Economic Modeling and Forecasting Software

Combined Synopsis/Solicitation for Economic Modeling and Forecasting Software Application and Subscription Office of Policy Development March 2010 This is a combined synopsis/solicitation for commercial items prepared in accordance with the format in FAR Subpart 12.6, as supplemented with additional information included in this notice. This announcement constitutes the only solicitation; quotations are being requested and a written solicitation will not be issued. The Government contemplates an award of a Firm Fixed Priced contract resulting from this solicitation. On behalf of the Economics and Statistics Administration (ESA), the US Census Bureau anticipates awarding a Sole Source contract to Interindustry Economic Research Fund, Inc. that incorporates one (1) basic year, and four (4) options for increased quantities, the total of which will not exceed the requirement for five (5) years {FAR Parts 17.204(e) & 17.204(f)(3)}. Solicitation No. ESA-RFQ-10-0000-OPD-FR-010 is being issued as a Request for Quotation (RFQ). This notice and the incorporated provisions and clauses are those in effect through the Federal Acquisition Circular The North American Industry Classification System (NAICS) code is 541990 - All Other Professional, Scientific, and Technical Services. OVERVIEW The Economics and Statistics Administration (ESA) is an agency under the United States Department of Commerce that produces, analyzes and disseminates national economic and demographic data. Its three primary missions are the following: 1. Maintain the highest possible quality Federal statistical system and make improvements where warranted and feasible. 2. Communicate a vision of the key forces at work in the economy and of the opportunities they create for improving the well-being of all Americans. 3. Support the information and analytical needs of the Department and the Executive Branch. The ESA oversees the Bureau of Economic Analysis (BEA) and the United States Census Bureau. The Office of Policy Development (OPD) provides analysis of economic developments and policies affecting business performance and the economy for the Chief Economist, the Under Secretary, and other senior officials. OPD staff participate in interagency economic and policy working groups on issues ranging from current industry and macroeconomic conditions to new technologies and innovation. The responsibilities of OPD include the ability to evaluate impacts to industries and the economy. In order to evaluate industry impacts, OPD has since 2001 been using the Inforum LIFT (for Long Term Forecasting Tool) model and the Iliad (for Interindustry Large-scale Integrated And Dynamic) model of the U.S. to measure interindustry transactions consistent with industry value added in the economy and total economic final demand or Gross Domestic Product (GDP) and total income or Gross Domestic Income (GDI). GDP, considered the most useful summary measure of the nation's production, measures final purchases by households, business, and government by summing consumption, investment, government spending, and net exports. GDP is consistent with another economic measure, called GDI which also measures total incomes earned by households by summing wages and salaries, rents, profits, interest, and other income. The LIFT and Iliad models are consistent with both GDP and GDI. LIFT Model & Iliad Model Overview LIFT Model Overview The Inforum LIFT model is unique among large-scale models of the U.S. economy. Combining an interindustry input-output (I-O) formulation with extensive use of regression analysis, it employs a "bottom-up" approach to macroeconomic modeling. LIFT's bottom-up technique possesses several desirable properties for analyzing the economy: 1. The model works like the actual economy, building the macroeconomic totals from details of industry activity, rather than distributing predetermined macroeconomic quantities among industries. 2. The model describes how changes in one industry, such as increasing productivity or changing international trade patterns, affect related sectors and the aggregate quantities. 3. Parameters in the behavioral equations differ among products, reflecting differences in consumer preferences, price elasticities in foreign trade, and industrial structure. 4. The detailed level of disaggregation permits the modeling of prices by industry, allowing one to explore the causes and effects of relative price changes. LIFT is a full macroeconomic model, with more than 800 macroeconomic variables determined consistently with the underlying industry detail. This macroeconomic "superstructure" contains key functions for household savings behavior, interest rates, exchange rates, unemployment, taxes, government spending, and current account. LIFT contains full demand and supply accounting for 97 productive sectors. In summary, the LIFT model is particularly suited for examining and assessing the macroeconomic and industry impacts of the changing composition of consumption, production, foreign trade, and employment as the economy grows through time. Iliad Model Overview Iliad is a more detailed I-O model that has been developed as a companion to the LIFT model. Iliad is a 360-sector model of the U.S. economy, forecasting all components of final demand and value added, as well as prices and employment. The model currently operates in 2000 constant dollars, and is based on a benchmark 1997 input-output table. Iliad also forecasts employment, value added components, and prices, at the 360-sector level. The Iliad model currently relies on the LIFT model for more aggregate drivers. The user of Iliad can either use LIFT variables to directly index the growth of the corresponding detailed sectors in Iliad, or use existing equations to forecast the detailed industries, and then control them to LIFT growth rates or levels. Equations exist for employment and imports, which can then be scaled to conform with LIFT totals, if so desired. [END OF OVERVIEW] DESCRIPTION OF NEED The Government is contemplating awarding a Firm Fixed Price (FFP) contract for the purchase of the most current version of LIFT-model and Iliad-model economic forecasting software, and an annual subscription to the LIFT and Iliad annual economic forecasts. 1.0 Background In 2009, OPD used the LIFT model for an interagency study on the economic impacts of implementing the Corporate Average Fuel Economy (CAF) provision and the Renewable Fuel Standards (RFS) provision of the 2007 Energy Independence and Security Act. While demonstrating that the CAF provision mandates are feasible, the study also demonstrated that the RFS provision mandates are not feasible. In addition to these findings, the study was able to show the impact on the economy and industries of reaching levels of energy efficiency and substitution that would not have been obtained if the Act were not in existence. Also in 2009 and extending into 2010, both the LIFT and the Iliad models were used as a resource to provide detailed CO2 emissions estimates for 360 sectors in the Iliad model for industries, government and households. These estimates, then, can be used in a variety of forums such as in climate change and international trade policy analysis. 2.0 Requirement In order to conduct these types of analyses, OPD requires an interindustry I-O model that measures interindustry transactions consistent with industry value added in the economy and total economic final demand (GDP). The model needs to be versatile enough so that impact to individual industries can be simulated in the economy (known as a "bottoms up" analysis approach) as well as the effects of macroeconomic variables on individual industry performance (known as a "top down" analysis approach). The model also needs to relate output to jobs by occupations and by number of employees, and predict output and employment, and employment by occupation, for over 350 NAICS industries, thus providing the industry-detail needed in OPD industry analysis. ESA and OPD require a solution that meets all of these criteria. 3.0 Scope The primary goal of this contract action is to obtain the most current software versions of Inforum's LIFT model and Iliad model software, and an annual subscription to the LIFT and Iliad annual economic forecasts. 4.0 Applicable Documents Attachment 1, Invoicing Procedures 5.0 Deliverables The Contractor shall deliver all deliverables to the COTR at: Wesley Dias Economics and Statistics Administration 1401 Constitution Ave N.W. - Room 4841 Washington, D.C. 20230 +1 (555) 000-0000 - contact@example.gov In order to support the needs of the ESA and the OPD, the Contractor shall provide: - The latest version of the LIFT and Iliad model software so that the OPD can run industry forecast simulations, as needed. - The historical database used to support the LIFT and the Iliad models is included in the model software. - Forecasts, for approximately 20 years into the future, of industry output, employment, and trade among other variables such as productivity for the 100 sector LIFT model and the 360 sector Iliad model. The forecast shall also include estimates of macro-variables such as GDP for the same forecast period. - An annual subscription to the LIFT and Iliad economic forecasts in print and CD ROM formats. - Technical support/services packaged in units of 25 days to be used on an ad hoc basis. 6.0 Required Format for Contract Deliverables The Contractor shall provide one copy of the software in the latest version of both the LIFT and Iliad models in the form of a CD-ROM. The Contractor shall also provide the OPD with an electronic version of the historical data used to support the models, and the forecasts of both industry and macro-variables, also on CD-ROM. The Contractor shall provide one or more paper-bound versions of the forecasts for both LIFT and Iliad models. No software or forecasts generated by the contractor will be made available by OPD to any requesting Government or private entity without the prior written approval of the Contractor. The Contractor shall be responsible for providing ESA with deliverables that conform to the Acceptance Criteria in Section 6.1 herein. The Contractor shall provide the deliverables to the COTR within 15 days of the date of award. 6.1 Acceptance / Quality Assurance The Contractor shall submit the deliverables in the required format, to the COTR as outlined in Section 5.0 and 6.0 herein. ESA reserves the right to review the deliverables and to reject any software media determined not to conform to contract requirements. ESA will provide the Interindustry Economic Research Fund, Inc with written notification relating to defective or non-conforming deliverables within 30 days of receipt of the deliverables. The Contractor shall provide a replacement of defective software media to the COTR within 7 days of receiving such notification from the Government. These replacements shall be provided at no cost to the Government. Acceptance of the contractor's data will be determined by the ESA's examination of the deliverables. The Contractor is expected to improve the quality (as necessary) of subsequent deliverables based on input from the OPD regarding the current deliverables. The deliverables shall reflect the characteristics on the ensuing list, such that ESA and OPD management and staff easily understand the deliverables. The data shall be: o Submitted within the required timeframes (consistent with customary industry practice); o Consistent with industry practice; o The latest available, in the correct units and for the correct time period; o Free of errors, and; o Submitted in the format specified in Section 6.0. 6.2 Price/Cost of Deliverables The following are the calendar year prices of the deliverables being acquired under this contract for the base period and the options. The contractor agrees to deliver the deliverables described herein at the prices listed on the table for all options that are exercised under this contract. In consideration of the Contractor's full performance of the contract, and in accordance with the terms of the contract, the Economics and Statistics Administration will pay the contractor a fixed price for each contract line item (CLIN) that conforms to sections 5.0, 6.0 and 6.1 that is delivered during a Period of Performance that has been exercised. The Contractor's offer price shall include any and all costs and expenses, direct and indirect, as well as any profit, fee, or any markups of any nature. Option Periods 1 through 4 are optional supplies (option quantities) that may be exercised at the government's discretion through a unilateral modification and are subject to the availability of funds. THE GOVERNMENT KNOWS OF ONLY ONE SOURCE: Interindustry Economic Research Fund, Inc. The Government intends to award a noncompetitive contract under the provisions set forth in the Federal Acquisition Regulation Part 6.302-1, Only one responsible source and no other supplies or services will satisfy agency requirements, as authorized by 41 U.S.C. 253(c)(1). The lack of competition for this procurement action is due to the Office of Policy Development's (OPD) need for an economic modeling and forecasting solution that provides a "top-down" and "bottom-up" analyses capability. LIFT is unique in that it allows for such a "top-down" and "bottom-up" analyses; users can impose a macroeconomic solution on the model and derive corresponding industry outputs ("top-down") or modify interindustry relationships and solve for the impact on macroeconomic variables ("bottoms-up"). For OPD's projects to assess direct impacts to industries, it will be necessary to modify interindustry relationships that can only be done with LIFT. In order to perform the required economic analyses OPD requires an economic forecasting model that is versatile enough so that impacts to individual industries can be simulated in the economy. This "bottoms-up" analysis approach is unique to the LIFT model. The model must also have the ability to simulate the effects of macroeconomic variables on individual industry performance. This "top down" analysis approach is common to the LIFT model, as well as to other industry models. The model also needs to relate output to jobs by occupations and by number of employees. The INFORUM LIFT model that will be provided by IERF is the only model known to EAS and OPD that meets all of these criteria. Furthermore, LIFT, when used with the Iliad model, predicts output and employment and employment by occupation, for up to 355 NAICS industries, while other models predict output for fewer NAICS industries. Thus, LIFT provides the greatest industry detail needed in OPD industry analysis. For these reasons, the Government knows of only one source capable of providing the required supplies at the desired level of quality. Submit all questions concerning this procurement by e-mail to contact@example.gov.