Federal Reports

We included an audit of the Tennessee Valley Authority’s (TVA) capital projects post projects economic assessment process in our annual audit plan because of the capital-intensive nature of the electric utility industry. TVA spent $2.076 billion on capital expenditures in fiscal year (FY) 2017 and anticipates capital expenditures of $1.974, $1.885, and $1.706 billion, respectively, in FYs 2018, 2019, and 2020. Our audit objective was to determine if TVA adequately monitors the actual return on investment of capital projects compared to those submitted during the budgeting and project review processes. We found TVA is not adequately monitoring actual return on investment of capital projects. Specifically, TVA Standard Programs and Processes requiring the assessments do not provide adequate guidance. We also found the required post-project benefits assessments were generally not being performed as only 1 assessment was performed in FYs 2015 through 2017 out of 22 projects completed. In addition, we found the estimated benefits in the project justification for the 1 assessment performed were not valid. Accordingly, the post-project assessment’s basis for comparison was not valid.

The U.S. Postal Service grew its package business significantly between 2012 and 2017, with the number of packages delivered nearly doubling. To achieve this, the Postal Service has relied extensively on middlemen, known as “channel partners,” who work with ecommerce merchants in different ways and are in a position to give USPS visibility with shippers. The Postal Service also has dramatically increased its use of Negotiated Service Agreements (NSAs), which are custom contracts with individual shippers for discounted postage. The number of domestic NSAs soared from 66 in FY 2012 to 786 in FY 2017. This strategy of relying on middlemen and NSAs has helped USPS grow its package volume. However, some unintended consequences have resulted.Two supplemental documents to this paper are available on the USPS OIG website via the Additional Details Link.