Proposal for Construction and Modification Services

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, the OIG examined a cost proposal submitted for construction/modification services. Our objective was to determine if the cost proposal was fairly stated for a planned $100 million contract. In our opinion, the cost proposal (1) included inconsistent equipment and labor markup rates, (2) included overstated labor markup rates, (3) overstated the Paradise Fossil Plant baseline project price, and (4) overstated the minimum non-manual wage rates. We estimated TVA could avoid about $4.1 million on the planned $100 million contract by negotiating reduced markup rates and ensuring fixed price estimates are calculated correctly with negotiated rates. In addition, we found the contract's compensation terms and related attachments were inconsistent with the methodology TVA intends to use to compensate the contractor.(Summary Only)