Great advice from Doc; there is nothing wrong with going to the boss in a positive way to ask what you can do to improve/hasten your chances of becoming permanent, seeking such mentoring strokes the ego of most bosses and shows them your positive motivation to progress. Ratting out the other employee, especially by name, is generally not a good idea because it makes you sound like a whiny sibling of the other person, not a grown-up. Company cultures and managers do vary on that, of course, a minority of them just love and live for the Machiavellian stuff (That does not sound like your situation though).
Some of them are complete hoseheads, of course, and will be annoyed by anything out of the ordinary, and will arbitrarily favor friends and extended family over you no matter what the objective value of your work ethic might be relative to you competitor, their own BFF.
I have been on the losing end of the social network at my job before, my own strategy is to look at the long view on how much permanence it has, and if it's going to be a long-term losing situation, I start looking for another job but keep it on the down-low. If you ever do something like that, do not make use of it as an opportunity for drama, your departure should be hugs, kisses, and tactful lies all around.