HSCG23-16-R-MSR046_Attachment_2_SOW.docx

0DEPARTMENT OF HOMELAND SECURITY (DHS)

U.S. COAST GUARD (USCG)

OFFICE OF STANDARDS EVALUATION AND DEVELOPMENT (CG-REG)

STATEMENT OF WORK (SOW)

FOR

CONTRACTOR RESEARCH SERVICES FOR INDUSTRY AND PORT REGION IMPACTS FROM GREAT LAKE PILOTAGE RULEMAKINGS

1.0 GENERAL.

1.1 BACKGROUND.

The U.S. Coast Guard (USCG) is required to comply with Executive Order (EO) 12866 on Regulatory Planning and Review, Executive Order 13563 on Improving Regulation and Regulatory Review, Office of Management and Budget (OMB) Circular A-4 on Regulatory Analysis, and the Regulatory Flexibility Act (5 U.S. Code) as part of its rulemaking processes. Furthermore, the USCG must annually propose and finalize the Great Lakes Pilots Annual Rate Review rulemaking in which it is required to set new rates for US Great Lakes pilots. The Great Lakes Pilotage Act of 1960 (“the Act”), requires U.S. vessels operating “on register[footnoteRef:1]” and foreign vessels to use U.S. or Canadian registered pilots while transiting the U.S. waters of the St. Lawrence Seaway and the Great Lakes system. For the U.S. registered Great Lakes pilots (“pilots”), the Act requires the Secretary of DHS to “prescribe by regulation rates and charges for pilotage services, giving consideration to the public interest and the costs of providing the services.” The Act requires that rates be established or reviewed and adjusted each year, not later than March 1. The Act also requires that base rates be established by a full ratemaking at least once every five (5) years, and in years when base rates are not established, they must be reviewed and, if necessary, adjusted. The Secretary’s duties and authority under the Act have been delegated to the USCG. [1: ‘‘On register’’ means that the vessel’s certificate of documentation has been endorsed with a registry endorsement, and therefore, may be employed in foreign trade or trade with Guam, American Samoa, Wake, Midway, or Kingman Reef.]

Given the requirements of the Great Lakes Pilotage Act along with requirements from EO 12866 and EO 13563, the USCG must perform an economic impact analysis and more specifically, a benefit-cost analysis for each rate making rule. The majority of the economic impacts are measured as monetary changes to the directly or primary impacted industry or entities (shippers, Great Lakes pilots, and pilot associations). However, based on comments from the general public, the USCG must consider methods to capture the impacts to industry and Great Lakes ports. Therefore, USCG is exploring additional frameworks for assessing the cost of Great Lakes pilot’s ratemaking regulations with a focus on capturing industry and port level economic impacts.

1.2 SCOPE.

The purpose of this Task Order is to provide technical support services needed to assist the USCG in its compliance with EO 12886, Regulatory Planning and Review, and the Great Lakes Pilotage Act of 1960. Specifically, the Contractor shall produce an updated analysis similar to the analysis presented in the 2004 report entitled “Analysis of the Great Lakes Pilotage Costs on Great Lakes Shipping and the Potential Impact of Pilotage Rate Increases”. The Contractor shall produce an analysis that includes data from 2013 or more recent. The Contractor shall assess the baseline economic impact of maritime commerce on the Great Lakes. The Contractor shall quantify the cost of operating vessels on the Great Lakes and compare the cost of foreign trade on the Great Lakes to other modes of transportation and coastal ports. The Contractor shall develop the elasticity of demand for Great Lakes pilotage and determine at what point Great Lakes foreign trade is affected. The Contractor shall measure the impact of the changes in Great Lakes pilot rates to the surrounding ports. Finally, the Contractor shall provide the USCG with an MS Excel-based model or tool that can be used to generate key impact results annually for both the shipping industry and the impacted ports based on periodic changes to data inputs. This will provide USCG with a way to periodically generate key shipping industry and port level impact statistics with its annual ratemaking regulatory impact analyses. The Contractor shall deliver the modeling results and associated reports in electronic format.

1.3 OBJECTIVE

The objective of this contract is to provide an updated analysis similar to the results of the report entitled “Analysis of the Great Lakes Pilotage Costs on Great Lakes Shipping and the Potential Impact of Pilotage Rate Increases, 2004”. The Contractor shall provide technical, research and analytical support to the USCG Office of Standards Evaluation and Development (CG-REG) to update the report, generate a new report that measures impacts from the Great Lakes pilot rate changes, and provides a model or tool to readily update key impact statistics based on annual changes to model input variables. These results will enable USCG to provide an estimate of potential secondary impacts to both the shipping industry and the affected ports from the annual rate making rules.

1.4 APPLICABLE DOCUMENTS

“Analysis of the Great Lakes Pilotage Costs on Great Lakes Shipping and the Potential Impact of Pilotage Rate Increases”, Martin Associates, 2004.

2.0 SPECIFIC REQUIREMENTS/TASKS

The Contractor shall provide technical, research, and analytical support, as needed, to the USCG to produce a report similar to the analysis presented in the 2004 report entitled “Analysis of the Great Lakes Pilotage Costs on Great Lakes Shipping and the Potential Impact of Pilotage Rate Increases”. The Contractor shall draft a report that assesses the baseline economic conditions of maritime commerce on the Great Lakes, quantifies the cost of operating vessels on the Great Lakes, compares the cost of foreign trade on the Great Lakes to other modes of transportation and coastal ports, assesses the impact of changes in pilotage rates to the Great Lakes shipping industry including surrounding ports, and develops a demand elasticity for Great Lakes pilotage. Finally, the Contractor shall provide the USCG with an MS Excel-based model that can be used to generate key impact results annually for both the shipping industry and the impacted ports based on periodic changes to data inputs.

2.1 TASK ONE – Data Plan and Collection

The Contractor shall develop a plan for acquiring and updating existing data as stated in 2.0. All data collection procedures shall be in accordance with Paperwork Reduction Act (PRA) requirements. Once the data plan has been approved by USCG, the Contractor shall collect the required data in accordance with the plan. All contact with industry or government representatives to collect the data shall be coordinated with USCG. The Contractor shall deliver the data plan and collection no later than 1 month after award of contract.

2.2 TASK TWO – Great Lakes Pilotage Impact Analysis

The Contractor shall provide an analysis similar to the analysis in the 2004 report entitled “Analysis of the Great Lakes Pilotage Costs on Great Lakes Shipping and the Potential Impact of Pilotage Rate Increases”. The Contractor shall deliver the impact analysis no later than 4 months after award of contract. In order to complete this task, the Contractor shall complete the following subtasks:

2.2.1 Assess the Economic Impacts of Maritime Commerce on the Great Lakes The Contractor shall summarize the economic impact of maritime commerce on the Great Lakes St. Lawrence Seaway. The Contractor shall estimate the contribution of U.S. flag vessels operating on register and foreign flag vessels engaged in maritime commerce on the Great Lakes in relation to the general economic activity on the Great Lakes. The Contractor shall provide a baseline by which changes in pilotage rates shall be evaluated. The impacts shall be quantified and compared with the total economic activity of the Great Lakes St. Lawrence Seaway.

2.2.2 Quantify the Operating Costs of Vessels on the Great Lakes The Contractor shall quantify the costs of operating those vessels subject to pilotage costs (U.S. flag vessels on register and foreign flag vessels). The costs shall include capital costs, crew costs, maintenance and repair, fuel costs, and other costs related to operating the vessels. Data on these costs and on vessel routings, transit times and speeds shall be obtained from the U.S. Army Corps of Engineers, Office of Great Lakes Pilotage, the U.S. Maritime Administration, the St. Lawrence Seaway Development Corporation (SLSDC), and interviews with vessel owners (subject to Paperwork Reduction Act restrictions). The Contractor shall develop profiles of vessel and voyage costs that shall account for variances in voyage lengths and pilotage costs to demonstrate typical voyage costs for these vessels serving the Great Lakes.

2.2.3 Conduct Transportation Routing Cost Analysis of Great Lakes Pilotage Costs The Contractor shall conduct a transportation routing cost analysis to compare the cost of foreign trade on the Great Lakes and alternate coastal ports. The Contractor shall analyze the margins of shipping on the Great Lakes versus shipping using other modes of transportation and through alternative coastal ports. The analysis shall use the data collected in Task 2.2.2 plus additional data on U.S. port costs, inland costs between coastal and Great Lakes ports, and surface transportation costs for shipping via rail or truck to assess the competitive cost advantage of the Great Lakes ports compared to coastal ports, rail, truck, or barge routing.

2.2.4 Develop Demand Elasticity for Great Lakes Pilotage Rates The Contractor shall develop a demand curve for Great Lakes pilotage and the elasticity of demand due to changes in pilotage rates. If the price elasticity of demand is found to be elastic, the Contractor shall determine the intermodal substitution impact from rate increases. The Contractor shall identify the pilotage rate level that results in diversions of tonnage from foreign flag vessels and losses in the demand for pilotage service. In accordance with the Paperwork Reduction Act requirements, the Contractor shall supplement the analysis with interviews with importers and exporters to assess their ability to substitute the vessel service with laker service.

2.2.5 Quantify Impacts of Increases and Decreases in Pilotage Rates Based on the findings in Subtasks 2.2.1-2.2.4, the Contractor shall develop a market impact of changes to pilotage rates.

· The Contractor shall estimate the fluctuations in tonnage shipped on the Great Lakes due to changes in pilotage rates. The Contractor shall then quantify the impacts of decreases or increases in tonnage diverted as a result of changes in pilotage rates. These impacts shall include the net gain or loss in foreign trade shipping demand and tonnage on the Great Lakes and the economic impact on the regional economy.

· The Contractor shall also analyze the impact of rate changes in terms of direct, indirect and induced output, employment, personal income and local re-spending, business revenue, and state and local taxes.

· In addition, the Contractor shall provide the economic impacts of the Great Lakes pilot rate adjustments on the activities of the Great Lake ports. USCG will present the Contractor with the names and number of ports (not to exceed four) to be analyzed.

2.3 TASK THREE – Report

The Contractor shall present the methodologies used in the analyses and the findings from Task 2.2 in a draft and final summary report. The Contractor shall submit the draft report for USCG review and comment no later than 6 months after award of contract. The Contractor shall revise the draft report in accordance with USCG comments and prepare a final report. The Contractor shall submit a final summary report for USCG review and comment no later than two weeks after receipt of USCG comments. The Contractor shall document all data sources and analysis and deliver all work in electronic format.

2.4 TASK FOUR – Great Lakes Pilotage Secondary Impact Spreadsheet Tool/Model

2.4.1 Develop Great Lakes Pilotage Secondary Impact Spreadsheet Tool/Model The Contractor shall develop an MS Excel-based model or tool that can be used by USCG to quickly calculate key impact results periodically for both the shipping industry and the impacted ports based on changes to data inputs. The model shall be easily reproducible by USCG and capable of being used for future Great Lakes rulemakings. This spreadsheet model / tool shall be transparent in its methodology, and shall provide USCG with a way to periodically generate key secondary impact statistics with its annual ratemaking regulatory impact analyses. The Contractor shall document all data sources and analysis and deliver all work in electronic format. The Contractor shall deliver the draft spreadsheet model/tool to the USCG no later than 10 months after award of contract.

2.4.2 Finalize Great Lakes Pilotage Secondary Impact Spreadsheet Tool/Model The Contractor shall revise the draft spreadsheet model/tool in accordance with USCG comments and prepare a final spreadsheet model/tool. The Contractor shall deliver the final spreadsheet model/tool to the USCG no later than 1 month after receipt of USCG comments.

2.5 TASK FIVE – Task Briefing

In collaboration with the Contracting Officer’s Representative (COR) and Technical Program Manager (TPM), the Contractor shall prepare and present a task briefing for the USCG project team and CG-REG management and other interested parties on the progress, results, challenges and recommendations of the task to date. The briefing shall occur no later than 9 months after approval of the project plan described in Section 4.2 of this SOW.

3.0 GOVERNMENT TERMS & DEFINITIONS

3.1 CG-REG Office of Standards Evaluation and Development

3.2 COR – Contracting Officer’s Representative

3.3 DHS Department of Homeland Security

3.4 EO Executive Order

OMB Office of Management and Budget PM Project Manager SLSDC St. Lawrence Seaway Development Corporation

3.8 SOW Statement of Work

3.9 TPM Technical Program Manager

3.10 USCG – US Coast Guard

4.0 ADMINISTRATION

4.1 CONTRACTOR PERSONNEL

4.1.1 Project Manager. The Contractor shall provide a Project Manager (PM). The PM is further designated as Key by the Government (see SOW 4.2).

4.1.1.1 The PM shall be the single point of contact for the Contracting Officer and the Contracting Officer’s Representative (COR). The PM shall be the most senior level employee provided by the Contractor for this work effort. During any absence of the PM, only one alternate shall have full authority to act for the Contractor on all matters relating to work performed under this SOW. The PM and the designated alternate shall be able to read, write, speak and understand English.

4.1.1.2 The PM (or designated alternate)shall be available to the COR between the hours of 0800 and 1700, Monday through Friday, and shall respond to a request for discussion or resolution of technical problems within four (4) business hours of notification.

4.1.2 Qualified Personnel. The Contractor shall provide qualified personnel to perform all requirements specified in this SOW.

4.1.3 Employee Identification. Contractor employees visiting Government facilities shall wear an identification badge that, at minimum, displays the Contractor name, the employee’s photo, name, clearance-level and badge expiration date. Visiting Contractor employees shall comply with all Government escort rules and requirements. All Contractor employees shall identify themselves as Contractors when their status is not readily apparent and display all identification and visitor badges in plain view above the waist at all times.

4.1.4 Employee Conduct. The PM shall ensure Contractor employees are aware of, understand, and abide by established USCG rules, regulations, and safety and work practices.

4.1.4.1 Removing Employees for Misconduct or Security Reasons. The Government may, at its sole discretion, direct the Contractor to remove any Contractor employee from USCG facilities for misconduct or security reasons. Removal does not relieve the Contractor of the responsibility to continue providing the services required. The Contracting Officer will provide the Contractor with a written explanation to support any request to remove an employee.

4.1.5 Conflict of Interest. The Contractor shall not employ any person who is an employee of the U.S. Government if that employment would, or would appear to cause a conflict of interest.

4.2 KEY PERSONNEL. Before replacing any individual designated as Key by the Government, the Contractor shall notify the Contracting Officer no less than 15 business days in advance, submit written justification for replacement, and provide the name and qualifications of any proposed substitute(s). All proposed substitutes shall possess qualifications equal to or superior to those of the Key person being replaced. The Contractor shall not replace Key Contractor personnel without acknowledgment from the Contracting Officer.

4.3 SECURITY. All support positions under this SOW are classified as non-critical. However, Contractor personnel will have access to privacy information and shall maintain the privacy and integrity of all such data in accordance with (IAW) the Privacy Act (5 USC 522a) and all applicable USCG and Department of Homeland Security (DHS) rules and regulations.

4.4 PERIOD OF PERFORMANCE. The period of performance for this SOW is one (1) year from the date of award.

4.5 PLACE OF PERFORMANCE. The primary place of performance will be the U.S. Coast Guard Headquarters Building at the Department of Homeland Security’s St. Elizabeth facility located in Anacostia, Washington, D.C.

4.6 HOURS OF OPERATION. Contractor employees shall generally perform all work between the hours of 0800 and 1700 Eastern Time (ET), Monday through Friday (except Federal holidays). However, there may be occasions when Contractor employees shall be required to work other than normal business hours, including weekends and holidays, to fulfill requirements under this SOW.

4.7 TRAVEL. Reimbursable travel will not be required to fulfill the requirements of this SOW.

4.8 PROGRESS MEETINGS. The PM shall meet with the COR in person (if feasible) or by telephone to discuss Contractor performance and progress upon the COR’s request. The frequency of these meetings will be determined by the COR. A mutual effort will be made during these meetings to resolve any problems identified.

4.9 GENERAL REPORT REQUIREMENTS. The Contractor shall provide all written reports in electronic format with read/write capability using applications that are compatible with USCG Standard Workstation III (Windows 7 and Microsoft Office Applications). Reports will provide an objective basis for all estimates. Reports shall document all assumptions, data sources and analysis. Reports shall include an executive summary.

4.10 INTELLECTUAL PROPERTY. All documentation, photography and electronic data and information collected by the Contractor and entered into or generated in support of this SOW shall be considered Government property, and shall be returned to the Government at the end of the contract. All courses and materials developed under this SOW shall be the property of the USCG, including all intellectual property developed by the Contractor or provided by the Government in meeting the requirements of the contract.

4.11 PROTECTION OF INFORMATION. Contractor access to information protected under the Privacy Act is required under this SOW. Contractor employees shall safeguard this information against unauthorized disclosure or dissemination IAW the law and Government policy and regulation.

4.12 SECTION 508 COMPLIANCE. Section 508 of the Rehabilitation Act (29 U.S.C. 794d), as amended by the Workforce Investment Act of 1998 (P.L. 105-220), August 7, 1998, requires that when Federal agencies develop, procure, maintain, or use electronic and information technology, they must ensure that it is accessible to people with disabilities, unless it would pose an undue burden to do so. Federal employees and members of the public who have disabilities must have access to and use of information and services that is comparable to the access and use available to non-disabled Federal employees and members of the public. For additional information, please refer to FAR 39.2 or http://www.section508.gov.

4.2 POST AWARD ORIENTATION

The Contractor shall attend a Post Award Orientation with the Contracting Officer and the COR no later than 7 business days after the date of award. The purpose of the Post Award Orientation, which will be chaired by the Contracting Officer, is to discuss technical and contracting objectives of this contract and review the Contractor's draft project plan. The Post Award Orientation will be held at the Government’s facility, located at US Coast Guard Headquarters, 2703 Martin Luther King Jr Ave SE, Washington DC 20593-7418, or via teleconference.

4.3 PROJECT PLAN

The Contractor shall provide a draft Project Plan at the Post Award Orientation for Government review and comment. The Contractor shall provide a final Project Plan to the COR not later than 10 business days after the Post Award Orientation.

4.4 PROGRESS REPORTS

The Project Manager (PM) shall provide a monthly progress report to the Contracting Officer and COR via electronic mail. This report shall include a summary of all Contractor work performed, all direct costs by line item, an assessment of technical progress, schedule status, any travel conducted and any Contractor concerns or recommendations for the previous reporting period.

5.0 GOVERNMENT FURNISHED RESOURCES

The Government will provide data and documents to the Contractor, as needed and applicable, for work required under this contract. This includes the “Analysis of the Great Lakes Pilotage Costs on Great Lakes Shipping and the Potential Impact of Pilotage Rate Increases” by Martin Associates (2004).

6.0 CONTRACTOR FURNISHED PROPERTY

The Contractor shall furnish all facilities, materials, equipment and services necessary to fulfill the requirements of this contract, except for the Government Furnished Resources specified in SOW 2.0 and SOW 6.0.

7.0 GOVERNMENT ACCEPTANCE PERIOD

The COR will review deliverables prior to acceptance and provide the Contractor with an e-mail that provides documented reasons for non-acceptance. If the deliverable is acceptable, the COR will send an e-mail to the Contractor notifying it that the deliverable has been accepted.

7.1 The COR will have the right to reject or require correction of any deficiencies found in the deliverables that are contrary to the information contained in the Contractor’s accepted proposal. In the event of a rejected deliverable, the Contractor will be notified in writing by the COR of the specific reasons for rejection. The Contractor shall have an opportunity to correct the rejected deliverable and return it per delivery instructions.

7.2 The COR will have 10 business days to review deliverables and make comments. The Contractor shall have 10 business days to make corrections and redeliver.

7.3 All other review times and schedules for deliverables shall be agreed upon by the parties based on the final approved Project Plan. The Contractor shall be responsible for timely delivery to Government personnel in the agreed upon review chain, at each stage of the review. The Contractor shall work with personnel reviewing the deliverables to assure that the established schedule is maintained.

8.0 DELIVERABLES

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