Federal Reports

We determined that TCI met requirements in the HEA and regulations for institutional (excluding the 90/10 rule), program, and student eligibility and for award calculations. However, our review disclosed that (1) TCI improperly paid $440,487 to FFEL lenders to pay off its students’ loans and prevent their default; and (2) TCI had internal control deficiencies in the administration of Title IV programs during the period under review.

We reviewed $14.2 million of costs billed to TVA by a contractor for providing right-of-way clearing and restoration services and found:TVA had been overbilled $81,533 including (a) $38,796 in unallowable miscellaneous material costs, (b) $34,776 in duplicate billings for initial clearing costs, and (c) $7,961 in unsupported labor costs. Additionally, we found the contractor had underbilled TVA $5,776 due to various invoicing errors. The contractor agreed with our finding regarding unsupported labor costs and provided explanations for why it believed the remaining items were billed correctly. TVA management agreed with the findings regarding unallowable material costs, unsupported labor costs, and underbilled costs and stated they are conducting a review of the $34,776 in suspected duplicate billings for initial clearing services. Prior to award of the contract, Procurement's contract manager had requested the contractor to change its proposed billing rates to "TVA Valley-wide" rates. That action, which the contractor agreed to, caused TVA's costs to increase $522,212 because most of the rates that had been proposed by the contractor were lower than TVA Valley-wide rates. Procurement informed us that TVA had deployed a strategy to negotiate consistent pricing among all suppliers and that would be more favorable to TVA. Procurement further stated that although some of the prices were higher than the contractor's initial offer, lower prices were achieved in four areas (line items) where TVA expected the majority of the expenditures to take place; however, since the actual quantities of work performed under the various line items were other than anticipated, the resulting charges increased TVA's total cost by approximately 3.7 percent. Procurement plans to use this experience in some lessons-learned sessions. Summary Only

A review of trust funds administered by Economic Development (ED) found the majority of the trust funds were inactive, and according to ED management, had been established between 1983 and 1991 for a variety of purposes. ED management said they found no activity in the majority of these trusts. ED had closed approximately 11 inactive trust funds as of July 27, 2007. Our review further found that documentation of these trust agreements was limited. TVA management could not provide documentation to show the recipients of fund balance distributions or the reallocation of the funds beyond a 2006 closeout memorandum from TVA to the recipients that certified that the contract requirements had been met and that funds had been used as required by the contract. In addition, TVA management could not provide us with account statements for 11 of the 16 trust accounts, bank account numbers for 6 of the 16 trusts, or the underlying agreements for half the trusts. Because of the limited documentation, we were unable to determine whether the trust funds are being administered in accordance with the terms of the agreements and whether the trust funds are being administered in accordance with the terms of the agreements and applicable laws and regulations. According to the Senior Vice President, ED, TVA no longer establishes trust accounts, and it does not intend to do so in the future.