ML20006B095
| ML20006B095 | |
| Person / Time | |
|---|---|
| Issue date: | 01/31/1990 |
| From: | NRC OFFICE OF THE INSPECTOR GENERAL (OIG) |
| To: | |
| Shared Package | |
| ML20006B096 | List: |
| References | |
| CON-NRC-05-86-156, CON-NRC-05-86-158, CON-NRC-5-86-156, CON-NRC-5-86-158 NUDOCS 9001310400 | |
| Download: ML20006B095 (8) | |
Text
--
l o
I 1
s,....../
lf ly OFFICE OF.THE 2
INSPECTOR GENERAL 1
U.S. NUCLEAR REGULATORY COMMISSION 5
x...
Review of the Management.
of NRC's Contracts with PARAMETER, Inc.
l 2 l
- i,p JANUARY 1990 010 SBA-25 F
T AM C
PDC L
1
I Jue UNITED STATES NUCLEAR REGULATORY COMMISSION e
o s
- )
WASHINGTON, D.C. 20086 l
i y *"** j JAN 2 1990 l
OFFICE OF THE INSPECTOR GENERAL t
h MEMORANDUM FOR:
Chairman Carr l _. 4 Comissioner Roberts Commissioner Rogers Comissioner Curtiss J
,' V Commissioner Remick FROM:
David C. Williams Inspector General Office of the Inspector General
SUBJECT:
REVIEW OF THE MANAGEMENT OF NRC'S CONTRACTS WITH PARAMETER, IFC.
L The Office of the Inspector General has completed a review of the Nuclear Regulatory Commission's (NRC) contracts with Parameter, Inc. The attached-report contains the results of our review..
The purposes of our review were to determine the effectiveness of internal controls related to the management of the Parameter contracts and to review the appropriateness of NRC using a contractor to provide individuals with specific technical expertise.
In addition, we assessed Parameter's use of former NRC employees for fulfilling the contracts' requirements relative to NRC's conflict of interest regulations.
Our review was conducted in accordance with' generally accepted Government auditing standards. The review was performed at NRC Headquarters from November 1988 to April 1989.
Conclusions and Recommendations L
l Our review disclosed that NRC's administration of the Parameter contracts was L
generally satisfactory. However, we believe there are two internal control L-elements relating to the management of the contracts that need: strengthening.
I:
Specifically, we believe contractors should-be used only when qualified NRC staff is not available.
In that regard, documentation should be available for each task order explaining NRC's use of a contractor rather than NRC staff.-
Also, we believe the Office of Nuclear Reactor Regulation should' document the reasons for not using or using only portions of a contractor's report. Our.
report contains two recomendations related to these findings.
CONTACT:
Fred Herr, 0IG 49-27051 a
Y e-
~
wv+--
v
-,r.,.-i=-.==*e
. = = -
,,-wa r*,re e-
,-,,r-e-1-
w-
i J
2 j
Agency Comments In comenting on a draft of this report the Executive Director for Operations (ED0) agreed that prior to issuing task orders, the reasons why NRC staff are not available would be documented. The ED0 did not agree to document why a contractor's input was changed, partially used or not.used at all because it 4
would be too burdensome and because problems have never been encountered as a result of changing contractor input. While we believe such documentation would be prudent, we have no evidence that lack of documentation has, to this
,d time, led to problems or an inability to reconstruct why changes were made.
We have decided, therefore, to accept the ED0's' coments as resolving our recomendation rather than elevate it to the Commission for resolution.
- t heddr O.W'dl5me David C. Williams Inspector General Office of the Inspector General
Attachment:
As stated cc:
J. Taylor EDO S. Chilk, SECY W. Parler, OGC T. Murley, NRR L
P. Norry, ADM E. Halman, ADM J. Blaha, ED0 L. Hiller, ICC
?)ucces, &n&st 8@
t e
fkAAhQ &2u&2c2Alu a
saw Au
/AM W A u s M O/G RI '
y
l i
REVIEW 0F THE MANAGEMENT OF NRC'S CONTRACTS WITH PARAMETEL INC.
INTRODUCTION l
The Office of the Inspector General (OIG) has conducted a review of NRC's l
contracts with Parameter, Inc. The purposes of our review were to determine the effectiveness of the internal controls related to management of the contracts, and to review the adequacy of NRC using a contractor to provide individuals with specific technical expertise.
In addition, we assessed i
Parameter's use of fomer NRC employees in fulfilling the contracts' requirements relative to-NRC's conflict of interest regulations.
,g BACKGROUND For more than ten years Parameter, Inc. has provided technical assistance to support NRC personnel in: (1) investigating incidents; (2) performing inspections; (3) evaluating events, construction deficiencies and allegations; and (4) various other activities pertaining to problem reactors during construction, operation, and planned. outages.
At the time of our audit, Parameter had an average staff of eight. full-time employees, although it had subcontracts with more than thirty consultants located throughout the United
-i States with a variety of specialities to aid Parameter in providing services to NRC. Parameter's subcontractors include former NRC employees.
In March 1985, the Executive Director for Operations (ED0) requested approval from former Chairman Palladino to enter into two contracts, each exceeding
$750,000. The purpose of these contracts was to assist NRC'in developing and implementing programs and procedures for: (1) reactors requiring special inspection resources, and (2)' inspection of operating reactors during major outages.
In June 1985, the Chairman approved the ED0's request and'in l
March 1986, NRC awarded the two contracts to Parameter, Inc. The combined
)
ceiling amount of the contracts at the time of our review was $7.34 million.
The period of performance for both contracts was March 1986 through March 1989.
Contract 05-86-156 was originally enterdd into due to'the fomer Office of Inspection and Enforcement's (IE) need-for assistance with reactors requiring special inspection resources. The responsibility for contract administration.
l '.
was subsequently transferred to the Office of Special Projects which became the Associate Director for Special Projects (ADSP), Office of. Nuclear Reactor Regulation (NRR). Contract 05-86-158 was also entered into by IE for assistance in inspection of operating reactors during' major-outages. Contract administration for Contract 05-86-158 subsequently became the responsibility of the Planning Program & Management Support Branch (PMSB), NRR.
SCOPE OF REVIEW Our audi was performed at NRC Headquarters intermittently from November 1988 to April 389 and was conducted in accordance with generally accepted government auditing standards. Our audit included:
l
\\
l I
=..
j n
reviewing contract files 05-86-156 and 05-86-158 located in the Division I
of Contracts and Property Management (DCPM);-
reviewing statements of work and subcontracts issued for selected task l
orders; reviewing contract deliverables (monthly business reports and subcontractor technical reports) and various-NRC technical reports; discussions with selected project managers and technical monitors in NRR, and selected officials in both DCPM and NRR; and l>
reviewing NRC Manual Chapters and other documents pertaining to contracts and conflicts of interest.
At the time of our review, there were 34 task orders issued under-Contract 05-86-156 (ADSP) and 18 task orders issued under Contract 05-86-158 (PMSB).
We randomly selected 26 of the 52 task orders for review.
SUMMARY
OF FINDINGS Based on our review, we believe NRC's administration of NRC' Contracts 05-86-156-and 05-86-158 has been satisfactory.
Specifically, we found that the project officers, technical monitors and contract administrators satisfactorily monitored the work performed under the contracts.
In addition, we found that Parameter has complied with the contracts' terms in that contract deliverables were provided in accordance with the Reporting Requirements of both contracts. The reports provided by Parameter were. for the most part, used by NRC. NRR complied with NRC Bulletin 5101-7, Policy for Contracting on a Noncompetitive Basis with Former NRC Employees.
We believe, however, that two internal control elements relating to the management of the Parameter contracts need strengthening.
Specifically, we believe NRR, for,each task order, should document why contractors are being-used rather than NRC employees. Also, NRR should document the reasons for not using or using only portions of a contractor's report. Each of these findings is discussed in the following sections of this report, e
Use of Contractors According to the Chief, Technical Assistance Management Section, NRR the decision to use a contractor is based primarily on:-(1) the expertise needed, J
and (2) the availability of NRC staff at the time of the inspection. When a region requests technical assistance, the program offices in Headquarters determine whether qualified NRC -employees are available.
If NRC employees are not available, NRR obtains contractors to assist the region. This official-also stated that when a division director at Headquarters approves the.
regional request for assistance, the manager is implying there'is a need for>'
contractors. We were told by a Senior Technical Assistance Project Manager-l that if a Headquarters request for technical assistance fell within the scope of the Parameter contract and the estimated costs were within the budgeted amount, then contractors were used.
y d
f O
,.-m,
- - ~.. ~ - - -
c,
~
{
3 We reviewed the statements of work for each of the 26 task orders in our sample to determine the nature of the work and whether expertise was available in-house. We found that the expertise NRC requested in 24 of the 26 task orders was available among the NRC staff.
However, only three of the 24 task orders indicated that the work to be performed was of a reactiva nature,'which i
could justify the use of a contractor because of a lack of available NRC staff -
on short notice.
i Based on our review, we believe at least two of the remaining 21 task orders l
2 were for work of a proactive nature; that is, work initiated and scheduled by NRC. We could not determine whether work performed on the remaining'19 task:
orders was proactive or reactive because the wording in the statements of work.
j e
was too brief. None nf the task orders we reviewed provided sufficient information to justify that the contractors were needed immediately.
Based'on the infonnation available to us, we were not able to assure ourselves-that l
there was a need to use contractors in the majority of task orders we reviewed.
The Director, Program Management, Policy Development and Analysis Staff, NRR, told us that during the budgetary process an assumption is made that e,ontractors will be used wherever possible.
He felt this was a conscious decision made by NRR regarding the use of contractors versus NRR' staff. As a i
result, he thought that documenting the justification for using contractors on each task might only involve the completion of a form letter and not really H
serve a meaningful purpose. We believe, however, that the general budgetary assumption that contractors be used wherever possible does not adequately justify use of contractors. Rather, a separate justification should be prepared for each task order. While that justification may be documented in a form letter, the decision should be unique to each task order.
Use of Task Order Reports Both Parameter contracts state that descriptions of the content and due: dates for technical reports will be specified in each task order. While the wording in each task order is slightly different, the task orders we reviewed generally required final inspection report input that documents the i
contractor's activities, efforts, and findings.
Each of the technical reports e
we reviewed documented the contractor's activities, efforts, and findings as required.
We obtained copies of NRC inspection reports and NUREGS issued as a result of the work performed on the task orders in our sample. We compared the NRC-4 reports with the subcontractors' technical reports to determine whether NRC i
used the input provided by the subcontractors.
At the time of our review, NRC had not issued reports for two of the task orders in our sample for Contract 05-86-158 task orders.
In addition, the results of work performed on one additional task order was for NRC's internal-use only; therefore, no NRC report was issued. We reviewed seven NRC inspection reports and 20 subcontractor technical reports issued'as a result of work performed on the remaining six task orders.
i We found that 19 of the 20 (95 percent) subcontractor technical reports were used in the seven NRC reports. We contacted the NRC team leader to determine
I 4
7 why one subcontractor's technical report had not been used by NRC._ The team leader indicated that in this instance, the subcontractor's input related to o
inspection effort not reported on in NRC's inspection report. The team leader also told us that in some instances a subcontractor's input may not be used if the majority of the inspection team does not agree with a finding or the severity of a finding established by the contractor. The team leader informed l
us that there is no requirement to document the reasons for not using a l
subcontractor's work or, if applicable, to document that a subcontractor's I
work has been changed.
i l
Of the 17._ task orders included in our sample for Contract 05-86-156, seven had-been transferred to NRR by the Office of Special Projects.
Because we had y
already reviewed NRR's handling of contractor reports under Contract 05-86-158, we chose not to trace these seven task orders further. At the time of our audit, work had not been completed on four additional. task orders;_
therefore, we did not receive the related subcontractor technical reports. Of the remaining six task orders,-ADSP had not received the subcontractor reports for one task order. As a result, we were only able to review the-subcontractors' technical reports and NRC reports for. 5 of the 17 task orders in our original sample.
We reviewed 24 NRC reports and 61 subcontractor technical reports for the five task orders selected from Contract 05-86-156. We found that only 28 l
(45 percent) of the 61 subcontractor technical reports were included in the NRC reports we reviewed. The remaining 33 (55 percent)' subcontractor technical reports covered different inspection timeframes than the NRC reports provided by ADSP. Because ADSP did not have a method to track the NRC, reports / memoranda issued as a result of work performed under Contract 05-86-156, we could not determine with any certainty how NRC used the remaining 33 subcontractor technical reports.
We were informed by NRR officials that'a database was established to track various aspects of contract deliverables and NRC's use of the deliverables.
At the time of our review, ADSP was' operating independently of NRR as the Office of Special Projects. As a result of a reorganization in 1989, the Office of.Special Projects became a component of NRR. -NRR management assured OIG that ADSP contract deliverables would now be tracked using NRR's-tracking system. We confirmed that the system did exist and noted that it was being used at the time of our audit. We believe this system will provide an audit' trail regarding the disposition of the subcontractors' technical reports.
CONCLUSIONS s
Based on the results of our review, we-believe NRC Contracts 05-86-156 and; 05-86-158 have been satisfactorily administered.
It appears NRR and DCPM have complied with NRC Manual Chapters pertaining to contracts and conflicts of interest, and, for the most part, NRR has used input'provided by the subcontractors in NRC reports. We believe'NRR's system developed to track the contract deliverables and NRC's use of the deliverables will assist'NRR-l management in ensuring contract deliverables are used.
However, we believe that contractors should only be used when qualified NRC staff is not available. We also:believe the task order should specifically document why a contractor is being used rather than an NRC employee.
In
-..--n.
n,
---L-
5 addition, documentation should be available explaining why a contractor's l-input was not used, partially used, or changed by NRC.
.j Although the two contracts we reviewed have expired. NRR has similar contracts 6
with various companies. We believe the findings noted in this report are relevant to those other contracts.
~
RECOMMENDATIONS To ensure contractors are used only when NRC staff is not available and that-contractor input is used by NRC, we recomend the Director, NRR, ensure that:
a I,
1.
Prior to issuing task orders to obtain technical assistance from con-tractors, NRC managers document why NRC staff are not available to perform the tasks.
o 2.
Team leaders document why a contractor's input was changed, partially' used, or not used at all.
AGENCY COMMENTS On December 1,1989, the EDO commented on a draft of this report.
The ED0's comments are included in their entirety at Appendix !.to this report..The ED0-u agreed with Recommendation 1 and stated that action to implement this recom-mendation would be completed by February 28, 1990. The EDO did not agree with Recommendation 2 and stated that documenting the changes NRC made to a. con-tractor's report would create an " unnecessary administrative burden." 'OIG staff subsequently met with NRR and ED0 staff to discuss the ED0's response to Recommendation 2.
The NRR and EDO staff indicated that they have not encountered problems as a result of not documenting changes to a contractor's-report. The staff believes that if there is ever a need to defend changes made to a contractor's report, the staff would be able to reconstruct the circumstances for the changes from field notes, discussions among the staff, and memory. The staff also believes that implementing this recommendation is, in essence, fixing a problem that does not exist.
We disagree with the staff's position on implementing Recommendation 2.
Because there are few cases in which contractor input is substantively changed.
i little additional documentation would be required. We.believe it is better to l
document reasons for changes to contractor reports as they happen rather than relying on memory at a future date.
In addition, if a contractor's input is not used because the'NRC staff does not believe the contractor's work is.
competent, there should be a record to alert others in NRC considering using that contractor that problems were experienced previously. We are not elevating Recommendation 2 to the Commission for resolution, however, because our review-did not uncover instances in which the absence of such documentation has j
caused problems in the past. Also, discussions with two NRR team leaders' subsequent to receiving the EDO comments showed that they believe the recom-mended documentation is unnecessary. As a result, we consider Recomenda-tion 2 resolved.
(
APPENDIX 1
$ aek f
k UNIT ED STATES
/
NUCLEAR REGULATORY COMMISSION 4
I s
WAsHileeT006, s. C. Dette 1
k*....
DEC 0119M l
l 1
l 1
MEMORANDUM FOR: Martin G. Malsch Acting Inspector General l
FROM:
James M. Taylor Acting Executive Director for Operations j
$UBJECT:
REVIEW 0F THE MANAGEMENT OF NRC's CONTRACTS WITH l
PARAMETES,INC.
I I am responding to your memorandum of October 23,1989, in which you trans-l mitted the subject draf t audit report.
! as pleased to note your conclusion j
that NRC's administration of the Parameter, Inc., contracts has been satisfactory.
l With respect to your specific recomendations, I submit the following coments:
Recommendation 1 Prior to issuing task orders to obtain technical assistance from contractors, NRC managers should document why NRC staff are not available to perform the i
tasks.
Response
t Agree. As part'of NRC's planning, programming, and budgeting process maticdecisionsaremadeontheuseofHeadquartersandRegionalstaffprogram-(FTE) and contractor (program support) resources to achieve the Agency's goals.
At this time the resources required to carry out the inspection program are determined. Contractors provide specialized expertise and support the staff during periods of peak workloads. Contractor support is therefore essential to These decisions and their bases which the success of the inspection program.
are documented in the Five Year Plan, are reviewed and approved by the ED0 and I
the Comission and provide the bases for budget submissions to the OMB and the I
This comprehensive process ensures that both the need for contrac-Congress.
I tor technical assistance and the level of effort to be contracted for are I
justified and documented. As part of the justification for every new contract, i
NRC managers will suusarize the basis for the decision to use contracter assistance. This document will be considered by the designated official prior in J
to the issuance of individual task orders. The Office of Administration conjunction with the major Program Offices, will develop a standardized format for such sumaries and incor wrate this requirement into NRC Appendix 5101.
r bruary 28, 1990.
Estimated complacion date e
CONTACT:
Frank Gillespie, NRR 49-21275 I
~
-, - -... _ _. _ - _ _. _ ~ -. _
4 2
)
Recomendation 2 Team leaders should document why a contractor's input was changed, partially used, or not used at all.
Response
Disagree. These task order agreements require that the contractor provide an independent report at the conclusion of the task. The staff is not aware of any case in which a contractor's relevant technical input was not captured in the official NRC inspection report issued as a result of the inspection sup-i ported by the contractor.
Information and findings that have no regulatory bases or that are not relevant to the inspection are not included in the final inspection report. The team leader must integrate the input of each team j
into a single comprehensive and coherent l
men 6er, both staff and contractors,s technical inputs are used but almost inspection report. The contractor always require editing and rewriting for format and style by the team leader.
Moreover, information included in the input may not be germane or may even be i
erroneous as a result of information obtained by other inspection team men 6ers during the inspection. The team lander's draft inspection report is reviewed by the section chief, the branch chief, the division director, a technical editor, and other NRC staff and management personnel.
The draft inspection report can be revised at any of these review stages. Tracking and documenting changes to the contractor's input throughout this process would constitute an unnecessary administrative burden that could also extend the time required to l
1ssue an inspection report and would serve no useful purpose.
f l
.j
,/
u Ja es M. Tay ing Executive Director j
for Operations l
i 4
e b
+
l i
l
-.