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Volume 2008
Main headlines from this issue
Special Report: UK industrial participation in serious decline – MOD blocks enquiries
The number of industrial participation agreements implemented in the UK is in progressive decline. At the current rate it will be terminal within a few years. This is evidence, it seems, of restrictive budget cuts for defence acquisitions and a lack of political will in implementing an IP policy, even during a worsening recession and with unemployment in the defence industry on the rise...
Poland signs a blizzard of offset contracts as the year closes
Poland’s Ministry of Economy signed three offset contracts on December 10, 2008. By the end of the month, the country will have added offset contracts worth ZL1bn ($331m), representing an obligation of 100 percent of supply contract value in each case...
Recession bites into Turkey’s offset-generated defence exports
Turkish defence companies, which rely heavily on offsets for exporting their already limited products, will face a 25 percent decrease in Turkey’s overall exports because of the global financial crisis, say Turkish defence industry sources. This is despite the Turkish currency’s 25 percent decline in value against the dollar since the beginning of September...
Bulgarian industrialists complain “Offset programs are just a delusion” – demand protectionist policy
Chief executives of several Bulgarian defence sector companies have complained that the public procurement procedures of the Bulgarian Defence Ministry were formulated in a way that excludes Bulgarian firms from participating...
Main headlines from this issue
Israel lowers civil offset quota and allocates multipliers – policy “A victory for employment and investment”
Unless it can negotiate a new Government Procurement Agreement (GPA), 2009 will be the last year that Israel may demand industrial cooperation for civil procurements. Israel must also lower its 28 percent quota to just 20 percent with effect from January 1, 2009 for civil acquisitions made from countries that are signatories to the WTO agreement. Civil acquisitions from companies in countries which are not signatories to the GPA will continue at the 35 percent level...
Chinese company to discharge offsets in Israel
The Haifa Port Company, which tried its best to resist the Industrial Cooperation Authority’s imposition of an industrial cooperation commitment in the company’s tender documents for dockside cranes and equipment, has signed the winner - the Chinese company ZMPC - to a 35 percent industrial cooperation agreement...
Poland: Thales offset contract suspended as shipyard faces insolvency
Poland’s Deputy Defence Minister, Zenon Kosiniak-Kamysz, disclosed the shipyard's financial problems have caused the Defence Ministry to delay signing a contract with Thales Nederland for an electronic combat system for a corvette. The contract was understood to be for more than Z600m ($201m). The decision places in jeopardy construction of the first warship in free Poland, estimated to cost Z1.2bn...
Sri Lanka: Tea Association rejects government barter proposal
The Sri Lankan government has spoken of trying to arrange “some kind of barter deal” with major buying countries for its tea, but the Colombo Tea Traders Association (CTTA) warned that such an approach is an outdated concept. \The avenue of barter trade between friendly countries is not available anymore\" the CTTA said in a statement...
"Main headlines from this issue
Australia raises threshold – Industry capability programme working well
Australia has raised its threshold for industrial participation. All tender responses to Australian defence equipment RfP’s worth more than A$50m ($34m) should now include plans that maximise opportunities for local industry where cost-effective. The requirement will be particularly important when adapting existing products to meet Australia’s requirements since local firms will have to provide through-life support. The previous threshold was A$10m but was not a fixed entry level...
New Zealand: MoD must campaign for foreign primes to engage with domestic suppliers
New Zealand’s Defence Industry Committee will be asked to confirm annually that the MoD and its agent, the Industry Capability Network (ICN), have appropriately promoted domestic suppliers’ capabilities to prospective overseas prime contractors...
India: Bell withdraws, citing an impossible offset requirement
Bell Helicopters has withdrawn its bid from the competition for India’s 197 light utility helicopters, citing expected to be implemented under an offset programme, the Ambassador noted...
Offset conference in UAE boycotted
The conference organised by IQPC on Defence Industry Partnerships in the Middle East flopped badly when speakers and delegates apparently boycotted the event. We hear that speakers who had taken exception when asked to pay attendance fees rang delegates to express their displeasure...
Main headlines from this issue
Special Issue: EDA announces code of conduct on offsets “This is a breakthrough decision”
100 PERCENT CAP COVERS NON-SUBSCRIBING MEMBER STATES, INCLUDING THIRD COUNTRIES
The Steering Board of the European Defence Agency (EDA) has agreed a voluntary code of conduct on offsets. The Code is intended to ensure greater transparency, help to shape the European Defence Technological and Industrial Base (EDTIB), and reduce reliance on offsets. Described as “a first step in dealing with a very complex issue,” the EDA’s goal is ultimately the creation of market conditions in which offsets will no longer be needed...
South Korea: DAPA to consider awarding credits for nondefence offsets
South Korea's Defence Acquisition Program Administration (DAPA) may award credits for non-defence products made by registered SMEs. The government is also considering foreign investments made “in the national interest” as another method of indirect offset implementation...
Consensus winds down its offset activities – staff are cut back and re-deployed
If you were ever planning to weep for the masters of the universe, then this would be the moment. The global financial crisis and the shortage of liquidity are taking its toll of the offset service sector. The first company to fall victim is Consensus Business Group (CBG). There are other major players rumoured to be in difficulty...
ECCO or ECHO? An intriguing initiative to involve the global offset community
Offset executives at Areva, the French specialist energy conglomerate, are backing the launch of a European industry group, named ECCO, for the global offset community. An email to several corporations invited comments and suggestions, and gave notice of a meeting to be held at Areva’s premises in Paris on December 17...
Main headlines from this issue
India: “DPP 2008 has been misread” – New light thrown on interpretations
The offset credit banking provisions sanctioned under India's Defence Procurement Procedure 2008 (DPP 2008) have not been well received and are seen as too restrictive, admitted Maj. Gen. Mrinal Suman during an address to a Defence Manufacturers Association (DMA) seminar in London. Many vendors have misread them, he claimed...
Arguments over basic requirements of India’s civil offset policy to be resolved
Inter-ministerial consultations over the terms of India’s future national policy on civil offset have stalled over differences of opinion on at least three crucial features. The policy is intended to cover the entire commercial sector...
British offset and industrial participation associations to merge under joint patronage of DMA and SBAC
The British Industry Offset Group (BIOG) and the Industrial Participation Forum (IP Forum) are planning to merge into a single new industry body that would address all offset and industrial participation matters under the joint management of the Defence Manufacturers Association (DMA) and the Society of British Aerospace Companies (SBAC)...
Brazil: Three remaining contenders for fighters are down to the wire with offsets
Three of the six bidders for Brazil’s F-X2 fighter competition have been eliminated and the focus has now shifted to the offset proposals of the remaining competitors. The Eurofighter Typhoon, Lockheed Martin’s F- 16BR, and Sukhoi’s Su-35 have lost out; Boeing’s F/A- 18E/F Super Hornet, Dassault’s Rafale, and Saab’s Gripen remain in the running...
Main headlines from this issue
French Ambassador expresses concerns at India’s offset procedures
Jerome Bonnafont, the French Ambassador to India, told a Confederation of Indian Industry (CII) seminar that India’s offset policy is too complex to implement, and called on the government to review it...
Romania positive on offsets as new development phase begins
Romania’s Minister of Defence, Teodor Melescanu, told an offset conference at Bucharest’s Parliament House in September that Romania is about to enter a new phase for the development of the armed forces, with offset as an absolutely necessary tool for the expansion of the country’s economy. He underlined the important role offset plays in defence acquisitions by obtaining state of the art technologies and foreign investments...
“Southeast Asia wants the whole gamut of extremely complex offset packages”
Perhaps he was having an off day, or perhaps he was making it up as he went along, but Dr. Richard Blitzinger, Senior Fellow at Singapore’s Rajaratnam School of International Studies, told delegates to a Defence Finance conference in London that Southeast Asian countries want the whole gamut of extremely complex offset packages, and require a great deal more innovation than before. He was referring to Thailand, Malaysia, Singapore and Indonesia...
Publication of the ‘Offset Service Providers Directory’ service providers directory’ is suspended
The global financial crisis has taken its toll of several offset service providers, with some asking to be removed from the CTO’s Offset Service Provider Directory for 2009/10. Inclusion in the directory is subject to payment...
Main headlines from this issue
Special Report: EDA workshop on offset code of conduct splits into two main camps
European Defence Association (EDA) workshop that convened in Brussels this month to discuss the draft Code of Conduct on offsets amongst member states split into two main camps, with Spain surprising those present by taking a position contrary to expectations. It was a closed meeting, and press briefings were not permitted...
Taiwan: Defence companies may now discharge obligations with entirely civil projects
Taiwan is increasingly looking to countries other than America to provide new technologies, and now accepts civil offset solutions for defence acquisitions. Jack Tang, the Industrial Cooperation Programme (ICP) Program Director, told CTO the ICP is expected to recommend an increase in indirect offset projects to support local industries...
US-Taiwan business council petitions USTR to relax on Taiwan
The US-Taiwan Business Council has written to Jennifer Choe Groves, the Director for Intellectual Property and Innovation for the Office of the US Trade Representative (USTR), supporting the removal of Taiwan from the USTR Special 301 Watch List. The Special 301 annual review examines in detail the adequacy and effectiveness of intellectual property rights protection in 87 countries and classifies countries accordingly...
South Korea: DAPA presses for Co-Development and export licenses
Defence Administration Program Administration (DAPA) Deputy Chief, Kim Jong-min, called on the head of France’s General Delegation for Ordnance to discuss ways to improve the countries' cooperative relationship and to request that France simplify its export authorization process to help Korea export to third parties the defence goods it builds with French technology, DAPA said in a press release...
Main headlines from this issue
Russia surrenders to India’s offset therapy
The eighth meeting of the India-Russia working group on shipbuilding, aviation and land systems was held last month and discussed issues relating to offset arrangements in various armament deals contracted between the two countries. Indian negotiators expressed concern that Russia has so far declined to engage with the concept of offset even though Russian arms sales to India have amounted to more than $5bn over the past five years.
India: Government to “Strike a balance” as union opposition mounts against private sector defence production
Predictably, India’s trades unions are threatening to frustrate the MoD’s decision to lift restraints on India’s private sector and allow private companies to compete for work with Defence Public Sector Undertakings (DPSUs).
Poland to agree alternative projects with obligors
Poland’s Economy Ministry has reported to the Council of Ministers that offset projects implemented in 2007 were worth $700m. Most of them were attributable to Lockheed Martin.
Lockheed secures global servicing facility with offset potential
Lockheed Martin has awarded MAG Maintenance Technologies a broad-reaching purchasing agreement that covers global service and support of manufacturing equipment at major Lockheed locations around the world.
Main headlines from this issue
“MAN Ferrostaal bribed Thabo Mbeki, Jacob Zuma, and the ANC” Newspaper goes for the kill in “Offset con”
President Thabo Mbeki is threatening legal action against South Africa’s Sunday Times after the newspaper published agonizingly detailed allegations of corruption concerning the German conglomerate MAN Ferrostaal and the country's submarine contract. The newspaper claims that there has been what it calls “an offset con.\...
"India: “DPP 2008 fails to clarify technology policy
Deba R. Mohanty, Senior Fellow for Security Studies at the Observer Research Foundation, a New Delhi-based think tank, said Indian industry would remain backward in gaining technology unless the government clearly spells out its policy on technology transfer. \I don't think the latest DPP has thrown clarity on this\" he said...
"Saab’s ‘Improved’ offset offer to Norway is 20% lower than before
Saab's apparently generous offer to Norway in connection with its Gripen project might not be as big-hearted as it appears. \TodayI can state that Saab and the Norwegian business community have identified collaboration projects to such an extent that we can now increase our commitment regarding industrial collaboration projects to at least 180 percent [by way] of the offset value over a period of ten to fifteen years\" promised Ake Svensson CEO and President of Saab. \"Our discussions will continue.\"...
"Gripen completes Hungarian obligations early and to mutual satisfaction
Hungary’s Ministry of Economy and Transport has signed off the final offset achievements submitted by the Saab/Gripen team. The Gripen obligation in Hungary has now been completed. The total value of the offsets delivered is 7419m SEK ($45.5m), a company statement declared...
Main headlines from this issue
Business plan brings sweeping changes to Kuwait’s national offset company
Kuwait’s National Offset Company (NOC) is refreshing its code of practice. The business plan is calculated to have a positive influence on offset programs, particularly the civil infrastructure sector. Special attention will be given to technology transfer and the creation of job opportunities, training, and educational services for Kuwaiti citizens. The changes envisage the company playing a much larger role in the country’s economy...
DPP 2008 is revolutionary for India, A missed opportunity for contractors
Defence Minister A. K. Antony was clearly in his element. Announcing the release of the Defence Procurement Procedure document for 2008 (DPP 2008) on August 1, he practically declared a revolution. “We are doing away with the licence raj,” he proclaimed...
India: Trade unions unite to protect state sector against RURs
The MoD is facing stiff resistance from a number of significant trades unions to plans to allow private sector participation in defence programs. The unions are supported by the powerful Indian National Trade Union Congress and are determined to protect state industries.
Israel helps Kazakhstan develop and indigenous defence industry
With the assistance of Israeli defence companies Israel Military Industries (IMI), Soltam, and Elbit, Kazakhstan’s Ministry of Defence is developing an indigenous defence industry to manufacture three modern artillery systems at its Petropavlovsk PZTM industrial complex to equip the Kazakh army.
Main headlines from this issue
India: It’s time to end the leaks and reveal the real DPP 2008
India’s Defence Procurement Procedure (DPP) 2008 policy document currently lies between life and death. It has lingered in that condition throughout 2008. Now we are officially told, the release date is August 1. It MAY not happen...
Algeria moves towards a formal industrial cooperation policy
Algeria, with plenty of petrodollars on hand, is on a spending spree but is insisting that each big contract it awards be accompanied by an industrial cooperation project. The consequence is drawn-out negotiations that are adding years to the consultation periods, and to the negotiators...
European parliament fires a rocket as tanker re-bid gets under way
Defence Secretary Robert Gates has infuriated members of the European Parliament by throwing out the winning bid to replace the Air Force's refuelling tankers...
Poland looks again at enforcing its offset policy
Hubert Krolikowski, Director of Poland’s Offset Program at the Ministry of Economy and Labour, is to appoint a team to establish new strategies to ensure that offset programs realise their objectives more effectively. The team will pay special attention to technology transfer and access to technology...
Main headlines from this issue
Special Report: Swiss offset audit denounces ‘false hopes and expectations’
An exceedingly contentious report on Switzerland's industrial participation and offset process has detonated a political uproar in the country. The 100-page document was prepared by the Swiss Audit Authority following a six-month probe of Armasuisse, the body responsible for administering Switzerland's offset policy. After the report's presentation to Parliament’s Security Commission last September, the Commission decided not to allow publication. The report has now been leaked. Armasuisse has written a 7-page riposte to the Audit Authority denouncing many of its findings...
South Africa: Saab issues shares worh $12.3m to comply with BEE requirement
Saab has concluded a Black Economic Empowerment transaction with Imbani Amandaba, a 100 percent black-owned company whose members consist of investors from historically disadvantaged groups. The consortium has subscribed for 25 per cent plus 1 share in Saab Grintek Defence. The transaction involves the issue of new shares to the consortium at a value of R95m ($12.3m)...
South Africa’s corvette inquiry “Corruption took place at the offset level”
The Dusseldorf public prosecutor's office has closed its investigation into whether former employees of Thyssen Krupp had paid bribes to South Africans in connection with the sale of four corvettes to the South African navy...
Poland: MoE to retain management of offset program, not the MoD
Domestic press reports advising that Poland’s MoD intends to set up a new department for industrial cooperation next year to be handled by a branch of the Armaments Agency have confused the industry. The Ministry of Economy, which administers Poland’s offset policy, is recognized as having a strained relationship with the MoD...