United States Nuclear Regulatory Commission - Protecting People and the Environment

Information Notice No. 88-35: Inadequate Licensee Performed Vendor Audits

                                  UNITED STATES
                          NUCLEAR REGULATORY COMMISSION
                      OFFICE OF NUCLEAR REACTOR REGULATION
                             WASHINGTON, D.C.  20555

                                  June 3, 1988


Information Notice No. 88-35:  INADEQUATE LICENSEE PERFORMED VENDOR AUDITS 

Addressees: 

All holders of operating licenses or construction permits for nuclear power 
reactors. 

Purpose: 

This information notice is being provided to alert addressees to potential 
problems resulting from inadequately performed licensee audits at vendor 
facilities which may not reveal the vendor's failure to implement critical 
portions of its quality assurance (QA) program.  It is expected that 
recipients will review this information for applicability to their facilities 
and consider actions, as appropriate, to avoid similar problems.  However, 
suggestions contained in this information notice do not constitute NRC 
requirements; therefore, no specific action or written response is required. 

Description of Circumstances: 

NRC reviews during January-April 1988 of documents obtained from Piping Sup-
plies, Incorporated (PSI) of Folsom, New Jersey and West Jersey Manufacturing 
Company (WJM) of Williamstown, New Jersey identified several inconsistencies 
that indicate potential generic safety implications with pipe fittings and 
flanges supplied by PSI and WJM to nuclear power plants.  (This issue is 
discussed further in NRC Bulletin No. 88-05, "Nonconforming Materials Supplied
by Piping Supplies, Inc. at Folsom, New Jersey and West Jersey Manufacturing 
Company at Williamstown, New Jersey.")  The NRC inspectors reviewed such 
typical licensee-auditable manufacturer/supplier records as certified material 
test reports (CMTRs), certificates of compliance, and heat treat records.  The 
NRC believes the inconsistencies found should have been identified by a 
licensee during the performance of its own audit. 

An NRC inspection on June 10-15 and June 24-28, 1985 at the Nuclear Energy 
Services Company (NES) at Greensboro, North Carolina identified 22 conditions 
that did not conform to the NES QA program implementation and one 10 CFR 
Part 21 violation (reference NRC inspection report 99901018/85-01).  The NRC 
performed these inspections at the request of the Department of Energy to 
determine the adequacy of the NES QA program relative to the fabrication of 
canisters to collect, transport, and store the Three Mile Island, Unit 2 core 
debris.  The inspection results raised a concern in regard to the adequacy of 
the implementation of the QA program at the NES facility in Greensboro, North 
Carolina because of the collective impact of the numerous deviations from the 
vendor's program.  Before the NRC inspections, General Public Utilities and 
Bechtel Power Company had jointly performed surveillance activities.  On the 

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cover sheet of the report the results of the surveillance were summarized as 
unsatisfactory.  However, no nonconformances were issued to NES, nor was the 
vendor requested to perform any corrective actions other than to develop a 
specific non-destructive testing examination procedure which, required by 
contract, should have already been established. 

An NRC inspection on November 16-20, 1987 at the Nutherm International Indus-
tries, Incorporated (NI) facility in Mount Vernon, Illinois identified six 
nonconforming areas of implementation failures (reference NRC inspection 
report 99900779/87-01).  Considering a number of identified problems, 
substantiated allegations, and the breakdown of the QA program in certain 
areas, the NRC became concerned about the validity of NI's certificates of 
conformance.  Before the NRC audit, inspections had been performed by several 
licensees.  NRC's review of the audit reports produced by licensees indicates 
that only one licensee identified any deviations, and that that licensee 
failed to correctly interpret the audit findings. 

An NRC inspection on August 25-29, 1986 at the Amerace Corporation facility in 
Union, New Jersey (Amerace is the manufacturer of Agastat 7000 series timer 
relays) identified that the vendor had failed to adequately establish and 
implement a QA program in several areas.  One violation of 10 CFR Part 21 and 
nine nonconformances to the vendor's QA program were identified (reference NRC 
inspection report 99900296/86-01).  The NRC inspection found, in part, that 
"The failures are indicative of a lack of management involvement in the 
quality assurance functions...."  A review of several audits previously 
performed by licensees indicated that licensees had identified few or no 
problems with either the vendor's QA program or its implementation. 

An NRC inspection on July 11-12 and August 5-9, 1985 at the Air Balance Incor-
porated facilities at Westfield, Massachusetts and at Wrens, Georgia found 
that the vendor had failed to (a) establish a 10 CFR Part 21 program, (b) 
effectively implement a QA program, and (c) obtain QA program support from 
management.  Two violations of 10 CFR Part 21 and 17 nonconforming items were 
identified (reference NRC inspection report 99901005/85-01).  Again, a review 
of several audits that licensees had previously performed indicated that 
licensees had identified few or no problems. 

A recent NRC inspection of Elgar Corporation identified several concerns with 
the vendor's QA program.  These include 1) failure to perform independent 
design review (12 of 55 engineering change notices audited were prepared, 
reviewed, and approved by the same individual), 2) failure to ensure that the 
cumulative effects of multiple design changes on an individual drawing did not 
adversely affect the ability of the equipment to perform its intended 
function, 3) failure to maintain previous versions of revised drawings, 4) 
failure to establish duties and authorities of engineering personnel, and 5) 
failure to perform 10 CFR Part 21 evaluations of identified design errors and 
deviations.  Again, a review of audits licensees had previously performed 
indicated that these concerns were not identified.

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On April 29, 1988, in accordance with the requirements of 10 CFR Part 21, IMO 
Delaval, Inc. (Delaval) notified the NRC of potential problems with certain 
engine control devices in the air start, lube oil, jacket water, and crankcase 
systems in their DSR or DSRV standby diesel generators.  In response to a 
number of reported failures, Delaval performed an audit of the manufacturer of 
these components, California Controls (Calcon) which identified a concern 
regarding the implementation of the Calcon QA program.  Delaval concluded that 
there was no objective evidence of product testing having been performed by 
the sub-vendor.  The NRC staff is not certain as to whether any licensees have 
previously audited Calcon.

Discussion: 

The NRC is concerned that the inspections discussed above appear to indicate 
that licensees may not be adequately implementing their established 10 CFR 
Part 50 Appendix B program requirements, particularly Criterion VII.  
Licensees are reminded that it is their responsibility to ensure, by such 
actions as verifying the validity of and the basis for such 
manufacturer/vendor records as CMTRs, certificates of compliance, and heat 
treat records, that purchased equipment and components are able to perform 
their intended functions.  Licensees are further reminded that, as discussed 
in 10 CFR Part 50 Appendix B Criterion VII, "the effectiveness of the control 
of quality by contractors and subcontractors shall be assessed by the 
applicant or designee at intervals consistent with the importance, complexity, 
and quantity of the product or services."  On the basis of the NRC inspections 
discussed here, it appears that, in some cases, licensee audit efforts have 
not been effective.  The NRC believes that additional attention in this area 
may be appropriate. 

No specific action or written response is required by this information notice.
If you have any questions about this matter, please contact the technical 
contact listed below or the Regional Administrator of the appropriate regional 
office. 




                              Charles E. Rossi, Director 
                              Division of Operational Events Assessment 
                              Office of Nuclear Reactor Regulation 

Technical Contact:  Joseph J. Petrosino, NRR
                    (301) 492-0979 

Attachment:  List of Recently Issued NRC Information Notices
.                                                            Attachment
                                                            IN 88-35 
                                                            June 3, 1988 
                                                            Page 1 of 1

                             LIST OF RECENTLY ISSUED
                            NRC INFORMATION NOTICES 
_____________________________________________________________________________
Information                                  Date of 
Notice No._____Subject_______________________Issuance_______Issued to________

88-34          Nuclear Material Control      5/31/88        All holders of OLs
               and Accountability of                        or CPs for nuclear
               Non-Fuel Special Nuclear                     power reactors. 
               Material at Power Reactors 

87-61,         Failure of Westinghouse       5/31/88        All holders of OLs
Supplement 1   W-2-Type Circuit Breaker                     or CPs for nuclear
               Cell Switches                                power reactors. 

88-33          Recent Problems Involving     5/27/88        All Agreement 
               the Model Spec 2-T                           States and NRC 
               Radiographic Exposure                        licensees 
               Device                                       authorized to 
                                                            manufacture, 
                                                            distribute or 
                                                            operate radio-
                                                            graphic exposure 
                                                            devices and source
                                                            changers. 

88-32          Promptly Reporting to         5/25/88        All NRC material 
               NRC of Significant                           licensees. 
               Incidents Involving 
               Radioactive Material 

88-31          Steam Generator Tube          5/25/88        All holders of OLs
               Rupture Analysis                             or CPs for 
               Deficiency                                   Westinghouse and 
                                                            Combustion 
                                                            Engineering 
                                                            designed nuclear 
                                                            power plants. 

88-30          Target Rock Two-Stage         5/25/88        All holders of OLs
               SRV Setpoint Drift                           or CPs for nuclear
               Update                                       power reactors. 

88-29          Deficiencies in Primary       5/24/88        All holders of OLs
               Containment Low-Voltage                      or CPs for nuclear
               Electrical Penetration                       power reactors. 
               Assemblies 

88-28          Potential for Loss of         5/19/88        All holders of OLs
               Post-LOCA Recirculation                      or CPs for nuclear
               Capability Due to                            power reactors. 
               Insulation Debris Blockage 
_____________________________________________________________________________
OL = Operating License
CP = Construction Permit 
Page Last Reviewed/Updated Tuesday, November 12, 2013