US Federal Government Consulting

We help analysts and decision makers answer a variety of critical questions, such as:

• Given newly enacted budget cuts in my program, how do I fulfill program mandates with fewer resources?
• What is the impact of changes in program benefits?
• What is the effect on the macro-economy of changes in spending and tax policies?
• How can I utilize scarce resources in detecting fraud to maximize reductions in the cost to taxpayers?
• How do I ensure eligibility for program beneficiaries on a continuing basis?
• How do I develop forecasts for specific industries whose future direction could be affected by underlying Federal policies?
• How do I develop the economic impact of specific infrastructure policies?
• How do I meet Congressional forecasting mandates?
• How do I make the most use of open source intelligence resources?
• Where do I go for tailored forecasts and analysis required in establishing guidelines for regulatory compliance?

Our key advisory services build upon a significant capital base of forecasting models, data and analytic approaches that can provide solutions for our federal government clients in a quick, cost-effective manner.

Policy Simulation Services - Special consulting services that allow us to leverage our existing economic models in order to assess the short term and longer term effects of specified policies at a national and regional level

Tailored Forecasting Services - Tailored forecasting services that are often based on the application of variables from our existing forecasting systems as principal right-hand drivers in developing forecasts of specific industries, subsectors or programs

Probabilistic Modeling - Models that predict the likelihood of an event that can have a significant cost impact on an agency's administrative and benefit costs, often focused on fraud and program eligibility. Drawing on IHS in-house data and forecasts, client data assessment methods, and data analytic capabilities we can help clients achieve significant cost reductions.

Tailored Cost Forecasting - Analysis that uses IHS cost models to provide tailored forecasts of expected price/cost increases over a five- to ten-year time frame. used by agencies in budgeting and purchasing decisions as well as in the context of pre-award audits and forward price verification.

Economic Impact Analysis - Comprehensive assessments for a particular sector of the economy, or of specific policy prescriptions of the direct, indirect, and induced effects in terms of employment, value added, labor income, and tax revenues.

Open Source Intelligence Training - Training services that enable agencies to quickly and efficiently obtain open source intelligence from the Internet and other sources

Case Study #1: Tailored Modeling and Forecasting to Create Transportation Freight Analysis Framework

Challenge: The purpose of this project was to develop future national commodity flow forecasts from the 2007 base year US Department of Transportation Freight Analysis Framework 3 (FAF3) freight flow database. Starting with an update for 2010, forecasts were developed through 2040 in five-year increments. They were based on three economic growth scenarios, established in consultation with the US Department of Transportation, led by the Office of Freight Operations in the Federal Highway Administration.

Solution: Forecasts were generated on an origin and destination basis for the 123 regions used in the 2007 US Commodity Flow Survey (CFS), and eight international regions (Canada, Mexico, Rest of the Americas, Europe, Africa, South, Central and Western Asia, Eastern Asia, South-Eastern Asia and Oceania, Latin America and the Rest of the World). The commodity dimension was detailed at the two-digit SCTG (Standard Classification of Transported Goods) commodities. Origin and destination forecasts were provided on a tonnage and value basis over the specified forecast horizon by commodity, region and mode (truck, rail, rail intermodal, air, water, pipeline and other). For international trade, forecasts were generated by commodity and mode by US origin, US gateway and world region destination for exports and world region of origin, US gateway and final US destination for imports.

Case Study #2: Probabilistic Modeling for United States Postal Service Fraud Detection

Challenge: Determine drivers and probability of fraud in US Postal Service workers' compensation in order to increase detection rate and efficiency.

Solutions: IHS consultants collaborated with the US Postal Service Office of Inspector General (USPS OIG) to create a list of relevant drivers of fraud. Working off this list, we completed a driver analysis using techniques such as data mining and factor analysis, to form an abridged catalog of key drivers. Drawing on historical cases of identified fraud, we built a predictive model leveraging characteristics which were statistically significant in determining whether a case was more or less likely to be fraudulent. With the help of analytical modeling tools and techniques, we then developed risk ranking models that prioritised cases according to the likelihood that they could be successfully resolved at the smallest possible cost.

Results: The OIG could proactively identify fraud and focus their limited resources on cases that were most likely to be fraudulent and had the highest return on investment. The figure below illustrates how the IHS predictive model was able to successfully prioritize cases for investigation by rank from highest to lowest likelihood of fraudulent activity. With the help of this model, the OIG was able to double their fraud detection rate for the top 50 percent of cases investigated.

Case Study #3: Tailored Cost Forecasting Efforts for the Department of Defense

Challenge: IHS has a long history supporting the aerospace and defense industry. Price forecasts are employed in long-term contracting between the US government and private parties via economic price adjustment (EPA) claUSes. These projected costs are adjusted every year based on the actual data reported by the US Bureau of Labor Statistics (BLS). One series that is heavily relied upon by the US government and aircraft manufacturers is the employment cost index (ECI) for total compensation in aircraft manufacturing. This series is utilised in countless contracts, and in the mid-2000s, volatility in the series wreaked havoc on EPA calculations.

Solution: One large defence contractor made pension contributions of $8.0 billion between 2002 and 2005 and reported these to the BLS. The pension cost incurred during the time under CAS accounting standards was only $1.1 billion, however. Therefore, $6.9 billion of the pension funding reported was a pre-payment credit, and not a change to compensation of employees. The BLS, however, counted the $8.0 billion in contributions in their estimations of the cost to employers of having employees, rather than the $1.1 billion. Therefore, the ECI for "Compensation, Aircraft Manufacturing" registered wild spikes periodically from 2003 to 2006 that were not, in fact, a reflection of changes in compensation for workers, but instead changes in the funding of pension trusts. Therefore, the ECI was not reflective of compensation at this time.

Results: With the assistance of IHS Consulting, the US Department of Defense Inspector General's (DoD IG) office was able to estimate what the true changes to compensation were in 2005 and 2006, excluding the pre-payment pension credits reported by the defence contractor. Based on these estimations, IHS provided new projections of compensation changes going forward. The DoD IG's office then recalculated contract adjustments for several weapon systems using the estimated series. As a result, the US government avoided significant costs that would have been incurred based on the ECI as reported by BLS. In the wake of the adjustment, Claude Kicklighter, the DoD Inspector General, offered his sincere thanks to IHS, saying, "because of your support, we were able to calculate price adjustments on the multiyear contracts that were significantly less than those based on the improperly inflated aircraft manufacturing index. We were able to avoid a cost of $520.6 million for the DoD and for American taxpayers."