Federal Reports

At the request of the Tennessee Valley Authority’s (TVA) Supply Chain, we examined the cost proposal submitted by a company for designing, fabricating, and delivering hydraulic turbine runners and components as specified by TVA.  Our examination objective was to determine if the company’s cost proposal was fairly stated for a contract with expenditures up to $175 million.

In our opinion, the company’s proposed (1) hourly manufacturing and labor rates and (2) markup factors for recovery of indirect costs were fairly stated. However, the company’s proposed billing rates for craft labor were overstated.  Specifically, the proposed craft billing rates in the example project included (1) an ineligible sick leave markup, (2) overstated state unemployment insurance markup, and (3) duplicated workers’ compensation insurance markup.  We estimated TVA could avoid about $1.2 million over the potential $175 million contract by negotiating appropriate reductions to the craft labor billing rates.  In addition, we suggest TVA negotiate to include craft labor billing rates in the contract’s rate schedule, including craft markups and cost adders.  

After previous failed attempts, VA is modernizing its finance and acquisition systems by implementing the Integrated Financial and Acquisition Management System (iFAMS). The system is being deployed by the Financial Management Business Transformation Service (FMBTS) in waves across VA. The six waves that had been carried out as of June 2023 represent only about 3.6 percent of all projected iFAMS users. One remaining wave is for the Veterans Health Administration, which represents more than 92 percent of iFAMS users. As of fiscal year 2024, the life cycle cost estimate to deploy and sustain the system across VA is anticipated to be about $8.6 billion through 2050.

Interfaces, which are created and tested during the iFAMS software development process, facilitate the flow of data between systems to automatically complete business processes. Therefore, interface development is critical for iFAMS to meet users’ needs. The VA OIG conducted this audit to assess whether the interface development process aligned with stated goals to enhance iFAMS implementation. The OIG examined FMBTS’s planning, communication, and monitoring of success metrics for the process. This audit focuses on the Consolidated Wave Stack, the first wave that deployed both finance and acquisition functions simultaneously.

The OIG found that during the Consolidated Wave Stack, validation sessions lacked essential details and FMBTS missed opportunities to fully confirm the system functioned properly. If functionality issues are not identified or corrected before deployment, user productivity and efficiency can decrease while the risk of errors increases. Consequently, FMBTS should test essential functions for both real-world application and technical assessment moving forward. The OIG made four recommendations for FMBTS to improve the interface development process for future implementation waves.

Each year, the U.S. Department of Housing and Urban Development (HUD or Department) Office of Inspector General (OIG) provides the Department with a memorandum of priority open recommendations the OIG issued in its reports. The OIG designated these recommendations as“priority” because, if implemented, the recommendations will have the most significant impact on increasing efficiency in HUD programs, reducing fraud and wasteful spending, and assisting HUD with addressing its top management challenges.