ML20079A158
| ML20079A158 | |
| Person / Time | |
|---|---|
| Issue date: | 10/31/1994 |
| From: | Bodensteiner J, Donovan D, Frederick L, Huber D, Mulley G NRC OFFICE OF THE INSPECTOR GENERAL (OIG) |
| To: | |
| References | |
| NUREG-1415, NUREG-1415-V07-N01, NUREG-1415-V7-N1, NUDOCS 9412300183 | |
| Download: ML20079A158 (50) | |
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Mauoaanovu ro ras cuarausu The Office of the Inspector General (OlG)is pleased to submit this " Semiannual Report" to the U.S. Congress, covering the period from April 1 through September 30,1994. This report com-plies with Section 5 of the Inspector General Act of 1978, as amended.
The accomplishments presented in this report represent the united efforts of 010 suff and U.S.
Nuclear Regulatory Commission (NRC) management. Agency management has continued to provide complete access and cooperation for both investigative and audit initiatives. We ac-knowledge this support as we continue working together to achieve the highest level ofintegrity and efficiency for NRC programs and operations.
The 01G is committed to preventing fraud, waste, and abuse and to improving the economy and efficiency of NRC's programs and operations. In furtherance of these goals, the OIG provided
[
training seminars entitled Management Focus Groups. These seminars focused on prevention of misconduct and strengthening vulnerable fiscal and management information systems. OIG senior managers and top agency officials participated in the training and discussion.
In addition, OIG staff from the NRC and from the U.S. Agency for International Development (USAID) reviewed assistance provided by NRC to nations of the former Soviet Union for its nuclear power program. This assistance was provided through the Lisbon Initiative, announced by Secretary of State James A. Ilaker on May 23,1992. We are pleased to have participated in this global initiative.
l Sincerely, D & k C. % %
David C. Williams inspector General
Tants or coureurs y %,,
n b
O 5
E e
z 4
,o Reporting Requirements Index...
v Executive Summary...........
vii The U.S. Nuclear Regulatory Commission..............................
1 The Office of the lnspector General...........................
3 The Chief Financial Officers Act.
5 The Audit Program.
7 The Investigative Program................
19 Special Features
- U.S. Nuclear Safety Assistance Programs in Russia and Ukraine.........
27
-issue Area Monitoring.......
28 Regulatory Review 29 OtherActivities
- OIG Planning Conference..........
33
- Peer Review Assessment..........
34
- Management Focus Groups......
34 Appendices l
Audit Listings......
35 Abbrevia tions...............................................
39 Glossary..........
40 111 1
1 Reroarino asaurasueursinosx i
l The Inspector General Act of 1978, as amended (1988), specifies reporting requirements for j
semiannual reports. The requirements are listed and indexed to their applicable pages.
k Topic Reporting Requirements Page i
Section 4(a)(2)
Review of Legislation and Regulations 29 j
Section 5(a)(1)
Significant Problems, Abuses, and Deficiencies 5-13,19-23 Section 5(a)(2)
Significant Recommendations for Corrective Action 5-13 1
Section 5(a)(3)
Prior Significant Recommendations Not Yet Completed 14 Section 5(a)(4)
Matters Referred to Prosecutive Authorities 24-25 Section 5(a)(5)
Information or Assistance Refused None i
Section 5(a)(6)
Listing of Audit Reports 35-38 Section 5(a)(7)
Summary of Significent Reports 5-13,19-23 l
Section 5(a)(8)
Audit Reports--Questioned Costs 17 i
Section 5(a)(9)
Audit Reports--Funds Put to Better Use 18 Section 5(a)(10)
Audit Reports Issued Before Commencement of the Reporting Period for Which No Management Decision Has Been Made 18 Section 5(a)(ll)
Significant Revised Management Decisions None Section 5(a)(12)
Significant Management Decisions With Which OIG Disagreed None v
Execunys suuunv The following two sections highlight selected audits and investigations completed during this reporting period. More detailed summaries of these activities appear later in this report.
AUDITS OIG reviewed NRC's policy and procedures for decommissioning nuclear power reactors o
prematurely shut down. Yankee Rowe was the first nuclear power plant to begin decommis-sioning activities under a recently revised NRC policy. We found that NRC's current de-commissioning practice for prematurely shutdown plants represents a significant shift from prior policy.
OIG staff from NRC and from the U.S. Agency for International Development reviewed o
assistance provided by NRC to the former Soviet Union for its nuclear power program. As a result, the OIG issued two audit reports that found that NRC's assistance had positive effects in improving the regulation of nuclear power. The OIG made recommendations to enhance NRC's management controls over assistance provided to both countries.
o OIG performed a followup review ofits June 1992 report on NRC's contract closecut pro-l cess to determine the status of the recommendations OlG made to improve NRC's man-agement of completed but not-yet-closed contracts. OIG found that NRC had implemented the recommendations and had significantly reduced the backlog of completed but not-yet-closed contracts. As a result of NRC's efforts, nearly 73 percent of the backlog of completed contracts was closed and approximately $8 million was deobligated.
l o
The OIG reviewed the NRC's funds management practices and its compliance with estab-lished policies and procedures. OIG found that the unobligated portion of NRC's fiscal year (FY) 1993 no-year appropriated funds was over $53 million, which is almost double j
the amount for FY 1992. To determine the cause for the increase, OlG evaluated NRC's j
financial management.
INVESTIGATIONS o
An OIG investigation disclosed that an NRC regional office failed to investigate alleged intentional violations of quality assurance (QA) procedures, attempts by management to circumvent the QA program, and falsification of QA records by plant managers.
j o
The OIG investigation of Thermal Science, Incorporated (TSI), the manufacturer of Theiano-Lag fire barriers, is continuing. TSI used Industrial Testing Laboratories (ITL) to witness qualification tests of Thermo-Lag fire barrier materials. In April 1994,ITL and its President pleaded guilty to five counts of aiding and abetting the making of false statements within the jurisdiction of the NRC. In September 1994, TSI and its President were indicted on charges of conspiracy and false statements.
vii
The OlG conducted an investigation into complaints from employees at the Tennessee e
Wiley Authority (TVA). The complainants claimed that the NRC had granted them confi-dentiality but had subsequently disclosed their identities. The investigation determined that the NRC had disclosed the identities of the TVA allegers to the TVA's OlG.
The OIG received information from a confidential source that members of an advisory committee to the Commission were possibly abusing NRC's expense reimbursement pro-cess. The investigation disclosed that two members submitted improper claims. One of the members subsequently resigned.
The OIG investigated a theft of funds through NRC's payroll system. The investigation found that two NRC employees abused the payroll system by fraudulently claiming over-time expenses. The OlG conducted a separate review to explain to the Commission why NRC management failed to detect the time and attendance fraud.
The OlG investigated the accuracy ofinformation provided by senior NRC management to OIG during a previous investigation. OIG determined that a senior NRC manager provided inaccurate information during the earlier investigation, and OIG identified weaknesses in NRC's procedures for conducting safety evaluations and tracking generic safety issues, viii
Tus v.s. nuctsaa asoutsroar couurssion The Energy Reorganization Act of 1974, as amended, established the NRC as an independent agency of the Federal Government. This act, along with the Atomic Energy Act of 1954, as amended, provide the framework for regulating the nation's commercial nuclear power indus-try.
The NRC's scope of responsibility is diverse and complex. Its mission is to ensure that civilian uses of nuclear materials in the United States are carried out with the foremost regard for pro-tection of public health and safety, the environment, and national security. The use of nuclear materials includes the operation of nuclear power plants and medical, industrial, or research applications.
The NRC fulfills its responsibilities through licensing and regulatory activities supporting six major program areas:
Reactor Safety Research (Research) e Reactor Special and Independent Reviews, Investigations, and Enforcement e
(Reviews)
Nuclear Material and Low-Level Waste Safety and Safeguards Regulation e
(Low-Level Waste)
High-Level Nuclear Waste Regulation (High-Level Waste) e Reactor Safety and Safeguards Regulation (Reactor Regulation) e Nuclear Safety Management and Support (Management & Support) e i
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The NRC's fiscal year (FY) 1994 budget is $535 million, which includes the OIG's budget of $4.8 million.
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Major NRC Programs s
FY 1994 Budget
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(Total $535 Million*)-,'
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Management & Support '
Research l
(Total $162.1 M) y
($92.8 M) ;
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Reviews
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($30.7 M)
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lh Waste Tfhyf9$'[fhj hh..
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-($61.6 M)
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High LevelWaste
($22.0 My 1
Rea'ctor Regulation a (Total $161.0 M)
. Note: Includes otG Budget of $4.8M Source: NRC Green Book Budget Estimates NUREG-1100, Volume 10 f
2 4
2
Tus orrics or ras rusescroa osusaat The Inspector General Act of 1978, as amended, created an independent OlG within the NRC.
The OIG's primary mission is to assist the NRC in operating more effectively and efficiently by identifying ways to improve the agency's programs and operations through the prevention and detection of fraud, waste, and abuse.
To accomplish its mission, OIG's audit staff conducts performance and financial audits, as well as special evaluations. Performance audits focus on NRC's administrative and programmatic operations. Through financial audits, OIG reviews NRC's internal control systems, transaction processing, and financial systems. Special evaluations usually examine the implications of NRC's programs that affect national issues.
The OIG's investigative staff conducts investigations and special event inquiries. The OlG in-vestigates violations oflaw or misconduct by NRC employees and contractors and allegations of irregularities or abuse in NRC programs and operations. Special event inquiries examine an event that does not focus specifically on individual misconduct.
In addition, the NRC's OIG shares some unique responsibilities with the agency. The NRC's primary mission is to provide adequate assurance that public health and safety is protected in the commercial use of nuclear materials and in the operation of nuclear facilities. The OIG assesses i
and reports on NRC's efforts to ensure that its safety-related programs are operating effectively.
Of particular impos. ace is the NRC's responsibility for ensuring that individuals who identify nuclear safety concerns do not suffer adverse job actions as a result of these activities. The OlG continually evaluates NRC's efforts to combat this type of unlawful discrimination.
The NRC is relatively unique among Federal agencies because it is required by the Omnibus Budget Reconciliation Act of 1990 to recover approximately 100 percent ofits budget authority.
In FY 1993, the NRC collected approximately $507.1 million in fees from the industries that it regulates. Therefore, the agency must employ sound financial practices to fully comply with its legislative mandates, and OIG's financial audits help the agency to meet these objectives.
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Tus caterrisancist arricsasacr The Chief Financial Officers Act of 1990 (CFO Act) gave the Inspectors General of the 23 departments
{t and agencies cited in the act new responsibilities for
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the conduct of financial statement audits of Federal a,
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trust funds, revolving funds, and commercial activi-p%
ties. Since the NRC is required by law to collect ap-V j
proximately 100 percent of its budget through the assessment of fees, it is regarded as a commercial ac-tivity and therefore is subject to an audit of its finan-s a
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cial statements.
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The CFO Act was passed to help reform financial h
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management in the Federal Government. The act created the need for a Chief Financial Officer in each i
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of the 23 Federal departments and agencies. The F
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principal statements for the fiscal year that ended s
September 30,1993, which included an assessment b)h g of the agency's internal control structure and its com-y
/. __ h pliance with laws and regulations, were audited by an OIG contractor.
The results of the audit of each major area are as follows:
Principal Financial Statements A qualified opinion was issued on the Statement of Financial Position as of September 30, o
1993. The qualified opinion resulted from a lack of assurance regarding compliance of the U.S. Department of Energy (DOE) with laws and regulations related to NRC funds paid to DOE for work performed at DOE's national laboratories under an interagency agreement between NRC and DOE. In addition, a scope restriction resulted from the lack of historical records to support pre-1992 acquisitions noted in the Property, Plant, and Equipment-net account.
Internal Control Structure Two material internal control weaknesses affecting the financial statements were reported:
o concern about funds spent at DOE's National Laboratories and failure to bill licensees for 10 CFR Part 170 services in a timely manner.
The audit also identified a need to formalize agency policies relating to capitalization of o
property, plant, and equipment.
i Six recommendations were made to improve NRC's internal control structure. NRC agreed with the report findings and provided specific comments about how the recommendations would be implemented.
5
The audit of the FY 1994 financial statements was begun in July 1994 to meet an accelerated date for audited financial statements levied on agencies by the U.S. Office of Management and Budget. OIG and NRC officials have agreed to the accelerated audit schedule.
l l
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Tussuvirraooasu In keeping with the goal of helping the agency to improve its effectiveness, the OIG completed 11 performance and financial audits, and analyzed 45 contract audit reports issued by the De-fense Contract Audit Agency (DCAA) and I contract audit report issued by the U.S. Depart-ment of Health and Human Services (HIIS).The performance audit work resulted in 13 recom-mendations to NRC management.
In addition, the OlG staff from NRC and the Office of Personnel Management jointly conducted an external quality control review of the audit operations of the Treasury Department's Office of Inspector General. This review was conducted in accordance with the April 1992 " Guide for Conducting External Quality Control Reviews of the Audit Operation of Offices ofInspector General" of the President's Council on Integrity and Efficiency. The objectives of the review were to determine if Treasury's OIG (1) has an internal quality control system that is adequate j
and operating effectively,(2) follows the U.S. General Accounting Office's (GAO's)" Govern-ment Auditing Standards," and (3) follows its own established policies and procedures.
NRC Program Areas:
E Reactor Safety Research (Research)
E Reactor Reviews, Investigations, & Enforcement (Reviews) i E Nuclear Material and Low-Level Waste Safety (Low-level Waste)
]
and Safeguards Regulation 1
E High-Level Nuclear Waste Regulation (High-Level Waste)
E Reactor Safety and Safeguards Regulation (Reactor Regulation)
E Nuclear Safety Management and Support (Management & Support) 1 7
AUDIT SUAfhiARIES Decommissioning the Yankee Rowe Nuclear Power Plant:
NRC Policy at a Crossroads (Reactor Regulation & Low-Level if aste)
When a nuclear power plant permanently ceases opera-II tions, the utility begins the process of decommissioning the facility to safely remove it from se" zi:e. The ultimate goalis to reduce residual radioactivity levels to permit the eventu-al release of the property for unrestricted use.
OIG conducted an assessment of NRC's policy and proce-dures for decommissioning. NRC's fundamental decom-missioning requirements stipulate that these activities must pose no adverse public health and safety consequences and must be completed within 60 years of ceasing operations. NRC allows utilities wide latitude in determining how to decommission their nuclear power plants within these requirements.
NRC's current decommissioning practice for prematurely shutdown nuclear plants represents a significant shift from its previous policy. Under NRC's initial policy, the agency allowed a utility to conduct only minor component disassembly, decontamination, and storage and shipment of spent fuel prior to NRC's approval of its decommissioning plan.
In January 1993, the Commission issued new criteria to be implemented on a case-by-case basis regarding what activities would be allowed prior to the agency approving a utility's decommis-sioning plan. The criteria allows utilities to use 10 CFR 50.59 for decommissioning activities prior to NRC's approval ofits decommissioning plan, provided that the utility meets certain con-ditions. With this change, a utility can remove major systems and components and thus signifi-cantly dismantle nuclear power plants before the agency approves their decommissioning plan.
Yankee Rowe was the first nuclear power plant to remove major components under NRC's new policy. A significant number of dismantlement activities, such as removing four steam genera-tors, the pressurizer, and pordqr.s of the reactor internals, have been completed at the Yankee Rowe plant.
In March 1994, a public interest group filed suit in the Federal District Court for the District of Massachusetts against the NRC to halt any and all activity that is part of the early component removal project at the Yankee Rowe plant. The suit was dismissed on May 20,1994, for lack of subject-matter jurisdiction. However, on May 26,1994, the public interest group filed a petition for review with the First Circuit Court of Appeals, as well as an appeal of the District Court's jurisdictional ruling. Consequently, the final resolution of this issue resides with the judicial sys-tem.
8
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Review ofNRC's Technical Assistance j
Activities Under the Lisbon Initiative (Reactor Regulation) 3 Following the accident at Chernobyl in 1986, NRC be-1 gan a program of technical cooperation with the Soviet Union. NRC joined the Joint Coordinating 4
Committee for Civilian Nuclear Reactor Safety (JCCCNRS)in 1988. The JCCCNRS initially focused on cooperative technical exchanges through topic-specific working groups. In May 1992, former Secre-tary James A. Baker announced the Multilateral Nu-clear Reactor Safety Initiative at the Usbon Confer-ence. Under the Lisbon Initiative, NRC, along with the Department of State, the U.S. Agency for Interna-tional Development (USAID), and the Department of Energy, developed proposals for assisting Russia and Ukraine, two of the New Independent States of the former Soviet Union. In FY 1992, USAID began to provide funding to NRC to support NRC's activities to improve the regulation of nuclear power in both Russia and Ukraine.
In FY 1994, OIG conducted two audit.sjointly with USAID's OIG to determine how the USAID funds were used and to evaluate whether they met the objectives of the program for Russia and Ukraine. In both audits, OIG found that NRC's assistance program had a number of positive effects on the regulation of nuclear power in the host country. The reports made observations and recommendations, including the need for performance measures to enhance NRC's techni-cal assictance program.
Review ofNRC's Processfor Regulating Parts Used in Nuclear Power Plants (Reactor Regulation)
OIG reviewed NRC's process for regulating parts used in nuclear power plants. Specifically, OIG examined NRC's justification for changing inspections of utilities' commercial-grade dedi-cation programs from a programmatic to a reactive type performance-based inspection.
From 1986 to 1989, NRC inspections disclosed widespreaa concerns with utilities' programs for approving commercial-grade items for use in nuclear plant safety systems. Based on NRC's con-cerns and the potential for the existence of substandard and counterfeit parts, the industry devel-oped a program to improve the process for approving commercial-grade parts. In 1990 and 1991, NRC conducted assessments and pilot inspections to evaluate the industry's improvement 9
__-__ ~ __ -
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program. In November 1993, N RC decided to change its inspection program from programmat-l ic evaluation of utility activities to a reactive type of performance-based inspection.
l Performance-based inspection is N RC's effort to increase the emphasis on actual observation of ongoing facility activities and to reduce the emphasis on compliance review as the primary re-source for NRC inspections.
l OlG's review disclosed that NRC records do not support N RC's decision to change commercial-l grade item inspections from a programmatic to a reactive type performance-based inspection j
only. The inspections and assessments conducted in the early 1990s appear to present results j
with safety implications similar to the inspections conducted in the late 1980s. Although the j
N RC staff explained their decisions, the staff did not have documented analysis to (1) address the issues leading to the decision to use a reactive-type inspection, or (2) explain the factors that j
mitigate the apparent safety implications of the assessment and pilot inspection findings.
The review also disclosed that N RC had not informed Congress of the change in its commitment 1
to perform programmatic inspections of utilities' programs for approving commercial-grade
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parts used in the safety systems. NRC committed to this action in response to a GAO report on j
the existence of substandard parts. The OlG made recommendations to support and document j
NRC's decision to perform commercial-grade dedication inspections on a reactive basis only j
and to inform Congress and GAO of this change in inspection policy.
i i
l FoHowup of NRC's Contract Closcout Process l
(Management & Support)
The OlG's followup review of recommendations contained in its June 1992 report on NRC's contract closcout process disclosed that corrective action has been taken and the recommenda-tions have been or are currently being satisfactorily implemented. The recommendations stemmed from OlG's review of NRC's backlog of completed but not-yet-closed contracts, which have increased significantly since the last audit in July 1988. OlG noted that the contractor hired to reduce the backlog had made limited progress and, therefore, about $8.1 million in funds was being tied up unnecessarily.
In response to OIG's recommendations, NRC developed a new contractual agreement that con-tained performance standards requiring (1) the closeout of 800 contracts for the first 2 years of the contract and (2) the assignment of first priority to the deobligation of funds, in Februaiy 1994, NRC reported that it had closed 625 expired contracts and deobligated approximately $8 million in excess funds since July 1,1992. As of January 31,1994, the backlog of expired but not-yet closed contracts totaled 386, of which 138 were newly expired. The agency had estab-lished a closeout inventory goal of 300 contracts by July 31,1994. Since the issuance of OlG's followup report, the agency has reduced the number of contracts in the closecut inventory to 287 and has deobligated $9,206,914 in excess funds as of June 1994.
10
Review ofPhnds Management (Management & Support)
The OlG reviewed the NRC's funds management practices and its compliance with established policies and procedures. Specifically,01G examined NRC's unobligated budget carryover (car-ryover), advance procurement planning, allottee financial plans, and fund obligation patterns.
The unobligated portion of NRC's FY 1993 no-year appropriated funds exceeded $53 million, which is almost double the amount for FY 1992. To determine how this increased carryover occurred, OIG evaluated NRC's financial management.
The OIG found that NRC's increased attention to financial management has resulted in im-proved funds management practices. In addition, although NRC's funds management practices generally comply with established policies and procedures, the agency has experienced signifi-cant increases in its level of carryover and unliquidated obligations. The review disclosed two areas where improvements could enhance NRC's financial management: financial management goals, and the advance procurement planning (APP) process.
Although OIG supports the Office of the Controller's efforts to establish financial management goals for the allottees, these goals were generally not achieved during FY 1993. OIG also found that the NRC needs to improve its APP process to achieve orderly procurement planning that could reduce the levels of unobligated commitments and unliquidated obligations. To enhance NRC's financial management, OIG recommended that the agency establish a process for hold-ing allottees accountable for achieving agreed-to management goals, expand initiatives to make the APP process a more effective and timely planning tool, and modify agency guidance to im,r-porate changes to strengthen the APP process.
11
Review of Contracting For Services (Management & Support) e s
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Recently, Federal procurement officials have expressed an interest in the growing and extensive use of contracted senices by various agencies and in whether any abuses and problems result from an increased dependency on these senices. OIG initiated a review of NRC's contracting senices to determine (1) the nature and volume of services (including whether contractors were performing inherently governmental functions),(2) the adequacy of controls on payments made l
to contractors, and (3) whether these contracts accomplished their intended purpose.
OIG's review disclosed that although NRC is dependent upon contractors to perform continuing technical and administrative functions, the use of contracted senices is declining. OIG also found that the NRC has adequate control for approving contractor invoices, that contractors are generally accomplishing what is intended, and that they are not performing inherently govern-mental functions.
NRC Is Considering Actions To Improve Information About the Control ofSealed Sources (Low-Level if aste)
OIG initiated a survey on the control and disposal of byproduct material contained in sealed sources and devices. The survey emphasized the identification and evaluation of any major problems in NRC's effectiveness to ensure that its licensees implement needed precautions for 12
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the control of byproduct materials. OIG identified two issues: the adequacy of NRC informa-
]
tion about sealed sources under the control of general licensees and NRC's lack of complete i
information on events involving loss of control for byproduct material. However, during the course of the audit, OIG discovered that NRC had initiated actions to address the two issues that j
OIG had initially identified. Therefore, OlG concluded its survey and reported on NRC actions underway to address the two issues.
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Followup Review ofNRC's Management of Reporting j
Requirements Under 10 CFR Part 21 i
(Low-Level IVaste)
)
The OlG's followup review of recommendations contained in its November 1990 report on NRC's management of reporting requirements under 10 CFR Part 21 disclosed that NRC had taken corrective action on seven of the eight recommendations. The uncompleted recommen-dation addresses the agency's need to revise 10 CFR Part 21 to accommodate materials licens-j ees. An OIG report in 1990 found that the Office of Nuclear Material Safety and Safeguards did i
j not have a program to monitor its licensees. Although the agency has been working to draft a t
j proposed rule to address materials licensees, increased management attention is needed to j
bring this recommendation to closure.
i 4
4 NRC's Compliance With the Anti-Isbbying Act (Management & Suppon) l To assess NRC's compliance with the Anti-Lobbying Act, the OIG reviewed FY 94 contract ac-tions over $100,000 to determine if the required contract clauses and certifications were in-cluded where applicable. OlG reviewed 18 of the 56 fiscal-year-to-date contract actions and j
found that the agency was generally in compliance with the requirements of the Anti-Lobbying i
Act.
l OIG also found that there were no alleged violations relating to NRC's covered Federal actions, i
therefore, no action was required by the Chairman and the NRC imposed no penalty.
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13
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SIGNIFICANT REC 0hihiENDATIONS NOT YET C0h!PLETED
)
l in accordance with the reporting requirements of Section 5(a)(3) of the Inspector General Act of i
1978, as amended (1988), the agency has not completed actions to implement three recommen-l dations made in the OlG audit report entitled NRC Afanagement ofAfisadministration Informa-tion is Inadequate, dated September 7,1993. The agency informed OIG by memorandum from the Deputy Executive Director for Nuclear Materials Safety, Safeguards and Operations Sup-
]
port on April 21,1994, and September 30,1994 of actions it plans to take regarding the recom-mendations of the report.
OlG found the agency's plans for two of the three recommendations to be satisfactory. Ilowev-er, the agency did not indicate how it plans to implement the other recommendation to use mis-l administration data to establish performance indicators. This recommendation is particularly i
relevant to achieving the Vice-President's National Performance Review initiatives and to es-tablishing performance measures for programs as required by the Government Performance and Results Act of 1993.
OlG conducted a followup review of recommendations contained in its November 1990 report entitied NRC's Afanagement of Reporting Requirements Under 10 CFR Part 21 and found that the agency has not yet completed action on one recommendation. This recommendation addresses l
the agency's need to revise 10 CFR Part 21 to accommodate reporting requirements for material licensees. This revision is necessary to comply with Section 206 of the Energy Reorganization l
Act of 1974, as amended.
j The NRC advised OlG that a study was being conducted to determine which licensees could 3
experience a component failure that could create a substantial safety hazard that should meet the intent and framework of the Part 21 reporting requirement. Preliminary results of the study are expected by November 1994 and a new proposed rule is expected by mid-1995.
1 i
AUDITS IN PROGRESS Survey ofNRC's 2.206 Process-The OlG is conducting a survey of the agency's process for i
handling and responding to petitions filed under 10 CFR 2.206. The purpose of the survey is to determine whether the agency is effectively tracking and resolving petitions in a timely i
manner.
Review of the Office of Research's (RES) Implementation of Prior OlG Audit Recommenda-tions-In response to the Commission's continuing interest in this important regulatory function, OlG is (l) assessing the progress RES has made in establishing performance mea-sures and implementing corrective actions recommended in a March 8,1993, audit report (OIG/92A-11), and (2) evaluating whether current research initiatives meet user needs.
14
Review of NRC's Implementation of Inspection blanual Chapter 1245 Training Require-e ments-NRC established mandatory training requirements to ensure that its inspectors meet minimum knowledge and qualification standards for performing their duties. NRC revised its inspector training requirements as a result of concerns the industry and the staff raised. OIG is reviewing the agency's implementation of the formal training requirements for inspectors to determine how well the agency is meeting its training specifications.
Review ofNRC's bianagement ofInspector Training-NRC spends miilions of dollars annu-ally on its inspector training program. Also, multiple offices provide required training for inspectors. OIG is reviewing the management of the agency's inspector training program to determine if the program is effectively and efficiently managed.
OlG Special Evaluation: Afanagement Review ofImplementation and Tracking of Key Deci-sions-At the Chairman's request OIG is examining NRC's processes for communicating and documenting key decisions having a programmatic or agency-wide application. OIG's initial work will focus on NRC's Office of Nuclear Material Safety and Safeguards but may be expanded to include other NRC offices. The Office of Nuclear Reactor Regulation has examined similar issues within its organization, and OIG will consider the results of that effort, as appropriate.
Review of Compliance with NRC's Notice ofEnforcement Discretion (NOED) Policy and Pro-cedures-Based on concerns raised by a public interest group and the Congress, OIG initi-ated a review of NRC's enforcement discretion policy. Enforcement discretion allows the NRC staff to choose not to enforce an applicable technical specification or license condi-tion in certain circumstances. OlG's objective was to examine NRC's compliance with NOED procedural requirements and the document control process for tracking NOEDs.
OIG has completed the field work and has issued a draft report for management comment.
Audit ofNRC's FY1994 Financia/ Statements-As required by the Chief Financial Officers Act of 1990, the Inspector General (IG) is required to audit the agency's financial state-ments. OlG has retained an independent certified public accounting firm to review the internal controls and prior years' recommendations to prepare for the audit of the FY 94 financial statements.
Review of Consultiog Services-Although the Office of Management and Budget has re-scinded Circular A-120," Guidelines for Use of Advisory and Assistance Services," the stat-utory requirement to report the progress NRC has made in establishing effective manage-ment controls over contracts for consulting services remains. The OIG plans to examine whether the NRC has changed the controls since the last reporting period.
ReviewofNRC's Budget Formulation Process-As a part ofits review of funds management practices in the agency, the OIG is conducting a review of NRC's budget formulation pro-cess. The objective of the review is to determine whether the agency has an adequate bud-get formulation process in place.
Review of NRC's implementation of the Federal A1anagers' FinancialIntegrity Act (FA1FIA) for 1994-Annually, OIG conducts a review to evaluate NRC's compliance with the 15
Fh'FIA. In this year's review, the OIG will evaluate NRC's process for assessing the ade-quacy of management controls. OIG will also evaluate how the agency is correcting the materia' weaknesses reported in prior reports to the President and the Congress.
AUDIT TABLES The NRC's dependence on commercial contract activity is relatively small. Thus, questioned costs and savings are inherently smaller than those reported by most other agencies.
During this reporting period, the OIG analyzed 45 contract audit reports issued by the DCAA and 1 contract audit report issued by IIHS. The following tables depict the cost savings from this l
work.
1 I
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Table I Ofice ofthe Inspector General Reports Containing Questioned Costs (Dollar iblue)
Number of Questioned Unsupported Reports Reports Costs Costs l
A.
For which no management 0
0 0
decision had been made by the commencement of the reporting period B.
Which were issued 7*
244,922 396,971 during the reporting period Subtotals (A+ B) 7 244,922 396,971 C.
For which a management decision was made during the reporting period:
(i) dollar value of 2
80,749 0
disallowed costs (ii) dollar value of costs 0
0 0
not disallowed D.
For which no management 5
164,173 396,971 decision had been made by the end of the reporting period E.
Reports for which no 0
0 0
management decision was made within 6 months of issuance
- Thefigure differsfrom the number ofreports reviewedbecause 35 reports had no questioned costs.
17
Table II Opice of the inspector General Reports Issued With Recommendations That Funds Be Put to Better Use Number of Dollar Value Reports Reports ofFunds A.
For which no management decision 1
$9,580 had been made by the commencement of the reporting period j
13.
Which were issued during the 1*
20,705 reporting period Subtotals (A+ 13) 2 30,285 C.
For which a management decision was made during the reporting period:
(i) dollar value of recommendations 0
0 that were agreed to by management (ii) dollar value of recommendations 0
0 that were not agned to by management D.
For which no management decision 2
30,285 had been made by the end of the reporting period E.
For which no management decision 1**
9,580 l
was made within 6 months of issuance
- Three other pre-award audit reportsfound that either zero funds were availablefor better use, or that no contract was awarded.
- Selection of awardee was delayed due ;o conflict of-interest issues.
18
Tusinvesriosriva raooasu i
SPECIAL AGENT During this reporting period, the OlG received 213 allega-i i
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tions, initiated 57 newinvestigations, and closed 52 cases. In UQ}Sg "dd' " 43 '"""'" **'" ="de '
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f NRC Program Areas:
i E Reactor Safety Research (Research)
I E Reactor Reviews, Investigations, & Enforcement (Reviews) l 5 Nuclear Material and Low-Level Waste Safety (Low-Level Waste) and Safeguards Regulation j
E High-Level Nuclear Waste Regulation (High-Level Waste)
E Reactor Safety and Safeguards Regulation (Reactor Regulation)
J E Nuclear Safety Management and Support (Management & Support) i 1
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INVESTIGATIVE CASE SUMMARIES NRC Mishandled Allegations ofFalsification of Quality Assurance Records (Reactor Regulation)
An OIG investigation determined that an NRC regional office did not investigate allegations of deliberate violations of River Bend Station quality assurance (OA) procedures, attempts by Riv-er 13end management to circumvent the OA program, and falsification of OA records by plant managers in an effort to cover up an intentional violation of OA welding procedures. These allegations challenged the viability of the River Bend OA program and raised questions about the integrity of the plant officials involved in the alleged misconduct.
OlG found that the regional inspector had concluded after a brief review that the reported weld-1 ing violations were non-safety related. The regional office did not address the deliberateness of the OA violations or the actions by plant management to circumvent the OA program. Addi-tionally, despite reports that plant managers falsified QA records to attempt to cover up an in-tentional violation, the regional office did not enter an allegation of misconduct by plant man-agement into the regional Allegation Management System and did not conduct an investigation into the alleged misconduct. As a result of OlG's investigation, an NRC task force was as-sembled to resiew this matter.
20
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Industrial Testing Laboratories and Its President Plead Guilty in U.S. District Court (Reactor Regulation)
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Thermo-Lagfire barrier test article following NRC-sponsored test l
at Underwriters Laboratories, incorporated.
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The OIG investigation of Thermal Science, Incorporated (TSI), the manufacturer of Thermo-Lag fire barriers,is continuing. On April 14,1994, Industrial Testing Laboratories (ITL) and its President pleaded guilty in U.S. District Court in Baltimore to five counts of aiding and abetting i
the making of false statements within the jurisdiction of the NRC. TSI used ITL to witness the l
fire endurance and ampacity derating tests that were used to demonstrate to the NRC, the nu-clear utilities, and the American Nuclear Insurers (ANI) that Thermo-Lag met NRC require-ments specified in 10 CFR Part 50, Appendix R.
l ITL and its President admitted to signing test reports and letters prepared by TSI on ITL statio-4 nery, which falsely purported to be test reports and letters written by ITL The test reports also falsely represented that fire endurance and ampacity tests had been performed "under the su-i pervision and total control of Industrial Testing Laboratories." These letters and test reports j
were signed by ITL even though the documents contained false information about the testing j
process and represented facts about the tests for which ITL had no knowledge. Between March l
21 I
1982 and January 1991, ITL and its President aided and abetted TSI in the issuance of more than 30 false test reports on Thermo-Lag that TSI sent to the NRC, the nuclear utilities, and ANI.
On September 29,1994, a special Federal grand jury returned a seven-count indictment against TSI and its President. The charges included conspiracy, false statements, and Atomic Energy Act violations in connection with the sale to nuclear utilities of more than $58 million of Thermo-Lag that was subsequently installed in over 70 nuclear power plants.
NRC Fails To Protect the Identities of Tennessee Valley Authority Allegers (Management & Support)
This investigation was conducted as a result of complaints received by the OlG from employees of the Tennessee Valley Authority (TVA). The OlG investigation disclosed that the complain-ants had brought safety concerns to the NRC because they feared retaliation if they reported their concerns directly to TVA. NRC granted the complainants confidentiality, but the NRC subsequently disclosed their names to TVA's OlG without the consent of the complainants. OIG learned that the disclosures were the result of a Memorandum of Understanding (MOU) be-tween TVA's OIG and the NRC Subsequently, the NRC rescinded its MOU with TVA's OIG.
False Claims by Members of a Commission Advisory Committee (Reactor Regulation)
OIG received information from a confidential source that members of an advisory committee to the Commission were possibly abusing the NRC's expense reimbursement process. OIG con-ducted investigations into questionable claims submitted by two members.
OIG determined that one member submitted claims to the NRC in excess of $34,000 for the cost of secretarial sersices provided by his spouse. The U.S. Department of Justice (DOJ) declined prosecution of this individual. Also investigated under false claims statutes, was an allegation that a second committee member was improperly reimbursed $5,520 for office rental expenses.
This individual also submitted claims and received $10,650 for the cost of secretarial services provided by his spouse. The member resigned as a result of this investigation, and DOJ is con-sidering criminal prosecution.
1 22
l l
They of$135,000 Through the NRC Payroll System (Management & Support)
OIG conducted an investigation into the theft of money through the NRC payroll system. OIG determined that two NRC employees abused the payroll system by fraudulently receiving over-time payments in excess of $135,000. This theft was accomplished by adding hours to timecards after they were signed by a manager or by forging the signature of an overtime certifying and approving official. This matter was referred to the U.S. Attorney's Office for the District of Maryland for prosecution consideration.
At the request of the NRC Chairman, OlG conducted a separate review to provide the Commis-sion with an understanding as to why managers failed to detect the time and attendance (T&A) fraud. OIG found that the present T&A system contains a number of measures designed to en-sure that the system is not abused or manipulated. However, some NRC managers were un aware of the security measures, whereas others did not fully understand their responsibilities with respect to recording and verifying employee T&A.
Senior NRC Manager Provides Inaccurate Information on Rosemount Transmitters (Reactor Regulation) l OIG conducted an investigation into the accuracy ofinformation provided by senior NRC man-agers to OIG during a previous OlG investigation (OIG Semiannual Report, October 1,1993 -
March 31,1994) involving allegations that the staff avoided its regulatory responsibility. The current OIG invastigation disclosed that a senior NRC manager provided inaccurate informa-tion about how the NRC staff addressed problems associated with a pressure monitoring device used in many nuclear power plants. The investigation also identified weaknesses in NRC's pro-cedures for conducting safety evaluations and tracking generic safety issues.
23
INVESTIGATIVE STATISTICS Source of Allegations (Totat 213*)
Of the 213 allegations, none were carried forwardfrom the unc Management (79) previous period, and NRC 23 resultedfrom Empfoyee holline Calls.
(14 O
Anonymou ong ss (2)
(22)
Other Gov't.
Agenckes (8)
Regulate intervenor (4)
Industry (1)
OlG Investigation or Audit (8)
Genera Public (71)
" Note: Includes Media (2) and Contractor (2) sources for this period Dispos tion of The remaining Allegat ons allegations were l~"
i closed through
'm administrative procedures.
L_
43 V
5~
24
4 INVESTIGATIVE STATISTICS (continued)
Status of Investigations Pending DOJ Action 4
DOJ Declinations 4
Indictments & Arrests 4
Convictions 3
PFCRA Referrals 1
PFCRA Recovery
$7,027 NRC Administrative Actions Terminations & Resignations 6
Suspensions & Demotions 1
Other Administrative Actions 10 Total 17
\\
INVESTIGATIONS
SUMMARY
(From April 1,1994 to September 30,1994)
[6tabil6cktionofIQQtl0hlCaNyover llbpbned((Ul5}Q@[rbis}
Conflict of iterest 5
5 2
8 Internal Fraud 4
11 7
8 External Fraud 9
3 10 2
False Gtatements 2
2 2
2 Then 0
2 0
2 Misuse of Government Property 5
2 3
'4 Employee Misconduct 4
11 7
8 Management Misconduct 18 9
16 11 Technical Allegations-Other 5
12 5
12
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P5 TT
--nas u
mu aw Event inquiry 0
2 1
1 25
Srscist usarvass U.S. NUCLEAR SAFEW ASSISTANCE PROGRAMS IN RUSSIA AND UKRAINE The explosion at the Chernobyl nuclear power plant in 1986 caused higher levels of radioactive iodine to be registered in Harrisburg, Pennsylvania, than did the accident at Three Mile Island, which took place only a few miles away from Harrisburg. Because a cloud of radiation has no territorial boundaries, the U.S. Gov-ernment has an interest in the safe operation of nu-clear reactors at any location worldwide.
Ukraine's Chernobyl nuclear power plant consists of four RBMK reactors. The RBMK is a basically unsta-ble reactor design which, among other safety defects, does not have a containment building (a primary safety feature of U.S. reactors). Ukraine operates 2 RBMKs at Chernobyl(one having been disabled by fire in 1991) and 12 other reactors within Ukraine's borders. Russia operates 11 RBMKs, as well as 14 other reactors.
The United States and other Western nations have long recognized the need to improve the safety of nuclear reactors in the former Soviet Union. Following the accident at Chernobyl, the United States and the Soviet Union formed the Joint Coordinating Committee on Civilian Nu-clear Reactor Safety (JCCCNRS), which began a series of technical exchanges and initiated an important dialogue on reactor safety between the two superpowers.
Following the breakup of the Soviet Union, former Secretary of State James A. Baker an-nounced the Multilateral Nuclear Reactor Safety Initiative at the Lisbon Conference, in May 1992. Under the Lisbon Initiative, the NRC, along with the Department of State, the U.S.
Agency for International Development, and the Department of Energy, developed proposals for providing a broad program of nuclear safety assistance to Russia and Ukraine.
Although the NRC has cooperative technical exchange programs with many countries, its pro-grams with Russia and Ukraine encompass a full range of regulatory expertise. For example, NRC is helping the Russian and Ukrainian regulators create an emergency support center,im-prove their licensing and inspection activities, establish training programs, develop fire safety standards, and upgrade their computer modeling analysis capabilities. NRC is primarily using technical experts to train Russian and Ukrainian regulators, while also providing equipment such as computers and communication devices. USAID has provided the NRC with over $13 million for fiscal years 1992 through 1994 for these programs, with more funding potentially available.
To ensure that NRC programs in the former Soviet states are meeting their intended goals, NRC's OIG and USAID's OlG conducted audits of regulatory assistance programs to Russia 27
and Ukraine. Ajoint team of auditors visited Russia and Ukraine in February and May 1994 to intersiew regulators and to assess the progress of the assisunce programs.
To date, these cooperative programs have succeeded in increasing the stature of the regulatory authorities in both countries, establishing radio linkage between Russian regulators in Moscow and two of its nuclear power plants, and developing laws on nuclear safety for consideration by the Ukrainian parliament. The auditors recommended ways to improve NRC's management of the program. These improvements include performance measures to gauge the program's prog-ress and interim milestones to alert managers to any problems in implementing the program.
ISSUE AREA MONITORING During the past year, OIG developed and instituted Issue Area Monitoring (I AM) to strengthen its oversight of NRC's operations, activities, and programs. Through continuous communica-tion with NRC managers, OIG's Issue Area Monitors foster and enhance their understanding of the regulatory responsibilities and activities of the agency's major program and regional offices.
OlG's policyis to ensure that its limited audit resources are focused on the most important NRC issues-issues in which OlG can make the greatest contribution toward improving the efficien-cy, the effectiveness, and the economy of the agency. Tb accomplish this goal, OIG must possess current knowledge of NRC's major programs and activities.
These issue areas parallel the agency's major program areas. An OIG senior-level auditor is assigned to each area. The monitors must be familiar with the agency organizations and func-tions for their area and must establish and maintain contact with NRC program managers. OIG uses this process to identify emerging issues and to enhance its ability to promptly respond to
'lueries from Congress, the Commission, and others.
Internally, the monitors phy a major role in developing the Inspector General's annual plan and provide a global approach to the strategic planning and development of OIG's annual audit plan. IAM improvesinternal coordination between the audit staff and the investigative staff on issues of mutual concern. The monitors also periodically brief OlG management and assist OlG legal counselors in preparing comments, as appropriate, for regulatory matters. IAM benefits OIG by allowing the office to best utilize its limited resources.
28
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i The Inspector General Act,5 U.S.C. App.3, Section 4(a)(2), requires the OIG to reviewexisting and proposed legislation and regulations and to make recommendations concerning the impact of such legislation or regulations on the economy and efficiency of programs and oper tions l
administered by the agency.
OIG continues to enhance its regulatory review. For example, OIG recentlyimplementec om-prehensive procedures governing its entire regulatory review process. This guidance, w ch is documented in the OIG Regulatory Review Manual, defines the purpose and scope of
- view, j
provides direction for processing and coordinating comments, and details agency resp
<e re-j quirements. The manual also provides guidance on information management and d
. ment i
retrieval systems for legislative and regulatory tracking.
From April through September 1994, the OIG reviewed more than 10 bills introduced o ao Con-gress, approximately 20 proposed regulations,150 Commission papers, as well as numerous j
management directives and other regulatory or policy documents originating within NRC. This work resulted in a variety of substantive and procedural recommendations to NRC manage-l ment.
I LEGISLATIVE DEVELOPMENTS i
On September 28,1994, OIG forwarded to Congress its comments on two newly introduced l
bills affecting IG activities, namely, the " Inspector General Reform Act of 1994"(H.R. 4679),
{
and the "Whistleblower Protection Enhancement Act of 1994"(H.R. 4680).
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29 l
In a letter to Congressman John Conyers, Jr. (D-MI), Chairman, Subcommittee on Legislation and National Security, Committee on Government Operations, and Congressman John M.
Spratt, Jr. (D-SC), Chairman, Subcommittee on Commerce, Consumer, and Monetary Affairs, Committee on Government Operations, OIG conveyed its overall support for the legislation. In addition, substantive comments were provided, which addressed several provisions (e.g., term limits on IGs, subpoenas duces tecum serviceable on other Federal agencies).
In addition to commenting on the proposed legislation, OIG identified areas in which further legislation is needed. Of particular significance was the recommendation that IGs be given tes-timonial subpoena authority. OlG noted the benefits to be gained from this authority, particu-larly when the establishment that an IG oversees has statutory testimonial subpoena authority, as is the case with NRC through the Atomic Energy Act. Granting IGs similar authority places both the IG and the agency on an equal par. Further,IG testimonial subpoena authority would avoid unnecessary jurisdictional issues when the agency's investigative office and the IG conduct joint investigations.
OIG also reviewed the " Federal Acquisition Streamlining Act of 1994"(S.1587). In relevant part, the legislation provides contractor employees with whistleblower protection and requires agency OlGs to investigate specified complaints. Further, it instructs the Comptroller General of the United States to review the independence of legal services provided to IGs. This legisla-tion was passed by Congress on September 22,1994, and is expected to become law in October.
PATIENT RELEASE CRITERIA On March 18,1994, OIG commented on proposed amendments to NRC regulations pertaining to the release of patients from medical facilities who have been administered radioactive mate-rial. The proposed change in the regulation would,in some cases, permit the release of a patient who previously was required to remain hospitalized because of radioactivity.
OIG had numerous concerns with the staff's proposal. In the spirit of the National Performance Review,01G personnel met with NRC staff to resolve concerns before OlG issued a formal comment. The meeting, which included technical and legal representatives from the agency, fo-cused on documentation of the depth and detail of the staff's analysis. As a result of this meet-ing, the staff prepared a memo identifying additional data and information considered, but did not change the proposed amendment.
As drafted, the staff's recommendation to the Commission appeared to reflect inadequately supported analysis. Of additional concern was the staff's apparent reliance upon information from biased sources without elaboration upon the weight afforded that information. Both the staff's recommendation and its supporting analysis noted the medical community's support for easing the release criteria. Cited comments from medical interests included reduced exposure of medical personnel to radiation, availability of hospital beds for other treatments, and large dollar savings. The resulting increased radiation exposure to individual outside medical 30
facilities was not discussed with detailed supporting data or information. OIG comment re-flected concern that, although the proposed change to NRC regulations might not significantly affect public health and safety, the staff's recommendation and analysis could have been more thoroughly supported.
The draft amendment, clarifying memorandum, and OIG comments were forwarded to the Commission. By memorandum dated May 11,1994, OIG was notified that the Commission approved the staff's recommendation.
OTHER MANAGEMENT DIRECTIVE REVIEWS On April 25,1994, OIG commented on management directive (M D) M D 11.4, "NRC Small and Disadvantaged Business Program." To increase contract participation from small and disadvan-taged basinesses, among other action, the agency recommended dividing acquisitions into sev-eral parts. OIG noted that the language of the directive could inadvertently support the inap-propriate splitting of contract requirements. OIG suggested additional language to clarify ap-propriate methods for dividing requirements. In response to similar comments from OIG and l
the Office of the General Counsel, the directive was revised and published with clearer defini-l tions.
On September 12,1994, OIG reviewed draft MD 12.5,"NRC Automated Information Systems Security Program." The directive established responsibilities for planning and implementing the security program for the NRC's automated information systems that process, store, or pro-duce sensitive unclassified and classified information or data. Because a contractor can be heavily involved in the development of a system, an office may lack the technical background and/or expertise required to develop an adequate system security plan. Therefore, OIG recom-mended that NRC's Office of Information Resources Management (IRM) retain responsibility for that system's security plan, and that IRM work closely with the office throughout the certifi-cation and accreditation process. In addition, OIG requested that the directive mention that the OIG must be notified of any suspected wrongdoing.
1 1
31
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0THER ACTIVITIES i
l OIG PLANNING CONFERENCE I
In June 1994, the third Annual OIG Planning Conference was held at NRC Headquarters, j
Rockville, Maryland. The conference theme was "How Is the Office of the Inspector General l
Doing?" Panels composed of agency, industry, and special interest representatives presented various issues to the OIG staff. The first panel of senior agency managers outlined its views on the strengths and weaknesses of OIG. The panel also provided suggestions for improving the coordination and planning of OIG work. The second panel, representing the nuclear industry, outlined areas of concern that OIG should consider for auditing. The last panel, representing 1
j various nuclear public interest groups, provided audit suggestions, as well as its perspective on j
NRC's regulation of the nuclear industry.
I Y
pl 4Werb s m V.
q Picturedfrom left to right: Timmas Barchi, Ron Simard, Bill Rasin, Ellen Ginsberg i
yp i
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Picturedfrom left to right: Robert Watkins, Jane Fleming, Paul Blanch, Paul Gunter, and James Riccio I
i 33 i
i
PEER REVIEWASSESSMENT An interagency peer review team recently completed a quality control review of OIG's audit activities. The review was conducted in accordance with criteria of the President's Council on Integrity and Efficiency and generally accepted Government auditing standards. The objectives of the review were to determine whether NRC's OIG (1) has an internal quality control system that is adequate, in place, and operating effectively and (2) follows its established policies and procedures and the Government auditing standards of GAO.
The audit team reviewed OIG's audit policies, procedures, and operations, as well as 7 of the 22 audits completed by the OIG during the semiannual reporting periods ending September 30, 1993, and March 31,1994. In its report, the team concluded that the OIG's internal controls "are operating effectively and provide reasonable assurance that the OIG is following its estab-lished policies, procedures, and Government auditing standards."
MANAGEMENTFOCUS GROUPS Management focus group training is an initiative undertaken by the IG as a means of communi-cating proactively and positively with the agency's top managers on a collegial and personal lev-el.To achieve this communication goal,60 of the agency's most senior operational and adminis-trative managers were divided into 6 groups. These small groups of executives, the IG, and the IG's senior staff convened with an agenda designed to inform managers of OIG operations and to elicit communications regarding areas of management concern.
Responding to frequently asked questions about how the OIG functions, the initial part of the IG's presentation described each of OIG's organizational components, processes, and proce-dures. Next, OIG products from each component-audit, investigative, and regulatory com-mentary-were reviewed, along with the purpose, substance, and agency response for each type of document. The OIG introduced OIG traininginitiatives and Issue Area Monitoring; a discus-sion of the various effects of these initiatives on agency management followed.
Assimilating data from audits and investigations during the last 5 years, the IG provided insight and observations about the climate of the agency. The IG enumerated program vulnerabilities that had surfaced as recurring causes of audit findings, as well as the more frequent staff miscon-duct problems evidenced in investigations. The IG also identified alternatives for corrective action in each of these areas.
The presentations concluded with the IG soliciting comments from the managers concerning which OlG efforts were most beneficial to the agency. The IG also asked for ir.put as to how OIG's limited resources could be more effectively directed in the future.
34
PPENDICES AUDIT LISTINGS Internal Program Audit Reports Date Title Number 4105/94 Followup Review of NRC's Contract OlGl94A-10 Close-Out Process 6/23/94 Review of NRC's Contractingfor OIGl94A-08 Services 6/24/94 NRC Is Considering Actions to OlGI94A-14 Improve Information About the Control of Scaled Sources 6/27/94 Decommissioning the Yankee Rowe OIGl94A-07 Nuclear Power Plant: NRC Policy At A Crossroads 6/28/94 Review of NRC's Technical OlGl94A-15 Assistance Activities in Russia Under the Lisbon Initiative 6/28/94 Followup Review of NRC's OIG194A-21
\\
Management of Reporting Requirements Under 10 CFR Part 21 6/29/94 Results of the Audit of U.S. NRC's OlGl94A-09 FY1993 Financial Statements 7/19 NRC's Compliance With the Anti-OlGl94A-22 Lobbying Act: Section 319 of Public Law 101-121 7/28/94 Review of NRC's Processfor OIGI93A-25 Regulating Parts Used in Nuclear Power Plants l
7/29/94 Review of NRC's Technical Assistance OlGl94A-25 l
Activities in Ukraine Under the Lisbon Initiative 9/23/94 Review of Funds Management OlG194A-17 35
INVENTORYOF CONTRACT AUDITS OlG Questioned Funds 1%t To issue Contractor /
Costs Retter Use Date Contract Number (Dollars)
(Dollars) 04/04/94 ENGINEER INTERNATIONAL, INC.
O NRC-04-83-016 04/04/94 COLUMBIA UNIVERSITY 0
NRC-04-85-113-02 04/11/94 COMEX CORP.
69,224 NRC-05-86-170 04/19/94 TEC11NOLOGY APPLICATIONS,INC.
0 04/25/94 BATTELLE COLUMBUS LABORATORIES 0
NRC-04-76-293-07 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-101 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-102 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-103 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-104 05/04/94 SONAIXSTS, INC.
O NRC-03-89-031-106 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-107 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-109 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-110 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-111 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-112 l
36 l
INVENTORY OF CONTRA CT A UDITS (Continued)
OIG Questioned Funds Put To issue Contractor /
Costs Better Use Date Contract Number (Dollars)
(Dollars) 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-113 05/04/94 SONALYSTS, INC.
O NRC-03-89-031-117 06/01/94 SCIENCE & ENGINEERING ASSOC.
139,794 NRC-04-87-086 06/08/94 LEHIGH UNIVERSITY 11,525 NRC-04-81-133 06/08/94 WESTINGHOUSE ELECTRIC CORP.
O NRC-04-90-085 06/10/94 CORE CORPORATION O
RS-NRR-94-035 06/17/94 SOUTH RESEARCH INSTITUTE O
NRC-03-87-119-02 06/17/94 CREARE, INC.
O NRC-04-86-127 06/17/94 ANATEC INTERNATIONAL INC.
O RS-NRR-94-035 06/22/94 BATTELLE MEMORIAL INSTrfUTE O
NRC-04-87-066-29 06/22/94 BATTELLE MEMORIAL INSTITUTE O
NRC-04-87-066-26 06/22/94 BATTELLE MEMORIAL INSTITUTE O
NRC-04-87-066-31 06/22/94 BATTELLE MEMORIAL INSTITUTE O
NRC-04-84-103 l
06/29/94 ABB COMBUSTION ENGINEERING 0
06/30/94 PACIFIC SCIENCE & ENG. GROUP 0
NRC-04-90-074 37
INVENTORY OF CONTRA CT A UDITS (Continued)
OlG Questioned Funds Put To.
Issue Contractori Costs Better Use i
Date Contract Number (Dollars)
(Dollars) 06/30/94 WESTINGHOUSE ELECTRIC CORP 0
NRC-04-91-049 06/30/94 CREARE, INC.
0 07/07/94 IRVING BURTON ASSOCIATES 0
NRC-10-87-355 07/22/94 PENNSYLVANIA STATE UNIVERSITY 0
NRC-04-92-040 07/22/94 SONALYSTS, INC.
O RS-NRR-94-022 08/09/94 CORE CORPORATION 41,410 RS-NRR-94-022 08/29/94 TI-lE SCIENTEX CORPORATION 0
09/01/94 MATERIAL ENGINEERING ASSOC.
0 NRC-04-88-072 09/12/94 MANUFACTURING SCIENCES, INC.
O NRC-04-84-121 (FY 85) 09/12/94 MANUFACTURING SCIENCES, INC.
O NRC-04-84-121 (FY 86) 09/12/94 M ANUFACTURING SCIENCES, INC.
O NRC-04-84-121 (FY 87) 09/12/94 M ANUFACTURING SCIENCES, INC.
O NRC-04-84-121 (FY 88) 09/14/94 ADRIAN BROWN CONSULTANTS, INC.
23,306 NRC-02-05-009 09/20/94 ADRIAN BROWN CONSULTANTS, INC.
1,073 NRC-02-85-009 09/20/94 ADRIAN BROWN CONSULTANTS,INC.
291,827 NRC-02-85-009 09/20/94 ADRIAN IIROWN CONSULTANTS, INC.
105,144 NRC-02-85-009 38
BBREVIATIONS ANI American Nuclear Insurers APP Advance Procurement Planning Process CFO Act Chief Financial Officers Act CFR Code of Federal Regulations DCAA Defense Contract Audit Agency s
DOE U.S. Department of Energy DOJ U.S. Department of Justice FMFIA Federal Managers' Financial Integrity Act FY Fiscal Year GAO U.S. General Accounting Office HHS U.S. Department of Health and Human Services IA M Issue Area Monitoring IG Inspector General 1
IRM NRC's Office of Information Resources Management ITL Industrial Testing Laboratories JCCCNRS Joint Coordinating Committee for Civilian Nuclear Reactor Safety MD Management Directive MOU Memorandum of Understanding NOED Notice of Enforcement Discretion NRC U.S. Nuclear Regulatory Commission NRC's Office of the Inspector General OIG t
PFCRA Program Fraud Civil Remedies Act
]
QA Quality Assurance
]
T&A Time and Attendance TSI Thermal Science, Incorporated TVA Tennessee Valley Authority 4
USAID U.S. Agency for International Development 39 4
Gwssa EVENTINQUIRY An OIG investigative report which examines an event that does not focus specifically on individual misconduct. This type of investigative effort was previously referred to as an inspection.
FINANCIAL AUDIT A financial audit assesses the effectiveness ofinternal control systems, transaction pro-cessing, financial systems, and contracts.
FUNDS PUT TO BETTER USE Funds identified in audit recommendations that could be used more efficiently by avoid-ing unnecessary expenses.
HOTLINE A toll-free telephone number (1-800-233-3497) available to anyone for reporting inci-dents of possible fraud, waste, and abuse to the NRC's Office of the Inspector General.
MANAGEMENT DECISION A final decision based on management's response to audit recommendations and find-ings.
MATERIAL WEAKNESS A specific instance of noncompliance with the FMFIA of sufficient importance to be reported to the President and the Congress. Aweakness that would significantlyimpair the fulfillme a of an agency component's mission: deprive the public of needed services; violate statutory or regulatory requirements; significantly weaken safeguards against waste, loss, unauthorized use, or misappropriation of funds, property, or other assets; or result in a conflict of interest.
PERFORMANCE AUDIT An OIG audit that focuses on the NRC's administrative and program operations and evaluates how managerial responsibilities are carried out.
SPECIAL EVALUATION An OIG report that examines the implications of NRC's programs that affect national issues, such as high-level radioactive waste disposal, nuclear pow
' nt decommis-sioning, or the use of radiation by the medical community in treati
'se.
QUESTIONED COST A cost questioned as a result of an alleged violation of law, regulation, contract, or agreem:nt gove. ming the expenditure of funds (costs unsupported by adequate docu-mentation or funds for a particular purpose that are unnecessary or unreasonable.)
40
i, i
How to Contact l
the Ofice of the Inspector General i
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For additional copies of this report, phone:
(301) 415-7013 (301) 415-5930 Or write to the address below:
U.S. Nuclear Regulatory Commission Office of the Inspector General Mail Stop T-5 D28 Washington, D.C. 20555-0001 41
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