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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 . 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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