Federal Reports

This is our seventh semiannual report to Congress. It summarizes our major activities and accomplishments from April 1, 1989 to September 30, 1989.During this reporting period, we issued 31 final audit reports, 131 investigative reports, and 6 project reports to TVA management. These investigations and audits have demonstrated their cost-savings potential. For example, one investigative project--involving over 650 interviews--has resulted in TV A management's withholding over $4.3 million from TVA contractors. Other investigations involving workers' compensation benefits may have saved TVA more than $2.5 million over the long term in avoided disability benefits costs.Our auditors are also working to save TVA money. Their reports have identified almost $4 million in questioned costs and about $27 million in funds that could be put to better use. For example, we conducted five preaward audits which questioned $2.5 million of the contractors' proposed costs. We also completed two audits in support of litigation with TVA contractors which questioned over$3 million of the $5 million in claimed damages. TVA subsequently settled these lawsuits out of court and agreed to pay only $260,000 of the $5 million claimed.In pursuit of our goal to improve TVA, we have also identified instances of questionable conduct and needed improvements. However, the shortcomings identified in this report should not be viewed as characteristic of TVA. To the contrary, a significant number of our conclusions are favorable to TVA management and employees. For example, during this reporting period, approximately two-thirds of the allegations we investigated were not substantiated.The support of TVA managers and employees makes possible many of the results documented in this report, and we are pleased to report this support is strong and continuing to increase. We draw strength and encouragement from this support and will continue to work to justify this trust.Sincerely,Norman A. Zigrossi

This is the fifth Semiannual Report for the Office of the Inspector General (OIG). It summarizes our major OIG activities and accomplishments from April 1, 1988 to September 30, 1988.This six-month period saw major changes at TVA. In mid­ May, a corporate reorganization was announced which was designed to improve TVA's overall efficiency and ability to operate in a competitive business environment. During June, a major reduction in force was announced with a goal of reducing TVA's workforce by 7,500. The Board of Directors voted in August to keep power rates at current levels and also announced their commitment to keeping rates stable for three years. The entire Agency, including the OIG, has focused during this reporting period on identifying "A New Way of Doing Business."There were a number of significant accomplishments this re­ porting period. We opened 308 new cases, closed 494 investigations, and referred 73 matters to Federal and state prosecutors. The United States Court of Appeals for the Sixth Circuit affirmed a district court's ruling that our investigation of alleged drug use by Sequoyah Nuclear Plant employees (which we reported last April) was entirely appropriate. We issued 39 audit reports and identified over $7 million in questioned costs. Moreover, TVA management accepted our audit recommendations over 86 percent of the time.In our last semiannual report, we described our investigation of a major travel voucher fraud scheme involving Nuclear Quality Assurance employees. As a result of that investigation, TVA terminated 28 employees, a Federal Grand Jury indicted 27 individuals, and 24 persons pled guilty to submitting fraudulent travel vouchers. Twenty-four former employees have been ordered by a Federal Judge to make restitution to TVA.The investigations of drug use and travel fraud were difficult for the OIG and for TVA and its employees. It is regrettable there has been so much disruption in TVA and in the lives of those individuals who were the subjects of these investigations. However, the principle underlying those cases--that the Government must have a trustworthy, unimpaired workforce-­ is immutable.A significant development occurred just prior to our issuing this report. On October 18, 1988, President Reagan signed the Inspector General Act Amendments of 1988 into law. This new law created agency-appointed Inspectors General for 33 Federal entities including TVA. The OIG is now re­ sponsible, as a matter of law, for virtually all of TVA's internal audit and investigative activities. For the most part, this new law will not radically affect the OIG's operations. However, we welcome the permanent subpoena power and the authority to take sworn statements.As we complete a reporting period marked with change and challenges, the OIG is committed to helping TVA find "New Ways of Doing Business" that will promote integrity and efficiency and benefit our ratepayers and taxpayers.Sincerely,Norman A. Zigrossi

This is our fourth Semiannual Report and it marks the second full year of the Office of the Inspector General's (OIG) operations. The report describes our major activities from October 1, 1987 to March31. 1988.This has been an eventful six months and a productive two years.As of the date of this report, we have closed nearly 90 percent of the employee concerns that. fell within our investigative jurisdiction and were reported to the Quality Technology Company. In addition, since the OIG's inception, TVA management has agreed-with 80 percent of our audit recommendations. To date, these management actions have resulted in more than $126 million in avoided costs.There were also significant accomplishments this reporting period. An OIG-recommended change in TVA's accounting procedures resulted in a $92 million increase in TVA's revenues. On the investigative side,we closed over 450 cases•, referred 74 matters to Federal or Stateprosecutors, and issued over 200 investigative reports. In addition, significant criminal investigations are underway that already have resulted in the recent indictment of over 25 TVA employees.These accomplishments demonstrate the OIG is a catalyst for change within TVA and is striving to promote integrity and efficiency in TVA's programs. We believe our activities will continue to benefit TVA management and employees, the ratepayers, and the taxpayers­ which is what the Board of Directors intended when it established the OIG as an independent ·office within TVA.Throughout the last two years, the TVA Board of Directors, TVA managers and employees, Members of Congress, and the public have strongly supported the OIG. We continue to draw strength and encouragement from this support and will continue to work to justify this trust.Sincerely,Norman A. Zigrossi

This is the third "Semiannual Report" of the Office of the Inspector General. It describes our significant audit and investigatory activities from April through September 1987.During this period, we audited and investigated matters of critical importance to TVA and the public. We investigated bomb threats, drug abuse, concerns by employees about TVA's nuclear program, and allegations of fraud and misconduct. At the request of the Office of Government Ethics, we have monitored TVA's compliance with the guidelines TVA adopted to help pre­ vent conflicts of interest from occurring in its nuclear program.We have reviewed management's guidelines for developing information for the TVA Board of Directors, as well as other management processes. We have audited claims by contractors seeking millions of dollars from TVA, and we are currently reviewing TVA's financial processes.One matter which we identified in our last semiannual report continues to be unresolved. The TVA Retirement System Board of Directors objects to a full­ scope OIG review of the economy, efficiency, and effectiveness of the system's operations. However, the TVA Board of Directors has recently received an opinion from TVA's General Counsel which describes the Board's rights and obligations with respect to the Retirement System, including advice on the Board's authority to require the system to submit to a comprehensive audit.The last six months have been productive. The first year of organizing and staffing the office is returning benefits. To the advantage of the ratepayers and the public, we are affecting the reasonableness of costs, assurances of safety, fairness of practices, and accountability processes.Since the OIG's inception, we have been supported by the TVA Board of Directors, senior TVA managers, TVA employees, Members of Congress, and the public. We draw strength from this strong support and will continue to work to justify the confidence that has been placed in us.Sincerely,Norman A. Zigrossi

This is the second ''Semiannual Report" of the Tennessee Valley Authority Inspector General. It describes the significant audit and investigatory activities of the office during the reporting period from October 1, 1986 to March 31, 1987.During this period, the Office of the Inspector General (OIG) has audited and investigated matters of critical importance to TVA, its employees, the public, and other Governmental officials. The OIG has investigated a number of employee concerns, nearly half of which involved issues raised by employees about TVA 's nuclear program. The OIG has investigated and reported on allegations of harassment, misconduct, and management deficiency. At the request of the Office of Government Ethics, the OIG has also been monitoring the guidelines TVA adopted to help prevent conflicts of interest from occurring in the management of its nuclear program.Our auditors have also evaluated TVA's program for handling employee concerns. They have audited contested claims by contractors seeking millions of dollars from TVA. They are currently reviewing TVA 's policy formulation, nuclear quality assurance, and financial processes. However, one audit remains impaired. The TVA Retirement System (TVARS) Board of Directors continues to object to the OIG conducting a full scope review of the economy, efficiency, and effectiveness of TVARS.The last six months have been a period of learning and growth. OIG managers and employees---many of whom came to TVA from other Federal agencies --have been challenged to learn and appreciate the diversity and scope of TVA 's activities and operations. Other TVA managers and employees have also had an opportunity to learn about the OIG and witness firsthand our effort to make a positive contribution as an independent and objective audit and investigatory organization within TVA.Since the OIG's inception, we have been supported by the TVA Board of Directors, senior TVA managers, TVA employees, members of the Congress, and the public. We draw strength from this continued support and will continue to work to justify the confidence that has been placed in us.Sincerely,Norman A. Zigrossi

This is the first Semiannual Report of the Inspector General of the Tennessee Valley Authority. It summarizes the significant organizational. audit. and investigative activities undertaken by the Office of the Inspector General (OIG) for the period ending September 30, 1986. This report has been prepared by the Inspector General for transmittal to Congress by the TVA Board of Directors in accordance with the Board's October 18. 1985 Resolution establishing an OIG within TVA.When we began organizing the Office of the Inspector General eight months ago. we set out to accomplish two objectives. We planned to complete the organization and be fully operational by October 1. 1986. And we planned to address those issues that led to the creation of the OIG. The OIG is now fully operational. Our examinations of nuclear program issues and of related employee concerns are under way.Two important reviews were concluded during this reporting period. Our investigation of the contract conflict of interest issues surrounding the manager of nuclear power concluded that there were no criminal violations but there were management shortcomings in the contract process. Our audit of personal services contracts revealed that TVA has not complied with Public Law No. 98-72 in its contract to acquire annual financial audits. This law is intended to promote competition in Government contracting.During the OIG's formative period there have been two instances in which the independent authority of the Inspector General has been challenged. First, a proposed OIG audit of TVA's Retirement System was seriously impaired due to a limitation imposed on the scope and procedures of the audit by the Retirement System's Board of Directors. Second. TVA management officials have been reluctant to turn over to the OIG management of the annual financial audit of TVA. The TVA Board is now considering whether to let the OIG manage the audit contract in the future. The TVA Board Resolution which established the OIG clearly assigned all audit responsibility to the OIG.In order to ensure an effective program. we have selected five goals and developed a Master Plan for achieving them. The OIG will undertake a balanced program of investigative and audit projects that will improve TVA.During the next six months. the OIG will focus on three areas: (l) gaining an understanding of TVA goals and the factors critical to their accomplishment. (2) continuing to address those issues that led to establishment of an OIG, and (3) developing a program for achieving professional excellence as an office.We appreciate the support of the TVA Board of Directors. TVA employees, the public. and TVA's friends and constructive critics in the Congress who have provided useful advice and assistance. We would like to assure all of you that the men and women of the OIG are dedicated to maintaining the trust and support that have been bestowed on them.Sincerely,Norman A. Zigrossi