Can the rise in prices of defense equipment be controlled?

As soon as reference is made to the rise in prices of defense equipment, it is common to cite the famous Augustine's law, which anticipated, from 1970, a much more rapid increase in the prices of defense equipment, compared to that of defense budgets with, ultimately, a significant reduction in the sizes of armies.

It is clear that the facts over the last 30 years seem to prove Norman Augustine, who was director of Lockheed Martin when he formulated this theory, right. Thus, while the budget of the French armies has more than doubled since 1994, the format of major French military capabilities has been halved, sometimes more, going from 900 to 200 combat tanks, from 600 to 225 combat aircraft. combat, or even from 2 aircraft carriers and 30 high seas escorts, to a single AP, and only fifteen escorts.

This concentration is largely linked to the increase in the costs of defense equipment, both for purchase and ownership, which is much higher than inflation alone and increases in military budgets. It is therefore essential to understand the causes that can explain these increases and, possibly, identify approaches likely to contain and limit them, for the benefit of the mass, now essential, to face the threat.

The price of Western defense equipment has almost tripled in 30 years

The fact is, in many aspects, the prices of military equipment have increased considerably since the 90s and the end of the Cold War. And this, throughout the Western sphere, and concerning all categories of equipment.

Rafale C Mirage 200D
Le Rafale alone replaces 8 models of fighter aircraft within the French air and naval forces. However, the total number of devices has been divided by 3 since 1990, while the unit price per device has increased by 3.

Thus, in France, the standard fighter plane in 1995, the Mirage 2000C, cost barely more than €25 million, with a cost per flight hour of less than €3. Today, the Rafale costs around €100 million per aircraft, and a cost per flight hour of more than €10. Likewise, the five light stealth frigates, acquired by the French Navy, were purchased for less than €000 billion, design included, compared to €1 billion for the 4 defense and intervention frigates to come.

Certainly, the operational capabilities of the IDF, like those of the Rafale, are much superior to those of the FLF or the Mirage 2000C RDI. Yet even when it comes to the same equipment, prices have risen considerably in just twenty years. For example, the American FIM-96 Singer missile cost less than $30 per copy in 000. It is now billed for more than $1995 to the US Army and to American customers of the FMS.

The F-16 Block 15, from the 90s, was sold for $25 to $30 million per aircraft. The Block 70 Viper is now approaching $80 million. Even the Aster 15 missile, initially purchased to arm the Charles de Gaulle in 1998, was then priced almost 40% less than it is today. Likewise, the Leopard 2 or the American Abrams were offered for less than $3 million in 1995. Today they exceed $15 million.

We understand, in these conditions, how these price increases have considerably burdened the formats and budgets of the armies. The subject is all the more worrying because these increases are not homogeneous worldwide.

Thus, the Russian T-90A was purchased for between $1 and $1,5 million by the Russian Army in the 90s, while it remains below $3 million today. In other words, where a Leopard 2 cost the price of two T-90s in 1995, today it costs the price of 5 T-90Ms, a very capable tank.

What are the causes of these price increases for defense equipment in the West?

To meet the needs of the armies, the most obvious solution, also widely used, including at parliamentary level, is to demand an increase in investments devoted to the acquisition of this equipment.

FREMM frigate defense equipment
by going from 17 to 8 units ordered, the price of the FREMM contract for the French Navy increased from €8 billion to €8 billion…

However, it could be useful to look into the causes of these price increases, which could possibly bring to light certain avenues, precisely to increase the size of the armies, without having to go through a massive increase in credits.


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