Ammonia Supplier Billings

We audited $7.9 million of costs billed to TVA by a contractor for supplying ammonia and providing engineering and technical services for ammonia facilities to various TVA fossil plants. In summary, we found (1) the prices billed for $2.8 million of the ammonia delivered to five TVA fossil plants could not be verified because prices for the ammonia were not included in the contract, (2) TVA was overbilled $106,054 for ammonia shipments to a fossil plant because an incorrect markup had been used, and (3) TVA was billed $4,375 for ineligible surcharges that were not provided for by the contracts. Additionally, we found that TVA did not have a process in place to verify the amount of ammonia that was delivered and subsequently billed to its plants. We recommend TVA management (1) recover the overbilled costs, (2) determine the reasonableness of the ammonia prices billed for the five TVA fossil plants, and (3) implement controls to independently verify the quantities of ammonia being delivered to TVA's plants.