As part of our annual audit plan, we performed an audit of costs billed to the Tennessee Valley Authority (TVA) by Terracon Consultants, Inc. (Terracon) for geotechnical and hydrogeological site investigations and groundwater quality monitoring services under Contract No. 15087. Our audit objective was to determine if costs were billed in compliance with the contract’s terms. Our audit scope included $9.93 million in costs paid from January 3, 2022, through October 21, 2024.
In summary, we determined Terracon overbilled TVA an estimated $387,879, including (1) an estimated $304,431 in overbilled labor costs (of which TVA has recovered $3,164), (2) $81,898 in ineligible subcontractor markups, and (3) $1,550 in overbilled travel costs. In addition, we identified instances where meals and incidental costs associated with travel were not billed in accordance with the contract, resulting in a net immaterial overbilling. We also found TVA did not include a pricing schedule containing the time and material billing rates until March 28, 2024, although the contract was effective July 13, 2020.