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OFFSET IN POLANDOFFSET IN POLAND LESSONS LEARNEDLESSONS LEARNED
LEGAL ISSUESLEGAL ISSUES
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
Presented by Presented by
Łukasz KANIUKAŁukasz KANIUKA
Department of Offset ProgrammesDepartment of Offset Programmes
MINISTRY OF ECONOMYMINISTRY OF ECONOMY
REPUBLIC OF POLANDREPUBLIC OF POLAND
OFFSET IN POLAND Lessons learned Legal issues
2
Act of September 10th, 1999 on certain compensation
agreements conluded in connection with supply contracts
for the needs of national defence and security
(Dz. U. of 1999 No 80, pos. 903 with further revisions)
Regulation of the Council of Ministers of July 2nd, 2002
regarding detailed principles for granting credit for offset
commitments of a foreign supplier of armament or
military equipment towards the value of the offset
agreement
(Dz. U. of 2002 No 100, pos. 907)
OFFSET IN POLAND OFFSET IN POLAND - LEGAL ENVIRONMENT - LEGAL ENVIRONMENT
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
3
OFFSET ADMINISTRATIONOFFSET ADMINISTRATION
MINISTER OF ECONOMY ((monitoring and supervision monitoring and supervision over offset agreements over offset agreements))
DEPARTMENT DEPARTMENT OF OFFSET PROGRAMMES OF OFFSET PROGRAMMES
((administrative unitadministrative unit))
COMMITTEE COMMITTEE FOR THE OFFSET FOR THE OFFSET
AGREEMENTS AGREEMENTS ((ADVISORY BODYADVISORY BODY))
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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PERFORMANCE OF OFFSET PERFORMANCE OF OFFSET AGREEMENTS – PRACTICAL ASPECTS AGREEMENTS – PRACTICAL ASPECTS
Definition of offset needs
Improper quality of offset offers
Time limitation regarding negotiations (up to 60 days)
Optimistic declarations of foreign suppliers
Overestimated expectations of offset beneficiaries
Offsetees condition (direct offset)
Expectation of immediate benefits
Difficulties in fulfiling „sophisticated” offset commitments
Difficulties in fulfiling direct offset commitments
Insufficient knowledge of offset aspects – improper info policy
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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WHY TO AMEND OFFSET ACT ?WHY TO AMEND OFFSET ACT ? EXPERIENCE AND FINDINGS EXPERIENCE AND FINDINGS
REGARDING MONITORING REGARDING MONITORING OF OFFSET AGREEMENTSOF OFFSET AGREEMENTS
FORTHCOMING NEW OFFSET AGREEMENTSFORTHCOMING NEW OFFSET AGREEMENTS
PURPOSE OF OFFSET ACT AMENDMENT PURPOSE OF OFFSET ACT AMENDMENT MORE EFFECTIVE OUTCOMES MORE EFFECTIVE OUTCOMES
FROM FULFILMENT OF OFFSET AGREEMENTS FROM FULFILMENT OF OFFSET AGREEMENTS
IN ORDER TO BENEFIT ECONOMIC DEVELOPMENT IN ORDER TO BENEFIT ECONOMIC DEVELOPMENT
IN POLANDIN POLAND
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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KEY ELEMENTS OF AMENDMENT - IKEY ELEMENTS OF AMENDMENT - I NEW PROCEDURE AIMING AT NEW PROCEDURE AIMING AT
CONCLUSION OF OFFSET AGREEMENTSCONCLUSION OF OFFSET AGREEMENTS rights and obligations (pointed out precisely) rights and obligations (pointed out precisely)
guidelines for offset offer (award criteria guidelines for offset offer (award criteria in defence procurement) in defence procurement)
offset offer includes only agreed (with offsetees) offset offer includes only agreed (with offsetees) offset commitmentsoffset commitments
possibility of exclusion of offset bidder and continuation possibility of exclusion of offset bidder and continuation of procedure with the next best offset bidder of procedure with the next best offset bidder
defence contract cannot be conluded defence contract cannot be conluded before offset contract before offset contract (before amendmentbefore amendment offset contract should be concludedup to 60 days after defence contract)
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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KEY ELEMENTS OF AMENDMENT - IIKEY ELEMENTS OF AMENDMENT - II
LIST OF ARMAMENT LIST OF ARMAMENT (regulation for the purpose of the offset act)(regulation for the purpose of the offset act)
FULFILMENT OF THE DIRECT OFFSET FULFILMENT OF THE DIRECT OFFSET (enterpreneurs also from private sector enabled to fulfil direct (enterpreneurs also from private sector enabled to fulfil direct offset commitments, offset commitments, before amendment - closed list of before amendment - closed list of companies included in regulation of Council of Ministerscompanies included in regulation of Council of Ministers) )
CATALOGUE OF OFFSET NEEDS CATALOGUE OF OFFSET NEEDS (aim – to create a list of offset projects, (aim – to create a list of offset projects, conducted by Minister of Economy)conducted by Minister of Economy)
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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KEY ELEMENTS OF AMENDMENT - IIIKEY ELEMENTS OF AMENDMENT - III OFFSET COMMITMENT PROMISE OFFSET COMMITMENT PROMISE
(negotiated offset projects promised to be included (negotiated offset projects promised to be included in forthcoming offset agreements)in forthcoming offset agreements)
NEW DEFINITIONS NEW DEFINITIONS (awarding entity, foreign supplier, (awarding entity, foreign supplier, offsetor, technology transfer)offsetor, technology transfer)
FOREIGN SUPPLIER’S RANGE OF LIABILITY FOREIGN SUPPLIER’S RANGE OF LIABILITY (detailed regulation transferred from offset act to offset agreements)
OFFSET AGREEMENTS (OFFSET AGREEMENTS (general provisionsgeneral provisions) ) DISCLOSED TO PUBLIC OPINIONDISCLOSED TO PUBLIC OPINION
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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EXPECTED OUTCOMES EXPECTED OUTCOMES Rationalization of procedure Rationalization of procedure
aiming at conlusion of offset agreementaiming at conlusion of offset agreement
Premeditated offset offers (offset commitments)Premeditated offset offers (offset commitments)
Offset influence on procedure of defence procurement Offset influence on procedure of defence procurement
Development of small and medium Development of small and medium sized sector including defence sectorsized sector including defence sector
NEW REGULATION - OFFSET MULTIPLIERS NEW REGULATION - OFFSET MULTIPLIERS Sectors vital for Polish economy – precisely indicatedSectors vital for Polish economy – precisely indicated
Better differentiation of offset multipliersBetter differentiation of offset multipliers
Technologies, investments, R&D - preferredTechnologies, investments, R&D - preferred
Foreign suppliers motivated to fulfil Foreign suppliers motivated to fulfil sophisticated offset commitmentssophisticated offset commitments
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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OFFSET AGREEMENT – PRINCIPLESOFFSET AGREEMENT – PRINCIPLES
Offset agreement – obligatory when the value of contract for delivery of armament or military equipment exceeds 5 mln euro for one foreign supplier in three years’ time
Total value (with offset multipliers) of the offset agreement shall not be lower than value of the supply contract
Total value of direct offset commitments shall not be lower than half of the value of the offset agreement
Offset agreement – signed between the State Treasury represented by Minister of Economy and the foreign supplier
Concluded for a period not longer than ten years
Approved by the Council of Ministers
Supervised and monitored by Minister of Economy
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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OFFSET COMMITMENTSOFFSET COMMITMENTS
• DIRECT – addressed to licensed companies dealing within the sphere of manufacturing and the turnover of explosives, weapon, ammunition, as well as products and technologies designated for military or police purposes
• INDIRECT
– addressed to any other company registered in Poland
• POTENTIAL
- direct or indirect offset commitments
(potential project not covered by terms of liability)
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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PURCHASE OF SHARES FROM PURCHASE OF SHARES FROM THE STATE TREASURYTHE STATE TREASURY
FINANCIAL CONTRIBUTION FINANCIAL CONTRIBUTION TO A COMPANYTO A COMPANY
CONCLUSION & PERFORMANCE OF CONCLUSION & PERFORMANCE OF - SALES- SALES- DELIVERY CONTRACT- DELIVERY CONTRACT- LICENCE - LICENCE - KNOW-HOW - KNOW-HOW
CONCLUSION & CONCLUSION & PERFORMANCE PERFORMANCE
OF OTHER CONTRACT OF OTHER CONTRACT FOR THE TRANSFER FOR THE TRANSFER
OF RIGHTS OR OF RIGHTS OR PERFORMANCE PERFORMANCE
OF SERVICESOF SERVICES
OFFSET OFFSET COMMITMENTSCOMMITMENTS
PROJECTSWHICH FOREIGN SUPPLIER (OFFSETOR) PERFORMS ACCORDING TO SPECIFICATION INCLUDED IN OFFSET AGREEMENT
OBJECT OF OFFSET COMMITMENT - PRECISELY DEFINED IN REGULATION OF COUNCIL OF MINISTERS
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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OFFSET MULTIPLIERSOFFSET MULTIPLIERS
MULTIPLIERS :
0,5 – 2
2 – 5 (used in cases justified by the interest
of economy or security and defence of the State)
OFFSET MULTIPLIER
> 2 - 5: PRECISE VALUE INDICATED IN GUIDELINES FOR OFFSET OFFER (new regulation)
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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Offset Agreement with LOCKHEED MARTIN Corp.: umowa offsetowa z Lockheed Martin Corporation (LMC): starting in ZM MESKO S.A. production of up-to-date ammunition, unguided rocket systems and utilisation of outdated ammunition; offset commitments addressed to: ZM Dezamet S.A., Kombinat PZL-Hydral S.A.
Offset Agreement with RAFAEL – technology transfer to ZM MESKO S.A. resulting in starting production of up-to-date elements of weapons
Offset Agreement with THALES – technology transfer to RADMOR S.A. – modernization of radio station VHF PR4G.
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
DIRECT OFFSET COMMITMENTS DIRECT OFFSET COMMITMENTS - EXAMPLES- EXAMPLES
OFFSET IN POLAND Lessons learned Legal issues
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3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET AGREEMENTS IN POLAND - 1OFFSET AGREEMENTS IN POLAND - 1
2001: EADS-CASA
(C295 transport aircrafts) – 306,36 mln USD
GEIE Eurotorp
(light torpedos) – 26,99 mln EUR
THALES Nederland B.V
(systems for ORKAN class ships) – 76,28 mln EUR
2003: LOCKHEED MARTIN Corp.
(F-16 aircrafts) – 6,028 bln USD
PATRIA Vehicles Oy
(AWV) – 482,00 mln EUR
OTO MELARA S.p.A.
(AWV – gun turrets) – 308,71 mln EUR
OFFSET IN POLAND Lessons learned Legal issues
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3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET AGREEMENTS IN POLAND - 2OFFSET AGREEMENTS IN POLAND - 22004: RAFAEL Armament Dev. Auth. Ltd.
(anti-tank guided missiles) – 440,00 mln USD
2006: HARRIS Corp.
(digital radio stations) – 10,49 mln USD
NAMMO A.S.
(12,7 mm & 30 mm ammunition) – 70,96 mln EUR
SAAB Bofors Dyn. AB
(RBS 15Mk3 missile) – 127,30 mln EUR
2007: AVIO S.p.A.
(gas turbine for corvette ship) – 9,76 mln EUR
TOTAL VALUE OF OFFSET AGREEMENTS:
6,78 BLN USD6,78 BLN USD AND 1,1 BLN EUR1,1 BLN EUR
OFFSET IN POLAND Lessons learned Legal issues
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OFFSET – INTERNATIONAL ISSUESOFFSET – INTERNATIONAL ISSUES
July 1st, 2006: POLAND - pMS in
„CODE OF CONDUCT ON DEFENCE PROCUREMENT”
(forthcoming harmonization of offsets requirements)
INTERPRETATIVE COMMUNICATION
issued on December 7th, 2006
(restrictive application of art. 296 TEC)
2007: EU prepares possible
DIRECTIVE on DEFENCE PROCUREMENT
(not covered by art. 296 TEC)
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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CONCLUSIONSCONCLUSIONS
Vital role of definition of offset needs
and redifined guidelines for offset offers
Negotiations – worth doing well
Exchange of information with foreing offsets administration
Monitoring of EU (esp. European Defence Agency)
endavours within the framework and future of offsets
Exploring by offsets administration
„Public Relation” tools and techniques
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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CONTACT INFORMATION CONTACT INFORMATION http://www.mg.gov.pl/http://www.mg.gov.pl/
MINISTRY OF ECONOMY
DEPARTMENT OF OFFSET PROGRAMMES
Pl. Trzech Krzyży 3/5
00-507 Warsaw POLAND
phone: (+48-22) 628-16-91; 693-50-14
fax: (+48-22) 693-40-56
DIRECTOR
TADEUSZ PYRCAK
e-mail:tadeusz.pyrcak@mg.gov.pl
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
OFFSET IN POLAND Lessons learned Legal issues
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Thank you for your kind attention
Presented byŁukasz KANIUKA
Ministry of Economy Republic of Poland
lukasz.kaniuka@mg.gov.pl
3rd International Seminar on Offset and Industrial Cooperation 3rd International Seminar on Offset and Industrial Cooperation Jerusalem, 7th-9th May 2007Jerusalem, 7th-9th May 2007
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