Office of Inspector General 

Semiannual Report to Congress 

Covering the Period 

 

April 1, 2020 – September 30, 2020 

FEDERAL MARITIME COMMISSION 
FEDERAL MARITIME COMMISSION

Washington, DC 20573

October 29, 2020 

Office of Inspector General

Dear Chairman Khouri and Commissioners Dye, Maffei, Sola and Bentzel: 

The following report is submitted in accordance with Section 5 of the Inspector General 

Act of 1978, as amended. This report summarizes the activities of the Federal Maritime 

Commission (FMC) Office of Inspector General (OIG) for the period April 1, 2020 to September

30, 2020. During this reporting period, the OIG completed several program reviews, and initiated 

two required annual audits. All of these assignments are discussed in more detail in this report. 

The OIG continues to appreciate the cooperation and courtesies provided by the FMC’s 

leadership and staff. 

 Respectfully submitted,

 Jon Hatfield 

 Inspector General

Enclosure
TABLE OF CONTENTS

Transmittal Letter

EXECUTIVE SUMMARY............................................................................................................................ 1

FEDERAL MARITIME COMMISSION ......................................................................................................... 1

OFFICE OF INSPECTOR GENERAL ............................................................................................................. 1

OFFICE OF INSPECTOR GENERAL ACTIVITIES ............................................................................................ 2

Completed Assignments ........................................................................................................................................... 2

Open Audits .............................................................................................................................................................. 5

Hotline and Investigations........................................................................................................................................ 5

Memorandum of Understanding.............................................................................................................................. 5

Review of Legislation ................................................................................................................................................ 6

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities ...................................................... 6

SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS ........................................................... 8

TABLE I - Summary of Reports with Corrective Actions Outstanding for More than 6 Months ................. 9

TABLE II - Listing of Reports Issued ........................................................................................................ 9

TABLE III - Reports with Questioned Costs...........................................................................................10

TABLE IV - Recommendations that Funds be Put to Better Use............................................................. 11

Appendix A - Peer Review Activity.......................................................................................................12

Pictured: Port of Long Beach, CA: Long Beach Container Terminal, Pier G. 

 Picture source: Courtesy of the Port of Long Beach.
 

EXECUTIVE SUMMARY

This semiannual report summarizes the activities and accomplishments of the Federal 

Maritime Commission (FMC), Office of Inspector General (OIG) for the six-month reporting 

period April 1, 2020 through September 30, 2020. During this reporting period, the OIG 

completed several program reviews, and initiated two annual audits. Additional details on these 

assignments can be found in subsequent sections of this report. 

During the period, the OIG received one hotline complaint, and one hotline complaint was

closed during the period. There was one hotline complaint open at the end of the reporting period. 

There were no investigations or matters referred to prosecutorial authorities during this period. 

FEDERAL MARITIME COMMISSION

The FMC is an independent Federal agency responsible for ensuring a competitive and 

reliable ocean transportation supply system that supports the U.S. economy and protects the public 

from unfair and deceptive practices. The principal statutes or statutory provisions administered by 

the Commission are: the Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 

1998; the Foreign Shipping Practices Act of 1988; and Section 19 of the Merchant Marine Act of 

1920. 

The FMC is headed by five Commissioners nominated by the President and confirmed by 

the U.S. Senate, each serving five-year terms. The majority of FMC personnel are located in 

Washington, D.C., however, the FMC also maintains a presence in Los Angeles, Seattle, New 

York, New Orleans, Houston, and South Florida through Area Representatives. These Area 

Representatives serve the major ports and transportation centers within their respective geographic 

areas, and provide information, liaison, and investigatory services on behalf of the FMC. 

OFFICE OF INSPECTOR GENERAL

 The OIG was established in 1989 by the Inspector General (IG) Act of 1978, as amended 

(5 U.S.C. app.). The OIG is an independent audit and investigative unit headed by an Inspector 

General (IG) who reports to the FMC Commissioners and Congress. Audits are conducted for the 

purpose of finding and preventing fraud, waste and abuse, and promoting economy, efficiency and 

effectiveness within the agency. The OIG investigations seek out facts related to allegations of 

wrongdoing on the part of FMC employees and individuals, or entities contracting with, or 

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obtaining benefits from, the agency. The IG Act provides that the OIG shall have access to all 

agency records and may subpoena records from entities outside of the agency in connection with 

an audit or investigation. 

The IG is required by law to prepare this report summarizing OIG audits and investigations 

during the immediately preceding six-month period. The report is sent to the FMC 

Commissioners, the President of the Senate, the Speaker of the House and FMC’s Congressional 

appropriating and authorizing committees. This dual reporting requirement helps to ensure the 

independence of the OIG. 

OFFICE OF INSPECTOR GENERAL ACTIVITIES

Completed Assignments

OIG Review of FMC’s Lease, Change, and Construction Management Support Services

Contract. The OIG completed a review of the FMC’slease, change, and construction management 

support services contract (lease consulting contract). The FMC’s headquarters lease will expire in

September 2022, but the planning process for a new lease begins years prior to the lease expiration. 

In September 2019, the FMC awarded a contract for expert advice, guidance, and assistance with 

space requirements, space design, and organizational change associated with the re-competition of 

the agency’s headquarters lease. The OIG reviewed the solicitation and award of the lease 

consulting contract to assess compliance with the Federal Acquisition Regulation (FAR). 

Based on our review, the OIG concluded the agency adhered to the FAR for the solicitation 

and award of the lease consulting contract. However, our review identified a weakness in the 

agency’s security program for the acquisition process. Specifically, the OIG determined the 

contractor personnel for the lease consulting contract had not been cleared by the agency’s 

personnel security officer (PSO) prior to commencing work on the contract. Upon further 

examination, the OIG identified two additional contracts with similar issues. 

After the OIG’s review, FMC management reported the required security requirements had 

been performed. In addition, management agreed to enhance policies by creating a Managing 

Directive to provide guidance on security requirements for service contracts to all FMC 

employees, including the personnel security officer (PSO), contracting officer (CO), and 

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contracting officer’s representatives (CORs). The guidance will include direction that the PSO 

continue to maintain a real-time inventory for all agency contractor personnel, including the status 

of background investigations and whether they have been cleared to work at the Commission, and 

instruction for the CO and CORs to consult with the PSO throughout the contract solicitation and 

award process to ensure that security requirements are met. 

Risk Assessment of the FMC’s Purchase Card Program. Executive agencies, including 

the FMC, use purchase cards to purchase needed goods and services for the agency. In 

accordance with the Government Charge Card Abuse Prevention Act of 2012 (Charge Card Act), 

Public Law 112‐194, Federal agencies are required to establish and maintain safeguards and 

internal controls for purchase cards. The Charge Card Act requires the Inspector General (IG) of 

each executive agency to conduct a periodic risk assessment of the agency’s purchase card 

program. The objective is to assess the risk of illegal, improper, or erroneous use of the purchase 

card program to determine the scope, frequency, and number of future audits and reviews to be 

conducted by the OIG.

To assess risk for the purchase card program, the OIG considered several factors, including:

effectiveness of internal controls; training requirements; policies and procedures; prior problems 

with the program, if any; and previous audits and reviews. The OIG concluded the risk of illegal,

improper, or erroneous use in the FMC’s purchase card program is “low.” As a result, an OIG audit 

or review of the agency’s purchase card program is not planned for 2020. 

FMC’s Compliance with Reporting and Performance Requirements Regarding 

Improper Payments. Each agency IG is required to review improper payment reporting in their 

agency’s annual Performance and Accountability Report (PAR) or Annual Financial Report 

(AFR). The objective of the review is to determine if the agency is adhering to reporting 

requirements of the Improper Payments Information Act of 2002 (IPIA), as amended. The purpose 

of IPIA, as amended, and the related requirements, are to improve the Federal government’s efforts 

to reduce and recover improper payments. 
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The FMC reported that based on the results of testing a sample of transactions, the FMC’s 

assessment of risk factors, and reliance on internal controls, including an appropriate segregation 

of duties, there were no FMC programs or activities susceptible to significant erroneous payments 

in FY 2019. For FY 2019, the FMC reported no improper payments. The OIG concluded the 

FMC complied and met the requirements that are applicable to the agency for improper payment 

reporting. 

Audit Survey of the Succession Planning Process. The OIG completed an audit survey 

of the agency’s succession planning process to identify any improvements to the agency’s

succession planning process; and to decide whether a more detailed OIG audit of the process 

would be beneficial. Succession planning is designed to ensure the continued effective 

performance of an organization, division, department, or work group by making provisions for the 

development, replacement, and strategic application of key people over time. According to the 

FMC’s Office of Human Resources (OHR), 20% of the FMC’s employees are eligible to retire in 

2020, and more than half of the FMC’s employees will be eligible to retire between 2020 and the 

end of 2030. Among other reasons, these statistics underline the importance of preparing for the 

retirement of employees, in addition to vacancies in positions caused by an employee being 

promoted or leaving to work elsewhere.

The OIG’s audit survey did not reveal any problem areas that would benefit from further 

review by the OIG. The OIG found the FMC utilizes a variety of information to assist the 

Commission in identifying trends for succession planning purposes. The agency has also 

implemented some succession planning best practices. While the OIG made no recommendations 

as a result of the audit survey, the OIG did provide three suggestions to improve the agency’s

succession planning process based on best practices. The Office of Human Resources agreed to 

consider the suggestions.
Open Audits 

Independent Auditors’ Report of FMC’s FY 2020 Financial Statements, A21-01. The 

audit objectives are to opine on whether the FMC’s FY 2020 financial statements follow U.S. 

Generally Accepted Accounting Principles and present fairly the financial position of the agency. 

The audit will also review internal controls over financial reporting, and agency compliance with 

financial related laws and regulations. The statements to be audited are the Balance Sheet as of 

September 30, 2020, and the related Statement of Net Cost, Statement of Changes in Net Position, 

Statement of Budgetary Resources, and Statement of Custodial Activity. The final audit report 

will be issued by November 16, 2020. 

Audit of FMC’s Compliance with the Federal Information Security Modernization Act 

(FISMA) FY 2020, A21-02. The objective of the independent audit of the FMC’s information 

security program is to identify improvements for the agency’s information technology security 

program. The audit will assess compliance with FISMA and related information security policies, 

procedures, standards, and guidelines. The scope of this audit includes general controls of the FMC 

network and applications housing service contracts, tariff location filings, and FMC license 

applications. The OIG will evaluate potential system vulnerabilities and assess management 

actions to implement prior-year recommendations. The final audit report will be issued by 

November 2, 2020. 

Hotline and Investigations

The Inspector General Act of 1978, as amended, provides that the IG may receive and 

investigate complaints or information concerning possible allegations of fraud, waste, and abuse 

occurring within FMC programs and operations by employees or contractors. Matters of possible 

wrongdoing are referred to the OIG in the form of allegations or complaints from a variety of 

sources, including FMC employees, other government agencies and the general public. 

During the period, the OIG received one hotline complaint, and one hotline complaint was 

closed during the period. There was one hotline complaint open at the end of the reporting period. 

There were no investigations or matters referred to prosecutorial authorities during this period. 

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Memorandum of Understanding

In accordance with Section 6 of the Inspector General Reform Act of 2008, each Inspector 

General shall have his or her own legal counsel, or obtain the services of a counsel appointed by 

and directly reporting to another Inspector General or the Council of the Inspectors General on 

Integrity and Efficiency (CIGIE) on a reimbursable basis. The OIG has a memorandum of 

understanding (MOU) with the Treasury Inspector General for Tax Administration for the FMC 

OIG to obtain legal advice services to carry out its responsibilities under the Inspector General 

Act. 

Review of Legislation

As required by the Inspector General Act of 1978, as amended, the OIG routinely reviews 

proposed legislation and regulations. The purpose of these reviews is to assess whether the 

proposed legislation or regulation: (1) impacts the economy and efficiency of FMC programs and 

operations; and (2) contains adequate internal controls to prevent and detect fraud, waste, and 

abuse. 

Council of the Inspectors General on Integrity and Efficiency (CIGIE) Activities

The CIGIE was established by law as an independent entity by the Inspector General 

Reform Act of 2008 (P.L. 110-409) to: 

• address integrity, economy and effectiveness issues that transcend individual government 

agencies; and 

• increase the professionalism and effectiveness of personnel by developing policies, 

standards, and approaches to aid in the establishment of a well-trained and highly skilled 

workforce in the Offices of Inspectors General. 

During this reporting period, the IG served on the CIGIE’s Audit Committee. The Audit 

Committee is responsible for coordinating government-wide activities that promote economy and 

efficiency in Federal programs and operations, and to address areas of weakness and vulnerability 

with respect to fraud, waste, abuse, and mismanagement. The Audit Committee serves as a 

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resource for the Federal audit community, maintains professional audit standards, and develops 

auditor training requirements. 

The CIGIE is comprised of all inspectors general that are Presidentially-appointed / Senate 

confirmed and those that are appointed by agency heads. The FMC OIG remains active in CIGIE 

operations. Specifically, the OIG is a member of CIGIE, participates in the monthly CIGIE 

meetings, and periodically assists CIGIE on special projects. 
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SUMMARY OF INSPECTOR GENERAL REPORTING REQUIREMENTS

IG Act Reference Reporting Requirement Pages 

Section 5(a)(1) Significant problems, abuses and deficiencies None

Section 5(a)(2) Recommendations with respect to significant problems, 

abuses, or deficiencies

None

Section 5(a)(3) Prior recommendations on which corrective actions have not 

been completed

9

Section 5(a)(4) Matters referred to prosecutorial authorities and results None

Section 5(a)(5) Summary of instances where information was refused None

Section 5(a)(6) List of audit, inspection, and evaluation reports by subject 

matter, and where applicable, the value of questioned costs, 

unsupported costs, and funds put to better use

9

Section 5(a)(7) Summary of each report 2-4

Section 5(a)(8) Audit, inspection, and evaluation reports with questioned 

and unsupported costs

None

Section 5(a)(9) Audit, inspection, and evaluation report recommendations 

that funds be put to better use

None

Section 5(a)(10) Summary of each audit, inspection, and evaluation report

issued before the commencement of this reporting period for 

which no management decision was made by the end of the 

reporting period; for which comments were not returned 

within 60 days of report issuance; and for which there are 

any outstanding unimplemented recommendations

None

Section 5(a)(11) Description and explanation of significant revised 

management decisions

None

Section 5(a)(12) Significant management decisions with which the inspector 

general disagrees

None

Section 5(a)(13) Information under Section 804(b) of the Federal Financial 

Management Improvement Act (FFMIA) of 1996

None

Section 5(a)(14)(15) Peer review activity on FMC OIG 12, App. A

Section 5(a)(16) Peer review activity by FMC OIG on another OIG 12, App. A

Section 5(a)(17) Statistical tables on investigative activities None

Section 5(a)(18) Description of metrics used for developing the data for the 

statistical table under Section 5(a)(17)

None

Section 5(a)(19) Report on each investigation involving a senior Government 

employee where allegations of misconduct were 

substantiated

None

Section 5(a)(20) Description of whistleblower retaliation None

Section 5(a)(21) Description of any attempt by the establishment to interfere 

with the independence of the OIG

None

Section 5(a)(22) Description of particular circumstances of each inspection, 

evaluation, and audit conducted that is closed and was not 

disclosed to the public; and investigation conducted by the 

OIG involving a senior Government employee that is closed 

and was not disclosed to the public

None
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TABLE I - Summary of Reports with Corrective Actions Outstanding for More 

than 6 Months

Recommendations

Report Title Report 

Number

Issue 

Date Number Open Closed

Evaluation of the FMC’s 

Information Technology 

Inventory

A-18-04 05/31/18 4 4 * 0 

*In a memorandum dated October 19, 2020, the Managing Director informed the IG that 

the agency has corrected the recommendations. The Office of Information Technology 

(OIT) has replaced the manual computer equipment inventory spreadsheet with a new 

automated tracking system, and the agency’s computer equipment has been barcoded with 

the new automated system, among other actions to address the OIG’s recommendations. 

The OIG initiated a follow-up of the agency’s corrective actions during this reporting 

period. 

Independent Auditor’s Report 

of the FMC’s FY 2019 

Financial Statements

(Management Letter)

A-20-02a 09/30/19 6 3 * 3 

*In a memorandum dated October 19, 2020, the Managing Director informed the IG that 

the agency has corrected three of the six recommendations. The OIG reviewed actions 

taken by management during this reporting period and the OIG closed three of the six 

recommendations. Further, management is working to resolve the other three open 

recommendations. 

DATA Act Audit, 2019 A-20-01 11/7/19 3 3 * 0 

*In a memorandum dated October 19, 2020, the Managing Director informed the IG that 

the agency has corrected the recommendations. The OIG is planning to conduct the third 

of three required DATA Act audits in early 2021, and the audit will include a follow-up of 

these recommendations.

TABLE II - Listing of Reports Issued

Report Title Assignment 

Number

Issue 

Date 

Questioned 

Costs

Unsupported 

Costs

Funds 

Put to 

Better 

Use

N/A N/A N/A $0 $0 $0
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TABLE III - Reports with Questioned Costs

Number

of 

Reports

Questioned 

Costs

Unsupported 

Costs

A. For which no management decision has been 

made by the commencement of the reporting 

period. 

0 $0 $0

B. Which were issued during the reporting period. 0 $0 $0

Subtotal (A + B) 0 $0 $0

C. For which a management decision was made 

during the reporting period. 

0 $0 $0

(i) dollar value of disallowed costs; and 0 $0 $0

(ii) dollar value of costs not disallowed. 0 $0 $0

D. For which no management decision has been 

made by the end of the reporting period. 

0 $0 $0

E. Reports for which no management decision 

was made within six months of issuance. 

0 $0 $0
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TABLE IV - Recommendations that Funds be Put to Better Use

Number

of 

Reports Dollar Value

A. For which no management decision has been made 

by the commencement of the reporting period. 0 $0 

B. Which were issued during the reporting period. 0 $0

Subtotal (A + B) 0 $0

C. For which a management decision was made during 

the reporting period. 0 $0 

(i) dollar value of recommendations that were 

agreed to by management; and

0 $0

(ii) dollar value of recommendations that were not 

agreed to by management. 

0 $0

D. For which no management decision has been made 

by the end of the reporting period. 0 $0 

E. Reports for which no management decision was 

made within six months of issuance. 0 $0 
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Appendix A - Peer Review Activity

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 

2010 (Section 989C of P.L. 111-203), which amended Section 5 of the Inspector General Act of 

1978, OIGs are required to include in their semiannual reports (SAR) to Congress the results of 

peer reviews of their offices, as well as outstanding and not fully implemented recommendations 

from peer reviews the OIG received from another OIG, and outstanding and not fully implemented 

recommendations the OIG made in any peer review it performed for another OIG. 

An external audit peer review of the FMC OIG audit office was completed on May 23, 

2019 by the U.S. Equal Employment Opportunity Commission OIG. A pass rating was issued and 

there were no recommendations contained in the system review report. 

In addition, the OIG completed an audit peer review of the U.S. Commodity Futures 

Trading Commission (CFTC) OIG during a prior reporting period and issued a peer review report 

on August 13, 2019. The FMC OIG issued a pass rating and there were no recommendations 

contained in the system review report to the CFTC OIG. 
HOTLINE COMPLAINTS

The success of the OIG mission to prevent fraud, waste and abuse 

depends on the cooperation of FMC employees and the public. 

Employees and the public are encouraged to contact the OIG regarding 

any incidents of possible waste, fraud or abuse occurring within FMC 

programs and operations.

A COMPLAINT CAN BE REPORTED BY CALLING OUR 24-HR DIRECT LINE: 

(202) 523-5865

ONLINE COMPLAINT FORM: 

https://www2.fmc.gov/oigcomplaints/

TO PLACE A COMPLAINT IN WRITING PLEASE MAIL TO: 

Federal Maritime Commission

Office of Inspector General

Suite 1054

800 North Capitol Street, NW

Washington, DC 20573

To Be Opened By the IG Only

THE INFORMATION YOU PROVIDE IS CONFIDENTIAL. YOU CAN CHOOSE TO REMAIN 

ANONYMOUS; HOWEVER, INDIVIDUALS ARE ENCOURAGED TO ASSIST THE INSPECTOR 

GENERAL BY SUPPLYING INFORMATION AS TO HOW THEY MAY BE CONTACTED FOR 

ADDITIONAL INFORMATION.

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