FEDERAL MARITIME COMMISSION

SERVICE CONTRACT INVENTORY ANALYSIS

FY 2013

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 PSCs are being reported to OMB as FMC

Special Interest Functions (SIF):
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PSC PSC Description

Number of 

Contracts FY 

2013 for PSC

Total Contracting 

Dollars FY 2013 for 

PSC

D301 Automatic Data Processing 

Facility Management

2 $146,774.00

D307 Automated Information System 

Design and Integration Services

3 $99.000.00

R704 Auditing Services 2 $52,955.00

R431 Support – Professional: Human 

Resources

1 $10,000.00

These PSCs were selected because they may be identified as closely related to the work 

of Government Employees and have the potential for inherently governmental work to be 

performed by contractors. 

Agency Analysis of Contracts

Twenty-one (21) service contracts have been reviewed totaling $562,734.00. 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
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• 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

• 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 

Contracts for services totaled $562,734 in obligations and included 21 contract actions. 

FMC reviewed four SIF codes on six contracts totaling $308,729.00 (54% of obligated 

service contracts). Of these six contracts in FMC’s sample, three are contracts for the 

maintenance and supervision of large IT projects, two are for auditing services, and one is 

for professional support in the area of Human Resources.
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A. 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.

B. 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. 

C. 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. FMC is giving special management 

attention, as set forth in FAR 37.114, to functions that are closely associated with 

inherently governmental functions. This review assessed the extent to which 

functions might be closely associated with inherently governmental functions, and 

identified internal controls, including governance and internal reviews, to ensure 

functions that are closely associated with inherently governmental functions are 

given special attention. Although the functions are not inherently governmental, 

contractors’ employees may work in a situation that permits or might permit 

access to confidential business information or other sensitive information, or may 

provide support for human resources management. FMC depends on well trained 

Contracting Officer Representatives to ensure that work performed by contractor 

does not expand into inherently governmental functions during the performance 

of a contract. 

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 six FMC contracts were assessed based on the complexity of 
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the functions, impact of stop-work, and the risk of the functions. Based on this 

assessment, FMC did use contractor support to enhance the agency’s mission, but 

did not use contractor employees to perform critical functions which would 

adversely impact the agency’s ability to maintain control of its mission and. 

iv. There are sufficient internal agency resources to manage and oversee contracts 

effectively. Based on the number of contractors compared to the number of 

federal workers, and federal workers providing oversight and management of 

service contracts, FMC has sufficient internal resources to manage and oversee 

contracts effectively. The sufficiency of contract management, through the 

availability of appropriately trained and experience Contracting Officer 

Representatives (CORs) and contract staff, was also assessed as sufficient. 

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

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