Offset Obligation Fufillment

GTS clients include many US and foreign companies that have offset or industrial cooperation obligations in one or more countries. These obligors might have their own obligations with the foreign government or they may be supporting their prime contractor customer, who has the commitment.

Generally obligations are concurrent with the delivery of the weapon system, but larger programs may extend out for 10 years. Each country has its own laws or guidelines that are supporting local government policies.

Direct vs. Indirect Obligations

Every country and obligor has their own definitions of these terms. Strictly defined “Direct” offset obligations consist of the local foreign supplier producing or servicing the actual products being sold into the country. Some countries support a broader definition that covers aerospace and defense related production opportunities. This might also include technology transfer and training that supports the country’s military requirements.

Generally speaking one may define “Indirect” offsets as everything else that a governmental offset authority may decide to credit. Some specific examples are manufacturing opportunities offerred by the obligor from other seller’s business units, suppliers, and global partners. These exports need to be high technology oriented and show potential for job expansion and export growth. Technology transfer is acceptable as long as work (POs) are linked to such activities.

GTS Role

GTS is most helpful in assisting obligors to satisfy indirect obligations, leaving the oblgor to source their work themselves. Having said that several GTS clients are looking to find new sources for their aerospaceand defense products.

GTS works with all the players; obligors, local companies, third party implementers as well a the offset authorities to identify and develop successful offset projects. GTS often visits the country to survey local companies and start a dialogue with the offset authorities to determine the local needs and capabilities. GTS matches local capabilities to our clients that are looking for international low cost, competitive suppliers. GTS then prepares a project summary that the obligor submits for pre-approval. We work with the local suppliers to insure that they have the desire and the tools to be successful. Lastly GTS works with all the parties to implement the project and earn the offset credits for the designated obligors.

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