ML20043D194

Office of Inspector General Semiannual Rept for Oct 1989 - Mar 1990

ML20043D194
Person / Time
Issue date:	03/31/1990
From:	David Williams NRC OFFICE OF THE INSPECTOR GENERAL (OIG)
To:
Shared Package
ML20043D192	List: ML20043D190 ML20043D194
References
NUDOCS 9006070242
Download: ML20043D194 (17)

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.I i t is with great pleasure that i submit this semi annual report to you 1 covering the period of October 1,1989 to March 31, l!FXI. Although this is the second report for the of6ce, it is the first semi annual report which I have subastted since I began work on December 3,1989.

Continued success has been made in reducing the number and age of the office's backlog of investigative cases in this perkd in prior years, a

emOTODdum this backlog has txxn of great concern to both Congress and to the lO the Commission. I am happy to report to you that this backlog and particularly the number of veiy old investigative matters have tren greatly reduced.

During the period 41 imestigations have been closed 'lhe office has also OISON issued 7 internal audit reports containing 25 recommendations for c

improvement to the efficiency and effectiveness of the NRC's operation. 'Ib u;

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the credit of the Commission offices and divisions, we have reached 0,,.

agreement on all of these recommendations with NRC management. Also

_f aJ significant are the many instances in which the auditors found NRC E

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components operating well and elfectively. Numerous investigations also A

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cleared many employees of alkgations of wrongdoing. Contract audits also u-identified $24517 in questioned costs and 5525,889 in funds recommended to be put to lxtter use.

Currently the office has 13 ongoing imernal audits and inspections and 52 open investigations. During tiss perkd two very significant imestigative matters concerning the manner in which this office conducted investigations prior to becoming a statuto y Oflice of the Inspector General are being conducttd 'Ihese investigations consumed nearly one half of the investigative resources of the office and were conducted in a highly charged emironment against a backdrop of painful introspection. I am pleased that these matters are coming to a close. However, I can say that much has been learned about how this office can assure the integrity and quality of its future work. Because of your interest and concern I will present our findings to you when these investigations are complete. These matters are also of great concern to Congress. It is my intention to submit the findings of thete inquiries to the congressional members and committees that have expressed interest.

As you know, a large number of new staff members have joined the Office of the Inspector General. 'iheir diverse inckgrounds and career successes bring powerful new assets into play for the complex challenging mission of the NRC and of the office.

Thank you for your strong support and timely responses to the needs of this new office. I am pleased with the manner in which the office has mobilized to perform its nsssion and with the quality and volume of work accomplished during the period Sincerely, hodh C. b $2amvo Da\\id C. Williams inmector General omcf of THE /WH70R E\\UW

• MNMYNCV /#10KT 1

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i ntroduction The U.S. Nuclear Regulatory Commission (NRC) was established by the Energy Reorganization Act of 1974 as an independent agency of the Federal government. 'lhe lhe NRC Commissioners are nominated by the President and confirmed by tne Senate The Chairman of the Commission is appointed by the President from among the Commissioners confirmed.

The principal mission of the NRC is to assure that ci illan uses of nuclear facilities and materials in the United States-as in the operation of nuclear power plants, in medical, industrial or research applications, and in transportation and waste disposal operations-are carried out with proper regard and provision for the protection of public health and safety, of the emironment, and of the national security. The NRC accomplishes its purposes through a regulatory program which includes licensing of facilities and materials; issuance of safety and security standards; inspection of facilities; and enforcement by orders, civil penalties, license modifications, revocations, and suspensions. NRC's regulatory oversight extends to over i

Contents one hundred nuclear power phmts licensed for operation and thousands of licenses for industrial, research, and medical uses of nuclear materials. NRC Intmduction 2 currently has about 3,200 employees located in the hhington, D.C. area Audits 3 and five n>gional offices and a budget of about $150 million.

This is the Office of the inspector General's (OlG) second semi-Summary of Audits l

annual report and the first covering a full six months of operation. During Completal 4 this reporting period the OlG has taken further steps toward implementing Intemal Audits i

all of the requirements of the inspector General Act of 1978, as amended. In in Progress 6 l

the last six months, the office's first inspector General reported for duty, a I rmal organization was put in place and hiring of the investigative staff was Contract Audits B completed.

Iniestigations 10 l

The principal mission of the NRC is regulation rather than the administration of large grants and entitlement programs like many of the i

Summary ofSignificant larger agencies with inspectors General Accordingly, the mvestigations and i

Intestigatjons 1.,.

audits conducted by the NRC's Inspector General are directed principally Other ActMiles 12 toward improving program management, assuring the integrity of NRC's regulat ry programs and identifying fraud and misuse of agency funds by Appendix ll agency employees. During the reporting period, however, the OlG has assumed management responsibility for all contract audits performed by outside organizations. As a result, the Office is able to report potential monetary savings for the first time.

The staffing level for the OlG is currently 30 position 3, including twelve auditors and eight investigators.

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2 OC7Dl%R L 1% 1U MARCH 3L I!w hlClfAR RERLAR RY CoAMWoV

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l udits LVTERVAL AUDTIS During the last six months, we issued seven intertal audit reports on NRC programs. Another thirteen were in progress at the end of the reporting period. The following is a sumnwy of the results:

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For which no management decision was made 2

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i For which a management decision has been 27 made during the pericxl l

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l Reactor operators are trained in nuclear pouer plant simulators i

before bRC examines their qualifications This area is the subject of an ongoing OlG audit.

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ARC's Cash Afanagement aae 1989, NRC had imprest funds throughout the agency totalling v

M The Department of the Treasury has ec.couraged NRC to reduce I

Program hkds its cash holdings in imprest funds in order to evaluate NRL s success m ImpmWment reducing its cash holdings, we conducted an audit of the agency's cash management program.

Our review found mat while NRC had successfully implemented sorne cash management initiatives, the agency had not yet been able to reduce its cash holdings Our resiew identified additional actions NRC should take to enable it to actually reduce cash levels in imprest funds. We estimated that by reducing imprest fund levels and outstandmg travel advance balances, the Government could realize savings of $98,000. The Executive Director for Operations ([1Xh agreed to take steps to implement the recommendations that would result in these savings.

ARC fntemal The OlG conducted a review of two major NRC contracts with Paranieta, Inc. to ascetain the effectiveness of the intenal nianagenwnt Afanagement Contmls controls over these contracts. Our review also assessed Parameter s use of Over Contracts A,ced former NRC employees to fulfill the contracts' requirements. Parameter, Inc Impmvement has been used by NRC for approximately ten years in providing technical assistance. The firm supports NRC personnel in investigating incidents and performing inspections at nuclear power plants.

Our audit found that adequate documentation did not exist for using an outside contractor. Based on this finding. we recommended to NRC management that prior to issuing task orders to obtain technical assistance.

NRC managers document that internal staff is not available. The 12X) has taken action to implement this recommendation.

ARC Needs to improve we initiated an audit of NRC's comphance with office of Management its Reporting on The and Budget (OMBi Circular A 120 entitled " Guidelines for the Use of Use of Consultants Adusoq and Assistana Muces? Wular A420 estabhshes pohg assigns responsibilities and sc ts guidehnes to be followed in determining and controlhng the appropriate use of advisory and assistance services obtained i

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' M M SE$ M W E STi M B A NIIN El M 5 M. M E M M Ei M E.ZEEG M i . from individuals and organizations. Our resiew a cused on the questions of whether NRC is complying with the expanded definition of consultants under this circular and whether these senices are properly being reported to the Federal Procurement Data Center. We concluded that the Division of Contracts and Property Management did not adopt the definition of " Contracted Advisory and Assistance Senices" as required. As a result, there was no assurance that NRC was properly reporting these senices to the Federal Procurement Data Center. We made four recommendations to ensure compliance with Circular A 120 and all were agreed to by Management. A resiew was conducted of NRC's activities relating to the disposal of ARCMakes Progress low level radioactive waste. In Implementing 7he Each year the United States generates between 1 million and 1.5 tog.teygj 4 million cubic feet of low level radioactive waste. The Low Level Radioactive Radioacthe Haste Waste iblicy Act was passed in 1980 to assure safe disposal and to establish the necessary storage capacity. In 1985, the Act was amended to PolicyAmendments address unanswered questions with respect to the establishment and Act regulation of disposal facilities. The amendments require NRC to develop I and issue technical guidance and to provide regulatory support functions to i the States. Individual Shtes, under the Act, are responsible for providing { waste disposal sites. Our audit focused on NRC's compliance with the above j l legislation. l We concluded that NRC is making progress in implementing the provisions of the Low-Level Radioactive Waste Policy Amendments Act of 1935. Further, we found NRC is prepared to perform licensing reviews when i State and Regional compacts submit applications. Therefore, no i recommendations were made, j i l An audit of the non SES performance appraisal process was Non SES Performance i conducted to assure that the intent of the program was being met and all EEralsalS ' stem in E needed internal controls were in place. While our review found that the performance appraisal system was operating without major deficiencies, the Need ofImprovement { program was in need of some improvement. We made four recommendations to improve the system's follow up and oversight i procedures. The EDO agreed to implement all of our recommendations. { The Federal Managers' Financia! Integrity Act of 1982 requires ARC Complies with Federal managers to establish a continuous process for evaluating, The Federal improving and reportmg on their internal control and accounting systems. We conducted an audit to determine whether NRC's internal control and j Managers' Financial evaluation processes were conducted in accordance with the Act and the IntegrityAct OMB guidelines. We concludci that the agency has effectively implemented the requirements of the Act and OMB guidelines. We did, however, make one recommendation for improvement. We recommended that the time frame for implementing the new License Fee Billing System be expedited in L_ l -_ OmCE OF THElASPECIDR GEvERAL = SEUMnUAL RFJURT 5

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.H _ M Z E G M M,? f 7 g M M E R M E ~ L accordance with a commitment made in response to a material weakness identified in NRC's 1987 Financial Integrity Act report. The EDO agreed to implement our rm>mmendation. Regional Counsels Beginning in 1982, NRC began placing attorneys in its five regional l Applauded flices to provide legal advice to Regional Administrators. These attorneys are called Regional Counsels. The OlG revieww] NRC's Regional Counsel function to determine whether the Regional Counsels were being used effectively and if there was adequate support and oversight from the lleadquarters Office of the General Counsel. We concluded that the Regional Counsels provide a valuable and indispensable senice to the Regional Administrators and their staffs. We also concluded that the Office of the General Counsel is providing the necessary legal support and oversight for the Regional Counsel function. OlG made one recommendation to upgrade the [x)sition descriptions to reflect organizational changes and management agreed to this action. niernal audits ih Progress The following internal audits were in progress at the end of the reporting 3 period: B Review of NRC's Nuclear Documents System The Nuclear Documents System (huX)CS) is an agency centered, computer assisted system for collecting, indexing and retrieving agency documents related to NRC activities. This audit is reviewing the development and implementation of NUDOCS. B Review of NRC's Management of 1.icensee's Reporting of Defects and Noncompliance - Part 21 Reports Part 21 of Title 10, Code of Federal Regulations requires NRC licensees and others to report defects and noncompliances associated with component parts used in nuclear facilities. This audit is reviewing NRC's actions taken in response to Part 21 reports received. B Review of Operator Ucensing - Our review is evaluating the effectiveness of NRC's program for licensing operators of nuclear power plants. B Review of Bectronic Publishing and Graphic Services - This review is looking at the cost effectiveness of contracted senices to perform l graphics work as well as the planned acquisition of a microcomputer-based I j graphics system. L_ _ _. _ _ I 6 <nuatu um nuwcu x in. xusw nrzwner commay

m . -. -. -.,. - - - - - - _ -. ~. - - -. -. - -. -.. -. ~... -. - - 5 Review of NRC's Debt Collection and Prompt ibyment Process - Mhis audit is assessing whether NRC is paying its bilis as required by the , Prompt Ihyment Act and collecting debts in compliance with existing laws - and regulations. 5 Review of NRC's License Fee Program This audit is evaluating the process used by NRC to 1) accumulate the costs that form the basis for

license fees and 2) subsequently bili licensees for services rendered.

5 Review of the Use of and Control Over NRC's Official Representation Fund NRC's Office of Governmental and Public Affairs e maintains a fund for use in entertaining foreign visitors. Our audit is . examining the administration of this fund. 5 Review of Medical Use of By Product Material This audit is resiewing NRC's program for regulating users of nuclear materials for medical purposes. 5 Survey of the Emergency Response Data System The Emergency Response Data System (ERDS) is designed to provide NRC with information from nuclear power plants during accidents. Our audit is looking into the development of the system, system capabilities and schedule for implementation. 5 Review of Emergency Planning We have initiated a review of NRC's emergency planning requirements around nuclear power plants and the guidance provided to the NRC staff for determining the adequacy of emergency plans. 5 Resiew of NRC's Personnel Security Irwestigations Program The . President's Council on Integrity and Efficiency (PCIE) is conducting a Government wide audit of the policies, scope and costs of personnel security investigations. We are participating in this PCIE review. 5 Inspection of the NRC Staff's Activities Regarding Emergency. Planning at the Pilgrim Nuclear Ibwer Plant This inspection was initiated in response to letters received by the OlG from public citizens. These letters stated that the NRC staff did not provide accurate information to the Commission regarding the status of off site emergency planning at Pilgrim during two Commission meetings discussing the licensing of Plgrau. This inspection is evaluating both the accuracy and completenN af the information provided by the staff during these meetings, the adequacy of the NRC staff's review of off site emergency planning at Pilgrim. and NRC's relationst ip with the Federal Emergency Management Agency in making their assessment. 5 Review of the Atomic Safety and Licensing Board The Atomic Safety and Licensing Board (ASLB) is an independent adjudicatory body which conducts hearings and issues initial decisions on licensing cases. We have initiated an audit of the ASLB including the nature of its worldoad and its resource requirements. I T - onKE of THE b5PEC7DR GLsFRAL

• SEWAWLV. REPORT

4 $ $ 0 M Y2 M N i i ontractAudits a During the reporting period, the OlG issued 8 contract audit reports. The following tables depict the cost sasings from these audits, ,\\ Table 1 Office ol'Ihe inspector General Reports with Questioned Costs tuww (in tinusuxh Narin Orstmil Unsgx*tal A. For which no management decision had been madebythe commencement of the reporting period 0 0 0 B. Which were issued during the reporting period 1 $24517 0 Subtotals (A + B) 1 $24517 0-C. For which a management decision was j madeduring the reportingperiod: 0 0 0 L L (i) dollar value of disallowed costs 0 0 0 (ii)dollarvalue of costs not disallowed 0 0 0 .{ D. For which no management decision had l. been madebytheendof thereporting l period 1 $24517 0 1 L Reports for which no management decision j was made within six months of issuance 0 0 0 l l l i

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N$$t05.5,$lb?MY$WsSS$ Table 11 Office ollhe inspector General Reports issued %ith Recommendations That Funds Be Put to Better Use t ikAr h Nstini (inthamav.s) A. For which no management decision had been made by the commencement of the reporting period - 0 0 B. Which were issued during the reporting period 5 $525,889 Subtotals (A + B) 5 $525,889 C. For which a management decision was made during the reporting period: 4 $462,773 (i) dolkv value of recommendations that wereagreed tobymanagement 1 $ 98,035 (ii) do!!ar value of recommendations that were not agreed to bymanagement 3 $361,738 D. For which no management decision had been made bythe end of the reporting period 1 $ 63,116 s Reports for which no management decision l was made within six months of issuance 0 0 l l lhrs klble truhules SWMn in sarongs p"nerated htwit an ' rnternalaudalIrlWt i i I l ~ OMCE OF THEL \\ SPEC 7DR GENR tL

• SDfi A\\.\\GU. RDURT 9

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~ During the reporting period, the OlG received 69 allegations, closed 44 imestigations and referred 4 matters to the Department of Justice for - ~ resiew. A summary of our overall investigative program for the re[x>rting period follows: Allegations Soutte ma na "N*"" cfAllegations NRC Employee 15 Media 0-NRC Management 13 OlG Investigation / Audit 3 Congress 1 Contractor 1 Other Government Agency 0 RegulatedIndustry Intervenor 5 (Licensee / Utility) 19 GeneralPublic 7 Anonymous 5 TOTAL 69 Disposition ua wa "n"'"" an*= ofAllegations Carried c'onvard 10/1/89 1 Referred for OlG Audit 4 Received During Period 69 Referred to NRC Management / Disposition Staff 4 ClosedAdministratively 23 Referred to External Referred toolG Agency 0 investigation 34 mm VJTAL 65 Source of Allegatiot. dhMd Nac b wc' Pending' Review / Action 3/31/90 5 EMi[5 : 43RWJM[ihT N[f ~ Abl ybl.'l 13Al GNRAl. A * * /' 8~kg !]I.. PlBUC th b-k on(FRR ~M. % i INRR\\1N)R n \\ Ei < ~ / [.../,4 yWWBKX5 n krEMA1}D$ '} i f# _ _ __ _ _ __ _. _.] l lo OCTUlfR I,1% 10 MARCll 31.1% *.\\lCIL1R REGlIATURY Com!LSSIOV

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',, v \\, e investigative Statistics Status of wa wa - inwsti,rdkva hetgaths" InWstigatlons Investigations Carried Investigations Closed 44 = forward 10/1/89 62 - Investigationsin Progress investigations Opened 34 3/31/90 52 Nunt-a n-ear. Classificatlons 10'l 'tt) 10'l

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- canorm.wd amo no in w. ofInwstigations Conflict ofinteitst 8 6 3 11 laternalFraud 4 3 0 7 open inmdgauoiis by Type ' Contract / Contractor Related sN/rNUMac - g N" Misconduct 3 3 1. 5 Falsification of Reccids/ -ai 'l 0 Statements 5 2 3 4 ? Theft Related'Jffenses 2 3 3 2 memorT' f '9. w' 0F Misuse of Government ["dik Property 3 0 2 1 ActionsAffectingSafety/ s;- NRC fiograms 19 8 20 7 g2g - Management Misconduct and Othe C 1 Referrals Referrals to the Department ofJustice(DOJ) ua wa Pcfmals IWnts Referrals Pending DOJ Indictments 3 Decision 10/1/89 2 Referrals Made During Period 4 Convictions 0 Disposition Accepted forIYosecution 0 TOTAL 4 Declinations 4 Referrals Penai,e DOJ L Decision 3/31/W 2 } l-3 1' [ GFHW OF THEL %PECIUR GE\\ERAL

• 93fMUUAL REN)KT II f

-omm mm-omaan---- s ummary ofSignificant Investigations Con /flet ofIntemst An investigation of the activities of an NRC Project blanager concluded that the subject s%ed Title 18 U.S.C. Section 1001 and 208. 'ihe Project byan ARCProject hianager was found to have actively negotiated employment with two firms Manager who were competitive bidders on a Request for Proposal (RFP) the subject had helped prepare. The negotiations took place while the RFP was under i j development. This matter is currently under resiew by the Department of Justice. Illegal Use The OlG received a referral from a member of NRC management containing 0/ the FIS inf rmati n indicating p ssible FfS abuse by agency employees. Initial 1 resiew by OlG investigators indicated a large number of long distance calls placed to a private residence. Further investigation revealed that a member i of the NRC professional staff placed over 300 personal calls to the i residential number during an eight month period. The cost of those calls i was approximately $3.600. This matter is currently under review by the U.S. i Attorney's Office. f Another investigation of FFS abuse was Liitiated as the result of information l developed during an OlG audit. The iwestigation determined that an NRC supervisor was guilty of FfS abuse. ihe U.S. Attorney's Office declined prosecution in favor of administrative action by the NRC. Agency action is I pending. ARCAddsoryConunittee, The OlG opened an investigation based on an allegation from NRC Violated Procuminent l management that a Commission advisory committee may have illegally kegulations l employed a pnvate attorney. 016 was also advised that the advisory committee employed the attorney after being directed not to do so by the L L i Commission. The investigation concluded that the advisory committee i l violated federal procurement regulations in the course of obtaining outside legal counsel. It also substantiated that the advisory committee took this action after being directed by the Commission not to do so. i l i l l I 1 l i l2 GCIDEER I. I!w R1 MKH 31,1Mn

• M:CIDR REGLMIDRY CUWC EGY

MWIIQiM2iTAFE$ META %TEEIM1k%WSN5SNElthMWS ther Activities t During the reporting period the OiG completed a number of other important initiatives and activities l OIG Organization The OlG completed its organizational structure with the establishment ol two new staffs. The Planning and Analysii, Staff is responsible for all the administrative functions within the Office including budget, cmtracts, personnel and space management. This staff also provides operational support to the audit and investigative groups as well as managing the OlG Hurl.lNE pragam. The Inspection Staff conducts narrowly focused quick t turnaround inquiries that examine the agency's operational capability. The OlG organization is depicted below: l Planning and , Anahsin Naff l I _ [._ l Assistant inspettor Assistant inspecttw f General General for Amitts for imentig tions 1. 1 i l 1 4tministrathe j lechnical ! Imestigathe Team A Amfit Naff Amlit Maff i U l l .....___) l I IJ inamtim 9aff l ' Imestigathe Team 11 { l _.._.__j L._ l l ORKE OF THEiw1TIUR GEMXU

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= L 1 Congressional Matters At the request of Senator Glenn, the OlG prosided comments regarding a = number of issues concerning law enforcement authorities for IG Offices. In L general, the inspector General felt e number of the authorities at issue (e.g.,- authority for agents to carry weapons) were in need of clarification or resision. Also, at the request of Senator basser, comments were provided 1 regarding, among other things, OlG procedures for the protection of whistleblower identities. E Hotline Program The OlG established NRC's first HOTLINE program for reporting fraud, waste and abuse by agency employees and contractors. ppendix Internal Audits QtestmdCosts IkumnahtumsThat I (Unsugrated Costs) Finhik Put { Rmrts tolMter the l i Reviewof theRegionalCounselFunction OlG 89A 13,11/30/89 0 0 l Reviewof NRC'simplementationof the l Federal Managers' Financial Integrity Act 1 l l OlG-89A 28,12/18/89 0 0 i I i Reviewof the Management of NRC's i Contracts with PARAMETFR,Inc. l OIG 88A 25,1/2/90 0 0 ] Resiewof NRC Activities Relating to 1-Low LevelWaste Disposal OlG 89A 9,1/18/90 0 0 Reviewof the Non SES Performance l AppraisalSystem l l OlG-89A 19,1/30/90 ) 0 0 i IO-. _I.- ._.__2 1-I oC"lDi1ER I. IM9 70 h!ARCll 31,1%

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, t H.226%%iRTIAMEMNEFstErzitungsurverssfim wme <= %=imw. nw tt m inic.ed O su' hnkMV Repra v rew Inr Review of NRC's Cash Management IYogram OlG-89A 24,2 l!90 0 $ 98,035 Review of Contracting for Consultants OlG 88A 22,3'8 !K) 0 0 SUlrIUTAL 0 $ 98,035 Contract Audits lYeaward Aucht of Solicitation No.RS PER 336,1129 90 0 $ 18,129 TYeaward Audit ollYoposal No RS-NRR 89-026,1129 89 0 $271,273 lYeaward Audit olIYopmal No.RS-RES 89-N6.12 28 89 0 $ 75,336 lYeaward Audit of IYoposal No. NRC 03-90-27,3 16 90 0 $ 63,116 lbst Award Audit of Contract No. NRC-03-87-119-03,12 '22 89 0 0 R>st Award Audit of Contract No. NRC-33-87 224,2 28 90 0 0 Ibst Award Audit of Contract No NRC 05-858-1612 28 89 $24,M7 0 These tuo nuclear p<ncer plants SUlrRTTAL $24,547 M27,8M trere the suh;cct of signr4 cant allegations concerntng emergency TUFALAllAUDrIS $24,547 $525,889 preparedneu innes ..r gg),'3 '-* EM.a A gfY G < r ' l; l ?lr - m :::~ o.s f.$ $l A(4) 4 n l ;,, - J%

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= a m ma - a s sa m m m e n - m e m - m an h33-3497 1 -s or write v NRCINSPEC1DR GENERAL Washington, D.C. 20555 All Information Is Confidential Callers Can Remain Anonymous! j REPORT: FRALD, WASTE, ABLSE, MISEAGEMENT l t 16 ..... _.. _ _ _ _ _ _}}