Title 10 — Armed Forces
Part V · Chapter 385 — Other Technology Base Policies and Programs
§ 4852. Offset policy; notification
Statutory text
Establishment of Offset Policy.—
The President shall establish, consistent with the requirements of this section, a comprehensive policy with respect to contractual offset arrangements in connection with the purchase of defense equipment or supplies which addresses the following:
Transfer of technology in connection with offset arrangements.
Application of offset arrangements, including cases in which United States funds are used to finance the purchase by a foreign government.
Effects of offset arrangements on specific subsectors of the industrial base of the United States and for preventing or ameliorating any serious adverse effects on such subsectors.
Technology Transfer.—
No official of the United States may enter into a memorandum of understanding or other agreement with a foreign government that would require the transfer of United States defense technology to a foreign country or a foreign firm in connection with a contract that is subject to an offset arrangement if the implementation of such memorandum or agreement would significantly and adversely affect the defense industrial base of the United States and would result in a substantial financial loss to a United States firm.
Paragraph (1) shall not apply in the case of a memorandum of understanding or agreement described in paragraph (1) if the Secretary of Defense, in consultation with the Secretary of Commerce and the Secretary of State, determines that a transfer of United States defense technology pursuant to such understanding or agreement will result in strengthening the national security of the United States and so certifies to Congress.
If a United States firm is required under the terms of a memorandum of understanding, or other agreement entered into by the United States with a foreign country, to transfer defense technology to a foreign country, the United States firm may protest the determination to the Secretary of Defense on the grounds that the transfer of such technology would adversely affect the defense industrial base of the United States and would result in substantial financial loss to the protesting firm. The Secretary of Defense, in consultation with the Secretary of Commerce and the Secretary of State, shall make the final determination of the validity of the protesting firm’s claim.
Notification Regarding Offsets.—
If at any time a United States firm enters into a contract for the sale of a weapon system or defense-related item to a foreign country or foreign firm and such contract is subject to an offset arrangement exceeding $50,000,000 in value, such firm shall notify the Secretary of Defense of the proposed sale. Notification shall be made under this subsection in accordance with regulations prescribed by the Secretary of Defense in consultation with the Secretary of Commerce.
Definitions.—
In this section:
The term “United States firm” means a business entity that performs substantially all of its manufacturing, production, and research and development activities in the United States.
The term “foreign firm” means a business entity other than a United States firm.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
National Defense Authorization Act, Fiscal Year 1989
Pub. L. 100–456 div. A title VIII § 825(b) · 102 Stat. 1918
Enacted · 10 U.S.C. § 4852
Added Pub. L. 100–456, div. A, title VIII, § 825(b), Sept. 29, 1988, 102 Stat. 2020, § 2505
Source evidence
Code source credit
Added Pub. L. 100–456, div. A, title VIII, § 825(b), Sept. 29, 1988, 102 Stat. 2020, § 2505Enacted provision · exact public law section
(b) Amendment to Title 10.— Chapter 148 of title 10, United States Code, as amended by sections 821 and 824, is further amended by inserting after section 2504 the following new section: “§ 2505. Offset policy; notification “(a) Establishment of Offset Policy.— The President shall establish, consistent with the requirements of this section, a comprehensive policy with respect to contractual offset arrangements in connection with the purchase of defense equipment or supplies which addresses the following: “(1) Transfer of technology in connection with offset arrangements. “(2) Application of offset arrangements, including cases in which United States funds are used to finance the purchase by a foreign government. “(3) Effects of offset arrangements on specific subsectors of the industrial base of the United States and for preventing or ameliorating any serious adverse effects on such subsectors. “(b) Technology Transfer.— (1) No official of the United States may enter into a memorandum of understanding or other agreement with a foreign government that would require the transfer of United States defense technology to a foreign country or a foreign firm in connection with a contract that is subject to an offset arrangement if the implementation of such memorandum or agreement would significantly and adversely affect the defense industrial base of the United States and would result in a substantial financial loss to a United States firm. “(2) Paragraph (1) shall not apply in the case of a memorandum of understanding or agreement described in paragraph (1) if the Secretary of Defense, in consultation with the Secretary of Commerce and the Secretary of State, determines that a transfer of United States defense technology pursuant to such understanding or agreement will result in strengthening the national security of the United States and so certifies to Congress. “(3) If a United States firm is required under the terms of a memorandum of understanding, or other agreement entered into by the United States with a foreign country, to transfer defense technology to a foreign country, the United States firm may protest the determination to the Secretary of Defense on the grounds that the transfer of such technology would adversely affect the defense industrial base of the United States and would result in substantial Claims. financial loss to the protesting firm. The Secretary of Defense, in consultation with the Secretary of Commerce and the Secretary of State, shall make the final determination of the validity of the protesting firm’s claim. “(c) Notification Regarding Offsets.— If at any time a United States firm enters into a contract for the sale of a weapon system or defense-related item to a foreign country or foreign firm and such contract is subject to an offset arrangement exceeding $50,000,000 in value, such firm shall notify the Secretary of Defense of the proposed Regulations. sale. Notification shall be made under this subsection in accordance with regulations prescribed by the Secretary of Defense in consultation with the Secretary of Commerce. “(d) Definitions.— In this section: (1) The term ‘United States firm’ means a business entity that performs substantially all of its manufacturing, production, and research and development activities in the United States. (2) The term ‘foreign firm’ means a business entity other than a United States firm.”.Defense Conversion, Reinvestment, and Transition Assistance Act of 1992
Pub. L. 102–484 div. D title XLII § 4202(a) · 106 Stat. 2315
Changed · 10 U.S.C. § 4852
Pub. L. 102–484 renumbered section 2505 of this title as section 2532
Source evidence
Code amendment note
Pub. L. 102–484 renumbered section 2505 of this title as section 2532.Enacted provision · exact public law section
(a) Repeal and Redesignation of Existing Provisions.— Chapter 148 (other than sections 2504 through 2507), chapter 149 (other than sections 2517 and 2518), and chapter 150 (other than sections 2524, 2525, and 2526) of title 10, United States Code, are repealed. Sections 2504, 2505, 2506, and 2507 of such title are redesignated as sections 2531, 2532, 2533, and 2534, respectively.William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021
Pub. L. 116–283 div. A title XVIII § 1870(b) · 134 Stat. 3388
Changed · 10 U.S.C. § 4852
Pub. L. 116–283 renumbered section 2532 of this title as this section
Source evidence
Code amendment note
Pub. L. 116–283 renumbered section 2532 of this title as this section.Enacted provision · exact public law section
(b) Transfer and Redesignation of Sections 2531 and 2532.— Sections 2531 and 2532 of title 10, United States Code, are transferred to chapter 385 of such title, as added by subsection (a), inserted after the table of sections at the beginning of subchapter I, and redesignated as sections 4851 and 4852, respectively.Effective date note
Amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.
3 of 3 references resolved to an enrolled provision
Editorial Notes
Amendments1992–2021 · 2 rounds
2021
Pub. L. 116–283 renumbered section 2532 of this title as this section.
1992
Pub. L. 102–484 renumbered section 2505 of this title as section 2532.
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
Amendment by Pub. L. 116–283 effective , with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as a note preceding section 3001 of this title.
Contractual Offset Arrangements; Congressional Statement of Findings
Pub. L. 100–456, div. A, title VIII, § 825(a), , 102 Stat. 2019, provided that:
“Congress makes the following findings:
“(1) Many contracts entered into by United States firms for the supply of weapon systems or defense-related items to foreign countries and foreign firms are subject to contractual arrangements under which United States firms must agree—
“(A) to have a specified percentage of work under, or monetary amount of, the contract performed by one or more foreign firms;
“(B) to purchase a specified amount or quantity of unrelated goods or services from domestic sources of such foreign countries; or
“(C) to invest a specified amount in domestic businesses of such foreign countries.
Such contractual arrangements, known as ‘offsets’, are a component of international trade and could have an impact on United States defense industry opportunities in domestic and foreign markets.
“(2) Some United States contractors and subcontractors may be adversely affected by such contractual arrangements.
“(3) Many contracts which provide for or are subject to offset arrangements require, in connection with such arrangements, the transfer of United States technology to foreign firms.
“(4) The use of such transferred technology by foreign firms in conjunction with foreign trade practices permitted under the trade policies of the countries of such firms can give foreign firms a competitive advantage against United States firms in world markets for products using such technology.
“(5) A purchase of defense equipment pursuant to an offset arrangement may increase the cost of the defense equipment to the purchasing country and may reduce the amount of defense equipment that a country may purchase.
“(6) The exporting of defense equipment produced in the United States is important to maintain the defense industrial base of the United States, lower the unit cost of such equipment to the Department of Defense, and encourage the standardized utilization of United States equipment by the allies of the United States.”
Negotiations With Countries Requiring Offset Arrangements
Pub. L. 100–456, div. A, title VIII, § 825(c), , 102 Stat. 2021, as amended by Pub. L. 101–189, div. A, title VIII, § 816, , 103 Stat. 1501, provided that:
“(1) The President shall enter into negotiations with foreign countries that have a policy of requiring an offset arrangement in connection with the purchase of defense equipment or supplies from the United States. The negotiations should be conducted with a view to achieving an agreement with the countries concerned that would limit the adverse effects that such arrangements have on the defense industrial base of each such country. Every effort shall be made to achieve such agreements within two years after .
“(2) In the negotiation or renegotiation of any memorandum of understanding between the United States and one or more foreign countries relating to the reciprocal procurement of defense equipment and supplies or research and development, the President shall make every effort to achieve an agreement with the country or countries concerned that would limit the adverse effects that offset arrangements have on the defense industrial base of the United States.”
[For delegation of functions of President under section 825(c) of Pub. L. 100–456 to Secretary of Defense and United States Trade Representative, see section 5–201 of Ex. Ord. No. 12661, 54 F.R. 779, set out as a note under section 2901 of Title 19, Customs Duties.]
Credits
1988–2021 · 3 acts
- 1988Added Pub. L. 100–456, div. A, title VIII, § 825(b), , 102 Stat. 2020, § 2505
- 1992renumbered § 2532, Pub. L. 102–484, div. D, title XLII, § 4202(a), , 106 Stat. 2659
- 2021renumbered § 4852, Pub. L. 116–283, div. A, title XVIII, § 1870(b), , 134 Stat. 4284.
Show as published
(Added Pub. L. 100–456, div. A, title VIII, § 825(b), , 102 Stat. 2020, § 2505; renumbered § 2532, Pub. L. 102–484, div. D, title XLII, § 4202(a), , 106 Stat. 2659; renumbered § 4852, Pub. L. 116–283, div. A, title XVIII, § 1870(b), , 134 Stat. 4284.)