Attachment 1 - Statement of Work - 1232SA26Q0772.pdf

Statement of Work Economic Research Service

Efficiency of Shared File Organization

1.0 Organization and Background

U.S. Department of Agriculture (USDA) Economic Research Service (ERS) Market and Trade Economics Division (MTED) 355 E Street, S.W.

Washington, D.C. 20024-3221

The Economic Research Service is a Federal agency within the US Department of Agriculture (USDA). ERS provides agricultural economic research and policy services that address issues at the forefront of domestic and global concerns. Within ERS, the Market and Trade Economics Division (MTED) monitors, evaluates, and conducts research on domestic and foreign economic and policy factors affecting agricultural markets and trade.

ERS needs monthly reports containing consistent U.S. and international macroeconomic forecasts, along with the model and data used in creating those forecasts with a data history of at least 30 years. The monthly forecast needs to go out at least 5 years, with 10-year time horizons or longer provided at least four times a year. The model needs to be usable in performing complex analyses of policy decisions, as well as reflect the interdependence of individual countries in the global market in Windows-based PC software. The organization providing this must have at least a 10-year track record.

2.0 Scope

ERS’ main objectives for this modeling and forecasting service are to improve its function in providing USDA with long-term macroeconomic forecasts which are used in ERS’s farm income estimates, the USDA Baseline and other ERS and USDA outlook analyses, to provide USDA with analysis of the implication of a variety of macroeconomic changes on U.S. agriculture as they arise, and to have access to an extensive historical and projections database of macroeconomic variables for both the United States and countries around the world.

3.0 Deliverables

The contractor shall, but is not limited to, the following:

• A Windows-compatible global macroeconomic model that is usable in generating tabulated reports.

• Forecast data that are provided to ERS monthly and available online, including the updated historical data set used in the construction of the model. This data set is updated monthly as new data become available.

• Monthly reports containing forecasts and analysis of U.S. and other countries’ economies, downloadable using the internet for installation on the ERS local area network.

• Technical support, documentation, and training for these products and services. This includes training webinars, and at ERS's discretion, training sessions at ERS.

• Provide sitewide access for ERS/MTED or define number of users within MTED for each data set.

Clear understanding of what data is available and accessible for which individual users. Contractor will define a clear term of use with data for MTED users.

3.1 The Forecasting and Policy Simulation Model

The model is estimated using quarterly data and is updated monthly as new releases of data become available. The model is composed of a set of individual country models that are fully linked through global assumptions about trade volumes and prices, competitiveness, capital flows, interest and exchange rates, and commodity prices.

• Forecasts are updated each month and provided on a 5-year ahead, 10-year ahead and 25-year ahead basis.

• The theoretical framework for the model is Keynesian in short-run and Monetarist in long-run.

o Consumption is a function of real income, wealth and interest rates.

o Investment - ‘q’ formulation with accelerator terms.

o Exports depend on world demand and relative unit labor costs.

o Imports depend on total final expenditure and competitiveness.

o Layard-Nickell wage/price system.

o Monetary policy is endogenized. Options include Taylor rule, fixed money and exchange rate targeting.

o Exchange rate determined by UIP in short term and equilibrium exchange rates in long run.

o Expectations are adaptive.

• The model covers 81 economies (11 countries in the Americas, 22 countries in Europe, 15 countries in Asia, and 22 countries in the Middle East and Africa), plus the Eurozone. The rest of the world economy is covered in six trading blocs.

• Variables available for each of these countries include, but are not limited to:

o Endogenous: Real Gross Domestic Product (GDP), fixed investment, inventories, consumption, exports of goods and services, current account balance, money supply, short-term interest rate, long-term interest rate, effective exchange rate, stock market price index, expected interest rate, labor supply, labor force participation rate, unemployment rate, natural unemployment rate, potential output, output gap, employment, and average earnings.

o The GDP and major components are available in nominal and real terms, and price deflators are included. Exchange rates are available in nominal and real terms, as are oil prices.

o Exogenous: government spending and tax rates.

• The model software allows users to:

o Change assumptions for key economic variables to produce new forecasts or economic scenarios.

o Add new variables and equations.

o Produce presentation-quality graphics.

o Produce, visualize, and download data tables.

o Download data into spreadsheets and other data-handling packages.

3.2 Data Set Requirement

The model includes a data set that covers the history of each variable back to 1980 for each of the 81 countries, the Eurozone, and the six rest of world trading blocs—to the extend data exist. Monthly data releases include historical and forecast data and any documentation and software changes are available online.

3.3 User Guide

• A User Guide provides documentation on the Model in PDF format.

• For each country model, there is a file that contains all equations and identities, along with the estimation statistics for the key equations.

• Within the model, users can access information on any variable: mnemonic, description, source and equation (or indication that the variable is exogenous), last period of actual data and a list of other variables in the model that are affected by the selected variable.

3.4 Monthly Reports

Monthly reports provide concise analysis of the major economic conditions and developments in all countries. This includes key changes to the forecast, underlying drivers for the outlook, and central bank policy. The reports include a detailed risk section looking at market demand, market cost, exchange rate, sovereign credit, trade credit and global risks. The reports also include a section on the long-term outlook including forecasts for labor, capital and productivity growth. Multiple tables and charts provide a clear illustration of the monthly forecast.

3.5 Support and Training

Support is provided between 9 am and 5 pm EST, either via telephone or e-mail to answer questions on the forecasts, reports, and/or software performance. Training videos and additional material are available online. Webinars or in-person training on the model, software or databank can be provided upon request.

3.0 Place of Performance

Virtual.

4.0 Period of Performance

Period of performance of this contract shall be completed between 01 July 2026 through 30 June 2027.

This contract includes four options years.

5.0 Security

The contractor(s) may be required to obtain a suitability determination through USDA/ERS. In addition, they shall complete all mandatory training (e.g., the privacy basis and security training) required of all with access to USDA/ERS networks and facilities.

6.0 Travel

No travel is expected, as this training will be conducted virtually.