Sole_Source_Justification_-_V3211010_Redacted.pdf

V220T.12 (01/15)

Procurement Request No. V3211010

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE ASSISTANT SECRETARY FOR RESEARCH AND TECHNOLOGY

VOLPE NATIONAL TRANSPORTATION SYSTEMS CENTER (VOLPE CENTER)

INSERT OFFICE OF THE TECHNICAL INITIATOR OF THE PR

SOLE SOURCE SAP JUSTIFICATION

A. Description of Supplies/Services.

This purchase order is to procure technical services from Victoria University Centre of Policy Studies (CoPS). The contractor shall: (1) incorporate modifications into the United States Applied General Equilibrium – Highway (USAGE- Hwy) model, consistent with priorities raised by Volpe’s project sponsor, Federal Highway Administration (FHWA); and

(2) conduct and report on new USAGE-Hwy model runs addressing highest-priority research questions centering on the socioeconomic impacts of highway investment. The contractor shall conduct analytical runs of highway investment scenarios using the USAGE-Hwy model, and shall provide a written report describing how the model results differ across the scenarios.

The estimated price for this effort is , including options.

This contract continues macroeconomic highway modeling and analysis that was performed under Purchase Order DTRT5716P80020 valued at , with a period of performance of 12/9/15-1/26/16, and other prior contracts.

B. Market Research.

The market research for this procurement was performed by , Volpe Center Economic Analysis Division (V321) during the period of March 2016 through May 2016. This included detailed analysis of existing and emerging macroeconomic analytical models and their applicability to the current requirement. To date, the USAGE-Hwy macroeconomic model has been determined to offer superior analytical and policy value and has been used extensively by the Volpe Center in support of its sponsors. As discussed below, the analysis showed that the USAG-Hwy model still offers superior value, and that the expected cost benefit of applying the model to current requirements is in the Government’s best interest.

Prior market research conducted in 2013-2014 identified USAGE, a proprietary analysis model owned and operated by the CoPS, as the most appropriate macroeconomic model to use for the analyses planned to be conducted; LIFT was identified as the next-best available alternative, but with several critical deficiencies for the purposes of the analysis. Other computable general equilibrium models and the set of macroeconometric models were found to have additional deficiencies that rendered them inadequate for the purposes of the analysis. Such deficiencies include a lack of a representation of the transportation sector, a lack of representing productivity by industry, and a lack of structural linkages between different sectors of the U.S. Economy. USAGE was selected, and since that time, additional model refinements have been made.

In the most recent market research, no new models were identified that could be applied in lieu of USAGE-Hwy. The market research identified one key development in the LIFT model: the ILIAD model, which is essentially an expanded form of LIFT that includes additional industrial sectors. No other changes were identified in the LIFT model, making the expanded industrial representation in LIFT/ILIAD the only key development to consider. However, the presence of additional industrial sectors does not mitigate the deficiencies in LIFT that support the selection of USAGE-Hwy for both the first and second phases of the analysis. However, subscription prices and licensing fees to employ the LIFT/ILIAD model are estimated to be 2-3 times the price of the USAGE model, with less functionality.

Comparing the expected costs of applying USAGE-Hwy versus LIFT/ILIAD, it appears that there is no expected cost advantage to applying LIFT/ILIAD. Conversely, the expected overall costs for applying LIFT/ILIAD are higher than for USAGE-Hwy.

V220T.12 (01/15)

Based on the market research, Volpe maintains the finding from the analysis under IAA HW7AA1: USAGE-Hwy is the best available tool for meeting our research needs. Although the addition of ILIAD to the LIFT framework improves the industrial specification in the model, the USAGE model framework is superior for Volpe's research needs. Furthermore, the refinements already included within USAGE-Hwy, the version of USAGE that was customized for Volpe's needs, have increased the margin by which USAGE offers value relative to available alternatives. Similarly, the application of USAGE-Hwy in the new analysis would support comparability between the findings of previous analyses, which would improve the value of research that Volpe can provide to the sponsor.

C. Supporting Rationale.

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

CoPS, Victoria University is the sole owner of the USAGE model, and no other source can provide the level of analytical depth required by the Volpe Center.

USAGE-Hwy is the only available model capable of mapping outputs from the HERS model to a model of the United States economy that accounts for linkages among costs of production, labor supply, household expenditures, and travel costs. USAGE-Hwy would offer a superior means of analyzing all relevant linkages between highway investment and economic outcomes consistent with forthcoming FHWA outreach on the economic benefits of highway investment.

USAGE-Hwy was developed exclusively by the Centre of Policy Studies (CoPS) at Victoria University, and is proprietary to CoPS. Because Victoria University is the only source capable of conducting the required analysis in USAGE-Hwy, it is necessary for Victoria University to conduct the required analysis.

Additionally, it would be infeasible to educate another contractor to obtain the required expertise. An appropriate macroeconomic model requires a high level of experience and technical effort, and ideally should have the support of the research community. The only subset of potential contractors that could be educated to obtain the required expertise are those that were considered in the market research previously discussed. However, it would be impractical to reconfigure other existing models to achieve the requirements of the research within prevailing practical constraints.

(2) Brand Name: A specific brand that is available from multiple vendors: 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)