Construction and Modification Services Contract

We audited $22.1 million of costs paid by TVA to a contractor for construction and modification services at TVA facilities. In summary, we foundAn estimated $20.8 million billed by the contractor for craft augmentation labor using hourly billing rates was inflated by approximately $619,000 because the contractor's billing rates included (a) overstated payroll tax costs and (b) calculation errors; andThe contractor billed TVA $25,658 for subcontract services it had not incurred. We recommended TVA management recover the inflated and overbilled costs and take steps to ensure the contractor's billing rates for craft augmentation labor are reasonable based on the company's actual costs. Summary Only