[Federal Register Volume 76, Number 36 (Wednesday, February 23, 2011)]
[Notices]
[Page 10005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-3916]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

[Docket No. 110207100-1092-02]


Reporting for Calendar Year 2010 on Offsets Agreements Related to 
Sales of Defense Articles or Defense Services to Foreign Countries or 
Foreign Firms

AGENCY: Bureau of Industry and Security, Department of Commerce.

ACTION: Notice; annual reporting requirements.

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SUMMARY: This notice is to remind the public that U.S. firms are 
required to report annually to the Department of Commerce (Commerce) on 
contracts for the sale of defense articles or defense services to 
foreign countries or foreign firms that are subject to offsets 
agreements exceeding $5,000,000 in value. U.S. firms are also required 
to report annually to Commerce on offsets transactions completed in 
performance of existing offsets commitments for which offsets credit of 
$250,000 or more has been claimed from the foreign representative. This 
year, such reports must include relevant information from calendar year 
2010 and must be submitted to Commerce no later than June 15, 2011.

ADDRESSES: Reports should be addressed to ``Offsets Program Manager, 
U.S. Department of Commerce, Office of Strategic Industries and 
Economic Security, Bureau of Industry and Security, Room 3878, 
Washington, DC 20230.''

FOR FURTHER INFORMATION CONTACT: Ronald DeMarines, Office of Strategic 
Industries and Economic Security, Bureau of Industry and Security, U.S. 
Department of Commerce, telephone: 202-482-3755; fax: 202-482-5650; e-
mail: [email protected].

SUPPLEMENTARY INFORMATION:

Background

    In 2009, the Congress reauthorized the Defense Production Act of 
1950 (DPA), and added a new section 723 to that Act, which replaced 
prior section 309 and addresses offsets in defense trade (See 50 U.S.C. 
app. 2172). Offsets are compensation practices required as a condition 
of purchase in either government-to-government or commercial sales of 
defense articles and/or defense services, as defined by the Arms Export 
Control Act and the International Traffic in Arms Regulations. For 
example, a company that is selling a fleet of military aircraft to a 
foreign government may agree to offset the cost of the aircraft by 
providing training assistance to plant managers in the purchasing 
country. Although this distorts the true price of the aircraft, the 
foreign government may require this sort of extra compensation as a 
condition of awarding the contract to purchase the aircraft.
    Section 723(a)(1) of the DPA requires the President to submit an 
annual report to the Congress on the impact of offsets on the U.S. 
defense industrial base. Section 723 directs the Secretary of Commerce 
(Secretary) to function as the President's executive agent for carrying 
out the responsibilities set forth in that section and authorizes the 
Secretary to develop and administer the regulations necessary to 
collect offsets data from U.S. defense exporters.
    The authorities of the Secretary regarding offsets have been 
delegated to the Under Secretary of Commerce for Industry and Security. 
The regulations associated with offsets reporting are set forth in part 
701 of title 15 of the Code of Federal Regulations.
    As described in those regulations, U.S. firms are required to 
report on contracts for the sale of defense articles or defense 
services to foreign countries or foreign firms that are subject to 
offsets agreements exceeding $5,000,000 in value. U.S. firms are also 
required to report annually on offsets transactions completed in 
performance of existing offsets commitments for which offsets credit of 
$250,000 or more has been claimed from the foreign representative.
    Commerce's annual report to Congress includes an aggregated summary 
of the data reported by industry in accordance with the offsets 
regulation and the DPA. As provided by section 723(c) of the DPA, BIS 
will not publicly disclose the information it receives through offsets 
reporting unless the firm furnishing the information specifically 
authorizes public disclosure. The information collected is sorted and 
organized into an aggregate report of national offsets data, and 
therefore does not identify company-specific information.
    In order to enable BIS to prepare the next annual offset report 
reflecting calendar year 2010 data, U.S. firms must submit required 
information on offsets agreements and offsets transactions from 
calendar year 2010 to BIS no later than June 15, 2011.

    Dated: February 15, 2011.
Kevin J. Wolf,
Assistant Secretary for Export Administration.
[FR Doc. 2011-3916 Filed 2-22-11; 8:45 am]
BILLING CODE 3510-JT-P