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It seems a mix of things.

Partly it’s because funding tends to be short term for various reasons. This means that it’s difficult to convince private industry to make the investment required to ensure supply. Private industry doesn’t want to outlay tens or hundreds of millions of € setting up a factory because without a guarantee of on-going sales over decades then private industry runs the risk of “holding the bag” and outlaying that investment only to discover the next purchase order didn’t get approved meaning all that investment was for nothing.

This has two critical effects, one being that they just don’t make these investments which means stuff that does get made is more “custom” or boutique and not usually mass produced so doesn’t benefit from economies of scale. Secondly it means they want to recoup their investment immediately (MIC gotta feed) so instead of amortizing their profit over a run of hundreds or thousands of units, they want to recoup immediately which means charging exorbitant prices up front (or rather, even more exorbitant prices than your run of the mill western MIC.)

Another problem is a lack of suppliers or suppliers operating in what amount to cartels so you get the usual price gouging.

Another problem is that no one important ever gets fired for a project running decades late and billions over budget but they will get punished if things aren’t done by the book. So the incentives aren’t there for leadership to actually seek efficiency. There’s little upside in actually being on time or on budget and there’s no important downside to being over budget and behind schedule.

Another problem is the frequent German mindset when making a plan, that you stick to the plan, and if you have to change the plan then that means the plan was bad which means you were bad.

There’s also the nato mindset that believes great power wars can be won with small highly elite forces with excellent toys so there is an emphasis on quality and an intentional disregard for quantity, a focus on wunderwaffe and small elite units, a concept which is literally being demolished in Ukraine right now. The focus was always on having several hundred extremely good tanks instead of thousands of good tanks or on expensive fancy smart bombs rather than small arms and artillery shells.

It’s almost as though they are still thinking in terms of being tiny Prussia needing to win short decisive wars. An political aversion to fighting a big violent war (understandable) has lead to blinkered thinking. Since they don’t want to fight a big violent war, they didn’t equip for one and so instead equipped themselves for a short sharp and decisive war, basically out of wishful thinking or some kind of psychological aversion - although I hope they’re right that a big violent war doesn’t happen nonetheless they’re in a position of extreme vulnerability by allowing this aversion to mean they simply aren’t prepared for a big violent war.

There’s also the pacifist movement in Germany which has always been strong, although unfortunately weakening greatly in recent decades. This meant it was simply uncomfortable to have a big powerful army so the compromise was to focus on a small elite force.