Why not privatize it? Also, does it make a profit? If not, maybe privatization should be looked at. As far as I can tell it's always been a government-funded jobs program operating at a loss.
I don't know what the business decision was to hire outside contractors, however it resulted in the layoff of 62 workers. TVA hasn't hired an H1B employee since 2008. But if they needed to hire for a role where H1Bs were required they could afford to pay a competitive salary.