Independent Examination of Cost Proposal for Transmission Construction Services

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the cost proposal submitted by a company for transmission construction services. Our examination objective was to determine if the cost proposal was fairly stated for a planned 5-year, $25 million contract.In our opinion, the company's cost proposal was overstated. We found the proposed labor markup rates, for recovery of indirect costs, were overstated compared to recent actual costs. We estimated TVA could avoid about $783,000 over the planned $25 million contract by negotiating revised labor markup rates to more accurately reflect the company's recent actual costs. (Summary Only)