United States Government Publishing Office publisher pbl distributor dst United States Government Accountability Office National Security and International Affairs Division author aut Government Organization text government publication eng GAOREPORTS Legislative Agency Publications gao legislative 2010-08-12 U.S. Government Printing Office 1998-12-18 monographic deposited born digital 16 p. GA 1.13:NSIAD-99-35 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-99-35 P0b002ee1803754f5 f:ns99035 DGPO 2010-08-12 2011-03-28 GAOREPORTS-NSIAD-99-35 machine generated eng fdlp REPORT GAOREPORTS-NSIAD-99-35 NSIAD-99-35 Technology transfer Foreign military sales agreements Department of Defense contractors International trade Equipment contracts Foreign technical aid Foreign military arms sales Multinational corporations Export regulation Foreign corporations Foreign Military Sales Program Letter Report NSIAD

Pursuant to a congressional request, GAO reviewed the types of activities undertaken by U.S. contractors to meet offset obligations associated with the sale of defense equipment to various foreign governments.<p/>GAO noted that: (1) companies undertake a broad array of activities to satisfy offset requirements; (2) under offset programs, U.S. contractors commonly award subcontracts for components and subsystems to firms in purchasing countries, and in a few cases, have made longer-term commitments covering foreign firm participation in the event of future sales of weapon systems; (3) this activity has been accompanied by technology transfers, for example, providing manufacturing technology needed to produce a component; (4) placing contracts overseas has resulted in the emergence of additional contractors that are qualified to participate in weapon system development and production; (5) the long-term supplier relationships that develop may result in reduced business opportunities for some U.S. firms; (6) nonetheless, the value of the export sale, in the transactions examined, greatly exceeded the amount of work placed overseas; (7) for procurements not directly related to weapon systems, U.S. prime contractors enlisted their major subcontractors, their suppliers, and other foreign entities to help meet offset obligations; (8) U.S. contractors also undertook a wide variety of activities that could be labelled business development; (9) contractors provided technical assistance to foreign firms across a wide range of technologies and industries and assisted foreign firms in marketing their products in export markets using the expertise of the contractors' own organizations or consultants; (10) in a few cases, U.S. contractors advocated a foreign firm's product to the Department of Defense or suppliers; (11) in isolated cases, offset transactions involved financial assistance to subsidize particular export sales; (12) these transactions were limited to foreign markets and therefore did not involve improper incentive payments under U.S. law; (13) U.S. contractors also facilitated or established joint ventures with firms in the offset country; and (14) while a country's economic development ministry might perform similar activities, the offset program allowed the country, or firms in the country, to leverage the expertise and know-how of major U.S. multinational firms. https://www.govinfo.gov/content/pkg/GAOREPORTS-NSIAD-99-35/html/GAOREPORTS-NSIAD-99-35.htm https://www.govinfo.gov/content/pkg/GAOREPORTS-NSIAD-99-35/pdf/GAOREPORTS-NSIAD-99-35.pdf GAO/NSIAD-99-35 https://www.govinfo.gov/app/details/GAOREPORTS-NSIAD-99-35 Letter Report GAO/NSIAD-99-35; Defense Trade: U.S. Contractors Employ Diverse Activities To Meet Offset Obligations; Technology transfer Foreign military sales agreements Department of Defense contractors International trade Equipment contracts Foreign technical aid Foreign military arms sales Multinational corporations Export regulation Foreign corporations Foreign Military Sales Program Title 10 Section 2410g 10 U.S.C. 2410g Title 50 Appendix 2099 50 U.S.C. App. 2099 Public Law 103-236