Contract for Supply of Ammonia and Urea

We audited $59.5 million of costs billed to TVA by a contractor for the supply of ammonia and urea for TVA's Selective Catalytic Reduction systems. In summary, we found TVA (1) overpaid the contractor $188,231 due to invoice payment errors and the contractor's use of incorrect unit prices, (2) paid $12.4 million for certain charges that could not be validated because of inadequate or missing compensation provisions, and (3) site personnel at a certain fossil plant processed payments for ammonia before the ammonia had been received. Additionally, the quantities of ammonia billed to TVA at this fossil plant were not independently verified. We recommended TVA management recover the overbilled and overpaid costs. Additionally, TVA management should (1) provide training to site personnel on material payment procedures and institute a process for reconciling payments to material receipts, (2) ensure the contract is revised to provide compensation provisions for all costs that are payable by TVA, and (3) revise the receiving procedures at fossil plants to ensure that payments for ammonia are processed after the ammonia has been received and verified. Summary Only