Proposal for Civil Projects and Coal Combustion Residual Program Management Work

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the cost proposal submitted by a company for civil projects and coal combustion residual program management work at TVA's steam electric power plants. Our examination objective was to determine if the company's cost proposal was fairly stated for a planned <br> $10 million contract.In our opinion, the company's cost proposal was overstated. Specifically, we found the company's proposal included overstated noncraft labor markup rates as compared to its most recent actual costs. In addition, the company's proposed contract rate attachments included (1) labor classifications that were not consistent with the company's actual job titles and (2) unnecessary attachments for craft labor and equipment costs. We estimated TVA could avoid about $381,000 by negotiating reductions to the noncraft labor markup rates to more accurately reflect the company's recent actual costs. In addition, we suggest TVA negotiate revisions to the company's contract rate attachments to (1) more accurately reflect the company's actual labor classifications and (2) remove the unnecessary attachments for craft labor and equipment. (Summary Only)