Y R A L Office Of The Inspector General TENNESSEE VALLEY .

35 YEARS OF MAKING TVA BETTERCreation and Evolution of the OIGOctober 18, 2020, marks 35 years since the creation ofThe TVA OIG was created by the TVA Board onthe TVA OIG. Our core mission as set forth in theOctober 18, 1985, because of problems associatedIG Act of 1978, as amended, has remained largelywith its then-encumbered nuclear program. Two of theunchanged. The OIG conducts independent and objectivethree Board members believed there was a need toaudits, evaluations, and investigations to promotehave an independent organization within TVA to receiveeconomy, effectiveness, and efficiency and to prevent andcomplaints and report directly to the Board and todetect waste, fraud, and abuse. Simply put, we are here toCongress. In 1988, the TVA OIG became a statutoryhelp make TVA better for the people of the Tennessee Valley.OIG under amendments to the IG Act of 1978.In looking back 35 years, we reflect on the accomplishmentsIn 1999, a major event occurred that called into questionof the OIG that would not have been possible withoutwhether the then-TVA Board Chairman was trying to(1) our dedicated professional team members andimpede the independence of the IG, which was a(2) cooperation of and collaboration with TVA BoardTVA Board-appointed position. An investigation by themembers, management, and employees who provideGovernment Accountability Office into allegations againstinformation, cooperate with, and make decisions tothe then-TVA Board Chairman, as well as an allegationact upon our information and recommendations for thethe Chairman made against the IG related to misuse ofbetterment of the people of the Tennessee Valley.a TVA credit card,¹ found (1) the Chairman’s actions“. . . could be viewed as an attempt to undermine theTVA’s business environment has shifted dramaticallyindependence of the IG” and (2) “. . . no evidence ofover these years driven by changes in the governanceTVA credit card misuse by the IG.” As a result of thisstructure, environmental regulations, technology, demandevent, the late Senator Fred Thompson sponsored a billfor electricity, workforce composition, debt burden, andto make the TVA IG a presidentially appointed position.financial health. These shifts have also changed the risksThe bill passed and President William (Bill) Clintonto the agency. As TVA has adapted to the changes andsigned it into law in November 2000.challenges presented, it has been imperative that theOIG adapt to the changing risk environment. AccomplishingFrom the inception of the OIG, there have been five IGs andour mission and helping make TVA better requires us totwo Acting IGs to lead the organization. These IGs have ledstay abreast of the changes and challenge ourselves tothe office through countless changes at TVA and in themake sure we focus our finite resources in the right areas.IG community. They all recognized the need to stay flexible,be timely, be innovative in our approaches to doing our job,In this feature, we look back at the evolution of the OIG andand the need to build relationships with TVA to be successful.how we have focused on making TVA better by identifyingOIG audits, evaluations, and investigations have continuallyways to save or recover money, reduce risks, eliminatefocused on helping TVA save or recover money, improve thefraud and waste, and improve operations.efficiency and effectiveness of TVA operations, and serve asa deterrent to misconduct and fraud.1Government Accountability Office, Tennessee Valley Authority: Facts Surrounding Allegations Raised Against the Chairman and the IG,September 15, 1999, http://www.gao.gov/products/OSI-99-20.7

Saving or Recovering Moneythat include contractor billings, product substitution,As TVA works to keep rates as low as feasible, theclaims, government credit card misuse, and time andOIG invests significant resources to find ways to helpTVA save and recover money. Over 35 years, our reviewsand investigations have resulted in more than 2.6 billionin questioned costs, funds put to better use, recoveries,savings, fines and penalties, averaging more than 50 million annually over the last five years.To support its operations, TVA spends about 3.5 billionannually on labor and services, as well as materialsand equipment contracts and purchase orders, and 2.8 billion a year for coal, gas, coal transportation, andpurchased power contracts. We provide oversight ofTVA’s contracting activities through the conduct of preawardexaminations, compliance reviews, contracting processreviews, and investigations. Preaward Examinations – TVA management oftenrequests assistance from the OIG in determining ifcontractor cost proposals are fairly stated prior to theaward of a large contract or extensions on currentcontracts. These reviews allow TVA management tounderstand where further negotiation could reducecosts. Contract Compliance Audits – The OIG routinelyreviews contracts in place to ensure contractors arebilling in accordance with contract terms. We userisk-based analysis to determine which contracts toreview. In these reviews, we identify overbillings orimproper payments so that TVA can recover the funds. Contracting Process Audits – While performingcontract compliance reviews, we also identifyimprovement areas in contract administration to helpTVA become more efficient and effective. Additionally,based on trends and risks we identify, we sometimesperform detailed examinations of certain processessuch as the invoice approval process to identify wherecontrols and processes can be further improved. Investigations – We also help TVA recover funds andreduce future costs through our investigative work.OIG investigations have uncovered fraud in areas8medical provider billing, temporary living expenseleave abuse. In addition, the OIG has conducted orassisted with investigations for local power distributorswho were financially impacted by employeeembezzlement, resulting in recoveries or judgmentsfor the distributors.In this area, our focus on building and maintaininghealthy working relationships with TVA’s contractingorganizations has been an important component in ourability to help TVA. We also, at TVA’s request, haveprovided training to TVA procurement officials on thetrends we see in our contract-related work to help thembetter manage their contracts.Increase Operational Efficiency andEffectivenessAs a part of our mission to promote economy, effectiveness,and efficiency in TVA programs, we perform risk-basedreviews and investigations into specific program areas.TVA’s mission is broad―Energy, Economic Development,and Environment. Not surprisingly, TVA has faced manychallenges and continues to evolve both organizationallyand culturally. Our operational reviews mirror the breadthof TVA’s mission and closely align with its evolution.Over the last 35 years, our audits, evaluations, andinvestigations have focused on improving operations,improving the workplace (culture and safety), protectingboth the public and the environment, and providing anindependent look at major events in TVA history. Webelieve our unique perspective, including occasionalcounterbalancing views, has been valuable to TVA andits stakeholders. Below are some of the highlights fromour work. Organizational Effectiveness – Typically, the focusof an audit or evaluation is on the structuraland/or operational aspects of a program or process.The behaviors and actions of the workforce, whichcomprise the organizational culture, are just asnecessary as the structural and operational elements

for achievement of an organization’s mission. In theThese reviews provide TVA with specific information onOIG’s history, we provided “snapshots” ofwhere controls need to be strengthened to lessenTVA’s organizational health, sometimes directlyTVA’s risks and provide recommendations to improvereferred to as “culture” but, more often than not,controls or increase the effectiveness of a group orlabeled as “leadership” or “process control” issues.program. An investigation involving cyber securityThese “snapshots” revealed patterns of behavior thatresulted in successful prosecution of an individual whonegatively impacted operational performance therebyshared prohibited nuclear information outside of the U.S.heightening risks related to effectiveness and efficiency.In 2015, the TVA OIG developed a new type ofevaluation that focuses on the organizationaleffectiveness or the ability of an organization toachieve its mission and goals. In this type ofevaluation, we look at a business unit from both anoperational and a cultural perspective to identifystrengths and risks to the individual business unit’sability to achieve its mission. Since 2015, we haveperformed more than 40 organizational effectivenessreviews and 15 follow-up reviews. The results ofthese reviews varied widely between business units―some with serious issues and some that exemplifyorganizational effectiveness. Through these reviews,we have provided an independent perspective to theTVA Board and management and promoted effortsto ensure a sustained focus on TVA organizationaleffectiveness strategies. We have also served as aresource to other federal OIGs interested in adopting Environmental – A core mission at TVA is protectingthe air quality, water quality, and more broadly,the Valley’s historical, cultural, and environmentalresources. The vast area TVA covers and itsdiverse generation provide TVA unique challengesin managing its environmental responsibilities. Overour history, the OIG has investigated many casesinvolving dumping of chemicals and waste into theTennessee River watershed, leading to successfulprosecutions that stopped companies and individualsfrom further damaging the environment. To stayon top of schemes that could impact TVA, we alsomaintain a presence on regional environmental taskforces, informal work groups, and other collaborativeenforcement efforts. The OIG has recently performedevaluations looking at environmental reporting events,groundwater monitoring, and historic preservation tohelp identify ways TVA can strengthen its environmentalprograms and reporting.elements of our innovative approach to this issue. IT and Cyber Security – As the largest public powerproducer in the country and a government corporation,TVA is a part of the nation’s critical infrastructure.As such, cyber security is considered a major riskarea for TVA, as evidenced by the nearly continuousefforts to probe its defenses by outside forces rangingfrom lone hackers to nation-states. Ever-changingtechnology and a complex regulatory environmentfurther exacerbate the risk, and TVA devotes constantattention to this area. The OIG bolsters these effortsby devoting substantial resources to this area. OurIT Audits team performs security testing of criticalTVA assets, reviews the effectiveness of IT programs,assesses the protection of personal data of employeesand contractors, and performs the annual FederalInformation Security Modernization Act assessment.TVA Postage Stamp, CIRCA 19839

Safety – The safety of TVA employees, contractors, Major Projects or Events – At points during theand the public is a top TVA priority. As an electricOIG’s existence, major projects such as constructionutility, TVA employees face hazards related to highof Watts Bar Nuclear Plant (WBN) Unit 2 ortemperatures and pressure, electric shock, confinedcatastrophic events such as the Kingston Ash Spillspaces, hazardous materials, moving components,warranted multiple evaluations and/or investigations oftrip hazards, and radioactive materials, to name justactions by TVA. Our reviews brought forward issuesa few. These hazards can result in significant injurythat demonstrated information was not communicatedor death to TVA employees and contractors. As theto TVA executives regarding the true status of themanager of the Tennessee River system, TVA mustschedule and cost to build WBN Unit 2 and revealedalso take reasonable steps to protect recreationalfactors other than a faulty “slimes” layer identified byusers in the vicinity of TVA facilities and communitiesTVA’s expert as the trigger for the spill may have beenthat could be impacted by flooding or TVA activities.of equal or greater significance, as well as transparencyFrom an investigative perspective, the OIG hasissues that cause reputational harm. There are manyconducted investigations related to falsification oflessons learned in these types of reviews that can beinjury classifications, quality control information, andused to prevent similar events in the future.unsafe operation of vehicles that were successfullyprosecuted or received administrative action. Our auditsAgain, building and maintaining healthy workingand evaluations groups have performed wide-rangingrelationships with TVA’s management team is an effectivereviews that cover hearing loss claims, safety proceduresway to encourage needed change. To that end, we pursueto clear equipment before work is done, demolition safetyopportunities to meet with new officers, particularly thoseprocedures, fatigue rules, arc flash risks, and fire risks,entering TVA from the private sector, to make them awareamong others. Safety-related reviews identify ways toof our unique federal role and how we can help them makestrengthen safety-related processes and programs thatTVA better in their particular programmatic roles.help prevent loss of life or injury.Similarly, we have placed greater emphasis on identifying Financial Oversight and Corporate Governance –Financial oversight broadly underlies many ofthe reviews performed by the OIG. Reviewsperformed focus on TVA‘s financial reporting, otherfinancial-related programs, regulatory, and governanceprograms and processes. Most recently, we havereviewed controls around programs such as purchasingcards, travel reimbursements, business and hospitalityso that TVA employees understand the resources we haveto offer and can make personal connections with theAudits, Evaluations, and Investigations staffs. Finally,we have regular meetings with senior officials to answerquestions, identify emerging concerns, and generallymaintain healthy dialogue.expenses, economic development loans, executiveDeterrent to Misconduct and Fraudtravel, and use of airplanes. Findings of misuse inAnother important way our office helps TVA is to providethese programs increases the reputational risk for TVA.deterrence to employee misconduct and potential fraud,Many years ago, an OIG review identified the need forincluding third-party fraud by contractors. Criminaladditional oversight of TVA power distributors to ensureinvestigations can and do result in indictments,contract compliance, and for a period of time, theconvictions, and pretrial diversions, all of which canOIG conducted these reviews until TVA managementhave a real deterrent effect on those who would attemptdeveloped and implemented the needed procedures.to defraud TVA. Likewise, administrative investigationsAdditionally, we actively engage in statutorily mandatedhave resulted in definable process changes orduties such as the oversight of TVA’s external auditordisciplinary actions. Other activities that also help deterto ensure the external audit is performed in accordanceor identify misconduct or fraud include:with Government Auditing Standards.10opportunities to speak at employee meetings of all types

Debarments – In 2010, TVA and the OIG workedCongress has, however, occasionally made slight changescollaboratively to develop a suspension and debarmentto our duties. For example, in 2012, Congress passedprocess for contractors that defraud TVA. Since that time,the Whistleblower Protection Enhancement Act, whichsix debarments have occurred.has evolved over time to assign new duties to federalOIGs. We now serve as an information clearinghouse forFraud Risk Assessments – In 2004, the OIG kicked offTVA employees who feel they may be suffering reprisala TVA-wide initiative to help groups identify fraud risksfor protected whistleblower activities. We embrace thisfor their area. The assessments that are performed inobligation, which is ultimately consistent with our originalconjunction with TVA business organizations identifyduty to deter misconduct.(1) types of fraud that can occur, (2) the likelihood andsignificance of fraud occurring, (3) controls in place toThe strong performance of federal OIGs has made ourprevent fraud, and (4) remediation needed to improveoffices an obvious place to look when Congress or afraud prevention controls. While the primary purpose ofPresidential administration considers certain new oversightthe assessments is to reduce risks for TVA, the collateralroles. We will, of course, endeavor to pursue any newbenefit is the trust that is built between the OIG staff andduty diligently as we move into the future, but we will neverTVA employees. Since program inception, our office haslose focus on our original mission.performed 63 assessments.Fraud Awareness Briefings – Our agents conduct briefingsConclusionfor individuals and groups to educate them on what typeThe TVA Board, management, and OIG personnelof fraud schemes they may encounter, what to look for,have a mutual purpose—making TVA better. Theand how to report it. An increased awareness can lead toOIG is committed to providing TVA with informationearlier reporting of potential fraud.regarding ways it can save or recover money as well asconstructive feedback on the efficiency and effectivenessEmPowerline – Our hotline mechanism, EmPowerline,of its programs. This dynamic can be tricky when theallows for people to anonymously report misconduct“watchdog” and the agency have differing opinions onand fraud to the OIG. Over the past five years, we havea topic, but we have learned that a healthy workingreceived 882 reports. Addressing the information receivedrelationship is important to the ultimate goal of makingin an appropriate manner can lead to an investigation, audit,TVA better. Our 35-year history and the many examplesevaluation, or management action, all of which can result inabove prove that the fundamental concepts work.saving TVA money or identifying misconduct or fraud.We will continue to build and maintain strong workingEvolving Rolerelationships where people feel comfortable askingus to review an area or provide training on trends weAt the outset, we noted that our core mission as set forthsee in a program, and where TVA and OIG personnelin the IG Act of 1978, as amended, has remained largelyrespectfully discuss differing opinions on findings andunchanged. While we have identified new practices andrecommendations. In that way, the OIG will remainmore efficient ways to pursue our own internal work, weintegral to solving the challenges of today and tomorrowhave remained true to the statutory mission.and, ultimately, in making TVA better for the people ofthe Tennessee Valley.11

35 YEARSMaking TVA Better .12IDENTIFIED COSTS 2.6B13,200 CASES & REVIEWSRECOVERED 1.16B

Audits & nts256Pre-TrialDiversionsDebarments 1.87BFindings 512MWaste Identified 237MRecoveries /Projected Savings2,300 Reports issued926MRecoveries /Savings13

NOTEWORTHY EVENTS14

TVA OIG TEAM WINS CIGIE AWARDin the country. TPS&S plans, designs, builds, operates,The Council of the Inspectors General on Integrity andgeneration partners to keep the grid balanced and reliable.Efficiency (CIGIE) was established to address integri

Blue Ridge Dam Hiwassee Dam Apalachia Dam Fontana Dam Tellico Dam Ft. Loudoun Dam & Lock Melton Hill Dam . American Museum of Science and Energy Buffalo Mountain Ijams Nature Center Morgan County Vocational Technical School Adventure . Tennessee Valley. Jill M. Matthews Deputy Inspector G