USDA, FSA, KCMO, ASD; P.O. Box 419205, Kansas City, MO 64141-6205

B -- SPECIAL STUDIES AND ANALYSIS - NOT R&D POC Alice J. Murphy, Contracting Officer (816-926-1244). Development of Actuarially Sound Premia to accommodate expansion of the Office of Risk Management Income Protection Insurance Program. This Research and Evaluation Branch (REB) of the Office of Risk Management (ORM) of the United States Department of Agriculture has a requirement to expand an existing multiple peril crop insurance program. The contractor must have demonstrated expertise and capability in crop insurance and in all aspects of analysis and development of an actuarially sound revenue insurance program. The income protection policy (IP) insures producers against low income events due to either low yields and/or low prices. In contrast to traditional multiple peril crop insurance (MPCI), the income protection policy pays indemnities when any combination of yield and price result in revenue that is less than the revenue guarantee. The IP plan uses the policy terms and conditions of the Actual Production History (APH) plan of MPCI as the basic coverage. APH provides the yield component and provides a yield forecast through the insured's records of historic yields. It also provides a documented process to determine the yield for the insurance period. Revenue protection is attained by extending crop insurance protection based on APH to include price as well as yield variability. The pricing component to IP is accomplished using the commodity futures market for price discovery. Price discovery occurs twice in the IP plan. First, before the insurance period, to establish the revenue guarantee and premium, and second, at harvest to measure the revenue to determine indemnities. IP provides the insured producer an indemnity when any combination of harvested and appraised yield and harvest time price results in revenue that is less than the guaranteed revenue. The payout distribution and hence the actuarially neutral premia associated with each policy will differ and will depend upon the joint probability density function of price and yield. The contractor shall have experience in complex statistical analysis and report writing. The contractor shall have or have access to software development capability sufficient to create a specified quotation software package. The contractor shall have sufficient computer resources to accomplish the statistical analyses. The contractor shall have successful experience in the management of large, complex projects. The contractor must be willing to accept a firm project time line upon which the success or failure of the project, and therefore the project reimbursement, will be based. The project will have significantly reduced value to ORM if the time line is not met. Submissions should include organization name, address, primary point of contact, phone and fax number, and comprehensive explanation of how your organization meets these requirements. Closing date for submissions of responses is fifteen (15) days from publication of this notice. Please submit your interest in writing to: USDA, FSA, KCMO, ASD, ATTN: Alice J. Murphy, P.O. Box 419205, Kansas City, Missouri 64141-6205. (149)

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