Federal Reports

In 1988, Congress established by law the Office of Inspector General at TVA. A fair question is, to what end? If we were judged on the same basis as private sector business units, how would we stack up? Did we pay our way? And perhaps the most important consideration, have we helped make TVA better? Some might say there is a natural tendency in government to dismiss prior administrations as ineffective and to discount their achievements, that each administration strives to make its distinctive mark and to laud its own achievements. We owe the American public more. We owe them our best efforts to learn from the past as we move to the future. Looking at the TVA OIG, I see more than any one particular administration. Compartmentalization by Inspector General, Board members, or who was sitting in the White House does a disservice to the work of the many fine auditors and investigators who managed to transcend any such limitation. The exemplary work done by our people today was made possible in large part by those who went before us. This edition of our semiannual report honors their contributions to helping make TVA better and clearly answers the questions I pose above. In March of this year, the TVA OIG brought together four of our former Inspectors General to reflect on their years as IG. Bill Willis, the former general manager of TVA, gave us a Board level view of the creation of the TVA OIG, including the attendant concerns. The combined recollections of the former IGs and Bill Willis put into context the historical relationship between the TVA Board and the OIG. Most of the current employees of our office had never heard these accounts. Our office has gone from agency created to statutorily mandated to presidentially appointed. The four former Inspectors General who came together helped us understand the context of our evolution and the many lessons learned over the past 20 years. They also helped us see different viewpoints and approaches for handling issues that have faced the IG community from day one, such as how to balance independence and working with management. By learning from the past, we are in a better position to deal with whatever may happen. In conclusion, this semiannual report illustrates results today and over the last 20 years that show we have paid our way and we have helped make TVA better. But I would be remiss if I did not emphasize that much of our success has been due to the steadfast support of the TVA Board and TVA management who understand our role and share our beliefs. Particularly, I extend my heartfelt gratitude to the TVA Board and President and CEO Tom Kilgore for their continued efforts to make the relationship between TVA and the OIG work. Their commitment to make TVA a world- class organization is evident with each passing year.

We performed a pre-implementation review of security, application testing, and data loading for TVA's Electronic Access Protection System (EAPS). We determined the EAPS security plans and procedures and TVA's plans for application testing and data loading provided adequate controls over security, testing, and data reliability. Summary Only

We reviewed 40 contracts awarded by Procurement during fiscal year 2006 and found: (1) insufficient competition existed in the award of seven of the contracts because only one bid had been received and evaluated; (2) Technical Contract Managers contacted vendors and received pricing quotes prior to Procurement's involvement in five of the contract awards; and (3) with some exceptions, Procurement's contract managers and purchasing agents had appropriate documentation in the contract files. To help TVA assure it is receiving adequate competition, we recommended TVA Procurement: (1) require management approval for all contracts greater than $25,000 when only one bid is received; (2) reinforce compliance with TVA's requirement that only Procurement personnel are authorized to obtain proposals from potential suppliers; and (3) provide clear guidance as to the contract file documentation requirements. In addition, we suggested Procurement consider the benefits of creating a position of Competition Advocate, a position required for other federal agencies. TVA management is reviewing our recommendations to decide what actions should be taken to improve the contract award process. Summary Only

The recent restructuring of the Information Services (IS) operations area mirrors leading practices. In addition, IS' methodologies and tools for conducting information technology projects are above those of its peers. However, our review showed some areas needed improvement, such as, TVA needs to (1) better integrate IS governance with TVA business strategy; (2) improve focus on strategic business partnering and communication with customers; (3) target organization and policy changes, performance measures, and service management toward aiding customers to achieve business goals; (4) consolidate procedures to increase usability; and (5) develop a strategy for handling the risk of the aging workforce and ensuring knowledge transfer. Management generally agreed with the recommendations and is taking corrective action.

While IT Security has made strides in establishing the technology infrastructure, we found (1) IT Security lacks a business-level mechanism to provide cross-agency oversight, a strategic TVA-wide approach, and grounding in risk management; (2) coordination and communication with business units were not well defined and could be more effective with increased training, communication, and business unit involvement in security planning; (3) procedures were outdated and did not address issues for all business segments; and (4) performance management was substantially undefined. Management agreed with the recommendations and is taking corrective action. Summary Only