United States Nuclear Regulatory Commission - Protecting People and the Environment

Bulletin 83-07: Apparently Fraudulent Products Sold by Ray Miller, Inc.

                                                        SSINS No: 6820/5340 
                                                        OMB No.: 3150-0011 
                                                        IEB 83-07          

                                UNITED STATES
                        NUCLEAR REGULATORY COMMISSION
                    OFFICE OF INSPECTION AND ENFORCEMENT
                           WASHINGTON, D. C. 20555
                                     
                                July 22, 1983

IE BULLETIN NO. 83-07:   APPARENTLY FRAUDULENT PRODUCTS SOLD BY RAY MILLER, 
                         INC. 

Addressees: 

     For Action: 

     All nuclear power reactor facilities and fuel facilities holding an 
     operating license (OL) or construction permit (CP). 

     For Information: 

     Other fuel cycle licensees and Category B, Priority I (processors and 
     distributors) material licensees. 

Purpose: 

Power reactor facilities were informed in January 1983 by Information Notice 
83-01 that fraudulent products may have been sold to nuclear industry 
companies by Ray Miller, Inc. An updated and comprehensive list of Ray 
Miller, Inc. customers for the years 1975-1979 was provided to power reactor 
licensees and to selected fuel cycle and Category B, Priority I material 
licensees in Supplement 1 to IN 83-01 that was issued on April 15, 1983. 
Since information is now available regarding specific purchase orders for 
which materials were apparently substituted, licensees are requested to 
determine where suspect material has been installed in plants, evaluate its 
safety significance, and tag or dispose of the suspect material not yet 
installed. 

The specific information on apparently fraudulent material covers a five 
year period and pertains to orders filled by the Charleston office only. 
Although the Charleston office was apparently the major offender, the other 
Ray Miller, Inc. branch offices may have also supplied fraudulent materials, 
in some cases. However, the NRC has been unable to locate any records for 
review from these other branch offices. In an effort to aid in determining 
the scope of the fraudulent materials problem, licensees are requested to 
examine and test materials from other Ray Miller, Inc. branch offices that 
they have been able to identify, are in stock, but which are not included in 
the NRC-identified list of apparently fraudulent materials. 



8306270409 
.

                                                              IEB 83-07    
                                                              July 22, 1983 
                                                              Page 2 of 7  

Discussion: 

During February 1983, the NRC completed a detailed review of 29 file boxes 
of Ray Miller, Inc. records that were in the custody of the U.S. Attorney's 
Office in Charleston, West Virginia. These records related to orders filled 
by the Charleston, West Virginia branch office of Ray Miller, Inc., and 
covered the period 1975 through 1979. No other Ray Miller, Inc. records have 
been identified thus far. 

The data obtained from the records review are presented in Attachment 1, 
"Fraud Data Base Alpha Sequence Condense." These data are for apparently 
fraudulent items only, and were selected on the basis of notations made on 
the Ray Miller, Inc. work sheets which indicated that unauthorized 
substitutions or modifications were made. The data are arranged 
alphabetically by buyer, and include delivery point, order number, order 
date, line number, material size, material type, fraud code, and comments. 

The order number column provides the buyer's purchase order number when this 
was available. When it was not available, the Ray Miller, Inc. order number 
is provided. 

The order date column lists the date of the buyer's purchase order when this 
was available. When it was not available, the Ray Miller, Inc. order date is 
listed. 

The line number column provides the line number of the buyer's order for 
which substitution or modification of material was apparently made. 

The material size column provides a code entry for the size of the material 
involved. For tubing, the size indicates the outside diameter. For pipe, the 
size indicates the nominal size. For fittings and flanges, the size 
indicates the nominal pipe diameter for the material, however, there may be 
some inconsistency in recording values in these cases. The codes are as 
follows: 

     Material size codes:     0 = 1" or less 
                         1 = greater than 1" and less than or equal to 2" 
                         2 = greater than 2" and less than or equal to 4" 
                         3 = greater than 4" 

The material type column lists a code entry for the type of material 
involved. All items that are not piping or tubing are included in fittings 
and flanges. The codes are as follows: 

     Material type codes:     PIPE = Piping 
                         TUBE = Tubing 
                         FTFL = Fittings and Flanges 

The fraud code column provides a code entry for the type of substitution or 
modification that was apparently made. Dual or multiple entries for fraud 
code indicate either substitutions of more than one type or that a 
determination of which substitution was made could not be established from 
the information available. 
.

                                                              IEB 83-07    
                                                              July 22, 1983 
                                                              Page 3 of 7  

     Fraud codes:   W = Welded for Seamless 
                    C = Carbon Content (Std. grades of stainless steel for
                        low carbon or in some cases low carbon for Std.) 
                    F = Foreign-made for Domestic-made 
                    X = Forming or Machining performed 
                    P = Pressure Ratings substituted 
                    T = All others, e.g., 304 SS for 316 SS

The and/or column indicates whether multiple entries for the fraud code were 
multiple substitutions (AND column) or determination of which substitution 
was made could not be established (OR column). 

The comments column presents various notations that were found on the Ray 
Miller, Inc. work sheets. 

Attachment 2 "Fraud Data Base Condense Buyer/Delivery Point Differ" is a 
different sorting of selected data contained in Attachment 1. In this case, 
the data are arranged alphabetically by delivery point and only include data 
when the receiver (delivery point) differs from the buyer. This presentation 
is useful to identify materials that were delivered directly to a company 
that did not originate the purchase order. 

The fraud data base file is not complete in all cases. Some of the 
information was not available from the Ray Miller, Inc. records. Items from 
the NRC work sheets have been compared with the computer file only for NRC 
licensees and DOE contractors. For these items, 100 percent accuracy was 
verified. 

At approximately the same time this Bulletin is issued, the NRC will be 
sending a letter to each non-licensee company that received apparently 
fraudulent material from Ray Miller, Inc. Appropriate portions of the fraud 
data file will be included. These companies will be asked to identify any 
nuclear facility that may have been supplied the fraudulent materials. They 
will be asked to notify licensees, as appropriate, and the NRC by August 31, 
1983. 

The actions listed below deal primarily with material included in the fraud 
data base file, however, the actions also include a request to examine and 
test a sample of other materials supplied by Ray Miller, Inc. that are still 
in stock, regardless of which Ray Miller branch office supplied the 
material. The basis for this request is the need to compile and evaluate 
data on the quality of shipments that were presumed "legitimate." The 
results of this evaluation will be provided to the nuclear industry on a 
timely basis. 

Action Requested of Nuclear Fuel Cycle Licensees (Except As Noted Below) and 
Category B, Priority 1 Material Licensees: 

This Bulletin is provided for information only. No specific action or 
response is required. 

Action Requested of All Nuclear Power Reactor Facilities and Fuel Facilities 
Holding an OL or CP: 

Within eight months of the date of this bulletin complete the actions 
identified in items 1 through 4: 
.

                                                              IEB 83-07    
                                                              July 22, 1983 
                                                              Page 4 of 7  

1.   Based on a review of the attached lists of Ray Miller, Inc. customers 
     who received apparently fraudulent materials (Attachments 1 and 2), 
     and pertinent information obtained from any of these companies, either 
     directly or indirectly: * 

     (a)  Identify those companies on the lists that supplied materials or 
          services to your facility (include subcontractors as well as 
          major contractors); and 

     (b)  Determine whether any of the apparently fraudulent Ray Miller, 
          Inc. materials were provided to or used at your facility. 

     (c)  Determine whether any of the apparently fraudulent material 
          supplied to you was installed in safety-related systems** at your 
          facility, or is still in stock. 

     (d)  If other Ray Miller, Inc. materials not listed in Attachments 1 
          and 2 have been identified by your own initiative, determine 
          whether any was installed in safety-related systems** at your 
          facility, or is still in stock. 

2.   For Ray Miller, Inc. materials, both the NRC-identified apparently 
     fraudulent materials listed in Attachments 1 and 2, and other 
     materials identified by your own initiative, that are installed in 
     safety-related systems** of your facility: 

     (a)  Evaluate the safety significance of the presence of these 
          materials assuming the fraud is as identified in the attachments 
          or assuming material failure. 

     (b)  Determine the disposition of the installed material; e.g., use as 
          is, remove and replace, etc. 

3.   For all material from Ray Miller, Inc. still in stock, whether 
     identified by item 1 or previously identified by your own initiative: 


*To aid in this identification, a supplement to this Bulletin will be issued 
within 75 days from the date of this Bulletin to provide the results 
obtained from the survey of non-licensee companies that received apparently 
fraudulent material. However, this does not relieve the licensees of the 
responsibility of contacting their suppliers to ascertain whether any of the 
material listed in Attachment 1 has been supplied to their facility. 

**For the purpose of the applicable actions of this bulletin 
"safety-related" constitutes those systems covered by the definition given 
in 10 CFR Part 100, Appendix A Sections III.(c)(1), III.(c)(2), and III 
(c)(3). In assessing the impact of Ray Miller, Inc. supplied materials in 
other systems at their facilities, licensees should consider the provisions 
of GDC 1 to 10 CFR Part 50 Appendix A. 
.

                                                              IEB 83-07    
                                                              July 22, 1983 
                                                              Page 5 of 7  

     (a)  Segregate into two groups: (1) material included in the purchase 
          orders listed in the fraudulent data file, and (2) all other 
          material supplied by Ray Miller, Inc., regardless of the branch 
          office that supplied the material. 

     (b)  For the material included in the fraudulent data file: 

          (1)  Discard the material, or 

          (2)  Tag or otherwise mark the materials for use only in systems 
               not important to safety. 

     (c)  For material supplied by Ray Miller that is not included in the 
          fraudulent data file, do one of the following: 

          (1)  Discard the material. 

          (2)  Tag or otherwise mark the materials for use only in systems 
               not important to safety, or 

          (3)  Subdivide material into groups of identical items and 
               examine and test material in each group in accordance with 
               either item (i) or (ii), below: *** 

               (i)  Perform sufficient comprehensive examinations and tests 
                    to qualify each group of material for use in systems 
                    important to safety. If there are less than 10 
                    identical items in the group, each item should be 
                    examined. If there are 10 or more identical items, a 
                    statistical sampling plan may be used, to demonstrate 
                    with 90% confidence that 90% of the material conforms 
                    to the purchase specifications. Groups of material 
                    found acceptable may be used as desired. 

               (ii) Perform comprehensive examinations and tests of a 
                    limited sample of each group of identical items. The 
                    minimum sample size is to be two items, or 10% of the 
                    items in the group, whichever is greater. Examination 
                    and test of this limited sample does not provide a high 
                    degree of assurance that the entire group satisfies the 
                    procurement specifications. The NRC will compile the 
                    results of all the data received, determine the 
                    statistical significance of the results, and advise 
                    industry of the overall results and conclusions. 
                    Therefore, a utility should not use this material in 
                    systems important to safety until the NRC's evaluation 
                    is complete. 


***Licensees are encouraged to perform examinations and tests rather than to 
discard the material, even though the economic incentives probably favor 
discarding the material. Data obtained in response to this Bulletin will be 
compiled by the NRC and disseminated to the industry. The extent to which 
this material deviates from its procurement specifications may be an 
important consideration in evaluating the safety significance of Ray Miller, 
Inc. material not included in the fraudulent data file. 
.

                                                              IEB 83-07    
                                                              July 22, 1983 
                                                              Page 6 of 7  

4.   Provide a written report describing the results of the actions in 
     items 1 through 3. Table 1 (Attachment 3) provides a suggested format 
     for reporting the results of the examination and testing of materials. 

The written report requested by item 4 above should be submitted to the 
appropriate Regional Administrator under oath or affirmation under 
provisions of Section 182a, Atomic Energy Act of 1954, as amended. In 
addition, the original copy of the cover letters and a copy of the reports 
should be transmitted to the U.S. Nuclear Regulatory Commission, Document 
Control Desk, Washington, D.C. 20555 for reproduction and distribution. 

Because it appears that some equipment suppliers may be substituting 
substandard or nonconforming materials when filling orders, licensees are 
cautioned to be particularly sensitive to this issue. For example, in 
addition to the Ray Miller, Inc. problem, the NRC has substantiated that 
some nuclear power plants were supplied with nonconforming pipe fittings and 
flanges by the Tube-Line Corporation (see IE Bulletin 83-06). Therefore, 
although the specific details involving apparently fraudulent materials 
received from Ray Miller, Inc. may not directly apply for your facility, you 
are requested to review the general concerns expressed in the Bulletin for 
applicability at your facility. Your response should describe the results of 
the review, and if the general concerns apply, you should describe the 
short-term and long-term corrective actions to be taken and the schedules 
thereof. 

This request for information was approved by the Office of Management and 
Budget under clearance number 3150-0011. Comments on burden and duplication 
should be directed to the Office of Management and Budget, Reports 
Management, Room 3208, New Executive Office Building, Washington, D.C. 
20503. 

Although no specific request or requirement is intended, the following 
information would be helpful to the NRC in evaluating the cost of this 
Bulletin: 

     1. Staff time to perform requested review and testing. 
     2. Staff time spent to prepare requested documentation. 

If you have any questions regarding this matter, please contact the Regional 
Administrator of the appropriate NRC Regional Office, or one of the 
technical contacts listed below. 


                                   Richard C. DeYoung Director 
                                   Office of Inspection and Enforcement 

Technical Contacts: Mary S. Wegner, IE
                    (301) 492-4511

                    Ronald M. Young, IE
                    (301) 492-9672

Attachments:   see page 7
.

                                                              IEB 83-07    
                                                              July 22, 1983 
                                                              Page 7 of 7  

Attachments:
1.   Fraud File, Alphabetical by Buyer 
2.   Fraud File, Buyer and Delivery Point Differ,
       Alphabetical by Delivery Point 
3.   Table 1 - Material Examination and
       Test Results 
4.   List of Recently Issued IE Bulletins
Page Last Reviewed/Updated Tuesday, July 23, 2013