EVALUATION REPORT

Inspector General’s Assessment of the

Most Serious Management and Performance

Challenges Facing NRC

OIG-11-A- 01 October 1, 2010

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

October 1, 2010

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-11-A-01)

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 accordance with the act,

I identified seven management and performance challenges confronting the Nuclear 

Regulatory Commission that I consider to be the most serious.

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, Director, Office of Commission Appellate Adjudication

James E. Dyer, Chief Financial Officer

Hubert T. Bell, Inspector General

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

Michael F. Weber, Deputy Executive Director for Materials, Waste,

 Research, State, Tribal, and Compliance Programs, OEDO

Darren B. Ash, Deputy Executive Director 

 for Corporate Management, OEDO

Martin J. Virgilio, Deputy Executive Director for Reactor

 and Preparedness Programs, OEDO

Nader L. Mamish, Assistant for Operations, OEDO

Kathryn O. Greene, Director, Office of Administration

Patrick D. Howard, Director, Computer Security Office

Roy P. Zimmerman, Director, Office of Enforcement

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

 and Environmental Management Programs

Cheryl L. McCrary, 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

Catherine Haney, 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

James T. Wiggins, Director, Office of Nuclear Security

 and Incident Response

Marc L. Dapas, Acting 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

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. 

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.

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. 

The 2010 list of challenges reflects one change from the 2009 list. Prior 

Challenge 6, Administration of all aspects of financial management, was 

reworded to include a reference to procurement. The new wording,

Administration of all aspects of financial management and procurement, is 

intended to reflect the overarching responsibility that NRC has to manage and 

exercise stewardship over its resources. 

The following chart provides an overview of the seven most serious 

management and performance challenges as of October 1, 2010.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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Most Serious Management and Performance Challenges

Facing the Nuclear Regulatory Commission *

as of October 1, 2010

(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 and 

procurement.

Challenge 7 Managing human capital.

*The most serious management and performance challenges are not 

ranked in any order of importance.

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. 

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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ABBREVIATIONS AND ACRONYMS

CFR Code of Federal Regulations

CUI Controlled Unclassified Information

FY fiscal year

IG Inspector General

HSPD-12 Homeland Security Presidential Directive-12

IMPEP Integrated Materials Performance Evaluation Program

NMMSS Nuclear Materials Management and Safeguards System

NRC U.S. Nuclear Regulatory Commission

NSTS National Source Tracking System

OIG Office of the Inspector General

3WFN Three White Flint North
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TABLE OF CONTENTS

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

ABBREVIATIONS AND ACRONYMS ..................................................................iii

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

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

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

Challenge 1 Protection of nuclear material used for civilian 

purposes....................................................................................... 4

Challenge 2 Managing information to balance security with 

openness and accountability ........................................................ 8

Challenge 3 Ability to modify regulatory processes to meet a 

changing environment, to include the licensing 

of new nuclear facilities .............................................................. 12

Challenge 4 Oversight of radiological waste................................................... 16

Challenge 5 Implementation of information technology and 

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

Challenge 6 Administration of all aspects of financial

management and procurement .................................................. 22

Challenge 7 Managing human capital ............................................................ 26

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

APPENDIX

SCOPE AND METHODOLOGY ......................................................................... 29
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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I. BACKGROUND

On January 24, 2000, Congress enacted the Reports Consolidation Act of 

2000 (Reports Act), 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 Reports Act 

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.

II. PURPOSE

In accordance with the Reports Act’s provisions, the U.S. Nuclear 

Regulatory Commission (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 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.

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

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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:

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 2010, the IG assessed the most serious 

management and performance challenges facing NRC and identified seven 

challenges that he considered most serious. The challenges identify critical 

areas or difficult tasks that warrant high-level management attention. The 2010 

list of challenges reflects one change from the 2009 list: 

Prior Challenge 6, Administration of all aspects of financial 

management, was reworded to include a reference to 

procurement. The new wording, Administration of all aspects of 

financial management and procurement, is intended to reflect the 

overarching responsibility that NRC has to manage and exercise 

stewardship over its resources.

The following chart provides an overview of the seven challenges

identified as most serious. 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 or planned to address the challenges. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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Most Serious Management and Performance Challenges

Facing the Nuclear Regulatory Commission *

as of October 1, 2010

(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 and 

procurement.

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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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 programs as a condition of their licenses. 

All other license applications (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 to States, upon their request, its authority to regulate 

certain radioactive materials and limited quantities of special nuclear 

material. After these States demonstrate that their regulatory programs 

are adequate to protect public health and safety and compatible with 

NRC’s program, the States enter into an agreement assuming this 

regulatory authority from NRC and are called Agreement States.

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

each issue include the following:

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

Based Licensing, and the Licensing Verification System 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 in December 2008 and was 

available to licensees in January 2009 for tracking Code of 

Conduct1 materials in categories 1 and 2. Although there are some 

issues regarding NSTS’ credentialing process, the staff has 

numerous actions underway to address these difficulties and 

 

1

In January 2004, the International Atomic Energy Agency published the Code of Conduct on the Safety 

and Security of Radioactive Sources as the standard the international community uses to govern the 

safety and security of radioactive materials based on the categorization system. While the International 

Atomic Energy Agency classifies sources into five categories, it notes that sources in categories one 

through three are designated as varying degrees of dangerous.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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ultimately increase the online usage of NSTS. The agency is still 

working to make operational Web Based Licensing and the 

Licensing Verification System. The agency recently awarded the 

Integrated Source Management Portfolio contract, which will 

integrate NSTS, Web Based Licensing, and the Licensing 

Verification System to license and track source materials under one 

mechanism.

Issue: Ensure that radioactive material is adequately protected to 

preclude its use for malicious purposes. 

Action: Although NRC initiated a rulemaking to expand the 

materials tracked in NSTS, the decision and potential 

implementation of that rulemaking was not approved by the 

Commission. A Commissioner highlighted the following 

improvements in NRC’s overall licensing process as a reason for 

not approving the rulemaking: background investigations;

increased inspections; additional license review; pre-licensing 

verification and site visits; transfer of sources under existing 

security orders to verify new users; flagging of significant changes 

in ordering patterns; licensing of end users; requirements in Title 

10, Code of Federal Regulations (CFR), Part 30.41, requiring 

licensees to verify that a recipient is authorized to receive material;

and the presence of existing increased control orders for licensees 

possessing quantities of material that in the aggregate exceed 

Category 2 levels.

One radioactive isotope that is of particular concern for malicious 

use is cesium-chloride. The U.S. National Academy of Sciences 

issued a report that emphasized replacement technologies be 

considered for cesium-chloride, a highly dispersible chemical form 

of the radioactive isotope of Cesium, Cs-137. Cesium-chloride is 

very soluble in water and easily dispersed in the air and is highly 

toxic if ingested. Cesium-chloride, used in nuclear medicine, 

research, and industry, is typically double sealed and contained in a 

stainless steel capsule for safety reasons. In light of the views on 

alternative technologies as a replacement, NRC convened public 

workshops to seek input from various stakeholders. NRC also 

commissioned a study by its Advisory Committee on the Medical 

Uses of Isotopes. After carefully considering all these inputs, as 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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well as the NRC’s own internal analysis, the agency concluded that 

near-term replacement of cesium-chloride devices was not 

practicable, and would be detrimental to the delivery of medical 

care and research. The current policy allows the continued use of 

cesium chloride while actively pursuing a better alternative. 

Additionally, NRC issued a draft policy statement for public 

comment that emphasizes that developing alternatives to cesiumchloride sources would be prudent.

Issue: Ensure the appropriate oversight of 

uranium recovery facilities.

Action: NRC maintains a regulatory 

oversight program with respect to 

licensing and inspection of uranium 

recovery facilities to ensure that 

licensees conduct activities safely and in 

an environmentally protective manner. 

NRC regulates four in situ recovery 

facilities2in the Western States, and, for those operating facilities, 

conducts routine annual inspections to ensure that they are safely 

operated. 

Issue: Ensure adequate inspections to verify licensees’ commitments to 

their material control and accounting programs.

Action: NRC is enhancing its inspection program. Currently, fuel 

cycle material control and accounting inspections are a shared 

responsibility between the Office of Nuclear Material Safety and 

Safeguards and NRC’s Region II. The agency continues to ensure 

that there are two material control and accounting inspectors in 

each location.

Additionally, NRC is working to document the basis for riskinforming its material control and accounting program with respect 

to conducting periodic inspections. 

 

2

In situ recovery is one of the two primary extraction methods that are currently used to obtain uranium 

from underground. These facilities recover uranium from low-grade ores where other mining and milling 

methods may be too expensive or environmentally disruptive.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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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 issues of 

material control and accounting in response to OIG-03-A-15, Audit 

of NRC’s Regulatory Oversight of Special Nuclear Materials. On 

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

regulations to improve the accuracy of material inventory 

information maintained in the NMMSS. The amendments, effective 

January 1, 2009, lower the threshold of reportable quantities of 

special nuclear materials and certain source materials to the 

NMMSS, modify the types and timing of submittals to the NMMSS, 

and require licensees to reconcile any material inventory 

discrepancies that NRC identifies in the NMMSS database. NRC 

reports that it has started implementing the rule change requiring 

improved reporting and reconciliation for licensees reporting to 

NMMSS, and has verified the adequacy of material control and 

accounting of special nuclear material at NRC licensed facilities.

Additionally, the Commission has directed the NRC staff to revise 

and consolidate current material control and accounting regulations 

into 10 CFR Part 74. This final rule and associated guidance is 

scheduled to be completed by April 30, 2012.

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 8 to 10 reviews per year of Agreement 

State radioactive materials programs and NRC’s regional programs 

under the agency’s Integrated Materials Performance Evaluation 

Program (IMPEP). Furthermore, NRC completed a selfassessment of IMPEP in July 2010. To date, the agency has 

evaluated the IMPEP Team Member Training and audited the 

preparations and onsite portion of an IMPEP review. NRC also 

plans to review IMPEP policies and procedures, interview agency 

and Agreement State managers and staff, and develop a procedure 

for future self-assessments.
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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 related to this challenge and the agency’s actions to address 

each issue include the following:

Issue: Be responsive to requests for information and provide external 

stakeholders with clear and accurate information about regulatory 

programs and facilitate public participation in the regulatory process to 

ensure openness and accountability.

Action: NRC instituted a contract to review documents that were 

removed from the public domain after September 11, 2001, and 

restore them to the public domain, in their entirety or redacted, 

whichever is appropriate. This contract will remain in effect through 

fiscal year (FY) 2011.

Action: NRC continues to evaluate security related information to 

determine what can be made publicly available. Information that 

would not be beneficial to an adversary has been made available to 

the public through various means including the NRC Web site, a 

public version of the annual security report to Congress, and public 

meetings. A recent example is a series of public meetings 

addressing proposed improvements to the significance 

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

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Action: NRC 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. 

Action: In response to recommendations in OIG’s Audit of NRC’s 

Process for Closed Meetings (OIG-A-14), the agency is planning to 

implement several measures to better notify the public about when 

NRC holds non-public meetings with external stakeholders and to 

what topics these meetings pertain. 

Issue: Manage information in accordance with new Federal Government 

policies for designating, marking, safeguarding, and disseminating 

controlled unclassified information (CUI).

Action: In May 2009, the President issued a memorandum on CUI 

which established an interagency Task Force to review the CUI 

framework. Following further presidential direction, the National 

Archives and Records Administration will issue implementation 

guidance and NRC will develop its plan to implement the new CUI 

program. NRC’s Safeguards Information program will be 

incorporated into the CUI program. 

Issue: Ensure that sensitive information is handled in accordance with 

agency policies and procedures for public disclosure.

Action: NRC announced the release of the “NRC’s Personally 

Identifiable Information Responsibilities Awareness and 

Acknowledgement of Understanding” training presentation through 

Yellow Announcement No. 116 dated November 16, 2009. NRC 

developed this presentation to ensure that all personnel are aware 

of their responsibilities for protecting Personally Identifiable 

Information, understand the consequences of violating of these 

responsibilities, and acknowledge these responsibilities on an 

annual basis.

Action: In addition, NRC is in the process of reviewing the shared 

network drives to ensure that Personally Identifiable Information is 

adequately protected or removed if unnecessary.
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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. 

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.

Issue: Technologies or materials, which the NRC regulates, have 

potential intelligence value to foreign states and non-state actors from 

either an intelligence or a counterproliferation, counterterrorism, or 

economic espionage perspective and should be protected from potential 

compromise. Further, there is the potential that NRC employees have 

knowledge and access to information that may be of interest to foreign 

powers and non-state actors.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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Action: The NRC has begun the process of developing 

programmatic efforts aimed at identifying potential threats and 

vulnerabilities that exist in its programs and operations. Such 

efforts should continue and receive senior leadership support.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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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 

2010, NRC had received 18 Combined Operating License applications, 

and the agency expects to receive 2 new applications through FY 2012.

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. 

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

each issue include the following:

New Facilities 

Issue: Implement the new Construction Inspection Program.

Risk-inform Construction Inspection Program activities to ensure 

the safe operation of newly constructed nuclear facilities.

Ensure that the NRC staff has the necessary knowledge and skill to 

successfully implement the program.

Action: The Office of New Reactors has developed the new 

Construction Inspection Program in accordance with 10 CFR Part 

52. New inspections, tests, analyses, and acceptance criteria 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.”

Additionally, the agency has issued and revised a number of 
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Inspection Manual Chapters and procedures to implement the new 

inspections, tests, analyses, and acceptance criteria process. 

The Office of New Reactors continues to make improvements to its 

construction inspection and quality assurance practices per OIG

recommendations. For example, 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 Construction Inspection 

Program. 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 

Combined Operating License application review process. Part of the 

license review process includes conducting risk-informed performancebased vendor inspections and quality assurance/quality control audits. 

Issue: As the sources of manufactured reactor components become 

more globalized, NRC must ensure its regulations and oversight activities 

appropriately address the challenges associated with licensees procuring 

components from suppliers located outside of the United States.

Action: The Office of New Reactors has taken steps to allocate 

resources for the use of translators and/or interpreters to support 

the office’s foreign vendor inspections. NRC also participates in the 

Multinational Design Evaluation Program, which is a multinational 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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initiative taken by national safety authorities to develop approaches 

to leverage the resources and knowledge of the national regulatory 

authorities who will be tasked with the review of new reactor power 

plant designs.

Existing Fleet

Issue: Ensure NRC maintains the ability to effectively review licensee 

applications for license renewals and power uprates submitted by industry 

in response to the Nation’s increasing demands for energy production. 

Action: For planning purposes, NRC continues to work with plant 

licensees to develop a schedule of anticipated license amendment 

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

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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. 

In March 2010, NRC formed a Groundwater Contamination Task 

Force to review the actions taken in response to recent releases of 

tritium into groundwater by nuclear facilities. In June 2010, the 

Task Force issued a report with 16 conclusions and 4 specific 

recommendations for the agency to strengthen NRC’s response to 

groundwater incidents.

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 lead and management for the Reactor Oversight Process, 

and support the development of programmatic changes when 

needed. Additionally, the Reactor Oversight Process features an 

annual assessment process which is used to revise the program as

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

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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 uncertainty of a potential withdrawal 

of a Department of Energy license application for the 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 increase as access to disposal facilities becomes more limited 

given facility closures and restricted accessibility.

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

each issue include the following:

Issue: Address increasing quantities of radiological waste requiring 

interim storage or permanent disposal.

Action: NRC developed and implemented a risk-informed 

decisionmaking framework in connection with a wide range of 

nuclear waste storage issues. NRC has conducted reviews using 

the framework for dry cask waste 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 issued guidance on interim storage of low-level nuclear waste. 

Stakeholder outreach is an integral part of the implementation of 

NRC’s low level waste strategic assessment.

Issue: Address issues regarding the uncertainty of NRC’s continued 

review or the potential withdrawal of the Department of Energy’s license 

application to construct a high-level radioactive waste repository at Yucca 

Mountain.

Action: NRC is continuing to review the Yucca Mountain license 

application submitted by the Department of Energy in June 2008. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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In 2010, the agency held hearings and evaluated a wide range of 

technical and scientific issues. On August 2, 2010, the agency 

issued Volume 1 of a safety evaluation report on the U.S. 

Department of Energy license application to construct a geologic 

repository at Yucca Mountain, Nevada. Volume 1 contains the 

NRC staff’s conclusion that the “General Information” section of the 

Department of Energy license application adequately describes the 

proposed repository. A final decision on the application will be 

made after completion of NRC’s independent technical review of 

the application, an adjudicatory hearing, and subsequent 

Commission review. If the Department of Energy successfully 

withdraws its license application for a high-level waste repository, 

NRC staff plan to conduct an orderly shutdown of the technical 

review program, including knowledge management and responding 

to continued intervener appeals.

Issue: Oversight of low-level waste storage and disposal, including lowlevel radioactive waste disposal sites. All current low-level waste disposal 

sites are regulated by Agreement States.

Action: NRC has focused on stakeholder outreach as an integral 

part of the Low-Level Waste Strategic Assessment. This outreach 

communicates to licensees that the NRC's staff position continues 

to be that low-level waste storage must meet NRC requirements to 

ensure safe operation, and that when constructing new low-level 

waste storage facilities, the regulations for evaluating proposed 

changes to facilities must be met. In March 2010, NRC posted to 

its Web site guidance on long-term storage of low-level waste.

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 13 power reactors currently undergoing 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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decommissioning. NRC staff published NUREG-1307, "Report on 

Waste Burial Charges," which provides updated disposal costs for 

pressurized water reactors and boiling water reactors based on 

estimated disposal volumes.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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CHALLENGE 5

Implementation of information technology and information security measures.

NRC needs to continue upgrading and modernizing its information 

technology 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 information technology activities to improve 

the productivity, efficiency, and effectiveness of agency programs and 

operations.

Action: An aggressive implementation schedule was developed to 

upgrade the existing information technology environment and to 

bring new technologies to NRC. Projects under development 

include a virtual private network and standard laptop and dockable 

workstation configuration. The Computer Security Office has also 

established mandatory laptop security standards, including 

requirements for full-disk encryption and security wireless 

capabilities for users outside of the NRC network. These efforts, 

which were underway in FY 2010 and will continue during FY 2011, 

are intended to enable NRC staff to securely access and use the 

systems and information needed to perform job junctions, 

regardless of where they are located.

Action: To further agency plans for technology modernization, the 

Office of Information Services began analysis of information 

technology/information management legacy applications with 

business owners to identify opportunities for transforming legacy 

applications starting in FY 2013. The office continues to work with 

offices to develop a funding strategy for application modernization. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

20

In addition, the office now offers business analysis services with the 

goal of improving requirements definition.

Action: The Office of Information Services has developed an 

enterprise contracting strategy for commonly used information 

technology services to improve productivity and efficiency in 

information technology contracting.

Action: NRC Implemented Microsoft Office 2007, thereby 

upgrading the office suite of applications to a current platform. The 

agency also implemented Internet Explorer 8 to upgrade the current 

Web browser to a current and more secure application.

Issue: Provide laptop computers with enhanced functionality, security, 

and support.

Action: The agency has set goals concerning laptops for the 

Office of Information Services to implement over the next several 

years. The agency has identified and is addressing its needs to 

(1) develop policies and standards for the use of laptop computers, 

(2) implement enterprise encryption and updating of operating 

systems to support the laptop program, and (3) provide secure 

wireless capability access.

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 all general support systems and major applications that 

are reported to the Office of Management and Budget in 

accordance with the Federal Information Security Management Act; 

(2) initiating a continuous monitoring process to annually evaluate 

information technology security controls of agency information 

technology systems to provide assurance that systems remain 

secure after having been authorized to operate; (3) publishing 

information technology security policy and standards to address 

current agency needs; and (4) implementing a security impact 

assessment process for evaluating the nature and extent of 

changes to information technology systems that have been 

authorized to operate. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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Action: The NRC is deploying a variety of capabilities that 

strengthen its ability to identify, mitigate and ameliorate threats 

against its information systems infrastructure. These means, 

coupled with cyber tabletop exercises designed to examine the 

agency’s response to potential network intrusion attacks, provide 

the NRC with enhanced capabilities to respond to such threats.

Action: The agency has established a secure network that 

enables authorized users to access safeguards information 

documents electronically. This system will reduce the need to print 

documents and will enable the management of safeguards 

documents in a centralized electronic document management 

system.

Action: The agency has issued Homeland Security Presidential 

Directive-12 (HSPD-12) identification cards to NRC staff and 

contractors and is working to install HSPD-12 card readers at 

headquarters and regional facilities. Use of this technology is 

expected to reduce the risk of unauthorized personnel gaining 

access to NRC facilities, thereby improving security of sensitive 

information and information technology assets. 

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 years 2012 and 

2016.
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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CHALLENGE 6

Administration of all aspects of financial management and procurement.

NRC management is also responsible to 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 programmatic and administrative areas, as 

well as accounting and financial management.

NRC’s procurement of goods and services must be made with an aim to 

achieve the best value for the agency’s dollars in a timely manner. 

Further, agency policy provides that NRC’s procurement of goods and 

services supports the agency’s mission; is planned, awarded, and 

administered efficiently and effectively; and is consistent with sound 

business practices and contracting principles.

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

each issue include the following:

Financial Management

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

obsolete, overly complex, and inefficient. 

Action: The agency is scheduled to deploy the new Financial 

Accounting and Integrated Management Information System 

(FAIMIS) on October 1, 2010. The FAIMIS core implementation 

replaces the functionality of five core financial systems with a single 

Web-based system based on a commercial-off-the-shelf software 

system. The agency plans to deploy an acquisitions module for 

FAIMIS in October 2012.

Action: NRC’s plans to upgrade the Time and Labor System in 

July 2010 were delayed because of performance issues identified 

during production testing. The agency is currently analyzing the 

performance issues to determine the root causes. Once the root 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

23

causes have been identified, the agency plans to develop a path 

forward, including a project plan to address implementation 

strategy, resource requirements, and milestones. NRC will 

continue to use the legacy system until the new system is 

deployed. 

Action: In July 2009, NRC implemented e-Travel, a Governmentwide initiative to improve travel operations and management. The 

agency expanded implementation of the system in FY 2010 to 

include specialized travel, such as foreign and premium class travel 

and split pay, an option that allows employees to apply a portion of 

their travel reimbursement to pay their Government credit card bill 

and a portion to their bank account. 

Issue: Respond to Commission direction and implement 

recommendations of the Advisory Group on Budget Formulation and 

Financial Plan Reporting. This issue encompasses both budget 

formulation and budget execution.

Action: NRC made improvements in the budget formulation and 

execution processes consistent with Commission direction and the 

recommendations of the Advisory Group on Budget Formulation 

and Financial Plan Reporting. 

Budget Formulation: For the FY 2011 budget, the budget 

formulation process was streamlined and took advantage of the 

upgraded Budget Formulation System accessibility and functionality 

enhancements. The formulation of the FY 2011 budget included a 

new budget structure that incorporates products and product lines. 

Budget Execution: During FY 2010, NRC implemented 

improvements to the budget execution process. 

The midyear review and request process was eliminated and 

replaced with a reprogramming strategy early in the fiscal year. 

This resulted in funds being made available earlier in the year. 

Plans are to continue to streamline and accelerate this process 

for the next execution year. 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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Additionally, advance procurement planning was coordinated 

with the planning for funds utilization, which brought the agency 

a step closer to ultimately integrating the advanced procurement 

plan and budget execution. 

Finally, the new budget structure positions the agency to 

integrate budget formulation, execution, and performance 

information using the new financial management systems. 

Budget execution and management information reporting will be 

improved through enhanced capabilities to compare budgeted 

amounts with actual funds used. 

Procurement 

Issue: Implement improvements in the agency’s procedures for awarding, 

negotiating, and managing agreements with Department of Energy 

laboratories. 

Action: In response to an OIG audit,

3 NRC has agreed to revise 

Management Directive 11.7, NRC Procedures for Placement and 

Monitoring of Work with the U.S. Department of Energy. The 

revisions include the following: requiring NRC offices to consider 

the use of commercial sources through market research, clarifying 

Management Directive 11.7 to emphasize the requirement to 

document the rationale and basis for using a Department of Energy

lab, and requiring independent review of justifications by NRC 

Division of Contracts personnel to ensure that commercial sources 

are fully considered. In addition, the NRC plans to initiate efforts 

with the Department of Energy to update the memorandum of 

understanding between the two agencies to require that the 

Department of Energy provide NRC with timely audit reports.

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

grants are awarded in a timely manner and NRC personnel who award 

and administer grants are provided appropriate training. 

 

3 OIG-10-A-12, Audit of NRC’s Management of Agreements with Department of Energy Laboratories

(April 23, 2010).
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Action: NRC established and documented a process for 

announcing grants, reviewing applications, and administering 

grants. NRC also implemented the Department of the Treasury’s 

Automated Standard Application for Payments System to ensure 

accessible and timely distribution of funds to the grantees. This 

allows funds to be available as early as the beginning of the grant’s 

period of performance for immediate drawdown based on incurred 

costs. 

Action: NRC conducted a Lean Six Sigma4review of the agency’s 

process for awarding grants to reduce the overall time for 

processing grants. Recently, the Division of Contracts issued 

Interim guidance to offices responsible for implementing the Grants 

Program to include the Office of Human Resources, Office of Small 

Business and Civil Rights, and Office of Nuclear Regulatory 

Research, as recommended by the Lean Six Sigma and by OIG’s 

Audit of NRC’s Grant Management Program.

5

Action: On June 24, 2010, the Executive Director for Operations

issued a memorandum to the Office of Human Resources, Office of 

Small Business and Civil Rights, and Office of Nuclear Regulatory 

Research, establishing a Grants Management Certification and 

Training Program, effective immediately. The training program will 

ensure that grants specialists or grants project officers are 

appropriately trained and certified to carry out their fiduciary 

responsibilities. The program mandates specific training for staff 

involved in awarding, administering, and monitoring grants and 

cooperative agreements. Implementation of this program also 

responds to recommendations in OIG’s Audit of NRC’s Grants 

Management Program. 

 

4

Lean Six Sigma is a structured methodology that NRC uses to accomplish sustained improvements to 

the types of process, transactions, and services that are performed routinely at the agency.

5 OIG-09-A-16, Audit of NRC’s Grant Management Program (September 29, 2009).
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

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CHALLENGE 7

Managing human capital.

Over the last 6 years, NRC’s workforce has grown from 3,059 staff to 

approximately 4,000 staff currently. This represents an increase of 

approximately 33 percent. Some offices still have a need for additional 

staff to deal with the increased workload in the Low-Level Waste and 

Uranium Recovery Programs while other offices may face a decreased 

need resulting from various states becoming Agreement States. To 

effectively manage human capital, while continuing to accomplish the 

agency's mission, NRC must continue to implement initiatives in the 

following areas:

Recruitment and training.

Space planning. 

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

each issue include the following:

Issue: NRC must address recruitment, training, and knowledge 

management in light of anticipated fluctuations in workload demands and 

retirements.

Action: NRC is refining the agency’s human capital program 

through the following initiatives: (1) reviewing existing recruitment 

strategies to determine how the agency can maximize and leverage 

limited resources to position the agency to be successful with both 

current and long-term human capital needs; (2) developing a talent 

acquisition and recruitment plan that will focus on strengthening its 

academic linkages, diversity, and other areas; and (3) acquiring 

wellness services to provide for functions involving health, physical 

fitness, ergonomics, automated external defibrillation, and 

occupational safety and health services.

Action: For FY 2011, NRC will strategically focus on fine tuning 

available skill sets to meet future mission needs. The agency 

anticipates various critical skill needs for the next several years and 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

27

will continue to recruit, hire, and develop staff to meet these skill 

needs. Hiring strategies will also include emphasis on 

governmentwide programs, specifically hiring of the disabled and 

employment of veterans. 

Issue: NRC needs to facilitate continuation of its space planning efforts. 

Last October, the General Services Administration signed a lease for the 

construction and occupation of a building that the developer will construct 

across Marinelli Road from One White Flint North. NRC will occupy the 

building, referred to as Three White Flint North (3WFN), under the terms 

of a 15-year lease between the General Services Administration and the 

building owners. Ground-breaking ceremonies for the building were held 

during May with excavation beginning in early July. When completed, 

3WFN will provide office space for approximately 1,300 NRC staff 

members and allow the agency to reconsolidate headquarters staff who 

are now dispersed among four offsite locations. The space in 3WFN will 

allow the agency to decompress work areas and restore conference 

rooms that had been converted to workstations in both One White Flint 

North and Two White Flint North. The building will also house the 

Headquarters Operations Center and the Data Center. At the present 

time, there is no funding in the budget for either above ground or 

underground pedestrian access between One White Flint North and 

3WFN. To access 3WFN, agency employees will have to cross Marinelli 

Road, which is a multi-lane road. NRC faces two challenges related to 

3WFN. The agency must ensure that: 

Building requirements are met and within budget.

Provisions are put in place to ensure safe pedestrian movement 

between the buildings. 

Action: Although the construction is in the preliminary phase and 

the target date to begin moving staff into 3WFN is September 2012, 

NRC is currently working on the design requirements for the interior 

of the building. The goal is to provide a good working environment 

for NRC employees within the budget. 

Action: In late August, the agency signed a Memorandum of 

Understanding with Montgomery County to ensure cooperation to 

maximize pedestrian safety around the White Flint complex. In the 
Inspector General’s Assessment of the Most Serious Management and Performance Challenges Facing NRC

28

near term, the county Department of Transportation staff are 

meeting with NRC staff to discuss current and future pedestrian 

and vehicle flows on both sides of Marinelli Road and how best to 

manage them between Rockville Pike and the White Flint complex 

vehicle entrance/exit. 

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 May through August 2010 at NRC 

Headquarters. The major contributors to this report were Steven Zane, 

Deputy Assistant Inspector General for Audits; Sherri Miotla, Team 

Leader; Beth Serepca, Team Leader; Kathleen Stetson, Team Leader; RK 

Wild, Team Leader; and Judy Gordon, Quality Assurance Manager.