FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 1

FEDERAL MARITIME COMMISSION 

PERFORMANCE AND 

ACCOUNTABILITY REPORT 

FISCAL YEAR 

2008 
 2 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

 

 

 

VISION 

 

Fairness and Efficiency in U.S. Maritime Commerce 

 

 

 

 

 

MISSION 

The FMC’s Mission is to : 

 

• Develop and administer policies and regulations 

that foster a fair, efficient and secure maritime 

transportation system;

• Protect U.S. maritime commerce from unfair 

foreign trade practices and market-distorting 

activities; 

 

• Facilitate compliance with U.S. shipping statutes 

through outreach and oversight; 

 

• Assist in resolving disputes. 

 

 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 3

This Fiscal Year 2008 Performance and Accountability Report 

is published by the 

Federal Maritime Commission 

An electronic version of this report can be found at 

http://www.fmc.gov/home/performanceaccountabilityreports.asp

Please refer any questions concerning this report to the 

Federal Maritime Commission at 

(202) 523-5800 

Published in Washington, DC 

November 17, 2008 
 4 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

The Federal Managers’ Financial Integrity Act of 1982 requires continuous evaluations and reporting of the adequacy 

of the systems of internal accounting and administrative controls. The Act can be found at the following URL: 

http://www.whitehouse.gov/omb/financial/fmfia1982.html

The Chief Financial Officers Act of 1990 provides for the production and submission of complete, reliable, timely, and consistent 

financial information for the use of the Executive Branch of the government and the Congress in the financing, management and 

evaluation of federal programs. The Act can be found at the following URL: 

http://www.gao.gov/special.pubs/af12194.pdf

The Reports Consolidation Act of 2000 authorizes agencies to consolidate several reports in order to provide performance, 

financial and other related information in a more useful manner. The Act can be found at the following URL: 

http://www.cbo.gov/showdoc.cfm?index=2193&sequence=0

The Federal Financial Management Improvement Act of 1996 requires the assessment of financial systems to ensure they adhere 

to government -wide financial requirements. The Act can be found at the following URL: 

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=104_cong_public_laws&docid=f:publ208.104.pdf

The Inspectors General Act of 1978 (amended) requires that the inspector general make available information on management 

actions taken in response to inspector general audits. The Act can be found at the following URL: 

http://www.access.gpo.gov/uscode/title5a/5a_2_.html

The Government Performance and Results Act of 1993 requires an annual report that measures the performance results of the 

agency against the established agency goals. The Act can be found at the following URL: 

http://www.whitehouse.gov/omb/mgmt-gpra/gplaw2m.html

The Government Management Reform Act of 1994 requires the submission of audited financial statements. The Act can be found 

at the following URL: 

http://govinfo.library.unt.edu/npr/library/misc/s2170.html

The Federal Maritime Commission’s Performance and Accountability Report provides program 

and financial information that enables the President, Congress, and the public to assess the 

performance of the agency relative to its mission and the resources entrusted to it. This PAR 

satisfies the following legislation: 
 GLOSSARY OF ACRONYMS 

-#- 

1920 Act Merchant Marine Act, 1920

1984 Act Shipping Act of 1984 

-AALJ Administrative Law Judge 

 AR Area Representative 

-BBCL Bureau of Certification and Licensing 

 BOE Bureau of Enforcement 

 BPD Bureau of the Public Debt 

 BTA Bureau of Trade Analysis 

-C-

 CADRS Office of Consumer Affairs and Dispute Resolution Services 

 C&A Certification and Accreditation Services 

 CIO Chief Information Officer 

 COOP Continuity of Operations Plan 

 

-D- 

 DC District of Columbia 

 

-E- 

 EEO Equal Employment Opportunity 

 e-government Electronic government 

 e-OPF Electronic Official Personnel File 

-F- 

 FACTS Federal Agencies’ Centralized Trial-Balance System 

 FAIR Act Federal Activities Inventory Reform Act 

 FFMIA Federal Financial Management Improvement Act 

 FISMA Federal Information Security Management Act 

 FMC/Commission Federal Maritime Commission 

 FMFIA Federal Managers’ Financial Integrity Act 

 FSPA Foreign Shipping Practices Act of 1988 

 FTE Full-Time Equivalent 

 FY Fiscal Year 

-G- 

 GPRA Government Performance and Results Act 

 GRI General Rate Increase 

-I- 

 IG Inspector General 

 IT Information Technology 
 GLOSSARY OF ACRONYMS 

-M- 

 MD&A Management’s Discussion and Analysis 

 MTO Marine Terminal Operator 

-N- 

 NIST National Institute of Standards and Technology 

 NVOCC Non-Vessel-Operating Common Carrier 

-O- 

 OA Office of Administration 

 OALJ Office of Administrative Law Judges 

 OFM Office of Financial Management 

 OGC Office of General Counsel 

 OHR Office of Human Resources 

 OIG Office of the Inspector General 

 OIT Office of Information Technology 

 OMB Office of Management and Budget 

 OMS Office of Management Services 

 OPM Office of Personnel Management 

 OPS Office of Operations 

 OS Office of the Secretary 

 OSRA Ocean Shipping Reform Act of 1988 

 OTI Ocean Transportation Intermediary 

-P- 

 P.L. Public Law 

 PAR / Report Performance and Accountability Report 

 PVO Passenger Vessel Operator 

-R- 

 RPI Regulated Persons Index 

-S- 

 SBR Statement of Budgetary Resources 

 SEOP Safety and Security of Employees and Operations Plan 

 SES Senior Executive Service 

 Shipping Act Shipping Act of 1984 

-U- 

 URL Uniform Resource Locator 

 U. S. United States 

-V- 

 VOCC Vessel-Operating Common Carrier 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 7

 TABLE OF CONTENTS 

 

 

 

 A Message From the Commission 1 

 Chapter One: Management’s Discussion and Analysis 

 

 Introduction 2 

 Organization Chart 3 

 Regulatory Responsibility 4 

 Future Challenges 5 

 Program Performance Overview 6 

 Financial Performance Overview 6 

 Financial Statement Highlights 8 

 Systems, Controls, and Legal Compliance 11 

 

 Chapter Two: Program Performance 

 

 Annual Performance Report 14 

 Areas for Improvement 21 

 Efforts to Integrate Results Into Budget Planning 21 

 

 Chapter Three: Auditors’ Report and Financial Statements: 

 

 A Message from the Chief Financial Officer 22 

 Limitations of the Financial Statements 23 

 Independent Auditor’s Report 24 

 Balance Sheet 27 

 Statement of Net Cost 28 

 Statement of Changes in Net Position 29 

 Statement of Budgetary Resources 30 

 Statement of Custodial Activity 31 

 Notes to the Financial Statements 32 

 Chapter Four: Other Accompanying Information: 

 Inspector General’s Assessment of the Most Serious Management 

 Challenges Facing the FMC 44 

 Summary of Financial Statement Audit and Management Assurances 49 

 Annual Performance Plan 2008 50 

 

 FY2008 Federal Maritime Commission 
 1 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

FEDERAL MARITIME COMMISSION

MANAGEMENT’S DISCUSSION and ANALYSIS 

Fiscal Year 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 1

A MESSAGE FROM THE COMMISSION 

The Federal Maritime Commission’s (“FMC” or “Commission”) Performance and Accountability Report for 

Fiscal Year 2008 will enable industry participants and the public to understand the Commission’s ongoing 

performance in the regulation of the international ocean shipping industry. We believe that the performance and 

financial data in the Report are complete and reliable under Office of Management and Budget guidelines. In a few 

clearly marked instances, estimates have been used where actual numbers do not yet exist. As data becomes 

available, those estimates will be replaced with actual figures in subsequent Reports. 

The Commission’s mission is to: 

• Develop and administer policies and regulations that foster a fair, efficient and secure maritime 

transportation system; 

• Protect U.S. maritime commerce from unfair foreign trade practices and market-distorting activities; 

• Facilitate compliance with U.S. shipping statutes through outreach and oversight; 

• Assist in resolving disputes. 

The fundamental mandate underlying the agency’s mission is to help remove impediments to fair competition – 

undue controls, influences or non-market barriers imposed by any nation, carrier, cargo owner or transportation 

intermediary – which can adversely affect U.S. oceanborne trade. Our regulatory system calls for necessary 

oversight with minimal disruption to the efficient flow of U.S. imports and exports, ensuring fair competition in the 

ocean transportation industry while allowing the industry to conduct business as efficiently as possible. We are 

committed to developing programs and processes that will enable the Commission to fulfill this mission in the 

context of an evolving industry. In doing so, we strive to increase performance efficiencies and the effectiveness of 

our workforce. 

In fiscal year 2008, the Commission set out to achieve twelve specific performance goals. Progress was made on 

each of the goals which the Commission pursued in 2008: one goal was fully achieved, one goal was substantially 

changed and two goals were deemed unnecessary or not feasible. During fiscal year 2008, the Commission drafted 

a new Strategic Plan for 2010-2015 and in that process changed the manner in which it will measure performance, 

setting performance goals directly linked to new strategic goals. In addition, the Commission continued its 

substantial progress towards fulfillment of the President’s Management Agenda. Notably, the agency received an 

unqualified opinion on its financial statements for the fifth consecutive year. The agency further expanded its use 

of electronic government by increasing the number of documents available online and by making substantial 

progress towards agency-wide database integration. Regarding succession planning, the Commission updated 

Commission Order 90, Emergency Preparedness Program, which outlines the Commission’s order of succession 

plan as well as its vital records program. 

The Commission is proud of its fiscal year 2008 accomplishments and we look forward to continuing to provide 

high-quality service to the American public in future years. 

Sincerely, 

 

November 17, 2008 

MANAGEMENT’S DISCUSSION & ANALYSIS 
 2 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Introduction 

This Performance and Accountability Report (“Report” or “PAR”) represents the completion of the Federal 

Maritime Commission’s program and financial management process for fiscal year (“FY”) 2008, which began with 

mission and program planning, continued with the formulation and justification of FMC’s budget submission to the 

President and Congress, through budget execution, and ending with a report of our program performance and the 

use of resources. This report was prepared pursuant to the requirements of the Chief Financial Officers Act, as 

amended by the Reports Consolidation Act, and the Office of Management and Budget (“OMB”) Circular NoA136 (Revised), and covers the Commission’s activities from October 1, 2007 through September 30, 2008. 

FMC Core Functions 

The FMC is an independent transportation/trade regulatory agency which administers the Shipping Act of 1984 

(“1984 Act” or “Shipping Act”) as amended by the Ocean Shipping Reform Act of 1998 (“OSRA”); section 19 of 

the Merchant Marine Act, 1920 (“1920 Act”); the Foreign Shipping Practices Act of 1988 (“FSPA”); and Public 

Law (“P.L.”) 89-777 (passenger vessel certification). The Commission: monitors the activities of ocean common 

carriers, marine terminal operators, conferences, ports and ocean transportation intermediaries (non - vessel - 

operating common carriers and ocean freight forwarders) which operate in the U. S. foreign commerce to ensure 

they maintain just and reasonable practices; maintains a trade monitoring and enforcement program designed to 

assist regulated entities in achieving compliance and to detect and appropriately remedy malpractices and 

violations of the prohibited acts set forth in section 10 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 arrangements and service contracts 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 Commission 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 financial responsibility 

in case of nonperformance or injury to passengers. 

Organization 

The FMC is composed of five Commissioners appointed for five-year terms by the President with the advice and 

consent of the Senate. No more than three members of the FMC may belong to the same political party. The 

President designates one of the Commissioners to serve as Chairman. The Chairman is the chief executive and 

administrative officer of the agency. The FMC’s organizational units consist of: Offices of the Commissioners; 

Office of the General Counsel (“OGC”); Office of the Secretary (“OS”), including the Library and Office of 

Consumer Affairs and Dispute Resolution Services (“CADRS”); Office of Administrative Law Judges (“OALJ”); 

Office of Equal Employment Opportunity (“EEO”); Office of the Inspector General (“OIG”); Office of Operations 

(“OPS”), including the Bureaus of Certification and Licensing (“BCL”), Enforcement (“BOE”), and Trade 

Analysis (“BTA”); and Office of Administration (“OA”), including the Offices of Financial Management 

(“OFM”), Human Resources (“OHR”), Information Technology (“OIT”), and Management Services (“OMS”). 

The majority of FMC personnel are located in Washington, DC, with Area Representatives (“ARs”) in New York, 

New Orleans, Los Angeles, Seattle, Houston and South Florida. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 3

Office of Equal

Employment

Opportunity

Office of the

Inspector General

Office of the

Secretary

Office of

Operations

Office of

Administration

Office of the

General Counsel

Commissioner

(DYE)

Commissioner

(BRENNAN)

Chairman *

(Vacant)

Commissioner

(CREEL)

Commissioner **

(Vacant)

Bureau of

Certification

 and Licensing

Bureau of

Enforcement

Bureau of Trade

Analysis

Office of

Administrative

Law Judges

Office of

Consumer Affairs

and Dispute

Resolution

Services

Area

Representatives

New York

Los Angeles

Houston

New Orleans

Seattle

South Florida

Office of Financial

Management

Office of Human

Resources

Office of

Information

Technology

Office of

Management

Services

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

*The former Chairman resigned on November 30, 2006. 

**The Commissioner position was vacated on May 30, 2008. 

Organizational Chart as of September 30, 2008 
 4 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Regulatory Responsibility 

The Commission’s principal regulatory responsibilities include: 

• Reviewing agreements among ocean common carriers and marine terminal operators (“MTOs”) relating to 

service in the U.S. foreign oceanborne trades, to ensure that they do not cause substantial increases in 

transportation costs or decreases in transportation services. 

• Reviewing service contracts between ocean common carriers and shippers to guard against detrimental effects 

to shipping in the U.S. foreign trades. 

• Ensuring that common carriers’ tariff rates and charges are accessible to the shipping public in private, 

electronically accessible systems. 

• Regulating rates, charges, and rules of government-owned or -controlled carriers to ensure that they are just 

and reasonable. 

• Issuing passenger vessel certificates evidencing financial responsibility of vessel owners or charterers to pay 

judgments for personal injury or death, or to refund passenger fares for the nonperformance of a voyage or 

cruise. 

• Licensing OTIs in the U.S. to protect the public from unqualified, insolvent, or dishonest companies. 

• Ensuring that OTIs maintain sufficient financial responsibility to protect the shipping public from financial 

loss. 

• Protecting the shipping public against economic harm by investigating rates, charges, classifications, and 

practices of common carriers, MTOs, and OTIs operating in the foreign commerce of the U.S.

• Taking action to address unfavorable conditions arising out of foreign government or business practices in the 

U.S. foreign shipping trades. 

The FMC is authorized by the FSPA, section 19 of the 1920 Act, and section 13(b)(6) of the 1984 Act to take 

action to ensure that the foreign commerce of the U.S. is not burdened by non-market barriers to ocean shipping. 

The FMC may take countervailing action to correct unfavorable shipping conditions in U.S. foreign commerce and 

may impose penalties. The FMC may address actions by carriers or foreign governments that adversely affect 

shipping in the U.S. foreign oceanborne trades including the intermodal operations of carriers or the operations of 

OTIs, or that impair access of U.S.-flag vessels to ocean trade between foreign ports. 

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

commerce. It exempts agreements that have become effective under the 1984 Act from the U.S. antitrust laws, as 

contained in the Sherman and Clayton Acts. The FMC reviews and evaluates agreements to ensure that they do 

not exploit the grant of antitrust immunity, and to ensure that agreements do not otherwise violate the 1984 Act or 

result in an unreasonable increase in transportation cost or unreasonable reduction in service. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 5

In addition to monitoring relationships among carriers, the FMC is also 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 also 

requires all carriers to make their rates, charges and practices available in automated tariff systems that must be 

available electronically to the public. Non-vessel-owning common carriers (“NVOCCs”) may assess the rates and 

charges published in their tariffs or may offer service arrangements 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 our Internet-based system, and are provided confidential treatment by the FMC as 

required by the 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. 

P. L. 89-777 requires 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, injury, or nonperformance of 

transportation. The FMC certifies such operators upon the submission of satisfactory evidence of financial 

responsibility. The FMC ensures that all OTIs operating in the foreign commerce of the U.S. have established 

sufficient financial responsibility to protect shippers from financial loss. Additionally, the FMC licenses all U.S. 

OTIs. 

The FMC carries out its regulatory responsibilities by conducting informal and formal investigations. It holds 

hearings, considers evidence and renders decisions, and issues appropriate orders and implementing regulations. 

The FMC also adjudicates and mediates disputes involving the regulated community, the general shipping public, 

and other affected individuals or interest groups. 

The FMC also carries out a management and support function for information technology (“IT”), financial 

management, human resources, and administrative support. 

The FMC oversees approximately 5,400 regulated persons (passenger vessel operators, conferences, OTIs, etc.). 

The FMC has a new, improved, easy-to-navigate website which contains more information concerning the 

agency’s activities and responsibilities. Please visit us at www.fmc.gov. 

Future Challenges 

International trade remains dependent upon an efficient ocean transportation system. The ocean shipping industry 

continues to face significant challenges related to port and maritime security, port congestion, industry 

consolidation and dynamic economic conditions. As the industry restructures to adapt to these changes, it is 

imperative for the FMC to ensure that its oversight produces a competitive trading environment in U.S. ocean 

commerce that is in harmony with, and responsive to, international shipping practices, and encourages fair and 

open commerce. 

In response to industry changes, the Commission continues to review its regulatory initiatives to ensure that agency 

resources are utilized in a manner best suited to accomplish statutory obligations with a minimum of government 

intervention and regulatory cost. Similarly, we have implemented new internal business processes that are more 

responsive to the needs of the industry and other government agencies. 

Cooperative working arrangements with front-line security agencies remain in place. Effective use of emerging 

information technologies continue to facilitate our efforts. 

Chapter One 

 

 MANAGEMENT’S DISCUSSION and ANALYSIS 
 6 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

Program Performance Overview 

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

Government Performance and Results Act (“GPRA”). The FMC has organized its performance goals to achieve its 

strategic goals. The complete FY 2008 Program Performance Report is contained in Chapter 2, Program 

Performance. In FY 2008, the Commission focused on refining the agency’s business practices, specifically on 

revising and updating internal procedures in line with the amendment of Commission regulations. This includes 

facilitating the use and dissemination of filed material in order to improve analysis of required filings and 

responsiveness to inquiries, and implementation of procedural changes to enhance the effectiveness of agency 

operations. We broadened our efforts to implement the President’s Management Agenda initiative to expand 

electronic government (“e-government”) by improving the management of information through the more effective 

use of available technologies. We also streamlined the delivery of services and information to regulated entities, 

other government agencies and the public, and further automated agency systems and enhanced the use of agency 

databases to allow staff to discharge program responsibilities more effectively. In FY 2008 the Commission 

updated Commission Order 90, Emergency Preparedness Program, which outlines the Commission’s order of 

succession plan as well as its vital records program. Overall, we are pleased with the success we achieved in 

addressing our stated goals and objectives. 

Achieving Strategic Goal Results 

The FMC has a distinct process for measuring performance. Performance goals are developed to promote one of 

the FMC’s strategic goals, and the processes or activities required to achieve the goals are identified. The agency 

then specifies the outcomes it believes will result from accomplishing each stated goal, and agrees on performance 

indicators as the quantifiers of performance. Finally, performance measures are established for evaluation of 

achievement of performance goals. Taken together, performance goals under each strategic goal are designed to 

enhance and further those goals each fiscal year, bringing the agency closer to its ideal of full achievement of its 

strategic goals. 

Financial Performance Overview 

As of September 30, 2008, the financial condition of the FMC was sound with respect to having sufficient funds to 

meet program needs and adequate control of funds in place to ensure obligations did not exceed budget authority. 

The FMC’s accounting services provider, the Bureau of the Public Debt (“BPD”), prepared the agency’s financial 

statements in accordance with accounting standards and OMB Circular A-136, Financial Reporting Requirements 

(Revised 6/03/2008). 

Chapter One 

 

 MANAGEMENT’S DISCUSSION and ANALYSIS 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 7

Chapter One 

 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Sources of Funds 

The FMC has a single source of funds, Salaries and Expenses, funded by an annual appropriation that is available 

for commitments and obligations incurred during the fiscal year in which the authority was granted. The FMC’s 

total new budget authority for FY 2008 was $22,072,000. This represents a net increase in budget authority over 

FY 2007 of $1,644,090. Although the FMC collects remittances for “user fees” and “fines and penalties,” the 

agency is not authorized to offset any of its budget authority by utilizing these funds. The collections are deposited 

directly into the Treasury General Fund, and captured in the Statement of Custodial Activity which can be found in 

Chapter 3, Auditors’ Reports and Financial Statements.

Personnel Strength History 

 

The FMC’s actual full time equivalent (“FTE”) level has fluctuated since 2000. After a decline in 2001, the FMC 

experienced modest growth in its FTE level through 2004, followed by an annual decline through 2008. The 

agency has endeavored to develop the appropriate mix of staffing and other available means to ensure the effective 

accomplishment of our mission. 

In recent years, the Commission has been authorized a total of 180 FTE positions. Due to appropriation levels, the 

Commission has been required to maintain full-time personnel levels much lower than authorized. 

14,097 15,466 16,477 16,591

18,471

19,340 20,294 20,427

22,072

2000 2001 2002 2003 2004 2005 2006 2007 2008 0

5,000

10,000

15,000

20,000

25,000

Appropriation

FederalMaritime Commission

Appropriation

(000s)

128 121 127 129 129 124 121 119 115

0

50

100

150

200

2000 2001 2002 2003 2004 2005 2006 2007 2008

FTE

FederalMaritime Commission FTE Strength
 8 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

Uses of Funds by Expense Category 

In FY 2008, the FMC incurred new obligations of $21.6 million, which was a $4.2 million increase over FY 2007. 

Of the total appropriation, 66.5% was used for salaries and benefits. Of the remaining budget authority, 1% was 

used for Commission travel expenses and the remaining 32.5% was used for administrative expenses also known 

as operating expenses (e.g., rent, furniture, printing, maintenance). The un-obligated authority balance of $447,579 

will remain active for four years to service FMC-established requirements. 

Audit Results 

The FMC received an unqualified opinion on its FY 2008 financial statements from the independent auditing firm 

of Dembo, Jones, Healy, Pennington & Marshall, P.C. under contract through the FMC’s OIG. Comparative 

statements can be located in Chapter 3, Auditors’ Report and Financial Statements. 

Financial Statement Highlights 

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

Commission pursuant to the requirements of 31 U.S.C. 3515(b). These statements have been prepared from the 

books and records of the Commission in accordance with the formats prescribed by OMB and are in addition to the 

financial reports used to monitor and control budgetary resources. The financial statements, footnotes, and the 

remainder of the required supplementary information appear in their entirety in Chapter 3, Auditors’ Report and 

Financial Statements. A brief analysis of the principal statements follows. 

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

14,380

11,425

231 186

7,013

5,813

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

FY 2008                                                       FY2007    

Utilization of Funds by Expense Categories

Salaries & Expenses Travel Administrative
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 9

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Analysis of the Balance Sheet 

The FMC’s assets in FY 2008 were $4,128,825 

as of September 30, 2008. This represents an 

increase over FY 2007 of $1,212,310. The 

FMC’s assets reported in the balance sheet are 

summarized in the accompanying table. 

The Fund Balance with Treasury is comprised 

only of annual appropriations maintained by the 

Department of the Treasury to address current 

liabilities. The FMC had an increase in its FY 

2008 Fund Balance with Treasury of 42.8% over 

the FY 2007 level. The FY 2008 Fund Balance of 

$4,062,134 includes FY 2008 budget authority not spent in the amount of $447,579, largely due to vacancies of 

senior management and Commissioner positions. Also included is unavailable funds of $300,086 representing 

spending authority from prior years; these funds represent expired authority unavailable for new obligations. The 

final and largest portion of the Fund Balance with Treasury is obligated balances not yet disbursed totaling 

$3,314,469. This category represents goods and services received by the Commission for which vendors have not 

been paid. 

Accounts Receivable represents all outstanding debts owed the Commission from its customers. As of September 

30, 2008 the total book value for accounts receivable was $64,579.

The “Net” value of $2,112 for Capital Assets, also known as Property, Plant and Equipment accounts for the 

depreciation of all assets and represents the current book value of those assets. 

The FMC’s Liabilities totaled $2,451,226 as of 

September 30, 2008. The accompanying table 

depicts an increase of $126,739 total liabilities 

over FY 2007. Accounts Payable represents goods 

and services received for which vendors have not 

been paid as of the close of FY 2008. Federal 

Employee Benefits represents accrued salaries and 

liabilities that are not funded by budgetary 

resources. These liabilities represent future 

workers’ compensation and accrued annual leave. 

Analysis of the Statement of Changes in 

Net Position 

The Statement of Changes in Net Position 

reports the change in the agency’s net position 

during the reporting period. The statement is a 

summary of two factors, Unexpended 

Appropriations and Cumulative Results in 

Operations. The increase of $1,085,571 from 

FY 2007 to FY 2008 is due principally to an 

increase in unexpended appropriations. 

Net Position is the difference between total 

assets and total liabilities. The total net 

position for FY 2008 is an increase of $1,085,571 from FY 2007. Unexpended Appropriations represents the total 

authority granted by Congress that the FMC has not expended as of September 30, 2008. The decrease in 

Cumulative Results is due mainly to the net decrease in Capital Assets as of September 30, 2008. 

FY 2008 FY 2007 

Fund Balance with Treasury $4,062,134 $2,843,269 

Accounts Receivable $64,579 $66,144 

Capital Assets (Net) $2,112 $7,102 

Other 0 0 

Summary of Assets as of September 30, 2008 

Total Assets $4,128,825 $2,916,515 

Summary of Liabilities as of September 30, 2008 

FY 2008 FY 2007 

Accounts Payable $310,274 $315,679 

Payroll Taxes Payable $130,152 $110,916 

Accrued Liabilities $914,920 $820,051 

Total Liabilities $2,451,226 $2,324,487 

Federal Employee Benefits $1,032,287 $1,012,520 

Custodial Liability $63,593 $65,321 

Net Position Summary as of September 30, 2008 

FY 2008 FY 2007 

Unexpended Appropriations $2,706,788 $1,596,624 

Cumulative Results of Operations ($1,029,189) ($1,004,596) 

Total Net Position $1,677,599 $592,028 
 10 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Analysis of Net Cost 

The analysis of Net Cost presents the net cost 

of FMC’s five Commission Programs as 

identified in the FMC’s Annual Report. The 

five agency programs are Office of 

Administration, Office of Operations, Formal 

Proceedings, Office of Inspector General, and 

Office of Equal Employment Opportunity. 

Net Costs compared to Budgetary Resources 

can be found in Chapter 3, Auditors’ Report 

and Financial Statements. 

Analysis of the Statement of Budgetary Resources 

 The Statement of Budgetary Resources 

(“SBR”) shows the source of the agency’s 

budgetary resources and the status of those 

resources at the end of the reporting period. 

The total budgetary resources must be equal 

to the status of budgetary resources at all 

times. A more detailed SBR can be found in 

Chapter 3, Auditors’ Report and Financial 

Statements. For FY 2008, the FMC had total 

budgetary resources available of $22,438,514. 

This represents a 8.1% increase over FY 2007 

budgetary resources available of $20,747,389. 

For FY 2008, the FMC incurred obligations 

of $21,690,849, representing 98.3% of available funding. The unobligated balance of $447,579 is largely due to 

vacancies of senior management and Commissioner positions. 

 Summary of the Statement of Budgetary Resources as of 

September 30, 2008 

FY 2008 FY 2007 

Total Budgetary Resources $22,438,514 $20,747,389 

Obligations Incurred $21,690,849 $20,536,495 

Status of Budgetary Resources $22,438,514 $20,747,389 

Unobligated Balance $447,579 $4,511 

Unobligated Balance Unavailable $300,086 $206,383 

 Summary of the Statement of 

Net Cost as of September 30, 2008 

FY 2008 FY 2007 

Office of Administration $6,088,432 $8,869,541 

Office of Equal Employment 

Opportunity 

$161,903 $141,593 

Net Cost of Program Services $22,015,432 $21,409,846 

Office of Inspector General $597,799 $394,294 

Formal Proceedings $5,627,251 $4,801,085 

Office of Operations $9,540,047 $7,203,333 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Systems, Controls, and Legal Compliance 

This section provides information on FMC’s compliance with the: 

Federal Managers’ Financial Integrity Act 

Federal Financial Management Improvement Act 

Prompt Payment Act 

Debt Collection Improvement Act 

Biennial Review of User Fees 

Performance Measure Summary 

Inspector General Act 

Federal Managers’ Financial Integrity Act 

The Federal Managers’ Financial Integrity Act (“FMFIA”) requires that agencies establish controls that reasonably 

ensure that obligations and cost comply with applicable law; assets are safeguarded against waste, loss, 

unauthorized use, or misappropriation; and revenues and expenditures are properly recorded and accounted for. It 

requires the agency head to provide an assurance statement of the adequacy of management controls and 

conformance of financial systems with Government standards. 

In our Message earlier in this document, the Commission provided its annual assurance statement. This statement 

was based on various sources and included management knowledge gained from the daily operation of agency 

programs and reviews, discussions with senior managers who together comprise the agency’s Senior Policy Group, 

audits of financial statements, annual performance plans, and OIG reports, among other sources. The Senior Policy 

Group is comprised of all SES-level senior executives, including the Director of Operations and General Counsel, 

among others. Additionally, the Commission meets regularly with, and receives regular reports from, the FMC’s 

OIG. 

Management control deficiencies, when identified, are addressed at the highest management levels within the 

agency. For instance, corrective actions for significant deficiencies identified in the agency’s information 

technology area are overseen directly by the agency’s Chief Information Officer (“CIO”). 

Commission Assurance Statement 

The Commission determined that, as of September 30, 2008, the management controls of the FMC provide 

reasonable assurance that the objectives of the FMFIA are being met, and that the FMC, as a whole, is in 

compliance with section 2 of the FMFIA. The FMC’s financial management systems also are in substantial 

compliance with the objectives of the FMFIA, and the Commission is in compliance with section 4 of the FMFIA. 

 

November 17, 2008 
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CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

During the fiscal year, the IG identified one significant deficiency (formerly called a "material weakness” by 

OMB) in the information technology (“IT”) program. The OIG’s evaluation found that the FMC consistently 

failed to adequately document key aspects of its information security program, calling into question whether 

required planning and testing activities were performed. Certification and Accreditation (“C&A”) documentation 

reviewed by the OIG did not comply with National Institute of Standards and Technology (“NIST”) or OMB 

requirements for the FMC Network and several mission- critical business applications. Further, it was found that 

FMC’s emergency preparedness documentation and Safety and Security of Employees and Operations Plan / 

Continuity of Operations Plan (“SEOP” / “COOP”) did not address IT recovery in sufficient detail. 

Federal Financial Management Improvement Act 

The Federal Financial Management Improvement Act (“FFMIA”) requires agencies to implement and maintain 

systems that comply substantially with: Federal financial management system requirements; applicable Federal 

accounting standards; and the standard general ledger at the transaction level. The Act requires the agency head to 

determine whether the agency’s financial management systems comply with the FFMIA and to develop 

remediation plans for systems that do not comply. 

FY 2008 Federal Financial Management Improvement Act Results 

The Commission determined that, as of September 30, 2008, the FMC’s financial management systems were in 

substantial compliance with the FFMIA. In making their determination, the Commission considered the results of 

audits conducted by outside auditors in successive fiscal years, in addition to OIG reports, among other resources. 

Prompt Payment Act 

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 2008, the FMC maintained a percentage of on-time payments at 98.41%. The interest 

payments of $321.00 were a direct result of late approvals received from the COTRs of merchandise or services 

received. The FMC will continue to strive towards 100% on-time payments in future years. The FMC has 

maintained a 100% on-time electronic/credit-card payment to its vendors. 

Debt Collection Improvement Act

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

Act centralized the collection of non-tax delinquent debt owed to the Government. The collection of delinquent 

debts is conducted by the Financial Management Service through the Treasury Offset Program where the names 

and taxpayer identification numbers (“TIN”) are matched against the TINs of recipients of Government payments. 

The balance owed the Government is deducted or offset from the payment to the entity to satisfy the debt. All 

Office of Personnel Management (“OPM”) retirement, vendor, Internal Revenue Service refunds, Social Security 

Benefits, and some Federal salary payments are being offset. Federal agencies are required to refer delinquent 

accounts in excess of 180 days to Treasury for collection. The goal of the FMC is to minimize the amount of 

delinquent debt owed to the agency. 

Biennial Review of User Fees 

The Chief Financial Officers Act requires agencies to conduct a biennial review of fees and other charges imposed 

by agencies, and to make revisions to cover program and administrative costs incurred. During FY 2008, the FMC 

completed its biennial review of user fees. The OIG conducted an audit of the methodology used to calculate the 

updated user fees. Implementation of new user fee structure is pending. 

Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Chapter One 

 MANAGEMENT’S DISCUSSION and ANALYSIS 

Performance Measure Summary 

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

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

accounting and financial services from the Bureau of Public Debt (“BPD”) located in Parkersburg, WV. The 

Commission verifies and reconciles all financial statements and reports prior to submission, and has remained in 

compliance with all reporting thresholds including FACTS I (Federal Agencies’ Centralized Trial-Balance System) 

reporting and reconciliation of any financial statement differences. 

Inspector General Act 

The FMC has a very good record in resolving and implementing open audit recommendations presented in its OIG 

reports. Section 5(b) of the Inspector General Act requires agencies to report on final actions taken on OIG audit 

recommendations. Information can be found in Chapter 4, Other Accompanying Information. 

Briefly, during FY 2008, the Inspector General completed the following audits/inspections: 

Audit of FY 2007 FISMA Compliance 

Audit of FY 2007 Financial Statements 

Audit of the FMC’s Telephone Services 

Review of Expenses to Furnish, Redecorate or Improve the Offices of FMC Commissioners 

Audit of the Management of BlackBerry Communication Devices 

Audit of the FMC’s Budget Execution Processes, Procedures and Policies for FY 2007 

Audit of FY 2008 FISMA Implementation 

Evaluation Report on Privacy and Data Protection 

IG Assessment of Management Challenges Facing the FMC 

The Inspector General’s reviews disclosed no instances of questioned costs and two recommendations were made 

regarding funds totaling $40,800 which could have been put to better use. The FMC has addressed a number of 

recommendations from these reviews, and it is anticipated that the ones which remain outstanding will be 

completed in FY 2009. 

 

During FY 2008, the agency mitigated four significant deficiencies which had been identified in a previous fiscal 

year. The Inspector General, in his FY 2008 FISMA Review, identified one significant deficiency related to the 

agency information security program; it is anticipated that corrective action on that deficiency will be completed in 

FY 2009. 
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CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

CHAPTER TWO

PROGRAM PERFORMANCE 

Fiscal Year 2008 
FEDERAL MARITIME COMMISSION 

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Chapter Two 

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Annual Performance Report 

Introduction 

The FMC’s performance management system includes both strategic goals and performance goals and measures. 

The strategic goals represent the FMC’s mission and reflect the overall outcomes the agency is working to achieve. 

They are: 

• Efficient Regulatory Process; 

• Compliance; 

• Balanced Enforcement; 

• Technological Efficiencies; and 

• Management Capabilities 

The performance goals focus on outcomes that contribute to the agency’s strategic goals. 

To achieve the FMC’s strategic goals, both steady-state activities (i.e., long-term and ongoing regulatory 

responsibilities) and fiscal-year specific performance goals have been developed. The FMC plans and budgets for 

its program activities during each fiscal year to ensure that appropriate resources (funds and FTEs) are available to 

accomplish its steady-state activities and achieve its performance goals. 

The Commission’s actual performance in FY 2008 is compared with the targeted levels of performance established 

in the agency’s FY 2008 Final Annual Performance Plan. This progress report covers the Commission’s efforts in 

FY 2008 to foster an equitable, secure, and market-driven ocean transportation industry. In FY 2008, the agency 

focused on twelve performance goals. Progress was made on each of the goals, and one goal was fully achieved, 

one goal was substantially changed and two goals were deemed unnecessary or not feasible. 

While our FY 2008 Final Annual Performance Plan contains specific Performance Goals, many of the 

Commission’s resources were dedicated to its various day-to-day activities. This Report focuses on the agency’s 

annual Performance Goals and how they were achieved. Thus, we have organized this report by the five Strategic 

Goals under which we operated in FY 2008. For each of these Goals, we state the steady state activities and the 

Performance Goals that are directly related to them. For any Performance Goal that was not met or not 

substantially completed, we have provided a specific explanation why the Goal was not met, along with the actions 

and schedule for meeting the Goal in the future. 

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 Internet web site to ensure that 

it is accessible to interested parties. All Commission employees have been advised to review it. Finally, it should 

be noted that the Commission does not participate in OMB’s Program Assessment Rating Tool (PART) program. 

Accordingly, no PART program evaluations were conducted during FY 2007. 

Ongoing Improvements in Performance Management 

In FY 2005, the FMC’s performance plan for the first time allocated all agency resources, and linked the agency’s 

performance goals directly to its strategic goals, instead of its budget program activities. We continued this 

process in FY 2006 and FY 2007. During fiscal year 2008, the Commission drafted a new Strategic Plan for 2010-

2015 and in that process changed the manner in which it will measure performance, setting performance goals 

directly linked to new strategic goals. This new Plan includes a set of performance measures that will facilitate the 

evaluation of the FMC’s steady-state activities across several years. In updating the Strategic Plan and moving 

towards a new performance measurement system, the agency will increase its reporting of ongoing steady-state 

performance measures, and reduce its reporting of discrete performance measures designed to be concluded as a 

single-year goal. 
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Chapter Two 

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Strategic Goal: Efficient Regulatory Process 

Provide a timely, efficient and decisive regulatory process, including alternative dispute resolution, to enable 

all segments of the industry to operate more effectively, with a minimum of regulatory costs. 

The primary intention of this Strategic Goal is to minimize regulatory costs by maintaining timely and decisive 

regulatory processes, and by providing various dispute resolution services. These steps will make the FMC more 

effective in addressing possible prohibited acts and matters precluding industry efficiency, while reducing the costs 

of pursuing matters before the agency. Decisive action and effective assistance in resolving informal complaints or 

disputes will help to remove uncertainties as to statutory interpretations or the application of FMC rules. Such 

uncertainties may impede operational efficiencies or technological changes, and their resolution can foster a more 

economical ocean shipping system. 

2008 Steady State Activities: 

— Adjudication and resolution of complaints 

— Adjudication and resolution of investigatory proceedings, including fact-findings and show cause proceedings 

— Issuance of rules through the rulemaking process 

— Commission decision-making activities through meetings (formal and notation) that comply with the 

Government in the Sunshine Act 

— Public information and assistance processes such as press relations, responses to legislative and regulatory inquiries, and compliance with Freedom of Information Act and Privacy Act requirements 

— Other regulatory processes, including activities such as appeals of actions taken on delegated authority, 

policy issuances, and formal petition processes 

— Providing timely legal counsel to the Commission in order to facilitate regulatory action that is consistent with statutory mandates 

— Representing the Commission’s interest in matters before Congress and OMB 

— Reviewing and refining Commission rules to determine their economic impact and ensure that they 

reflect the current industry environment, as well as meet the needs of the Commission’s regulatory mandate 

— Compiling, organizing, and maintaining Commission records 

— Monitor, review and modify, as necessary, Commission regulations to address changing trade conditions, industry practices or statutory modifications 

Performance Goal 1: 

Develop plan for automating PVO Application Form 131 and perform requirements analysis.

Progress: Due to competing priorities and limited resources, this performance goal has changed and is now pending the completion of an Enterprise-wide Database system. BCL started preliminary plans to automate the PVO 

Application Form FMC-131, Application for Certificate of Financial Responsibility, and conducted a corresponding requirements analysis to facilitate the filing of PVO applications. This requirements analysis will be revisited 

in conjunction with the broader agency database integration initiative in Performance Goal 3 under the Technological Efficiencies in Strategic Goal 4. A draft Statement of Work for the Enterprise-wide Database system will be 

developed in the 2nd quarter of FY 2009. Discussions have begun to determine the time required for project completion. Based on these discussions, a new time line with milestones will be produced. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Chapter Two 

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Performance Goal 2: 

By 9/30/08, assess the impact and effectiveness of the new rules for agreements.

Progress: This goal will allow the Commission to further update and/or refine its rules relating to the content of 

filed agreements, minutes, information form and monitoring reports. Meetings have been held at the staff level to 

discuss the effectiveness of the rules, but no formal report to the Director, OPS has yet been completed. We have 

identified areas for improvements; monitoring reports for agreements have been modified on an ad hoc basis for 

several agreements. A pilot program for monitoring reports is underway, making them less burdensome on filers 

but still meeting our needs for analysis. Due to competing priorities and limited resources, this review has not yet 

been completed. A timeline with new milestones will be developed. 

Strategic Goal: Compliance

Promote the development of U.S. exports and the efficiency of ocean shipping by monitoring and assisting 

stakeholders in achieving compliance with shipping statutes administered by the FMC. 

This Strategic Goal centers on achieving compliance with the substantive provisions of the shipping statutes the 

FMC administers, and protecting those involved in U.S. ocean commerce from unfair practices. We address this 

goal particularly by interacting with all sectors of the industry, and by vigilant monitoring of ongoing commercial 

activities. Accomplishing this goal should minimize unjust discrimination and undue preference or prejudice that 

may preclude certain shipping interests from obtaining rates or service levels that can render their businesses more 

economic and efficient. Increasing industry compliance should enable stakeholders to concentrate on fair and legal 

means of enhancing operational efficiency, secure in the knowledge that competitors are not engaging in illegal 

actions aimed at improving short-term profits. 

2008 Steady State Activities: 

— Reviewing and maintaining a database of SCs between ocean common carriers and shippers, and using 

this database to guard against anticompetitive practices and other unfair prohibited activities under the 

1984 Act. 

— Ensuring that common carriers’ rates and charges are accessible to the shipping public in private, electronically accessible systems. 

— Ensuring that OTIs maintain bonds that protect the shipping public from financial losses. 

— Providing formal and informal legal opinions and guidance to the Commission’s staff and the general 

public to ensure clarity and understanding of Commission rules and regulations. 

— Administering the Commission’s international affairs program. 

— Working with other agencies to enhance maritime security. 

— Reviewing operational and pricing agreements among ocean common carriers and marine terminals to 

ensure that they do not unduly restrict competition. 

— Issuing passenger vessel certificates evidencing financial responsibility of vessel owners or charterers 

to pay judgments for personal injury or death or to repay fares for the nonperformance of voyage or 

cruise. 

— Licensing OTIs to protect the public from unqualified, insolvent, or dishonest companies. 

— Responding to informal complaints and informal inquiries from Congress and the public relating to 

Commission responsibilities. 

— Acting as a liaison between the FMC and the public by responding and/or coordinating agency responses to public inquiries. 

— Maintaining a specialized maritime law library for agency and public use. 

 
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Chapter Two 

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— Conduct audit activity of regulated entities, including OTIs and VOCCs, to promote and ensure compliance with applicable statutes and Commission regulations. 

— Respond to inquiries and complaints from the regulated industry and shipping public. Provide information, assistance and forms necessary to comply with applicable statutes and Commission regulations including educational seminars. 

Performance Goal 1: 

 Enhance OTI audit/monitoring program as to unlicensed operators.

Progress: In FY 2008, BCL continued to enhance the OTI audit/monitoring program through joint effort with corresponding bureaus in the Agency. BCL has identified entities that may be operating without a license. As part of 

the audit/monitoring program, BCL continues to develop the OTI outreach program and promote awareness of OTI 

requirements. This aspect of the outreach program is geared to increase compliance by VOCCs and OTIs with the 

Shipping Act and decrease the number of transportation users currently impacted by action of unlawful operators. 

Performance Goal 2: 

Begin redesign of the functionality of OTI list on the homepage to include more information and make it 

 more interactive.

Progress: In FY 2008, BCL focused its limited resources to modernize and expand the Regulated Persons Index 

(“RPI”), a Commission database containing up-to-date records of licensed OTIs, foreign-based unlicensed OTIs, 

ocean common carriers, passenger vessel operators, marine terminal operators, and other entities. Among other 

data uses, the RPI is used to post on the Commission’s website a list of OTIs which are compliant with OTI requirements, so that carriers and others can ascertain whether an OTI is properly licensed, bonded and, if required, 

has posted the location of its automated tariff. In FY 2008, the Commission enhanced the availability of information about OTIs in compliance with FMC requirements by increasing the frequency of updates to the OTI list from 

weekly to real time. This up-to-date information allows carriers and individuals to identify unlicensed OTIs, and is 

helpful to other government agencies. BCL will continue to add enhancements to the OTI list on the homepage as 

the staff assesses results of reviews and reports and plan to work with the OIT to initiate a redesign of the OTI list 

maintained on the Commission’s website to increase accessibility to information, facilitate public search capability, and make it more interactive for users.

Strategic Goal: Balanced Enforcement 

Foster economic efficiencies, reliance on marketplace factors and maritime security by administering U.S. 

shipping statutes in a balanced and equitable manner to redress anticompetitive actions and other unlawful 

activities. 

This Strategic Goal is designed to foster economic efficiencies, assist maritime security initiatives, promote reliance on marketplace factors, and redress excessive anticompetitive practices harmful to international commerce. 

The FMC’s continuing efforts to address the actions of foreign governments that adversely affect U.S. interests and 

our nation’s foreign trade comport with that aspect of the agency’s mission aimed at creating an environment “free 

of unfair foreign maritime trade practices.” The FMC’s focus on commercial malpractices enhances the objective 

of limiting unlawful activities. 

2008 Steady State Activities: 

— Investigating discriminatory rates, charges, classifications, and practices of common carriers, terminal 

operators, and OTIs operating in the foreign commerce of the U.S. 

— Representing the FMC before U.S. courts and other administrative agencies. 
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FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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— Reviewing staff recommendations and initial decisions for legal sufficiency and preparing final decisions and orders. 

— Regulating rates, charges, and rules of government-owned or -controlled carriers to ensure that they 

are just and reasonable and are not unfairly undercutting private competitors. 

— Protecting shippers and carriers engaged in the foreign commerce of the U.S. from restrictive or unfair 

foreign laws, regulations or business practices that harm U.S. shipping interests or ocean trade. 

— Prosecute formal proceedings initiated by the Commission. 

— Monitor activities and conduct investigations of regulated entities and of SC activity to ensure compliance with statutes and regulations administered by the Commission. 

— Conduct non-adjudicatory fact-finding proceedings as directed by the Commission. 

— Provide liaison between the Commission and the shipping industry, the public and other governmental 

entities. 

— Coordinate and cooperate with other government entities to improve homeland security by effective 

exchange of information and assistance regarding foreign ocean transportation. 

Performance Goal 1: 

Review “best practices” re: VOCCs and NVOCCs offering service to non-compliant entities.

Progress: This performance goal was not fully met in FY 2008 Model provisions for a “best practices” program 

covering both ocean carriers and NVOCCs have been have been prepared and informally discussed with industry 

representatives. Those provisions, however, required revision in accord with the Commission’s decision in Docket 

No. 06-09, In the Matter of the Lawfulness of Unlicensed Persons Acting as Agents for Licensed Ocean Transportation Intermediaries. As the Commission’s decision in Docket No. 06 – 09 was appealed to the U.S. Court of 

Appeals for the District of Columbia, the revised provisions have not been finalized or reviewed by the Commission. 

Performance Goal 2: 

Develop rulemaking containing new enforcement options against cruise lines that fail to file PVO reports.

Progress: Due to competing priorities and limited resources, the necessary development for a rulemaking has not 

been finalized. The Bureau had critical personnel losses, which included the retirements of the PVOIP Director 

and the OTI Director, as well as loss of staff due to internal agency promotions which affected allocation of BCL 

personnel to this goal. The Commission has previously researched cruise line issues regarding financial responsibility options and has been following the cruise line industry closely. Staff will continue to monitor changes in the 

cruise industry and work on identifying areas to continue to protect the cruising public. 

Strategic Goal: Technological Efficiencies

Employ technological enhancements to improve efficiency and to facilitate the exchange of information. 

This Strategic Goal focuses on making effective use of advancements in information technology to improve the 

efficiency of agency operations and to enhance the exchange of information with external parties. Dynamic 

changes continue to be made in this area, and the FMC intends to take advantage of any improvements that can 

enable it to perform its functions more effectively and efficiently. 

2008 Steady State Activities: 

— Implementing a wide range of IT programs and services, including operating the agency’s local area 

network, strategic planning for short- and long-term IT initiatives, IT security, data telecommunications, 

database development and management, and Internet page development and maintenance to enhance productivity and efficiency. 

 
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Chapter Two 

 PROGRAM PERFORMANCE 

— Maintaining and updating internal databases to enhance the ability of the public and Commission to 

obtain relevant program-related information and enhance staff productivity. 

— Converting Commission records into electronic format to enable easier public access to information 

Performance Goal 1: 

Implementation of Pay.gov.

Progress: The performance goal was not completed, but progress was made. The Commission researched issues 

related to implementing Pay.gov and held discussions with Treasury representatives regarding procedures and 

system requirements. After consult with senior management, it was determined that Pay.gov implementation 

should be incorporated in a larger database integration plan. Meetings were held with contractors to discuss the 

ways agency units might require Pay.gov support. Full implementation is expected in FY 2009. 

Performance Goal 2: 

Upgrade network and desktop operating systems.

Progress: It was determined by the new Director of Information Technology that this goal was unnecessary. The 

Desktop Operating systems will not need to be upgraded until FY 2010, and the network operating systems will be 

upgraded in FY 2009. 

Performance Goal 3: 

Initiate integration of major databases.

Progress: It was determined by the new Director of Information Technology that this goal would not be feasible. 

The project to integrate major database systems has been replaced by the project to create an Enterprise-wide 

Database system. This project was started in the 4th Quarter of FY 2008 and continue into FY 2009. 

Performance Goal 4: 

Explore options for and begin the development of an online catalogue for the FMC’s law/reference 

library collection.

Progress: Progress has been made toward achievement of this goal. In FY 2008, the Commission completed a 

needs assessment and evaluated recommendations for the development of an online catalogue for its law/reference 

library collection. In FY 2009, the agency will implement the adopted plan to replace the current paper catalogue. 

This plan will employ technology to improve workforce productivity by providing an in-house library access 

station, as well as online access of the catalogue to all staff from their individual desktops. It is also anticipated that 

the automated library catalogue entries will be directly linked to other electronic library resources. This will reduce 

redundancy and increase administrative efficiencies. 

Strategic Goal: Management Capabilities 

Ensure the FMC has the appropriate organizational framework and management systems to carry out its 

statutory mandates. 

This Strategic Goal addresses Commission management and operations, and serves as the basis for the agency to 

accomplish the policy objectives set forth in its mission statement. This Goal also ensures continuation of a 

comprehensive approach to the strategic management of human capital.
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

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Chapter Two 

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2008 Steady State Activities: 

— Executing financial management policies and programs, including developing annual budget 

justifications for submission to the Congress and OMB, managing agency appropriations, administering 

internal control systems for agency funds, travel and cash management, and coordinating with contractors 

who provide accounting and payroll services. 

— Fostering human resources management principles, including recruitment and placement, position 

classification and pay administration, occupational safety and health, employee assistance, employee 

relations, workforce discipline, performance management and incentive awards, employee benefits, career 

transition, retirement, employee development and training, personnel security, and an equal employment 

opportunity. 

— Ensuring the program operations of the agency are administratively supported via telecommunications, 

procurement of administrative goods and services, property management, space, printing and copying, 

mail and records services, facilities and equipment maintenance, and transportation. 

— Promoting economy and efficiency in the administration of, and protecting and detecting waste, fraud 

and abuse in, the agency’s programs via auditing agency operations. 

— Providing guidance to staff regarding administrative matters, including procurement, personnel and 

contracting issues. 

— Ensuring program compliance with various rules and regulations regarding such areas as forms 

clearance, Paperwork Reduction, Small Business Paperwork Reduction Act, and other federally required 

reports and submissions 

Performance Goal 1: 

Fast track implementation of EHRI (e-OPF).

Progress: This performance goal has been achieved. The FMC continued to participate as a member of the Small 

Agency Human Resources Consortium (“SAHRC”) to evaluate approaches for automating Federal personnel 

records. Despite contractor delays, the eight member agencies implemented the electronic Official Personnel 

Folder (“e-OPF”) in the last quarter of FY 2008. Although the program was fully implemented, the “backfile 

conversion process” was not accomplished and is scheduled for completion in FY 2009. Access to e-OPF accounts 

for employees will be activated following this data conversion and further evaluation will be possible thereafter. 

Performance Goal 2: 

Assess telework program to encourage usage & advance efficiency of operations.

Progress: The performance goal was not fully completed. A survey was conducted in FY 2007 to identify the total 

number of employees who telework and to assess supervisors’ and employees’ opinions regarding the effectiveness 

of the program and the necessity for program changes. Fifty percent of the workforce completed the survey and 

results were shared with senior executives. Survey findings were encouraging and subsequent reports of telework 

activity reflected approximately twenty-five percent of the workforce teleworked during the year. Further review 

and evaluation of program operations relative to the effective and efficient conduct of agency business was 

deferred, pending the appointment of an agency head (anticipated during FY 2009). 
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Areas for Improvement

The Commission continues to pursue improvements in our information technology and data management. As 

envisioned in Performance Goals established in previous fiscal years, we continue to work towards automation of 

forms submitted by the public including the FMC-18, Application for a License as an Ocean Transportation 

Intermediary, the FMC-78, NVOCC Service Arrangement Registration, and the FMC-83, Service Contract 

Registration Form. The FMC-18 has been available optionally for filing electronically in FY 2008, and the 

Bureau of Certification and Licensing will continue to design enhancements to the system to expedite licensing. 

As well, the agency has initiated a pilot program for electronic filing of monitoring reports and minutes collected 

by the Bureau of Trade Analysis. 

The Commission is also working toward enterprise-wide integration of various databases to facilitate and expedite 

our work processes. This is needed to avoid redundancies in the receipt and maintenance of information as well as 

to increase transparency throughout the agency and facilitate the easy sharing and exchange of information 

between agency components. 

The Commission recently hired an outside contractor to develop a Human Capitol Plan and Accountability System, 

which will support the development of a human capitol plan featuring a workforce analysis, a human capitol 

accountability system, and succession plans. Among various purposes, this will help us to identify potential 

workforce shortfalls of gaps caused by recent attrition or workload shifts resulting from industry changes, and will 

assist us in planning for succession in coming years. 

Efforts To Integrate Results Into Budget Planning 

The FMC continues to make progress in achieving budget and performance integration. The Commission’s 

Strategic Plan and Annual Performance Plan continue to represent the fundamental framework for the agency’s 

planning and budgeting activities. Each year, applicable performance goals are incorporated into the staff’s annual 

performance plans. In FY 2008, funding and FTE levels were integrated into the agency’s performance planning 

document by strategic goal to identify clearly the budgetary and staff resources that are needed to accomplish each 

goal. 

When preparing the resource needs for FY 2008, the Commission first looked at the agency’s strategic direction. 

Activities and performance targets of each of the bureaus and offices were determined and the necessary resources 

to accomplish the work were identified. The FY 2008 staffing and appropriation levels, in addition to execution 

requirements, dictated some adjustments to performance targets. Completion of some of the FY 2008 performance 

goals, and some other prior year goals, are anticipated to be accomplished in FY 2009 and FY 2010. Adequate 

resources, as may be needed and available to complete these outstanding goals, will be considered within the 2009 

and 2010 appropriation levels. 

During FY 2008, the FMC’s program managers received monthly reports which showed the full cost of their 

programs and reported how the expenditures compared to their respective budget allocations. These reports 

allowed managers to plan and manage their programs more efficiently throughout the fiscal year. The reporting 

mechanism also enabled managers to shift resources to better accomplish performance goals, as necessary. 

During FY 2008, the Commission began a comprehensive strategic planning effort to reassess and establish new 

baselines for performance goals. The agency revised its mission statement and FY 2010-2015 Strategic Plan. The 

updated strategic plan afforded the opportunity to keep performance measures current to reflect program changes 

and industry practices and improve performance assessment. The FMC will continue its forward movement in the 

area of budget and program performance as we develop a closer and clearer link between planning, performance 

results and our budget process. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 22

CHAPTER THREE

AUDITORS’ REPORTS AND FINANCIAL 

STATEMENTS 

Fiscal Year 2008 
 22 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

 Message from the Chief Financial Officer 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 23

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

LIMITATIONS OF THE FINANCIAL STATEMENTS 

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

pursuant to the requirements of the Chief Financial Officers Act of 1990, as amended by the Government 

Management Reform Act of 1994. These statements have been prepared from the books and records of the FMC in 

accordance with the formats prescribed by the Office of Management and Budget. However, these statements 

differ from the financial reports used to monitor and control budgetary resources that are prepared from the same 

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

U.S. Government, a sovereign entity. 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 the independent firm of Dembo, Jones, 

Pennington & Marshal, P.C., under contract to the FMC’s Office of the Inspector General. These financial 

statements represent nine months of actual data and three months of estimated industry trends.
 24 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

Independent Auditor’s Report 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 25

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 
 26 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 27

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

The accompanying notes are an integral part of these statements. 

2008 2007

Assets:

Intragovernmental:

Fund Balance W ith Treasury (Note 2) 4,062,134 $ 2,843,269 $ 

Total Intragovernmental 4,062,134 2,843,269 

Accounts Receivable, Net (Note 3) 64,579 66,144 

General Property, Plant and Equipment, Net (Note 4) 2,112 7,102 

Total Assets 4,128,825 $ 2,916,515 $ 

Liabilities (Note 5):

Intragovernmental:

Accounts Payable 36,647 $ 22,201 $ 

Employer Contributions and Payroll Taxes Payable 118,028 99,376 

Unfunded FECA Liability 1,968 - 

Custodial Liability 63,593 65,321 

Total Intragovernmental 220,236 186,898 

Accounts Payable 273,627 293,478 

Accrued Payroll 914,920 820,051 

Employer Contributions and Payroll Taxes Payable 12,124 11,540 

Unfunded Leave 1,030,319 1,012,520 

 Total Liabilities 2,451,226 2,324,487 

Net Position:

Unexpended Appropriations - Other Funds 2,706,788 1,596,624 

Cumulative Results of Operations - Other Funds (1,029,189) (1,004,596) 

Total Net Position 1,677,599 592,028 

Total Liabilities and Net Position 4,128,825 $ 2,916,515 $ 

FEDERAL MARITIME COMMISSION

BALANCE SHEET

AS OF SEPTEMBER 30, 2008 AND 2007

(In Dollars)
 28 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

The accompanying notes are an integral part of these statements. 

2008 2007

Program Costs:

Office of Administration 6,088,432 $ 8,869,541 $ 

Office of Operations 9,540,047 7,203,333 

Formal Proceedings 5,627,251 4,801,085 

Office of Inspector General 597,799 394,294 

Office of EEO 161,903 141,593 

Net Cost of Operations (Notes 7 and 8) $ 21,409,846 22,015,432 $ 

FEDERAL MARITIME COMMISSION

STATEMENT OF NET COST

FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007

(In Dollars)
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 29

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

The accompanying notes are an integral part of these statements. 

2008 2007

Cumulative Res ults of Operations :

Beginning Balances (1,004,596) $ (1,030,074) $ 

Budgetary Financing S ources :

A ppropriations Us ed 20,906,472 20,257,069 

Other Financing S ources (Non-Exchange):

Imputed Financing Sources (Note 11) 1,084,367 1,178,255 

Total Financing Sources 21,990,839 21,435,324 

Net Cos t of Operations (Notes 7 and 8) 22,015,432 21,409,846 

Net Change (24,593) 25,478 

Cumulative Res ults of Operations $ (1,004,596) (1,029,189) $ 

Unexpended Appropriations :

Beginning Balances 1,596,624 $ 1,453,216 $ 

Budgetary Financing S ources :

A ppropriations Received 22,072,000 20,427,910 

Other A djus tments (55,364) (27,433) 

A ppropriations Us ed (20,906,472) (20,257,069) 

Total Budgetary Financing Sources 1,110,164 143,408 

Total Unexpended A ppropriations 2,706,788 $ 1,596,624 $ 

Net Pos ition 1,677,599 $ 592,028 $ 

FEDERAL MARITIME COMMIS S ION

S TATEMENT OF CHANGES IN NET POS ITION

FOR THE YEARS ENDED S EPTEMBER 30, 2008 AND 2007

(In Dollars )
 30 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

The accompanying notes are an integral part of these statements. 

2008 2007

Budgetary Resources:

Unobligated Balance Brought Forward, October 1 $ 126,737 210,894 $ 

Recoveries of Prior Year Unpaid Obligations 210,984 220,175 

Budget Authority

Appropriation 22,072,000 20,427,910 

Less: Permanently Not Available 55,364 27,433 

Total Budgetary Resources 22,438,514 $ 20,747,389 $ 

Status of Budgetary Resources:

Obligations Incurred

Direct (Note 9) 21,690,849 $ 20,536,495 $ 

Unobligated Balance

Apportioned 4,511 447,579 

Unobligated Balance Not Available 300,086 206,383 

Total Status of Budgetary Resources 22,438,514 $ 20,747,389 $ 

Change in Obligated Balance:

Obligated Balance, Net

Unpaid Obligations, Brought Forward, October 1 2, $ 2,549,426 632,375 $ 

Total Unpaid Obligated Balance, Net 2,632,375 2,549,426 

Obligations Incurred Net 21,690,849 20,536,495 

Less: Gross Outlays 20,797,771 20,233,371 

Less: Recoveries of Prior Year Unpaid

Obligations, Actual 210,984 220,175 

Obligated Balance, Net, End of Period

Unpaid obligations 3,314,469 2,632,375 

Total, Unpaid Obligated Balance, Net, End of Period 3,314,469 $ 2,632,375 $ 

Net Outlays:

Net Outlays:

Gross Outlays 20,797,771 $ 20,233,371 $ 

Less: Offsetting Collections - - 

Less: Distributed Offsetting Receipts - - 

Net Outlays 20,797,771 $ 20,233,371 $ 

FEDERAL MARITIME COMMISSION

STATEMENT OF BUDGETARY RESOURCES

FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007

(In Dollars)
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 31

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

The accompanying notes are an integral part of these statements. 

2008 2007

Revenue Activity:

Total Cash Collections (Note 13) 478,250 $ 1,951,111 $ 

Accrual Adjustments (1,728) 64,041 

Total Custodial Revenue 476,522 2,015,152 

Disposition of Collections:

Transferred to Others (by Recipient) 478,250 1,951,088 

Increase/(Decrease) in Amounts Yet to be Transferred (1,728) 64,064 

Total Disposition of Collections 476,522 2,015,152 

Net Custodial Activity - $ - $ 

(In Dollars)

FEDERAL MARITIME COMMISSION

STATEMENT OF CUSTODIAL ACTIVITY

FOR THE YEARS ENDED SEPTEMBER 30, 2008 AND 2007
 32 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity 

The Federal Maritime Commission (FMC) was established as an independent regulatory agency on August 12, 1961. FMC is responsible for the regulation of ocean borne transportation in the foreign commerce of the United States (U.S.). The principal statutes or statutory provisions administered by the 

Commission are the Shipping Act of 1984, the Foreign Practices Act of 1988, and section 19 of the Merchant Marine Act of 1920, and sections 2 and 3 of Public Law No. 89-777. Most of these statutes were 

modified by the passage of the Ocean Shipping Reform Act of 1998, which took effect in 1999. 

FMC monitors the activities of ocean common carriers, marine terminal operators, conferences, ports 

and ocean transportation intermediaries (OTIs) (non-vessel-operating common carriers and ocean freight 

forwarders) who operate in the foreign commerce of the U.S. to ensure they maintain just and reasonable 

practices. FMC maintains a trade monitoring and enforcement program designed to detect and appropriately remedy malpractices and violations. FMC monitors the laws and practices of foreign governments 

which could be potentially restrictive and identifies carriers owned or controlled by foreign governments; processes and reviews agreements and service contracts for compliance with statutory requirements; and reviews common carriers’ privately published tariff systems for accessibility and accuracy as 

required by the Ocean Shipping Reform Act of 1998. FMC also issues licenses to qualified OTIs in the 

U.S., ensures that all OTIs are bonded or maintain other evidence of financial responsibility, and ensures 

that passenger vessel operators demonstrate adequate financial responsibility for casualty and nonperformance. 

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 also the chief executive and administrative officer of FMC. 

Congress enacts appropriations to permit FMC to incur obligations for authorized purposes. In fiscal 

years 2008 and 2007, FMC was accountable for General Fund appropriations. FMC recognizes budgetary resources as assets when cash (funds held by the U.S. Treasury) is made available through the Department of Treasury General Fund warrants. 

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. 

FMC makes custodial collections and holds custodial receivables that are non-entity assets and are transferred to Treasury at fiscal year end. 

B. Basis of Presentation 

The financial statements have been prepared to report the financial position, net cost of operations, 

changes in net position, and the status and availability of budgetary resources of the FMC. The statements are a requirement of the Accountability of Tax Dollars Act of 2002. 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 approved by the 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 33

Chapter Three 

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NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

principals of the Federal Accounting Standards Advisory Board (FASAB), OMB Circular A-136, Financial Reporting Requirements 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 statements consist of the Balance Sheet, Statement of Net Cost, Statement of Changes in Net Position, Statement of Budgetary Resources, and the Statement of Custodial Activity. In accordance with 

OMB Circular A-136, 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. These financial statements were prepared following accrual accounting. Budgetary accounting facilitates compliance with legal requirements on the use of 

federal funds. Balances on these statements may therefore differ from those on financial reports prepared pursuant to other OMB directives that are primarily used to monitor and control FMC’s use of 

budgetary resources. 

D. Revenues & Other Financing Sources 

Congress enacts annual appropriations to be used, within statutory limits, for operating and capital expenditures. Additional revenues are obtained from service fees and reimbursements from other government entities and the public, but these revenues are not available to the agency to fund operating expenses. 

Appropriations are recognized as a financing source when expended. Revenues from service fees associated with reimbursable agreements are recognized concurrently with the accrued expenditures for performing the services. Appropriations expended for capitalized property and equipment are recognized 

as expenses when an asset is consumed in operations. 

FMC recognizes as an imputed financing source the amount of accrued pension and post-retirement 

benefit expenses for current employees paid on its behalf by the Office of Personnel Management 

(OPM). 

There are no earned revenues for the periods ended September 30, 2008 and 2007. 

E. Taxes 

FMC, as a federal entity, is not subject to federal, state, or local income taxes, and, accordingly, no provision for income taxes has been recorded in the accompanying financial statements. 
 34 

CHAPTER THREE 

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Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

F. Fund Balance with Treasury 

The U.S. Treasury processes cash receipts and disbursements. Funds held at the Treasury are available 

to pay agency liabilities. FMC does not maintain cash in commercial bank accounts or foreign currency 

balances. 

G. Accounts Receivable

Accounts receivable consists of amounts owed to FMC by its employees and the general public. Accounts receivable in the Salaries and Expense Fund represent employee-related receivables. An allowance for uncollectible accounts receivable from the public is established when, based upon a review of 

outstanding accounts, management determines that collection is unlikely to occur considering the 

debtor’s ability to pay. Debts six months or more past due are referred to the Department of Treasury 

for follow-up collection efforts in keeping with the Debt Collection Improvement Act of 1996 (DCIA). 

Treasury’s Debt Management Services (DMS) administers the program and deducts 18 percent from 

amounts ultimately collected for its fee. Collections, net of fees, are returned to the FMC for remittance 

to the general fund of the Treasury. 

H. Property, Plant and Equipment, Net 

FMC’s property, plant and equipment is recorded at original acquisition cost and is depreciated using the 

straight-line method over the estimated useful life of the asset. Major alterations and renovations are 

capitalized, except wherein the tenant improvement allowance specified in lease agreements covers the 

costs of certain renovations. Maintenance and repair costs are expensed as incurred. FMC’s capitalization threshold is $25,000 for individual purchases. Applicable standard governmental guidelines regulate the disposal and convertibility of agency property, plant and equipment. The useful life classification for capitalized equipment assets is 5 years. 

I. Advances and Prepaid Charges 

Advance payments are generally prohibited by law. There are exceptions, such as some 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. 

J. Liabilities

Liabilities covered by budgetary or other resources are those liabilities for which Congress has appropriated funds or funding is otherwise available to pay amounts due. 

Liabilities not covered by budgetary or other resources represent amounts owed in excess of available 

congressionally appropriated funds or other amounts. The liquidation of liabilities not covered by budgetary or other resources is dependent on future congressional appropriations or other funding. Intragovernmental liabilities are claims against FMC by other federal agencies. Liabilities not covered by budgetary resources on the Balance Sheet are equivalent to amounts reported as components requiring 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 35

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

or generating resources on the Reconciliation of Net Cost to Budget. Additionally, the Government, acting in its sovereign capacity, can abrogate liabilities. 

K. Accounts Payable 

Accounts payable consists of amounts owed to other federal agencies and the public. 

L. 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. Nonvested leave is expensed when used. 

Any liability for unused sick leave by a Civil Service Retirement System (CSRS)-covered employee is 

transferred to the Office of Personnel Management upon the retirement of that individual. No credit is 

given for sick leave balances upon the retirement of Federal Employee’s Retirement System (FERS)-

covered employees. 

M. Accrued and Actuarial Workers’ Compensation 

A liability is recorded for actual and estimated future payments to be made for workers’ compensation 

pursuant to the Federal Employees’ Compensation Act (FECA). The actual costs incurred are reflected 

as a liability because FMC will reimburse the Department of Labor (DOL) two years after the actual 

payment of expenses. 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.

N. Retirement Plans 

FMC employees participate in either the Civil Service Retirement System (CSRS) or the Federal Employees’ Retirement System (FERS). FERS was established by the enactment of Public Law 99-335. 

Pursuant to this law, FERS and Social Security automatically cover most employees hired after December 31, 1983. Employees hired before January 1, 1984 elected to join either FERS and Social Security, 

or remain in CSRS. All employees are eligible to contribute to the Thrift Savings Plan (TSP). For those 

employees participating in the FERS, a TSP account is automatically established and FMC makes a 

mandatory one percent contribution to this account. In addition, FMC makes matching contributions, 

ranging from one to four percent, for FERS eligible employees who contribute to their TSP accounts. 

Matching contributions are not made to the TSP accounts established by CSRS employees. For FERS 

participants, FMC also remits the employer’s share of the required contribution. 

FERS employees and certain CSRS reinstatement employees are eligible to participate in the Social Security program after retirement. 
 36 

CHAPTER THREE 

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Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

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. 

O. Use of Estimates 

Management has made certain estimates when reporting assets, liabilities, revenue, and expenses, and in 

the note disclosures. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported 

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 

P. Net Position 

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. Unobligated balances are the amount of appropriations 

or other authority remaining after deducting the cumulative obligations from the amount available for 

obligation. The cumulative results of operations is the net result of FMC’s operations since inception. 

Q. 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 2008 and 2007 to the extent directed by OMB. 

R. 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 they are both probable and can be reasonably estimated. 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. There are no contingencies that require disclosure. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 37

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 

S. Expired Accounts and Cancelled Authority 

Unless otherwise specified by law, annual authority expires for incurring new obligations at the beginning of the subsequent fiscal year. The account in which the annual authority is placed is called the expired account. For five fiscal years, the expired account is available for expenditure to liquidate valid 

obligations incurred during the unexpired period. Adjustments are allowed to increase or decrease valid 

obligations incurred during the unexpired period but not previously reported. At the end of the fifth expired year, the expired account is cancelled. 

T. Reclassification 

Certain fiscal year 2007 balances may have been reclassified, retitled, or combined with other financial 

statement line items for consistency with the current year presentation. 

NOTE 2. FUND BALANCE WITH TREASURY 

Fund balance with Treasury as of September 30, 2008 and 2007 consisted of: 

The unavailable unobligated fund balances represents the amount of appropriations for which the period of availability for obligation has expired. This balance is 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.

NOTE 3. ACCOUNTS RECEIVABLE, NET 

Net accounts receivable balances as of September 30, 2008 and 2007 are $64,579 and $66,144, respectively. 

The accounts receivable is primarily made up of a balance from one non-federal vendor for $56,421 that 

represents an amount due from a contractor for unsupported claims that were paid by the agency. 

2008 2007

Fund Balances

Appropriated Funds $ 4,062,134 $ 2,843,269

Total Fund Balance $ 4,062,134 $ 2,843,269

Status of Fund Balance with Treasury

Unobligated Balance

Available $ 447,579 $ 4,511

Unavailable 300,086 206,383

Obligated Balance not yet Disbursed 3,314,469 2,632,375

Total $ 4,062,134 $ 2,843,269
 38 

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Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 4. GENERAL PROPERTY, PLANT AND EQUIPMENT 

Property, plant and equipment account balances as of September 30, 2008 and 2007 were as follows: 

NOTE 5. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

The liabilities on FMC’s Balance Sheet as of September 30, 2008 and 2007 include liabilities not covered by budgetary resources, which consist of unfunded leave balances of $1,030,319 and $1,012,520 

and FECA balances of $1,968 and zero, respectively. 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. 

NOTE 6. LEASES 

FMC occupies office space in seven locations, of which only five of the lease agreements are required to 

be accounted for as operating leases. The lease locations and terms are listed below: 

 LOCATION TERM LEASE EXPIRATON DATE

Hollywood, FL 23 months 05/31/2010 

San Pedro, CA 5 years 09/30/2011 

Washington DC 10 years 10/31/2012 

Jamaica, New York 5 years 07/01/2013 

 Houston, TX 10 years 08/31/2018 

The lease amounts vary from year to year depending on the specific lease. The schedule of future payments for the term of the leases is as follows: 

Schedule of Property, Plant and Equipment as of September 30, 2008 

Acquisition Accumulated Net

Cost Depreciation Book Value

Description

Office Equipment 5 yrs. $ 291,938 $ 289,826 $ 2,112

Schedule of Property, Plant and Equipment as of September 30, 2007 

Acquisition Accumulated Net 

Cost Depreciation Book Value 

Description 

Office Equipment 5 yrs. $ 350,588 $ 343,486 $ 7,102 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 39

Chapter Three 

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Fiscal Year Lease Payments

2009 $ 2,877,886

2010 2,892,828

2011 2,897,671

2012 2,913,050

2013 289,816

Thereafter 64,674

Total Future Payments $ 11,935,925

Operating Leases 

The operating lease amount does not include estimated payments for leases with annual renewal options. 

NOTE 7. INTRAGOVERNMENTAL COSTS 

Intragovernmental costs represent goods and services exchange transactions made between two reporting entities within the Federal government, and are in contrast to those with non-federal entities (the 

public). Intragovernmental costs include payments to federal vendors for personnel benefits, rent, 

utilities, and other services. Payments made to non-federal entities (the public) are comprised primarily of employee salaries and other services. Such costs are summarized as follows: 
 40 

CHAPTER THREE 

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Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

2008 2007

Office of Administration:

 Intragovernmental Costs $ 2,844,453 $ 5,641,709

 Public Costs 3,243,979 3,227,832

 Total Office of Administration Costs $ 6,088,432 $ 8,869,541

Office of Operations: 

 Intragovernmental Costs $ 3,005,774 1,155,565 

 Public Costs 6,534,273 6,047,768 

 Total Office of Operations $ 9,540,047 7,203,333 

Formal Proceedings: 

 Intragovernmental Costs $ 1,785,954 753,220 

 Public Costs 3,841,297 4,047,865 

 Total Formal Proceedings $ 5,627,251 4,801,085 

Office of Inspector General 

 Intragovernmental Costs $ 165,737 $ 43,570 

 Public Costs 432,062 350,724 

 Total Office of Inspector General $ 597,799 $ 394,294 

Office of EEO: 

 Intragovernmental Costs $ 71,152 $ 18,754 

 Public Costs 90,751 122,839 

 Total Office of EEO $ 161,903 $ 141,593 

 

Total Intragovernmental costs

$ 7,873,070 $ 7,612,818 

Total Public costs

 14,142,362 13,797,028 

 Total Net Cost

$ 22,015,432 $ 21,409,846 

 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 41

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 8. OPERATING/PROGRAM COSTS 

Costs by major budgetary object classification as of September 30, 2008 and 2007 are as follows: 

NOTE 9. APPORTIONMENT CATEGORIES OF OBLIGATIONS INCURRED 

At September 30, 2008, FMC has $21,690,849 of direct obligations incurred against amounts apportioned under Category A funds, and $20,536,495 at September 30, 2007. Category A apportionments 

distribute budgetary resources by fiscal quarters. FMC has no reimbursable obligations incurred or any 

balance in exempt from apportionment. 

NOTE 10. BUDGETARY RESOURCE COMPARISONS TO THE BUDGET OF THE 

UNITED STATES GOVERNMENT 

Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, calls for explanations of 

material differences between amounts reported in the Statement of Budgetary Resources (SBR) and the 

actual balances published in the Budget of the United States Government (President’s Budget). However, the President’s Budget that will include FY08 actual budgetary execution information has not yet 

been published. The President’s Budget is scheduled for publication in February 2009 and can be found 

at the OMB Web site: http://www.whitehouse.gov/omb. The 2009 Budget of the United States Government, with the Actual column completed for 2007, has been reconciled to the Statement of Budgetary 

Resources and there were no material differences. 

NOTE 11. IMPUTED FINANCING SOURCES 

FMC recognizes as imputed financing the amount of accrued pension and post-retirement benefit expenses for current employees. The assets and liabilities associated with such benefits are the responsibility of the administering agency, the Office of Personnel Management. For the periods ended September 30, 2008 and 2007, respectively, imputed financing from OPM was $1,084,367 and $1,178,255. 

Budgetary Object Classifications 2008 2007

Personnel and Benefits $ 15,476,038 $ 15,530,048

Travel and Transportation 226,734 186,959

Rents, Communication & Utilities 3,217,133 3,290,761

Printing and Contractual Services 2,439,076 1,930,738

Supplies and Materials 164,779 227,805

Equipment 491,672 243,821

Miscellaneous - (286)

Total $ 22,015,432 $ 21,409,846
 42 

CHAPTER THREE 

AUDITORS’ REPORT and FINANCIAL STATEMENTS 

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

NOTE 12. UNDELIVERED ORDERS AT THE END OF THE PERIOD 

Statement of Federal Financial Accounting Standards No. 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, states that the amount 

of budgetary resources obligated for undelivered orders at the end of the period should be disclosed. For 

the periods ended September 30, 2008 and 2007, undelivered orders amounted to $1,959,123 and 

$1,385,730, respectively. 

NOTE 13. CUSTODIAL ACTIVITY 

FMC is an administrative agency collecting for the General Fund. As a collecting entity, FMC reports 

cash collections and refunds as custodial activity on the Statement of Custodial Activity. Cash collections result primarily from FMC regulatory activities to include the assessment of fines and penalties and 

the payment of license fees by qualified ocean transportation intermediaries (OTIs) in the U.S. A small 

portion of amounts collected is for interest on past due fines, petitions, status changes and special permission fees. 

Custodial receipts are broken out in the following general receipt funds: 

NOTE 14. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGET 

The Federal Maritime Commission has reconciled its budgetary obligations and non-budgetary resources 

available with its net cost of operations. 

2008 2007

Fines, Penalties and Forfeitures $ 

182,513

$ 1,372,037

General Fund Proprietary Receipts (license fees) 

299,947

 

587,738

Refund of Moneys Erroneously Received and Covered 

(4,210)

 

(8,664)

Total Custodial Collections $478,250 $ 1,951,111
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 43

Chapter Three 

 AUDITORS’ REPORTS AND FINANCIAL STATEMENTS 

2008 2007

Resources Used to Finance Activities:

Budgetary Resources Obligated

 Obligations Incurred $ 21,690,849 $ 20,536,495

 Less: Spending Authority from Offsetting Collections

 And Recoveries 210,984 220,175

 Obligations Net of Offsetting Collections and Recoveries 21,479,865 20,316,320

 Less: Offsetting Receipts - -

 Net Obligations 21,479,865 20,316,320

Other Resources

 Imputed Financing from Costs Absorbed by Others 1,084,367 1,178,255

 Net Other Resources Used to Finance Activities 1,084,367 1,178,255

Total Resources Used to Finance Activities $ 22,564,232 $ 21,494,575

Resources Used to Finance Items Not Part of the Net Cost of 

Operations

 Change in Budgetary Resources Obligated for Goods,

 Services and Benefits Ordered but Not Yet Provided $ 573,393 $ 59,250

Resources that Fund Expenses Recognized in Prior Periods - 48,731

Total Resources Used to Finance Items Not Part of the Net 573,393 107,981

 Cost of Operations

Total Resources Used to Finance the Net Cost of Operations $ 21,990,839 $ 21,386,594

Components of the Net Cost of Operations that will Not

Require or Generate Resources in the Current Period

Components Requiring or Generating Resources in Future

Periods

 Increase in Annual Leave Liability $ 17,799 $ -

 Other 1,968 -

 Total Components of Net Cost of Operations that will

 Require or Generate Resources in Future Periods 19,767 -

 Components Not Requiring or Generating Resources:

 Depreciation and Amortization 4,989 9,373

 Revaluation of Assets or Liabilities - 13,879

 Other (163) -

 Total Components of Net Cost of Operations that will Not

 Require or Generate Resources 4,826 23,252

 Total Components of Net Cost of Operations that will Not

 Require or Generate Resources in the Current Period 24,593 23,252

Net Cost of Operations $ 22,015,432 $ 21,409,846
 44 

CHAPTER ONE 

MANAGEMENT’S DISCUSSION and ANALYSIS 

CHAPTER FOUR

OTHER ACCOMPANYING INFORMATION 

Fiscal Year 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 44

 Inspector General’s Assessment of the Most Serious Management Challenges Facing the FMC 

Management Challenges Facing the FMC
 45 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

 Inspector General’s Assessment of the Most Serious Management Challenges Facing the FMC 

Management and Performance Challenge: To secure the FMC’s information systems and network against 

destruction, data loss or compromise. 

Agency Progress in Addressing the Challenge: The FMC continues to make progress in developing its information 

security program and has addressed or begun to address past security vulnerabilities identified by the OIG. For 

example, the agency now has documented policies and procedures for many of its IT processes. These form the 

backbone of a mature information security program. The agency’s annual security training program has been 

revamped to include protection of personally-identifiable information (PII) and other privacy-related issues. 

Participation in this on-line training module is mandatory and employees are required to pass a test at the 

completion of the training session. The agency installed scan software, enabling security staff to scan the FMC 

network for harmful activities and vulnerabilities and initiated planning for security control implementation at its 

continuity of operations (COOP) site. 

Although progress has been made, the OIG has noted areas where improvements are still needed. Implementation 

of a successful IT security program requires that Federal agencies adopt an enterprise-wide security strategy. It 

requires a fundamental shift from policy-based compliance to a risk-based approach where agency missions and 

business functions drive security requirements and associated safeguards. Risks differ depending on agency 

mission and objectives. Based on the current and prior-year IT security evaluations, the OIG believes that the 

agency has not yet made the shift to a risk-based approach. 

In prior years, the agency followed a piecemeal approach to information security, focusing on securing the 

agency’s firewall from outside attacks, downloading patches where appropriate and upgrading infrastructure with 

enhanced security capabilities. At the same time, the agency focused on building new databases, increasing online connectivity to the agency and its resources and enhancing the tools available to staff to do its work. When 

security and plans for improving functionality clashed, security often lost out. As a result there was no overall plan 

to manage information security at the agency. 

The agency continues to struggle with accrediting its information systems. The accreditation process provides 

assurances that security is included in systems from the ground up during development, that risks to those systems 

are identified and controls implemented that are commensurate with the level of risk, and that the systems are 

continuously monitored for changes to the risk factors. 

In our FY 2007 review of IT security, the OIG opined that the lack of a certification and accreditation process was 

a significant deficiency in the agency’s IT security program. In our FY 2008, assessment, the condition continued 

to exist, resulting in the same finding. However, the FMC also, near the end of the fiscal year, allocated significant 

budgetary resources to a private, information security consulting firm, to address weaknesses in its information 

security program, including the certification and accreditation of all agency systems, and the development of a 

comprehensive security program to guide the agency in future requirements and challenges. 

The Challenge Ahead: IT threats are changing daily. Vulnerabilities arise overnight. Attacks are made on the IT 

resources of government organizations hourly, many by “thrill seekers” with little or no need or desire for data. 

Still, systems are compromised and, often, data is lost or destroyed. Fortunately the FMC has not fallen victim to 

“hackers.” However, the agency must not become complacent. One weak link is all hackers need to compromise 

an entire network. 

As the agency continues to move toward electronic databases and applications with a concomitant increase in 

internet activity, the agency must remain diligent. The investment needed this year to bring agency systems into 

compliance with Federal requirements is substantial. For too many years, emphasis was placed on production (i.e., 

faster servers, more powerful desktops, enhanced software, etc.) rather than on security. Now the agency has 

fallen behind and must spend liberally. Moving forward, it is essential that security receives the attention (i.e., 

resources) it needs to protect agency assets, and the assets of the organizations connected to FMC systems, from 

being compromised or destroyed. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 46

Management and Performance Challenge: Ensure that controls over safeguarding personally identifiable 

information are maintained. 

Agency Progress in Addressing the Challenge: During the past year, the FMC has taken significant steps to protect 

PII that is stored electronically. For example, the agency implemented several privacy and data protection policies, 

reviewed systems of record and updated its Systems of Records Notice (SORN), reviewed the collection of staff’s 

personally identifiable information to assess whether such collection is needed and included sections on privacy 

and data protection in its annual security awareness training. 

The Challenge Ahead: While the FMC has made progress in implementing privacy and data protection practices, 

it has not always gone far enough to ensure that controls over PII in both paper and electronic form are 

implemented. For example, the agency posted its privacy policy on the FMC website, and created a Privacy 

Impact Assessment (PIA) review tool. However, there is no guidance or procedures for conducting PIA’s on 

electronic information systems. A PIA review had only been conducted on one of the agency’s four systems. 

Further, the web-posted policy was not posted in standardized, machine-readable format to ensure that individuals 

using any one of a number of web browsers can access it. The agency has not encrypted all data on mobile 

computers/devices carrying agency data; required two-factor remote access authentication; implemented a 30-

minute inactivity timeout function for remote access; or logged and verified all computer-readable data extracts 

from databases holding sensitive information. 

All FMC managers must continue to focus on the challenge of safeguarding the sensitive personal information in 

their possession, both electronically and maintained in hard copy records, and include measures to control the 

collection, use and transmission of such information. The agency’s Privacy Act Officer must continue to work 

with the Chief information officer and the Senior Agency Officer for Privacy to ensure a coordinated effort to 

protect public and agency staff’s PII. 

Management and Performance Challenge: Implement a user fee structure that is fair, efficient and complies with 

applicable regulation and cost accounting principles. 

Agency Progress in Addressing the Challenge: 

The FMC has implemented a process to set user fees for services or products from which the recipient derives a 

benefit so that the Government recovers the full cost of rendering that service. The agency determines (or 

estimates) full costs from the best available records in the agency. 

The user fees established are based on direct labor costs plus fringe benefits, multiplied by a calculated overhead 

rate. Based on prior audit work in this area, the OIG determined that the agency did not calculate and apply 

overhead rates in keeping with cost accounting principles. Using its current methodology, the agency charges one 

dollar of overhead for each dollar of direct labor allocated. This method significantly understates the agency’s 

costs by about half. 

The Challenge Ahead: 

The agency has not calculated user fees using generally accepted cost accounting methods. As a result, the agency 

continues to undercharge for services it provides to the public. The OIG understands that there are policy 

implications to dramatically increasing fees, as this outcome would require. Specifically, attempts to safeguard the 

public through the licensure of transportation intermediaries, for example, could be negatively impacted if fees 

were dramatically increased to cover full costs. Small businesses could decide to forgo an FMC license and its 

accompanying consumer-oriented safeguards. Office of Management and Budget Circular A-12, User Charges, 

advises agencies to review fees charged to the public every two years. The last review occurred at the FMC in 

2005. 

To stay in compliance with the regulation, the agency needs to revisit its cost allocation methodology, specifically 

the identification and application of indirect cost rates. Because of formulas used to set cost rates, moving some 

indirect costs to direct costs, would decrease overhead rates and lower total costs. Alternatively, management 

could propose to the Commission that it set fees artificially low to ensure that the “greater good,” i.e., widespread 

compliance with licensing requirements, is achieved. 

 Inspector General’s Assessment of the Most Serious Management Challenges Facing the FMC 
 47 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

Management and Performance Challenge: To perform all procurement transactions in a manner that provides for 

and promotes full and open competition. 

 Agency Progress in Addressing the Challenge: During the past two fiscal years, the OIG identified weaknesses in 

the procurement operation that has led to the agency overpaying for services, limiting competition and spending 

excessively at year-end. In many instances, there was a demonstrated lack of procurement planning, which 

resulted, in part, in Congressional inquiries as to how the agency was spending appropriated funds. Contributing 

to these outcomes was the culture within the agency to spend all of its unspent appropriated funds (due primarily to 

significant personnel vacancies) so as not to reduce subsequent years’ appropriations. 

Recognizing weaknesses in these areas, the director of the procurement office has taken steps to tighten up the 

controls in place to guard against these and similar abuses in procurement transactions. Management has agreed to 

use a service provider at a sister agency to process many of its complex procurement transactions. Management 

also now uses a procurement checklist to ensure that all FAR regulations are followed to ensure competition 

among procurements. Financial managers have tightened controls over spending. In FY 2008, the agency 

returned over 2 percent of its budget back to the Treasury, up from .0002 percent the previous year. 

The Challenge Ahead: Problems in the procurement area often surface at or near fiscal year end when unused 

funds are available to address unmet needs. The temptation is to use these funds to address legitimate agency 

needs while protecting the agency’s base. As is too often the case, in the rush to obligate funds in the waning days 

of the fiscal year, sometimes regulations are not closely followed. In some extreme cases, the agency may end up 

paying more for goods and services because it was not careful to obtain multiple bids. It is critical to begin proper 

procurement planning, not in the weeks prior to the fiscal year end, rather in the first month of the fiscal year by 

beginning to identify unmet program needs should excess funds be available at year end. 

Management and Performance Challenge: To be accountable to agency stakeholders and taxpayers for 

administrative and regulatory decisions made by the Commission. 

 Agency Progress in Addressing the Challenge: At the agency’s oversight hearings in FY 2008, criticisms were 

voiced that the Commission, collectively, was not making decisions and not effectively overseeing the 

administration of the agency. Several vacancies remained unfilled for several months causing angst and 

uncertainty among existing staff regarding the future of the agency – not to mention the obvious impact on 

workload for those who remained. Lacking an agency head for several months due to the departure of the previous 

chairman (without replacement), many within the agency felt that the FMC was a ship adrift on the ocean, without 

clear direction. 

Without a chairman, the Commission met infrequently, choosing instead to vote on matters using voting sheets or, 

in the vernacular of the Commission, on notation. While this approach was seen by some as an efficient and 

effective way to conduct the agency’s business, it also had the unintended effect of limiting public debate among 

Commissioners. 

In response to external criticisms, and the realization that a new chairman would not be forthcoming in the near 

future, the remaining Commissioners made significant changes in how the agency conducted its business. For 

example, the Commission now meets in public session on a bi-monthly basis. These meetings provide an 

opportunity for the Commission to exercise oversight of the agency and for industry and the public to observe 

select deliberations and decision making affecting the maritime industry. The agency has moved forward with 

filling critical staff vacancies and planning staff have revised the agency’s strategic plan to better reflect the 

agency’s role in a changing maritime industry. Recent Office of Personnel Management Human Capital employee 

surveys indicate that staff attitudes about the FMC workplace have significantly improved. 

 Inspector General’s Assessment of the Most Serious Management Challenges Facing the FMC 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 48

The Challenge Ahead: The agency faces challenges on a number of fronts, both in the immediate future and 

moving forward as it seeks to regulate a sector of the economy that has changed more than most. Short term, the 

agency has operated without a chairman since December 2006. The existing Commissioners are tasked with 

jointly serving as the chairman. This requires an extraordinary amount of cooperation and compromise as the 

commission involves itself in the daily management of the agency. 

On the programmatic front, the Commission is witnessing dramatic increases in demand for U.S. exports. The 

total cargo volume of U.S. liner exports shipped worldwide grew by approximately 20 percent in FY 2008, 

however import cargo still exceeded export cargo by a factor of almost 2:1. 

The Commission continues to oversee developments in the U.S. export growth. Paradoxically, this growth has 

resulted in new challenges for the agency. Specifically, shippers in certain parts of the country are having 

difficulty obtaining sufficient containers and services to ship their goods. The Commission has reached out to both 

carriers and shippers to solve the supply problem. The OIG applauds the Commission’s efforts in this regard and 

believes that outreach, both to the industry it regulates, and to the public who rely on the FMC to ensure a fair, 

efficient and effective maritime industry, enhances the FMC’s accountability and value to its stakeholders and the 

public. 

 Inspector General’s Assessment of the Most Serious Management Challenges Facing the FMC 
 49 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

 Summary of Financial Statement Audit and Management Assurances

Audit opinion

Restatement

Material Weakness Beginning Balance New Resolved Consolidated

None $0.00

Unqualified

No

Summary of Financial Statement Audit

Table 1.

Statement of Assurances

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

None $0.00 $0.00

Total Material Weaknesses $0.00 0 0 0 0 $0.00

Statement of Assurances

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

None $0.00 $0.00

Total Material Weaknesses $0.00 0 0 0 0 $0.00

Statement of Assurances

Material Weakness Beginning Balance New Resolved Consolidated Reassessed Ending Balance

None $0.00 $0.00

Total Material Weaknesses $0.00 0 0 0 0 $0.00

Overall Substantial Compliance

1. System Requirements

2. Accounting Standards

3. USSGL at Transaction Level

Table 2.

Summary of Management Assurances

Yes

Yes

Agency Auditor

Yes Yes

Yes

Conform

Compliance with Federal Financial Management Improvement Act (FMFIA)

Unqualified

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Effectiveness of Internal Control over Financial Operations (FMFIA § 2)

Unqualified

Conformance with financial management system requirements (FMFIA § 4)
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 50

FEDERAL MARITIME COMMISSION 

FINAL ANNUAL PERFORMANCE PLAN FOR FY 2008

February 2007 

 Final Annual Performance Plan 2008 
 51 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

LIST OF ACRONYMS 

 

1984 Act Shipping Act of 1984 

 

AR Area Representative 

 

BCL Bureau of Certification and Licensing 

 

BOE Bureau of Enforcement 

 

BTA Bureau of Trade Analysis 

 

CADRS Office of Consumer Affairs and Dispute Resolution Services 

 

COOP Continuity of Operations Plan 

 

EHR1 Enterprise Human Resources Integration 

 

e-OPF Electronic Official Personnel Folder 

 

FMC/Commission Federal Maritime Commission 

 

FR Final Rule 

 

FRB Federal Reserve Bank 

 

FTE Full Time Equivalent Employee 

 

FY Fiscal Year 

 

GPEA Government Paperwork Elimination Act 

 

GPRA Government Performance and Results Act 

 

IAA Inter-agency Agreement 

 

IT Information Technology 

 

NARA National Archives and Records Administration 

 

NPR Notice of Proposed Rulemaking 

 

NVOCC Non-Vessel-Operating Common Carrier 

 

OIT Office of Information Technology 

 Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 52

OMB Office of Management and Budget 

OPF Official Personnel Folder 

OPM Office of Personnel Management 

OPS Office of Operations 

OSRA Ocean Shipping Reform Act of 1998 

OTI Ocean Transportation Intermediary 

PVO Passenger Vessel Operator 

SAHRC Small Agency Human Resources Consortium 

SC Service Contract 

SOW Statement of Work 

U.S. United States 

VOCC Vessel-Operating Common Carrier 

 

 

 

 

 

 

 

 

 

Final Annual Performance Plan 2008 
 53 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

INTRODUCTION 

This document comprises the FMC’s Final Annual Performance Plan for FY 2008. This plan is 

closely linked to the agency’s Strategic Plan, and it sets forth objective performance goals and 

narrow, measurable performance indicators so as to facilitate implementation and assessment of 

performance. 

For FY 2008, we have continued the modified approach for our annual planning first 

implemented with our Revised Final Plan for FY 2005. Agency performance goals now are tied 

directly to our Strategic Goals instead of our budget program activities. This has resulted in the 

development of broader performance goals better suited to the achievement of agency-wide 

objectives, as opposed to more narrowly focused goals tailored to the responsibilities of 

individual units. It also facilitates our aim of utilizing a more inclusive, collaborative approach 

in conducting our ongoing activities, which we believe both enhances decision-making and 

improves ultimate results. Addressing our performance goals in this fashion also has enabled us 

to link planning, budgeting and performance more effectively. 

Our Plan for FY 2008 focuses on continuing our efforts to implement the President’s 

Management Agenda initiative to expand electronic government. Several performance goals 

focus on utilizing technology to streamline and simplify the delivery of services and 

information to regulated entities and the public, and to improving our databases so the staff can 

more effectively identify regulated entities, relevant data/information, and potential abuses. 

Performance goals also were developed to enhance our management capabilities, with 

particular focus on the more effective use of teleworking and the implementation of EHRI, and 

to improve our technological efficiency through upgrading agency network and desktop 

operating systems and improving access to library information. 

The Commission’s Annual Performance Plan comports with the overall objectives of GPRA 

while maintaining flexibility in its presentation and application. This modified approach has 

been authorized by OMB since the majority of Commission activities are statute-driven and our 

goals essentially are based upon legislative mandates which are clear and direct. Significant 

alteration of our existing programs is not possible, given that many measures and goals are 

required by statute. 

Our Plan sets forth the mission statement and general goals from our Strategic Plan, as a point 

of reference for the reader. As aforementioned, we have prepared performance goals for the 

agency in line with each of the agency’s Strategic Goals. Each performance goal has been 

stated as a narrow, measurable objective. For each performance goal, we have identified the 

related “means to achieve” from the Strategic Plan, the intended outcomes, appropriate 

performance indicators, the processes and resources required to accomplish it, and the means 

for measuring/evaluating performance. To ensure a clear understanding of the Plan’s contents, 

set forth below are definitions of basic terms used. We relied on OMB’s published guidance for 

these definitions, and have included parenthetically our interpretation of their practical 

application. 

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 54

Performance Goal - A target level of performance; a measurable objective (a specific, 

proposed performance action). 

Related Strategic Goals/Outcomes/Means - A specific action identified in the agency’s 

Strategic Plan as one means of achieving a particular Strategic Goal (actions to accomplish 

Strategic Goals). 

Outcome - Intended result or consequence of carrying out the activity (the projected effect or 

what is hoped to be achieved). 

Performance Indicator - A value or characteristic for measuring results (the quantifier or 

qualifier of performance). 

Process/Activity - The processes, skills, or resources that are required to effectively accomplish 

a performance goal (what is needed to achieve the goal). 

Performance Measure/Evaluation - The means used to verify and validate measured values 

(methods used for assessing if programs achieved objectives or, the specific means to measure 

if outcomes were realized). 

The Commission used its existing consultation process in developing this Plan. We have kept 

key Congressional Committees apprised of our efforts, and have responded to any inquiries. We 

continued our ad hoc meetings and visits with industry officials to discuss the state of U.S. 

ocean shipping and the FMC’s oversight responsibilities. In coordination with the various 

sectors of the maritime industry, we are holding periodic briefings by industry experts designed 

to provide Commission staff with valuable information on industry services, operations, 

business practices, and regulatory concerns. And we have initiated a broader outreach program 

to expand our extant seminar series, where agency staff travels to various locations to exchange 

information and discuss relevant issues with the industry and the shipping public. The 

information and opinions we received via these various efforts have assisted us in developing 

our performance goals and implementing approaches. It is clear that those involved in the 

various sectors of U.S. ocean shipping understand the Commission’s major program activities 

and, at the same time, the Commission is cognizant of the views of all parties with whom it 

interacts. 

In line with OMB guidance, the Commission has reflected the resources needed to accomplish 

its various functions. We have provided FTE and funding figures for each Strategic Goal, which 

reflect what we believe will be required to accomplish the performance goals and “steady state” 

functions under each respective Strategic Goal. Accordingly, all Commission resources are 

accounted for in this Plan, i.e., the figures under each Strategic Goal, when summed, reflect the 

full FTE and funding levels of our FY 2008 budget. 

 

Final Annual Performance Plan 2008 
 55 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

The Commission will post this Performance Plan on its Internet website to ensure that it is 

readily accessible to interested parties, and will advise all employees to take the time to review 

it. Additionally, all employee performance plans are required to comport with the agency’s 

Strategic and Annual Performance Plans, and contain specific elements and standards with a 

clear explanation of what is expected of the employee in support of the agency achieving its 

goals. This process in turn has the effect of directly furthering the Administration’s initiative on 

strategic human capital management. Performance of managers and staff is evaluated in part on 

how they achieve the objectives in this plan. 

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 56

FMC STRATEGIC GOALS 

1. Efficient Regulatory Process: Provide a timely, efficient and decisive regulatory process, 

including alternative dispute resolution, to enable all segments of the industry to operate more 

effectively, with a minimum of regulatory costs. 

2. Compliance: Promote efficiency and fairness in U.S. foreign waterborne commerce through 

various means, including outreach and monitoring, to protect the public and assist stakeholders 

in achieving compliance with ocean transportation statutes administered by the FMC. 

 

3. Balanced Enforcement: Foster economic efficiencies, reliance on marketplace factors and 

maritime security by administering U.S. shipping statutes in a balanced and equitable manner to 

redress excessive anticompetitive actions and other unlawful activities. 

 

4. Technological Efficiencies: Employ technological enhancements to improve efficiency and 

to facilitate the exchange of information. 

 

5. Management Capabilities: Ensure the FMC has the appropriate organizational framework 

and management systems to carry out its statutory mandates. 

 

 

Final Annual Performance Plan 2008 
 57 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

FMC VISION AND MISSION

The FMC’s vision is: 

 

Fairness and Efficiency in U.S. Maritime Commerce. 

 

To achieve its vision, the FMC’s mission is to: 

 

• Develop and administer policies and regulations that foster a fair, efficient and 

secure maritime transportation system; 

 

• Protect U.S. maritime commerce from unfair foreign trade practices and marketdistorting activities. 

 

• Facilitate compliance with U.S. shipping statutes through outreach and oversight. 

 

• Assist in resolving disputes.

 

OSRA and the events of September 11, 2001, have significantly changed the manner in which 

the business of ocean shipping is being conducted. The industry continues to restructure its 

operations to adapt to dynamic economic conditions, emerging trends, and maritime security 

efforts. International trade remains dependent upon an efficient ocean transportation system. 

Therefore, it is imperative for the FMC to ensure that its oversight activities produce a 

competitive trading environment in U.S. ocean commerce that is in harmony with and 

responsive to international shipping practices, and permits fair and open commerce. We must 

focus our energies and efforts on this mission, and assure that the agency is organized and 

managed in a manner best suited to accomplish it with a minimum of government intervention 

and regulatory cost. Effective use of emerging information technologies will facilitate our 

efforts. Our actions also must encourage the development of a sound U.S.-flag liner fleet. 

Accordingly, the FMC has established the following five strategic goals to carry out its 

statutory mandates. 

 

 

 

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 58

LINKAGE BETWEEN MISSION STATEMENT AND STRATEGIC GOALS 

Our strategic goals address essential FMC statutory, programmatic, and management 

responsibilities. They were developed with a specific focus on accomplishing the basic 

purposes of our mission and attaining the competitive, nondiscriminatory shipping environment 

envisioned by the 1984 Act, as amended by OSRA. 

The primary intention of Strategic Goal 1 is to minimize regulatory costs by maintaining timely 

and decisive regulatory processes, and providing various dispute resolution services. This will 

render the FMC more effective in addressing matters that perpetuate discrimination or preclude 

industry efficiency, while reducing the costs of pursuing matters before the Commission. 

Decisive action and effective assistance in resolving informal complaints or disputes will help 

to remove uncertainties as to statutory interpretations or the application of FMC rules. Such 

uncertainties may impede operational efficiencies or technological changes, each of which can 

foster a more economical ocean shipping system. 

Our second strategic goal centers on achieving compliance with the substantive provisions of 

the shipping statutes the FMC administers, and protecting those involved in U.S. ocean 

commerce from unfair practices. We will address this goal particularly by interacting with all 

sectors of the industry, and by vigilant monitoring of ongoing commercial activities. 

Accomplishing this goal should minimize the unjust discrimination and undue preference or 

prejudice that precludes certain shipping interests from obtaining rates or service levels that can 

render their businesses more economic and efficient. Increasing industry compliance should 

enable stakeholders to concentrate on fair and legal means of enhancing operational efficiency, 

secure in the knowledge that competitors are not engaging in widespread illegal actions aimed 

at improving short-term profits. The agency’s focus on the qualifications of intermediaries 

operating in the 

 

U.S. trades will afford greater protection to our stakeholders and contribute to national maritime 

security. And cruise passengers also will be protected through the demonstration of financial 

responsibility by passenger vessel operators. 

Strategic Goal 3 is designed to foster economic efficiencies, assist maritime security initiatives, 

promote reliance on marketplace factors, and redress excessive anticompetitive practices 

harmful to international commerce. This is a direct link to our mission statement’s call for an 

efficient, secure, market-driven ocean transportation system. Our continuing efforts to address 

the actions of foreign governments that adversely affect U.S. interests and our foreign trade 

comport with that aspect of our mission aimed at creating an environment free of unfair foreign 

maritime trade practices. Our focus on commercial malpractices enhances our objective of 

limiting unlawful activities. 

We also have a specific strategic goal that focuses on making effective use of advancements in 

IT to improve the efficiency of our operations and enhance our exchange of information with 

external parties. Carrying out the agency’s mission in times of budgetary limitations dictates 

that we appropriately utilize all available resources. Dynamic changes continue to be made in 

Final Annual Performance Plan 2008 
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CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

this area, and the Commission intends to take advantage of any improvement that can enable it 

to perform its functions more effectively. We hope to improve our business operations so as to 

add efficiency to the Commission’s dissemination and receipt of information. We intend to 

perform the research and analysis necessary to identify the best options for implementing 

technical enhancements to facilitate our efforts to achieve our mission. 

Finally, our fifth strategic goal addresses Commission management and operations. In order to 

achieve the objectives of our mission, we must maintain effective processes that enhance 

efficiency, without serving as ends in themselves. It is essential that we manage for results, and 

that we effectively tie our budget needs to our performance. This strategic goal serves as the 

internal underpinning that enables us to accomplish the policy objectives set forth in our 

mission statement. This goal also ensures continuation of a comprehensive approach to the 

strategic management of our human capital. 

Achieving these mission-driven goals will enable us to address the external factors we face, 

while assuring an equitable and efficient administration of the shipping statutes under our 

jurisdiction. Our processes and procedures will be refined or updated as necessary. We are 

committed to accomplishing our strategic goals and the outcome goals related to them. 

Therefore, specific means have been identified to enable the FMC to achieve these goals in the 

most cost-efficient and least disruptive manner possible. 

 

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 60

I. STRATEGIC GOAL: Efficient Regulatory Process 

36 FTEs and $6,731,000 will be required to accomplish this goal. 

2008 Steady State Activities: 

— Adjudication and resolution of complaints 

— Adjudication and resolution of investigatory proceedings, including fact-findings and 

show cause proceedings 

— Issuance of rules through the rulemaking process 

— Commission decision-making activities through meetings (formal and notation) that 

comply with the Government in the Sunshine Act 

— Public information and assistance processes such as press relations, responses to 

legislative and regulatory inquiries, and compliance with Freedom of Information Act 

and Privacy Act requirements 

— Other regulatory processes, including activities such as appeals of delegated authority 

actions, policy issuances, and formal petition processes 

— Providing timely legal counsel to the Commission in order to facilitate regulatory 

action that is consistent with statutory mandates, representing the Commission’s interest 

in matters before Congress and OMB 

— Reviewing and refining Commission rules to determine their economic impact and 

ensure that they reflect the current industry environment, as well as meet the needs of 

the Commission’s regulatory mandate 

— Compiling, organizing, and maintaining Commission records 

— Monitor, review and modify, as necessary, Commission regulations to address 

changing trade conditions, industry practices or statutory modifications 

Final Annual Performance Plan 2008 
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CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

Final Annual Performance Plan 2008 

Performance 

Goal

Related Strategic Goals/ Outcomes/ MeansOutcome Performance 

Indicator

Process/Activity Performance Measure/ 

Evaluation

1. Develop 

plan for automating PVO 

Application 

Form 131 

and perform 

requirements 

analysis.

- Automate 

agency systems.

- More user friendly 

and convenient process for industry to 

apply for certificates 

of nonperformance 

and casualty. 

- Reduction in burden and cost for 

industry. 

- More timely and 

effective staff review and process. 

- More efficient database management.

- Facilitate 

filing of PVO 

applications. 

- Improve 

BCL’s ability 

to receive and 

process PVO 

certificates. 

- Contributes to 

streamlined 

PVO process. 

- Reduce staff 

database management efforts.

- Discuss with 

PVOs benefits 

of electronic 

filings.

 - Identify system functionality.

- Initiate development of 

SOW.

- Begin development of system 

& implementation plans.

- Requirements analysis 

conducted.

- Initial SOW drafted.

- Feedback from staff.

- Identify and resolve any 

impediments, then continue 

next steps identified in 

overall plan.

2. By 

9/30/08, 

assess the 

impact and 

effectiveness 

of the new 

rules for 

agreements. 

-Update and/or 

refine FMC 

rules relating to 

the content of 

filed agreements, minutes, 

information 

form & monitoring reports.

-Written report to 

Director, OPS re: 

- Extent relevant 

filings are timely, 

useful, complete, & 

accurate. 

- Level of industry 

compliance/ concerns - 

Filings’ impact on 

regulatory costs/

burdens; 

- Impact on processing times for 

agreement filing/

effective -ness 

of ongoing monitoring of agreements of concern to 

BTA; - Impact 

on “follow-up” 

contacts w/filers 

related to routine 

monitoring; 

- Extent to which 

filed information 

effectively used; 

-Recommendations 

for further changes 

to rules postassessment. 

-Drawing on 

relevant BTA 

databases, data 

and information to address 

the performance goal are 

collected. 

-Relevant 

agreement 

files reviewed, 

and information relevant to 

the performance goal collected. - BTA 

staff surveyed 

to collect information relevant to the 

performance 

goal. 

- Relevant data 

from samples 

of industry 

filers collected. 

-Research team 

is established -- 

composed of a 

team leader and 

approximately 

four BTA staff 

members. 

-Team agrees 

on the necessary tasks & 

workload distribution to 

address fully 

the performance goal. 

-Team meets bi

-weekly to 

share findings, 

concerns or 

problems. 

- Team members meet with 

industry representatives for 

relevant input. 

- Team drafts 

final report and 

any proposals 

for revising 

existing rules. 

-Bureau director manages 

ongoing staff efforts. 

-Team leader for project 

tracks progress of team 

through periodic meetings 

and deadlines established 

to maintain schedule. 

- Feedback from industry 

sectors on costs/burdens 

related to current rules, 

and on alternative data 

sources. 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 62

II. STRATEGIC GOAL: Compliance 

47 FTEs and $7,970,000 will be required to accomplish this goal. 

2008 Steady State Activities: 

— Reviewing and maintaining a database of SCs between ocean common carriers and 

shippers, and using this database to guard against anticompetitive practices and other 

unfair prohibited activities under the 1984 Act. 

 

— Ensuring that common carriers’ rates and charges are accessible to the shipping public in private, electronically accessible systems. 

 

— Ensuring that OTIs maintain bonds that protect the shipping public from financial 

losses. 

 

— Providing formal and informal legal opinions and guidance to the Commission’s staff 

and the general public to ensure clarity and understanding of Commission rules and 

regulations. 

 

— Administering the Commission’s international affairs program. 

 

— Working with other agencies to enhance maritime security. 

 

— Reviewing operational and pricing agreements among ocean common carriers and 

marine terminals to ensure that they do not unduly restrict competition. 

 

— Issuing passenger vessel certificates evidencing financial responsibility of vessel 

owners or charterers to pay judgments for personal injury or death or to repay fares for 

the nonperformance of voyage or cruise. 

 

— Licensing OTIs to protect the public from unqualified, insolvent, or dishonest companies. 

 

— Responding to informal complaints and informal inquiries from Congress and the 

public relating to Commission responsibilities. 

 

— Acting as a liaison between the FMC and the public by responding and/or coordinating agency responses to public inquiries. 

 

— Maintaining a specialized maritime law library for agency and public use. 

 

— Conduct audit activity of regulated entities, including OTIs and VOCCs, to promote 

and ensure compliance with applicable statutes and Commission regulations. 

Final Annual Performance Plan 2008 
 63 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

— Respond to inquiries and complaints from the regulated industry and shipping public. 

Provide information, assistance and forms necessary to comply with applicable statutes 

and Commission regulations including educational seminars. 

Performance 

Goal

Related Strategic Goals/ Outcomes/ Means

Outcome Performance Indicator Process/Activity Performance 

Measure/ 

Evaluation

1. Enhance OTI 

audit/monitoring 

program as to 

unlicensed operators.

-Ensure higher 

compliance with 

licensing & 

bonding requirements. 

-Enhance monitoring programs 

to improve industry compliance.

-Ensure those 

OTIs whose applications have been 

rejected or terminated for inaction 

receive compliance follow-up. 

- Pursue, monitor 

or audit those 

OTIs who fail to 

get licensed or relicensed.

- Number of entities relicensed. 

- Number of compliance 

or enforcement actions 

against entities who refuse to be licensed or relicensed.

- Develop procedures to assist review of monitoring. 

- Identify procedures and requirements to coordinate 

possible compliance or enforcement actions.

-Quarterly reviews by BCL. 

-Quarterly reports 

by BOE & ARs 

as to efforts with 

regards to noncompliant entities.

2. Begin redesign of the functionality of OTI 

list on the 

homepage to 

include more 

information and 

make it more 

interactive.

-Increase outreach via FMC’s 

homepage.

- Enhance query/ 

search capability. 

- Provide more 

timely information. 

-Protect the public & users of 

ocean transportation services by 

providing more 

information re: 

choosing an OTI 

or ensuring an 

OTI is licensed/

bonded.

- Facilitate industry and 

public accessibility to 

list of compliant OTIs. 

- Improve compliance 

with statute and regulations by OTIs and 

VOCCs. 

- Enhance protection of 

shipping public.

- Identify data to 

be displayed & 

queried.

 - Conduct requirements analysis.

- Develop overall 

plan for system 

and its implementation.

- Requirements 

analysis successfully completed.

- Identify and 

resolve any impediments, then 

continue next 

steps identified 

in overall plan.

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 64

III. STRATEGIC GOAL: Balanced Enforcement 

19 FTEs and $3,497,000 will be required to accomplish this goal. 

2008 Steady State Activities: 

— Investigating discriminatory rates, charges, classifications, and practices of common 

carriers, terminal operators, and OTIs operating in the foreign commerce of the U.S. 

— Representing the FMC before U.S. courts and other administrative agencies. 

 

— Reviewing staff recommendations and initial decisions for legal sufficiency and preparing final decisions and orders. 

 

— Regulating rates, charges, and rules of government-owned or -controlled carriers to 

ensure that they are just and reasonable and are not unfairly undercutting private competitors. 

 

— Protecting shippers and carriers engaged in the foreign commerce of the U.S. from 

restrictive or unfair foreign laws, regulations or business practices that harm U.S. shipping interests or ocean trade. 

 

— Prosecute formal proceedings initiated by the Commission. 

 

— Monitor activities and conduct investigations of regulated entities and of SC activity 

to ensure compliance with statutes and regulations administered by the Commission. 

 

— Conduct non-adjudicatory fact-finding proceedings as directed by the Commission. 

 

— Provide liaison between the Commission and the shipping industry, the public and 

other governmental entities. 

 

— Coordinate and cooperate with other government entities to improve homeland security by effective exchange of information and assistance regarding foreign ocean transportation. 

Final Annual Performance Plan 2008 
 65 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

Performance 

Goal

Related Strategic 

Goals/Outcomes/ 

Means

Outcome Performance Indicator Process/Activity Performance 

Measure/ 

Evaluation

1. Review “best 

practices” re: 

VOCCs & 

NVOCCs offering service to non

-compliant entities

- Encourage voluntary compliance by 

increasing outreach to industry.

-Improved compliance by VOCCs 

and NVOCCs w/

their statutory responsibility not to 

provide service to 

non-compliant 

OTIs. 

-Improved maritime security by 

limiting service to 

non-compliant 

OTIs. 

-Increased protection of the shipping 

public by limiting 

the operations of 

unbonded and 

unqualified OTIs. 

-More equitable 

competition among 

VOCCs and among 

entities operating 

as compliant OTIs.

-Increased recognition by 

VOCCs & NVOCCs of 

the benefits of implementing a “best practices” 

program. 

-Reduction in the number 

of noncompliant OTIs 

receiving service from 

VOCCs & NVOCCs. 

-Reduction in the number 

of complaints received by 

CADRS relating to unbonded & untariffed 

NVOCCs.

-Utilize outreach 

resources, including the FMC’s 

website, electronic 

databases & activities of the 

ARs, to promote 

the ‘best practices” program 

among the VOCC 

& NVOCC communities. 

-Provide appropriate “mitigation” 

recognition in 

enforcement actions to entities w/ 

“best practices” 

programs.

-Review of outreach & promotional efforts & 

materials developed to advise 

VOCCs & 

NVOCCs of the 

availability of 

the “best practices” program. 

-Number of 

VOCCs & 

NVOCCs implementing “best 

practices” programs. 

-Usage of “best 

practices” in 

mitigation of 

enforcement 

actions. 

-Level of recidivism among 

those VOCCs & 

NVOCCs adopting “best practices” programs.

2. Develop rulemaking containing new enforcement options 

against cruise 

lines that fail to 

file PVO reports.

- Enhance monitoring programs 

to improve compliance.

- Timely filed and 

accurate PVO 

reports. 

- More efficient 

and effective 

monitoring of 

PVO activities.

- Reduction of staff resources spent contacting 

PVOs to submit reports.

- Prepare NPR. 

- Solicit comments. 

- Issue FR.

- Reduction in 

number of 

PVOs identified 

as noncompliant. 

- Actions taken 

against noncompliant 

PVOs.

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 66

IV. STRATEGIC GOAL: Technological Efficiencies 

15 FTEs and $2,518,000 will be required to accomplish this goal. 

2008 Steady State Activities: 

— Implementing a wide range of IT programs and services, including operating the 

agency’s local area network, strategic planning for short- and long-term IT initiatives, 

IT security, data telecommunications, database development and management, and 

Internet page development and maintenance to enhance productivity and efficiency. 

 

— Maintaining and updating internal databases to enhance the ability of the public and 

Commission to obtain relevant program-related information and enhance staff productivity. 

 

— Converting Commission records into electronic format to enable easier public access 

to information 

Final Annual Performance Plan 2008 
 67 

CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

Performance Goal

Related 

Strategic 

Goals/ Outcomes/ 

Means

Outcome Performance IndicatorProcess/Activity Performance 

Measure/ 

Evaluation

1. Implementation of 

Pay.gov.

-Increase use 

of modern 

technologies 

& systems to 

improve 

results. 

-Employ 

OMB’s procedures to 

meet GPEA 

mandates.

-Agencywide 

acceptance of 

electronic 

payments. 

-Industry use 

of electronic 

payments. 

-Relative reporting output 

from Pay.gov.

-Volume of electronic 

payments received. 

-Feedback from the 

industry/users of electronic payments. 

-Feedback from involved FMC employees.

-Conduct internal assessment to determine 

ways agency units 

might require Pay.gov 

support. 

-Meet w/ Treasury regarding implementation 

procedures and requirements. 

-Discuss and refine 

requirements. 

-Consult w/ senior management & Chairman 

with proposed implementation plans. 

- Conduct meeting (s) 

with Treasury to develop an Agency Configuration Template. 

-Begin conversion process. 

-Sign agreement w/ 

FRB Cleveland to set 

up, create and deploy 

application for FMC to 

receive electronic payments. 

-Conduct application 

testing prior to going 

“live”. 

-Deploy electronic 

payment option agencywide.

-Industry usage 

of electronic 

payments. 

-Feedback from 

customer base. 

-Feedback from 

involved FMC 

employees.

2. Upgrade network 

and desktop operating 

systems.

- Identify and 

provide information 

technology to 

improve 

workforce 

productivity.

- Agency-wide 

standard desktop and laptop 

foundation. 

- Agency-wide 

standard 

server configuration.

- Successful upgrade 

from current operating 

system to new operating system. 

- Positive feedback 

from FMC users.

- Complete inventory of 

existing equipment. 

- Select software, test, 

acquire & configure. 

- Update all procedures 

w/ new desktop and 

server configurations. 

- Deploy software.

- Agency operating systems are 

selected, tested, 

and deployed. 

- Feedback from 

FMC staff.

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 68

Performance Goal Related 

Strategic 

Goals/ Outcomes/ 

Means

Outcome Performance Indicator Process/Activity Performance 

Measure/ 

Evaluation

3. Initiate integration of major databases.

 

 

- Increase 

use of modern technologies to improve results 

by enhancing work 

processes.

 

 

- Building on 

analysis of information collections completed in FY06, 

design centralized, unified & 

secure database 

system of regulated entities for 

use by Commission staff.

- Design to 

meet needs of 

all Commission 

offices & bureaus with regard to regulated entity data 

collection.

- Facilitate retrieval of 

data.

- Enhance analytical 

capability.

- Reduce duplication of 

data input. 

- Work with other 

Commission components, OIT & contractor, if applicable, to 

develop system.

- Assure periodic meetings held to evaluate 

progress.

- Develop SOW or inhouse proposal to develop system.

 

- Successful 

completion of 

implementation plan of 

action steps.

- Feedback 

from staff.

 

 

4. Explore options 

for and begin the 

development of an 

online catalogue for 

the FMC’s law/

reference library 

collection.

 

 

-Employ 

technology to 

improve 

workforce 

productivity.

 

 

- Paper catalogue 

in library replaced by online 

access station.

- Staff has access 

to library catalogue from desktops.

- Increased efficiency in searching library resources.

- Directly link 

online catalogue 

entries to other 

electronic resources.

- Reduce redundancy of data 

entry across 

library modules.

- Options for automating 

the card catalogue 

evaluated against specific needs and recommendations made.

- Online catalogue created based on recommended approach.

- Paper catalogue replaced with online work 

station in the library.

- Staff access to catalogue from desktops.

 

 

- Research online catalogue options, make 

recommendations.

- Design screens and 

other aspects of system.

- Populate catalogue 

through either scanning 

of catalogue cards or use 

of outside source documents.

- Work with OIT to 

provide desktop access 

to staff, including ARs, 

through central server.

 - Train staff on how to 

use system.

 

 

- Assess recommendations 

for timeliness 

and appropriateness.

- Assess feedback from 

FMC staff and 

the public.

- Assess overall effectiveness of new 

system.

 

 

Final Annual Performance Plan 2008 
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CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

V. STRATEGIC GOAL: Management Capabilities 

10 FTEs and $1,606,000 will be required to accomplish this goal. 

2008 Steady State Activities: 

— Executing financial management policies and programs, including developing annual 

budget justifications for submission to the Congress and OMB, managing agency appropriations, administering internal control systems for agency funds, travel and cash management, and coordinating with contractors who provide accounting and payroll services. 

 

— Fostering human resources management principles, including recruitment and placement, position classification and pay administration, occupational safety and health, employee assistance, employee relations, workforce discipline, performance management 

and incentive awards, employee benefits, career transition, retirement, employee development and training, personnel security, and an equal employment opportunity. 

 

— Ensuring the program operations of the agency are administratively supported via 

telecommunications, procurement of administrative goods and services, property management, space, printing and copying, mail and records services, facilities and equipment maintenance, and transportation. 

 

— Promoting economy and efficiency in the administration of, and protecting and detecting waste, fraud and abuse in, the agency’s programs via auditing agency operations. 

 

— Providing guidance to staff regarding administrative matters, including procurement, 

personnel and contracting issues. 

 

— Ensuring program compliance with various rules and regulations regarding such areas 

as forms clearance, Paperwork Reduction, Small Business Paperwork Reduction Act, 

and other federally required reports and submissions 

Final Annual Performance Plan 2008 
FEDERAL MARITIME COMMISSION 

FY2008 PERFORMANCE AND ACCOUNTABILITY REPORT 

 70

Performance 

Goal

Related Strategic 

Goals/Outcomes/ 

Means

Outcome

Performance Indicator

Process/Activity Performance 

Measure/ 

Evaluation

1. Fast track implementation of 

EHRI (e-OPF)

-Evaluate approaches for increasing the use of 

modern technology 

to improve results.

- Eliminate the 

need for a paper 

OPF. 

- Establish database 

to enable electronic 

transfer of e-OPF 

data among Federal 

agencies (future). 

- Achieve economy/ annual savings by eliminating 

the paper folder. 

-In sync w/ OPM 

strategic plan & 

operational goal to 

convert 50% of 

hard copy OPFs to 

electronic format 

by 10/1/2008.

-Volume of OPF 

documents processed & filed. 

-Feedback from eGovernment officials, users of eOPF. 

-Feedback from 

involved FMC 

employees.

-Meet w/ OPM/ & 

SAHRC on funding, 

implementation, and 

requirements. 

-Begin Fast-track 

implementation. 

-Update IAA w/ 

OPM & SAHRC 

EHRI reps to lay 

framework for other 

products. 

-Activate e-OPF accounts for employees, 

managers, “friends 

and family” accounts.

-Feedback from 

SAHRC user 

group, EHRI 

program officials, customers. 

-Feedback from 

involved FMC 

employees. 

- NARA requirements.

Final Annual Performance Plan 2008 
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CHAPTER FOUR 

OTHER ACCOMPANYING INFORMATION 

Performance 

Goal Related Strategic 

Goals/Outcomes/ 

Means

Outcome Performance IndicatorProcess/Activity Performance 

Measure/ Evaluation

2. Assess telework program to 

encourage usage 

& advance efficiency of operations.

- Emphasizes 

workforce planning 

issues such as recruitment and retention. 

-Encourage activities that help employees demonstrate abilities and 

achieve full potential.

-Encourages the 

better understanding of the benefits 

of teleworking for 

both employees, 

agency and the 

environment (e.g., 

more flexibilities 

for employees, a 

more powerful tool 

for recruitment & 

retention of employees, less fuel 

consumption) 

-Agency increases 

the total number of 

participating employees & teleworked days without deterioration of 

effectiveness and 

efficiency. 

-Supervisors can 

assess employees’ 

performance using 

simple measurement tools. 

-Agency has clear 

benchmarks to 

assess success of 

program.

-Significant increase in total 

number of participating employees& 

total number of 

teleworked days 

per year over prior 

year’s experience. 

-Development of 

new supervisory 

tools. 

- Development of 

an annual survey 

of supervisors’ and 

employees’ opinions of program. 

-Development of 

benchmarks by 

which Agency may 

measure success of 

program.

-Identify total number of employees & 

days teleworked under current program 

in the past year. 

-Review positions/ 

types of work which 

can, or cannot, be 

performed via telework. 

- Identify the optimum number of days 

per week/ month/year 

which can be teleworked consistent 

with Agency’s duties. 

-Identify benchmarks 

for satisfactory use of 

program. 

-Assess supervisors’ 

and employees’ opinions on the program. 

-Registration of eligible employees for use 

of program. - Administration of opinion survey of supervisors and employees 

on their views regarding the program. 

- Implementation of 

new supervisory 

tools.

-Senior management evaluates the 

adequacy of the 

number of participating employees, 

the results of annual survey of supervisors and employees. 

-Chairman evaluates the operation 

of the program 

relative to the effective and efficient 

conduct of Agency 

business. 

-Chairman reviews 

the results of supervisor & employee 

survey & target 

benchmarks established for the program.

Final Annual Performance Plan 2008