View source for IA-98-182, Requests Approval to Mod Contract W/Mpr Associates,Inc for Purpose of Furnishing Limited Indemnification to Gpun. Indemnification Limited to Max of Listed Amount in Event That Removal of Samples Breaches Rv Wall

{{Adams
| number = ML20237C271
| issue date = 12/30/1988
| title = Requests Approval to Mod Contract W/Mpr Associates,Inc for Purpose of Furnishing Limited Indemnification to Gpun. Indemnification Limited to Max of Listed Amount in Event That Removal of Samples Breaches Rv Wall
| author name = Stello V
| author affiliation = NRC OFFICE OF THE EXECUTIVE DIRECTOR FOR OPERATIONS (EDO)
| addressee name = The Chairman, Zech
| addressee affiliation = NRC COMMISSION (OCM)
| docket = 
| license number = 
| contact person = 
| case reference number = CON-NRC-04-88-086, CON-NRC-4-88-86, FOIA-98-182
| document report number = NUDOCS 9808210061
| package number = ML20237C231
| document type = INTERNAL OR EXTERNAL MEMORANDUM, MEMORANDUMS-CORRESPONDENCE
| page count = 7
}}

=Text=
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      \*****/                                    DEC 8 01988 N(fc       '
MEMORANDUM FOR:       Chairman Zech l
FROM:                 Victor Stello, Jr.                                                                                          {
Executive Director for Operations

==SUBJECT:==
REQUEST FOR APPROVAL OF LIMITED INDEMNIFICATION UNDER CONTRACT NO. NRC-04-88-086 1
Your approval is requested to modify the subject contract with MPR                                                                 l Associates, Inc. (MPR) for the purpose of furnishing a limited                                                                     {
indemnification to GPU Nuclear Corporation (GPUN). The indemnification will be limited to a maximum of $3,000,000 in the event that removal of the samples breaches the reactor vessel wall and results in leakage from the vessel as discussed below. The proposed modification will result in a maximum cost exposure to the Agency which exceeds my delegation of authority and requires your approval.

===Background===
On January 15, 1988, MPR was awarded Contract No. NRC-04-88-086 for the research project entitled, " Test Specimens from the damaged TMI-2 Bottom Head." The purpose of the contract is the removal of samples from the bottom head of the THI-2 reactor vessel for metallurgical examination. MPR must subcontract with GPUN for support services essential to the successful removal of the metallurgical samples. The sampling activities are scheduled to be completed immediately following GPUN's defueling operations.
Discussion On August 1, 1988, MPR advised RES that it was ready to sign a subcontract with GPUN for on-site support services, but could not proceed until GPUN was assured that it would be indemnified against the consequences of any loss of TMI-2 reactor pressure vessel integrity that might occur because of program activities.
CONTACTS:
R. Van Houten, RES (49-23538)
M. Page, ARM (49-27442) 9908210061 900817 PDR    FOIA                                                                                                                     .
DEGOOYE99-182 PDR                                                                                                    ;
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On December 1, 1988, MPR submitted information and supporting documentation clarifying the nature and extent of indemnity coverage being requested. MPR indicates that GPUN is willing to accept a $3,000,000 upper limit on indemnification to cover costs related to damage of the TMI-2 reactor vessel during sampling. GPUN defines damage as any (sampling related) breach of the reactor vessel wall which results in, or has the potential to result in, leakage out of the reactor vessel at a rate of three (3) gallons per minute or greater. In turn, MPR will agree to do its very best to assure that the TMI-2 lower head sampling program will leave the lower head boundary intact and able to withstand any subsequent efforts to further decontaminate the inner surfaces of the TMI-2 pressure vessel by acid leaching.
GPUN further conditions its acceptance of MPR's proposed subcontract upon NRC's approval of the inclusion of the federal contract provision entitled
                                  " Insurance - Liability to Third Persons." This clause, which is routinely included in federal cost type contracts, recognizes the contractor's cost of litigating and settling claims brought by third parties for injuries arising out of the performance of the contact, subject to the availability of appropriated funds. Althoush GPUN's subcontract is based on their standard pricing policy rather than cost, the allocation of these risks to the Government appears consistent with GPUN's role in this project.
Supporting information provided by MPR includes both MPR and GPUN's commercial insurance coverage. This information shows that GPUN exhausted its existing coverage for nuclear activities and that it cannot obtain additional coverage from its carriers for that purpose.                                                         It also shows that MPR has no insurance covering its professional activities and that it cannot obtain insurance covering nuclear activities. Both firms do carry automobile, workmen's compensation and other standard liability insurance.
RES considers it very unlikely that the TMI-2 lower head sampling program will lead to a significant breach in the THI-2 lower head, because the conditions of high heat and pressure in the pressure vessel at the time of the accident no longer exist.                                                        However, in the event that a breach does occur, funding to cover any resultant indemnification would be made available from the RFo budget to cover allowable costs in connection with claims made by the i.ontractor. While payment of such costs would have a negative impact on NRC's research program, RES believes that the value of the data to be oa'.ned far exceeds the current projected overall program l                                costs, including a maximum indemnificatica exposure of $3,000,000. To assure the proper technical base for the TMI-2 lower head sampling window, a modification to the basic MPR contract to cover the GPUN indemnification issue must be in place by late January 1989. Non-approval of this proposed action would likely result in cancellation of the sampling program as the time-frame (July 1 - August 15, 1989) for removing the samples is rapidly approaching, and GPUN will not permit the program to proceed on their site without the requested indemnification and third person liability coverage.
k L_ _ _______ _

9 S
l A status update on the TMI-2 lower head sampling program is attached.
Recommendation i
I recommend that you provide approval to enter into a contract modification                                                        l to grant the limited indemnification to GPUN under the subject contract.                                                           !
Onginal syned by            .
                                                    %ctor Stello, Jr,         .
1 Victor Stello, Jr.                                                                           l Executive Director for Operations                                                            I cc:  Commissioner Roberts Commissioner Carr Commissioner Rogers Commissioner Curtiss                                                                                                          ,
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MSc1 den r/f EDO r/f                                                                                                                            j MPage PEdgeworth THagan BKildee RVan Houten, RES RMeyer, RES FCostanzi, RES JMurphy, RES EBeckjord, RES MJMattia ELHalman PGNorry WGMcDonald JMTaylor V. Stello atC.                                           >.                                                                            .
OFFICE: M_MPP12 CAB EC MVW : RES: AEB [C(('gRES: AEBg'],:RE!S/4Ei-
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I Attachment Backaround: In the previous status report (July 12,1988) the Commission was informed that:
: 1. An international (OECD-NEA) support base was being developed for the subject investigation and a multi-national agreement had been drafted.
: 2. Initial demonstration tests of a proposed method to seal critical lower head instrumentation tubes had proved successful.
Discussion: We now wish to summarize the program progress since July 13, 1988:
: 1. In mid-July, the OECD-NEA final draft agreement was distributed for signature tn representatives of the participating countries.
: 2. A few days later, representatives of NRC/RES and the program prime contractor, MPR, visited a key MPR subcontractor, PCI, to witness the initial demonstration of the proposed metal cutting process. The demonstration was successful.
: 3. In late July, representatives of NRC/RES, DOE, MPR, and EG&G met with GPUN at the TMI-2 site to discuss the overall question of GPUN technical support of the TMI-2 lower head sampling program. In particular, GPUN reservations about a proposed MPR subcontract with GPUN for labor and health physics support services were l
discussed.
l I                  4. On August 1, 1988, MPR advised NRC/RES that GPUN was requesting indemnification against the consequences of any loss of TMI-2 reactor pressure vessel integrity that might occur because of program activities.
: 5. On November 18, 1988, the first meetings of the Board of Managers and the Program Review Group for DECD-NEA program support activities were held in Paris, France.
All attendees expressed strong support for this joint effort.

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