At the request of the Tennessee Valley Authority’s (TVA) Supply Chain, we examined the cost proposal submitted by a contractor for (1) outage and supplemental maintenance and modification services and (2) support services at TVA’s nuclear plants. Our examination objective was to determine if the cost proposal was fairly stated for a planned $975 million contract.
In our opinion, the contractor’s cost proposal was overstated. Specifically, we determined the application base for the contractor’s proposed markup rate for the recovery of general and administrative (G&A) costs did not reflect TVA’s intent as provided for in the request for proposal (RFP). We notified TVA of the inconsistencies for use in their negotiations. Subsequently, TVA informed us the parties agreed to (1) apply the G&A markup rate to unburdened noncraft wages to more accurately reflect TVA’s intent for reimbursing G&A costs, (2) reduce the G&A rate, and (3) remove the G&A application on noncraft staff augmentation labor. In addition, the contractor did not propose a rate for long-term temporary assignments, as requested in the request for proposal.
