Federal Reports

We audited $211.6 million of costs billed to TVA by a contractor from January 1, 2006, through December 31, 2007, for the administration of TVA's medical benefit program. Our objective was to determine if the costs billed to TVA were in compliance with the contract terms and conditions. In summary, we found TVA had potentially been overbilled up to an estimated $473,024. The overbilling included (1) $327,513 in potentially duplicate line item charges; (2) $71,518 for unallowable procedures and services; (3) $4,659 for claims that exceeded plan limits; (4) $61,840 of audit recoveries that had not been credited to TVA; and (5) $7,494 of miscalculated claim payments.In addition, we found TVA had been billed an additional $1 million due to payment provisions the contractor had negotiated with some of the providers in its preferred provider organization network. These provisions, referred to as stop-loss provisions, effectively offset discounts TVA would have otherwise received when providers' costs exceeded specified amounts. Summary Only

We reviewed TVA's process for ensuring it does not knowingly contract with vendors that have been: (1) debarred or suspended by the federal government and/or (2) found unsatisfactory within TVA. In summary, we determined:TVA does not have formal procedures for ensuring TVA does not knowingly contract with vendors that have been debarred or suspended by the federal government. However, Procurement requires its Contract Managers/Procurement Agents to review the Excluded Parties Listing System (EPLS), which is the federal government's database of debarred and suspended vendors, before awarding contracts over $100,000. Although we found TVA had not awarded contracts to vendors that were included on the EPLS during our review period (2005-2008), TVA's process was not always followed and/or documented.The Federal Acquisition Regulations (FAR) include certain requirements that if implemented by TVA could improve TVA's process and further ensure that TVA does not do business with contractors and subcontractors that are debarred or have committed a civil or criminal offense.TVA does not have a formal process for internally identifying vendors that have been found unsatisfactory within TVA. The lack of such a process could result in TVA not being aware of problems it has had with vendors prior to awarding contracts to them.We recommended TVA Procurement develop written procedures detailing its vendor debarment process. In addition, TVA should improve its process by requiring more verification of the debarment status of contractors and subcontractors as prescribed by the FAR, including certifications and notifications by contractors regarding debarment and/or civil or criminal actions. TVA should also develop a process for (1) identifying TVA vendors that should be on a "watchlist" based on certain serious offenses committed by the vendor and (2) reporting any significant misconduct by contractors to the federal government. Summary Only

EAC OIG, through the independent public accounting firm of Clifton Gunderson LLP, conducted this evaluation to determine whether EAC had implemented effective controls to ensure compliance with internet usage policies.