Bureau of Industry and Security, Department of Commerce.
Notice; annual reporting requirements.
This notice is intended to remind the public that U.S. companies are required, pursuant to the Defense Production Act of 1950, as amended (DPA), to report annually to the Department of Commerce (Commerce) information on contracts for the sale of defense articles or defense services to foreign countries or foreign companies that are subject to offsets agreements exceeding $5,000,000 in value. Consistent with the DPA, U.S. companies are also required to report annually to Commerce information on offsets transactions completed in performance of existing offsets commitments for which an offsets credit of $250,000 or more has been claimed from the foreign representative. Such reports from calendar year 2016 must include relevant information and must be submitted to Commerce no later than June 15, 2017.
Submit reports in both hard copy and electronically. Address the hard copy to “Offsets Program Manager, U.S. Department of Commerce, Office of Strategic Industries and Economic Security, Bureau of Industry and Security (BIS), Room 3878, Washington, DC 20230”. Submit electronic copies to OffsetReport@bis.doc.gov.
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FOR FURTHER INFORMATION CONTACT:
Ronald DeMarines, Office of Strategic Industries and Economic Security, Bureau of Industry and Security, U.S. Department of Commerce, telephone: 202-482-3755; fax: 202-482-5650; email: email@example.com.
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Section 723(a)(1) of the Defense Production Act of 1950, as amended (DPA) (50 U.S.C. 4568 (2015)) requires the President to submit an annual report to Congress on the impact of offsets on the U.S. defense industrial base. Section 723(a)(2) directs the Secretary of Commerce (Secretary) to prepare the President's report and to develop and administer the regulations necessary to collect offsets data from U.S. defense exporters.
The authorities of the Secretary regarding offsets have been delegated to the Under Secretary of Commerce for Industry and Security. The regulations associated with offsets reporting are set forth in part 701 of title 15 of the Code of Federal Regulations. Offsets are compensation practices required as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services, as defined by the Arms Export Control Act (22 U.S.C. 2778) and the International Traffic in Arms Regulations (22 CFR 120-130). Offsets are also applicable to certain items controlled on the Commerce Control list (CCL) and with an Export Control Classification Number (ECCN) including the numeral “6” as its third character (“600 series” items). The CCL is found in Supplement No. 1 to part 774 of the Export Administration Regulations.
An example of an offset is as follows: A company that is selling a fleet of Start Printed Page 26776military aircraft to a foreign government may agree to offset the cost of the aircraft by providing training assistance to plant managers in the purchasing country. Although this distorts the true price of the aircraft, the foreign government may require this sort of extra compensation as a condition of awarding the contract to purchase the aircraft. As described in the regulations, U.S. companies are required to report information on contracts for the sale of defense articles or defense services to foreign countries or foreign companies that are subject to offsets agreements exceeding $5,000,000 in value. U.S. companies are also required to report annually information on offsets transactions completed in performance of existing offsets commitments for which offsets credit of $250,000 or more has been claimed from the foreign representative.
Commerce's annual report to Congress includes an aggregated summary of the data reported by industry in accordance with the offsets regulation and the DPA (50 U.S.C. 4568 (2015)). As provided by section 723(c) of the DPA, BIS will not publicly disclose individual company information it receives through offsets reporting unless the company furnishing the information specifically authorizes public disclosure. The information collected is sorted and organized into an aggregate report of national offsets data, and therefore does not identify company-specific information.
In order to enable BIS to prepare the next annual offset report reflecting calendar year 2016 data, affected U.S. companies must submit the required information on offsets agreements and offsets transactions from calendar year 2016 to BIS no later than June 15, 2017.
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Dated: June 6, 2017.
Matthew S. Borman,
Acting Assistant Secretary for Export Administration.
[FR Doc. 2017-11981 Filed 6-8-17; 8:45 am]
BILLING CODE 3510-JT-P