Date Issued
Report Number
2018-15606
Report Type
Audit
Description
At the request of the Tennessee Valley Authority's (TVA) Supply Chain, we examined the cost proposal submitted by a company for civil projects and coal combustion residual program management work at TVA's steam electric power plants. Our examination objective was to determine if the company's cost proposal was fairly stated for a planned <br> $10 million contract.In our opinion, the company's cost proposal was understated. Specifically, we found the company's proposed costs for a Bull Run Fossil Plant (BRF) project included (1) markup rates that were misstated and (2) overstated materials, travel, and equipment costs. We also found the company's proposed rate attachments included (1) a contractor owned equipment attachment containing equipment that the company anticipates will be leased or rented from third parties, (2) fee on cost reimbursable work that exceeded the maximum allowable fee rate in TVA's request for proposal (RFP), and (3) excessive time and material (T&M) billing rates for most labor classifications because the rates were based on the company's maximum pay rates.We suggest TVA negotiate appropriate adjustments to the BRF unit rates to more accurately reflect the company's actual costs. In addition, we suggest TVA negotiate (1) revisions to the company's contract rate attachments to correct errors and more accurately reflect the company's actual equipment usage, (2) a reduction to the company's proposed fee for cost reimbursable work to the maximum allowable fee rate in TVA's RFP, and (3) T&M billing rates based on the wage ranges' midpoint pay rates.(Summary Only)
Joint Report
Yes
Participating OIG
Tennessee Valley Authority OIG
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$0