ML19129A446

OI Presentation at the 2019 Rapid Conference-05/20-22/19: Just Another Trip to the Beach - A. Shuttleworth

ML19129A446
Person / Time
Issue date:	05/07/2019
From:	Shuttleworth A NRC/OI
To:
Pasquale D
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Download: ML19129A446 (19)

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05/07/2019 THE 28TH RAPID Conference & Technical Exhibit JUST ANOTHER TRIP TO THE BEACH Clearwater, FL May 20-22, 2019 Andy Shuttleworth, Director, Office of Investigations 2

Responsibilities outlined in Title 10 of the CFR, Part 1.36, Office of Investigations

• Conduct investigations of allegations of wrongdoing

• Maintain current awareness of inquiries and inspections by other NRC offices

• Make appropriate referrals to the Department of Justice

• Liaise with other agencies and organizations, both domestic and international, to ensure the timely exchange of information of mutual interest 1

05/07/2019 3 JUST ANOTHER TRIP TO THE BEACH 4

I thought (the counterfeit market) was all about fake Louis Vuitton purses.

Andy Shuttleworth National IPR Center 2

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https://www.iprcenter.gov/

Telephone: 1-866-DHS-2-ICE 7

Generates nearly $1.5 trillion in illicit proceeds every year Over 80% of all counterfeit items seized coming into the U.S. originated from one country Three big drivers:

o cyber commerce, o express consignment delivery, o just-in-time inventory It goes far beyond what we think we know 3

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05/07/2019 10 11 Counterfeit components are prevalent in all areas of industrial technology, counterfeiting is a criminal activity and in these instances industry is the victim.

Costs associated with counterfeits go beyond the basic fraud and cost industry in lost production, costly man hours, and repairs.

Potential safety hazards for employees and the general public as well, in extreme cases could pose a risk to national security.

Supply chain integrity is the goal, but effective partnership with industry is the key.

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05/07/2019 12 Systems, Structures, And Components (SSC) designs must provide that the facility can be operated without undue risk to the health and safety of the public 14 JUST ANOTHER TRIP TO THE BEACH 6

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05/07/2019 19 18 ASSESSING THE RISK 9

05/07/2019 19 An acceptance process undertaken to provide that a commercial grade item to be used as a basic component will perform its intended safety function and, in this respect, is deemed equivalent to an item designed and manufactured under a 10 CFR Part 50, appendix B, quality assurance program.

10 CFR 21 20 Favorable criminal environment: Favorable profit margins:

• lack of reporting high profit potential

• little fear of prosecution low capital and labor costs

• low fines and sentences upon access to sub-suppliers conviction easily distributed via the internet

• unprecedented anonymity no research & development costs

• may involve alternate illicit activities no advertising costs Favorable market conditions:

• obsolescence Aging operating units

• advancing technology Digital I&C, CAD software, 3D Printing, etc.

• global supply chain 58 nuclear plants under construction worldwide

• diminishing suppliers (10 CFR 50, Appendix B) More CGDs

• new norms high in-service failures 10

05/07/2019 21 UNDESIRABLE or ILLEGAL?

22 Poor performance by a vendor resulting in a nonconformance, while undesirable, can be managed by effective customer oversight.

Intentionally misrepresenting equipment, parts or materials is illegal and must be dealt with appropriately 11

05/07/2019 23 A GLOBAL SUPPLY CHAIN PROBLEM 24 Multinational Design Evaluation Programme Common Position CP-VICWG-04 10/23/2018 Vendor Inspection Co-operation Working Group (VICWG)

1. ASN - France

2. CNSC - Canada

3. KINS - South Korea

4. NRA - Japan

5. NNR - South Africa

6. NRC - United States

7. ONR - United Kingdom

8. STUK - Finland https://www.oecd-nea.org/mdep/common-positions/cp-vicwg-04.pdf available for public use 12

05/07/2019 25 CP-VICWG-04 General Topics:

1. Information & notification in the case of irregularities (including safety culture )

2. Testing and materials (including sharing CFSI information)

3. Inspection of licensees, suppliers, and external parties (including identification of at-risk procurements)

4. Control of commercial products used in safety-related applications (including quarantining of suspected items)

5. Enforcement (including response protocols & collaboration with Law Enforcement)

6. Effective CFSI training for all level of participation https://www.oecd-nea.org/mdep/common-positions/cp-vicwg-04.pdf available for public use 26 COLLABORATION 13

05/07/2019 27 28 Partnership with industry to fight CFSI

• Get ahead of the problem before it becomes a problem

• Education and awareness at the right levels throughout industry

• What to do to prevent CFSI from entering the supply chain

• What to do when CFSI is detected Partnership world-wide

• Promoting increased CFSI reporting in IAEA/IRS

• National Intellectual Property Rights Coordination Center

• Exchanging and sharing information and best practices

• Building tools to connect industry with OEM and associations 14

05/07/2019 29 CFSI has nothing to do with Licensee Encourage efforts beyond what is required

• expose threats vs. hiding or ignoring them

• flush out bad actors, report their presence and keep them out of the equation

• eliminate risks from the supply chain wherever and whenever possible

• question erratic or unusual component failures recognize reluctance, and public reporting vs public opinion 30 CFSIWHY OI?

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05/07/2019 31 The NRCs Office of Investigation:

employs Federal Criminal Investigators/Special Agents from:

DHS, FBI, DEA, ATF, NCIS, Postal Inspections Service, Secret Service, and Offices of Inspectors General works closely with Europol, Interpol, DOS & others continues to conduct high quality investigations follows Attorney General and Department of Justice Guidelines regarding investigative standards ensures that stakeholders are fully informed of the conclusions of independent investigations 32 The OI is committed to combatting the introduction of counterfeit parts into the nuclear supply chain through strategic partnerships with internal and external stakeholders, both domestically and globally 16

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• Assist in developing a Common Practice for responding to CFSI and aberrant behavior between international regulators

• Assist with confirmation evaluations of suspect counterfeit or fraudulent incidents

• Establishing and training dedicated CFSI response teams

• Collaborate with appropriate Law Enforcement Agencies

• Information deconfliction

• Collaborate with OEMs and Federal Agencies to issue product announcement of high CFSI risk components

• Routing identified occurrences of Non-10 CFR 21 defects

• DataNet - Using data analytics as a Proactive Anti-CFSI tool

• Assist with performance of due diligence

• Addressing reasonable assurance in a rapidly evolving supply chain

• Direct access to OEMs, Trade Associations , and International Anti-counterfeiting Coalitions

• Assist with developing supply chain safety culture attributes (including insider threats)

• Facilitate knowledge transfer

• Lessons learned

• Improved receipt inspections

• Train the Trainer 34 NEED NORE INFORMATION?

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05/07/2019 35 https://www.nrc.gov/about-nrc/cfsi.html FOR MORE INFORMATION 36 https://www.nrc.gov/about-nrc/cfsi.html Dan Pasquale, Office of Investigations Sr. Reactor Systems Engineer (301) 415-2498 Daniel.Pasquale@nrc.gov 18

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