Federal Reports

As part of our annual audit plan, we reviewed the processes related to identifying and managing surplus materials to determine if surplus material was identified and managed in accordance with TVA policies and procedures. We identified areas of noncompliance and recommended corrective action to management. Management provided comments on our findings, including corrective action taken.

Our audit of costs billed to TVA by a contractor who provided engineering and technical support found that most of the contract employees had been transferred from staff augmentation contracts where they had been performing the same duties at a substantially lower cost to TVA. In total, we determined TVA's costs increased $689,000 when the staff augmentation contract employees were moved to the "managed task" contract, primarily due to a high overhead markup rate. By moving the contract employees to the "managed task" contract, it appeared TVA was attempting to avoid reporting this headcount as staff augmentation. Since it appeared doubtful TVA had received $689,000 worth of management oversight from the contractor, it is our opinion that TVA wasted $689,000 when it moved staff augmentation contract employees to the "managed task" contract. Summary Only

We audited $4.5 million of payments TVA made to a contractor from April 2004 through November 2006 for engineering and technical support. In summary, we found TVA was overbilled and/or had overpaid the contractor $30,645, including (1)$28,679 for payroll tax billings that exceeded the contractor's actual costs and (2)$1,966 due to miscellaneous billing and payment errors. The contractor and TVA management agreed with our findings. Summary Only

We audited $2.49 million of costs billed to TVA by a contractor from January 1, 2005, through December 31, 2006, for the administration of TVA's vision benefit program. Our audit objective was to determine if the costs billed to TVA were in compliance with the contract terms and conditions. In summary, we found TVA was billed (1)an estimated $69,928 for miscalculated and unsupported claim costs, (2)$4,210 for duplicate claims, and (3)$22,255 for claims that exceeded the contract frequency limitations. Additionally, TVA was billed an estimated $56,748 in ineligible claim costs that occurred because eligibility information was not timely updated. Summary Only

We audited $3.9 million of costs billed by a TVA contractor who provided engineering, materials, and installation support for automating TVA's hydro system. We found TVA was billed $380,000 for costs and associated fees that were either excessive, unsupported, or not in accordance with the contract. The overbillings included excessive labor markups, unsupported labor costs, unallowable or unsupported travel costs, excessive facility rental costs, duplicate billings, overstated retroactive billing adjustments, and fees. Summary Only