Request for Quote Research to Improve the Empirical Foundations for Capital Services Measures - This is a solicitation for commercial items. The announcement constitutes the solicitation and a written solicitation will not be issued. This solicitation is being issued as a request for quotation. (RFQ) I. Background The Bureau of Labor Statistics (BLS) requires additional empirical evidence to improve the measures of capital used in measuring “multifactor productivity” (MFP). BLS is seeking to fund one or more proposals for research projects that would identify and exploit new data sources to improve the assumptions made in the measurement process. The projects will be presented as research papers, presented by the contractor at seminars in Washington, DC, during September, 2006. Improvements in the design of new capital goods, and the sheer accumulation of capital goods, can raise productivity. To understand economic growth it is important to have good measures of capital. BLS measures MFP using a neoclassical productivity model, in the tradition of work by Solow, Jorgenson, and many others. As with any economic measure, many assumptions must be made in capital measurement. However, the role of capital in production is particularly complex. There is uncertainty, at the time assets are produced, about the pattern of returns they will provide in the future. For most types of assets, rigid assumptions are typically made about the patterns of services and returns to assets. These assumptions are often based on a few parameters derived from evidence that is either out of date or that relates to other types of assets. II. Scope of research projects that will be considered. There are a number of specific areas where BLS requires better information: - Service lives, i.e., the length of the period that assets spend in the service of businesses or households. - Patterns of utilization of assets during their lifetimes, e.g., data on the intensity with which they are used, such as number of hours they are in service and the amount of output they generate. There are issues of how these variables behave during the business cycle as well as with the age of the asset. - The behavior of asset rental prices (revenues less cost associated with particular assets) with age and/or over the business cycle. - The behavior of asset purchase prices. - Changes in the characteristics or “quality” of new capital goods. Little effort has been made to base quality adjustments on rental prices, the basis suggested in capital theory, instead of on asset prices. - The factors that influence service lives, utilization, and depreciation, such as physical decay (which may cause down-time or increased maintenance cost), obsolescence, the business cycle, or the growth rate of the industry employing the assets. - Land values. Present land value measures rest on heroic assumptions. Evidence on the value of land relative to the value of structures would be useful. Time series data that differentiated by industry or otherwise by type of land-use would be most useful. (Data might be based on hedonic studies conducted by the authors. Alternatively, good estimates may be available from tax assessment databases, provided the assessments are based on sophisticated methods.) - Inventory depreciation or other price changes. - Assets that are used in specific industries as well as assets that are found throughout the economy. Although the primary focus will be on new data sources for tangible business assets, other topics that improve the empirical basis for capital measurement would be of interest. For example, new evidence on the role of intangible capital, human capital, or consumer durables would be of interest, as would be studies that use micro data to help identify how company-based capital data might be used in developing capital time series for establishment-based industry productivity studies. The use of data sources that have not been used previously in capital measurement work is paramount. The data may be obtained from private sources or they may be tabulated from public notices, such as advertised prices. The selection and use of advanced econometric techniques will be important to extracting information on relationships and parameters that are useful to the BLS capital and multifactor productivity measures. If there are issues relating to protecting the confidentiality of the data provider, the contractor must raise these issues in the proposal so that the BLS and the contractor can evaluate potential legal issues and potential limitations to the study before the contract is awarded. III. Work Plan The proposal shall specify the types of assets, industries, and/or types of issues (see Section II for the scope of issues) that will be examined. The proposal shall also describe which data source(s) will be developed and how it will be used. A successful proposal shall describe a project that would significantly benefit the goals of improving the BLS MFP measures and that would represent a significant and novel contribution to the literature on the subject of capital measurement. The proposal shall include the curriculum vita of the principal investigator. Each contractor shall obtain the data, analyze the data, and write up the results in a format suitable for sharing with academic peers. It is the sole responsibility of the contractor to obtain the data for the proposed project. An interim report shall be submitted to BLS no later than April 30, 2006. This report shall present tabulations demonstrating that the contractor has the data and has control of the data in an analytic software package and it shall clarify the directions of the remainder of the project. After receiving this report, BLS will provide feedback on the most useful directions for the analysis. A research paper shall be submitted to the BLS no later than August 31, 2006 so that BLS officials have an opportunity to read it before the seminar is presented during September. At the seminar, the contractor shall present the findings of the research orally and shall answer questions posed by BLS staff and by members of the research community invited to the seminar by BLS. The BLS, at its discretion, may ask for additional analysis or revisions to the paper. These revisions may be to address any of several possible issues, such as improving the usefulness of the results to the BLS, addressing econometric issues raised at the seminar, or acknowledging editorial comments. The revised paper, along with an executive summary of approximately two pages, will constitute the final report. This will be due no later than September 30, 2006 or one year from date of award, whichever comes first.. IV. Period of Performance The contract period shall be one year from the date of award. The projected date of the award is September, 2005. V. Deliverables The following deliverables shall be completed within the timeframe stated below: Deliverables: Delivery Dates: Interim report April 30, 2006 Research paper August 31, 2006 Presentation at Seminar September 15, 2006 Final report September 30, 2006 VI. Funding BLS will making one or more awards not to exceed $100,000, depending on available funds, the costs of the proposals, and the quality of the proposals as determined using the selection criteria, below. The contractor shall submit a cost breakdown for all costs, such as travel, costs for data, etc. VII. Selection Criteria Proposals shall be evaluated in accordance with the following criteria: 1) The relevance of the data source to U.S. business sector capital. The Bureau will consider questions such as: How significant are the assets being evaluated? How representative are the observations available from the data source of the general population of assets? How many variables are there upon which to gauge the physical use and value of assets as they age? Are there panel qualities to the data as well as cross section? What is the quality of the data to be used in the study? (20 points) 2) The quality of the analytic framework. For example: Are the econometric tests or statistics that are proposed appropriate? Will the study likely be viewed as a contribution to the literature on economic measurement? Will the study be likely to identify variables in a way that will be useful in estimating U.S. business sector capital. (20 points) 3) The number of issues are addressed by the full set of proposals. The Bureau prefers that each study encompass a different topic. If multiple proposals are on very similar topics then the best one will be given preference and the others will be less likely to be selected relative to proposals on different topics. (10 points) 4) The feasibility of the plan of study described in the proposal. The Bureau will judge whether the proposal describes an area of study that can be completed in the time frame allowed and with the funds available. (10 points) 5) Experience of the contractor. The Bureau will review the contractor’s past publications of studies using econometric tools to do empirical analysis. (20 points) 6) Cost of project. The cost of the project will be assessed relative to the scope and difficulty of the proposed project. A less difficult project may be funded if it is of value and if its cost is in line with its difficulty. (20 points) VIII. Response Information Interested persons may identify their interest and capability to respond to the requirement by submitting quotations. The Government will consider all quotes received by the response date on this notice. The purchasing activity is not responsible for locating or securing any information which is not identified in the quotation and reasonably available to the purchasing activity. All quotes should be submitted to the Bureau of Labor Statistics, PSB Room 1830, 2 Massachusetts Ave. NE, Washington, DC 20212 no later than 3:00pm on May 2, 2005 and be clearly marked with RFQ#BLS-05-15. The point of contact for all information is Emily Whitted/Michelle Govan, Contract Specialists at the location specified in the announcement or via email at
[email protected]. No hand carried quotes will be accepted. Quotes submitted electronically are encouraged provided all the necessary documentation requested in this RFQ is included. Subject lines must read as follows: RFQ#BLS-05-15-Research. All future information about this acquisition, including solicitation amendments, will be distributed through the FedBizOpps (FBO) site. Interested parties are responsible for monitoring the FBO site to ensure that they have the most current information about this acquisition.