V320A1014_SSJ_V3_redacted.pdf

Procurement Request No. V320A1014

V220T.12 (01/15)

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE ASSISTANT SECRETARY FOR RESEARCH AND TECHNOLOGY

VOLPE NATIONAL TRANSPORTATION SYSTEMS CENTER (VOLPE CENTER)

Economic Analysis Division (V321)

SOLE SOURCE JUSTIFICATION

A. Description of Supplies/Services.

The Volpe National Transportation Systems Center (Volpe Center) has been tasked by the National Highway Safety Administration (NHTSA) to analyze the economic impact of changes in the Corporate Average Fuel Economy (CAFE) standards. A central component of this task focuses on performing an analysis on fuel economy standards for vehicle model years 2021-2026. It is virtually certain that the pending final rule establishing new fuel economy standards for vehicles produced during these model years will be subject to litigation, and that the representation of accompanying macroeconomic and employment impacts will be at issue, and litigants will cite one or more prominent academic expert analyses using the economic impact model developed by REMI. Replicating these studies at Volpe is a critical aspect of being able to respond to litigation of the standard and determining which aspects of these external analyses can be adopted or should be refuted.

Fully replicating the litigation studies of the macroeconomic and employment effects of CAFE standards, and ensuring consistency with the econometric and input-output framework behind these impacts requires using the REMI PI+ model, distributed by Regional Economic Models, Inc. (REMI) in Amherst, Massachusetts. The REMI model allows for analyzing the economic impact of changes in the composition and magnitude of spending by industry by U.S. regions (as defined by the Bureau of Economic Analysis (BEA)) and tracing the transmission mechanism through which they will affect the broader US economy (via changes in income and employment). The estimated cost for a perpetual license for the REMI regional model and maintenance is .

B. Market Research In preparation for finalizing the pending new CAFE standards, technical discussions established that in order to determine the veracity of external analyses representing the economic effect of the proposed rule, running an analysis using the same REMI economic impact model would be necessary. The REMI model is the only dynamic economic impact model available and is unique in incorporating both an input-output and econometric modeling framework, and forecasting capability, that cannot be duplicated with other models.

REMI also allows for analyzing economic effects at the four-digit North American Industry Classification System (NAICS1) level (which is required to observe changes in the automobile industry).

The Volpe Center technical initiator, Senior Economist of V321, who has been working with many sources of vehicle, population, and economic data for more than a decade, researched the capability and availability of REMI PI+ and similar models online between May 2018 and November 2018, including the Environmental Protection Agency’s (EPA) MOtor Vehicle Emission Simulator (MOVES) and various data resources available from IHS Global Inc. Through Volpe expert observations plus queries with experts at National Highway Traffic Safety Administration (NHTSA), the Environmental Protection Agency (EPA), and the BEA during the period May-November 2018, all Government and industry experts consulted confirmed that REMI PI+ was the only model capable of meeting the requirements of the CAFE analysis. Furthermore, REMI PI+ is not available through any distributor except for REMI, a small business located in Amherst, MA..

C. Supporting Rationale:

(1) Sole Source: Only one responsible source and no other supplies or services will satisfy agency requirements.

Due to the highly technical nature of the CAFE work, and the need to have a consistent approach when replicating external analyses of the pending standard, it is essential to use the same REMI PI+ model. This will allow for a defensible and credible analysis and response that will be acceptable by all stakeholders, including NHTSA, EPA and industry.

Based on market research conducted from September to November 2018, it has been confirmed that there are no substitutes for the REMI PI+ model, and licenses for this product are only available directly through REMI. Not using REMI PI+ for the CAFE analysis will cost the Volpe Center and the Federal Government the ability to robustly and defensibly respond to critiques of the pending CAFE standards. This is an important aspect of the work being done to ensure the standard is economically as efficient and effective as possible. The Volpe Center risks the following consequences if the REMI PI+ model is not contracted for economic impact analysis:

1 NAICS = North American Industry Classification System

Procurement Request No. V320A1014

V220T.12 (01/15)

• The Volpe Center and NHTSA would not be able to complete the required work on the pending CAFE standard.

• The Federal Government will not be able to respond to critiques of the CAFE standard, which could lead to a sub-optimal standard being implemented.

(2) Brand Name: N/A.

(3) Unusual and Compelling Urgency: N/A.

D. Required Signatures. The following signatures represent concurrence/approval of this justification:

PR Technical Initiator Date PR Technical Initiator’s Supervisor Date

Contracting Officer Date Chief, Contracts Branch (or designee) Date (Signature required for procurements over $25,000)