Sources Sought Notice – UI Actuarial Support

Notice Type: Sources Sought Notice

Posted Date: 31-JUL-13

Office Address: Department of Labor; Employment Training Administration; Division of Contract Services; 200 Constitution Avenue, NW, Room N-4655 Washington DC 20210

Subject: UI Actuarial Support

Classification Code: R - Professional, administrative, and management support services

Solicitation Number: DOL131RI20669

Contact: Jeffrey Brown, Phone 2026933159, Email [email protected]

Setaside: Total Small BusinessTotal Small Business

Place of Performance (address): Except for training seminars, the work on this project will be located on-site at the Office of Unemployment Insurance of the Employment and Training Administration in Washington, D.C., to facilitate coordination with OUI staff and access to the UI database and to computer networks and equipment. Some travel may be necessary.Washington, DC

Place of Performance (zipcode): 20210

Place of Performance Country: US

Description: Department of Labor

Employment Training Administration

Division of Contract Services

THIS IS A SOURCES SOUGHT NOTICE ONLY. In accordance with Federal Acquisition Regulation (FAR) 10.002(b)(2)(i) this notice is issued for the purpose of market research to determine what types of businesses are capable and experienced to perform the required work. THIS NOTICE IS NOT A REQUEST FOR PROPOSALS (RFP). THE RFP RESULTING FROM THIS SOURCES SOUGHT NOTICE WILL BE ISSUED SEPARATELY AND ADVERTISED on the FedBizOpps Website https://www.fbo.gov/. The information received will be used to determine whether to issue the proposed solicitation as a competitive set-aside or full and open competition (unrestricted). The extent of the work is described within the attached statement of work. PURPOSE The U.S. Department of Labor (DOL) is seeking a qualified contractor that can provide actuarial support for the Office of Unemployment Insurance (OUI) in the areas of state unemployment insurance (UI) trust fund forecasting, technical assistance to states in managing profiling models, budget and legislative estimating, budget execution, and producing statistical reports.

BACKGROUND The Unemployment Insurance (UI) system, as established by the Social Security Act of 1935, is a unique Federal-state system grounded in Federal law, but executed in its relationship to the employer and to the unemployed worker through state law. Federal law provides the broad parameters for the program and individual state laws establish specific financing and benefit payment structures.

The Office of Unemployment Insurance (OUI) of the U.S. Department of Labor is the Federal partner in the system. Its role is one of overall oversight and coordination, including ensuring conformity of state laws to Federal requirements, measurement of state performance, and providing for the administrative expenses of the program.

The Division of Fiscal and Actuarial Services (DFAS) of the OUI has several responsibilities in the UI system. Some of the most important are: providing technical assistance to states on benefit financing and profiling, producing budget and legislative estimates and analyses, monitoring Federal trust fund accounts, providing for administrative financing, and providing statistical and analytical support for OUI initiatives.

SCOPE OF WORK The objective of this project is to provide the DFAS needed support in carrying out its responsibilities. The contractor for this project would assist the DFAS in two major areas.

The first major area is technical assistance to State Workforce Agencies (SWAs). A large part of the technical assistance is in the area of benefit financing. Since the 1970s, trust fund solvency has been an ongoing concern in the UI system. In theory, UI tax systems are designed to build up reserves in good economic times in order to pay benefits when unemployment is high. In practice, many states do not maintain adequate reserves and some are forced to borrow from the Federal loan fund even in relatively mild recessions. During the most recent recession and its aftermath, thirty-six states were forced to borrow and twenty-three states still owe over $28 billion as of February 2013. Only eleven states currently have adequate trust funds.

The ongoing solvency concerns of the UI system make it important for the DFAS to be active in this area. A key activity is to make available to the SWAs a trust fund simulation model called the Benefit Financing Model (BFM). This model is maintained and supported in the National Office by the DFAS and is currently used by about one-third of the states. Currently, DFAS is exploring the idea of building an Excel version of the model to make it easier to implement the model in new states and easier to maintain the model. The DFAS also works closely with states that request assistance in modifying or designing new tax structures, either with or without use of the BFM. Another aspect of benefit financing technical assistance to states is the presentation of periodic Benefit Financing Seminars to introduce state actuarial staff to benefit financing concepts and trust fund forecasting techniques.

A second type of technical assistance is to assist states in the development and maintenance of profiling models. All states are required to profile their UI claimants in order to identify potential UI exhaustees and provide them reemployment services early in their UI spells. This is most often accomplished through the use of a statistical model, which uses various claimant characteristics to predict the probability of benefit exhaustion. When requested, DFAS works closely with states to develop and/or update these models.

A third type of technical assistance is the provision of training seminars in quantitative methods and profiling methods for state staff. The quantitative methods training gives state staff information, instruction and hands-on experience in basic regression and forecasting techniques that are applicable to UI trust fund forecasting and analysis. Similarly, the profiling methods training gives state staff information and experience in the specific statistical procedures used in developing profiling models.

The second major area in which the contractor will assist the DFAS is in its role at the national level. This role includes making estimates and doing analyses for budget and legislative purposes, monitoring state and Federal trust fund account activity and solvency, providing data analysis in support of DOL performance goals and in support of OUI initiatives, forecasting state workloads to allocate administrative funds, compiling and analyzing various UI indicators, and disseminating data to the public.

At least twice a year, the DFAS is responsible for updating all estimates and projections of UI benefit outlays, revenues, workloads, and administrative outlays in conjunction with the Federal budget process. The DFAS is also responsible for making estimates of the cost and revenue impact of proposed law changes being considered by the Congress or the Administration. To make these estimates and projections, the DFAS employs a number of computer models and spreadsheets, ranging from simple to complex. These models require continual monitoring, maintenance, and enhancements.

All of the administrative costs of the UI system, both state and Federal, are funded by the Federal unemployment tax. The DFAS is responsible for developing the overall administrative budget as well as for budget execution, including allocating the available funds equitably among the states. A key component of the annual allocation process is to forecast several key workload items by state. The DFAS puts a great deal of time and effort into using the best available statistical forecasting techniques for this purpose and to making forecasts on a consistent basis across states.

Another area of work involves compiling and publishing data and doing data analysis related to various UI indicators, including solvency measures, recipiency rates and wage replacement rates, that may be used to establish performance measures and goals. DFAS is responsible for developing, calculating and analyzing measures of trust fund adequacy such as the Average High Cost Multiple. DFAS is also responsible for estimating the amount of FUTA collections by state and compiling, publishing and analyzing comparisons of collections to amounts returned to states.

DFAS is responsible for providing various estimates and projections to be used in the annual and quarterly Department of Labor Financial Statements. These include estimating disbursements, estimating accrued benefit payments, and simulating the impact of various recession scenarios on balances in the Unemployment Trust Fund (UTF).

PROJECT TASKS Quantitative Methods and Profiling Methods Training

1. The contractor shall produce up to 5 one-week Quantitative Methods and Profiling Methods Seminars during the project period, for approximately twenty participants from SWAs.

The quantitative methods training is provided for the purpose of improving the quantitative analysis skills of SWA personnel engaged in trust fund forecasting. This training will focus on using statistical methods to build a UI benefit cost estimating model and to project workloads and other variables. The content of this training will include the following topics: 1) introductory statistics, including descriptive statistics, correlation, hypothesis testing, distribution analysis, and variance and error measurement; 2) regression analysis, including significance testing, model building techniques, regression diagnostics, problems encountered in Ordinary Least Squares, varying functional forms, and lagged variables; 3) forecasting methods, including time series analysis, auto-regressive moving average techniques, forecasting in regression analysis, and measuring forecast error; and 4) other topics relevant to UI benefit cost estimating, including use of survival rates. The training will emphasize hands-on learning using up-to-date statistical software.

The profiling methods training will include topics such as: identification of profiling variables, use of characteristic screens, building logistic regression models, techniques for overcoming statistical problems, and monitoring models. The training will emphasize hands-on learning using up-to-date statistical software.

The exact agenda of each seminar may vary according to the needs of state personnel as determined by the Contracting Officer Representative (COR). The COR will be responsible for the announcement and scheduling of each seminar and the selection of all participants. The contractor shall provide all training materials, equipment, software and supplies and arrange for facilities and lodging.

Budget and Legislative Analysis

2. The contractor shall maintain, monitor and improve Excel-based computer models used to make Federal budget and legislative estimates. The contractor will have responsibility for the revenue and state loan model, which makes state-by-state projections of tax rates, fund balances, loans, etc. The contractor will also have responsibility for the STUBEN regular benefits model, the Emergency Unemployment Compensation (EUC) model and the Extended Benefits (EB) model. The contractor shall use these models to make budget and legislative estimates as required. Model equations must be reviewed and updated annually. The contractor shall review and assess alternative techniques and methodologies for modeling and projecting key UI program variables. All model changes must be documented.

3. The contractor shall work with Federal staff to make annual two-year-ahead forecasts of six state UI workload items (initial claims, weeks claimed, nonmonetary determinations, appeals, wage records, and subject employers), using the best available statistical methods, for the purpose of developing Resource Justification Model submissions and for allocating the base administrative budget. The contractor shall assist in determining what methods should be used and how they should be applied such that all states are treated equitably in the process and the most accurate forecasts are produced.

4. The contractor shall produce actuarial calculations on a quarterly basis for the DOL financial statements. These include estimated disbursements for the current and prior month for regular UI , Unemployment Compensation for Federal Employees (UCFE), Unemployment Compensation for ex-military (UCX), EUC and EB, due and payable accruals for all programs, and existing claims accruals for Federal UI programs. The contractor shall also produce information annually for the Required Supplemental Information attachment to the financial statements, including 10-year projections of UTF balances under three economic scenarios and an assessment of state solvency using a variation of the Average High Cost Multiple.

Profiling Model Technical Assistance

5. The contractor shall assist DFAS in providing technical assistance and support to states and Regional Offices in developing, implementing, maintaining and updating statistical models or characteristic screening systems for identifying claimants likely to exhaust benefits and in need of reemployment services. Technical assistance will be performed either via telephone or on-site, as determined by the COR. Technical assistance will include: identifying and analyzing state data sources and elements, determining model specifications and estimating model coefficients, developing system specifications, in coordination with state staff, for integrating the econometric model into existing UI software systems and for interfacing with identified data sources, and assisting Regional Office staff in reviewing and assessing state profiling systems.

Trust Fund Forecasting Technical Assistance

6. As needed, the contractor shall work with DFAS staff to provide support to SWAs in the task of forecasting UI trust fund balances using the BFM. This task entails developing and maintaining various UI-related regression equations used in the simulation models, modeling new state UI laws, collecting and setting up numerous input data files, running simulations under various economic scenarios, and providing technical support to state users. The contractor may also be required to assist in developing a prototype Excel version of the BFM.

7. The contractor shall produce up to 2 one-week Benefit Financing Seminars during the project period, for approximately thirty participants from SWAs. Topics will include: UI cost and revenue forecasting, UI tax structures, experience rating, measuring trust fund solvency, Title XII loans, and basic statistical methods. Hands-on use of the BFM will be emphasized. The contractor shall provide all training materials and supplies and will coordinate logistics. Contract staff shall prepare presentations jointly with Federal staff. The COR will determine seminar dates and specific course content.

Reports

8. The contractor shall prepare a quarterly publication, the UI Data Summary, which provides a detailed comparison of the status of states with respect to unemployment rates, benefit payment activities, revenues, and trust fund reserves. The publication shall be made available both in hard copy and on the OUI website. The contractor shall maintain and document routines used to extract data, manipulate data, and produce the report. The contractor shall respond to requests for data related to this report or other UI data from researchers, Congressional staff, etc.

9. The contractor shall publish official five-year UI projections and Federal and state trust fund account status in the UI Outlook. These projections are updated twice a year in conjunction with the Federal budget process. The publication shall be made available both via email and on the OUI website. Routines and spreadsheets must be documented.

10. The contractor shall produce annual estimates of the amounts of FUTA taxes paid by employers in each state and compile data on the amounts returned to the states for administration and benefits. The contractor shall publish these data on the OUI website.

11. The contractor shall compute annually, or more frequently as required, state fund adequacy measures such as the Average High Cost Multiple and perform analyses of these measures as required. The contractor shall publish these data in a form determined by the COR.

THIS IS A 100% SMALL BUSINESS SET-ASIDE, interest in this Sources Sought announcement is open to all small businesses relative to the primary North American Industry Classification System (NAICS) code 541611, Administrative Management and General Management Consulting Services. The small business size is $14 million. Please identify the firms type of small business; HUBZone small business; service-disabled, veteran-owned small business; 8(a) small business; woman-owned small business; and/or small disadvantaged business.

All firms responding to this RFI must demonstrate their experience in the aforementioned work. Pertinent factors for consideration of qualifications are the firm's demonstrated experience in the following:

(1) Developing and presenting training sessions on statistical methods, including forecasting with regression analysis and using logistic regression and/or other techniques to model binary dependent variables.

(2) Developing, improving and maintaining large regression-based Excel models for use in making budget projections and in analyzing legislative proposals for unemployment insurance (UI ) or other social insurance programs.

(3) Using statistical forecasting techniques, including regression, ARIMA models, and exponential smoothing to project variables such as UI workloads.

(4) Estimating benefit accruals for UI or other social insurance programs for purposes of reporting on government financial statements.

(5) Developing, implementing and maintaining statistical profiling models for use in targeting services for UI or other government benefit programs.

(6) Gathering data from databases and various sources, compiling it into reports, and preparing files for publication on a Web site.

(7) Understanding of the complexities of the UI system, in particular state tax systems, and of UI data.

All interested firms must submit a capabilities statement, to Jeffrey Brown, Program Analyst, Division of Contract Services, 200 Constitution Avenue, NW, Room N-4643, Washington, DC 20210. Responses are due August 15, 2013 by 2 p.m. EST. Electronic copies of capability statements are preferred and may be emailed to [email protected] with DOL131RI20669 UI Actuarial Support in the Subject field. The response must be specific to each of the qualifications listed above to demonstrate that the respondent is capable. The submittals shall not exceed 10 pages, TOTAL. Oral communications, telecommunications, and faxed inquiries or comments are NOT acceptable as a response to this notice.

Link/URL: https://www.fbo.gov/spg/DOL/ETA/WashingtonDC/DOL131RI20669/listing.html