Procurement: January 19, 2001

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Industrial offsets are a necessary evil of selling weapons these days. The general idea is that to sell a country $500 million worth of your airplanes, you have to agree to buy some amount of that nation's products (which the buying contractor then has to find a market for). This is often seen as the only way to secure a contract, as buying nations often include such a requirement in their request for bids. Sometimes a nation wants equal dollars; in a few cases they actually demand that the selling contractor buy more of their products than they buy in weapons. A growing trend in offsets, however, is demanding that the contractor buy items from the purchasing country which are related to the weapons (or at least the general concept of aerospace and military technology). In this way, the buying nation not only gets its money back, but gets its own weapons industry upgraded by the profits on the purchases (and the technology which the selling contractor is forced to hand over so that the customer can make and sell things that the contractor makes itself). The offset concept is purely a long-term political decision. The buying nation does not save money; the weapons would always be cheaper if they simply took the lowest or best bid for whatever kind of weapons they wanted.--Stephen V Cole 

 


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