The Tennessee Valley Authority circumvented the law by hiring a manager for its beleaguered nuclear plants at a salary of more than $355,000 a year, nearly five times the legal ceiling for TVA employes, the General Accounting Office said yesterday.
The manager, retired admiral Steven A. White, was hired in January through a contract with Stone and Webster Engineering Corp. of Boston. TVA, a wholly owned government corporation, is exempt from civil service rules but cannot legally pay its employes more than $72,300 a year, the top salary for a TVA board director.
In an opinion prepared at the request of Rep. Patricia Schroeder (D-Colo.), GAO investigators said that White's contract was designed to skirt that statutory limit and constitutes an "improper use of a personal services contract."
TVA officials defended White's salary as the minimum necessary to attract a top-flight manager for the agency's crippled nuclear program. TVA, which once planned to build 17 reactors, has completed only five. All have been shut down since last August because of safety concerns and repeated violations of Nuclear Regulatory Commission rules.
"We found it was necessary to go outside and find somebody with a great deal of expertise," said TVA spokesman Craven Crowell. "The problem we've had is the inability to compete with private companies. We've had to resort to contract arrangements, and that's what we had to pay."
White, a retired four-star admiral, has no experience in the commercial nuclear industry but was commander of the Navy's Atlantic nuclear submarine fleet.
Crowell said he had no figures to illustrate what private companies might pay for an executive with comparable responsibilities "but it is substantially more than our government limit."
According to Business Week magazine's annual scoreboard on executive compensation, $355,000 a year would put White in a league with the presidents of Commonwealth Edison and American Electric Power. The presidents of Pacific Gas & Electric and Southern California Edison make a bit more, at $440,000 and $408,000 respectively.
At TVA, White is subordinate to general manager William F. Willis and the agency's board of directors, who oversee not only the five completed nuclear plants and four more under construction, but also 29 hydroelectric dams and 12 coal-fired plants.
Board chairman Charles H. Dean Jr. earns the statutory limit of $72,300 and Willis' salary is "in that vicinity," according to TVA spokesman Mike Harris.
The GAO also cited what appears to be a violation of federal laws against "double-dipping," or receiving compensation from two federal entities at once. In addition to his contract salary from TVA, White receives $53,700 a year in military retirement pay.
In a statement, Willis said that the agency and its lawyers believe the contract with White is "proper" under the 1933 law that established the TVA as a quasi-private corporation.
"The TVA Act explicitly authorized TVA to enter into such contracts," he said. "That explicit authority is not limited by the salary limitations of regular employes."
GAO opinions are not binding on the TVA, but Schroeder said she would "work to ensure that taxpayers and ratepayers do not have to pick up Steven White's excessive bill."
"TVA has violated the law to try to rescue its failed nuclear power program," she said.
A spokesman for TVA inspector general Norman A. Zigrossi said the matter is also under internal scrutiny. Spokesman Bruce Cadotte said Zigrossi is investigating the legality of White's contract as well as contracts for consultants brought in to help White get TVA's nuclear program back on its feet. TVA officials said most of those contracts also call for salaries substantially above the limit for regular employes.
The inquiry will include several "potential violations of federal conflict-of-interest laws," Cadotte said. He would not elaborate on any specific allegations.
The GAO, meanwhile, also questioned payments that TVA made to Zigrossi to lure him away from his job as head of the FBI's Washington field office earlier this year. According to the GAO, Zigrossi was granted $22,000 in "incentive payments" to offset relocation expenses and $33,500 in advance contributions to a TVA retirement account.
Cadotte and Crowell said such "inducements" have been common practice since at least 1980.
"If there's a problem with his inducements, it's generic to TVA," Crowell said. "We've not treated him any differently than other TVA employes."