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Brought to you by the Council of the Inspectors General on Integrity and Efficiency
In keeping with its responsibilities under the Inspector General Act of 1978, as amended, the OIG monitored the audit of TVA's fiscal year 2025 financial statements performed by Ernst and Young LLP (EY) to assure their work complied with Government Auditing Standards. Our review of EY's work disclosed no instance in which the firm did not comply in all material respects with Government Auditing Standards.
We performed an audit of costs billed to the Tennessee Valley Authority (TVA) by Kiewit Power Constructors Company (Kiewit) under Contract No. 13156 for work performed in support of TVA’s coal combustion residual conversion program. Our audit objective was to determine if the costs billed to TVA were in accordance with the contract’s terms. Our audit scope included approximately $133.7 million in costs billed to TVA between January 1, 2023, and September 30, 2024.
In summary, we determined Kiewit overbilled TVA $51,251, including (1) $24,192 in ineligible fee and general and administrative costs, of which $8,097 was due in part to contradictory language in the contract, (2) $15,957 in a duplicate materials cost, and (3) $11,102 in incorrect craft labor costs. We also determined Kiewit billed TVA for reimbursement of temporary living allowance (TLA) costs that were not supported. Specifically, Kiewit billed TVA an average of $4,396 per month per employee for TLA. However, Kiewit only provided documentation supporting an average of $2,310 per month per employee in TLA costs incurred. Based on our analysis and Kiewit’s inability to provide documentation supporting the full amount of TLA costs it incurred, we have referred this matter to the Office of the Inspector General Investigations for further review. In addition, we noted opportunities to improve contract administration by TVA related to (1) tax exemption requests, (2) craft labor rate schedules that did not match the Project Labor Agreement, and (3) TLA employee certification forms that were not notarized as required by the contract.
The Office of the Inspector General (OIG) performed the procedures, which were requested and agreed to by Tennessee Valley Authority management solely to assist management in determining the validity of the Winning Performance (WP)/Executive Annual Incentive Plan measures for fiscal year (FY) ending September 30, 2025. Tennessee Valley Authority management is responsible for the WP measures data provided. In summary, procedures applied by the OIG found the:
FY 2025 WP goals for the enterprise measures were properly approved.
Actual FY to-date results for the enterprise measures agreed with the underlying support, without exception.
FY 2025 WP, Executive Annual Incentive Plan, and Chief Executive Officer payout percentages provided by the Enterprise Financial and Performance Reporting organization on October 31, 2025, were mathematically accurate and agreed with the OIG’s recalculation.
The Occupational Safety and Health Administration states that establishing a safety and health program is one of the most effective ways of protecting workers. The Tennessee Valley Authority (TVA) Standard Programs and Processes (SPP) 18.004, Contractor Safety Management, establishes the contractor safety program and defines oversight requirements for managed task contractors and subcontractors working on TVA-owned-or-controlled sites to meet state and federal safety and health regulations.
TVA-SPP-18.004 outlines several contract pre-mobilization requirements, including requiring all contractors to submit a Site-Specific Safety and Health Plan (SSSHP), which should adequately identify hazards inherent to the work environment and address safe-work practices based on the scope of work identified in the contract. In addition, the process requires (1) a TVA Contractor Oversight Representative (COR) be assigned as the single point of contact for providing appropriate technical direction and oversight of work performed by each contractor and (2) TVA Safety to conduct audits of contractor safety performance. Due to the importance of the health and safety of personnel working at TVA sites, we performed an evaluation of TVA’s oversight of contractor safety.
We determined TVA was not providing adequate oversight of contractor safety in accordance with the contractor safety program. While some oversight was provided through tracking and trending of contractor safety performance, there were several areas that were not adequate. Specifically, TVA (1) could not provide completed SSSHPs for some contracts, (2) could not identify the COR for most of the contracts we reviewed or provide documentation that some of their responsibilities were being performed, and (3) did not perform safety audits as required.
The Tennessee Valley Authority (TVA) operates four coal plants, which are required to comply with the Clean Air Act (CAA). In 2023, changes to the CAA required the reduction of nitrogen oxide (NOx) from power plants. To comply with the changes, TVA made the decision to install Selective Catalytic Reduction (SCR) systems at TVA’s Shawnee Fossil Plant (SHF) for Units 2, 3, 7, and 8 and entered into a $59.5 million contract for the design and delivery of SCR systems (SCR systems are emission control technology designed to remove NOx from flue gases emitted by combustion sources). The contract included performance guarantees for meeting metrics such as NOx emissions, and system pressure drop. Due to the importance of complying with environmental regulations and the cost of the project, we initiated an evaluation to determine whether performance guarantees were met for the SHF SCR project.
We determined metrics associated with performance guarantees for the SHF SCR project were met. However, TVA project support personnel performed the SCR tuning, which was a defined contractor responsibility. This resulted in unnecessary risk and additional cost to TVA.
The Office of the Inspector General performed an audit of the Tennessee Valley Authority’s (TVA) Unmanned Aircraft Systems (UAS) Program due to the increased use of unmanned aircraft in TVA operations. Our audit objectives were to determine if TVA's (1) UAS Program was in compliance with applicable federal requirements and (2) use of unmanned aircraft was in compliance with applicable TVA policies. Our audit scope included TVA's use of unmanned aircraft from January 1, 2024, through December 31, 2024.
In general, we determined TVA's (1) UAS Program complied with applicable federal requirements and (2) use of unmanned aircraft complied with applicable TVA policies. However, we determined 2 of 64 pilots did not have the remote pilot certificate required to operate UAS. We made one recommendation to management to address verification of remote pilot certificates.
