The Office of Inspector General determined that the Tennessee Valley Authority’s portfolio management process is not operating as intended. Specifically, we found: • Some types of projects did not follow the portfolio management process as required by Tennessee Valley Authority-Standard Programs and Processes 19.003. In addition, TVA does not have a reverse capital flex list, as described in the Portfolio Management Guide. • Economic analyses were not performed for 9 of 17 projects reviewed with a forecasted cost greater than $10 million, although Tennessee Valley Authority’s Portfolio Management Guide states economic analyses are required for all projects equal to or greater than $10 million. • Economic analyses for two Tennessee Valley Authority Board of Directors approved projects had negative net present values, which indicates the projects might not add value to TVA. These analyses, as well as additional costs for one of the projects, were not provided to the Tennessee Valley Authority Board of Directors.• Two purchase orders were issued prior to spend approval for one project, indicating a control gap.
Open Recommendations
| Recommendation Number | Significant Recommendation | Recommended Questioned Costs | Recommended Funds for Better Use | Additional Details | |
|---|---|---|---|---|---|
| ISS.1 | Yes | $0 | $0 | ||
| We recommend the Executive Vice President, Chief Financial and Strategy Officer, in conjunction with the Vice President, Financial Operations and Performance, ensure all projects are optimized in a consistent and holistic manner to ensure the most value to TVA ratepayers. | |||||
| ISS.2 | Yes | $0 | $0 | ||
| We recommend the Executive Vice President, Chief Financial and Strategy Officer, in conjunction with the Vice President, Financial Operations and Performance, ensure economic analyses are (1) performed for all applicable projects and (2) considered in decision making. | |||||
| ISS.3 | Yes | $0 | $0 | ||
| We recommend the Executive Vice President, Chief Financial and Strategy Officer, in conjunction with the Vice President, Financial Operations and Performance, provide economic analyses and all known costs to the Tennessee Valley Authority Board when presenting projects for approval. | |||||
| ISS.4 | Yes | $0 | $0 | ||
| We recommend the Vice President, Financial Operations and Performance, implement a reverse capital flex list for use in the event of a funding shortfall. | |||||
| ISS.5 | Yes | $0 | $0 | ||
| We recommend the Vice President, Financial Operations and Performance, evaluate the control gap to identify solutions to prevent the execution of purchase orders for projects that do not have all required approvals. | |||||
