Welcome back to the podcast, bribe, swindle, or steel. I'm Alexandra Rogge, and today we're talking about offsets.

I've asked today's guest, Bill Steinman, to shed light on this slightly mysterious world for us.

Bill is a partner with Steinman and Rogers, a boutique, DC firm.

Because Bill does a great deal of work with aerospace and defense clients, he has spent a lot

of time addressing the compliance risks surrounding offsets. So Bill, thank you for joining me.

Oh, it's such a pleasure to be here. Thank you for having me.

Why don't you just start by telling us what offsets are?

For people who don't work in this field, they're a really peculiar animal.

There are a bit of a peculiar animal for people like me who work in this field regularly, to be quite candid.

To make it simple, offsets are primarily a feature in international defense and aerospace

procurement. And simply put, when a foreign sovereign purchases defense equipment or anything

that's going to be used by the Ministry of Defense, it's not necessarily limited to defense

equipment itself, but when a foreign Ministry of Defense, it's not necessarily limited to defense equipment itself.

But when a foreign Ministry of Defense acquires goods or services, an increasing trend over the last

20, 30 years, has been for the purchasing ministry to separately impose a financial burden

on the seller. And that financial burden is a set burden on the seller.

And that financial burden is a set dollar amount, and it obliges the seller to cause an amount

of economic benefit to flow into the country.

I'll give a couple of practical examples.

So let's say the Ministry of Defense in France

purchases an armored vehicle manufactured in Italy. The French Ministry of Defense might say to the

Italian manufacturer, thanks so much for these vehicles, we're going to impose an offset obligation

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