Millions of misinvestments-dual-use logistics as a start solving approach for the structural deficits of the Bundeswehr
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Prefer Xpert.Digital on GoogleⓘPublished on: May 31, 2025 / Updated on: May 31, 2025 – Author: Konrad Wolfenstein
Millions of euros in failed investments – Dual-use logistics as a starting point for addressing the structural deficiencies of the German Armed Forces – Image: Xpert.Digital
Stopping bad investments: Why dual-use logistics could be the first step to saving the German Armed Forces
Dual-use logistics as a solution to the structural deficiencies of the German Armed Forces: A critical analysis of waste and strategic realignment
The German Federal Court of Auditors' recent critique of the Bundeswehr reveals fundamental structural problems: While billions from special funds are being wasted, a coherent strategy for building a robust defense is lacking. The article illustrates how inadequate planning leads to millions of euros in misinvestments, while at the same time, dual-use logistics, as a strategic approach, has the potential to both increase efficiency and systematically address the structural weaknesses of the aging and top-heavy Bundeswehr. The challenge lies in moving from the current culture of waste to a strategically sound, modular approach that intelligently integrates civilian and military infrastructures.
Current headlines:
- Image | Court of Auditors criticizes: German Armed Forces have too many "desk soldiers"
- Frankfurter Allgemeine | SPECIAL REPORT: Court of Auditors urges reforms in the German Armed Forces
The concept of dual-use logistics: fundamentals and strategic potential
Definition and delimitation of traditional dual-use goods
Dual-use goods are traditionally defined as "goods with a dual purpose"—items, technologies, and knowledge that typically serve civilian purposes but can also be used for military purposes. The EU Dual-Use Regulation (EU) 2021/821 strictly regulates these goods to control the proliferation of sensitive technologies. However, this traditional definition captures only a fraction of the strategic potential inherent in the systematic integration of civilian and military logistics structures.
Extending the dual-use concept to logistics infrastructure opens up entirely new dimensions. While traditional dual-use goods are primarily subject to export control regulations, dual-use logistics refers to transport systems such as railways, bridges, tunnels, and especially combined transport terminals, which are designed to meet the requirements of both civilian freight transport and the specific needs of military transport. This strategic expansion of the concept makes it possible to systematically unlock synergies between civilian economic interests and military defense requirements.
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Innovative approaches to infrastructure optimization
The concept of “dual-use logistics” represents a particularly advanced approach that requires the coordinated collaboration of numerous actors, including the German Armed Forces and its logistics command. This approach promises to create a more resilient and efficient transport infrastructure that benefits both sectors. Critical combined transport facilities can be primarily financed through defense funds allocated under the heading of “ensuring military preparedness and defense logistics,” but are designed from the outset to be efficiently used by civilian logistics actors in peacetime.
The strategic importance of this approach lies in the fact that Germany, as both a central logistics hub in Europe and a crucial hub for NATO, particularly within the framework of Host Nation Support and the defense of the eastern flank, must possess a high-performance and resilient transport infrastructure. However, the current analysis reveals significant deficiencies in the condition of the German rail network, especially regarding bridges, signal boxes, and heavily used sections of track, which negatively impact both civilian economic activity and military operational readiness.
Analysis of structural waste: Symptoms of a systemic problem
Millions of euros in failed investments in IT projects
The Federal Court of Auditors' criticism of the Ministry of Defense under Boris Pistorius underscores the extent of the structural problems. The wasteful spending on software licenses is particularly egregious: Since 2006, the German Armed Forces have spent more than €50 million on unused software from a specific vendor and, under unchanged conditions, pay the vendor at least €5 million annually for the maintenance of this unused software. This waste is especially serious because the German Armed Forces knew when purchasing the software that they would have to pay the vendor an annual fee for software maintenance, even if they did not use the software.
Another example of problematic procurement practices is the multi-billion-euro IT project TaWAN LBO by the defense contractor Rheinmetall, which is projected to cost around €5.5 billion over nearly ten years. The Federal Court of Auditors warned of “considerable development risks” and potential “investment ruins,” as the contractor is largely unable to meet the German Armed Forces' requirements for the software. A particularly problematic aspect is that the contract was awarded directly to Rheinmetall Electronics without a regular tendering process.
Lack of strategic planning and control
The Federal Court of Auditors notes that the published examples range “from failed procurement and digitization projects and management errors to avoidable additional expenditures in the millions for unused software licenses.” This waste is particularly problematic because the German Armed Forces have virtually unlimited financial resources at their disposal due to the relaxation of the debt brake for defense spending. The auditors warn that the “signal of unlimited borrowing capacity” could lead to rising prices in the defense sector, as it creates incentives for industry to charge higher prices for the same level of service.
The Federal Ministry of Defense should prevent such misguided purchases through effective technical oversight and reduce ongoing expenditures on unused software. Instead, a pattern of payments for projects is emerging, without any clarity as to whether they are even needed or functional. This practice violates fundamental economic principles and jeopardizes the long-term financing of defense capabilities.
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Structural deficiencies: The “top-heavy” nature of the German Armed Forces
Staff misallocation and organizational inefficiency
A key structural problem within the German Armed Forces (Bundeswehr) is its pronounced "top-heavy" structure – an overrepresentation of administrative leadership personnel compared to the actual troops. The Federal Court of Auditors is calling for a comprehensive reorganization: "To align the Bundeswehr with national and collective defense, its personnel structure must be restructured: away from the current top-heavy structure, towards more 'troops'." This criticism is based on concrete figures: compared to 2010, the armed forces had approximately 60,000 fewer authorized positions for soldiers in 2024, representing a decrease of 24 percent.
The development of the personnel structure is particularly problematic: While the number of authorized positions for enlisted personnel and non-commissioned officers decreased by 40 and 20 percent respectively, the number of authorized positions for officers and staff officers increased by a total of 5 percent. As a result, the proportion of authorized positions for officers and staff officers grew from 15 percent in 2010 to 21 percent in 2024. This development has led to a military personnel structure that is now significantly more top-heavy than in 2010.
Administrative bloat despite promises of reform
The Ministry of Defense itself is a prime example of the lack of willingness to undertake structural reform. Contrary to announcements, the ministry has not been streamlined: in 2017, around 2,500 positions were deemed to represent an "adequate staffing level," yet with approximately 3,000 positions, the ministry is now comparable in size to that of 2012. This development stands in stark contrast to the requirements of an efficient defense organization and ties up resources that are urgently needed for operational tasks.
In addition, tens of thousands of positions are designated for tasks that, according to the Ministry of Defense, are not required in the event of national or alliance defense. The Federal Court of Auditors states: “This scale is unacceptable.” The criticized “leveling of personnel allocation” leads to tasks being assigned to increasingly higher-ranking or better-paid soldiers in order to increase the attractiveness of the positions; nevertheless, many posts remain vacant.
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.
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German Armed Forces transformation with the future model of dual-use logistics: Efficiency through modular approaches
Dual-use logistics as a strategic solution
Modular approach to system transformation
Dual-use logistics offers a strategic solution that can systematically address the structural problems of the German Armed Forces. Instead of investing billions in isolated, often unused systems, the modular design of a dual-use infrastructure enables a gradual, well-considered modernization. The concept is based on designing critical infrastructure elements to meet both military and civilian requirements, thus enabling dual value creation.
The strategic advantage lies in avoiding redundancies and maximizing utilization efficiency. While the German Armed Forces traditionally build separate military logistics systems that are underutilized in peacetime, dual-use logistics enables continuous use and thus a better return on investment. This is particularly relevant given that Germany's role as "Europe's central logistics hub and a crucial hub for NATO" requires a high-performance and resilient transport infrastructure.
Integration of innovation and proven structures
A particularly promising aspect of dual-use logistics is the integration of innovative technologies. The German Armed Forces Cyber Innovation Hub is already successfully working with dual-use solutions developed by young, innovative startups. From the initial idea to a first MVP product and on to testing with soldiers, these projects often take only a few months. The problem, however, is not a lack of innovation, but rather ensuring a sustainable impact within the German Armed Forces due to excessively slow financing and procurement processes.
Examples of successful dual-use innovations demonstrate the potential: “Rollt!” is a digital solution for route and navigation calculation that combines existing logistical planning methods into a single digital tool. “Yarded” digitizes and automates existing processes for deploying heavy military equipment and won the NATO Innovation Challenge. These examples illustrate that dual-use technologies from civilian logistics are currently in a favorable position.
Economic efficiency and strategic autonomy
The economic advantages of dual-use logistics are considerable. Instead of operating separate military and civilian infrastructures in parallel, intelligent networking enables significantly higher capacity utilization and thus greater efficiency. This is particularly important because the Federal Court of Auditors warns that "a sustainable and sound financing of the Federal Republic of Germany's defense capabilities is not guaranteed by a heavily debt-financed and therefore structurally unsustainable budget.".
Dual-use logistics can also contribute to solving the personnel problem. By sharing infrastructure, qualified specialists can be deployed for both civilian and military tasks, increasing efficiency and counteracting the skills shortage. This is particularly relevant because innovative materials like wood, as a "dual-use raw material," can play a key role in both military and civilian logistics.
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Challenges and implementation strategies
Overcoming institutional inertia
The greatest challenge in implementing dual-use logistics lies in overcoming institutional inertia and established structures. The Federal Court of Auditors notes that a comprehensive review of tasks is lacking and that "defense-critical tasks must be distinguished from those of lesser importance." This requires a fundamental shift in the mindset of military leadership and political decision-makers.
A key aspect is accelerating approval processes and adjusting production capacities. The German Federal Association of Wooden Packaging, for example, advocates for accelerating relevant production approval procedures and securing the necessary adjustments to production capacities through the defense budget. This demonstrates that even traditional sectors like wooden packaging can be important components of an efficient dual-use strategy.
Technological integration and standardization
The successful implementation of dual-use logistics requires well-thought-out technological integration and standardization. This applies to both physical infrastructure and digital systems. The EU Dual-Use Regulation (EU) 2021/821 has already established common authorization requirements and procedures for all EU Member States, providing an important basis for cross-border coordination.
Of particular importance is the development of modular, serial, and systemic construction methods that can be implemented quickly. Wood, as a renewable and flexible building material, is especially suitable here. The introduction of a building class "V" for defense or utilities, with reduced technical requirements and systematic, simplified planning, could accelerate implementation.
Financing and risk management
A critical success factor is the development of sustainable financing models that adequately consider both military and civilian users. The German Federal Court of Auditors rightly warns of the risks of uncontrolled spending: “The risks increase with every additional euro spent without oversight.” A dual-use strategy must therefore include clear cost-benefit analyses and performance metrics from the outset.
The challenge lies in ensuring the necessary speed of procurement without abandoning sound economic principles. This requires new procurement models that combine flexibility with control while simultaneously fostering innovation. The Cyber Innovation Hub already demonstrates how commercially available dual-use solutions often require only a few months from the initial idea to testing with soldiers.
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Strategic realignment is the order of the day
The analysis of the Federal Court of Auditors' report in the context of dual-use logistics makes it clear that the German Armed Forces are facing a pivotal decision. Either they continue down the current path of structural waste and organizational inefficiency, or they seize the historic opportunity for a fundamental strategic realignment through intelligent dual-use concepts.
The enormous financial resources from the special fund offer a unique opportunity not only to address military shortcomings but also to build a modern, resilient, and economically sustainable defense infrastructure that strengthens Germany both as a NATO partner and as a European logistics hub. The modular development of dual-use logistics could serve as a strategic starting point for systematically tackling the organizational, personnel, and technological challenges facing the Bundeswehr. Crucially, however, this transformation must be implemented with the necessary strategic vision, economic discipline, and political resolve – only then can the current crisis become an opportunity for a future-proof German defense architecture.
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