Defence equipment carries costs beyond the material in each unit. Small orders must absorb research, company overhead, and profit across relatively few purchases. Governments also pay to retain enough industrial capacity to expand production in wartime even when peacetime demand cannot keep that capacity busy. A rough estimate puts this low-volume premium at 50 percent. Modern systems add integration charges as equipment from different suppliers must communicate and operate together, making nominal budget growth a poor guide to buying power.
Chapter · 15:22-17:22
Small production runs drive defence inflation
Low-volume procurement spreads research, overhead, standby capacity, and integration costs across too few units.