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
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