Information Notice No. 89-56, Supplement 2: Questionable Certification of Material Supplied to the Defense Department by Nuclear Suppliers

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

                                July 19, 1991


Information Notice No. 89-56, SUPPLEMENT 2:  QUESTIONABLE CERTIFICATION
                                                 OF MATERIAL SUPPLIED TO THE
                                                 DEFENSE DEPARTMENT BY 
                                                 NUCLEAR SUPPLIERS


Addressees:

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

Purpose:

This information notice supplement is intended to alert addressees of 
additional information concerning a problem with the certification of 
material furnished by the Meredith Corporation, Pressure Vessel Nuclear 
(PVN), of Hillside, New Jersey, discussed in U.S. Nuclear Regulatory 
Commission (NRC) Information Notice (IN) 89-56 and IN 89-56, Supplement 1.  
It is expected that 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.

Description of Circumstances:

In NRC IN 89-56, the staff discussed a 27-count indictment rendered on 
May 4, 1989, by a Newark Federal Grand Jury charging PVN and Alloy & Carbon 
Steel Company Incorporated (Alloy) corporate officers with substituting 
commercial-grade steel for military-grade steel and fraudulently documenting 
the substitutions as meeting military specifications.  The notice indicated 
that the NRC was interested in obtaining information relevant to material 
supplied to nuclear utilities or vendors by PVN or Alloy in which 
discrepancies have been found.  The NRC is aware that a number of 
organizations have independently tested PVN material.  Some of the results 
of that testing were made available in NRC IN 89-56, Supplement 1.  The 
following discussion provides additional information that has been made 
available to the NRC.

Discussion:

In January 1991, William Lanza, President of PVN, pleaded guilty before U.S. 
District Court Judge Harold A. Ackerman in Newark, New Jersey, to charges 





9107120259 
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                                                  IN 89-56, Supplement 2 
                                                  July 19, 1991 
                                                  Page 2 of 3 


of conspiracy, mail fraud, and making false statements on test reports in 
connection with supplying steel to contractors working for the United States 
Navy.  Lanza admitted to charges of Federal conspiracy in connection with 
the making of false statements on test reports for material supplied to the 
Navy by PVN.  Lanza also admitted to providing false and incomplete 
documents to the U.S. Naval Investigative Service in response to a subpoena 
issued by the Department of Defense.  He was sentenced to 30 months in 
prison, 3 years probation and fined $20,599.  PVN was ordered to make 
restitution of $25,800.

In August 1990, a guilty plea was entered by Dean Lanza of PVN.  In 
December 1990, guilty pleas were entered by Hamilton Vazquez of PVN and 
Louis Mikosh and Thomas Syms of Alloy.  Dean Lanza was sentenced to 9 months 
in prison, 2 years probation, and fined $10,000.  Hamilton Vazquez was 
sentenced to 3 years probation and fined $5,050.  Louis Mikosh was sentenced 
to 20 months in prison, 3 years probation, and fined $20,599.  Thomas Syms 
was sentenced to 4 months in a halfway house, 5 years probation, and fined 
$10,000.  Alloy was ordered to make restitution of $25,800.

Attachment 1 contains copies of the press releases which were issued by the 
U.S. Department of Justice for the District of New Jersey.

The NRC has reviewed 1073 separate records on PVN material representing 504 
different heats provided by 41 primary manufacturers and supplied to 
23 organizations indicating a commercial nuclear end use.  Forty-eight 
records contained one or more property values which failed to meet the 
specification requirements which covered 29 heats of material and 
represented 5 percent of the total records.  Except for those previously 
reported in IN 89-56, Supplement 1, the nonconformances appear to represent 
minor deviations from the specifications.  PVN appears to have made a 
practice of altering the documents which they obtained from manufacturers.  
Such changes, when coupled with nonconforming tests of PVN material 
performed by utilities, suggest that the authenticity of data on PVN 
Certified Material Test Reports (CMTRs) may be questionable.

Recipients of this information may wish to evaluate PVN-supplied material to 
determine if it is suitable for applications that are important to safety.  
Addressees also may wish to consider this recent additional information in 
planning their activities relative to the validity of the certification of 
materials supplied by PVN.  The NRC remains particularly interested in 
receiving additional results from independent verification testing of 
material supplied by PVN. 
.

                                                  IN 89-56, Supplement 2 
                                                  July 19, 1991 
                                                  Page 3 of 3 


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 appropriate NRR project manager.




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


Technical Contacts:  Ramon Cilimberg, NRR
                     (301) 492-0945

                     U. Potapovs, NRR
                     (301) 492-0959


Attachments:
1.  Press Releases
2.  List of Recently Issued NRC Information Notices


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