Assured Supply for Microelectronics Manufacturing

The U.S. Army Contracting Command-New Jersey, Emerging Technologies Contracting Center (ACC-NJ-ET), Benet Laboratories, on behalf of the Office of the Under Secretary of Defense for Research and Engineering (OUSD(R&E)) is issuing a sources sought as means of conducting market research to seek information on business models and/or public-private partnerships to provide long-term, economically-viable, and assured sources to meet United States (U.S.) commercial and government needs for state-of-the-art (SOTA) microelectronics design, fabrication, and packaging within a domestic ecosystem. It is our goal to ensure the U.S. is recognized globally as the preferred source for developing superior technologies quickly, cost effectively, efficiently, and with the highest level of assurance. The U.S. Government (USG) is seeking inputs from commercial microelectronics industry, industrial and standards groups, research and development contributors from government and industry, and states and

regional governments, and private capital market players. Information that contributes to frameworks or specific implementation opportunities that can provide an integrated and holistic solution over partial and un-coordinated efforts are preferred. Sources are encouraged to pay attention to the effects and ease of implementing assurance and security practices so the resultant parts and access meet USG needs and provide partnering companies with market-differentiating qualities for their customer base.The appropriate North American Industry Classification System (NAICS) identifiers include: 334413 Semiconductor and Related Device Manufacturing.THIS IS A REQUEST FOR INFORMATION (RFI) ONLY. This RFI is issued solely for information and planning purposes - it does not constitute a Request for Proposal (RFP) or a promise to issue an RFP in the future. This request for information does not commit the Government to contract for any supply or service whatsoever or the authority to enter into negotiations to award a contract (see FAR 15.201(e)). Further, ACC-NJ-ET is not at this time seeking proposals and will not accept unsolicited proposals. Sources are advised that the U.S. Government will not pay for any information or administrative costs incurred in response to this RFI; all costs associated with responding to this RFI will be solely at the interested party's expense. No funds have been authorized, appropriated, or received for this effort. Not responding to this RFI does not preclude participation in any future RFP, if any is issued. If a solicitation is released, it will be synopsized on the Federal Business Opportunities (FedBizOpps) website. It is the responsibility of the potential Sources to monitor this site for additional information pertaining to this requirement.1.0 Background:The Problem: Microelectronics and semiconductors are now, and will continue to be, an underlying enabler for technical innovation, national security, and economic growth. Despite being an industry created in the U.S. and driven in previous decades by the needs of the USG, overseas competitors are challenging U.S. leadership in technology and production. The licit and illicit offshoring of intellectual property (IP), research and development (R&D), and production capabilities threaten the ability of U.S. companies to capitalize for the market-driving technologies of the future, opens critical infrastructure and data systems to attack, and degrades our national security. The current set of incentives offered by the USG can be better aligned to retain domestic capacity and technology leadership. The USG only represents less than 2% of the global commercial market for microelectronics, and with current USG unique procurement policies, standards, and security requirements, industry lacks incentives to willingly and affordably meet the government microelectronics demands.Cost of Inaction: Other nations will innovate faster, capture market share, and obtain the best technology at the expense of the U.S., impacting domestic innovation and the manufacturing base. The U.S. may lose the ability to realize the best ideas and capabilities across commercial and national security sectors, becoming dependent on competitor nations. A reliance on foreign-made microelectronics with unreliable assurance and security could disrupt USG access to advanced technology critical to national security, and in general, devastate U.S. manufacturing, business, financial, and communications infrastructure.Outcome Sought: The USG seeks to avoid these potentially disastrous outcomes. Our goal is to ensure the U.S. is recognized globally as the preferred source for superior microelectronics; delivering technology faster, more efficiently, and with the highest levels of assurance. The U.S. will retain and improve its infrastructure to advance microelectronics leadership, providing excellence from component design to product integration for both commercial and national security ecosystems. Domestic foundries and packaging capabilities will support these activities, translating leading-edge R&D into new products. Assurance and security become competitive advantages for U.S. industry practiced at all stages of development and production ensuring the nation delivers reliable and superior microelectronics components, systems, and capabilities more quickly than other nations. Critical market sectors, including internet-of-things, smart city, artificial intelligence and autonomy, big data and finance, automotive, space, communication, and biomedical develop a preference for assured microelectronic products because they are differentiated from foreign competitors by their superior assurance and security. Thus, industry adoption of enhanced assurance standards provide direct market incentives for assured products that U.S. commercial industry is uniquely positioned to provide and are preferred for USG and national infrastructure application.USG Actions and Requests: The USG recognizes the need to proactively engage with industry to make these efforts successful in delivering microelectronics technologies and providing value to the industrial base. The USG is executing a plan to provide semiconductor and microelectronics leadership now and into the future with a whole-of-government effort. Public-Private Partnerships (PPPs) are a critical part of this plan. The ACC-NJ-ET is requesting information on behalf of the USG on how to achieve the above outcomes most effectively. Sections below provide details of the response content and structure.2.0 Requested Information:Sources are encouraged to provide their perspective, input, and ideas for the structure and sustainability of commercial business arrangements and/or PPPs necessary to deliver microelectronics manufacturing and leadership in a domestic ecosystem now and into the future. Topics of interest range from Research and Development (R&D) to production, including ways to provide value to industry through market-differentiating advantages while ensuring USG assured access to the capabilities it needs from domestic sources. Highlighted topic areas below are important to the solution, but do not preclude the inclusion of other ideas, solution, and important topic areas.2.1 Responses should follow the basic outline and format listed below:• Background: The problem, cost of inaction, and desired outcome as seen from the source's point of view. This description should set up the proposed commercially viable business model and/or PPP solutions for microelectronics assurance and access in subsequent sections.• Specific Viable Business Opportunities: Comprehensive descriptions of the framework and technical implementation approaches and assumptions for a commercially viable business case and/or PPPs that cover:o The production ecosystem;o The R&D ecosystem; ando Integrated proposals where R&D feeds into production.• Assurance and Access Model: An approach for promoting and maintaining assurance and access supported by business cases for both domestically increasing competitive advantage in a global marketplace and ensuring the USG can securely acquire and leverage commercial microelectronic products and services.• Business Case Analysis for Sustainment and Advancement: Complete business case analysis of sustainable, commercially viable solutions as well as a business case for USG access and partnership. Business cases should include:o Specific partners and cost shares across government (regional, state, USG) and private industry, target industries and markets, and academia;o Commercial viability and leadership case must be made for a leadership position within 5 years; ando Access models that will meet current and future USG technology, business, and assurance needs.2.2 Details of information sought for each section are listed below:• Business Case Analysis of commercially viable solutions and/or PPP. State business model and business case description of commercially viable arrangements and/or industry-government partnerships that provide access, availability, and assurance to state-of-the-art (SOTA) or combined state-of-the-practice (SOTP) and SOTA design, foundry, and packaging and test services for critical national economic competitiveness and national security. Successful business models should address technical services for lifecycle support, including unique government requirements, product life modeling, failure analysis, and obsolescence. Elements of a successful business model include: key partners, key activities, key resources, value propositions, customer relationships, customer segments, channels for delivery and production, cost structure, and revenue streams. Provide partnering opportunities, including participant government programs, offices, and agencies. A mapping of key national economic competitiveness areas (e.g., internet-of-things, smart city, artificial intelligence and autonomy, big data and finance, automotive, space, robust-secure communication, and biomedical) and national security needs to the means of production, PPP components, business units (key resources), and financial models must be included. Sources should draw on the current best practices, reserve options, and modern computing and virtualization model capabilities and other services to support design and access. The business model should discuss the ability to sustain long-term commercial viability and any agreements necessary to support current and future needs for economic competitiveness and national security.• Technical approach. State and outline the technical approach and portion of the value chain the commercially viable solution and/or PPP would encompass (e.g., R&D separately, production alone, or an integrated solution). Describe capacity that could be made available and for what process nodes and technologies (e.g., application specific integrated circuit (ASIC) foundry for SOTA complementary metal-oxide-semiconductor (CMOS), mixed signal, memory, commercial-off-the-shelf (COTS), etc.). Describe access to, availability of, and the ability to augment IP and design services to reduce design cycle time and capture new technology within a U.S. ecosystem. Provide justification for how this approach promotes microelectronics innovation domestically and meets USG requirements for long term, economically viable, and assured microelectronics supply across commodity and advanced specialized technologies. The business case analysis should consider acquisition or access costs, capacity reservations or other purchase guarantees, annual operation and support costs, ownership, foreign ownership, control or influence (FOCI) concerns, support for low volume/high mix production (e.g., multi-project wafer runs required for R&D), and the ability of the foundry to address U.S. innovation and USG special requirements and/or the diversity of its requirements.• Cost/Funding Estimates and Methods. Provide a top-level breakdown of estimated implementation costs, financial and other business arrangements, and other incentives necessary to implement capability and sustain viability. Additionally, all sources when submitting their business case analysis for sustainment and advancement should anticipate the utilization of numerous financing and investment structures made available by the USG and private capital markets. These structures could include all combinations of (see section 5.2 Appendix for additional definitions):o Purchase commitmentso Short term working capital financingo Long term credit facilities and loan guaranteeso Tax credits, and education creditso Infrastructure support (including energy credits and/or energy supply)o Export financingo Financing for overseas investments (in allied and partner nations that pose minimal risk for IP loss)o Other company proposed financing / investing instruments and cost sharing models.The sources should identify the type of investments necessary, and the use for these funds (e.g., R&D, production scale-up, engineering costs, equipment purchase costs, and business development costs). Sources should anticipate utilizing these financing structures made available by both the private sector as well as USG agencies. If the approach includes a loan or loan guarantee, provide the assumed terms. Sources should provide guidance and insight into proposed ownership structures to identify foreign ownership and/or foreign oversight of their operations. Give consideration to sustainable operations and the anticipated longevity of the partnership. The business case analysis should consider the commercial viability (e.g., customer base, market position, revenues, and profitability) of resulting intellectual property, goods, or capital. Responses should also address the anticipated impacts of increased assurance necessary to differentiate U.S. produced products over less secure alternatives for their existing customer base to include the USG. Describe any other factors, including policy and regulatory actions, potentially impacting the long-term availability and access to the design, foundry, packaging, and test technologies in a U.S. domestic ecosystem.2.3 Cost Share. Estimate the likely cost share of the investment industry. The extent of cost sharing between the USG and industry is important and private investment must be the majority of any partnership. As an example of the USG business needs, the Department of Defense, which dominates the USG market-share, currently buys approximately $5.6B in total microelectronics, $1.4B in mil/aero microelectronics of which about 3% are custom ASIC microelectronics for defense purposes each year. Any government investments and incentives are to position domestic firms to become commercially viable, obtain a market leadership position, and support the limited USG needs for access and availability.2.4 Assumptions. State any assumptions used to derive the commercially viable solution and/or PPP, such as anticipated government requirements, government investments or other financial actions, actions or incentives by sub-federal governments, limitations under federal regulations (e.g., export controls), IP rights agreements for USG and industry partners, or anticipated markets for dual-use commodities resulting from the partnership. Describe any expectation or requirements for USG support, collaboration, and investment during development (e.g., on security features, radiation-hardening, and technical assessments).2.5 Assurance and Access. Where possible, this assessment should leverage existing resources, organizations, and activities that have researched this topic, and reuse their methodology or information where possible (e.g., the Institute of Defense Analyses, the Sandia National Laboratory, Massachusetts Institute of Technology (MIT) Lincoln Laboratories, the Defense Microelectronics Activity, the ongoing National Defense Industrial Association Trust Model activity, and other Capability Analysis of Alternatives available to the source). The source should also highlight commercial market demand that is forecasted to grow based on a preference for assured supply chain output over other products. The source may utilize financial forecasts to describe adoption scenarios and revenue streams that show when and how the industry will transition to sourcing microelectronics from this assured ecosystem.3.0 Responses3.1 Sources are requested to respond to this RFI with a white paper. White papers in Microsoft Word compatible or portable document format files are required.3.2 Section 1 of the white paper shall provide administrative information, and shall include the following as a minimum:• Name, mailing address, overnight delivery address (if different from mailing address), phone number, fax number, and e-mail of designated point of contact.• Recommended contracting strategy.• Business type (large business, small business, small disadvantaged business, 8(a)-certified small disadvantaged business, HUBZone small business, woman-owned small business, very small business, veteran-owned small business, service-disabled veteran-owned small business) based upon North American Industry Classification System (NAICS) code 334413, Semiconductor and Related Device Manufacturing. "Small business concern" means a concern, including its affiliates that is independently owned and operated, not dominant in the field of operation in which it is bidding on Government contracts, and qualified as a small business under the criteria and size standards in 13 CFR part 121. A small business concern for the purposes of this RFI is generally defined as a business, including its affiliates, averaging no more than 1,250 employees. Sources are cautioned, however, that this is a general description only. Additional standards and conditions apply. Please refer to Federal Acquisition Regulation FAR 19 for additional detailed information on Small Business Size Standards. The FAR is available at http://www.arnet.gov.3.3 Section 2 shall address all the requested information in Section 2.0 above and shall be limited to 50 pages. Proprietary information, if any, should be minimized and MUST BE CLEARLY MARKED. To aid the Government, please segregate proprietary information. Please be advised that all submissions become Government property and will not be returned.• All proprietary information provided must be marked as such. Sources are advised that employees of commercial firms under contract to the Government may be used to administratively process capability statements, or perform other administrative duties requiring access to other firms' proprietary information. These support contracts include nondisclosure agreements prohibiting their contractor employees from disclosing any information submitted by other contractors or using such information for any purpose other than that for which it was furnished.4.0 Submission Information:4.1 Responses to the sources sought must be received no later than COB 1600 EST on 19 July 2018 via email. The Point of Contact for this action is Lauren Scripps, Contract Specialist, U.S. ACC-NJ-ET, Bldg. 40 Watervliet Arsenal, NY 12189; email: lauren.a.scripps.civ@mail.mil. NO TELEPHONE INQUIRIES WILL BE ACCEPTED.4.2 Questions: Questions regarding this RFI shall be submitted in writing by e-mail to the POC listed in 4.1. Verbal questions will NOT be accepted. Questions shall NOT contain proprietary or classified information. The Government does not guarantee that questions received after COB 1600 EST on 19 July 2018 will be answered.5.0 Summary5.1 THIS IS A REQUEST FOR INFORMATION (RFI) ONLY to identify sources that can provide assured supply for microelectronics research, development, manufacturing, and sustainment. The information provided in the RFI is subject to change and is not binding on the Government. The USG has not made a commitment to procure any of the items discussed, and release of this RFI should not be construed as such a commitment or as authorization to incur cost for which reimbursement would be required or sought. All submissions become Government property and will not be returned.5.2 AppendixPurchase commitments: This structure provides a financial "forward" price and volume guarantee for a future offtake of services or product. This contract could be considered future revenue and needs to be recognized according to GAAP accounting principles by the entity. Purchase commitments could be utilized by entities to secure private market financing (equity or debt).Short term working capital financing: This structure could provide a one to two-year low interest financing option to service the needs of working capital.Long term credit facility: This structure could be a long term credit facility for the entity to draw on when needed for strategic initiatives and growth or acquisition investments. The benefits of the draw facility could include low interest rate with combination of low or minimal non-usage fees and graduated re-payment models.Loan guarantee: This structure provides a loan guarantee insurance policy to private lenders when considering financing options for the entity. The benefit to the entity could include low or minimal origination fees for the loan guarantee.Tax credits: The tax credit structure could provide reduced tax liability or credits for R&D spending and new product line initiation expenses.Education credits: Education credits could provide employees of the company portable and transferable benefits for continued education in the fields deemed important and critical. Employees would not be bound by continued employment at the company but instead restricted to maintaining employment in U.S. owned and managed enterprises.Infrastructure support: Infrastructure support structure could provide a company energy credits to reduce the O&M costs.Export financing: Export financing structures could provide cheaper and long-term financing to facilitate export of allowed product and materials, as well as promotion of U.S. businesses overseas.Overseas investment financing: Similar to export financing, companies could also benefit from cheaper infrastructure financing when developing a base of operations in foreign countries (with appropriate controls in place to prevent IP theft or losses).DISCLAIMER"THIS SOURCES SOUGHT IS FOR INFORMATIONAL PURPOSES ONLY. THIS IS NOT A "REQUEST FOR PROPOSAL (RFP)" TO BE SUBMITTED. IT DOES NOT CONSTITUTE A SOLICITATION AND SHALL NOT BE CONSTRUED AS A COMMITMENT BY THE GOVERNMENT. RESPONSES IN ANY FORM ARE NOT OFFERS AND THE GOVERNMENT IS UNDER NO OBLIGATION TO AWARD A CONTRACT AS A RESULT OF THIS ANNOUNCEMENT. NO FUNDS ARE AVAILABLE TO PAY FOR PREPARATION OF RESPONSES TO THIS ANNOUNCEMENT. ANY INFORMATION SUBMITTED BY RESPONDENTS TO THIS TECHNICAL DESCRIPTION IS STRICTLY VOLUNTARY. RESPONSES WILL NOT BE RETURNED TO THE RESPONDER. NOT RESPONDING TO THIS NOTICE DOES NOT PRECLUDE PARTICIPATION IN ANY FUTURE REQUEST FOR QUOTE (RFQ) OR INVITATION FOR BID (IFB) OR RFP, IF ANY ISSUED. IF A SOLICITATION IS RELEASED, IT WILL BE SYNOPSIZED ON THE GOVERNMENT-WIDE POINT OF ENTRY (GPE). IT IS THE RESPONSIBILITY OF POTENTIAL SOURCES TO MONITOR THE GPE FOR ADDITIONAL INFORMATION PERTAINING TO THIS REQUIREMENT."