Federal Reports

At the request of Tennessee Valley Authority's (TVA) Supply Chain and TVA's Senior Vice President, Generation Construction, we audited $66.4 million in costs billed to TVA by Phillips and Jordan, Inc. (P&J), under an Advance Authorization (AA) agreement and Contract No. 78268. The AA agreement and contract provided for P&J to unload and dispose of at least four million tons of coal combustion by-products from the coal combustion by-products spill at TVA's Kingston Fossil Plant in December 2008. Our objective was to determine if the costs billed from June 2, 2009, through September 4, 2011, were in compliance with the terms of the AA agreement and the contract.In summary, we determined P&J overbilled TVA $366,401 which included (1) $225,832 in overbilled tonnage costs, (2) $122,921 in overbilled leachate costs, (3) an estimated $11,206 in overbilled standby costs, and (4) $6,442 in overbilled structural adequacy costs. Summary Only

The Tennessee Valley Authority (TVA) identified asset performance and operations as a major risk for the agency. Without effective management of critical spare parts, TVA could face equipment failure which could result in safety and generating failures. This review was initiated to determine if the Nuclear Power Group (NPG) and Coal & Gas Operations (C&GO) were effectively managing critical spare parts.We found critical spare parts could be managed more effectively. We found there were inconsistencies in TVA's management of its critical spare parts. Specifically, we found (1) C&GO does not have written policies to govern its critical spare parts program; (2) preventive maintenance is not being performed on critical spare parts at certain plants; and (3) information maintained in TVA's system for asset and location information, Maximo, regarding critical spare parts, is unreliable. We also found the lack of critical spare parts has negatively affected system and component health. We noted TVA has taken steps to improve identification and procuring of critical spare parts but has not followed through with implementing steps recommended by a management consulting firm. Additionally, our physical inventory counts at the plants were consistent with the information contained in Maximo.We recommended the Executive Vice President and Chief Generation Officer, Generation, (1) develop C&GO procedures to govern the identification and procurement of critical spare parts; (2) ensure proper maintenance is performed on spare parts; (3) take steps to follow-up on actions recommended by a management consulting firm, (4) work with Engineering Environmental & Support Services to implement controls over the information maintained in Maximo, including who can identify what are critical spare parts; and (5) work with Supply Chain to accurately update Maximo to reflect what items should be listed as critical spare parts. TVA management agreed with our recommendations.