Recovery - Accountability Section Risk Modeling Project

Recovery Accountability and Transparency Board Accountability Section - Risk Modeling Project Statement of Objectives 1. Introduction BACKGROUND The American Recovery and Reinvestment Act of 2009 (ARRA or the Recovery Act) is an unprecedented effort to jumpstart our economy, save and create millions of jobs, and address challenges so our country can thrive in the 21st century. ARRA is an extraordinary response to a crisis. With much at stake, ARRA provides for unprecedented levels of transparency and accountability. As specified by the Recovery Act, the Recovery Accountability and Transparency Board (RATB) was established to coordinate and conduct oversight of funds distributed under this law in order to prevent fraud, waste, abuse, and/or mismanagement. The RATB includes a Chairman, appointed by the President, and 12 Inspectors General (IG). The Board has a series of functions and powers to assist it in its mission of providing oversight and promoting transparency of the expenditure of funds at all levels of government. ACCOUNTABILITY SECTION -- RISK FOCUSED RESOURCE MANAGEMENT The Accountability Section of the Recovery Board approaches the oversight function in multiple ways to stay at the forefront of fraud prevention for the American taxpayer. In a more traditional mode, we take in tips from "citizen IGs" on our hotline service. Since we stood the hotline up on September 28, 2009, we have received over 1,700 total complaints from the public. These complaints come to us in many ways, including phone calls, fax, mail, and through our submission form on www.recovery.gov. Of these complaints, over 140 have been referred to the oversight community, the 29 Inspectors General that have responsibility under the American Recovery and Reinvestment Act. The number of complaints is not uncommon for a hotline service. If you consider other tip lines like this, you will find that only about 10% or less of the complaints are actually actionable information. The remainder include non-actionable information like threats, vulgarity, political statements, etc. In a more proactive mode, the Board keeps watch over the spending patterns, and more importantly, who's actually getting the funds at our Recovery Operations Center (ROC) located in Washington, DC. We have established never-before used methods to identify high-risk recipients of contracts, grants, and loans to help prevent fraud before it occurs. We do this by employing business rules commonly used in the financial industry to look for recipients that may be of concern based on factors like recent bankruptcies, excessive liens, judgments and lawsuits, lack of experience or history in a certain contract specialty, and other risk-relevant information. The Special Programs Unit laid the foundation with regard to preventative efforts during our first year in existence. This unit generated proactive issues by scouring public information and finding non-compliance issues that, in some cases, revealed more serious problems. These issues ranged from simply not being registered in the Central Contractor Registration database (an ARRA requirement) to more complex concerns involving the Federal Acquisition Regulation (FAR). Now, the Special Programs Unit not only looks for non-compliance issues, but also actively searches for broader, more complex deficiencies to preclude non-authorized entities from getting Recovery funds. To explain more about our approach in the ROC, we have created a three-tiered system to address the overwhelming challenge of Recovery spending oversight. The first-tier uses screening models (briefly described above) to get through large volumes of data to try and isolate potential high-risk recipients. This screening model makes us aware of publicly available information to help ensure the Federal Government is doing business with authorized entities. As an example, the ROC analyzes risk-factors such as fraudulent business addresses, involvement in past criminal behavior, and whether or not the entity has been suspended or debarred from working with the Government. The second tier uses a link-analysis tool to uncover non-obvious relationships between entities. For example, while it may be that "Company A" presents itself as a low risk recipient, they may have undisclosed ties to known criminal or high-risk entities. In short, we do not want to allow Recovery funds to get into the hands of criminals. It is here where we have directed our attention in employing a multi-talented Accountability Section staff. We have employed people with backgrounds in audit, investigations, procurement, program analysis, math, statistics, sociology, etc. We found the challenge of ferreting out potential fraud, given this volume of funding, requires an unconventional approach to prevention. Having a multi-talented staff with diverse experience and educational backgrounds allows us to look at potential problems in many different ways, and then report those findings to the cognizant Inspector General office. Lastly, we use the results of the first two tiers (preliminary screening and link analysis), along with historical risk factors, and present-day trends to create risk-based resource management tools for the oversight community. For example, we create maps that depict counties across the U.S. that have been hardest hit by the recession (i.e., high foreclosure and unemployment rates). We then overlay that information with Recovery.gov information to show where Recovery Act funds are flowing and correlate that data with previously identified high-risk programs (these programs were provided by the Inspectors General). Finally, we track where our hotline calls are coming from to look for trends in potential fraud and waste allegations. Through this methodology, we aim to focus limited oversight resources where they are needed most across the Nation. In the end, we exist to bring the power of technology and analysis to the existing oversight community and give them a more focused view of Government spending and potential fraud. The challenge we face is in on a level that our Government has not previously known for a single appropriation. Never before have we created, and then charged a single oversight Board with this amount of responsibility. It is our opinion that our efforts in fraud prevention and detection, coupled with our transparency initiatives will forever change the public's expectations of their Government. 2. Requirements Product: Feasibility Study The RATB currently uses a comprehensive risk-screening model. The RATB requires the use of a study designed to identify/enhance our efforts by revealing risk indicators available, but not currently being used. The study will show, in the form of a final report, the existence of risk variables that may be used in screening and assessment. The Government expects the Offeror to conduct research and analysis on fraud indicators found in fully adjudicated investigations to find consistent fraud indicators that can be applied to the tremendously diverse types of spending with the Recovery Act. It is expected that a normal rule set will not consist of more than 15-20 rules, but the Offeror is not limited to that model. The Offeror will provide a solution that uses mathematical modeling to identify a set of characteristics which, based on mathematical regression analysis, are statistically proven to correlate to fraudulent activities. This is similar technology currently used within the credit granting industry to automate the process of granting credit, detecting fraudulent transactions and automating risk management. Experience and expertise working with large databases and employing mathematical algorithms to automate credit risk management for credit grantors is a key factor in providing a risk modeling solution. The Feasibility Study (product of this SOO) must indicate how it is possible to automate, with great precision and accuracy, the process of identifying possible fraudulent activities related to Recovery Act contracts, grants, loans, and entitlements. The Offeror shall provide briefings to the government on the program during the project. The scope of these briefings shall be the progress and status of the project. These presentations shall include presentations of all schedules as needed. Post-Award Meeting The Offeror and the Government will meet face to face at the RATB facility within 7 days of award. This meeting will be used to clarify any issues, streamline points of contact, and confirm lines of authority. This is a 60-day contract. The Offeror shall propose a process whereby the Offeror can hand off adequate documentation to permit a vendor or the Government to assume management and maintenance of the program at the end of the contract. Deliverables Schedule Description Due Date Government Review - 1) Initial outline of workflow/concept 10 Days after award - (may be accomplished via telephone.) Yes - 2) Final document on fraud analysis risk-screening model with stated rules 50 days after award Yes - 3) Proof of Concept of rules on one "real-world" example 60 days after award Yes Specific criteria for acceptance for contract deliverables will be as follows: Reports, lists, and recommendations will be submitted in Microsoft Word, Excel, and PowerPoint, video, and other format as appropriate. Deliverables will be submitted via e-mail and in hard copy as appropriate. Contract year will be for 60 days from date of agreement. This is a Firm Fixed Price Contract and shall be administered as follows: Period of Performance Feasibility Study Solution The period of performance for the basic task order shall be from Date of Award (DOA) and last 60 calendar days in a Firm Fixed Priced CLIN 0001. For Software Licenses (if applicable) Software licensing arrangements will be considered with the proposal; however they may ultimately be negotiated separately and awarded as required by the Government. Note: Technology and Software Development funded with Government appropriations are by default "Unlimited Rights" per FAR 27. Physical and virtual access to systems may be provided by the Government as required. Given certain data sensitivities, the Offeror should make clear the level of access required. Note: Travel expenses will not be reimbursed by the Government as separate charges and shall be delineated in the cost proposal as part of the CLIN 0001 effort. This project is unclassified. For Official Use Only. All Government information, data, and/or equipment used by the Offeror in performance of this contract shall only be disclosed to authorized personnel on a need-to-know basis. The Offeror shall ensure that appropriate administrative, technical, and physical safeguards are established to ensure the security and confidentiality of this information, data, and/or equipment is properly protected. When no longer required, this information, data, and/or equipment shall be returned to Government control; destroyed; or held until otherwise directed. Destruction of items shall be accomplished by tearing into small parts, burning, shredding, or any other method that precludes the reconstruction of the material. All sensitive information contained on Offeror computers shall be either degaussed or shall use the Department of Defense method of a three time overwrite of the sensitive data. In the absence of other agreements negotiated with respect to time provided for Government review, deliverables shall be inspected and the Offeror notified of the Government's findings within 10 workdays after receipt of a deliverable. If the Government does not respond to the deliverable within the 10 workday period, the deliverable shall be deemed to be acceptable. The Project Manager (or other specified federal representative) and the Offeror shall talk on a monthly basis to review performance and discuss work for compliance with the SOO, the contract and all modifications thereto. Offerors shall propose a billing schedule based upon the total cost of the contract, and the period of performance. Invoices shall be sent to: Recovery Accountability and Transparency Board, Attention: Assistant Director Finance and Budget, P.O. Box 27545, Washington DC 20006. Failure to comply with the procedures outlined above may result in your payment being delayed. The Offeror's attention is directed to FAR Subpart 9.5, Organizational Conflicts of Interest. Notice to Offerors Offerors are hereby notified that the Government may use The MITRE Corporation, Federally Funded Research and Development Center (FFRDC) to provide assistance during this fair opportunity competition. The company/organization may have access to some of the information contained in the proposals and will be subject to appropriate conflict of interests and standards of conduct. The MITRE Corporation is also required to comply with strict confidentiality restrictions. This proposal will be awarded using a written submission. The Offerors shall furnish the proposal in separately bound volumes in the quantities specified in the table below. Each volume shall be complete in itself in order that evaluation of one volume may be accomplished independently of, and concurrently with, evaluation of the other. Offeror's proposals shall consist of the following three separate volumes submitted in accordance with the limitations listed below. Please note that any pages exceeding the maximum pages stated in the chart below will not be evaluated by the Government. Volume No. Volume Name Maximum Pages Copies I Technical/Solution Approach 10 pages Original, 1 electronic copy II Past Performance 5 pages Original, 1 electronic copy III Price Proposal No limitation. Size of print per page must be at least Arial 10 font Original, 1 electronic copy Each proposal volume shall include an index/table of contents of that volume's contents that identifies major paragraphs and subparagraphs by number and descriptive title as well as the corresponding page numbers. The page maximums for Volumes I and II are inclusive of the table of contents, executive summary, charts, graphs, tables, figures, matrices, acronym lists, etc. Every physical page included in Volumes I and II count towards the maximum page limitation, except blank sides and section/tab dividers. Each page within each volume and section shall be numbered using a consistent numbering scheme. This scheme shall also be used for all supporting documentation such as charts, figures, etc. included in each volume. Each volume including all supporting documentation shall be submitted separately in - inch binders. Each binder shall contain a cover sheet and spine that cites the Offeror's name, solicitation name and number, volume number, volume title, and if appropriate, the number of binders within the volume, e.g., Binder # of #. Each binder shall also be marked to indicate whether it is an original or copy. Paper size shall be 8 1/2 by 11-inch white paper with printing on one side only. The typewritten or printed letters shall be 12 point Arial (with the exception of pre-printed product literature). No reduction is permitted except for organization charts or other graphic illustrations. In those instances where reduction is allowable, Offerors shall ensure that the print is easily readable; no less than 8-point font on graphs and 10-point font on tables. Each page shall have adequate margins on each side (at least one inch) of the page. Header/footer information (which does not include any information to be evaluated) may be included in the 1" margin space. Fold outs for complete spreadsheets and/or organization charts are permissible up to 11" by 17", with printing on only one side, if secured with the volume. Large sheets (i.e., greater than 8 by 11 inch) shall count as two pages. Offeror shall not exceed the page limitations set forth above. Each proposal volume shall include an exceptions section that identifies and explains in detail any exceptions, deviations, or conditional assumptions taken with the objectives of the SOO. Any exception, etc., taken must contain sufficient amplification and justification to permit evaluation. All benefits to the Government shall be fully explained for each exception taken. Such exceptions will not, of themselves, automatically cause a proposal to be determined unacceptable for award. A large number of exceptions, or one or more significant exceptions not providing benefit to the Government, may, however, result in rejection of your proposal as unacceptable for award. A proposal that fails to show compliance with these instructions may not be considered for award. In order that your technical proposal may be evaluated strictly on the merit of the material submitted, NO PRICE INFORMATION IS TO BE INCLUDED IN VOLUME I, OR VOLUME II. Offerors shall provide an electronic copy of their proposal submission in ITSS. Offerors shall also mail one (1) complete "hard copy" submission of their proposal to: RATB P.O. Box 27545 Washington, DC 20006 Attn: Douglas Hassebrock Proposals are due no later than July 3, 2010 by 4:00 p.m. EST. All proposal material must be received by this time. Content The Offeror's written proposal shall include the following proposal segments: Technical Past Experience/Past Performance Price Within these proposal segments, the proposal shall comply with the following: Technical The Technical Proposal section shall include the following sections: Design Proposal The Design Proposal shall include any third party products/software needed to implement the solution. It shall include a (concept) sample of the software user interface. The text of the ARRA legislation, the objectives defined in this SOO shall be used to develop the proposal. Study Methodology The study methodology shall include steps/tools/concepts that will be used in fulfilling the requirements of the contract. Include detailed ideas on your methods and planned steps to complete the study in the given time-frame. Technical Approach and Planning The approach shall also specifically identify estimated delivery dates for each deliverable. The approach shall also identify a staffing plan for this project (if applicable) and include resumes (each not to exceed two pages each in length) for all key personnel. Each resume shall include a listing of the relevant experience projects on which these individuals worked, describing their role on that project(s). The Past Experience/Past Performance proposal shall include a short narrative which addresses the technical expertise, knowledge of requirements, and ability to meet the requirements as outlined in the statement of objectives. The Past Experience/Past Performance proposal shall include a portfolio of projects performed during the past two (2) years or more, including references. Examples shall include previous analytic models that demonstrate the Offeror's ability to execute the contract. Portfolio project descriptions shall include: a brief description of work completed on the project the project timeline the role and capacity key proposed personnel had in the projects Documentation on Industry awards and recognition Sufficient information shall be included to allow the Government to contact the agencies/organizations/companies served and assess the quality of the services provided. Examples provided shall be categorized and, if warranted, be clearly labeled for the specific area desired to be highlighted (i.e., flexibility, scalability, expandability, usability, etc.). Information to be provided shall, at a minimum, include the following: Name of Client; Point of Contact Name, Phone Number, and e-mail address; Period of Performance; Contract Value; and Name(s) of Proposed Key Personnel who worked on the referenced project. Price: Offerors may, according to their solution, require resources from multiple sources. All prices must be presented in U.S. currency. Offerors shall submit their price proposal in Microsoft Excel format. The Government is not obligated to reimburse the Offeror for costs incurred in excess of the total amount awarded on this delivery order by the Government. The Price Proposal section shall include firm fixed pricing in sufficient detail in order to review the Offeror's pricing. The price proposal shall include, at a minimum, the proposed Labor Categories, Hourly Rates, and Number of Hours required to perform the work. CLIN 0001 shall also include any and all 3rd party supplies or equipment required to perform the work (to include any Subscription and/or License Fees), if required. In an effort to receive the highest quality solution at the lowest possible price the government requests all available discounts on all labor rates offered by Offerors for this requirement. Offerors are encouraged to offer discounts. When discounts are offered, proposals must clearly identify both the contract and the discount price for each labor rate being discounted. Offerors may, according to their solution, offer resources from other GSA Schedule holders. Labor categories may be on GSA Schedule contract. CTA agreements shall specify the exact duties, responsibilities, and pricing of each member and shall be provided with the Offeror's proposal. Best Value The Government will award a contract resulting from this solicitation to one Offeror that provides the greatest value solution to the Government. "Best value" means the expected outcome of an acquisition that, in the Government's estimation, provides the greatest overall benefit in response to the requirement. In determining best value, Technical and Past Experience/Past Performance are equally important and each more important than Price. Offerors will be given the opportunity to clarify minor irregularities or apparent clerical mistakes in their submission; however, the Government reserves the right to make its award decision based solely on initial, written proposals without conducting negotiations or allowing changes to proposals. The Offeror's Technical Proposal section shall be evaluated based upon how well the section indicates successful performance of the task. In assessing this, the Government is significantly more concerned with unique, usable, and proven fraud indicators than minimum requirements. Understanding of the requirement, design strategy, implementation approach, interaction, user experience, flexibility, and usability, and other SOO requirements shall be factored into the determination of successful performance. Performance The Past Experience/Past Performance factor shall be evaluated based on the relevancy of the Offeror's past experience compared to the requirements specified in the above SOO. The Government may supplement the information you provide with any other information it may obtain from any other source including its own experience with your firm (or Subcontractor or Teaming Partner), and information concerning performance from any other reliable source. Items that may contribute to relevancy include (in no particular order of importance), but aren't limited to: Experience in fraud prevention modeling Knowledge of best practices/industry and government standards for predictive analysis Demonstrated project management skills, with on-time delivery PRICE Pricing is not rated. Price will be considered in determining the proposal that represents the best value to the Government. Attachment 1 - Software Licenses