TVA Dental Program

March 31, 2006

2006-512I

Audit

TVA's previous contract for administration of dental benefits went into effect on January 1, 1999. In April 2005, TVA's Employee Benefits and Procurement sent out a Request for Proposal for quotes from seven companies interested in providing administrative services for dental benefits to TVA's employees. Beginning January 1, 2006, a new dental administrator began administering TVA's dental benefit program.We assessed whether Employee Benefits/Procurement adequately considered the costs/benefits of switching to the new dental administrator for administration of the dental benefits program. In summary, we determined that it appears Employee Benefits/Procurement adequately considered the costs/benefits of switching. However, documentation could be improved. Specifically, no documentation was maintained supporting (1) the rationale behind the technical evaluation scoring methodology and (2) key assumptions used in the cost analysis (i.e., network penetration and average discount rates). Our review of the proposals also noted nothing to question the recommendation of the new dental administrator as the dental plan administration provider, assuming the unsupported network penetration and average discount rates used in Employee Benefits/Procurement's cost analysis were accurate. Management agreed with our findings and has taken or plans to take appropriate corrective actions. Summary Only

Yes

Yes (agency-wide)

$0

$0