Federal Maritime Commission

Service Contract Inventory Analysis

Fiscal Year 2015

Background 

Section 743 of Division C of the FY 2010 Consolidated Appropriations Act, P.L. 111-117,

requires civilian agencies subject to the Federal Activities Inventory Reform Act of 1998 (Public 

Law 105-270; 31 U.S.C. 501) to prepare an annual inventory of their service contracts. The 

Office of Management and Budget (OMB), Office of Federal Procurement Policy (OFPP), issued 

a memorandum on November 5, 2010 to provide guidance to Federal agencies on preparing their 

initial inventories of service contracting for Fiscal Year (FY) 2010 and beyond. 

As provided in the OMB Memoranda of November 5, 2010 and December 19, 2011, Service 

Contract Inventories (SCI), (http://www.whitehouse.gov/omb/procurement-service-contractinventories), agencies were tasked to conduct a meaningful analysis of the data in their 

inventories for purposes of determining whether contract labor is being used in an appropriate 

and effective manner, and if the mix of Federal employees and contractors in the agency is 

effectively balanced. Moreover, OMB established the reporting threshold of $25,000 and above. 

As a result, the Federal Maritime Commission’s (FMC) contracting staff reviewed each of these 

contracts. The results of this review are summarized below. 

Methodology

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

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

attention due to heightened risk of workforce imbalance. The team reviewed the Product Service 

Codes (PSCs) and Special Interest Functions (SIFs) representing the highest dollar volume PSCs 

included in the Federal Procurement Data System – Next Generation (FPDS-NG). The 

following PSCs are being reported to OMB as FMC SIFs:

PSC PSC Description

Number of Contracts 

FY 2015

for PSC

Total Contracting Dollars 

FY 2015

for PSC

R704 Auditing Services 1 $32,080.18

R431 Support – Professional: 

Human Resources 1 $50,000.00

R707 Support- Management: 

Contract/Procurement/

Acquisition Support 

1 $40,920.00

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

government employees and have the potential for inherently governmental work to be performed 

by contractors. 
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Agency Analysis of Contracts

Eleven service contracts, totaling $1,920,100.06 have been reviewed. The FMC has issued no 

contracts for personal services, and the agency is giving attention, as set forth in FAR 37.114, to 

avoid contracting for functions that are closely associated with inherently governmental 

functions. Contracts in the Special Interest Function areas represented $123,000.18 of the total 

contract obligations of the FMC for FY 2015.

Contracted Services and Agency Objectives

The mission of the FMC is “to foster a fair, efficient and reliable international ocean 

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

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

by:

• Reviewing and monitoring agreements among ocean common carriers and marine 

terminal operators (MTOs) serving the U.S. foreign oceanborne trades to ensure that they 

do not cause substantial increases in transportation costs or decreases in transportation 

services;

• Maintaining and reviewing confidentially filed service contracts and Non-VesselOperating Common Carrier (NVOCC) Service Arrangements to guard against 

detrimental effects to shipping;

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

obtain relief from ocean shipping practices or disputes that impede the flow of 

commerce;

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

tariff systems and electronically available;

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

ensure they are just and reasonable; and

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

business practices in U.S. foreign shipping trades.

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

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

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

disputes between cruise vessel operators and passengers;

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

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

that violate the Shipping Act;

• Licensing shipping companies with appropriate character and adequate financial 

responsibility;

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

from the United States; and

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

injury or death, and to reimburse passengers when their cruise fails to sail.
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The FMC also recognizes the critical importance of providing effective, performance-oriented 

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

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

financial management at the Commission.

All contracts on this Service Contract Inventory (SCI) are put into place in order to aid in the 

fulfillment of the FMC’s Strategic Goals and Strategies. Contracts identified as Critical (CT) on 

the SCI are directly related to the mission and strategic goals of the FMC. 

Agency Findings 

Eleven contracts for services totaled $1,920,100.06 in obligations. The FMC reviewed three SIF 

codes on three contracts totaling $123,000.18. Of the remaining contracts in FMC’s sample: one

contract is for the maintenance of large IT projects; two are for scanning services; one is for 

professional support in the area of Human Resources; and four are for professional support in the 

areas of computer assisted legal research and contract/procurement/acquisition.

A. Currently, the FMC is implementing OMB Policy Letter 11-01, Performance of 

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

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

simplified acquisition threshold. The designee is the Contracting Officer, and all FY15

actions to date have been reviewed in accordance with the guidance.

B. The FMC has placed emphasis on awarding contracts to underrepresented socioeconomic 

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

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

and services not available through current staff. 

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

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

governmental functions as outlined in FAR Subpart 7.5. The FMC is giving 

special management attention, as set forth in FAR 37.114, to functions that 

are closely associated with inherently governmental functions. This review 

assessed the extent to which functions might be closely associated with 

inherently governmental functions, and identified internal controls, including 

governance and internal reviews, to ensure functions that are closely 

associated with inherently governmental functions are given special 

attention. Although the functions are not inherently governmental, 

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

access to confidential business information or other sensitive information, or 

may provide support for human resources management. The FMC depends 

on well-trained Contracting Officer Representatives to ensure that work 

performed by contractors does not expand into inherently governmental 

functions during the performance of a contract. 

ii. The agency has specific safeguards and monitoring systems in place to 

ensure that work being performed by contractors has not changed or 

expanded during performance to become an inherently governmental 
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function. The FMC has utilized acquisition personnel to provide training to 

improve understanding of the necessary oversight to ensure that work being 

performed by contractors has not changed or expanded during performance 

to become an inherently governmental function.

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

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

mission and operations. The eleven FMC contracts were assessed based on 

the complexity of the functions, impact of stop-work, and the risk of the 

functions. Based on this assessment, it is our determination that the FMC

used contractor support to enhance the agency’s mission, and did not use 

contractor employees to perform critical functions which would adversely 

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

iv. Based on the number of contractors compared to the number of Federal 

workers, and Federal workers providing oversight and management of 

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

oversee contracts effectively. The availability of appropriately trained and 

experienced Contracting Officer Representatives (CORs) and contract staff, 

was also assessed as sufficient. 

v. The Contracting Officer identified no contracts as being poorly performed

because of excessive costs or inferior quality.

Responsible Officials

The senior agency management official who is accountable for the development of procurement 

policies, procedures, and training associated with OFPP Policy Letter 11-01 addressing the 

performance of inherently governmental and critical functions is Vern W. Hill, Managing 

Director.

The official who is responsible for ensuring appropriate internal management attention is given 

to the development and analysis of service contract inventories is Kristian Jovanovic, Director, 

Office of Management Services.

Vern W. Hill December 30, 2015

Managing Director

Kristian Jovanovic December 30, 2015

Director, Office of Management Services