The Bundeswehr procurement process is considered one of the biggest obstacles: The dilemma of Bundeswehr procurement
Xpert pre-release
Language selection 📢
Published on: October 19, 2025 / Updated on: October 19, 2025 – Author: Konrad Wolfenstein
The Bundeswehr procurement process is considered one of the biggest obstacles: The dilemma of Bundeswehr procurement – Creative image: Xpert.Digital
Ignored & thwarted: How Germany's bureaucracy is sabotaging its own high-tech industries
The paradoxical business: Why foreign armies are queuing up while the Bundeswehr hesitates
The "turning point" has given German defense policy a historic special fund of 100 billion euros to modernize the Bundeswehr and make it operational. But as the billions flow, frustration grows in eastern Germany. Particularly in Saxony, a center of highly specialized industry, numerous defense companies feel systematically ignored. The core problem lies in a cumbersome procurement system, historically rooted in the West, which favors established corporations and hampers innovative medium-sized companies from the former East German states with lengthy bureaucratic procedures.
The paradox is that while German authorities are hesitant, Saxon companies like Spekon and MWK Defence are sought-after partners on the global market. Their products, from military parachutes to precision parts for weapons systems, are successfully exported abroad – a testament to their competitiveness, yet one that is largely ignored at home. This article sheds light on the dilemma of the East German arms industry: a field of tension between untapped potential, political failures, and a deep-rooted social debate. It is the story of an economic struggle that is about more than just contracts – it is about fair participation, technological sovereignty, and the future of an entire industry in eastern Germany.
Suitable for:
Billions are flowing – but whose hands are holding the cake? Why East German companies are on the sidelines despite their know-how
The debate surrounding the role of the East German defense industry has gained renewed momentum due to political developments in recent years. Saxony exemplifies the struggle for equitably distributed innovation, economic participation, and security policy responsibility within a national context. The industry is experiencing a rollercoaster of emotions: The federal government is providing unprecedented funding, while key companies from Saxony such as MWK Defence, PMG Precision Mechanics Group, and Spekon are emphasizing their expertise and willingness to invest, yet are often more successful with inquiries from abroad than at home.
The central problem appears to be the procurement practices within Germany. Despite a special fund of €100 billion for the modernization of the Bundeswehr, many East German defense companies feel ignored or trapped in lengthy bureaucratic procedures. At the same time, demand for military equipment is growing worldwide—especially against the backdrop of the war in Ukraine—and is pushing export figures for German companies to record levels.
This analysis is structured according to the relevant building blocks of a well-founded analysis: from historical roots, current mechanisms, practical examples and critical controversies to an outlook and a final evaluation.
Suitable for:
Historical influences and economic shifts: The development of the arms industry in East Germany
The starting point for the defense industry in Saxony and the former East German states is characterized by profound historical and structural contradictions. After the end of the GDR and the reunification of Germany, West German industry dominated the markets and value chains for security and defense-related products. Supplier relationships and symbioses with the Bundeswehr developed firmly in the West, while East German companies struggled to position themselves in new market structures.
This development is still reflected in procurement practices today. Saxony's Prime Minister Michael Kretschmer and Economics Minister Dirk Panter are constantly demanding that the billions of euros in investments also reach the eastern states and not only benefit West German companies. Figures demonstrate the inequality: Of the €100 billion in federal funds, Saxon companies have so far received only a minimal share, further demonstrating the historic lag.
Nevertheless, Saxon industry is on par with its West German competitors in terms of technology and quality. The region has developed a strong research landscape and highly specialized companies that enjoy an excellent reputation, particularly in mechanical engineering, automotive manufacturing, and other high-tech sectors. Companies like MWK Defence in Königswartha demonstrate this with their extensive expertise and broad production portfolio.
Suitable for:
Mechanisms in transition: How procurement structures and innovation dynamics shape the industry
The Bundeswehr procurement process is considered one of the biggest obstacles to the growth and integration of East German companies. While in countries like Poland or Norway, direct negotiations with the military authorities lead to contracts within weeks, Saxon companies in Germany experience lengthy and often non-transparent processes with the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support (BAAINBw) in Koblenz. Decision-making authority usually lies with established suppliers in the West, and new providers are rarely integrated.
The Germany-wide bureaucratic dilemma affects not only procurement, but also innovation capacity: Complex tendering conditions prevent quick solutions and lead to a fixation on so-called "gold-plated solutions" – tailor-made projects that are hardly competitive in an international context. The Bundeswehr cultivates a silo mentality that has so far failed to produce cross-departmental collaboration and open innovation ecosystems.
In addition, specific requirements and approval procedures for new technologies are particularly hampering small and medium-sized enterprises. However, examples like the Cyber Innovation Hub demonstrate that collaboration with startups and research institutes can produce market-ready solutions within three months – if the structures are adapted to the times.
Hub for security and defense - advice and information
Hub for security and defense - Image: Xpert.digital
The hub for security and defense offers well-founded advice and current information in order to effectively support companies and organizations in strengthening their role in European security and defense policy. In close connection to the SME Connect working group, he promotes small and medium -sized companies (SMEs) in particular that want to further expand their innovative strength and competitiveness in the field of defense. As a central point of contact, the hub creates a decisive bridge between SME and European defense strategy.
Suitable for:
Saxony's arms boom: Export records instead of Bundeswehr orders – Why East German suppliers often only receive “crumbs from the cake”
Current realities: Status quo and economic importance of East German arms companies
The current status of Saxony's defense industry is characterized by both hope and frustration. Approximately 2,000 employees work in approximately 80 companies, the majority of which see themselves as specialized suppliers, primarily manufacturing components for larger weapon systems, sensors, optics, and precision engineering. Some companies, including MWK Defence, PMG, and Spekon, emphasize that their expertise meets international standards and that orders from abroad are received regularly and promptly.
Spekon Sächsische Spezialkonfektion GmbH is established worldwide as a manufacturer of military parachutes and has experienced a massive increase in sales since the beginning of the war in Ukraine – however, this is largely due to exports rather than orders from the German Armed Forces. PMG Precision Mechanics Group is considered a specialist in sophisticated precision parts, primarily serving the aviation, motorsport, and defense industries – here, too, the majority of its business partners are international.
The region's economic potential is enormous, especially since the transformation of the automotive industry is exerting new pressure on the defense industry to become more attractive, and numerous suppliers are seeking new markets. Politicians and industry experts therefore emphasize the need for structural reforms to anchor value creation in the East and secure jobs.
Suitable for:
Local reality: Influential company examples and their international significance
MWK Defence, based in Königswartha, impressively demonstrates that it has the expertise and skills to produce rocket launchers, but that the order situation in Germany hardly matches its capabilities. While international customers decide on contracts in a few weeks, German bureaucracy often takes years. The company specializes in special machinery construction and tank components, but sees little opportunity to profit substantially from the Bundeswehr's special fund in the current situation.
PMG Precision Mechanics Group in Wilsdruff also demonstrates how Saxon medium-sized companies are positioning themselves to benefit from the announced arms offensive. With investments in new machinery and halls, PMG is continuously expanding and focusing on innovative and sustainable production. Nevertheless, major orders continue to go to West German companies, while East German suppliers have to make do with "crumbs from the cake."
The case of Spekon in Seifhennersdorf is particularly striking: The company supplies parachutes to more than 50 countries, including numerous armies around the world, but the German Armed Forces (Bundeswehr) are not among its major customers. Since the Ukraine war, sales have nearly doubled to five million euros, but exports are primarily outside Germany.
Controversies and criticism: Between pacifism, protests and economic responsibility
The debate surrounding the establishment and promotion of the arms industry in Saxony is deeply rooted in social and historical controversies. Especially in the east, many people cultivate pacifist values, invoking the Peaceful Revolution and the motto "Swords into Plowshares." Protests against planned facilities, such as tank production in Görlitz or munitions factories in Großenhain, are still deeply felt today. Critics doubt that an expansion of the arms industry is sustainable and effective and warn of the historical consequences of economic arms buildup.
Politically, the discussion is nuanced: While Economics Minister Panter calls for greater industrial participation and innovation, emphasizing the need not to prepare for war, others advocate for alternative economic development measures. The BSW parliamentary group, for example, criticizes the focus on weapons production and calls for sustainable concepts instead of military buildup.
Despite this criticism, many stakeholders agree that a defensible Federal Republic, economic transformation, and job security must go hand in hand. The path to achieving this goal remains controversial and requires social debate.
Suitable for:
Innovation, dual-use and disruptive technologies: Outlook on future trends in Saxony
Dual-use and AI: How Saxony can become a high-tech defense hub
The future of the defense industry in eastern Germany will be significantly shaped by technological innovations and the transformation toward dual-use technologies. Mechanical engineering, microelectronics, and the high-tech cluster "Silicon Saxony" offer an excellent foundation for advancing disruptive technologies such as autonomous systems, AI applications, laser defense, and digital twins. In particular, the trend toward the integration of civilian and military research opens up opportunities that have so far been untapped.
The EU and NATO are increasingly focusing on these fields and also supporting start-ups that develop innovative solutions for defense and security. Saxony therefore has the opportunity to establish itself as a pioneer of new value chains and logistics hubs – particularly due to its geographical location on NATO's eastern flank.
Political decisions, such as increasing direct award limits and more flexible tendering conditions, could significantly facilitate the participation of East German companies in the future. It remains to be seen to what extent these measures will disrupt existing structures and bring about substantial change.
Reform lesson for Saxony: More participation instead of crumb economy
An analysis of Saxony's defense industry reveals a complex interplay between technical innovation potential, economic attractiveness, and political framework conditions. East German companies may excel in terms of quality and technology, but often remain marginalized in the national procurement process. Their economic significance—given structural change and job losses in other sectors—is immense, but is controversially discussed politically and socially.
Existing deficits in the Bundeswehr's procurement system, the dominance of West German suppliers, and the slowness of bureaucratic processes are hampering development. While the export orientation of Saxony's industry mitigates some of these losses, it does not replace national participation in the German defense budget. Protests and ethical concerns must be respected as a reflection of societal values, but they must not lead to a blockade of the necessary economic transformation.
For the future, there remains hope that innovations, dual-use concepts, and disruptive technologies will give new impetus to the East – provided the political course is set correctly. Saxony has the potential to get more than just a "crumb from the cake." The crucial question is whether the current reforms, social discourse, and industrial investments will lead to genuine participation or whether the old structures will continue.
Advice - planning - implementation
Markus Becker
I would be happy to serve as your personal advisor.
Head of Business Development
Chairman SME Connect Defense Working Group
Advice - planning - implementation
Konrad Wolfenstein
I would be happy to serve as your personal advisor.
contact me under Wolfenstein ∂ Xpert.digital
call me under +49 89 674 804 (Munich)
Your dual -use logistics expert
Dual -use logistics expert - Image: Xpert.digital
The global economy is currently experiencing a fundamental change, a broken epoch that shakes the cornerstones of global logistics. The era of hyper-globalization, which was characterized by the unshakable striving for maximum efficiency and the “just-in-time” principle, gives way to a new reality. This is characterized by profound structural breaks, geopolitical shifts and progressive economic political fragmentation. The planning of international markets and supply chains, which was once assumed as a matter of course, dissolves and is replaced by a phase of growing uncertainty.
Suitable for:
