Federal Reports

As part of our annual audit plan, we audited the allocation of labor expenses in the Tennessee Valley Authority’s (TVA) Information Technology (IT) organization. Our audit objective was to determine if financial transactions for labor charged to Operations and Maintenance and Capital general ledger accounts under the IT organization during fiscal year 2018 received the proper accounting treatment. We were unable to determine if financial transactions for labor charged to Operations and Maintenance and Capital general ledger accounts under the IT organization during fiscal year 2018 received the proper accounting treatment. TVA’s IT had informal processes in place to compare forecast to actual project costs on a monthly and quarterly basis to ensure labor charges received the proper accounting treatment. While the description of these variance review processes appeared adequate, we found (1) they were not documented, and (2) limited evidence was provided to show the described processes were followed. TVA management agreed with our recommendations.

IPERA Determination

Harris County, Texas needs additional technical assistance and monitoring to ensure grants management comply with Federal procurement regulations. The County’s procurement policies, procedures, and business practices were not adequate to expend disaster grant funds in accordance with Federal procurement regulations and Federal Emergency Management Agency (FEMA) guidelines. We recommended FEMA disallow $2.7 million in ineligible costs and require Texas to work with the County to incorporate Federal procurement regulations when using Federal funds, and review procurement activities before the County awards future contracts. We made three recommendations that will help improve the procurement capability of Harris County, Texas. FEMA concurred with all three recommendations.

We audited costs claimed by the Chicago Horticultural Society (CHS) on Grant No. L15AC00032 with the Bureau of Land Management (BLM) to determine whether they were allowable and allocable and whether the CHS complied with Federal regulations, BLM policies and procedures, and contract terms and conditions. We found the CHS did not comply with many of the applicable Federal regulations, BLM policies and procedures, and contract terms and conditions.

What We Looked AtThe Pipeline and Hazardous Materials Safety Administration (PHMSA) is responsible for determining whether proposed and existing liquefied natural gas (LNG) facilities meet Federal safety standards. According to the U.S. Energy Information Administration, LNG exports from the United States are projected to rise from about 2 trillion cubic feet in 2020 to 6 trillion cubic feet in 2030. Given the importance of PHMSA’s oversight of LNG facilities, we initiated this audit with the following objectives: to assess PHMSA’s (1) review of new LNG facilities’ plans for compliance with Federal siting requirements, (2) inspection of existing LNG facilities in accordance with Agency policies and Federal standards, and (3) evaluation of State gas programs’ oversight of LNG facilities. What We FoundPHMSA’s standard operating procedures for its reviews of LNG facility developer applications are generally comprehensive, but they do not include a second-level verification of reviews by engineers. Second-level verification steps reduce the risk that PHMSA’s analysis will be incomplete, contain errors, or lack consistency. In addition, while PHMSA’s inspections of existing interstate LNG facilities met Agency standards, its evaluations of State gas programs missed deficiencies in inspection intervals and inspector training. One factor is that PHMSA’s guidance does not require evaluators to document which records they review. Evaluators described using their own judgment when selecting records, but that means some State records may never be reviewed due to the inherent biases in judgmental sampling. As a result, there is an increased risk that the Agency’s evaluation results will neither accurately measure State gas program performance nor give PHMSA the information it needs to respond to inquiries, conduct inspections, and pass on institutional knowledge to new evaluators. Our RecommendationsPHMSA concurred with and implemented our three recommendations to improve its guidance on reviewing applications and evaluating State programs. We consider all three recommendations resolved and closed.

What We Looked AtEstablished in 1982 at 5 low-activity control towers, the Federal Aviation Administration’s (FAA) Contract Tower (FCT) Program currently consists of 254 contract towers in 46 states operated by 3 contractors and the Air National Guard. Managing about 28 percent of the Nation’s air traffic control operations, contract towers constitute an essential part of the National Airspace System (NAS). Our audit objective was to assess the FCT Program’s cost effectiveness and safety record. We statistically grouped towers based on characteristics that affect air traffic controller and tower workloads. Specifically, we gathered and examined hours of operations, numbers of takeoffs and landings, types of aircraft handled, and runway configurations. Based on these characteristics, we used two statistical methods to group 351 air traffic control towers, consisting of 248 contract towers and 103 lower level FAA towers. Our methods produced groups containing a mixture of comparable FAA and contract towers. We determined the towers within each group were similar to each other and then analyzed and directly compared their cost and safety data. We reviewed cost and safety data between fiscal years 2015 and 2018 for the universe of 351 towers. What We FoundBetween fiscal years 2015 and 2018, contract towers were more cost effective per aircraft handled than comparable FAA towers, and that the safety records of contract and comparable FAA towers were similar. On average, contract towers used at least 47.6 percent fewer resources—or incurred lower controller staffing costs—per aircraft handled per year even though comparable FAA towers handled more total flights. Furthermore, while contract towers had statistically fewer safety events per aircraft handled, we do not believe the difference between these numbers and those of FAA’s towers is meaningful because, among other reasons, the numbers of safety related events across the NAS were very low relative to the total number of flights. RecommendationsWe are making no recommendations.

The report summarizes the FTC OIG’s activities and accomplishments during the first half of the FY 2020 reporting period.