Contract for Equipment for Dry Cask Storage

We performed an audit of the prices billed to the Tennessee Valley Authority by a contractor for certain equipment related to dry cask storage systems for spent nuclear fuel at Sequoyah Nuclear Plant and Browns Ferry Nuclear Plant (BFN). In summary, we found TVA had been overbilled $276,000 because the contractor overstated the price of a vertical crawler that had been delivered to BFN. The overstatement resulted because the contractor did not follow the contract's pricing criteria which required the price of the BFN vertical crawler to be set at cost plus 10 percent. We recommended TVA management recover the $276,000 overbilling by the contractor.The contractor disagreed it had overbilled TVA $276,000 stating (1) the contract's pricing for the vertical crawler had been changed from cost plus 10 percent to fixed price because the crawler sent to BFN had been diverted from another utility, and (2) the fixed price took into account the companies increased risk associated with a replacement crawler sent to the other utility.Although the contractor stated its price to TVA for the BFN crawler took into account its increased risk associated with the replacement crawler sent to another utility, our audit acknowledged that TVA would probably need to cover the contractor's increased cost for the replacement crawler. Accordingly, our recommendation for TVA to recover $276,000 allowed the contractor to be reimbursed for its cost of the replacement crawler sent to the other utility plus a 10 percent markup. Summary Only