ML20211K434
| ML20211K434 | |
| Person / Time | |
|---|---|
| Site: | San Onofre  |
| Issue date: | 03/26/1999 |
| From: | Van Cleave V, Williamson E NRC OFFICE OF INSPECTION & ENFORCEMENT (IE REGION IV) |
| To: | |
| Shared Package | |
| ML20211K424 | List: |
| References | |
| FOIA-99-234 4-1998-041, NUDOCS 9909070220 | |
| Download: ML20211K434 (51) | |
Text
i CASE No. 4-1998-041 p~m,,
United States !
Nuclear Regulatory Commission % ..... / l Report of Investigation SAN ONOFRE NUCLEAR GENERATING STATION:
COERCION AND DISCRIMINATION AGAINST ACCESS /FFD AUDIT TEAM BY SCE MANAGEMENT Office of Investigations Reported by OI.RIV ri . , ; .- .,
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Title:
SAN ONOFRE NUCLEAR GENERATING STATION:
COERCION'AND DISCRIMINATION AGAINST ACCESS /FFD AUDIT TEAM BY SCE MANAGEMENT Licensee: Case No.: 4-1998-041 Southern California Edison Co. Report Date: March 26, 1999 23 Parker Street Irvine, CA 92718 Control Office: OI:RIV Docket No.: 50-361/362 Status: CLOSED Reported by: Reviewed and Approved by:
E -
Virgn ia Van Cleave, Sr. Special Agent E . "L . Williamson, Director Office of Investigations Office of Investigations Field Office, Region IV Field Office, Region IV WARNING
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DO NOT DISSEMINATE, PLACE IN THE PUBLIC DOCIDfENT ROOM, OR DISCUSS
' THE CONTENTSNOF THIS REPORT--QF INVESTIGATJON O SIDE NRC WITHOUT AUTHORI'EY OF T E APPROV NG OFP CIAL OF,TifIS REP T. UTHORIZED
,i DISCLOSURE MAY SUL N ADVERS INISTRATIVE ACTION AND/OR
' CRIMINAL PROSEC ON.
0 SYNOPSIS This investigation was initiated by the Nuclear Regulatory Commission'(NRC), Office of Investigations (OI), Region IV (RIV),
on August 14, 1998, to determine if a joint utility audit team
' leader at Southern California Edison's (SCE) San Onofre Nuclear Generating Station (SONGS) was coerced into removing an effectiveness statement from an audit report issued following the team's audit of.the Institute of Nuclear Power Operations' (INPO)
Access Authorization (AA) and Fitness-for-Duty (FFD) programs.
Based on the evidence, testimony, and documentation developed during the investigation, the allegation that an audit team leader was coerced by SCE management was not substantiated.
However, the evidence indicates that standard practice was not followed in the processing of this INPO audit report by SCE, as a result of apparent pressure by INPO on SCE senior management.
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TABLE OF CONTENTS !
Pace SYNOPSIS............................................ 1 LIST OF INTERVIEWEES................................ 5 DETAILS OF INVESTIGATION............................ 7 Allegation (Coercion and Discrimination
-Against Access /FFD Audit Team by SCE Management).................................. 7 Applicable Regulations......................... 7 Purpose of Investigation....................... 7 Background..................................... 7 Interview of Alleger........................... 8 Documentation Review........................... 15 Testimony / Evidence............................. 21 Coordination with NRC Staff.................... 41
-Agent's Analysis............................... 42 Conclusions.................................... 45 LIST OF EXHIBITS.................................... 47 l
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LIST OF INTERVIEWEES Exhibit ADKINS, Jmmes E., Senior QA Specialist, .STP............. 29 FRANCIS,. Sandra M., QA Specialist, Duke Energy.......... 31
-LARSON, Jeffrey A., Procurement Quality Supervisor, SONGS............................................. .... 32 LEE, Thomas, QA Endineer, SONGS......................... 2 McWEY, Robert J., Manager, Quality Maintenance and Material, SONGS........................................ 33 NUNN, Dwight E., Jr.,.'Vice President, Engineering and Technical Services, SONGS........................... .. 34
-ROBINSON) David RI, QA Manager, CNS.......... .......... 28 i
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p DETAILS OF INVESTIGATION A.llecation .
Coercion and Discrimination Against Access /FFD Audit Team by SCE Management Acolicable Reculations 10 CFR 50.5: Deliberate Misconduct (1998 Edition) 10 CFR 50.7: Employee Protection (1998 Edition) 10 CFR 50.9: Completeness and Accuracy of Information (1998 Edition) 10 CFR 26.80(b)~: Audits (1998 Edition) 10 CFR 73.56(b) and (g) (2 ) : Personnel Access Authorization
' Requirements for Nuclear Power Plants (1998 Edition) 10-CFR Part 50, Appendix B: Quality Assurance (QA) Criteria for Nuclear Power Plants and Fuel Reprocessing Plants (1998 Edition)
Purpose of JF .etication This investigation was initiated by the Nuclear Regulatory Commission (NRC), Office of Investigations (OI), Region IV (RIV),
on August 14, 1998, to determine if Thomas LEE, QA Engineer, SONGS, a joint utility audit team leader at Southern California Edison's (SCE) San Onofre Nuclear Generating Station (SONGS) was coerced into removing an effectiveness statement from an audit report issued following the team's audit of the Institute of Nuclear Power Operations' (INPO) Access Authorization (AA) and Fitness-for-Duty (FFD) programs (Exhibit 1).
Backcround By letter dated April 24, 1998, an anonymous individual notified Russ Wise,-Senior Allegations Coordinator, NRC:RIV, that INPO officials implied potential retaliation against a joint utility audit team for the unfavorable results of the team's audit of INPO's' Unescorted AA and FFD Programs. The audit team concluded that INPO's programs were not being implemented in accordance NOT FOR K IC DISCLOSURE WITHOUT APPROVAL OF FIELD OFFICE DIREC'{OR f OFFIMs INVESTIGATIONS, REGION IV W /
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with the regulations. During the exit meeting, an INPO officer stated INPO would not accept the audit team's conclusions, and the meeting was over. The anonymous individual further stated that SCE officers coerced the audit team leader into removing the
. effectiveness evaluation section of the audit report which is required by industry standards and Nuclear Energy Institute j (NEI) 94-02. The audit report was subsequently issued without an )
effectiveness evaluation. On August 13, 1998, following a i determination by NRC Headquarters that the Office of Nuclear Reactor Regulation (NRR) would handle this allegation, an NRR Allegation Review Board (ARB) requested that OI:RIV initiate an investigation to determine if SCE management coerced or intimidated the audit team into changing its report.
Interview of LEE (Exhibit 2)
LEE, a quality assurance (QA) engineer for SCE for approximately 23 years, was interviewed by.OI:RIV on August 20, 1998. LEE explained that an annual audit of INPO's AA and FFD programs was conducted under the auspices of NEI, using NEI procedures. NEI coordinates audit activities until an audit lead utility is identified, at which time that utility becomes responsible for the balance of' audit activity. SCE was assigned audit team leadership for the 1998 INPO audit.
LEE said he was asked by the NEI coordinat.or to be team leader since he had participated in the INPO audit for the past 5 or 6 years. LEE said there was nothing different about the 1998 audit; the audit, plan, scope, and activities were the same.
During the audit, the audit team referenced 10 CFR 73.56 for AA and Part 26 for-FFD, as well as NUMARC Guidelines A901, INPO's internal procedures, and NEI 94-02. Team members were selected by the participating utilities. The audit team varied year to
-year although some 1998 team members had been there before.
LEE said during.the 1998 INPO audit, the team met each evening and then discussed problems they had found with INPO personnel, primarily Jeffrey WHEELOCK, Director, Human Resources (HR), and Barbara TROTT, Supervisor, FFD and AA. INPO personnel reported to the VP on a daily basis. During the audit, INPO personnel were professional, courteous, and accommodating, until a certain point in the exit interview.
LEE said the entire audit team met Thursday evening, February 26, 1998, to discuss the team's findings. During that meeting, it NO'E FOR PU,BItI(DISCLOSUREJIITMOUT APPROVAL OF FIELD OFFICE DIRECTOR > g FlCE'OF INVESTIGATIUn6 Q GION I,V Case No. 4-1998-041 8
l was agreed, based on identified deficiencies, that INPO's AA program implementation was ineffective. One factor leading to l
this conclusion was that several findings were repeat problems '
which had supposedly.been fixed. During the February 26, 1998, '
audit team caucus, the audit team expressed " serious concerns" i about the FFD program, and felt they could " easily" have also characterized it as ineffective, but there were so many problems with the AA program that the team decided to not disqualify the FFD program although they listed each deficiency with the FFD program. LEE said this appeared to be a unanimous decision because no one expressed any disagreement with the conclusion.
LEE.said immediately after that meeting, he telephoned Jeffrey LARSON,' Procurement Quality Supervisor, SONGS, and told him of the team's determination. LEE said, as a standard policy, with every vendor other than INPO, the audit team did not talk to utility management until they returned to their office. LEE said, "for some reason INPO has always been treated differently t tn anyone else," and he called LARSON to be sure he would be sapported by SCE management in the audit conclusions. LEE said he "got the green light" from LARSON.
LEE said on February 27, 1998, at 8:00 a.m., he briefed WHEELOCK and TROTT of the audit's conclusion. He said when he told them that the team had quantified the findings as ineffective implementation, there was a " gasp of devastation." They seemed to have no problem with the identified deficiencies, until it was characterized as ineffective implementation, which seemed to put a different connotation on it. LEE said the phrase " ineffective implementation" was standard terminology that could be used with any contractor. LEE explained that each utility was required to review tne audit results and decide what, if anything, they needed to do as a result of the audit findings, such as possibly imposing restrictions on the use of a contractor. However, if the audit team characterized a program as effective, the utilities could use that as their basis for accepting the contractor.
LEE said the entire audit team met with INPO representatives, WHEELOCK; TROTT; A. C. " Fred" TOLLISON, Jr., Executive Vice President (VP); and George FELGATE, VP , Administration, for an exit interview on February 27, 1998, at 1:00 p.m. LEE said he gave an opening statement and brief overview of audit activities and reviewed the audit results. Each area deficiency was then commented on by the appropriate audit team member. LEE said, at the conclusion of the audit findings presentation, he told INPO N WITHOUT A yPOVAL OF FIELD OFFICE U % IC DISCLQS STIGATIONS,MGIQ) LIV -
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the audit team had concluded that implementation of the AA l program was ineffective. According to LEE, FELGATE said he ;
believed the audit team had performed a thorough review, but he !
disagreed with the audit conclusion, and TOLLISON stated the meeting was "now terminated and will be reconstituted at a later I time when ours and your CEOs could be present," and instructed the audit team not to release the findings until a final exit was j held. LEE said that ended the meeting, and he never completed his closing remarks. LEE said he left a handwritten draft of each identified deficiency with INPO. These deficiencies or findings did not change between the draft and final audit report.
There was no effectiveness statement in the draft findings because that was typically included in the synopsis or executive summary.
LEE said, approximately 15 minutes after the conclusion of the exit meeting, TOLLISON asked-if he (LEE] could remain because he (TOLLISON) had contacted the CEO who was on his way. LEE said
'while he was waiting for the INPO CEO, he received a telephone call from. Rich ENKEBOLL, Assistant to PADS Administrator, NEI, who. questioned him about the audit activities and findings.
ENKEBOLL wanted to ensure all audit team members were aware of the " severeness of the categorization of the audit," and that was ,
the determination of the entire team. LEE said he told ENKEBOLL !
that was 'the audit team's determination, and it would be stated in'the audit report. LEE said ENKEBOLL asked if the audit findings would necessitate pulling badges. LEE said that decision would be left up to the individual utility, usually the security manager. LEE said it appeared ENKEBOLL was using that to measure the effectiveness of the program, but that was not a common criteria. LEE said he did-not know how ENKEBOLL became aware of the audit results and assumed that someone at INPO had called him. Shortly after his discussion with ENKEBOLL, LEE said TOLLISON returned and said the CEO would not be coming. TOLLISON also asked what INPO needed to do to fix the problems. LEE said he explained the issues and what would be required to resolve them.
uEE said he was " absolutely surprised" by TOLLISON's response to the audit findings during the exit meeting. LEE said he had attended, at a minimum, 24 exit interviews a year for the last 23 to 24 years and had never been treated in this manner, regardless of the audit team's conclusion. LEE said he believed TOLLISON's comments were meant to exert pressure on the audit team to change NbTFOR L DISCLOSURE-WIRHOUT APPROVAL-OF FIELD OFFICE DIRECTO ,-OFFICE OF INVESTIGATIONS, REGION IV Case No. 4-1998-041 -10
its conclusions, but the members did not do so. LEE.said he found TOLLISON's response during the exit interview to be intimidating.
LEE said, in his experience, when an audit team determined a program was ineffective, the company understood the issues and committed to take whatever actions were necessary to return to effective status. Typically, an audit report was issued, the
! company responded, the problem areas were resolved, and program status was returned.
! LEE said he had no further discussions with INPO representatives regarding this audit after February 27, 1998. LEE said he later discussed INPO's response at the exit with most of the audit team members, and all indicated they believed INPO attempted to intimidate the audit team into changing their findings by talking about escalating the audit to the CEO level. LEE said no one he talked with indicated any concerns about the findings, and all believed the findings were valid and should stand. LEE said previous INPO audits characterized the overall program as effective, but identified many of the same concerns and deficiencies. !
LEE said he gathered each audit team members' notes and supporting documents and returned to SONGS where, as the team I
leader, he was responsible for preparing the final audit report.
When he arrived at SONGS, as is standard, he met with LARSON and Bob McWEY, QA Manager, to discuss the audit findings. LEE said I he brought up INPO's response to the team's classification of the findings because it concerned him. LEE said, although nothing was stated, he "had a feeling" that, prior to his arrival, there
-had been some communication by INPO to SCE about the audit because LARSON and McWEY did not seem surprised by his comments.
LEE said when he returned to SCE, he followed standard procedure.
I He prepared a draft report, turned it in for typing, reviewed the typed draft, and provided the final draft to LARSON. LEE said, from the time he returned to SONGS, there was " constant discussion" about the audit, but there was nothing unusual about that. LEE said LARSON reviewed the draft, made "a few minor editorial adjustments," and returned it to typing. LEE said on March 16, 1998, a draft copy of the audit report was provided to him for his review and signature. He noticed the determination of the audit team and the full accounting of the exit interview meeting had been deleted, including the paragraph entitled, NOp F6R' PUBLIC ,DISCCO'l5URE WITHOUT VAL OF FIELD OFFICE DIRECTOR, OFFIC STIGATI REGION IV Case No. 4-1998-041 11
" Quality Impact of Audit Findings / Effectiveness Statement." LEE said this was a boilerplate statement, required by procedures, saying the program was effective or ineffective, and his draft report had that statement in it.
LEE said he wrote an informal memorandum to LARSON citing 10 CFR 73.56, NEI 94-02, and SCE procedure S0123-XII-18.4 that required an effectiveness statement in an audit report. The memorandum further stated that he (LEE) refused to sign the audit report as it was currently. written. LEE said the removal of the effectiveness statement and other changes to his audit report were never discussed with him. LEE said never before had a significant change been made to one of his reports without discussion, and this was the first time something was removed from one of his reports without his knowledge. LEE said LARSON later asked him what was needed in the report for him to sign it.
LEE said the next day, he provided LARSON with two statements for his review, saying he would sign the report if it contained one of those two statements. LEE said one of the suggested statements was entitled, " Quality Impact of Audit Findings / Effective Statement" and said there was ineffective implementation and ineffective oversight of the program which warranted prompt and aggressive management action. LEE said the second suggested statement, which was ultimately used in the report, indicated it was SCE management's determination that the number of findings and repeat issues identified indicated that ,
program oversight, attention to detail, and implementation of corrective action warranted prompt and aggressive management action. LEE said he did not discuss the report's changes in detail with LARSON, who indicated the report had been reviewed by others. LEE said he did not know who removed the effectiveness statement from the report.
LEE said he initially refused to sign the report because he believed it was his responsibility to record the findings as agreed to by the audit team. LEE said he felt uncomfortable with the removal of the ineffectiveness statement from the report, but with his suggested paragraph, he made it clear upper management had decided to address the issues in that fashion, and it was not his decision. LEE said he did not consider that paragraph to be an effectiveness statement. He felt the report conveyed the team's findings to the best of his ability, under the circumstances. LEE said all the deficiencies were still listed as written in the report and " remained unscathed."
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NOT FOR PUBLIC DISCLOSURE WITHOUT. APPROVAL OF FIELD OFFICE DIRECTOR OFFICE u OF INVESTIGATIONS, REGION IV Case No. 4-1998-041 12
LEE said SCE also deleted the paragraph about INPO's response to the findings during the exit meeting. The audit report was issued without in-depth details of the exit interview and without a clear statement or assessment of the program by the audit team.
LEE said in his lengthy experience, this is the only audit report he had ever seen that was issued without a clear effectiveness statement because it was required by procedure.
. LEE said he did not know why the effectiveness statement was removed from his; report and could only theorize that " ineffective !
program" meant something. drastic to INPO, and they [INPO) l conveyed that to SCE management. LEE said LARSON told him a teleconference was held after the exit interview that included l Harold RAY, Executive VP, SCE, Dwight NUNN, VP , Engineering and -
Technical Services, SCE, TOLLISON, and maybe FELGATE. LEE said he believed they discussed the audit results, but he had no specific information about the conversation. LEE said he had no )
knowledge of any additional discussions between SCE management and INPO management about the audit.
When asked, "Do you believe that you were pressured or coerced to sign the report without a clear effectiveness statement in it?"
LEE said, "There was some pressure for those words not to be in the report, so I [would say] yes." He said if that section had not been removed, he would never have written the paragraph that was used in the. report.
LEE said he believed he talked with at least one member of the audit team after he wrote the new sentence for the audit report, but could not recall who he spoke to. He recalled that the team l member (s) indicated that at least the paragraph showed it was not the team leader's decision. LEE said he believed the situation had been taken out of his hands, and he was comfortable clearly indicating it was not his decision, and the findings, !
observations, and recommendations of the audit team remained the same. LEE said he was unsure if he would have had repercussions had he insisted on leaving the ineffectiveness statement in the report.
LEE said McWEY contacted all the audit team members by telephone
.before the report went out to substantiate the team's assessment and classification of the audit results. LEE did not know if anyone asked McWEY to do that, but he was unaware of this ever happening before. MCWEY told LEE that, with one exception, the team members were unanimous in their assessment of the audit.
NOT FORDIRECWR, P QIC DISCLOSURK WITHOUT APPROVAL-OF-FIELD-OFFICE OFFICE ObINVESTIGATIONS, REGION IV Case No. 4-1998-041 13 ,
LEE said he met with LARSON, McWEY, and NUNN on several occasions to discuss the status of the audit and responses provided by INPO. He believed NUNN brought up the issue about the findings not being significant enough to warrant pulling someone's badge.
LEE said it was not typical for NUNN to be involved in this type of discussion, and this was the first time he had been involved with NUNN in this manner.
LEE said he discussed the audit report with some of the audit team members after it was issued, and some expressed concerns about the way the audit report was issued. A number of utilities called him about the report, asked specifically about the program effectiveness statement, and appeared concerned that one was not included. LEE said he told them that issue was addressed in the section of the report identified for that, but "no one was happy with that." LEE said he received written communication from i Arizona Public Service (APS) regarding the absence of the I effectiveness statement, which he passed on to his supervisor. l LEE said, once the audit report was issued, he had no further I discussions with his management about it. )!
LEE said he believed the audit report being changed negatively impacted the audit process, but it was limited to INPO. He said INPO,had always been treated differently, such as being allowed to respond'before the report was issued so as to make it appear that, although there may have been a problem, it was corrected before the report was issued.
LEE said a follow-up audit to verify corrective action was conducted at INPO on July 7-9, 1998, by the original audit team, with'the exception of Dave ROBINSON. LEE said McWEY attended the exit interview,'which was the only time McWEY had attended an exit meeting off site. The audit team concluded, with one exception, that all findings had been resolved. LEE said the team experienced no problems with INPO in July 1998. j LEE said the part of this whole experience that he considered intimidating was TOLLISON's comments that he was going to have SCE's CEO meet with INPO's CEO and the audit team. LEE said that, while he did not feel forced to remove the effectiveness statement by anyone at SCE, it was clear the word " ineffective" would not be used for this particular audit. LEE said the team succeeded in getting INPO to improve their program, which was what they wanted to. accomplish, even though they were " prevented" from saying ineffective in the audit report.
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Documentation Review NEI 94-02, Nuclear Power Plant Personnel Standardized Industry Audit Process for Licensee-Anoroved Contractor / Vendor Access Authorization and Fitness-For-Duty Procrams,Section I, dated November 1994 (Exhibit 3)
Page I-9 stated that the audit report would summarize audit results and include a statement of the overall effectiveness of the program elements. Pages I-15 and 16, part of a sample audit report, showed three versions of a summary paragraph, all of which included a statement that "the AA screening company program was rated effective..." or
- the AA screening company program was rated not effective..."
SONGS OA Procedure SO123-XII-18.4, Revision 3, Nuclear Oversicht Audits-Plannina, Performance, and Documentation, effective January 30, 1998 (Exhibit 4)
Section 6.1 of this procedure stated that it applies to all QA audits of SCE internal departments and organizations. Supplier audits are conducted using SO123-XII-18.19. Section 6.5.1 of this procedure stated the audit report must include an audit summary with an evaluation statement regarding the effectiveness of all-audited QA program elements.
SONGS OA Procedure SO123-XII-18.19, Rev. 2, NOD Supplier Audits, effective May 30, 1997 (Exhibit 5)
Section 6.1 of this procedure stated that it applied to Nuclear Oversight Division (NOD) audits of suppliers providing materials, services, or equipment to SCE. Section 6.10.2 of this procedure stated the audit report must include a synopsis of audit results, including an evaluation statement of audited quality program elements and how the audit findings impact product quality.
Draft Audit Findinas Presented to INPO by LEE, dated February 27, 1998 (Exhibit 6)
This handwritten list of findings and summary of discrepancies was. presented to INPO by LEE following the exit meeting. It did not address program effectiveness.
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Synoosis of Exit Interview Preoared by LEE, Undated (Exhibit 7)
This document listed the individuals present during the INPO exit I meeting on February 27, 1998, with the exception of ADKINS, who was present, but whose name was inadvertently omitted from this document. This document stated LEE told INPO the audit team had determined that implementation of the AA program was ineffective.
At that point, TOLLISON terminated the meeting, saying it would be reconvened with INPO's CEO and the team member's utilities' CEOs. TOLLISON f.urther instructed the audit team not to release any findings prior to this second meeting.
Initial Draft Audit Report Preoared by LEE, Undated (Exhibit 8)
Page 8 of this report stated, "it was the determination of the audit team that implementation of the Access Authorization Program was ineffective."
4 Document Precared by LEE and Provided to LARSON Containino Two Statements for Possible Inclusion in the Audit Report, Undated (Exhibit 9)
This document, which testimony indicated was prepared by LEE on or about March 16, 1998, stated that, since the audit report provided to him for his signature did not address 10 CFR 73.56 (g) (2 ) , NE2 94-02,Section I, or SO123-XII-18.4, 6.5.4, he declined to sign it. He provided two statements entitled,
" Quality Impact of Audit Findings / Effectiveness Statement" and said if one of those was included in the report, he would sign it. The first version stated the audit indicated ineffective implementation of certain elements of the program or ineffective oversight of the program. The second version, which was ultimately used in the audit report, stated, "While there were no instances identified that necessitated removal of INPO personnel, SCE management has determined that the number of findings and ;
repeat issues identified indicate that oversight of the program, attention to detail, and implementation of corrective actions to prevent recurrence warrant prompt and aggressive management action."
SCE Audit Report INPO-1-98, sianed March 19, 1998 (Exhibit 10)
Exhibit 10 includes pages 1-8 of 139 pages of this audit report.
.The remaining pages, which are individual answer sheets, audit comment sheets, and Corrective Action Requests (CARS) referenced NOT.3 OR' IC DISCLOS K WITHO p ROVAL OF FIELD OFFICE DIRE R, OFFICE OF'INVESTIGATIONB, sui.uAva Av Case No. 4-1998-041 16
in the audit report, are not included as exhibits to this report but are available for review in the OI:RIV offices. This final audit report did not specifically state if INPO's overall program was effective or ineffective, but page 5 included a " Quality Impact of Audit Findings / Effectiveness Statement" which stated,
" Eleven findings and seven observations were identified during the audit (Attachment 1). Many of the discrepancies had been identified on previous audits of INPO's FFD/AA program. While there were no instances identified that necessitated removal of INPO personnel access, SCE management had determined that the number of findings and repeat issues identified indicate that oversight of the program, attention to detail, and implementation of corrective actions to prevent recurrence warrant prompt and aggressive management attention (CAR S-1638)."
Memorandum from FELGATE to Zack T. PATE, CEO, INPO, dated March 5, 1998 (Exhibit 11)
FELGATE stated he spoke with ENKEBOLL about a conversation he (ENKEBOLL] had with LEE on February 27, 1998. According to FELGATE, ENKEBOLL said LEE told him the audit findings were essentially administrative and easily fixed, and no one had been allowed access to nuclear stations under INPO's program who should not have been granted access.
Letter from PATE to Steohen FRANK, President and CEO, SCE, dated March 5, 1998 (Exhibit 12)
This letter referenced the above conversation between ENKEBOLL and LEE. PATE stated if SCE was "considering action that would effectively remove INPO access to U.S. nuclear plants," INPO requested an exit meeting with INPO's CEO, SCE senior management, and NEI. PATE said INPO did not consider the February 27, 1998, "dth(iefing" to be a valid exit meeting. PATE further stated INP0 was sending FRANK additional information for consideration in evaluating INPO's program effectiveness.
Letter from James T. RHODES. INPO. to FRANK, dated March 5, 1998 (Exhibit 13_l This letter stated INPO will " aggressively address the team's findings" and several of the deficiencies had already been corrected. However, INPO did not believe their program had been ineffectively implemented. RHODES attached specifics regarding INPO's proposed or instituted corrective actions thus far.
NQT FOR % LIC DISCLOSURE WITHOUT OF FIELD OFFICE DIREC$0RT-Off5CE OF4NVESTIGATIONS, R I Case No. 4-1998-041 17 ,
Letter from FELGATE to NUNN, dated March 13, 1998 (Exhibit 14)
Attached to'this letter was INPO's response to the audit team's findings'and recommendations. The findings were listed by CARS 1628 to 1638. CAR 1638's finding stated, " resolutions and corrective actions taken by INPO to resolve discrepancies identified during the' previous audits are deemed ineffective based on recurrences identified in the current audit activity."
(NOTE: The CARS,provided to OI:RIV by SCE were signed and dated on March 18 and 19, 1998. They were provided to INPO under cover letter dated March 19,- 1998 (Exhibit 15).]
Letter from NUNN to TOLLISON, dated March 19, 1998 (Exhibit 15)
SCE provided INPO with a copy of the audit report findings and CARS. The letter stated SCE will provide personnel to assist INPO in resolving the deficiencies and identifying measures to j preclude recurrence. This letter references a conference call
{
between SCE and INPO on March 12, 1998, during which the audit <
findings were discussed. l I
E-mail from John NIELSEN, APS, with LARSON's Pronosed Response, dated Aoril 23, 1998 (Exhibit 16)
NIELSEN stated he had reviewed LEE's audit report and found no statement that INPO's programs "were effective or not." NIELSEN said before APS granted access to INPO personnel, he needed an effectiveness statement in order to analyze the audit against ANSI 45.2.12. LARSON drafted a " standard response... to provide consistent information during inquiries," which he provided to NUNN for his approval. This stated that each utility was responsible for evaluating audit results for acceptability of the program. LARSON further stated that, " based on the results of the audit, no instances were identified that necessitated removal of INPO personnel access, and based upon the additional ,
information obtained by the now complete SCE supervisory assist visit and INPO's immediate corrective actions taken, SONGS would accept the INPO FFD/AA Programs." An additional e-mail note stated NUNN concurred with this wording.
Letter from NUNN to FELGATE, dated May 18, 1998 (Exhibit 17) J This letter stated INPO's response to the CARS and the audit team's recommendations was evaluated and found acceptable.
Attached were copies of the CARS indicating SCE's acceptance of INPO's corrective action.
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Case No. 4-1998-041 18
1998 NEI' Joint Utility Audit of'INPO's FFD/AA Procrams, INPO Corrective Action-Trackina, dated Julv 8, 1998 (Exhibit 18)
This document tracked INPO's response and the status of each l response to specific audit findings. Pages 13-15 indicated i several utilities deemed INPO programs unacceptable, placed INPO programs on a restricted list, and/or subjected INPO personnel to
-additional requirements as a result of the February 1998 audit.
r i Letter from NUNN to FELGATE, dated July 29, 1998 (Exhibit 19) l This letter referenced the audit conducted on July 7-9, 1998,.to verify INPO's corrective actions. The letter stated INPO's ;
responses and actions were satisfactory and CARS 1628-1637 were closed. CAR 1638, which pertained to long-term corrective action effectiveness, would remain open until completion of the next NEI audit scheduled for early 1999.
Carolina Power & Licht Audit Reoort OAA/2255-95-04 of INPO's AA and FFD Procrams, dated March 17, 1995 (Exhibit 20)
This report stated that the audit's purpose was to evaluate the AA and FFD programs for " effective implementation and compliance ;
with regulatory requirements," using NEI 94-02. The audit report ;
concluded INPO's AA/FFD programs were weak, and immediate I corrective action was required for 2 of 8 nonconformances. .
i INPO's response to the nonconformances was considered adequate to I
preclude recommending withdrawal of unescorted access. The audit report concluded that INPO's policies and procedures adequately addressed program elements required for implementation of a standard FFD program, but lack of INPO management oversight contributed to several programmatic weaknesses. The audit report concluded that corrective action taken, following the previous-joint utility audit, was effective and satisfactory.
Comed Audit Report G-96-86 of INPO's AA and FFD Procrams, dated April 16, 1996 (Exhibit 21)
This report stated that the audit's purpose was to evaluate INPO's AA and FFD programs for " effective implementation and compliance with regulatory requirement," using NEI 94-02. The audit identified three findings and two unresolved items, which were considered minor with no major impact on the effectiveness of INPO's AA and FFD programs. The audit report concluded that corrective actions taken following the previous joint utility audit were effective and satisfactory.
NOTIOR LIC DIS OSURE WITHOUT APPROVAL OF FIELD OFFICE DIR , OFFI OF INVES S V Case No. 4-1998-041 19 4
i TVA Audit Reoort TVA/SSA 97-01 of INPO's AA and FFD Procrams, dated Aoril 15, 1997 (Exhibit 22)
This report stated that the audit's purpose was to evaluate INPO's AA and FFD programs for " effective implementation and compliance with requirements," using NEI 94-02. The audit summary stated, "The overall AAP and FFDP were rated effective."
The audit identified one unresolved item, two nonconformances, two observations, five recommendations, and a program strength.
SCE Sucolier Audit Reoort ODI-1-97, Preoared by LEE, dated October 24, 1997 (Exhibit 23)
SCE Audit Report QDI-1-97 of Quest Diagnostics, Inc., a laboratory drug testing service, stated on page 3, " Based on the above identified deficiencies, the audit team concluded that Quest Diagnostics, Inc. Quality Program is ineffective in meeting the requirements of 10 CFR 26 and SCE/APS purchase order stipulations... the subject supplier's qualification status is changed to "Not qualified" pending resolution of the identified-deficiencies..."
SCE Sucolier Audit Reoort CPSI-1-98, Prepared by LEE, dated April 23, 1998 (Exhibit 24)
. SCE Audit Report CPSI-1-98 of Choice Point Services, Inc., a background investigation company, stated on Page 3 under the
, heading Effectiveness Evaluation, " Based on the review of records the Audit Team concluded that the investigation process and Operating Plan in general, demonstrate effective implementation with the exception of instances listed in the enclosed (CARS)."
Letter from ROBINSON to DAVIS, NEI, dated March 23, 1998 (Exhibit 25)
ROBINSON stated he participated in an audit of INPO in February 1998 which concluded that INPO was not effectively implementing their AA program. ROBINSON stated SCE management changed the team's conclusion regarding the effectiveness of INPO's implementation of their AA program, contrary to requirements of 10 CFR 50, Appendix B, regarding independence of the QA function. ROBINSON stated, until they received assurance that joint NEI audits were independent, Nebraska Public Power District would not use them as the sole basis for approving a contractor FFD or AA program.
N OR PUB IC'DISCLO URE WITHO PRO LD OFFICE h TOR, OFFIC STIGA IV Case No. 4-1998-041 20 .
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i Letter from DAVIS to ROBINSON, dated July 29. 1998 (Exhibit 26)
DAVIS stated a recent industry task force, which had reviewed industry experience and updated NEI 94-02, had concluded the basic process and responsibilities shown in NEI 94-02 were adequate. DAVIS said conflicts sometimes developed over specific .
audit findings, and NEI.was a resource to support the audit team leader. NEI was not responsible for providing oversight to each licensee's management of its QA program.
E-mail from ADKINS to Tim WALKER INFIl, dated' February 28, 1998
-(Exhibit 27)
ADKINS stated the audit exit at INPO did not go well. TOLLISON ended the exit meeting, said he would call the executives from each team member's utility, and the audit team would have to return to INPO to review the audit when INPO's CEO and NEI could b'e present. TOLLISON also told LEE he was not to communicate anything about the audit to other utilities until they had another meeting. ADKINS said TOLLISON did not upset him, but there was talk among the audit team members of intimidation.
ADKINS said he did not agree with all of the findings, but INPO had a lot of attention to detail and recurring issues.
Testimonv/ Evidence Interview of ROBINSON (Exhibit 28)
ROBINSON was interviewed by OI:RIV on September 3, 1998, and said ;
he has been QA manager at Cooper Nuclear Station (CNS) since l 1989. -
i ROBINSON said he first participated in an audit of INPO in February 1998, although he'had conducted other AA and FFD audits.
During the INPO audit, he was responsible for reviewing FFD, and the' rest of the audit team worked on AA. Duyring the audit, the audit team was treated very well by INPO personnel, and he heard no derogatory or negative comments.
ROBINSON said the audit team met each evening and discussed the day's findings, then met with INPO and briefed them. During the team meeting on Thursday evening, they-discussed the program and determined there were 10 or 11 findings, most in the AA area.
The team's consensus was that INPO's FFD program'was being effectively implemented, but the AA program was not being
'T . FO LIC DISCLOSURE WITHOUT APPROVAL OF FIEJaD OFFICE DIREC o,- OF vasilunT.LONS , REGION IV Case No. 4-1998-041 21 ,
l effectively implemented.' ROBINSON said ADKINS told him earlier on Thursday he knew where the team was headed, but he was not convinced he would call it that way if it was up to him.
According to ROBINSON, ADKINS did not voice that during the Thursday evening meeting. ROBINSON said by stating the AA program was ineffectively implemented, that meant it was not doing what it was intended to do. ROBINSON said the audit team never discussed or considered if the findings were significant enough to warrant pulling somebody's badge, but each utility l' would have to make that determination.
ROBINSON said each audit team member presented his/her individual findings at the exit interview on Friday, and LEE provided a wrap !
up and conclusion. ROBINSON said LEE stated the audit team had l concluded the AA program was ineffective. According to ROBINSON, '
FELGATE said he was disappointed to hear that, he thought the ;
audit team was wrong, and they had lost focus on their purpose, and TOLLISON said the exit was'over, and the audit team would be I expected to return to Atlanta to repeat the exit when PATE; INPO's new incoming CEO; and a senior NEI representative could be present. ROBINSON said TOLLISON left the room without giving the team a chance to respond. LEE told FELGATE the audit team was ,
required by NEI process to "put the word out" to other utilities. I ROBINSON said FELGATE responded that the exit had not been concluded, and INPO did not want information provided to utilities until the matter was resolved. .
ROBINSON said, having done audits and attended exit meetings for 15 years, his initial reaction was shock, then anger. He characterized INPO's reaction as unprofessional and uncalled for, but he did not consider it to be intimidating. LEE later asked the team members if anyone felt intimidated. ROBINSON said he could not recal] if anyone said they felt intimidated, but he told LEE " hell 1.o, I'm mad." ROBINSON said, depending on the individual, it could be an intimidating situation for some people. ROBINSON said he had never seen a response like INPO's from anyone he had audited. ROBINSON said he had no further contact with INPO or anyone from the audit team that week.
ROBINSON said because they had deemed INPO's AA program to be ineffective and in' light of INPO's reaction, he briefed CNS management about the audit. He also discussed the audit with the CNS FFD/AA supervisor and determined if INPO sent anyone to CNS, they would have to provide their background investigation files
~
to CNS for review to be sure they met all CNS requirements.
NOT OR PUB DISCLOS LD OFFICE DIRECTOR CE OF INVESTIGATIONS, REGION IV Case No. 4-1998-041 22
4 ROBINSON stated if an audit team determined a program.was ineffectively implemented, each utility had to decide if they needed to'take some action. ROBINSON'said that was'an important statement, and-he believed any utility that received a report stating a vendor program was being ineffectively implemented '
would take some mitigating action. He said even though the same 10 or 11 deficiencies were identified, some utilities might view the.results less seriously without a statement saying the program was' ineffective. . ROBINSON said including an effectiveness statement in alliaudit reports was common practice and was proceduralized by some utilities, including CNS.
ROBINSON said McWEY called him the week following the audit and told him he had been directed to call each audit team member and ask if they agreed with the conclusion about the AA program.
ROBINSON said he believed McWEY told him a SCE VP had received a call from PATE. ROBINSON said he told McWEY he did not participate in.the AA audit, but based on what he had heard from other team members, it appeared that taken individually, none of j the' items identified were significant, but taken in the aggregate ;
and in light of the fact that almost all of them were repeat problems from previous audits, the program was not being effectively implemented.
ROBINSON said he later received a call from ADKINS who also had
. received a telephone call from McWEY. ROBINSON said ADKINS I called him because this had never happened to him before.
ROBINSON said it was also the first time he had been contacted by a utility representative to verify an audit's conclusion.
ROBINSON said, before the audit report was issued, LEE told him the audit team's conclusion had been changed in the report to omit the word " ineffective." ROBINSON said LEE did not provide him with specifics, other than to tell him it was an SCE management decision not to use the word " ineffective" in the audit report. ROBINSON said he could " sense from the tone of the conversation" that LEE was unhappy about the way the report was written. Although LEE never said so directly, he [ ROBINSON] said he got the impression that LEE did not want to remove the word inadequate from the audit report, but he was directed or asked to do so. ROBINSON said this was the first time he had received this type of call from an audit team leader. ROBINSON said he was aware of no other instance in which a utility changed the audit team's conclusion in an audit report.
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Case No. 4-1998-041 23
ROBINSON said sometime'in late March 1998, he wrote a letter to NEI stating he was concerned about the integrity of the NEI sponsored program, since the INPO audit report, as issued, did not reflect the conclusions that were presented in the audit exit. ROBINSON said he wrote that letter with the support of CNS management because he wanted to let NEI know what had taken place About a month later, he received a call from DAVIS who said NEI was'a facilitator and not responsible for performance or reporting of audits. ROBINSON received a letter dated July 29, 1998, reiterating these points and saying it was the lead utility and team leader's responsibility to prepare the report and
. provide the conclusions.
ROBINSON characterized the audit report as factual but incomplete in that it did not show the audit team reached a consensus that the AA program implementation was inadequate. ROBINSON believed
-that presented "an incomplete picture to the rest of the industry about... the team's conclusion.. "
ROBINSON said, in his experience, an effectiveness statement in an audit report is standard. He believed in this case, it was changed by SCE management at the suggestion or request of INPO management. He speculated that INPO believed it'would not look good for them to have an audit report saying they did not .
effectively implement their program, since they evaluated other's programs. ROBINSON also believed if the audit report had stated INPO's AA program was ineffective, most utilities would have removed INPO's program approval or done something similar to CNS, i.e., review the background investigation documents themselves.
ROBINSON said he received calls from other utilities indicating they were going to refuse to use INPO AA documentation without prior review. He said several asked about the lack of an effectiveness statement in the audit report. ROBINSON said he also got several calls from count.erparts asking why he wrote the letter to NEI. He told them he wrote the letter because the audit team told INPO at the exit that the AA program was not effectively implemented, but the report said something different.
ROBINSON said he did not participate in the reaudit of INPO in July 1998. LEE later told him the audit went well, and INPO had taken appropriate corrective action.
NOT FOR LIC DISCLOSURE WITHOUT APPROVAL OF FIELD OFFICE DI MFh6CNSr-REGf0TiIV I Case No. 4-1998-041 24
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Interview of ADKINS (Exhibit 29)
(
ADKINS was interviewed by OI:RIV on September 8, 1998, and said he has been a senior QA specialist at STP since 1986. He was selected to participate in the February 1998 INPO audit because he was the only one at STP with experience in AA and FFD audits,
-although he had never audited INPO's programs.
ADKINS said INPO, personnel' treated them well during the audit,
.and he heard no negative or derogatory comments. The audit team 4 i
discussed the issues as they came up and in evening team meetings. After the evening team meeting, they briefed INPO personnel of the day's findings. He said INPO had some
" attention to detail" type problems primarily regarding international members and verification of education, credit checks, and work time experience.
ADKINS,said, during the team meeting on Thursday, at the conclusion of the audit, the team decided that INPO's corrective action program had not been effective in preventing recurrence of previously identified deficiencies. ADKINS said, in his opinion, the corrective action program was ineffective,. but the whole program was not ineffective. ADKINS said he understood, following the Thursday evening meeting, that only the corrective action portion of the program was determined to be ineffective and needed~immediate management attention. He did not believe they were going to call the entire AA program ineffective. j ADKINS said during the exit meeting, each audit team member reviewed his/her part of the audit, and LEE told INPO their AA program was ineffective. ADKINS said he viewed that as a
" misplay on words" because he thought only the corrective action portion was ineffective. According to ADKINS, TOLLISON said the exit meeting was over, and he wanted a list of audit team members, their utilities, and the team's findings. TOLLISON said the team would have to return to INPO to conclude the exit with
-NEI and INPO's CEO present to review the audit results. ADKINS said LEE told TOLLISON he (LEE] was required to communicate the audit results to the utilities. ADKINS said TOLLISON told LEE that he was not to communicate anything until they had a second exit, and INPO would contact executives at each utility to discuss the audit results.
ADKINS said, although he had never experienced this type of reaction at the conclusion of an audit, he was not intimidated or NOT OR PUBL SCLOSURE,.W HOUT APPROVAL OF FIELD OFFICE
- DIlOECTOR, E OF I IGkTIONS7-REGZ M Case No. 4-1998-041 25 .
threatened by TOLLISON, whom he considered more unprofessional than intimidating or threatening. ADKINS said there was no further discussion amongst the team members, except LEE said, "I feel like I've been intimidated," and laughed about it, so ADKINS did not know if LEE was serious.
ADKINS said he initiated contact with WHEELOCK after he returned to STP. ADKINS said WHEELOCK did not appear knowledgeable of the regulations, and,he [ADKINS) wanted WHEELOCK to be aware that, in his [ADKINS) opinion, some issues identified by the audit team were not valid. ADKINS said he had a copy of the handwritten findings and reviewed each issue with WHEELOCK, compared the finding to the' regulation, and provided WHEELOCK his [ADKINS]
opinion of the finding. ADKINS said he did this on his own, and his management did not ask him to do it. He reviewed each finding because he wanted to be prepared to answer any questions about the audit. ADKINS said he had no further dealings with
-WHEELOCK nor did he talk to anyone else at INPO about the audit. j AGENT'S NOTE: By letter dated September 8, 1998 (Exhibit 30), ADKINS provided clarification of his testimony, including that upon reflection, he believed he talked with WHEELOCK.on one or two additional occasions.
ADKINS admitted he did not talk to LEE about this, although he told LEE when he did not agree with the team's interpretation of a regulation. He said it was ultimately LEE's decision to determine deficiencies, but he [ADKINS] admitted it was.usually a consensus of the audit team, even though he [ADKINS] did not l agree with the decision. ADKINS said he believed the l deficiencies would be accurate because LEE would have to cite the regulation or INPO procedure being violated.
ADKINS said McWEY called him the week following the audit or the week after that, after he [ADKINS] had spoken with WHEELOCK.
McWEY told him [ADKINS) INPO had contacted the president of SCE about the audit results, and he asked his [ADKINS) impression of l the audit and audit findings. McWEY asked about the statement that the entire program was ineffective, and ADKINS said he told McWEY it had been his understanding only the corrective action portion of the program was ineffective. McWEY asked him [ADKINS]
if he [ADKINS] had discussed this with LEE, and he told him he had. -ADKINS said, about a week after this conversation, McWEY called him back and told him he had spoken with all the team members, and he [ADKINS) was the only one with any reservations t NOT FOR P KIC DISCLOSURE WITHOUT APPROVAL OF FIELD OFFICE kJ DIRECTORNFFICE OF INYFJPPIGKTIONg, REGJQhLIV I Case No. 4-1998-041 26 w
about the overall program being considered ineffective. McWEY asked him if he would like to change his statement, but ADKINS i told him he' stood behind it. ADKINS said McWEY asked no specific questions; he focused only on the effectiveness statement for the overall program. ADKINS said this was the first time any lead utility's manager or employee had called him to ask his opinion about an audit's conclusions.
ADKINS said he did not know if SCE management changed the initial audit report. He never saw a draft report and never talked to LEE about the audit report. ADKINS said he did not believe the audit report was incomplete, but some issues were written up that were not entirely within the NRC or NEI' guidelines. ADKINS said he believed an effectiveness statement was required in audit reports, and he had seen "very few" that did not have an effectiveness statement. Such a statement was a Nuclear Utilities Procurement Issue Council (NUPIC) and NEI guideline requirement. When STP was the lead utility, an effectiveness statement was required in the audit report. -ADKINS said he viewed the statement'in the " Quality Impact of Audit Findings and Effectiveness Statement" portion of the audit report as the effectiveness statement, even though it did not clearly state the overall program was effective or ineffective. ADKINS said, based on,his knowledge of the audit and discussions with audit team members and McWEY, he was " surprised" the report did not state the program was determined to be ineffective. l ADKINS said he did not recall the audit team discussing if the findings were.significant enough to pull someone's badge or using that as a criteria to rate the program effective or ineffective.
If.the audit team had "significant findings," those were supposed
'to be sent to the utilities before the audit report was issued.
ADKINS said each utility was responsible for reading each audit report and making its own determination as to acceptability of the programs.
ADKINS said the only other member of the audit team he talked with after the audit was ROBINSON, which was a short conversation, the details of which he could not recall. l l
ADKINS said he participated in the July 1998 reaudit at INPO, but there was no discussion about the previous audit. The audit team had no problems at INPO during that audit. All but one of the previously' identified deficiencies had been corrected.
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Interview of FRANCIS (Exhibit 31) ,
FRANCIS was. interviewed by OI:RIV on December 10, 1998, and said she has been employed by Duke Energy as a QA specialist for 20 years.
FRANCIS said she participated in a joint utility audit of INPO's FFD and AA programs in' February 1998. FRANCIS stated LEE did a fine job on the-audit, was an excellent team leader, did nothing wrong, and was treated poorly by an INPO VP and subsequently by his [ LEE's) management.
FRANCIS said she audited both FFD and AA while at INPO in .
February 1998. Initially, INPO employees were cordial and cooperative, although they seemed to lack understanding of the requirements. She said INPO believed they had complied with requirements when they had not done so, particularly in the area of international employees. t FRANCIS said the audit uncovered numerous significant and minor problems in the AA and FFD programs. She said she strongly believed the INPO 1A program was inef fective, and had the audit uncovered those kinds of issues and problems at any company other than INPO, the audit team would have immediately called utilities to tell them the program was ineffective. She said it was the responsibility of the team leader to make,that decision based on the team's assessment of the program, and he should not have to receive his management's " buy in." Theoretically, these audits were supposed to be independent assessments, but she said INPO had always been considered "high profile" and treated differently.
FRANCIS said during the February 1998 audit, the audit team met every evening and discussed the day's work and findings then met with and briefed INPO personnel. She said on Thursday evening, the audit team deemed the AA program ineffective. LEE asked each team member if he/she agreed with that assessment, and no one expressed any reservations about calling INPO's AA program ineffective. She said the FFD program could also have been l characterized as ineffective, but the technical specialist made the final determination. FRANCIS said, under the NEI Guidelines, the audit team was required to state if the program was effective or ineffective. However, each utility had to make their own determination as to appropriate action to take regarding the }
supplier or vendor.
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Case No. 4-1998-041 28
. FRANCIS said after the audit team's discussion on Thursday evening, they met with INPO personnel and reviewed the problems they had found in the program, but did not tell them the program was deemed ineffective. She theorized that LEE wanted to discuss that decision again with the team on Friday morning, which he did. She said there was no change in the team's position that the AA program should be characterized as ineffective. FRANCIS related that following the team meeting on Friday morning, L.EE met alone with FELGATE, WHEELOCK. and TROTT, and told them the.AA program was going to be rated ineffective.
FRANCIS said the audit team held an exit meeting with INPO personnel on Friday afternoon, and each team member reviewed his/her findings with INPO personnel, and then LEE stated the audit team had concluded that INPO's AA program was ineffective.
TOLLISON stood up and said the exit meeting was terminated and would be reconvened when INPO's incoming and outgoing CEOs, as well as NEI representatives, could be present. FRANCIS said LEE told TOLLISON he [ LEE) needed to contact the other utilities and advise them of the team's findings. According to FRANCIS, TOLLISON told LEE, "No, do not contact other utilities" because this was not an exit meeting, and there needed to be another meeting. FRANCIS said at that point, she told TOLLISON she believed the AA program was ineffective, and she was going to report that to her management. FRANCIS said she had never experienced this type of situation in 20 years, where the contractor started telling the audit team what they could and could not do. FRANCIS said she was not intimidated by INPO's response, but it was a " clear effort.on INPO's part to influence the audit which, in fact, they did."
FRANCIS said, after the exit meeting, the audit team met, and LEE asked if anyone felt intimidated. FRANCIS said everyone responded "not really," but several expressed a concern that INPO was clearly trying to influence the audit results. The' audit team agreed that the meeting with INPO was an exit meeting, and no other meeting would be held. FRANCIS said after that, all communication took place between INPO and SCE management.
FRANCIS said the week following the INPO audit, she received two telephone calls about it. McWEY called and told her he had been asked to call the audit team members to determine if they agreed with LEE's conclusion that INPO's AA program was ineffective and if the-entire team had been'in agreement while at INPO. She said McWEY did not ask any questions about individual findings.
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i FRANCIS said she told MchEY that she definitely believed INPO's )
total AA program was ineffective and that the audit team had been j in agreement with that determination. FRANCIS said, never in her '
20 years-of conducting this type of audit, had a utility supervisor contacted her and asked if she agreed with the lead auditor's findings. FRANCIS said by that time, in this case, she was not' surprised to receive the call from McWEY. She believed it was " obvious" INPO hoped to influence the audit findings.
FRANCIS said DAVIS called and told her he had received a call from INPO complaining that she (FRANCIS] had called her utility and conveyed the audit team's findings to her management after the Friday afternoon meeting, when INPO did not consider the audit to be complete. FRANCIS said she told DAVIS the audit was complete, the AA program was ineffective, and nothing INPO said or did would change that determination by the team. She said 3 I
DAVIS did not try to influence her to change her mind or imply that she had done anything wrong by calling her management. She said utility auditors began using NEI Guidelines in 1994 to conduct their audits, and this was the first time anyone from NEI had contacted her about an audit.
FRANCIS said, after her discussions with McWEY and DAVIS, she asked LEE when the report was going to be issued. LEE told her his upper management had the report, and he had no idea when it l would be issued. She'said LEE seemed "very cautious" in his wording and said nothing further about the report.
FRANCIS said when she received a copy of the audit report, she was surprised there was no statement in it saying the AA program j was ineffective. FRANCIS said she did not question LEE about it ,
because it was apparent that SCE management had made the decision not to place that statement in the report. She said it was !
unusual.not to have an effectiveness statement in an audit report )
because the NEI Guidelines required it. She said she had never known a utility's upper management to become involved in an audit to this extent. She knew of no other case'where the issue was elevated above the lead auditor's immediate supervisor.
FRANCIS said she participated in the reaudit of INPO's AA and FFD programs in July 1998. FRANCIS said the team found that INPO's ,
AA program had " vastly improved" since the February 1998 audit.
FRANCIS said McWEY attended the exit interview, which was highly unusual, because " management personnel never attends these meetings." l NOT FOR P LIC DISCLOSURE WITNRROVAIr-OF~TZELD OFFICE DI TO M INVESTIGATIONS, REGION IV Case No. 4-1998-041 30 l
Interview of LARSON (Exhibit 32)
LARSON.was interviewed by OI:RIV on November 5, 1998, and said he has been the procurement quality supervisor at SONGS since December 1996. ..
LARSON said he selected LEE to lead the INPO audit because he was the " cognizant auditor" for FFD and AA. LARSON said he reviewed and approved the, plan, team, scope, report, corrective actions, and all documents associated with the audit, using standard guidance NEI 94-01 [94-02).
LARSON said once an audit team was on site, he typically did not interface with them unless there was a problem. In this case, ;
LEE called him on February 16, 1998, and briefed him on the audit I findings but did not provide a conclusion. According to LARSON, LEE did not indicate there might be a problem or that the audit team considered the program effective or ineffective. LARSON said he told LEE to perform the audit in accordance with (NEI]
guidelines and summarize it when he returned to SONGS.
LARSON said LEE called him after the exit meeting and told him INPO responded angrily to the findings. LARSON said LEE told him when he stated the audit team had determined the AA program was
. ineffectively implemented, an INPO representative (NFI) said the -
exit meeting was over and would be continued when senior .
management wer'e present. LEE did not say he was intimidated or surprised by INPO's reaction. LARSON said he relayed what LEE had said to McWEY. LARSON said he neither received nor made any l other telephone calls about this matter that day. j LARSON said he did not consider INPO's reaction atypical. LARSON ,
admitted the phrase " ineffectively implemented" had a negative connotation for the entire program and could lead one to believe people were inappropriately granted access to facilities. With this type of shared audit, each utility would analyze the results and take appropriate action, which could be to refuse unescorted access to INPO employees. LARSON denied that stating the program was ineffective was more-negative than simply listing each problem area.
LARSON said his initial contact with INPO was on March 5, 1998, when he received a call and fax from WHEELOCK, in response to the audit findings. WHEELOCK asked him what SCE would do if INPO's program was deemed ineffective, and LARSON told him they would NOT'FOR -
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bring INPO personnel on site under their [SCE's) AA and FFD
. program and provide notification to other utilities that the
-program was considered ineffective. LARSON said, that same week McWEY called and told him SCE had received " communications," and they needed to brief NUNN about the audit. He, McWEY, and LEE met with'NUNN and discussed the audit, findings, classification, and what' actions SCE needed to take regarding the audit. LARSON said this was the only' time he had met with NUNN about an audit.
NUNN did not issue any direction but asked if the audit team still agreed that the program was ineffective. LARSON said they told NUNN they needed to organize the findings before they could draw the conclusion that the program was ineffective. LARSON said that was typical because when SCE was the lead utility, they always reviewed every audit during preparation of the report.
LARSON said they worked on a fast track because this was a serious. issue, and they wanted everything evaluated before they drew any conclusions. LARSON said typically he and the lead auditor worked on an audit, but in this case McWEY was involved due to the level of attention the audit was receiving. LARSON insisted that was because of the number of AA findings, not because it was INPO, although it.was unique in that INPO was the only vendor program under which SCE allowed unescorted access.
LARSON s' aid usually,the lead auditor prepared a draft audit report, but in this case, he assisted LEE in researching regulations and past INPO audit reports. There were several management meetings with McWEY and NUNN, although typically approval did not go above McWEY. LARSON said he received the initial draft report, reviewed it, made several changes, and discussed it with LEE. LARSON said he probably received the final draft report on March 17, 1998. LARSON said the original draft report prepared by LEE had a statement, in reference to the exit meeting, that the audit team had concluded that the program was ineffectively implemented. LARSON said he removed the section about the exit meeting, which included the effectiveness statement, because they typically did not put a " blow-by-blow" account of an exit meeting in an audit report. LARSON said he discussed this with LEE and circled that section in the report, stating it was unnecessary. LARSON said he frequently discussed the. audit report with LEE, asking if it reflected the team's findings, and he [ LEE) always said it did.
LARSON said the final draft did not contain an effectiveness statement; they did not address that one way or the other. They NQT_ EOR P,UBM DISCLOSp4fITHQUT__JDDROm. F FIELD OFFICE DIRECTOR y ICE OF INVESTIGATIONS, REGION T Case No. 4-1998-041 32
were required to make a statement regarding the quality impact of the audit findings, which they did in the section entitled
" Quality Impact of Audit Findings / Effectiveness Statement."
According to LARSON, an effectiveness statement was not required by SCE procedure.18.19. He said LEE had been working under SCE's internal audit procedure, 18.4, when he should have been using SCE's external programs audit procedure, 18.19. Reports under
~
these two procedures were basically the same with different headings and slightly different requirements.
LARSON said in this case, McWEY reviewed the audit report as they went along, although usually he would only see a final draft when it was ready for his signature. McWEY said he made no specific changes to the audit report; no one else reviewed the report; and the draft report was never, to his knowledge, provided to INPO or NEI.
LARSON said when LEE received the final draft report for his signature, he refused to sign it. LEE provided him (LARSON] with two versions of a paragraph and said he would only sign the report if one of those versions appeared in it. LARSON said Version B included a statement he and LEE had prepared previously, with the added caveat that "SCE management had determined..." ,
LARSON asked LEE why he wanted to add those words to the audit report, and LEE said, because of the requirements, he would feel more comfortable with those words. LEE did not say anything about an effectiveness statement, although LARSON said during the report's evolution, LEE'had repeatedly stated they needed an effectiveness statement for the program. LARSON said "in our opinion" that section addressed program effectiveness by stating no instances required removal of personnel access. LARSON said this satisfied LEE.
LARSON said he accepted Option B from LEE because it did not l change the findings or conclusion. After that change was made, 1 LEE signed the audit report. LARSON reiterated that he had discussed all changes to the report with LEE who was present at every meeting and reviewed every change. >
LARSON said SCE's procedure only required the individual elements be assessed as to their effectiveness. LARSON said he believed an effectiveness statement about the program was required in an audit report and one was included in this report - the Impact of N,OT-FORgPUBLIC DISCLOSURE WITHOUT APPROVAL OF FIELD OFFICE DIREC OLIwyssT2QATIOJL_. REGION IV Case No. 4-1998-041 33 ,
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Audit Findings paragraph. According to LARSON, SCE complied with i procedures in this case and the audit report was complete and .f l accurate. l i
l l LARSON said there was a lot of discussion amongst SCE management and' supervisors as to program effectiveness and the significance l of the audit findings. According to LARSON, the SCE AA supervisor and FFD supervisor said they believed several findings were administrative, a few were significant and needed to be addressed, but the program was not ineffective. LARSON said no pressure was exerted on him, and no one told him not to l I
characterize the program as ineffective nor was he told not to
.put in an effectiveness statement. LARSON was aware there was a conference call between RAY, NUNN, and INPO on March 12, 1998, l but he was not present and did not know what was discussed.
LARSON said he received no direction from NUNN, RAY, or INPO as to how to handle the audit.
LARSON admitted that by not saying the program was ineffective, it could be seen as saying it was effective. LARSON further admitted that at some point, SCE made a determination that the program would not be characterized as effective or ineffective, but reiterated that such a statement was not required. LARSON said he-was ultimately responsible for the audit report being issued, and he decided to issue it without an effectiveness l .
statement. LARSON believed the report indicated the status of the overall program without using the words " effective" or
, " ineffective."
l LARSON said APS contacted SCE and said they were committed to ANSI 45.2.12 and needed an assessment of INPO's overall program.
SCE told them the "real requirement" was for each utility to ,
evaluate the audit findings under their own program and determine whether the program was effective or, ineffective. That was what SCE did - assessed each program element, including background investigations, drug testing and screening, etc. and determined if each individual program was natisfactory or unsatisfactory.
l It was up to each utility to determine if they accepted the l program with identified weaknesses. LARSON said SCE accepted L INPO's program.
I Interview of McWEY (Exhibit 33) !
McWEY was interviewed by OI:RIV on November 6, 1998, and stated he had been manager of Quality Maintenance and Material for 2 years. !
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o McWEY said his first involvement in the INPO audit was the Thursday prior to the' exit meeting when LARSON told him the audit had resulted in several findings. He did not recall LARSON saying anything about the overall program being effective or ineffective. It was not typical for LARSON to contact him about an audit nor was:it typical for an auditor to contact LARSON. He speculated that LEE contacted LARSON, and LARSON contacted him-
[McWEY) in this case because of the number of concerns. McWEY stated the Monday after the audit, LARSON told him the exit meeting did not1go well, that TOLLISON was discourteous and did not agree with the audit team. McWEY said he was surprised by TOLLISON's reaction and theorized that TOLLISON may have believed the audit team's. finding would necessitate removing all INPO personnel from every U.S. site. The term " ineffective" had much broader negative connotations than just listing the various findings.
McWEY said all member utilities were required to evaluate and determine on their own if they were going to accept the audit results. He said they must determine if they agreed with the findings, the findings' impact on their program, and appropriate actions. McWEY admitted stating INPO's program was overall ineffective might have changed how utilities looked at the program.
McWEY said he met with LEE the Tue,sday following the audit after receiving a call from NUNN. McWEY said NUNN told him he had received a call from FRANK who had. received a call from INPO
[NFI] asking him to look into the audit. McWEY said he met with NUNN, LARSON,'and LEE later that day, and LEE reviewed the audit-and stated the audit team had concluded the program was ineffective. NUNN questioned how they had reached that conclusion, stating in his opinion, ineffective implied a totally unacceptable program and total noncompliance. NUNN asked them to ensure each finding could be tied to a regulatory or procedural requirement. McWEY said NUNN asked him to contact the audit team members and ask them about the exit meeting, if they believed the program was ineffective, and if they would still characterize it that.way. NUNN said he wanted to be sure there was a consensus of the audit team. McWEY said this was the first time he had been asked to contact audit team members. McWEY said it was unusual for NUNN to be involved in this much detail, but there had been one or two cases when NUNN was kept informed about an audit,. adding that typically, concerns were addressed at LARSON's level and occasionally at his (McWEY's] level.
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=McWEY said he met separately with LEE on several occasions, and they met with'NUNN about every other day regarding the status of the audit report. McWEY said they had told NUNN several of the issues were recurring. problems, and he had asked for specific data. McWEY said he, LARSON, and LEE reviewed past INPO audit reports and prepared a matrix of the findings. They also assembled the current findings and associated regulation or procedure. McWEY said it was uncommon for him to be involved to this extent.
McWEY said he contacted the audit team members and asked if they agreed that the program was ineffective and for their view of the exit meeting. He said the main reason for his calls was to ask l them if they believed the program was ineffective. All of them, l' with the exception of ADKINS, said they believed it was ineffective. ADKINS said he thought the issues identified were administrative, indicating a lack of attention to detail and a problem with their corrective action program, but did not warrant pulling any badges or categorizing the program as ineffective.
McWEY.said, other than ADKINS, no one from the audit team expressed any reservations about characterizing the program as ineffective. He said several asked him why he was calling them, and he told them SCE had received a telephone call, and he was asked to contact them. McWEY said he met with NUNN and told him what the team members had said. He said NUNN acknowledged the information but had no response.
McWEY said he reviewed several versions of the audit report. He ,
. recalled the initial draft audit report contained a long description of the exit meeting, which was deleted, with LEE's I
-approval. McWEY said he believed LEE put the description in the i report because NUNN had told him to document the exit meeting, l and LEE may have assumed he was supposed to put it in the report.
McWEY could not recall if the initial draft contained an effectiveness statement, but he believed it did.
McWEY said when they had what they thought was a final draft, LEE refused to sign the report without some wording that the conclusions were those of SCE management. McWEY said that condition was acceptable, and they changed it. McWEY said during the meetings with NUNN, they asked LEE several times if he felt comfortable with the changes and the conclusions they "were drawing as a company." LEE always said they were fine. McWEY said he was primarily concerned about how LEE felt about SCE's decision not to' characterize the program as ineffective because NO PUBLIC ISCLOSURE THOUT APPROVAL OF FIELD OFFICE DhtECTOR, OF I IQn J.V Case No. 4-1998-041 36
I i
they did not see anything that would have necessitated pulling anybody's badge at SONGS. The findings were mostly minor administrative issues that indicated a lack of attention to detail, although INPO had a history of similar type findings.
McWEY said. after SCE had decided not to characterize the program as ineffective, he contacted each of the auditors, with the exception of FRANCIS, and told them the proposed wording for the report. All the auditors told him they had no problem with the l wording as stated. McWEY said the paragraph was written by LEE I and LARSON and incorporated LEE's change as to it being an SCE l management decision. None of the audit team members expressed reservations about not characterizing the program as ineffective.
1 McWEY said LEE never told him that he believed there needed to be a statement in the report saying the program was ineffective, although LEE initially stated the team had determined the program i was ineffective. McWEY said he, LARSON, and NUNN decided not to use the word " ineffective" because-they believed the wording they used conveyed the identified findings, they did not eliminate any team findings, and they did not need to use the term
" ineffective." According to McWEY, LEE agreed with this decision. McWEY said the final decision not to use the word
" ineffective" and,to put other words in the report, was based on the connotation that ineffective meant totally unacceptable and l out of control. McWEY said they believed not having to pull
~
I anyone's access was a reasonable standard to use on the program.
McWEY said typically there would be an effectiveness statement in '
an audit report. He said procedure 18.4 was for internal audits, i and 18.19 applied to external vendor audits. INPO was considered i a vendor which was why LARSON's group did the audit. McWEY said he did not believe-18.19 required an effectiveness statement.
Although the procedure was slanted towards a vendor providing a ,
commodity, McWEY said this was the standard procedure they used l l
to audit anyone outside of SCE.
McWEY said SCE management was responsible for the audit report; all identified findings were left intact; and they believed the report was accurate. None of the audit team members expressed any reservations about the words in the report. McWEY said SCE procedures did not require an effectiveness statement in this type of report. McWEY said he did not believe omitting the effectiveness statement removed the audit team's independence because the findings and observations remained intact. McWEY -
NOT FOR P LI SCLOSURE WITHOUT APPROVAL OF Q OFFICE y DIRECTO $T5GATIONS ION IV Case No. 4-1998-041 37 -
said at no time did' LEE indicate they needed an effectiveness statement in the report, that the report was in noncompliance, or that what they were doing was wrong.
McWEY said he never spoke with anyone at INPO throughout this process. He was aware there was a conference call with INPO and SCE senior management on March 12, 1998, but he did not know the substance of the call.
McWEY said INPO was reaudited in July 1998, and the audit team found a drastic improvement in attention to detail and program implementation. McWEY believed this was the direct result of SCE senior management's involvement. McWEY said, although he typically did not go on audits, he went to INPO during the July audit to show INPO that SCE management supported the auditors, in
. light of.the unprofessional' treatment they received during the first exit meeting.
Interview of NUNN (Exhibit 34)
NUNN was interviewed by OI:RIV on November 6, 1998, and stated he has been VP of Engineering and Technical Services since returning to SCE in 1996.
NUNN said his first involvement in the INPO audit was on Friday,
[ February 27, 1998] or the following Monday when he received a telephone call from FRANK, who said he had received a call from INPO. According to NUNN, INPO [NFI] told FRANK they disagreed with the audit's conclusion and asked him to look into it. NUNN said he told FRANK he understood, he [ FRANK] need have no further involvement, and he [NUNN) would " resolve the situation."
NUNN said he told McWEY and LARSON that, as the lead utility, management would have to concur with the audit findings. He met
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with McWEY, LARSON, and LEE and discussed the audit and how they could measure effectiveness of the program. NUNN said he asked LEE if the findings demonstrated an ineffective program and if there were examples of anyone being granted access who should not have been. LEE told him no one had been inappropriately granted access. NUNN said he asked McWEY and LARSON to review the audit findings and previous audits and determine the overall program characterization. He asked them to look at whether the nature and type of findings demonstrated ineffectiveness. NUNN said the purpose of the first meeting was to ask McWEY to ensure they could support the conclusion that it was an ineffective NOT FOR,PUBLIQ DJSOL E WITH PRFOVA JLF_ FmD OFFICE DIRECTOR, OFFICE O NVESTIGATIONS, REGION -
Case No. 4-1998-041 38
implementation of the program. NUNN said he believed ineffective meant they were not adequately implementing the program, adding it.could mean someone should not have been granted access to a nuclear plant.
NUNN said he spoke with TOLLISON and FELGATE on at least two occasions about the audit, the first time within hours before or after his. initial meeting with McWEY, LARSON, and LEE. He said TOLLISON and FELGATE expressed concerns about the term
- ineffective." NUNN said he told them SCE management would review it, make a determination, and get back to them with their findings.
NUNN said he asked McWEY to contact the audit team members to make sure there was no dissenting opinion. NUNN said he also later' told McWEY to be sure all audit team members agreed with the wording in the final report. NUNN said he had no memory of McWEY telling him the audit team members, with one exception, believed the AA progrsm was ineffective. NUNN said he only recalled McWEY telling him the audit team members agreed with the omission of the ineffectiveness terminology.
NUNN said there were subsequent meetings with McWEY, LARSON, and LEE after they reviewed past INPO audit reports. NUNN said it was not typical for him to meet with QA like this, but it was not typical for SCE to be the lead utility on "an audit of this nature." NUNN said he wanted to determine if there was some programmatic problem within INPO which was causing these minor, but repetitive findings. NUNN said he, McWEY, and LARSON eventually concluded the problem was lack of management attention and followup. He knew SCE management was changing the wording and way the problem was characterized by the audit team. He believed it was common to apply management judgement which sometimes changed an auditor's work product.
NUNN admitted he did not typically review or approve audit reports. In this case, he reviewed the final audit report in detail and reviewed one or two drafts. He recalled that during the initial meeting, something he reviewed had an ineffectiveness statement in it. He said he would not characterize that document as a draft report because parts of it were handwritten, and it was marked up. NUNN said he did not recall if he saw anything else that stated the program was ineffective. He said he did not make any formal comments on a draft report.
NOT'FO PUBLIC-DISCLO p OUT p V R OF FI p OFFICE IRECTOR, OFFICE OF I S T ,I G A T I O N S , REGION IV Case No. 4-1998-041 39
i.
NUNN said the audit team's conclusion that the program was ineffective was changed as a result of McWEY and LARSON reviewing
'the current and previous INPO audits and exercising their management' responsibilities that SCE could not support the conclusion that the program was ineffectively implemented. NUNN said he agreed with that characterization. NUNN said, at some point, a consensus was reached that'since none of the findings resulted in pulling someone's access, that was a reasonable measure of the effectiveness of the program, and thus it was not ineffective. Administrative errors had no bearing on the
. program's effectiveness.and simply indicated lack of attention to detail. NUNN said he asked LEE, McWEY, and LARSON several times if they had problems with the wording or characterization of the findings, and they all stated they had no objection. NUNN said he never told anyone not to state the program was ineffective.
NUNN said he had no idea LEE had refused to sign the report, and i LEE, McWEY, or LARSON never discussed that issue with him. NUNN said he had been unaware that LEE expressed any reservations, but it was. fine with him that the report went out stating, "SCE .
management has determined..." l NUNN said, after they arrived at their conclusions, he and RAY had a teleconference with RHODES and TOLLISON. He said SCE presented the findings and deficiencies, and INPO accepted them.
SCE, during this process, decided to send two AA supervisors to INPO to show them how to implement their program and include appropriate controls and checks. INPO's program was reaudited, and McWEY was sent as a management representative to ensure SCE had exercised their responsibilities as the lead utility prior to the audit team leaving the site.
NUNN said NEI Guidance governed the preparation of an audit report of this nature. He believed the report complied with SCE procedures. NUNN said he believed the report included an effectiveness statement by showing the nature of the program, even though it did not state " effective" or " ineffective." NUNN said SCE did not use the word " ineffective" because he did not believe the program was ineffective. bRnaJ said the findings were the same as the previous four or five audits, none of them stated the program was ineffective, and he did not believe the program was ineffective solely because they were repetitive findings.
NUNN said SCE was a member of the audit team as a corporation and management changing the conclusion did not remove the audit r .m HQT,FOR PUBL{C DISCLOSU -RE WITHOUTyJLO AL OF FIELD OFFICE DIRECTOR [ OFFICE OF INVESTIGATIONS, REGION -
Case No. 4-1998-041 40 l
l I
team's independence. "I think the term " ineffective" by itself is meaningless." NUNN said by reading the statement they put in the report and the audit report itself, the status of INPO's program was clear.
NUNN said he typically did not sign out audit reports but did so in this case because he had direct involvement in it. He had asked for re-reviews and for management to determine if they believed the program was ineffective, so he accepted responsibility fo.r the end result.
NUNN said INPO asked him to look into the issue because they did not believe their program was ineffective, but they did not ask him to change anything. He said neither RAY nor FRANK ever asked him to ensure the program not be characterized as ineffective.
NUNN said he did not believe INPO was trying to influence SCE to change the audit results. He said he believed they sincerely thought the use of the term " ineffective" was inappropriate.
NUNN said he was comfortable with t-he audit report as it was issued, and he did not believe INPO's AA program was ineffective.
Coordination with NRC Staff Dennis D. GORDON, Reactor Security Specialist, Safeguards Branch, Division of Inspection and Program Management, NRR, reviewed the transcripts of interview and additional documentation provided to OI:RIV by SCE. GORDON's Allegation Briefing Sheet dated October 22, 1998, stated NRR Safeguards Branch had concluded that this allegation was substantiated and 10 CFR 50.9(a) and 10 CFR
- 73. 56 (a) (4 ) , (b), and (g) (2) were violated (Exhibit 35) GORDON stated SCE management: failed to provide complete and accurate information concerning the resu3ts of the audit; failed to retain responsibility for the effectiveness of the INPO AA program; accepted the INPO AA program despite knowledge that the audit team had determined the program to be ineffective: and failed to provide high assurance that individuals granted unescorted access did not constitute an unreasonable risk to the public.
GORDON's Allegation Briefing Sheet dated November 23, 1998, stated review of additional information provided by OI:RIV did not change his determination in the October 22, 1998, Briefing Sheet (Exhibit 36). y, NDT FOR-PUBLIC DISCLOSURE WITHOUT APPROVAL OF FIELD OFFICE v / DIh CTOR, OFF1CE.OFINVESThGATIONS, REGIOTiV Case No. 4-1998-041 41 ,
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- Cf;L Atlep t ' s Ana lys i_s The February 1998 audit of INPO's AA and FFD programs was led by LEE, an auditor with 23 years oxperience. All the audit team members had many years experience in conducting audit.s. As in standard practice, LEE included an effectivoness s t a t omen t in his l audit report, stating INPO's implement a t i on of their Ars program was ineffective. This was removed and replaced by SCE management with a statement that did not say the program was effectivo or ineffective. NUMN, McWEY, an(1 I. ARSON al l. agree t.ha t SCE management docided not to call. I tJ PO ' s program inoffective. This was the first timo in I,EE's experionce that an audit team's conclusion about- a prouram war changod by SCE manaqomont This was the first time McWEY, at NUNN's direction, cont act.ed audit team mombers to verify an aud i t. 's conclusion. This was tho first time that McWEY, again at NUNN's diroction, ca l l ed audi t team mombers and ankod if thoy agreed with the st at oment plarod l in the audit report [.in lieu of an offectiveness sta t emont ]
ROBINSON, FR AtJCI S , and ADKINS all s t a t od thoy had never boon contacted by a load utility's management- for any reasor or boon asked to confir m an audi t team's conclusion. In fact, ADMINS thought it so s t rango, he oalled ROBINSON to ask if he had bonn 4
i NOT FOR PUBLIC DISCLOSURE WITHOUT APPROVAL ~OF-FIELD OFFICE DIRECTOR, OFFICE OF INVESTIGATIONS, REGION I'V Case No. 4-1998-041 42
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Auent's Analysi_s The February 1998 audit of INPO's AA and FFD programs was led by LEE, an auditor with 23 voars experience. All the audit team members had many years experience in conducting audits. As is standard practice, LEE included an effectiveness statement. in his audit report, stating INPO's implementation of their AA program was ineffective. This was removed and replacod by SCE management with a statement that did not say t he program was effective or ineffective. PRIt:N, McWEY, and LARSON all agree that SCE management decided not to call INPO's program inoffective. This I was the first timo in LEE's experience that an audit team's conclusion about: a program was changed by SCE manaqoment.
This was the first time McWEY, at MUNN's direction, contacted audit team mombers t o verify an aud i t. ' n conclusion. This was the first rime that McWEY, again at NUNN's diroction, called audit team mombers and askod if t.hoy agreed with the nt atoment placed in the audit report [in lieu of an effectiveness statement)
ROBINSON, FRANCIS, and ADMINS all stat ed they had never born contacted by a load utility's management for any reaso:, or been asked to confirm an audit team's conclusion. In fact, ADKINS tnought it so s t. ra ng e , he nalled ROBTNSON to ask if he had hoon
( NOT FORDIRECTOR, PUBLIC DISCLOSURE OFFICE OFWITHOUT APPROVAIrREGION 1NVESTIGATIONS, OF-FIELDI'VOFFICE Case No. 4-1998-041 42
contacted by McWEY. According to the auditors and McWEY himself, the purpose of his calls was to ask the auditors if they believed the overall program was ineffective.
According to SCE testimony, this was the first time NUNN had been involved in an audit report's evolution, and in fact, he met with LEE, McWEY, and LARSON approximately every other day about this matter. Typically, McWEY was not involved in preparation of an audit report, but he was in this case. Seldom, if ever, had an audit report risen above LARSON's level, even when there was a conflict about the conclusions. LARSON said he had never
.previously met with NUNN about an audit. NUNN said he typically did not meet with QA about an audit nor did he typically review or approve audit reports. McWEY typically reviewed the final audit report and signed the letter to the contractor, but in this case, NUNN signed the letter.
NUNN admitted he asked management (LARSON and McWEY] to determine
-if they believed the program was ineffective. NUNN said McWEY and LARSON changed the audit team's conclusion that the program was ineffective because SCE management could not support the conclusion that the program was ineffectively implemented, and NUNN agreed with that. NUNN said the audit report complied with SCE procedures and included an effectiveness statement, although it did not state " effective or " ineffective."
Testimony indicated it is not typical for an SCE auditor to call his supervisor while conducting an audit. LEE said he contacted LARSON in this case because INPO was treated differently, and he wanted to be sure he would be supported by SCE management in the
-audit conclusions. McWEY said LARSON called him after he received LEE's call, which was also unusual. At the exit interview, TOLLISON made it clear he was displeased with the audit's conclusions. He said that meeting was not an exit meeting, they would meet again with utility CEOs, INPO's CEO, and NEI, and instructed LEE not to contact utilities about the audit results. Audit team members interviewed stated they had never !
been treated that way by company representatives. In fact, i INPO's CEO, PATE, subsequently contacted SCE's CEO, FRANK, who l contacted NUNN about the audit. NUNN told FRANK he would resolve the. issue. From that point forward, it was no longer LEE's or the joint utility audit team's audit. It became clear, as LEE put it, that the word " ineffective" was not going to be used in the audit report.
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I LEE was subsequently contacted by NEI, asking if the stated conclusion was that of the entire team. This was the first time anyone from NEI had called him. FRANCIS was later called by NEI, and said this was the first time someone from NEI called her.
LEE said the final draft audit report was given to him for his signature without the effectiveness statement or full accounting
-of the exit interview, which he had included in the initial draft report. This was the first time significant changes had been made to one of his reports without discussion. No other report of his had ever been worded in this way, but he wanted to make it clear that it was SCE upper management's conclusion. This was the only audit report LEE had seen issued without a clear effectiveness statement.
LEE and ROBINSON said several utilities contacted them about the absence of an effectiveness statement. APS sent an e-mail asking about it (Exhibit 16). This indicated other utilities expected to see a clear effectiveness statement in the audit report.
LARSON said he believed an effectiveness statement was required in an audit report and one was included in this report - the Impact of Audit Findings paragraph. LARSON admitted "somewhere along the line" SCE, management decided not to characterize the program. LARSON said he decided to issue the report without an effectiveness statement; the report indicated the program status without using the word effective or ineffective. McWEY said he, LARSON, and NUNN decided not to use the word " ineffective," based on the connotation that ineffective meant totally unacceptable and out of control. McWEY admitted typically there was an effectiveness statement in an audit report. McWh. attended the exit meeting at INPO following the July 1998 audit, although he '
typically did not attend such meetings.
Audit reports for the 1995, 1996, and 1997' audits of INPO's AA and FFD programs stated the audit's purpose was to evalu?.te the programs for " effective implementation." One of the three i reports lacked a clear' effectiveness statement, concluding INPO's l AA/FFD programs were weak. Two audit reports prepared by LEE of l suppliers of services contained clear effectiveness statements.
The evidence indicated the audit team members believed SCE management changed the team's conclusion regarding the
. effectiveness of INPO's implementation of their AA program.
ROBINSON stated he was aware of no other instance in which a
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utility changed the audit team's conclusion in an audit report.
ROBINSON went so far as to complain in writing to NEI about this change (Exhibit 25). Audit team members stated including an effectiveness statement in all audit reports was common practice and proceduralized by some utilities. -
Conclusions Based on the evidence developed during the investigation, the allegation that LEE was coerced by SCE management was not substantiated. However, the evidence indicates that standard
-practice was not followed in the processing of this INPO audit report by.SCE, as a result of apparent pressure by INPO. (
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LIST OF EXHIBITS Exhibit No. Descriotion -
1 -
Investigation Status Record, dated August 14, 1998.
2 Transcript of Interview with LEE, dated August 20, 1998.
3 NEI 94-02, dated November 1994.
4 SONGS QA Procedure SO123-XII-18.4, Rev. 3, dated January 30, 1998.
5 SONGS QA Procedure SO123-XII-18.19, Rev. 2, dated May 30, 1997.
6 Draft Audit Findings, dated February 27, 1998.
7 Synopsis of Exit Interview, Undated.
. 8 Draft Audit Report, Undated.
9 Statements for Inclusion in Audit Report, Undated.
10 SCE Audit Report INPO-1-98, dated March 19, 1998.
11 Memorandum from FELGATE to PATE, dated March 5, 1998.
12 Letter from PATE to FRANK, dated March 5, 1998.
13 Letter from RHODES to FRANK, dated March 5, 1998.
14 Letter from FELGATE to NUNN, dated March 13, 1998.
15 Letter from NUNN to TOLLISON, dated March 19, 1998.
16' E-mail from APS, dated April 23, 1998.
17 Letter from NUNN to FELGATE, dated May 18, 1998.
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18 INPO Corrective Action Tracking, dated July 8, 1998.
19 Letter from NUNN to FELGATE, dated July 29, 1998.
20 CP&L Audit Report QAA/2255-95-04, dated March 17, 1995.
21 Comed Audit Report G-96-86, dated April 16, 1996.
22 TVA Audit Report TVA/SSA 97-01, dated April 15, 1997.
23 SCE Supplier Audit Report QDI-1-97, dated October 24, 1997.
24 SCE Supplier Audit Report CPSI-1-98, dated April 23, 1998.
25 Letter from ROBINSON to DAVIS, dated March 23, )
1998.
26 Letter from DAVIS to ROBINSON, dated July 29, 1998.
27 E-mail from ADKINS to WALKER, dated February 28, 1998.
28 Transcript of Interview with ROBINSON, dated September 3, 1998.
i 29 Transcript of Interview with ADKINS, dated September 8, 1998.
30 Letter from ADKINS to NRC, dated September 8, 1998.
31 Report of Interview with FRANCIS, dated December 10, 1998.
32 Transcript of Interview with LARSON, dated November 5, 1998.
33 Transcript of Interview with McWEY, dated November 6, 1998.
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34 Transcript of Interview with NUNN, dated November 6, 1998.
35 NRC Allegation Briefing Sheet, dated October 22, 1998.
36 NRC Allegation Briefing Sheet, dated November 23, 1998.
37 E mail from BROWN to WILLIAMSON, dated February 25, 1999.
38 Memorandum from TREBY to LIEBERMAN, dated August 23, 1994.
39 E-mail from LONGO to BROWN, dated March 18, 1999.
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