Comdata Network, Inc.

At the request of the Tennessee Valley Authority (TVA) Supply Chain organization, the OIG audited $22.7 million in costs billed to TVA by Comdata Network, Inc. The contractor was to provide TVA with a MasterCard platform and issue fuel cards to TVA personnel to purchase fuel, vehicle fluids, and car washes for TVA-related business. The objective of the audit was to determine if costs paid by TVA from October 1, 2011, through June 30, 2013, were billed in accordance with contract terms. In summary, the OIG determined TVA was overbilled $1,044,302, including:$846,022 for duplicate invoices submitted by the contractor.$83,271 in duplicate costs charged on merchant transactions.A net $106,174 in state taxes paid on fuel purchases which included (1) $157,065 in state fuel taxes from which TVA was exempt, (2) $59,229 in state fuel excise taxes that had been stripped from invoices by the contractor and for which TVA was liable, and (3) $8,338 in state excise taxes from states outside TVA's service region and from which TVA may be exempt.$8,835 in unauthorized transactions.In addition, the contractor owes TVA $11,459 in interest on overpayments made by TVA due to duplicate invoices submitted by the contractor.In response to our draft report, the contractor stated TVA should reimburse it a net $192,042 for state taxes stripped from invoices for which either TVA is liable ($65,907) or the contractor cannot file for a refund from the states ($126,135). Based on additional documentation provided, the OIG determined TVA may owe the contractor up to $164,663 of the $192,042 it claimed it was owed for state taxes that had been stripped from invoices, including:$59,229 in state taxes applicable to TVA (discussed above).$93,227 in Alabama state taxes that the contractor had stripped from invoices and for which the contractor cannot file for a refund. (TVA will need to recover the taxes from Alabama and provide a credit to the contractor for the stripped amount.)$9,411 in Tennessee state taxes that the contractor had stripped from invoices that should not have been.$3,045 in Georgia state taxes that had been stripped from invoices and for which the contractor cannot file a refund. (TVA will need to recover the taxes from Georgia and provide a credit to the contractor for the stripped amount.)Less the $249 overbilled to TVA for North Carolina taxes.The OIG recommended TVA management take action to recover:$846,022 from the contractor for payments made on duplicate invoices plus $11,459 in interest.$83,271 overbilled by merchants due to duplicate costs charged on merchant transactions.$253,337 from the appropriate party for state fuel taxes billed by the contractor for tax exempt fuel purchases, pay the contractor $164,663 for state fuel taxes stripped from invoices for which either TVA is liable or the contractor cannot file for a refund from the respective state, and determine if TVA can recover $8,338 in state excise taxes billed by the contractor for other states outside TVA's service region.$8,835 from the contractor for unauthorized charges billed. Summary Only