Industrial Cooperation: Frequently Asked Questions

Industrial cooperation is a defence-industrial strategic tool designed to ensure that Norwegian national security interests are safeguarded during major foreign acquisitions. Its core purpose is to maintain, further develop, or create competitive national industrial capacity and technical competence in areas vital to the Armed Forces' future needs and operational capability.

While industrial growth and national value creation are positive effects of these agreements, they are not goals in themselves that can ever trump defence capability. Simply put, our mandate is to build defence capability, and industrial cooperation serves as a vital tool to ensure our security of supply and the strength of our national industrial base.

"Offset" often implies a transactional obligation that can be satisfied through unrelated purchases. Industrial cooperation is different as it is designed around strategic value, technology transfer, and high-tech development that would not necessarily be reflected in a simple 1:1 exchange. Using the term "offset" is considered outdated and does not reflect our modern requirements.

As a general rule, an ICA is required for all foreign defence acquisitions exceeding 100 million NOK. This obligation is also triggered in the following specific circumstances:

• If a Norwegian-registered contractor is used, but foreign production or sub-deliveries exceed 100 million NOK, an ICA is mandatory. This applies even if the companies belong to the same corporation.
• If an initial contract is under 100 million NOK, but total value is expected to exceed the threshold through options or additional purchases within five years, an ICA must be established.

It is also worth noting that an ICA must be finalised and signed before the main procurement contract can be concluded. The NDMA will not authorise the signature of the primary contract until all industrial obligations are legally secured.

The NDMA specifically seeks projects that align with the strategic technology areas defined in the National Defence Industrial Strategy (Meld. St. 17 (2020–2021)).

These include:

• Command, control and information, ​decision support and combat systems (incl. radar systems).
• System integration
• Autonomous systems
• Missile technology
• Underwater technology: Specialist sub-surface and maritime technologies. 
• Ammunition & weapon stations: ammunition, military explosives, aiming devices, and Remotely Controlled Weapon Stations (RWS). 
• Specialised material technology: Materials specifically developed or adapted for military applications
• Life cycle support for military land, air and sea systems​

Projects are divided into three categories based on their strategic importance:

• Category I (Strategic projects): Projects essential for national security. Minimum 50% of a supplier's total obligation must fall into this category.
• Category II (Defence-related projects): Standard military materiel and technology.
• Category III (Security-related projects): Protection of fundamental national functions (Grunnleggende Nasjonale Funksjoner). This category is limited to a maximum of 25% of the total obligation.

We only credit new growth. A project must be a direct result of the defence contract, meaning the activity or technology transfer would not have occurred without this agreement. Existing business relationships are generally not credited unless there is a significant, documented expansion of the partnership.

To incentivise high-value cooperation, we use factors between 0.1 and 5.0. This means the "credit value" of a project can be significantly higher than the actual financial investment.

• Standard Procurement: Usually credited at a factor of 1.0.
• Technology cooperation, including Research & Development (R&D): Factor 1.0 - 5.0.
• Technology Transfer: Factor 1.0 - 2.5.
• Assistance related to market development/market access: Factor 0.1 - 2.0

Yes. We prioritise the inclusion of SMEs in international supply chains. We apply an additional multiplier for these partners:

• Small Enterprises: factor 1.5.
• Medium Enterprises: factor 1.3.

This makes Norwegian SMEs highly attractive partners for foreign suppliers looking to fulfil their ICA obligations efficiently.

Only the portion of value creation that actually takes place in Norway is credited.

• >80% Norwegian share: The project is credited at 100% value.
• <20% Norwegian share: The project receives 0% credit.
• 20% to 80%: Credited based on the actual percentage of Norwegian value creation.

The NDMA maintains a list of foreign suppliers with remaining industrial cooperation obligations. We encourage Norwegian companies to identify relevant actors on this list and proactively pitch projects that align with our priority technology areas.

The foreign supplier forwards proposals for industrial cooperation projects to the Office for Industrial Cooperation at the NDMA for evaluation and potential approval. While the Norwegian Ministry of Defence owns the regulations, the NDMA is responsible for negotiating and managing these agreements on behalf of the Ministry.  Ideally, you should submit your industrial cooperation proposal at the same time you submit your bid for the main defence contract.

The ICA must be finalised and signed before the main procurement contract can be concluded. The negotiation of the ICA runs in parallel with the main contract negotiations.

• Suppliers must submit an annual report by 31 March covering activities from the previous calendar year.
• The NDMA will provide feedback and credit approvals by 30 September.
• Activities cannot be credited if they were completed more than two years prior to the reporting date.

We take these commitments seriously. Failure to meet milestones or final obligations leads to:

• Financial penalties of a minimum of 10% of the outstanding value at milestones.
• The supplier will be barred from participating in future competition for deliveries to the Armed Forces until the commitment has been fulfilled.

The defence sector and its suppliers shall operate in line with good business practices and ensure high ethical standards. Foreign suppliers may not restrict a Norwegian partner's ability to provide an independent assessment of a project to the NDMA. Furthermore, Norwegian companies must not be used to lobby the Ministry of Defence regarding project values or factors.