NEW Offset Reporting Template.xlsx

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Overview

Cover Page
Table of Contents
General Instructions
Reported Offset Agreements
Reported Offset Transactions
Definitions

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Sheet 1: Cover Page

OMB Control Number: 0694-0084

Revision Number: March 2024

REPORTING ON OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS

REPORTING ON OFFSETS IS REQUIRED BY LAW

A response to this data inquiry is required by law (50 USC § 4568). Willful violation of the provisions of section 705 of the Defense Production Act of 1950, as amended, and related statutes or this part is a crime and upon conviction, a person may be punished by fine or imprisonment, or both as provided in section 705 of the Defense Production Act of 1950, as amended. The Government may seek an injunction from a court of appropriate jurisdiction to prohibit the continuance of any violation of, or to enforce compliance with, the Defense Production Act of 1950, as amended, and this regulation. The information will be protected pursuant to the appropriate exemptions from disclosure under the Freedom of Information Act (FOIA), should it be the subject of a FOIA request.

BURDEN ESTIMATE AND REQUEST FOR COMMENT

A Federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a penalty for failure to comply with an information collection subject to the requirements of the Paperwork Reduction Act of 1995 unless the information collection has a currently valid OMB Control Number. The approved OMB Control Number for this information collection is 0694-0084. Without this approval, we could not conduct this information collection. Public reporting for this information collection is estimated to be approximately 15 hours per response, including the time for reviewing instructions, searching existing data sources, gathering, and maintaining the data needed, and completing and reviewing the information collection.  Send comments regarding this burden estimate or any other aspect of this information collection, including suggestions for reducing this burden to the U.S. Department of Commerce, Bureau of Industry and Security, Room 2099, Washington, D.C. 20230.

BUSINESS CONFIDENTIAL - Per Section 723(c) of the Defense Production Act

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Sheet 2: Table of Contents

Table of Contents
I	Cover Page
II	Table of Contents
III	General Instructions
1	Reported Offset Agreements
2	Reported Offset Transactions
A	Definitions
BUSINESS CONFIDENTIAL - Per Section 723(c) of the Defense Production Act

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Sheet 3: General Instructions

REPORTING ON OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS

General Instructions

Reports must be submitted on OMB control number 0694-0084. Reports must be submitted no later than June 15 of each year to the U.S. Department of Commerce, Bureau of Industry and Security, Office of Strategic Industries and Economic Security as an e-mail attachment to [email protected]. E-mail attachments must include the information in a computerized spreadsheet or database format. If unable to submit a report in computerized format, companies should contact the Offset Program Manager for guidance. All submissions must include a point of contact (name, telephone number, and e-mail address) and must be submitted by a company official authorized to provide such information. U.S. firms that previously reported offset agreements or offset transactions in the last three years, and have no offset agreements or offset transactions to report for the current reporting period, should notify the U.S. Department of Commerce via the e-mail listed above. Reports must include the information described below. Any necessary comments or explanations relating to the information shall be footnoted and supplied on separate sheets attached to the reports. See section 701.4(b) of the Offset Reporting Regulation.

Reporting Offset Agreements

Please provide the infromation required in sections 701.4(c)(1) and 701.4(d) under the "Reported Offset Agreements" tab.

Reporting Offset Transactions

Please provide the infromation required in sections 701.4(c)(2), 701.4(d), and 701.4(e) under the "Reported Offset Transactions" tab.

BUSINESS CONFIDENTIAL - Per Section 723(c) of the Defense Production Act

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Sheet 4: Reported Offset Agreements

Reported Offset Agreements

Name of Foreign Country

Foreign Party to Offset Agreement

Date Offset Agreement was Signed

Offset Agreement Value

Offset Agreement Term

Offset Agreement Performance Measures

Offset Agreement Penalties for Non-Performance

Description of the Military Export Sale(s)

Date of Military Export Sale(s)

Military Export Sale(s) Classification

Military Export Sale Value

Identify the country of the foreign government agency or branch involved in the offset agreement associated with the military export sales contract(s). §701.4(c)(1)(i)

Identify the foreign government agency or branch that is the signatory to the offset agreement. §701.4(c)(1)(ii)

Provide the date (month and year) the offset agreement was signed. §701.4(c)(1)(iii)

Provide the U.S. dollar value of the offset agreement. §701.4(c)(1)(iv)

Identify the term of the offset agreement in months (provide numeral value). §701.4(c)(1)(v)

Identify each category that describes the offset agreement’s performance measures: best efforts, accomplishment of obligation, or other (please describe). §701.4(c)(1)(vi)

Identify each category that describes the offset agreement’s penalties for non-performance: liquidated damages, debarment from future contracts, added offset requirements, fees, commissions, bank credit guarantees, or other (please describe). §701.4(c)(1)(vii)

Provide a name and description of the military export sale(s). If multiple military export sales are associated with one offset agreement, please indicate by creating providing information for each military export sale on seperate lines. §701.4(c)(1)(viii)

Provide the date (month and year) that the military export sale(s) contract(s) was entered into that is associated with the offset agreement. §701.4(c)(1)(ix)

Identify the six-digit North American Industry Classification System (“NAICS”) code(s) associated with the military export sale(s). Refer to U.S. Census Bureau’'s U.S. NAICS Manual for a listing of up-to-date and applicable NAICS codes (https://www.census.gov/naics/). §701.4(c)(1)(x)

Provide the U.S. dollar value of the military export sale. Should the military export sale involve more than one NAICS code, please separately list the values associated with each NAICS code. §701.4(c)(1)(xi)

Month

Year

Category

Description (if "OTHER")

Category

Description (if "OTHER")

Month

Year

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Sheet 5: Reported Offset Transactions

Reported Offset Transactions

Name of Foreign Country

Foreign Party to Offset Agreement

Date Offset Agreement was Signed

Description of the Military Export Sale(s)

Date of Military Export Sale(s)

Military Export Sale(s) Classification

Offset Transaction Category

Offset Transaction Classification

Offset Transaction Type

Name of Offset Performing Entity

Name of Offset Receiving Entity

Offset Transaction Performance Location

Actual Offset Value

Offset Credit Value

Identify the country of the foreign government agency or branch involved in the military export sales contract(s) subject to the offset agreement associated with the offset transaction. §701.4(c)(2)(i)

Identify the foreign government agency or branch that is the signatory to the offset agreement. §701.4(c)(2)(ii)

Provide the date (month and year) the offset agreement was signed. §701.4(c)(2)(iii)

Provide a name and description of the military export sale(s) subject to the offset agreement associated with the offset transaction. If multiple military export sales are associated with one offset agreement, please indicate by creating providing information for each military export sale on seperate lines. §701.4(c)(2)(iv)

Provide the date (month and year) that the military export sale(s) subject to the offset agreement was entered into. §701.4(c)(2)(v)

Identify the six-digit North American Industry Classification System (“NAICS”) code(s) associated with the military export sale(s). Refer to U.S. Census Bureau’'s U.S. NAICS Manual for a listing of up-to-date and applicable NAICS codes (https://www.census.gov/naics/). §701.4(c)(2)(vi)

Identify each category that describes the offset transaction as co-production, technology transfer, subcontracting, training, licensing of production, investment, purchase, credit assistance, multiple categories (two or more categories), or other (please describe). If the offset transaction involves multiple categories, please provide the categories involved from the list above. §701.4(c)(2)(vii)

Identify the six-digit NAICS code(s) associated with the offset transaction. Refer to U.S. Census Bureau’s U.S. NAICS Manual for a listing of applicable NAICS codes (http://www.census.gov/epcd/www/naics.html). §701.4(c)(2)(viii)

Identify the offset transaction as a direct offset transaction, an indirect offset transaction, or a combination of both. §701.4(c)(2)(ix)

Identify, by name, the entity performing the offset transaction on behalf of the U.S. firm that is party to the offset agreement. §701.4(c)(2)(x)

Identify the foreign entity receiving benefits from the offset transaction. §701.4(c)(2)(xi)

Name the country where each offset transaction was fulfilled, such as the purchasing country, the United States, or a third country. §701.4(c)(2)(xii)

Provide the U.S. dollar value of the offset transaction without taking into account multipliers or intangible factors. Should the offset transaction involve more than one NAICS code, please list the U.S. dollar values associated with each NAICS code. §701.4(c)(2)(xiii)

Provide the credit U.S. dollar value received, including any multipliers or intangible factors. §701.4(c)(2)(xiv)

Month

Year

Month

Year

Category

Description (if MULTIPLE CATEGORIES" or "OTHER")

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Sheet 6: Definitions

Definitions
Term
Co-production §701.2(a)	(1) Transactions that are based upon government-to-government agreements authorizing the transfer of technology to permit foreign companies to manufacture all or part of U.S.-origin defense articles. Such transactions are based upon an agreement specifically referenced in Foreign Military Sales (FMS) Letters of Offer and Acceptance (LOA) and government-to-government Memorandums of Understanding (MOU). Co-production is always classified as a direct offset. (2) Example: Company A, a U.S. firm, contracts for Company B, a foreign firm located in country C, to produce a component of a U.S.-origin defense article subject to an offset agreement between Company A and country C. The defense article will be sold to country C pursuant to a FMS and the production role of Company B is described in the LOA associated with that sale and a government-to-government co-production MOU. This transaction would be categorized as co-production and would, like all co-production transactions, be direct as it is directly related to the article(s) exported or to be exported pursuant to the military export sales contract.
Credit Assistance §701.2(b)	(1) Credit assistance includes direct loans, brokered loans, loan guarantees, assistance in achieving favorable payment terms, credit extensions, and lower interest rates. Credit assistance specifically excludes the use of “banked” offset credits (credits that exceed the requirement of the offset agreement and are permitted, by the terms of the agreement, to be applied to future offset obligation). Credit assistance is nearly always classified as an indirect offset but can also be direct. (2) Example. Company A, a U.S. firm, makes arrangements for a line of credit at a financial institution for Company B, a foreign firm located in country C, so that Company B can produce an item that is not subject to the offset agreement between Company A and country C. The transaction would be categorized as credit assistance and would be indirect because the credit assistance is unrelated to an item covered by the offset agreement.
Credit Purchase §701.2(c)	(1) A credit purchase occurs when credit for full or partial fulfillment of the offset agreement is received by monetary payment. Credit purchase is an indirect offset. (2) Example. Company A, a U.S. firm, pays a certain amount of money to receive credit for full or partial fulfillment of the offset agreement. The transaction would be categorized as credit purchase and would be indirect because the purchase is unrelated to the article(s) or service(s) exported or to be exported pursuant to the military export sales agreement.
Direct Offset §701.2(d)	An offset transaction directly related to the article(s) or service(s) exported or to be exported pursuant to the military export sales agreement. Co-production, credit assistance, investment, licensed production, multiple categories, other, subcontracting, technology transfer, and training are all types of transactions that either are or can be classified as a direct offset.
Indirect Offset §701.2(e)	An offset transaction unrelated to the article(s) or service(s) exported or to be exported pursuant to the military export sales agreement. Credit assistance, credit purchase, investment, licensed production, multiple categories, other, purchases, technology transfer, and training are all types of transactions that either are or can be classified as an indirect offset.
Investment §701.2(f)	(1) Investment arising from an offset agreement, often taking the form of capital dedicated to the establishment of a foreign entity unrelated to the defense sale or to expanding the U.S. firm’s subsidiary or joint venture in the foreign country. Investment can be either a direct or indirect offset. (2) Example. Company A, a U.S. firm, makes an investment in Company B, a foreign firm located in country C, so that Company B can create a new production line to produce a component of a defense article that is subject to an offset agreement between Company A and country C. The transaction would be categorized as investment and would be direct because the investment involves the article(s) exported or to be exported pursuant to the military export sales contract.
Licensed Production §701.2(g)	(1) Overseas production of a U.S.-origin defense article based upon the transfer of technical information under direct commercial arrangements between the U.S. manufacturer and the foreign government or producer. Licensed production is not pursuant to a co-production government-to-government MOU. In addition, licensed production almost always involves a part or component for a defense system, rather than a complete defense system. Licensed production transactions can be either direct or indirect offsets. (2) Example. Company A, a U.S. firm, contracts for Company B, a foreign firm located in country C, to produce a component of a U.S.-origin defense article that is subject to an offset agreement between Company A and country C. The contract with Company B is a FMS and Company A licenses Company B to use Company A’s production technology to produce the component. There is no co-production agreement between the United States and country C. The transaction would be categorized as licensed production and would be direct because it involves the article(s) exported or to be exported pursuant to the military export sales contract.
Military Export Sales §701.2(h)	Exports that are either Foreign Military Sales (FMS) or commercial (direct) sales of: (1) Defense articles and/or defense services as defined by the Arms Export Control Act and International Traffic in Arms Regulations; or (2) Items controlled by the Export Administration Regulations under an Export Control Classification Number (ECCN) that has the numeral “6” as its third character in the Commerce Control List found in supplement no. 1 to part 774 of this chapter other than semi-submersible and submersible vessels specially designed for cargo transport and parts, components, accessories and attachments specially designed therefor controlled under ECCN 8A620.b; test, inspection and production equipment controlled in ECCN 8B620.b; software controlled in ECCN 8D620.b; and technology controlled in ECCN 8E620.b.
Multiple Categories §701.2(i)	(1) Activities to fulfill offset agreements that are categorized under two or more of the following: co-production, credit assistance, credit purchase, investment, licensed production, purchases, subcontracting, technology transfer, training, and other. Multiple categories can be either direct offsets, indirect offsets, or both depending on the activities identified. (2) Example. Company A, a U.S. firm, engages in activities to fulfill offset agreements that are categorized as subcontracting and a technology transfer related to the military export sale. The transaction would be categorized as multiple categories and would be direct.
Offsets §701.2(j)	Compensation practices required to enter into either government-to-government or commercial military export sales. The term can include, but is not limited to, activities referred to as industrial participation; industrial cooperation; industrial return; industrial and technological benefits; and security of supply.
Offset Agreement §701.2(k)	An agreement, arrangement, or understanding between a U.S. firm and a foreign country under which a U.S. firm agrees to offsets. This includes all offsets, whether they: (1) Are “best effort” agreements, arrangements, or understandings. (2) Exclude performance measures or are subject to penalty clauses. (3) Are described as other activities, such as industrial participation, industrial cooperation, industrial return, industrial and technology benefits, or security of supply.
Offset Transaction §701.2(l)	Any activity for which the U.S. firm claims credit for full or partial fulfillment of the offset agreement. Activities to fulfill offset agreements are categorized as co-production, technology transfer, subcontracting, credit assistance, training, licensed production, investment, purchases, credit purchase, multiple categories, and other.
Other §701.2(m)	An offset transaction other than co-production, credit assistance, credit purchase, investment, licensed production, purchases, subcontracting, technology transfer, training, or multiple categories. If a U.S. firm reports “other” as a type of transaction, please describe the transaction.
Person §701.2(n)	Includes an individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative thereof.
Prime Contractor §701.2(o)	Any person who directly enters into a prime contract with a foreign entity or with the U.S. Government for military export sales.
Purchases §701.2(p)	(1) Purchases involve the procurement of off-the-shelf items from the offset recipient. Purchases are always indirect offsets. (2) Example. Company A, a U.S. firm, purchases various off-the-shelf items from Company B, a foreign firm located in country C, but none of these items will be used by Company A to produce the defense article subject to the offset agreement between Company A and country C. The transaction would be categorized as purchases and would, like all purchase transactions, be indirect because the purchase is unrelated to the article(s) or serve(s) exported or to be exported pursuant to the military export sales contract.
Subcontractoring §701.2(q)	(1) In the offset context, subcontracting is the overseas production of a part or component of a U.S.-origin defense article. The subcontract does not necessarily involve the licensing of technical information. Instead, it is usually a direct commercial arrangement between the defense prime contractor and a foreign producer. Subcontracting is always a direct offset. (2) Example. Company A, a U.S. firm, contracts for Company B, a foreign firm located in country C, to produce a component of a U.S.-origin defense article subject to an offset agreement between Company A and country C. The contract with Company B is for a direct commercial sale and Company A does not license Company B to use any technology. The transaction would be categorized as subcontracting and would, like all subcontracting transactions, be direct as the subcontract is directly related to the article(s) exported or to be exported pursuant to the military export sales contract.
Subcontractor §701.2(r)	Any person, other than the prime contractor, who offers to furnish or furnishes any supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract; and includes any person who offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor.
Technology Transfer §701.2(s)	(1) Transfer of technology that occurs as a result of an offset agreement and that may take the form of research and development conducted abroad, technical assistance provided to the subsidiary or joint venture of overseas investment, or other activities under direct commercial arrangement between the defense prime contractor and a foreign entity. Technology transfer can be either a direct or indirect offset. (2) Example. Company A, a U.S. firm, transfers technology to Company B, a foreign firm located in country C, which allows Company B to conduct research and development directly related to a defense article that is subject to an offset agreement between Company A and country C. This transaction would be categorized as technology transfer and would be direct because the research and development is directly related to the article(s) or service(s) exported or to be exported pursuant to the military export sales contract.
Training §701.2(t)	(1) Generally includes training related to the production or maintenance of the exported defense item. Training, which can be either direct or indirect, may be required in unrelated areas, such as computer training, foreign language skills or engineering capabilities. Training can be categorized as either a direct or indirect offset. (2) Example. Company A, a U.S. firm, arranges for training of personnel from Company B, a foreign firm located in country C. The training is related to the production and maintenance of a U.S.-origin defense article that is subject to an offset agreement between Company A and country C. The transaction would be categorized as training and would be direct because the training is directly related to the production and maintenance of an article(s) exported or to be exported pursuant to the military export sales contract.
United States §701.2(u)	Includes the 50 states, the District of Columbia, and U.S. territories.
U.S. Firm §701.2(v)	Any person located in the United States.
BUSINESS CONFIDENTIAL - Per Section 723(c) of the Defense Production Act