Licensee Commercial-Grade Procurement and Dedication Programs (Generic Letter 91-05)
April 9, 1991
TO: ALL HOLDERS OF OPERATING LICENSES AND CONSTRUCTION PERMITS FOR
NUCLEAR POWER REACTORS
SUBJECT: LICENSEE COMMERCIAL-GRADE PROCUREMENT AND DEDICATION PROGRAMS
(GENERIC LETTER 91-05)
This generic letter notifies the industry of the staff's pause in conducting
certain procurement inspection and enforcement activities and identifies a
number of failures in licensees' commercial-grade dedication programs
identified during recent team inspections performed by the U.S. Nuclear
Regulatory Commission (NRC). The pause, which began in March of 1990, will
end in late summer of 1991. The purpose of the pause is to allow licensees
sufficient time to fully understand and implement guidance developed by
industry to improve procurement and commercial-grade dedication programs.
This generic letter expresses staff positions regarding certain aspects of
licensee commercial-grade procurement and dedication programs which would
provide acceptable methods to meet regulatory requirements.
During the period from 1986 to 1989, the NRC conducted 13 team inspections
of the licensees' procurement and commercial-grade dedication programs.
During these inspections, the NRC staff identified a common, programmatic
deficiency in the licensees' control of the procurement and dedication
process of commercial-grade items for safety-related applications. In a
number of cases, the staff found that licensees had failed to adequately
maintain programs as required by 10 CFR Part 50, Appendix B, to assure the
suitability of commercially procured and dedicated equipment for its
intended safety-related applications. In addition, the staff identified
equipment of indeterminate quality installed in the licensees' facilities.
Because of a decrease in the number of qualified nuclear-grade vendors, the
NRC staff is aware that there has been a change in the industry's
procurement practices. Ten years ago, licensees procured major assemblies
from approved vendors who maintained quality assurance programs pursuant to
Appendix B of Part 50 of Title 10 of the Code of Federal Regulations
(10 CFR). Currently, due to the reduction in the number of qualified
nuclear-grade vendors, licensees are increasing the numbers of
commercial-grade replacement parts that they procure and dedicate for use in
safety-related applications. This is a substantial change from the
environment in which 10 CFR Part 50, Appendix B was promulgated. This has
necessitated an increased emphasis by licensees and the NRC staff to
maintain procurement and dedication programs that adhere to the requirements
of 10 CFR Part 50, Appendix B, and thus assure the quality of items
purchased and installed in safety-related applications. Therefore,
dedication processes for commercial-grade parts have increased in importance
and NRC inspections have determined that a number of licensees have not
satisfactorily performed this procurement and dedication process.
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GENERIC LETTER 92-05 -2-
The industry has been made fully aware of the NRC's concerns in this program
area. In the past, escalated enforcement cases have provided notice to the
affected licensees and to the industry of NRC's findings, concerns, and
expectations in the implementation of procurement and dedication programs.
Further, the NRC staff continues to participate in numerous industry
meetings and conferences at which the NRC's positions in this area have been
presented. The Nuclear Utility Management and Resources Council (NUMARC)
Board of Directors recently approved a comprehensive procurement initiative
as described in NUMARC 90-13, "Nuclear Procurement Program Improvements,"
which commits licensees to assess their procurement programs and take
specific action to enhance or upgrade the program if they are determined to
be inadequate. The initiative on the dedication of commercial-grade items,
which is part of NUMARC 90-13, was to be implemented by January 1, 1990.
The staff is monitoring implementation of licensee program improvements by
conducting assessments of their procurement and commercial-grade dedication
programs and maintaining close interaction with the nuclear industry through
participation in conferences, panels, and meetings.
The staff will continue to perform reactive inspections relating to plant
specific operational events or to defective equipment and, as required, will
continue to initiate resultant enforcement actions. In addition, the staff
will continue to perform inspections of vendors. The staff expects to
resume procurement and dedication inspection activities in the late summer
of 1991. These resumed inspections will be conducted using 10 CFR Part 50,
Appendix B (not the NUMARC initiatives) as the applicable regulatory
requirement. Licensee programs must assure the suitability of commercially
procured and dedicated equipment for its intended safety-related
application.
The staff position is that the staff will not initiate enforcement action in
cases of past programmatic violations that have been adequately corrected.
In addition, the staff does not expect licensees to review all past
procurements. However, if during current procurement activities, licensees
identify shortcomings in the form, fit, or function of specific vendor
products, or if failure experience or current information on supplier
adequacy indicates that a component may not be suitable for service,
corrective actions are required for all such installed and stored items in
accordance with Criterion XVI of 10 CFR Part 50, Appendix B. Also in
accordance with Criterion XVI, licensees must determine programmatic causes
when actual deficiencies in several products from different vendors are
identified during current procurement activities and these deficiencies lead
to the replacement of installed items as part of the corrective action. In
such cases, a further sampling of previously procured commercial-grade items
may be warranted.
In NRC Generic Letter (GL) 89-02, "Actions to Improve the Detection of
Counterfeit and Fraudulently Marketed Products," the staff described its
perspective on good practices in procurement and dedication and provided the
NRC's conditional
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GENERIC LETTER 91-05 -3-
endorsement of an industry standard (EPRI NP-5652) on methods of
commercial-grade procurement and dedication. A number of recent inspection
findings, as discussed in Enclosure 1, indicate that licensees have failed
to include certain key activities, as appropriate, in the implementation of
the dedication process. The NRC staff's positions on the successful
implementation of licensees' programs for commercial-grade dedication with
respect to critical characteristics and like-for-like replacements are as
follows. (These are also included in Enclosure 1.)
The term "critical characteristics" is not contained in Appendix B and has
no special regulatory significance beyond its use and definition in various
industry guides and standards. The NRC first used the term critical
characteristics in GL 89-02 as constituting those characteristics which need
to be identified and verified during product acceptance as part of the
procurement process. The NRC has not taken the position that all design
requirements must be considered to be critical characteristics as defined
and used in EPRI NP-5652. Rather, as stated in Appendix B, Criterion III,
licensees must assure the suitability of all parts, materials, and services
for their intended safety-related applications (i.e., there needs to be
assurance that the item will perform its intended safety function when
required). The licensee is responsible for identifying the important
design, material, and performance characteristics for each part, material,
and service intended for safety-related applications, establishing
acceptance criteria, and providing reasonable assurance of the conformance
of items to these criteria.
A like-for-like replacement is defined as the replacement of an item with an
item that is identical. For example, the replacement item would be
identical if it was purchased at the same time from the same vendor as the
item it is replacing, or if the user can verify that there have been no
changes in the design, materials, or manufacturing process since procurement
of the item being replaced. If differences from the original item are
identified in the replacement item, then the item is not identical, but
similar to the item being replaced, and an evaluation is necessary to
determine if any changes in design, material, or the manufacturing process
could impact the functional characteristics and ultimately the component's
ability to perform its required safety function. If the licensee can
demonstrate that the replacement item is identical, then the licensee need
not identify the safety function or review and verify the design
requirements and critical characteristics. Engineering involvement is
necessary in the above activities. Reliance on part number verification and
certification documentation is insufficient to ensure the quality of
commercially procured products.
The other matters discussed in Enclosure 1 do not constitute NRC staff
positions, but provide information on inspection findings and clarify the
characterization of effective procurement and dedication programs previously
described in GL 89-02.
BACKFIT DISCUSSION:
Based on past inspection findings and the resulting enforcement actions, the
NRC staff has determined that licensee commercial-grade procurement and
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GENERIC LETTER 91-05 -4-
dedication programs needed to be improved to comply with the existing NRC
requirements as described in 10 CFR Part 50, Appendix B, Criterion III
(Design Control), IV (Procurement Document Control), VII (Control of
Purchased Material, Equipment and Services), and XVIII (Audits).
Specifically, licensees have failed to adequately maintain programs to
assure the suitability of commercially procured and dedicated equipment for
its intended safety-related application. Since the generic letter presents
staff positions regarding implementation of existing regulatory
requirements, as contained in Appendix B to 10 CFR Part 50, the staff has
concluded, that this is a compliance backfit and has prepared the generic
letter in accordance with 10 CFR 50.109 (a)(4)(i). In light of the
inadequacies identified in the procurement and dedication programs of a
large number of licensees, the issuance of this generic letter is necessary
to express the staff's position on the key element that licensees must
include as part of the dedication process, specifically that commercial-
grade procurement and dedication programs must assure the suitability of
equipment for its intended safety-related application. This generic letter
is also intended to clarify the elements of effective procurement and
commercial-grade dedication programs that were previously provided to
licensees in GL 89-02. Since licensees' procurement and dedication programs
may contain programmatic deficiencies, the staff has included in the generic
letter the necessary licensee corrective action to address shortcomings
identified in specific vendor products or components that directly lead to
the component not being suitable for safety-related service.
Although no response to this letter is required, if you have any questions
regarding this matter, please contact the persons listed below.
Sincerely,
James G. Partlow
Associate Director for Projects
Office of Nuclear Reactor Regulation
Enclosures:
1. Characteristics of Effective Commercial-Grade
Procurement and Dedication Programs
2. List of Recently Issued Generic Letters
Technical Contacts: Richard P. McIntyre, NRR
(301) 492-3215
Uldis Potapovs, NRR
(301) 492-0959
.
Enclosure 1
CHARACTERISTICS OF EFFECTIVE COMMERCIAL-GRADE
PROCUREMENT AND DEDICATION PROGRAMS
Background
Appendix B to 10 CFR Part 50 contains the NRC's regulations for procurement
quality assurance (QA) and quality control (QC) for products to be used in
safety-related applications. In addition, the NRC has provided further
guidance in Regulatory Guides 1.28, 1.33, and 1.123. These requirements and
guides, if properly implemented, provide a measure of assurance for the
suitability of equipment, including commercial-grade items for use in
safety-related systems. Criterion III of Appendix B requires licensees to
select and review for suitability of application materials, parts,
equipment, and processes that are essential to the safety-related functions
of the structures, systems, and components. Criterion IV requires that
procurement documents specify the applicable requirements necessary to
ensure functional performance. Criterion VII requires licensees to assure
that the following are sufficient to identify whether specification
requirements for the purchased material and equipment have been met: source
evaluation and selection, objective evidence of quality, inspection of the
source, and examination of products upon delivery. The process used to
satisfy these requirements when upgrading commercial-grade items for
safety-related applications is commonly called "dedication." The process of
ensuring compliance with 10 CFR Part 50, Appendix B, must include all those
activities necessary to establish and confirm the quality and suitability of
commercially procured and dedicated equipment for its intended
safety-related application. Some of the dedication activities may occur
early in the procurement cycle, before the item is accepted from the
manufacturer. Generic Letter (GL) 89-02, "Actions to Improve the Detection
of Counterfeit and Fraudulently Marketed Products," discussed
commercial-grade dedication in terms of engineering involvement in the
procurement process, product acceptance, and the dedication process as
identified in the EPRI NP-5652 guidelines. This enclosure further discusses
the characteristics of effective procurement and dedication programs
previously discussed in GL 89-02 and provides examples of specific failures
by licensees to effectively implement these characteristics for dedicating
and ensuring the suitability of commercial-grade products for safety-related
applications. Appropriate implementation of these characteristics would
have avoided many of the failures to meet 10 CFR Part 50, Appendix B
requirements in licensee procurement and commercial-grade dedication
programs which were identified during past NRC inspections.
Inspection Observations and Findings
From 1986 to 1989, headquarters and regional personnel conducted 13 team
inspections of licensees' procurement and dedication programs. These
inspections have identified a common, broad programmatic deficiency in
licensees' control over the process of procurement and dedication of
commercial-grade
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items. In a number of cases, licensees have not maintained programs to
ensure the suitability of equipment for use in safety-related applications
as required by 10 CFR Part 50, Appendix B, Criterion III. These 13
inspections resulted in findings with significant safety implications. The
staff identified eight findings that were considered to be Severity Level
III violations and three findings that were Severity Level IV violations.
At one plant, the staff did not assign a severity level to individual
violations. Instead, the staff considered the entire group to be a Severity
Level III problem and used enforcement discretion, as provided under the
enforcement policy, based on the licensee's corrective actions (see
10 CFR Part 2, Appendix C, Section V.G.2). Only one of the plants that were
inspected did not receive violations in this program area.
In GL 89-02, the NRC has conditionally endorsed the dedication methods de-
scribed in EPRI NP-5652 guidelines. The staff believes that licensees who
implement these dedication methods, in accordance with the NRC's
endorsement, can establish a basis for satisfying the existing requirements
of Appendix B to 10 CFR Part 50 as these requirements apply to the
dedication process for commercial-grade items. An effective
commercial-grade dedication program must include provisions to demonstrate
that a dedicated item is suitable for safety-related applications. For a
licensee to adequately establish suitability, certain key activities must be
performed, as appropriate, as part of the dedication process. This generic
letter is intended to clarify the dedication approaches described in GL
89-02.
During each of the 13 inspections, the staff identified a common element in
each of the inspection findings. This element was the failure of the
licensee to assure that a commercially procured and dedicated item was
suitable for the intended safety-related application. A dedicated
commercial-grade item must be equivalent in its ability to perform its
intended safety function to the same item procured under a 10 CFR Part 50,
Appendix B QA program. The following is a list of the 13 licensees
inspected and the inspection report numbers. A summary of the general
inspection findings and NRC observations on these findings follows the list
of licensee inspections.
LICENSEE and PLANT INSPECTION REPORT NO.
1. Tennessee Valley Authority (Sequoyah) 50-327/86-61
50-328/86-61
2. Southern California Edison (San Onofre) 50-206/87-02
50-361/87-03
50-362/87-04
3. Alabama Power (Farley) 50-348/87-11
50-364/87-11
4. Louisiana Power and Light (Waterford) 50-382/87-19
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LICENSEE and PLANT INSPECTION REPORT NO.
5. Sacramento Municipal Utility District (Rancho Seco) 50-312/88-02
6. Maine Yankee Atomic Power (Maine Yankee) 50-309/88-200
7. Northern States Power (Prairie Island) 50-282/88-201
50-306/88-201
8. Portland General Electric (Trojan) 50-344/88-39
50-344/88-46
9. Connecticut Yankee Atomic Power (Haddam Neck) 50-213/89-200
10. Washington Public Power Supply System (WNP-2) 50-397/89-21
50-397/89-28
11. Florida Power (Crystal River) 50-302/89-200
12. Gulf States Utilities (River Bend) 50-458/89-200
13. Commonwealth Edison (Zion) 50-295/89-200
50-304/89-200
1. Inspection Findings
a. Failure to identify the methods and acceptance criteria for
verifying the critical characteristics, such as during receipt
inspection, dedication process, or post-installation testing.
b. Failure to establish verifiable, documented traceability of
complex commercial-grade items to their original equipment
manufacturers in those cases where the dedication program cannot
verify the critical characteristics.
c. Failure to recognize that some commercial-grade items cannot be
fully dedicated once received on site. Certain items are manufac-
tured using special processes, such as welding and heat treating.
Dedication testing of these items as finished products would
destroy them. For these items, licensees may need to conduct
vendor surveillances or to witness certain activities during the
manufacturing process.
Discussion
The NRC staff has met on several occasions with NUMARC and licensee
representatives to discuss "critical characteristics" as used in the
context of commercial-grade procurement and dedication. The term
"critical characteristics" is not contained in Appendix B and has no
special regulatory significance beyond its use and definition in
various industry
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guides and standards. The NRC first used the term critical
characteristics in GL 89-02 as constituting those characteristics which
need to be identified and verified during product acceptance as part of
the procurement process. The NRC has not taken the position that all
design requirements must be considered to be critical characteristics
as defined and used in EPRI NP-5652. Rather, as stated in Appendix B,
Criterion III, licensees must assure the suitability of all parts,
materials, and services for their intended safety-related applications
(i.e., there needs to be assurance that the item will perform its
intended safety function when required). The licensee is responsible
for identifying the important design, material, and performance
characteristics for each part, material, and service intended for
safety-related applications, establishing acceptance criteria, and
providing reasonable assurance of the conformance of items to these
criteria. There is no minimum or maximum number of critical
characteristics that need to be verified. Further, the critical
characteristics for an item may vary from application to application
depending on the design and performance requirements unique to each
application.
A licensee may take different approaches for the verification of the
critical characteristics, depending on the complexity of the item. In
many cases, the licensee can verify the critical characteristics of
each item during receipt inspection testing. However, for a complex
item with internal parts which receive special processing during
manufacturing, the licensee may need to conduct a source verification
of the manufacturer during production to verify the critical
characteristics identified as necessary for the item to perform its
safety function. When these methods cannot verify the critical
characteristics related to special processes and tests, certification
by the original equipment manufacturer may be an acceptable alternative
provided documented, verified traceability to the original equipment
manufacturer has been established and the purchaser has verified by
audit or survey that the original equipment manufacturer has
implemented adequate quality controls for the activity being certified.
For items with critical characteristics that can be verified for the
most severe or limiting plant application, the licensee might prefer to
identify and verify the item's critical characteristics to qualify that
item for all possible plant applications. For complex items that would
be purchased for specific plant applications, it may be appropriate to
address the acceptance criteria for each item individually.
Engineering involvement is important in either method because the
technical evaluation will identify the critical characteristics,
acceptance criteria, and the methods to be used for verification.
2. Inspection Findings
a. Failure to demonstrate that a like-for-like replacement item is
identical in form, fit, and function to the item it is replacing.
Part number verification is not sufficient because of the
probability of undocumented changes in the design, material, or
fabrication of commercial-grade items using the same part number.
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b. Failure to evaluate changes in the design, material, or
manufacturing process for the effect of these changes on safety
function performance (particularly under design basis event
conditions) of replacement items that are similar as opposed to
identical to the items being replaced.
c. Failure to ensure that items will function under all design
requirements. On some occasions, licensees only ensured that the
commercial-grade item would function under normal operation
conditions.
d. Failure to verify the validity of certificates of conformance
received from vendors not on the licensee's list of approved
vendors/ suppliers. An unverified certificate of conformance from
a commercial-grade vendor is not sufficient.
Discussion
A like-for-like replacement is defined as the replacement of an item
with an item that is identical. For example, the replacement item
would be identical if it was purchased at the same time from the same
vendor as the item it is replacing, or if the user can verify that
there have been no changes in the design, materials, or manufacturing
process since procurement of the item being replaced. If differences
from the original item are identified in the replacement item, then the
item is not identical, but similar to the item being replaced, and
evaluation is necessary to determine if any changes in design,
material, or the manufacturing process could impact the functional
characteristics and ultimately the component's ability to perform its
required safety function. If the licensee can demonstrate that the
replacement item is identical, then the licensee need not identify the
safety function or review and verify the design requirements and
critical characteristics.
Engineering involvement is necessary in the above activities. The
extent of this involvement is dependent on the nature, complexity, and
use of the items to be dedicated. Participation of engineering
personnel is appropriate in the procurement process, and product
acceptance, to develop purchase specifications, determine specific
testing requirements applicable to the products, and evaluate the test
results. When engineering personnel specify design requirements for
inclusion on the purchase documents for replacement components, they
need not reconstruct and reverify design adequacy for procurement
purposes, but need only ensure that the existing design requirements
(which may reference the original design basis) are properly translated
into the purchase order.
Reliance on part number verification and certification documentation is
insufficient to ensure the quality of commercially procured products.
Effective product acceptance programs have as elements, receipt and
source inspection, appropriate testing criteria, effective vendor
audits and surveillances (including witness/hold points as
appropriate), special tests and inspections, and post-installation
tests. Procedures and adequate qualifications and training for
implementing personnel are also necessary factors in successful
implementation.
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