ML20196J931

Office of the Inspector General.Semiannual Report to Congress,April-September 1998

ML20196J931
Person / Time
Issue date:	11/30/1998
From:	NRC OFFICE OF THE INSPECTOR GENERAL (OIG)
To:
References
NUREG-1415, NUREG-1415-V11-N01, NUREG-1415-V11-N1, NUDOCS 9812110109
Download: ML20196J931 (38)

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MEMORANDUM TO tie CHAIRMAN i

I On behalf of the Office of the Inspector Geneml(OlG) for the U.S. Nuclear Regulatory Commission (NRC), I am pleased to submit this SemiannualReport to the U.S. Congress. This report summa-rizes significant OIG activities during the period from April 1,1998, through September 30,1998, in compliance with Sections 4 and 5 of the Inspector General Act of 1978, as amended.

During this reporting period, our office completed six performance and financial audits, as well i as two special evaluations of the NRC's programs and operations. This work led the OIG to make several recommendations to the NRC for program improvement. In addition, the OIG completed 49 investigations and 1 Event Inquiry, and made 36 refenals to NRC management. Finally, the OIG l analyzed 20 contract audit reports issued by the Defense Contract Audit Agency. Overall, these j analyses caused the OlG to question $88,038 in costs, and enabled our office to identify $30,769 that I could be put to better use.

As detailed later in this report, the audit and investigative activities canied out during this period, together with other initiatives that are still in progress, have specificaliy addressed 5 of the 10 management challenges facing the NRC, which the OIG has previously identified to Congress.

We look forward to continuing to work creatively to assist you and the entire NRC staff in en- '

suring the highest levels of program efficiency, effectiveness, and integrity in the NRC's operations.

i i

Sincerely, Y h ??/

Hubert T. Bell Inspector General

l l CONTENTS Reporting Requirements Index . . . . . .. . . . ..... . .. . .... . . . .. . . . .. .. . . . . . .. . . . . . . . . ... .. . . . . . .. . .. . . . . . . . . . . .. . .. . . . .. . . . . iv 1

Executive Sum mary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

i The U.S. Nuclear Regulatory Commission ........................... ...... ............. ............ .. .......... .... 1 The Office of the inspector General .. ................... ... ........ . .......... ................... ........ .......... ... 3 The A udit Progrom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Au d i t S u m m a ri e s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Au d it s i n Prog res s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Significant Recommendations Not Yet Completed ......................................................... 12 The In vestigative Program . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

investig a tive Ca se S u m m a ries .. . . . . . . . . . . . . . . . . .. . . . . .. . . .. .. . . .. . . .. . . . . . . . . . . .. .. . . . . . . . . .. .. . . . . . . . ... . . . . . . . .. 15 investigative Stati stics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Special Feature : The NRC's Safety Culture and Climale Survey .................................. ..... 21 Other A ctivities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Reg u la to ry Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

OlG information and Planning Conference ..................... ............................................ 24 Appendices...................................................................................................................26 Au d it Li sti n g s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Au d 'Il To ble s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Abb revi a tio n s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

n ulossary................................................................................................................33 April 1,1998 - September 30,1998 iii l

)

REPORTING REQUIREMENTS INDEX The Inspector General Act of1978, as amended (1988), specifies reporting requirementsfor semiannual reports. This index cross-references those requirements to the applicable pages where they arefulfilledin this report.

CITATION REPORTING REQUIREMENTS PAGE Section 4(a)(2) Review of legislation and Regulations ................................................ 23-24 Section 5\a)(1) Significant Problems, Abuses, and Deficiencies.......................... 7-11,15-17 Section 5(o)(2) Significant Recommendations for Corrective Action ............................. 7-11 Section 5(o)(3) Prior Significant Recommendations Not Yet Completed........................12,13 Section 5\a)\4) Matters Referred to Prosecutive Authorities .................................... ...... None Section 5\a)(5) Information or Assistance Refused ....................................................... None Section 5\a)(6) Listing af Audit Reports .......................... . . .... ........ ... ......... .. .... . ........ .. 26-28 Section 5\a)(7) Summary of Significant Reports ............................................ .. 7-11,15-17 Section 5(o)(8) Audit Reports-Questioned Costs .. ....... .. ............... .. . .................... ........ .... 2 9 Section 5(o)(9) Audit Reports-Funds Put to Better Use ..................................................... 30 Section 5(o)(10) Audit Reports Issued Before Commencement of the Reporting Period for Which No Management Decision Has Been Made ................ None Section 5(a)() 1) Significant Revised Management Decisions .. ....................................... None Section 5(a)(12) Significant Management Decisions With Which the OlG Disagreed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

iv NRC OIG SemiannualReport

EXECUTIVE

SUMMARY

Thefollowing two sections highlight selected audits and investigations completed during this reporting period. More detailed summaries appear in subsequent sections of this report.

AUDITS management processes used to oversee this important agency function. The OIG found E With the assistance of an outside organiza. a lack of consensus about management's tion, the Office of the Inspector General expectations of the PMs' role, inadequate (OlG) surveyed all employees of the U.S. management oversight regarding PM Nuclear Regulatory Commission (NRC) training, and impediments to processing about their attitudes regarding the agency's certain types of technical reviews.

safety culture and climate. More than 56 percent of the NRC's workforce participated E Consistent with the NRC's rebaselining and in the survey. Details regarding this body of direction-setting efforts in 1995 and 1996, work are provided in the Special Feature the Commission tasked the Office of beginning on page 21. Nuclear Regulatory Research (RES) to develop a set of core research capabilities.

E In June 1997, the OIG conducted a Special The O!G conducted a special evaluation to Evaluation to assess the NRC's progress on assess RES progress in developing these the Year 2000 (Y2K) issue. This evaluation capabilities and to determine their uses.

identified several actions that 6 agency The OIG reported that RES preselected core research areas, and did not use Commission-could take to improve its Y2K program. ,,

In a recent update, the OIG focuss on the approved criteria. Additionally, without NRC's efforts to ensure that iis licensees Proper weighting, limited value was gained by using the core capabilities criteria and addmss safety-related Y2K issues. In

"*S ci ted metrics. It was also not clear how particular, the OIG stressed that the NRC .

or if the criteria would be used to identify should attempt to assist its licensees. The and close out projects. Finally, the NRC OlG also provided feedback on efforts staff did not know how the Commission underway m the NRC's Office of Nuclear plans to use the core research capability Reactor Regulation (NRR) and Office of results in the future. The value of this Nuclear Material Safety and Safeguards analysis may be less than expected unless (NMSS). Finally, the OIG discussed with the Commission establishes specific senior managers the nature and extent of our objectives regarding its ultimate use.

future involvement with NRC offices regarding the Y2K issue. E The OIG conducted a followup review of the NRC's policy and procedures for issuing E The NRR established a Project Manager (PM) position to assist in licensing and Notices of Enforcement Discretion (NOEDs).

The OlG's objective was to evaluate if the monitoring the Nation's commercial nuclear agency had implemented recommendations power plants. The OIG reviewed the role of PMs, factors that affect their work, and (continued on next page)

April 1,1998 - September 30,1998 v

Executive Summary (continued) revealed that the NRC Commissioner inap-from a 1994 audit in this same area and con-tinued to comply with its NOED procedural propriately used a Government vehicle and requirements. The OIG found that NRC driver for personal travel to and from air-generally remains in compliance with its ports in the Washington, DC, metropolitan area on 24 occasions, procedures for granting NOEDs, although the OiG identified some shortcomings in the E The OlG conducted an investigation regard-NRC's administration of the NOED pro-ing an NRC employee who obtained per-gram. During this review, NRC manage- sonal software through the Internet and ment implemented corrective actions to installed it on three Government computers address these shortcomings.

in the NRC Operations Center. The NRC employee ran the software on the Govern-ment computers while he was both on- and INVESTIGATIONS off-duty. The contractor assigned to provide O The OIG conducted an Event Inquiry after a technical computer suppon to the Opera-newspaper article reponed that the NRC tions Center concluded that the unauthorized Chairman and two Commissioners had met personal software contributed to degraded privately with a consultant for an NRC computer performance. The unauthorized licensee. Members of the public complained software was removed from the computer, to the OlG that such a meeting violated the and performance subsequently improved.

l Government in the Sunshine Act, as well as E The OIG conducted an investigation regard-l the NRC mies regarding ex parte communi-cations. The OlG inquiry disclosed that the ing a male NRC employee who allegedly I

Sunshine Act did not apply and the rules made unwanted sexual advances toward a regarding ex parte communications were subordinate female co-worker while on an official NRC business trip. When the OIG not relevant.

interviewed the male employee, he main-During this inquiry, the OIG learned of a tained that the female employee responded series of other non-public meetings be- to his advances. The OIG found, however, tween the Commissioners and management that the female worker complained to two officials for a troubled licensee. The fre- co-workers about the unwanted advances quency of such meetings, coupled with the shortly after the incident. Moreover, when virtual absence of similar meetings with the co-workers confronted the male em-members of the public, appeared to run ployee about the incident, he admitted to counter to the NRC's promulgated Prin- them that what he did was wrong.

ciples of Good Regulation Regarding Inde- E The OlG conducted an investigation involv-pendence and Openness. Those principles ing an NRC employee who failed to make require the NRC to transact nuclear regula.

timely payments for charges made on his tion publicly and candidly, and to openly Government American Express (Amex) seek and consider the public's input during credit card in connection with expenses in the regulatory process. the amount of $22,375.15 during a change-O The OIG conducted an investigation in of-station move. The OlG found that, despite response to an anonymous allegation that an receiving cash advances from toe NRC in excess of $25,000.00, the employee did not NRC Commissioner misused the NRC's vehicle / driver service. The OIG investigation make timely payments to Amex.

NRC OlG SemiannualReport vi

THE U.S. NUCLEAR REGULATORY COMMISSION In 1974, the U.S. Cong. ss established the In particular, the NRC carries out its mis-U.S. Nuclear Regulatory Commission (NRC) as sion through activities surrounding the follow-an independent Federal agency responsible for ing responsibilities:

regulating the Nation's civilian uses of byproduct, source, and special nuclear materials.

License and regulate the constniction and In fulfilling this respon:,ibility, the NRC's Operation of nuclear power plants; research, primary mission is to ensure that civilian uses of test, and training reactors; and fuel cycle nuclear materials in the United States are carried facilities.

out in a manner that adequately protects the

. License the s. .iting, design, construction, health and' safety of the public, as well as the Peration, and closure of low-level radioac-environment, while promoting the Nation's common defense and security. This mission is tive waste disposal sites under NRC junsdic-defined by the Energy Reorganization Act of n, as weH as the constmetyn, operation, 1974, as amended, along with the Atomic and closure of geologic repositories for high-level radioactive waste.

Energy Act of 1954, as amended, which provide the framework for regulating the Nation's .

License the operators of nuclear power and civilian uses of nuclear materials.

nonpower test and research reactors.

(continued on next page)

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• Inspect licensed facilities and activities. ,

inspecting facilities and operations, and impos-

• License the possession, use, processing, ing any required enforcement actions. Federal handling, storage, transport, and exportation regulations and the NRC's regulatory programs of nuclear materials for medical, academic, are important elements in protecting the public.

and industrial purposes. However, NRC licensees have the primary re- .

SPonsibility for the safe use of nuclear materials.

. Protect nuclear materials from theft or sabo.

tage, and combat the proliferation of nuclear For Fiscal Year 1998 (FY 98), the NRC's weapons materials worldwide. total budget authority is approximately

$473 million, which includes an appropriation

• Conduct research to gam mdependent of $4.8 million for the Office of the Inspector expertise and information for use m making General (OIG). The NRC is relatively unique timely regulatory judgments and anticipating among Federal agencies because it is required problems of potential safety sigmficance, by the Omnibus Budget Reconciliation Act of '

1990 to assess fees in order to recover a Develop and implement rules and regula-100 percent ofits budget authority,less the tions that govem licensed nuclear activities.

amounts appropriated from the Nuclear Waste

• Collect, analyze, and disseminate information Fund for high-level waste activities, and from about the operational safety of commercial the General Fund for regulatory reviews and nuclear power reactors and certain other assistance provided by the U.S. Depart-nonreactor activities, ment of Energy (DOE). Therefore, the NRC must employ sound financial practices to fully The NRC and its licensees share a common comply with its legislative mandates. The responsibility to protect public health and safety. OlG's financial audits help the NRC to meet For its part, the NRC accomplishes its statutorily these objectives.

2 NRC OlG SemionnualReport

THE OFFICE OF THE INSPECTOR GENERAL In passing the Inspector General Act of where wrongdoing is suspected and where 1978, the U.S. Congress sought to ensure intense scrutiny and controversy exist. In this integrity and efficiency within the Federal capacity, IGs consolidate responsibility for Government and its programs. To achieve that performing audits and investigations within objective, each Inspector General (IG) has a the agency.

dual reporting responsibility to the Congress and the head of the respective agency. Each IG Established as permanent, independent, submits semiarmual reports to the agency head nonpartisan, and objective overseers, the IGs are and Congress regarding their findings, conclu. tasked with combating waste, fraud, and abuse.

sions, and recommendations for corrective In order to accomplish this broad mandate, IGs actions. The IGs may also issue immediate have been granted a substantial amount of reports on particularly serious or flagrant prob. independence and authority. Within this broad lems they discover. Indeed,IGs are required to Purvue, the IGs are authorized to conduct keep the agency head and Congress fully and audits and investigations of agency programs; currently informed about problems and defi- have direct access to agency records and mate-ciencies related to the administration of pro- rials; issue subpoenas for all necessary infor-grams in their agencies through these reports mation, data, reports, and other documentary and other mechanisms, including in-person evidence; hire their own staffs; and request meetings and testimony at hearings, assistance from other Federal, State, and local govemment agencies. Consequently,IGs may The existence of the IGs also relieves agency program managers and executives from (continued on next page) being solely responsible for gathering objective data and evidence in circumstances i'

. . . . mq*.

\ 4

/

, , L Victoria G. Francis, on OIG I

% s4, int 1. $'

Investigative Analyst, greets v , m .

visitors at the OlG Information booth at the Annual Conference l-

!Q

'L l ' ;'[}[~ $l_l '-

of the NationalOrganizot.on of Blacle I.aw Enfortement Secutives (NOBLE).

April I, I998 - September 30, I998 3

Offico of the Inspector General (continued)

The OIG's investigative staff conducts perform services at the request of the agency head and may serve as technical advisors in investigations and event inquiries. The staff such areas as financial management systems investigates violations of law or misconduct by and internal controls. In such instances, the NRC employees and contractors, as well as IGs and management pursue the same ultimate allegations of fraud, waste, or abuse affecting objective-efficient and effective program op- NRC programs and operations. An event in-eration and delivery of services. Thus, the IGs quiry is an investigative report documenting the should be viewed as a key element in any effec- examination of events or agency actions that do tive management program, not focus specifically on individual misconduct.

Instead, these reports identify institutional To accomplish their mission, IGs may work weaknesses that led to or allowed the occurrence in cooperation with State or local authorities, of a problem.

private entities, or other organizations. Agency The OIG's Counsel reviews existing and program managers provide ideas for the IG's workplans. Anyone may request that an IG con- proposed legislation, regulations, and policies.

duct a specific audit, investigation, or study with The resulting commentary documents an objec-assurance that the identity of the requester will tive analysis of regulatory vulnerabilities created not be revealed. As the need arises, the IGs also within NRC programs and operations. The in-tent of these reviews is to assist the agency in work together through the President's Council on Integrity and Efficiency to examine issues of Prospectively identifying and preventing poten-tial problems.

major significance.

The OIG shares in the NRC's responsibility In the case of the NRC, Congress estab-to assure the public that its health and safety are lished an independent Office of the Inspector General (OlG) through the 1988 amendment to adequately protected in the commercial use of nuclear materials and in the operation of the Inspector General Act. Today, the OIG's nuclear facilities. The OIG assists the agency primary mission is to assist the NRC by identi-by assessing and reporting on the NRC's ef-fying ways to improve the agency's programs l forts to ensure that its safety-related programs

and operations by preventing and detecting fraud, waste, and abuse. The OIG accomplishes are operating effectively, this mission by performing audits, special evalu- , ,

In response to a Congressional request m ations, investigations, and event inquiries. January 1998, the OlG identified the following The OIG's audit staff conducts perfor- 10 management challenges facing the NRC:

mance and financial audits, as well as special (1) - Derming and Implementing a Risk-evaluations. In performance audits, the OIG Inf rmed, Performance-Based Approach to focuses on the NRC's administrative and pro.

Regulatory Oversight Versus Traditional grammatic operations. Through fmancial audits, Compliance Based Approach the OIG examines the NRC's internal control systems, transaction processing, and financial (2) - Review and Licensing of the DOE's systems. In special evaluations, the OIG consid- Anticipated License Application to Operate ers the implications of NRC programs that affect a High-Level Waste Facility national issues.

NRC OlG Semiannual Report 4

i (3)- Information Management Systems (10)- The Ability to Effectively Communi-Development cate with the Public and Industry (4) - The Impact of Industry De-Regulation OIG's audit and investigative activities and Licensees Related Trend to Decommis- conducted during this period, together with sion RatherThan Renew Licenses other initiatives that are still in progress, have specifically addressed challenges 3,4,8,9.

(5)- The Resident Inspector Program and 10.

(6)- NRC's Pilot Test Relative to Possible Of additional importance is the NRC's Oversight of DOE Facilities responsibility to ensure that individuals do not (7) - The Ability to Anticipate and Respond suffer adverse job actions as a result ofidentify-to Issues in the Nuclear Materials Area, ing and reportmg safety concerns regarding the Particularly the Medical Area use f nuclear materials. The OlG continually evaluates the NRC's effons to combat this type (8) - The Ability to Assess Performance, Both of unlawful discrimination.

Intemal and Extemal, of Agency Programs (9)- Administration and Oversight of Agency Procurement Under New Govem-ment Contracting Rules April 1,1998 - September 30,1998 5

THE Auorr PROGRAM To help the agency improve its effectiveness, during this period, the OlG completed sixperfor-mance andfinancial audits, as well as two special evaluations, which resulted infive recommenda-

, tions and suggestions to NRC management. In addition, the OIG analyzed 20 contract audit reports issued by the Defense Contract Audit Agency (DCAA). Ove.n 'l, these analyses caused the OlG to question $88,038 in costs, and enabled the ofice to identip ; 0,769 that could be put to better use.

AUDITSUMMARIES significant attention from Congress, the Office of Manage-NRC Safety Culture and Climate Survey ,9 ment and Budget In October 1997, the OIG began the pro- ( }'

n c cess of suneying all NRC employees to gain a thorough understanding of the agency's orgam- GO zational safety culture and climate as pemeived the Executive Office of the President, and others. As a result, by its employees. An outside organization assisted the OIG in this effort. The survey was the OIG initiated a followup suney concerning distributed to employees in late February 1998, the NRC's progress on the issue to help ensure and completed forms were returned in March. that the agency will continue to meet its estab-More than 56 percent of the NRC's workforce lished goals. Through this survey, the OIG participated in the survey. (Details regard! . , f cused on the NRC's efforts to ensure that its this body of work are provided in the Spe- 3 li ensees address safety-related Y2K issues.

Feature beginning on page 21.) The OIG is The time left to complete Y2K programs is currently reviewing the information learned rapidly diminishing. As a result, the OIG worked from the s a vey and developing plans for future closely with agency officials to ensure that licen-work that will benefit the agency, sees' effons are adequate to protect public health and safety. In panicular, the OIG focused on NRC's Egorts with Licensees on the providing information and suggestions to agency Year 2000 Issue officials as quickly as possible through meetings, rather than completing the work before reponing In June 1997, the OIG issued a Special to management through a formal document. Spe-Evaluation report regarding the NRC's progress cifically, the OIG's work included (1) interview-on the Year 2000 (Y2K) issue. In that report, ing a wide variety of sources,(2) reviewing and the OIG identified several actions that the commenting on NRC and other documents related agency could take to improve its Y2K program. to Y2K programs, and (3) sharing infomiation to In response, the NRC initiated actions related to facilitate quick implementation of improvements each of the OIG's suggestions, made other and to promote awareness through the OIG's office.

changes, and substantially improved its pro-gram. However, the issue continues to gamer (continued on next page)

April 1,1998 - September 30,1998 7 l

use Commission-approved criteria as intended. impact. In addition, the NRC is expected to take As a result, RES did not use objective evalua- enforcement action for any root cause violation tions to select core areas, and the selection was that led to the request for the NOED.

so broad that it included all research areas. Left unchecked, this process could continue in subse. The OIG found that the NRC generally quent core reviews. The OIG also found limited remains in compliance with its procedures for value in the core capabilities criteria and associ. granting NOEDs; however, the OIG also identi-ated metrics unless they are properly weighted. fied some shortcomings in the NRC's adminis-In a related matter, it was unclear how or if RES tration of the NOED program. During this would use the criteria to determine when " sun review, NRC management implemented correc-setting" conditions are reached and projects tive actions to address these shortcomings. As a closed out. Finally, the NRC staff did not know result, the OIG made no recommendations.

how the Commission plans to use the core (Addresses Management Challenge #8) research capability results. The value of further core research capability analysis, as well as a ProcurementStreamlining Measures broader core capability study for other offices, Implemented: Improrements Can Be Made may be less than expected unless the Commis-sion establishes specific objectives regarding its In 1993, as a result of Vice President ultimate use. Because this work was perfonned Gore's National Performance Review (NPR),

as a special evaluation, the OIG did not make the NRC was designated as a " procurement any recommendations. (Addresses Management reinvention laboratory." The NRC used this Challenge #8) NPR laboratory status to streamline its procure-ment process in an effort to reduce procurement Followup Reriew of the NRC's Processfor lead times and remove some of the burdensome issuing and Tracking Notices ofEnforcement spects of the contracting process.

Discretion (NOED)

During this reporting period, the OIG The OIG conducted a followup review of conducted a review to assess the efficiency and the NRC's policy and procedures for issuing effectiveness of the NRC's procuren ent stream-Notices of Enforcement Discretion (NOEDs). lining process. This review showed that stream-The OIG's objective was to evaluate if the agency lining appears to have had a positive effect on had implemented recommendations from a 1994 the NRC's procurement process. For almost all audit in this same area and continued to comply NRC procurements in FY 97, the staff used one with its NOED procedural requirements. or more streamlining measures. In addition, the NRC Contract Tracking System showed that NOEDs result from the exercise of discre- procurement lead times were reduced when the tion with regard to limiting conditions for opera- NRC applied streamlining measures. The OIG tion in power reactor Technical Specifications or also found that the agency could take additional other license conditions for an operating facility. steps to improve the streamlining data it tracks.

This enforcement discretion may only be exer- The NRC primarily accounts for the time saved cised if the NRC staffis clearly satisfied that the in using streamlining measures by applying

. action is consistent with protecting the public estimated savings criteria that were established health and safety. The action is requested by the in 1994. However, the OIG found that the NRC licensee and must be temporary and nonrecur-ring, and it must involve minimal or no safety (continued on next page)

April 1,1998 - September 30,1998 9

Audit Program (continued) has not reassessed these savings since that time, findings with NRC senior management and and the agency should periodically reassess provided several suggestions for consideration its estimated savings to ensure that the reported as the DCPM continues with the design and benefits are accurate and that tmcking them m- implementation of its new, consolidated infor-mains worthwhile. (Addresses Management mation system. (Addresses Management Challenge #9) Challenge #9)

Review ofNRC's Contracting Activities Surrey of the NRC's Assistance Programs Under the Foreign Assistance Actfor the New In 1995, at the request of the NRC's Independent States of the Former Soviet Union Executive Director for Operations (EDO), the OIG initiated a review of the number and The OIG completed a survey of the U.S.

significance of cost overruns on commercial Agency for International Development (AID) contracts at the NRC. At that time, the NRC funded assistance activities for four countries in did not have the reliable summary data needed the former Soviet Union (FSU), including Russia, to identify cost overruns and other contract the Ukraine, Armenia, and Kazakhstan. In con-i price increases. The Division of Contracts and ducting this survey, the OIG's objectives were to Property Management (DCPM) advised the identify the various assistance activities and asso-OlG that they were developing a new, auto- ciated expenditures for potential review and to mated system from which such summary data evaluate the related management controls.

could be obtained. The OIG ended that review with the intent of revisiting the area after the The Foreign Assistance Act (FAA) of 1961, agency implemented its new Contracts and as amended, provides the funding authority to conduct nuclear regulatory assistance in the FSU.

Payments System (CAPS).

The objective of this assistance is to increase the In late 1997, the OlG initiated a followup capacity and stature of each country's regulatory review to determine the nature, extent, and body to ensure operational safety of the Soviet-controls of NRC contract price increases, on the designed reactors located in each country.

basis ofinformation contained in CAPS. How- Through the end of FY 1997, the NRC had ever, CAPS contained inaccurate and unreliable received $25,650,000 in funding from the AID data conceming the nature and extent of contract for assistance programs in the FSU. Formal price increases. This prevented the OIG from nuclear safety assistance programs for Russia examining controls over those price increases to and the Ukraine were established in 1992, and the extent believed necessary. At that time, the the NRC has funded these programs with DCPM informed the OIG that a new contract $24,220,000 of the AID funds. Additionally, information system was being developed and since FY 95, the NRC has provided $1,430,000 that the NRC would merge CAPS into this new in AID funding for the Armenian and system. The OIG also found that the NRC Kazakhstan programs.

needed to assess whether the information in CAPS is unnecessarily duplicative of that in On the basis of the survey, the OIG was another NRC system. Senior managers outside satisfied that the NRC has adequate manage-of the DCPM also told the OIG that they were ment controls over the use of the AID funds.

interested in receiving contract information However, the OIG identified two issues that which CAPS, or its successor system, may be affected program efficiencies. One dealt with the capable of providing. The OIG shared these integration or consolidation of AID assistance NRC OlG Semiannual Report 10

r efforts, while the second addressed the AID Surrey of the NRC's Continued Progress on funding method. Because the agency was the Year 2000 issue Relating to Internal attempting to resolve these issues, the OIG Programs shared our observations with senior manage-ment and perfonned no further work. As previously discussed, in June 1997, the OIG issued a Special Evaluation report regard-ing the NRC's progress on the Y2K issue. In AUDITSIN PROGRESS that report, the OIG identified several actions that the agency could take to improve its Y2K program. In response, the NRC initiated actions Review ofNRC's Controls Orcr Work related to each of the OIG's suggestions, and Performed Under CISSCO substantially improved its program. The OIG subsequently initiated and reported on a In 1996, the U.S. Congress enacted the followup survey, which focused on the NRC's Clinger-Cohen Act (fonnerly called the Informa-efforts to ensure that its licensees address tion Technology Management Reform Act) t safety-related Y2K issues. The OIG's current reform the guidance regarding Government survey is focusing on the agency's internal acquisition ofinformation systems. The NRC's programs to ensure the adequacy and accuracy primary vehicle for acquiring infom1ation systems of the NRC's progress reporting and contin-is called the Comprehensive Information Sup- gency planning for mission-critical and other port Systems Contract (CISSCO).

systems. (AddressesManagement

. . . Challenge #3)

During this reportmg penod, the OIG conducted a survey of the CISSCO project with regard to Clinger-Cohen requirements. The Review of the NRC's Management Control survey produced questions about the adequacy Program of relzted management controls. In light of To assist the NRC, the OIG conducts an those questions, the OIG imtiated a full review ggg ,

g, to determme whether (1) the NRC has adequate trol program. In 199.3, the NRC redesigned and controls over the use of CISSCO resources and (2) quality assurance measures are effective. streamlined its program in accordance with OMB Circular A-123, Management Controls. The (Addresses Management Challenge #3) objective of the current O1G review is to deter-mine if the program is achieving its goals as es-Review ofNRC Controls to Prerent the tablished by the NRC's implementing guidance.

Unauthorized Reitase of Sensitive Information (Addresses Management Challenge #8)

Some NRC offices nave released sensitive infonnation vithout the authority to do so. Review of the NRC's Performance Goals Therefore, the NRC Chairman requested that the Pursuant to audit requirements under the OlG conduct an agency-wide audit to determine Chief Financial Officers Act of 1990, the OIG is if the NRC has adequate contmls in place to prevent currently reviewing selected performance goals the unauthorized release of sensitive information, established in the agency's strategic and perfor-and whether those controls are consistently mance plans. The primary objective of this implemented throughout t% agency. (Addresses Management Challenges #3 and#9) (continued on nextpage)

April I,1998 -September 30,1998 11

Audit Pn> gram (continued) review is to assess the reliability of the systems (2) management's assertion about the effective-and processes that produce performance infor- ness of internal controls, and (3) the NRC's com-mation. (Addresses Management Challenge #8) pliance with applicable laws and regulations.

Review of the NRC's Representation Fund Review of the NRC's License Renewal Process In the past, Congress appropriated $20,000 The NRR has primary responsibility for for official representation expenses. The NRC implementing the license renewal program for uses this representation fund primarily for commercial nuclear reactors. The OIG initiated international cooperation activities and NRC- a review of this program in response to industry, sponsored protocol functions. NRC guidance public, and Congressional interest. The objec-specifies that monies may be expended if (1) the tives of this review are to determine (1) the representation is sponsored in the name of the amount of time required for the NRC to process NRC and can be defended as official Commis- and decide on a renewal request, and (2) whether sion business, and (2) the underlying purpose is licensees believe the agency provided clear to attain NRC objectives. The OIG is currently and reasonable guidance on what should be conducting an audit to review and assess the submitted to support a license renewal applica-adequacy of the NRC's internal controls over tion. (Addresses Management Challenge #4) the expenditure of the representation fund.

Review of the NRC's Controls Over the PC SIGNIFICANTRECOMMENDATIONS Refresh Program NOTYETCOMPLETED Under this program, the NRC's Office of The Nuclear Waste Policy Act of 1982 the Chief Information Officer acquires, config- requires that the NRC approve or disapprove the ures, installs, and maintams new personal com- construction of a high-level waste repository puters (PCs). The PC Refresh program calls for within 3 to 4 years of receiving a DOE construc-upgrading approximately 93 percent of the tion license application. To meet this deadline, NRC's PCs with Pentium-class systems. In the NRC enacted a rule requiring the develop-auditing this program, the OIG's objectives are ment of an electronic infonnation management to identify the management controls associated system (known as the Licensing Support System) with the PC Refresh program and to determine to reduce the time needed for discovery during if those controls are effective. (Addresses Man- the license hearing process. The rule requires agement Challenge #3) that the DOE design and develop the system, and that the NRC operate and maintain it.

Audit of the NRC's FY 98 Financial In March 1995, the OIG issued a report Statements entitled,"NRC Needs to Provide Strong Direc-tion for the Licensing Support System (LSS),"

The Chief Financial Officers Act of 1990 which stated that the program had stalled over requires the NRC to issue audited financial statements annually. In auditing this program, the past 5 years. The report attributed many the OlG's objective is to render an opinion on delays to an inadequate system definition and disagreement between the DOE and the NRC (1) whether the FY 98 financial statements fairly present the agency's financial position, regarding the roles and responsibilities of each NRC OIG SemiannualReport 12

sr-,

agency. As a result, the OIG recommended that Commission. The proposed revised rule elimi-the NRC obtain a fonnal commitment from the nated the current prescriptive requirements for a DOE in an interagency agreement or Memoran- centralized LSS administered by the NRC. As dum of Understanding (MOU) on key aspects of such,it also eliminated the requirement for an the LSS. In response, the Executive Director for LSS Administrator. The proposed rule also Operations (EDO) appointed a Senior Manage- required that all potential panies, including the ment Team (SMT) to reevaluate the purpose and NRC and the DOE, must make their documen-need for the LSS and to address the issues raised tary material available in electronic form to all by the OIG audit. other participants beginning in the pre-applica-In status reports issued in 1996, the EDO advised the Commission that the SMT would In September 1997, the Commission develop an action plan addressing the issues approved the revised rule with comments. The affecting the LSS program. However, because of NRC incorporated those comments and published Congressional budget action related to the DOE's the proposed mle in the FederalRegister in high-level nuclear waste program, them was no November 1997. The comment period on resumption of any LSS activities and the DOE's the proposed rule was to end in January 1998, LSS-related tsetivities remained stalled, including but the NRC extended the deadline until the finalization of an MOU with the NRC. March 30,1998. During that period, the Commission received six letters commenting The EDO also provided an SMT action on the proposed rule, one frons the DOE and plan to address outstanding LSS issues. The five from other entities represented on an LSS plan was subsequently revised to reevaluate the Advisory Review Panel.

need for an LSS as originally envisioned.

This reevaluation has been ongoing since In response to the comment letters, the November 1996. The SMThas recommended NRC revised the proposed rule before circulat-to the Commission an option which it believes ing it within the agency for final review in "provides the best solution for maintaining the August 1998. On September 16,1998, the basic functionality of the LSS conceptual Office of the General Counsel requested that all design, while most flexibly accommodating NRC staffinvolved in the f' mal review process current and future technological developments." Provide their comments by September 18,1998.

As of the preparation of this semiannual report, To bring about the SMT's recommended the Commission had not yet voted on the final changes to the LSS, a revised mle is required. mle. As a result, the OIG will continue to Consequently, in July 1997, the SMT provided morutor these events, a proposed revised rule for approval by the April 1,1998 -September 30,1998 13

THE INVESTIGATIVE PROGRAM During this reporting period, the OlG received 140 allegations, initiated 33 investigations and 1 Event Jr.quiry, and closed 49 cases and 1 Event Inquiry. In addition, the OIG made 36 referrals to NRC management.

INVESTIGATIVE CASESUMMARIES between the Commissioners and management officials for a troubled licensee. The frequency of such meetings, coupled with the virtual Allegation ofSunshine Act and Ex Parte absence of similar meetings with members of Communs'cationViolations by NRC the public, appeared ta nm counter to the NRC's Commissioners promulgated Princip'es of Good Regulation r g rding Independence and Openness. Those The OIG conducted an Event Inquiry after Principles require the NRC to transact nuclear a newspaper article reported that the NRC regulation publicly and candidly, and to openly Chairman and two Commissioners had met pri-seek and consider the public's input during the vately with a consultant for an NRC licensee.

r gulatory process. (Addresses Management Members of the public complained to the OIG enge 0) that such a meeting violated the Government in the Sunshine Act (Title 5, U.S. .

Misuse of Government Vehicles / Drivers by an Code, Section -f . NRC Commissioner 552b) as well as The OIG conducted an investigation in the NRC rules ( j regarding ex parte communications (Title 10,

\ / response to an anonymous allegation that an NRC Commissioner used a Government vehicle Part 9.100, of the Code offederal and driver for transport to airports in the Wash-ington, DC, metropolitan area for personal trips.

Regulations). The OIG inquiry dis-The alleger indicated that such infractions had closed that the consultant met with the ccurred since the beginnm, g of the Commissioners individually, rather than as a group comprising a quorum; therefore, Commissioner's appointment.

the requirements of the Sunshine Act did not The OIG investigation revealed that the apply. Further, since there was no NRC adjudi-NRC Commissioner improperly used a catory proceeding in existence at the time of the Government vehicle and driver for personal meetings, the rules regarding ex parte communi-travel to and from airports in the Washington, cations were not relevant. DC, metropolitan area on 24 occasions. In an interview with OIG, the Commissioner claimed However, during this inquiry, the OIG that NRC officials had advised that such use of leamed of a series of other non-public meetings (continuedon next page)

April 1,1998 - September 30,1998 15

The investigative Progrom (continued) the vehicle was permitted. However, the inves- was responsible for causing or aggravating the tigators were unable to verify this point. As a reported computer problems. Nevertheless,in result of the OIG investigation, the Commis- the opinion of the contractor assigned to provide sioner reimbursed the agency in the amount of technical computer support to the Operations

$2,100.62, which was the cost to the Govern- Center, the unauthorized personal software con-ment for the services in question. tributed to the degraded computer performance.

The unauthorized software was removed from the computer, and performance subsequently Misuse of Government Computers in the NRC smproved.

Operations Center The NRC maintains an Operations Center, Unwanted Sexual Advance by NRC Employee which is continuously staffed by a Headquarters The OIG conducted an investigation in Operations Officer trained to receive, evaluate, and respond to all types of events. The Opera- response to allegations that a male NRC tions Center serves as the focal point for NRC employee made unwanted sexual advances communications with licensees, State agencies, toward a subordinate female co-worker while on and other Federal agencies regarding events that an official NRC business trip.

occur in the commercial nuclear sector. When the OIG interviewed the male Depending upon the nature and severity of the employee, he maintained that the female em-reported event, the response by the Operations Pl oyee responded to his advances. The OlG Officer may range from making computer and f und, however, that the female worker com-log entries, followed by appropriate notifica-tions, to establishing emergency conference Pl,amed to two co-workers about the unwanted advances shortly after the incident. Moreover, calls among the licensees and senior NRC when the co-workers confronted the male em-Regional and Headquarters staff. ployee about the incident, he admitted to them

'Ihe OIG conducted an investigation that what he did was wrong.

! regarding an NRC employee who obtained personal software through the Intemet and in- Alleged Failure to Pay Just Debt Associated stalled it on three Govemment computers in the H7th Government American Express Card NRC Operations Center. The NRC employee The OlG conducted an investigation in-then ran the software on the Government com-volving an NRC employee who failed to make puters while he was both on- and off-duty. The software was designed to decipher encrypted hmely payments for charges on his Government American Express (Amex) credit card in con-computer codes, and the employee used the nection with expenses incurred during a change-software in an attempt to decipher a code in of-station move. Specifically, the employee order to win a contest advertised on the Internet.

charged $22,375.15 to his Govemment Amex Operations Center employees reported credit card between March and September 1997.

that they experienced recurring performance Despite receiving cash advances from the NRC pmblems on the Operations Center computers in excess of $25,000.00, the employee failed to that the employee used. However, the OIG did make timely payments to Amex.

not determine whether the unauthorized software I

f NRC OlG Semiannual Report 16

Amex suspended the employee's Govern- the charges. In addition, the OIG found that, ment credit card account for insufficient pay- instead of making payments to AMEX, the ment in June 1997 and later in September 1997. employee used the NRC cash advances to '

The OlG determined that in September 1997, cover expenses associated with the purchase of the employee misled Amex by implying that he a new home.

had not received funds from the NRC to cover April 1,1998 - September 30,1998 17

INVESTIGATIVE STATISTICS Source of Allegations - April 1,1998 through September 30,1998 General OlG Investigation /

Public Audit (2)

Regulated Industry (1)

(47)

Contractor (1) .,

Other Government Agency (2) Anonymous (26)

Congress (1)

NRC Management

/ NRC Employee (12)

(48)

Total: 140

___._.m.____.___ _ _ _ . _ _ _ _ _ _ _ _ _ -

Disposition of Allegations - April I,1998 through September 30,1998 140 I

6 6 5 e

j l , r

?

p& sh

.a .. .. _ . . - . . . . . -. -

18 NRC OIG SemiannualReport

n.

Status ofInvestigations DOJ Referrals 7 DOJ Declinations 7 Pending DOJ Action 0 indictments and Arrests '

0 Convictions O PFCRA Referrals 0

..s FFCRA Recoveries 0 Other Recoveries $2,844 41 NRC Administrative Actions-p Terminations and Resignations 0 j Suspensions and Demotions 2 Other Administrative Actions 6 .,

Counseling 1

]

r - .

mm m_2_m m_m -m a Summary ofInvestigations ClassiReation of Opened Closed Cases In Investigations Carryover Cases Cases Progress A - Conflict of Interest 6 2 5 3 l B -Internal Froud 2 1 1 2  :

C - Extemol Froud 18 5 8 15 g D - False Statements 3 2 3 2 E Theft 2 1 3 0 F Misuse of Government Property 3 2 3 2 j G - Employee Misconduct 14 6 12 8  :

H - Monogement Misconduct 8 10 4 14 1 - Technical Allegations - Other 11 3 9 5 J - Whistleblower Reprisol 3 0 1 2 "l Totalinvestigations 70 32 49 53 f Total Event inquiries 3 1 1 3 hw Laux .ax.a.uan:.wx.wu.a.=;wua=a v_ .. . a a.a April 1,1998 - September 30,1998 19

SPECIAL FEATURE: THE NRC's SAFETY CULTURE AND CUMATE SURVEY In October 1997, the OlG began the process ofsun' eying allNRC employees about their attitudes regarding the agency's safety culture and climate. The OlG's overall objectivefor the survey was to gain a thorough understanding of the NRC's organizational safety cuVure and climate as perceived by its employees. More than 56 percent ofthe agency's workforce co npleted and returned the survey questionnaires. The OIG shared survey results with the entire agency in June 1998. In addition, on the basis ofinformation learnedfrom the survey, the OlG is currently reprogramming some ofits resources andplanning reviews that will benefit the agency.

The NRC is facing a rapidly changing envi- of a special evaluation to help the office assess ronment as it prepares to enter the 215t century. the current organizationr1 safety culture and Industry economic changes, Federal deficit re- climate of the NRC's workforce. A better ductions and downsizing, continued high public understanding of the agency's current safety interest in the NRC's mis- culture and climate will help sion, and technological and the OIG assess the evolution societal trends all effect the e of the NRC. In turn, this agency's safety culture and -

will allow the OIG to better climate. In accordance with gig'gg go determine which areas and the Government Performance CUMATE SURVEY Programs require greater and Results Act, the NRC . focus. The survey estab-has developed a strategic -

lished an overall baseline plan to serve as the agency's . < against which the OIG can guide for the next several reevaluate the NRC's safety years. Additionally, the .

culture and climate. In later agency is moving to a more ' '

years, the OIG plans to l risk-informed, performance- -

re-survey the agency and ,

based approach to regulation. 1 compare those results with l These are major changes for the NRC.

. ;g

.ar the benchmark created from this year's survey.

The OIG is committed To help with the assess-to using audits, investigations, special evalua- ment of the NRC's safety culture and climate, tions, and event inquiries to enhance the ir.teg- the OIG competitively selected Intemational rity of the NRC's mission, with particular Survey Research (ISR), a global survey firm.

emphasis on employees' responsibilities in that ISR's expertise lies in the collection and role. In keeping with that commitment, the Inspector General (IG) announced the initiation (continued on next page) i

{

April 1,1998 - September 30,1998 21

A SpecialFeature (continued)

The OIG and ISR presented the results of analysis of vital organizational, operational, and strategic intelligence through the use of the NRC's Safety Culture and Climate Survey to tailored survey instruments. Most importantly, the agency in an open briefing on June 25,1998.

the company has thoroughly developed and According to ISR's executive summary, tested the process used to conduct surveys and several themes emerged from the overall provide feedback concerning the results.

results of the survey. The NRC safety cul-The survey's scope included the NRC's ture appears to be bending but not breaking.

entire workforce. ISR began the survey process ...The cause for concern is that NRC em-by reviewing any available existing research on ployees have indicated they need more from the safety culture and climate. Next,ISR con- their leaders, and they may not be patient ducted the qualitative design component of the much bnger. Based on the results as a survey. This included focus group and one-on- whole, without significant and meaningful one interviews with a cross-section of NRC improvement in management leadership, canployees and managers in Headquarters and employee involvement, and communication, Regions I and III. The information learned in the NRC's curvat climate could eventually these first two steps served as the basis for erode the employees' outlook, and eventu-designing the survey instrument. ally their commitment to doing their job.

The good news is that employees seem The survey questionnaire included both ready and willing to offer their insight and selected items from ISR's normative databases constmetive ideas on how to improve their and items tailored to address the unique topic area within the NRC. Ultimately, the chal-of the NRC's safety culture and climate. The lenge may lie in harnessing and integrating draft survey instrument was pretested using the tremendous output of such intense intel-a random sampling of NRC employees and lectual scrutiny."

managers in Regions II and IV, and again Viewgraphs used during the agency brief-in Headqparters.

ing, a transcript of the presentation, and ISR's The OIG's NRC Safety Culture and Climate executive summary of the survey results were Survey was distributed to all agency employees posted on the NRC's external Web page in order and managers (3,013 total employees) from to ensure that all agency employees had access February 27 through March 31,1998. Of those, to the survey results. Additionally, a guide to 1,696 completed valid surveys for an overall the contents of the 63 volumes of statistical data return rate of more than 56 percent. This return that supported the briefing and executive sum-has a precision of +/- 1.6 percent and is more mary wm also posted on the Web site. The sta-tistical volumes are available through the NRC's than sufficient to provide a reliable and valid measure of the current attitudes and perceptions Public Document Room, Headquarters Library, of NRC employees and managers. and regional offices.

Sul* sequent to the OlG's release of the NRC's Safety Culture and Climate results, the EDO tasked Lis staf to review the survey results and recommend actions to address the identified issues.

An interim briefng by the stafis plannedfor completion by October 31,1998, andpnal recommen-dations are due to the EDO by December 31,1998.

NRC OIG SemiannualReport 22

OTHER AcuvmES REGULATORYREVIEW 5 CFR 2635.203 describes the role and duties of I the DAEO within the agency. Specifically, the The Inspector General Act,5 U.S.C. App. 3, DAEO's responsibilities focus on managing and Section 4(a)(2), requires the OlG to review exist. coordinating the agency's ethics program, and ing and proposed legislation and regulations and include such duties as reviewing financial disclo-to make recommendations concerning the impact sure reports, initiating and maintaining ethical ,

of such legislation or regulations on the economy education and training programs, and monitoring

)

and efficiency of programs and operations admin- administrative actions and sactions. The most istered by the agency. critical aspect of this function is the development ,

and provision of counseling as part of a program From April 1,1998, through September 30, of formal advice available to all agency employ-1998, the OIG reviewed more than 240 agency ees on issues conceming ethics and standards of documents, including approximately 160 docu- conduct. Imparting consistent advice to employ-ments issued by the Office of the Secretary ees, and making known the availability of this (SECYs) and 57 Federal Register notices, regu- guidance is essential to ensure compliance with latory actions, and statutes. Upon completing ethics statutes and regulations.

this review, the OIG provided regulatory com-mentaries, which addressed issues related to the The NRC's Ethics Program has been highly OIG's mission requirement to assist in prevent. rated in audits, and recognized with awards from ing fraud, waste, and abuse. The OIG also pro. the Office of Govemment Ethics. However,in vided guidance to sensitize agency managers to two recent Management Directives, the guid-the importance of considering aspects of agency ance to employees failed to identify the DAEO policy and procedures that impact the OIG's as the appropriate source of advice:

functions. In addition, the OIG initiated discus-sions with the agency on policy cencems, and (1) Management Directive 13.4, " Transportation cooperative efforts resulted in improved guid- Management," provides imponant and mlevant ance to the agency staff. This section summa- instruction regarding the limitations appli-rizes the commentaries that raised the most cable to the authorized use of Government -

significant issues. vehicles. The initial draft of this directive omitted reference to the DAEO as the proper Two commentaries wntten during this office from which to seek advice on issues reponing period reflected the OIG's concem concerning standards of conduct-a recurrent regarding a recturing issue, namely the imponance Problem in this area.

of the Designated Agency Ethics Official (DAEO). ,

The Ethics in Govemment Act,5 U.S.C. App. 5, (2) In the draft version of Management Direc-is implemented in Title 5 of the Code offederal tive 3.23, " Mail Management," employees Regulations (CFR). This statute and its implement- were enneously directed to tum to their ing regulations direct the oversight of ethics regu- supervisors for advice regarding the often lations in the Executive Branch. In panicular,

{ continued on next page) .

April 1,1998 - September 30,1998 23 i ._

Other Activities (continued) complex question of permissible uses of references to the IG Act, Standards of Conduct, penalty mail for outside professional activi- and bribery and fraud statutes.

ties. The OIG commentary urged revision of the directive to ensure that employees are aware of the availability of the DAEO as the OlG INFORMATION AND proper authority to determine whether an PLANNING CONFERENCE outside activity qualifies as professionally related and entitled to support by use of The OIG held its annual Information and i penalty mail. Planning Conference on September 22,1998.

The theme for this year's conference was "OIG j Another commentary demonstrated the

& NRC: Partnering to Achieve Regulatory importance of the OIG's review of agency direc-Effectiveness in a Changing Environment." The tives for two separate reasons. First, such conference consisted of a keynote speaker and l reviews ensure that the agency consistently three panels, and was open to the public.

recognizes the office's authority under the IG Act. Second, such reviews allow the OIG to Mr. Hubed Ben, Inspector General for achieve its primary function under the statute- the NRC, opened the conference with welcom-preventing fraud, waste, and abuse. Review of ing remarks. He then introduced the keynote draft Management Directive 11.1,"NRC Acqui-speaker, Mr. Ralph Beedle, Senior Vice Presi-sition of Supplies and Services," revealed omis-dent and Chief Nuclear Officer at the Nuclear sions in both areas.

Energy Institute (NEI). Mr. Beedle addressed The initial part of the OIG commentary current issues facing the nuclear industry. He suggested that the Management Directive then presented his ideas on how the OIG, NRC, should include additional information concern- and NEI can assist each other in improving ac-ing the IG's contracting authority. Citing tivities and relationships between the agency Section 6(a)(9) of the Inspector General Act, and the nuclear industry. l I

which states that the IG is authorized to enter '

The conference's first panel spoke about into contracts and other arrangements...with

" Improving Regulatory Effectiveness at the public agencies and private persons and to NRC." The panel consisted of Hugh Thompson, make payments as may be necessary to carry out the provisions of the Act, the commentary Deputy Executive Director for Regulatory suggested that the IG should be added as a Programs; Ashok Thadani, Director, Office of Nuclear Regulatory Research; and Mary Ann position authorized to contract and enter into interagency agreements. Kruslicky, Assistant Director for the Energy, Resources, and Science Issues Area at the Consistent with the OIG's obligation to U.S. General Accounting Office (GAO).

prevent fraud, waste, and abuse, the commen-tary also provided language identifying the The second panel presented issues related IG as the entity responsible for investigating to " Fraud Awareness." This panel included alleged fraud in the procurement process. Joseph McMillan, Deputy Director for Techni-In addition, the commentary identified for cal Services at the Defense Criminal Investiga-inclusion in the directive related verbiage and tive Service; Thomas Swanson, Chief of the 24 NRC OIG Semiannual Report

Investigative Support Division in the DCAA's At the conclusion of Mr. Beedle's keynote Mid-Atlantic Region; and Maryann Grodin, address and each of the panel presentations.

01G Counsel. memoers of the audience asked questions of the participants. The questions generally sought The last panel for the day involved clarification of points made by the participants, Dr. Rona Stillman, GAO's Chief Scientist for or elicited opinions regarding matters related to Computers and Telecommunications; John the topics presented. The thought-provoking Stephenson, a member of Senator Bennett's information generated by this year's conference Special Committee on the Y2K issue; and will be factored into developing the OIG's Anthony Galante, the NRC's ChiefInformation FY 99 Annual Plan.

Officer. This panel presented current issues related to "The Year 2000 and Beyond.

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Inspector GeneralHubert T Bellintroduces Ralph Beedle (center), keynote speaker at the Annual OlG Information and Planning conference, while William McDowell, Audit Team leader, looks on.

l April I,1998 - September 30, I998 25

k APPENDICES AUDIT USTINGS Internal Program Audit and Special Evaluation Reports Title Audit Number Dofe NRC Safety Culture and Climate Survey OlGl97A-16 6/25/98 i

OlGl98A-10 811 419 8 NRC's Eforts with Licensees on the Year 2000 Issue Review of the Project Manager Position in the OlGI97A-21 7113/98 Ofice ofNuclear Reactor Regulation Review of the NRC's Development of Core Research OlG/98E-12 81619 8 Capabilities Followup Review of the NRC's Processfor issuing and O1G/98A-06 7/30!98 Tracking Notices ofEnforcement Discretion (NOED)

Procurement Streamlining Measures Implemented: OlGl98A-03 611 019 8 Improvements Can Be Made Review ofNRC's Contracting Activities OlGl98A-02 SI18/98 Survey ofNRC's Assistance Programs Under the 01Gl98A-01 4/24/98 Foreign Assistance Actfor the New Independent States of the Fonner Soviet Union NRC OIG SemiannualReport 26 1

Contract Audit Reports OlG Contractor / Questioned Funds Put to issue Date Contract Number Costs Better Use 4/13/98 SoHar, Incorporated NRC-04-94-046 0 0 NRC-04-95-081 0 0 4/20/98 JAI Corporation RS-NMS-98-006 0 0 4/24/98 Parameter, Inc.

NRC-03-93-026 0 0 4/28/98 Beckman and Associates,Inc.

RS-NRR-98-021 0 $30,769 4/29/98 Applied Management Systems,Inc.

NRC-33-92-203 0 0 5/4/98 Westinghouse Electric Corporation NRC-04-91-049 $2,349 0 5/8/98 215' Century Industries, Incorporated

, RS-NMS-98-006 0 0 5/15/98 Raytheon Engineers &

Constructors, Inc.

NRC-04-90-099 $126 0 NRC-04-90-100 $284 0 6/3/98 Battelle MemorialInstitute NRC-04-92-047 0 0 6/3/98 Pal Consultants,Inc.

NRC-03-89-033 $2,147 0 6/3/98 Tne MITRE Corporation NRC-04-87-399 $83,079 0 April 1,1998 - September 30,1998 27

Contract Audit Reports (continued)

Questioned Funds Put to OlG Contractor /

Contract Number Costs Better Use issue Date 6/11/98 Science & Engineering Associates,Inc. (SEA) 0 0 NRC-04-91-071 7/7/98 Ebasco Services,Incogorated 0 0 NRC-03-87-119 7/7/98 Ebasco Services, Incorporated 0 0 NRC-03-87-119 7/7/98 Ebasco Services,Incogorated 0 0 NRC-03-87-119 0 0 NRC-04-90-100 8/7/98 Scientech,Inc.

0 0 NRC-04-93-064 0 0 NRC-04-94-047 8/7/98 Scientech, Inc.

0 0 NRC-04-93-064 0 0 NRC-04-94-047 0 0 NRC-04-96-041 9/8/98 Halliburton NUS - Brown and Root Environmental 0 0 NRC-26-87-420 9/10/98 SoHar, Incorporated 0 0 NRC-04-94-046

$53 0 NRC-04-95-081 9/11/98 Hummer Associates 0 0 NRC-38-94-286 NRC OIG Semiannual Report 28

AUDIT TABLES During this reporting period, the OIG analyzed 20 contract audit reports issued by the DCAA.

Thefollowing tables depict the cost savingsfrom this work.

Table I. -Post Award Findings OIG Reports Containing Questioned Costs April 1,1998 -September 30,1998 Questioned Unsupported Number of Costs Costs Reports Reports (Dollars) (Dollars)

A. For which no management decision had been made by the commencement of the reporting period 0 0 0 l

B. Which were issued during the reporting period 5 $88,038 0 Subtotal (A + B) 5 $88,038 0 C. For which a management decision was made during the reponing period:  ;

l (i) dollar value of disallowed costs 5 $88,038 0 (ii) dollar value of costs not disallowed 0 0 0 D. For which no management decision had been made by the end of the reporting period 0 0 0 E. For which no management decision was made within 6 months ofissuance 0 0 0 April 1,1998 - September 30,1998 29

Table ll. -Pre Award Findings OlG Reports Issued with Recommendations That Funds Be Put to Better Use April 1,1998 - September 30,1W8 Number of Dollar Value Reports of Funds Reports A. For which no management decision had been made by the commencement of the reporting period 0 0 B. Which were issued during the reporting 3* $30,769 period 3 $30,769 Subtotal (A + B) l C. For which a management decision was made during the reponing period:

(i) dollar value of recommendations $30,769 that were agreed to by management 3 (ii) dollar value of recommendations that were not agreed to by management 0 0 D. For which no management decision had been made by the end of the reponing 0 0 period E. For which no management decision was 0 0 made within 6 months ofissuance 0 Two pre-award reports indicated that zemfunds were availablefor better use or that no contract was awarded.

NRC OlG SemiannualReport t 30 l

ABBREVIATIONS AID U.S. Agency for International Development AMEX American Express CAPS Contrac's and Payments System CFR Code of Federal Regulations CISSCO Comprehensive Information Support Systems Contract DAEO Designated Agency Ethics Official DCAA U.S. Defense Contract Audit Agency DCPM Division of Contracts and Property Management (NRC)

DOE U.S. Department of Energy EDO Executive Director for Operations FAA Foreign Assistance Act FMFIA Federal Managers' Financial Integrity Act FSU Former Soviet Union FY Fiscal Year GAO U.S. General Accounting Office IG Inspector General ISR Intemational Survey Research LSS Licensing Support System MOU Memorandum of Understanding NEI Nuclear Energy Institute NMSS Nuclear Material Safety and Safeguards, Office of(NRC)

NOED Notices of Enforcement Discretions NPR National Performance Review l

April 1,1998 - September 30,1998 3!

NRC U.S. Nuclear Regulatory Commission NRR Nuclear Reactor Regulation, Office of (NRC)

OIG Office of the Inspector General (NRC)

OMB Office of Management and Budget PC Personal Computer PM Project Manager RES Nuclear Regulatory Research, Office of (NRC)

SMT Senior Management Team Y2K Year 2000 NRC OIG SemionnualReport I

32

mm-mmmmmmer -

GLOSSARY EventInquiry The event inquiry is an investigative product documenting examination of events or agency actions that do not specifically focus on individual misconduct. These reports identify institutional weak-nesses that led to or allowed a problem to occur. This type ofinvestigative effort was previously referred to as an inspection.

FinancialAudit A financial audit assesses the effectiveness ofinternal control systems, transaction processing, financial systems, and contracts.

Funds Put to Better Use Funds identified in audit recommendations that could be used more efficiently by avoiding unnecessary expenses.

Hotline A toll-free telephone number (1-800-233-3497) available to anyone for reporting incidents of possible fraud, waste, and abuse to the NRC's Office of the Inspector General.

Management Decision A final decision founded on management's response to audit recommendations and findings.

SpecialEvaluation An OIG audit report that documents the results of shon-term, limited assessments. It provides an initial, quick response to a question or issue, and data to determine whether an in-depth independent audit should be planned.

Questioned Cost A cost questioned as a result of an alleged violation oflaw, regulation, contract, or agreement governing the expenditure of funds (costs unsupported by adequate documentation or funds for a panicular pmpose that are unnecessary or unreasonable.)

April 1,1998 - September 30,1998 33

THE NRC OIG HOTLINE The OlG established a toll-free number (l-800-233-3497) to provide NRC employees, contractors, and others with direct access to the OIG's Hotline Program. liotline procedures and guidelines were carefully developed to ensare the confidentiality (unless totally unavoidable) of NRC employees wishing to report incidents of possible fraud, waste, and abuse within the NRC. Trained OIG staff are available to answer calls Monday through Friday, between 10 AM and 4 ru (eastern standard time).

\

HOTLINE:

1-800-233-3497 Individuals may also provide information to hotline personnel by writing to the following address:

U.S. Nuclear Regulatory Commission Office of the inspector General Hotline Program Mail Stop T-5 D28 Washington, DC 20555-0001

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