ML20141M496

Forwards Partially Deleted Rept Concerning Investigation Into Alleged Falsification of QA Records by Zack Co

ML20141M496
Person / Time
Issue date:	06/07/1983
From:	Jamarl Cummings NRC OFFICE OF INSPECTOR & AUDITOR (OIA)
To:	Hayes B NRC OFFICE OF INVESTIGATIONS (OI)
Shared Package
ML20141M494	List: IA-91-187, Partially Deleted Ltr Concerning Investigation Conducted on 820503-830124 Re Allegation of Falsified QA Documentation ML20141M492 ML20141M496 ML20141M580
References
FOIA-91-187 NUDOCS 9208310250
Download: ML20141M496 (21)

Text

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, QNUCLE AR _ REGUL Uf.n L D sT All s

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s'*...+/ June 7, 1983 ggqg3g MEMORA',DUM TOR: Ben B. Haves, Director M Y M ISIU ICN3 Office of" Investigations D ARIIR 9

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FROM: James J. Cumings, Director Office of Inspector and Auditor VMl(N ""

ZACK COMPANY - ALTERATION OF OA RE

SUBJECT:

l In accordance with our tasking from the Comission to monitor the Office of '

Investigations (01) program development, this investigation was reviewed for investigative suf ficiency and possible Department of Justice referral, in the opinion of the Office of Inspcctor and Auditor (OlA) this investigation into the alleged f alsification of the quality assurance records by Zack Corrany employces was completed in a very professional manner. The report is comprehensive and conplete.

As to ry decision whether referral of the matter to the Department of Justice is warranted, I have decicTd to refer the Zack Correny investigation it should be noted this wts an extrenely close call. The 01 investigation determined through admissions by Zack Ccepany Vice Fresident/lianager of Nuclear Construction that he was the party principally responsible for alter-int cuality assurance records and forging certifying signatures. OlA recognitcs the seriousness and pctential criminal culpability for such irresponsible cenduct.

The technical review conducted t'y NRC i,.g:ction personnel generally concluded that the riterations te the cuality assurance cocuments were not of technical

!.ignificance end thcre is nc indication in the O! report that substandard raterial has t'rcr utilized at nuclear constructior sites, it is ry opinion that th9 substartially wulens the n3terielity ele ~ent. However, the willful and deliterate cceduct o' the 2tct Compan,. executive recuires Departrent o' Justice review cf the natter.

I also feel obliged to bring to your ettertion the seriousness in which ! view the Zack Corpany Vice P cicent/lbrager of Nuclear Cerstruction's conduct in this nciter, The alterat. ;ns to the quality atsurance records were eccot.plished ir. e willful and deliberate ranner by a senior executive of a company supplying raterial to the nuclear industry. The U.S. Nuclear Regulatory Comission canrot turn a blind eye to such conduct and must bring to beer the full weicht of its civil regulatory authority in deterring such activity. I will be happy to join with you in conveying this message when the civil penalty is being considered.

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. 4600 W. 12th Place l Chicago, Illinois 60650 l March 1, 1983 STATEMENT I, Christi.,e Zack DeZutel, hereby make the following voluntary b s statement to Robert M. Burton who has identified himself to me as 7 an investigator with the U. S. Nuclear Acgulatory Commission. I to make make this statement freely with no threats or promises of reward CW 1 having been made to me.

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O O I am employed as President of The Zac mpany in Cicero, '

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~ Illinois and have held that position since Jent. ry, 1976.

tA Sharon Marello was hired by Zack Company it. October, 1981, as a clerk in the document control department. lier prior employ-ment had been as a waitress at a restaurant near the Zack Company 4 offices in Cicero, Illinois.

I am not aware of Mrs. Marello being harassed, intimidated 7

or being subjected to severe personal abuse by Zack Company.

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To the best of my knowledge, the document control personnel

.J were under no greater pressure or stress than any other Company employcos.

Mr. Albert T. !!oward was hired by Zack Company on October 19,1983.

On November 16, 1981, at Mr. Calkins' urging, Mr. Howard, after less than a month, became " supervisor" of the document control department

- because of the departure of Howard McGrane, who had baen on " loan" from Consumers Power Company of Michigan to assist in reorganizing the document control function. Mr. Howard was hired at the request of - -

l David Calkins,who was an old friend of his.J ._

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(control department was first located on the second lfloor of the y

b Company office. Subsequently, the departrent was relocated down-stairs near my office. After this time, I perr.onally observed that the department had serious problems with concentrating on and ac-complishing its work. My own work was disrupted on a number of occasions because of the laughter and loud talking which came from 4

the docu't.ent control room. [

.l In January, 1982, Mr. Calkins, who had been Orality Assurance Manager, was made Project Manager at the Midland, Michigan Con-

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$ sumers Power construction site. Shortly thereafter, the Company g promoted Martin Skates, who had been Assistant Quality Assurance Man-ager since September 8, 1981, to assume Mr. Calkins' duties oc OA Manager. Mr. Skates had extensive background and experience in the nuclear OA field, and was well qualified for the position. At about that time, Mr. Ilovard had expressed to Mr. Calkins, a desire  !

to assume Mr. Calkins' prior position.

}lieex-pressed to others displeasure over the fact that he was not given the job of QA Manager, s

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- lack of efficiency and organization in the de-partment, ahck , _ y

.~ )that improver.ents were necessary in the department, I"3sked Andrea Cawley in March, 1982 to review the Chicago document control department operation and suggest improvements.

Mrs. Cawley was experienced in document control and was employed by the Company as lead OC inspector in charge of documen-tation and receiving at the Clinton, Illinois jobsite. She spent ap-proximately one week, in early March wi th the document control depa rt-ment.

She reported to me certain c riticisms of I

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,7' and indicated that M$de ne'gatiMorren ts about their pay.

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She later told re she also felt that i was "trying" to work with, opinionated,

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1 on or about April 15, 1982, Mr. Calkins told me that Mr. Howard had told him that he (liowa rd) had called Hank Leonard, Manager for the Midland, Michigan OA department of Consumers power in Michigan, and made allegations to Mr. Leonard about the Company and its OA documentatlon. As a result, Mr. Leonard and an audit team conducted an audit of Zack Company on April 19 through April 22, 1982. At this time, I was advised by Dave-Calkins that one of Mr. Howard's allega-tions had been an allegation that Zack OA documents were altered after the . time that CAR NO. 14 had been issued. Mr. Howard had never told me that he thought any such alterations existed before making this clair-to Consumers Power. The audit team, after conducting their audit, and after interviewing Mr. Howard at some length, found this claim unsub-stantiated. . , . ~ ~ - - - - - '

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InlateApril,ImadearequestofMr. Howard, as super-visor of the document ,:cntrol department, to formulate a training plan T for the department, including a listing of reauired reading lists and

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, g an identif3 cation of specific procedures upon which training of his l personnel should be conducted. Mr. Howard responded with a two page l outline proposing further " corrective action", including proposals for the entire Zack Quality Assurance program rather than the document con-trol department which he supervised. The detail regarding specific pro-cedures upon which the document control department - - - - - -

needed training was not provided.

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,on the morning of pril 30,1982, I went to the NRC offices in Glen Ellyn, Illinois and met with Mr. D. 1:aya n . I told him that it wan necessary to term-inate the employment of an employee in the Zack Document Control De-partment and to also relieve certain other employees of their duties.

I wanted to make sure he understood that, in 'te event any allega-tions were made, Zack would cooperate fully by providing whatever -

documents and information were necessary to investigate any such al-legatiens fully.

I have read the foregoing statement consisting of eight (8) typed pages. I have made and initialed any necessary corrections and have signed my name in ink in the margin of each page. This statement is the truth to the best of my knowledge and belief. I of he foregoing is true and co: rect.

declare ander penalty Signature: C}uq % 4OL pertury that .

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Subscribed and_oworn to before me this [ST day of_

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Z/.CK CCMPiiNY 12th Place

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1cago, .llinois 00650 j March 1, 1983 STATEMENT I, David E. Calkins, hereby make the following voluntary  !

statement to Robert M. Burton who has identified himself to me as an investigator with the U. S. Nuclear Regulatory Commission. I make this statement freely with no threats or promises of reward having been made to me.

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D In order to respond to the NRC's interest in my understanding

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'N of various concerns related to the Zack Company, I have provided t

) some general background information and than discussed my under-standing of these concerns.

4 A.- BACP. GROUND On June 1, 1981, the Zack Company officially transferred the Midland site quality functions to Consumers Power Company under A

the direction of a group known as MPQAD (Midland Project Quality Assurance Department). This transfer of responsibility also in-

> cluded all the on-site Zack Company quality records; part of which were the material certifications for all items previously shippc

\ to the Midland Project.

In early July, 1981, as the Zack Company Quality Assurance Manager, I was notified by MPOAD of some questionable material certi-fications and requested to check the original copies at the Zack Company files.

The initial check of the questionable certifications revealed that some 0pparen' discrepancies did exist and a preliminary inves-tigation was initiated. The results of this investigation indicated that the discrepancies might be more extensive than originally _ thought, inW m9in ID N * [ maid Kpc[. t xw. -

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and, as the Zack Company 0.A. Manager, I irraediately advised the Midland Project of a po*ential 10CI'R50.55(e) condition (see Zack Anunasnt U .i) W Company letter 7220-M-151-CD-538, dated August 28, 1981'. This 3i3 letter identified four categories of the discrepancies:

1. Material certifications with incomplete information.

2. Material certifications sith technical inaccuracies.

3. Material certifications 5dth possible unauthorized N

6 and improper inodifications, 1

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The letter also attached a copy '% 7ack Company Corrective Action Requeat iseued by me as the Quality Assurance Manager (see CAP-014 dated I.ugust 28, 1981) (AFAC.hmci.i

• 2)hl,y3 As the first step of CAR-014, the Zack Company initiated the formation of a document reviev' team. The team would consist of (4)

Document Tecnnicians and (1) MPOAD Representative to review the ma-

' terial certifications for accuracy and completeness. The Document Review Team consisted of i

(\( 1. Ilovard McGrane - MPOAD Representative Started 9/'81 2, Ron Perry - Quan-Tech Associates Started 9/8/'81

3. Larry Mondock - Quan-Tech Associates Started 8/31/'81

4. Zueil liilyer - Quan-Tech Associates Started 9/'81 i

5. Dean llenigan - Zack Company t Started 9/21'81 p

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During the month of September, 1981, the Document Review Group g gathered enough data to indicate that the material certification prob-Itm also extended to the LaSalle County NJclear Station and the Clinton Nuclear Power Project. Therefore, on September 25, 1981, as the Zack Company O.A. Manager, I notified the Commonwealth Edison Company and Baldwin Associates that a potential 10CTR50. 55 (c) re-port 4ble condition existed (see Zack Compan letters Contract IJ-2590,

$Y4 W L & * $ iq~](orW4 G 9/25/81Aand K-2910-CZB-9N A respectively .

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• 5 8,, Ji di3 D On October 9, 1981, in lett r CD-548A I notified the Midland E

Project and subsequently the Clinton and LaSalle Project, that the I deficiencies identified in the original material certification re-b port could be evaluated as to their reportability under the require-ment: of 10CPR50.55 (e) by October 26, 1981. This letter was based Mnaoa a f W6) @ 3/,/ss upon the October 5, 1981 !nterim Report /of the Document Review Group.

On October 19, 1981, Mr. Albert T. Howard (a personal friend),

was hired as a Document Technician by the Zack Company as e personal Although he had no background in the nuclear industry, favor to me.

I felt, based on his educational background, he was qualified to re-view material certifications.

On October 23, 1981, Aotified I the Midland, Clinton and LaSalle GSO (AnAceNT T) (A rfA.c.mear *g>Q 3 /s/r3 Projects in Zack letters 08-5524)ZCB-300 and Contract #J2590-10-23-81V (Atu CmW7 respectively, of the Zack Company , ovaluation on the reportability h ;

of the material discrepancies. The referenced letters also included as an attachment the "Zack Company, Potential; 10CFR50. 55 (e) Re-Portable Defect Evaluation for Material Certification Deficiencies" report that identified those corrective actions taken by the Zack Company, including the identification and reprimand of Zack Company

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employees involve in the material certificat deficiencies, i

and those planned corr <2ctive actions to be completed.

Between October 19, 1981 and November 15, 1981, Mr. Albert T.

Howard performed the functions of a doctunent reviewer and received  ;

on-the-job training and classroom instruction as to t;.e functions, methods and responsibilities of the Document Control Group by Mr.

T 11oward McGrane. I felt at that time that Mr. !!oward would make a  ;

%g i suitable replacement for Mr.McGrane, MPQAD Representative who had N >

l been acting as supervisor of the document group but was now being called back to Midland.

On November 5, 1981, Mr. Howard was appointed the Document

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'g Control Supervisor effective November 16, 1981. However, Mr. McGrane I

remained at the Zack Company for an additional period of time to in-

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sure a smooth transition.

At the end of January 1982, the Project M.snager for Midland-T =

res190ed due to personal health problems and I accepted the assign-ment. The position of the Zack Company Quality Assurance Manager was given to Martin Skates, q t

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W B. DISCUSSION j ,J The following expresses my understanding of various situations as they apply to concerns > resented against the Zack Company.

The Zack Company has had an established and client approved 2 ki Quality Assurance Program since 1976. This program includes the  ;

formal control of quality documents and has:, been audited periodically

5) by both the Zack Company and its clients. Any programatic or specific

,e deficiencies identified by these audits were entrected and verified P

by the responsible auditors. At no time did I state, or in any way imply, that there did not exist a formal Quality Assurance Docuent Program.

Only that there had been a breakdown in the part or this program that related to material certi ficatior.s and access to those documents.

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Prior to the initiation of a centralized Document Control De-partment, the documents were maintained in four (4) _ separate areas within the Cicero offices and were under the control of their respec-tive departments (i . e . , Engr . , O.C., Mfg. and Purchas.ing).

Based upon discrepancies found with the material certifications, a document review group was initiated in September, 1981. At that time it was detern Ted that all quality related documents would be gathered from their respective areas and brought to the company con-forence room for integration and verification. Therefore, many boxes-of records were on the floor in the conference room at the l

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initiation of the document O review groups' O

efforts.

Individaals engaged by the Zack Company in the review of the document.ation discrepancies were, to my knowledge, qualified by vir-tuo of either their educational background or experience and tne trein-ing provided by the Zack Company for the functions they were to perform.

The primary requirements for this position were the abilities to read and write and some familiarity with technical tarms. The main function performed was the comparison of material documentation (i.e., certified material test reports) against specific technical kj standards for compliance and completeness. This function was ner-4.,

formed in accordance with written instrections and checklists (see instruction No. 04 issued 10/26/81) (ATTAotAteer 93 Ocehyy The Zack Company has investigated whether welders on site and within the Chicago manuf acturing f acilities were qualified in accord- ,

I ance with the recognized staadards and technical specifications.

%, Representatives of the NRC and tho C . I' . Braun Company have reviewed the welder qualifications at the LaSalle project. The Zack Company reviewed the qualification of its Chicago based welding personnel. s (4nAc.H vluYl+)-

This evaluation was performed as part of the potential _ 10CFR2Qrc-Jhh}U ported to the NRC Region III offices on July 29, 1982 and withdrawn iA Wh cH vcar* L10@11.Its on September 14, 1982f. The report of the investigation and the results were transmitted to each of the sites on September 28, 1982.

Mr. H. McGrane provided training for its document centrol personnel for the 2ack Company in both classroom sessions and on-the-job sessions. On-the-job training is specifically reccgnized by the nuclear induetry standard for qualification of personnel in ANSIUN45.2.6 1973, para. 2.1.2 "On-the-job participation shall also be included in the program, with emphasis on first hand experience

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O O gained through actual performance".

Shortly after I joined the Zack Ccmpany in June, 1981, Mrs. I I

Christine DeZutel, President of Zack Company, delegated all signa-ture authority of her office, related to quality matters, to me and to the best of my knowledge, neither she or any other senior management representatives signed-off or accepted any quality doc-umentsinlieuoftheQualityAssuranceDepartment'ssign-off[*'O

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within the Zack Company, access to quality records has always, (i to my knowledge, been limited to responsible individuals of management g or their designees. However, in-process documents, until they were finalized and became quality records, were maintained by the re-

< sponsible departanent. At the initiation of the Document Review Group, it was determined that the most efficient method of operation would

( be to establish a single point responsibility for the filing and dis-tribution of all documents, whether they were quality records or not.

It was during this transition that a certnin amount of confusion and delays were experienced in compiling all the appropriate records.

( The Zack Company did overccme this confusion and establish a central-1::ed filing system where all appropriate doewnents are maintained and distributed. (Juay rep esentation that "even the owner's dog had access to Zack OA records" g d '3 W . ou is an exaggeration and mis-leading. On the one( occasion that the President'3 six week old puppy

- was in the of fice, he got loose for a few minutes and wandered lato the document control group's area and I am not aware that it chewed up any documents. It was considered an extremely humorous situation by everyone at the time.

As stated previously, the Zack Company identified the types of discrepancies on quality records (material certifications) as early b ,]f QfV

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as August 28, 1981. This identification and categorization of the discrepancies was further refined in the Zack Company Corrective Action Report No. 14 and subsequent evaluations and reports on prog-ress (i.e., October 23, 1981 CAR 614evaluationreport)(ATMceC4T"N)

The Zack Company Quality Control Department at the Clinton Pro-ject identified material embossed with Somisa Ind. Argentina on a lece MitauMW d n .- t//ty of 8"x11.5" auxiliary steel channel on NCR (ZC-CB-519 A, dated 6/25/81.

$ An investigction of this situation was conducted. All pieces of kn this steel were either accepted by the design engineers, based upon N

I actual physical tests performed by an independent laboratory, or the D

material was removed from site and scrapped.

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>h certain bolts and nuts that were not pr.sperly marked in accord-ance with the ASTM requirements were identified within the Zack Com-pany and reviewed with the responsible design agency for disposition.

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, An example of this is the Supplier Deviation Disposition Request

1. 2187 dated 9/29/81 by the Zack Company and accepted by Bechtel Corp-oration for the Midland Project 11/2/81 and incorporated into the Midland Technical Specification 7220-M-151(A) Rev. 11. para. 5.12 signed-off 3/4/82.

The Zack Company letters of notification in August and September, 19tl, with the attached C.4rrective Action Peport No. 14 identified improper alteratiens of material certifications (i.e., stickers, white-out, etc.) as one of the apparent discrepancies that the document review group was formed to verify and identify. Part of this veri-fication-function was to obtain missing certifications or corrected certifications from the various suppliers wherever possible. One of the methods utilized to meet this objective used by Zack personnel, includ-ing the document review group, was the generation of a written re-

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quest to the supplier identifying the information required, and in some cases, an acceptable format that would satisfy the requirements ,

and needs of our clients. These requests often resulted in our sup-plier being able to provide the required information alleving the ,

Zack Company to accept the material. Sometimes the information re-ceived allowed for only partial compliance and acceptance for the (Anh cW 4 W materials. For example, U.S. Steel Company letter dated 9/21/81 A 4 identified that it could not certify compliance to their nuclear veri-( fication program but could certify the material to the applicable q\ ASTM stendards specified. Therefore, the material was accepted

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based on having met the technical requirements even though progra-matic requirements were not met. If a supplier could not provide corrected certification, the deficiency was reported to the design engineer for evaluation if required. Copies of the letters of re-quest to RMC, Weld Star, etc. have been provided to the NRC along with their responses and any required dispositions.

The materials specified for HVAC by the respective design ag-s- encies for use in nuclear power plants, is commercial grade materials s

to commercial standards (i.e., ASTM-A-36-xx). The design agencies k have not imposed any specialized codes, like ASME,Section III Boiler and pressure Vessel Codes. Therefore, the materials supplied by the Zack Company complied with the-technical requirements of the design agencies. The Zack Company recognized in CAR-014 that the purchase orders did not, in all cases, impose nuclear programatic requirements on the suppliers, and as part of the corrective action program, a reverification of all purchase orders and evaluation of supplier's commercial programs has been undertaken.

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The Zack Company suppliers w?re originally qualified, based on their historical performance wit}. the Company and certain limi-ted audits, prior to the fct11 of 1981. liowever , based upon the ma-terial certification problems identified in CAR f14, and a review of the suppliers involved, it was determined th<st the Zack Company did not have enough historical data on file to substantiate this as a basis of qualification. The Zack Company then inii.iated a pro-gram of audits and surveys which included the verification of sup-k g pliers commercial programs for identification and control of mater-J als and substantiating the certifications of materials supplied for i

purchase orders that had not imposed nuclear requirements, and re-

% sulted in the development of an Approved Vendors List that can be substantiated.

To my knowledge, Suppliers / Vendors that were determined to be unqualified were removed from the AVL and orders were not placed with them until they had been re-established as acceptable. An example

• V of this is the Delta Screw Company which was removed f rom the " Approved Vendors List" on October 20, 1981. 16 additional orders were placed g

until December 17, 1981, when Delta Screw Company and other hardware suppliers were reinstated based on a telephone conversation with Mr.

liarvey n'escott of the NRC, Region III offices which revealed that a hardware supplier is not required to have a Quality Assurance Program irspection becausethematerialiscompletely)verifiableatreceipt (AnNmccT

• It (see DEC Memo 12/17/81)A. Based on this discussion and the referenced memo, Delta Screw Company was then released for procurement of hard-L i ware items for safety relation applications.

In August, 1981, a.= the material discrepancy problem unfolded, the Zack Company recognized the nead for stricter enforcement of the

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quality requirements and training of its personnel. This was clearly

' delineated in the October 23, 1981 report which outlined the correc-tive actions planned and implemented to date. This recognition was followed up with the development of a new quality assurance manual, I i

i procedural changes, imposition of specific penalties for non compliance i i

(i.e., warning - 3 days off - dismissal) and classroom and or.-the-job 1

b) training.

D 1 Due to the problems identified in CAR-014, Zack Company senior

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p management maintained a close follow-up on the document review group activities and progress. Senior Management continually authorized unlimited overtime to substantiate its support of whatever was re-

_ quired to resolve the problem. To my knowledge, there was no harass-ment of the document review group. Normal management emphasis was ex-A erted to meet connitment dates or keep management advised of any changes.

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The progress reports, relative to CAR-014 issued under my term as Quality Assurance Manager, were prepared initially for the utilities by Mr. lloward McGrane, an independent consultant representing the utility, and later by Mr. Albert T.-Howard. In both cases, Mr. McGrane and Mr. Iloward prepared and issued the reports f or me with the only ,

condition imposed that it was to be issued in a timely manner. No restrictions as to context and conclusions were imposed. To the best of my knowledge, this policy continued under my successor.

As ** the statement of Zack's President to the Midland Project, this was in a letter to the Vice-President of Consumers Power thanking him for providing the services of Mr. McGrane and of the excellent job

. he had done, particularly in relation to the initially established scope of work for safety related applications. This was not a formal status e , , , ,e .-. r

... . . o o report but rather an acknowledgement of the effort and services provided by Mr. McGrane.

All companies and personnel in the construction industries work to deadlines, the Zack Company is no different. The deadlines were be-lieved to be realistic at the time they were set and the personnel in-k't volved were given unlimited overtime to complete them. The actual N hours worked were set by the individuals themselves and were not in-t posed by Zack management. It should also be noted that the deadlines 1

were revised at least three times when it became apparent a complete l

- report could not be accomplished and, in fact, the Midland Project and Clinton Project reports are still open.

I have read the foregoing statement consistirg of fourteen (14) s typed pages. I have made and initialed any necessary corrections and have signed my name in ink in the margin of each page. This stateruent is the truth to the best of my knowledge and belief. I declare under penalty of perjury that the foregoing is true and cor-rect.

Executed on 'l a , d / , / '7 [ 3 at 3.' 6i hM , .

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Interviewee: __ X Z8g u Name l

i Subscribed and sworn to before me this /57 day of d

f////M , 1983 at _

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