Overview of the Offset Program Process

The Offset Process is composed of four key stages, namely:

1. The Supply Contract Stage
2. The MOA Stage
3. The Approval Stage
4. The Performance Stage

1. During the Supply Contract Stage the foreign contractor is primarily engaged in pursuing and winning the desired supply contract. At this stage, foreign contractors are advised to visit the PEO and gather information prior to signing a supply contract. The offset program has received wide publicity both in the embassies and in institutions abroad. Furthermore, many government bodies formally notify bid participants of the offset program or include clauses to that effect in their supply contracts. Once the supply contract is signed, the offset obligation takes effect.
2. The next step is to sign a Memorandum of Agreement (MOA) between the foreign contractor and the Ministry of Finance. The MOA is a formal acknowledgment of the Offset Obligation and must be signed even in cases where the supply contract contains clauses regarding the Offset Program.
3. Once the MOA is signed, the foreign contractor enters the Approval Stage. Here he is required to obtain approval of the business plan from the PEO after conducting relevant market surveys, and submitting a "Concept Paper" and a "Proposal."
4. Once the final business plan is approved, the performance stage commences during which the foreign contractor is required to fulfill his offset obligation.
      Fulfillment of the Offset Obligation is achieved through the accumulation of a total of current credits equal to the offset obligation within the eight year offset period. In certain cases, future credits can be earned which can be attributed to future offset obligations to be incurred.
5. Credits are awarded based on the investment and expenditure of an offset business venture. During this period the foreign contractor is required to provide periodic progress and financial reports to the PEO which will monitor his progress.
6. Once the offset obligations fulfilled, the foreign contractor is formally notified that he has successfully completed the Program and is thereby released from his obligations to the government.