Federal Reports

Due to constraints on the existing fiber network, in May 2017, the TVA Board of Directors approved the Strategic Fiber Initiative (SFI) with a budget of $300 million to expand TVA’s fiber capacity by 3,500 miles over the course of ten years on 31 prioritized routes.  In addition, TVA planned to lease surplus fiber to external entities to help offset a portion of the operational costs. As of January 2026, the 31 routes that were originally scheduled for fiber installation had been reduced to 19 routes and mileage reduced from 3,500 to approximately 1,900 miles to stay within the $300 million budget.  Due to the decrease in mileage, we initiated an evaluation of the SFI program to identify the cause(s) for the decrease in scope for the strategic fiber program.

We determined the original budget for the SFI program contained some flawed assumptions that resulted in an underestimated cost per mile.  To stay within the approved $300 million budget, TVA reduced the scope of the program.  We reviewed documentation that identified some of the flawed assumptions that contributed to cost increases (resulting in scope decreases), including: (1) issues with wood poles, (2) limited use of helicopter to install the fiber, (3) increased use of contractor labor, (4) environmental requirements, and (5) outage availability. Additionally, the program has not generated the amount of revenue from leasing excess fiber capacity that was anticipated.  At the request of the Project Review Board, program personnel identified lessons learned to be applied to future programs of similar size and duration. 

Why We Did This Report

We conducted this evaluation to determine the extent to which Drinking Water State Revolving Fund Infrastructure Investment and Jobs Act supplemental funds are used for projects that improve resilience to physical and cyber threats and hazards.

Summary of Findings

The EPA has opportunities to improve its oversight of physical or cyber resilience projects. Such oversight would help the Agency meet and track strategic goals and requirements to safeguard water and wastewater critical infrastructure.

We performed an audit of costs billed to the Tennessee Valley Authority’s (TVA) by a contractor for nuclear steam supply system refueling and inspection services at TVA’s Watts Bar Nuclear Plant and Sequoyah Nuclear Plant.  The contract provided for TVA to compensate the contractor on a time and material or fixed price basis in accordance with the contract’s pricing schedule.  In addition, the contract provided that (1) outside personnel used for craft labor would be reimbursed at the contractual TVA Project Maintenance and Modification Agreement rates plus an administrative fee, and (2) TVA was to pay the contractor performance fee based on a performance metric program containing bonuses, incentives, and reductions in compensation.  Our audit objective was to determine if costs billed to TVA were in accordance with the contract’s terms.  Our audit scope included approximately $42.5 million in costs billed to TVA from January 1, 2023, through May 31, 2025.

In summary, we determined the contractor overbilled TVA $1,386,951, including (1) $787,862 in overbilled subcontractor, travel and living, labor, and equipment costs; (2) $136,411 for performance fee not earned; (3) $130,383 due to provisional escalation costs that were not trued-up to actual; (4) $322,397 in unsupported costs; and (5) $9,898 in invoice and payment errors.

Due to the importance of protecting operational technology from cybersecurity threats, we audited the security of a specific type of system access at the Tennessee Valley Authority’s (TVA) gas sites.  Our objective was to determine if a specific type of system access supporting Gas Operations was securely configured and monitored to mitigate cybersecurity threats.  We made eight recommendations to TVA management.  The specifics are being withheld from public release due to their sensitive nature in relation to TVA’s cybersecurity.

The Consumer Product Safety Commission (CPSC) Office of Inspector General retained Williams, Adley & Co.-DC LLP, an independent public accounting firm, to perform an audit of the CPSC’s Zero Trust implementation.  Overall, the audit confirmed the CPSC’s current Zero Trust trajectory is aligned with federal cybersecurity modernization objectives and supports the continued development of a more secure and resilient information security environment.  

Introduction

This management alert presents the issues the U.S. Postal Service Office of Inspector General (OIG) identified during the Effectiveness of Package Verification Solutions audit (Project Number 25-130). Our objective is to provide immediate notification of these issues. 

Background

In August 2017, the U.S. Postal Service launched the Automated Package Verification (APV) system to identify insufficient postage for some package volume. The system compares shippers’ reported package weights and measurements with actuals captured on postal processing equipment, charging any additional postage due and refunding overpayments (see Figure 1 for an example of package processing equipment). In 2018, the Postal Service invested $22.6 million to expand APV capabilities to improve revenue protection by evaluating every package that is processed on plant equipment. Since it was introduced, APV has increased Postal Service postage collection by $1.1 billion.

We conducted an audit on the effectiveness of the U.S. Department of Housing and Urban Development’s (HUD) Home Equity Conversion Mortgage (HECM) program’s Life Expectancy Set Asides (LESA).  The LESA is a set aside portion of the HECM mortgage that makes property tax, hazard insurance, and flood insurance payments on behalf of certain financially vulnerable borrowers.  While not guaranteed, the LESA funds are intended to last for the full duration of the borrower’s life expectancy.  We initiated this audit because of recent federal reporting on rising nationwide property tax and hazard insurance costs, paid for by LESA funds.  Our audit objective was to determine whether LESAs were meeting the intent of the program for financially vulnerable borrowers.

We found an estimated 1,237 HECM borrowers will need to begin making property charge payments out of pocket because their LESAs will deplete in significantly less time than HUD estimated they would last. This occurred because HUD did not evaluate whether LESA calculations were effective or whether LESAs would be available for the borrowers’ estimated life expectancy.  If borrowers cannot make these property charge payments out of pocket, their HECM loans would default, resulting in a projected loss of $258 million to HUD.

The 2026-2030 strategic plan outlines the vision and priorities that guide EAC OIG as it carries out its mission.