JA - SPE7MX23R0078.pdf

CUI

JUSTIFICATION FOR OTHER THAN FULL AND OPEN COMPETITION

Generalized Emulation of Microcircuits (GEM)

SPE7MX-23-R-0078

Source Selection Information-- See FAR 2.101 and 3.104 electronic circuit function. The elements may be formed on or within a semiconductor material substrate; may consist of conductive film(s) formed on an insulating substrate; or may be a combination of one or both of these types with discrete elements. The term “microcircuit” as applied to circuit devices including, Integrated Circuit Devices, Integrated Circuit Modules, and Integrated Electronic Devices (Hybrid, Magnetic, Molecular, Opto- Electronic, and Thin Film). Conversely, the term “microcircuit” excludes items consisting of interconnected “micro-components” (discrete miniaturized components), and items fabricated in the form of monolithic thick-film or thin-film structures that in themselves are not functional electronic circuits (e.g., Capacitors, Resistors, Transistors, or “arrays” thereof.

The microcircuit industry is characterized by short lifetimes for production technology processes. The demand for faster and smaller microcircuits in the commercial market results in production technology processes with short lifetimes. Microcircuits used by the military typically do not utilize the most current technology, because many DoD weapon systems outlive their long lifespans. Aggregate DoD requirements (direct and indirect) for microcircuits constitute less than 1% of the total microcircuit industry's market share.

Microcircuit insertion into DoD systems occurs late in the production life of given technologies due to the strict environmental, quality, and documentation requirements of weapon system platforms. The long lifetime of fielded weapon platforms results in supportability problems when industry abandons a particular production technology process for reasons including low profitability, production equipment evolution, and technology evolution in raw production materials.

The GEM program has delivered over 170,000 microcircuits in the support of over 560 weapon systems. Major weapon systems include but are not limited to the F-15 Eagle, F-16 Fighting Falcon, JointSTARS, Phalanx, AN/UKK44, PATRIOT, F/A-22, MLRS, Bradley Fighting Vehicle, F/A-18 Hornet, B1-B Bomber, AEGIS, MOPMS (modular Pack Mine System), AV-8 Harrier, and AIM-9G Sidewinder Missile weapon systems.

In the mid-1980s, the Joint Technical Coordinating Group on Microcircuits (JTCG-MC) analyzed DoD's microcircuit needs and coordinated a technical approach to solve DoD's microcircuit obsolescence problems. The JTCG-MC commissioned the Microcircuit Emulation Program (MEP) to address DoD's microcircuit obsolescence issues. In partnership with MEP, the DLA Manufacturing Technology (MANTECH) program successfully developed GEM Technology to satisfy all MEP goals. The GEM Program continues to be the only solution to DoD's microcircuit obsolescence problems by providing Form, Fit, Function, and Interface (F3I) replacement parts for some non-procurable ICs. The GEM Program maintains weapons systems readiness levels through full-scale production of microelectronic devices meeting F3I requirements of the original devices. The GEM Program eliminates the time and cost associated with the redesign of the next higher assembly (NHA). The GEM Program capability maintains future emulated device availability by inventorying the microcircuit designs in the GEM design library, in lieu of part inventory.

future device availability and manufacture parts as needed through a low volume on demand type manufacturing capability, in lieu of a one-time costly production runs. SRI International (03652) currently offers more than 1,000 microcircuit types listed on the GEM Website, http://www.gemes.com. GEM microcircuits have been successfully tested, validated, and accepted through engineering insertion tests in Army, Navy, Marines, and Air Force systems.

4. The statutory authority permitting other than full and open competition is:

10 U.S.C. 3204(a)(1) - Available from only one or a limited number of sources. It is necessary to limit competition and restrict this acquisition to SRI International (03652) in order to maintain essential engineering and research and development capability required for the GEM program. In particular:

Only Source with Unique GEM Design and Production Capability: SRI International is the only source with the capability and capacity to produce and deliver microelectronic devices meeting F3I requirements using GEM technology in quantities required for the application(s). SRI currently maintains a 12,000 square foot wafer foundry clean room facility operating on two shifts, five days a week, for developing new silicon technologies and delivering prototype product, on-demand production, or engineering samples. SRI International maintains capacity to deliver GEM parts in support of DoD surge requirements. SRI International has demonstrated their capability and capacity by currently offering 1,000 microcircuit types used in 560 DoD unique weapons systems.

SRI International is the only company with detailed knowledge of GEM reverse engineering procedures, GEM design procedures, design tools, the GEM Design Library, GEM arrays, GEM fabrication processes, and GEM test procedures. SRI International’s capability for design and simulation, base wafer fabrication and base wafer personalization elements are unique to the industry. Other elements of GEM design and production capabilities exist within industry, but at this time no known viable commercial industrial alternatives meet the capabilities offered at SRI International.

There is no known commercial (non-military) requirement identified for GEM emulation technologies. As discussed above, the commercial technology has moved past DoD’s requirements for replacement microcircuits, so commercial technology would not currently support DoD’s requirements. Please reference Attachment 2 for a summary of SRI International’s unique GEM capability.

Only Qualified Manufactured Listed (QML) Certified Integrated Circuit Fabrication Facility: SRI International is the only known supplier with a QML certified IC Fabrication Facility and 35 years of experience in fabricating GEM microcircuits. SRI International is the only source with the mature capability to deliver Class Q microcircuits. SRI International uses GEM Technology to interpret the detailed government or customer microcircuit specifications to fabricate microcircuits to exactly meet the military customers’ needs. SRI International’s IC Facility is used almost exclusively to fabricate GEM wafers. A wafer is the silicone disc that contains a grid of the microcircuit. The wafer is then sectioned into the individual dies and packaged. SRI

International has successfully delivered more than 170,000 or QML or 888-B conforming microcircuits of 450 different specifications during 25 years of GEM production contracts. SRI International’s DLA Land & Maritime certified QML quality system controls the entire process. Based on the GEM Program’s history, the length of time to get a new source with the “generalized” production capability from wafer fabrication to device testing could be as long as 10 years if at all possible.

Cost, Time, Risk Avoidance: In 1980, the average microcircuit’s product life ranged from five to ten years. As of today, the average microcircuit product life of 18 months is much shorter compared to DoD weapon system operation life cycles ranging from 20 to 40 years. Weapon systems throughout the Department of Defense are adversely impacted by rapid changes in integrated circuit (IC) technologies, resulting in serious obsolescence problems. Since 1980, the microcircuit or IC industry total market value increased from approximately $9.8B to $489B in 2021. The Department of Defense was once the largest procurer of microcircuit technology, but currently the DoD's market share represents less than 1% of the microcircuit industry, generating insufficient sales volume for microcircuit manufacturers to yield high profit margins. It is only cost effective for microcircuit Original Equipment Manufacturers (OEMs) to invest in high production volumes. The OEM’s in the current industry continue to migrate to faster, smaller, and more complex manufacturing technologies to support the high sale volume of smart-phones, tablets televisions, and personal computers. The microcircuits manufactured today utilize advanced technology incompatible for use as replacements for older microcircuits.

The investment of time and funds required to develop another source are substantial and cannot guarantee similar levels of performance and support the GEM program capabilities currently in place. The Government avoids the estimated $6B to $8B cost to build and operate a Government-run fabrication facility by continuing the GEM capability with SRI International. Due to the required high-level of resources, it currently costs in the $10M - $20M range per year to manage and operate the current microcircuit facility.

A new GEM source of supply would have to validate their GEM capability before starting the production of GEM parts, which could take up to ten years. Considering the technical complexity of GEM requirements, the chances of a new source failing to meet requirements is high. Awarding the successor contract to SRI International avoids jeopardizing the existing industrial base and threatening our national defense readiness.

The Government lacks sufficient requirements or resources to support two production sources for GEM.

Only Domestic Trusted Integrated Circuit Fabrication Facility: Since the majority of U.S.

based microcircuit companies focus on commercial technologies to earn higher profit, they outsource microcircuit manufacturing overseas. Most microcircuits used in DoD weapon systems are determined obsolete by the manufacturer within 18 months of initial weapon system production. The unavailability of military-grade microcircuits and overseas manufacturing results in microcircuit obsolescence and increase of counterfeit devices. In 2003, the Office of Secretary of Defense (OSD) identified counterfeit devices as a major area of concern. OSD established a directive for the creation of the Defense Trusted Integrated Circuits Strategy (DTICS). DoD Instruction 5200.44 Incorporating Change 3, October 15, 2018, Protection of Mission Critical Functions to Achieve Trusted Systems and Networks (TSN), requires the use of accredited suppliers for the procurement of custom designed microelectronics with specific military end use by manufacturing microelectronics in a trusted foundry. The Defense Microelectronics Activities (DMEA) is the program manager for the DoD Trusted Foundry program. The program provides a cost-effective means to assure the integrity and confidentiality of integrated circuits during design and manufacturing. The US Government receives access to leading edge microelectronics technologies for both Trusted and non-sensitive applications. DMEA defines “Trusted” as the confidence in one’s ability to secure national security systems by assessing the integrity of the people and processes used to design, generate, manufacture and distribute national security critical components (i.e.

microelectronics).

The DoD Trusted Foundry program uniquely provides the US Government with guaranteed access to leading edge trusted microelectronics services for the typically low volume needs of the US Government. DMEA and NSA co-fund the Trusted Foundry program to facilitate this. The Trusted Access Program Office (TAPO) facilitates and administers the contracts and agreements with industry to provide US Government users with:

i. Leading edge foundry services including multi-project wafer runs, dedicated prototypes, and production in both high- and low-volume models

ii. A library of standard IP blocks

iii. Limited packaging and test service

SRI’s wafer foundry certification is a Category 1A Microelectronics Trusted Source, which meets Mission Assurance Category 1 as defined by Instruction 8500.2 of the DoD Directives effective October 7, 2022, with a renewal date of October 7, 2024. SRI International is the only known domestic supplier with the capabilities required to support the GEM program. The award of the GEM Successor contract to SRI International as the continuing source will mitigate the risk of counterfeit microcircuits.

Nation’s Defense Readiness: Microcircuit obsolescence continues to threaten our national defense readiness. It is vital the GEM program continues without a break or interruption, since microcircuits are necessary for the proper functioning of all DoD military weapon systems.

Sole Source of Supply: Since inception of the GEM Program, all contracts have been awarded to Sarnoff or their parent company, SRI International. SRI International’s performance is rated satisfactory or better on all GEM Production contracts. SRI International’s on-time or early delivery rate for during Year 5 on the current GEM Production Contract was 100%. There are zero technical complaints or problems regarding GEM microcircuits delivered under the current GEM Production contract, and SRI International earned the Defense Supply Center Columbus Supplier Excellence Gold Award for maintaining the highest performance standards.

DLA L&M has awarded 850+ orders via the GEM program, supporting multiple NSNs for 560 listed weapon systems. Past studies on DoD weapon system supported by the GEM program reveal that every microcircuit emulation performed is an enormous benefit to DoD. On average, each microcircuit emulation provides support to 98 weapon systems across the military services. The loss of industrial capability to produce GEM devices, solely developed and provided by SRI International, would result in serious degradation to the DoD’s mission readiness worldwide.

In sum, the Government will procure the GEM production requirement as a sole source procurement with SRI International (03652), while using “Other than Full and Open” competition in accordance with FAR 6.302-1, Only One Responsible Source or a Limited Number of Responsible Sources and No Other Supplies or Services Will Satisfy Agency Requirements. The statutory authority permitting this is 10 U.S.C. 3204(a)(1). SRI International is the only known source of supply satisfying the government’s minimum requirements for the GEM Program. SRI International’s demonstrated their GEM capability through delivery of 450+ unique microcircuit types since program inception. SRI International remains the sole continuing source of supplying GEM microcircuits for a five (5) -year and six (6) month follow-on production contract by:

i. Possessing capability to deliver GEM Microcircuits meeting the F3I requirements in the quantities required for the applications.

ii. Maintaining an on-site QML certified and Trusted Integrated Circuit Fabrication

Facility

iii. Assigning key personnel with many years of emulation and DMSMS industry experience.

iv. SRI International is the only known supplier with the mature capability to deliver

Class Q microcircuits from a detailed controlling government or customer specification.

v. SRI International is the only known supplier with a QML certified Integrated Circuit Fabrication Facility (IC Facility) and 30 years of experience in GEM microcircuit fabrication.

SRI International is the only company with detailed knowledge of GEM reverse engineering procedures, design procedures, design tools, GEM Design Library, arrays, fabrication processes, and test procedures.

5. Efforts to ensure that offers are solicited from as many sources as practicable are:

[ X ] On February 14, 2023, DLA Land and Maritime issued a Sources Sought Notice on

SAM.gov. The purpose of the sources sought announcement was to gain knowledge of potential qualified sources that can provide emulated microelectronic devices to meet the needs of the DoD and DoD contractors for readiness and logistical support. SRI International was the only vendor that responded to the Sources Sought Notice.

[ X ] The acquisition will be synopsized on SAM.gov on or about August 17, 2023.

[ X ] The solicitation will not be posted to DIBBS as the Government will procure the GEM requirement as a sole source procurement. The solicitation will be made available upon request until October 2, 2023. All responsible sources may submit a capability statement or proposal, which shall be considered by the agency.

6. I hereby determine that the anticipated cost to the Government will be fair and reasonable:

The contracting officer has determined that the anticipated cost to the Government will be fair and reasonable. The Contracting Officer anticipates the costs and prices will be fair and reasonable based on certified cost or pricing data and subsequent negotiations. The vendor’s cost proposal shall reflect clear, complete, and accurate cost data along with their financial plan for accomplishing the efforts contained within the technical proposal. The vendor’s cost proposal will be determined unacceptable if adequate cost data is not provided in an acceptable format. Based off SRI International’s past performance, it is anticipated that final, negotiated prices for the Basic Contract will be in line with pricing received under the past production contracts with SRI International. In addition, pursuant to the Advanced Agreement for the contract, the Contracting Officer Representative (COR) reviews cost data and conducts negotiations as necessary for each individual delivery order requirement issued against the basic contract. Individual requirements for specific NSNs start as a Purchase Request (PR). After the Acquisition Specialist exhaust all avenues to locate a source of supply for specific NSNs, the item is determined non-procurable. A typical reason for sources declining to quote are a significant decline in demand for the NSN and a subsequent decision by the source that it is no longer in their interest to continue to produce the item. Then a non-procurable item technical referral will sent to the Product Specialist that is assigned to the specific NSN. The Product Specialist reviews the NSN and coordinates with the Engineering Source Activity (ESA) to ensure no sources are available prior to awarding against the GEM contract.

7. Market Research/Efforts to Obtain Competition:

The results of the market research supports that SRI International is the only known source of supply that can satisfy the GEM Program requirements. SRI International has performed satisfactorily with delivering GEM Program F3I microcircuit devices on the current contract and past contracts. There are no other emulation technologies known to exist within the commercial industry that can satisfy the need for F3I replacement microcircuits. Please see the market research summary below.

On February 14, 2023, DLA Land and Maritime issued a Sources Sought Notice on SAM.gov.

The purpose of the sources sought announcement was to gain knowledge of potential qualified sources that can provide emulated microelectronic devices to meet the needs of the DoD and DoD contractors for readiness and logistical support. SRI International was the only vendor that responded to the Sources Sought Notice. A brief synopsis of SRI’s response is below:

SRI International (03652): SRI International was the only qualified source that responded to the 2023 GEM sources sought notice by expressing their strong interest of continuing as the source for the GEM successor contract. On March 06, 2023, and as requested by the Acquisition Specialist, SRI International responded to the sources sought notice by providing a comprehensive 108-page document (Dated March 2023) titled “Sources Sought Generalized Emulation of Microcircuits” which is included as Attachment 2. This document describes the GEM design, manufacturing and delivery capability that SRI International offers. SRI International noted that they satisfy Government’s GEM requirements by stating, “SRI has the capability to deliver GEM microcircuits which meet the form, fit, function, and interface (F3I) requirements in the quantities required for specific DoD applications. SRI continues to demonstrate this capability by delivering over 170,000 GEM microcircuits for 25 years of DLA L&M’s GEM Program contracts. SRI has also demonstrated its ability to be a continuing source of GEM microcircuits during the current five-year SPE7MX-19-D-0025.” In addition to a description of SRI International’s GEM Capability, this document includes; the GEM parts delivered to customers, GEM parts delivered to DLA by date, SRI International and Sarnoff Certifications (MIL-PRF-38535 - Custom Microcircuit Certification and Laboratory Suitability Certificate) and resumes of SRI International GEM Program Managers.

On March 8, 2023, the Acquisition Specialist forwarded SRI’s response to the GEM Program Manager for evaluation. The GEM Program Manager sated that SRI International has demonstrated their ability to design and manufacture microcircuits as described in the Statement of Work. Additionally, the Program Manager stated that SRI International has demonstrated the ability to deliver required parts under delivery orders as described in the Statement of Work. The DLA Land and Maritime GEM Program Manager confirmed that SRI International (03652) is the only source capable of meeting all Government minimum requirements to be met by the emulation contractor in order meet the government’s needs.

Information received regarding the commerciality of the item(s): The GEM Program requirement does not meet the definition of a commercial item per FAR 2.101. The GEM Program uses specialized technology to produce and deliver GEM parts no longer available in the commercial marketplace. The GEM Program’s production provided DLA the ability to provide fully qualified military grade microcircuits meeting customers’ requirements and performance parameters. The GEM Program satisfies DoD and DoD contractor’s needs by providing readiness and logistical support. The microcircuits emulated and supplied under past and current GEM contracts do not have direct commercial equivalents. The Contracting Office determines that the GEM Core Effort and Delivery Order effort are not commercial.

8. Additional facts supporting other than full and open competition are:

[ X ] When 6.302-1 is cited for follow-on acquisitions as described in 6.302-(a)(2)(ii), an estimate of the cost to the Government that would be duplicated and how the estimate was derived.

The investment of time and funds required to develop another source would be substantial and would not guarantee the same level of performance and support of the GEM program currently provided by SRI International. Alternate personnel with appropriate technical backgrounds would need an extended familiarization period to become proficient in the specialized skills required to keep the GEM technology viable. The risk of failure of developing a second source is high. The funding required to develop another source would substantial. In addition, to develop a second source would require extensive amount of time. It is likely any new source would go through a research and development phase and verification and validation phase of five years each before entering a production phase. The capability to transition the new technology developed under the DLA AME R&D Contract to production under the DLA Land and Maritime GEM Production Contract would be greatly affected.

Furthermore, the Government does not have sufficient requirements to support two production sources for GEM, and it would jeopardize the existing industrial base by awarding the contract to other than SRI International.

9. A listing of sources, if any, indicating an interest in the acquisition is:

SRI International (03652)

10. Past history was reviewed in Records Management. The J&A for contract SPE7MX19D0025 is included as Attachment 3 per DFARS PGI 206.303-2 (b)(i)(B).

CONTRACTING OFFICER CERTIFICATION

I hereby certify that the information contained in this justification is accurate and complete to the best of my knowledge and belief. If not exceeding $750,000, this signature serves as the approval.

ALEXANDER MOLLER

Contracting Officer

APPROVAL/CERTIFICATION

MARY SHEARER

Competition Advocate

CATHERINE CONTRERAS, SES

Head of the Contracting Activity

APPROVAL REQUIREMENTS

[ ] Up to $750,000 Contracting Officer [ ] $750,000 up to $15,000,000 Competition Advocate [ X ] $15,000,000 up to $100,000,000 Head of Contracting Activity (HCA) [ ] over $100,000,000 Senior Procurement Executive (AQ)

Attachments:

Attachment 1 – GEM Statement of Work Attachment 2 – SRI International Response to Sources Sought Attachment 3 – Prior J&A for SPEMX19D0025

MOLLER.ALEXAND

ER.M.1404026743

Digitally signed by

MOLLER.ALEXANDER.M.14040

26743 Date: 2023.08.31 10:05:21 -04'00'

SHEARER.MAR

Y.E.1250702449

Digitally signed by

SHEARER.MARY.E.1250702449

Date: 2023.09.15 15:08:34 -04'00'

CONTRERAS.CATH

ERINE.L.122938647

Digitally signed by

CONTRERAS.CATHERINE.L.122

9386472 Date: 2023.10.12 12:05:58 -04'00'