SPRING 2016 SEMIANNUAL MESSAGE
I am pleased to present our report for the period October 1, 2015, to March 31, 2016. The work of the Office of the Inspector General (OIG) is focused on understanding, identifying, and recommending ways to mitigate risks. The theme for this semiannual report is Navigating Risk: A Focus on Contracting. In recent years, Tennessee Valley Authority (TVA) has focused on reducing costs.
Annually, TVA spends more than $7 billion through its contracts for various services, materials, equipment, and purchased power.
In our feature article, we discuss how our contract audit work helps TVA recover millions of dollars every year from contractors, negotiate better pricing for future contracts, and improve contract administration processes. These results impact TVA's ability to manage its costs and maintain its financial health. We would be remiss if we also did not acknowledge that the strong working relationships Contract Audits and TVA contracting groups have built together over the years are integral to our success in this area.
In this semiannual period, our audit, evaluation, and investigative activities identified more than $26.5 million in recoveries, fees, fines, penalties, potential savings, questioned costs, and other monetary loss and identified numerous opportunities for TVA to improve its programs and operations. Highlights include:
- Contract compliance audits identified potential overbillings of more than $8.8 million and preaward examinations of cost proposals identified more than $15.4 million in potential savings opportunities that TVA could use during negotiations.
- Four organizational effectiveness reviews provided TVA with a holistic view of operations in its Corporate Accounting department as well as its Cumberland, Kingston, and Bull Run Fossil Plants. In these reviews, we identified operational and work environment issues that, if left unresolved, could impact each group's ability to meet its mission.
- Organizational effectiveness reviews in TVA's Information Technology (IT) organization identified improvements made by the groups since previous reviews in 2011 as well as additional areas for improvement going forward.
- An evaluation of TVA's Nuclear Employee Concerns Program (ECP) identified areas for improvement related to documentation, the resolution follow-up process, and reporting to site management.
- An audit of $17.3 million in corporate card transactions revealed policies could be strengthened and appropriate controls put in place to mitigate the risk of charge card fraud and abuse.
- Investigations identified more than $615,000 in recoveries/fees primarily associated with (1) two ineligible contractor employees receiving temporary living allowances, and (2) funds recovered from a utility for nonfunctioning water heater load management switches.
Whether the focus of our work is contracting, cyber security, governance, operational or cultural risks, our intent is to provide TVA management with an independent and objective assessment of how well the risks are being mitigated and recommend solutions to issues that will help TVA become better. As always, we appreciate the cooperative spirit in which both the TVA Board and TVA management work with the OIG to accomplish mutual goals.