receive advance payments. This aims to accelerate production and deployment of military equipment, unblocking about 12,000 stalled procurement processes[4]. Overall spending on the armed forces is expected to exceed €162 billion by 2029, more than triple the pre-Ukraine war budget.
Christoph Goller, a lawyer at Gleiss Lutz in Stuttgart, explains that a key function of procurement law is to achieve cost-effectiveness through competition among providers[2]. However, the surge in demand coupled with accelerated procurement could have mixed impacts on arms procurement prices. Faster procurement and larger orders might improve economies of scale, reducing unit prices over time. On the other hand, sudden increases in demand and the rush to equip forces quickly often drive up costs due to supply chain constraints, raw material price increases, and premiums for expedited production[1][4].
Germany’s shift toward advanced technologies (e.g., AI and quantum projects) and extensive collaboration with European defense industries (e.g., Rheinmetall, Airbus) could further influence pricing dynamics by increasing complexity and innovation costs[1][4].
In 2022, the Bundestag approved a special fund of 100 billion euros for urgent acquisitions and modernizations of the Bundeswehr[5]. Kay Scheller, President of the Federal Court of Auditors, urges the Ministry of Defense and the Bundeswehr to implement control instruments for the effective and responsible use of financial resources[6]. The federal government plans to increase the budget to at least 2% of GDP once the special fund is exhausted[7].
The Federal Court of Auditors emphasizes that efficiency, effectiveness, and control are essential for funds to be effective, even in the face of increased defense spending[6]. However, the court warns about the responsible handling of financial resources in the enlarged financial framework and the potential signal of unlimited borrowing possibilities leading to higher prices in the defense sector[8].
The EU allows for exemptions from treaty provisions for reasons of national security, usually involving the question of whether direct award is necessary to safeguard essential security interests[9]. Goller states that exceptions to procurement law, such as direct awards for reasons of national security, are narrowly defined[2].
The Ministry of Defense and the Bundeswehr are sometimes unable to use financial resources efficiently, according to audit results[10]. Examples of inefficiencies include failed procurement and digitization projects, management errors, and waste from unused software licenses. Scheller urges caution against a "money is no object" approach on the administrative side[11].
By 2028, the federal government expects defense expenditures of 96 billion euros[12]. The regular defense budget for 2025 is over 53 billion euros[13]. Wolfgang Leja's contact information is provided for further information.
In summary, Germany’s increased defense spending and expedited procurement likely lead to higher overall arms budgets, while procurement pricing effects depend on balancing economies of scale against supply-side pressures and technological investment needs. The Federal Court of Auditors stresses the importance of maintaining efficiency, effectiveness, and control in the use of financial resources to ensure the responsible management of increased defense spending.
- The German government's draft bill, aiming to simplify military procurement processes, may influence the allocation of resources in the defense sector, potentially impacting prices in the general-news context.
- The Federal Court of Auditors emphasizes the need for efficiency, effectiveness, and control in the use of financial resources during this period of increased defense spending and expedited procurement, as inappropriate handling could lead to a rise in arms procurement prices in the realm of politics.
