Federal Reports

To meet the Tennessee Valley region’s growing demand for power, the Tennessee Valley Authority (TVA) is investing in existing assets and new generation.  In fiscal year 2025, TVA invested more than $4.6 billion in capital investments and plans to invest $4.2 billion in fiscal year 2026.  Due to potential risks to cost and schedule from rework in TVA projects, we performed an evaluation of contractor rework for Major Projects at TVA.  The objectives were to evaluate TVA’s oversight of contractor rework and determine if rework was being handled in accordance with contract terms and conditions.  Our scope included active projects in the implementation phase for TVA’s Major Projects organization.

We reviewed nine contracts associated with our sample of projects and identified rework was required for two.  We determined the rework was handled in accordance with contract terms and conditions.  Specifically, where defects were discovered, contractors took corrective actions to remedy the defects at its expense.  However, we also identified a lack of guidance for oversight of rework because TVA’s project management Standard Programs and Processes do not define rework or provide any information on how rework should be documented and tracked.

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.

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.

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.