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Ministry of Industry

and Trade of the

Czech Republic

nr. 1

Presentation << Czech Republic>>

Ministry of Industry and Trade of the Czech Republic

Department of Industry Research and Development

Miroslav Chlumský

E-mail: [email protected] Phone: +420 22485 3569 Fax: +420 22485 3277


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Presentation << Czech Republic >>

Regulations of Offset Programs are provided by

– Governmental Resolution No. 9/2005 on Principles on Implementation of Industrial Cooperation Programs

– Order No. 3/2005 of the Minister of Industry and Trade


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The Principles of Offset Programs

• To apply compensation transactions to direct deliveries exceeding CZK 500 million (E 18 mil.) or sub-deliveries exceeding 250 mil. CZK (E 9 mil.) of equipment, materials and services for defence and safety purposes from abroad

• The compensation should constitute at least 100% of the contract value with at least 20% of direct offsets

• Duration up to 10 years


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The Offset Programs Objectives

• To stimulate new business oportunities,• To support regional development,• To support technology transfer, • To launch long-term partnership and co-operation

between local and foreign companies, including establishment of joint ventures.


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Organisation of Offset Programs

The Ministry of Industry and Trade is charged to take care of activities associated with preparation, assessment, implementation and control of the offset programs. In support of Offset programs implementation.

The Minister of Industry and Trade established an Offset Committee consisting of representatives of ministries concerned. Activities of the Offset Committee are set in the Status and Rules of Procedure.Offset agreements are concluded between contractual partners of the main contract.


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Offset transaction

It concerns the project of industrial cooperation, i.e. proposed or proceeded contractual transaction between the foreign and Czech partner that is approved and accepted by the Offset Commission.


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Types of offset transactions

Technology and know how transfers as well as support of research and development

Foreign direct investments Export support The other types of projects


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Value of offset transactionThere are three methods of evaluation:

According to revenues from sales of own products and services (added value),

According to the local value of export sales

Other methods proposed by submitter and accepted by Offset Coimmittee

(for example long-run infrastructure projects).


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Categories of offset transactions

Direct Offset – is imminently related to the implementation of a public tender or to cooperation in defence industry

Indirect Offset – includes all other offset forms, i.e. involvement of the domestic subjects in projects related to the applicant‘s activities.


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Pre-offset transactions

Pre-offset transactions are those submitted by a foreign proposer and approved by the Offset Commission before opening the contract negotiations with the selected applicant for the particular public contract.


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Offset Programs priorities

Transfer of progressive technologies and know how in favour of the Czech Republic

Accessing and entering new export markets Development of new R&D capacities Development of environmental technologies Development of SMEs in the Czech Republic


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Offset coeficients

Offset coeficients increasing offset transaction value are not used in practice.


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Penalty for default of Offset Programs

a) Penalty for non-performance of the total value of Program amounting to 5-10 %

b) Payment linkage between the main contract and the Program

c) Penalty for partial non-performance of the Program in terms of agreed milestones

d) Performance bonde) Other, in here not listed forms of penalty agreed with

the contractual partner


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Offset programs running in the Czech Republic

A bulding of the radio communication system for the Integrated Emergency System with EADS starting on 2001

2. The purchase of helicopters for the Czech police for Integrated Emergency System with EUROCOPTER starting on 2003

3. Leasing of supersonic aircrafts JAS 39 with Gripen International starting on 2004

4. Purchasing of radars ARTHUR with ERICSSON starting on 2004

5. Multiple rocket system with SAAB Bofors starting on 20056. Delivery of wheel transporters – supplied by the Austrian

company Steyr-Daimler-Puch, starting on 2006


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Complete Offset Guidelines in Czech and

English versions are available on

www.mpo.cz Industry and Construction/Offsets

Any questions?

Thank you

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