Federal Reports

We audited the City of San Bernardino, CA’s HOME Investment Partnerships program. We audited the City based on the Region 9 Office of Inspector General’s 2016 risk analysis of Los Angeles area community planning and development grantees. In addition, although the County of San Bernardino had been administering the City’s recent HOME grants, the City still had several of its own HOME activities underway and others that had closed within the past 2 years. Our audit objective was to determine whether the City administered its HOME program in accordance with HUD requirements.The City did not fully administer its HOME program in accordance with HUD requirements. For the most part, the City used its HOME funding in accordance with program requirements. However, accounting and drawdown errors resulted in $22,402 in duplicative overcharges to the program. This error was due to the City’s not having adequate policies, procedures, and controls to ensure that HOME draws were accurate and in accordance with HUD requirements. As a result, these funds were not available to carry out eligible HOME activities.We recommend that the Director of HUD’s Los Angeles Office of Community Planning and Development require the City to (1) repay its program $22,402 for erroneous costs charged to HOME activity 2292 from non-Federal funds and (2) update and implement changes to its policies and procedures to prevent similar errors and ensure that HOME draws are accurate and in accordance with HUD requirements.

At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the cost proposal submitted by a company for civil projects and coal combustion residual program management work at TVA's steam electric power plants. Our examination objective was to determine if the company's cost proposal was fairly stated for a planned <br> $10 million contract.In our opinion, the company's cost proposal was understated. Specifically, we found the company's proposed costs for a Bull Run Fossil Plant (BRF) project included (1) markup rates that were misstated and (2) overstated materials, travel, and equipment costs. We also found the company's proposed rate attachments included (1) a contractor owned equipment attachment containing equipment that the company anticipates will be leased or rented from third parties, (2) fee on cost reimbursable work that exceeded the maximum allowable fee rate in TVA's request for proposal (RFP), and (3) excessive time and material (T&M) billing rates for most labor classifications because the rates were based on the company's maximum pay rates.We suggest TVA negotiate appropriate adjustments to the BRF unit rates to more accurately reflect the company's actual costs. In addition, we suggest TVA negotiate (1) revisions to the company's contract rate attachments to correct errors and more accurately reflect the company's actual equipment usage, (2) a reduction to the company's proposed fee for cost reimbursable work to the maximum allowable fee rate in TVA's RFP, and (3) T&M billing rates based on the wage ranges' midpoint pay rates.(Summary Only)