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Volume 2012
Main headlines from this issue
Kuwait’s NOC: Reem takes charge – new GM to be named
In the latest of a series of developments at Kuwait’s National Offset Company Reem Al-Khudur has been appointed to head a newly established committee to oversee projects. She replaces Abdullrahmin Al Ibrahim. Mr Al Ibrahim remains a committee member. They both carry on as Assistant General Managers.
EC says no to Izmir offset conference – offset Czars stay away – but record turnout likely
The European Commission on May 4 informed GOCA/ADS that it would not be represented on a panel at the Izmir conference to discuss the EU Stance on Offset, citing other commitments. The Commission was invited last December and has been chased for a response ever since. The Global Industrial Cooperation Conference (GICC) takes place from May 20.
South Africa: new focus on directs and revised multipliers
–battle ahead over “actual performance” of previously awarded credits
South Africa’s DTI has provided Parliament with a detailed report on arms deal offsets under the National Industrial Participation Programme (NIPP).
THE DIRECTIVE: UK’s TURN FOR AN EU MISSIVE
The European Commission has warned the UK that it must transpose the Directive's provisions with regard to Gibraltar.
Italian corruption inquiry leads to Indian offset “slush fund”
A consultant whose offices in Switzerland were raided last month by Italian authorities as part of a probe into corruption in a helicopter deal with India is an offsets service provider who has been very active in the Indian defence sector.
Main headlines from this issue
Kuwait: Leadership crisis at NOC General Manager dismissed, questions raised in Parliament
Abdullah Ghaith Al-Mutawaa has been removed from his post as General Manager of Kuwait’s National Offset Company, triggering a debate in Parliament and leaving the NOC functioning by committee, for a time with no-one in charge. After the parliamentary hearing a Committee Chairman was appointed by the Board of Directors.
India: National Offset Policy faces strong resistance
An ambitious plan by the government of India to consolidate all major civil and defence imports and leverage them through mandatory offsets may not take off thanks to strong opposition from several ministries and the Planning Commission.
European Union keen to invoke ‘Juste Retour’
A draft regulation, issued by the European Commission will allow EU public bodies to exclude certain bids from outside the EU where such tenders comprise a significant element of non-EU goods and services.
Japan pays for Defence Department study into component manufacture in Japan
Studies led by the Defence Department and two Joint Strike Fighter contractors will outline options for Japanese companies to manufacture components and play a role in assembling F-35 aircraft.
Canada: Auditor-General finds fault with IRB promises for F-35
Two years after Canada’s Department of National Defence pressured other departments to back the F-35 programme by warning that $15.4bn in regional spinoffs could be lost if there were any delays, criticism of the industrial regional benefits are addressed in a hard-hitting report by the Auditor-General.
Main headlines from this issue
India’s revised offset policy released –FDI increase ruled out
The only positive statements made at India’s DEFEXPO summit were entirely negative. The 26 percent FDI cap would not be raised, and the revised offset regulations were not ready. A poorly attended seminar discussed procurement procedures and offsets; little was new and the event fizzled. DEFEXPO closed, everyone went home — then Defence Minister A.K. Antony announced the changes.....
Bulgaria and Luxembourg formally warned to transpose directive 2009/81/EC
The European Commission has acted to ensure that Bulgaria and Luxembourg comply with their obligations to implement EU rules on defence procurement. They join Germany and the Netherlands, who faced infringement proceedings served on January 26th.
Czech Republic to transfer offset administration to MOD
The Czech government is set to transfer responsibility for the management of future offset contracts from the Ministry of Industry and Trade (MIT) to the MoD. The guidelines will be scrapped and all offset negotiations between the MoD and defence contractors will take place on a case-by-case basis.....
It’s witchcraft – South Africa’s formula for arriving at job creation
The government said 16,917 direct jobs and 33,834 indirect jobs had been created through the NIPP programme. Analysts soon twigged that an entirely theoretical factor of two had provided the government with exactly 16,917 direct jobs.
PPP in Asia: How to resolve infrastructure problems
According to DLA Piper, a global law firm, economic growth in Asia has created an enormous demand for financing solutions for economic and social infrastructure projects in the region.....
Main headlines from this issue
DAPA: “We will blacklist Eurocopter”
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South Korea’s DAPA is threatening to blacklist Eurocopter. The company says DAPA is refusing to close an offset agreement for a follow-through purchase under the KHDP. A senior DAPA source told CTO: “We are so upset with them we are taking steps to possibly bar them from all arms procurement.”
"Italy’s post-directive policy is emerging
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Italy’s industrial participation policy remains under review pending changes to comply with Directive 2009/81/EC. We are told it will be several months before they are ready. Some details however are already emerging.....
"Slovenia prepares new guidelines – multipliers are both up and down
Slovenia’s Ministry of Economic Affairs has submitted new draft offset guidelines for approval by the National Assembly...
Nigeria to base ‘industrial partnership’ policy on the South African model
Foreign companies benefiting from lucrative public sector contracts and the nation’s massive market will have to start setting up factories to manufacture some equipment in Nigeria.
Main headlines from this issue
India: Offset agency quarrels and policy rumours create usual confusion
Internal disagreements are delaying the Indian MoD’s revisions to the country’s offset policy. The Acquisition Wing and the Department of Defence Production (DDP) are arguing over which agency should hold exclusive responsibility for the offsets.
Korea revisits its offset regulations
DAPA has updated the country’s offset regulations. The new policy reflects a more discretionary approach to the offset quota for government-to-government (G2G) defence contracts, adjusts the rules on credit banking, and introduces swaps as an acceptable practice.
Study of Egypt’s military programme exposes an underrated industrial participation policy
Despite their increased costs Egypt’s co-production agreements and technology transfers may be intensifying under the leadership of an interim military government, says an academic study of the Egyptian military.
Sinking feeling as Daewoo’s British shipbuilding contract makes waves
Britain’s Royal Navy is to award a £452m contract to South Korea’s Daewoo Shipbuilding and Marine Engineering to build four tankers. UK companies will benefit from £150m of associated contracts, equivalent to 33 percent of purchase contract value.
Swiss prepare to negotiate 100 percent offset benefits for Gripen procurement
With the selection of Saab settled as the preferred bidder for the Swiss multirole fighter, attention is now focused on two principle issues: how to finance the Sfr3.1bn ($3.4bn) Gripen E/F procurement; and determining the reciprocal benefits.
Main headlines from this issue
Biggest collapse in offset values since 2005
The 16th Annual Report to Congress on the Impact of Offsets in Defence Trade reveals a titanic decline in both the number and value of offset contracts with U.S. contractors during 2010. The fall in direct offset transactions has continued but the number of indirect transactions is......
As the EU hates offsets, the U.S. no longer cares
The most notable aspect of the 16th Annual Report to Congress, says Joel Johnson, the Teal Group’s Executive Director International, is what’s missing: an American politician out to attack the practice……As for the EU: “There is no such thing as an independent defence industrial base.”
South Africa to launch new NIPP programme
South Africa’s Department of Trade and Industry is undertaking a major review of its National Industrial Participation Programme (NIPP). The government wants to amend the scheme to ensure obligations are discharged in the same sector as the contract.
European Court of Justice rules out dual use under Article 346
The Advocate General at the European Union Court of Justice has found that derogation from the public procurement rules based on national defence cannot apply to items which, although they are to be used for a specific military purpose, are no different from similar items used in the civilian sector.
Transparency International finds the industry less than willing to talk
Transparency International (UK) has produced a report reviewing the corruption risk associated with defence offset programmes…. TI calls on industry associations to be more proactive.
Main headlines from this issue
Britain’s new industrial participation policy protects SMEs and sets $1.6m threshold
The UK will invite bidders for prime contracts over £1m ($1.6m) in value, where it is reasonable to do so, to identify the volume of work they intend to sub-contract to SMEs. The MoD will ask primes to advise on the steps they will take to increase SME participation in the supply chain for government contracts.
Norway carries on implementing its offset regulations – and the EC can do nothing
Norway will transpose Directive 2009/81/EC into national law, but in its own good time and not at the behest of the European Commission. Offsets are continuing to be demanded under the prevailing regulations and the EC is powerless to intervene.
EC threatens Netherlands and Germany
The EC has written to the German and Dutch governments warning them that if they fail to comply with Directive 2009/81/EC within two months they may face fines. An EC spokesperson told CTO that neither country had shown any initiative so far, whereas the other non-compliant member states have at least shown a willingness to transpose the directive.
South Africa: “Cancel the contracts, return the warships and warplanes”
The activist whose crusade against corruption in South Africa’s arms procurement program in the 1990s has brought about the Commission of Inquiry, may move to have the entire arms deal repudiated and declared \unfixable.\"
"India: MoD scuppers CII/ADS Defexpo offset conference
A dithering MoD finally roused itself sufficiently in late January to pull a surprise out of the hat. It appointed the Federation of Indian Chambers of Commerce and Industry (FIICI) instead of the Confederation of Indian Industry (CII) as the Defexpo organiser.
Main headlines from this issue
Hungary responds to the Directive with a ‘Specific Unique Procedure’
Hungary is hoping that it has found a way around the problem of Directive 2009/81/EC. The government has changed its procurement decree by abolishing the clause about offsets and establishing a ‘Specific Unique Procedure'.....
Bulgaria’s new offset rules takes shape – pre-offsets remain welcome!
While Hungary tries to skip around the EU Directive, Bulgaria’s parliament is introducing changes to the Public Procurement Law to transpose its requirements into the law.
Malaysia: ‘MIGHT’ awarded ISO certification for services to offset and countertrade
The Malaysian Industry Government Group for High Technology (MIGHT) has been awarded SIRIM’s stamp of approval for its countertrade and offset program. SIRIM oversees International Standardisation Organisation certification for Malaysia.
South Africa: “Bogus multiplier” drags Agusta Westland into new offset scandal
South Africa’s Priority Crime Investigation unit (the Hawks) has opened an investigation into a new $74m arms deal scandal in which an \extraordinarily high multiplier\" was allegedly used by the DTI to credit Agusta Westland Helicopters.
"Czech Republic surrenders to EC diktat – case closed
The European Commission has closed the case against the Czech Republic for breaching EU public procurement rules. The Czech Republic has confirmed that contracting authorities will in future limit the use of the derogation from public procurement procedures for military purchases (Article 346 TFEU) to.....
Main headlines from this issue
Portugal: “General Dynamics / Steyr in blatant breach of offset obligation — our MOD doesn’t care”
A Portuguese producer of armoured vehicles, Fabrequipa, has written to Defence Minister Jose Pedro Aguiar-Branco alleging that General Dynamics’ Austrian subsidiary, Steyr, is in \clear and blatant breach\" of its offset agreement.
"Malaysia picks up offset, battles to work it
As Europe distances itself from civil offsets, Malaysia is moving steadily in the other direction. The country’s national offsets policy is focused on defence and on civil offsets, with all ministries asked to engage in the process. But delivering real benefits has not been straightforward....
Poland declares its hand – EC declares its indignation
Poland, which has been leading a delicate rearguard action against the demands of Directive 2009/81/EC, continues to tease out legislative proposals that the EC are likely to find objectionable.
Finland is revising legislation, but offsets will continue
Henrik Raiha, Director, Ministry of Employment and the Economy and Secretary of the Finnish Committee on Industrial Participation, said that Finland has not been asking for offsets since August 21, 2011, when Directive 2009/81/EC came into force. “But we certainly will be.”
Japan’s F-35 procurement and relaxation of the export ban signals new chapter in industrial participation
Japan’s selection of Lockheed Martin F-35s will begin a new chapter in Lockheed’s long-standing partnership with Japanese industry.
Volume 2011
Main headlines from this issue
Seventeen EU member states to receive final warning in January to transpose Directive; court beckons.
Only one third of EU Member States have so far transposed Directive 2009/81/EC into their legislation, more than four months after the August 21st deadline has passed.....
EDA’s advice on Article 346 is conspicuously unreciprocated by EC – rift opens
The EC has, in effect, rebuffed the advice given by the EDA’s Senior Officer for Industry and Market to Member States searching for a way to continue to ask for offsets.
“Greece was blackmailed into transposing the Directive”
Dr. Athanasios Potsis, Epicos’s Senior Manager for Industrial Cooperation, questioned the EC’s right to oblige his country to bring in the directive as part of the financial support package given to Greece.
GPA gives Israel given 16 years to phase out civil offsets
New terms agreed under the WTO’s Agreement on Government Procurement (GPA) have given Israel more than sixteen years to phase out its civil offset program and domestic content requirements.
Burkard Schmitt: “EDA Code of Conduct on Offsets is Irrelevant”
There is only one “at least theoretical possibility” to justify offsets, and that is under Article 346....
Main headlines from this issue
Azerbaijan goes global in search for industrial participation partners
Azerbaijan has announced the establishment of a military industrial complex to reduce dependence upon foreign military procurement. The country, whose defence industry was founded only in 2005, has also produced an informal policy that requires many basic defence procurements to demand domestic industrial participation.
India amends DPP 2011 – permits tier-1 discharge of offsets
.....The revision does not address the position with regard to earlier procurements or clarify whether the MMRCA program will qualify.
British MP rages at BAE’s decision to transfer Hawk production to India
A government MP has heavily criticised BAE Systems in the House of Commons. The company had announced that 3,000 jobs would be lost and a historic Hawk jet manufacturing plant would be closed because production in Britain was moving to India.
Algeria’s experiment with reciprocal investment may be short-lived
Tender documents issued by Algeria’s Ministry of Energy make some big demands but offer little in the way of detail. The tender obliges contractors to invest in Algeria by up to 20 percent of the value of the purchase contract…
Court backs Philippines government in Manila airport terminal BOT dispute
The losing party in a legal dispute to operate Terminal 3 at Manila’s airport is looking into other options after experiencing a setback, an official said.