Information Notice No. 89-56: 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 20, 1989
Information Notice No. 89-56: 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 is being provided to alert addressees to a possible
problem with the certification of material furnished by Meredith Corporation,
Pressure Vessel Nuclear (PVN) and Alloy & Carbon Steel Company, Incorporated
(ALLOY) of Hillside, New Jersey. 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:
On May 4, 1989, the U.S. Department of Justice, District of New Jersey, issued
information that corporate officers for PVN and ALLOY were indicted for their
alleged roles in selling commercial-grade steel as military-grade steel which
was used to build and repair U.S. Navy submarines and surface ships. The
27-count indictment rendered on May 4, 1989, by a Newark Federal Grand Jury,
charges the defendants, some of whom are presently employees of PVN, with
substituting commercial-grade steel for military-grade steel and fraudulently
documenting the substitutions as meeting military specifications. From April
1984 through August 1985 the defendants allegedly caused nonconforming steel
to be shipped to Department of Defense contractors. The defendants allegedly
falsely marked and stenciled steel, created false documentation bearing the
letterhead of various companies, falsely altered manufacturer issued certified
material test reports (CMTRs), caused fraudulent chemical and physical test
certificates to be prepared for tests that had not been performed, and
prepared false certificates of conformance (C of Cs) for steel that did not
conform to purchase requirements. Attachment I contains a copy of OVERT ACTS
from the indictment that identifies faulty documents, heat numbers, and
manufacturers' names.
8907140274
. IN 89-56
July 20, 1989
Page 2 of 3
Discussion:
During NRC inspections of PVN conducted the weeks of November 2, 1988 and
February 1, 1989, three examples of material supplied to ASME Section III
requirements without adequate basis were discovered. In all three cases PVN
purchased stock material and sold it as meeting the requirements of Section
III without performing the upgrade testing required by NCA-3867.4(e). In
addition, it was also noted that PVN had altered CMTRs received from American
Tank and Fabricating Company (ATF). On material ATF had purchased from an
ASME Quality Systems Certificate (QSC) holder as stock material and
subsequently sold to PVN, PVN had removed ATF's name from the "Sold To" and
"Shipped To" blocks of the CMTR and inserted PVN's name and address. Based on
the indication that the material was purchased directly from an ASME QSC
holder, the customer would not be looking for upgrade testing results nor
suspect the material was not in conformance with code requirements.
On June 13 and 14, 1989, Virginia Power conducted an audit of PVN. The audit
examined a sample of purchase orders which consisted of 16 safety-related
purchase orders, encompassing 30 individual line items of various types of
safety-related materials. The 16 safety-related purchase orders were issued
between September 1, 1988 and May 4, 1989. From the sample of 30 line items,
Virginia Power auditors determined that in 3 cases PVN purchased material from
unapproved suppliers and in 17 cases PVN supplied commercial grade material.
In all 20 cases, PVN certified that the material met all the requirements of
Virginia Power's purchase orders, including Appendix B to 10 CFR 50. However,
there is no indication that PVN took any action to determine that the
materials supplied were suitable for safety-related applications prior to
certifying the material met the requirements of Appendix B.
Addressees may wish to review nuclear procurements from these vendors to
ensure that appropriate bases exist for the use of PVN or ALLOY supplied
material. Further, addressees may wish to contact the steel mills identified
as the manufacturer of the procured materials to confirm traceability of the
material and to inform one of the NRC technical contacts listed below of any
materials identified as not originating from the manufacturer indicated in the
documentation or having material properties different from those indicated in
the documentation. The NRC is interested in obtaining information on material
supplied by PVN or ALLOY in which discrepancies have been found that are
similar to those described above or in the indictment described in Attachment
1. The NRC is particularly interested in discrepancies discovered as a result
of independent verification testing of chemical and mechanical properties and
information on recent procurements.
Addressee audits of material manufacturers and suppliers which include a
review of the basis for certifications provided by vendors and the supporting
tests and records of traceability can prevent problems such as those discussed
above. Addressees may wish to review the adequacy of previous vendor audits
and their general vendor approval process in light of Information Notice No.
88-35, "Inadequate Licensee Performed Vendor Audits" and the above
information.
. IN 89-56
July 20, 1989
Page 3 of 3
No specific action or written response is required by this information notice.
If you have any questions about this matter, please contact one of the techni-
cal contacts listed below or the Regional Administrator of the appropriate
regional office.
Charles E. Rossi, Director
Division of Operational Events Assessment
Office of Nuclear Reactor Regulation
Technical Contacts: Ramon Cilimberg, NRR
(301) 492-3220
Ed Baker, NRR
(301) 492-0959
Attachments:
1. Overt Acts
2. List of Recently Issued NRC Information Notices
. Attachment 2
IN 89-56
July 20, 1989
Page 1 of 1
LIST OF RECENTLY ISSUED
NRC INFORMATION NOTICES
______________________________________________________________________________
Information Date of
Notice No._____Subject_______________________Issuance_______Issued to_________
89-45, Metalclad, Low-Voltage 7/6/89 All holders of OLs
Supp. 1 Power Circuit Breakers or CPs for nuclear
Refurbished With Substandard power reactors.
Parts
89-55 Degradation of Containment 6/30/89 All holders of OLs
Isolation Capability by a or CPs for nuclear
High-Energy Line Break power reactors.
89-54 Potential Overpressurization 6/23/89 All holders of OLs
of the Component Cooling or CPs for nuclear
Water System power reactors.
89-53 Rupture of Extraction 6/13/89 All holders of OLs
Steam Line on High or CPs for nuclear
Pressure Turbine power reactors.
88-46, Licensee Report of 6/8/89 All holders of OLs
Supp. 3 Defective Refurbished or CPs for nuclear
Circuit Breakers power reactors.
89-52 Potential Fire Damper 6/8/89 All holders of OLs
Operational Problems or CPs for nuclear
power reactors.
89-51 Potential Loss of Required 5/31/89 All holders of OLs
Shutdown Margin During or CPs for nuclear
Refueling Operations power reactors.
88-88, Degradation of Westinghouse 5/31/89 All holders of OLs
Supp. 1 ARD Relays or CPs for nuclear
power reactors.
89-50 Inadequate Emergency 5/30/89 All holders of OLs
Diesel Generator Fuel or CPs for nuclear
Supply power reactors.
89-49 Failure to Close Service 5/22/89 All holders of OLs
Water Cross-Connect or CPs for nuclear
Isolation Valves power reactors.
______________________________________________________________________________
OL = Operating License
CP = Construction Permit
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