CTO Newsletter

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...

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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...

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S. Korea publishes 2008 guidelines – “Past offset performances to comply with revised guidelines”

South Korea's Defence Acquisition Program Administration (DAPA) has released the country's revised defence offset program guidelines. The guidelines are backdated to January 24, 2008, even though they were only published this month...

Franco-Spanish industrial co-operation for UAVs

Indra Sistemas, a leading Spanish Information Technology and Defence Systems company, has signed an industrial cooperation agreement covering Unmanned Aerial Vehicle Medium-Altitude Long-Endurance (MALE UAV) activities with Dassault Aviation and Thales...

Transparency International gets worked up over “Sleazy Offsets”

In an unusual diversion for an offset conference, Mark Pyman, Transparency International’s Defence
Anti-Corruption Program Director, told the recently-held global industrial cooperation event in Seville that most of the action happens long after the contract award, when press and media scrutiny has long since moved on...

S. Korea sponsors intellectual commodity barters

South Korea’s Ministry of Knowledge Economy said that three countries were being considered for an ‘information-technology-for-natural-resources’ development deal. The countries were not identified. \Local companies can provide these countries with know-how and equipment to set up e-government infrastructures and automated systems to better control such administrative processes as public procurement and customs\" said an official. In exchange for such services foreign countries could give South Korean firms development rights to natural resources...

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Tortuous demands of the Greek offset regulations “cost contractors nothing”

Greece’s dystopian policy on offsets is possibly the most convoluted and detailed of any country. Interpreting the guidelines is not straightforward and opportunities for public debate with ministry officials who administer the policy are exceptional. The Global Industrial Co-operation Conference in Seville provided one rare chance...

Saudi Arabia sets a threshold

Saudi Arabia’s MoD has for the first time determined a threshold above which offsets will be required when military equipment is purchased. It is set at SR 400m ($107m). Previously the threshold was decided on a case-by-case basis.

Kuwait: Balance shifting towards civil offsets

Mazen Madooh, Managing Director of Kuwait’s National Offset Company (NOC), said that the NOC is changing the way it is implementing projects. The NOC is accelerating the process of issuing licenses and government approvals for projects and is providing sector and project studies, and marketing surveys...

Kuwait approves offset fund managed by leading regional investment bank

NBK Capital, a leading regional investment bank, has established a fund focused on investing in private equity opportunities in Kuwait...

Main headlines from this issue

GOCA / DMA duet is three times a winner!

The third biennial Global Industrial Co-operation Conference produced by America’s Global Offset & Countertrade Association (GOCA) and Britain’s Defence Manufacturers Association (DMA), drew about 300 delegates to the Spanish city of Seville - a strong turnout for a location that isn’t the easiest to reach...

India set to present ‘Across the board’ civil offset policy

India’s future national policy on civil offset will address high-value government purchases that stretch beyond aerospace and cover the entire commercial sector. The threshold at which the government will demand offsets has been agreed in principle but is not yet ready for public disclosure. Obligors will have a free choice in their discharge of commitments; they may partner any company, public or private...

Portugal: Offset is at the heart of economic policy

The Portuguese government has decided that the Permanent Commission on Offsets (CPC) should take a more robust approach to industrial cooperation. “We want now to put the offset policy in the centre of the economy and use offsets as a true and credible instrument of public policy, bringing new capabilities to Portuguese defence-related and other hi-tech industries,” said Pedro Catarino, the CPC’s President...

South Africa: NIP guidelines to be consistent with supplier development policy

Sipho Zikode, Chief Director for IP at South Africa’s Department of Trade and Industry (DTI), killed speculation that the National Industrial Participation (NIP) would transit into the Supplier Development Policy(SDP), a new initiative soon to be introduced. “We will continue with the non-defence NIP programs”, he said emphatically...

Main headlines from this issue

Slovak Atlantic Commission Offset Report

Slovakia: \We should have used offset earlier...but won't use it to save ailing companies\"

Slovakia’s Defence Minister Jaroslav Baška has told an offset conference in Bratislava that he regrets his country’s previous failure to demand offsets. The practice ensures that resources are recovered allowing the country to “regain the originally invested value” he noted...

EDA’s Ulf Hammarström: “Use offsets in a more intelligent way”

Ulf Hammarstrom, the European Defence Agency’s (EDA) Director for Defence Industry and Markets, told conference delegates in Bratislava that the debate today is not about the future existence of offsets; it is about using offsets in a more intelligent way. Europe needs a more coherent defence policy and a more coherent defence industrial policy, “and we can’t afford the fragmentation that we have.”

MOKYS – How BAE tempted Slovakia with forbidden fruit

The acquisition of the MOKYS mobile communication system from BAE Systems has been the largest military tender ever given by the Slovakian government to a private company. The estimated value is nearly SKK 7,500m ($360m) and should be implemented within nine years. The offsets comprise 30 percent direct and 70 percent indirect...

China undermines Russia’s arms exports by copying SU-27 jet fighters

Beijing is using Russian technology to boost arms exports on a global scale, while Moscow's efforts to control the Chinese arms market through technology transfers have proved futile. Under a 1996 contract, Beijing received Russian technology for assembling Sukhoi Su-27 Flanker fighters, but subsequently violated the contract, mastered production of the Su-27's J-11 equivalents, and started exporting them to developing countries, according to Russia’s Nezavisimaya Gazeta...

Main headlines from this issue

The difference between the GOCA and EPICOS matchmaking services revealed…Almost

The Washington DC-based Global Offset and Countertrade Association (GOCA) is talking with a number of global defence trade associations about providing their members with complimentary access to GOCA’s offset match-making service. An agreement would make the service a truly international resource...

India: 50 percent offset requirement becoming normal as helicopter RFP is approved

India’s RfP for 384 light helicopters will have an offset clause requiring foreign vendors to provide benefits worth 50 percent of the value of the contract. The procurement is estimated to cost about $1.6bn...

Belgian technology transfer for Malaysia’s Agusta program

Malaysia is to involve domestic firms NAR Aviation Sdn. Bhd. for weapons integration into the army’s fleet of Agusta-Westland A109H aircraft. SME Ordnance Sdn. Bhd. is to manufacture rockets with the assistance from FZ Belgium...

Macedonia wants benefits from APV purchase

The Macedonian Defence Ministry is negotiating with manufacturers for the supply of 33 armoured patrol vehicles. The ministry has indicated that investment in a domestic production facility could decide the competition. Macedonia has an offset/countertrade requirement for 100 percent of supply contract value...

Denmark: Heated debate as DECA outlines its new policy

About 100 people were invited to a seminar on industrial participation in Copenhagen in April hosted by the Danish Enterprise and Construction Authority (DECA). Sparks flew when the question of project definition was raised...

Main headlines from this issue

“Jordan is fortunate in having no offset agreements”

Jordan’s King Abdullah II Design and Development Bureau (KADDB) does not have access to offset agreements and, it seems, doesn’t want any. The KADDB, which reports directly to the King of Jordan, provides scientific and technical services to the Jordanian Armed Forces, and aims to help the country create a sustainable industrial base to complement civilian applications of defence technology...

US Interagency team’s lack of progress report

The US Department of Defence’s Inter-Agency Working Group (IaWG) suggested in its 2007 annual report that further discussions on offsets will be forthcoming. No talks have been held this year and none have been arranged so far. The group consults with foreign nations on ‘Limiting the Adverse Effects of Offsets in Defence Procurement.’...

Three-pronged offensive to boost India’s defence sector

India’s Associated Chambers of Commerce and Industry (Assocham) has demanded that the Defence Offsets Facilitation Agency (DOFA) be empowered as a regulator for armament purchases. It’s also calling for DOFA, which works under the patronage of the Defence Ministry, to be expanded to include leading members of Indian industry.

Britain agrees that offsets should be dropped

Britain’s Secretary of State for Defence, Des Browne, declared that the government agrees that offsets can distort the functioning of markets and therefore should ultimately be dispensed with. Then he back-tracked...

Main headlines from this issue

Colombia furious with contractors who disclose multipliers

Multipliers have led to multiple problems for contractors negotiating offset commitments with Colombia. Some contractors, we are reliably informed, have exchanged information — and found that different integers have been agreed with different contractors for similar benefits...

Ukrainian offset guidelines still in development

The Ukrainian Defence Ministry views the introduction of offsets as an important step for attracting foreign investment for rearming the country’s armed forces and is developing a suitable policy, Defence Minister Yuriy Yekhanurov told a discussion group in Kiev on the use of offset transactions...

SABIC seeks expansion through barter

An Economist Intelligence Unit report states that the Saudi Basic Industries Corporation (SABIC), a global manufacturer and supplier of chemicals, fertilizers, plastics and metals, has in the past arranged petrochemicals-for-rice deals. The company may be open to other similar arrangements as it seeks to expand its market position in Southeast Asia, Africa, and the states of the former Soviet Union. The use of countertrade, which conforms with Islamic finance practice, is likely to increase, the report says...

BAE to set up assembly line in southwest Saudi Arabia

BAE Systems is in advanced talks with a Saudi firm about building an assembly line for 48 Eurofighter Typhoons in Saudi Arabia following the Saudi Air Force’s declared intention to purchase 72 Typhoon aircraft for at least 4.43bn pounds...

Main headlines from this issue

Slovakia airs new offset rules

Details of Slovakia’s new principles for implementing offsets were premiered at the SMi conference on Offsets in Central and Eastern Europe last month. The Slovakian government approved the new approach in December 2007...

Hungary thinks ‘Quality and group dynamics’ for the years ahead

Hungary is seriously thinking of eliminating the concept of net and gross offset. While no decision has yet been taken, Dr. Sándor Szabó, Offset Director at Hungary’s Ministry of Economy and Transport (MET), signalled that guideline changes are expected soon. Discussions have still to take place on the details...

Czech Republic rejects preoffsets and declares new objectives

The Czech Republic has not experienced much success with pre-offset activity and there is a view within the Offset Committee that these transactions should be abandoned...

Bulgaria: The role of Saitc in offset deals – and other confusing matters

The Bulgarian government has established a permanent Inter-ministerial Council of Special-Purpose Public Procurements (ICSPOA) at deputy minister level to approve offset projects and agreements...

Main headlines from this issue

EDA may see regional approach as offset solution

Regionality may form part of the European Defence Agency’s (EDA) answer to the sensitive question of whether member states should be able to continue to ask for offsets...

Poland reminds delegates of recent technical adjustments to regulations

?ukasz Kaniuka, Main Specialist in the Polish Ministry of Economy’s Department of Offset Programs, alerted conference delegates to some recent policy fine-tuning. Previously, the offset contract had to be concluded within 60 days of the foreign contractor signing the supply contract...

Polish industry would not survive without offsets

Jan Dolaniecki, Manager of the Offset Bureau for the Bumar Group told conference delegates that about 4,000 jobs have been saved as a result of Poland’s offset program, and perhaps some new jobs have been created too. What is lacking though, he said, is the commitment of obligors to provide for the development of Polish science projects through participation in joint R&D programs. Recommendations will be made to the Ministry of Economy to address this need in future amendments to the offset guidelines...

Lockheed has an easy ride – Beneficiaries reminded they will receive $6BN in benefits, not cash

Stan Ramirez, Deputy Director of Lockheed Martin Aeronautics’ Poland Offset Program, is accustomed to a highly critical domestic press. Ramirez reminded delegates that $6bn in offset economic benefits do not come in the form of cash. Moreover, if you divide those benefits over a ten-year period the impact of $600m a year on an economy is really not that great...

Main headlines from this issue

Canada in high spirits over dual focus of Lockheed benefits

The Canadian government’s contract with Lockheed Martin for the supply of seventeen C-130J Hercules aircraft, worth about $1.4bn, imposes on Lockheed two very different sets of obligations...

Poland: Audit team to examine F-16 offsets

Poland’s Supreme Board of Inspection (NIK) is to investigate the completion of the offset obligations connected to the purchase of F-16 fighters.

Greek equation will regulate evaluation procedure

An equation to be used for the evaluation of the best Greek Industrial Participation (GIP), Greek Added
Value (GAV), financing terms, life cycle cost, and offset benefits tendered by prime contractors has been
submitted by the Greek MoD for approval by Parliament...

Czech Republic: Patria offers to undertake Steyr’s offest pledges

Finland’s Patria is prepared both to supply armoured personnel carriers (APCs) to the Czech military and to undertake the offset programmes that were part of the original contract with Steyr, said Filip Rybin, Patria’s representative in the Czech Republic...