CTO Newsletter

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...

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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...

Main headlines from this issue

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...

Main headlines from this issue

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...