We performed an audit of costs billed to the Tennessee Valley Authority (TVA) by Wright Brothers Contracting, Inc. (Wright Brothers) for site grading services and materials under Contract No. 16512. The contract provided for TVA to compensate Wright Brothers for work on a fixed price basis for deliverables and materials and on a time and material (T&M) basis for performance of the work. Our audit objectives were to determine (1) if costs were billed in accordance with the contract terms and (2) the reasonableness of TVA’s process for evaluating and awarding proposed fixed price tasks issued under the contract. Our audit scope included approximately $28.7 million in costs paid by TVA between September 3, 2021, and May 31, 2024. This included approximately $24.5 million for 17 fixed price tasks and $4.2 million for one T&M task.
In summary, we determined:
• Wright Brothers billed TVA $1,401,563 in T&M billings for cost categories that were not included in the contract, Wright Brothers proposal, or TVA’s purchase order. Additionally, the proposal and invoice documentation did not provide adequate detail for a field invoice approver to effectively review invoices.
• Wright Brothers billed TVA $49,355 in unsupported T&M costs, including (1) $43,860 in unsupported equipment costs and (2) $5,495 in unsupported labor costs. (Note: $11,320 of the $49,355 unsupported cost were also included in the $1,401,563 ineligible T&M billings.)
• There were opportunities to strengthen TVA’s process for evaluating and awarding fixed price tasks. Specifically, TVA did not always compete fixed price tasks as required by the contract. In addition, when TVA received only one bid for a fixed price task, there were no policies or guidance for steps TVA should take to ensure the fairness of the fixed price amount.
