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Poland Offset Programs - Current Status -. Mr. Philip (Phil) Georgariou Director, Poland Offset Programs Lockheed Martin Aeronautics Company Local: 22-657-0309 e-mail: philip.georgariou@lmco.com. Today’s Presentation. What Are Offsets? Current Polish Program Status What’s Next.

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slide2

Mr. Philip (Phil) Georgariou

Director, Poland Offset Programs

Lockheed Martin Aeronautics Company

Local: 22-657-0309

e-mail: philip.georgariou@lmco.com

today s presentation
Today’s Presentation
  • What Are Offsets?
  • Current Polish Program Status
  • What’s Next
general disclaimer
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
how offset programs work

Foreign Gov’t/

Ministry Of

Defense

Transfer Implementation

Responsibility

(1)

USG -

(USAF)

Negotiates LOA

Offset Authority

e.g. Min. Of Economy

(2)

$

Negotiates Offset

Agreement

Lockheed

Martin

Project Authorization(4)

Determine

Costs*

Determine

Credits*

(3)

American

Company

In-Country

Company

Execute

Project

(5)

Offset Project

*Initial Projects Negotiated As Part Of Offset Contract

How Offset Programs Work

And Credit Approval(6)

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

general considerations
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 Country’s Economic Objectives
where project ideas come from
Customer Country’s 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)

Where Project Ideas Come From
how are credits determined
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

formalizing project agreements

Lockheed

Martin

Determine

Determine

(3)

Costs

Credits

American

In-Country

Company

Company

Execute

Project

(5)

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
negotiating credits
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
polish offset hierarchy
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
poland offset program
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
got a project idea
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
slide15

Mr. Philip (Phil) Georgariou

Director, Poland Offset Programs

Lockheed Martin Aeronautics Company

Local: 22-657-0309

e-mail: philip.georgariou@lmco.com