A brief guide to offset agreements in Poland. A way to boost Polish defense sector even further

On 1 January 2025, Poland will assume the presidency of the Council of the European Union. The Polish Presidency is to lay stress on European security. The Polish government, unlike many other EU leaders, prioritizes safety. The level of Poland's defense spending announced for next year, amounting to 4,7 percent of GDP, will make Poland a leading spender in NATO.

The priority of the Ministry of National Defense (MoD) is to develop a new national security strategy. Following this, a program for the development of the Armed Forces for the years 2025-2039 that is to be formulated will incorporate lessons learned from the Russian aggression on Ukraine. The Ministry of National Defense aims at limiting "ad hoc purchases," and insisting that procurement procedures will formulate requirements based on identified threats and operational needs. Additionally, the acquisition of equipment must be accompanied by the expansion of infrastructure and the adaptation of the army's training and educational facilities to fully utilize the new capabilities.

The new Polish government is committed to using the offset (and "Polonization") method more frequently, which is perceived as a useful tool for reinforcing Polish defense capabilities. Therefore, the arrangements with foreign suppliers would have to provide for either of those, so that the government ultimately allocates half of military expenditures to its domestic industrial base. It means that offset agreements are to become an essential part of the Polish defense landscape to be taken into consideration by all foreign bidders and contractors.

This brief publication provides an overview of the rules governing the applicability of the offset method, its key principles, specifics of its associated proceedings, its offer and implementational structure of contractual schemes.

We hope it will help understand the legal landscape of offset, and the accompanying opportunities and challenges.