GE Hitachi Nuclear Energy Americas LLC

We performed an audit of costs billed to the Tennessee Valley Authority (TVA) by GE Hitachi Nuclear Energy Americas LLC (GEH) for nuclear steam supply system refueling and inspection outage services at TVA’s Browns Ferry Nuclear Plant under Contract No. 10354. Our audit objective was to determine if costs were billed in compliance with the contract’s terms. Our audit scope included about $31 million in costs billed from January 1, 2022, through May 31, 2023. In summary, we determined GEH billed TVA: • $3,536,279 in excessive noncraft subcontract labor costs because the costs were billed at GEH’s time and material (T&M) rates, rather than at actual subcontractor costs, as provided for in the contract. Due to the potential significance of the excessive noncraft subcontract labor costs billed to TVA, we expanded our scope and estimated TVA has paid an additional $10.9 million in excessive noncraft subcontract labor costs billed outside our audit scope as of January 31, 2024. We also estimated TVA could pay approximately $10.3 million in excess labor costs over the course of the remaining contract spend if GEH continues to bill noncraft subcontract labor costs at GEH’s T&M rates instead of actuals. • $1,080,779 in costs that did not have a corresponding rate in the contract, including (1) $1,045,574 in equipment costs and (2) $35,205 in other costs, such as supplies, cart rentals, craft incentive bonuses, and physicals. • A net $256,155 in overbilled rates, including (1) $237,474 for overbilled per diem rates, (2) $7,306 for overbilled noncraft GEH labor rates, (3) $7,089 for overbilled craft subcontract labor rates, (4) $6,179 for overbilled equipment rates, and (5) a net underbilling of $1,893 for site security access fee rates. • $59,216 in unsupported costs, including (1) $49,212 in unsupported noncraft subcontract labor costs, (2) $7,852 in unsupported noncraft GEH labor costs, and (3) $2,152 in unsupported per diem. In addition, we determined GEH did not bill airfare and mileage costs, totaling $361,718, in accordance with the contract. Specifically, GEH billed a flat fee for airfare and mileage instead of actual costs, as provided for in the contract. However, due to lack of documentation supporting the actual costs and rates, we could not quantify the cost impact, if any. GEH did not dispute the findings totaling $28,685 related to (1) overbilled rates for noncraft GEH labor, craft subcontract labor, equipment, and site security access fees, and (2) unsupported costs for noncraft GEH labor and per diem. However, GEH disagreed with our findings related to (1) excessive noncraft subcontract labor costs, (2) costs that did not have a corresponding rate in the contract, (3) overbilled per diem rates, (4) unsupported noncraft subcontractor labor costs, and (5) airfare and mileage costs not being billed in accordance with the contract.