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.

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 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.  

The Department of Energy’s Weatherization Assistance Program (WAP) assists low-income families in reducing energy costs by increasing the energy efficiency of dwelling units while ensuring health and safety. WAP provides billions of dollars in grants to all 50 states, the District of Columbia, Native American tribes, and U.S. territories. These entities then contract with local weatherization providers to offer WAP services to their communities. The Infrastructure Investment and Jobs Act added $3.5 billion to WAP program appropriations.

Due to the importance of WAP and the risk areas we previously identified, we selected one state for review. We performed this audit to determine the extent to which Wisconsin’s Division of Energy, Housing and Community Resources (DEHCR) officials managed WAP in accordance with applicable requirements.

Wisconsin’s DEHCR officials did not always manage WAP in accordance with applicable requirements. We found that DEHCR officials did not: (1) maintain all supporting documentation necessary to support costs claimed by their subgrantees and lower-tier subcontractors, and (2) identify a potential conflict of interest. Lastly, we identified two areas for improvement related to DEHCR’s internal control system that, if addressed, should help its officials administer WAP in accordance with applicable requirements.

These issues occurred because DEHCR officials did not have a policy to maintain all supporting documentation, including copies of invoices, from their subgrantees. In addition, DEHCR’s conflict of interest policy lacked the rigor to identify potential conflicts of interest. Further, DEHCR officials did not have a formal documented procedure for their Performance Evaluation tool or their process for receipt and resolution of complaints. The Department is responsible for overseeing activities performed under the award. However, its oversight did not ensure compliance with the terms and conditions of the award or identify the issues in our report.

An effective internal control system is necessary to help ensure the overall effectiveness of WAP funding and to demonstrate costs are allowable, allocable, and reasonable.

To address the issues identified in this report, we have made two recommendations and one suggested action that, if fully implemented, should help DEHCR officials improve their administration of WAP and ensure compliance with applicable requirements.  

Battelle Memorial Institute manages and operates the Pacific Northwest National Laboratory (PNNL) for the U.S. Department of Energy’s Office of Science. PNNL’s research priorities concentrate on three principal missions addressing major challenges of national and global consequence: scientific discovery, energy resiliency, and national security. In support of these missions, PNNL acquires consultants to perform certain tasks and uses subcontracts to commit resources and formalize its relationships with consultants.

We initiated this audit to determine if PNNL managed its professional and consultant services agreements in compliance with applicable laws, regulations, and contract requirements.

We found that PNNL did not fully comply with applicable laws, regulations, and contract requirements in managing its professional and consultant services agreements. Specifically, we found that PNNL: (1) did not always obtain required conflicts-of-interest disclosures; (2) accepted and paid invoices from consultants that lacked sufficient detail to support the services rendered; and (3) may not have ensured segregation of duties within the procurement and oversight of professional and consultant services agreements.

We attributed these issues to weaknesses in PNNL’s policies and procedures. Specifically, we found PNNL policies that conflicted, did not incorporate or address requirements, or allowed procedures that did not follow best practices.

These weaknesses limit PNNL’s ability to provide reasonable assurance that other consultant and professional services agreements comply with applicable laws and regulations and that only allowable costs are incurred and claimed.

To address the issues identified in this report, we made five recommendations that, if fully implemented, should help ensure that PNNL manages its professional and consultant services agreements in accordance with applicable laws, regulations, and contract requirements.

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