Voith Hydro, Inc. - Contract No. 9000

As part of our annual audit plan, we performed an audit of costs billed to the Tennessee Valley Authority (TVA) by Voith Hydro, Inc. (Voith) under Contract No. 9000, for hydro modernization, unit rehabilitation, and functional support services in support of TVA's hydro facilities, including Raccoon Mountain Pumped Storage Plant. The contract provided for TVA to compensate Voith for these services on either a fixed price, time and material, and/or target price estimate basis. Our audit objectives were to determine if (1) costs were billed in accordance with the terms and conditions of the contract and (2) tasks were issued using the most cost efficient pricing methodology. Our audit scope included about $119.6 million in costs TVA paid to Voith from August 20, 2014, through December 31, 2020. This included $118.2 million for fixed price projects and $1.4 million for time and material projects. In summary, we determined Voith billed TVA (1) at least $2,435,353 for labor classifications that did not have a corresponding labor rate in the contract and (2) $12,606 in excessive labor rates due to ineligible rate adjustments. In addition, based on the limited fixed price information we reviewed, it did not appear TVA was paying excessive prices by compensating Voith on primarily a fixed price basis. (Summary Only)