EVALUATION REPORT 

Inspector General’s Assessment of the 

Most Serious Management and Performance 

Challenges Facing NRC 

OIG-08-A-20 September 30, 2008 

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/ 


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 summarize annually 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 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 and 

performance challenges. 

RESULTS IN BRIEF

The IG identified eight 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 

NRC management attention. 

This year’s list of challenges reflects several changes from last year’s 

list. 

• Prior challenge 2, Appropriate handling of information, was 

combined with prior challenge 7, Communication with external 

stakeholders throughout NRC regulatory activities. The 

consolidation of these challenges resulted in the following 

description for new challenge 2: Managing information to balance 

security with openness and accountability, which captures the 

need for both openness and protection of information. 

• Prior challenge 3, Development and implementation of a riskinformed and performance-based regulatory approach, was 

revised to the current challenge 3 language: Implementation of a 
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risk-informed and performance-based regulatory approach. This 

change reflects the relative maturity of NRC’s risk-informed and 

performance-based regulatory programs and their advancement 

beyond developmental efforts to implementation activities. 

• Prior challenge 4, Ability to modify regulatory processes to meet a 

changing environment, specifically the potential for a nuclear 

renaissance, was reworded to more precisely focus on licensing 

issues. Current challenge 4 now states, Ability to modify 

regulatory processes to meet a changing environment, to include 

the licensing of new nuclear facilities. Waste issues, formerly 

covered in challenge 4, are reflected in a new challenge 5, 

Oversight of radiological waste. 

• Prior challenge 5, Implementation of information technology, was 

reworded to current challenge 6, Implementation of information 

technology and information security measures, to emphasize the 

need to ensure that information technology resources use 

technological solutions for information security when appropriate. 

The chart that follows provides an overview of the eight most 

serious management and performance challenges as of 

September 30, 2008. 
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Most Serious Management and Performance Challenges 

Facing the Nuclear Regulatory Commission* 

as of September 30, 2008 

(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 Implementation of a risk-informed and performance-based 

regulatory approach. 

Challenge 4 Ability to modify regulatory processes to meet a changing 

environment, to include the licensing of new nuclear facilities. 

Challenge 5 Oversight of radiological waste. 

Challenge 6 Implementation of information technology and information 

security measures. 

Challenge 7 Administration of all aspects of financial management. 

Challenge 8 Managing human capital. 

*The most serious management and performance challenges are not 

ranked in any order of importance. 

CONCLUSION

The eight 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 successfully achieving the 

agency’s mission and goals. 
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ABBREVIATIONS AND ACRONYMS 

CFR Code of Federal Regulations 

COL Combined Operating License 

CUI controlled unclassified information 

DOE Department of Energy 

FY Fiscal Year 

IG Inspector General 

IT information technology 

MC&A material control and accounting 

NMSS Office of Nuclear Material Safety and Safeguards 

NMMSS Nuclear Materials Management and Safeguards 

System 

NRC U.S. Nuclear Regulatory Commission 

NSTS National Source Tracking System 

OIG Office of the Inspector General 

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..........................................7

Challenge 3 Implementation of a risk-informed and 

performance-based regulatory approach .......................9 

Challenge 4 Ability to modify regulatory processes to meet a 

changing environment, to include the licensing 

 of new nuclear facilities................................................11 

Challenge 5 Oversight of radiological waste ....................................15 

Challenge 6 Implementation of information technology and 

information security measures .....................................17 

Challenge 7 Administration of all aspects of financial 

 management ................................................................19 

Challenge 8 Managing human capital..............................................21 

IV. CONCLUSION................................................................................23 

APPENDIX 

 SCOPE AND METHODOLOGY .....................................................25 
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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 Inspector General (IG) of each Federal agency to 

summarize annually 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 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 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:

 
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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, the IG revised his list of the most serious 

management and performance challenges facing NRC. The 

challenges identified represent critical areas or difficult tasks that 

warrant high-level NRC management attention. The following chart 

provides an overview of the eight management challenges. The 

sections that follow 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, 2008 

(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 Implementation of a risk-informed and performance-based 

regulatory approach. 

Challenge 4 Ability to modify regulatory processes to meet a changing 

environment, to include the licensing of new nuclear facilities. 

Challenge 5 Oversight of radiological waste. 

Challenge 6 Implementation of information technology and information 

security measures. 

Challenge 7 Administration of all aspects of financial management. 

Challenge 8 Managing human capital. 

*The most serious management and performance challenges are not 

ranked in any order of importance. 
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Changes to Management Challenges

This year’s list of challenges reflects several changes from last year’s 

list. 

Consolidation of Two Challenges 

Prior challenges 2 and 7 were combined to form challenge 2: Managing 

information to balance security with openness and accountability, which 

captures the need for both openness and protection of information.1 

New Wording for Three Challenges 

Prior challenge 3 was revised to the current challenge 3 language: 

Implementation of a risk-informed and performance-based regulatory 

approach.

2

 This change reflects the relative maturity of NRC’s riskinformed and performance-based regulatory programs and their 

advancement beyond developmental efforts to implementation activities. 

Prior challenge 4 was reworded to more precisely focus on licensing 

issues.3 New challenge 4 states, Ability to modify regulatory processes 

to meet a changing environment, to include the licensing of new nuclear 

facilities. 

Prior challenge 5 was reworded to current challenge 6, Implementation 

of information technology and information security measures, to include 

emphasis on ensuring that information technology (IT) resources use 

technological solutions for information security when appropriate.4

New Challenge 

Waste issues, formerly covered in the writeup corresponding to 

challenge 4, are reflected in a new challenge 5, Oversight of radiological 

waste. Managing current and future waste is a major issue for the 

nuclear industry and the Nation, and NRC must be prepared to support 

safe, sound, and long-lasting solutions for high and low level nuclear 

waste. 

 

1

 2007 challenge 2: Appropriate handling of information; 2007 challenge 7: Communication with 

external stakeholders throughout NRC regulatory activities. 2

 2007 challenge 3: Development and implementation of a risk-informed and performance-based 

regulatory approach. 3

 2007 challenge 4: Ability to modify regulatory processes to meet a changing environment, 

specifically the potential for a nuclear renaissance.

4

 2007 challenge 5: Implementation of information technology.
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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 establishes 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 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. 

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

issue include the following: 

Issue: Ensure that radioactive material is adequately protected to 

preclude its use for malicious purposes. 

Action: NRC is enhancing its material licensing processes, 

including a new policy for onsite visits for issuing new 

material licenses, examinations of existing licenses to 

determine their legitimacy, and the formation of a working 

group to update and revise existing material licensing 

guidance. 

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 MC&A inspections are a shared 

responsibility between the Office of Nuclear Material Safety 

and Safeguards (NMSS) and Region II, with two MC&A 

inspectors in each location. Additionally, the Commission 

approved a staff proposed rulemaking effort to include 

enhancements to MC&A inspection frequency and on April 

25, 2008, the staff provided its rulemaking plan to the 

Commission. The rulemaking is ongoing under the 

sponsorship of NMSS and the Office of Federal and State 

Materials and Environmental Management Programs.
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Issue: Ensure reliable accounting of special nuclear materials in 

the NRC and Department of Energy’s (DOE) 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. To improve the accuracy of 

material inventory information maintained in NMMSS, NRC 

approved the final rule on February 7, 2008, amending the 

Code of Federal Regulations (CFR) Title 10, Parts 40, 72, 

74, and 150. This added requirements to track smaller 

quantities of special nuclear material. However, the 

Commission approved a DOE request to delay 

implementation by 1 year. 

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

ensure the accurate tracking of byproduct material, especially those 

materials with the greatest potential to impact public health and 

safety. 

Action: NRC expects to have NSTS on line by 

December 31, 2008, initially populating the system with data 

submitted into an interim database by licensees during 2008. 

In addition, NRC has initiated several rulemakings to expand 

the materials tracked in NSTS. 

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 continues to conduct about 10 to 12 reviews 

per year of Agreement State radioactive materials programs 

under NRC’s Integrated Materials Performance Evaluation 

Program. 
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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: Manage information in accordance with new Federal 

Government policies for designating, marking, safeguarding, and 

disseminating controlled unclassified information (CUI). 

Action: NRC will implement new CUI policies and 

procedures over a 5-year period once guidance has been 

issued by the National Archives and Records Administration. 

Safeguards Information 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 responded to congressional and public 

concern regarding an incident at a Nuclear Fuel Services, 

Inc., facility by reviewing and releasing a number of pertinent 

agency documents that had not been made publicly 

available. In addition, the NRC resumed public meetings on 

the facility’s performance during the fall of 2007. 

Action: NRC issued multiple announcements related to the 

appropriate handling of information. It also completed 

reviews of shared network drives and office files to ensure 
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that personally identifiable information and Privacy Act 

information was adequately protected or removed if 

unnecessary. 

Issue: Provide external stakeholders with clear and accurate 

information about regulatory programs, and facilitate public 

participation in the regulatory process. 

Action: The staff conducted monthly public working-level 

meetings with industry and public stakeholders to discuss 

ongoing changes to the Reactor Oversight Process. The 

staff also conducted public meetings near each operating 

reactor to discuss results of the NRC’s annual assessment 

of the licensee’s performance. Further, staff held an annual 

public meeting in November 2007 to present information on 

the overall security performance of the commercial reactor 

industry, and to respond to questions and solicit comments 

on nuclear security issues. Lastly, in November 2007, staff 

issued a revised communications plan for engaging Federal, 

Tribal, State, and local government stakeholders. 
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CHALLENGE 3 

Implementation of a risk-informed and performance-based regulatory 

approach.

NRC’s intent is to increase its safety focus on licensing and 

oversight activities through the application of a balanced 

combination of experience, deterministic models, and probabilistic 

analysis. This approach is known as risk-informed and 

performance-based regulation. Incorporating risk analysis into 

regulatory decisions is intended to improve the regulatory process 

by focusing both NRC and licensee attention and activities on the 

areas of highest risk. 

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

issue include the following: 

Issue: Ensure that the appropriate level of focus on risk-informed 

and performance-based regulation is maintained. 

Action: NRC continues its work to improve the agency's 

Risk-Informed Performance-Based Plan, including a recent 

expansion of the plan's objectives to more fully achieve a 

holistic, risk-informed, and performance-based regulatory 

structure. 

Issue: Develop and implement risk-informed and performancebased regulation for fuel cycle facilities. 

Action: The agency conducted risk analyses during an 

application review for a proposed gas centrifuge facility and 

continued implementation of an enhanced fuel cycle facility 

oversight process. 

Issue: Ensure that the Reactor Oversight Process meets the 

agency’s regulatory needs. 

Action: NRC uses results of an annual self-assessment of 

the Reactor Oversight Process to better identify significant 

performance issues and to ensure that licensees take 

appropriate actions to maintain acceptable safety 

performance. 

Issue: Ensure that research programs enhance the validity of 

current risk models, and also develop risk insights for new 

technologies, including program areas transitioning to risk-informed 

regulation. 
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Action: NRC continues to make progress in developing risk 

assessments. For example, NRC completed a review of the 

fire probabilistic risk assessment for two nuclear power 

plants. The agency also continues to develop tools that 

allow staff to make complex and probabilistic riskassessment calculations on their desktop computers. 
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CHALLENGE 4 

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 demand for energy 

production. By August 2008, NRC had received 12 Combined 

Operating License (COL) applications (Calvert Cliffs, South Texas 

Project, Bellefonte, North Anna, Lee, Shearon Harris, Grand Gulf, 

Vogtle, V.C. Summer, Comanche Peak, Levy County, and Victoria 

County). NRC expects to receive additional COL applications. 

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. 

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

each challenge include the following: 

New Facilities 

 

 Issue:

 

Instituting a Construction Inspection Program. 

• Developing strong control processes for project 

management to ensure the agency meets its new reactor 

review and licensing objectives. 

• Developing technical review processes. 

• Ensuring a comprehensive standard review plan and 

adequately documented safety evaluation reports. 

Action: NRC is taking a design-centered review approach 

to optimize the COL application review process. The Office 

of New Reactors is in the process of developing a new 

construction inspection program in accordance with 10 CFR 

52. The new program of "inspections, tests, analyses, and 

acceptance criteria" has been integrated into the Part 52 

licensing process to create a design-specific, pre-approved 
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set of performance standards. Licensees must meet these 

standards and the Commission must find that the standards 

have been met before the licensee can load fuel and operate 

the plant.

Issue: Ensure that the process for reviewing applications for new 

facilities meets the public’s demand for new energy sources while 

focusing 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. 

 

Existing Fleet

Issue: Ensure the ability to review licensee applications for license 

renewals and power uprates submitted by industry in response to 

the Nation’s demand for energy production. 

Action: 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 implemented a number of recommendations to 

improve the license renewal review process, to include 

closer management oversight of the renewal process, as 

well as provide additional guidance to standardize the 

content of NRC’s license renewal review reports. 

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. NRC staff 

explained details of the new procedures during breakout 

sessions at the agency’s 2008 Regulatory Information 

Conference. 

Issue: Ensure the ability to identify emerging operating and safety 

issues at all plants, including issues associated with extended and 

uprated licenses; consistently apply regulatory and review changes 

in response to these emerging issues across the existing fleet of 

reactors. 
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Action: Annually, agency staff communicate the status of 

the power uprate program to the Commission. The staff is 

currently revising Inspection Procedure 71004 to provide 

additional guidance on inspection planning, implementation, 

and documentation. 

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.
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CHALLENGE 5 

Oversight of radiological waste.

High-level radioactive waste is primarily in the form of spent nuclear 

fuel generated from commercial nuclear power reactors. 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 grow 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 waste storage 

systems and concluded that such systems provide a safe 

means to store spent nuclear fuel with exceedingly low risk. 

Issue: Address issues regarding the license application to 

construct a high-level radioactive waste repository at Yucca 

Mountain. 

Action: The NRC received the Yucca Mountain license 

application from DOE in June 2008. Consistent with 

direction in the Nuclear Waste Policy Act and the Energy 

Policy Act, the agency has been conducting high-level waste 

pre-licensing activities to ensure appropriate standards and 

regulatory guidance are in place. Additionally, NRC is 

interacting with the applicant, the DOE, such that the 

licensing review for a potential Yucca Mountain high-level 

waste repository can be conducted in 3 to 4 years as 

directed by Congress. NRC is also preparing to publish a 

final revision to 10 CFR Part 63 to align agency regulations 

to new Environmental Protection Agency standards for 

radiation protection at a high-level waste repository. 
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Issue: Oversight of low-level waste disposal, including low-level 

radioactive waste disposal sites. 

Action: NRC has informed fuel cycle and materials 

licensees about the potential need to store some low-level 

radioactive waste onsite for an extended period after the 

low-level waste disposal facility in Barnwell, South Carolina, 

closed. NRC-updated guidance advises licensees to 

consider ways to minimize production of Class B and C lowlevel 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. 
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CHALLENGE 6 

Implementation of information technology and information security 

measures.

NRC needs to continue upgrading and modernizing its IT 

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: NRC recognizes that it continues to lag behind 

many other Federal agencies in terms of its IT infrastructure. 

For example, it recently upgraded software applications to 

include Microsoft Office Suite and Microsoft Outlook – both 

commonly used in the private and public sectors. In 

addition, the agency has begun to address longstanding 

telephone problems by upgrading the telephone system 

performance both with new enhanced features and service 

as well as bandwidth capabilities. 

Issue: Implement a program to provide program office laptop 

computers with enhanced functionality, security, and support. 

Action: The agency has set goals concerning laptops for 

the Office of Information Services to implement in 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. 

The use of laptop computers is expected to increase in the 

coming years. 

Issue: Ensure that information systems are protected. 
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Action: The NRC Computer Security Office was formed to 

provide an increased capability to oversee the integration of 

security controls into all IT projects and operations and to 

improve the security of automated information. The position 

of Chief Information Security Officer was established as the 

head of this office. 

Action: NRC has made progress in correcting the two 

significant deficiencies identified in the 2007 evaluation of 

the Federal Information Security Management Act 

concerning its information systemwide security controls. As 

of August 2008, more than half of the agency’s systems 

were certified and accredited; however, the agency needs to 

certify and accredit all of its systems. The agency is working 

towards this goal and expects to complete all certifications 

and accreditations by the end of FY 2009. 

Action: NRC is awarding a contract in excess of $2 million 

to advance the organization’s strengthening of security 

controls that protect NRC’s information systems and 

information using a certification and accreditation process. 

By implementing this contract, NRC hopes to ensure that 

security controls for information systems are adequate, and 

that unauthorized access, use, disclosure, disruption, 

modification, or destruction of NRC’s information systems or 

data can be detected and prevented. 
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CHALLENGE 7 

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 

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. 

 

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

address each issue include the following: 

Issue: Replace or upgrade the agency’s current financial systems, 

which are obsolete, overly complex, and inefficient. 

Action: In June 2008, the Chairman approved the Financial 

Accounting and Integrated Management Information System 

Implementation project. The new system, which will replace 

five aging financial systems5 with a single integrated core 

financial system, is expected to be operational in October 

2010. 

Action: NRC completed the eTravel pilot. eTravel is a 

Governmentwide initiative to improve internal efficiency. The 

paperless system will automate travel documentation and 

approval routing of most travel arrangements. The lessons 

learned from the pilot are currently under review and may 

result in a delay of full implementation from the planned date 

of December 2008. 

Action: NRC plans to implement the upgrade to the Time 

and Labor (T&L) System during the second half of FY 2009. 

The upgrade will provide a modern, Web-enabled version of 

the existing PeopleSoft T&L software. The system will 

include electronic approval of time, as well as other forms 

associated with leave and overtime/compensatory time. 

 

5

 The five financial systems are Federal Financial System, Fee Billing System, 

Allotment/Allowance Financial Plan System, Cost Accounting System, and the Capitalized 

Property System. 
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Action: In response to a business process improvement 

study that focused on time and labor and fee billing 

processes, the agency developed guidance for managing 

reporting codes. Initially, the number of reporting codes was 

reduced to fewer than 10,000; however, since January 2008, 

the number of codes has grown to approximately 20,000. 

The agency has issued further guidance and instituted a 

periodic review process to ensure that the new policy is 

consistently observed. 

Issue: Ensure that the agency continues its efforts to monitor the 

effectiveness of existing controls over the fee billing process and 

implement additional controls to address weaknesses identified. 

Action: NRC improved its internal control over fee billing by 

implementing additional detection controls. As a result, the 

agency’s independent auditors downgraded the material 

weakness related to NRC’s legacy Fee Billing System to a 

significant deficiency. The agency continues to conduct 

reviews to ensure that detection controls are working as 

intended and to seek ways to improve the fee billing 

certification process. These reviews have identified areas 

needing improvement. 

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 implementing cross-servicing 

agreements for travel and contract support payment with an outside 

provider, evaluating the expansion of the cross-servicing effort to 

other NRC financial activities, and engaging in a thorough review of 

unliquidated funds, which resulted in funds being made available to 

fund high priority activities. 
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CHALLENGE 8 

Managing human capital. 

NRC’s human capital needs are changing due to the receipt of (1) 

applications to construct and operate the next generation of nuclear 

reactors, (2) DOE’s license application to construct a nuclear waste 

repository, and (3) industry applications 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 rigorously implement the following initiatives: 

• Timely personnel security adjudication. 

• Space planning. 

• Recruitment and knowledge management. 

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

address each issue include the following: 

Issue: Achieve timely personnel security adjudication. Work start 

dates for NRC employees, contractors, and licensees are 

frequently delayed 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 will develop recommendations to expedite the 

process. 

Action: In accordance with Executive Order 13467 

dated June 30, 2008, Reforming Processes Related to 

Suitability for Government Employment, Fitness for 

Contractor Employees, and Eligibility for Access to 

Classified National Security Information, NRC must 

develop reciprocity processes and procedures to 

accept applicable investigations and adjudications 

conducted by other Federal agencies. 

Action: In November 2007, the Office of 

Administration hired two additional Personnel 

Security Specialists for the adjudication of 

personnel security cases. Three additional 

Personnel Security Specialists were brought on 

board during the summer of 2008. 
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Action: The Human Resources Recruitment 

Activity Tracking System was modified to include 

security processing/adjudication status 

information. Reports from this system are shared 

with the program offices to keep managers 

informed of the status of their new hires. 

Issue: NRC must continue to accomplish the agency's mission 

during workspace related changes agencywide. In headquarters, 

changes involve the use of multiple headquarters office buildings at 

various sites in Montgomery County, Maryland. 

Action: NRC is implementing a Headquarters Strategic 

Housing Plan designed to meet space needs through 

FY 2009. This plan addresses workspace needs, workflow, 

and business processing structures. Beginning in 2013, the 

agency expects to begin occupying a new permanent 

building in an effort to reconsolidate headquarters staff. 

Once the moves to the new permanent building are 

complete, the agency will have headquarters staff 

consolidated in three buildings within the White Flint 

Complex. Furthermore, most NRC regional offices are 

seeking new office space for additional staff in order to meet 

increased workload demands. 

Issue: NRC must continue to address anticipated increased 

workload demands and retirements with recruitment and knowledge 

management strategies. 

Action: Since FY 2005 there have been 1,561 new 

employees added to the workforce.6

 In FY 2007, the 

agency exceeded its hiring goal of a 200 net gain of 

staff by bringing on board 417 new employees. During 

FY 2008, NRC is projected to bring on board 495 new 

employees with an estimated net gain of more than 

200. 

Action: NRC maintains a recruitment program that 

includes participation in approximately 80 recruitment 

events each year at colleges, universities, and 

professional conferences. Other initiatives include 

developing new recruitment displays and videos to 

show at recruitment events, hiring additional human 

resource staff to perform critical human resources work, 

and upgrading the agency’s Web-based job application 

tool. 

 

6

 As of August 30, 2008, there were approximately 3,791 NRC staff. 
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Action: NRC is implementing knowledge management 

strategies7

 that include mentoring, early replacement 

hiring, and rehiring annuitants with or without use of a 

pension offset as applicable.8 The agency also 

developed a knowledge management Web site, 

expressly for the purpose of retaining knowledge before 

key employees are promoted or retire. 

IV. CONCLUSION 

The eight 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 successfully achieving the 

agency’s mission and goals. 

 

7

 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. 8

 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. 
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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, OIG 

focused on determining (1) current challenges, (2) the agency’s 

efforts to address the challenges during FY 2008, 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 2008. 

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, Senior Analyst.