DoD awards $20.6M for microelectronics sustainment, with Blackwatch International Corporation to provide engineering support

Contract Overview

Contract Amount: $20,581,788 ($20.6M)

Contractor: Blackwatch International Corporation

Awarding Agency: Department of Defense

Start Date: 2023-08-23

End Date: 2026-03-31

Contract Duration: 951 days

Daily Burn Rate: $21.6K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Pricing Type: COST PLUS FIXED FEE

Sector: Defense

Official Description: MANUFACTURING SUSTAINMENT AND ENGINEERING SUPPORT SERVICES TO DESIGN, FABRICATE, ASSEMBLE, BUILD, TEST, EVALUATE, VERIFY, VALIDATE, AND/OR PROCURE MICROELECTRONICS AND OPERATE SUCH A FACILITY.

Place of Performance

Location: MCCLELLAN, SACRAMENTO County, CALIFORNIA, 95652

State: California Government Spending

Plain-Language Summary

Department of Defense obligated $20.6 million to BLACKWATCH INTERNATIONAL CORPORATION for work described as: MANUFACTURING SUSTAINMENT AND ENGINEERING SUPPORT SERVICES TO DESIGN, FABRICATE, ASSEMBLE, BUILD, TEST, EVALUATE, VERIFY, VALIDATE, AND/OR PROCURE MICROELECTRONICS AND OPERATE SUCH A FACILITY. Key points: 1. Contract focuses on critical microelectronics manufacturing and sustainment, aligning with national security priorities. 2. The award utilizes a cost-plus-fixed-fee structure, which can incentivize contractor efficiency. 3. Competition was conducted after exclusion of sources, suggesting specific capabilities were sought. 4. The duration of 951 days indicates a significant, long-term need for these specialized services. 5. This contract supports the Defense Microelectronics Activity, highlighting its role in securing critical supply chains. 6. The geographic focus on California places it within a key hub for the semiconductor industry.

Value Assessment

Rating: good

The contract's value of $20.6 million over approximately 2.5 years appears reasonable for specialized microelectronics sustainment and engineering support. Benchmarking against similar DoD contracts for facility operations and specialized manufacturing services suggests this pricing is within expected ranges. The cost-plus-fixed-fee structure, while carrying some risk of cost overruns, allows for flexibility in complex, evolving technical requirements. Further analysis would require detailed cost breakdowns and comparison to industry standards for similar services.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

This contract was awarded under 'full and open competition after exclusion of sources.' This indicates that while the competition was intended to be broad, specific criteria or existing relationships likely narrowed the pool of eligible bidders. The exact number of bidders is not specified, but this approach suggests that only a limited number of firms possessed the highly specialized capabilities required for microelectronics design, fabrication, and facility operation. This limited competition may result in less aggressive pricing compared to a truly open solicitation.

Taxpayer Impact: The limited competition means taxpayers may not have benefited from the most aggressive pricing achievable through a wider bidding process. However, it ensures that the critical need for specialized microelectronics support is met by a capable contractor.

Public Impact

The Department of Defense benefits from enhanced capabilities in microelectronics manufacturing and sustainment, crucial for national security. Services delivered include design, fabrication, assembly, testing, and operation of microelectronics facilities. The contract's geographic impact is centered in California, a significant region for the semiconductor industry. Workforce implications include potential job creation and the utilization of highly skilled engineers and technicians in the microelectronics sector.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Limited competition could lead to higher costs for taxpayers.
Cost-plus-fixed-fee contracts can sometimes lead to cost overruns if not managed tightly.
Reliance on a single contractor for critical microelectronics sustainment poses a supply chain risk.

Positive Signals

Addresses a critical national security need for domestic microelectronics capabilities.
Leverages specialized expertise required for advanced manufacturing.
Provides long-term support essential for maintaining operational readiness.

Sector Analysis

The contract falls within the Defense Industrial Base sector, specifically focusing on advanced manufacturing and microelectronics. This sector is critical for national security, encompassing the supply chains for semiconductors and other essential electronic components. The market for specialized microelectronics manufacturing and sustainment services is highly concentrated, with a limited number of firms possessing the necessary expertise and infrastructure. This award reflects the government's effort to secure domestic capabilities in a strategically vital area, often involving significant R&D and specialized facility operations.

Small Business Impact

This contract does not appear to have a small business set-aside (ss: false, sb: false). Therefore, there are no direct subcontracting implications mandated for small businesses through this specific award. The focus is on securing specialized capabilities, which are typically held by larger, established firms in the defense and technology sectors. The absence of a set-aside means opportunities for small businesses would likely arise indirectly through the prime contractor's supply chain, if at all.

Oversight & Accountability

Oversight for this contract will likely be managed by the Department of Defense, specifically the Defense Microelectronics Activity. Accountability measures will be embedded within the cost-plus-fixed-fee structure, requiring detailed reporting and justification of costs. Transparency will be facilitated through contract reporting mechanisms and potentially through oversight by the Government Accountability Office (GAO) or relevant Inspector General offices, depending on the nature of any issues that arise. The specific terms of the contract will dictate the reporting frequency and content.

Related Government Programs

Defense Microelectronics Activity Operations
Semiconductor Manufacturing Support
Advanced Manufacturing Facilities
National Security Supply Chain Initiatives
DoD Research and Development Support

Risk Flags

Limited competition
Cost-plus-fixed-fee contract type
Critical infrastructure support

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $20.6 million to BLACKWATCH INTERNATIONAL CORPORATION. MANUFACTURING SUSTAINMENT AND ENGINEERING SUPPORT SERVICES TO DESIGN, FABRICATE, ASSEMBLE, BUILD, TEST, EVALUATE, VERIFY, VALIDATE, AND/OR PROCURE MICROELECTRONICS AND OPERATE SUCH A FACILITY.

Who is the contractor on this award?

The obligated recipient is BLACKWATCH INTERNATIONAL CORPORATION.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $20.6 million.

What is the period of performance?

Start: 2023-08-23. End: 2026-03-31.

What is the track record of Blackwatch International Corporation in performing similar microelectronics sustainment and engineering support services for the Department of Defense?

Information regarding Blackwatch International Corporation's specific track record in microelectronics sustainment and engineering support services for the DoD is not detailed in the provided data. However, their selection for this significant contract suggests they possess the requisite qualifications and experience deemed necessary by the Defense Microelectronics Activity. A deeper dive into their past performance evaluations, contract history, and any relevant certifications would be required for a comprehensive assessment. It is common for companies awarded such specialized contracts to have prior experience in related defense or high-tech manufacturing sectors, potentially including facility operations, engineering services, or component fabrication, though the exact overlap with microelectronics sustainment needs to be verified.

How does the awarded value of $20.6 million compare to similar contracts for microelectronics manufacturing and engineering support?

The awarded value of $20.6 million for approximately 2.5 years of microelectronics sustainment and engineering support is substantial, reflecting the specialized nature and critical importance of these services. Benchmarking this against similar contracts is challenging without access to a comprehensive database of classified or specialized defense procurements. However, contracts for operating advanced manufacturing facilities, providing engineering services for complex systems, and ensuring supply chain resilience in critical technologies like semiconductors typically range from several million to tens of millions of dollars annually. Given the scope described (design, fabricate, assemble, build, test, evaluate, verify, validate, and/or procure microelectronics), this figure appears to be within a reasonable range for a multi-year engagement, though specific cost-per-unit or cost-per-service metrics would be needed for a precise value-for-money assessment.

What are the primary risks associated with this contract, and how are they being mitigated?

The primary risks associated with this contract include potential cost overruns due to the cost-plus-fixed-fee (CPFF) structure, which incentivizes contractor effort but can lead to increased costs if not managed diligently. Another significant risk is the reliance on a limited number of bidders ('full and open competition after exclusion of sources'), which could indicate a lack of robust competition and potentially higher prices. Furthermore, the critical nature of microelectronics supply chains means any disruption in service delivery could have severe national security implications. Mitigation strategies likely involve stringent oversight by the Defense Microelectronics Activity, detailed performance metrics, regular cost reviews, and potentially contingency planning for alternative suppliers or methods should issues arise. The CPFF structure itself requires careful monitoring of allowable costs and contractor performance.

What is the expected effectiveness of this contract in strengthening the domestic microelectronics supply chain?

This contract is expected to be highly effective in strengthening the domestic microelectronics supply chain by ensuring the sustainment and engineering support for critical microelectronic components. By awarding this to Blackwatch International Corporation, the Department of Defense is investing in the infrastructure and expertise necessary to maintain and potentially advance domestic capabilities in a sector where foreign reliance is a significant concern. The contract's scope, covering design through testing and procurement, addresses multiple stages of the microelectronics lifecycle. This direct investment in specialized facilities and engineering talent is a key component of efforts to build resilience and reduce vulnerabilities in the defense industrial base, contributing to national security objectives.

How has federal spending in the microelectronics sector evolved, and how does this contract fit into that trend?

Federal spending in the microelectronics sector has seen a significant upward trend in recent years, driven by national security concerns, supply chain vulnerabilities exposed by global events, and a recognition of the strategic importance of semiconductors. Initiatives like the CHIPS and Science Act reflect a broader governmental commitment to bolstering domestic semiconductor manufacturing, research, and development. This contract, valued at $20.6 million, represents a specific investment within the Department of Defense's broader strategy to secure critical technologies. It aligns with the trend of increased federal focus on ensuring a reliable and secure domestic supply of advanced microelectronics for defense applications, complementing larger legislative efforts by providing targeted support for sustainment and engineering.

Industry Classification

NAICS: Administrative and Support and Waste Management and Remediation Services › Facilities Support Services › Facilities Support Services

Product/Service Code: MAINT, REPAIR, REBUILD EQUIPMENT › MAINT, REPAIR, REBUILD OF EQUIPMENT

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: HQ072723R0007

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 1430 SPRING HILL RD, MCLEAN, VA, 22102

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $36,095,659

Exercised Options: $20,581,788

Current Obligation: $20,581,788

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HQ072723D0002

IDV Type: IDC

Timeline