Offset arrangements are agreements made with export customers designed to generate work, or to create capability or economic value, in that customer’s country. Currently around 80 countries operate offset regulations and these are often an important element of the evaluation process for defence contracts.
We have offset commitments in a number of countries and through these programmes we seek to support customers’ economic and development goals, and deliver long-term sustainable benefits. All offset arrangements are governed by our OF (including our Offset Policy) and Code of Conduct.
BAE Systems applies a risk based review and approval process depending on the type of Offset that is being undertaken and the location in which the offset is being provided.
Our Offset Policy sets out the principles we apply to all our offset activities. The underlying principles applicable to all of our offset activities are that:
- they are undertaken in accordance with our Code of Conduct;
- they have clear line management ownership and executive oversight;
- they are consistent with the customer’s offset policies and proportionate to the value of related contracts; and
- financial and non-financial risks are clearly assessed and mitigated.
Our businesses have skilled personnel who plan, negotiate and deliver offset. They are supported by a central Group Business Development team with related expertise in areas such as: investment planning, government liaison and education programmes, and by the Compliance function which assists with conducting due diligence on our offset partners. The Group Business Development team is also responsible for developing and embedding our offset policy, process and training materials, as well as overseeing risk management.
Training on both the commercial and the compliance considerations related to offset activity is provided to all relevant employees.
All proposals for offset put forward by our businesses are subject to a rigorous review and approvals process which includes risk-based anti-corruption due diligence. All offset proposals are endorsed by the Board.