Independent Examination of Labor and Labor Markup Rates
At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the labor and labor markup rates included in a contract TVA has with a contractor. Our examination objective was to determine if the contract's labor and labor markup rates were fairly stated for the five-year, $100 million contract.In our opinion, the contract's labor markup rates were overstated. We estimated TVA could save $1.4 million by negotiating reductions to the labor markup rates to more accurately reflect the contractor's recent historical costs.