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
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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.
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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:
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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.
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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.
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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
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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, March 09, 2021
Page Last Reviewed/Updated Tuesday, March 09, 2021