EVALUATION REPORT 

Inspector General’s Assessment of the 

Most Serious Management and Performance 

Challenges Facing NRC 

OIG-09-A-21 September 30, 2009 

All publicly available OIG reports (including this report) are accessible through 

NRC’s Web site at: 

http:/www.nrc.gov/reading-rm/doc-collections/insp-gen/ 
UNITED STATES 

NUCLEAR REGULATORY COMMISSION 

WASHINGTON, D.C. 20555-0001 

OFFICE OF THE 

INSPECTOR GENERAL 

 September 30, 2009 

MEMORANDUM TO: Chairman Jaczko 

FROM: Hubert T. Bell /RA/ 

Inspector General 

SUBJECT: INSPECTOR GENERAL’S ASSESSMENT OF THE MOST 

SERIOUS MANAGEMENT AND PERFORMANCE 

CHALLENGES FACING NRC (OIG-09-A-21) 

The Reports Consolidation Act of 2000 requires the Inspector General of each Federal 

agency to annually summarize what he or she considers to be the most serious 

management and performance challenges facing the agency and to assess the 

agency’s progress in addressing those challenges. In compliance with the act, 

I identified seven management and performance challenges confronting the Nuclear 

Regulatory Commission that I consider to be the most serious. 

Each of the seven challenges identified this year also appeared on my 2008 list. The 

single difference between the 2008 and 2009 lists is that the new list excludes prior 

challenge 3, Implementation of a risk-informed and performance-based regulatory 

approach. This challenge was included in my first list of challenges, issued to 

Congress in January 1998, and remained on the list each year since, with slight 

variations in wording. I removed the challenge from my list this year because the riskinformed and performance-based regulatory approach is now mature and reflected 

throughout the agency’s regulatory framework. 

We appreciate the cooperation extended to us during this evaluation. The agency 

provided comments on this report, which have been incorporated as appropriate. If 

you have any questions, please contact Stephen D. Dingbaum, Assistant Inspector 

General for Audits, at 415-5915 or me at 415-5930. 

Attachment: As stated 

 
Electronic Distribution

Edwin M. Hackett, Executive Director, Advisory Committee on Reactor 

 Safeguards 

E. Roy Hawkens, Chief Administrative Judge, Atomic Safety and 

 Licensing Board Panel 

Stephen G. Burns, General Counsel 

Brooke D. Poole, Jr., Director, Office of Commission Appellate Adjudication 

James E. Dyer, Chief Financial Officer 

Margaret M. Doane, Director, Office of International Programs 

Rebecca L. Schmidt, Director, Office of Congressional Affairs 

Eliot B. Brenner, Director, Office of Public Affairs 

Annette Vietti-Cook, Secretary of the Commission 

R. William Borchardt, Executive Director for Operations 

Bruce S. Mallett, Deputy Executive Director for Reactor 

 and Preparedness Programs, OEDO 

Martin J. Virgilio, Deputy Executive Director for Materials, Waste, Research, 

 State, Tribal, and Compliance Programs, OEDO 

Darren B. Ash, Deputy Executive Director for Corporate Management 

 and Chief Information Officer, OEDO 

Vonna L. Ordaz, Assistant for Operations, OEDO 

Kathryn O. Greene, Director, Office of Administration 

Patrick D. Howard, Director, Computer Security Officer 

Cynthia A. Carpenter, Director, Office of Enforcement 

Charles L. Miller, Director, Office of Federal and State Materials 

 and Environmental Management Programs 

Guy P. Caputo, Director, Office of Investigations 

Thomas M. Boyce, Director, Office of Information Services 

James F. McDermott, Director, Office of Human Resources 

Michael R. Johnson, Director, Office of New Reactors 

Michael F. Weber, Director, Office of Nuclear Material Safety and Safeguards 

Eric J. Leeds, Director, Office of Nuclear Reactor Regulation 

Brian W. Sheron, Director, Office of Nuclear Regulatory Research 

Corenthis B. Kelley, Director, Office of Small Business and Civil Rights 

Roy P. Zimmerman, Director, Office of Nuclear Security and Incident Response 

Samuel J. Collins, Regional Administrator, Region I 

Luis A. Reyes, Regional Administrator, Region II 

Mark A. Satorius, Regional Administrator, Region III 

Elmo E. Collins, Jr., Regional Administrator, Region IV 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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EXECUTIVE SUMMARY 

BACKGROUND

The Reports Consolidation Act of 2000 requires the Inspector 

General (IG) of each Federal agency to annually summarize what 

he or she considers to be the most serious management and 

performance challenges facing the agency and to assess the 

agency’s progress in addressing those challenges. 

PURPOSE

In accordance with the act, the IG at the U.S. Nuclear Regulatory 

Commission (NRC) updated what he considers to be the most 

serious management and performance challenges facing NRC. 

The IG evaluated the overall work of the Office of the Inspector 

General (OIG), the OIG staff’s general knowledge of agency 

operations, and other relevant information to develop and update 

his list of management and performance challenges. As part of the 

evaluation, OIG staff sought input from NRC’s Chairman, 

Commissioners, and management to obtain their views on what 

challenges the agency is facing and what efforts the agency has 

taken to address previously identified management challenges. 

RESULTS IN BRIEF

The IG identified seven challenges that he considers the most serious 

management and performance challenges facing NRC. The challenges 

identified represent critical areas or difficult tasks that warrant high-level 

management attention. 

The 2009 list of challenges reflects one change from the 2008 list: 

 Prior challenge 3, Implementation of a risk-informed and 

performance-based regulatory approach, was removed as a 

standalone challenge. This challenge was included in the IG’s 

first list of management challenges, issued to Congress in 

January 1998,

1

 and has remained on the list each year since, with 

slight variations in wording. Although this regulatory approach – 

which incorporates risk analysis into regulatory decisions so that 

NRC and licensee attention can be focused on areas of highest 

 

1

 In December 1997, prior to the Reports Consolidation Act of 2000, Congressman Armey 

requested that Inspectors General independently identify the 10 most serious management 

problems in their respective agencies to help Congress target key problem areas for attention. 

NRC’s IG complied with the request in January 1998. For subsequent lists, congressional 

members changed the word “problems” to “challenges.” The Reports Consolidation Act of 2000 

made this an annual reporting requirement for Federal Inspectors General. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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risk – is expected to continue evolving in the years ahead, the 

approach is now mature and reflected throughout the agency’s 

regulatory framework. Therefore, the IG removed the challenge 

from the 2009 list and, instead, addresses the issue in narrative 

about the other challenges, as appropriate. 

The chart that follows provides an overview of the seven 

most serious management and performance challenges as 

of September 30, 2009. 

Most Serious Management and Performance Challenges 

Facing the Nuclear Regulatory Commission * 

as of September 30, 2009 

(as identified by the Inspector General)

Challenge 1 Protection of nuclear material used for civilian purposes. 

Challenge 2 Managing information to balance security with openness and 

accountability. 

Challenge 3 Ability to modify regulatory processes to meet a changing 

environment, to include the licensing of new nuclear facilities. 

Challenge 4 Oversight of radiological waste. 

Challenge 5 Implementation of information technology and information 

security measures. 

Challenge 6 Administration of all aspects of financial management. 

Challenge 7 Managing human capital. 

*The most serious management and performance challenges are not 

ranked in any order of importance. 

CONCLUSION

The seven challenges contained in this report are distinct, yet 

interdependent relative to the accomplishment of NRC’s mission. 

For example, the challenge of managing human capital affects all 

other management and performance challenges. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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The agency’s continued progress in taking actions to address the 

challenges presented should facilitate achieving the agency’s 

mission and goals. 
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ABBREVIATIONS AND ACRONYMS 

CFR Code of Federal Regulations 

CIP Construction Inspection Program 

COL combined operating license 

CUI controlled unclassified information 

FAIMIS Financial Accounting and Integrated Management 

Information System 

FOIA Freedom of Information Act 

FY Fiscal Year 

IG Inspector General 

IT information technology 

ITAAC inspections, tests, analyses, and acceptance criteria 

MC&A material control and accounting 

NMMSS Nuclear Materials Management and Safeguards 

System 

NRC U.S. Nuclear Regulatory Commission 

NSTS National Source Tracking System 

OIG Office of the Inspector General 

ROP Reactor Oversight Process 

T&L Time and Labor 
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TABLE OF CONTENTS 

EXECUTIVE SUMMARY.........................................................................i 

ABBREVIATIONS AND ACRONYMS ....................................................v 

I. BACKGROUND .............................................................................1 

II. PURPOSE......................................................................................1 

III. EVALUATION RESULTS...............................................................1 

Challenge 1 Protection of nuclear material used for civilian 

purposes ........................................................................5 

Challenge 2 Managing information to balance security with 

openness and accountability..........................................9

Challenge 3 Ability to modify regulatory processes to meet a 

changing environment, to include the licensing 

 of new nuclear facilities................................................13 

Challenge 4 Oversight of radiological waste ....................................17 

Challenge 5 Implementation of information technology and 

information security measures .....................................19 

Challenge 6 Administration of all aspects of financial 

 management ................................................................21 

Challenge 7 Managing human capital..............................................25 

IV. CONCLUSION................................................................................28 

APPENDIX 

SCOPE AND METHODOLOGY...........................................................29 
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I. BACKGROUND 

On January 24, 2000, Congress enacted the Reports Consolidation 

Act of 2000, requiring Federal agencies to provide financial and 

performance management information in a more meaningful and 

useful format for Congress, the President, and the public. The act 

requires the IG of each Federal agency to annually summarize 

what he or she considers to be the most serious management and 

performance challenges facing the agency and to assess the 

agency’s progress in addressing those challenges. 

II. PURPOSE 

In accordance with the act’s provisions, the NRC IG updated what 

he considers to be the most serious management and performance 

challenges facing the agency. The IG evaluated the overall work of 

OIG, the OIG staff’s general knowledge of agency operations, and 

other relevant information to develop and update his list of 

management and performance challenges. 

In addition, OIG sought input from NRC’s Chairman, 

Commissioners, and management to obtain their views on what 

challenges the agency is facing and what efforts the agency has 

taken or planned to address previously identified management and 

performance challenges. 

III. EVALUATION RESULTS 

The NRC’s mission is to regulate the Nation’s civilian use of 

byproduct, source, and special nuclear materials to ensure 

adequate protection of public health and safety, promote the 

common defense and security, and protect the environment. Like 

other Federal agencies, NRC faces management and performance 

challenges in carrying out its mission. 

Determination of Management and Performance Challenges

Congress left the determination and threshold of what constitutes a 

most serious management and performance challenge to the 

discretion of the Inspectors General. As a result, the IG applied the 

following definition in identifying challenges:

 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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Serious management and performance challenges are mission critical areas or 

programs that have the potential for a perennial weakness or vulnerability that, 

without substantial management attention, would seriously impact agency 

operations or strategic goals. 

Based on this definition, in 2009, the IG revised his list of the most 

serious management and performance challenges facing NRC. 

The challenges identify critical areas or difficult tasks that warrant 

high-level management attention. The following chart provides an 

overview of the seven management challenges. The sections that 

follow the chart provide more detailed descriptions of the 

challenges, descriptive examples related to the challenges, and 

examples of efforts that the agency has taken or are underway to 

address the challenges. 

Most Serious Management and Performance Challenges 

Facing the Nuclear Regulatory Commission * 

as of September 30, 2009 

(as identified by the Inspector General)

Challenge 1 Protection of nuclear material used for civilian purposes. 

Challenge 2 Managing information to balance security with openness and 

accountability. 

Challenge 3 Ability to modify regulatory processes to meet a changing 

environment, to include the licensing of new nuclear facilities. 

Challenge 4 Oversight of radiological waste. 

Challenge 5 Implementation of information technology and information 

security measures. 

Challenge 6 Administration of all aspects of financial management. 

Challenge 7 Managing human capital. 

*The most serious management and performance challenges are not 

ranked in any order of importance. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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Changes to Management Challenges

The IG identified seven challenges that he considers the most serious 

management and performance challenges facing NRC. The challenges 

identify critical areas or difficult tasks that warrant high-level 

management attention. 

This year’s list of challenges reflects one change from last year’s list: 

 

 Prior challenge 3, Implementation of a risk-informed and 

performance-based regulatory approach, was removed as a 

standalone challenge. This challenge was included in the IG’s 

first list of management challenges, issued to Congress in 

January 1998,

2

 and has remained on the list each year since, with 

slight variations in wording. Although this regulatory approach – 

which incorporates risk analysis into regulatory decisions so that 

NRC and licensee attention and activities can be focused on 

areas of highest risk – is expected to continue evolving in the 

years ahead, the approach is now mature and reflected 

throughout the agency’s regulatory framework. Therefore, the IG 

removed the challenge from the 2009 list and, instead, addresses 

the issue in narrative about the other challenges, as appropriate. 

 

2

 See footnote 1 for a description of management challenges lists developed in response to 

congressional requests prior to the Reports Consolidation Act of 2000. 
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CHALLENGE 1 

Protection of nuclear material used for civilian purposes. 

NRC is authorized to grant licenses for the possession and use of 

radioactive materials and establish regulations to govern the 

possession and use of those materials. 

NRC’s regulations require that certain material licensees have 

extensive material control and accounting (MC&A) programs as a 

condition of their licenses. All other material licensees (including 

those requesting authorization to possess small quantities of 

special nuclear materials) must develop and implement plans that 

demonstrate a commitment to accurately control and account for 

radioactive materials. 

NRC may relinquish its authority to regulate certain radioactive 

materials and limited quantities of special nuclear material to 

States. After these States demonstrate that their regulatory 

programs are adequate to protect public health and safety and are 

compatible with NRC’s program, the States enter into an 

agreement assuming this regulatory authority from NRC and are 

called Agreement States. 

The issues facing NRC and the agency’s actions to address each 

issue include the following: 

Issue: Implement the National Source Tracking System (NSTS), 

Web-Based Licensing,3 and the Licensing Verification System4 to 

ensure the accurate tracking and control of byproduct material, 

especially those materials with the greatest potential to impact 

public health and safety. 

Action: NSTS became operational early in 2009. 

Furthermore, the agency is working to meet its goal of 

getting Web Based Licensing on line by late 2009 or early 

2010. NRC continues to work on the development of the 

Licensing Verification System. 

Issue: Ensure that radioactive material is adequately protected to 

preclude its use for malicious purposes. 

 

3

 A Web-Based Licensing system is intended to serve as a repository for nationwide license 

information from both NRC and Agreement States. 

4

 A License Verification System is planned to interface with NSTS and the Web-Based Licensing 

system to provide secure, online verification of license and inventory information. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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Action: NRC staff recently proposed a final rulemaking to 

amend its regulations to expand the current NSTS to include 

Category 3 materials. 5 The staff in its proposal concluded 

that improving the accountability of certain lower level 

sources could reduce the possibility of these sources being 

aggregated to higher activity levels for potential malevolent 

use. In June 2009, the Commission was unable to reach a 

majority decision on the staff proposal to expand NSTS to 

include additional specific licensees that possess sealed 

sources containing Category 3 threshold quantities of 

radioactive material. Therefore, the proposed action was not 

approved.

Issue: Ensure adequate inspections to verify licensees’ 

commitments to their MC&A programs. 

Action: NRC is enhancing its inspection programs. 

Currently, in response to an OIG audit,6

 NRC is working on 

documenting how risk insights were applied to its reactor 

MC&A program to determine what types and quantities of 

materials must be inspected and the frequency of those 

inspections. Fuel cycle facility MC&A inspections have 

become a shared responsibility between the Office of 

Nuclear Material Safety and Safeguards and Region II. The 

agency is training staff to ensure that there are two MC&A 

inspectors in headquarters and two in Region II. 

Issue: Ensure reliable accounting of special nuclear materials in 

the NRC and Department of Energy’s jointly managed Nuclear 

Materials Management and Safeguards System (NMMSS). 

Action: NRC has been working since 2003 to resolve 

MC&A issues in response to OIG-03-A15, Audit of NRC’s 

Regulatory Oversight of Special Nuclear Materials. On 

February 7, 2008, NRC approved a final rule that amended 

its regulations in Title 10, Code of Federal Regulations (10 

CFR), Parts 40, 72, 73, 74, and 150, to improve the 

accuracy of material inventory information maintained in 

NMMSS. The amendments, effective January 1, 2009, 

lower the threshold of reportable quantities of special nuclear 

material and certain source materials to NMMSS, modify the 

 

5

 Consistent with guidelines established by the International Atomic Energy Agency, NRC 

categorizes nuclear materials into five groups based on radioactivity level. Category 1 materials 

pose the greatest potential for radiological consequences and Category 5 the least. 

6

 OIG-03-A-15, Audit of NRC’s Regulatory Oversight of Special Nuclear Materials (March 23, 

2003). 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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types and timing of submittals to NMMSS, and require 

licensees to reconcile any material inventory discrepancies 

that NRC identifies in the NMMSS database. NRC 

anticipates that these changes to NMMSS reporting 

requirements will improve the accuracy of material balance 

(inputs/outputs) information. 

Issue: Ensure that Agreement State programs are adequate to 

protect public health and safety and the environment and are 

compatible with NRC’s program. 

Action: NRC conducts about eight reviews per year of 

Agreement State radiation control programs under NRC’s 

Integrated Materials Performance Evaluation Program using 

performance indicators to ensure that public health and 

safety is being adequately protected and that Agreement 

State programs are compatible with NRC’s program. NRC 

plans to perform a self-assessment of its evaluation program 

by July 2010. 
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CHALLENGE 2 

Managing information to balance security with openness and 

accountability.

NRC employees create and work with a significant amount of 

sensitive information that needs to be protected. Such information 

includes sensitive unclassified information and classified national 

security information contained in written documents and various 

electronic databases. 

In addressing continuing terrorist activity worldwide, NRC 

continually reexamines its information management policies and 

procedures. NRC faces the challenge of attempting to balance the 

need to protect sensitive information from inappropriate disclosure 

with the agency’s goal of openness in its regulatory processes. 

Over the past year, NRC has made various efforts to improve 

public access to information while protecting sensitive information, 

including security-related information, from inappropriate 

disclosure. 

The issues facing NRC and the agency’s actions to address each 

issue include the following: 

Issue: Be responsive to the numerous information requests from 

State and local governments, as well as the public, to ensure 

openness and accountability within the resource constraints of the 

agency. 

Action: The staff have conducted a number of stakeholder 

outreach efforts to include public meetings on specific 

regulatory issues and with elected officials regarding issues 

at facilities within their jurisdiction. 

Issue: Manage information in accordance with new Federal 

Government policies for designating, marking, safeguarding, and 

disseminating controlled unclassified information (CUI). 

Action: In May 2008, the White House issued a Presidential 

Memorandum conveying requirements for the designation 

and sharing of controlled unclassified information. The 

memorandum also established a framework for designating, 

marking, safeguarding, and disseminating terrorism-related 

CUI that originates in departments and agencies. Under the 

CUI framework, all CUI will be categorized into one of three 

combinations of safeguarding procedures and dissemination 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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controls, which will be indicated through one of three 

identified markings: (1) Controlled, Standard; (2) Controlled, 

Specified; and (3) Controlled Enhanced, Specified. 

The CUI framework was created to standardize “Sensitive 

But Unclassified” practices and thereby improve information 

sharing. NRC has until 2013 to implement new CUI policies 

and procedures. Safeguards Information7 is exempt from 

the new regulations; therefore, NRC will continue to manage 

Safeguards Information according to current policies. 

Issue: Ensure that sensitive information is handled in accordance 

with agency policies and procedures for public disclosure. 

Action: NRC recognized weaknesses in contracts 

regarding personal information such as social security 

numbers and dates of birth, and implemented the use of a 

contract clause for protecting personal information that may 

be provided, collected, used, possessed, or processed in the 

course of performing work under an NRC contract. 

Action: NRC implemented new Freedom of Information Act 

(FOIA) procedures based on guidelines issued in January 

2009. In a memorandum to heads of executive departments 

and agencies, the Attorney General instructed Government 

workers to apply "a presumption of disclosure" when 

handling FOIA requests. According to the new guidelines, 

agencies also need to take affirmative steps to make 

information public and not wait for specific requests from the 

public. 

Action: In April 2009, NRC issued Management Directive 

3.17, NRC Information Quality Program, to implement the 

NRC Information Quality Program, and thereby ensure the 

quality of information it relies on for decisionmaking or 

 

7

 Safeguards Information is a special category of sensitive unclassified information authorized by 

Section 147 of the Atomic Energy Act of 1954, as amended, to be protected. Although 

Safeguards Information is sensitive unclassified information, it is protected similar to Government 

classified confidential information and significantly more than other sensitive unclassified 

information. Disclosure of Safeguards Information could reasonably be expected to have a 

significant adverse effect on the health and safety of the public and/or the common defense and 

security by significantly increasing the likelihood of theft, diversion, or sabotage of materials or 

facilities subject to NRC jurisdiction. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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disseminates to the public. The directive includes guidance 

on how to make an information correction request and a 

description of the NRC process for processing Information 

Correction Requests and appeals.

 

NRC also revised Management Directive 3.4, Release of 

Information to the Public, to reflect current guidance on the 

timing of release of documents to the public, add 

consolidated guidance on the withdrawal of documents from 

the Agencywide Documents Access and Management 

System Public Library, and reflect the agency’s revised 

policy on protection and disclosure of information. As part of 

the revision, NRC separated from the Directive and placed 

on NRC’s internal Web site specific guidance for staff 

concerning which documents should routinely be released to 

the public. Placement of this guidance on the Web is 

intended to allow for frequent updating by all offices and 

regions. 

Issue: Provide external stakeholders with clear and accurate 

information about regulatory programs and facilitate public 

participation in the regulatory process. 

Action: The staff solicited public input concerning how NRC 

could increase public access to security information (e.g., 

security inspection reports) and held four public meeting 

around the country to acquire opinions. This information 

was considered by the NRC staff in preparing SECY-08-

0185, Options for Security Openness, Transparency, and 

Reactor Oversight Process Improvements, which was 

presented to the Commission in late 2008. The Commission 

reviewed the three options presented in SECY-08-0185, two 

of which would have made more security information 

available to the public, and considered the staff’s 

recommendation for one of those two options. The 

Commission was unable to reach a majority decision on the 

staff’s recommendation; therefore, the proposed action was 

not approved.

Issue: Review and strengthen programs to protect licensee, 

vendor, and Government-owned assets (e.g., facility designs, 

technology descriptions, dual use material and components, 

classified information) from compromise by foreign sources and 

industrial espionage and increase awareness of the relationship of 

these assets to the Nation’s economic and industrial base and 

energy infrastructure. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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Action: NRC has recognized the need to ensure 

technological data involving licensee, vendor, and 

Government-owned assets is fully protected against 

potential loss to adversaries. NRC has promulgated orders 

that provide additional security measures for the protection 

of these assets. 

NRC employees and contractors are required to have a 

baseline level of security awareness upon entry on duty and 

the receipt of a security clearance. Others, depending on 

their job and involvement in the creation and use of 

protected information, are provided various "role based" 

training programs, such as classifier's training, training for 

administrative personnel, declassification training, Secret 

Internet Protocol Router Network users training, and 

Sensitive Compartmented Information Access training. The 

training is layered, targeted, and recurring for those who 

have specific responsibilities for various types of protected 

information. 

In addition, NRC has increased its information security 

awareness through the issuance of a variety of agencywide 

announcements informing staff of the methods employed by 

those targeting NRC information systems and the 

corresponding need for employees to heighten their 

computer security information protection posture. 
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CHALLENGE 3 

Ability to modify regulatory processes to meet a changing environment, to 

include the licensing of new nuclear facilities. 

NRC faces the challenge of maintaining its core regulatory 

programs while adapting to changes in its regulatory environment. 

NRC must address a growing interest in licensing and constructing 

new nuclear power plants to meet the Nation’s increasing demands 

for energy production. As of June 2009, NRC had received 18 

Combined Operating License (COL) applications. NRC expects to 

receive an additional five COL applications through FY 2011. 

While responding to the emerging demands associated with 

licensing and regulating new reactors, NRC must maintain focus 

and effectively carry out its current regulatory responsibilities, such 

as inspections of the current fleet of operating nuclear reactors and 

fuel cycle facilities. NRC intends to increase its safety focus on 

licensing and oversight activities through risk-informed and 

performance-based regulation.8

The challenges facing NRC and the agency’s actions to address 

each challenge include the following: 

New Facilities 

Issue: Implement the new Construction Inspection Program (CIP). 

This includes (1) risk-informing CIP activities to ensure the safe 

operation of newly constructed nuclear facilities and (2) ensuring 

that the NRC staff has the necessary knowledge and skill to 

successfully implement the CIP. 

Action: The Office of New Reactors has developed the new 

CIP in accordance with 10 CFR Part 52. The newly 

developed inspections, tests, analyses, and acceptance 

criteria (ITAAC) have been integrated into the Part 52 

licensing process to create a design-specific, pre-approved 

set of performance standards that the licensee must meet 

and that the Commission must find have been met, before 

the licensee can load fuel and operate the plant. 

 

8

 Risk-informed performance-based regulation incorporates risk analysis into regulatory 

decisions. This approach is intended to improve the regulatory process by focusing both NRC 

licensee attention and activities on the areas of highest risk. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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Additionally, the agency has issued and revised a number of 

Inspection Manual Chapters and procedures to implement 

the new ITAAC process. 

NRC has revised Inspection Manual Chapter 1252, 

Construction Inspector Training and Qualification Program,

to ensure that the agency is effectively preparing inspectors 

to implement the new CIP. The agency will monitor the 

effectiveness of the training program as inspections of the 

new construction projects begin. 

Issue: As the public’s demand for new energy sources continues, 

NRC must ensure that the process for reviewing applications for 

new facilities focuses on safety and effectiveness. 

Action: NRC’s preparations have been focused on issuing 

reactor design certifications, revising the regulation that 

governs early site permits, and engaging in ongoing 

interactions with nuclear plant designers and utilities 

regarding prospective new reactor applications and licensing 

activities. In April 2009, the Office of New Reactors 

developed a set of goals with the purpose of enhancing the 

agency’s ability to plan and implement its reviews more 

effectively in a dynamic environment resulting from changes 

in the applicants' business strategies. 

NRC is taking a "design-centered review approach" to 

optimize the COL application review process. Part of the 

license review process includes conducting performancebased vendor inspections and quality assurance/quality 

control audits. 

Existing Fleet

Issue: NRC’s license renewal and power uprate review processes 

must effectively focus on an applicant’s ability to ensure the 

continued safe operation of the plant. 

Action: For planning purposes, NRC continues to work with 

plant licensees to develop a schedule of anticipated requests 

for license renewals and power uprates. The agency has 

also implemented a number of recommendations to improve 

the license renewal review and power uprate processes to 

include closer management oversight. For license renewal 

reviews, the agency has updated report-writing guidance to 

include management expectations and report-writing 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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standards. For power uprate reviews, the agency has 

developed a training module for technical reviewers and 

project managers that is specifically focused on writing or 

contributing to a safety evaluation. 

Issue: Respond to a heightened public focus on license renewals 

resulting in contested hearings. 

Action: NRC has open dialogs with the industry, licensees, 

and stakeholders, and appropriate comments have been 

incorporated into new inspection procedures. Additionally, 

the license renewal process allows stakeholders to request a 

hearing in order to present their concerns. 

Issue: Ensure the ability to identify emerging operating and safety 

issues at all plants including issues associated with license renewal 

and power uprate; consistently apply regulatory and review 

changes in response to these emerging issues across the existing 

fleet of reactors. 

Action: NRC continues to make changes to its regulatory 

programs based on emerging operational and safety issues 

related to license renewal and power uprate. For example, 

as a result of identified weaknesses in the power uprate 

program, Inspection Procedure 71004 was revised to 

provide additional guidance on inspection planning, 

implementation, and documentation. Annually, agency staff 

communicate the status of the license renewal and power 

uprate programs to the Commission. 

Issue: Establish and maintain effective, stable, and predictable 

regulatory programs or policies for all programs. 

Action: NRC continues to interface with stakeholders, 

develop regulatory policy, update rules and technical 

guidance, provide technical leadership and management for 

the Reactor Oversight Process (ROP), and support the 

development of programmatic changes when needed. 

Additionally, the ROP features an annual assessment 

process which is used to revise the process as necessary. 
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CHALLENGE 4 

Oversight of radiological waste.

NRC regulates spent nuclear fuel generated from commercial 

nuclear power reactors, which is referred to as high-level 

radioactive waste. NRC faces significant issues involving the 

potential licensing of the proposed Yucca Mountain repository for 

storing high-level radioactive waste. Additional challenges in the 

high-level waste area include the interim storage of spent nuclear 

fuel, certification of storage and transportation casks, and the 

oversight of decommissioned reactors and other nuclear sites. 

Additionally, the amount of low-level waste continues to grow; 

however, no new disposal facilities have been built since the 1980s 

and unresolved issues will multiply as the once-operational disposal 

facilities shut down. 

The challenges facing NRC and the agency’s actions to address 

each challenge include the following: 

Issue: Address increasing quantities of radiological waste 

requiring interim or permanent disposal sites. 

Action: NRC developed and implemented a risk-informed 

decisionmaking framework in connection with a wide range 

of nuclear waste storage issues. The NRC has conducted 

reviews using the framework for dry cask storage systems 

and concluded that such systems provide a safe means to 

store spent nuclear fuel with exceedingly low risk. NRC has 

met with Agreement States and industry to discuss guidance 

on interim storage of Class B/C waste.9 Stakeholder 

outreach is an integral part of NRC’s low level waste 

strategic assessment. 

Issue: Address issues regarding the license application to 

construct a high-level radioactive waste repository at Yucca 

Mountain. 

Action: The NRC is continuing to review the Yucca 

Mountain license application submitted by the Department of 

Energy in June 2008, and is conducting high-level waste 

licensing activities to ensure public health and safety and 

protection of the environment. Due to the unprecedented 

 

9

 Classes A, B, and C radioactive waste present increasing levels of risk of disposal, with Class C 

waste posing the greatest risk. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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number of contentions filed, the Department of Energy’s 

decision not to submit the required Environmental Impact 

Statement, and the staff’s limited resources, the agency has 

stated that the review proceedings will not meet the 10 CFR 

Part 2, Appendix D schedule. In 2009, NRC issued the final 

requirements in 10 CFR Part 63 to align agency regulations 

to new Environmental Protection Agency standards for 

radiation protection at a high-level waste repository. 

Issue: Oversight of low-level waste disposal, including low-level 

radioactive waste disposal sites. 

Action: NRC modified Inspection Procedure 84900 to 

address long-term storage of Class B and C waste. As 

recommended in the Low-Level Waste Strategic 

Assessment, NRC issued Regulatory Issue Summary 2008-

32, which consolidated previous NRC low-level waste 

guidance and communicated to licensees that the NRC's 

staff position continues to be that low-level waste storage 

must meet NRC requirements and that when constructing 

new low-level waste storage facilities the regulations for 

evaluating proposed changes to facilities must be met. 

Issue: Oversight of nuclear waste issues associated with the 

decommissioning and cleanup of nuclear reactor sites and other 

facilities. 

Action: NRC continues to hold public meetings with 

stakeholders and licensees to explore safe and secure 

storage options associated with decommissioning of plants, 

such as transitioning from spent pool storage to dry cask 

storage. NRC continues to oversee the 14 power reactors 

currently undergoing decommissioning. NRC staff published 

NUREG-1307, Report on Waste Burial Charges, which 

provides updated low-level waste disposal costs for 

reference pressurized water reactor and boiling water 

reactor based on estimated disposal volumes. 
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CHALLENGE 5 

Implementation of information technology and information security 

measures.

NRC needs to continue upgrading and modernizing its information 

technology (IT) and security capabilities both for employees and for 

public access to the regulatory process. Recognizing the need to 

modernize, the Office of Information Services established goals to 

improve the productivity, efficiency, and effectiveness of agency 

programs and operations, and enhance the use of information for 

all users inside and outside the agency. NRC also needs to ensure 

that system security controls are in place to protect the agency’s 

information systems against misuse. 

The issues related to this challenge and the agency’s actions to 

address each issue include the following: 

Issue: Upgrade and manage IT activities to improve the 

productivity, efficiency, and effectiveness of agency programs and 

operations. 

Action: A specialized team reporting to the Director of the 

Office of Information Services Infrastructure and Computer 

Operations Division was established. This team is 

responsible for planning and coordination activities to ensure 

the agency’s IT infrastructure is sufficient to support growth 

and program needs. 

Action: In the second quarter of FY 2009, the Office of 

Information Services hosted a 1-day IT summit for NRC 

offices and regions to engage in discussions with offices and 

regions to provide a better understanding of the agency’s IT 

program, raise an appreciation for the necessary and crucial 

planning needed to properly execute technology projects, 

whether they are led from a program office or the Office of 

Information Services, and to verify the current plans and 

directions for technology modernization across the agency. 

A variety of presentations enhanced understanding and 

encouraged discussion of IT project interrelationships and 

explained the need for a clear, agreed-upon strategy and 

path forward on all agency IT projects. 

Action: An aggressive implementation schedule was 

developed to upgrade the existing IT environment and to 

bring new technologies to NRC. Some of the projects under 
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20

development include strategies, methods, and tools used to 

capture, manage, store, preserve, and deliver content and 

documents related to organizational processes. 

Issue: Provide laptop computers with enhanced functionality, 

security, and support. 

Action: An agency laptop standard and security policy was 

developed and published on the NRC intranet and 

distributed via an announcement. The Customer Support 

Center offers encrypted thumb drives as well as a laptop 

loaner program. Standard policies for the use of commercial 

wireless devices, services, and technologies have also been 

implemented. The IT infrastructure was expanded to 

support 1,000 Blackberry devices. 

Issue: Ensure that information systems and assets are protected. 

Action: The Computer Security Office has taken action on 

identified vulnerabilities. Such actions include (1) certifying 

and accrediting 89 percent of the agency’s systems that are 

reported to the Office of Management and Budget under the 

agency’s Federal Information Security Management System, 

(2) initiating a continuous monitoring system to evaluate IT 

security controls of agency IT systems to provide assurance 

that systems remain secure after having been authorized to 

operate, and (3) publishing IT security policy to address 

current agency needs to include encryption of data at rest, 

encryption of data in transmission, and use of thumb drives. 

Action: The agency is providing a secure network for 

authorized users to access safeguards information 

documents electronically. This system will cut down on the 

need to print documents and will enable the management 

and collaboration of safeguards documents in a centralized 

electronic document management system. 

Issue: Ensure that plans for a cyber security inspection program 

are developed and implemented. 

Action: The staff plans to develop an inspection procedure 

for conducting cyber security inspections at nuclear power 

plants and hold training for NRC cyber security inspectors. 

The inspections are planned to be conducted between 

calendar year 2012 and 2016.
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CHALLENGE 6 

Administration of all aspects of financial management.

NRC management is responsible for establishing and maintaining 

effective internal controls and financial management systems that 

meet the objectives of several statutes including the Federal 

Managers’ Financial Integrity Act. This act mandates that NRC 

establish controls that reasonably ensure that (1) obligations and 

costs comply with applicable law; (2) assets are safeguarded 

against waste, loss, unauthorized use, or misappropriation; and 

(3) revenues and expenditures are properly recorded and 

accounted for. This act encompasses program operational, and 

administrative areas, as well as accounting and financial 

management. 

In addition, NRC’s management of its expanded grant program 

must be conducted in accordance with Federal regulations, which 

includes ensuring that funds are distributed and used as intended. 

 

The issues related to this challenge and the agency’s actions to 

address each issue include the following: 

Issue: Replace the agency’s current financial systems, which are 

obsolete, overly complex, and inefficient. 

Action: On May 8, 2009, the Chief Financial Officer 

announced that the agency had selected Momentum 

Financials as the software for the Financial Accounting and 

Integrated Management Information System (FAIMIS) 

implementation project. In June 2009, the agency began the 

configuration and integration phase of the project. The 

planned “go-live” date is October 1, 2010. To ensure that 

FAIMIS performs as intended, the agency will conduct final 

user acceptance testing and end-to-end testing in parallel 

with the NRC legacy systems during the 6 months prior to 

the October “go-live” date. 

Action: On July 20, 2009, NRC implemented e-Travel, a 

governmentwide initiative to improve travel operations and 

management. The paperless system automates travel 

documentation and approval, funds certification, and booking 

of travel reservations. Currently, e-Travel includes local and 

temporary duty travel. The agency plans to implement 

specialized travel, such as foreign and premium class travel, 

by December 2010. 
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Action: NRC plans to implement an upgrade to the Time 

and Labor System (T&L) during the second quarter of 

FY 2010. The upgrade will provide a modern, Web-enabled 

version of the existing PeopleSoft T&L software. The 

system will also provide the capability for electronic workflow 

and approval of employee timesheets. 

Issue: Respond to Commission direction and implement 

recommendations of the Advisory Group on Budget Formulation 

and Financial Plan Reporting (Advisory Group). This issue 

encompasses both budget formulation and budget execution. 

Action: In response to direction from the Commission to 

improve the agency’s budget formulation process, the 

agency has undertaken efforts to implement a more topdown, programmatic-based budget process. Improvements 

include an update of the budget structure, which is being 

implemented in a two-phased approach. The agency is 

identifying product lines and specific products for each 

product line during formulation of the FY 2011 and 2012 

budgets, respectively. The ultimate goal of the budget 

structure is to integrate budget formulation, execution, and 

performance information to support the assessment of the 

efficiency and effectiveness of agency programs, products, 

and activities. 

Action: Based on the Advisory Group’s reviews and initial 

recommendations, the Office of the Chief Financial Officer 

(OCFO) and the Office of the Executive Director for 

Operations (OEDO) made a number of improvements to the 

FY 2009 budget execution process. These improvements 

include the CFO/EDO periodic budget briefings, an earlier 

mid-year review exercise, increased focus on identifying and 

processing deobligations, quarterly Advanced Procurement 

Plan updates, and the use of IT to enhance communication 

and efficiency. A recent Advisory Group report and 

Commission direction included recommendations for 

additional improvements to the budget execution process. In 

general, the level of process maturity for budget execution 

lags behind that of budget formulation by a few years. 

Additional challenges in this area may result from possible 

future Continuing Resolutions, which can impact the timing 

of receipt of future appropriations. 

Issue: Manage the agency’s expanded grant program to ensure 

funds are efficiently and effectively distributed and used as 

intended. 
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Action: In response to legislative and congressional 

direction over the past several years, NRC has initiated and 

implemented a new education grant program. In FY 2007, 

NRC was authorized to distribute $5M in education grants, 

and for both FY 2008 and 2009, this figure increased to $20 

million. Prior to FY 2007, NRC’s financial assistance 

program was much smaller; for example, NRC provided 

about $1.5 million in assistance during FY 2006, and 

$564,000 in FY 2005. To implement its expanded grant 

program, NRC has hired several grant experts from other 

Federal agencies and is working to establish and document 

a process for announcing grants, reviewing applications, and 

administering these types of grants. NRC also is conducting 

a Lean Six Sigma10 review of the agency’s process for 

awarding grants to reduce the overall time for processing 

grants. Another Lean Six Sigma goal is to implement a 

formal, electronic tracking and reporting system that 

minimizes data inconsistencies. 

In addition to the issues noted above, the agency has taken 

several steps to meet the challenge of administering all 

aspects of financial management. Those steps include 

completing the requirements to receive a certification and 

accreditation over the License Fee Billing System, instituting 

a new process to estimate the accounts payable balance, 

evaluating the expansion of the cross-servicing effort to 

other NRC financial activities, and streamlining the financial 

reports preparation process for account reconciliation and 

financial statement generation. 

 

10 Lean Six Sigma is a methodology for improving business processes that combines the 

strategies and tools from two other business process improvement methodologies 

focused on (1) reducing process time and resources by eliminating unnecessary delays 

and steps, and (2) identifying and reducing specific sources of process variation. 

Combining these two complimentary methodologies, in conjunction with a successful 

implementation, is thought to result in a process that is faster, takes less resources, is 

more consistent, and, therefore, more predictable. 
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CHALLENGE 7 

Managing human capital. 

NRC’s human capital needs are changing due to the receipt of 

applications to construct and operate the next generation of nuclear 

reactors and to increase the number of fuel cycle facilities. To 

effectively manage human capital as these changes progress, while 

continuing to accomplish the agency's mission, NRC must continue 

to implement the following initiatives: 

 Timely personnel security adjudication. 

 Space planning. 

 Recruitment, training, and knowledge management. 

 Optimal use of resources. 

The issues related to this challenge and the agency’s actions to 

address each issue include the following: 

Issue: Timely personnel security adjudication. Work start dates for 

NRC employees, contractors, and licensees are frequently delayed 

for months at a time due to the time-consuming personnel security 

adjudication process currently in place for granting access 

authorization. 

Action: The agency is reviewing its hiring process for 

external applicants, which includes the entire hiring and 

security process that occurs from identification of an active 

vacancy through the entrance on duty date, and plans to 

develop recommendations to expedite the process during 

FY 2010. 

Action: In accordance with Executive Order 13467, 

Reforming Processes Related to Suitability for Government 

Employment, Fitness for Contractor Employees, and 

Eligibility for Access to Classified National Security 

Information dated June 30, 2008, NRC has developed 

reciprocity processes and procedures to accept applicable 

investigations and adjudications conducted by other Federal 

agencies. 

Action: The HR Recruitment Activity Tracking System was 

modified to include security processing and adjudication 

status information. Reports from this system are shared with 

the program offices to keep managers informed of the status 

of their new hires. 
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Issue: Space planning. NRC must continue to accomplish the 

agency's mission and communicate effectively with staff located in 

multiple office locations. 

Action: NRC is implementing a Headquarters Strategic 

Housing Plan designed to meet space needs through 

FY 2013. The agency expects to begin consolidating staff 

by occupying a new permanent building in close proximity to 

the White Flint Complex in FY 2012. Furthermore, most 

NRC regional offices are seeking new office space to 

accommodate additional staff in order to meet increased 

workload demands. 

Action: To ensure the agency maintains its sense of one 

community while employees are in multiple locations, a 

Staying Connected Working Group that includes 

representatives from various NRC Offices has been meeting 

regularly since 2008. Its role is to confirm that employees in 

interim buildings are receiving the services they need to 

perform their work and maintain workplace satisfaction. 

Among other accomplishments, the working group has 

facilitated onsite demonstrations of virtual meeting service 

for employees in interim buildings and arranged to increase 

shuttle service among headquarters buildings. The group 

also is looking at the uses of videoconferencing and other 

electronic methods to facilitate connectivity, and it is 

developing a “Staying Connected” Web page. 

Action: On January 1, 2009, Region III acquired an 

additional 11,028 square feet of leased office space to 

consolidate offices and improve the readiness and 

capabilities by further enhancing the integration of safety and 

security with key emergency and communications systems. 

Issue: Recruitment, training, and knowledge management. NRC 

must continue to address anticipated increased workload demands 

and retirements. 

Action: NRC is refining the agency’s human capital 

program through the following initiatives: (1) streamlining 

and enhancing the hiring process through use of emerging 

technologies such as the centralized hiring tools available 

through the USAJobs.Gov Web site and implementation of 

Lean Six Sigma process change recommendations; (2) 

refining work life programs intended to improve employee 

satisfaction and wellness; (3) implementing a Leaders 
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Academy that provides contemporary management and 

leadership training and continued development to current, 

future and potential NRC leaders; and (4) using advanced 

training methods to improve skills, target individual learning 

styles, reduce travel, and reduce time to competency. 

Action: NRC is implementing knowledge management 

strategies11 that include mentoring, early replacement hiring, 

and rehiring annuitants with or without use of a pension 

offset as applicable.12 The agency also has developed a 

knowledge management Web site, expressly for the purpose 

of retaining knowledge before key employees are promoted 

or retire. 

Action: In response to legislative and congressional 

direction, NRC recently implemented a $20-million per year 

education grant program to support and develop the 

educational infrastructure necessary to allow the Nation to 

safely move its nuclear energy initiatives forward. Funds are 

used to support courses and curricula relevant to careers in 

the nuclear field and to provide scholarships, fellowships, 

and faculty development to benefit the nuclear sector. While 

these grants are expected ultimately to benefit the entire 

nuclear profession by increasing the pool of competent, 

qualified workers to work in the nuclear field, NRC also 

benefits from an increased applicant pool from which to 

draw. 

Issue: Optimize utilization of resources to address the change in 

agency workload resulting from various states becoming 

Agreement States. 

Action: Regional and program offices are working 

cooperatively within the budget process to assure resources 

are allocated to address changing workloads. The agency 

has also been evaluating the impacts on projected workload 

over the next several years. 

 

11 Knowledge management involves capturing critical information and making the right 

information available to the right people at the right time to assure that knowledge and experience 

of the current staff is passed on to the next generation of NRC staff. 

12 This flexibility allows NRC to rehire a retiree to fill a position at full pay if the agency has 

experienced difficulty in filling a position, or if a temporary emergency exists. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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IV. CONCLUSION 

The seven challenges contained in this report are distinct, yet are 

interdependent to accomplishing NRC’s mission. For example, the 

challenge of managing human capital affects all other management 

and performance challenges. 

The agency’s continued progress in taking actions to address the 

challenges presented should facilitate achieving the agency’s 

mission and goals. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC 

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Appendix 

SCOPE AND METHODOLOGY 

This evaluation focused on the IG’s annual assessment of the most 

serious management and performance challenges facing the NRC. 

The challenges represent critical areas or difficult tasks that warrant 

high level management attention. To accomplish this work, the 

OIG focused on determining (1) current challenges, (2) the 

agency’s efforts to address the challenges during FY 2009, and 

(3) future agency efforts to address the challenges. 

OIG reviewed and analyzed pertinent laws and authoritative 

guidance, agency documents, and OIG reports, and sought input 

from NRC officials concerning agency accomplishments relative to 

the challenge areas and suggestions they had for updating the 

challenges. Specifically, because challenges affect mission critical 

areas or programs that have the potential to impact agency 

operations or strategic goals, NRC Commission members, offices 

that report to the Commission, the Executive Director for 

Operations, and the Chief Financial Officer were afforded the 

opportunity to share any information and insights on this subject. 

OIG conducted this evaluation from June through August 2009. 

The major contributors to this report were Anthony Lipuma, Deputy 

Assistant Inspector General for Audits; Steven Zane, Team Leader; 

Beth Serepca, Team Leader; Sherri Miotla, Team Leader; and 

Judy Gordon, Quality Assurance Manager.