Microelectronics focuses on the study and manufacture of micro devices, such as silicon integrated circuits, which are fabricated in submicron dimensions and form the basis of all electronic products. In DOD research, microelectronics extends beyond silicon integrated circuits and cuts across scientific disciplines such as biological sciences, materials sciences, quantum physics, and photonics. DOD research also covers many different types of materials, devices, and processes. For example, DOD service laboratories conduct research in materials other than silicon, such as gallium nitride, indium arsenide, and silicon carbide—materials that could provide higher performing or more reliable devices to meet DOD needs. DOD’s overall budget authority for fiscal year 2005 was approximately $400 billion. About $69 billion, or 17 percent of the overall budget, was directed toward research and development activities. The vast majority of this funding goes to development programs for major systems such as the Joint Strike Fighter and the Space Based Infrared System High. About $5.2 billion, or about 1.3 percent of the overall budget, was directed toward research (see fig. 1). Because DOD tracks funding by funding category, not by specific technology area, the microelectronics portion of this funding category cannot be broken out. DOD research and technology development is conducted by universities, DOD laboratories, industry, and other organizations. Universities and DOD laboratories are primarily involved in research. Once a new device is proven and has potential application for DOD, the technology is transferred to industry to further develop and ultimately produce and integrate into defense systems. These organizations may collaborate on microelectronics projects through various arrangements, such as cooperative research and development agreements and collaborative technology alliances. Figure 2 shows the distribution of DOD research and advanced technology development funding by performing organizations. Microelectronics production and research prototyping require specialized equipment and facilities. To prevent flaws in production, microelectronic devices are produced in clean rooms where the air is constantly filtered, and temperature, humidity, and pressure may be regulated. Clean rooms are rated according to a federal standard. For example, a class 1000 clean room has no more than 1000 particles larger than 0.5 microns in a cubic foot of air, while a class 100 clean room has no more than 100 particles. The people who work in clean rooms wear special protective clothing that prevents workers from contaminating the room (see fig. 3). The equipment found at research facilities and at production facilities are similar but are used for different purposes. Because research facilities focus on developing new device concepts, materials, and processes, the equipment is set up for flexibility because it is used for different experiments to prove concepts and validate theories. Once a technology is sufficiently developed, a small quantity is prototyped in a production environment to prove the design. Production facilities are set up to produce higher volumes of microelectronics and have more automation and multiple sets of equipment to increase productivity. At the time of our review, eight DOD and FFRDC facilities that received funding from DOD were involved in microelectronics research prototyping or production. Three military facilities focused solely on research; three primarily focused on research but had limited production capabilities; and two focused solely on production (see fig. 4). The three military facilities provide basic and applied research covering a wide spectrum of microelectronic devices and materials. For example, the Naval Research Laboratory facility is conducting basic research on the potential application of nonsilicon materials in microelectronic devices. Through its applied research, the Air Force Research Laboratory facility developed a process to improve the performance and reliability of microwave devices needed for military radar and communications systems. This technology was ultimately transferred from the Air Force to various contractors and used in a number of systems, including the Joint Strike Fighter. The Army Research Laboratory facility conducts both basic and applied research, primarily on multifunction radiofrequency, optoelectronics, and power conversion. Three other facilities also conduct research but can produce prototypes or limited numbers of devices if commercial sources are not available. For example, the Lincoln Laboratory’s facility—which primarily focuses on applied research in sensing and signal processing technologies—has developed components for the space-based visible sensor because no commercial source was available to meet this DOD need. Sandia’s facility primarily focuses on research and design of radiation hardened microelectronics. However, because the number of commercial producers able to meet the radiation requirements of the Department of Energy and DOD has dwindled to two suppliers, Sandia maintains limited in-house production capability to fill near-term critical needs. According to Sandia officials, they have not been called upon to produce microelectronics for DOD in recent years. The SPAWAR facility, which recently closed, primarily conducted research on radiation-hardened microelectronics, but at one time produced these devices for the Navy’s Trident missile system. When production of these devices was transferred to a commercial supplier, the facility maintained capability to produce microelectronics as a back-up to the commercial supplier. Two facilities focused only on production—one on leading edge technology and one on lagging edge technology. NSA’s microelectronics facility focuses on producing cryptographic microelectronics—devices not readily obtainable on the commercial market because of their unique and highly classified requirements. DMEA fills a unique role within DOD by providing solutions to microelectronics that are no longer commercially available. DMEA acquires process lines that commercial firms are abandoning and, through reverse-engineering and prototyping, provides DOD with these abandoned devices. In some cases, DMEA may produce the device. The type and complexity of research conducted or device produced largely determines a facility’s clean room class and size and its equipment replacement costs. For example, to produce cryptographic electronics, NSA has a 20,000 square foot class 10 clean room facility. In contrast, the Naval Research Laboratory conducts research in a 5,000 square foot class 100 clean room facility, with some class 10 modules where greater cleanliness is required. In general, research does not require state-of-the- art equipment to prove concepts, and tools can be purchased one at a time and are often second-hand or donated. Table 1 summarizes the eight facilities’ microelectronics focus, clean room class and size, and equipment replacement costs. Since we began our review, the SPAWAR facility closed on October 31, 2004, making Sandia the only backup to the two remaining commercial radiation-hardened suppliers to DOD. Officials from the facility told us that without funds from the Trident program, operating the facility became cost prohibitive. Further, NSA’s microelectronics facility is slated for closure in 2006. NSA estimated that it would cost $1.7 billion to upgrade its equipment and facility to produce the next generation of integrated circuits. NSA is contracting with IBM to take over production of the microelectronic devices produced at its facility. Part of the contract costs includes security requirements for IBM to produce classified circuits. There may be changes to other facilities pending the review of the Base Realignment and Closure Commission for 2005. As a result of prior commission recommendations, the Army constructed a new facility to consolidate Army specialized electronics research into one location. DOD has several mechanisms in place aimed at coordinating and planning research conducted by the Air Force, Army, Navy, and defense agencies. In electronics and microelectronics research, DOD works with industry to review special technology areas and make recommendations about future research. DOD’s Defense Reliance process provides the Department with a framework to look across science and technology (S&T) efforts of the Defense Advanced Research Projects Agency, Defense Threat Reduction Agency, and the Missile Defense Agency as well as the Army, Navy, and Air Force. Each service and defense agency updates its own S&T plans with the needs of each organization in mind. The Defense Reliance process is intended to improve coordination and determine if the overall DOD S&T vision and strategy are being met. The Defense Science and Technology Strategy document is updated periodically to provide a high-level description of what the science and technology programs aim to accomplish. The Defense Reliance process includes the development of three planning documents, which taken together provide a near-, mid-, and long-term look at DOD specific research needs (see table 2). The planning documents present the DOD S&T vision, strategy, plan, and objectives for the planners, programmers, and performers of defense S&T and guide the annual preparation of the defense program and budget. Figure 5 illustrates the relationship between the planning documents and overall reliance process. Science and technology efforts are planned and funded through service and defense agency plans. To obtain a perspective across DOD, a portion of the service and agency efforts are represented in the various Defense Reliance planning documents. DOD’s goal is to have about half of the investment in service and agency efforts represented in defense technology objectives. According to DOD officials, this goal is aimed at balancing flexibility—which services and defense agencies need to pursue research that is important to their organizations—with oversight and coordination. DOD officials stated that looking at a portion of the efforts provide an adequate perspective of the S&T research across the services and defense agencies to help ensure the goals of DOD’s S&T strategy are being met. These projects are generally considered high priority, joint efforts, or both. Two key components in the Defense Reliance process are the defense technology objectives and technology area review and assessments. Defense technology objectives are intended to guide the focus of DOD’s science and technology investments by identifying the following objectives, the specific technology advancements that will be developed or payoffs, the specific benefits to the warfighter resulting from the challenges, the technical barriers to be overcome; milestones, planned dates for technical accomplishments, including the anticipated date of technology availability; metrics, a measurement of anticipated results; customers sponsoring the research; and funding that DOD estimates is needed to achieve the technology advancements. Both the Joint Warfighting and Defense Technology Area plans are comprised of defense technology objectives that are updated annually. In its 2004 update, DOD identified 392 defense technology objectives —130 in the Joint Warfighting Science and Technology Plan across five joint capabilities, and 262 in the Defense Technology Area Plan across 12 technology areas. Microelectronics falls within the sensors, electronics, and electronic warfare area. There are 40 defense technology objectives in this area; five were identified as microelectronics (see fig. 6). However, according to DOD officials, research relating to microelectronics is not limited to these five defense technology objectives because microelectronics is an enabling technology found in many other research areas. For example, research in electronic warfare is highly dependent on microelectronics. To provide an independent assessment of the planned research, DOD uses Technology Area Review and Assessment panels. DOD strives to have a majority of the Technology Area Review and Assessment team members from outside DOD, including other government agencies, FFRDCs, universities, and industry. Most team members are recognized experts in their respective research fields. The Technology Area Review and Assessment panels assess DOD programs against S&T planning guidance, defense technology objectives, affordability, service-unique needs, and technology opportunities; and provide their assessments and recommendations to the Defense Science and Technology Advisory Group. For the electronics research area, additional industry and university insight is obtained through the Advisory Group on Electron Devices. DOD established this advisory group to help formulate a research investment strategy by providing ongoing reviews and assessments of government- sponsored programs in electronics, including microelectronics. The advisory group is comprised of experts representing the government, industry, and universities, who provide DOD with current knowledge on the content and objectives of various programs under way at industry, university, and government laboratories. Periodically, the advisory group conducts special technology area reviews to evaluate the status of an electronics technology for defense applications. The advisory group also serves as a bridge between electronic system and component developers within DOD by establishing regular, periodic interactions with system program offices, industry system developers, and government and industry components developers. We provided a draft of this report to DOD for review. In its response, DOD did not provide specific written or technical comments (see app. II). We are sending copies of this report to interested congressional committees; the Secretary of Defense; and the Director, Office of Management and Budget. We will make copies available to others upon request. In addition, this report will be available at no charge on the GAO Web site at http://www.gao.gov. Please contact me at (202) 512-4841 if you or your staff has any questions concerning this report. Major contributors to this report are listed in appendix III. To identify and describe DOD and FFRDC facilities that receive funding from DOD for microelectronics production or research prototyping, we visited all eight facilities identified by DOD as having capability to produce or prototype microelectronics. Using a set of structured questions, we interviewed officials at each facility to determine their microelectronics focus, clean-room and equipment characteristics, and types of research, production and/or research prototyping the facility provides. We also obtained and analyzed supporting documents and toured the facilities. We did not include in our scope universities or commercial firms that also conduct DOD research and have microelectronics facilities. Because microelectronics is a part of a much broader area of research, we looked at DOD’s overall research coordination in addition to microelectronics-specific areas. To determine how DOD coordinates its research investments, we interviewed officials from the Executive Staff of the Defense Science and Technology Reliance process; the Office of the Deputy Under Secretary of Defense for Science and Technology (Space and Sensor Technology); and the Advisory Group on Electron Devices. We also obtained and reviewed DOD’s defense research planning- documents—including the Basic Research Plan, the Defense Technology Area Plan, Joint Warfighting Science and Technology Plan, and the Defense Technology Objectives document. We also met with Defense Advanced Research Projects Agency officials to discuss their role in sponsoring DOD research and development activities. In addition, at the DOD service laboratories that we visited, we obtained information on microelectronics related research projects. We performed our review from November 2003 to January 2005 in accordance with generally accepted government auditing standards. In addition to the individual named above, Bradley Terry, Lisa Gardner, Karen Sloan, Hai Tran, Brian Eddington, and Steven Pedigo made key contributions to this report.

Summary: The Department of Defense's (DOD) ability to provide superior capabilities to the warfighter is dependent on its ability to incorporate rapidly evolving, cutting-edge microelectronic devices into its defense systems. While many commercial microelectronics advances apply to defense systems, DOD has some unique microelectronics needs not met by industry. Therefore, to maintain military superiority, DOD has the challenge of exploiting state-of-the-art commercial microelectronics technology and focusing its research investments in areas with the highest potential return for defense systems. Given the importance of advanced microelectronics to defense systems and the rapid changes in these technologies, Congress asked GAO to (1) identify and describe DOD and federally funded research and development center (FFRDC) facilities that receive funding from DOD for microelectronics production or research prototyping and (2) describe how DOD coordinates investments in microelectronics research. At the time of our review, eight DOD and FFRDC facilities that received funding from DOD were involved in microelectronics research prototyping or production. Three of these facilities focused solely on research; three primarily focused on research but had limited production capabilities; and two focused solely on production. The research conducted ranged from exploring potential applications of new materials in microelectronic devices to developing a process to improve the performance and reliability of microwave devices. Production efforts generally focus on devices that are used in defense systems but not readily obtainable on the commercial market, either because DOD's requirements are unique and highly classified or because they are no longer commercially produced. For example, one of the two facilities that focuses solely on production acquires process lines that commercial firms are abandoning and, through reverse-engineering and prototyping, provides DOD with these abandoned devices. During the course of GAO's review, one facility, which produced microelectronic circuits for DOD's Trident program, closed. Officials from the facility told us that without Trident program funds, operating the facility became cost prohibitive. These circuits are now provided by a commercial supplier. Another facility is slated for closure in 2006 due to exorbitant costs for producing the next generation of circuits. The classified integrated circuits produced by this facility will also be supplied by a commercial supplier. DOD has several mechanisms in place aimed at coordinating and planning research conducted by the military services and defense agencies. One key mechanism is identifying defense technology objectives--the specific technology advancements that will be developed or demonstrated across multiple joint capabilities and technology areas. As of February 2004, there were almost 400 defense technology objectives; five of these were identified as microelectronics. DOD also collaborates with industry to review and assess special technology areas and make recommendations about future electronics and microelectronics research.