Black & Veatch Corporation - Contract No. 10820

As part of our annual audit plan, we audited costs billed to the Tennessee Valley Authority (TVA) by Black & Veatch Corporation (B&V) for engineering services under Contract No. 10820. Our audit objective was to determine if costs were billed in accordance with the terms and conditions of the contract. Our audit scope included about $42.46 million in costs billed to TVA from November 2, 2015, through February 13, 2020. In summary: We determined B&V overbilled TVA an estimated $5,771,839, including (1) an estimated $5,657,998 for unapproved OT costs for exempt labor categories, (2) $69,383 in travel and temporary living allowance costs, and (3) a net $44,458 for incorrect hourly billing rates. We noted several opportunities to improve contract administration by TVA. Specifically, we determined TVA paid an estimated $3.3 million more in labor costs by using fixed hourly labor rates instead of negotiating cost reimbursable compensation terms in its contract with B&V. We also found (1) invoices were not submitted timely, (2) B&V did not submit an electronic billing file to the TVA Office of the Inspector General in the format provided for in the contract, (3) site expenses were not provided for in the contract, and (4) the labor categories included in the contract's pricing schedule did not correspond to B&V's internal job titles. (Summary Only)