Federal Reports

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We audited $5.6 million of costs billed by a TVA contractor for providing construction and modification services for TVA generating plant switchyards, substations, electrical transmission system, and power control communication facilities. We found TVA had been overbilled an estimated $186,378 for (1) craft labor costs that exceeded amounts provided for by TVA’s labor agreements, (2) misclassified subcontractor labor, (3)ineligible subsistence allowance payments, and (4) unsupported costs. The contractor agreed with most of our issues and provided credits to TVA. However, the contractor stated it planned to perform a 100 percent review of craft labor costs associated with the audit period rather than rely on the audit estimate of the overbilling. TVA management plans to work with the contractor to recover the overbilled craft labor costs. Summary Only

TVA provides engineering and technical assistance to the Federal Emergency Management Agency (FEMA) for major disasters and emergencies using TVA retirees who are working for a TVA subcontractor. In April 2006, the Department of Homeland Security requested all Offices of the Inspector General to perform a review of the 2005 Gulf Coast Hurricane Assignments performed by their agency to evaluate their agency's procedures pertaining to the billing and reimbursements for FEMA mission assignments.Our review found TVA (1) did not have adequate controls in place to ensure the accuracy of costs TVA paid to its contractor and subsequently billed to FEMA and (2) could not provide documentation of FEMA's approval of TVA's use of a markup rate to recover its costs of administering the retiree subcontract. TVA management subsequently instituted new procedures to correct the deficiencies identified by our audit. Based on the new procedures, we determined TVA is generally in compliance with federal guidelines pertaining to the billing and reimbursements for FEMA mission assignments. However, we recommended FEMA provide written authorization for TVA's use of a specific markup to recover its costs of administering the retiree subcontract. Summary Only

We audited $22.2 million of costs billed by a TVA contractor for providing construction and modification services for TVA generating plant switchyards, substations, electrical transmission system, and power control communication facilities. We found overbillings and overpayments of about $58,000 including (1) overbillings for small tools due primarily to the contractors application of a recovery rate to an incorrect cost base, (2) craft wages and benefits that exceeded amounts provided for by TVA's labor agreements, and (3) miscellaneous overpaid and unsupported costs. The contractor and TVA management agreed with our findings except for the overbilled craft wages and benefits. In response to that issue, management stated TVA labor relations had decided certain variances from the labor agreements would be allowed and most of the variances identified in this review were within the guidelines established by labor relations. Summary Only