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The Military Equipment Cost Problem - Why (some) Nations Struggle to Build Affordable Weapons

Perun

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Sponsored by: Private Internet Access: https://www.piavpn.com/Perun

Many countries have gotten pretty good at producing cutting edge military equipment - but cheap equipment is often a different matter.

With the war in Ukraine demonstrating that quantity and affordability can sometimes matter as much as raw capability, today (by patron vote), I want to unpack some of the reasons countries can sometimes struggle to build equipment for less than eye-watering prices - and what options might be available to try and narrow the cost gap with more economical competitors.

Patreon:
Patreon: PerunAU

Reading and Sourcing (partial):

U.S. DoD Office of the Inspector General - Audit of the Business Model for TransDigm Group Inc. and Its Impact on Department of Defense Spare Parts Pricing (DODIG-2022-043)
https://www.dodig.mil/reports.html/ar...

https://media.defense.gov/2021/Dec/27...

USN cancels the constellation class frigate
https://www.twz.com/sea/navy-sinks-th...

Included reporting on constellation
https://www.twz.com/sea/first-constel...

CSIS - Calculating the Cost-Effectiveness of Russia’s Drone Strikes
https://www.csis.org/analysis/calcula...

2024 reporting on firms wanting persistent orders
https://www.bbc.com/news/articles/c5y...

Janes - Netherlands plans to sign Leopard 2A8 MBT contract in mid-May
https://www.janes.com/osint-insights/...

USAF Procurement of Ammunition Justification Book FY2025
https://www.saffm.hq.af.mil/Portals/8...

USAF Procurement of Missiles Justification Book FY2025
https://www.saffm.hq.af.mil/Portals/8...

ROK Destroyer Procurement
https://www.defensenews.com/naval/201...

C. Dougherty - Gradually and Then Suddenly: Explaining the Navy's Strategic Bankruptcy
https://warontherocks.com/2021/06/gra...

F-35 in Midnight Hammer
https://www.businessinsider.com/f-35s...

US to buy a million drones by 2028
https://www.twz.com/air/army-sets-out...

USAF seeking low--cost anti air missile
https://www.twz.com/air/usafs-new-low...

S LaGrone - Air Boss: Navy Committed to Maintaining 11 Aircraft Carriers
https://news.usni.org/2025/08/26/air-...

Reporting on AJAX training halt
https://www.theguardian.com/uk-news/2...

Ukraine clones Russian "Molniya" drone
https://united24media.com/latest-news...

Reporting on RAPTOR torpedo
https://www.twz.com/sea/navy-wants-a-...

Reporting on Leopard 2A8 New Builds
https://www.defensenews.com/global/eu...

Caveats & Comments:

All normal caveats and comments apply. In particular – I would like to note as always that this material has been created for entertainment purposes and is not intended to be a complete or comprehensive examination of the topic in question and should not be relied upon to inform financial or other similar decisions.

Any content relating to the conduct, views, activities or any aspect of any person or character in this video is included for entertainment purposes and does not represent an assertion of fact on those matters or any matters in relation to that person or character.

Care has been taken in compiling data, quotes, and other inputs from various sources but errors can occur. Quotes and included data should be considered illustrative, not definitive and their veracity should not be relied on.

Timestamps:

00:00:00 — Opening Words
00:01:39 — What Am I Talking About?
00:03:52 — How Bad is It?
00:14:51 — Who?
00:20:48 — the Military Doesn't Ask for Them
00:27:52 — Governments Doesn't Fund Them
00:32:06 — Industry Doesn't Design Them
00:37:05 — Commercial OTS Inputs & Incentives
00:43:57 — Scale, Predictability & Incentives
00:52:32 — Are Things Changing?
00:58:45 — Channel Update

20 Comments

@PerunAU Creator 10 months ago Pinned

Sponsored by Private Internet Access, Use the following link to access their promotional offer: https://www.piavpn.com/Perun

Cheers to the Patrons for voting for this one - my goal here is that we use this episode to get some of the basic concepts and issues on the table so when we talk about specific programs (not that I'm thinking of any particular frigate program or anything) we can jump into the details without having to cover the basics. Hope you enjoy the episode, and I'll see you all again next week.

@Valkertok 10 months ago

1:19
"NATO states, including the US, can struggle to build weapon systems that don't have price point so high that it counts as a form of friendly fire"

That's an instant classic quote if I ever saw one.

@Sultan-cf5wf 10 months ago

The weekly PowerPoint has arrived. Most excellent.

@lolskywalker7119 10 months ago

Last time I was here Constellation Class was still a credible Frigate

@TomvanSmash 10 months ago

Someone in the Canadian media remarked that we didn't have a military procurement agency, we had a regional economic redistribution agency that occasionally made some guns. Thought it illustrated the priorities of Canadian procurement though I'm glad to see that hopefully things are changing.

@Zeppflyer 10 months ago (edited)

I was present for USS Zumwalt's commissioning. It was a fun event, where everyone from the Assistant SECNAV down to her first commander; Capt James Kirk, made a Star Trek joke.

When the command was given to "Bring the ship to life!" the hatches on the turrets sprung open and the barrels shot up, releasing balloons into the air. It was a cool effect, but even then, there were rumors that costs had ballooned on the supposedly cheap shells and the AGS was a dead gun walking. Really cast a pall over things.

@albertstebbins7590 10 months ago

"Sticker shock and awe"

Love it.

@ihdieselman 10 months ago

I still don't understand how some dude in Australia is able to hypnotize me into watching a PowerPoint presentation on economics for an hour almost every week.

@einarcgulbrandsen7177 10 months ago

Buy a cheap, off-the-shelf design… then immediately cram it full of so many “brilliant new ideas” that it mutates into a completely unrecognizable monster.
Apparently, this is the government’s secret recipe for transforming a bargain into a budget-devouring chaos machine.

@pauladam2867 10 months ago

Something to be mentionned is that NATO level product specifications are often very weighty for the manufacturers, eg: "I want my drone to do X at Y speed and Z weight and at night" vs "use two of them and add a thermal camera to one" for Ukrainians and Russians

@taufiqutomo 10 months ago

It's almost four years since the lectures started. Your subscribers deserve a diploma (maybe a one-time payment for a merch in the shape of a diploma?)

@Ves189 10 months ago

Perun is such an asset for the layman who wants to understand the military-industrial side better. Well done, again.

@1977Yakko 10 months ago

USS Neversail strikes the USN again with the Cancelation Class.

@MoonlessMess 10 months ago

Perun; a lot of people think you are the best PP presenter on youtube. Be proud and do what you can. If life is making a schedule crack, accept and think about the 53.000 people who will watch after 6 hours. They all appreciate this show, and you. Thank you.

@diekssus7194 10 months ago

Ofcourse Emutopia needs a beerfridge in their tanks!
Nothing but the best for their troops!

@Pds3.14 10 months ago

Part of the problem with "our troops deserve the best" is that "our troops deserve SOMETHING" is also true. If you buy a few IFVs and aircraft for a few thousand front line troope, that means a handful of them get to ride in the fancy vehicles and most of them will be showing up riding APCs and ultralites at best, and more likely Toyotas, motorbikes, mountain bikes, and horses, with a genuine possibility that they will simply have to walk. Getting too few systems can be worse than getting too underspecced systems.

I saw two listings for computer mice on Amazon, one was for a $450 mouse that weighed 37 grams due to an all carbon fiber design and extensive lightening holes. It had a 35k DPI sensor pushing up against the limits of optics, a rechargeable battery, the most reliable switches, and an 8000 Hz polling rate.

Another was for bulk discount cheap 5 button office mice that take AAA batteries and cost around $2.25 a piece.

I think you're going to be much better off if your organization has 1000 employees spending a $5000 budget on making sure everyone has A mouse of some kind and buying a few half decent $10-50 mice for your actual high speed low drag spreadsheet warriors as opposed to buying 10 of the most gold-plated mice in existence the then making the rest of your employees hotbunk 200 cheap mice.

@erf3176 10 months ago

Survivability adds cost but if you're a military that goes to war often, like the USA, that feature costs you on the weapon development but it saves you the cost of retraining a pilot or tank crew who got a great ejection seat or proper armor. It also adds value on the morale end and lower casualty rates are good for recruitment.

@martythemartian99 10 months ago

26:55 Oddly enough, this did once happen in Australia on live TV. GM Holden sponsored a program where at the end of the show, one lucky person could choose any car in the Holden line up as their prize. This gave Holden the opportunity to showcase their entire line on TV. Highest priced vehicle was a either a Statesman limo or a GTS Monaro (can't remember which). The lady that won the prize didn't get the idea and chose a small hatchback.
The audience was stunned and the host begged her to reconsider. But in the end she insisted that she could not live with such a big car and so they gave her a free cheap hatchback.🤣

@scottelaurant9747 10 months ago

There is another elephant in the room on this one. Among people who rate the degree of transparency and corruption in different countries and industries, defense industries are usually rated among the worst (least transparent and most corrupt). Only oil and gas usually scores worse. I know Perun has covered corruption well before in relation Private Conscriptovitch, but it happens in the west too. Lobbyists, nepotism, nationalism and conflicts of interest all damage efficient tendering.