BAE Systems, U.S. Department of Commerce research non-binding preliminary agreement for new national security project

The Biden administration, through the U.S. Department of Commerce, reached a non-binding preliminary agreement with BAE Systems Electronic Systems to provide approximately $35 million in federal incentives for its new Microelectronics Center in Nashua, N.H.

By the end of the project, the Microelectronics Center will replace aging tools and quadruple the company’s production of chips for critical defense programs, such as the F-35 fighter jet program.

“Microelectronics are at the heart of the technology and products we make for our defense and aerospace customers—from next-generation aircraft and satellites to military-grade GPS and secure communications,” Tom Arseneault, president and CEO of BAE Systems, Inc., said. “This funding will help modernize our Microelectronics Center and fulfill the promise of the CHIPS and Science Act by increasing our capacity to serve national defense programs, growing our technical workforce, and helping to strengthen the nation’s onshore supply chain. This initiative is the result of a strong partnership with federal, state, and local government.”

Funding was provided by the CHIPS and Science Act, as deployment of its next phase gets underway. To date, the Department of Commerce noted more than 550 statements of interest and nearly 150 pre-applications, full applications and concept plans for similar incentives.

“We have been clear since day one that the CHIPS for America Program is about advancing our national security and strengthening domestic supply chains, all while creating good jobs supporting long-term U.S. economic growth,” Secretary of Commerce Gina Raimondo said. “As national security becomes as much about the chips inside of our weapons systems as the weapons systems themselves, this first CHIPS announcement shows how central semiconductors are to our national defense.”

This phase of things is known as a preliminary memorandum of terms (PMT), which outlines key terms for a CHIPS incentives award, including the amount and form of the award. Once signed, a comprehensive oversight process begins for proposed projects and other information related to their applications. After this, the department can enter into final award documents, subject to negotiations with applicants.