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, $90 million contract. In our opinion, the company's cost proposal was overstated. Specifically, we found the methodology the company used to calculate its proposed labor markup rates was not reflective of the divisions that would be performing the anticipated scopes of work. We estimated TVA could avoid about $5.17 million over the planned $90 million contract by negotiating reductions to the labor markup rates to more accurately reflect the costs from the company divisions who would be performing work under the potential contract. (Summary Only)