Independent Examination of Cost Proposal for Engineering Services

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined a cost proposal for engineering, design, and construction support services. Our examination objective was to determine if the cost proposal was fairly stated for a planned 5-year, $300 million contract. In our opinion, the cost proposal was overstated. Specifically, we found the proposed labor markup rates, for recovery of indirect costs, were overstated compared to recent actual costs. We estimated TVA could save about $4 million over the planned $300 million contract spend by negotiating reduced labor markup rates to more accurately reflect recent actual costs. (Summary Only)