Office of the Inspector General

Semiannual Report

October 1, 2001 ~ March 31, 2002

2002
Tennessee Valley Authority, 400 West Summit Hill Drive, Knoxville, Tennessee 37902-1401

G. Donald Hickman

Inspector General (Acting)

April 30, 2002

TO THE TVA BOARD OF DIRECTORS AND THE UNITED STATES CONGRESS

I am pleased to submit this semiannual report on the accomplishments of the OIG for the six-month period ending March 31, 2002.

It is a privilege to serve as the Acting Inspector General at TVA during this time. Following the tragic events of

September 11, 2001, we expanded our efforts to ensure the security and safety programs TVA has in place are

adequate. We also have continued our efforts to achieve our strategic objectives. Those objectives include

focusing on high risk areas, leveraging resources to optimize productivity and results, enhancing communications

with stakeholders, and delivering services that meet stakeholder needs. 

I appreciate the support I have received as Acting Inspector General from OIG employees, the TVA Board, and

our other stakeholders. The OIG’s efforts during this reporting period have been well received and have contributed in many ways toward helping TVA achieve its goals. 

I look forward to further serving Congress, TVA, and our other stakeholders.

Sincerely,

G. Donald Hickman
SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002TABLE OF CONTENTS

Executive Summary 1

TVA Profile 2

Office of the Inspector General 3

Special Features 5

Audits 9

Nonaudit Services 13

Investigations 14

Legislation and Regulations 20

Highlights 31

Appendices 22

Appendix 1 Audit Reports Issued 23

Appendix 2 Audit Reports Issued With Questioned Costs and Recommendations for Better Use of Funds 26

Appendix 3 Investigative Referrals and Prosecutive Results 28

Appendix 4 Audit Reports With Corrective Actions Pending 29

Appendix 5 Index of Reporting Requirements Under the Inspector General Act 30
TVA / OFFICE OF THE INSPECTOR GENERAL 1 EXECUTIVE SUMMARY

During this reporting period, we continued our efforts to support TVA through

quality audits and investigations. Our

reviews aligned with (1) the need to

ensure security and safety at TVA,

(2) agency-wide principles set forth in the

President's management agenda, and

(3) our strategic plan. 

We believe our efforts helped TVA management avoid unnecessary costs,

recover funds, and correct identified

weaknesses. Also, in many instances,

our efforts helped confirm that many programs were working effectively. In total,

we identified over $35 million in recoveries, fines/penalties, potential savings,

questioned costs, or funds which could

be put to better use. A large portion of

these funds resulted from our preaward

audits, where we identified potential savings for management to use in negotiating contracts. 

We completed 40 audits and 12 nonaudit service engagements during this

reporting period. These reviews included

(1) preaward and postaward contract

audits, (2) other financial-related audits,

(3) performance reviews of TVA operations, and (4) information technology

reviews. Corrective actions in response

to our audits included monetary recoveries, process improvements, and security

enhancements. Nonaudit engagements

were conducted primarily in support of

procurement activities. 

We also closed 114 investigations,

including multi-agency task force projects, which led to over $1.4 million in

recoveries, projected savings, and

fines/penalties; administrative or disciplinary action against 6 individuals; and

other corrective action in 15 cases. Our

investigations led to several referrals to

TVA’s Designated Agency Ethics Official.

Matters we investigated included alleged

workers’ compensation fraud, contractor

claims for temporary living expenses,

environmental crimes, health care fraud,

and employee misconduct. Our investigations also led to five individuals or entities being indicted and three convicted.
2 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002T VA P R O F I L E

TVA is a federal corporation established

in 1933 to provide flood control, navigation, and electric power in the Tennessee

Valley region. Today, TVA is the nation’s

largest public power company and a

regional development agency that supplies low-cost reliable power, supports a

thriving river system, and stimulates sustainable economic development in a

service area that covers 80,000 square

miles in the Southeastern United States,

including almost all of Tennessee and

parts of Mississippi, Kentucky, Alabama,

Georgia, North Carolina, and Virginia.

TVA generates power at 11 coal-burning

plants, 3 nuclear plants, 29 hydroelectric

dams, and 1 pumped storage plant.

TVA also produces energy from three

renewable sources––sun, wind, and

methane gas from waste. It provides

electric power to 158 local power distributors, 54 large industries, and 8 federal

agencies through a network of 17,000

miles of transmission lines.

TVA manages the nation’s fifth largest

river system. TVA’s dams are part of a

totally integrated resource management

system where each dam operates in

relationship to the others, and they are

used for multiple purposes and public

benefits. These include navigation, flood

control, power supply, land use, water

quality, and recreation.

TVA also contributes to the Valley economy, chiefly by keeping power rates competitive, which helps attract and retain

industries that provide quality jobs in the

region. TVA also helps communities promote sustainable economic development

by providing assistance in job creation

and retention and productivity improvements via capital investment, support of

business incubators, specialized technical services and advice, and recruitment

for new and existing industries.

TVA’s power system pays its own way by

selling electricity and issuing bonds. The

system does not use tax dollars. In

addition, TVA no longer receives congressional appropriations to help fund its

activities in navigation, flood control,

environmental research, and land management. These programs are now

funded by power revenues.

TVA is governed by a three-member

Board of Directors. Directors are

appointed by the President and 

confirmed by the Senate. Glenn L.

McCullough, Jr., is Chairman, and Skila

Harris and Bill Baxter are Directors.
Office Authority

TVA’s OIG was created by the TVA Board

of Directors in October 1985. It became

statutory under the Inspector General

Act Amendments of 1988. Those

amendments established OIGs at TVA

and 32 other agencies with Inspectors

General appointed by the agency heads.

The authority to appoint the TVA

Inspector General was transferred to the

President in November 2000 by Public

Law 106–422.

The Inspector General is responsible for

conducting audits and investigations

relating to TVA programs and operations,

while keeping the TVA Board and

Congress fully and currently informed

about problems and deficiencies relating

to the administration of TVA’s programs

and operations. TVA’s Inspector General

is independent and subject only to the

general supervision of the TVA Board of

Directors. The Inspector General’s

authority includes conducting any audits

or investigations the Inspector General

deems necessary or desirable, issuing

subpoenas, administering oaths, and

granting confidentiality to individuals who

provide information to the OIG.

OFFICE OF THE INSPECTOR GENERAL

TVA / OFFICE OF THE INSPECTOR GENERAL 3

Organization

The OIG consists of two major operational units––Audits and Investigations.

OIG Audits consists of four departments––(1) Advisory Services, focusing

on preaward audits and management

and congressional request work;

(2) Corporate Operations and Control,

focusing on contract compliance reviews

and corporate programs; (3) Energy

Operations, focusing on TVA core business operations; and (4) Information

Technology, focusing on computer security and system reviews and managing

the OIG’s independent computer 

network. 

OIG Investigations consists of three

departments––(1) Business Integrity,

focusing on nuclear issues, workers’

compensation fraud and abuse, employee misconduct, and OIG employment

suitability background investigations;

(2) Business Protection, focusing on

contract fraud, contract-related misconduct, and environmental crimes; and

(3) Computer Crimes and Electronic

Commerce, focusing on computer intrusion and fraud issues, health care fraud,

and workplace violence prevention.
Strategic Plan

We continued our efforts to meet our five

strategic objectives: (1) cultivate and

retain a highly skilled, innovative, and

motivated workforce; (2) enhance communications with stakeholders and deliver services that meet their needs;

(3) leverage OIG resources to optimize

productivity and results; (4) focus on

areas of high risk to TVA; and (5) envision

change affecting TVA and identify effective solutions. We have concentrated

during this period on the areas of

improving stakeholder relations, developing our staff, and focusing our resources

on areas that contribute to TVA’s 

success.

Staffing and Budget

The OIG’s offices are in the TVA headquarters in Knoxville, Tennessee. The

OIG also has a satellite office in

Chattanooga, Tennessee.

The OIG’s fiscal year 2002 budget was

$8 million with a budgeted headcount of

90 employees.*

OFFICE OF THE INSPECTOR GENERAL

4 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

INSPECTOR GENERAL

(Acting)

G. Donald Hickman

Legal Counsel

Richard P. Levi

Deputy Assistant

Inspector General

(Audit and Support)

Lewis M. Ogles

Assistant Inspector

General (Audits)

Ben R. Wagner

Manager

(Human Resources)

Kay T. Myers

Assistant Inspector

General (Investigations)

G. Donald Hickman

 Advisory Services

David P. Wheeler

Manager

 Corporate Operations 

and Control

Jill M. Matthews

Manager

 Energy Operations

Paul E. Ivie

Manager

 Information Technology

Deborah M. Thornton

Manager

Business Integrity 

C. Dale Hamilton

Manager

Business Protection 

Ron W. Taylor

Manager

Computer Crimes and 

Electronic Commerce

Curtis D. Phillips

Manager

* The OIG budget reflects a reduction from our previous semiannual report due to a change in 

accounting for employee benefits.
SECURITY AND SAFETY AT TVA

On October 10, 2001, the Chairman,

TVA Board of Directors, testified before

the Subcommittee on Water Resources

and Environment, Committee on

Transportation and Infrastructure, United

States House of Representatives, on the

heightened physical security measures

TVA was taking in light of the attacks on

America on September 11, 2001. The

Chairman testified that heightened security measures were in force throughout

TVA, including in TVA’s office buildings,

dams, and power plants. The Chairman

also noted that TVA was continuing to

further strengthen its overall security program through improved integration of

TVA’s major business units’ emergency

plans and emergency operations 

centers.

As a function of our oversight responsibility, we performed a preliminary survey

to assess the adequacy of TVA’s security

plans and actions taken in response to

the terrorist attacks and related threats.

We found TVA was taking or had taken

appropriate measures to mitigate the

risks associated with the security of

TVA’s nuclear and nonnuclear facilities.

However, due to the sensitive and evolving nature of this issue, we concluded

that another survey of TVA’s infrastructure security would be warranted in

about six months. Accordingly, during

the next reporting period, we plan to

reassess the adequacy of TVA’s efforts.

We also completed three reviews during

this reporting period and initiated a major

effort to assist TVA in developing a plan

to validate the effectiveness of security

procedures and controls. Highlights of

these completed or ongoing projects 

follow.

 We assessed the adequacy of the

controls of a TVA automated system

and found the controls to prevent

unauthorized physical access were

sufficient. However, we noted the

controls to prevent unauthorized

users from accessing the software

needed to be strengthened. TVA

management agreed with our findings

and is taking appropriate corrective

action. 

 We assessed the adequacy of another TVA system and identified some

opportunities for improvement in the

areas of granting access and development of contingency plans in the

event of system failure. TVA management agreed with our findings

and is taking appropriate corrective

action.

 We assessed the adequacy of TVA’s

efforts to address workplace violence

by identifying and comparing the key

elements of a workplace violence

program to the programs and

processes in place at TVA. Based on

our findings, TVA management plans

to, among other things, (1) establish

a TVA-wide policy emphasizing TVA’s

commitment to workplace violence

SPECIAL FEATURES

TVA / OFFICE OF THE INSPECTOR GENERAL 5
prevention; (2) formalize and establish

the role of a threat assessment team;

(3) place additional emphasis on

training to increase employee awareness, including the recognition of

aberrant behavior; and (4) develop

crisis management criteria and

processes. 

 Recently, we made a major commitment to assist TVA management in

developing a cost-effective plan to

evaluate TVA computer security procedures and controls. The assessment will provide management with

the current status of security controls

to enable informed decisions for mitigating risks to an acceptable level.

When implemented, the assessment

process will establish a framework,

baseline, and continuing cycle for

assessing risk, developing and implementing security procedures and

controls, and monitoring 

effectiveness.

THE PRESIDENT’S MANAGEMENT

AGENDA

The President introduced a management

agenda for fiscal year (FY) 2002 that is

designed to improve the management

and performance of the federal government. Government-wide areas targeted

include: (1) strategic management of

human capital, (2) competitive sourcing,

(3) expanded e-government, (4) budget

and performance integration, and

(5) improved financial performance. 

Strategic Management of Human

Capital

In the area of human capital, the

President’s initiative includes taking steps

to enhance management flexibility, permit

more performance-oriented compensation, correct skills imbalances, and provide other tools to recruit, retain, and

reward a high-quality workforce. 

TVA’s personnel system is separate from

the civil service; however, TVA is experiencing some of the same human capital

issues as other federal organizations.

For example, because its workforce is

aging, TVA faces a prospective loss of

knowledge and skills through retirements. Efforts TVA has taken in this area

include (1) a “3R” (recruit, retain, and

reward) Program developed to ensure

TVA has a workforce with the right skills

to meet future challenges, (2) an integrated staffing achievement plan that supports overall business performance

objectives, and (3) establishing a “line of

sight” between individual performance

and business unit/corporate 

performance. 

OIG efforts in this area during the reporting period included an audit that

addressed staffing in TVA fossil plant

materials storerooms. Also during this

period, our investigative staff reviewed

the resources and processes in place at

TVA to address workplace violence and

made recommendations for improvement. (Projects mentioned herein are

SPECIAL FEATURES

6 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002
discussed in more detail later in this

report.)

Competitive Sourcing

This initiative is designed to improve

competition between segments of the

federal workforce who perform tasks

readily available in the commercial marketplace and private sector service

providers. This initiative is based on

requirements of the Federal Activities

Inventory Reform Act and Office of

Management and Budget (OMB) Circular

A-76 that are not legally applicable to

TVA, which has separate procurement

authority. However, in the last decade or

so, TVA has contracted out much work

previously done by TVA employees, an

action that contributed to the almost 50

percent reduction in staffing since 1990.

The OIG contributes to the efficiency,

effectiveness, and competition in TVA’s

contracting process by (1) providing contract advisory services, (2) performing

contract preaward and contract compliance audits, (3) providing negotiation

support for TVA management on contracts where we have performed audits,

and (4) investigating contract fraud.

Expanded E-Government

The administration has established a

goal to champion citizen-centered electronic government that will result in a

major improvement in the federal government’s value to the citizen. This effort

will center on improving information technology management, simplifying business processes, and unifying information

flows across lines of business in order to,

among other things, (1) provide highquality customer service, (2) reduce the

expense and difficulty of doing business

with the government, and (3) cut government operating costs.

TVA has implemented web-based applications for services it provides to the

general public such as dock permitting,

and to TVA distributors and directly

served customers such as equipment

purchases through an eMarketplace.

TVA has a review and approval process

for all major projects, including those

involving information technology. 

The OIG has audit and investigative

departments which focus on computer

system controls, security, and intrusion.

Work during the reporting period included a review of TVA’s electronic business

strategy.

Budget and Performance Integration

This initiative is designed to (1) formally

integrate performance review with 

budget decisions, (2) identify high-quality

outcome measures and accurately monitor program performance, and (3) more

completely integrate cost and performance information in a single oversight

process. Expected results of this initiative include better performance, better

control over resources, and improved

management accountability.

SPECIAL FEATURES

TVA / OFFICE OF THE INSPECTOR GENERAL 7
TVA has adopted a scorecard strategy

that integrates budgeting, performance

management, and incentives in a program called Winning Performance. The

program defines agency success, identifies those things TVA must do well to

succeed, organizes and commits its

resources (capital, budgets, and people)

around those requirements, and bases

team incentive on the results. Progress

in meeting goals is published monthly.

TVA is also in the process of implementing activity-based management to even

better integrate strategy, performance,

and cost.

An OIG representative attends the

agency quarterly performance reviews.

In addition, the OIG has adopted this

system, defining performance targets,

monitoring performance, and linking

incentive pay to levels of accomplishment. For reasons of independence,

however, our performance measures are

not linked to TVA’s.

Improved Financial Performance

This final government-wide initiative

encompasses strategies to reduce erroneous payments and to ensure that federal financial systems produce accurate

and timely information to support operating, budget, and policy decisions. One

of the expected results of these efforts is

improved accountability through audited

financial reports, achievable by financial

systems that routinely produce information that is timely, useful, and reliable.

TVA has prepared annual, independently

audited, financial statements for many

years. TVA also issues quarterly financial

reports that are published and distributed

to investors. TVA’s Chief Financial Officer

routinely reviews financial and operating

performance information with TVA’s

Board of Directors and top executive

team. 

The OIG is active in this area. Each year

we perform a review of TVA’s annual

financial statement audit to ensure it is

performed in accordance with generally

accepted government auditing standards. Also, in support of the preparation and audit of the government-wide

financial statements, we review the trial

balance data TVA submits to the OMB,

General Accounting Office, and

Department of the Treasury. In addition,

we conduct financial-related reviews to

assess the effectiveness of internal controls over various TVA financial programs

and systems. For example, during this

period, we reviewed internal controls

over real estate transactions and over

the system that provides data for TVA

transmission services billing. These

types of reviews help TVA ensure the reliability of its financial information for decisionmaking and reporting purposes.

SPECIAL FEATURES

8 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002
AUDITS

TVA / OFFICE OF THE INSPECTOR GENERAL 9

Summary of

Representative Audits

Audits are initiated from (1) the OIG

annual workplan, (2) issues identified by

the OIG subsequent to the annual workplan, (3) issues identified by cooperative

efforts with TVA management, or (4) concerns raised by TVA management or others. During this reporting period, we

completed 40 audits which identified

almost $1.8 million in questioned costs

and about $31.9 million in funds which

could be put to better use. We also

identified numerous opportunities for TVA

to improve program operations. Our

audits included (1) preaward and postaward contract audits, (2) other financialrelated audits, (3) performance reviews of

TVA operations, and (4) information technology reviews.

PREAWARD CONTRACT AUDITS 

To support TVA management in negotiating procurement actions, we identified

about $31.9 million in potential savings

involving 17 preaward audits. During this

reporting period, TVA management successfully negotiated $6.1 million in savings as a result of audits issued during

this and previous reporting periods and

is continuing to negotiate other potential

contracts audited during this period.

Highlights of the more significant

preaward audits follow.

 We reviewed the proposed costs and

pricing methodologies submitted by

two contractors for providing services

and equipment for TVA’s hydro modernization program under a potential

$350 million contract. One contractor’s proposal included about

$20 million in overstated costs and

excessive profits. The other contractor’s proposal did not provide sufficient data to assess the

reasonableness of the proposed pricing methodology. In addition, the latter proposal included (1) an inflated

contribution margin that could

increase TVA’s costs by about

$4.4 million and (2) unreasonable

restrictions on TVA’s audit rights.

Negotiations for this contract award

are ongoing.

 We reviewed a contractor’s proposal

to provide air preheater equipment

and related services under a planned

seven-year, $50 million contract. We

determined the contractor’s proposal

included excessive profit levels and

unreasonable sales and marketing

expenses. TVA management subsequently negotiated savings of

$2.2 million on future projects. 

 We reviewed a contractor’s proposed

labor and indirect cost rates for a

seven-year, $120 million contract to

provide specialty fire protection

equipment and services. We determined TVA could save about

$1.8 million by (1) reducing the billing

rate for payroll taxes to correspond
AUDITS

10 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

with the contractor’s actual costs and

(2) eliminating certain direct costs and

including the cost recovery in the

contractor’s overhead rate. The contractor agreed with our findings and

revised its proposal accordingly.

 We reviewed a contractor’s proposed

adjustments to its labor and indirect

cost rates under a contract to provide selective catalytic reduction

process equipment and services.

Some of the proposed rates were

overstated and could have increased

TVA’s costs by about $912,000

based on estimated contract expenditures of $40 million. TVA management subsequently negotiated

savings of about $709,000.

CONTRACT COMPLIANCE

During this reporting period, we completed 12 contract compliance audits that

identified nearly $1.8 million in ineligible

and unsupported costs. Management

generally agreed with our findings and

has taken or plans to take appropriate

corrective action. Highlights of some of

the more significant audits follow.

 A contractor providing industrial

hygiene services either overbilled or

could not adequately support about

$220,000 of the $1.3 million invoiced

for labor and equipment. In addition,

the contractor could not provide documentation that nine of its employees

met the professional qualification

requirements stipulated in the contract. TVA management negotiated a

partial recovery of the questioned

costs and decided not to renew the

contract. 

 A contractor providing chemical services to TVA overbilled about $43,000

of the $5.67 million invoiced under

the contract. TVA management

agreed with our findings and is seeking recovery of these costs. In a

related matter, we found the contractor’s request for a price increase

involving a proposed extension to the

contract was fairly stated. 

 At the request of TVA management,

we reviewed two labor adjustment

claims submitted by a contractor that

installed combustion turbines at TVA

facilities. We identified $116,000 in

unsupported labor costs and calculation errors.

 A contractor providing transmission

line services could not support about

$1.4 million of the $4.4 million billed

for labor, equipment, and mobilization. TVA management agreed the

costs were not appropriately supported but decided not to seek recovery

after determining the work had been

performed. However, TVA management did take action to improve controls over documentation and

approval of future work performed

under the contract.

AFFIRMATIVE PROCUREMENT

We assessed (1) compliance of TVA’s

Affirmative Procurement Plan with

Section 6002 of the Resource
AUDITS

TVA / OFFICE OF THE INSPECTOR GENERAL 11

Conservation and Recovery Act (RCRA)

and applicable regulatory guidance and

(2) TVA’s execution of the plan. We

found the plan addressed applicable

RCRA requirements, but opportunities

for improvement exist. The plan’s

requirements regarding minimum content

standards appeared inconsistent both

internally and with Environmental

Protection Agency (EPA) guidance. Also,

contrary to plan requirements, TVA decisions to purchase items not meeting

minimum content standards were generally not documented. TVA management

agreed with our findings and is taking

appropriate corrective action.

STOREROOM ACCESS AND

STAFFING AT TVA FOSSIL PLANTS

We reviewed storeroom access and

staffing at TVA’s 11 fossil plants and

found the number of individuals with

access to materials storerooms

appeared excessive at all but one plant.

We also found that (1) overtime worked

by fossil plant storeroom employees, on

average, increased during the 29-month

period reviewed; and (2) about 50 percent of fossil plant storeroom employees

were near retirement. TVA management

agreed with our findings and has initiated

action to reduce the number of individuals with storeroom access, establish

optimum storeroom staffing levels at

each site, and implement staffing plans

for refilling positions due to retirements.

REAL ESTATE TRANSACTIONS

We reviewed the adequacy of TVA’s controls over the acquisition and disposal of

land and found the controls to be sufficient and working effectively except in

the area of communications between

TVA organizations. In addition, we concluded TVA’s policy over the use, acquisition, and disposal of TVA land should

be updated. TVA management agreed

with our findings and is taking steps to

(1) revise processes and update and/or

integrate systems to facilitate better

communication between TVA organizations and (2) institute an updated business practice for land management.

FY 2001 FINANCIAL STATEMENT

AUDIT

We reviewed TVA’s FY 2001 financial

statement audit by (1) assessing the

methodology used by the external auditor in performing the financial statement

review, (2) performing supplemental tests

of the accounting records and comparing our results to those of TVA’s external

auditor, and (3) examining the independence of the external auditor. We determined the financial statement audit was

performed in accordance with generally

accepted government auditing standards

in all material respects.

TRANSMISSION AND ENERGY

SCHEDULER (TES) SYSTEM

TES is used to validate the reservation

and scheduling of TVA’s transmission

system. We determined the automated

internal controls of TES were adequate
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12 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

to ensure accurate information for billing

purposes. However, no process existed

to provide adequate oversight of manual

overrides to the system. In addition, the

system did not provide the reporting

capabilities necessary to adequately

monitor controls and system activity.

TVA management agreed with our findings and is taking corrective action by

(1) developing additional processes for

manual overrides of the system and

(2) enhancing the system’s reporting

capabilities. 

DAM SAFETY INSPECTION PROCESS

We reviewed TVA’s dam safety inspection

process and found that the process

(1) complied with federal guidelines for

dam safety, (2) was effectively followed

by inspection personnel, and (3) was

adequately supported by an information

database. We also found, however, that

TVA could improve its process by

(1) ensuring dam inspection work orders

include an updated checklist of items

needing to be inspected, (2) establishing

a process for evaluating the risks associated with further delaying maintenance

on overdue projects, and (3) routing

inspection reports on equipment used to

support both powerhouse and spillway

operations through TVA’s Manager, Dam

Safety Inspections and Instrumentation.

TVA management agreed with our findings and has taken appropriate action to

improve its dam safety inspection

process.

ELECTRONIC BUSINESS STRATEGY

We assessed the reasonableness of

TVA’s agency-wide electronic business

(e-business) guidance by comparing

TVA’s guidance to that of 21 federal

agencies. In summary, we found that,

unlike the other federal agencies, TVA

had not developed comprehensive

agency-wide guidance. We recommended that TVA develop an agencywide business practice on e-business to

provide guidance on critical success factors, coordinating internal efforts, optimizing technology investments,

managing risk, and addressing key 

e-business issues. TVA management

agreed and is implementing our 

recommendation.
NONAUDIT SERVICES

TVA / OFFICE OF THE INSPECTOR GENERAL 13

Summary of Nonaudit

Services

We provide nonaudit services upon

request to assist TVA management in

improving the efficiency and effectiveness

of its operations. In addition, when

requested, we provide information, data,

and analyses to members of Congress to

help keep them informed about aspects

of TVA’s operations. In some instances,

we initiate nonaudit services, such as a

“management alert,” when we believe a

particular issue needs to be brought to

management’s attention for immediate

consideration. Depending upon the

objective, these reviews are performed in

accordance with either the (1) American

Institute of Certified Public Accountant’s

Standards for Consulting Services or

(2) President’s Council of Integrity and

Efficiency’s (PCIE) Quality Standards for

Inspections. 

During this reporting period, we completed 12 projects involving nonaudit services. Highlights follow.

 We participated as an advisor to TVA

Procurement on a potential partnering agreement with a large firm for

the design, engineering, and fabrication of boiler components, spare and

repair parts, and engineering services

at various TVA fossil plants.

 We provided informal advice on six

Requests for Proposal involving

truckload transportation services,

audiovisual services, a reservoir operation study, retiree dental benefits,

employee benefits, and information

technology vulnerability assessments.

 We performed additional analyses of

data included in a prior report dated

December 20, 2000, addressing the

willingness of nuclear security contractor employees to report nuclear

safety and quality issues. 

 We provided our view on the security

risks associated with removing password protection linked to some sensitive fossil plant processes and

procedures.
INVESTIGATIONS

14 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

Summary of

Representative

Investigations

During the last six months, we investigated allegations and concerns received

from ratepayers, TVA managers and

employees, governmental and congressional staffs, and OIG auditors. Our

investigations, including task force projects, resulted in (1) over $1.4 million in

recoveries, projected savings, and

fines/penalties, (2) five individuals or entities being indicted, and (3) three individuals or entities being convicted.

Representative investigations are highlighted below.

WORKERS’ COMPENSATION 

BENEFITS INVESTIGATIONS

To receive benefits under the Federal

Employees’ Compensation Act (FECA),

recipients must periodically submit forms

to the Office of Workers’ Compensation

Programs (OWCP) that require the recipient to report all employment, including

self-employment. OWCP uses the forms

to determine a recipient’s continuing eligibility for FECA benefits. Failure to disclose employment information to OWCP

violates state and federal laws.

During this reporting period, our FECA

fraud investigations led to recoveries and

long-term savings of over $1.3 million

and one conviction. Highlights of our

investigative results follow.

Former Employee Convicted

A joint investigation performed by the

TVA OIG and the United States

Department of Labor (DOL) OIG revealed

a former TVA Nuclear pipefitter receiving

FECA benefits was performing construction work but did not report that employment to OWCP as required.

As a result of our investigation, the former employee pled guilty to one count of

making false statements to receive benefits. The individual was ordered to serve

four months in a federal prison, four

months’ confinement in a halfway house,

and three years’ probation. In addition,

he was ordered to pay TVA $22,988 in

restitution.

As a result of this conviction, OWCP terminated the individual’s benefits, providing a projected long-term savings to TVA

of over $800,000.

Administrative Results

During this period, we also reported the

following administrative results.

 A joint investigation with the DOL OIG

revealed that a former TVA employee

was receiving benefits to which he

was not entitled.

Over 20 years ago, a TVA craftsman

apprentice was injured on the job.

He subsequently received continuous

payments for a loss in wage earning

capacity (LWEC). OWCP/TVA also

provided rehabilitation benefits
INVESTIGATIONS

TVA / OFFICE OF THE INSPECTOR GENERAL 15

through which, over time, he received

both bachelor’s and master’s

degrees. The individual eventually

became head of a county agency,

earning more than three times the

salary upon which his LWEC was

based.

Although the individual reported his

earnings to OWCP as required, he

continued to receive LWEC benefits

every four weeks.

As a result of this investigation,

OWCP terminated the individual’s

benefits, providing a projected longterm savings to TVA exceeding

$350,000.

 Eyewitness testimony and documentation gathered during our investigation showed a former TVA employee

owned and was actively involved in a

concrete finishing company but did

not report this employment activity to

OWCP on three claim forms he submitted between 1992 and 1997.

As a result of our findings, OWCP

ruled the individual would forfeit benefits he received based on the three

forms and declared he was overpaid

$122,489. Prosecution was declined

in this case in favor of administrative 

remedies.

FALSE CLAIMS––TEMPORARY 

LIVING EXPENSES (TLE)

We continued our efforts to reduce TVA

contract costs by identifying fraudulent

and ineligible TLE paid to TVA contractor

employees. During this reporting period,

one TLE investigation resulted in a recovery exceeding $17,000.

Our investigation revealed a TVA contractor employee received per diem benefits to which he was not entitled. The

employee should have received TLE only

if he incurred duplicate expenses for a

permanent home more than 100 miles

from his TVA assignment. Evidence

showed, however, that the contractor

employee did not incur duplicate

expenses as he had stated on several of

his TLE certifications.

Prosecution was declined in this case in

favor of administrative remedies available

to TVA. As a result of an agreement

between the contractor’s employer and

TVA, the individual made a lump sum

payment to his employer of $17,827.50,

which was credited to TVA.

EMPLOYEE MISCONDUCT

Ethics Issue

We received an allegation that a former

TVA Board member, while at TVA, purchased season tickets to University of

Tennessee football games at face value

without making a separate required

annual monetary donation. Because

TVA has contracts with The University of

Tennessee, it generally would be an
INVESTIGATIONS

16 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

ethics violation for a TVA employee to

accept a gift exceeding $20 from the

University. 

After conducting a preliminary review,

this office recused itself. At our request,

the Office of Personnel Management

(OPM) OIG completed an investigation

into this allegation. The OPM OIG determined the Board member––who left TVA

during the OPM investigation––paid face

value for tickets beginning in 1993, but

did not make the required annual donation to the University. The OPM OIG further found the former Board member did

not solicit the tickets, the University did

not ask him for a donation, and he made

a donation for one year upon learning of

the allegation against him. The Board

member stated he did not know a monetary donation was required. We referred

the OPM findings to TVA’s Designated

Agency Ethics Official (DAEO), who stated he would include the “lessons

learned” from this matter in future ethics

training.

Senior Manager Transfer

We concluded a perception of favoritism

and waste resulted from (1) allowing a

manager to attend on TVA time a university located in a city where the manager’s

spouse resided, which was outside the

Tennessee Valley; (2) authorizing TVA’s

reimbursement or payment of various

expenses related to the manager’s attendance at the university; and (3) subsequently transferring the manager to the

same city, even though the manager

remained in Knoxville receiving per diem

payments over half of the time after the

transfer. The responsible manager was

counseled.

Sexual Misconduct

Evidence revealed a TVA employee

engaged in sexually related misconduct

at a TVA worksite. As a result of our

investigation, the individual was demoted, suspended without pay for two

weeks, and transferred to another work

station.

Ethics Referral

We developed information indicating

some car rental companies doing business with TVA may be offering TVA executives and their spouses discounted

rates not available to other TVA employees or the general public. Based on the

information we developed and discussions with the TVA DAEO, we referred

this matter to the DAEO so he could take

action to ensure TVA executives are sensitive to the ethics regulations regarding

acceptance of personal discounts from

TVA contractors. The DAEO advised us

he would include a discussion of ethics

guidelines related to this issue at an

upcoming TVA Business Council meeting, and he would address the topic in

future ethics briefings, training sessions,

and updates. (The Business Council

consists of TVA Vice Presidents and

above.)
INVESTIGATIONS

TVA / OFFICE OF THE INSPECTOR GENERAL 17

HEALTH CARE FRAUD TASK FORCE

We continued to support health care

fraud task forces and working groups

sponsored by United States Attorneys’

offices in Tennessee’s Eastern, Middle,

and Western federal districts.

The cases below reflect our involvement

in the Eastern District of Tennessee

Health Care Fraud Task Force. Other

participants on the task force include the

following local, state, and federal agencies: Sevier County (Tennessee) Sheriff’s

Department, Tennessee Bureau of

Investigation, Internal Revenue Service

Criminal Investigations, United States

Department of Health and Human

Services (HHS) OIG, Federal Bureau of

Investigation (FBI), and United States

Department of Defense Criminal

Investigative Service.

Physician Indicted

Investigation of a physician’s claims to

various benefits plans (including TVA’s) is

being conducted by special agents of

the TVA OIG and agencies serving on the

task force.

During the investigation, a forensic examination of the physician’s computers by a

TVA OIG Special Agent revealed evidence which led to the physician’s indictment on one count of possessing

computer images containing child

pornography. The investigation of his

claims continues.

Federal Charges Against Doctor and

Nurse in Health Care Fraud Scheme

As a result of a task force investigation, a

Knoxville, Tennessee, physician and

nurse were named in a 57-count 

indictment.

The charges included conspiracy, money

laundering, mail fraud, and health care

fraud. The indictment alleged, among

other things:

 From 1994 to the present, the physician devised a scheme to receive

payments from various health care

benefits programs, including TVA’s

medical plan and the TennCare/

Medicaid program, based on fraudulent representations. The nurse

joined and participated in this

scheme as early as April 1996.

 The physician and/or nurse submitted

claims to the benefits programs,

although the physician was not entitled to receive payment because of

his exclusion from participation in

those programs. (HHS had barred

the physician from participation in the

TennCare/Medicaid and Medicare

programs since at least 1994 as a

result of convictions for federal health

care fraud offenses he committed. In

addition, during 2001 a medical center the physician operated was

excluded by HHS from participating

in all federal health care programs.)
INVESTIGATIONS

18 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

ENVIRONMENTAL CRIMES JOINT

TASK FORCE (ECJTF)

We continued our participation in the

ECJTF, which is comprised of members

from state and federal agencies, including the FBI, EPA, Department of Justice,

TVA’s OIG, and the TVA Police.

ECJTF focuses enhanced law enforcement resources against individuals and

companies by applying the most effective federal and state criminal and civil

statutes. 

Our participation in the task force supports one of TVA’s Six Strategic

Objectives––River and the Environment.

Highlights of the task force’s work reported during this period include the 

following.

Criminal Sentencing: Fish Kill––

Improper Use of Pesticide

Investigation revealed the owner of a

produce company was responsible for a

major fish kill in the Sequatchie River, a

tributary of the Tennessee River.

The responsible individual pled guilty in

the United States District Court to one

count of use of a registered pesticide in

a manner inconsistent with its labeling.

The individual was placed on probation

for 4 years, ordered to perform

150 hours of community service, and

sentenced to pay restitution of

$42,369.98 to Tennessee Wildlife

Resources Agency and $1,602.44 to the

affected municipal water system.

Guilty Plea: Clean Water Act Violated

by Waste-Disposal Company and Its

President

A Chattanooga company and its president each pled guilty to one count of violating the Clean Water Act. 

Investigation revealed the president of a

waste recycling/disposal company and

his company knowingly falsified documentation to the city of Chattanooga

relating to the company’s permit to dispose of nonhazardous waste into sewer

lines at its facility.

On over 40 occasions, the company’s

discharge monitoring reports to the city

failed to disclose its wastewater discharges exceeded limitations. According

to the EPA, levels of copper in the discharged wastewater were as much as

17 times the federal limit, and the levels

of zinc as much as 14 times the limit.

The company and its president are

awaiting sentencing.
INVESTIGATIONS

TVA / OFFICE OF THE INSPECTOR GENERAL 19

Administrative and Disciplinary Actions

April 1, 1997 ~ March 31, 2002*

Total = 272

Oral/Written 

Warnings

19% Suspensions/

Demotions/

Transfers

9.5%

Resignations/

Terminations

10.5%

Counseling/

Management 

Techniques

41%

Reemployment

Flagged

20%

*Prosecutive referrals are shown in Appendix 3.

Closed Cases by Area

October 1, 2001 ~ March 31, 2002

Total = 90* Transmission/

Power

Supply

7%

Administration

19% Other

12% Fossil Power

13.5%

Human 

Resources

11%

TVA Nuclear

25.5%

River System 

Operations &

Environment

12%

*Figures do not include 24 OIG employment suitability 

background investigations closed during this period.

Sources of Hotline Calls Warranting Further OIG Action 

October 1, 2001 ~ March 31, 2002

Total = 41

General Public

34%

Former TVA/

Contractor

Employees

12%

TVA/Contractor 

Employees

54%
LEGISLATION AND REGULATIONS

20 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

Effective October 1, 2001, the TVA OIG

became a member of the PCIE. We

continued to follow issues of interest to

the OIG and TVA, including proposals

regarding law enforcement authority and

utility deregulation. 
TVA / OFFICE OF THE INSPECTOR GENERAL 21
22 SEMIANNUAL REPORT / OCTOBER 1, 2001 ∼ MARCH 31, 2002

APPENDICES
APPENDIX 1

TVA/OFFICE OF THE INSPECTOR GENERAL 23

Audit Reports Issued

AUDIT REPORT

NUMBER QUESTIONED UNSUPPORTED FUNDS PUT TO

AND DATE TITLE COSTS COSTS BETTER USE

2001-085C

10/16/2001 General Electric - Johnsonville $7,753 $7,753

Labor Adjustment

2001-084C

10/17/2001 Federal Data Corporation -

Contract No. 00002054 

(Formerly 97BYQ-216424-001)

2001-060P

10/22/2001 Storeroom Access and Staffing at 

TVA Fossil Plants

2001-023C

10/25/2001 Crisp & Crisp Contracting - 1,401,145 1,401,145

Contract 95PA4-143741-02

2001-049C

10/29/2001 Sugar Camp Coal LLC - 

Contracts 97P01-197103, 

97P05-218982, 97P05-219030, 

and 98P05-236835

2001-077C

11/06/2001 Alstom Power, Inc. - $603,400

Bull Run Boiler Modifications

2001-032F

11/07/2001 Review of Internal Controls Over 

Real Estate Transactions

2001-043C

11/09/2001 Alstom Power Environmental Systems 912,000

2001-052T

11/26/2001 Electronic Business Strategy

2001-040C

11/30/2001 McDaniel Fire Systems 1,784,344

2001-080F

12/04/2001 Review of Tennessee Valley Authority’s 

FY 2001 Financial Statement Audit

2001-083F

12/10/2001 Review of the Internal Controls of the 

Transmission and Energy 

Scheduler System

2001-086T

12/10/2001 Unix Server Security Assessment

2001-066C

12/17/2001 Key Services - Contract 00PYC-158282
APPENDIX 1

24 SEMIANNUAL REPORT / OCTOBER 1, 2001 

∼ MARCH 31, 2002

Audit Reports Issued

AUDIT REPORT

NUMBER QUESTIONED UNSUPPORTED FUNDS PUT TO

AND DATE TITLE COSTS COSTS BETTER USE

2002-003V

12/18/2001 Alstom Power Inc. - Hydro Division, $20,000,000

Turbines and Generators

2002-006C

12/19/2001 General Electric Company - $107,998 $107,998

Field Labor Cost Adjustment - 

Lagoon Creek I Project - 

Contract No. P98P6D-195379-000

2002-007C

12/19/2001 Trism Inc. - Contract

No. 00002483 (Formerly

99BC5-252631-000)

2001-012C

12/21/2001 Analytical Industries, Inc. - 220,400 23,801

Contract 97PPW-219248

2001-064T

12/21/2001 Hydro Automation Security - HDCC

2001-059C

01/02/2002 Enron North America Corp.

2001-074T

01/07/2002 Application Review of Pegasys

2000-012P

01/09/2002 TVA’s Affirmative Procurement Plan for 

Items Containing Recovered Materials

2002-018V

01/09/2002 Review of BCBS-TN’s Proposed 

Administrative Services Only Fee

2002-023C

01/10/2002 United States Enrichment Corporation - 

Contract Nos. 95N8A-118891-000 

and 99N8A-185677-015

2002-005V

01/18/2002 Bechtel Proposal for TVA Browns 512,077

Ferry Unit One Recovery 

Support Services

2001-053C

01/25/2002 Alstom Power, Inc. - Air Preheater Division 2,154,657

2002-027C

01/25/2002 Photo Science, Inc.

2001-089C

01/29/2002 Ondeo Nalco - 42,676

Contract 99N7B - 236079
APPENDIX 1

TVA / OFFICE OF THE INSPECTOR GENERAL 25

Audit Reports Issued

AUDIT REPORT

NUMBER QUESTIONED UNSUPPORTED FUNDS PUT TO

AND DATE TITLE COSTS COSTS BETTER USE

2002-026C

01/29/2002 Tuck Engineering, Inc. 

2002-028C

01/29/2002 Michael Baker, Inc.

2002-029C

01/29/2002 Earth Data International

2001-056C

02/06/2002 Review of Contract 94N8A-106630 

Framatome Cogema Fuels

2002-024V

02/13/2002 GE Hydro Power, Inc. - Hydro $4,400,000

Modernization Project

2001-076F

02/14/2002 Review of TVA’s Dam Safety 

Inspection Process

2002-030C

02/28/2002 Haverfield Aviation - Audit of Contract 

No. 00001049 and Contract 

No. 969A1-176544-000

2002-039C

03/07/2002 Verification of Summarized 

Facts Data FY 2001

2002-036V

03/15/2002 Stone & Webster, Inc. - 

TVA Nuclear Modification and 

Supplemental Maintenance Services

2002-001V

03/27/2002 Duratek Price Increase 895,000

2002-035V

03/27/2002 Day & Zimmermann NPS, Inc. - 613,000

Nuclear Maintenance and Modifications

2002-040C

03/28/2002 Calvert City LLC - Solicitation

of Offers for Terminal Services

TOTAL 40 $1,779,972 $1,540,697 $31,874,478*

* This figure includes funds identified in preaward audits of proposals for contracts that may not be awarded.
APPENDIX 2

26 SEMIANNUAL REPORT / OCTOBER 1, 2001 

∼ MARCH 31, 2002

Audit Reports Issued With Questioned Costs

QUESTIONED COSTS

NUMBER TOTAL UNSUPPORTED

A. For which no management decision has been

made by the commencement of the reporting period 1 $103,553 $103,553

B. Which were issued during the reporting period 5 $1,779,972 $1,540,697

Subtotals of A and B 6 $1,883,525 $1,644,250

C. For which a management decision was made during

the reporting period 6* $1,883,525 $1,644,250

(i) Dollar value of disallowed costs 5 $267,471 $219,304

(ii) Dollar value of costs not disallowed 2 $1,616,054 $1,424,946

D. For which no management decision has been made by

the end of the reporting period 0 $0 $0

E. For which no management decision was made within

six months of issuance 0 $0 $0

* The total number of reports differs from the sum of C.1 and C.2 when the same reports contain both costs disallowed

and not disallowed by management.
APPENDIX 2

TVA / OFFICE OF THE INSPECTOR GENERAL 27

Audit Reports Issued With Recommendations for Better Use of Funds

NUMBER DOLLAR VALUE

A. For which no management decision has been

made by the commencement of the reporting period 2 $335,250

B. Which were issued during the reporting period 9 $31,874,478

Subtotals of A and B 11* $32,209,728

C. For which a management decision was made during

the reporting period 8** $7,182,728

(i) Dollar value of disallowed costs 7 $6,068,937

(ii) Dollar value of costs not disallowed 2 $1,113,791

D. For which no management decision has been made by

the end of the reporting period 4 $25,027,000

E. For which no management decision was made within

six months of issuance 0 $0

* The total number of reports (A+B) differs from the sum of C and D when the same reports contain recommendations

with and without management decisions.

** The total number of reports differs from the sum of C.1 and C.2 when the same reports contain both costs disallowed

and not disallowed by management.
APPENDIX 3

28 SEMIANNUAL REPORT / OCTOBER 1, 2001 

∼ MARCH 31, 2002

Investigative Referrals and Prosecutive Results

Referrals

Subjects Referred to United States Attorneys 5

Subjects Referred to Other Agencies for Investigative or Administrative Action 4

Results

Subjects Indicted5

Subjects Convicted 3

Referrals Declined6

OWCP declared an overpayment for one individual and terminated benefits for

two others, creating a recovery and projected savings totaling $1,286,658.
APPENDIX 4

TVA / OFFICE OF THE INSPECTOR GENERAL 29

Audit Reports With Corrective Actions Pending

AUDIT REPORT

NUMBER

AND DATE DESCRIPTION

2000-016P

February 23, 2001 The report contained two recommendations regarding the internal controls associated with TVA

coal quality adjustment report (CQAR) payments. TVA has corrected the CQAR calculation

errors identified in this audit and has developed, but not implemented, computer software to

provide additional automated controls for these payments.

2000-026C-01 

April 02, 2001 The report contained a recommendation regarding automation of staff augmentation billing

processes. TVA is considering options for tracking contractor tasks.

2001-001C

July 23, 2001 The report contained a recommendation regarding recovery of overbillings. TVA is seeking

recovery.

2001-028F

June 20, 2001 The report contained three recommendations about internal controls over contributions and one

about $8 million of unused funds. TVA is still working towards a comprehensive resolution of all

the recommendations.

2001-034T

September 07, 2001 The report contained ten recommendations regarding aspects of TVA’s computer security program. TVA is planning security assessments to commence this fiscal year.

2001-036P 

September 12, 2001 TVA management has initiated, but not completed, action to correct the CQAR calculation

errors identified in this audit. In addition, consistent with our recommendation in Audit

2000–016P, TVA management has developed, but not implemented, computer software to provide additional automated controls for these payments.
APPENDIX 5

30 SEMIANNUAL REPORT / OCTOBER 1, 2001 

∼ MARCH 31, 2002

Index of Reporting Requirements Under the Inspector General Act

REPORTING REQUIREMENT PAGE

Section 4(a)(2) Review of Legislation and Regulations 20

Section 5(a)(1) Significant Problems, Abuses, and Deficiencies 5-19

Section 5(a)(2) Recommendations With Respect to Significant Problems, Abuses, and Deficiencies 5-19

Section 5(a)(3) Recommendations Described in Previous Semiannual Reports on Which

Corrective Action Has Not Been Completed Appendix 4

Section 5(a)(4) Matters Referred to Prosecutive Authorities and the Prosecutions and Convictions

That Have Resulted Appendix 3

Section 5(a)(5) Summary of Instances Where Information Was Refused None

and 6(b)(2)

Section 5(a)(6) Listing of Audit Reports Appendix 1

Section 5(a)(7) Summary of Particularly Significant Reports 9-19

Section 5(a)(8) Status of Management Decisions for Audit Reports Containing Questioned Costs Appendix 2

Section 5(a)(9) Status of Management Decisions for Audit Reports Containing Recommendations

That Funds Be Put to Better Use Appendix 2

Section 5(a)(10) Summary of Unresolved Audit Reports Issued Prior to the Beginning of the

Reporting Period None

Section 5(a)(11) Significant Revised Management Decisions None

Section 5(a)(12) Significant Management Decisions With Which the Inspector General Disagreed None
HIGHLIGHTS

TVA / OFFICE OF THE INSPECTOR GENERAL 31

MAR 31, SEPT 30, MAR 31, SEPT 30, MAR 31,

2002 2001 2001 2000 2000

ANNUAL BUDGET (In Millions of Dollars) 8.0* 8.6 8.6 7.2 7.2

CURRENT STAFFING 90 86 74 77 79

AUDITS IN PROGRESS

Carried Forward 38 45 43 48 36

Started 43 44 52 38 59

Canceled (8) (4) (7) (8) (2)

Completed (40) (47) (43) (35) (45)

In Progress at End of Reporting Period 33 38 45 43 48

AUDIT RESULTS (Thousands)

Questioned Costs $1,780 $3,519 $2,613 $1,800 $952

Disallowed by TVA 267 1,236 3,010 379 820

Recovered by TVA 225 1,634 821 390 1,333

Funds to Be Put to Better Use $31,874 $10,401 $70,422 $12,862 $5,296

Agreed to by TVA 6,069 10,155 37,450 12,499 5,509

Realized by TVA 6,090 8,277 30,918 17,340 5,775

NONAUDIT SERVICES (Thousands)

Completed 12 0 13 8 12

Cost Savings Identified/Realized 0 0 0 $233 $345

INVESTIGATION CASELOAD

Opened 93 94 86 132 107

Closed 114 120 83 99 111

In Progress at End of Reporting Period 126 147 173 170 137**

INVESTIGATIVE RESULTS (Thousands)

Recoveries $233 $6,527 $214 $179 $3,758

Savings 1,175 542 532 521 988

Fines/Penalties 0.1 105 250 11 25

ADMINISTRATIVE AND

DISCIPLINARY ACTIONS

Recommended (# of Cases) 22 13 14 13 21

Actions Taken (# of Subjects) 6 8 30 11 13

Counseling/Management

Techniques Employed (# of Cases) 15 3965

PROSECUTIVE ACTIVITIES (# of Subjects)

Referred 5 13 7 32 7

Indicted 5 5 19 5 6

Convicted 3 7 14 5 9

* An additional $1.6 million in benefits is being covered in FY 2002 as a corporate rather than an organizational expense 

as was done in the past.

** Adjusted from previous semiannual reports.

AUDITS & SPECIAL PROJECTS

INVESTIGATIONS
The OIG Vision:

. . . illuminating today’s challenges 

and tomorrow’s solutions . . .

OFFICE OF THE INSPECTOR GENERAL OF THE TENNESSEE VALLEY AUTHORITY

400 WEST SUMMIT HILL DRIVE

KNOXVILLE, TENNESSEE 37902-1401