Enercon Services, Inc. - Contract No. 7757

As part of our annual audit plan, we audited costs billed to the Tennessee Valley Authority (TVA) by Enercon Services, Inc. (Enercon) for engineering services under Contract No. 7757. The contract provided for TVA to compensate Enercon for work on either a cost reimbursable or fixed price basis. Our audit objectives were to determine if (1) costs were billed in accordance with the terms and conditions of the contract and (2) tasks were issued using the most cost efficient pricing methodology. Our audit scope included about <br> $48.1 million in costs paid by TVA from September 9, 2013, to June 30, 2018.In summary, we determined:Enercon did not provide $94,936 in volume rebates due TVA. In addition, Enercon overbilled TVA $31,792 on cost reimbursable projects, including (1) $24,594 in unsupported travel costs and (2) $7,198 in excessive performance fee payments.The use of fixed price payment terms on a sample of 18 projects totaling $1.34 million caused TVA to pay at least $122,996 (10.11 percent) more than it would have if cost reimbursable payment terms had been used for those projects.We also noted issues with TVA's contract administration, including inadequate oversight of the (1) fee evaluation process and (2) process for evaluating fixed price proposals. Additionally, TVA may have missed the opportunity to receive $22,089 in volume rebates due to a September 2016 contract change with an effective date that benefitted Enercon.(Summary Only)