ML20006D462
| ML20006D462 | |
| Person / Time | |
|---|---|
| Issue date: | 08/03/1988 |
| From: | Stello V NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO) |
| To: | |
| Shared Package | |
| ML20006D458 | List: |
| References | |
| FOIA-89-404 NUDOCS 9002130276 | |
| Download: ML20006D462 (3) | |
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NO g.g NRC TECHNICAL REVIEW AND ACTIONS N.O' REGARDING THE POS$1BLE USE OF COUNTERFEIT AND SUBSTANDARD i
MATERIALS IN NUCLEAR POWER PLANTS MR. VICTOR STELLO, JR.
EXECUTIVE DIRECTOR FOR OPERATIONS U. S. NUCLEAR REGULATORY COMM15510N t
AUGUST 3, 1988 IN CHAIRMAN 2ECH'S OPENING REMARKS HE IDENTIFIED A NUMBER OF CASES l
OF VENDOR SUPPLIED COUNTERFEIT AND SUBSTANDARD PRODUCTS INY0LVING
, PIPING, VALVES, PUMPS, FASTENERS, AND ELECTRICAL EQU!PMENT USED IN THE NUCLEAR INDUSTRY.
ESSENTIALLY ALL MATERIALS, EQUIPMENT, AND SERVICES ARE SUBJECT TO COUNTERFEITING OR SUBSTITUTION.
ONE i
COMMON THEME THAT APPEARS IN MANY OF THE CASES !$ THAT THE COUNTERFEIT AND SUBSTANDARD MATERIALS ARE INTRODUCED WHEN A PURCHASE ORDER IS PLACED WITH A LOCAL SUPPLIER WHO BID THE LOWEST
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PRICE AND THE QUICKEST DELIVERY.
WITHIN THE NRC WE ARE CURRENTLY REVIEWING OUR REGULATORY FRAMEWORK TO IDENTIFY NECESSARY CHANGES IN OUR REGULATIONS FOR VEhDOR AUDIT AND RECE!Pi INSPECTION AND TESTING PROGRAMS, P
l A CONCERN FACED BY THE NRC AND I A$$UME BY A HUMBER OF OTHER GOVERNMENT AGENCIES 15 THAT EXISTING REQUIREMENTS FC' QUALITY
-ASSURANCE AND WENDOR AUDITS ARE GENERALLY STRUCTURED TO CONFIRM
.THE QUALITY OF PRODULTS AND TO DETECT SUBSTANDARD PRODUCTS BUT N01
.T0l DETECT FRAUD AND INTENT TO DECEIVE.
THE SHRINr19G NUCLEAR I
, MARKET HAS CAUSED A REDUCTION IN THE NUMBER OF MANUFACTURERS MAINTAINING PRODUCT LINES OFFERED UNDER NUCLEAR QUALITY PROGRAM
[ STANDARDS.
OFTEN. THE DIFFERENCE BETWEEN NUCLEAR AND COMMERCIAL
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MARKET PRICES OR BETWEEN NEW AND REFURBISHED EQUIPMENT PA!CES PROVIDES AN INCENTIVE TO MISREPRESENT THE PRODUCT.
I SUSPECT WE, t
WRC.. AS WELL AS OTHER AGENCIES ARE ONLY NOW SEEING THE TIP* 0F TPE l
ICEBERG OF THIS ISSUE.
I WANT TO BPIEFLY IDENTIFY SOME OF THE CASES NRC IS PRESENTLY REVIEWING AND,THE TYPES OF COUNTERFE!T AND SUBSTANDARD ISSUES WE ARE FACED WITH.
THE FIRST CASE INVOLVES ASME MATERIALS SUCH AS P! PING, FLANGES, AND FITTINGS WHICH ARE FURNISHED WITH CERTIFIED MATERIAL TEST s:,. REPORTS WHICH CERTIFIED THAT COMMERCIAL GRADE STEEL AND IN SOME CASES FOREIGN IMPORT STEEL MET ASME CODE REQUIREMENTS WITHOUT ADEQUATE JUSTIFICATION.
BASED ON TESTS IT WAS DETERMINED THE MATERIAL PROPERTIES 00 NOT MEET REQUIRED SPECIFICATIONS AND BASED ON RECORD REVIEH. WE FOUND CASES OF SUSPECTED RECORD FALS!FICATION.
THIS ISSUE INVO!.YED DVER 57 NUCLEAR POWER PLANTS IN THE U.S. AND A NUMBER OF PLANTS IN FOREIGN COUNTRIES.
THE NUMBER OF SUSPECT I'
MATERIA 1,5 AT SOME NUCLEAR. POWER PLANTS RANGES FROM LESS THAN S0 T0 I
GREATER'THAN 3000 ITEMS.
A SECOND CASE INYOLVED A REFURBISHED VALVE WHICH WAS SOLD AS NES.
IN T*d!S CASE THE FAULTY VAL'/E WAS DISCOVERED BY STEAM LEAKS AND
' $UBiEQUENT VAtVE REPl.ACEMENT IDENTIFIED THF VALVE TO BE A
.y. REFURBISHED COUNTERFEli VALVE.
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THE THIRC CASE 1 WAhT TO DISCUSS INVOLVES THE MARKETING OF j
REFURBISHED ELECTRICAL CIRCUlf BREAKE :S AND OTHER ELECTRICAL r
EQUIPMENT PEING REFURBISHED AND SUPPLIED AS NEW.
TH15 CAS.E PERSONALLY DISTURBS ME BECAUSE WE HAVE FOUND EVIDENCE THAT INDICATES SOME BUSINESSES MAhUFACTURED COUNTERFilT LABELS FOR MA M U.S. ELECTRICAL MANUFACTURERS AND FOR UNDERWRITERS LABORATORY SEALS TO MASK THE REFURBISHED, ALTERED EQUIPMENT.
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- THESE MAY HAVE BEEN PLACED IN IMPORTANT APPLICATIONS BASED ONLY ON A VERIFICATION THAT THE PROCURED PRODUCT HAS THE CORRECT
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MANUFACTURE MODEL :VUMBER.
WE ARE PRESENTLY REVIEWING THl$ CASE; TO DATE WE HAVE FOUND YHAT THE CASE ENCOMPASSES BOTH NUCLEAR AND N0hNUCLEAR APPLICATIONS.
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IN OUR REVIEW WE IDENTIFIED OVER 20 GOVERNMENT AGENCIES WHO PROCURED ELECTRICAL EQUlPMENT FROM THESE COMPANIES.
THAT INFORMATION HAS BEEN Dl!$iM!NATED TO THOSE AGENCIES.
i I TRUST THAT THis BRIEF OVERVIEW 0F SOME CASES WE ARE PURSUING HELPS YOUR UNDERSTANDING OF WHAT I SEE AS A BROAD YENDOR PRODUCT ISSUE REQUIRING A C00RDlhATED INTERAGENCY EFFORT FOR RESOLUTION.
1F YOU ARE INTERESTED IN ANY FURTHER DETAILS 1 HAVE DESCRIBED, YOU WILL FIND COPIES OF NRC CORRESPONDENCE ON THESE CASES IN THE BLUE l
FDLDERS WHICH WERE DISTRIBUTED.
NRC TECHNICAL CONTACTS ON EACH
- ISSUE ARE IDENTIFIED IN-THE DOCUMENTS.
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