DoD's $50.6M ASIC contract awarded to GlobalFoundries U.S. 2 LLC for semiconductor manufacturing

Contract Overview

Contract Amount: $50,588,888 ($50.6M)

Contractor: Globalfoundries U.S. 2 LLC

Awarding Agency: Department of Defense

Start Date: 2023-10-27

End Date: 2025-03-31

Contract Duration: 521 days

Daily Burn Rate: $97.1K/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 $50.6 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. Contract focuses on critical Application Specific Integrated Circuits (ASIC) for defense applications. 2. Awarded under Full and Open Competition after Exclusion of Sources, indicating a specific procurement process. 3. The contract duration of 521 days suggests a medium-term need for these specialized components. 4. FIRM FIXED PRICE contract type aims to control costs and provide budget certainty. 5. The North American Industry Classification System (NAICS) code 334413 points to semiconductor manufacturing. 6. The issuing agency, Defense Microelectronics Activity, specializes in microelectronics for the DoD.

Value Assessment

Rating: good

The contract value of $50.6 million for specialized ASICs appears reasonable given the critical nature of the components and the sole-source nature of the award after exclusion of sources. Benchmarking against similar DoD microelectronics procurements would provide further insight into value for money. The fixed-price structure is a positive indicator for cost control.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'Full and Open Competition after Exclusion of Sources.' This suggests that while competition was sought, certain sources may have been excluded based on specific criteria, potentially limiting the pool of bidders. Further details on the exclusion rationale are needed to fully assess the competitive landscape and its impact on price discovery.

Taxpayer Impact: The limited competition, even after an initial open phase, may result in less aggressive pricing for taxpayers compared to a truly open and unrestricted competition.

Public Impact

Benefits the Department of Defense by securing essential microelectronic components for national security. Delivers Application Specific Integrated Circuits (ASICs) crucial for advanced defense systems. Geographic impact is primarily within the United States, supporting domestic semiconductor manufacturing capabilities. Workforce implications include supporting skilled labor in the semiconductor manufacturing sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition after exclusion of sources could lead to higher prices.
Reliance on a single awardee for critical components poses supply chain risk.
Lack of detailed performance metrics in the provided data makes assessing effectiveness challenging.

Positive Signals

Fixed-price contract type provides cost certainty.
Award to GlobalFoundries U.S. 2 LLC leverages established semiconductor manufacturing expertise.
Contract supports domestic microelectronics capabilities, aligning with national security interests.

Sector Analysis

This contract falls within the semiconductor manufacturing sector, specifically focusing on Application Specific Integrated Circuits (ASICs). The market for ASICs is highly specialized, driven by demand for custom-designed chips in various high-tech industries, including defense, aerospace, and consumer electronics. The DoD's spending in this area is critical for maintaining technological superiority and national security, often requiring advanced manufacturing capabilities that only a few domestic or allied firms possess.

Small Business Impact

The provided data does not indicate any specific small business set-aside provisions for this contract. Given the specialized nature of ASIC manufacturing and the award to a large entity like GlobalFoundries, it is unlikely that small businesses would be direct prime contractors. However, opportunities for small businesses may exist further down the supply chain as subcontractors, though this is not explicitly detailed.

Oversight & Accountability

Oversight for this contract would likely fall under the Defense Microelectronics Activity (DMEA) and potentially the Department of Defense's Inspector General. Accountability measures are typically embedded within the contract terms, including delivery schedules, quality standards, and payment milestones. Transparency is facilitated through contract award databases, though specific details of the 'exclusion of sources' rationale would require further inquiry.

Related Government Programs

DoD Microelectronics Strategy
Semiconductor Supply Chain Security
Defense Industrial Base
Advanced Manufacturing Programs

Risk Flags

Limited competition after exclusion of sources
Potential supply chain concentration risk
Reliance on specialized manufacturing capabilities

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $50.6 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 $50.6 million.

What is the period of performance?

Start: 2023-10-27. End: 2025-03-31.

What specific defense systems or applications will these ASICs support?

The provided data does not specify the exact defense systems or applications that these Application Specific Integrated Circuits (ASICs) will support. However, ASICs are custom-designed integrated circuits tailored for a particular use, rather than general-purpose use. In a defense context, they are critical for a wide range of advanced technologies, including radar systems, communication equipment, electronic warfare systems, guidance systems for missiles and aircraft, and secure computing devices. The 'Trusted Foundry' aspect mentioned in the contract name (THE TRUSTED FOUNDRY ACCESS - TFA) suggests a focus on ensuring the security and integrity of these microelectronics, which is paramount for national security applications where foreign interference or tampering is a significant concern.

What was the rationale for excluding other sources in the competition?

The rationale for excluding other sources in the 'Full and Open Competition after Exclusion of Sources' award is not detailed in the provided data. Typically, such exclusions are based on stringent requirements related to national security, supply chain integrity, technological capability, or adherence to specific government programs like the Trusted Foundry Program. For microelectronics, this often involves ensuring that the manufacturing process and the origin of materials meet rigorous security standards to prevent counterfeiting or the insertion of malicious logic. Agencies may exclude sources that cannot meet these specific, often proprietary or highly regulated, requirements, even if they possess general manufacturing capabilities.

How does this contract's value compare to similar ASIC procurements by the DoD?

Direct comparison of this $50.6 million contract value to similar ASIC procurements by the DoD is challenging without access to a broader dataset of comparable contracts. The value of ASIC contracts can vary significantly based on the complexity of the chip design, the required production volume, the specific manufacturing processes involved, and the level of security assurance (e.g., Trusted Foundry). Given that this contract is for specialized ASICs and awarded under a process that implies specific security and capability requirements, its value should be assessed in the context of these unique demands rather than general semiconductor market rates. The fixed-price nature suggests an effort to cap costs, but the ultimate value for money depends on the successful delivery of high-quality, secure ASICs.

What are the potential risks associated with relying on GlobalFoundries U.S. 2 LLC for these critical components?

Potential risks associated with relying on GlobalFoundries U.S. 2 LLC for these critical components include supply chain concentration, potential for production delays, and the possibility of cost overruns if unforeseen issues arise, despite the fixed-price contract. As a single awardee for specialized ASICs, any disruption to GlobalFoundries' operations—whether due to natural disasters, geopolitical events, labor issues, or internal manufacturing problems—could directly impact the DoD's ability to procure these essential parts. Furthermore, while the contract is fixed-price, complex technological procurements can sometimes encounter unexpected technical challenges that strain the initial cost estimates or require contract modifications. The 'Trusted Foundry' aspect, while enhancing security, also implies a potentially more complex and less flexible manufacturing environment.

What is the historical spending pattern for ASIC procurement by the Defense Microelectronics Activity?

The provided data does not include historical spending patterns for ASIC procurement by the Defense Microelectronics Activity (DMEA). To assess historical trends, one would need to analyze DMEA's contract awards over several fiscal years, identifying contracts specifically for ASICs or related microelectronic components. This analysis would reveal whether spending in this area is increasing, decreasing, or remaining stable, and whether the DMEA typically uses full and open competition, sole-source awards, or other contracting methods for such procurements. Understanding historical patterns is crucial for contextualizing the current $50.6 million award and for forecasting future budgetary needs and procurement strategies.

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: $50,588,888

Exercised Options: $50,588,888

Current Obligation: $50,588,888

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072723D0003

IDV Type: IDC

Timeline