FEDERAL MARITIME 

COMMISSION

An independent agency of the U.S. Government 

Performance and 

Accountability Report 

FISCAL YEAR 2016 

Chairman Mario Cordero

November 2016

 
MESSAGE FROM TH E CHAIRMAN 

I am pleased to submit the Federal Maritime Commission’s

Performance and Accountability Report for Fiscal Year 2016. The 

attached Report contains financial and program performance 

results which are complete and reliable. Prior to the preparation of 

this Report, the Commission evaluated its management controls 

and financial management system pursuant to the Federal 

Managers’ Financial Integrity Act of 1982. No material weaknesses 

were identified, and the Commission’s financial management 

system conforms to government financial system requirements. In accordance with the Office of 

Management and Budget’s (OMB) Circular 123, Management’s Responsibility for Internal Control and 

Enterprise Risk Management, Appendix C, no improper payments were made. An independent, 

certified public accountant audited the Commission’s financial statements, internal controls, and 

management systems and verified that they conform to generally accepted accounting principles, 

laws, regulations, and requirements. This report illustrates how the FMC properly manages limited 

resources and plans to meet future challenges. 

As charged by Congress, the FMC administers the ocean liner shipping laws of the United States, 

and regulates the companies involved in liner shipping, receiving, handling, and transporting cargo 

and passengers in foreign commerce. International trade is a critical part of the United States’ 

economy, and a fair and efficient ocean transportation system depends heavily upon the FMC’s role 

in evaluating agreements for anti-competitive impact and licensing ocean transportation 

intermediaries to protect the shipping public and facilitate international trade. 

The overwhelming majority of U.S. imports and exports, particularly when considered in the context 

of volume, travel on ships. Last year, in the $980 billion international ocean transportation industry, 

31.5 million twenty-foot equivalent units (TEUs) moved in the U.S. liner trades. If the shipping 

industry reaches a point where practices are either inefficient or anticompetitive, the consequences 

to our economy would be significant, and for this reason, the Commission undertook a study of 

congestion and the impact on our nation’s ports. Negative impacts could include a reduction in 

consumer choices for cargo transportation options that could put upward pressure on the cost of 

transportation and, therefore, the costs to bring goods to market and America’s store shelves. Free 

flowing trade, delivered economically via ships as part of a supply chain system that is regulated 

minimally, but effectively, helps increase purchasing power of consumers and keeps needed cash in 

the pockets of individual Americans, allowing them to stretch their family budgets.

The Commission continued to serve a critical role in U.S. commerce during fiscal year 2016, 

ensuring competition and reliable service to U.S. exporters, importers, and consumers. The FMC’s 

mission directly supports the President’s commitment to economic growth and job creation. 

Commission programs related to monitoring international oceanborne trade conditions advance the 
President’s National Export Initiative by promoting access to foreign markets for American exports 

and efficient supply chains for the importation of goods for domestic production and consumption. 

The FMC’s Strategic Plan for 2014-2018 incorporates our statutory mandate and agency objectives 

referenced in this performance report. Fiscal year 2016 was the eighth consecutive year in which 

there has been a quantitative measurement of performance goals, employing measures and targets. 

The Commission’s actual performance is compared with the targeted levels of performance 

established in the Strategic Plan. For the 13th straight year, the FMC received an unmodified 

(“clean”) opinion on its financial statements. 

As described in the Management Assurances section (see page 21), the Commission completed its

annual assessment of internal controls over operations, systems, and financial reporting. The 

referenced evaluations and reports confirm that the FMC has no material weaknesses, significant 

deficiencies, or instances of non-compliance with laws and regulations to report. The performance 

data described in this PAR was compiled and evaluated using the techniques described in this report 

for achieving the required level of credibility for the verification and validation of performance data 

relative to its intended use, and I have no reason to doubt the completeness or reliability of our 

performance data. Additionally, the financial and performance data presented in this report are 

complete, reliable, and accurate in keeping with the guidance from the Office of Management and 

Budget.

I am extremely proud of the FMC’s accomplishments during the fiscal year. Our small but dedicated 

staff has one of the most important tasks in the country: to ensure fair, efficient and reliable 

international ocean transportation for our Nation. I want to recognize the support of the 

Commissioners, senior executives, and the entire staff. I am fortunate to work with such a dedicated 

group committed to continuously improving our performance on behalf of the American public.

Sincerely,

/s/

Mario Cordero

Chairman

November 15, 2016
TABLE OF CONTENTS 

Message from the Chairman

Introduction 1

History, Mission, and Organization ............................................................................................................2

MANAGEMENT’S DISCUSSION and ANALYSIS 1

Regulatory Responsibility and Oversight.................................................................................................10

Financial Performance Overview..............................................................................................................17

Financial Statement Highlights..................................................................................................................19

Controls, Systems, and Legal Compliance ...............................................................................................21

Chairman’s FMFIA Statement of Assurance...........................................................................................25

PROGRAM PERFORMANCE INFORMATION 26

Annual Performance Report......................................................................................................................27

FINANCIAL INFORMATION 32

Message from the Chief Financial Officer...............................................................................................33

Principal Financial Statements...................................................................................................................34

Independent Auditors' Report...................................................................................................................38

OTHER INFORMATION 60

Office of Inspector General Fiscal Year 2016 Management Challenge ..............................................61

Comments on IG-Identified Management and Performance Challenges...........................................65

Improper Payments Information Act.......................................................................................................66

Summary of Financial Statement Audit....................................................................................................67

This Report can be downloaded at http://www.fmc.gov/about/performance_and_accountability_reports.aspx 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 1

INTRODUCTION 

This Performance and Accountability Report (Report or PAR) serves as a progress report, wherein 

the FMC reviews its program performance results, financial information, activities and accomplishments for fiscal year 2016 (FY 2016). This report enables the President, Congress, and the public to 

assess the agency’s performance relative to its mission and the resources entrusted to it. This Report

satisfies the following legislation:

• The Federal Manager’s Financial Integrity 

Act of 1982 requires continuous evaluations 

and reporting of the adequacy of systems of 

internal accounting and administrative 

controls. 

• The Chief Financial Officers Act of 1990

provides for the production and submission 

of complete, reliable, timely, and consistent 

financial information for use by the 

Executive Branch of the government and the 

Congress in the financing, management and 

evaluation of Federal programs. 

• The Government Management Reform Act 

of 1994 requires the submission of audited 

financial statements. 

• The Reports Consolidation Act of 2000

authorizes agencies to consolidate several 

reports to provide performance, financial,

and other related data in a more useful 

manner. 

• The Inspector General Reform Act of 2008

amends the Inspector General Act of 1978 to 

enhance the independence of the Inspectors 

General, to create a Council of the Inspectors General on Integrity and Efficiency, and 

for other purposes. 

• The Government Performance and Results 

Modernization Act of 2010 (GPRA Modernization Act) requires an annual report that 

measures the performance results of the 

agency against the established agency goals. 

• The Improper Payments Elimination and 

Recovery Act of 2010 provides for estimates 

and reports of improper payments by Federal 

agencies. 

• The Digital Accountability and Transparency 

Act of 2014 (DATA Act) amends the Federal 

Funding Accountability and Transparency 

Act of 2006 (Public Law 109-282), requiring 

the establishment of government-wide data 

standards for spending information.

HOW THIS REPORT IS ORGANIZED

Management’s Discussion and Analysis (MD&A) provides an overview of the Commission, financial 

results, a high-level discussion of program performance, management assurances on internal 

controls and financial management systems compliance; and other management information, 

initiatives, and issues. 

Program Performance Information describes the Commission’s strategic goals and targets, and provides

data on progress toward meeting those goals during the Fiscal Year. 

Financial Information provides financial details, including a message from the Chief Financial Officer, 

the independent auditor’s report, and the audited financial statements. 

Other Information includes a statement prepared by the Inspector General (IG) summarizing what the 

Office of the Inspector General considers to be the most serious management and performance 

challenges facing the Commission, a report on improper payments, and a table summarizing the 

financial statement audit.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 2

HISTORY, MISSION, AND ORGANIZATION

THE FMC: OUR PURPOSE AND HISTORY

Since its founding on August 12, 1961, the Federal Maritime Commission (FMC) has worked to 

ensure that neither the activities of liner shipping groups nor foreign government laws or regulations 

impose unfair costs on American shippers, exporters, or on American consumers of imported 

goods.

The FMC was officially established in 1961 in the early months of the Kennedy Administration, but 

its genesis can be traced back to the turmoil of World War I.

GENESIS OF THE FMC’S ROLE IN MARITIME TRADE

America’s economic lifelines since before its founding as a nation were the sea lanes of export from 

and imports to our shores, largely accomplished using vessel fleets of other nations. To address this 

situation that had grown serious, Congress enacted the organic act of all our maritime commercial 

statutes – the Shipping Act of 1916.

In 1914, the war in Europe created a tremendous crisis in ocean shipping as so many vessels were 

being used in the war effort, while demand for U.S. exports and vessel space grew quickly. Based on 

war-generated concern, and information developed in an investigation into the methods and 

practices of shipping lines (The Alexander Committee Investigation, 1912-1914), Congress 

determined that the fear that collective liner pricing organizations called conferences might gain 

sufficient market power and the ability to unreasonably raise rates or reduce services, had to be 

weighed against the need for a stable and reliable source of international ocean shipping. A new 

maritime agency, Congress decided, could adequately protect American exporters and importers 

from any potential abuse of the limited antitrust immunity Congress would grant conferences under 

new shipping legislation. The agency they created, under the Shipping Act of 1916, was the United 

States Shipping Board.

EARLY VERSIONS OF THE FMC

The United States Shipping Board and its immediate successor organization, the United States 

Maritime Commission, combined the roles of regulator and promoter of what was to become the 

U.S. merchant marine, an integral part of the Allied victory in World War II.

In 1920, Congress passed the Merchant Marine Act, which charged the United States Shipping 

Board with monitoring and responding to foreign laws, regulations, or practices that create 

conditions unfavorable to shipping in the foreign trade.

In 1933, President Franklin D. Roosevelt signed an executive order that transferred the United 

States Shipping Board’s functions to the U.S. Shipping Board Bureau in the Department of 

Commerce. In 1936, Congress separated the Board from the Commerce Department, creating the 

United States Maritime Commission. In 1950, the regulatory programs of the United States Maritime 

Commission were transferred to the Federal Maritime Board at the Department of Commerce, 

where they resided until the FMC's creation in 1961.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 3

THE FOUNDING OF THE FMC

In 1961, the Kennedy Administration and Congress decided that the tasks of regulating the activities 

of international liner shipping companies and promoting a healthy U.S. merchant marine should be 

pursued by separate agencies. By executive order (called Reorganization Plan No. 7) signed by 

President John F. Kennedy, two agencies were established: the Federal Maritime Commission and 

the Maritime Administration (MARAD). As an independent agency, the FMC was charged with 

regulating U.S. ocean commerce, and MARAD was formed to promote America’s merchant marine 

and oversee an emergency reserve of cargo ships for use in times of conflict.

The Commission's creation in 1961 also coincided with the early days of the containerization 

revolution – the spread of the use of intermodal shipping containers that could be carried on ships, 

rail, and trucks – that greatly increased the efficiency and reliability of international trade in goods. 

The rapid adoption of the intermodal container system, and the accompanying drop in 

transportation costs, provided a powerful boost to global trade. It also meant that an industry that 

had long been relatively stable suddenly became much more dynamic. This resulted in a challenge to 

the fledgling FMC to take the lead in updating the nation’s transportation regulations to remove 

obstacles to the intermodal services that became so critical to our nation’s commerce.

THE SHIPPING ACT OF 1984

By the early 1980s, both shippers and carriers recognized that the pre-container Shipping Act of 

1916 needed modernization. Passage of the Shipping Act of 1984 (1984 Act), on March 20th of that 

year, introduced regulatory innovations that have had a major impact on liner shipping and the 

FMC’s responsibilities. For example, the 1984 Act introduced the concept of contract carriage under 

service contracts filed with the FMC. The pricing of liner services via negotiated contracts, rather 

than exclusively by public tariffs, was a change that had profound effects on the liner industry. The 

1984 Act also clarified the authority of conference members to offer intermodal pricing (the 

integration of ocean carriage with truck or rail service) – an important advance in transportation 

service.

The FMC’s authority to review and approve agreements was also overhauled. Under the Shipping 

Act of 1916, ocean common carriers and other entities wishing to enter into cooperative agreements 

were required to justify the terms of those agreements to the FMC. The Commission’s review and 

approval process could be time-consuming, particularly when an agreement was protested by outside 

parties. Under the 1984 Act, cooperative agreements automatically become effective after 45 days, 

unless the Commission takes specific actions to block the effective date of the agreement. As a result 

of that change, the Commission has heightened its emphasis on monitoring competitive conditions 

and carrier activity to ensure that carrier agreements remain in compliance with the letter and spirit 

of the 1984 Act.

THE OCEAN SHIPPING REFORM ACT OF 1998

The 1984 Act included a requirement that the FMC conduct a 5-year study on how the Act’s 

reforms actually worked out in practice. The Section 18 Study, as it was known, provided the 

foundation for a subsequent review of U.S. liner shipping policy also mandated in the 1984 Act. 

That review was conducted between April 1991 and April 1992 by a high profile advisory panel -

The Advisory Commission on Conferences in Ocean Shipping (ACCOS). The ACCOS Report’s 

research, findings and recommendations, while not initially acted on by Congress, provided the basis 

for a second round of deregulatory liner legislation – The Ocean Shipping Reform Act of 1998 

(OSRA).
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PERFORMANCE AND ACCOUNTABILITY REPORT 4

OSRA was signed into law on October 14, 1998, and went into effect on May 1, 1999. It provides 

the basis of U.S. liner shipping policy today. The primary objectives of OSRA were to provide the 

ocean shipping industry with more flexibility in conducting daily business, remove certain regulatory 

restrictions, and promote U.S. international liner trade by supporting greater reliance on the 

marketplace. Among its most notable changes were:

• ending the authority for liner conferences to regulate their members’ service contracts;

• encouraging confidentiality of rates in contracts;

• giving the Commission enhanced authority to provide exemptions from existing statutory 

provisions; and

• strengthening the FMC’s authority to address restrictive practices by foreign governments and 

state-controlled carriers.

THE FMC TODAY

Over the past five decades, international ocean transportation has changed dramatically. The FMC, 

an independent expert agency charged with regulating liner shipping in U.S. trades, has adapted to 

and evolved with those changes. From its inception, the FMC has worked to further its mission to 

foster a fair, efficient, and reliable international ocean transportation system for the benefit of U.S. 

exporters, importers, and the U.S. consumer. While the specifics of U.S. maritime policy and 

legislation have changed markedly during the last several decades, the FMC’s goal of protecting 

American exporters and consumers remains the cornerstone of today’s regulatory efforts.

The Commission is responsible for the regulation of oceanborne transportation in the foreign 

commerce of the United States for the benefit of U.S. exporters, importers, and consumers. The 

Commission is directed by five Commissioners appointed for staggered five-year terms, with one 

Commissioner designated by the President to serve as Chairman. The Chairman is the Chief 

Executive and Administrative Officer of the agency. 

Congress has charged the FMC with a number of oversight responsibilities designed to ensure 

competitive and efficient ocean transportation services for the shipping public, and to protect the 

public from unfair and deceptive practices. The principal statutes administered by the Commission, 

now codified in Title 46 of the U.S. Code at sections 40101 through 44106, are:

• The Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (Shipping 

Act);

• The Foreign Shipping Practices Act of 1988 (FSPA);

• Section 19 of the Merchant Marine Act, 1920 (1920 Act); and

• Sections 2 and 3 of Pub. L. No. 89-777, 80 Stat. 1350.

The FMC ensures competitive and efficient ocean transportation services for the shipping public by:

• reviewing and monitoring agreements among ocean common carriers and marine terminal 

operators (MTOs) serving the U.S. foreign oceanborne trades to ensure that they do not cause 

substantial increases in transportation costs or decreases in transportation services;

• maintaining and reviewing confidentially filed service contracts and Non-Vessel-Operating 

Common Carrier (NVOCC) Service Arrangements to guard against detrimental effects to 

shipping;

• providing a forum for exporters, importers, and other members of the shipping public to obtain 

relief from ocean shipping practices or disputes that impede the flow of commerce;
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 5

• ensuring common carriers’ tariff rates and charges are published in private, automated tariff 

systems and electronically available;

• monitoring rates, charges, and rules of government-owned or -controlled carriers to ensure they 

are just and reasonable; and

• taking action to address unfavorable conditions caused by foreign government or business 

practices in U.S. foreign shipping trades.

The FMC engages in a variety of activities that protect the public from financial harm, and 

contribute to the integrity and security of the nation’s import and export supply chains and ocean 

transportation system. These activities include:

• licensing and registering ocean transportation intermediaries; 

• helping resolve disputes about the shipment of goods or the carriage of passengers;

• investigating and prosecuting unreasonable or unjust practices, and ruling on private party 

complaints alleging Shipping Act violations; and

• ensuring that passenger vessel operators maintain proper financial coverage to reimburse cruise 

passengers in the event their cruise is cancelled or to cover liability in the event of death or 

injury at sea.

OUR ORGANIZATION 

The FMC is directed by five commissioners nominated by the President and confirmed by the 

Senate, each serving a staggered five-year term. No more than three members of the Commission

may be from the same political party. One commissioner, designated by the President, serves as 

Chairman. The post is currently held by Mario Cordero, a commissioner since 2011, who was 

designated Chairman on April 1, 2013. The Chairman serves as the Chief Executive and 

Administrative Officer of the Commission. Under a recent statutory change, Commissioners 

appointed and confirmed after December 18, 2014, may serve no more than two terms.

The FMC’s staff is comprised of economists, attorneys and experts in ocean transportation and 

government administration. While most of the Commission’s workforce is located at its 

Washington, D.C. headquarters, the Commission maintains a presence in six major port locations 

nationwide. 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 6

COMMISSIONER

DYE

COMMISSIONER

DOYLE

COMMISSIONER

MAFFEI

CHAIRMAN

CORDERO

Office of the 

Inspector 

General

Office of Equal 

Employment 

Opportunity

Office of the 

Managing 

Director

COMMISSIONER

KHOURI

Office of 

the General 

Counsel

Office of 

the 

Secretary

Office of 

Administrative 

Law Judges

Office of

Consumer 

Affairs & 

Dispute 

Resolution 

Services

Office of 

Budget and 

Finance

Office of 

Human 

Resources

Office of 

Management 

Services

Office of 

Information 

Technology

Bureau of 

Certification and 

Licensing

Bureau of 

Enforcement

Bureau of Trade 

Analysis Area Representative

Houston 

Los Angeles 

New Orleans 

New York/New Jersey Seattle/Tacoma 

South Florida

FEDERAL MARITIME COMMISSION 

ORGANIZATION CHART

SEPTEMBER 30, 2016 

Administrative Direction

Technical Direction
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 7

In addition to its Commissioners’ offices, the Commission is organized into bureaus and offices to 

accomplish its mission:

Area Representatives (ARs): The ARs 

represent the FMC in their locations -- Southern 

California, South Florida, New Orleans, New 

York, Houston and Seattle -- and serve major 

ports and transportation centers within their 

respective areas and beyond. The ARs act as a 

conduit for information to and from the 

maritime industry and the shipping public, 

resolve complaints and disputes between parties 

involved in international oceanborne shipping 

(often coordinating with CADRS), investigate 

alleged violations of shipping statutes, and 

function as an intelligence resource. They 

provide advice and guidance to the shipping 

public, collect and analyze information of 

regulatory significance, and assess industry 

conditions. The ARs frequently cooperate and 

coordinate with other Federal, state and local 

governmental agencies, providing shipping 

expertise and information. The ARs inform the 

public regarding FMC requirements and 

services through activities such as seminars, 

participating in various conferences and 

industry events, making presentations, and 

through various local community contacts. 

Bureau of Certification and Licensing 

(BCL): BCL is responsible for the Passenger 

Vessel Certification and Ocean Transportation 

Intermediary programs. BCL is composed of 

two offices, the Office of Passenger Vessels and 

Information Processing (OPVIP) and the 

Office of Transportation Intermediaries (OTI).

Bureau of Enforcement (BOE): BOE is the 

prosecutorial arm of the Commission. Bureau 

attorneys participate as trial counsel in formal 

proceedings, and work closely with the 

Commission’s Area Representatives in 

investigations of potential violations of the 

Shipping Act and Commission regulations. 

BOE negotiates settlements and informal 

compromises of civil penalties, and may act as 

investigative offices in formal fact-finding 

investigations initiated under the Shipping Act 

or the FSPA.

Bureau of Trade Analysis (BTA): BTA 

reviews agreements and monitors the concerted 

activities of ocean common carriers and marine 

terminal operators under the standards of the 

Shipping Act. BTA also reviews and analyzes 

service contracts, monitors rates of government 

owned controlled carriers, reviews carrier 

published tariff systems under the accessibility 

and accuracy standards of the Shipping Act and 

responds to inquiries or issues that arise 

concerning service contracts or tariffs. BTA is 

responsible for competition oversight and 

market analysis, focusing on activity that is 

substantially anti-competitive under the 

standards of 6(g) of the Shipping Act. 

Office of the Administrative Law Judges 

(OALJ): The OALJ resolve cases of alleged 

violations of the Shipping Act and other laws 

within the Commission’s jurisdiction.

Office of Consumer Affairs and Dispute 

Resolution Services (CADRS): CADRS 

provides assistance to shippers, ocean 

transportation intermediaries, cruise operators 

and passengers, truckers and marine terminal 

operators by providing alternative dispute 

resolution services, ombuds assistance, mediation, 

facilitation, and arbitration to resolve challenges 

and disputes involving cargo shipments, 

household goods shipments, and cruises.

Office of Equal Employment Opportunity 

(OEEO): The OEEO advises and assists the 

Commission in carrying out its responsibilities 

relative to Titles VI and VII of the Civil Rights 

Act of 1964 (as amended), other laws, executive 

orders, and regulatory guidelines affecting

affirmative employment, and the processing of 

EEO complaints.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 8

Office of the Inspector General (OIG): The 

OIG is an independent and objective oversight 

office created within the FMC by the 

Inspector’s General Act of 1978 (as amended) 

to conduct and supervise audits, inspections, 

and investigations relating to FMC programs; 

detect and prevent waste, fraud and abuse; 

promote economy, efficiency, and effectiveness; 

review existing and proposed legislation and 

regulations; keep the Chairman, Commissioners, 

and Congress fully informed of serious 

problems and deficiencies and recommend 

corrective actions; and report violations of law 

to the U.S. Attorney General.

Office of the General Counsel (OGC): The 

OGC provides legal services to the 

Commission. Some key responsibilities include:

providing advice and recommendations; 

preparing final decisions, orders and regulations 

for Commission approval and issuance; 

representing the Commission in litigation 

before the courts; representing the 

Commission’s interests in matters before 

Congress; providing technical and policy 

assistance to other government agencies 

engaged international negotiations or 

discussions on shipping matters; and providing 

legal opinions to the Commission, its staff, and 

the general public in appropriate instances. 

OGC also oversees the Commission’s 

international affairs activities.

Office of the Managing Director 

(OMD): The OMD is responsible for 

implementing the administrative directives of 

the Chairman, the management and 

coordination of Commission Bureaus, and 

overseeing the agency’s Area Representatives. 

It has direct oversight of the administrative 

offices of the Commission, which include the 

Offices of Budget and Finance, Human 

Resources, Information Technology, and 

Management Services.

Office of the Secretary (OS): The OS serves 

as the focal point for all matters and documents 

submitted to and emanating from the 

Commission. It receives and processes a variety 

of documents in regulatory and administrative 

proceedings. The OS is responsible for 

preparing and submitting regular and notation 

agenda matters for consideration by the 

Commission; maintaining official files and 

records of all formal proceedings; issuing orders 

and notices of actions of the Commission; 

compliance with Freedom of Information, 

Government in the "Sunshine," and Privacy 

Acts; responding to information requests from 

the maritime industry and the public, issuing 

publications and authenticating instruments and 

documents of the Commission; maintaining a 

Public Reference/Law Library and a Docket 

Library; and overseeing the organization and 

content of the Commission’s website.
MANAGEMENT’S DISCUSSION 

AND ANALYSIS 

Fiscal Year 2016
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 10

REGULATORY RESPONSIBILITY AND OVERSIGHT

The Federal Maritime Commission meets its primary regulatory responsibilities and strategic goals while 

ensuring the integrity of the U.S. ocean transportation system by: 

• licensing qualified OTIs in the U.S., and 

ensuring that all OTIs (including foreign 

OTIs) are bonded or maintain other 

evidence of financial responsibility;

• processing and reviewing agreements, 

service contracts, and NVOCC service 

arrangements pursuant to the 1984 Act 

for compliance with statutory requirements; and reviewing common carriers’ 

privately published tariff systems for 

accessibility, accuracy, and reasonable 

terms;

• monitoring the activities of ocean 

common carriers, MTOs, ports, and OTIs 

operating in the U.S. foreign commerce to 

ensure just and reasonable practices;

• reviewing competitive activities of rate 

discussion agreements, carrier alliances, 

and other agreements among common 

carriers and/or MTOs;

• providing dispute resolution and ombuds

services to the industry and consumers;

• maintaining trade monitoring, 

enforcement, and dispute resolution 

programs to assist regulated entities in 

achieving compliance, and to detect 

and remedy malpractice and violations 

of § 10 of the 1984 Act;

• monitoring the laws and practices of 

foreign governments for any 

discriminatory or otherwise adverse 

impact on shipping conditions in U.S. 

trades, and imposing appropriate 

remedial action pursuant to § 19 of the 

1920 Act or FSPA;

• enforcing special regulatory 

requirements applicable to carriers 

owned or controlled by foreign 

governments; and 

• ensuring that PVOs demonstrate 

adequate financial responsibility to 

indemnify passengers in the event of 

nonperformance of voyages or 

passenger injury or death pursuant to 

46 U.S.C. §§ 44102 and 44103.

The 1984 Act is applicable to the operations of common carriers and other persons engaged in U.S. 

foreign commerce, and exempts agreements that have become effective under the 1984 Act from U.S. 

antitrust laws. The FMC reviews and evaluates agreements to ensure that they do not exploit the grant of 

antitrust immunity, or result in an unreasonable increase in transportation cost or unreasonable reduction 

in service and to ensure that they do not otherwise violate the 1984 Act.

In addition to monitoring relationships among carriers, the FMC is responsible for ensuring that individual 

carriers, as well as those permitted by agreement to act in concert, fairly treat shippers and other members 

of the shipping public in accordance with the 1984 Act’s prohibition against undue discrimination. The 

1984 Act requires all carriers to make their rates, charges, and practices available in automated tariff 

systems available electronically to the public. Non-vessel-operating common carriers (NVOCCs) may 

assess the rates and charges published in their tariffs, or may offer service arrangements or negotiated rate 

agreements with shipping customers. Ocean common carriers are permitted to enter into service contracts 

with their shipper customers. Such contracts are filed electronically with the FMC in an Internet-based 

system, and are provided confidential treatment by the FMC as required by the 1984 Act. The FMC does 

not have the authority to approve or disapprove general rate increases (GRIs) or individual commodity 

rate levels in the U.S. foreign commerce, except with regard to certain foreign government-owned or 

controlled carriers.

Sections 2 and 3 of P.L. 89-777 require the operators of passenger vessels with 50 or more berths who 

embark passengers at U.S. ports to establish financial coverage to indemnify passengers in cases of death, 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 11

injury, or nonperformance of transportation. The FMC certifies such operators upon the submission of 

satisfactory evidence of financial responsibility. 

The FMC oversees nearly 7,000 regulated entities (PVOs, vessel-operating common carriers (VOCCs), 

MTOs, conferences, OTIs, etc.). The agency ensures that all OTIs operating in the foreign commerce of 

the U.S. have established the required experience and financial responsibility to protect shippers from 

financial loss, and additionally, licenses all U.S. OTIs and requires registration of all foreign NVOCCs 

serving U.S. trades.

The FMC carries out its regulatory responsibilities in a variety of ways, including conducting informal and 

formal investigations and audits, holding hearings, considering evidence, rendering decisions, issuing

appropriate orders, and implementing regulations. A vigorous enforcement program is carried out, 

assessing civil penalties for Shipping Act violations. The FMC also adjudicates and mediates disputes 

involving the regulated community, the general shipping public, and other affected individuals or interest 

groups.

All of the agency’s activities are supported by the FMC’s management and support functions of

information technology, budget and financial management, human resources, and management services.

AGENCY MISSION CHALLENGES

The Commission is aware of the day-to-day issues and challenges facing the United States’ vital ocean 

transportation system and its stakeholders, and will continue to focus its efforts on fostering the nation’s 

international trade and economic growth. This agency strives to accomplish its strategic goals by 

improving staff efficiency and closely managing its resources in order to enforce the Commission’s 

governing statutes and regulations to protect the shipping public. As financial resources allow, the FMC

will continue to prioritize investments needed in information technology to improve information security,

efficiency, and greater public access, while reducing costs over time. 

REGULATORY REVIEW

The FMC continuously reviews its processes and regulatory requirements for efficiency and effectiveness. 

As economic conditions alter the state of our trades, regulations are revised to respond to new conditions. 

As part of the Commission’s ongoing Plan for Retrospective Review of Existing Rules, the FMC will continue to 

review and update regulations related to a number of its programs. In Fiscal Year 2016, the Commission 

issued an Advance Notice of Proposed Rulemaking, and after reviewing filed comments, issued a Notice 

of Proposed Rulemaking in Docket No. 16-04 containing recommendations concerning potential 

regulatory reforms to the filing and processing of agreements, quarterly monitoring reports and agreement 

meeting minutes. The Commission also issued an Advance Notice of Proposed Rulemaking, and a later 

Notice of Proposed Rulemaking, in Docket No. 16-05 on the regulations governing service contract and 

NVOCC service arrangements. The FMC anticipates concluding these rulemaking initiatives early in FY 

2017. Further, the Commission plans a review of the Commission’s Marine Terminal Operator Schedule 

regulations and a review of the Carrier Automated Tariff regulations in the next fiscal year.

ALLIANCE AND VESSEL SHARING AGREEMENTS

The FMC monitors key trade lanes, and reviews and analyzes the competitive impact of agreements with 

particular emphasis on issues of consolidations, adequate vessel capacity, and equipment availability. The 

difficult economic environment continues to cause significant developments among vessel operating 

carriers with respect to the complexity and scope of agreements that have been filed with the Commission. 

Significant changes in the ocean carrier industry, notably related to consolidations, have resulted in 

changes to the composition of operational alliances. Implementation of carrier consolidations is ongoing, 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 12

and will continue to impact existing and future filed agreements. With the industry in motion, the FMC 

will continue to play a strong role in analyzing agreements for anticompetitive practices, overseeing the 

changes and monitoring the impact on the nation's exporters to ensure exported goods reach foreign 

markets efficiently and effectively. One example of the Commission’s work during FY 2016 was the 

review of the OCEAN Alliance agreement, which allows the sharing of members’ vessels, charter and 

exchange of space on members’ vessels, and allows the members to enter into cooperative working 

arrangements in international trade lanes between the U.S. and ports in Asia, Northern Europe, the 

Mediterranean, the Middle East, Canada, Central America, and the Caribbean. The Commission’s staff 

worked very hard to balance the needs of the OCEAN Alliance members and all other parties involved in 

the intermodal supply chain, with the ultimate goal of safeguarding competition in international 

oceanborne common carriage, with the American shipping public foremost in mind.

PORT CONGESTION AND SECURITY INITIATIVES

In FY 2016, the Commission implemented the third phase of its study on congestion -- a supply chain 

innovation initiative, led by Commissioner Rebecca Dye. This initiative brings together industry leaders 

from across the international ocean transportation supply chain to discuss challenges and collaborate on 

solutions to help reduce port congestion and remove related obstacles to efficient U.S. supply chain 

operations. The FMC's three teams are each composed of industry leaders that, under FMC authority and 

oversight, conduct non-public discussions aimed at identifying and implementing actionable processes to 

improve supply chain visibility and better integrate the various transportation and logistics actors involved. 

Industry participants include ports, terminal operators, major shippers, ocean transportation 

intermediaries, port labor, railroads, truckers, and chassis providers. 

Additionally, the FMC participates with other agencies in U.S. oceanborne commerce security initiatives to 

protect the U.S. public. The Commission shares data with Federal agencies engaged in homeland security 

to improve the flow of information and identification of entities providing and utilizing maritime 

transportation services. To facilitate these activities, the FMC has executed a Memorandum of 

Understanding (MOU) with U.S. Customs and Border Protection providing for more efficient utilization 

of existing systems and services. The FMC also has an active MOU with the Census Bureau, U.S. 

Department of Commerce, providing the FMC with access to the Census’ Automated Export System 

(AES) database. These MOUs allow the FMC to handle and use confidential U.S. export shipment data to 

accomplish its mission and to protect the nation’s security interests. The FMC also supports the Nation’s 

economic and security interests by partnering with the National Intellectual Property Rights Coordination 

Center (IPR Center), a Department of Homeland Security-led partnership of 23 Federal and international 

agencies targeting intellectual property- and trade-related crimes.

ENFORCEMENT, DISPUTE RESOLUTION AND PUBLIC INFORMATION

With the increasing pressure of industry consolidation, environmental concerns, port congestion, and high

energy costs, the Commission is particularly sensitive to the impact on the nation’s exporters and their 

need for efficient ocean transportation in reaching foreign markets. The FMC will continue to monitor 

agreements, service contracts, and tariffs in key trades as barometers of market cycles and shifts in the 

balance of supply and demand. The FMC will continue to expand and promote its compliance-focused 

program to monitor and audit ocean common carrier, NVOCC, and ocean freight forwarder operations.

The Commission’s Bureau of Enforcement, through the Commission’s statutory and regulatory mandate, 

protects the shipping public and ensures industry adherence to U.S. shipping laws. 

The FMC provides direct services to the public through a number of offices, programs, and its website. 

The Commission’s CADRS office receives time-sensitive requests for assistance (through e-mail and calls 

to its toll-free number) from shippers and carriers. The Commission’s Area Representatives, strategically 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 13

located at six key maritime ports, commonly operate as the “front line” for questions and issues facing the 

industry. The Commission’s Office of the Secretary updates the FMC’s website and social media

frequently, providing time sensitive notifications and important information to the public. The FMC also 

responds to requests for information from the press and the public, delivering key information directly to 

potentially affected shippers and consumers. 

The FMC plays an important role in improving international commerce and assisting with industry-driven 

solutions to ocean shipping issues. For example, in late FY 2016, the Commission began continuously 

monitoring developments related to the bankruptcy of a large foreign-based container shipping company, 

which has impacted U.S.-based terminal operators, cargo owners, truckers, and others in the supply chain. 

ENCOURAGING ECONOMIC GROWTH

This agency’s mission directly supports the President’s commitment to encourage economic growth and 

job creation in the United States. The Commission’s important work fosters economic growth through 

effective shipping and infrastructure practices. Commission programs related to monitoring international 

oceanborne trade conditions, and carrier and marine terminal operator agreements ensure the free flow of 

shipping commerce and efficient supply chains for both the import and export of goods for domestic 

production and consumption. 

PROGRAM PERFORMANCE OVERVIEW

The FMC, like other Federal agencies, provides a performance plan to Congress, pursuant to the 

Government Performance and Results Act (GPRA). The Commission’s performance goals are organized 

to aid in achieving its strategic goals. The FMC’s Strategic Plan Fiscal Years 2014-2018 (Revised) is available 

on the FMC’s website. The complete Program Performance Report for FY 2016 is contained in the

Program Performance section of this report.

The Commission is aware of and responsive to changing conditions affecting the state of our trades, 

including licensing, agreements, and contracting practices. During FY 2016, the Commission continued to 

make progress in modernizing its business processes. The Commission issued a final rule in early FY 2016

updating ocean transportation intermediary licensing and financial responsibility requirements. The 

Commission issued an Advance Notice of Proposed Rulemaking regarding its service contract regulations

and NVOCC service arrangements in FY 2016, and received numerous comments, which will be analyzed 

and considered before a final rule is issued. 

ACHIEVING STRATEGIC GOAL RESULTS

The FMC developed performance goals to both promote its strategic goals and support its mission. 

Specific targets and activities must be accomplished to meet the identified performance goals. Fiscal year 

2016 was the eighth year in which the FMC undertook to quantify and measure performance goals. The 

Commission’s actual performance in FY 2016 is compared with the targeted levels of performance 

established in the agency’s Strategic Plan Fiscal Years 2014-2018 (Revised). Taken together, performance 

measures and targets under each strategic goal were designed to enhance and further those goals each 

fiscal year, bringing the agency closer to full achievement of its strategic goals. Experience in previous

years enabled us to better set realistic targets for FY 2016 in the revised strategic plan.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 14

Historical Performance of Strategic Goals and Objectives

Strategic Goal Objective Performance Measures 2013 2014 2015 2016

Goal 1. Maintain an 

efficient and competitive 

international ocean 

transportation system.

1. Enhance efficiency in 

the trades through the 

use of asset sharing 

authority under the 

Shipping Act of 1984.*

Percentage share of U.S. containerized 

cargo moving on other agreement 

parties' vessels in major U.S. trades.**

TARGET

19.5% 39.5% 40% 40.5%

ACTUAL

19.5% 45.6% 49% 51%

Goal 2. Protect the 

public from unlawful, 

unfair and deceptive 

ocean transportation 

practices and resolve 

shipping disputes.

1. Identify and take 

action to end unlawful, 

unfair and deceptive 

practices.

Percentage of enforcement actions taken 

under the 1984 Act successfully resolved 

through favorable judgment, settlement, 

issuance of default judgment, or 

compliance letter or notice.

TARGET

76% 76.5% 77% 77.5%

ACTUAL

78.9% 83.8% 83.4% 88.6%

2. Prevent public harm 

through licensing and 

financial responsibility 

requirements.

Percentage of decisions on completed 

OTI license applications rendered within 

60 calendar days of receipt, facilitating 

lawful operation of OTIs with the 

appropriate character and experience 

requirements.

TARGET

75% 75% 75% 75%

ACTUAL

87.6% 71.3% 72% 98%

Percentage of cruise line operators 

examined during the year that have the 

full financial coverage required by 

regulation to protect against loss from 

non-performance or casualty.

TARGET

93% 94% 95% 95%

ACTUAL

100% 96.7% 96% 96%

3. Enhance public 

awareness of agency 

resources, remedies and 

regulatory requirements 

through education and 

outreach.

Percentage of key Commission 

issuances, orders, and reports are 

available through the Commission’s 

website within 5 working days of receipt.

TARGET

76% 76% 78% 80%

ACTUAL

86% 93% 92% 90%

4. Impartially resolve 

international shipping 

disputes through ADR 

and adjudication.

Number of cases opened and closed 

each fiscal year using ombuds and ADR 

services to assist consumers in 

recovering goods or funds.

TARGET

800 825 825 825

ACTUAL

800 994 882 778***

Percentage of formal complaints or 

Commission-initiated orders of 

investigation completed within 2 years 

of filing or Commission initiation.

TARGET

56% 58% 58% 60%

ACTUAL

91% 88% 90% 86%

* This objective was revised for FY 2014-2018. In FY 2013, the objective was: identify and take action to address substantially anticompetitive conduct or unfavorable conditions in U. S. trades. The target for FY2013 was 19.5%.

** This measure was revised for FY 2014-2018. In FY 2013, the measure was: percentage share of total U.S. international oceanborne trade 

moved by containership, as an indicator of liner shipping efficiency. The target for FY 2013 was 19.5%.

***For a complete explanation of why this goal was not met, please see Table 1: Summary of Performance Measure Results – FY 2016 in the 

Program Performance Information section of this Report.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 15

A brief overview of the agency’s successes includes the following:

Strategic Management of Human Capital – In 2016, the FMC continued to implement the strategic goals, 

strategies, and measures of results outlined in the 2012-2017 Human Capital Plan, Workforce Plan, and 

Accountability Plan. The Commission’s Human Capital Plan was developed under the Office of 

Personnel Management’s (OPM) Human Capital Assessment and Accountability Framework, and provides 

for recruiting and retaining a talented workforce, and to appropriately manage succession in the 

Commission’s small workforce. Currently, the 2017-2022 Human Capital Plan is being constructed to 

reflect the results and changes of strategies and goals for the continued success of the Commission.

To recruit and retain a highly qualified and diverse workforce, the Human Capital Plan includes improved 

marketing of the FMC; streamlining of the application process through implementation of utilizing an 

automated application system; targeting recruitment tools and areas of consideration to increase the 

diversity of applicants; and incorporating organizational needs based on the annual OPM Federal 

Employee Viewpoint Survey results. In order to meet mission objectives, the FMC is actively working to 

define and plan for the workforce of the future, consistent with the current Administration’s programs and 

reform initiatives.

Strong leadership is a critical asset, and at the close of FY 2016, 47 percent of the FMC’s executives were 

eligible for optional retirement. The Commission is engaged in succession management and projecting its 

future needs. Current staff are developed to prepare individuals to assume greater levels of responsibility, 

and to allow the agency to continue to maintain talented and knowledgeable leadership to meet the 

challenges of the future. Continuous training and development in leadership competencies will prepare 

the next generation of leaders at the Commission.

Competitive Sourcing - The FMC submitted its FY 2016 Federal Activities Inventory Reform Act (FAIR 

Act) Inventory to OMB in June 2016. The Inventory identified 71 of the agency’s 130 authorized Full-time 

Equivalent employees (FTEs) as commercial activity FTEs. No challenges to its commercial inventories 

have ever been received.

Improved Financial Performance - The FMC received an unmodified (“clean”) opinion on its financial 

statements in FY 2016, and will continue to strive to make improvements in its operations and achieve 

unmodified audit opinions in the future.

Expanded E-Government - The Commission continued to monitor public usage trends and leverage user 

feedback during FY 2016. Public feedback was used to refine and improve users’ experience with the 

website (www.fmc.gov), and enhance the organization, quality, clarity, and accessibility of content 

provided to the shipping public. Notable achievements in FY 2016 include: 

• archiving and streamlining content to improve delivery and accuracy of information; 

• initiating and beginning work on a major platform migration and extensive improvements to the 

information architecture of www.fmc.gov; 

• developing and launching a new online automated filing system for the renewal of registrations for 

foreign-based unlicensed NVOCCs (Form FMC-65); and

• developing and launching a new online automated option to the industry for agreement filing, review, 

and publication – the eAgreements system. This system includes instant filing confirmation receipts, 

elimination of paper, postage or courier costs, and faster publication of filed agreements on the 

FMC’s website.

The Commission has focused on completing major upgrades to its internal IT systems, in part through 

creation of an Enterprise Content Management (ECM) solution to improve data support for all 

Commission programs and research projects, as well as to simplify stakeholder interaction and filing 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 16

processes and to ensure that the FMC’s systems meet cybersecurity best practices. During FY 2016, the 

FMC made significant progress towards the planned identified goals and objectives, including:

• moving the Commission’s disaster recovery server to a cloud-based solution, assisting the FMC in 

effectively continuing operations during emergency events and saving the Commission the operating 

costs of maintaining a physical disaster recovery location;

• making significant upgrades to the agency’s infrastructure;

• becoming FEDRAMP compliant by migrating the Commission’s ISP contract to a FEDRAMP 

compliant ISP provider;

• enhancing the FMC’s security posture by employing various security tools, such as Xacta, Nessus, 

ManageEngine, and Varonis, in addition to the security services provided by Microsoft, the CDM 

program;

• offering the availability of all internal line of business applications in the cloud via Office 365; and

• streamlining communication between the FMC’s field offices and headquarters, no longer requiring 

field offices to connect via a VPN.

Performance Improvement – The Commission’s Strategic Plan represents the fundamental framework for 

planning and budgeting activities. Funding and FTE levels are integrated into the Commission’s

performance budget planning document by strategic goal to clearly identify the budgetary and staff 

resources committed to the performance of each goal.

Fiscal Year 2017 will conclude the five-year performance cycle with the current Strategic Plan. 

Commission staff will commence planning and study towards formulating a new Strategic Plan.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 17

FINANCIAL PERFORMANCE OVERVIEW

The FMC’s financial condition as of September 30, 2016, is sound, and a number of internal controls are

in place to ensure that funds are utilized efficiently and effectively, and that its budget authority is not 

exceeded. The FMC’s accounting services provider, the Bureau of the Fiscal Services (BFS), prepared the 

financial statements as required by the Accountability of Tax Dollars Act of 2002. They have been 

prepared from, and are fully supported by, the books and records of the FMC in accordance with 

Generally Accepted Accounting Principles (GAAP), standards approved by the Federal Accounting 

Standards Advisory Board (FASAB), and OMB Circular A-136, Financial Reporting Requirements.

SOURCE OF FUNDS

The FMC has single source funding, Salaries and Expenses, funded by an annual appropriation available 

for commitments and obligations incurred during the fiscal year in which the authority was granted. 

Congress approved FY 2016 appropriations for the FMC in the amount of $25,660,000 through P.L. 114-

113, straight-lined at the FY 2015 final appropriation level. Additionally, the Commission had 

reimbursable budget authority of $125,458 for work performed by FMC staff at other government entities. 

The FMC collects remittances for user fees and penalties, however, it is not authorized to offset any of its 

budget authority by utilizing these funds. Collections are deposited directly into the Treasury General 

Fund. This information is captured in the Statement of Custodial Activity which can be found in the

Financial Information section of this report.

APPROPRIATION HISTORY
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 18

FULL-TIME EQUIVALENT HISTORY

The FMC’s FTE level is largely driven by our annual appropriation level; however, unanticipated vacancies 

in such offices as the Offices of the 

Commissioners have sometimes remained 

unfilled for lengthy periods of time, 

awaiting Presidential and Congressional 

action. The FMC has maintained a full 

complement of Commissioners since June 

2011.

The FMC experienced a number of 

unanticipated retirements and separations 

in 2014, resulting in a lower than 

anticipated FTE level. The FMC had a 

slight increase in FTEs in 2015. The actual 

FTE level for 2016 was 123, with 119

employees on board at fiscal year’s end. 

The Commission has endeavored to develop the appropriate mix of staffing and other available means to 

ensure effective accomplishment of its mission.

USES OF FUNDS BY EXPENSE CATEGORY

During FY 2016, obligations against the FMC’s appropriation totaled $25,574,275, representing 99.67% of 

the funding level. The Commission spent $25.574 million as follows: 71.83% for salaries and benefits, 

0.61% for official travel expenses, and 27.56% for administrative expenses (e.g., rent, government and 

commercial contracts, telephones, and IT services and equipment). The balance of $85,725 will be

allocated to legitimate increases to existing FY 2016 obligations.

18,370

156

7,052

17,355

185

8,102

$0

$5,000

$10,000

$15,000

$20,000

FY 2016 FY 2015

Salaries & Expenses Travel Administrative

Utilization of Funds by Expense Categories

($000s)
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 19

AUDIT RESULTS

The FMC again received an unmodified (“clean”) opinion on its FY 2016 financial statements from the 

auditing firm of Dembo Jones, P.C. under contract through the FMC’s OIG. Comparative statements are 

located in the Financial Information section of this report.

FINANCIAL STATEMENT HIGHLIGHTS

The financial statements were prepared to report the financial position and results of operations of the 

Commission pursuant to the requirements of 31 U.S.C. § 3515(b). While the statements were prepared 

from the books and records of the Commission in accordance with the formats prescribed by OMB, the 

statements are in addition to the financial reports used to monitor and control budgetary resources which 

are prepared from the same books and records. The statements should be read with the realization that 

they are for a component of the U.S. Government, a sovereign entity. One implication of this is that 

liabilities cannot be liquidated without legislation that provides resources to do so. 

The FMC’s financial statements summarize the financial position and financial activity of the agency. The 

financial statements, footnotes, and the remainder of the required supplementary information appear in 

their entirety in the Financial Information section of this report. A brief analysis of the principal statements 

follows.

SUMMARY OF ASSETS

The FMC’s assets were $4,182,979 as of 

September 30, 2016. This represents a decrease 

from FY 2015 of $642,979. The FMC’s assets 

reported in the balance sheet are summarized in 

the accompanying table. 

The Fund Balance with Treasury of $3,716,353

represents the FMC’s largest asset and represents 

88.9% of the agency’s total assets. This is a 

decrease of $681,306 from FY 2015. The Fund 

Balance with Treasury is comprised only of 

annual appropriations maintained by the Department of the Treasury to address current liabilities. 

Accounts Receivable as of September 30, 2016 was $3,720 for outstanding receivables billed to both 

Federal and non-Federal entities. This accounts for 0.1% of the FMC’s assets. 

Capital Assets, also known as Property, Equipment and Software, accounts for 11.1% of the FMC’s total 

assets as of September 30, 2016. The net value of $462,906 accounts for the depreciation of all assets and 

represents the current book value of those assets.

FY 2016 FY 2015

Fund Balance with Treasury $3,716,353 $4,397,659

Accounts Receivable $3,720 $19,987

Capital Assets $462,906 $408,312

Other $0 $0

Total Assets $4,182,979 $4,825,958

Summary of Assets as of 

September 30, 2016
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 20

SUMMARY OF LIABILITIES

The FMC’s Liabilities totaled $3,377,516 as of 

September 30, 2016, an increase of $933,825

from FY 2015. The majority of the increase 

is related to an increase in engineering, 

technical and software services and additional 

obligations where the goods and/or services 

have yet to be received or vendor(s) have not 

submitted billings for delivered orders.

The FMC’s accounts payable as of September 

30, 2016 was $1,346,485. This represents the funds owed for goods and services received from vendors. 

Accrued liabilities represent future costs such as accrued annual and sick leave balances and workman’s 

compensation that are not covered by current budgetary resources. Accumulated leave costs are 

recognized as they are taken and workman’s compensation costs are recognized as they are paid out.

ANALYSIS OF CHANGES IN NET POSITION SUMMARY

The Changes in Net Position Summary is 

a summary of two factors, Unexpended 

Appropriations (the amount of spending 

authority that remains unused at the end 

of the fiscal year) and Cumulative Results 

of Operations (the cumulative excess of 

financing resources over expenses). The 

total net position for FY 2016 is a

decrease of $1,576,804 from FY 2015.

Net position is the residual difference between assets and liabilities and is comprised of Unexpended 

Appropriations and Cumulative Results of Operations. Unexpended Appropriations represent the amount 

of unobligated and unexpended budget authority for the 5 year period ending on September 30, 2016. 

Unobligated balances are the amount of appropriations or other authority remaining after deducting the 

cumulative obligations from the amount available for obligation for the same period. The Cumulative 

Results of Operations is the net result of FMC’s operations for all active fiscal years.

ANALYSIS OF NET COST SUMMARY

The analysis of Net Cost Summary presents the 

net cost of FMC’s Programs as identified in the 

Annual Report. The four agency programs are 

Operational and Administrative, Formal 

Proceedings, Inspector General, and Equal 

Employment Opportunity. The Statement of 

Net Costs shows the net cost of operations for 

the agency as a whole and its sub-organizations 

and/or programs. Net Costs compared to 

Budgetary Resources can be found in the Financial Information section of this report. This table reflects 

costs attributable to all active fiscal years (2012-2016)

FY 2016 FY 2015

Accounts Payable $1,346,485 $537,340

Payroll Taxes $148,036 $117,760

Federal Employee Benefits $1,300 $0

Custodial Liabilities $0 $0

Accrued Liabilities $1,881,695 $1,788,591

Total Liabilities $3,377,516 $2,443,691

Summary of Liabilities as of 

September 30, 2016

FY 2016 FY 2015

Unexpended Appropriations $1,520,851 $3,167,730

Cumulative Results of Operation ($715,388) ($785,463)

Total Net Position $805,463 $2,382,267

Changes in Net Position Summary as of

September 30, 2016

FY 2016 FY 2015

Operational and Administrative $19,653,860 $18,283,294

Formal Proceedings $8,080,880 $7,781,594

Office of the Inspector General $389,900 $450,246

Office of Equal Employment 

Opportunity $162,482 $153,307

Total Net Cost $28,287,122 $26,668,441

Net Cost Summary as of 

September 30, 2016
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 21

ANALYSIS OF THE STATEMENT OF BUDGETARY RESOURCES

The Statement of Budgetary Resources (SBR) 

shows the source of the agency’s budgetary 

resources, the status of those resources at the end 

of the reporting period, and the relationship 

between the two. Total budgetary resources must 

be equal to the status of budgetary resources at all 

times. A more detailed SBR can be found in the

Financial Information section of this report. During 

FY 2016, the FMC had total budgetary resources available of $26,094,698 representing a decrease of 

$375,834 from 2015. The FMC incurred total obligations during FY 2016 of $25,698,859. The budgetary 

resources represent financial activity during the accounting period for the five active fiscal years.

CONTROLS, SYSTEMS, AND LEGAL COMPLIANCE

The Commission’s internal controls are fundamental to the systems and processes used in managing its 

operations and achieving its strategic goals. The Chairman’s Statement of Assurance in the following 

section notes that the FMC does not have any material weaknesses or instances of nonconformance to 

report for FY 2016. 

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT

The Federal Managers’ Financial Integrity Act (FMFIA) mandates that agencies establish controls that 

reasonably ensure that: 

• obligations and costs comply with applicable laws; 

• assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and 

• revenues and expenditures are properly recorded and accounted for.

This Act encompasses program, operational, and administrative areas as well as accounting and financial 

management. The FMFIA requires that the Chairman provide an assurance statement of the adequacy of 

management controls and conformance of financial systems with Government-wide standards, that FMC 

managers are held accountable for efficient and effective performance of their duties in compliance with 

applicable laws and regulations, and for maintenance of the integrity of their activities through the use of 

controls. 

The Chairman has provided his annual assurance statement in this report based on various sources,

including knowledge of the daily operation of Commission programs and reviews, frequent discussions 

with the Managing Director and the Directors of the Offices of Budget and Finance and Management 

Services, audits of the financial statements, annual performance plans, and OIG reports, among other 

sources. Additionally, the Chairman meets regularly with the Commission’s Senior Executive Service and 

receives regular reports from the FMC’s OIG. 

Identified deficiencies in management control will be addressed at the highest management levels within 

the FMC. For instance, corrective actions for significant deficiencies identified in the information 

technology area would be overseen directly by the agency’s Chief Information Officer (CIO).

During the fiscal year, the IG identified no significant deficiencies and there were no significant 

management decisions made on which the IG disagreed. During FY 2016, management and the OIG 

reached agreement on 6 OIG audit recommendations. Management took action with respect to all 

FY 2016 FY 2015

Obligations Incurred $25,698,859 $26,168,073

Unobligated Balance Unavailable $310,114 $284,834

Unobligated Balance Available $85,725 $17,625

Total Status of Budgetary Resources $26,094,698 $26,470,532

September 30, 2016

Statement of Budgetary Resources as of
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 22

recommendations and remedied 15, some from prior years. Management will continue work to implement 

the remainder of the IG’s recommendations during the coming fiscal year.

DEBT COLLECTION IMPROVEMENT ACT OF 1996

The Debt Collection Improvement Act enhances the ability of the government to service and collect debts 

because it centralized the collection of non-tax delinquent debt owed to the government. Federal agencies 

are required to refer delinquent accounts in excess of 180 days to Treasury for collection. The collection of 

delinquent debts is conducted on behalf of the Commission by the Bureau of Fiscal Services through the 

Cross-Servicing Program and Treasury Offset Program, where the names and taxpayer identification 

numbers (TIN) of the delinquent entities are matched against the TINs of recipients of government 

payments. The balance owed to the government is deducted or offset from the payment to the entity to 

satisfy the debt. The goal of the FMC is to minimize the amount of delinquent debt owed to the 

government.

DIGITAL ACCOUNTABILITY AND TRANSPARENCY ACT OF 2014

The Digital Accountability and Transparency Act of 2014 (DATA Act) is an amendment to the Federal 

Funding Accountability and Transparency Act of 2006 (Public Law No. 109-282), and requires the 

establishment of government-wide data standards for spending information that agencies report to 

Treasury, OMB, and the General Services Administration. Agencies are required to begin reporting 

standardized spending information by May 9, 2017.

Additionally, the DATA Act requires Treasury and OMB to publish standardized spending information 

for free access and download on the government’s USASpending.gov website by May 9, 2018.

The Commission utilizes the infrastructure and financial system maintained by its Federal Shared Service 

Provider, the Administrative Resource Center (ARC), Bureau of Fiscal Services (BFS). The Commission is 

working with ARC to ensure that it is on target with the DATA Act’s requirements. 

The Commission has established a working group, has prepared a DATA Act Implementation Plan, and is 

actively monitoring ARC’s implementation progress. The agency’s Inspector General completed a DATA 

Act Readiness Review in August 2016, and provided helpful insights which the Commission incorporated 

into its Plan.

PROMPT PAYMENT ACT OF 1982

The Prompt Payment Act requires agencies to make timely payments to vendors for supplies and services, 

to pay interest penalties when payments are made after the due date, and to take cash discounts when they 

are economically justified. In FY 2016, the FMC maintained a percentage of on-time payments of 98.4

percent.

In FY 2016, the FMC paid $4.00 in interest payments as a result of eight late payments. The FMC will 

continue to work towards maintaining 100 percent on-time vendor payments in future years.

BIENNIAL REVIEW OF USER FEES

Agencies are required by the Chief Financial Officers Act of 1990 to conduct biennial reviews of fees and 

other charges that they impose, and to make revisions to cover program and administrative costs incurred

as necessary. The Commission published notice of its final rule, Update of Existing and Addition of New User 

Fees, in August 2016. New user fee rates will take effect in FY 2017. 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 23

PERFORMANCE MEASURE SUMMARY

The FMC does not have an in-house financial accounting system, and does not receive a Performance 

Measure Summary from the Department of the Treasury. The agency acquires travel, procurement, 

accounting, and financial services from Treasury’s Bureau of Fiscal Services. The Commission verifies and 

reconciles all financial statements and reports prior to submission, and has remained in compliance with all 

reporting thresholds.

INSPECTOR GENERAL ACT OF 1978, AS AMENDED IN 1988, AND THE INSPECTOR GENERAL 

REFORM ACT OF 2008

Section 5(b) of the Inspector General Act of 1978 requires agencies to report on final actions taken on 

OIG audit recommendations. The Inspector General issued the following four audit and review reports in 

FY 2016:

• Independent Auditors’ Report of FMC’s FY 2015 Financial Statements;

• FY2015 Financial Statement Management Letter;

• Evaluation of FMC’s Compliance with the Federal Information Security Management Act FY 2015; 

and

• DATA Act Readiness Review.

The agency addressed a number of recommendations from these reviews, and it is expected that progress 

will be made to address the remaining open recommendations during FY 2017. 

No significant deficiencies were identified during FY 2016.

TREASURY ASSURANCE STATEMENT - USA SPENDING RECONCILIATION

The FMC has implemented its plan to ensure data completeness and accuracy on USAspending.gov by 

using control totals with financial statement data, and comparing samples of financial data to actual award 

documents. The prime Federal award financial data reported on USAspending.gov is correct at the 

reported percentage of accuracy, and the FMC has adequate internal controls over the underlying 

spending.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 24

FREEZE THE FOOTPRINT

OMB Memorandum 12-12, Section 3, Promoting Efficient Spending to Support Agency Operations and 

Management Procedures Memorandum 2013-02, “Freeze the Footprint” policy implementation guidance, 

require agencies to report total square footage associated with agency assets and annual operating costs. 

Although not a CFO Act agency, the FMC works closely with the General Services Administration (GSA)

to better steward government resources and align the size of Federal real property assets with actual 

program needs. An additional potential reduction in office space (and associated cost savings) was 

identified in FY 2016, and the FMC worked with GSA to reconfigure headquarters space. The agency will 

continue to evaluate its space needs going forward. 

FY 2016 - FMC Square Footage (Rentable Square Footage)

Location Square Footage Comment

Headquarters 62,155 60,380 + 1,775 in joint use space1

Houston 547

Los Angeles 838

New Orleans 2102 Space is provided at no cost by DHS–CBP

New York/New Jersey 1,405

Seattle/Tacoma 451

South Florida 1,249

TOTAL 66,855

Footprint Baseline Comparison (Usable Square Footage)

FY 2012

(Baseline) FY 2013 FY 2014 FY 2015 FY 2016

Total Square Footage 58,208 58,208 58,530 57,237 55,436

Reporting of O&M Costs – Owned and Direct Lease Buildings

FY 2012

Reported

Cost

FY 2013

Reported

Cost

FY 2014

Reported

Cost

FY 2015

Reported

Cost

FY 2016

Reported

Cost

Change in

Baseline 

2012-2016

Operation and

Maintenance 

Costs 

$2,994,981 $3,191,702 $3,234,499 $3,296,731 $3,217,4003 $222,419

1 Joint use space is applicable only to the HQ office space. The FY 2016 renegotiation of the Commission’s Occupancy Agreement

(OA) with GSA resulted in an increase in joint use space as other Federal agencies have vacated the Washington, D.C. building which 

houses the HQ offices.

2 The square footage provided for the New Orleans field office is approximate. The FMC does not maintain a lease or pay rent on this 

space, however the FMC has a Memorandum of Agreement with U.S. Customs and Border Protection (CBP), Department of 

Homeland Security (DHS). The relocation of the New Orleans office resulted in a decrease in square footage.

3 The FMC received a credit in FY 2016 for HQ Tenant Improvement Allowance renegotiation.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 25

CHAIRMAN’S FMFIA STATEMENT OF ASSURANCE

The Federal Maritime Commission’s management is responsible for establishing and maintaining an 

effective system of internal control and financial management to meet the objectives of the Federal 

Managers’ Financial Integrity Act of 1982 (FMFIA).

The FMC conducted its Fiscal Year 2016 assessment of the effectiveness of the internal controls put in 

place by the organization to support effective and efficient programmatic operations, reliable financial 

reporting, and compliance with applicable laws and regulations, and to determine whether the financial 

management system conforms to applicable financial systems requirements in accordance with the 

requirements of the Office of Management and Budget (OMB) Circular A-123, Management’s Responsibility 

for Internal Control and Enterprise Risk Management.

The FMC can provide reasonable assurance that its internal controls over the effectiveness and efficiency 

of operations, reliable financial reporting, and compliance with applicable laws and regulations as of 

September 30, 2016, were operating effectively, that any detected discrepancies were addressed, and that 

no material weaknesses were found in the design or operation of the agency’s internal controls based on 

the results of this assessment.

Further, based on this assessment, we have determined that the financial management system acquired 

from the Bureau of Fiscal Services, an integrated, internet-based financial system using Oracle Federal 

Financials, conforms to applicable financial systems requirements.

/s/

Mario Cordero

November 15, 2016
 

PROGRAM PERFORMANCE 

INFORMATION 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 27

ANNUAL PERFORMANCE REPORT

INTRODUCTION

The FMC’s performance management system includes specific strategic goals, performance 

measures, and targets. The strategic goals represent the FMC’s mission and reflect the overall 

outcomes and objectives the agency is working to achieve. This report describes progress towards 

performance targets in 2016 in furtherance of the Commission’s mission to foster a fair, efficient 

and reliable international ocean transportation system, and to protect the public from unfair and 

deceptive practices. The FMC’s strategic goals and objectives are as follows:

• Maintain an Efficient and Competitive International Ocean Transportation System.

o Identify and take action to address substantially anti-competitive conduct or unfavorable 

conditions in U.S. trades.

• Protect the Public from Unlawful, Unfair and Deceptive Ocean Transportation Practices and 

Resolve Shipping Disputes.

o Identify and take action to end unlawful, unfair, and deceptive practices. 

o Prevent public harm through licensing and financial responsibility requirements.

o Enhance public awareness of agency resources, remedies, and regulatory requirements 

through education and outreach. 

o Impartially resolve international shipping disputes through alternative dispute resolution 

and adjudication. 

The FMC quantitatively measured seven performance goals during the fiscal year. Six out of seven 

measures reached and exceeded FY 2016 targets. Each measure, target, and actual result is reported 

in the summary table below (Table 1) and includes a description of the data used to measure 

performance along with an explanation of the procedures in place to validate and ensure integrity of 

the reported result. Where a performance target was unmet, an explanation has been provided.

Trend data for measures in place since 2010 is reflected in a Table 2 below. This data reflects 

continuous increases in agency efficiency and productivity – a result of both improved and 

streamlined processes, and enhanced focus on improving the critical processes being measured. 

Table 3 provides a status update on unmet targets for FY 2011 through FY 2016. 

The Strategic Plan was revised in FY 2011 to remove a third strategic goal and its associated 

objectives and measures. The third goal was established for administrative support functions such as 

human resources, information technology and financial management. Each of these important 

functions is subject to its own stringent planning and measuring regimes pursuant to various laws 

and executive mandates. Those related plans support the strategic plan and are referenced and 

described therein.

The agency has forwarded this report to the President, with a copy to the Director, OMB, and 

appropriate Congressional committees. Additionally, this report has been placed on the FMC’s 

public website to ensure that it is accessible to interested parties. All Commission employees have 

been advised to review this report. 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 28

TABLE 1: SUMMARY OF PERFORMANCE MEASURE RESULTS – FY 2016

Targeted performance compared to actual results.

Strategic Goal No. 1: Maintain an efficient and competitive 

international ocean transportation system.

Performance Measure FY 2016

Target

FY 2016

Actual

Measure: Percentage share of U.S. containerized cargo moving on other agreement 

parties’ vessels in major U.S. trades. 

2016 Target: 40.5%

Validation: This outcome goal is measured by using information from several different 

commercial sources that collectively provide the number of loaded containers (TEUs) 

carried by vessels operating in selected major U.S. trade lanes while separately 

enumerating the number of TEUs carried by each vessel for the ship operator's own 

account and the number of TEUs carried by the vessel on behalf of other vessel operating 

common carriers (i.e., on behalf of third-parties). The vessels' data are aggregated, and 

the total number of TEUs carried on behalf of third-parties is divided by the total number 

of TEUs carried in the trades selected. The measure is applied to the transpacific and 

transatlantic liner trades, which together account for about two-thirds of all U.S. 

container cargo. 

40.5% 51%

Strategic Goal No. 2: Protect the public from unlawful, unfair and deceptive ocean transportation 

practices and resolve shipping disputes.

Performance Measure FY 2016

Target

FY 2016

Actual

Measure: Percentage of enforcement actions taken under the Shipping Act of 1984 

successfully resolved through favorable judgment, settlement, issuance of default 

judgment, or compliance letter or notice.

2016 Target: 77.5%

Validation: This outcome goal is measured by examining enforcement case inventory and 

physically counting the number of cases resolved. The inventory is maintained for case 

load management, and monthly and quarterly reporting purposes. The data is constantly 

under review and frequently updated.

77.5% 88.6%

Measure: Percentage of decisions on completed OTI license applications rendered 

within 60 calendar days of receipt, facilitating lawful operation of OTIs with the 

appropriate character and experience requirements.

2016 Target: 75%

Validation: This outcome goal is measured by comparing data fields in an internal 

database that contains, among other data points, the date the OTI license application is 

accepted for processing and the date a licensing determination is made or the 

application process has been completed. The difference between these two dates is the 

length of time to render a decision on an OTI application accepted for processing. The 

database is maintained for daily case load management, and monthly and quarterly 

reporting purposes. The data is constantly under review and frequently updated. 

75% 98%
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 29

Measure: Percentage of cruise line operators examined during the year that have the 

full financial coverage required by regulation to protect against loss from nonperformance or casualty.

2016 Target: 95%

Validation: This outcome goal is measured by comparing reported financial coverage 

amounts against required coverage amounts. Approximately 200 cruise vessels are 

registered in and monitored by the Commission’s Passenger Vessel (Cruise) Operator 

program. Operators covered by this program file semi-annual, monthly, and weekly 

unearned passenger revenue reports. This information is used to compare reported 

coverage against required coverage amounts.

95% 96%

Measure: Percentage of key Commission issuances, orders and reports that are available 

through the Commission’s website within 5 working days of receipt.

2016 Target: 80%

Validation: This outcome goal is measured by reviewing the workflow processes for 

posting documents to the Commission’s website docket activity logs. The date that each 

docket activity log is updated with new filings or issuances is compared to the date the 

document is filed with or issued by the Commission in a particular proceeding. The case 

logs are used on a daily basis by agency staff and by the public, and as such, any 

discrepancies are discovered and remedied quickly.

80% 90%

Measure: Number of cases opened and closed each fiscal year using ombuds and ADR 

services assisting consumers to recover goods or funds.

2016 Target: 825

Validation: This outcome goal is measured using data maintained by the Commission on 

each such case opened and closed.

This outcome goal is measured by the number of informal ombuds matters and 

mediation cases opened and closed by the Office of Consumer Affairs and Dispute 

Resolution Services (CADRS) and matters handled by the Commission’s Area 

Representatives (ARs). Such matters are opened upon the request of the public for 

assistance and are subject to the normal fluctuations in consumers seeking help from the 

Commission. Cases are closed upon resolution or impasse and only cases that are both 

opened and closed in the relevant period are counted. In addition to the normal 

fluctuations expected during any reporting period in the number of requests received for 

Commission assistance and therefore the number of cases opened and closed during the 

fiscal year, a temporary reduction in AR staff in two geographic regions may also have 

been a factor in the minor drop for this measure.

825 778

Measure: Percentage of formal complaints or Commission initiated orders of 

investigation completed within two years of filing or Commission initiation.

2016 Target: 60%

Validation: This outcome goal is measured using docket activity logs maintained by the 

Commission. The docket logs are used on a daily basis by agency staff and by the public, 

and as such, any discrepancies are discovered and remedied quickly.

60% 86%
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 30

TABLE 2: PERFORMANCE MEASURE TRENDS FY 2010-2016

Strategic Goal No. 1: Maintain an efficient and competitive international ocean transportation system.

Performance 

Measure FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY2015 FY 2016

Measure: Percentage share of U.S. containerized cargo moving on other agreement parties’ vessels in major U.S. trades.

TARGET 18%* 18.5%* 19%* 19.5%* 39.5% 40% 40.5%

ACTUAL 17.4% 17.9% 18.7% 19.5% 45.6% 49% 51%

Strategic Goal No. 2: Protect the public from unlawful, unfair and deceptive ocean transportation practices 

and resolve shipping disputes.

Measure: Percentage of enforcement actions taken under the Shipping Act of 1984 successfully resolved through 

favorable judgment, settlement, issuance of default judgment, or compliance letter or notice.

TARGET 70% 72% 74% 76% 76.5% 77% 77.5%

ACTUAL 72.9% 82% 88% 78.9% 83.8% 83.4% 88.6%

Measure: Percentage of decisions on completed OTI license applications rendered within 60 calendar days of receipt, 

facilitating lawful operation of OTIs with the appropriate character and experience requirements.

TARGET 55% 60% 70% 75% 75% 75% 75%

ACTUAL 65% 77% 90.2% 87.6% 71.3% 72% 98%

Measure: Percentage of cruise line operators examined during the year that have the full financial coverage required by 

regulation to protect against loss from non-performance or casualty.

TARGET 90% 91% 92% 93% 94% 95% 95%

ACTUAL 90 % 91% 100% 100% 96.7% 96% 96%

Measure: Percentage of attendees at agency sponsored outreach presentations that rate the program as “Useful” or 

“Extremely Useful” in their compliance efforts.

TARGET 70% 75% N/A* N/A* N/A* N/A* N/A*

ACTUAL 100% N/A* N/A* N/A* N/A* N/A* N/A*

Measure: Percentage of key Commission issuances, orders and reports that are available through the Commission’s 

website within 5 working days of receipt.

TARGET 70% 72% 74% 76% 76% 78% 80%

ACTUAL 77.1% 72% 79% 86% 93% 92% 90%

Measure: Number of cases opened and closed each fiscal year using ombuds and ADR services assisting consumers to 

recover goods or funds.

TARGET 550 625 700 800 825 825 825

ACTUAL 556 631 893 800 994 882 778

Measure: Percentage of formal complaints or Commission initiated orders of investigation completed within two years of 

filing or Commission initiation.

TARGET 50% 52% 54% 56% 58% 58% 60%

ACTUAL 56% 60% 73% 91% 88% 90% 86%

* In consultation with OMB, results for performance measure, “Percentage share of total U.S. international oceanborne trade 

moved by containership as an indicator of liner shipping efficiency” is reflected in the years 2010-2013. The outcome goal was 

changed in 2013. Also, “Percentage of attendees at agency sponsored outreach presentations that rate the program as ‘Useful’ or 

‘Extremely Useful’ in their compliance efforts.” The measure is not reflective of current agency outreach practices. It also proved 

logistically difficult to execute because most outreach is performed by FMC staff as invitees at non-FMC sponsored events. This 

outcome goal was removed for FY 2011 – 2015. 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 31

. TABLE 3: STATUS OF UNMET TARGETS, 2011 - 2016

Performance Measure (2011)

FY 2011

Target

FY 2011

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership 

as an indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient 

Competitive International Ocean Transportation System (2011) 

18.5% 17.9%

Performance Measure (2012)

FY 2012

Target

FY 2012

Actual

Measure: Percentage share of total U.S. international ocean borne trade moved by containership 

as an indicator of liner shipping efficiency. Strategic Goal No. 1: Maintain An Efficient 

Competitive International Ocean Transportation System (2012)

19% 18.7%

Performance Measure (2013) FY 2013

Target

FY 2013

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2013)

All Targets All Targets 

Reached

Measure: Strategic Goal No. 2: Protect the public from unlawful, unfair and deceptive ocean 

transportation practices and resolve shipping disputes (2013)

All Targets All Targets 

Reached

Performance Measure (2014) FY 2014

Target

FY 2014

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2014)

All Targets All Targets 

Reached

Measure: Percentage of decisions on completed OTI license applications rendered within 60 

calendar days of receipt, facilitating lawful operation of OTIs with the appropriate character and 

experience requirements. Strategic Goal No. 2: Protect the public from unlawful, unfair and 

deceptive ocean transportation practices and resolve shipping disputes (2014)

75% 71.3%

Performance Measure (2015) FY 2015

Target

FY 2015

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2015)

All Targets All Targets 

Reached

Measure: Percentage of decisions on completed OTI license applications rendered within 60 

calendar days of receipt, facilitating lawful operation of OTIs with the appropriate character and 

experience requirements. Strategic Goal No. 2: Protect the public from unlawful, unfair and 

deceptive ocean transportation practices and resolve shipping disputes (2015)

75% 72%

Performance Measure (2016) FY 2016

Target

FY 2016

Actual

Measure: Strategic Goal No. 1: Maintain An Efficient Competitive International Ocean 

Transportation System (2016)

All Targets All Targets 

Reached

Measure: Number of cases opened and closed each fiscal year using ombuds and ADR services 

assisting consumers to recover goods or funds. Strategic Goal No. 2: Protect the public from 

unlawful, unfair and deceptive ocean transportation practices and resolve shipping disputes 

(2016)

825 778
 

FINANCIAL INFORMATION 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 33

MESSAGE FROM THE CHIEF FINANCIAL OFFICER

I am pleased to present the financial section of this Performance and 

Accountability Report for Fiscal Year 2016, which shows that the Federal 

Maritime Commission continues to maintain its record of strong fiscal 

stewardship on behalf of the American people. The accompanying financial 

statements and related notes, which were prepared in conformity with 

accounting principles generally accepted in the U.S., and requirements set 

forth in Office of Management and Budget (OMB) Circular No, A-136, 

Financial Reporting Requirements, fairly present the Commission’s financial 

position. 

Fiscal Year 2016 marks the 13th consecutive year that the FMC has received an 

unmodified (“clean”) opinion on its financial statements. This unmodified opinion emphasizes the 

continuing commitment of this agency to maintain sound financial management of the resources 

entrusted to it: The FMC’s financial condition is sound, sufficient internal controls are in place to 

ensure that its budget authority is not exceeded, and funds are used efficiently and effectively. 

The following key accomplishments demonstrate the effectiveness and efficiency of the FMC’s 

acquisition and financial functions during Fiscal Year 2016:

• A continuous record of no material weaknesses, significant control deficiencies, or 

nonconformance with the Federal Managers’ Financial Integrity Act and other applicable 

laws and regulations;

• Collecting, in civil enforcement proceedings and user fees, more than $3,701,000 on 

behalf of the American public;

• Continued focus on internal controls, as mandated by OMB Circular A-123, providing 

budget information in concise, reliable, and understandable formats; and

• Accurate and timely issuance of financial statements as required by the Accountability of 

Tax Dollars Act of 2002, which are prepared from, and fully supported by, the books 

and records of the FMC in accordance with Generally Accepted Accounting Principles 

(GAAP), standards approved by the Federal Accounting Standards Advisory Board 

(FASAB), and OMB Circular A-136, Financial Reporting Requirements.

This report highlights the Commission’s commitment to fulfill its fiduciary responsibilities. We 

remain committed to exemplary financial management and strive to enhance operational efficiency. 

I wish to acknowledge the diligent efforts of staff and our financial service provider for their 

dedication and the role they play in effectively overseeing the FMC’s limited resources, and 

continuing to protect the interest of the American shipping public. While pleased with our FY 2016 

accomplishments, I am confident that we will continue to strive to improve and maintain high 

financial management standards in the coming fiscal years. 

Sincerely,

/s/

Karen V. Gregory, Chief Financial Officer

November 15, 2016
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 34

PRINCIPAL FINANCIAL STATEMENTS

The principal financial statements presented include:

• Balance Sheet – Presents the combined amounts the agency had to use or distribute 

(assets) versus the amounts the agency owed (liabilities), and the difference between the 

two (net position);

• Statement of Net Cost – Presents the annual cost of agency operations. The gross cost 

less any offsetting revenue is used to determine the net cost;

• Statement of Changes in Net Position – Reports the accounting activities that caused the 

change in net position during the reporting period;

• Statement of Budgetary Resources – Reports how budgetary resources were made 

available and the status of those resources at fiscal year-end; and

• Statement of Custodial Activity – Reports collections and their disposition by the agency 

on behalf of the Treasury General Fund. The FMC acts as custodian and does not have 

use of these funds. 

The principal financial statements have been prepared to report the financial position and results of 

operations of the FMC, pursuant to the requirements of 31 U.S.C. § 3515(b). While the statements 

have been prepared from the books and records of the agency in accordance with GAAP for 

Federal entities and the formats prescribed by OMB, the statements are in addition to the financial 

reports used to monitor and control budgetary resources, which are prepared from the same books 

and records. The statements should be read with the realization that they are for a component of the 

U.S. Government, a sovereign entity. Therefore, liabilities not covered by budgetary resources 

cannot be liquidated without the enactment of an appropriation, and the payment of all liabilities 

other than for contracts can be abrogated by the sovereign entity. Other limitations are included in 

the footnotes to the principal statements. The accompanying notes are an integral part of these 

statements. 

The Federal Maritime Commission’s financial statements were audited by Dembo Jones, P.C., under 

contract to the FMC’s Office of the Inspector General.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 35

REPORT ON THE

FINANCIAL STATEMENTS AUDIT 

OF FEDERAL MARITIME COMMISSION

FOR THE FISCAL YEARS ENDED SEPTEMBER 30, 2016 and 2015
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 36

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

November 9, 2016

Office of Inspector General

Dear Chairman Cordero and Commissioners:

I am pleased to provide the attached audit report required by the Accountability for Tax

Dollars Act of 2002 (ATDA), which presents an unmodified (clean) opinion on the Federal

Maritime Commission’s (FMC) fiscal year (FY) 2016 financial statements. The audit results

indicate that the FMC has established an internal control structure that facilitates the preparation

of reliable financial and performance information. The Office of Inspector General (OIG) 

commends the FMC for the noteworthy accomplishment of attaining an unmodified opinion.

The OIG contracted with the independent certified public accounting firm of Dembo 

Jones, P.C. to: perform the audit of the FMC’s financial statements for the fiscal year ended 

September 30, 2016; consider internal control over financial reporting; and test the agency’s

compliance with certain provisions of applicable laws, regulations, and contracts that could have

a direct and material effect on the financial statements. The contract required that the audit be

performed in accordance with U.S. Generally Accepted Government Auditing Standards and 

Office of Management and Budget (OMB) audit guidance.

In its audit of the FMC, Dembo Jones found: the financial statements were fairly 

presented, in all material respects, in conformity with U.S. Generally Accepted Accounting 

Principles; there were no material weaknesses or significant deficiencies in internal control

over financial reporting; and no reportable noncompliance issues with the laws and regulations 

tested.

In connection with the OIG’s contract, the OIG reviewed Dembo Jones’ report and related 

documentation and inquired of its representatives. Our review, as differentiated from an audit in 

accordance with U.S. Generally Accepted Government Auditing Standards, was not intended to 

enable the OIG to express, and we do not express, opinions on FMC's financial statements or 

internal control; or conclusions on compliance with laws and regulations. Dembo Jones is 

responsible for the attached auditors' report dated November 15, 2016 and the conclusions 

expressed in the report. However, our review disclosed no instances where Dembo Jones did not 

comply, in all material respects, with Generally Accepted Government Auditing Standards.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 37

The OIG would like to thank FMC staff; especially the Office of Budget and Finance, for 

their assistance in helping Dembo Jones and the OIG meet the audit objectives.

Respectfully submitted,

/s/

Jon Hatfield

Inspector General

Attachment

cc: Office of the Managing Director 

Office of the General Counsel

Office of Budget and Finance
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 38

INDEPENDENT AUDITORS' REPORT
FEDERAL MARITIME COMMISSION 

– FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 39
FEDERAL MARITIME COMMISSION 

– FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 40
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 41

APPENDIX A

FEDERAL MARITIME COMMISSION 

COMMENTS ON AUDIT REPORT
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 42

Federal Maritime Commission

Washington, DC 20573

 Office of the 

Managing Director

November 10, 2016

Donald K. Marshall, CPA

Dembo Jones, P.C.

6010 Executive Building, Suite 900

Rockville, MD 20852

Dear Mr. Marshall:

I have reviewed the financial statements audit report for the Federal Maritime Commission for 

fiscal year 2016. I concur with the audit report's findings that the financial statements fairly 

present the agency's financial position during the fiscal year ending September 30, 2016, and 

that the FMC's financial statements are in conformity with U.S. Generally Accepted Accounting 

Principles; that the FMC has maintained, in all material respects, effective internal control over 

financial reporting; and that there were no instances of reportable noncompliance with laws 

and regulations tested by the auditors. 

The Commission appreciates Dembo Jones’ work over the past fiscal year.

Sincerely,

/s/

Karen V. Gregory

Chief Financial Officer
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 43

APPENDIX B

FEDERAL MARITIME COMMISSION 

FINANCIAL STATEMENTS

FOR THE YEARS ENDED 

SEPTEMBER 30, 2015 and 2016

The accompanying notes are an integral part of these financial statements.
SION – FY 2016 PERFORMANCE AND 

FEDERAL MARITIME COMMISSION BALANCE 

SHEET

AS OF SEPTEMBER 30, 2016 AND 2015

(In Dollars)

2016 2015

Assets:

Intragovernmental

Fund Balance With Treasury (Note 2) $ 3,716,353 $ 4,397,659

Accounts Receivable (Note 3) 1,955 14,540

Total Intragovernmental 3,718,308 4,412,199

Accounts Receivable, Net (Note 3) 1,765 5,447

Property, Equipment, and Software, Net (Note 4) 462,906 408,312

Total Assets $ 4,182,979 $ 4,825,958

Liabilities:

Intragovernmental

Accounts Payable $ 434,801 $ 65,788

Other (Note 6) 148,036 117,760

Total Intragovernmental 582,837 183,548

Accounts Payable 911,684 471,552

Federal Employee and Veterans' Benefits (Note 5) 1,301 -

Other (Note 6) 1,881,695 1,788,591

Total Liabilities (Note 5) $ 3,377,517 $ 2,443,691

Net Position:

Unexpended Appropriations - Other Funds $ 1,520,851 $ 3,167,730

Cumulative Results of Operations - Other Funds (715,389) 

(785,463)

Total Net Position $ 805,462 $ 2,382,267

Total Liabilities and Net Position $ 4,182,979 $ 4,825,958
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 45

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

(In Dollars)

2016 2015

Program Costs:

Operational and Administrative

Gross Costs $ 19,698,881 $ 18,323,598

Less: Earned Revenue ( 45,020) (40,304)

Net Program Costs $ 19,653,861 $ 18,283,294

Formal Proceedings

Gross Costs $ 8,118,034 $ 7,803,459

Less: Earned Revenue ( 37,154) (21,864)

Net Program Costs $ 8,080,880 $ 7,781,595

Office of Inspector General

Gross Costs $ 389,899 $ 450,246

Net Program Costs $ 389,899 $ 450,246

Office of Equal Employment Opportunity

Gross Costs $ 162,482 $ 153,306

Net Program Costs $ 162,482 $ 153,306

Net Cost of Operations (Note 9) $ 28,287,122 $ 26,668,441
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 46

STATEMENT OF CHANGES IN NET POSITION

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

(In Dollars)

2016 2015

Cumulative Results of Operations:

Beginning Balances $ (785,463) $ (719,731)

Budgetary Financing Sources:

Appropriations Used 27,226,099 25,464,081

Other Financing Sources (Non-Exchange):

Imputed Financing Sources (Note 10) 1,131,097 1,138,628

Total Financing Sources 28,357,196 26,602,709

Net Cost of Operations (28,287,122) 

(26,668,441)

Net Change 70,074 

(65,732)

Cumulative Results of Operations $ (715,389) $ (785,463)

Unexpended Appropriations:

Beginning Balances $ 3,167,730 $ 3,129,440

Budgetary Financing Sources:

Appropriations Received 25,660,000 25,660,000

Other Adjustments (80,780) 

(157,629)

Appropriations Used (27,226,099) 

(25,464,081)

Total Budgetary Financing Sources (1,646,879) 38,290

Total Unexpended Appropriations $ 1,520,851 $ 3,167,730

Net Position $ 805,462 $ 2,382,267
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 47

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

(In Dollars)

2016 2015

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 $ 302,459 $ 387,204

Recoveries of Prior Year Unpaid Obligations 100,146 518,708

Other changes in unobligated balance (50,080) 

(157,548)

Unobligated balance from prior year budget authority, net 352,525 748,364

Appropriations 25,660,000 25,660,000

Spending authority from offsetting collections 82,173 62,168

Total Budgetary Resources $ 26,094,698 $ 26,470,532

Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 12) $ 25,698,859 $ 26,168,073

Unobligated balance, end of year:

 Apportioned, unexpired account (Note 2) 85,725 17,625

Expired unobligated balance, end of year (Note 2) 310,114 284,834

Unobligated balance, end of year (total) 395,839 302,459

Total Budgetary Resources $ 26,094,698 $ 26,470,532

Change in Obligated Balance 

Unpaid Obligations:

Unpaid Obligations, Brought Forward, October 1 $ 4,109,740 $ 3,717,924

New obligations and upward adjustments (Note 12) 25,698,859 26,168,073

Outlays (gross) (26,385,984) 

(25,257,549)

Recoveries of Prior Year Unpaid Obligations (100,146) 

(518,708)

Unpaid Obligations, End of Year (gross) 3,322,469 4,109,740

Uncollected payments:

Uncollected Customer Payments, Federal Sources, Brought Forward, October 1 (14,540) -

Change in Uncollected Payments, Federal Sources 12,585 

(14,540)

Uncollected Customer Payments, Federal Sources, End of Year (1,955) 

(14,540)

Obligated Balance, End of Year $ 3,320,514 $ 4,095,200

Budget Authority and Outlays, Net:

Budget authority, gross $ 25,742,173 $ 25,722,168

Actual offsetting collections (125,458) 

(47,709)

Change in Uncollected Payments, Federal Sources 12,585 

(14,540)
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 48

Recoveries of prior year paid obligations 30,700 81

Budget Authority, net, (total) $ 25,660,000 $ 25,660,000

Outlays, gross $ 26,385,984 $ 25,257,549

Actual offsetting collections (125,458) 

(47,709)

Outlays, net, (total) 26,260,526 25,209,840

Distributed Offsetting Receipts (225,359) 

(248,451)

Agency outlays, net $ 26,035,167 $ 24,961,389

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2016 AND 2015

(In Dollars)

2016 2015

Revenue Activity:

Sources of Cash Collections:

Miscellaneous $ 3,703,552 $ 2,299,802

Total Cash Collections (Note 14) 3,703,552 2,299,802

Accrual Adjustments (2,163)

 

(643)

Total Custodial Revenue 3,701,389 2,299,159

Disposition of Collections:

Transferred to Others (by Recipient) 3,703,552 2,300,035

Increase/(Decrease) in Amounts Yet to be Transferred (2,163) 410

Retained by the Reporting Entity - 

(1,286)

Total Disposition of Collections 3,701,389 2,299,159

Net Custodial Activity $ - $ -
FEDERAL MARITIME COMMISSION

NOTES TO THE FINANCIAL STATEMENTS

COMMISSION – FY 2016 PERFORMANCE AND 

PORT

NOTE 1. SUMMARY OF SIGNIFICANT 

ACCOUNTING POLICIES

A. Reporting Entity

The Federal Maritime Commission (FMC or 

Commission) was established as an 

independent regulatory agency on August 12, 

1961. The FMC is responsible for the regulation 

of oceanborne transportation in the foreign 

commerce of the United States. The principal 

statutes or statutory provisions administered by 

the Commission are the Shipping Act of 1984, 

as amended by the Ocean Shipping Reform Act 

of 1998, the Foreign Shipping Practices Act of 

1988 (FSPA), section 19 of the Merchant 

Marine Act of 1920, and sections 2 and 3 of 

Public Law No. 89-777.

The Commission monitors the activities of 

ocean common carriers, marine terminal operators (MTOs), agreements among ocean 

common carriers and/or MTOs, ports and ocean 

transportation intermediaries (non-vesseloperating common carriers and ocean freight 

forwarders) operating in the U.S. foreign 

commerce to ensure they maintain just and 

reasonable practices; maintains trade monitoring, enforcement and dispute resolution 

programs designed to assist regulated entities in 

achieving compliance and to detect and remedy 

malpractices and violations of the 1984 Act; 

monitors the laws and practices of foreign 

governments which could have a discriminatory 

or otherwise adverse impact on shipping 

conditions in U.S. trades, and imposes remedial 

action, as appropriate, pursuant to section 19 of 

the 1920 Act or FSPA; enforces special 

regulatory requirements applicable to carriers 

owned or controlled by foreign governments; 

processes and reviews agreements, service 

contracts, and service arrangements pursuant to 

the 1984 Act for compliance with statutory 

requirements; and reviews common carriers’ 

privately published tariff systems for accessibility and accuracy, as required by OSRA. 

The FMC also issues licenses to qualified ocean 

transportation intermediaries (OTIs) in the U.S., 

ensures that all OTIs are bonded or maintain 

other evidence of financial responsibility, and 

ensures that passenger vessel operators (PVOs) 

demonstrate adequate finan-cial responsibility 

in case of nonperformance of voyages or death 

or injury occurring to passengers.

The FMC is composed of five Commissioners 

appointed for five-year terms by the President 

with the advice and consent of the Senate. The 

President designates one of the Commissioners 

to serve as Chairman, who is the chief executive 

and administrative officer of the FMC.

The FMC reporting entity is comprised of 

General Funds and General Miscellaneous 

Receipts. General Funds are accounts used to 

record financial transactions arising under 

congressional appropriations or other authorizations to spend general revenues. General 

Fund Miscellaneous Receipts are accounts 

established for receipts of non-recurring 

activity, such as fines, penalties, fees and other 

miscellaneous receipts for services and benefits.

The FMC makes custodial collections and holds 

custodial receivables that are non-entity assets 

and are transferred to Treasury at fiscal yearend. The FMC has rights and ownership of all 

assets reported in these financial statements. 

FMC does not possess any non-entity assets.

B. Basis of Presentation

The financial statements have been prepared to 

report the financial position and results of 

operations of FMC. The Balance Sheet presents

the financial position of the Commission. The 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 50

Statement of Net Cost presents the 

Commission’s operating results; the Statement 

of Changes in Net Position displays the changes 

in the Commission’s equity accounts. The 

Statement of Budgetary Resources presents the 

sources, status, and uses of the Commission’s 

resources and follows the rules for the Budget 

of the United States Government.

The statements are a requirement of the Chief 

Financial Officers Act of 1990, and the 

Government Management Reform Act of 1994. 

They have been prepared from, and are fully 

supported by, the books and records of FMC in 

accordance with the hierarchy of accounting 

principles generally accepted in the United 

States of America, standards issued by the 

Federal Accounting Standards Advisory Board 

(FASAB), Office of Management and Budget 

(OMB) Circular A-136, Financial Reporting 

Requirements, as amended, and FMC 

accounting policies which are summarized in 

this note. These statements, with the exception 

of the Statement of Budgetary Resources, are 

different from financial management reports, 

which are also prepared pursuant to OMB 

directives that are used to monitor and control 

FMC’s use of budgetary resources. The 

financial statements and associated notes are 

presented on a comparative basis. Unless 

specified otherwise, all amounts are presented 

in dollars.

C. Basis of Accounting

Transactions are recorded on both an accrual

accounting basis and a budgetary basis. Under 

the accrual method, revenues are recognized 

when earned, and expenses are recognized 

when a liability is incurred, without regard to 

receipt or payment of cash. Budgetary 

accounting facilitates compliance with legal 

requirements on the use of federal funds.

D. Fund Balance with Treasury

Fund Balance with Treasury is the aggregate 

amount of the FMC’s funds with Treasury in 

expenditure and receipt accounts. Appropriated 

funds recorded in expenditure accounts are 

available to pay current liabilities and finance 

authorized purchases. 

E. Accounts Receivable

Accounts receivable consists of amounts owed 

to FMC by other Federal agencies and the 

general public. Amounts due from Federal 

agencies are considered fully collectible. An 

allowance for uncollectible accounts receivable 

from the public is established when, based upon 

a review of outstanding accounts and the failure 

of all collection efforts, management 

determines that collection is unlikely to occur 

considering the debtor’s ability to pay.

F. Property, Equipment, and Software

Property, equipment and software represent 

furniture, fixtures, equipment, and information 

technology hardware and software which are 

recorded at original acquisition cost and are 

depreciated or amortized using the straight-line 

method over their estimated useful lives. Major 

alterations and renovations are capitalized, 

while maintenance and repair costs are expensed as incurred. FMC’s capitalization threshold 

is $25,000 for individual purchases. Property, 

equipment, and software acquisitions that do 

not meet the capitalization criteria are expensed 

upon receipt. Applicable standard governmental guidelines regulate the disposal and 

convertibility of agency property, equipment, 

and software. The useful life classifications for 

capitalized assets are as follows:

Description Useful Life (years)

Leasehold Improvements 5

Office Furniture 5

Computer Equipment 5

Office Equipment 5

Software 5

G. Advances and Prepaid Charges

Advance payments are generally prohibited by 

law. There are some exceptions, such as 

reimbursable agreements, subscriptions and 

payments to contractors and employees. 

Payments made in advance of the receipt of 

goods and services are recorded as advances or 

prepaid charges at the time of prepayment and 

recognized as expenses when the related goods 

and services are received.
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 51

H. Liabilities

Liabilities represent the amount of funds likely 

to be paid by the FMC as a result of transactions 

or events that have already occurred.

The FMC reports its liabilities under two 

categories, Intragovernmental and With the 

Public. Intragovernmental liabilities represent 

funds owed to another government agency. 

Liabilities with the Public represent funds owed 

to any entity or person that is not a federal 

agency, including private sector firms and 

federal employees. Each of these categories 

may include liabilities that are covered by 

budgetary resources and liabilities not covered 

by budgetary resources.

Liabilities covered by budgetary resources are 

liabilities funded by a current appropriation or 

other funding source. These consist of accounts 

payable and accrued payroll and benefits. 

Accounts payable represent amounts owed to 

another entity for goods ordered and received 

and for services rendered except for employees. 

Accrued payroll and benefits represent payroll 

costs earned by employees during the fiscal year 

which are not paid until the next fiscal year. 

Liabilities not covered by budgetary resources 

are liabilities that are not funded by any current 

appropriation or other funding source. These 

liabilities consist of accrued annual leave, 

actuarial Federal Employees’ Compensation 

Act (FECA), and the amounts due to Treasury 

for collection and accounts receivable of civil 

penalties.

I. Annual, Sick, and Other Leave

Annual leave is accrued as it is earned, and the 

accrual is reduced as leave is taken. The 

balance in the accrued leave account is adjusted 

to reflect current pay rates. Liabilities associated with other types of vested leave, including 

compensatory, restored leave, and sick leave in 

certain circumstances, are accrued at year-end, 

based on latest pay rates and unused hours of 

leave. Funding will be obtained from future 

financing sources to the extent that current or 

prior year appropriations are not available to 

fund annual and other types of vested leave 

earned but not taken. Non-vested leave is 

expensed when used. Any liability for sick 

leave that is accrued but not taken by a Civil 

Service Retirement System (CSRS)-covered 

employee is transferred to the Office of 

Personnel Management (OPM) upon the

retirement of that individual. Credit is given for 

sick leave balances in the computation of 

annuities upon the retirement of Federal 

Employees Retirement System (FERS)-covered 

employees effective at 100%. 

J. Accrued and Actuarial Workers’ 

Compensation

The FECA administered by the U.S. 

Department of Labor (DOL) addresses all 

claims brought by the FMC employees for onthe-job injuries. The DOL bills each agency 

annually as its claims are paid, but payment of 

these bills is deferred for two years to allow for 

funding through the budget process. Similarly, 

employees that the FMC terminates without 

cause may receive unemployment compensation benefits under the unemployment 

insurance program also administered by the 

DOL, which bills each agency quarterly for paid 

claims. Future appropriations will be used for 

the reimbursement to DOL. The liability 

consists of (1) the net present value of estimated 

future payments calculated by the DOL, and (2) 

the unreimbursed cost paid by DOL for 

compensation to recipients under the FECA.

K. Retirement Plans

FMC employees participate in either the CSRS 

or the FERS. The employees who participate in 

CSRS are beneficiaries of FMC matching 

contribution, equal to 7% of pay, distributed to 

their annuity account in the Civil Service 

Retirement and Disability Fund.

Prior to December 31, 1983, all employees were 

covered under the CSRS program. From 

January 1, 1984 through December 31, 1986, 

employees had the option of remaining under 

CSRS or joining FERS and Social Security. 

Employees hired as of January 1, 1987 are 

automatically covered by the FERS program. 

Both CSRS and FERS employees may 

participate in the federal Thrift Savings Plan 

(TSP). FERS employees receive an automatic 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 52

agency contribution equal to 1% of pay and 

FMC matches any employee contribution up to 

an additional 4% percent of pay. For FERS 

participants, FMC also contributes the 

employer’s matching share of Social Security.

FERS employees and certain CSRS 

reinstatement employees are eligible to 

participate in the Social Security program after 

retirement. In these instances, FMC remits the 

employer’s share of the required contribution.

The FMC recognizes the imputed cost of 

pension and other retirement benefits during the 

employees’ active years of service. OPM 

actuaries determine pension cost factors by calculating the value of pension benefits expected 

to be paid in the future and communicate these 

factors to FMC for current period expense 

reporting. OPM also provides information 

regarding the full cost of health and life 

insurance benefits. FMC recognized the offsetting revenue as imputed financing sources to 

the extent these expenses will be paid by OPM.

FMC does not report on its financial statements 

information pertaining to the retirement plans 

covering its employees. Reporting amounts 

such as plan assets, accumulated plan benefits, 

and related unfunded liabilities, if any, is the 

responsibility of the OPM, as the administrator.

L. Other Post-Employment Benefits

FMC employees eligible to participate in the 

Federal Employees' Health Benefits Plan 

(FEHBP) and the Federal Employees' Group 

Life Insurance Program (FEGLIP) may 

continue to participate in these programs after 

their retirement. The OPM has provided the 

FMC with certain cost factors that estimate the 

true cost of providing the post-retirement 

benefit to current employees. The FMC 

recognizes a current cost for these and Other 

Retirement Benefits (ORB) at the time the 

employee's services are rendered. The ORB 

expense is financed by OPM, and offset by the 

FMC through the recognition of an imputed 

financing source. 

M. Use of Estimates

The preparation of the accompanying financial 

statements in accordance with generally 

accepted accounting principles requires 

management to make certain estimates and 

assumptions that affect the reported amounts of 

assets, liabilities, revenues, and expenses. 

Actual results could differ from those estimates. 

N. Imputed Costs/Financing Sources

Federal Government entities often receive 

goods and services from other Federal 

Government entities without reimbursing the 

providing entity for all the related costs. In 

addition, Federal Government entities also 

incur costs that are paid in total or in part by 

other entities. An imputed financing source is 

recognized by the receiving entity for costs that 

are paid by other entities. FMC recognized 

imputed costs and financing sources in fiscal 

years 2016 and 2015 to the extent directed by 

accounting standards. 

O. Contingencies

Liabilities are deemed contingent when the 

existence or amount of the liability cannot be 

determined with certainty pending the outcome 

of future events. FMC recognizes contingent 

liabilities in the accompanying balance sheet 

and statement of net cost, when it is both 

probable and can be reasonably estimated. 

The FMC discloses contingent liabilities in the 

notes to the financial statements when the 

conditions for liability recognition are not met 

or when a loss from the outcome of future 

events is more than remote. In some cases, once 

losses are certain, payments may be made from 

the Judgment Fund maintained by the U.S. 

Treasury rather than from the amounts 

appropriated to FMC for agency operations. 

Payments from the Judgment Fund are recorded 

as an “Other Financing Source” when made.

P. Reclassification

Certain fiscal year 2015 balances have been 

reclassified, re-titled, or combined with other 

financial statement line items for consistency 

with the current year presentation.
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 53

NOTE 2. FUND BALANCE WITH TREASURY

Fund balance with Treasury account balances as of September 30, 2016, and 2015 were as follows:

No discrepancies exist between the Fund Balance reflected on the Balance Sheet and the balances in the 

Treasury accounts.

The available unobligated fund balances represent the current-period amount available for obligation or 

commitment. At the start of the next fiscal year, this amount will become part of the unavailable balance, 

as described in the following paragraph.

The unavailable unobligated fund balances represent the amount of appropriations for which the period of 

availability for obligation has expired. These balances are available for upward adjustments of obligations 

incurred only during the period for which the appropriation was available for obligation or for paying claims 

attributable to the appropriations. The obligated balance not yet disbursed, includes accounts payable, 

accrued expenses, and undelivered orders that have reduced unexpended appropriations but have not yet 

decreased the fund balance on hand (see also Note 13).

2016 2015

Fund Balances:

Appropriated Funds $ 3,716,353 $ 4,397,659 

Total $ 3,716,353 $ 4,397,659 

Status of Fund Balance with Treasury:

Unobligated Balance

 Available $ 85,725 $ 17,625 

 Unavailable 310,114 284,834 

Obligated Balance Not Yet Disbursed 3,320,514 4,095,200 

Total $ 3,716,353 $ 4,397,659 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 54

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable balances as of September 30, 2016, and 2015, were as follows:

The accounts receivable is primarily made up of services provided to other Intragovernmental agencies. 

Historical experience has indicated that the majority of the receivables are collectible. There are no material 

uncollectible accounts as of September 30, 2016 and 2015.

NOTE 4. PROPERTY, EQUIPMENT, AND SOFTWARE

Schedule of Property, Equipment, and Software as of September 30, 2016

Schedule of Property, Equipment, and Software as of September 30, 2015

2016 2015

Intragovernmental

Accounts Receivable $ 1,955 $ 14,540 

Total Intragovernmental Accounts Receivable $ 1,955 $ 14,540 

2016 2015

With the Public

Miscellaneous Accounts Receivable $ 1,765 $ 5,141 

Interest Receivable - 21 

Penalties and Fines Receivable - 285 

Total Public Accounts Receivable $ 1,765 $ 5,447 

Total Accounts Receivable $ 3,720 $ 19,987 

Major Class 

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 225,000 $ 225,000 $ - 

Furniture & Equipment 614,777 381,895 232,882 

Software-in-Development 230,024 - 230,024 

Total $ 1,069,801 $ 606,895 $ 462,906 

Major Class

Acquisition 

Cost

Accumulated 

Amortization/

Depreciation

Net Book 

Value

Leasehold Improvements $ 225,000 $ 225,000 $ - 

Furniture & Equipment 502,537 324,249 178,288 

Software-in-Development 230,024 - 230,024 

Total $ 957,561 $ 549,249 $ 408,312 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 55

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

The liabilities for FMC as of September 30, 2016 and 2015 include liabilities not covered by budgetary 

resources. Congressional action is needed before budgetary resources can be provided. Although future 

appropriations to fund these liabilities are likely and anticipated, it is not certain that appropriations will be 

enacted to fund these liabilities. 

FECA and the Unemployment Insurance liabilities represent the unfunded liability for actual workers 

compensation claims and unemployment benefits paid on FMC’s behalf and payable to the DOL. FMC 

also records an actuarial liability for future workers compensation claims based on the liability to benefits 

paid (LBP) ratio provided by DOL and multiplied by the average of benefits paid over three years. 

Unfunded leave represents a liability for earned leave and is reduced when leave is taken. The balance in 

the accrued annual leave account is reviewed quarterly and adjusted as needed to accurately reflect the 

liability at current pay rates and leave balances. Accrued annual leave is paid from future funding sources 

and, accordingly, is reflected as a liability not covered by budgetary resources. Sick and other leave is 

expensed as taken.

NOTE 6. OTHER LIABILITIES

Other liabilities account balances as of September 30, 2016 were as follows:

2016 2015

Intragovernmental – FECA $ 889 $ -

Unfunded Leave 1,177,870 1,197,058 

Actuarial FECA 1,301 - 

Total Liabilities Not Covered by Budgetary Resources $ 1,180,060 $ 1,197,058 

Total Liabilities Covered by Budgetary Resources 2,197,457 1,246,633 

Total Liabilities $ 3,377,517 $ 2,443,691 

Current Non Current Total

Intragovernmental

FECA Liability $ - $ 889 $ 889 

Payroll Taxes Payable 147,147 - 147,147 

Total Intragovernmental Other Liabilities $ 147,147 $ - $ 148,036 

With the Public

 Payroll Taxes Payable $ 20,356 $ - $ 20,356 

 Accrued Funded Payroll and Leave 683,470 - 683,470 

 Unfunded Leave 1,177,869 - 1,177,869 

Total Public Other Liabilities $ 1,881,695 $ - $ 1,881,695 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 56

Other liabilities account balances as of September 30, 2015 were as follows:

NOTE 7. OPERATING LEASES

FMC occupies office space in seven locations, of which six of the lease agreements are required to be 

accounted for as operating leases. Lease payments are increased annually based on the adjustments for 

operating cost and real estate tax escalations. The total operating lease expense for fiscal years 2016 and 

2015 were $3,193,005 and $3,277,725, respectively. The lease locations and terms are listed below:

The operating lease amount does not include estimated payments for leases with annual renewal options. 

The schedule of future payments for the term of the leases is as follows:

NOTE 8. CONTINGENT LIABILITIES

FMC records commitments and contingent liabilities for legal cases in which payment has been deemed 

probable, and for which the amount of potential liability has been estimated, including certain judgments 

that have been issued against the agency. The FMC has no knowledge of any lawsuits/investigations in 

which payment is deemed probable. 

Current Non Current Total

Intragovernmental

Payroll Taxes Payable $ 115,597 $ - $ 115,597 

 Custodial Liability 2,163 - 2,163 

Total Intragovernmental Other Liabilities $ 117,760 $ - $ 117,760 

With the Public

 Payroll Taxes Payable $ 15,136 $ - $ 15,136 

 Accrued Funded Payroll and Leave 576,397 - 576,397 

 Unfunded Leave 1,197,058 - 1,197,058 

Total Public Other Liabilities $ 1,788,591 $ - $ 1,788,591 

Location Term Lease Expiration Date

Houston, TX 10 years 09/14/2018

Tacoma, WA 10 years 06/30/2019

Hollywood, FL 10 years 05/31/2020

San Pedro, CA 10 years 09/30/2021

Washington, DC 10 years 10/31/2022

Iselin, New Jersey 10 years 03/15/2024

Fiscal Year Totals

2017 $ 3,103,341 

2018 3,277,331 

2019 3,298,020 

2020 3,299,120 

2021 3,294,615 

Thereafter 3,642,170 

Total Future Minimum Payments $ 19,914,597 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 57

NOTE 9. INTRAGOVERNMENTAL COSTS AND EXCHANGE REVENUE

Intragovernmental costs and revenue represent exchange transactions between FMC and other federal 

government entities, and are in contrast to those with non-federal entities (the public). Such costs and 

revenue are summarized as follows:

NOTE 10. IMPUTED FINANCING SOURCES

FMC recognizes as imputed financing the costs of future benefits which include health benefits, life 

insurance, pension and post-retirement benefit expenses for current employees. The assets and liabilities 

associated with such benefits are the responsibility of the administering agency, OPM. For the years ended 

September 30, 2016 and 2015 imputed financing was as follows:

2016 2015

Operational and Administrative

 Intragovernmental Costs $ 4,867,783 $ 4,347,088

 Public Costs 14,831,098 13,976,510

 Total Program Costs 19,698,881 18,323,598

 Less: Intragovernmental Earned Revenue (45,020) (40,304)

 Net Program Costs 19,653,861 18,283,294

Formal Proceedings

 Intragovernmental Costs 5,719,697 5,463,367

 Public Costs 2,398,337 2,340,092

 Total Program Costs 8,118,034 7,803,459

 Less: Intragovernmental Earned Revenue (37,154) (21,864)

 Net Program Costs 8,080,880 7,781,595

Office of Inspector General

 Intragovernmental Costs 260,578 305,897

 Public Costs 129,321 144,349

 Net Program Costs 389,899 450,246

Office of Equal Employment Opportunity

 Intragovernmental Costs 36,018 24,556

 Public Costs 126,464 128,750

 Net Program Costs 162,482 153,306

Total Intragovernmental costs 10,884,076 10,140,909

Total Public Costs 17,485,220 16,589,700

 Total Costs 28,369,296 26,730,609

Less: Total Intragovernmental Earned Revenue (82,174) (62,168)

Net Cost of Operations $ 28,287,122 $ 26,668,441

2016 2015

Office of Personnel Management $ 1,131,097 $ 1,138,628 

Total Imputed Financing Sources $ 1,131,097 $ 1,138,628 
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 58

NOTE 11. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE UNITED 

STATES GOVERNMENT

The President’s Budget that will include fiscal year 2016 actual budgetary execution information has not 

yet been published. The President’s Budget is scheduled for publication in February 2017 and can be found 

at the OMB Web site: http://www.whitehouse.gov/omb/. The 2017 Budget of the United States 

Government, with the "Actual" column completed for 2015, has been reconciled to the Statement of 

Budgetary Resources and there were no material differences. 

NOTE 12. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED

Obligations incurred and reported in the Statement of Budgetary Resources in 2016 and 2015 consisted of 

the following:

Category A apportionments distribute budgetary resources by fiscal quarters.

NOTE 13. UNDELIVERED ORDERS AT THE END OF THE PERIOD

For the years ended September 30, 2016 and 2015, budgetary resources obligated for undelivered orders 

amounted to $1,125,012 and $2,865,271, respectively.

NOTE 14. CUSTODIAL REVENUES

FMC is an administrative agency, collecting for another entity or the General Fund of the Treasury. As a 

collecting entity, FMC measures and reports cash collections and refunds. These collections are reported 

as custodial revenue on the Statement of Custodial Activity. The type of cash collected is for fines, penalties 

and administrative fees. A small portion is for interest on the past due fines. Another component of the 

custodial revenue is general proprietary receipts (User Fees) for the application of licenses issued to 

qualified Ocean Transportation Intermediaries (OTI’s) in the U.S., FMC reviews petitions, status changes 

and special permission fees. FMC believes that all fines, penalties, administrative fees and user fees will be 

collected in full. There are no material uncollectible accounts as of September 30, 2016 and 2015.

Custodial collections are reported on the Statement of Custodial Activity. The miscellaneous receipts are 

broken out in the general receipt funds as follows:

2016 2015

Direct Obligations, Category A $ 25,608,181 $ 26,105,905 

Reimbursable Obligations, Category A 90,678 62,168 

Total Obligations Incurred $ 25,698,859 $ 26,168,073 

2016 2015

Custodial Collections:

 Fines, Penalties, and Forfeitures $ 3,482,000 $ 2,052,514

 General Fund Proprietary Receipts (User fees) 225,359 253,476

 Refunds of Proprietary Receipts (User fees) (3,807) (6,188)

Total Custodial Collections $ 3,703,552 $ 2,299,802
FEDERAL MARITIME COMMISSION – FY 2016 PERFORMANCE AND 

ACCOUNTABILITY REPORT 59

NOTE 15. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET

FMC has reconciled its budgetary obligations and non-budgetary resources available to its net cost of 

operations.

2016 2015

 Obligations Incurred $ 25,698,859 $ 26,168,073 

 Spending Authority from Offsetting Collections and Recoveries (213,019) (580,957)

 Offsetting Receipts (225,359) (248,451)

 Net Obligations 25,260,481 25,338,665 

 Imputed Financing from Costs Absorbed by Others 1,131,097 1,138,628 

 Net Other Resources Used to Finance Activities 1,131,097 1,138,628 

 26,391,578 26,477,293 

 1,835,708 42,414 

 28,227,286 26,519,707 

Generate Resources in the Current Period 59,836 148,734 

 $ 28,287,122 $ 26,668,441 

 Total Resources Used to Finance the Net Cost of Operations 

Resources Used to Finance Activities

Budgetary Resources Obligated

Other Resources

 Total Resources Used to Finance Activities 

 Resources Used to Finance Items Not Part of the Net Cost of 

Operations 

Net Cost of Operations

 Components of Net Cost of Operations that will not Require or 
 

OTHER INFORMATION 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 61

OFFICE OF INSPECTOR GENERAL

FISCAL YEAR 2016 MANAGEMENT CHALLENGE

 FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 14, 2016

Office of Inspector General

TO: Chairman Cordero

Commissioner Dye 

Commissioner Khouri 

Commissioner Doyle 

Commissioner Maffei

FROM: Inspector General 

SUBJECT: Inspector General’s Statement on the Federal Maritime Commission’s Management 

and Performance Challenge

The Reports Consolidation Act of 2000 (Public Law 106-531) requires inspectors general to 

provide a summary and assessment of the most serious management and performance challenges 

facing Federal agencies, and their progress in addressing these challenges. The attached document 

responds to the requirements and provides the annual statement to be included in the Federal Maritime 

Commission’s (FMC) Performance and Accountability Report (PAR) [or Agency Financial Report 

(AFR)] for fiscal year (FY) 2016. 

This year, the Office of Inspector General (OIG) has identified one management and 

performance challenge, and removed a challenge previously reported for the last three years. 

Specifically, the OIG has identified information technology security as a management and 

performance challenge. The OIG has removed workplace satisfaction as a management and 

performance challenge due to agency improvements in this area. These assessments are based on 

information derived from a combination of sources, including OIG audit and inspection work; 

Commission reports; Federal government reports; and a general knowledge of the Commission’s 

programs. 

The Reports Consolidation Act of 2000 permits agency comment on the inspector general’s 

statements. Agency comments, if applicable, are to be included in the final version of the PAR / AFR 

that is due by November 15, 2016. 

/s/

Jon Hatfield

Attachment

Cc: Karen V. Gregory, Managing Director

Peter J. King, Deputy Managing Director
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 62

Office of Inspector General

Fiscal Year 2016 Management Challenge

1. The Management Challenge - Information Technology Security:

The Federal Maritime Commission (FMC) continues to make improvements on the agency’s 

information technology (IT) security. However, some weaknesses remain, and government-wide, the 

Government Accountability Office (GAO) has maintained IT security on its list of high-risk 

government operations and programs since 1997. In 2015, GAO expanded their IT security risk area 

to include the protection of personally identifiable information (PII). 

The FMC shares with other Federal government departments and agencies this challenge due 

to the evolving and growing threats to government information systems. Risks to information and 

communication systems include insider threats from disaffected or careless employees and business 

partners; escalating and emerging threats from around the globe; the ease of obtaining and using 

hacking tools; the steady advance in the sophistication of attack technology; and the emergence of 

new and more destructive attacks.

Significant examples of the challenges faced by Federal agencies protecting information and 

communication systems are the cybersecurity incidents at the Office of Personnel Management 

(OPM). OPM first reported in early 2015, the discovery that the PII (personnel data, such as full 

name, birth date, home address and social security numbers) of 4.2 million current and former Federal 

government employees had been stolen through a cybersecurity incident. Then in June 2015, OPM 

discovered that the background investigation records of current, former, and prospective Federal 

employees had been stolen. OPM and the interagency incident response team concluded with high 

confidence that sensitive information, including social security numbers of 21.5 million individuals, 

was stolen from the background investigation databases. The frequency and increased sophistication 

of cyber threats underscores the need to properly manage and bolster the security of Federal 

information systems, and to remain vigilant. 

Agency Progress in Addressing the Challenge:

The Federal Information Security Management Act of 2002 (FISMA) established information 

security program and evaluation requirements for Federal agencies in the executive branch, including 

the FMC. Each year, the FMC OIG performs an independent evaluation of the information security 

program and practices of the agency. The results of the evaluation are reported annually to the Office 

of Management and Budget, selected congressional committees, the Comptroller General and the 

FMC’s Commission. 

In the OIG’s Evaluation of the FMC’s Compliance with the Federal Information Security 

Management Act (FISMA) FY 2015, the OIG found the FMC had effectively implemented five of the 

eight outstanding prior year FISMA recommendations. Further, the FY 2015 FISMA evaluation 

contained six recommendations to address five findings, and the agency agreed to implement all of 

the OIG’s recommendations. The OIG is nearing completion of the FY 2016 FISMA evaluation and 

the preliminary results indicate continued progress is being made by the agency to address security 

weaknesses; the final report is expected to be issued in November 2016. 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 63

The Challenge Ahead:

The 2015 OPM cybersecurity incidents, and GAO’s decision in 2015 to add the protection of 

personally identifiable information to their high-risk list, demonstrate the ongoing challenges 

protecting Federal systems and information. In GAO’s September 2016 testimony before the 

President’s Commission on Enhancing National Cybersecurity (GAO-16-885T), GAO reported the 

number of cyber incidents affecting Federal agencies have continued to grow, increasing about 1,300 

percent from fiscal year 2006 to fiscal year 2015. These incidents included unauthorized access to 

systems; improper use of computing resources; and the installation of malicious software, among 

others. The OIG looks for the agency to continue their focus on maintaining and enhancing security 

controls based on risk and evolving threats.

2. Update - Workplace Satisfaction:

The OIG identified workplace satisfaction as an FMC management challenge for the first 

time in 2013, and again in 2014 and 2015, due to low survey results as reported by the Office of 

Personnel Management (OPM) in their annual Federal Employee Viewpoint Survey (FEVS). In 

December 2012, the Partnership for Public Service (PPS), a nonprofit organization that works to 

revitalize the Federal government, released its rankings for the Best Places to Work in the Federal 

Government. The December 2012 report ranked the FMC the second lowest of small agencies; the 

FMC ranked the third lowest of small agencies in both the 2013 and 2014 rankings. 

Workforce satisfaction, or employee engagement, is defined as an employee’s sense of 

purpose: this is evident in their display of dedication, persistence, and effort in their work or overall 

commitment to their organization and its mission. OPM conducts the annual FEVS to provide 

government employees, including the FMC, the opportunity to candidly, and anonymously, share 

their perceptions of their work experiences, their agency, and their leaders. An engaged and satisfied 

workforce is central to effectively achieving agency goals, retaining staff, and recruitment of new 

staff. 

Agency Improvements:

The FMC has made progress to address the challenge of employee satisfaction and employee 

engagement. OPM’s 2015 and 2016 FEVS results showed meaningful improvements in the FMC’s 

workplace satisfaction and employee engagement scores; and in 2015, the FMC was recognized by 

the PPS for being the 2015 Most Improved Small Agency in the Federal government. The agency 

has also implemented the recommendations from the OIG’s March 2015 evaluation of the FMC’s 

workplace environment. Although there are still opportunities for continued improvement, the 2015 

and 2016 FEVS results, and actions by the agency, have resulted in the OIG removing workplace 

satisfaction as an agency management and performance challenge this year. 

Among the notable OPM FEVS results for the FMC are increases in the FEVS engagement 

index, eight and five percentage point increases for 2015 and 2016 respectively. The engagement 

index is a measure of the employee’s sense of purpose, the display of dedication, persistence, and 

effort in their work or overall commitment to their organization and its mission. The index is 

comprised of numerous FEVS questions in the following sub-factors: leaders lead - reflects the 

employees’ perceptions of the integrity of leadership, as well as leadership behaviors such as 

communication and workforce motivation; supervisors - reflects the interpersonal relationship 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 64

between worker and supervisor, including trust, respect, and support; and intrinsic work experience -

reflects the employees’ feelings of motivation and competency relating to their role in the workplace. 

Engagement Index Trends

2011 2012 2013 2014 2015 2016

FMC 65 48 54 56 64 69

Small 

Agencies

Combined 67 66 66 65 67 69

In addition to the improvements reported in the 2015 and 2016 FEVS results, the agency has 

implemented the recommendations contained in the OIG’s March 2015 evaluation of the FMC 

workplace. Specifically, the agency updated the FMC-wide action plan to focus on high impact and 

achievable action items in the workplace. The improved action plan added important elements, to 

include detailed action items, key deliverables, a timeline, responsible parties, resources needed and 

metrics for evaluating progress. The action plan was communicated in several ways to all employees, 

through email, meetings, and posted on the agency’s intranet. Several initiatives for FYs 2015 and 

2016 were included in the new action plan, to include an updated telework program, diversity training, 

fitness program, the appraisal process, and a refresh to the agency’s employee suggestion program. 

In addition, the Chairman, in his capacity as executive champion of the workplace improvement 

efforts, instituted regular meetings with the senior leaders to review progress and plan for next steps 

in the workplace improvement efforts; and regular FMC-wide, all-hands meetings to increase 

communication. 

Outlook:

OPM acknowledges there is no quick-fix nor one-size-fits-all solution to creating an engaged 

workforce; promoting employee engagement is a long-term and on-going process that requires 

continued interactions and efforts over time to improve and maintain. Further, OPM recognizes that 

cultivating engagement also involves continuous input and action from all levels of the organization 

(e.g., senior leaders, managers/supervisors, employees). The FMC has implemented several effective

workplace processes that have yielded improved FEVS results, and the OIG believes there are still 

opportunities for continued improvement. 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 65

COMMENTS ON IG-IDENTIFIED MANAGEMENT AND PERFORMANCE CHALLENGES

The Commission agrees with the Inspector General on the identified Management and Performance 

Challenge and is committed to continuing efforts to meet the challenge with careful planning, 

attention, and diligence. The FMC appreciates its Inspector General’s efforts in reviewing the 

agency’s work as well as its compliance with Federal laws and mandates. The role of the Inspector 

General is important government-wide to ensure accountability to the American public. A response 

to each challenge is outlined below:

1. Information Technology Security

The Commission is mindful of the increasing frequency and sophistication of cyber threats, and 

appreciates working proactively with the Inspector General and his auditor to strengthen the 

Commission’s security posture. The cybersecurity incidents mentioned underscore the need for 

the Federal government to be ever more vigilant and properly monitor, manage, and bolster 

security controls over Federal information systems. Protecting against unauthorized access to 

the Commission’s information and communication systems, and guarding against improper use 

of computing resources, will remain a priority.

2. Workplace Satisfaction

The FMC has made measurable progress in addressing the challenge of employee satisfaction 

and engagement in the last several years, however, as mentioned, there remain opportunities for 

improvement. The agency was recognized as being the 2015 Most Improved Small Agency in 

the Federal government, and will continue to strive toward the goal of being the best. The 

Chairman and the Senior Executives take this goal seriously and continue to hold regular 

meetings to review progress and implement next steps. Identified FY 2016 actions were 

completed, and with staff input and discussion, FY 2017 actions are now being identified. All 

actions continue to be communicated via all-hands meetings, inter- and intra-Bureau/Office 

meetings, and at tri-annual meetings between the Chairman and staff.
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 66

IMPROPER PAYMENTS INFORMATION ACT

NARRATIVE SUMMARY OF IMPLEMENTATION EFFORTS FOR FY 2016

The Federal Maritime Commission has not identified any program that in and of itself constitutes a 

high-risk for improper payments. Therefore, the FMC considers all of its payments to fall within the 

realm of low risk. The National Finance Center (NFC) became the agency’s payroll provider in 

2002 and is responsible for monitoring and reporting on any payroll-related payments. Any 

overpayments made to an FMC employee by the NFC on behalf of the FMC, would be offset by 

NFC. In FY 2015, the FMC had no overpayments. The FMC did not identify any improper 

collections through the Intergovernmental Payments and Collections (IPAC). 

I. The FMC used a statistical sample conducted by BFS to determine its improper payment 

rate. 

II. The FMC will continue to monitor payments to maintain a zero dollar improper payment 

figure. To this end, the FMC will ensure that there is sufficient segregation of duties 

pertaining to payments concomitantly with closer scrutiny of all IPAC collections made 

against the Commission. The FMC will continue to monitor all disbursements made on its 

behalf to ensure payments are valid and proper.

III. The table below represents the improper payments made by the FMC in FY 2015 with 

percentage forecasts through FY 2018. 

Improper Payments Information Act Reduction Outlook FY 2016 - 2019

(millions)

 Program

FY 16

Outlays

FY16

IP %

FY17

IP $

FY17

%

FY18

%

FY19

%

 Formal Proceedings $0.00 0.00 $0.00 0.00 0.00 0.00

 Inspector General $0.00 0.00 $0.00 0.00 0.00 0.00

 Equal Employment Opportunity $0.00 0.00 $0.00 0.00 0.00 0.00

 Operational and Administrative $0.00 0.00 $0.00 0.00 0.00 0.00

Totals $0.00 0.00 $0.00 0.00 0.00 0.00

IV. The FMC has a segregation of duties in place to ensure that all invoices processed for 

payment are legitimate expenses of the agency. All IPAC invoices are received by BFS and 

forwarded to OBF via electronic media for internal processing and payment authorization. 

When an invoice is received, it is first verified as a valid invoice belonging to the agency. 

OBF matches the invoice to documentation provided by the Contracting Officer’s 

Representative (COR) indicating that goods/services have been received by the 
FEDERAL MARITIME COMMISSION – FY 2016 

PERFORMANCE AND ACCOUNTABILITY REPORT 67

Commission, and approves the invoice for payment. BFS is advised of the purchase order 

the invoice is being paid against and the payment amount. OBF also ensures that sufficient 

funds have been obligated to make the payment and provides BFS with the period of 

performance. Once the payment authorization has been processed by OBF, the payment 

information is verified by a second OBF staff member. At that point, the invoice is 

electronically returned to BFS for processing. When the payment is loaded into the Oracle 

database, a final funds availability check is made by the financial system against the fund 

controls set for the FMC. OBF audits the payment information posted in the financial 

system.

V. The Chairman, as the Chief Administrative Officer of the FMC, is ultimately responsible for 

the efficient and effective utilization of the spending authority granted the agency by 

Congress. The Chairman has delegated administrative funds control to the Director, OBF. 

The Director of OBF has the responsibility to ensure that disbursements made by BFS on 

behalf of the FMC are legitimate expenses of the Commission and that there are sufficient 

funds available to pay the agency’s expenses. The OBF is responsible for reducing and 

recovering improper payments, and keeps senior agency officials apprised of all relevant 

activities.

VII. a. The FMC does not have an in-house information system to help reduce improper 

payments. The agency utilizes the infrastructure and financial system maintained by BFS 

in Parkersburg, WV.

b. In 2016, the FMC requested funding to maintain the contract between the FMC and 

BFS for financial support and platform access to the Oracle database through Oracle’s 

Discoverer portal.

VIII. There are no statutory or regulatory barriers that limit the agency’s ability to take corrective 

actions to address any improper payments.

SUMMARY OF FINANCIAL STATEMENT AUDIT

Summary of Financial Statement Audit

Audit opinion Unmodified

Restatement No

Material Weakness Beginning 

Balance New Resolved Consolidated Ending Balance

None 0 0 0 0 0