Federal Reports

We found that unsupported costs were charged to an IRA grant and BOR did not properly oversee a grant and cooperative agreement. 

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements.

Evaluation

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements.

We performed an audit of the Tennessee Valley Authority’s (TVA) Contract No. 13814 with Hitachi Energy USA, Inc. (Hitachi).  Under the contract, Hitachi was to design, furnish, and install/commission power transformers and related equipment at TVA designated locations.  Our audit objectives were to determine (1) if costs billed to TVA and purchase orders (PO) issued were in compliance with the contract's terms and (2) the reasonableness of TVA's process for evaluating the prices for products and services outside the contract's pricing schedule.  Our audit scope included about $471 million in approved spend for 466 POs issued between September 27, 2018, and September 26, 2024.

We selected ten POs issued under the contract, which included six POs for transformers listed in the contract’s pricing schedule and four POs for unique transformers or related services not listed on the contract’s pricing schedule.  We determined the costs for transformers included in the contract’s pricing schedule did not always comply with the contract’s pricing terms.  Specifically, we found:

• Between 2022 and 2024, TVA issued POs with transformer prices that significantly exceeded the contract’s pricing because of changing market conditions.  This resulted in TVA agreeing to pay $33.5 million more than the contract price for transformers on four POs.  Contract No. 13814 expired in 2024.  TVA executed a new contract with Hitachi in 2025, which included the necessary remediations to prevent TVA from agreeing to pay excessive transformer prices in the future.
• Although Hitachi followed the contract’s pricing on two POs we reviewed, Hitachi used incorrect index values when adjusting the base transformer pricing, resulting in $321,560 in overbilled transformer costs.

Additionally, for any transformer or transformer-related material, equipment, or services outside the contract's pricing schedule, we determined TVA’s process for evaluating PO prices was reasonable.

As part of our annual audit plan, we performed an audit of costs billed to the Tennessee Valley Authority (TVA) by Day and Zimmerman NPS, Inc. (DZNPS) for the services of qualified craft, noncraft, or staff augmented personnel to perform modification, outage, supplemental maintenance, and technical support work at TVA nuclear generating sites under Contract No. 11515.  Our audit objective was to determine if costs billed to TVA at Sequoyah Nuclear Plant were in compliance with the terms of Contract No. 11515. Our scope included approximately $100 million in costs billed to TVA under Contract No. 11515 (Purchase Contract No. 12567 for Sequoyah Nuclear Plant) from January 1, 2023, to December 31, 2024.

In summary, we determined the costs billed by DZNPS generally complied with the contract except for $56,659 in overbilled costs.  Specifically, we determined DZNPS billed TVA (1) $53,961 in ineligible incentives and (2) $2,698 in ineligible labor costs.

The Consumer Product Safety Improvement Act of 2008 (CPSIA) requires that the Office of Inspector General of the U.S. Consumer Product Safety Commission annually provide to the appropriate congressional committees the findings, conclusions, and recommendations from our reviews and audits performed under subsection 205(a) of the CPSIA as well actions taken with regard to employee complaints under subsection 205(b). The attached report fulfills these requirements for fiscal year 2025.

Review of ARC's cybersecurity and information security program

The OIG conducted a review of Peace Corps operations in Peru from April 2024 through December 2025. Our objective in reviewing the Peace Corps/Peru post was to determine whether its financial and administrative operations were functioning effectively and in compliance with Peace Corps policies and Federal regulations. Following a site visit in June 2024, we found that the post needed to improve its operations in multiple areas. We discussed our initial findings with the Peace Corps/Peru team, who quickly took action to address these findings.
As a result of the post management team’s actions to address our findings, we will not be making additional recommendations. However, we want to emphasize the importance of the areas we have identified and illustrate the proactive actions Peace Corps/Peru has taken, which could benefit other Peace Corps posts in managing their financial and administrative operations.