Federal Reports

We audited the costs billed to TVA by a contractor for providing (1) modification and supplemental maintenance services at TVA nuclear plants (operating unit work) and (2) construction services for the restart of Browns Ferry Nuclear Plant Unit 1 (BFN U1). The scope of our review included $272.2 million of noncraft costs billed by the contractor through December 31, 2007, including (1) $89.6 million for modification and supplemental maintenance services and (2) $182.6 million for the BFN U1 services.In summary, we found TVA had overpaid the contractor (1) from $876,519 to $1,579,575 for BFN U1 performance fees due to an overstated fee base and inflated fee rates, (2) $268,538 due to ineligible and unsupported billings for labor costs, (3) $54,633 due to overbillings for temporary living and relocation costs, and (4) $6,650 due to miscellaneous overbilled costs. We recommended TVA management recover up to $1,909,396 in overpaid costs from the contractor. Summary Only

We audited $25 million of costs billed to TVA by a contractor for providing research and development activities. In summary, we found (1) TVA made invoice payments in advance of the work being performed, thus losing an estimated $1,125,000 in interest over the audit period, (2) project status reports submitted by the contractor were incomplete and inaccurate, and (3) TVA was delinquent in recovering overfunded project amounts.We recommended TVA management (1) discontinue the use of advanced payments unless the contractor is required to pay interest on the advanced payments; (2) require the contractor to provide a final status report for all projects worked, and (3) recover all unspent funds and institute procedures for ensuring the timely collections of all future overpayments. Summary Only