DoD awards $19M for semiconductor manufacturing, with a focus on domestic production capabilities
Contract Overview
Contract Amount: $19,068,459 ($19.1M)
Contractor: Globalfoundries U.S. 2 LLC
Awarding Agency: Department of Defense
Start Date: 2025-04-29
End Date: 2026-03-31
Contract Duration: 336 days
Daily Burn Rate: $56.8K/day
Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Pricing Type: FIRM FIXED PRICE
Sector: Defense
Official Description: SOW 25-5C9
Place of Performance
Location: ESSEX JUNCTION, CHITTENDEN County, VERMONT, 05452
State: Vermont Government Spending
Plain-Language Summary
Department of Defense obligated $19.1 million to GLOBALFOUNDRIES U.S. 2 LLC for work described as: SOW 25-5C9 Key points: 1. Contract value represents a significant investment in bolstering domestic semiconductor supply chains. 2. The award is part of a broader strategy to reduce reliance on foreign semiconductor sources. 3. Performance period spans over a year, indicating a need for sustained manufacturing support. 4. Fixed-price contract type suggests clear cost expectations and risk allocation. 5. The specific NAICS code points to a specialized segment of the manufacturing sector.
Value Assessment
Rating: good
The contract value of $19.1 million for semiconductor manufacturing services appears reasonable given the strategic importance and specialized nature of the work. Benchmarking against similar large-scale defense contracts for microelectronics, this figure aligns with investments aimed at securing critical supply chains. The firm fixed-price structure provides cost certainty for the government, though it places the financial risk on the contractor.
Cost Per Unit: N/A
Competition Analysis
Competition Level: limited
This contract was awarded under 'FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES,' indicating that while competition was sought, certain sources were initially excluded. The specifics of this exclusion are not detailed, but it suggests a targeted approach to finding qualified vendors. The limited nature of the competition may impact the government's ability to secure the absolute lowest price compared to a fully open solicitation.
Taxpayer Impact: The limited competition means taxpayers may not benefit from the most aggressive pricing that could have been achieved through a broader, unrestricted bidding process.
Public Impact
The Department of Defense is the primary beneficiary, enhancing its access to critical semiconductor components. Services delivered will support the manufacturing of semiconductors vital for national security applications. The geographic impact is likely concentrated where the manufacturing facilities are located, potentially creating or sustaining high-tech jobs. This contract supports the U.S. semiconductor industry's efforts to onshore production and reduce foreign dependency.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Potential for limited competition to result in higher costs for taxpayers.
- Lack of transparency regarding the exclusion of sources could mask underlying issues.
- Dependence on a single contractor for critical components carries inherent supply chain risks.
Positive Signals
- Direct investment in domestic semiconductor manufacturing capacity is a positive step for national security.
- Firm fixed-price contract provides budget predictability.
- Longer performance period ensures sustained support for critical defense needs.
Sector Analysis
This contract falls within the semiconductor manufacturing sector, a critical but highly concentrated industry globally. The U.S. has been actively seeking to revitalize its domestic semiconductor production capabilities due to national security concerns and supply chain vulnerabilities exposed by geopolitical events. Spending in this area is often characterized by high capital investment and specialized technological expertise. Comparable spending benchmarks are difficult to establish precisely due to the proprietary nature of semiconductor manufacturing, but significant government investments are being made across the sector.
Small Business Impact
The 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 set-aside provision. The primary contractor, GLOBALFOUNDRIES U.S. 2 LLC, is a large entity, and any subcontracting opportunities would be at their discretion, not mandated by a small business set-aside.
Oversight & Accountability
Oversight for this contract will likely be managed by the Defense Microelectronics Activity (DMEA) and the contracting officer's representative (COR). The firm fixed-price nature of the contract provides a degree of financial oversight by locking in costs. Transparency regarding the specific manufacturing processes and outcomes may be limited due to the sensitive nature of defense-related semiconductor production. Inspector General jurisdiction would apply in cases of fraud, waste, or abuse.
Related Government Programs
- CHIPS and Science Act Programs
- Defense Production Act Investments
- DoD Microelectronics Strategy
- National Security Technology Accelerator (NSTA)
Risk Flags
- Limited Competition
- Potential Supply Chain Vulnerability (despite domestic focus)
- Technological Obsolescence Risk
Tags
defense, department-of-defense, semiconductor-manufacturing, microelectronics, firm-fixed-price, limited-competition, domestic-production, national-security, supply-chain, manufacturing, usa, vermont
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $19.1 million to GLOBALFOUNDRIES U.S. 2 LLC. SOW 25-5C9
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 $19.1 million.
What is the period of performance?
Start: 2025-04-29. End: 2026-03-31.
What is the track record of GLOBALFOUNDRIES U.S. 2 LLC in fulfilling defense contracts, particularly those involving semiconductor manufacturing?
GLOBALFOUNDRIES U.S. 2 LLC is a significant player in the semiconductor manufacturing industry. While specific details on their past defense contract performance are not provided in this data snippet, the company has a history of producing advanced semiconductor technologies. Their involvement in this Department of Defense contract suggests they possess the necessary capabilities and security clearances. A deeper dive into their contract history with DoD and other federal agencies, including performance reviews and any past issues, would be necessary for a comprehensive assessment of their track record. However, their selection for a contract of this magnitude implies a level of confidence from the awarding agency in their ability to meet requirements.
How does the awarded amount of $19.1 million compare to typical government spending on similar semiconductor manufacturing services?
The $19.1 million award for semiconductor manufacturing services is substantial, reflecting the high costs associated with advanced fabrication and the strategic importance of domestic production. Benchmarking this against typical government spending is challenging due to the specialized nature of semiconductor manufacturing and the varying scope of services. However, considering the national security implications and the need to build resilient supply chains, investments in this range are becoming more common, especially under initiatives like the CHIPS Act. This amount is likely intended to cover a significant portion of production runs or specific technological development phases, rather than routine, low-volume manufacturing. Comparisons would ideally be made with other DoD or national security-related microelectronics procurements.
What are the primary risks associated with this contract, and how are they being mitigated?
Key risks include potential supply chain disruptions (even with domestic focus), technological obsolescence, cost overruns (despite fixed-price), and contractor performance issues. Mitigation strategies likely involve robust quality assurance, clear performance metrics in the SOW, contingency planning for material sourcing, and potentially multiple production facilities or lines if available to the contractor. The firm fixed-price nature shifts cost overrun risk to the contractor, but could incentivize cutting corners if not properly monitored. The limited competition also presents a risk of suboptimal pricing. The DoD's oversight and the contractor's own risk management protocols are crucial.
What is the expected effectiveness of this contract in achieving its objective of bolstering domestic semiconductor production?
The effectiveness hinges on several factors: the specific capabilities of GLOBALFOUNDRIES U.S. 2 LLC, the clarity and scope of the Statement of Work (SOW), and the overall strategic alignment with broader U.S. semiconductor initiatives. If the contract funds the production of critical, high-demand components that are currently sourced internationally, it will directly contribute to domestic capacity. Its success will also be measured by the reliability and quality of the manufactured semiconductors and the contractor's ability to meet delivery schedules. This award is likely one piece of a larger puzzle aimed at re-shoring and securing the semiconductor supply chain for defense applications.
How does this contract fit into historical federal spending patterns for semiconductor manufacturing and defense-related technology?
Historically, federal spending on semiconductor manufacturing has fluctuated, often increasing during periods of perceived national security risk or technological competition. Recent years have seen a significant uptick, driven by concerns over global supply chain vulnerabilities and strategic competition. This $19.1 million award is indicative of this trend, representing a more focused and substantial investment compared to some past, smaller-scale R&D or niche production contracts. It aligns with a strategic shift towards ensuring domestic capabilities for critical technologies, moving beyond purely R&D funding to direct manufacturing support.
Industry Classification
NAICS: Manufacturing › Semiconductor and Other Electronic Component Manufacturing › Semiconductor and Related Device Manufacturing
Product/Service Code: RESEARCH AND DEVELOPMENT › C – National Defense R&D Services
Competition & Pricing
Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES
Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE
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: $19,270,325
Exercised Options: $19,270,325
Current Obligation: $19,068,459
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES
Cost or Pricing Data: NO
Parent Contract
Parent Award PIID: HQ072723D0003
IDV Type: IDC
Timeline
Start Date: 2025-04-29
Current End Date: 2026-03-31
Potential End Date: 2026-03-31 00:00:00
Last Modified: 2025-12-30
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