Procurement: Accessories That Make A Difference

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September 20, 2014: Getting accurate data on weapons exports is difficult because there is no standard way to calculate the value of these exports. That should not be a problem, as you can simply take the money paid for exports and add it all up each year. The problem is that some of the numbers are secret and many that are made public are deceptive. For example, it is common for countries to export the same weapons to different customers at very different prices. The smallest reason for differences is inflation (as years go by the same item gets more expensive). The most common reason for differences are accessories. This can more the double the sales price of a weapon. This involves things like spare parts, maintenance, training, tech support services, consulting and all manner of exported knowledge and experience. Leave out all the accessories and Russia is a little ahead of the United States as a weapons exporter. But include the services and the value of the American exports more than doubles.

Russia does not like to dwell on this distinction because it is one of the primary reasons why American weapons invariably defeat Russian ones in combat. On paper the Russian weapons are often the equal, or a little superior, to their American counterparts. But add in all the accessories and that makes the U.S. weapons much more effective.

There is one more item that can make the price vary; bribes. These are often required in some countries if the supplier wants to get the sale. Normally this does not add more than ten percent or so to the actual cost. Occasionally the bribes can be huge and boost cost by fifty percent or more. The Russians are much more flexible on the subject of bribes than their Western competitors.

Most Western weapons are offered with a lot of these services. Next to the United States, Britain is the most energetic exporter of these accessories. This changes the rankings of arms exporters. Most of these rankings only include hardware. By this reckoning the U.S. is the leading exporter followed by Russia, France, Britain, China, Germany, and Italy. But if you include military related services you get a new lineup. The U.S. is still first but is followed by Britain, Russia, France, Germany, Israel and Italy.  Britain has been exporting these services longer and more energetically than anyone else and now has a well-deserved reputation that makes it a major player in this field.

Global defense spending has increased nearly 50 percent since 2000, to over $1.4 trillion. That's about 2.5 percent of global GDP. After the Cold War ended in 1991, defense spending declined for a few years to under a trillion dollars a year. But by the end of the 1990s it was on the rise again. The region with the greatest growth has been the Middle East, where spending has increased 62 percent in the last decade. The region with the lowest growth (six percent) was Western Europe. Spending growth has resumed now that the recession is over in many parts of the world. The Middle East, because of their continuing inability to produce enough locals who have the technical skills and motivation to maintain high-tech gear are a major customer for military service exports.

 


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