ML19353B081

Semiannual Rept,Apr-Sept 1989

ML19353B081
Person / Time
Issue date:	09/30/1989
From:	Malsch M NRC OFFICE OF THE INSPECTOR GENERAL (OIG)
To:
References
NUDOCS 8912110157
Download: ML19353B081 (15)

Text

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I clear Regulatory Commission OMee of TheInspector General

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April 1,1989 September 30, 1989 i

Semi-Annual Report 8912110157 890930 PDR ORG NRCI oLi

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l This is the first semi annual re;x>rt for the U.S. Nuclear Regulatory Commission's (NRC) Office of the laspector General (OlG), Semi annual reports from the OlG are now required by the inspector General Act of 1978, as amendal by the Inspector General Act Amendments of 1988.

This report is for the period from the OlG's inception, April 15,1989, i

eTHOTGdM through September 30,1989. It summarizes the OlG's activities and accomplishments during this period.

A Since April 15,1989, the OlG has directal substantial effort toward fOf. li 6 full implementation of the inspector General Act, hiemoranda of Understanding were executed with the Office of the General Counsel ChOff[HQ[]

and the Office of Administration to assure the availability of legal adsice and neakd administrative senices and preserve the OlG's independent authority to do audits and investigations. A hiemorandum of Understanding with the Office of the Controller is schedukxl for execution October 2,1989. A hiemorandum of Understanding with the Defense Contract Audit Agency is also being processed for signatures and an agreement with the Office of Personnel is being negotiated.

Other actions taken or in progress to implement our kgislative requirements include the establishment of a program to resiew legislative and regulatory proposals affecting agency operations, key personnel actions, establishment of a HO'lLINE program and improvements in the investigative program.

During the reporting period, we issued five audit reports containing 35 recommendations for programmatic or operational improvements. I am pleased to report that in almost all cases, agency management has agreed to implement our recommendations. Currently, we have 14 audits of agency programs in progress. The OlG also issual 24 formal investigation reports to management and referred five matters to the Department of Justice. At the close of the reix>rting period, the OlG had 41 active investigations. During the short reporting period, we closed 35 investigations-only 21 less than had been closal by our predecessor office in the preceding one and one half years.

As you know, hir, Dasid C. Williams has been nominated by the Contents President for the NRC Inspector General. Accordingly, this will likely be both my first and last semi annual report as Acting inspector General.

Intinduction ;

'Iherefore, I would like to take this opportunity to express formally my appreciation for the cooperation afforded me and the other members of I,#$"(f,'f,,'j,y this Office by you, other members of the Commission, and other top agency management. Tlus cooperation was evident in the logistical and Audits 4 other support prosided to establish the OlG, as well as, in the conduct of

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our audit and investigative missions. We will continue to work to maintain Audits Completed 5 and foster an effective and productive relationship with agency managers.

Sincerely, Audits in Prvgirss i Inststigations 9 Suminary of Significant Imtstigations 11 hiartin G. hialsch Appendir 12 inspector General (Acting)

Office of the Inspector General

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I The U.S. Nuclear Regulatory Commission (NRC) was established by the Encrgy Reorganization Act of 1974 as an independent agency of the l

Federal government. lhe five NRC Commissioners are nominated by the j

President and confirmed by the Senate. The Chairman of the Commis-3 sion is appointed by the President from among the Commissioners confirnwd.

i The principal mission of the NRC is to assure that civilian uses of i

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nuclear facilities and materials in the United States-as in the operation l

uClear of nuclear gxmvr plants, in nwdical, industrial or research applications, i

and in trans;x>rtation and waste disposal operations-are carried out l Regulatory with proper regard and provision for the protection of public health and safety, of the emironment, and of the national security. The NRC COmHHSSIOD l

accomplish < s its purposes through a regulatory program which includes l

licensing of facilities and materials; issuance of safety and security i

standards; inspection of facilities; and enforcement by orders, civil O((lCe O[

e penalties, license modifications, revocations, and suslwnsions. NRC's

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regulatory oversight extends to over one-hundred nuclear power plants 7he ID8ROCfor I

l licensed for operation and thousands of licenses for industrial, research, General t

and medical uses of nuclear materials. NRC currently has about 3.200 employees located in the Washington, DC, area and five regional offices and a budget of alxiut M20 million.

ggggggggy Tlus report covers the period from the Office of the inspector Report General's(OlG) inception, April 15,1989, through September 30,1989.

t As mandated by the Inspector Geaeral Act Amendments of 1988 (P.L 100 5N), a statutory Inspector General was established at the NRC, effective April 15,1989. The new OlG supplanted the fonner Office I

of Inspector and Auditor (OIA) which had tren rerponsible for conducting the agency's internal audit and investigative programs.1he NRC OlG is a small oflice. The current staffing level for the OlG is 26 positions, including 13 auditors and seven investigators.

!! is important to note that the principal mission of the NRC is f

regulation. The NRC does not administer large grants and enticement programs like many of the existing agencies with statutory inspectors General. Accordingly, the investigations and audits conducted by the NRC's inspector General are directed principally toward improving program management, assuring the integrity of NRC's regulatory program, and ireventing and identifying fraud or misuse of agency April 1,1989 l

funds by agency employees. All of the OlG audit recommendations this reporting period have addressed program,mprovements which do not SeI>tember 30 1989 i

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have directly quantifiable monetary sasings, but which do contribute to regulatory program effectiveness and integrity.

NRC spends about $150 million per year for contracts for j

technical assistance and nuclear safety research. Much of this has been carried out at the Department of Energy's national laboratories.

i llowever, in recent years, NRC has koked increasingly to private l

organizations for research and technical assistance. 'lherefore, the OlG i

plans to devote more resources toward financial audits. Specifically, l

more staff resources are planned to be used to (1) deve!op a contract j

i audit program, and (2) administer audits performed by the Defence t

Contract Audit Agency, The latter was previously managed by NRC's l

l Office of Administration. 'Ihus, in future reports, it should be possible to t

report on monetary savings.

I mplementation of the IGLegislation

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The OlG has devoted substantial effort in the reporting period toward implementing the requirements of the insiwetor General Act of 1978 and i

the Inspector General Act Amendments of 1988. Following are some of j

the more significant actions completed or in progress:

I Legislation and The 1978 Inspector General Act requires each OlG to establish a i

Regulation Review program to review existing and proposed legislation and regulations and l

make recommendations concernu,g their impact on the effectiveness of Program

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agency programs and operations. The OlG implemented this program i

shortly after inception of the office by requesting that significant matters l

pending before the agency be referred to the OlG for comment prior to final agency decision. Our comments to the President's Council on Integrity and Efficiency pertaining to legislation vesting Inspectors General with testimonial subpoena pwer are also noteworthy. ~lhe NRC j

itself has the authority to compel testimony by subpoena. It was the 1

OlG's strong opinion that it should have testimonial subpoena power in order that the OlG would clearly have the same investigative powers as the NRC itself, Otherwise an anomalous and potentially confusing l

situation results whereby NRC investigative authority will vary j

depending on whether the investigation is focused on wrongdoing by NRC licensees or waste, fraud, or abuse by NRC employees and j

contractors.

I Memoranda of

'Ihe OlG has executed or is in the process of executing Memoranda of j

Understanding Understanding with the following offices and agencies:

l 5 Office of Personnel-Provide guidelines on the working i

relationship needed to execute the OlG's independent personnel l

authority while utilizing the expertise of the Office of Personnel staff.

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5 Office of the General Counsel-Prosides ground rules for

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i prosiding independent kgal counsel to the OlG. This Memorandum of l Understanding was executed September 6.1989.

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l 5 Office of the Controller-Establishes the necessary budget and accounting procedures and controls necessary to execute the OlG's independent budget authority.This Memorandum of Understanding will L j - be effective October 2,1989, i

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t Defense Contract Audit Agency (DCAAJ-interagency t

agreement on the procurement of sersices for the audit of NRC l

contracts. The Memorandum of Understanding has been approved by all parties and is being processed for signatures.

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-l 5 Office of Administration-Internal procedures to implement j the DCM agreement and prmide for the OlG oversight of the program.

l i, 'Ihis Memorandum of Understanding was executed September 28,1989.

Other Initiatives i

E Commission support was sought and obtained for a 15"o l increase in the OlG staffing level (from 26 to 30 FTEs) and a budget of

[ $2.9 million for FY 1990.

i E An organizational strwture was established and a number of l

key positions have been filkxl or are pending selection, including the Assistant inspectors General for Audits and imestigations and the Planning and Resource Officer.

l 5 Space modifications and other logistical needs for the OlG to l {

accomplish its mission and accommodate its new organization structure i

j ' have been completed.

j B Tracking systems to proside the infonnation necessary to

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meet the OlG's kgislated reporting requirements are in place.

t 5 New criteria were developed to prioritize im'estigations, and all l pending investigations were resiewed against the new criteria and j

assigned a new priority where necessary, E A strong and successful effort was made to reduce the backlog of pending investigations, especially those several years old. In 1

the approximate five month reporting period beginning April 15,1989,35 imestigations were closed, compared to only 56 investigations closed J

during the entire preceding one and one-half years.

L E An OlG l-lUILINE program is being established, and should be in effect early in fiscal year 1990.

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udits i

During the reporting period, the OlG completed five audits of l

NRC programs. A'mther N were in progress at the end of the reporting period. ibliowing is a summary of resuits:

Inspector wmu.7 onu.wmmasasa.

General Audit i

Reconnnendations

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For which no ntutagement decisiott was nuide 1

by the commencement of the reporting period i

For which a management decision has teen 34 made during the period l

For which no management decision has twen 2

made by the end of the reporting period 1

Prior to the commencement of the reporting period the former Office of Inspector and Auditor (OlA~)isstmd an audit report entitled "Use of Consultants at Waterford," dated March 12,19S5. The report examined NRC's contracting for consultants to assist the investigative l

team at the Waterford Nuclear ibwer Plant. OlAs audit found that contracting with "allegers" as consultants to provide the agency with information on a confidential basis created special problems in process-l ing the contracts due to the need to maintain their confidentiality. OlA l

recommended agency management prepare a paper asking the Commis-sion's opinion on whether to pursue a policy of paying indniduals for infomiation as part of an investigation.

No management decision was made regarding the repon's recom-l mendation by the close of the reponing perioct ik cause the issue involved is important to the OlG as well as NRC's Office of investiga-tions, NRC is delaying resolution of this issue until a permanent inspec-tor General is confirmed. Fo!!owing the inspector General's confirmation, i

the OlG, the Executive Director for Operations and the Office of the General Counsel will develop a plan and timetable for resching this recommendation.

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imptmements Our audit of NRC's enforcement pmgram for nuclear power plants Needed IU revealed certain weaknesses in existing NRC administrative procedures Procedures i

and a need for improved NRC Headquarter's oversight. The enforcement Goreming ARC's program is designed to ensure nuclear power plant licensees comply Enfon'ement i

I with NRC requirements and maintain adequate protection of the public i

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l health and safety.1he Commission has the authority to issue significantcivil penahies a l we fotmd that NRC's Office of Enforcement (DE) was doing a cmiitable I job in managing the program, OE needed to improve monitoring of

! Rgional office compliance with Headquarter's procedures. Also, we

! found that OE needed to update and consolidate certain enforcement

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We made six recommendations to agency management including

! having the Director, OE, institute sampling pnredures to determine if I regional offices were consistently following agency enforcement policy.

l The Executive Director for Operations (ElX)) agreed with our recom-l mendations and indicated actions would be or had been taken to imple-ment them.

hRC Takes Steps Our resiew found a lack of consistency among NRC regional offices in to Standanfize reporting findings from NRC's Systematic Assessment of Licensees Plant Perfonnance ltrformance (SAlf) program. The SAlf program prosides a compre.

hensive evaluation and rating of licensee perfonnance for each nuclear Infonnation power plant under construction or operation in the United States. 'lhis l

procesr. results in the only document NRC makes public which compre-

' hensively rates each nuclear plant's performaace. We found, however, that because NRC's five regional offices published SAlf findings in

different formats, the resulting reports made it difficult to compare plant i

performance around the country. We also found that (1) although Mlf ratings are supposed to be used to allocate NRC's inspection resources, a system was needed to ensure this process was taking place, and (2) the time frame to complete the SAlf process varied widely among the i

regional offices with some regions meeting required deadlines and l

! others not.

l We made seven recommendations to agency management.

t Smral were directeci at achieving a greater degree of standardized l

j reporting and providing more comparable information to the public on nuclear power plant performance.The EDO agreed with four of the l

seven recommendations. An alternative course of action was agreed to l

for two of the recommendations.

l' The EDO disagreed with one recommendation. This recommendation related to the need for a consistent gx>licy regarding SAlf reviews for nuclear power plants that are shut down because of safety problems and C__

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the neal for an unacceptable SALP rating for these plants. This recom-j l

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j mendation was refemtl to the Commission for resolution on August 25, l

l 1989, and was pending a Commission decision on September 30,1989.

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ARCNeeds Better Our audit of NRC's incident investigation Program (IIP) determined that I

Assurance that procedures were not in place to ensure corrective actions had been

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taken by either NRC or power plant licensees to resolve inspection

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L findings. Under the llP, a team of NRC inspectors investigates significant l

l FindingsAre operational events at operat',ng nuclear power plants. While taking no Resolved at Plants exception uth IIP resuhs, we determined that pma< lures were not in i

Experiencing place to follow.up on team inspection findings. Consequently, NRC could

[ Sedous Operating n t ensure carrective actions had been impkmented by the licensee.

We also found chang'of NRC staff actions taken in res es were needed in the program to assure l

Mlents independent review j

team findings, especially those findings that were critical of prior staif l

performance.

l We made four recommendatior.s (o !!w llX) to, among other things, develop more specific guidance to the staff regarding folk >w up action and close-out proculures for llP findings. We also recommendal l

j steps to ensure more independent follow up on llp findings that were i

critical of prior staff performance. The EDO agreed to implement all four t

l recommendations.

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t ARC Controls for We initiated an audit of NRC's handling of cash receipts as a result of a l

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Cash Rece/ pts referral from NRC's Division of Accounting and Finance. Agency officials i

Need had found that cash received by an imprest fund cashier could not be accountal for. Our review identified additional funds unaccounted for, I

Strengthening as well as numerous intemal control weaknesses in the manner the imprest fund cashier handlai cash receipts. We also found that certain existing procedures were not being followed.

Our report contained 13 recommendations to agency management to strengthen the internal controls governing the handling l

of cash receipts. Management agreal with 12 of our recommendations l

and has or is planning to take appropriate action. We agreed with an alternative course of action proposed for one recommendation. In addition, based on the audit findings, an investigation of the missing cash receipts was initiated (see Chapter on investigations),

i ARC Needs to Our review of NRC's control and management of personal computers Take Steps to identified a number of weaknesses including (1) personal computers Tighten Controls wm not being fuuy utilintl; (2) the NRC staff lacked awareness l

on the Use o/

mgar ing agency pasonal aimpute and schwam pokM3) mies for ADP coordinators were undefined; and (4) the existing accounting Personal system for software needed improvement. We made five Cornputers and recommendations to agency management addressing these and other Software problems found in our review. The EDO agreed with our recommendations and indicated steps had been or would be taken to implement them.

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I udits in Progress l l

The following audits were in progress at the end of the reporting period:

E Review of NRC Actisities Relating to low Level hte Disgisal 'lhis audit is assessing NRC's efforts to ensure sufficient and safe low level radioactive waste storage capacity exists in the United States.

i 5 Review of NRC's Nuclear Documents System-lhe Nuclear Documents System (NUDOCS) is an agency centered, computer assisted i

system for collecting, indexing and retrieving agency documents related to NRC activities.1his audit is resiewing the development and implementation of NUDOCS.

A Resiew of Potential Conflicts of Interest of Contractor's

- Ibriorming Work for NRC-lhis review is examining potential conflicts of interest on the part of research and technical assistance contractors l

1 wrking for both the NRC and the Department of Energy or regulated I

utilities.

5 Review of the Regional Counsel Function-1his audit is focusing on the ellectiveness of work performance by attorneys assigned to NRC's five regional offices.

E Survey of Operator Licensing-Our survey is evaluating the effectiveness of NRC's program for licensing operators of nuclear power plants.

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j B Retiew of Non SES Performance Appraisals-This audit will i

determine whether the program is being carried out as required.

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5 Resiew of NRC's Management of Licensee s Reporting of Defects and Noncompliance-Part 21 Reports-Part 21 of litle 10, Code l

of Federal Regulations requires NRC licensen and others to report I

defects and noncomphances associatal with component parts used in l

nnelear facilitiu. This audit is reviewing NRCs a';tions taken in response

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to Part 21 reports received.

l E Resiew af NRC's imprest Funds-This audit is part cf the j

i 01G's ongoing program to assess the adequacy of ARC's imprest fund op rations.

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I B Review of E!eetronic Publishing and Craphic Senices l

l Performed in NRC-This resiew is looking at the cost eHectiveness of i

i contracted services to perform graphics work as well as the planned l

l acquisition of a microcomputer-based graphics system.

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l E Resiew of the Ellectiveness of Par uneter, Inc. Contract-Parameter, Inc. has been under contract with NRC for a number of years to supply certain technical expertise to agency inspection teams.

l Our audit is examining the awarding and administration of this contract as well as whether it is effective and efficient to contract for this type of support.

3 5 Resiew of Contracting for Consultants-This audit is resiewing controls over contracting for consultants and the reporting of contractualinformation on consultants to the Federal Procurement Data System.

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E Resiew of NRC's Cash Management Practices-We are auditing management actions to reduce the amount of cash needed for j

agency imprest funds.

i 5 Resiew of NRC's Internal Control Systems-The OlG annually evaluates NRC's compliance with the Faleral Managers' Financial integrity Act of 1982.

j E Review of NRC's Debt Collection and Prompt Payment Process-The audit is assessing whether NRC is paying its hills as required by the Prompt Payment Act and collecting debts in compliance with existing laws and regulations.

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Dunng the relorting Irrid the OlG received 30 allegations, closed 35

. imestigative actions and issutd 24 formal investigatrve reports to NRC I

i management. We also referred five matte s to the ikpartment of Juv. ice 1

i for resiew, A sumnmry of our overall investigative program for the reporting i

Imriod follows:

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Soutres Nunder of Nond.r a Nkyations Alkyations g[Affpgg(fggg NRC thiployee 6

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NRC Management 1I General Public 6

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Received During Period 30 Referred to NRC Disposition Management lStalf 0

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.An OlG audit of cash receipts received by an imprest hmd cashier could Theft o/ Agency l

l no: account for over $1RXI. During our itwestigation into t'le matter.

. f7gyfy,fg L the cashier admitted taking the money for his personal use. The I

t employee resigned in lieu of dismissal.

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!. The editor of a Suifolk County newspaper wrote of a ;xissible conflict of Conflict of interest invohing an NRC resident inspector. This ir.pector was Inte1rst by 2

stationed at the Shoreham Nuclear Ibwer Plant on Long Island, New an Elhector York. The inspector reportedly left the agency to accept employment with the finn that built the reactor at Shoreham. Our investigation found AIIP8Cd i

that lxith the employee and agency management were in siolation of NRC regulations governing the negotiation of employment with outside j

firms. However, we found no evidence to indicate the employee i

l compromised his inspection aethities at Shoreham to gain employment with the finn. Management action on this matter is pending.

flased on information provided by a Security Officer from another Illegal Use of the L

government agency, the OlG initiated an investigation into allegations j'f3 c

i that the wife of an NRC employee was placing personal long distance l

calls through the NRC's Federal Telecommunications System (FIS). Our investigation determined that an agency employee placed a diverter on l

l his government telephone which gave his wife direct access to an FIS l

line. The wife used this FI'S line to place over 2JKK) personal calls, i

including a kirge number in support of her private business. The i

approximate cost of these calls was $33X). Agency action is pending.

l At the request of agency management, the OlG opened an inquiry into Misuse of "976" unauthorized calls placed to "976" exchanges over agency telephone Exchange 3 I

lines. The "976" exchange is used for reaching recorded messages such

-i as dial a prayer, dial a horoscope, etc. We detennined that over GlX) i prohibited calls were made to "976" numbers over a two month period.

However, because many of the calls were made from vacant offices and after official hours, we could not detennine who made the calls.

Subsequent to our inquiry, the NRC restricted access to the "976" exchange thrcugh agency telephone lines.

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} Alleged Misuse of An employee of a nuclear power plant advised one of NRC's regional i

! In/onnation offices that she believed the utility's security force was receiving l

1 i Prodded by an advance information on unannounced inspections by NRC. It was further alleged that this information was prosided by an NRC secretary 1

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NRC Employee to her husband, an employee of the utility. The OlG did not substantiate j

that there was in fact unauthorized information prosided to the utility.

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of the unarmounced inspections clearly did eist. Subsequent to the j

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.tr.tiation of <or inves',igation, notifcation procedures for unannounuti I

inspections at the involved r.uchr power plant wre changed by the l

Region.

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ppendix l

Audit Reports i

i Title RepwtNo.

Date of issuant e OlG'sReviewof theControl OlG SSA 10 June 21,1989 and Management of Personal Computers Review of NRC's Faforcement OlG 87A-20 August 1,1989 Program 010 Resiew of NRC'sincident OlG 8SA 11 August 1,1989 Investigation Program OlG Review of NRC's Systematic OlG 87A 21 August 15,1989 Assessment of ljeensee l

Ibriormance Program (SALP) l Resiewof Cash Receipts OlG 89A-18 August 28,1989 Received by imprest Fund Cashier

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