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72.

What level of competition are offset contracts subject to?

Score

SCORE: 25/100

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There is no provision from the Public Procurement Code about offset contracts [1]. In practice, procurement officials do not use this type of contract [2][3] [4].

Single-source offset contracts are not justified . They are entered into at the discretion of senior military officials, who issue directives to procurement officers without seeking to justify anything [1] [2].

Cameroon has not explicitly prohibited offset contracts in the defence sector. It has neither defined them nor scheduled a legal provision related to this commercial practice [1] [2].

Offset contracts in the defence sector are not regulated within the legal framework for public procurement in Côte d’Ivoire [1]. Nor are they common practice in Côte d’Ivoire [2].

Because there are no regulations on offset contracts, there are no formal policies or procedures (1).

There is no explicit reference in Kenyan law or defence procurement regulations to competition requirements for offset contracts. Offset agreements, where they exist, appear to be managed via bilateral defence cooperation arrangements or direct procurement methods, particularly for strategic acquisitions. In such cases, competition is often bypassed. For example, as a background, the 10th Parliament’s investigation into the Kenya Defence Forces Modernisation Programme highlighted several contracts awarded through non-competitive methods, including direct procurement. These were not framed as offset contracts per se, but may have involved countertrade or industrial participation elements that resemble offset practices [1].

However, these arrangements lacked transparency and value-for-money safeguards. There is no evidence that such offset-like contracts were subject to open, competitive tendering, nor are there formal provisions requiring this [2].

Liberia does not regulate or practice offset contracting in its defence procurement. As such, there is no evidence of offset contracts being awarded on a single-source basis, nor of any justification processes. While bilateral arrangements exist in other policy domains (such as climate finance agreements supervised by the EPA),[2] these are not defence procurements and do not constitute offset contracts under the PPCC.

The Public Procurement Code does not mention the existence of compensation markets [1]. Specialists in the field also confirm this absence [2][3].

There are no formal policies and procedures related to offset contracts.[1]

The Regulation on Equipment and Armament of the Defence and Security Forces in Mozambique that addresses the issue of compensation contracts does not address competition levels [1]. Thus, if this type of contracts exists, they are treated as Classified Documents and it was not possible to obtain information and justifications on the subject [2, 3].

Niger does not impose any competition requirements or restrictions on the use of agents and intermediaries in offset contracts, as there is no legal framework regulating such agreements. A review of the 2013 decree on defense and security procurement found no provisions ensuring competitive bidding or restricting the involvement of intermediaries in offset contracts [1]. Additionally, there is no evidence that Niger has publicly committed to regulating the use of agents and intermediaries in defense procurement [2]. Given the lack of legal safeguards and oversight mechanisms, any offset contracts—if they were introduced—could be awarded arbitrarily, with no requirement for transparency, competition, or anti-corruption controls.

Offset contracts are excessively secretive arrangement in the defence procurement realm. As such, it is hardly made public. However, government officials can mention ongoing bilateral discussions that are suggestive of offset agreements that will bolster technological transfer to the country. Recently, Ministry of Defence in Nigeria announced collaborative discussions between NEANY and DICON to establish assembly lines in Nigeria for the production of advanced military equipment [1].

Offset contracts are explicitly prohibited under Senegal’s Public Procurement Code (Decree No. 2020-1235), so there is no competitive process for them. No legal framework exists for the competitive bidding of offset contracts, as they are not allowed [1] . This aligns with previous information stating no regulatory framework for offset contracts is in place. Therefore, this indicator is marked as Not Applicable.

In terms of the “Arms Deal”, the responsibility for the selection of subcontractors related to offsets rests with the main contractor with the caveat that Armscor can mandate that the main contractor subcontracts with enterprises owned by designated groups. A joint investigation into irregularities related to the “Arms Deal” found that main contractors did not follow formal or competitive procurement processes for the selection of subcontractors that would benefit from offsets agreements [1]. Although the case is from 2001, this is the most recent case of offsets and corruption. The 2022 report of the Zondo Commission revisited aspects of the Arms Deal and confirmed that the lack of transparency in subcontracting persists due to outdated procurement rules and absence of new offset agreements in two decades [2].

Offset or compensatory contracts in the South Sudanese defence sector are handled with virtually no transparency and minimal competition. Investigative reporting by the Organized Crime and Corruption Reporting Project (OCCRP) uncovered that in 2018 the Defence Ministry awarded an $81 million no-bid contract for military vehicles and communications equipment to Lou Trading, a single private firm, without formal competitive tender— the firm submitted the only bid and the Defence Ministry negotiated directly with it. Even internal legal advisors acknowledged the lack of urgency or justification for skipping open bidding, yet the finance ministry still approved the deal despite contradicting standard procurement rules and budget limits. [1] These offset-like contracts bypassed basic competitive standards, lacked documentation of alternate bids or evaluative criteria, and were driven by internal patronage networks rather than transparent, regulated processes [2].

Offset contracts are not conducted as open competition, as there is no formal framework governing offset contracts, and defence procurement practices often lack transparency. Defence-related contracts, including potential offset agreements, are frequently single-sourced and rarely subject to adequate justification or external scrutiny. For example, the procurement of fighter jets was awarded to an Israeli businessman without any tendering or bidding process, highlighting the lack of transparency and oversight in such dealings[1][2].

There is no information on off-set contracts because the defence forces does not make the contracts available to verify this information [1][2].

Country Sort by Country 72. Sort By Subindicator
Benin 0 / 100
Burundi 0 / 100
Cameroon 0 / 100
Cote d'Ivoire 0 / 100
Ghana 0 / 100
Kenya 0 / 100
Liberia 0 / 100
Madagascar 0 / 100
Mali 0 / 100
Mozambique 0 / 100
Niger 0 / 100
Nigeria 25 / 100
Senegal NA
South Africa 25 / 100
South Sudan 0 / 100
Uganda 0 / 100
Zimbabwe 0 / 100

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