Federal Reports

In 2019, the Office of Inspector General initiated an investigation related to Pantex Plant’s (Pantex) management and operating contractor, Consolidated Nuclear Security, LLC (CNS), after CNS disclosed to the Government credible evidence that production technicians fraudulently recorded timesheet hours that they did not work. The investigation found that CNS submitted payment claims for production technicians’ hours worked and recorded on timesheets; however, the hours had not been worked. In 2024, the case was settled and CNS paid the Department $18,400,000 to capture the loss of claimed labor hours.
We initiated this audit to determine whether the CNS timekeeping irregularities that occurred at Pantex had adverse impacts to operations.

CNS timekeeping irregularities at Pantex resulted in adverse impacts to operations. Specifically, CNS experienced:

• Production delays; 
• Negative impacts to conduct of operations, which was a program put in place to ensure worker, public, and environmental protection;
• Additional costs for training and security clearances of $8.4 million to replace the production technicians who were terminated or placed on administrative leave; and 
• Increases in weapons quality incident reports following the termination of production technicians.

We attributed the adverse impacts to operations to a lack of CNS oversight over timekeeping. CNS responded by implementing an attendance verification process and requiring production technicians to badge in and out upon arrival to and departure from the plant; CNS was actively monitoring the implementation of its attendance verification process. The current contractor, PanTeXas Deterrence, LLC., will take over the attendance verification process.

We did not have any recommendations. Pantex’s contractors, CNS and PanTeXas Deterrence, LLC., took action to address the primary causes of the timekeeping internal control failures.

At the request of the Tennessee Valley Authority’s (TVA) Supply Chain, we examined the cost proposal submitted by a contractor for (1) outage and supplemental maintenance and modification services and (2) support services at TVA’s nuclear plants.  Our examination objective was to determine if the cost proposal was fairly stated for a planned $975 million contract.

In our opinion, the contractor’s cost proposal was overstated.  Specifically, we determined the application base for the contractor’s proposed markup rate for the recovery of general and administrative (G&A) costs did not reflect TVA’s intent as provided for in the request for proposal (RFP).  We notified TVA of the inconsistencies for use in their negotiations.  Subsequently, TVA informed us the parties agreed to (1) apply the G&A markup rate to unburdened noncraft wages to more accurately reflect TVA’s intent for reimbursing G&A costs, (2) reduce the G&A rate, and (3) remove the G&A application on noncraft staff augmentation labor.  In addition, the contractor did not propose a rate for long-term temporary assignments, as requested in the request for proposal. 

In August 2024, we conducted unannounced inspections of four 3 U.S. Customs and Border Protection (CBP) short-term holding 4 facilities in the San Diego area — two Border Patrol facilities and 5 two Office of Field Operations ports of entry.  We found that CBP 6 facilities generally met the National Standards on Transport, 7 Escort, Detention, and Search for food and beverages, supplies 8 and hygiene items, bedding, and medical care.  We also found 9 areas of noncompliance at the facilities, including: 10  11 • One Border Patrol facility did not comply with duration of 12 13 14 15 16 17 18 19 20 21 detention standards, which generally limit time in custody to 72 hours.  The facility held more than half of its detainees longer than this standard.    • CBP did not comply with relevant standards of processing, documenting, and storing detainees’ personal property.    • All facilities could not always provide U.S.-equivalent medication to detainees in a timely manner.    22 • One Border Patrol station did not meet cleanliness and 23 24 sanitation standards.   

The Federal Emergency Management Agency’s (FEMA) Port Security Grant Program (PSGP) reimbursements — totaling more than $280 million — were allowable and paid in accordance with requirements, based on our review of records for fiscal years 20182021.  We did, however, question $281,045 in non-Federal cost share expenditures for which recipients either did not maintain adequate documentation or purchased items that were not allowable under the program, resulting in $199,083 in funds that may need to be returned to FEMA to meet non-Federal cost share requirements. 

TVA began hedging natural gas prices in April 2022 under the reinstated Financial Hedging Program (FHP). The program’s stated objectives are to reduce fuel rate volatility and balance operational and financial risks. From its reinstatement in April 2022 through February 2025, TVA’s FHP experienced losses of approximately $645 million.  We performed an audit of the FHP due to the financial risks associated with hedging. Our audit objective was to determine if TVA’s FHP is achieving its objectives of reducing fuel rate volatility and balancing operational and financial risks.

We determined the FHP achieved its objective of reducing fuel rate volatility between April 2022 and February 2025.  Over the 35-month period, fuel rate volatility was reduced by an average of about 3.5 percent.  However, we were unable to determine if TVA met its objective of balancing financial and operational risks because the objective is unclear and TVA has not defined parameters to define successful achievement of the objective. 

Although the fuel rate volatility was reduced over the entire time frame, the FHP resulted in (1) approximately $645 million in losses that were passed on to TVA’s customers and (2) a 2 percent increase in fuel rate volatility in fiscal year 2024.  We also found TVA had not performed the required back testing to measure volatility reduction and the effectiveness of the FHP.  At our request, TVA performed the back testing that showed the program had reduced fuel rate volatility. 

Additionally, we identified an opportunity for TVA to improve the information provided to the TVA Board, Tennessee Valley Public Power Association, and Tennessee Valley Industrial Committee related to FHP fuel rate volatility and FHP gains/losses.

As directed under the MISSION Act, VA created clinical resource hubs to improve healthcare access for veterans in underserved areas. The hubs backstop medical facilities in each regional Veterans Integrated Service Network (VISN) that do not have enough clinical staff due to attrition, recruiting difficulties, or growth in the veteran population. Hub physicians see most patients virtually. Encounters increased from almost 482,000 in fiscal year (FY) 2021 to about 1.2 million in FY 2024.

The OIG team found that despite the increase in patient encounters, physicians in some hub primary care and specialty group practices—such as cardiologists, dermatologists, and psychiatrists and psychologists—generally did not appear to meet established minimum productivity thresholds. The apparent failure to meet these thresholds may have been caused by gaps and inaccuracies in the data used to measure productivity. The available data did not consistently give physicians credit for work documented at a spoke site (where a veteran presents for care), recognizing only work documented at the facility to which the hub physician’s labor is mapped. Moreover, VHA lacked formal guidance on how hubs should measure and monitor specialty physician productivity. Hub officials simply relied on indicators like the number of patient encounters and veterans served, instead of using standardized productivity metrics that factor in the complexity of each visit. The lack of guidance also prevented VHA from identifying and remediating underperforming hub services.

The OIG recommended VHA improve data, issue guidance on which productivity measures apply to hub physicians, and clarify who should monitor productivity and take corrective action when targets are not met. These steps will help VHA evaluate whether the ever-increasing investment in hubs is justified and the number of veterans served is optimized. VHA agreed with the recommendations.