Federal Reports

We audited $58.5million of costs billed to TVA by a contractor for staff augmentation support services during FYs 2005 and 2006. We determined TVA was overbilled about $540,000 for labor costs due to duplicate billings, overpayments of labor hours, and use of incorrect wage rates. We also found the contractor had not maintained documentation to support approximately $340,000 of travel expenses billed to TVA. The contractor and TVA management agreed with our findings, and TVA management is planning to (1)recover the overbilled amount and (2)implement a requirement for the contractor to maintain documentation of travel expenses that are billed to TVA. Summary Only

EAC OIG conducted this audit to determine whether (1) travel was performed in accordance with the Federal Travel Regulation, (2) travel cards were properly controlled and used for only official purposes, and (3) travelers paid their travel card bills in a timely manner.

We were requested by the Vice President, Paradise Fossil Plant (PAF), to assess the procedures and key controls used to track and account for PAF tools. In summary, we found: No policies or procedures exist for tools at PAF.Tools can be ordered without management approval.Controls at the PAF for contractor tool rooms are inadequate to properly track and account for tools.Management agreed with our findings and recommendations and is taking or plans to take corrective action.

The objective of our review was to determine (1) vendor compliance with contract force majeure provisions and (2) the adequacy of coal contract terms and conditions related to force majeure events. In summary, we found: No documented instances in which (1) a vendor did not provide formal notification of a force majeure event and (2) the force majeure justification was not in accordance with the force majeure contract language.Standard contract language exists for the development of a contract force majeure clause; however, the force majeure clause is often modified either in initial contract negotiations or subsequent contract supplements. This variation could result in increased cost to TVA. Most of the force majeure events were not verified. In addition, we also found (1) no policies and/or procedures specifically governing how to manage force majeure events, (2) no central repository for documenting force majeure events declared and the impact resulting from these force majeure events, and (3) limited and/or inconsistent documentation pertaining to force majeure events and Fuel Supply actions. Management agreed with our findings and recommendations and is taking or plans to take corrective action.

As part of our annual audit plan, we reviewed the processes related to identifying and managing surplus materials to determine if surplus material was identified and managed in accordance with TVA policies and procedures. We identified areas of noncompliance and recommended corrective action to management. Management provided comments on our findings, including corrective action taken.

Our audit of costs billed to TVA by a contractor who provided engineering and technical support found that most of the contract employees had been transferred from staff augmentation contracts where they had been performing the same duties at a substantially lower cost to TVA. In total, we determined TVA's costs increased $689,000 when the staff augmentation contract employees were moved to the "managed task" contract, primarily due to a high overhead markup rate. By moving the contract employees to the "managed task" contract, it appeared TVA was attempting to avoid reporting this headcount as staff augmentation. Since it appeared doubtful TVA had received $689,000 worth of management oversight from the contractor, it is our opinion that TVA wasted $689,000 when it moved staff augmentation contract employees to the "managed task" contract. Summary Only

We audited $4.5 million of payments TVA made to a contractor from April 2004 through November 2006 for engineering and technical support. In summary, we found TVA was overbilled and/or had overpaid the contractor $30,645, including (1)$28,679 for payroll tax billings that exceeded the contractor's actual costs and (2)$1,966 due to miscellaneous billing and payment errors. The contractor and TVA management agreed with our findings. Summary Only