Date Issued
Report Number
2020-15701
Report Type
Audit
Description
As part of our annual audit plan, we audited costs billed to the Tennessee Valley Authority (TVA) by Mesa Associates, Inc. (Mesa) under Contract No. 13191 for engineering, design, and construction support services in support of TVA's dam safety, generation, and transmission work. The contract provided for TVA to compensate Mesa for these services on either a cost-reimbursable or fixed price basis. Our audit objectives were to determine if (1) costs were billed in accordance with the terms and conditions of the contract and <br> (2) tasks were issued using the most cost efficient pricing methodology. Our audit scope included about $57.5 million in costs billed to TVA from March 12, 2018, through August 31, 2020. This included $25.8 million for cost-reimbursable projects and $31.7 million for fixed price projects.In summary, we determined:Mesa overbilled TVA $213,545 on cost-reimbursable projects, including (1) $147,045 in temporary living allowances and travel costs, (2) $34,298 in subcontractor costs, <br> (3) $18,576 in labor costs, (4) a net $7,195 in performance fee payments, and (5) $6,431 in volume discounts not provided to TVA.The use of fixed price payment terms on projects caused TVA to pay at least $1.52 million more than it would have if cost-reimbursable payment terms had been used for those projects. Additionally, if TVA utilized cost-reimbursable pricing for the remaining spend on its current contract with Mesa (i.e., Contract No. 15396), we estimated TVA could potentially avoid up to $8.69 million in future costs.(Summary Only)
Joint Report
Yes
Participating OIG
Tennessee Valley Authority OIG
Agency Wide
Yes (agency-wide)
Questioned Costs
$0
Funds for Better Use
$0