DoD's $96M ASIC acquisition from GlobalFoundries U.S. 2 LLC awarded under full and open competition

Contract Overview

Contract Amount: $95,993,841 ($96.0M)

Contractor: Globalfoundries U.S. 2 LLC

Awarding Agency: Department of Defense

Start Date: 2023-09-20

End Date: 2025-03-31

Contract Duration: 558 days

Daily Burn Rate: $172.0K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: FIRM FIXED PRICE

Sector: Defense

Official Description: THE TRUSTED FOUNDRY ACCESS (TFA) CONTRACT ACQUIRED SUPPLIES ASSOCIATED WITH APPLICATION SPECIFIC INTEGRATED CIRCUITS (ASIC)

Place of Performance

Location: ESSEX JUNCTION, CHITTENDEN County, VERMONT, 05452

State: Vermont Government Spending

Plain-Language Summary

Department of Defense obligated $96.0 million to GLOBALFOUNDRIES U.S. 2 LLC for work described as: THE TRUSTED FOUNDRY ACCESS (TFA) CONTRACT ACQUIRED SUPPLIES ASSOCIATED WITH APPLICATION SPECIFIC INTEGRATED CIRCUITS (ASIC) Key points: 1. The contract focuses on acquiring Application Specific Integrated Circuits (ASICs), critical components for advanced defense systems. 2. Awarded through full and open competition, suggesting a robust market for these specialized semiconductor devices. 3. The contract duration of 558 days indicates a medium-term need for these integrated circuits. 4. The fixed-price contract type provides cost certainty for the Department of Defense. 5. The acquisition is managed by the Defense Microelectronics Activity, highlighting specialized procurement expertise. 6. The North American Industry Classification System (NAICS) code 334413 points to the semiconductor manufacturing sector.

Value Assessment

Rating: good

Benchmarking the value of this specific ASIC acquisition is challenging without detailed technical specifications and market comparisons for the exact components. However, the award to a known semiconductor manufacturer like GlobalFoundries suggests a competitive bid process likely yielded a fair market price for the specified integrated circuits. The firm fixed-price nature of the contract further supports value for money by capping potential cost overruns for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'Full and Open Competition After Exclusion of Sources.' While this indicates an initial intent for broad competition, the 'exclusion of sources' clause suggests specific criteria or prior exclusions may have narrowed the field. The number of bidders is not specified, but the 'full and open' designation implies that multiple qualified vendors were likely considered, fostering price discovery and potentially leading to more competitive pricing.

Taxpayer Impact: The use of full and open competition generally benefits taxpayers by encouraging a wider range of suppliers to bid, which can drive down prices and increase the likelihood of obtaining the best value for government spending.

Public Impact

The primary beneficiaries are the Department of Defense, which receives critical ASIC components for its advanced technological systems. The services delivered include the manufacturing and supply of specialized integrated circuits essential for defense applications. The geographic impact is primarily within the United States, given the domestic manufacturing capabilities of GlobalFoundries U.S. 2 LLC. Workforce implications include support for skilled labor in the semiconductor manufacturing sector, particularly in areas where GlobalFoundries operates.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential reliance on a single supplier for specific ASIC designs could pose a risk if that supplier faces production issues.
The 'exclusion of sources' clause, while allowing for competition, might limit the pool of potential suppliers and thus the breadth of competitive pressure.

Positive Signals

Awarding to a reputable domestic manufacturer like GlobalFoundries ensures access to advanced semiconductor technology.
The firm fixed-price contract provides budget predictability for the DoD.
The use of full and open competition, even with exclusions, suggests a structured procurement process aimed at achieving value.

Sector Analysis

The semiconductor industry is a cornerstone of modern technology, with ASICs being highly specialized chips designed for specific functions. The Defense Microelectronics Activity (DMEA) plays a crucial role in ensuring the U.S. military has access to cutting-edge microelectronics. This contract fits within the broader defense industrial base's need for secure and advanced semiconductor supply chains, particularly in light of global supply chain vulnerabilities. Comparable spending benchmarks are difficult to establish without specific ASIC details, but the overall defense spending on microelectronics is substantial.

Small Business Impact

The provided data indicates that this contract was not set aside for small businesses (ss: false, sb: false). Therefore, there are no direct subcontracting implications for small businesses arising from a small business set-aside. The primary focus is on large-scale semiconductor manufacturing capabilities, which are typically held by established companies like GlobalFoundries. The impact on the small business ecosystem would be indirect, potentially through the supply chain if smaller firms provide materials or services to GlobalFoundries.

Oversight & Accountability

Oversight for this contract would likely fall under the purview of the Defense Microelectronics Activity (DMEA) and potentially the Department of Defense's Inspector General. Mechanisms for accountability include the firm fixed-price contract terms, delivery schedules, and quality assurance provisions. Transparency is facilitated by the contract award notice, which provides basic details about the contractor, amount, and period of performance. Further oversight would involve performance reviews and audits as deemed necessary by the contracting agency.

Related Government Programs

Defense Microelectronics Activity (DMEA) Contracts
Semiconductor Manufacturing Contracts
Application Specific Integrated Circuits (ASIC) Procurement
Department of Defense Supply Chain Management

Risk Flags

Potential supply chain vulnerabilities in semiconductor manufacturing.
Risk of technological obsolescence for advanced defense systems.
Dependence on specific manufacturing processes and facilities.
Complexity of custom ASIC design and verification.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $96.0 million to GLOBALFOUNDRIES U.S. 2 LLC. THE TRUSTED FOUNDRY ACCESS (TFA) CONTRACT ACQUIRED SUPPLIES ASSOCIATED WITH APPLICATION SPECIFIC INTEGRATED CIRCUITS (ASIC)

Who is the contractor on this award?

The obligated recipient is GLOBALFOUNDRIES U.S. 2 LLC.

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Microelectronics Activity).

What is the total obligated amount?

The obligated amount is $96.0 million.

What is the period of performance?

Start: 2023-09-20. End: 2025-03-31.

What is the specific technical nature of the ASICs being acquired under this contract, and what are their intended applications within DoD systems?

The contract specifies the acquisition of Application Specific Integrated Circuits (ASICs). ASICs are custom-designed integrated circuits tailored for a particular use, rather than intended for general-purpose use. Within the Department of Defense, ASICs are critical for a wide range of advanced systems, including radar, electronic warfare, secure communications, guidance systems for munitions, and advanced computing platforms. Their specific design allows for optimized performance, reduced power consumption, and smaller form factors compared to general-purpose processors. The exact technical specifications and intended applications for this particular contract are not publicly detailed in the award notice but would be crucial for understanding the strategic importance and performance requirements of these components.

How does the pricing of this contract compare to similar ASIC procurements by the DoD or other federal agencies?

Direct price comparison for this $96 million contract is challenging without knowing the exact specifications, quantities, and complexity of the ASICs procured. ASIC development and manufacturing costs vary significantly based on process node, design complexity, testing requirements, and volume. However, the award to GlobalFoundries, a major semiconductor manufacturer, suggests that the pricing was determined through a competitive process. To perform a robust comparison, one would need to analyze the cost per gate, cost per function, or cost per unit for ASICs with similar performance characteristics and manufacturing technologies. Publicly available data on specific ASIC unit costs is often proprietary, making direct benchmarking difficult.

What are the key risks associated with this contract, and what mitigation strategies are in place?

Key risks include potential supply chain disruptions for specialized semiconductor manufacturing, technological obsolescence if the ASICs are for rapidly evolving systems, and performance issues if the custom designs do not meet stringent DoD requirements. Mitigation strategies likely involve GlobalFoundries' established manufacturing processes and quality control, the firm fixed-price nature of the contract which incentivizes contractor performance, and the DMEA's oversight role in monitoring production and delivery. The 'exclusion of sources' clause, while potentially limiting competition, might also be a risk mitigation if it ensures only highly qualified and vetted suppliers are considered for critical defense components.

What is the historical spending pattern for ASICs or similar microelectronics by the Defense Microelectronics Activity?

The Defense Microelectronics Activity (DMEA) is responsible for ensuring the U.S. military has access to advanced microelectronics, including ASICs. Historical spending patterns would likely show consistent investment in this area, reflecting the critical role of microelectronics in modern defense capabilities. DMEA often engages in strategic sourcing, technology insertion programs, and supply chain risk management, which involve various contract types and values. Analyzing past DMEA contracts for ASICs or related semiconductor services would reveal trends in technology focus, supplier relationships, and overall investment levels, indicating a sustained need for such specialized components.

How does the 'Full and Open Competition After Exclusion of Sources' designation impact the perceived value and competition level?

This designation indicates that while the competition was intended to be broad, certain sources were excluded. This could be due to specific technical requirements, security clearances, or prior relationships. The impact on value and competition is nuanced: it suggests a more controlled competition than purely 'full and open,' potentially limiting the number of bidders. However, if the exclusions were justified by technical necessity or risk management, the remaining competition could still yield good value. The key is understanding the rationale behind the exclusions; if they were arbitrary, it could reduce competitive pressure and potentially increase costs for taxpayers.

Industry Classification

NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Semiconductor and Related Device Manufacturing

Product/Service Code: ELECTRICAL/ELECTRONIC EQPT COMPNTS

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ072723R0001

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: Government of ABU Dhabi

Address: 1000 RIVER ST, ESSEX JUNCTION, VT, 05452

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Foreign Owned, Foreign-Owned and U.S.-Incorporated Business, Manufacturer of Goods, Not Designated a Small Business, Special Designations

Financial Breakdown

Contract Ceiling: $95,993,841

Exercised Options: $95,993,841

Current Obligation: $95,993,841

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072723D0003

IDV Type: IDC

Timeline