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> $200 million contract.In our opinion, the company's cost proposal was overstated. Specifically, we found the company's proposed costs for a Cumberland Fossil Plant project, proposed unit rates for a Bull Run Fossil Plant (BRF) project, and proposed costs for a Paradise Fossil Plant (PAF) project included overstated (1) labor markup and overhead/general and administrative rates, (2) material costs, (3) equipment costs, (4) labor costs, and (5) subcontractor costs. In addition, the company included (1) unsupported costs in the BRF project and (2) excessive project oversight costs in the PAF project. We also found the company's proposed rate attachments included (1) incorrect craft labor rates and (2) noncraft wage ranges that were not reflective of the company's actual wage ranges.We estimated TVA could avoid $19.07 million on the planned $200 million contract by negotiating appropriate reductions to (1) labor markup and overhead/general and administrative rates, material costs, equipment costs, labor costs, and subcontractor costs; (2) unit rates in the BRF proposal; and (3) project oversight costs in the PAF proposal. In addition, we suggest TVA negotiate revisions to the company's contract rate attachments to correct errors and more accurately reflect the company's actual wage ranges.(Summary Only)