FEDERAL MARITIME COMMISSION

SERVICE CONTRACT INVENTORY ANALYSIS

FY 2012

Background 

Section 743 of Division C of the FY 2010 Consolidated Appropriations Act, P.L. 111-

117 requires civilian agencies subject to the Federal Activities Inventory Reform Act of 

1998 (Public Law 105-270; 31 U.S.C. 501) to prepare an annual inventory of their 

service contracts. The Office of Management and Budget (OMB), Office of Federal 

Procurement Policy (OFPP), issued a memorandum on November 5, 2010 to provide 

guidance to federal agencies on preparing their initial inventories of service contracting 

for fiscal year (FY) 2010 and beyond. 

As provided in the Office of Management and Budget (OMB) Memorandum on 

November 5, 2010, and December 19, 2011, Service Contract Inventories (SCI), 

(http://www.whitehouse.gov/omb/procurement-service-contract-inventories), agencies 

were tasked to conduct a meaningful analysis of the data in their inventories for purposes 

of determining if contract labor is being used in an appropriate and effective manner and 

if the mix of federal employees and contractors in the agency is effectively balanced. 

The Federal Maritime Commission’s (FMC) contracting staff reviewed each of these 

contracts. The results of this review are summarized below. 

Methodology

As prescribed in the memorandum, OMB advised that agencies should give priority 

consideration to special interest functions, which are those that require increased 

management attention due to heightened risk of workforce imbalance. The team reviewed 

the Product Service Codes (PSCs) and Special Interest Functions (SIFs) representing the 

highest dollar volume PSCs included in the Federal Procurement Data System – Next 

Generation (FPDS-NG). The following PSC was reported to OMB as FMC Special 

Interest Functions:
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PSC PSC Description

Number of 

Contracts FY 

2012 for PSC

Total Contracting 

Dollars FY 2011 for 

PSC

D307 Automated Information Systems 

Services 3 $436,101.00

D318 IT and Telecom- Programming 3 $118,594.00

These PSCs were selected because they have the potential for inherently governmental 

work to be performed by contractors. These PSCs also cover some FMC critical 

functions.

Agency Analysis of Contracts

All service contracts were reviewed. FMC has issued no contracts for personal services, and the 

agency is giving attention, as set forth in FAR 37.114, to avoid contracting for functions that are 

closely associated with inherently governmental functions. Contracts in the Special Interest 

Function areas represented 7% (D307) and 2% (D318) of the total contract obligations of the 

FMC for Fiscal Year 2012.

Contracted Services and Agency Objectives

The mission of the FMC is “[t]o foster a fair, efficient and reliable international ocean 

transportation system and to protect the public from unfair and deceptive practices.”

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-VesselOperating 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

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

tariff systems and electronically available
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• Monitoring rates, charges, and rules of government-owned or –controlled carriers to 

ensure they are just and reasonable

• Taking action to address unfavorable conditions caused by foreign government or 

business practices in U.S. foreign shipping trades

The FMC protects the public from financial harm, and contributes to the integrity and security of 

the U.S. supply chain and transportation system by:

• Helping resolve disputes involving shipment of cargo, personal or household goods, or 

disputes between cruise vessel operators and passengers

• Investigating and ruling on complaints regarding rates, charges, classifications, and 

practices of common carriers, MTOs, and Ocean Transportation Intermediaries (OTIs), 

that violate the Shipping Act

• Licensing shipping companies with appropriate character and adequate financial 

responsibility

• Identifying and holding regulated entities accountable for mislabeling cargo shipped to or 

from the United States

• Ensuring that cruise lines maintain financial responsibility to pay claims for personal 

injury or death, and to reimburse passengers when their cruise fails to sail

The FMC also recognizes the critical importance of providing effective, performance-oriented 

management. FMC ensures the protection of resources allocated to its mission through strategic 

plans and measurement mechanisms for human capital, information technology and financial 

management at the Commission.

All contracts on this inventory are put into place on order to aid the fulfillment of the FMCs 

Strategic Goals and Strategies. Contracts identified as Critical (CT) on the SCI are directly 

related to the mission and strategic goals of the FMC. 

Agency Findings 

Of the two contracts in FMC’s sample, both are contracts for the maintenance and 

supervision of large IT projects. The maintenance and supervision of large IT projects is 

not within FMC’s core mission and is not an inherently governmental function. 

The following characteristics were adhered to for each of the contracts reviewed:

i. The agency is not using contractor employees to perform inherently governmental 

functions as outlined in FAR Subpart 7.5.
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ii. The agency has specific safeguards and monitoring systems in place to ensure that 

work being performed by contractors has not changed or expanded during 

performance to become an inherently governmental function. The FMC has 

utilized acquisition personnel to provide training to improve understanding of the 

necessary oversight to ensure that work being performed by contractors has not 

changed or expanded during performance to become an inherently governmental 

function.

iii. The agency is not using contractor employees to perform critical functions in such 

a way that could affect the ability of the agency to maintain control of its mission 

and operations. The FMC has utilized acquisition personnel to continuously 

provide training to improve the management oversight of awards for critical 

functions.

iv. The FMC has determined that its acquisition staff has sufficient resources to 

oversee contracts and is continuing to provide training to other Agency resources 

regarding management and oversight of existing service contracts.

v. No contracts have been identified as being poorly performed, as determined by 

the contracting officer, because of excessive costs or inferior quality.

Actions Taken 

Currently, FMC is implementing OMB Policy Letter 11-01, Performance of Inherently 

Governmental and Critical Functions. In accordance with the Policy Letter, an Agency 

Designee has been appointed to conduct reviews of all actions over the simplified 

acquisition threshold. The designee is the Contracting Officer and all FY12 actions to 

date have been reviewed in accordance with the guidance.

FMC has improved the data input process to FPDS-NG and will continue to improve the 

reporting before the next submission to ensure the complete and accurate retention of 

contracting data. 

FMC has placed emphasis on awarding contracts to underrepresented socioeconomic 

categories where feasible and will continue to do so. Also, contractors will not be 

utilized to perform inherently governmental functions, but to meet agency needs for skills 

and services not available through current staff.