Date Issued
Report Number
2007-510I
Report Type
Audit
Description
Our review covered the external contractual services' conducted by RM. Our objectives were to determine if (1) work was performed in accordance with applicable policies and procedures and (2) costs associated with TVA employees working for outside entities/agencies were adequately recovered. In summary, we found:The majority of fiscal year (FY) 2006 RM External Contractual Services' revenue was generated from work for other federal agencies, and the projects we selected for review appeared to be in compliance with the Economy Act of 1932, as amended (31 USC 1535). In addition, direct costs and approved overheads were captured on a project-specific basis and automatically billed to ensure cost recovery. The work performed was not a TVA core business and did not appear to align directly with TVA's Strategic Plan. RM stated the work was consistent with the spirit and historical enablement of the TVA Act and was implicitly included and serves as an enabler for many parts of TVA's new Strategic Plan. The work increased TVA's monetary, reputational, and environmental risks. RM stated, however, that they continue to improve the risk profile for the RM External Contractual Services' efforts through completion of high-risk projects, through their strategy on the nature of future work, and through actions and processes to mitigate financial risks including purchasing insurance and incorporating written indemnity clauses in certain contracts.For 5 of the 14 projects reviewed, a contract could not be provided. In addition, key decisions required by RM policies and procedures were not documented, or documentation was incomplete. Based on the risks and the lack of a clear direct nexus to TVA's core business as discussed above, our draft report recommended that the President and Chief Executive Officer terminate the RM External Contractual Services' program. Management stated in their comments to our draft report that RM plans to continue the program but will exit chemical agent work as it carries the greatest risk for TVA. Management also plans to (1) further review the risks associated with the program and update TVA's risk assessment as needed and (2) improve program documentation as TVA implements its new business management software in FY 2008. We agreed with management's planned actions.
Joint Report
Yes
Participating OIG
Tennessee Valley Authority OIG
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$0