The Bureau of Industry and Security (BIS) prepares an annual report to Congress on the impact of offsets in defense trade pursuant to Section 723 of the Defense Production Act of 1950, as amended.

Offsets in defense trade encompass a range of industrial compensation arrangements required by foreign governments as a condition of the purchase of defense articles and services from a non-domestic source.

BIS collects data annually from U.S. firms involved in defense exports with associated offset agreements in order to assess the impact of offsets in defense trade. BIS updated the Reporting of Offsets Agreements in Sales of Weapon Systems or Defense-Related Items to Foreign Countries or Foreign Firms regulation (15 CFR Part 701) in 2009.

BIS also participates in an interagency team established to consult with foreign nations on limiting the adverse effects of offsets in defense procurement.

Items offered as part of an offset transaction may require an export license from the relevant U.S. Government agency. For items that require an export license, such as items controlled for Missile Technology (MT) reasons, exporters are advised to consult with the Departments of Commerce, Defense, and State to obtain export control policy guidance prior to offering such items as part of an offset transaction.

This Web site includes a wide range of offsets in defense trade resources, including the Offset Reporting regulations, guidance and recommended format for reporting offset activities, frequently asked questions on offsets, and copies of recent reports to Congress and the Presidential Policy on Offsets.