SOLICITATION NOTICE
B -- Special Studies and Analysis - Not R&D
- Notice Date
- 6/13/2002
- Notice Type
- Solicitation Notice
- Contracting Office
- Department of the Interior, MINERALS MANAGEMENT SERVICE, Procurement Operations Branch, 381 ELDEN ST, MS2510, HERNDON, VA 20170
- ZIP Code
- 20170
- Solicitation Number
- 1435-01-02-RP-85256 MONTCAR Option Value Model
- Response Due
- 6/28/2002
- Archive Date
- 7/28/2002
- Point of Contact
- TERRY W. CARROLL, PROCUREMENT TECHNICIAN, FAX 703-787-1009
- Small Business Set-Aside
- N/A
- Description
- PLEASE READ THIS ENTIRE NOTICE CAREFULLY AS IT CONSTITUTES THE ONLY NOTICE THAT WILL BE ISSUED. This is a combined synopsis/solicitation for commercial items prepared in accordance with the format in Subpart 12.6, as supplemented with additional information included in this notice. This announcement constitutes the only solicitation; proposals are being requested and a written solicitation will not be issued. The solicitation document and incorporated provisions and clauses are those in effect through Federal Acquisition Circular 97-20. The following provisions and clauses apply to this acquisition: 1) 52.212-1, Instructions to Offerors-Commercial (OCT 2000); 2) 52.212-3, Offeror, Representations and Certifications-Commercial Items; 3) 52.212-4, Contract Terms and Conditions-Commercial Items (APR 1998), with an addendum; and 4) 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders Commercial Items (AUG 2000). Solicitation Number 1435-01-02-RP-85256; the solicitation is issued as a request for proposals (RFP). The Department of the Interior, Minerals Management Service (MMS) intends to competitively award a contract for consultation, review and recommendations for the design of the MONTCAR (Monte Carlo Simulation Program) Option Value Model. The Minerals Management Service (MMS) by virtue of the Outer Continental Shelf (OCS) Lands Act, the Submerged Lands Act, and pursuant to delegation of authority by the Secretary of the Interior has jurisdiction over leasing and development of OCS submerged lands and mineral development. In conjunction with this jurisdiction, the MMS is required to follow the overall Mineral Management goals as stated in the OCS Lands Act Amendments of 1978. Related to the MMS's responsibilities under the OCS Lands Act is staff analysis of environmental and resource information in conjunction with OCS oil and gas lease sales. In particular, the bid adequacy analysis for the high bids received at blocks offered for lease attempts to ensure that the Federal Government receives fair market value for those blocks. A procedure for reviewing bids and determining whether they are adequate has been developed by MMS. To assist in placing values on these blocks, computer models are used. The proprietary computer program used by MMS in the determination of the fair market value of a block is called MONTCAR (Monte Carlo Simulation Program). The mathematical methodology and statistical approach by the model is critical to ensure the correct fair market value assessment. MMS is preparing an optimization model that would be teamed in some way with MONTCAR. The optimization model that we have in view is often termed "real option valuation." Option Value (OV) is the result of optimization of uncertain net present value (NPV) over time. In calculating option value, the timing of activities is flexible and is variable within the optimizing model, instead of being assumed in terms of a fixed scenario. MMS expects to accomplish this work by the following steps: 1) MMS staff members prepare a requirement's document, design plan, and a model prototype; 2) The requirements document, plan, and prototype is critically reviewed by a consultant under this contract with constructive recommendations; 3) The consultant's comments are reviewed, and, if agreed to, implemented by MMS staff. The purpose of this contract is to obtain consultation, review, and recommendations for the design of the Option Value Model and its interface with MONTCAR. ESTIMATED LEVEL OF EFFORT: The government estimates a period of performance for this contract of twelve (12) months and a cost of $30,000. SCOPE OF WORK: The Contractor shall (1) attend a kick-off meeting at MMS headquarters in Herndon, Virginia within 1 month of the award where the contract requirements and detailed statement of work will be reviewed in detail. The contractor shall prepare a written summary of discussion and agreements reached in the kick-off meeting within 30 days of the meeting. (2) The Contractor will critically review MMS' design plan, prototype OV model, and strategy for model development. The Contractor will provide constructive recommendations for modifying current plans and OV model, including discussion and recommendations for the technical issues raised. The extent of Contractor's review, discussions, consultation and recommendations will include: (a) review of research literature as applied to basic option models of oil leases, emphasizing the latest literature, including a bibliography; (b) explain the pros and cons of alternative numerical techniques including binomial tree, Monte Carlo and finite difference techniques as they might be applied to the MONTCAR OV model; recommendation regarding the single vs. compound option approach relating to decisions to explore and/or develop the lease; (c) explain the principal variants of the Brownian Motion (BM) and Mean-Reverting (MR) model processes and cover detailed topics to encompass modeling prices in levels or in logs including a deterministic trend term or not, the statistical techniques that would be used to determine the model parameters, then recommend a price process to use in the OV MONTCAR model; (d) discus price models explaining how to estimate volatility and compute probabilities for the recommended price model and solution technique; (e) discuss various time step assumptions necessary for lead time on development; (f) discuss the discount rate issue for the calculation of OV and explain principal alternative ways of reflecting unhedged risk and the developer's risk preference in the OV model, then recommend a discount rate concept and explain how it is estimated from cost of capital data or the like; (g) discuss convenience yield, how it is estimated and recommend how to treat it in the OV model; (h) discuss practical implementation of prices before and after investment; (i) explain in detail how the recommended OV model links with MONTCAR and give a numerical illustration; (j) discuss how a single mean price path might be substituted in place of multiple possible price paths from the time of development onwards eliminating unnecessary computations and how they would or would not match up with existing MONTCAR price representations; (k) make recommendations as to specific information needed from MONTCAR runs so that additions and changes to existing models can be programmed by MMS staff members. (3) The Contractor, after completing the investigation of technical topics and finishing the review of the MMS design and prototype, will draft a final written report giving the findings and recommendations and make an oral presentation with MMS staff at MMS' headquarters to discuss the recommendations. (4) The Contractor will revise the draft paper to include material introduced in the oral discussion and transmit the final written report to MMS within one month of the final meeting. HOW TO RESPOND: Offerors must submit a Capabilities Statement, a Technical Proposal and a firm fixed price. CAPABILITIES STATEMENT: In order to compete for this contract, interested parties MUST demonstrate that they are qualified to perform the work by providing a Capabilities Statement detailing: (1) your key personnel and organizational experience and facilities in simulation, oil and gas property evaluation, real options, and computer programming; and (2) past performance including specific references (include contract number & project description, period of performance, dollar amount, client identification with the point of contact & telephone number) for previous work of this nature that your key personnel or organization is currently performing or has completed within the last three years. References will be checked. TECHNICAL PROPOSAL: detail how you plan to approach the project and tasks; include a time schedule indicating benchmarks; specify key personnel, their specific functions and reporting relationships. Indicate who will be the primary point of contact for this project. COST PROPOSAL: this will be a firm fixed price type contract. EVALUATION CRITERIA: the following factors are considered more important than price: (1) Contract Perception: overall comprehension of project needs and plan of execution; opportunity for MMS interaction and incorporation of comments. (2) Experience: Program Manager's experience with similar offshore oil and gas modeling projects; quality of experience as demonstrated with recent offshore oil and gas simulation and quantitative statistical modeling; demonstrated experience in real options; quality of experience with C++ as demonstrated with a recent review and explanation of the design, methodology, and algorithms of computer models written using this language; and verbal and writing skills of key personnel in the preparation of oral presentations and written reports dealing with technical and statistical subject areas. (3) Organization's Personnel: currency of personnel working on similar offshore oil and gas modeling projects; depth of experience working on projects relating to offshore oil and gas property acquisition, incorporation of real option financial modeling into oil and gas property value determination, statistics, simulation, systems analysis and computer programming; education and training in post-graduate mathematics, statistics, and computer programming; (4) Past Performance: ability to timely complete projects, adhere to schedules and budgets, produce quality products delivered, and cooperation between key personnel and the client. Between proposals that are evaluated as substantially equal in quality, the price to the Government will be a major factor in selection for an award. The Government may not conduct negotiations so submit your best offer. Contract award shall be to the responsible Offeror, whose acceptable offer, conforming to this RFP, is most advantageous to the Government. Offerors shall submit their Proposals in original and four copies, by 4:00 P.M. FRIDAY, JUNE 28, 2002 to: Minerals Management Service, 381Elden Street, Procurement Operations Branch, MS-2500, Herndon, Virginia 20170-4817. Attention: Terry W. Carroll. Send questions by e-mail or fax as soon as possible to: Terry W. Carroll. Fax (703) 787-1009, e-mail: terry.carroll2@mms.gov. Please include with your question(s) your full name, the RFP number & title, your organization, complete address with telephone, e-mail and fax numbers. TELEPHONIC QUESTIONS OR REQUESTS WILL NOT BE ACCEPTED. ADDRESS FOR RECEIPT OF OFFERS: Department of the Interior; Minerals Management Service, Procurement Operations Branch, Attention: Terry W. Carroll, 381 Elden Street - MS 2510; Herndon, VA 20170. Jane M. Carlson is the Contracting Officer. Terry W. Carroll is the Procurement Technician.
- Record
- SN00093199-W 20020615/020613213306 (fbodaily.com)
- Source
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FedBizOpps.gov Link to This Notice
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