Report April 1, 2020 - September 30, 2020
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LLEY E VA AU SE TH S O E ciency - E N - E e R y ct I N m iv T o e E n n Y T o e c s s E O L F A F R Office of the Inspector General I C E E N O E TENNESSEE VALLEY AUTHORITY F 1 G T 985 R H O E INSPECT Semiannual Report April 1, 2020 - September 30, 2020 1 W.V. IL. R o i v i e h r Lovers Lane KENTUCKY O Soccer Complex Shawnee Fossil Plant VIRGINIA Kentucky Paradise Combined MISSOURI Marshall Dam & Lock Cycle Plant Clear Creek Dam Combustion Turbine Duffield Primary School Beaver Creek Dam r e Ft. Patrick Henry Dam South v Holston Dam Boone Dam i C Doakes u John Sevier Dam Wilbur Dam m Creek Dam R John Sevier Cumberland b Watauga Fossil Plant Combined Cycle ARK. Gleason e Adventure Gallatin Fossil Plant Dam i Combustion Turbine r Science Center & Combustion Turbine Morgan County Buffalo l Vocational Technical Mountain Norris Dam p a Cherokee n School Nolichucky Gibson County d Dam p Bull Run Dam High School R Ijams i American Museum of Science and Energy Fossil i v Cocke County Johnsonville e Plant Nature Combustion Turbine r Center Douglas High School s Melton Dam Kingston Fossil Plant Hill Dam Lagoon Creek s & Lock i Combustion Turbine Cedar Ft. Loudoun Dam & Lock s Dam TENNESSEE & Combined Pin Oak Dam Tellico NORTH s Great Falls Dam Dam Cycle Plant Beech Dam Redbud Dam i Dogwood Dam Watts Bar CAROLINA Watts Bar Dam & Lock M Pine Dam Lost Creek Dam Nuclear Plant Sycamore Dam Fontana Dam Brownsville Combustion Turbine Normandy Dam BRIDGES Center R i v e r Apalachia Sequoyah Nuclear Plant Dam Tims Ford Dam Hiwassee Dam Allen Combined Cycle Plant Ocoee #1 Dam & Methane Facility Chickamauga Dam & Lock Ocoee #2 Dam Chatuge Dam Pickwick Landing Dam & Lock Nickajack Dam & Lock Ocoee #3 Dam Finley Stadium Nottely Dam Florence Water Huntsville Raccoon Southaven Wheeler Mountain SOUTH Magnolia Treatment Facility Dam & Lock Botanical Garden Pumped Blue Ridge Dam Combined Combined Storage CAROLINA Cycle Cycle Colbert Browns Ferry Plant Plant Plant Wilson CombustionTurbine Dam Nuclear Plant & Lock University of Mississippi e Cedar Creek Dam e Intramural Sports Complex b Guntersville g Little Bear Creek Dam i Dam & Lock b m y Bear Creek Dam T e n n e s s e e o a T w - r e e GEORGIA e t s a s Upper Bear Creek Dam W e n n e MISSISSIPPI T Caledonia ALABAMA Combined LEGEND Cycle Plant State Line TVA Nuclear Plant Mississippi State Water TVA Combined Cycle Plant University Ackerman Power Service Area TVA Combustion Turbine Plant Combined Cycle Plant TVA Watershed TVA Pumped Storage Plant TVA Hydroelectric Dam Green Power Switch® Solar Site TVA Non-Power Dam Green Power Switch® Wind Site Kemper Combustion ® Turbine TVA Coal-Fired Plant Green Power Switch Methane Site 0 20 40 60 mi. July 2020 N Power Supply from TVA-Operated Generation Facilities and Purchased Power 1 Twelve Months Ended September 30, 2020 (in millions of kilowatt hours) Purchased power • Coal-fired - 19,825 (non-renewable) Purchased power (renewable) Natural gas • Nuclear - 64,832 and/or oil-fired Coal-fired • Hydroelectric - 16,003 • Natural gas and/or oil-fired - 33,635 • Purchased power (non-renewable) - 11,592 Hydroelectric • Purchased power (renewable) - 7,934 Nuclear 1 For additional detail, see TVA’s 10-K for the period ended September 30, 2020. 2 TABLE OF CONTENTS Message from the Deputy Inspector General. ...........................................4 Special Feature.................................................................6 Noteworthy Events .............................................................14 Executive Overview .............................................................18 Organization ..................................................................22 Audits ......................................................................26 Evaluations...................................................................34 Investigations .................................................................40 Legislation and Regulations .......................................................46 Appendices...................................................................48 Appendix 1 – Index of Reporting Requirements Under the Inspector General Act . 49 Appendix 2 – Audit and Evaluation Reports Issued....................................... 51 Appendix 3 – Audit and Evaluation Reports Issued with Questioned and Unsupported Costs and Recommendations for Better Use of Funds................. 53 Appendix 4 – Audit and Evaluation Reports with Recommendations Included in a Previous Semiannual Report and Awaiting Implementation .................... 55 Appendix 5 – Investigative Referrals and Prosecutive Results .............................. 57 Appendix 6 – Substantiated Investigations Involving Senior Agency Officials .................... 58 Appendix 7 – Previously Undisclosed Investigations Involving Senior Agency Officials ............. 58 Appendix 8 – Statistical Highlights . 59 Appendix 9 – Government Contractor Audit Findings ..................................... 60 Appendix 10 – Peer Reviews of the TVA OIG ........................................... 61 Glossary.....................................................................62 Abbreviations and Acronyms . 65 3 MESSAGE FROM THE DEPUTY INSPECTOR GENERAL I am pleased to present our report for the period April 1, 2020, to September 30, 2020. October 18, 2020, marks 35 years since the creation of the Tennessee Valley Authority (TVA) Office of the Inspector General (OIG). Our feature, “Making TVA Better for 35 Years,” takes a look back at the evolution of our office and how we help TVA save or recover money, reduce risks, improve operations, and provide a deterrent to fraud. We approach our work with the purpose of making TVA better every day—a purpose that we share with the TVA Board of Directors (Board), management, and employees. The Tennessee Valley, our country, and the entire world • Evaluations of TVA’s arc flash procedures in have faced a unique challenge during this period as Power Operations and Nuclear identified some a result of the global pandemic. Our dedicated and requirements that were not being performed and professional staff made adjustments to how we perform improvement areas in personal protective equipment our work so that we could continue delivering results for management practices and arc flash training. the people of the Tennessee Valley. In this semiannual period, our audit, evaluation, and investigative activities • An evaluation found TVA’s implementation of the grid identified more than $32.8 million in questioned costs, access charge was revenue neutral as intended. funds put to better use, and recoveries and opportunities for TVA to improve its programs and operations. Below • In evaluations of overtime at coal and gas plants, are highlights of our work this period. we determined TVA may not be accurately capturing the effects of fatigue for individuals working • Six contract preaward examinations identified more significant overtime. than $21.9 million of potential savings opportunities for TVA to negotiate. • Information technology (IT) audits identified improvement opportunities in TVA’s (1) backup • Five contract compliance audits identified potential verification of mission essential data, (2) insider overbillings of almost $10.9 million and ways to threat program, and (3) management of ® improve contract administration. Mac desktops and laptops. • An audit determined TVA’s process for managing heavy • An audit of TVA’s Business Meetings and Hospitality equipment provided to contractors was not effective. program identified improvement opportunities in (1) the approval process to ensure compliance with • Organizational effectiveness evaluations in seven the Business Meetings and Hospitality policy and TVA business units identified behavioral and operational (2) guidance for compliance with TVA’s Food Services factors that could impact achieving their mission. policy and the classification of meeting-related expenses. 4 • Investigative results included three criminal Finally, I again want to recognize the perseverance and Informations filed, one conviction, two administrative dedication of our staff, which allowed us to achieve these cases involving inappropriate use/receipt of TVA funds, excellent results while facing unparalleled circumstances. and the conclusion of a Hatch Act matter. While we can anticipate continuing external challenges in the months ahead, we will remain committed to Our Inspector General (IG) position has been vacant since continuing our work and taking all necessary precautions September 2017 when Richard W. Moore resigned to to protect our staff. I am confident that as we begin become the United States (U.S.) Attorney for the our 36th year, we will maintain that focus on helping the Southern District of Alabama. On April 6, 2020, TVA Board, TVA management, and employees mitigate President Donald Trump nominated Katherine A. Crytzer risks to TVA’s mission and better serve the people of the to be the next TVA IG, but on September 22, 2020, the Tennessee Valley. nomination was withdrawn when the President instead decided to nominate her for a position as a U.S. District Judge. During this semiannual period, two members of the TVA Board departed. OIG staff had the opportunity to work closely with both Chair James “Skip” Thompson and Director Richard Howorth, who also previously served as Chair. We wish to recognize their service and note appreciatively that both always demonstrated the willingness Jill M. Matthews to listen, exchange ideas, and act on OIG