Independent Examination of Cost Proposal for Engineering Services

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the cost proposal submitted by a company for engineering, design, and construction support services. Our examination objective was to determine if the company's cost proposal was fairly stated for a planned 5-year, $200 million contract. In our opinion, the company's cost proposal included labor markup rates for the recovery of indirect costs that were misstated. We estimated TVA could save $7.44 million over the planned $200 million contract by negotiating revisions to the labor markup rates to more accurately reflect the company's recent actual costs. In addition, we found the proposed labor rate ranges were not reflective of the actual salary costs of the company. (Summary Only)