In a recent “60 Minutes” segment featuring retired Defense Department contract negotiator, Shay Assad, saying that American weapons suppliers have increased prices using the war in Ukraine as their excuse.
These price increases could diminish America’s defense capabilities in the future as U.S. military supplies sent to Ukraine are not being replenished in a timely manner due to the increasing costs from defense contracting companies.
The Biden administration is sending increasing numbers of military weapons and supplies to Ukraine “no matter the cost.”
Pentagon insiders are making claims of suppliers engaging in “price gouging,” where increased demand for products or services creates an unrealistic price increase in products and services by the supplier.
The threats to Taiwan by China also concern military leaders if those threats escalate into something more severe and America is called into protective action with limited military capability.
The Pentagon is paying more for missiles, radar, planes, and things as small as nuts and bolts. A 1991 shoulder-fired stinger missile sold for $25,000 has increased to over $400,000 in 2023. Improved technology and inflation would not be enough to justify that much of a price increase.
Another problem unforeseen by government bureaucrats is the producer of the product retains the proprietary design and the information and parts necessary to make repairs or replacements. The Defense Department would be prohibited from being able to make needed repairs with some types of equipment.
There was price competition in the 1990s when there were many military weapons manufacturers. Since then, through mergers and aquations, those companies have grown from many to half a dozen suppliers.
Since then, government contract negotiators have been let go as cost-saving job cuts.
General Chris Bogdan, a retired Air Force, Lieutenant, says there’s nothing wrong with making a fair and reasonable profit, but in a quest for profits acting in the best interests of the U.S. and making a hefty profit may conflict with the company’s goal.