United States Nuclear Regulatory Commission - Protecting People and the Environment

Information Notice No. 96-40: Deficiencies in Material Dedication and Procurement Practices and in Audits of Vendors

                                 UNITED STATES
                         NUCLEAR REGULATORY COMMISSION
                     OFFICE OF NUCLEAR REACTOR REGULATION
                          WASHINGTON, D.C 200555-0001

July 25, 1996


NRC INFORMATION NOTICE 96-40:  DEFICIENCIES IN MATERIAL DEDICATION AND
                               PROCUREMENT PRACTICES AND IN AUDITS OF VENDORS


Addressees

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

Purpose

The United States Nuclear Regulatory Commission (NRC) is issuing this
information notice to alert addressees to deficiencies in the dedication
practices of manufacturers and suppliers of commercial-grade items such as
fasteners, pipe, fittings, and structural shapes that are supplied as
components of more complex pieces of equipment.  This information notice also
identifies deficiencies in licensee audits of manufacturers and suppliers.  It
is expected that the recipients will review the 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.

Background

The NRC has conducted a series of inspections of material manufacturers and
suppliers to assess the effectiveness of quality assurance practices related
to the supply of materials to nuclear plants.  These inspections focused, in
part, on assessing the effectiveness of current procurement practices in
preventing substandard material from entering the nuclear supply chain.  The
inspections are limited to suppliers of simple material products, such as
fasteners, pipe, fittings, and structural shapes.  A list of the vendors that
were inspected and the corresponding NRC inspection report numbers are
included in Attachment 1.  Although all vendors included in this series of
inspections are accredited by the American Society of Mechanical Engineers
(ASME) to supply material meeting the quality requirements of Subarticle NCA
3800 of Section III of the ASME Code, purchases of both ASME Code and non-Code
material were reviewed.

Discussion

The inspection results suggest that material purchased to ASME Code
requirements from vendors accredited by the ASME was generally of acceptable
quality for nuclear applications.  Material procured in this manner complies


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with the quality assurance requirements of Title 10 of the Code of Federal
Regulations, Part 50, Appendix B.  

The NRC staff identified a concern that some licensees accepted material under
the ASME Code small parts exemption (NX 2610) apparently without review for
suitability of application by an N Certificate holder as required by the ASME
Code.  This type of material is typically supplied under the vendor
commercial-grade material dedication program and does not meet the material
quality requirements specified in Section NCA 3800 of the ASME Code.

Non-Code Material purchased to 10 CFR 50 Appendix B quality requirements from
all vendors (including ASME accredited vendors) is typically supplied under
the vendor's commercial grade material dedication program and certified as
meeting Appendix B to 10 CFR Part 50.  For items purchased in this manner, a
number of concerns were identified:

.. Inconsistent approach to identification of the critical characteristics of
   the material dedicated.  Guidance for selection of critical
   characteristics was not provided or was inadequate.  Some vendors identify
   all material specification requirements as critical, while others select
   certain parameters which may be based on ease of verification.

.  Indirect verification methods.  Some vendors use direct verification
   methods when testing material while others use indirect methods (e.g.,
   hardness testing to verify tensile properties).

.  Heat traceability generally was not established for material to be
   verified by destructive testing.  No technical bases or confidence levels
   were established when using sampling plans to test material from
   potentially nonhomogeneous lots.

.  Audits by licensees or those performed by the Nuclear Procurement Issues
   Council (NUPIC) were often ineffective in identifying the problems 
   described above.  Insufficient detail was provided in audit reports to
   enable a third-party user to draw meaningful conclusions about the vendor
   commercial-grade-item dedication program or the material sampling program.

.  Licensee purchase orders for material were often confusing and sometimes
   contained conflicting information.

On September 21, 1995, the NRC staff met with representatives from NUPIC to
discuss the results of NRC inspections of material suppliers as well as recent
improvements in the NUPIC audit process.  At this meeting, NUPIC informed the
NRC staff that the NUPIC inspection checklists have been changed to require
that audit reports provide additional discussion on the commercial-grade-item
dedication process, including a discussion of any sampling plans used as part
of the dedication process.  
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As noted in the listed inspection reports, the NRC concluded that the
commercial-grade material dedicated and supplied by the vendors inspected
during this series of inspections could not be considered as equivalent to
material manufactured under an Appendix B program or to material supplied
under the quality requirements of ASME Code, Section III, NCA 3800.  This
situation resulted primarily from failure to establish material traceability
and insufficient sampling to verify critical characteristics of nonhomogeneous
lots.  Devoting increased attention to the commercial-grade dedication
processes of vendors and the inclusion of more meaningful technical and
quality specifications in licensee purchase orders can address this problem. 

In correspondence with several of the vendors that were inspected, the NRC
reiterated the 10 CFR Part 21 definition of the term "dedication" as an
acceptance process undertaken to provide reasonable assurance 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
that is designed and manufactured under an Appendix B quality assurance
program.  The correspondence also identified a procurement option that could
be used for a significant volume of safety-related material without requiring
the vendor to perform a complete verification of all specification parameters. 
The complete text of this correspondence has been published in NUREG-0040,
"Licensee Contractor and Vendor Inspection Status Report," Vol. 19, No. 4,
October-December 1995, under "Correspondence Related to Vendor Issues."

This information notice requires no specific action or written response.  If
you have any questions about the information in this notice, please contact
the technical contacts listed below or the Office of Nuclear Reactor
Regulation project manager.          


                                          signed by

                                    Brian K. Grimes, Acting Director
                                    Division of Reactor Program Management
                                    Office of Nuclear Reactor Regulation

Technical Contacts:  Uldis Potapovs, NRR
                     (301) 415-2959
                     E-mail:  uxp@nrc.gov
                    
                     Larry Campbell, NRR
                     (301) 415-2976             
                     E-mail:  llc3@nrc.gov 

Attachments:
1.  Vendors (Material Suppliers) Inspected
2.  List of Recently Issued NRC Information Notices.                                                            Attachment 1
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                                                            Page 1 of 1



Vendors (Material Suppliers) Inspected

Vendor                                  Inspection Date NRC Report Number

Mid-South Nuclear, Inc.                 January 25-28, 1994 99901270/94-01
Birmingham, Alabama                     August 22-25, 1995  99901270/95-01

Cardinal Industrial Prod.               November 29-December 1, 1995 
Las Vegas, Nevada                       99901076/94-01

Mackson, Inc.                           February 15-17, 1995 99901179/95-01
Rock Hill, South Carolina                   

Energy & Process Corp.                  May 8-11, 1995       99900866/95-01
Tucker, Georgia

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