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Poland Offset Programs - Current Status -. 2 Mr. Philip (Phil) Georgariou Director, Poland Offset Programs Lockheed Martin Aeronautics Company Local:

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Presentation on theme: "Poland Offset Programs - Current Status -. 2 Mr. Philip (Phil) Georgariou Director, Poland Offset Programs Lockheed Martin Aeronautics Company Local:"— Presentation transcript:

1 Poland Offset Programs - Current Status -

2 2 Mr. Philip (Phil) Georgariou Director, Poland Offset Programs Lockheed Martin Aeronautics Company Local:

3 3 Todays Presentation What Are Offsets? Current Polish Program Status Whats Next

4 4 General Disclaimer This Is a General Overview of Offsets –Terminology Cited in This Brief Is the Generally Accepted Language Used No Two Countries Implement Offsets the Same –And What Works Once May Not Work Twice In The Same Country For The Polish Program – –Currently In Negotiations –Not Permitted To Discuss On-Going Discussions –Will Not Discuss Projects Included In LM Proposal

5 5 How Offset Programs Work General Steps 1) Weapon Sale Is Finalized 2) IC Agreement Is Negotiated 3) Projects Are Established 4) Projects Are Authorized 5) Projects Executed 6) Credits Claimed Execute Project (5) Project Authorization (4) Determine Costs* *Initial Projects Negotiated As Part Of Offset Contract Offset Authority e.g. Min. Of Economy Transfer Implementation Responsibility Negotiates Offset Agreement (2) Determine Credits * (3) American Company In-Country Company Offset Project And Credit Approval (6) Negotiates LOA (1) Foreign Govt/ Ministry Of Defense USG - (USAF) Lockheed Martin $

6 6 General Considerations Projects Must Be Allowable Under The Law (Direct/Indirect) Direct Usually Deals With The Weapon System Being Procured Indirect Projects Are All Others Restrictions Usually Exist (e.g. Hi-Tech Only) Projects Must Be Viable In A Standard Business Sense On Average, Projects Must Meet Cost-To-Credit Ratio Criteria (e.g. 3%) C-T-C Is Ratio Of Dollars Spent To Credits Earned Example: Project Costs Are $100 and Credits Earned Are $4,000 $100/$4,000 =.025/2.5% ($40 In Credits For Each $1 In Costs) Projects Must Meet Countrys Economic Objectives

7 7 Where Project Ideas Come From Customer Countrys Economic Priorities Customer Country's Niche Industries Should Focus On Economic Factors Attractive To All Parties Project Ideas Come From Many Sources –From Program-Related Requirements (e.g. Co-Production) –From In-Country Companies Seeking Assistance –From US Companies Seeking Partners –From 3rd Party Providers/Companies (Brokers) –LM Procurement Actions –From In-Country Sources (e.g. Customers, Embassy, LM Office)

8 8 How Are Credits Determined After Cost, Second Key To Project Acceptability (From LM Viewpoint) Is Credits That It Can Earn Credits Are Earned In Many Ways, Depending On The Project –Value Of Procurements –Value Of Investments Made –Value Of Technology Transferred –Value Of Technical Or Marketing Assistance Provided –Value Of Training Provided Most Projects Are A Combination Of These Valuations Note That Value Means Credit Value, Not The Costs Incurred Projects With More Credits Usually Take Precedence Over Those With Less

9 9 Formalizing Project Agreements Once Project Idea Is Agreed Upon In Principle By Companies, Agreement Must Be Formalized Several Ways To Do This: –MOA Between US/Polish Companies –MOA Between LM/Polish Companies Purpose Is To Formalize Agreements On Cost and Credits Project Sheet Is Filled Out For Submittal To IC Authority Credits Are Agreed-To And Submitted For Approval Lockheed Martin American Company In-Country Company Determine Credits Determine Costs Execute Project (3) (5)

10 10 Negotiating Credits Credit Approval Before Project Implementation Is Paramount Project Credit = Nominal Value X Multiplier –Polish Multipliers Set By Ordinance All Credit Claims Must Be Supportable And Reasonable –Why Are You Requesting $X In Project Value –Why Are You Requesting A Multiplier Of Y Submitted Projects Not Required To Be Implemented –Minimum Credit Levels Must Be Met

11 11 Polish Offset Hierarchy Ultimate Responsibility For Approval Of Offset Agreement Rests With Council Of Ministers Approval Of Offset Contract Lies With Inter-ministerial Offset Contract Committee –Headed By Minister Michal Kleiber Offset Contract Negotiated By Offset Negotiating Team –Led By Minister Jacek Piechota –Two Sub-teams Master Offset Contract Individual Project Negotiations

12 12 Poland Offset Program Current Status –Proposal Submitted 12 November 2002 No Additions Permitted, Per Law –Master Offset Contract (MOC) Being Negotiated Contains Program Terms & Conditions Will Contain Some Number Of Quick-Start Projects –Once MOC Signed, Additional Projects May Be Required LM Has Additional Projects In Proposal That Require Negotiations KBN Collecting Candidate Projects To Be Offered To LM

13 13 Got A Project Idea? Let Us Finish Negotiations First If There Are Still More Projects Needed, Will Have To Consider KBN Projects Next –These Projects Will Be Evaluated By Same Acceptance Criteria Cited Before Any Other Projects Will Then Be Considered Consider Getting Advocate In The Government –Have Them Sponsor Your Project With The Offset Committee

14 14 Questions?

15 15 Mr. Philip (Phil) Georgariou Director, Poland Offset Programs Lockheed Martin Aeronautics Company Local:


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