Department of the Interior, Minerals Management Service, Procurement Operations Branch, MS2500, 381 Elden Street, Herndon, Virginia 20170-4817

B -- A REVISED OCS ENVIRONMENTAL COST MODEL SOL 30996 DUE 040299 POC ERROR -- ERROR -- Michael W. Hargrove, 703-787-1367 E-MAIL: Contracting Officer's e-mail, Michael.Hargrove@mms.gov. The Department of the Interior, Minerals Management Service (MMS) intends to award a competitive contract to revise and update the General Purpose Environmental Cost Model (GPECM) and related data. In addition, the GPECM which runs only on LOTUS 1-2-3 release 2.2 in a DOS environment, must be upgraded to the Windows environment, preferably using Microsoft Office products (the agency standard software). MMS uses the GPECM to estimate environmental and social costs of natural gas and oil extraction activities on the Federal Outer Continental Shelf (OCS). The GPECM estimates environmental and social costs for each of MMS's 26 planning areas or "program areas" based on these 26 areas. A program area is a portion of one or more planning areas where an offshore natural gas and oil lease sale is proposed. Program areas are the aerial units actually analyzed in Department of the Interior 5-year planning. Currently, the GPECM organizes environmental and social costs associated with OCS activities into the following 14 sectors: Air Quality, Water Quality, Spill Avoidance and Response, Infrastructure, Fishing Ground Preemption and Gear Loss, Wetlands, Property Values, Oil-Spill Control and Cleanup, Recreation and Tourism, Commercial Fisheries, Wildlife, Subsistence, Legal, and Administrative and Research. The sectors were chosen to highlight issues the public identified as important with respect to the OCS leasing program in the 1980's. You may need to modify the sectors based on present public concern. Currently, the GPECM consists of a 15 layered spreadsheet: the 14 sectoral spreadsheets and a summary spreadsheet. The summary spreadsheet directs and provides input data to the 14 sectoral spreadsheets and displays model results. The model uses economic inputs, anticipated production, and exploration and development scenarios as the basis for its calculations. Most of these inputs are from the exploration and development scenarios and include: exploratory wells, platforms, production wells, miles of pipeline, pipeline landfalls, quantity of oil and gas produced, barrels of oil spilled, and spilled barrels of oil reaching shore. As its name implies, the GPECM was designed to accomplish several different environmental cost objectives. In practice, the model has only been used to estimate environmental and social costs for the 5-Year Program. MMS anticipates the revised model will have the same use for future 5-Year Programs and that this project will result in a simplified update of the existing GPECM. MMS does not envision an entirely new environmental and social cost model resulting from this project unless a new model seems appropriate based on the results of investigation conducted for this contract. THE OBJECTIVES OF THE RESULTANT CONTRACT ARE TO: revise the structure of the GPECM to eliminate obsolete sectors (i.e., sectors that are no longer public or agency issues) and make the structure more logical; update GPECM equations and parameters with the best available information; construct a revised environmental and social cost model that is up-to-date, simpler, easier to operate, easier to update, and easier to understand than the old GPECM; and identify the most up-to-date and accurate estimates of elasticities of demand and supply for crude oil and natural gas in a series of international sectors. SCOPE OF WORK: If you become the contractor for this study, you must complete the following tasks: 1.You must review the present structure of the GPECM both in general and specific terms. You must recommend a new structure for the revised environmental and social cost model. The new structure must eliminate unneeded and obsolete sectors from the model, combine different cost functions into fewer sectors, present the structure of the model in a logical, understandable manner, include environmental costs resulting from platform removal, and treat inflation and product price trends in a simple, direct manner. You should plan to construct the model using Microsoft Excel; however, if you believe alternative application software would produce a superior product, you should communicate this conclusion to the COTR. The application software must run on MMS's standard operating system/platform (currently Windows 98). 2. You must review, in depth, the literature on environmental and social costs. Based on this review, you must identify new cost function equations and new parameters for equations as well as designating those that will be retained from the old GPECM. 3. Based on the agreed upon structure, the agreed upon application software, and the agreed upon equations and parameters, you must build a revised environmental and social cost model. The revised model must: calculate environmental and social costs for all 26 OCS planning areas and for program areas based on the planning areas; be able to start with any 5-year planning period and extend impacts into the future for 40 years following the end of the planning period; calculate environmental and social costs for planning areas where they actually occur and for program areas to which the costs can be attributed based on where the natural gas and oil production occurs; be simple, easy to read, and straightforward to update; maintain the natural readability of spreadsheets (if the model is constructed as a spreadsheet as anticipated); use standard application input and output functions in the input/output/summary spreadsheet wherever possible; use macros only when their advantages are clear; provide documentation at the user interface; and supply a help function. YOU MUST PERFORM AT LEAST FOUR (4) TESTS OF THE REVISED GPECM that demonstrate the model's accuracy and consistency in a variety of development scenarios. You must provide complete, fully-annotated written documentation of the conceptual basis and operation of the revised environmental and social cost model. In addition, you must furnish user training covering all aspects of model operation. 4. You must review the literature and investigate other sources to find the most accurate, up-to-date estimates of elasticities of demand and supply for crude oil and natural gas. MMS requires long term elasticities for inclusion in the market simulation model used to estimate consumer surplus benefits for the 5-Year Program cost-benefit analysis. The elasticities needed are: Oil Demand for the U.S., Rest of OECD, OPEC, and Rest of World; Oil Supply for the OCS, Onshore Domestic, OPEC, and Rest of World; Gas Demand for the Total U.S.; and Gas Supply for the OCS, Onshore Domestic, and Imports (to U.S.). Unavailability of information may force modification of this list. You may need to estimate some of the elasticities if you cannot find them in the literature or obtain them from other sources. HOW TO RESPOND: Capabilities Statements must be submitted which demonstrate you are qualified to perform the work by describing in detail: a. KEY PERSONNEL: Provide a description of the experience and capability for each key person on your proposed project team. Descriptions must address such items as the individual's background, education, work experience, and accomplishments. Identify the publication background of the Project Manager, principal investigator(s), and major researchers. Show the knowledge that key personnel have gained through completed and ongoing work similar in nature to this effort. b. ORGANIZATIONAL EXPERIENCE AND FACILITIES : Describe the experience and capability of your organization in conducting similar work. Provide a description of the facilities and equipment your organization has or would need to acquire which you would need to perform this study. Address any major logistical considerations. c. REFERENCES: Provide a list of any similar contracts performed by either your proposed key personnel or your organization for the last three years. Include a description of the project, project title, contract number, period of performance, contract amount, and client identification (including agency or company name, contracting and technical reviewing official, address, and telephone number). REFERENCES WILL BE CHECKED. Submit your capabilities statement by 3:00PM, Eastern Standard Time, APRIL 02, 1999, IN ORIGINAL PLUS TWO (2) COPIES TO Michael Hargrove, Contracting Officer, Minerals Management Service, 381 Elden Street, MS-2500, Herndon, Virginia 20170-4817. SUBMIT FIVE (5)ADDITIONAL COPIES TO Bill King, Minerals Management Service, 381 Elden Street, MS-4042, Herndon, Virginia 20170-4817. MMS will determine the time of receipt of your capability statement by when it arrives in the Procurement Operations Branch, Herndon, Virginia. ELECTRONIC COPIES WILL NOT BE ACCEPTED. MMS WILL EVALUATE YOUR CAPABILITIES ON THE BASIS OF: a. Expertise and experience of key personnel including: environmental or natural resource and energy economist or economists relevant experience may include publications; computer programmers who must possess demonstrated ability to write simple, easy-to-read, maintainable, and self-documented code; the Project Manager who must demonstrate successful experience with this type of project; and technical personnel responsible for organization of information and production of documents and manuscripts whose qualifications must be relevant to their assigned tasks and estimated level of effort. b. Understanding of the scope, objective, and subject matter of the project; awareness of potential problems; demonstrated ability to resolve any problems identified; and quality and effectiveness of the Project Management Plan to produce high-quality deliverables within the time period allotted. c. Ability to complete projects in a timely manner, adhere to schedules and budgets, maintain effective cost controls, and deliver quality products; quality of cooperation between the client and your organization, staff, and key personnel; and degree of comparability of past projects to the current project, including number, complexity, and size. MMS will consider subcontracts and partnerships. Questions should be FAXED to BOTH Michael Hargrove and Lane Donley at (703) 787-1387, or e-mail addressed to BOTH Michael.Hargrove@mms.gov AND Lane.Donley@mms.gov. All correspondence MUST include the RFP number, your full name, company name and address, phone number, and fax number. MMS STRONGLY DISCOURAGES TELEPHONE REQUESTS OR QUESTIONS. Posted 03/02/99 (W-SN303959). (0061)

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