NUREG-1055

For Comment

Improving Quality and the

Assurance of Quality in the

Design and Construction of

Nuclear Power Plants

A Report to Congress

U.S. Nuclear Regulatory

Commission

Office of lnspection-andEnforcementr -- __ ____

W. Altman, T. Ankrum, W. Brach

Reprinted March 1987
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NVREG-1055

For Comment

Improving Quality and the

Assurance of Quality in the

Design and Construction of

Nuclear Power Plants

A Report to Congress

Manuscript Completed: April 19841

Date Published: May 1984

W. Altman, T. Ankrum, W. Brach

Division of Quality Assurance, Safeguards, and Inspection Programs Office of Inspection and Enforcement

U.S. Nuclear Regulatory Commission

Washington, D.C. 20555

ABSTRACT

At the request of Congress, NRC conducted a study of existing and alternative

programs for improving quality and the assurance of quality in the design and

construction of commercial nuclear power plants. A primary focus of the

study was to determine the underlying causes of major quality-related problems

in the construction of some nuclear power plants and the untimely detection and

correction of these problems. The study concluded that the root cause for

major quality-related problems was the failure or inability of some utility

managements to effectively implement a management system that ensured adequate

control over all aspects of the project. These management shortcoming arose in

part from inexperience on the part of some project teams in the construction of

nuclear power plants. NRC's past licensing and inspection practices did not

adequately screen construction permit applicants for overall capability to

manage or provide effective management oversight over the construction project.

The study recommends a number of improvements in industry and NRC programs.

For industry, the study recommends self-imposed rising standards of excellence,

treatment of quality assurance as a management tool, not a substitute for

management, improved trend analysis and identification of root causes of

quality problems, and a program of comprehensive third party audits of present

and future construction projects. To improve NRC programs, the study recommends a heavier emphasis on team inspections and resident inspectors, an

enhanced review of new applicant's capabilities to construct commercial nuclear

power plants, more attention to management issues, improved diagnostic and

trending capabilities, improved quality and quality assurance for operating

reactors, and development of guidance to facilitate the prioritization of

quality assurance measures commensurate with the importance of plant structures, systems, and components to the achievement of safety.

iii

CHAIRMA

;0 UNITED STATES

NUCLEAR REGULATORY COMMISSION

X WASHINGTON, D. C. 20555

April 20, 1984

The Honorable George Bush

President of the United

States Senate

Washington, DC 20515

Dear Mr. Speaker:

The NRC Authorization Act for fiscal years 1982-83 (P. L.

97-415) directed that the NRC "shall conduct a study of

existing and alternative programs for improving quality

assurance and quality control in the construction of

commercial nuclear power plants." Section 13 of that Act

contained specific study requirements, including

requirements to analyze five alternative approaches to

improving the assurance of quality in the nuclear industry

and to describe any administrative actions or legislative

proposals that the Commission has taken or plans to

undertake for improving quality assurance in construction.

In response, the NRC staff recently completed its report of

the required study. The Commissioners received a briefing

concerning that report on April 4, 1984. A brief overview

of the staff's report is attached (Enclosure 1) along with

a copy of the report itself (Enclosure 2).

The staff's report is complex and contains a large number

of interrelated actions recommended to be undertaken by the

NRC. Due to the complexity of the report and the need for

the Commission to fully understand the plans, schedules,

and resource implications if the recommendations are

implemented, we believe it necessary to take considerably

more time to study the matter before informing the Congress

of our final recommendations. While we are considering the

details of the report, we also believe it desirable to

request comments from the public on the staff's report.

The above deliberations by the Commission will likely take

several months. At the end of that time, we will forward

the Commission's final recommendations to the Congress.

Sincerely,

Nunzio J. Palladino

Enclosures: As stated

v

Brief Overview of NRC Staff Report on Improving

Quality and the Assurance of Quality in the

Design and Construction of Commercial Nuclear

Power Plants

The staff's report focuses heavily on improvements to the

NRC program. Improvements to NRC's programs are necessary,

but not sufficient, to achieve significant improvements in

quality in the nuclear industry. Significant improvements

can come only from the industry. We view the industry's

Institute of Nuclear Power Operations as a positive step in

that direction. The staff expresses the hope that NRC's

initiatives regarding the importance of excellence in

management to the achievement and assurance of quality will

act as a catalyst for such change.

A primary focus of the required study was to determine the

underlying causes, of (1) the occurrence of major

quality-related problems in the construction of some

nuclear power plants, and (2) the untimely detection and

correction of these problems. The answers to these

questions provided the staff with a foundation for

evaluating the specific alternatives proposed by Congress

in the Act and for recommending improvements to NRC's and

the nuclear industry's approach to and programs for both

achieving quality and assuring quality.

The staff concluded that the root cause for the major

quality-related problems in design and construction was the

failure or inability of some utility management to

effectively. implement a management system that ensured

adequate control over all aspects of the project. These

management shortcomings arose in part from inadequate

•nuclear design and construction experience on the part of

one or more of the key participants in the nuclear

construction project: the owner utility, architectengineer, nuclear steam supply system manufacturer,

construction manager, or the constructor,.and the

assumption by some participants of a project role which was

not commensurate with their level of experience. As a

corollary, NRC's past licensing and inspection practices

did not adequately screen construction permit applicants

for overall capability to manage or provide effective

management oversight over the construction project.

The staff found a number of reasons why the utilities and

the NRC were slow to detect or recognize the extent of

major problems in quality or quality assurance. The

reasons include an inability on the part of either to

recognize the underlying programmatic and managerial

deficiencies that caused individual quality problems, an

vii.
2

attenuation in the flow of essential project information

from the working level to top management, and a tendency on

the part of NRC to set the threshold for taking action for

construction problems higher than for operational problems

because of the lack of an immediate threat to public health

and safety.

The staff's conclusions with respect to the five specific

alternative approaches to quality assurance described in

the Act were as follows:

(1) Making architectural and engineering criteria more

prescriptive would not have a substantial impact on

quality; however, reducing the number of design

changes during construction would. More complete designs at initiation of construction would enhance

quality.

(2) Construction permits (CP) for future CP applicants

should be conditioned on post-CP demonstration by the

applicant of its capability and effectiveness in

managing a nuclear construction project, including the

quality assurance program. NRC's pre-CP screening

should be modified to evaluate the management

competence and prior nuclear experience of applicants,

and a special advisory board should be established to

provide further advice to the NRC on the

qualifications of new applicants.

(3) Audits by certain associations of professionals

including the American Society of Mechanical Engineers and the National Board of Boiler and Pressure Vessel

Inspectors, cover certain narrow technical areas in

more depth than NRC's inspection program but are not

sufficiently comprehensive in scope to substitute for

NRC inspections. The new construction evaluation

program of the Institute of Nuclear Power Operations

(INPO) provides the most comprehensive construction

,audit of any professional association, and it.

represents a positive industry initiated step ,toward

helping the nuclear industry raise its own standards

of performance. This INPO program should not be

construed as a substitute for NRC oversight of

construction quality, however. The roles of the NRC

and INPO are necessarily different, and INPO serves

the government, the industry and the public best in

its present role. Although the roles of the NRC and

INPO must remain separate, they are not fixed, and NRC

v ii
3

needs to be alert to industry improvements resulting

from INPO programs and adjust its programs

accordingly.

(4) There are a number of ways in which the NRC program

has improved in the past several years and can be

improved further. The resident inspector program has

become the foundation of the NRC inspection program,

and it may be expanded. Team inspections such as the

new Construction Appraisal Team (CAT) inspections

offer significant detection and diagnostic capability

for quality problems, and their use should be

expanded. NRC's past quality assurance efforts have

focused on form and paper at the expense of

implementation and evaluating quality of completed

work, and they should be reoriented to emphasize

performance and effectiveness. The inspection program

should address the issue of management capability and

effectiveness on a routine basis, not just when the

need for remedial action has become apparent.

(5) Comprehensive periodic audits by independent

(third-party) inspectors should be required of plants

currently under construction as well as future CP

applicants. In the interim until such a program can

be established by regulation, the CAT program should

be expanded to cover more plants for an operating

license for additional assurance that their plant's

design complies with licensing commitments and NRC

regulations.

Administrative actions underway and planned to address

these conclusions and others are found in the report and

are summarized in tables 2.1, 2.2, and 2.3 of Chapter 2.

Chapter 2 provides a comprehensive summary of the study,

its conclusions and its recommendations.

The staff's report concludes that at this time there are no

legislative changes required. Each of the recommended

staff actions could be implemented within NRC's current

statutory authority. However, the staff identifies several

issues that after subsequent analysis may result in

legislative proposals.

The staff notes that the actions which have been identified

and recommended by the study are extremely comprehensive

and several of them could consume all of NRC's current

budget and manpower allocated to development of the quality

assurance program. It will be necessary to establish

ix
4

priorities for the quality assurance issues within the

other issues faced by the NRC and make resource

allocations. As a result, some of the recommended actions

may necessarily be deferred until the higher priority

actions are completed.

x
TABLE OF CONTENTS

ABSTRACT ....... ....... ............................... . i.i.

LETTER TO CONGRESS ............................................ v

BRIEF OVERVIEW OF NRC STAFF REPORT ....... .................. .. vii

1.0 INTRODUCTION ........ ......... .......................... 1-1

1.1 Purpose of the Report ..... ....................... 1-1

1.2 Roles of the NRC and Utilities in Nuclear Construction. 1-6

1.3 Evolution of NRC Programs for Quality Assurance ......... 1-7

1.3.1 Quality Assurance Requirements and Guidance ....... 1-7

1.3.2 Quality Assurance Licensing Programs ........... .. 1-8

1.3.3 Quality Assurance Inspection Programs ............ 1-8

1.4 Project Technical Approach ...... ................. .. 1-9

1.5 Public Comments ........ ... ...................... .. 1-9

1.6 Organization of the Report.. ...... ............... .. 1-10

2.0 SUMMARY: STUDY CONCLUSIONS AND RECOMMENDATIONS ........... .. 2-1

2.1 Conclusions Stemming from Underlying Questions .......... 2-1

2.1.1 Why Have Several Nuclear Construction Projects

Experienced Significant Quality-Related Problems

While Others Have Not? . . . . . . . . . . . . . . . . . . 2-2

2.1.2 Why Have the NRC and the Utilities Failed or

Been Slow To Detect and/or Respond to These

Quality-Related Problems? .............. 2-5

2.2 Conclusions from NRC's Analysis of Ford Amendment

Alternatives b(1)-b(5). : ....... ................. ... 2-6

2.3 Other Conclusions .......................... 2-13

2.3.1 The Kist Report on Improvements to NRC's Programs. . 2-13

2.3.2 Battelle Reports on Contractual and Institutional

Issues and on QA Programs of Other Industries. . . 2-14

2.4 NRC Administrative Actions. ................. 2-16

2.4.1 NRC Administrative Actions To Support the

Prevention Objective and To Improve Management . . . 2-16

2.4.2 NRC Administrative Actions To Support the Detection

Objective and To Lower the Threshold for Taking

Action for Construction Quality Problems . . ..... 2-24

2.4.3 NRC Administrative Actions To Support the Assurance

Objective and To Increase Public Confidence ....... 2-30

2.4.4 Summary of NRC Actions Under Way and Actions

To Be Taken ..... ..................... 2-32

2.4.5 Actions Requiring Further Analysis .......... . . .2-34

2.5 Actions of the Nuclear Industry ...... .... ........ .. 2-39

2.5.1 Actions Already Undertaken .... ............. .. 2-39

2.5.2 Future Actions ........ ...... ............. .. 2-40

2.6 Possible Legislative Initiatives ..... .............. .. 2-44

3.0 QUALITY ASSURANCE CASE STUDIES AT CONSTRUCTION PROJECTS ....... 3-1

3.1 Purpose ........ ... ............................. 3-2

3.2 Why Have Several Nuclear Construction Projects

Experienced Significant Quality-Related Problems? ........ 3-3

3.2.1 Lack of Prior Nuclear Experience ............. .. 3-3

3.2.2 Project Management Shortcomings .............. .. 3-6

xi
3.2.3 Shortcomings in NRC's Screening of Construction

Permit Applications ....... ................. 3-9

3.2.4 Other Factors Contributing to Major Quality

Problems .......... ....................... 3-11

3.3 Why Have the NRC and the Utilities Failed or Been Slow

To Detect and/or Respond to These Quality-Related Problems? 3-11

3.3.1 Shortcomings in Utility Programs and Practices.. . . 3-11

3.3.2 Shortcomings in NRC's Programs and Practices . . . . 3-12

3.4 Why Have Some Nuclear Construction Projects Apparently

Been Successful in Achieving Quality While Others Have

Not?....... 3-14

3.4.1 Prior Nuclear Experience ....................... .3-14

3.4.2, Utility Management's Understanding of and

Involvement in the Project .... ............. .. 3-17

3. 3 Rising Standard of Performance/Commitment

To Excellence ............................... .. 3-19

3.4.4 Other Characteristics of Apparently Successful

Projects ........... ...................... .. 3-20

3.4.5 Design Completion and Project Planning ......... .. 3-21

3.5 The Overlap Between QA and Project Management ......... .. 3-23

3.6 Implications of the Case Studies for Future Plants ..... 3-24

0 ' PILOT PROGRAMS: QUALITY ASSURANCE AUDITS PERFORMED

BY INDEPENDENT INSPECTORS ............ ................. .. 4-1

4.1 Technical Approach and Findings ..... .............. .. 4-3

4.2 Parameters of Future Third-Party Audits ..... .......... 4-5

4.2.1 Frequency of Future Third-Party Audits .... ...... 4-7

4.3 Applicability of the Third-Party Audit Program to

Alternative b(2) ............................... .. 4-8

4.4 Description of the Four Third-Party Audits ........... .. 4-9

4.4.1 Independent Construction Review of Marble Hill Nuclear

Generating Station Units I and 2, Torrey Pines

Technology, San Diego, California, 1983 .......... 4-10

4.4.2 Independent Design and Construction Verification

Program - Midland Units 1 and 2, Monthly Status

Reports Numbers 1 through 6, TERA Corporation,

Bethesda, Maryland, 1983 ........................ 4-11

4.4.3 Evaluation of South Texas Project - Units I and 2

Construction Project, Gilbert Commonwealth Associates,

et al., 1983 ....... .................... .. 4-12

4.4.4 Independent Quality Assurance Evaluation of Palo-Verde Nuclear Generating Station, Units 1

2, and 3, Torrey Pines Technology, San Diego,

California, 1983 ........ .................. .. 4-13

5.0 AUDITS BY ASSOCIATIONS OF PROFESSIONALS ................. .. 5-1

5.1 Conclusions and Recommendations ............... ....... 5-2

5.1.'1 ASME/NB Audits and Inspections .... .......... .. 5-2

5.1.2 INPO Construction Project Evaluation Program . . . . 5-2

5.2 Technical Approach in Evaluating Organizations

of Professionals ........ .................... .... 5-3

5.2.1 ASME/NB ........................ 5-4

5.2.2 Institute of Nuclear Power Operationss ........ 5-4

xii
6.0 MORE PRESCRIPTIVE ARCHITECTURAL AND ENGINEERING CRITERIA. .

6.1 Summary, Conclusions, and Findings ..... .............

6.2 Analysis ............. ...........................

6.2.1 Earlier Attempts to Define "Principal A&E Criteria"

6.2.2 Current Initiatives ............................

6.2.3 Relationships of A&E Criteria to Major

Quality-Related Problems ..... ...............

6.2.4 Management of Change ...... ..... .............

6.2.5 Inspectability and Enforceability ..............

6.2.6 Prescriptiveness ...... ....................

6.2.7 Summary .......... ........................

7.0 REVIEW OF NRC'S PROGRAM FOR ASSURANCE OF QUALITY ............

7.1 Technical Approach ....................................

7.2 Abstract of Appendix B, the Kist Report ...............

7.2.1 Recommendations of the Kist Report for

Improvements in NRC's Organization, Methods, and

Progrems for Quality Assurance Development, Review,

and Inspection ....... .....................

7.3 Actions Recommended to Improve NRC Programs ............

7.3.1 Recommendation of NRC Case Studies, Review of NRC

QA Policies and Programs, and Review of Outside

Programs. . .......................

7.3.2 Additional Areas Requiring Further

Evaluation ......... .......................

7.4 Recent Improvements to NRC's QA Program ...............

7.5 Programs Under Development ...... ..................

6-1

6-1

6-2

6-3

6-4

6-4

6-5

6-6

6-7

6-7

7-1

7-1

7-3

7-3

7-6

7-6

7-10

7-11

7-16

8.0 CONTRACTUAL, ORGANIZATIONAL AND INSTITUTIONAL ISSUES ....

8.1 Abstract of Appendix C ...... ............... ..

8.2 Preliminary Findings, Conclusions and Recommendations.

9.0 REVIEW OF OTHER EXISTING ALTERNATIVE PROGRAMS FOR THE

ASSURANCE OF QUALITY ......... ....................

9.1 Abstract of Appendix D ...... .................

9.2 Results and Recommendations ..... ..............

9.2.1 Design and-Quality Engineering ............

9.2.2 Quality Programs ....... ................

9.2.3 Program Reviews ........ ................

9.2.4 Vendors .................................

9.2.5 Inspection Programs. ..... ...............

9.2.6 Making Management More Responsible for Quality.

. . . 8-1 . . . 8-1

8-1

* . . 9-1

* . . 9-1

. . . 9-2

. . . 9-3 . . . 9-3

. .. . 9-4

. . .9-4 * . . 9-4

*. . 9-5

10.0 PUBLIC COMMENTS ..... ........................ ........ 10-1

10.1 Text of the Amendment ...... ............ .......... 10-2

10.2 Comments of the Public, Licensees of Nuclear Power

Plants, Organizations of Professionals and Others, and

NRC's Response to These Comments ................. 10-4

10.2.1 Section 13(b)(1): More Prescriptive Architectural

Engineering Criteria ...... ................. .. 10-5.

xiii
10.2.2 Section 13(b)(2): Demonstration of Capability to

Independently and Effectively Manage the QA/QC

Function .....................................

10.2.3 Section 13(b)(3): Evaluations by Organizations of

Professionals Which Are More Effective Than Those

Currently Performed .................. . ....

10.2.4 Section 13(b)(4): Improvements to NRC's Programs,

Methods, and Organization ......................

10.2.5 Section 13(b)(5): Audits by Third-Party

Independent Inspectors ..... ................

10.2.6 Section 13(c): Pilot Programs . . ........... .

10.2.7 General Comments ......... ..................

10.3 ACRS Comments ........... .............. ........

10.4 Review Group ........ ... ...................... .

1.0.4.1 Review Group Comments on This Report ............

APPENDIX A: CASE STUDIES OF QUALITY AND QUALITY ASSURANCE IN THE

DESIGN AND CONSTRUCTION OF NUCLEAR POWER PLANTS

Executive Summary ...............................

A.1 Introduction. ........................

A.1.1 Background..... ...................... . ..

A.1.2 Purpose ... ....................

A.1.3 Technical Approach.... . .............

A.2 Conclusions and Findings ........ .................

A.3 Discussion : . . . . . . . . . . . . . . . . . . . .. . .

A.3.1 Case Studies ..........................

Case Study A ......... .....................

Case Study B ....... ....... ..............

Case Study C ....... ........ ..............

Case Study D ......... ......................

Case Study E ..... ........ .............

Case Study F ....... ................ .......

The Zimmer Case Study ........ ................

A.3.2 Summary of Case Study Findings ................

A.4 References ............. ........................

10-7

10-8

10-11

10-13

10-14

10-16

10-18

10-25

10-26

iii

A.1

A.2

A. 2 A. 2

A. 4

A. 7

A. 7 A. 7

A.11

A. 14

A.18

A. 24

A. 28

A. 32

A. 38

A. 43

APPENDIX B: MANAGEMENT ANALYSIS: U.S. NUCLEAR REGULATORY COMMISSION

PROGRAMS ASSURANCE OF QUALITY IN DESIGN AND CONSTRUCTION

OF NUCLEAR POWER PLANTS

Executive Summary ........... ........................

1.0 Introduction. ........................

1.1 Purpose of Management Analysis ...................

1.2 Scope ............. .........................

1.3 Background. ...... ... ......................

1.4 Technical Approach ....... ...................

1.5 Limitations of Management Analysis ..............

2.0 Summary and Conclusions ....... ...................

2.1 General ............. ........................

2.2 Organization ....... .................... ..

2.3 Management Practices ........ . . . . ..... ... ...

2.4 Standards Program for Assurance of Quality.. . . . .

2.5 Licensing Program for Assurance of Quality .......

2.6 Inspection Program for Assurance of Quality .......

iii

B.1

B.1

B.1

B.1

B.2

B.4

B.5

B.5

B.5

B.5

B.6

B.6

B.7

xiv

C.5.2 Project Ownership Arrangements...

C.5.3 Institutional Issues--A Summary . .

C.6 References ...... ........ .........

C.7 Bibliography ..... ................

APPENDIX D: PROGRAMS OF OTHER AGENCIES, INDUSTRIES,

COUNTRIES FOR THE ASSURANCE OF QUALITY

Executive Summary ..... ................

D.1 Introduction .........................

D.1.1 Background............. . ..

D.1.2 Purpose and Objectives . . . . ...

D.1.3 Technical Approach ............

D.2 Conclusions and Findings .............

D.2.1 Design ..... ................

D.2.2 Assurance of Quality Programs . . .

D.2.3 Program Reviews ..... ..........

D.2.4 Vendors ..... ...............

D.2.5 Inspection Programs . .. . ....

D.2.6 Other ...... ................

D.3 Significant Findings from Each Program . .

D.3.1 FAA Program ...... ............

D.3.2 DOE Program

D.3.3 NASA Program............. ...

D.3.4 Shipbuilding Program.........

D.3.5 NRC Program ..... ...... .....

C. 37

C.42

C. 43

C.45

AND FOREIGN

iii

D.1

D.1

D. 1

D.2

D.4

D.5

D. 5

D.6

D.6

D.6

D. 7

D.7

D.7

D.8

D. 9

D.9

D. 10

D.11

D.14

D.14

D.21

D. 35

D.44

D. 59

D. 66

D. 94

D.3.6 Nuclear Regulatory Programs in Other Countries. .

D.4 Summary of Assurance of Quality (AOQ) Programs .......

D.4.1 FAA Assurance of Quality (AOQ) Program ............

D.4.2 DOE Assurance of Quality (AOQ) Program ............

D.4.3 NASA Assurance of Quality (AOQ) Program .......

D.4.4 U.S. Shipbuilding Assurance of Quality (AOQ) Programs

D.4.5 NRC Assurance of Quality (AOQ) Program ..........

D.4.6 Foreign Nuclear Assurance of Quality (AOQ) Programs .

D.5 References ............... ........................

APPENDIX E: GLOSSARY OF ACRONYMS/ABBREVIATIONS ..... ............ E.1

xvi
LIST OF TABLES

2.1 NRC Administrative Actions Under Way and Recommended for

Nuclear Plants Under Construction To Support the NRC QA

Program Objectives of Prevention, Detection, and Assurance . . . 2-33

2.2 Actions Requiring Further Analysis ..... ............... .. 2-38

2.3 Comparison of Major Features of Former, Present and Proposed

NRC and Industry Programs for Assurance of Quality in the

Design and Construction of Nuclear Power Plants ........... .. 2-43

3.1 Summary of Relationship of Project Role to Prior Nuclear

Experience at the Time Quality Problems Occurred ........... .. 3-5

4.1 Summary Comparison of Pilot Program Independent Audits ........ 4-15

xvii

ACKNOWLEDGEMENTS

A number of individuals other than the immediate project staff and management

made important contributions to this report. Mr. Richard C. DeYoung, Director

of NRC's Office of Inspection and Enforcement (IE), selected the key project

participants and provided continuing support and suggestions throughout the

project. In addition to providing continuous senior management oversight of

the study, Mr. James M. Taylor, Deputy Director of IE,'was actively involved

in the performance of the study. Among his many contributions for the project,

he set up and managed the pilot program study and activities.

Mr. Brian Grimes, former Deputy Director for the Division of Quality Assurance,

Safeguards, and Inspection Programs, IE, provided valuable advice on several

complex issues and was largely responsible for establishment of the special

review group and selection of its members. Mr. Tom Dorian of the Office of the

Executive Legal Director provided continuing legal review and advice r- the

project as well as comprehensive editorial advice.

The manuscript was typed by Ms. Donna Zetts, and edited by Ms. Vicki Lee, Doth

of whom made personal and family sacrifices to contribute their considerable

talents to the project to ensure that the report was completed on, time.

The insights gained in this study would not have been possible without the

information obtained through the case studies and the pilot programs. The

study staff is indebted to the following utilities, each of whom agreed to

participate in the case studies and/Or the pilot program:

Public Service of Indiana (both)

Arizona Public Service Company (both)

Houston Lighting and Power Company (both)

Georgia Power Company (Case Studies)

Pacific Gas and Electric Company (Case Studies)

Florida Power and Light Company (Case Studies)

Consumers Power Company (Pilot Program)

The authors of the report are solely responsible for any awkwardness of phrase,

redundancy (of which there is much) and lack of logical thought.

xix

PROJECT ORGANIZATION

FORD AMENDMENT STUDY

Richard C. DeYoung, Director, Office of Inspection and Enforcement (IE)

James M. Taylor, Deputy Director, IE

J. Nelson Grace, Director, Division of Quality Assurance, Safeguards, and

Inspection Programs, (DQASIP), IE

James G. Partlow, Deputy Director, DQASIP, IE

G. Ted Ankrum, Chief, Quality Assurance Branch, DQASIP, IE

W. D. Altman, Study Project Manager, DOASIP, IE

Project Staff

E. W. Brach

Paul Keshishian

George Gower

Edward T. Baker

Ronald M. Langstaff

James E. Kennedy

Administrative Staff

Donna Zetts

Vicki Lee

Other Contributors

J. M. Sniezek, Former Deputy Director, IE

E. L. Jordan, Former Director, Division of Engineering and Quality Assurance, IE

B. K. Grimes, Former Deputy Director, DQASIP, IE

T. L. Harpster, Former Chief, Quality Assurance Branch, DQASIP, IE

Tom Dorian, Office of Executive Legal Director

Chip Cameron, Office of Executive Legal Director

John Fair, IE

Bill Beach, IE

Contractors

Pacific Northwest Laboratory

Harold Harty

Miles Patrick

James Christensen

Robert Sorenson

W. J. Apley

J. F. Nesbit

B. W. Smith

P. L. Hendrickson

N. C. Kist and Associates, Inc.

John L. Heidenreich

Richard M. Kleckner

xxi
Battelle Human Affairs Research Center

Marilyn Walsh

Mary McGuire

B. L. Hansen

EG&G Idaho

Ken Carroll

Larry Kubicek

Harley Ki rschenmann

Dellon Associates, Inc.

Robert M. Dellon

Earl Bradford

Dave Ross

xxii
REVIEW GROUP

FORD AMENDMENT STUDY

Fred Albaugh, Chairman John Gray

Independent Consultant International Energy Associates, Ltd.

John Amaral John Hansel

Bechtel Power Corporation System Development Corporation

Spencer Bush Robert Laney

Review and Synthesis Associates Independent Consultant

Thomas Cochran Leland Bohl

National Resources Defense Council General Electric

George Coulbourn

Boeing Engineering Company

xxiii

1.0 INTRODUCTION

1.1 PURPOSE OF THE REPORT

In recent years, major problems relating to the quality of design and/or

construction have arisen at several nuclear power plant construction projects.

Projects having received widespread attention in this regard include Marble

Hill, Midland, Zimmer, South Texas, and Diablo Canyon. Because of these

quality-related problems and others in the U.S. nuclear industry, many in the

public and in Congress have questioned (1) the nuclear industry's ability to

design, construct and operate reactors in a manner consistent with maintaining

public health and safety, and (2) the Nuclear Regulatory Commission's (NRC's)

ability to provide effective regulatory oversight of these activities. As a

result of these Congressional concerns, the NRC was directed by Congress in

Section 13(b)* of Public Law 97-415 (the NRC Authorization Act for fiscal years

1982 and 1983) to conduct a study of existing and alternative programs for

improving quality assurance and quality control in the construction of nuclear

power plants. The study requirements of that law are as follows:

Sec. 13(b) The Commission shall conduct a study of existing and

alternative programs for improving quality assurance and quality

control in the construction of commercial nuclear powerplants. In

conducting the study, the Commission shall obtain the comments of

the public, licensees of nuclear powerplants, the Advisory Committee

on Reactor Safeguards, and organizations comprised of professionals

having expertise in appropriate fields. The study shall include an

analysis of the following:**

(1) providing a basis for quality assurance and quality

control, inspection, and enforcement actions through the

adoption of an approach which is more prescriptive than

that currently in practice for defining principal architectural and engineering criteria for the construction of

commercial nuclear powerplants;

(2) conditioning the issuance of construction permits for

commercial nuclear powerplants on a demonstration by the

licensee that the licensee is capable of independently

managing the effective performance of all quality assurance

and quality control responsibilities for the powerplant;

*This amendment to the NRC Authorization Act was introduced by Senator Wendell,

Ford of Kentucky and was co-sponsored by Senators Simpson, Mitchell, Levin,

and Hart. It was called the "Ford Amendment" by its sponsors and this term

is adopted in this report.

**These five alternatives will frequently be referred to as "alternatives

b(1)-b(5)" in the remainder of this report.

1-1
(3) evaluations, inspections, or audits of commercial

nuclear powerplant. construction by organizations comprised

of professionals [-ving expertise in appropriate fields

which evaluations, inspections, or audits are more effective

than those under current practice;

(4) improvement of the Commission's organization, methods,

and programs for quality assurance development, review, and

inspection; and

(5) conditioning the issuance of construction permits for

commercial nuclear powerplants on the permittee entering

into contracts or other arrangements with an independent

inspector to audit the quality assurance program to verify

quality assurance performance.

For purposes of paragraph (5), the term "independent inspector"

means a person or other entity having no responsibility for the

design or construction of the plant involved. The study shall

also include an analysis of quality assurance and quality control

programs at representative sites at which such programs are

operating satisfactorily and an assessment of the reasons therefor.

(c) For purposes of --

(1) determining the best means of assuring that commercial

nuclear power plants are constructed in accordance with the

applicable safety requirements in effect pursuant to the

Atomic Energy Act of 1954; and

(2) assessing the feasibility and benefits of the various

means listed in subsection (b);

the Commission shall undertake a pilot program to review and

evaluate programs that include one or more of the alternative

concepts identified in subsection (b) for the purposes of assessing

the feasibility and benefits of their implementation. The pilot

program shall include programs that use independent inspectors for

auditing quality assurance responsibilities of the licensee for

the construction of commercial nuclear powerplants, as described

in paragraph (5) of subsection (b). The pilot program shall include

at least three sites at which commercial nuclear powerplants are

under construction. The Commission shall select at least one site

at which quality assurance and quality control programs have operated

satisfactorily, and at least two sites with remedial programs underway at which major construction, quality assurance, or quality

control deficiencies (or any combination thereof) have been identified

in the past. The Commission may require any changes in existing

quality assurance and quality control organizations and relationships

that may be necessary at the selected sites to implement the pilot

program.

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(d) Not later than fifteen months after the date of the

enactment of this Act, the Commission shall complete the study

required under subsection (b) and submit to the United States

Senate and House of Representatives a report setting forth the

results of the study. The report shall include a brief summary

of the information received from the public and from other persons

referred to in subsection (b) and a statement of the Cormmission's

response to the significant comments received. The report shall

also set forth an analysis of the results of the pilot program

required under subsection (c). The report shall be accompanied

by the recommendations of the Commission, including any legislative

recommendations, and a description of any administrative actions

that the Commission has undertaken or intends to undertake, for

improving quality assurance and quality control programs that are

applicable during the construction of nuclear powerplants.

This report describes the activities and results of the special study of

quality assurance required by the Ford Amendment. Congress' action to elevate

concern for quality in construction of commercial nuclear power plants to the

national level will be of continuing help to the NRC in attaining its goals

for quality in the nuclear industry.

In its 1984 "Policy and Planning Guidance" to the NRC staff, the Commission

states its policy for raising the quality of nuclear plants as follows:

Policy:

1. The NRC must improve its activities that affect quality in

the nuclear industry. RRC's goal is to assure a high level

of quality in management of reactor design, construction,

operations, and maintenance.

2. For both construction activities and operating facilities

the NRC needs to understand the causal factors leading to

problems and to develop a modified institutional and

legislative framework for future nuclear plants which will

decrease the probability of repetition of past mistakes.

The theme of "do it right the first time" should be adopted

to ensure plants are built properly and can operate safely.

3. In order to reduce operational problems including maintenance and modification activities, the NRC needs to pursue

more aggressively efforts (1) to assure utilities provide

the appropriate management framework and capability for

safe operation and maintenance of nuclear power plants*; (2)

to improve quality in utility operations and in procedures,

systems, and components used in operations; and (3) to

develop better guidance for the treatment of plant systems,

components, and equipment that can adversely affect safe

operation.

4. NRC should highlight the necessity for highly trained and

qualified professionals for licensees, contractors and

vendors to manage those functions that relate to safety.

1-3
This study reflects the above Comm~ission policy statement. It is a look to the

future--an opportunity for a mid-course correction that builds upon past

experience to chart a future course for assuring quality in nuclear power plant.

design and construction. While this study has looked at the past, it has been

from the perspective of what should be done in the future.

In any complex endeavor, some errors will be made. The more complex the

endeavor, the greater the chance of errors. If some risk is associated with

the endeavor, measures must be taken to provide assurance that errors are

found, corrected, and do not pose an undue threat to public health-and safety.

Construction of nuclear power plants is a very complex endeavor, and uncorrected errors in construction may seriously threaten public health and safety

when operation begins. The primary measure used by the nuclear industry to

provide assurance that construction errors are found and corrected is a quality

assurance (QA) program. As used by the NRC, "quality assurance" comprises all

those planned and systematic actions necessary to provide adequate confidence

that a structure, system or component will perform satisfactorily in service.

Quality assurance includes "quality control, which comprises those quality

assurance actions related to the physical characteristics of a material,

structure, component or system which provide a means to control the quality of

the material, structure, component or system to predetermined requirements."*

Congress has posed several very specific questions, and this study undertakes

to answer those questions. However, to provide a foundation for the answers to

those specific questions, the study sought also to answer the following underlying questions:

1. Why have certain nuclear construction projects experienced significant

quality-related problems whiie others have not?

2. Why have the NRC and the utilities failed or been slow to detect and/or

respond to these quality-related problems?

The answers to these underlying questions provide a foundation for answering

the following question which, in the NRC's opinion, summ~arizes the thrust of

the Ford Amendment:

3. What changes should be made to the current policies, practices, and

procedures governing commercial nuclear power plant design, construction

and regulation to prevent major quality problems in the future or to

provide more timely detection and correction of problems?

These questions helped to focus the study activities and approach, and their

answers provided the central themes for this report to Congress.

Perhaps equally important to stating what questions this study did answer is to

state what questions it did not answer. Primary among questions that this study

did not answer are the following:

*Code of Fe-deral Regulations, Title 10, Part 50-(10 CFR 50), Appendix B.

1-4
(1) This study did not attempt to quantify the relationship between quality

and quality assurance and safety, nor did the study develop a quantifiable

relationship between risk and quality assurance. In particular, this

study did not address the question of the extent to which the quality or

quality assurance problems that occurred at plants such as Marble Hill,

Midland, Zimmer, South Texas, or Diablo Canyon may have affected the

safety of those plants.

(2) This study did not address the issue of quality and quality assurance

for operating plants.

(3) This study did not develop a methodology to measure the effectiveness of

quality assurance programs. In particular, this study did not attempt to

evaluate the effectiveness of various non-NRC QA programs covered in the

study, including those of other government agencies, other industries, or

other countries, but rather sought to identify individual features of

those programs that should be considered for adoption in NRC's program.

(4) The study took as a given that NRC's statutory role is not to ensure the

survival of the nuclear option but rather to ensure that if nuclear power

is used in the U.S., such use is consistent with maintaining the common

defense and security and public health and safety. Consistent with this

premise, the study (1) did not consider the appropriate role of nuclear

power in the U.S.'s national energy policy, (2) did not attempt to determine whether NRC's present statutory role should be changed, and (3) did

not attempt to assess the future of nuclear power in the U.S. or the

effect of quality assurance programs on that future. Exploration of such

questions is beyond the statutory purview of the NRC. In this regard,

the Congressional Office of Technology Assessment (OTA) has recently

published a major study that deals with these issues: Nuclear Power in

an Age of Uncertainty.* The OTA report and this study complement each

other in many ways and, while dealing with overlapping issues from

different perspectives, each reinforces findings of the other (e.g., the

critical role of utility management in constructing and operating nuclear

power plants, and predictability in the licensing process).

Each of these questions was considered outside the scope of this study, which

was tailored to be as responsive as possible to the specific questions asked by

the Ford Amendment.

This report focused on developing an understanding of the quality or quality

assurance problems that have occurred in plants currently under construction.

Some of these projects have experienced problems in plant quality--parts of the

plants were built incorrectly. Some of these projects experienced problems in

*U.S. Congress, Office of Technology Assessment. February 1984. OTA-E-216,

Washington, D.C.

1-5
tý- assurance of quality--the utility was unable to demonstrate whether its

p :nt was built correctly. Some projects experienced problems in both quality

and the assurance of quality. To acknowledge this overlap, the report throughout will refer to problems in quality and/or quality assurance or quality and

the assurance of quality, etc. For simplicity of writing, problems generally

falling under this umbrella will sometimes be referred to as "quality-related"

problems.

1.2 ROLES OF THE NRC AND UTILITIES IN NUCLEAR CONSTRUCTION

Before describing the study activities and results, the statutory role of the

NRC in nuclear construction, quality and quality assurance should be made

clear. The NRC is not directly responsible for nuclear power plant quality.

The public policy of the United States, established in the Atomic Energy Act of

1954, is that ownership and operation of commercial nuclear power plants rest

in the hands of the public and privately owned utilities of the United States,

but only to the extent their use is consistent with the common defense and

security and the public's health and safety. The Act directs the NRC to issue

licenses only to persons "who are equipped to observe and who agree to observe

such safety standards to protect health and to minimize danger to life or

property as the Commission may by rule establish."*

It is the owner/licensee who is responsible for achieving and assuring the

quality and reliability of a nuclear power plant. The designers, the constructors, labor contractors, and component vendors are responsible to the

licensee to the extent that the owner/licensee delegated responsibility.

However, ultimate responsibility, even though delegated, is retained by the

licensee.** The NRC is responsible for the health and safety of the public,

not the quality or lack of quality of the nuclear power plant. If the licensee

has not fulfilled its responsibility for building a safe plant, the NRC can

still fulfill its responsibility by denying an operating license.

However, neither the interests of the public (who may also happen to be the

owners, stockholders and/or customers of the utilities) nor the utilities are

well served by a regulatory system that introduces uncertainty about the ultimate acceptability of an expensive and long-in-the-making facility until its

completion date. All parties are best served by a regulatory process that

establishes relevant standards, exercises due process in the change of those

standards, screens out at the beginning those organizations that are not

equipped to attain those standards, provides inspections that effectively

measure the attainment of those standards in a time frame that permits corrective action as early as possible and takes enforcement action in all cases

where corrective action is not adequate, and finally provides reasonable

confidence that a project has demonstrably met all requirements and can be

operated safely. Many of this study's recommendations, when implemented,

should improve NRC's ability to provide such a regulatory process.

*Atomic Energy Act of 1954, as amended, Section 103(b)(2).

**10 CFR 50, Appendix B.

1-6
1.3 EVOLUTION OF NRC PROGRAMS FOR QUALITY ASSURANCE

It is important to understand the evolution of the regulatory framework within

which the major quality-related problems have occurred. The regulatory framework governing the nuclear industry has developed and changed along with the

nuclear industry over the years, often in response to specific events. The

major quality-related problems at the five nuclear projects cited previously

provide a new set of events and programmatic failures that will lead to further

evolution of the regulatory framework. The purpose of this study is to provide

direction for that evolution and also to identify any factors that may be

beyond NRC's regulatory purview but that may have contributed to those major

quality-related problems.

The following sections describe the evolution of quality assurance requirements

and guidance, quality assurance licensing programs, and quality assurance

inspection programs.

1.3.1 Quality Assurance Requirements and Guidance

In July 1967, the Atomic Energy Commission (AEC) published for public and

industry comment Appendix A to 10 CFR Part 50, "General Design Criteria for

Nuclear Power Plants." Among the 55 criteria in Appendix A covering plant

design, one criterion required a quality assurance program for certain

structures, systems and components. Following review, public comments, and

subsequent revisions, Appendix A was issued as an effective regulation in

February 1971. Although its criterion for the QA program was very general, the

July 1967 draft of Appendix A was the first AEC proposal that would require

nuclear power plant licensees to have a quality assurance program.

The lack of AEC requirements and criteria for quality assurance was a key issue

raised by the Atomic Safety and Licensing Board (ASLB) in the operating license

hearings for the Zion plant in 1968. The board ruled that until the licensee

presented a program to assure quality and until the AEC developed criteria by

which to evaluate such a QA program, the hearings would be halted. Following

the board's rulings, the AEC developed requirements and criteria for quality

assurance programs and prepared a proposed new regulation, Appendix B to 10 CFR

Part 50, which would require licensees to develop programs to assure the

quality of nuclear power plant design, construction, and operation.

Appendix B contains 18 criteria that must be a part of the quality assurance

program for safety-related systems and components. Experience from military,

the National Aeronautics and Space Administration (NASA), and commercial

nuclear projects, as well as the AEC's own nuclear reactor experience, was used

in developing the criteria. Appendix B clearly places the burden of responsibility for quality assurance on the licensee. Although the licensee may

delegate to others the work of establishing and executing part or all of the

quality assurance program, the licensee retains responsibility for the program.

Visible QA documentation is required for all activities affecting the quality

of safety-related systems. Appendix B was published for comment in April 1969

and implemented in June 1970.

In addition to establishing QA regulations (i.e., Appendices A and B) in the

early 1970s, the AEC and the industry began issuing guidance that provided

acceptable ways of meeting the intent and requirements of the specific regulations. In October 1971, the American National Standards Institute (ANSI)

1-7
issued N45.2, "Quality Assurance Program Requirements for Nuclear Power

Plants." This standard was subsequently endorsed by the AEC in Safety Guide 28

(now Regulatory Guide 1.28) in June 1972. In 1973-1974, the AEC issued three

guidance documents for quality assurance in design and procurement, construction, and operation to help licensees establish QA programs. In July 1973, two

AEC Commnissioners and senior AEC staff participated in a series of regional

conferences with utilities to explain the role of quality assurance in

designing, constructing, and operating nuclear power plants and the NRC's role

in licensing, inspecting, and implementing licensee's quality assurance

programs. Since 1970, as the nuclear industry grew, as experience was gained

in nuclear regulation, and as the need for such guidance was recognized, many

consensus standards and AEC/NRC regulatory guides have been developed and

published to address various aspects of quality and quality programs.

1.3.2 Quality Assurance Licensing Programs

Appendices A and B of 10 CFR 50 set quality assurance requirements but left

open the issue of how to meet them. Industry standards were subsequently,

developed, and AEC guidance documents for quality assurance were prepared and

published. The standards and guidance documents helped both the AEC and the

license applicants understand what quality assurance is and how the quality

assurance program should function. AEC staff guidance was prepared for the

licensing staff to use as criteria for evaluating licensees' applications.

In the early 1970s, the regulatory staff believed that license applications

should contain additional information on the licensee's quality assurance

programs. In an effort to establish standards7 for the licensees' descri'ption

of their QA program in their construction permit applications, a proposed

"Standard Format and Content of Safety Analysis Reports 'for Nuclear Power

Plants" was issued for commient in February 1972 and later adopted. After the

new standard was developed, a staff Standard Review Plan (SRP) was published in

1974 and adopted in 1975 to standardize and guide the licensing staff in its

review of license applications. Licensing staff use the SRP as a benchmark in

reviewing the QA programs of license applicants. Updated and revised versions

of the SRP have been issued about every three years since.

1.3.3 Quality Assurance Inspection Programs

Before 1968, the AEC performed little inspection at nuclear power plants under

construction. Few inspection procedures and only minimal guidance were

available. As a result of quality-related problems in the construction of some

nuclear power plants, including the oyster Creek plant in New Jersey at which

major problems in vendor-supplied materials were discovered, the AEC recognized

the need to examine construction activities more closely and to develop more

formalized programs for inspecting construction activities. The AEC reassigned

inspectors from operations to construction and hired personnel with construction backgrounds.

As the number of inspectors and reactors increased, so did the need for more

inspection guidance. The AEC began developing a "General Facility Under

Construction Inspection Program" and began writing inspection procedures to

implement the program. In late 1969, the AEC issued a directive to the

regional compliance offices to implement the procedures. In 1972, a procedure

entitled "QA During Design and Construction" was issued. This procedure

addressed Appendix B of 10.CFR 50 and required a review of the licensee's

1-8
quality assurance manual, a meeting with corporate utility management, and an

initial inspection after the construction permit application was docketed but

before it was issued.

In 1973, more detailed inspection procedures were issued covering prV-dock'eting and pre-construction permit inspections. The AEC then began preparing a more

comprehensive inspection program, which greatly expanded and clarified the

inspection program during the pre-construction and post-construction permit

issuance period. These inspection programs have basically the same structure

today as when the major revised programs were issued in 1975. However, major

changes have recently been made to refine and prioritize the inspection

procedures, to increase inspection coverage with resident inspectors and team

inspections, and to direct more inspection effort to independently confirming

the quality of hardware and completed work and less inspection to quality

assurance documentation and programmatic aspects.

1.4 PROJECT TECHNICAL APPROACH

The findings, conclusions, and reconmendations of this study are based on

the following project activities: (1) case'studies of several commercial

nuclear power plant projects that have had major quality-related problems in

design and construction and several that have not; (2) pilot programs to assess

the feasibility and benefits of third-party inspections to evaluate QA program

effectiveness; (3) evaluation of audits of nuclear power plant construction by

the Institute of Nuclear Power Operations (INPO); (4) analysis of the feasibility and benefits of a more prescriptive approach for defining principal

architectural and engineering criteria; (5) review and analysis of NRC's

organization, methods, and programs for quality assurance; (6) analysis of

project, organizational, and institutional issues associated with quality in

nuclear power plant design and construction; (7) review of other selected

programs for the assurance of quality, including programs of other U.S.

government agencies, other industries, and foreign countries; (8) consultations

and interaction with the public, licensees, the Advisory Committee on Reactor

Safeguards (ACRS), associations of professionals and others to solicit their

ideas and input; and (9) establishment of a group of-outside senior and expert

consultants to provide individual commnents on study activities and findings.

Because the case studies and pilot program involved some common sites (Marble

Hill, South Texas, and Palo Verde), they may be confused with each other. In

the case studies, six projects were analyzed to identify the reasons for the

success or lack of success of their quality assurance programs, whereas the

pilot program was a test of the use of independent auditors at four sites to

evaluate QA program effectiveness. Although the pilot program audits did

analyze the quality assurance programs of four different licensees and overlapped some case study activity, the desired result from the pilot program was

an assessment of whether independent, third-party audits could feasibly enhance

the detection capability currently provided by existing NRC and licensee

programs.

1.5 PUBLIC COMMENTS

Because only fifteen months were available to complete the required analyses

and to prepare this report, time was not available to publish preliminary study

findings for public comment. The NRC elected to request public comments on the

Ford Amendment at the beginning of the study so that the comments could be used

1-9
to develop and refine the study plan. The NRC did not want to develop a study

p, i and discover, through a later public comment process, that a significant

iP. had been missed and could not be added because of time. Some of the

coiments received were used in conducting the study, and several of the study

conclusions support comments received. As a result, many of the comments that

were received have been adopted within NRC's planned actions or included in

issues slated for further study. The resulting study plan was presented at a

public meeting of an ACRS subcommittee in July 1983.

To provide some outside review, the NRC arranged for nine persons who were

independent of the NRC to examine NRC's plans and progress several times during

the study. These outside professionals had expertise in nuclear power plant

quality assurance, project management, engineering, and other relevant areas.

The names, positions, and a summary of the comments of the reviewers are

contained in Chapter 10 of this report.

1.6 ORGANIZATION OF THE REPORT

Based on the previously described project activities, the remainder of this

report is organized as follows. Chapter 2 is a summary of the report and

contains the study findings, conclusions, actions and recommendations.

Chapter 3 describes findings from the case studies and contains an assessment

of the reasons the quality programs at some nuclear projects have operated

satisfactorily while others have not. The case study methodology, analysis and

findings are described in more detail in Appendix A. In Chapter 4, the pilot

program and the results of the pilot program analysis are described. This

chapter also includes an analysis of the feasibility and benefits of conditioning construction permits on a positive post-construction permit demonstration of

the applicant's QA management ability and on the applicant's entering into

arrangements with third parties to audit its QA program performance. Chapter 5

is an analysis of the benefits and feasibility of audits by associations of

professionals, with a focus on the INPO's Construction Project Evaluation

program.

Chapter 6 is an analysis of the benefits and feasibility of adopting a more

prescriptive approach to defining principal architectural and engineering

criteria. Chapter 7 contains the results of an analysis of the NRC's organization, methods and programs for quality assurance. Appendix B, which is an

analysis of the NRC's QA program by a management consulting firm, covers the

NRC program in more detail. Chapter 8 contains the results of an analysis of

contractual, organizational, and institutional issues associated with quality

in nuclear power plant design and construction. The issues in this section

emerged as a result of other study activities, and the results of this analysis

help provide a more comprehensive understanding of indirect factors that have

some effect on quality in the nuclear industry. A more detailed analysis of

these issues is found in Appendix C.

Chapter 9 contains the results of a review of selected quality programs outside

the U.S. commercial nuclear industry, including those of other government

agencies, other industries and foreign countries. The purpose of this outside

program review was to identify aspects of other programs that could be translated to the NRC program and might improve the NRC program. Appendix D

contains a more detailed analysis of this review. Neither the Chapter 8 nor

the Chapter 9 analyses were required by the Ford Amendment, but they were

1-10
included in the study to provide a broader spectrum of information and analysis

from which to draw findings and conclusions and to develop recommendations.

Chapter 10 briefly summarizes information received from the public, licensees,

the ACRS, associations of professionals, and the special review group established for this study, together with NRC's response to the significant public

comments received.

The report has been structured so that Chapters 3 through 10 individually

describe the analyses and study results summarized in Chapter 2. Each of

Chapters 3 through 10 has been written as a stand-alone document so that

anyone who is interested in a particular subject (e.g., more prescriptive

architectural and engineering criteria) can read the chapter pertaining to that

subject and understand the study's conclusions on that subject without having

to read the rest of the report. The study's major results, conclusions and

recommendations are summarized in Chapter 2. This organization has resulted in

some necessary redundancy between Chapter 2 and the rest of the report to

achieve the goals of (1) summarizing the study results in one place, and

(2) covering each major topic in a self-contained, stand-alone treatise.

1-11

2.0 SUMMARY: STUDY CONCLUSIONS AND RECOMMENDATIONS

This chapter summarizes the conclusions and recommendations of the Ford

Amendment study. Section 2.1 describes the findings and conclusions stermiing

from NRC's analysis of the underlying questions introduced in Chapter 1. The

study conclusions with respect to the five specific alternative approaches to

improve quality assurance and quality control described in the Ford Amendment

are presented in Section 2.2. Section 2.3 discusses conclusions and recommendations from several consultant studies that were conducted as part of the

overall study. Section 2.4 describes administrative actions already undertaken

by the NRC or recommended by the study to be undertaken or further analyzed by

the NRC as a result of the findings and.conclusions in the preceding sections.

These actions are summarized in Tables 2.1 and 2.2. Section 2.5 covers actions

that the study found to be appropriate for consideration by the nuclear

industry. Table 2.3 summarizes the differences among the former (pre-1980),

the present (1982-83) and the recommended future NRC and industry programs for

the assurance of quality in designing and constructing nuclear power plants.

Section 2.6 describes an issue that was identified in the study that requires

further analysis before any legislative recommendations can be made.

As with the report as a whole, individual sections of this chapter have been

written as stand-alone treatises so that the reader may develop a quick understanding of the study's conclusions or recommendations on a particular topic

without reading the whole chapter. This has resulted in some redundancy

between sections of the chapter. To the extent possible,, the text has been

annotated to refer the reader to other similar material in the report.

Most of the actions recommended by this study are directed toward revising

NRC's program for the assurance of quality in nuclear power plant design and

construction. The recommended actions are intended to improve the capabilities

of the NRC and the nuclear industry to better achieve the overall quality

assurance (QA) program goals of prevention, detection, and assurance. Although

most of the recommended actions are directed at changes in NRC's performance of

its QA activities, they will also influence the way the nuclear industry

conducts its QA activities. The industry's activities are ultimately the more

important of the two, because the actual work activities that result in whether

a nuclear power plant is built and operated safely remain where they have

always been--with the owner/licensee.

2.1 CONCLUSIONS STEMMING FROM UNDERLYING QUESTIONS

While conducting this study, it became apparent that the root causes of quality

assurance breakdowns went well beyond the purview of the formal QA program

itself and that the solution of the QA problem went beyond how to devise new or

better quality assurance programs. To provide a foundation for the answers to

the specific questions asked by the Ford Amendment, there were two underlying

questions that needed to be answered first. The answers to these underlying

questions also form the foundation for the actions proposed by this study and

the conclusions formed concerning the five specific approaches Congress

prescribed for study. The following subsections discuss each of these underlying concerns.

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2.1.1. Why Have Several Nuclear Construction Projects Experienced

Significant Quality-Related Problems While Others Have Not?

The principal conclusion of this study is that nuclear construction projects

having significant quality-related problems in their design or construction

were characterized by the inability or failure of utility management to

effectively implement a management system that ensured adequate control over

all aspects of the project. Each of the major quality-related problems cited

in Chapter 1 was related to breakdowns or shortcomings in the implementation of

the project's quality assurance programs; however, the quality assurance

program's deficiencies had as their root cause shortcomings in corporate and

project management. At several projects, breakdowns in the quality assurance

program were part of larger breakdowns in overall project management, including

planning, scheduling, procurement, and oversight of contractors.

There are two major corollary findings associated with management capability

and effectiveness. First, in today's environment, prior nuclear design and

construction experience of the collective project team (defined as the

architect-engineer (A/E), nuclear steam supply system (NSSS) manufacturer,

construction manager (CM), constructor, and owner) is essential, and inexperience of some members of the project team must be offset and compensated for

by experience of other members of the team. Each member of the project team

should assume a project role consistent with its prior nuclear experience and

not overstep its capabilities. A false sense of security growing out of prior

success in fossil plant construction led several first-time utilities into

underestimating the complexity of nuclear design andconstruction. This

miscalculation resulted in the assembly of a project team that lacked the

requisite experience, background, and management capability, individually or

collectively, to successfully design and construct a commercial nuclear power

plant without the development of significant quality problems. Although prior

nuclear design construction experience of the collective project team appears

necessary for future plants, it is not sufficient to assure the completed

construction of a quality nuclear plant.

The second corollary finding is that in the past, the NRC has not adequately

assessed, the factors of management capability and prior nuclear experience in

its pre-construction permit reviews and inspections. The substantial changes

the NRC has required of some licensees' projects to bring them up to minimum

standards are evidence that some utilities that were not adequately prepared

to undertake a nuclear construction project were granted construction permits

(CPs). It is clear in retrospect that some utilities granted CPs under

previous standards would not, based on the same qualifications, be granted a CP

in today's regulatory environment without substantial personnel and organizational improvements in experience levels and management approach. Besides not

performing a searching evaluation of licensee management capability before

issuing the CP, the NRC also did not foresee that even an otherwise adequate

management could be overwhelmed and demoralized by increasingly numerous

regulatory, design, and hardware changes mandated during the design and

construction process.

Other factors that contributed to major construction quality problems in the

past include the changing regulatory, political, and economic environment

surrounding nuclear power over the past several years and some licensees'

inability to recognize and adjust to the changes as they occurred; the NRC's

2-2
and licensees' inability to manage change well; some licensees' failure to treat

quality assurance as a management tool, rather than as a paperwork exercise or,

conversely, as a substitute for their own management involvement; and NRC's

inability to convince some licensees of the necessity for implementing their

quality assurance program.

The major quality problems that have arisen in design were related to shortcomings in management oversight of the design process, including failure to

implement quality assurance controls over the design process that were adequate

to prevent or detect mistakes in an environment of many design changes.

An essential characteristic of a successful nuclear construction project is

prior nuclear construction experience of the project team (utility owner, A/E,

NSSS manufacturer, CM, and constructor) collectively, with individual team

members assuming roles consistent with their prior level of nuclear experience

and capabilities. Prior nuclear design and construction experience is necessary

for key project personnel for each of the organizations comprising the project

team.

Although it is necessary that each team member assume a project role commensurate with its capability and prior experience for project success, it is not

sufficient. Prior nuclear construction experience of the utility owner is

particularly helpful, although not mandatory if the corporate entities comprising the rest of the project team are sufficiently experienced and if the

utility and the other members of the project team assume project roles consistent with their respective levels of nuclear experience. However, the

utility is ultimately responsible for the project, and it cannot delegate its

management and oversight responsibilities to others. This thought was summarized well by the Deputy Administrator of one of the NRC regional offices:

It is essential that a utility undertaking the construction and

operation of a power reactor facility have strong project management capability within its own organization to enable independent

owner direction and assessment of overall management and assurance

of quality of the project.

Another essential characteristic of a successful nuclear construction project

is an understanding and appreciation of the complexities and difficulties of

nuclear construction by top corporate management that manifests itself in a

project management approach that includes adequate financial, organizational,

and staffing support for the project; good. planning and scheduling; and close

management oversight of the project and the project contractors. Other factors

contributing to project success include strong management commitment to quality

and support for the quality program that starts at the top of the corporate

structure and flows down through project-level management to first-line supervisors and foremen; involvement of top corporate management in the project;

commitment of resources sufficient to complete the project in a quality manner;

careful selection of key project staff; an atmosphere that encourages looking

for problems and solving them; an openness to ideas for improvements; effective

project communications vertically and across project interfaces; an understanding of the symptoms of poor management practices; use of the quality

assurance program as a management tool, rather than as a substitute for management; and an understanding of the role, mission, and constraints of the NRC.

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Nuclear construction is sufficiently different from and more complex than.

fossil construction that fundamental changes to a utility's corporate structure

and project approach may be necessary to successfully complete the project.

Finally, of several projects studied, there tended to be a direct correlation

between the project's success and the utility' s view of NRC requirements. More

successful utilities tended to view NRC requirements as minimum, not maximum,

levels of performance, and they strove to establish and meet increasingly

higher, self-imposed goals. This rising standard of excellence theme was an

important part of the study's analysis of industry initiatives for selfimprovement, such as industry establishment and support of the Institute of

Nuclear Power Operations (INPO) (Chapter 5).

The case studies (Chapter 3) of nuclear construction projects having various

levels of quality success confirmed, through the analysis of actual cases,

several widely held opinions about the cause of major quality-related problems.

These opinions include shortcomings in management oversight of the project,

lack of management commitment to quality, insufficient prior nuclear expe-

:ience, and use of a fossil approach to nuclear construction. The case studies

'Aso confirmed the phenomenon of top corporate management setting the tone for

a project and affecting the emphasis of its subordinates, both managers and

workers. In this regard, management's actions have much more influence than

their words.

The case studies were also useful in understanding what the principal causes of

the quality-related problems were not, e.g., craftsmanship. The case studies

.found that whi~le poor craftsmanship played a role in some of the major qualityrelated problems, it was an effect, not the cause, of the underlying problems.

The principal underlying cause of poor craftsmanship in constructing nuclear

power plants, as well as the quality problem, was found to be poor utility an'd

project management.

This discussion is not meant to minimize the importance of craftsmanship in

achieving quality. Clearly, it is craftsmen who build or fail to build quality

into a nuclear plant, and quality craftsmanship is necessary for achieving

quality in nuclear construction. However, good craftsmanship is not a sufficient condition to achieve quality. Good craftsmanship can be defeated in

.its attempts to build a quality plant by conditions out of its control. Such

conditions include unavailability of tools or materials, rework due-to excessive design changes, design completion not sufficiently ahead of construction

activity, untimely scheduling of quality of work inspection activities,

unqualified or uninformed supervisors and foremen, a. project environment that

emphasizes production to the detriment of quality, and a project environment

/'that takes away the craftsman's sense of pride and accomplishment in his work. Each of these conditions is within the control of management, not the craftsman,

~xand util project management is improved to minimize these conditions, the

of improved craft skills alone on nuclear plant quality will be minimal.

Frfurther discussion of these findings and conclusions, refer to Chapter 3

and Appendix A (Case Studies) and Chapter 5 (Audits by Associations of

~\ Professionals).

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2.1.2. Why Have the NRC and the Utilities Failed or Been Slow To Detect and/or

Respond To These Quality-Related Problems?

The utilities, which have primary responsibility for the safe construction and

operation of nuclear power plants, have been stow in detecting or responding to quality-related problems for several reasons. The reasons include

abdication of project oversight responsibilities to contractors or to subcontractors, inadequate implementation of quality assurance programs, cost and

schedule pressures, inadequate QA/QC staffing, and attenuation of vital project

information flowing from the working level to top management. Each of these

reasons was found to have its roots in shortcomings of project and corporate

management; many of these shortcomings were caused or exacerbated by inexperience in constructing nuclear power plants. In some cases, the licensees did

not have effective management control of their project as a whole, and the

quality problems were symptomatic of a much broader malaise that affected the

*tire project.

At some projects there was a tacit delegation by management of its responsibility for the achievement of quality to the NRC-required organization (the QA

organization) whose mission is the assurance of quality. Inappropriate

delegation of responsibility for quality, along with top management not knowing

what their quality assurance programs were discovering, either through lack of

interest or understanding or through attenuation of information as it passed

through layers of intermediate management, contributed in no small part to the

untimely detection of and response to some quality problems. Licensee QA

managers and their programs have not been without fault, but they can be only

as effective as top utility management permits. As with the improvement of

craftsmanship, substantial improvements in quality assurance programs must

start at the very top of the corporate structures of those organizations

involved in the nuclear industry.

The NRC was slow to detect and/or take strong action in the major qualityrelated problems cited previously for several reasons. These reasons include,

but are not limited to the following. The NRC made a tacit but incorrect

assumption that there was a uniform level of industry and licensee competence.

NRC inspection presence at construction sites was sporadic (before the NRC

resident inspector program was implemented). The NRC inspection program was

slow to synthesize scattered quality-related inspection findings coming in over

a period of time into a comprehensive picture of a project-wide breakdown.

Limited NRC inspection resources were so prioritized to address operations

first, construction second, and design last, that inadequate inspection of the

design process resulted. The threshold for reacting to construction-related

problems was set higher than for operational problems because of (1) no

immediate threat to public health and safety posed by construction deficiencies, (2) an attitude that construction problems would be found during an

intensive period of startup testing prior to issuance of an operating license,

and (3) an attitude that required a project-wide pervasive breakdown to be

demonstrated before strong enforcement action would be taken for construction

quality problems. The inspection program was oriented to focus heavily on

paperwork at the expense of examining either actual work in progress or QA

program implementation. The inspection program focused on detail rather than

on whether the overall management process for the project was working.

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Finally, the NRC was reluctant to address the issue of capability of utility

management until the need for a massive remedial program for a particular

licensee became evident.

2.2 CONCLUSIONS FROM NRC'S ANALYSES OF FORD AMENDMENT ALTERNATIVES b(1)-b(5)

The following conclusions summarize NRC's analyses of the specific alternatives

proposed for study by Congress. Collectively, the study conclusions on these

five Ford Amendment alternatives answer study question 3, which was introduced

in Section 1.1:

What changes should be made to the current policies, practices,

and procedures governing commercial nuclear power plant design,

construction and regulation to prevent major quality problems

in the future or to provide more timely detection and correction

of problems?

Later parts of this report will provide additional detail on the analyses and

on the specific actions that NRC has undertaken or that are recommended. In

this section, each alternative is first reprinted and then is followed by the

major conclusions resulting from this study's analysis of that alternative.

Alternative b(1)

Providing a basis for quality assurance and quality control,

inspection, and enforcement actions through the adoption of an

approach which is more prescriptive than that currently in

practice for defining principal architectural and engineering

criteria for the construction of commercial nuclear powerplants.

Conclusions:

The study concluded that while more prescriptive architectural and

engineering (A&E) (i.e., design) criteria would provide a stronger basis

for inspection and enforcement action, neither the degree of prescriptiveness of principal A&E criteria nor the enforcement of such criteria were

factors in the major quality-related problems that led to the Congressional mandate to perform this study. None of the five plants having

quality-related problems would have found their problems lessened if more

prescriptive A&E criteria during the plant's design and construction had

been required.

Quality problems in design were directly attributable to changes in the

design basis and to inadequate management oversight of the design process,

including implementation of quality assurance controls over the design

process, rather than to the degree of prescriptiveness of A&E criteria.

Historically, neither the industry nor the NRC has done a good job in

managing change, whether the changes be technical, regulatory, or

procedural. Recent NRC action to control the rate of regulatory change

and to prevent unnecessary change by establishing the Committee to Review

Generic Requirements has been a positive force in reducing the impact of

regulatory change on the industry.

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Two other considerations argue against more prescriptive design criteria.

First, there is usually'more than one satisfactory way to accomplish

design activity and more prescription would unnecessarily limit the

designer's choices. Second, too much prescription by the NRC tends to

shift the licensee's responsibility for safety to the NRC.

The study did find that a more complete design early in the construction

process would enhance several project activities, including planning,

scheduling, and procurement, and would facilitate readiness reviews (to

evaluate readiness to proceed to a new project phase of activity), thereby

improving the prospects for greater project quality. Current NRC initiatives concerning standardized designs address this point.

The study also found that current practice does not provide a strong

basis for inspection against Preliminary Safety Analysis Report (PSAR)

commitments. The study concluded that an effective way of providing a

stronger basis for inspection (and subsequent enforcement, if necessary)

would be to provide-more definitive procedures for management of changes

to principal A&E design criteria. One way to accomplish this would be to

make licensee commitments to certain A&E design criteria contained in the

PSAR conditions of the CP.

No new administrative action is recommended under this alternative other

than to revise future staff review practices to accommodate the above

conclusions and to further evaluate the impact of changes on the collective

NRC-industry regulatory and project management structure in order to

develop further guidelines for controlling unnecessary change and for

better managing necessary changes. The NRC has several actions currently

under way, including a legislative proposal, which address the issue of

standardized designs.

Alternative b(2)

Conditioning the issuance of construction permits for commercial

nuclear powerplants on a demonstration by the licensee that the

licensee is capable of independently managing the effective

performance of all quality assurance and quality control

responsibilities for the powerplant.

Conclusions:

The study concluded that this alternative would offer significant

advantages over current and past NRC practice. In the past, CPs have been

issued to some applicants who would not have met this criterion. Past NRC

reviews of CP applicants did not deal substantively with management

experience or capability either in an overall sense or in the context of

QA program effectiveness. The study found that deficiencies in utility

and project management were root causes of the major quality-related

problems experienced and that in such projects, problems in the quality

program were often accompanied by deficiencies in other management

aspects, including planning, scheduling, procurement, and oversight over

contractors. The study established a strong correlation between the

effectiveness of the QA program and the effectiveness of overall project

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management. Therefore, any future assessment of the effectiveness of the

licensee's management and oversight of its QA/QC responsibilities should

cover other management aspects of the project as well.

This study recommends that future CP applicants be required to meet this

criterion. While the licensee could use contractors to manage the project

or parts of it, the licensee would retain ultimate responsibility for the

effective management of the project, including its quality aspects.

Demonstrations of management capability and effectiveness would be

required both before CP issuance and throughout the construction process,

at about two-year intervals. The CP would be conditioned on the applicant's successful performance on each of these post CP-audits. Poor

performance on any single audit would not necessarily result in license

suspension but could lead to other enforcement action. Poor performance

repeated in a subsequent audit would lead to more extensive enforcement

action, including the possibility of license suspension. To perform these

audits, NRC staff should develop a better capability to assess, prospectively, project management and quality program management capability.

In addition to this prospective staff review of an applicant's management

capability, the NRC should also establish an advisory board that would be

similar in function to the Advisory Committee on Reactor Safeguards (ACRS)

but whose members would have appropriate background and experience to

review the management qualifications, experience, and capability of future

CP applicants. This board would advise the NRC of their findings and

recommendations regarding the applicant's capability and competence to

construct a nuclear power plant.

Comprehensive third-party audits such as those envisioned by alternative

b(5) could be used to periodically confirm management and QA/QC program

effectiveness after NRC's initial prospective finding of adequacy.

Therefore, the third-party audits that were examined in conjunction with

alternative b(5) would represent an acceptable method for meeting the

post-CP demonstration requirements of this alternative.

Alternative b(3)

Evaluations, inspections, or audits of commercial nuclear powerplant

construction by organizations comprised of professionals having

expertise in appropriate fields, which evaluations, inspections, or

audits are more effective than those under current practice.

Conclusions:

The study concluded that audits conducted by the American Society of

Mechanical Engineers (ASME) for ASME code work and by the National Board

of Boiler and Pressure Vessel Inspectors (NB) provide detection capability

in certain specific areas beyond that provided by the NRC. Those audits

therefore provide a valuable and continuing contribution that complements

the NRC inspection program.

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The new INPO Construction Project Evaluation (CPE) program fits the

alternative b(3) criteria of "evaluations...by organizations comprised

of professionals having expertise in appropriate fields, which evaluations... are more effective than those under current practice." INPO

implemented its CPE program after Public Law 97-415 was enacted, and this

program represents a significant enhancement of efforts by the nuclear

industry to improve quality assurance and quality control in design and

construction.

Of all audit or evaluation activities by associations of professionals

having appropriate expertise, only the CPE is comprehensive enough to be

considered as a potential surrogate for NRC inspections. However, the

INPO construction evaluations do not attempt to cover all of the areas

that a regulatory inspection must cover and do not evaluate the quality

of installed hardware to the extent that NRC's Construction Appraisal Team

(CAT) inspections do. The study concluded that INPO's current mission of

assisting nuclear utilities in raising their levels of performance and

standards of excellence will do more to improve industry performance and

to prevent future problems than any attempt to transpose INPO's activities

into a quasi-regulatory role. Consequently, the study concludes that

little change should be sought in INPO's current mission, which is to help

the nuclear industry improve itself by establishing standards of industry

performance and excellence, and evaluation against those standards.

Although the study concludes that NRC's and INPO's roles presently are

separate, INPO's potential is not yet fully realized. Therefore, the NRC

should remain alert to future changes in INPO's program that would justify

NRC's placing greater reliance on it and that would lessen the combined

impact of NRC and INPO evaluation programs on individual licensees. The

NRC should find ways to reinforce the INPO concept of improving levels of

performance in all areas of nuclear power, including operations, design

and construction. The goal should be to ensure that licensees who do

-not choose to strive for standards of excellence do not find the

alternative path any easier.

Currently, none of the designated organizations of professionals have the

NRC's technical inspection depth, breadth, and experience. Moreover, no

other organization has the statutory strength of the NRC. Effectiveness

is not only measured by technical competence, but also by the ability to

assure that identified problems are fixed. Only the NRC has the statutory

ability to provide such incentives.

Alternative b(4)

Improvement of the Commission's organization, methods, and programs

for quality assurance development, review, and inspection.

Conclusions:

The study found that the NRC shares responsibility with the utilities for

the occurrence and magnitude of the major quality-related problems that

stimulated this study. The major findings and conclusions relating to

NRC's organization, methods, and programs for quality are summarized

below. Improvements to NRC's organization, methods and programs for

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quality are discussed in Section 2.4 (NRC Administrative Actions) and

in Chapters 4 and 7. Each of these conclusions are-conclusions of the

study and any related recommended regulatory actions are only proposed for

implementation at this time. Those recommendations that would result in

new regulatory requirements will be subject to the Administrative Procedures Act and established NRC procedures, including review by the Committee

to Review Generic Requirements, by public comment, and by the NRC

Commissioners before being enacted.

NRC's program for the assurance of quality in design and construction in

the nuclear industry has several primary objectives that are achieved

through a hierarchy of organizational oversight arrangements involving the

licensee, its contractors, independent auditors, the ASME and NB, INPO and

the NRC. The three primary objectives of this total program for the

assurance of quality are (1) to prevent major quality-related problems

such as those cited in the introduction from occurring, (2) to detect, in

a timely fashion, developing quality problems and to take corrective

action before isolated problems multiply into a programmatic breakdown,

and (3) to provide assurance to the NRC, the public, and the Congress that

plants that are licensed to operate have met applicable legal requirements

and are designed and built in a manner consistent with public safety. The

NRC is not primarily responsible for accomplishing any of these three

activities, but the NRC is the architect and monitor of the total system

for assurance of quality and must share in the blame when the system does

not work. This NRC-required system has, on occasion, missed its goals in

some or all of the three objectives: prevention, detection, and assurance.

The study's conclusions on each of those objectives are discussed below.

Prevention

(1) NRC CP licensing reviews and pre-CP inspections should deal more

substantively with prior nuclear construction experience within the

project team and the capability of the licensee's management to carry

out its intended role within the project team. The NRC should review

the aggregate capability, prior nuclear experience, and project roles

proposed of each corporate entity within the project team.

To execute these new reviews, the NRC needs to develop methods to

assess project and utility management capability and effectiveness

prospectively. The capability for effective management should be a

criterion for license issuance and retention. The NRC should develop

evaluation criteria or characteristics, based on this study and

refined through further research, for the elements-of successful and

unsuccessful organization and management practices of commercial

nuclear power plant construction projects. These criteria should be

codified as part of NRC's pre-CP issuance inspection guidelines.

(2) The NRC should revise its quality assurance programmatic requirements

to emphasize performance rather than form and to establish QA principles as an integral part of licensee construction management

philosophy. As an NRC Regional Administrator observed, NRC quality

assurance efforts to date have, unfortunately, succeeded in establishing licensee QA organizations that are short on technical

2-10
expertise, long on bureaucratic paperwork and essentially isolated

from the safety-related licensee programs they were designed to

improve. This has resulted from a licensing process that has

emphasized organizational and programmatic form while failing to

impress licensees with the need to be effective in the day-to-day

management of engineering and construction activities. Similarly,

the requirement to establish QA functional independence has, in many

cases, convinced construction managers that QA is someone else's

job. NRC's failure is in not effectively communicating to licensees

that the 18 quality assurance program criteria of 10 CFR 50,

Appendix B, describe a comprehensive closed-loop management control

system that is worthy of adoption as an overall construction management system. Other knowledgeable officials have suggested that those

18 criteria should probably be given a new name in an effort to take

them out of the province of the QA department and establish them as

the provenance of the corporate boardroom.

(3) The NRC and industry need to improve their capability to manage

change. A key step in improving the management of change is reducing

change. The NRC and industry should continue and expand their

efforts to control procedural, technical, and regulatory change and

to stabilize design requirements.

Detection

(1) The NRC and industry need to focus more on the implementation of

quality assurance programs including the quality of completed hardware, and less on the details of the programs (e.g., program description, organization chart, independence of reporting chain, etc.).

(2) The NRC should continue current efforts to match its inspection

program to its resources so that areas of greatest safety significance are inspected more heavily. The inspection program should

focus more on licensee management performance and effectiveness than

it has in the past.

(3) The NRC should continue its newly established integrated design

inspections.

(4) The NRC needs to do a better job of synthesizing and analyzing

findings from individual inspections and other sources to lower its threshold for taking action on construction quality problems. Team

inspections have been found to be one way to address this problem.

The NRC should continue and expand current efforts to include more

team inspection activity in the inspection program.

(5) Comprehensive third-party inspections are a viable supplement to the

NRC inspection program and should be required of future and current

CP holders. The third-party audits should assess the effectiveness

of both QA program implementation and project management as well as

a verification of achieved quality in construction.

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Assurance

Assurance exists on at least two levels: the level of the total NRC

program and the nuclear industry as a whole and the level of an individual

project. Each time some part of the total NRC QA program for the

assurance of quality fails to prevent or provide timely detection of a

major quality-related problem, such as those cited previously, the level of

assurance that the total system provides to the public is lowered, no matter

which party (e.g., NRC, licensee, contractor) is primarily to blame.

Collectively, the five major quality-related problems cited previously so

lowered the level of assurance provided by the total program that Congress

directed that this study be conducted to find ways to redesign the system

and to restore public confidence in it.

The recent decision by the owners of the Zimmer project to convert their nuclear

project to coal underscores the importance of assurance at the individual project level. The NRC had halted safety-related construction on the project

because of deficiencies in the system that was intended to provide

assurance that the Zimmer project had been constructed in compliance with

NRC regulations. It appears that the high cost of a remedial program

designed to provide such assurance resulted in termination of the nuclear

portions of the project.

Alternative b(5)

Conditioning the issuance of construction permits for commercial

nuclear powerplants on the permittee entering into contracts or

other arrangements with an independent inspector to audit the

quality assurance program to verify quality assurance performance.

Conclusions:

This study concluded that comprehensive audits of nuclear construction

projects by qualified third parties (independent inspectors) can provide significant additional preventive and detection capability as well

as enhanced assurance that nuclear plants are built according to their

design and licensing commitments. This study found that this alternative,

including its provision for conditioning the CP, offers significant

benefits over current and past practice. Just as periodic independent

audits are conducted of publicly held corporations to determine their

financial condition, periodic independent audits of a licensee's construction project would provide the public, regulators and utility

stockholders greater assurance that the project's design and construction

were of high quality and according to applicable safety requirements. The

independent auditor would be required to meet independence criteria to be

established by the NRC, and the audits would be reviewed and monitored by

the NRC. The NRC also would establish criteria for audit coverage and

completeness. An audit frequency of approximately once every two years

appears most appropriate. The study concluded that a program of comprehensive periodic audits by qualified third parties should be implemented

both for plants currently under construction and for future plants.

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2.3. OTHER CONCLUSIONS

While preparing the analyses required by Congress, it became apparent that the

study should be expanded beyond Congress' specific questions to the previously

described underlying questions that seemed to go to the root of public concerns.

Expanding the study revealed several topics that affected the underlying

concerns but that required additional study before specific action could be

recommended. These topics and the additional study performed on them are

summarized below.

2.3.1. The Kist Report on Improvements to NRC's Programs

When it became apparent that NRC's past policies and practices contributed to

the development of quality-related problems in design and construction, the NRC

arranged for an independent contractor to assess NRC's activities and requirements for quality and quality assurance during design and construction. This

assessment was conducted by a management consulting firm, N. C. Kist and

Associates, which specializes in nuclear industry QA program audits and reviews.

The Kist Report comprises Appendix B of this report. Not all of its conclusions and recommendations have yet been evaluated for adoption. The Kist

Report includes the following recommendations:

(1) The regulatory process should be stabilized through more preventive action

and planning.

(2) The NRC should make the required elements of control more definitive

in guidance documents without specifying how those elements must

be implemented.

(3) The NRC should define the applicability of quality program requirements

for items considered important to safety.

(4) The NRC should focus QA licensing reviews more on the licensee's QA manual

itself and less on pro forma commitments in the PSAR application.

(5) The NRC should evaluate licensees' and contractors' experience, attitude and

management capability before authorizations and permits are issued. The

NRC should establish acceptance criteria for that evaluation.

(6) The NRC should require the licensee to demonstrate its capability to

implement the QA program before authorizations or permits are issued.

(7) The NRC should devote greater attention to design activities.

(8) The NRC should develop programs based on what must be done to assure safety

and then obtain necessary resources to implement the programs.

(9) The NRC should require a master Inspection Plan from licensees and

contractors, showing planned QA/QC inspection activity.

(10) The NRC should change regulations to permit industry organizations to.

evaluate vendors instead of requiring individual licensees to evaluate

vendors.

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(11) The NRC should take stronger, more expeditious enforcement action for

quality problems in design or construction, including determining the

magnitude of problems and correcting their root causes.

(12) The NRC should perform or require detailed periodic audits of each

licensee's implementation of its QA program.

(13) The NRC should increase the training of NRC inspectors in quality

assurance, auditing, and implementation of inspection modules.

(14) The NRC should establish an audit program of NRC activities, using

qualified personnel not having responsibility in the areas audited.

(15) The NRC should establish a quality assurance program within the NRC.

A number of the Kist Report's recommendations coincide with this study's

recommendations. The remainder are being evaluated by the NRC staff for

possible followup action.

2.3.2. Battelle Reports on Contractual and Institutional Issues

and on QA Programs of Other Industries

This study found that major quality problems were caused by breakdowns or

inadequate implementation of quality programs, which invariably stemmed from

problems with project management and/or with the project team's inexperience

in their assumed roles. Many factors indirectly influence these primary

causal factors. Battelle Human Affairs Research Center (HARC) and Pacific

Northwest Laboratory (PNL) (operated by Battelle) conducted analyses to identify

or better understand some of these less obvious factors. This section describes the results of two special substudies undertaken to develop a broader

perspective on which to base study conclusions and recommendations. As with

the Kist Report, not all of these conclusions and recommendations have yet been

fully evaluated for adoption.

Chapter 8 and Appendix C of this report examine some of the contractual,

organizational, and institutional issues associated with designing and constructing nuclear power plants. HARC performed this analysis, with the

following results:

(1) Previous nuclear experience appears to provide a significant advantage in

a nuclear construction effort. Utilities not possessing such experience initially should consider hiring either a project staff or contractors

who can provide such expertise.

(2) A nuclear construction project appears to benefit when its procurement

entity is large and experienced enough to exert "marketplace presence". A

large procurement entity offers the advantage of market familiarity and

commercial leverage as well as the "clout" needed to secure satisfactory

performance on procurements.

(3) Without substantially more complete designs before construction is begun

and stabilization of technical requirements, fixed-price contracting does

not appear to be justified for most aspects of nuclear power plant construction.

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(4) Achieving quality objectives includes attention to detail in procurement

documents and specifications, careful evaluation of a bidder's capability

before a contract is issued, and followup to evaluate contractors'

performance after a contract is issued.

(5) The NRC should focus more attention on how a licensee proposes to ensure

quality work is performed rather than on written descriptions of QA/QC

programs.

(6) Along with the NRC, state Public Utility Commissions (PUCs) provide a major

source of regulatory oversight for nuclear construction projects. Historically, state PUCs do not appear to have been active in disallowing construction costs that may have resulted from lapses in quality assurance

or project management. Recent developments suggest that this practice is

changing with unknown implications for the course of nuclear projects

currently under construction.

Chapter 9 and Appendix D describe a second analysis that was undertaken to

give this report additional perspective--an analysis of the existing programs

for assurance of quality of other U.S. government agencies, other industries,

and other countries. The analysis focused on identifying aspects of alternative QA programs that might be transferred to NRC's program and improve it.

This analysis was performed in conjunction with NRC staff by PNL. Major

insights from this analysis and related work include the following:

(1) Plant designs should be well advanced before construction activities

begin.

(2) The NRC should consider establishing a QA system that prioritizes quality

efforts commensurate with the relative importance of equipment, components, and systems to safety, reliability and availability.

(3) The NRC should consider adopting "readiness reviews" during nuclear plant

construction similar to those used by the Department of Energy (DOE) and

the National Aeronautics and Space Administration (NASA). In some industries,

readiness reviews are conducted before embarking on a major new phase of a

project to ensure that appropriate planning, coordination and design work

have been completed and that the project team is "ready" to proceed. These

would not be regulatory "hold points" but rather a requirement for

licensees to perform a self-assessment at critical points of the construction process.

(4) The NRC should study ways to better integrate NRC inspection functions with

system design reviews, test program reviews, and test program evaluations.

(5) The NRC should look at alternative ways of improving its vendor inspection

program.

(6) The NRC should emphasize that achieving quality is the responsibility

of licensee management, not the QA organization. Several alternative

programs studied emphasized the responsibility for quality of line

management from top executives down to first-level supervisors and

foremen. Several examples demonstrated that if this responsibility is

fulfilled, a large contingent of QC inspectors is not needed.

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4 NRC ADMINISTRATIVE ACTIONS

This section describes the administrative actions that the NRC has undertaken

or that are recommended by this study for improving quality assurance and

quality control programs. Each action may address several of the study's

findings and conclusions and is grouped according to the QA program objective

it most strongly supports: prevention/improved management; detection/lowered

threshold; assurance/increased public confidence. For convenience these

actions are summarized in tabular form at the end of this section in Tables 2.1

and 2.2. The tables make it easier to understand the actions under way and

actions recommended, applying to future plants and to plants currently under

construction, and actions requiring more analysis.

Although some of the requirements of the Ford Amendment were futuristic (e.g.,

--o of the five alternatives spoke of conditioning future CPs on certain requirements), several of this study's results are immediately applicable for plants

presently under construction. The actions described in the remainder of this

chapter collectively define both a framework for future CPs and a framework

thin which existing plants under construction can be completed safety,

according to NRC requirements, and with high assurance of the quality of

construction necessary for licensing and safe operation.

2.4.1 NRC Administrative Actions To Support the Prevention Objective and

To Improve Management

This section is divided into discussions of actions already undertaken and

actions recommended for consideration by the NRC.

Actions Already Undertaken

(1) Systematic Assessment of Licensee Performance

The study found that historically the NRC inspection program has not

focused on the quality, capability and effectiveness of licensee management. Following the accident at Three Mile Island, the NRC initiated an

effort to better address the issue of management performance through the

Systematic Assessment of Licensee Performance (SALP) program. Under the

SALP program, the overall performance of each nuclear power plant licensee

(both CP and operating license holders) is reviewed periodically (approximately every 9 to 18 months). Evaluation results are discussed with senior

licensee management and help prioritize the level of NRC inspection for the

coming period for each licensee. The SALP program is discussed in more

detail in Chapter 7.

(2) Committee to Review Generic Requirements

The study found that historically neither the NRC nor the industry

had managed changes well, whether they were technical, procedural,

or regulatory. The most direct way to improve management's capability

to handle change is to reduce the rate of change itself. In 1981, the NRC

established the Committee to Review Generic Requirements (CRGR) for the

NRC to exercise better management control over the flow of new regulatory

requirements and to carefully examine the feasibility and benefits of

proposed NRC staff actions having generic implications. The CRGR is

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generally credited with bringing order to the promulgation of new

regulatory requirements and thereby giving more stability to the

regulatory process.

Recommended Actions

(1) Enhanced Pre-CP Review of Applicants' Experience and Managerial

Qualifications

Past NRC reviews of CP applications have not dealt substantively with

management experience and capability or prior nuclear experience. The

Commission has no CP applications at this time nor does it expect any in

the near future. This hiatus presents an excellent opportunity to review

and revise Commission practice in this area without impacting any current

applications. This study has concluded that this issue should be

addressed in two ways: (1) enhancing NRC staff review, and (2)

establishing an advisory board.

As a result of this study, the NRC staff has improved its understanding of

the management factors that have resulted in both satisfactory and less

than satisfactory quality in construction. Based on this improved understanding and further analysis in this area, the study recommends that

the NRC staff revise portions of the Standard Review Plan (SRP) and the

inspection program to greater emphasize reviews of the applicant's management capability, quality assurance program, project team experience and

management's prior nuclear experience before CP issuance. The revised

SRP and inspection program are intended to provide substantial additional

guidance to the staff for its review of the applicant's ability to

effectively implement a quality program and manage a nuclear construction

project. The staff's efforts are anticipated to be augmented with expert

consultants in conducting these management reviews.

In addition to this enhanced staff review of management capability, the

study has concluded that independent advice on this subject is needed from

persons having expert knowledge of and experience in various aspects of

the management of a commercial nuclear power plant construction project.

One alternative is to establish an advisory board that is similar in some

regards to the Advisory Committee on Reactor Safeguards (ACRS) but whose

charter is to address management, organizational, experience, and qualification issues associated with constructing a commercial nuclear power

plant. In particular, the board would independently advise the NRC on the

applicant's capability to effectively mana-ge all aspects of a nuclear construction project, including its quality assurance program. The duties of

this board might also be expanded later to include advice on the applicant's capability to manage the plant's operation.

The Commission is authorized to establish advisory boards by Section 161a.

of the Atomic Energy Act. The creation and operation of such boards and

committees are subject to the requirements of the Federal Advisory

Committee Act and 10 CFR 7 of the Commission's regulations. The

proposed board would be a balanced body of persons having direct experience and knowledge of managing the design and construction of a large

commercial nuclear power plant. Board membership would be formed on

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an ad-hoc basis from a slate of experienced persons from such organizations as other nuclear utilities, investment banking firms that arrange

financing for nuclear projects, state PUCs, nuclear insurance firms,

nuclear-experienced A/E firms, NSSS manufacturers, legal firms with an

extensive nuclear practice, and perhaps management consulting firms. In

creating such a board (whose membership would be voluntary), procedural

safeguards would have to be carefully structured to avoid conflicts of

interest.

An alternative to the proposed construction advisory panel would be to

expand the duties of the ACRS to advise the NRC on the managerial qualification of CP applicants. Such an expansion in scope of ACRS purview would

represent a significant change from the highly technical reviews ACRS now

performs. Moreover, the type of background and experience envisioned for

the proposed advisory board historically has not been available on the

ACRS. This proposed administrative action directly addresses Congressional Alternative b(2).

(2) Post-CP Demonstration of Managerial Competence and Effectiveness

The study concluded that future CPs for commercial nuclear power plants

should be conditioned on a licensee's post-CP demonstration that it is

capable of managing or providing effective management oversight over the

construction project. This would include a demonstration that the

licensee is capable of independently managing or overseeing the management

of the effective performance of all quality assurance and quality control

responsibilities for the power plant. Although the licensee could delegate

some project responsibility, it would retain responsibility for the

effectiveness of project management, including the effectiveness of the

quality program.

In some cases in the past, the NRC has been slow to conclude that a major

breakdown has occurred in a licensee's quality assurance program, although

the symptoms of and practices leading to the breakdown were, in hindsight,

evident early in the project. In such cases, neither the interests of the

public nor the licensee have been well served by the delays inherent in

the NRC accumulating sufficient foundation for a Show Cause Order or other

enforcement action.

The study has concluded that a post-CP demonstration of management

-capability and effectiveness, as a condition of the license, is the most

effective way to impress upon an applicant the importance the Congress and

the Commission attach to proper implemention of the applicant's QA program.

Such a requirement would provide a substantial incentive for the licensee,

its reactor manufacturer, its A/E, and all its contractors to demonstrate that

the QA program committed to in the licensing process has been implemented

and is being effectively managed. Public confidence in the quality of the

project's design and construction would also be enhanced. The system of

independent third-party audits proposed by Congressional Alternative b(5)

could be one method for verifying such demonstration.

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The first of the periodic independent third-party audits, proposed by

Congressional Alternative b(5) and recommended by this study in Section

2.4.2, could appropriately evaluate this demonstration and could assure

the NRC and the public that the licensee is properly implementing its

QA/QC program and building a high-quality plant. If the performance in

this first audit were unsuccessful, the CP could be suspended or other

enforcement action could be taken.

NRC's past practice has not been to comprehensively assess, at an early

stage, a licensee's implementation of the QA/QC program. The Commission's

adoption of the requirement to demonstrate such implementation as a

condition of the CP would correct that shortcoming. A regulatory analysis

should be performed to assess the feasibility and benefits of alternative

approaches for implementing this proposed action. Alternatives include

promulgating a new rule requiring that the CP be conditioned on a post-CP

demonstration of management capability. This proposed administrative

action directly addresses Congressional Alternatives b(2) and b(5). See

Chapter 4 for further discussion of this recommendation.

(3) Performance Objectives for QA Programs

The study found that the regulatory basis for QA in the nuclear industry,

i.e., 10 CFR 50, Appendix B, was sound. The only significant change the

study envisions is that Appendix B should be viewed by the NRC and

industry as a "comprehensive, closed-loop management system", not just a

program for the assurance of quality. While the study found the management practices advocated by Appendix B to be sound and not needing improvement, NRC's methods for implementing Appendix B emphasize form and paper

at the expense of substance, and program implementation and effectiveness.

As one member of the ACRS noted, any new QA initiatives will not have the

effect of improving quality unless steps are taken to motivate people,

both in design, construction and vendor operations. The current methods

of quality assurance alienate professional and technically oriented

people, as well as craftsmen and foremen. He said a way must be found to

make these people feel that they can make an important contribution to

design, construction and safe operation.

The study concluded that NRC's methods to get licensees to implement the

management practices of Appendix B need to be changed so that licensees and

their employees are motivated to achieve results rather than merely comply

with regulations. The study recommends that this be done by re-examination

of NRC's method of ensuring that Appendix B is implemented. Both Appendix B

and NQA-1-1983, the voluntary consensus code and the standard, describe performance standards. The NRC must translate these performance standards

into performance objectives; implementing Appendix B by establishing performance objectives would define what a licensee's QA program is expected to

accomplish. NRC inspections would then measure the effectiveness of licensee

management and the QA program in meeting the performance objectives.

The study recognizes that successfully achieving this fundamental shift in

program emphasis from compliance to performance will not be easy. However,

such a shift in NRC (and industry) emphasis is necessary if substantial

improvements in quality and quality assurance are going to be made. The

following paragraphs describe how-such a program could be structured.

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NRC currently establishes very prescriptive requirements for a "QA

program" in Chapter 17 of NRC's Standard Review Plan. Once NRC has

approved a QA program, the licensee develops a set of detailed implementing procedures in the form of a "QA manual". The licensee's employees

use the QA manual to guide their actions.

The "QA program" reviews conducted by the NRC have emphasized description

of the QA program and provide reasonable certainty that any NRC-approved

QA program will have met all of the requirements of the Standard Review

Plan Chapter 17 guidelines. However, major difficulties have arisen at

some projects in implementing the written QA programs approved by the NRC.

NRC inspection experience suggests, and this study has confirmed, that the

major problems with QA programs are in their implementation, not in their

description.

The study concluded that an alternative to the current approach should be

developed in which performance objectives or criteria govern a licensee QA

program rather than its written description. These performance objectives

would establish what the NRC wants the licensee's QA activities to actually

accomplish. The licenseewould then develop a QA manual that establishes

detailed procedures designed to meet NRC's performance objectives. The

intermediate step of a "QA Program Description", which is currently

reviewed and approved by NRC, would be eliminated. The performance

objectives would be based upon 10 CFR 50, Appendix B, and would be a

substitute for the current Chapter 17 guidelines. A licensee could elect

to establish procedures that exceed NRC's minimums. However, a licensee's

actual performance would be evaluated against NRC's minimum performance

criteria rather than the procedures described in the licensee's QA manual,

which could exceed NRC's minimums.

To implement this study conclusion on a trial basis, the NRC staff should

begin developing a set of performance objectives for an operations QA

program and implement it on a voluntary trial basis with one or more

licensees who are currently constructing a plant and approaching the

operating license stage. Currently, no CP applicants are pending, so the

program would have to be tested on an operating license applicant.

Because all CP licensees are required to prepare a new QA program for the

operating phase of their project, this approach should allow an opportunity to test performance QA objectives in parallel with the existing

program. If the proposed program is successful, the NRC should consider

adopting performance objectives for all QA activities and should evaluate

the benefits and costs of backfit of these performance objectives to all

licensees. Although staff action to test the approach in a limited way

has begun, this action cannot be considered to be a short-term action in

terms of its effect on the assurance of quality. This proposed administrative action directly addresses Congressional Alternative b(4).

(4) Management Appraisals as an Adjunct to the CAT Inspections

The case studies conducted for this study produced a set of project and

management characteristics evidenced by more successful projects, as well

as a set of characteristics that tended to be shared by projects experiencing major quality-related problems. The empirical lessons learned

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about the quality, capability, and effectiveness of management should be

applied in future Construction Appraisal Team (CAT) inspections. (See

Section 2.4.2 for a discussion of the CAT program.) Current CAT methodology emphasizes hardware inspection and indirectly draws inferences about

the quality and effectiveness of project and quality management by

assessing the finished project's quality. Management problems are thus

identified indirectly and inferentially. The proposed adjunct to the CAT

methodology would complement the existing methodology by viewing project

and quality performance from the top down as well as from the bottom up.

It is believed that potential or actual problems in the management of the

project will be more quickly identified and better characterized through

this augmentation of the CAT inspection approach.

This recommendation differs from the previously described recommended

activities in that it can be implemented immediately and applied to plants

currently under construction. This activity, coupled with the recommended

interim expansion of the CAT program to cover plants currently under

construction pending action on a third-party audit rule (see description

of interim expanded CAT program in the next section) would provide a

significant near-term enhancement in NRC's oversight of utility and

project management. As one Regional Administrator noted, "The solution of

the short-term effective management problem must be based on observed

results and proper use of governmental authority." This proposed administrative action directly addresses Congressional Alternative b(4).

(5) Application of Ford Study Lessons to Plants Currently Under

Construction/Inspection Prioritization

The NRC should apply lessons learned from this study-regarding the

elements of successful and unsuccessful commercial nuclear power plant

construction experience, project organization, and management to projects

currently under construction. This retrospective look would be used to

identify any plants that might be more susceptible than others to problems

during design and construction. An enhanced inspection effort should be

undertaken to ensure that any such problems are detected as early as

possible. This administrative action directly addresses Congressional

Alternative b(4). This recommendation is discussed in more detail in

Chapter 7.

(6) Improved Diagnostic Capability Including Trend Analysis

NRC inspection program management recognizes and this study confirms the

need for NRC management and staff to recognize and treat NRC inspection

findings and licensee event reports as symptoms of potential utility

management shortcomings and to pursue them accordingly. In several of

the major construction quality problems, the NRC was slow to diagnose the

programmatic illnesses underlying the symptomatic information trickling

into the NRC via the inspection program and licensee reports.

To address this problem, the study concluded that NRC inspection staff and

management should (1) make a conscious effort to analyze each inspection

finding to determine its root cause, (2) based on inspection experience,

the results of this study, and other information, develop a set of con2-21
struction performance indicators to be monitored, trended and evaluated

by each licensee for his own performance and by the NRC. These activities

are discussed in more detail in Chapter 7. Such indicators should be

oriented toward measuring the effectiveness of activities that contribute

to, control, and verify construction quality. The trending program would

be an extension of some present SALP activities and would provide input

for future SALP evaluations. A goal of this "trending" program would be

for the licensee and NRC to more quickly detect and correct quality

problems. QA problems at any one site should be clearly and accurately

identified, including root causes, and that information should be provided

to all sites immediately. Strong results-oriented management of this

activity is needed to ensure adequate followup and problem resolution.

As a corollary to developing this trending program, the NRC should revise

its training program to instruct inspectors, supervisors, and managers in

the use of the system and followup of findings. Also, as the inspection

program is further revised from a compliance-based orientation to a

performance-based orientation, inspector, supervisor, and management

training must be revised to reflect the change in emphasis and to help

develop the skills needed for effective evaluation of performance. This

proposed administrative action directly addresses Congressional Alternative b(4).

(7) NRC/Utility Senior Management Meetings

The NRC should expand the existing practice of conducting senior-level

meetings between NRC and utility management to discuss the status,

progress, and problems of ongoing construction activities, particularly

those relating to quality and quality assurance. In such meetings both

top NRC and utility management have to focus on the problems of construction, including its quality. Such meetings require that top management of both the regulator and regulatee become personally aware of

specific details of construction projects, including quality problems, and

help to combat the attenuation of information that contributed to the

quality-related problems at some projects and that is inherent to some

degree in most organizational structures. This concept is strongly

supported by one NRC Regional Administrator, who writes:

Frequent planned meetings must be held between Regional

Administrators, cognizant Office Directors, and high level

licensee management for projects under construction. In

addition, periodic meetings with the Commission that involve

both a licensee and the staff should be held to assure

Commission support, advice and project familiarity. Such

meetings will serve to ensure direct involvement at the

highest levels of licensee and NRC management in QA-related

matters such as the adequacy Qf resources; the clear

recognition of significant problems at licensee and other

sites; and the acceptance (or non-acceptance) of corrective

measures, including root causes and timeliness, by the NRC.

This administrative action directly addresses Congressional Alternative

b(4).

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(8) Enhanced Vendor and Supplier Inspection Program

The NRC is in the process of modifying its vendor and supplier inspection

program to better prioritize its effort according to the significance of

safety concerns. However, this NRC inspection program, like the construction inspection program, fulfills an oversight role only. The

responsibility for the quality of a vendor's or supplier's product, like

the construction quality of a nuclear power plant, lies with the licensee.

With the decline in nuclear plant orders, the entire supplier/vendor/

licensee infrastructure is changing, with unknown implications for safety

and quality in the future. While this issue needs more study, within the

present structure enhanced NRC enforcement is clearly appropriate against

some licensees for failing to provide effective quality assurance oversight over their vendors, including in some cases failure to audit vendors

and/or to detect work of unacceptable quality.

Although not the focus of this study, there are many examples of poor quality

products supplied by vendors for use at nuclear power plants, which makes

the vendor issue of considerable importance to the NRC. Three of the five

NRC Regional Administrators provided comments on the vendor issue:

I think the NRC should take a strong stand on unacceptable

vendor performance, including enforcement action and

"blackballing", as appropriate.

I agree with (the above) comment concerning the role of the

vendors. We need to take a much stronger stand on unacceptable vendor performance. As I have stated many times over

the past 3 years, we need to have a strong enforcement

policy for vendors, including AEs, NSSS and component

suppliers, and equipment qualification facilities. In

addition, we need to review our inspection programs to

address the utilities vendor surveillance programs. Too

many utilities sit back and expect the NRC to do their work

with regard to vendors. We need to reverse this role andplace the responsibility directly on the shoulders of the

utility.

Heavy emphasis must be placed on the identification of

generic and QA weaknesses in the following organizations:

Nuclear Steam Supply System Manufacturers, Architect

Engineers, and Vendors supplying safety equipment. The

recommendations relating to High Level Meetings with

licensees are directly applicable to meetings with these

organizations - including the Commission. This area must

be aggressively pursued by the NRC to assure formal and

prompt feedback to licensees.

The NRC vendor program is in the process of being restructured, reoriented,

reprioritized, and relocated. While it is too early to characterize all

effects of this transformation, the following is clear for the near-term:

The licensee will continue to be held responsible for the quality of

work performed for it by vendors.

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0 The NRC vendor inspection program in no way substitutes for or

relieves the licensee of its responsibility for vendor oversight; the

NRC vendor inspection program is NRC's QA check of the effectiveness

of licensee oversight programs.

0 Stronger enforcement action than in the past can be expected against

licensees whose vendor and supplier oversight is demonstrably

inadequate.

Special note should be taken here about the first bullet above. Many

comments have been received on the desirability of licensing vendors,

and in particular, the major vendors such as the A/E and NSSS manufacturers. This study has concluded that the current organizational environment that requires that the utility take all or most of the price risk for

the nuclear power plant virtually demands that only the utility be

licensed. The licensing of vendors would inevitably reduce some of the

control utilities currently have over licensing-driven actions while still

requiring the utility to pay for those actions. However, there are

circumstances under which it may be desirable to license vendors, and this

is discussed in Section 2.4.5 under, the heading, "Project Ownership and

Management Arrangements". This administrative action directly addresses

Congressional Alternative b(4).

2.4.2 NRC Administrative Actions To Support the Detection Objective and

To Lower the Threshold for Taking Action for Construction ualit

Problems

This section is divided into discussion of actions already undertaken and

actions recommended for consideration by the NRC.

Actions Already Under Way

(1) Resident Inspector Program

As directed by the Ford Amendment [Section 13(a)], the NRC has assigned

at least one resident inspector to all sites under active construction

where construction is more than 15% complete. The study found that the

resident inspector program is the backbone of the present NRC inspection

program and provides the NRC with a better awareness and understanding of

the status of a construction project as well as a more continuous inspection presence than previously. Each of the five major quality-related

problems that stimulated this study began or occurred before the resident

inspector program was implemented. The day-to-day presence of the

resident at a site allows him to better understand the project and

improves the NRC's capability to determine the extent and magnitude of

quality or quality assurance problems and to require corrective action in

a more timely fashion.

While it cannot be conclusively demonstrated that major quality-related

problems in construction would not have occurred if the resident program

been in place earlier, the study found that several of the major qualityrelated problems would have been detected sooner and would not have been

as serious if the program been implemented sooner. For future applicants,

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the study concluded that the NRC should assign resident inspectors to the

construction site as early as CP issuance and possibly as early as the

start of any construction begun under a Limited Work Authorization before

CP issuance. The exact timing would be determined on a case-by-case basis

and such factors as prior nuclear construction experience would be

considered. This administrative action directly addresses Congressional

Alternative b(4).

(2) Team Inspections

One reason that NRC was slow to detect or realize the extent of some

of the quality problems in design and construction is the difficulty in

integrating and synthesizing, into a comprehensive picture, site-specific

inspection results determined at different times by different inspectors

in different disciplines. For several of the projects having significant

quality-related problems, the extent and magnitude of the problem was

eventually established by a comprehensive team inspection involving

several inspectors in different disciplines and several weeks of concurrent field work. With such comprehensive team inspections, information

can be interchanged frequently and quickly among inspectors looking at

different areas, and synthesizing and integrating findings and developing

project-wide conclusions are made easier.

Team inspections have also been shown to effectively overcome the problem

of reaching the "threshold" for taking action in response to quality

problems in construction. The NRC is establishing a pilot program in one

of its five regional offices to test the feasibility and benefits of

reorienting the present routine inspection program. The present inspection program generally supplements the resident program with inspections

by individual specialists from the regional office and uses few team

inspections. The reoriented program would (1) provide for more residents

at each site where special circumstances apply, and (2) use team inspections as the primary inspection activity of the regional office. This

trial program is consistent with this report's findings, and pending the

results of the pilot inspection program, the NRC inspection program for

all regions may be reoriented to place more residents at sites and place

region-based inspection emphasis on team inspections. This administrative

action directly addresses Congressional Alternative b(4).

(3) Construction Appraisal Team (CAT) Inspections

The team inspection approach for reactor construction projects has been

tested by the NRC regions and instituted by NRC headquarters. A regional

trial Construction Appraisal Team (CAT) inspection program was conducted

in 1981, with eight trial inspections being performed by region-based

inspectors. These inspections were effective in identifying hardware

and construction quality problems not identified by the routine inspection

program. However, the manpower demand of these team inspections caused

the Regional Administrators to defer routin -e performance of this type of

inspection. Although some regions have conducted subsequent CAT-type

inspections on an as-needed basis (the inspection program encourages the

regions to perform CAT-type inspections), they are not mandatory. The

previously described pilot program was a test of whether they should be

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made mandatory. A headquarters CAT program was instituted by the NRC

Headquarters Office of Inspection and Enforcement (IE) in 1982. These

headquarters-based CAT inspections serve as both an audit of the licensee's performance and the NRC's resident and regional-based inspection

program. The primary emphasis of the CAT is to concentrate on examining

safety-related hardware after installation and after the licensee's own

quality control inspection process has been completed. The study recommends that future CAT inspections be modified to more directly address

management issues through the addition of a management appraisal. See

Section 2.4.1.

Each CAT inspection involves about ten professionals in various

specialties who spend four to five weeks and 1,600 to 2,000 manhours

on site. Counting preparation time, analysis, and report writing,

each CAT inspection takes about three months to complete. As of

February 1984, six headquarters-based CAT inspections had been

conducted and further CAT inspections had been planned at a frequency

of four per year. This frequency is not sufficient to provide CAT

inspection coverage of the current population of plants under construction. Consequently, this study recommends an expansion of the

CAT program to ensure that plants presently under construction are

subject to either a CAT inspection or a comprehensive third-party

audit. This recommendation is discussed later in this chapter. The

CAT program is discussed also in Chapter 7. This administrative action

directly addresses Congressional Alternative b(4).

(4) Integrated Design Inspection (IDI)

The NRC has also developed a special design inspection program whose

object is to assess the quality of design activities. The design area

received little inspection attention in the past, and recent experience,

including some of the major quality-related problems that stimulated this

study, indicated that NRC should increase its design inspection efforts.

Like the CAT program, the Integrated Design Inspection (IDI) program uses

the team approach and is conducted by the NRC Headquarters Office of

Inspection and Enforcement.

The IDI inspection supplements a core group of NRC staff members with

contractors or consultants having specific design expertise and experience. This design inspection program encompasses the total design

process on a selected plant system, from formulating design and A&E

criteria through developing and translating the design and its reviews to

actual site construction. The inspection staff evaluates and confirms

certain basic design information previously submitted in connection with

license applications. Inspections are conducted at the A/E design

organization and the site to verify that proper design control programs

are in place. This program examines the adequacy and consistency of the

integration of all the design details-within a selected sample area. It

is believed that conclusions about the adequacy of the overall design

process can be drawn from this very detailed audit of a selected sample.

Each IDI requires about twelve persons'and four months to complete. As of

December 1983, three IDIs had been performed and current plans are to

conduct three IDIs per year. This frequency is based on staffing limitations and is not sufficient to provide coverage of every plant under

2-26
construction. For the forseeable future, IDI inspections will concentrate

on plants nearing completion of the construction process and for which the

design is essentially complete. Among this group of plants, candidates

for the IDI inspection are selected based on a review of all pertinent

data, including such things as whether any other form of independent'design

review has been performed (such as an Independent Design Verification Program,

see Section 2.4.3), the nuclear experience of the licensee and the A-E,

results of other inspections, and advice from the NRC Regional Administrator.

This administrative action directly addresses Congressional Alternative b(4).

The IDI program is discussed further in Chapter 7.

(5) Contractor Support to the NRC Inspection Program

An increase in direct NRC inspection of licensee-sponsored design and

construction would increase confidence that licensee commitments are being

met. This is particularly true when special circumstances require added

inspection attention (e.g., oversight of a project with a remedial program

under way or one with many allegations of safety-related deficiencies).

On a trial basis, the CAT and IDI inspections have used substantial

contractor support as one method for increasing the expert technical

resources available to the NRC for carrying out its inspection responsibilities. Such contractor augmentations have proven to be extremely

helpful for these headquarters-based inspection efforts. Like all NRC

team inspections, contractor-supported team inspections are led by an NRC

team leader having inspection authority and responsibility. There is no

delegation of NRC inspection authority or responsibilities to a contractor. The use of contractor assistance for NRC inspections is being

expanded in both headquarters and the region-based inspection programs,

including regional team inspections. Other appropriate uses for contractor support are being sought. This administrative action directly

addresses Congressional Alternative b(4).

(6) Revised Construction Inspection Program

The construction inspection program was recently revised for two reasons:

(1) a recognition that procedures in NRC's inspection program manual

exceeded inspection manpower resources; and (2) review of the licensee's

written QA program and QA program documentation was being emphasized at

the expense of observing work and inspecting hardware. The NRC staff is

presently revising the individual inspection procedures in the construction inspection manual to better match the budgeted resources and to

better focus the inspection effort to improve effectiveness.

The main goals of the revisions are as follows: (1) to shift emphasis of

inspection from reviewing records to observing work; (2) to facilitate

performance of certain procedures by resident inspectors; (3) to

re-examine the scope and frequency of some inspections based on limitations of inspector resources; and (4) to eliminate redundancies in the

procedures. Current plans will substantially consolidate procedures. It

is too early to determine the full effect of these revisions of the

written inspection program on the effectiveness of the implementation of

the NRC inspection program. This administrative action directly addresses

Congressional Alternative b(4) and is discussed further in Chapter 7.

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A word of caution: Improvements resulting from the revised procedures

are limited, as are any other improvements to the inspection program,

by the following two considerations. First, NRC's inspection program is

an oversight program only. It does not perform direct first-line QC

inspection. It is not sufficiently staffed to perform a 100% oversight

function and performs direct inspections of at most 1-2% of the safetyrelated work at a construction site, on a sampling basis. Second, only

about 1.5 manyears per year of direct NRC inspection effort are budgeted

for each reactor under construction.

Recommended Actions

(1) Independent Third-Party Audits

As indicated in Section 2.2, this study found that a program of periodic

independent third-party evaluations, inspections, or audits of commercial

nuclear power plant construction by qualified individuals would represent

a significant improvement over current practice and would complement the

Commission's own inspection program. Such independent audits would bring

an additional measure of confidence that licensing commitments are being

met and increase the probability that any major systematic quality deficiencies will be identified earlier than in the past. Current NRC direct

inspection resources of about 1.5 staff years per reactor under construction per year have not been adequate to provide timely detection of

all major problems. The added use of qualified, independent auditors

would increase the probability of more timely detection of major problems.

The study recommends that for future CP applicants, CP issuance be

conditioned on the applicant's entering into contracts or other arrangements with independent inspectors to periodically verify the adequacy of

its achieved construction quality, quality assurance program performance,

and ability to independently manage the effective performance of all QA

and QC responsibilities. That is, the study recommends that the proposed

third-party audit program meet the performance criteria implicit in both

Congressional Alternatives b(2) and b(5).

The study recommends that current CP holders also be subject to a program

of periodic independent third-party audits. Until the third-party audit

program is established as a requirement, the NRC should continue with the

current voluntary Independent Design Verification Program (IDVP) on a

case-by-case basis and implement an expanded CAT program. These recommended actions are discussed below.

The recommended independent audits would be conducted for each plant under

construction about every two years, with the scope and nature of the audit

being adjusted to the construction schedule and level of completion. For

example, the first audit should occur within the first 12 to 20 months of

construction and would concentrate on civil and structural work and the

design control process in addition to its primary objective of verifying

management capability to successfully implement an effective QA program.

Later audits would cover electrical work, piping, instrumentation and

control; etc. The last audit would cover completed design verification as

well as review proposed technical specifications against the plant design

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and serve the purpose, among others, of the current voluntary IDVP program. Each audit would be designed to meet the requirements of Congressional Alternatives b(2) and b(5), i.e., to verify that the licensee had

demonstrated the capability to independently manage or oversee the management of the effective performance of all QA and QC responsibilities for

the project over the previous two years.

Criteria for the third-party audits, including independence criteria

similar to those now used in the IDVP efforts, should be developed by

the NRC staff in consultation with appropriate professionals and other

interested groups. Those criteria should incorporate lessons learned from

the NRC's evaluation of the third-party audits reviewed as part of the

pilot program (Chapter 4), the case studies (Chapter 3), and the current

IDVP, CAT, and IDI programs.

A regulatory analysis will have to be performed before this proposed

action can be implemented as a new regulatory requirement. This proposed

administrative action is also discussed in Chapter 4. This action

directly addresses Congressional Alternatives b(2), b(4), and b(5).

(2) Interim Expanded CAT Program

Implementing a program for third-party audits for plants under construction would probably take two years or more from the date of initiation of

action before it could become effective, if it were approved by the

Commission. This time delay stems from the procedural safeguards that

are a part of the rulemaking process. According to current estimates,

many of the plants currently under construction will be completed within

this time frame, and the third-party audit requirement would not apply to

over half of the plants presently being constructed. Therefore, in the

interim, pending the approval and implementation of a third-party audit

rule, the study recommends that the NRC expand its CAT program to ensure

that as many plants under construction as possible are subjected to either

an intensive audit by a qualified third party or an NRC CAT inspection.

Thereafter, CATs would be required on a sampling basis (to check thirdparty audit effectiveness). The management appraisal recommended in the

preceding section as an adjunct to the CAT program should apply to the

expanded CAT program as well. This proposed administrative action

directly addressesCongressional Alternative b(4) and indirectly addresses

Alternative b(5).

(3) Regional Team Inspections

The use of contractor support to assist headquarters-based team inspections has been successful. The.study recommends that the regional inspection program be supplemented with additional use of contractor support for

the routine regional inspection program. This will allow more NRC staff

time for reactive inspections such as allegation followup, remedial

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program inspections, and regional team inspections. As indicated previously, increased use of regional team inspections is being tested in one NRC

regional office. Depending on its results, the NRC inspection program in

all regions may be reoriented to emphasize team inspections. This administrative action addresses Congressional Alternative b(4) and is also

discussed in Chapter 7.

(4) Resident Inspectors

The study found that for new applicants or for the restart of construction at projects presently in suspension, resident inspectors should

be assigned to the site as early as possible, preferably before CP

issuance and the start of safety-related construction activities. This

study recommends that this finding become part of NRC's future policy on

placing residents at construction sites. As indicated previously, the NRC

is also establishing a pilot program in one of its regional offices which

will place more resident inspectors at plant sites where special circumstances dictate. Depending on the outcome of this trial program, the NRC

inspection program may be reoriented to an even heavier emphasis on

resident inspectors. This proposed administrative action directly addresses

Congressional Alternative b(4) and is discussed further in Chapter 7.

(5) Improved Licensee Detection Capability

In licensee QA programs, additional emphasis must be placed on identifying

problems and trends, including the processing of nonconformance reports

and design changes. The NRC should develop more definitive guidance to be

followed by utilities for determining root causes of nonconformances,

timeliness of corrective action, and evaluation of generic implications of

nonconformances found both in the design and construction process. While

the NRC needs to improve its own capability in these areas, the NRC sees,

on a nation-wide basis, both good and bad practices and is in the most

logical position to develop and share such information and generic

guidance with the utilities. This proposed administrative action

addresses Congressional Alternative b(4).

2.4.3 NRC Administrative Actions To Support the Assurance Objective and To

Increase Public Confidence

This section is divided into discussions of actions already undertaken and

recommended actions for consideration by the NRC.

Actions Already Under Way

(I) Independent Design Verification Program (IDVP)

On a case-by-case basis, the NRC staff has requested an applicant for

an operating license to provide additional assurance that the design

process used in constructing the plant has fully complied with NRC

regulations and licensing commitments.

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Many licensees have responded to this request by initiating a design review

through an independent third-party contractor. This review has been termed

the Independent Design Verification Program (IDVP). This program has been

mentioned several times previously in conjunction with other actions under

way or proposed, and is also discussed in Chapter 7. Reviews conducted under

this program have provided an evaluation of the quality of design based on a

detailed examination of a small sample. The independent review has also

addressed programmatic areas, e.g., classification of systems and components,

design and verification records, interface control and interdisciplinary

review, consistency with the Final Safety Analysis Report (FSAR), nonconformances and corrective actions, and audit findings and resolutions. The

review includes verifying specific design features by independent calculations and comparing installations against as-built drawings. The NRC staff

reviews the selection of the independent review organization and the audit

plan before they are implemented, reviews the C~mpleted report, and assesses

the applicant's response to the audit findings.c In all cases to date, the

NRC staff has concluded that the applicant has complied with NRC regulations

and licensing commitments.

The usefulness of these audits has varied from site to site because of the

variability between each audit's scope and methodology. With the recent

transfer of IDVP responsibility to the same NRC program office (IE)

responsible for the IDI program, future IDVPs will be modeled somewhat

like an IDI, and the degree of variability should decrease.

Recommended Actions

(1) Interim IDVP/Third-Party Audit

This study has concluded that a series of comprehensive third-party audits

required by regulation with a clearly established set of audit criteria

will better enable the NRC to meet its responsibilities than the current IDVP

practice. Until this requirement has been established, however, the NRC

should continue to encourage licensees to perform independent design

reviews on a case-by-case basis.

The recommended third-party audit program was listed in Section 2.4.2

under the detection objective. However, it also strongly supports the

assurance objective. The independent oversight brought to the nuclear

construction process by the third-party audit concept should increase

public confidence in the construction process. This administrative action

directly addresses Congressional Alternatives b(4) and b(5).

(2) Audit Program for the NRC

One of the findings of the Kist Report was that the NRC should have a QA

program for its own activities. While the CAT, IDI, and PAT (Performance

Appraisal Team inspections) programs, as well as NRC Headquarters audits of

regional performance, provide some degree of quality assurance over NRC

regional activities, there is no formal NRC program for QA of NRC QA

activities. In view of the study findings that shortcomings in the NRC QA

program contributed partly to the quality problems that led to this study,

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both the overall assurance of quality for nuclear power and the public's

confidence in NRC's oversight of it would be enhanced if NRC had a formal

QA program covering its own QA activites. The study recommends that

such a program be established and that it include an audit program for

NRC QA activities that provides for periodic independent audits.

2.4.4 Summary of NRC Actions Under Way and Actions To Be Taken

Table 2.1 summarizes the NRC actions under way and proposed actions to be taken.

Note: The NRC actions that have been identified and recommended by the study

are extremely comprehensive, and several of them could consume all of NRC's

current budget and manpower allocated to development of the quality assurance

program. It will be necessary to prioritize the quality assurance issues

within the other issues faced by the NRC and make resource allocations. As a

result, some of the recommended actions may necessarily be deferred until the

higher priority actions are completed.

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TABLE 2.1. NRC Administrative Actions Under Way and Recommended for Nuclear

Plants Under Construction to Support the NRC QA Program Objectives

of Prevention, Detection, and Assurance

Objective

I. Prevention/Improved Management

Under Way

Appl ies

Current

Plants

To

Future

Plants

X

X

1.

2.

Systematic Assessment of Licensee Peformance

Committee to Review Generic Requirements

X

X

Recommended

1. Enhanced Pre-CP Review of Experience and

Managerial Qualif./Advisory Board

2. Post-CP Demonstration of Management Effectiveness

3. QA Program Performance Objectives*

4. Management Appraisals/CAT Adjunct*

5. Inspection Prioritization of Plants Currently

.Under Construction*

6. Improved Diagnostic Capability/Trend Analysis

7. Senior Management Meetings

8. Enhanced Vendor Program*

X

X

X

X

X

X

X

X

X

X

X

X

X

X

II. Detection/Lowered Threshold

Under Way

1.

2.

3.

4.

5.

6.

Resident Inspector Program

Team Inspections

CAT Program

IDI Program

Contractor Support to the NRC Inspection Program

Revised Inspection Program

X

X

X

X

X

X

X

X

X

X

X

X

Recommended

1.

2.

3.

4.

Third-Party Audit/Interim CAT*/Interim IDVP*

Regional Team Inspections*

Expanded Resident Program*

Improved Licensee Detection Capability

X

X

X

X

X

X

X

X

III. Assurance/Public Confidence

Under Way

1. IDVP

Recommended

X

1.

2.

Interim IDVP*/Third-Party Audit

QA of NRC

X

X

X

X

* Action on recommendation already begun.

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2.4.5 Actions Requirinq Further Analysis

During the course of this study, several possible actions were identified that

unfortunately could not be sufficiently analyzed in the time frame of this

report to be included as study recommendations. These possible actions are

described below. In some cases further study is needed to determine the

feasibility and benefits of further changes to NRC's programs. In other cases,

further study is required to better understand certain issues that may have an

impact on quality and the assurance of quality in the nuclear industry.

(1) Ford Amendment Study to Improve QA for Plants in Operation

The Ford Amendment directed the NRC to conduct a study designed to improve

quality and the assurance of quality in the design and construction of

nuclear power plants. An effort of similar magnitude and scope should be

undertaken for plants in operation. Many more nuclear plants are in

operation today in the U.S. (about 80) than are under active construction

(about 40), and operating plants represent a more immediate threat to

public health and safety than do plants under construction. The 1983 ATWS

(anticipated transient without scram) event at the Salem nuclear station

is a recent example of the importance of quality and quality assurance in

nuclear power plant operations and maintenance. The near-term future

focus of U.S. nuclear power will be in operations and maintenance, not

design and construction and serious, though less publicized, operational

problems with safety implications have occurred because of poor QA.

(2) Prioritization of OA Measures

The NRC needs to establish more detailed guidance for QA systems that

prioritize quality-related efforts. Such a QA system is currently

required by NRC regulations, but it has been unevenly implemented, partly

because of a lack of appropriate NRC guidance. In some prioritized

approaches, quality assurance measures are prioritized based on the

safety, reliability and availability analyses such as discussed under (7),

"Quality Engineering" below. The usefulness of this approach is suggested

by findings of the study on the DOE, NASA and shipbuilding programs. The

goal of new NRC guidance in this area would be to provide a logical

foundation for applying quality measures to plant structures, systems, and

components commensurate with their relative importance to achieving some

system objective such as safety or reliability. This guidance should also

reduce the application of deterministic engineering judgment to the lowest

possible level. Although such guidance is expected to extend beyond the

current "safety-related" class, it may also reduce quality program requirements for some equipment, systems or components that are presently considered to be "safety-related". This topic is discussed also in Chapters 7

and 9 and Appendices B and D.

(3) Measuring Effectiveness of QA Programs

As indicated in Chapter 1, this study did not attempt to quantify the

relationships among quality, quality assurance, and safety, nor did it

attempt to quantify the relationship between risk and -quality assurance.

It became increasingly clear during the study that clearly defined

measures need to be developed to assess QA program effectiveness.

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Developing such measures is crucial to meaningfully address the above

unanswered questions. Moreover, without such measures, it is virtually

impossible to evaluate the benefits that would accrue from adopting an

alternative approach to QA (such as that of NASA, the Federal Aviation

Administration (FAA), or DOE).

The NRC should set as top QA research priorities development of ways to

measure QA program effectiveness and analyses to quantify the quality,

quality assurance and safety relationship, and the relationship of risk to

quality assurance. In particular, the effect of a QA program on plant

safety should be evaluated through probabilistic and other risk analyses.

(4) Essentially Complete Design at CP Stage

The NRC should further analyze the feasibility and benefits of requiring

that plant designs of future CP applicants be well advanced before construction activities begin. This analysis should also consider whether

future applicants should be required to have scale models of their plants

and computer-assisted drawings. (See public comment (3) in Section

10.2.1.) This research is suggested by the findings from the case studies

(Chapter 3 and Appendix A), the review of outside programs (Chapter 9 and

Appendix D), the study of contracts (Chapter 8 and Appendix C), and other

study activities.

(5) Configuration Control/Management of Change

The NRC needs to further analyze the feasibility of applying the techniques of the aerospace industry's apparently successful configuration

management approach to the nuclear industry's need for improved management

of change. Change and the difficulty in managing change were found to

have significant impacts on design and construction quality. This

research is suggested by the results of the case studies (Chapter 3 and

Appendix A), the study of outside QA programs (Chapter 9 and Appendix D),

and comments from the study's special review group (Chapter 10).

As part of this effort, NRC should determine how best to revise staff

review practices to provide more definitive procedures for managing

changes to principal A&E design criteria. This analysis would include

consideration of including licensee commitments to certain A&E design

criteria contained in the PSAR as conditions of the CP. See the study

conclusion on Alternative b(1) in Section 2.2.

(6) Feasibility of Readiness Reviews

The NRC should analyze the feasibility and benefits of requiring formal

assessments by licensees of their readiness to proceed to the next

critical phase of a project (i.e., planning to construction, construction

to pre-operational testing, testing to operations). In such "readiness

reviews" plant designers, construction managers, owner/operators, and

(possibly) NRC staff would participate. The reviews could be required at

key points in the project beginning with "design ready for construction"

and could be repeated at selected key milestone points. The usefulness of

this approach is suggested by the findings from the DOE, NASA and shipbuilding programs (see Chapter 9 and Appendix D).

2-35
(7) Quality Engineering

The NRC should analyze the degree to which NRC design requirements should

include the completion of safety, reliability, and availability analyses,

including failure modes and effects analyses, and fault tree and hazard or

safety analyses. The usefulness of this approach is suggested by the

findings from the DOE, NASA, FAA, foreign nuclear, and shipbuilding

programs and the movement of the NRC toward expanded use of Probabilistic

Risk Assessment. See Chapter 9 and Appendix D.

(8) Project Ownership and Management Arrangements/PUC Interface

Projects under construction appear to benefit significantly when the

owners and members of the project team possess strong management experience and a strong financial position (see Chapter 8 and Appendix C). The

advantage of these circumstances appears great enough to warrant NRC's

examination of ways in which beneficial ownership and management arrangements can be stimulated and fostered. The specific advantages/disadvantages of various ownership and management arrangements for assuring safe

and successful nuclear projects need careful study. Such a study should

include determining which desirable changes are possible within the

present statutory framework and which would require legislation.

Recent events affecting the nuclear industry suggest that financial

considerations will be the principal determinant of any new CP applications and that a possible form of a new construction project may be the

presentation to a utility of an essentially "turnkey" proposal by an NSSS

manufacturer and A&E joint venture. One essential component of this

proposal is likely to be assumption of a significant portion of the price

risk by the joint venture.. Consistent with the previous discussion (see

Section 2.4.1, "Enhanced Vendor and Supplier Inspection Program") concerning the necessity for the entity having control of the funding also having

responsibility for licensing, the appropriate CP licensee in this case

might be the joint venture, not the utility., Further analysis must be

undertaken to understand the potential implications of such "dual licensing" where the CP holder may be different from the operating licensee.

For example, this process would be much simplified by using pre-approved

sites whose licensing was separate from the CP process. It would also

require a careful scrutiny of whether an operating license could reasonably be granted to a utility with no prior nuclear operating experience.

Further study of the NRC/PUC interaction must also be undertaken. There

are indications that certain major preventive maintenance actions, such as

replacing the recirculation piping in a boiling water reactor or replacing

a steam generator in a pressurized water reactor, may be deferred by

utilities because of concern over PUC policies. In cases like these, good

engineering judgment and safety concerns indicate that the work should go

forward, but it might be deferred because of a lack of confidence that

PUCs will consider the "non-essential" maintenance expenses to have been

prudently incurred, absent an NRC order to perform the maintenance. Other

lessor examples of utilities deferring or postponing important maintenance

activities because of concern over PUC policies exist. The NRC must

develop a clearer understanding of its options and possible actions when

faced by a new regulatory activism by state PUCs.

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(9) Feasibility of Designated Representatives

One possible way to increase the resources available to carry out NRC

inspections is the use of a "designated representative" (DR) program

analogous to that employed by the FAA. Under the FAA's DR program,

employees of an aircraft designer or manufacturer are deputized by the FAA

to perform examinations, inspections, and tests on behalf of the FAA. If

an analogous NRC program were established, it would place some NRC inspection responsibility and authority in the hands of employees of the

licensee. This is a potentially controversial program whose advantages

and disadvantages have not been fully assessed. Further analysis of this

issue is needed before any conclusion can be reached. This topic is also

discussed in Chapter 7 and was the subject of several NRC staff papers to

the Commission (SECY 83-26 and SECY 83-499).

(10) Limiting Construction Permits

Many of the problems experienced by the nuclear industry recently were

exacerbated by the surge of reactor orders and CP applications that

occurred in the early and mid-1970s. This surge caused utilities to

assemble project teams having key members with little or no prior nuclear

experience. (See discussion in Chapter 3 and Appendix A.) Extraordinary

demands were also placed on component suppliers and subcontractors, with

many entities competing for increasingly scarce nuclear experienced

personnel. The inevitable result was that performance declined--to

sometimes unacceptable levels.

The NRC was also faced with problems caused by the earlier rapid growth of

the nuclear industry: increased CP applications to be reviewed, safety

evaluation reports to be prepared with practically every reactor design

different from the last one reviewed, more and more construction projects

to be inspected, competition with the industry for a limited pool of

experienced personnel.

Consideration should be given to establishing limits on the rate of growth

of any future resumption in nuclear power plant construction. Depending

on when a resumption might begin and the circumstances causing such a

resumption, the U.S. could be faced with problems similar to those that

ocurred with the last rapid buildup. Many factors could influence a

decision on the number of construction permits issued in a year. Such

factors include the degree of standardization of design; the experience of

the potential operators; industry capacity and residual experience, including

major vendors, subcontractors and suppliers; NRC staffing levels and ability

to respond to workload fluctuations; and the availability of sites.

Further analysis.should be performed to identify the rapid-expansionrelated problems that previously occurred and to develop guidelines for

assessing whether and what future limits should be placed on issuing CPs

by the NRC. These efforts should not be directed to establish such limits

at this time but rather to identify the key parameters that could be used

to establish such limits in the future.

Table 2.2 lists all the the actions discussed in 2.4.5 requiring further

analysis.

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TABLE 2.2. Actions Requiring Further Analysis

(1) Ford Amendment Study for Plants in Operation

(2) Prioritization of QA Measures:

Guidance on "Safety-Related" vs. "Important to Safety"

(3) Measuring Effectiveness of QA Programs

(4) Essentially Complete Design at CP Stage

(5) Feasibility of Aerospace Industry's Configuration Management Approach

(6) Feasibility of Readiness Reviews

(7) Quality Engineering

(8) Alternative Project Ownership and Management Arrangements/PUC Interface

(9) Feasibility of Designated Representatives

(10) Limiting Construction Permits

Note: The NRC actions that have been identified and recommended by the study

are extremely comprehensive, and several of them could consume all of NRC's

current budget and manpower allocated to development of the quality assurance

program. It will be necessary to prioritize the quality assurance issues

within the other issues faced by the NRC and to make resource allocations. As a

result, some of the recommended actions may necessarily be deferred until the

higher priority actions are completed.

2-38
2.5 ACTIONS OF THE NUCLEAR INDUSTRY

This section discusses actions already undertaken and future actions by the

nuclear industry to improve quality and the assurance of quality in the

industry. The preceding section discussed in detail the framework of NRC

actions under way to improve quality and the assurance of quality in the

nuclear industry. NRC actions were emphasized because the Ford Amendment

specified that NRC actions be highlighted. While improvements to NRC's programs, methods, and organization are necessary for improving quality in the

nuclear industry, they are not sufficient. The study concluded that the

primary cause bf the quality-related problems in the nuclear industry was

shortcomings in utility management.

Real improvements to address this root cause must come from the industry

itself. The NRC cannot write a regulation that will achieve good utility

management. Better utility management must come from the utilities themselves,

from the boards of directors, from the stockholders, and from the ratepayers.

The NRC and the PUCs can provide penalties for poor utility management, but

these negative incentives are of limited value without the utilities' conscious

commitment to raise their own performance standards. Quality must be built into

a plant by the builder, it cannot be inspected in by QA. Similarly, achieving

quality in nuclear design, construction, and operation is the responsibility of

the utility and utility management, and it must be achieved by them. The NRC

cannot inspect quality into a plant.

Given that the sine qua non to improved quality in the nuclear industry is

improved, informed, capabable utility management, this section discusses

industry actions already taken or recommended by the study to improve quality.

2.5.1 Actions Already Undertaken

In 1979, in response to the accident at Three Mile Island, the nuclear industry

created the Institute of Nuclear Power Operations (INPO). INPO's chartered

mission is to promote the highest level of safety and reliability in operating

nuclear power plants. In carrying out this mission, INPO strives to encourage

excellence in all phases of design, construction, and operation. This study

performed a thorough review of INPO's new program for construction evaluation

and concluded that the program was consistent with INPO's stated mission of

promoting excellence in construction and design (See Chapter 5.).

Another INPO activity that bears directly on improving utility management has

been the sponsorship of several management workshops for utility chief

executive officers, plant managers, and others to stress the importance of

quality and management responsibility for quality and to strengthen management

awareness, understanding and commitment to safe operation and quality construction of nuclear facilities. NRC Commissioners and senior managers have

participated in these workshops to the mutual benefit of both the industry and

the NRC. The study endorses the INPO program of management workshops, which is

consistent with the belief that any significant improvements in the nuclear

industry must start at the top.

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2.5.2 Future Action

The already undertaken and proposed NRC actions described in Section 2.4 should

result in many improvements on the part of the nuclear industry in the design

and construction of nuclear power plants. Many of those actions were modifications to improve the NRC inspection program. It is important to understand

the limitations of any NRC inspection program, no matter how many improvements

are made to it.

The NRC inspection program is a sampling program that covers at most 1% to 2%

of the safety-related construction activities at a site. Presently, only 1.5

staff years/year/reactor is budgeted for direct inspection of reactors under

construction. Even if the NRC spent four or five times that inspection effort,

it could not keep pace with all of the activities of the several thousand

workers at a nuclear construction site. Although reshaping the NRC inspection

programs along the lines indicated in earlier discussion will improve the

programs and the overall assurance of quality, NRC actions alone will not be

enough to stop future quality problems of the type that stimulated this report.

As one NRC Regional Administrator noted, "While I endorse reshaping our

inspections along the line described, if the licensee doesn't do the job

properly, I don't believe we can ever count on our limited inspection program

alone to provide timely identification of the scope of the problems. We have

to achieve the principle of the licensee building quality in from the beginning."

The study confirmed the intuitively obvious observation that quality has to be

put into a product or project by the producer or builder, not by the inspector.

Because the NRC does not build nuclear plants, but only inspects them, no matter

how much NRC inspection effort is devoted to plants under construction, the

builder (i.e., the nuclear industry: utility-owners, A/E, CM, reactor supplier

and other vendors) must ultimately achieve quality in the construction. If the

nuclear industry does not take positive action, this report's recommendations

will do little more than assure that poorly or questionably built plants do not

operate. The recommendations will not assure that plants, once started, are

not stopped in mid-construction due to quality problems. Such positive

industry action cannot be successfully elicited through regulation; it must

come because the nuclear industry wants it to. It must come because the

nuclear industry, and each of its members, believes it is the right and

necessary, but not the obligatory thing to do. In this regard, three conclusions

of this study require voluntary industry action to be accomplished:

(1) Industry should view NRC requirements as minimum levels of performance,

not absolute goals, and should capitalize on and expand on the practice of

some utilities that continually seek to improve their level of performance

and seek excellence in their operations. Industry establishment and

support of INPO is a positive step in this direction.

The overriding, predominant conclusion of this report is that the common cause

of poor quality in nuclear power plant construction is poor management by the

responsible licensees--the utilities. It follows that the solution to the

problem must also lie with utility management. To the extent the utilities

use INPO, their performance can be aided measurably by the programs, reviews,

2-40
common knowledge, experience and peer pressure provided by INKO as an integral

part of utility management. The NRC is farther removed and does not have

responsibility for managing the utilities. In pursuing its statutory responsibilities for ensuring the health and safety of the public, the regulations,

inspections, and penalties NRC imposes can motivate utility management, including INPO, to strive toward high quality in construction and operations through

excellence in their management. However, since' the problem and the ultimate

solution lie with the utilities, NRC must recognize, encourage, support and

nurture the efforts of utility management, including INPO, to improve their

performance through their self-improvement, self-inspection, and self-developed

programs and peer pressure. Their programs and practices are no substitute for

NRC practices because the NRC has different responsibilities with the same

goal. The NRC cannot and must not manage for them and they cannot fulfill

NRC's statutory responsibilities to the public. This requires a rather

critical balance: if NRC over-prescribes and over-regulates, it can stifle the

efforts of utility management through INPO to do their job themselves. If this

should happen, the net result would be the opposite of what was intended.

The study found that of the utilit ies studied, there was a strong correlation

between project success in design and construction and embracement of the

"rising standard of excellence" concept by the owner utility (see Section

3.4.3). INKO efforts in this direction will improve quality and safety in the

nuclear industry and should contribute to increased public confidence in and

acceptance of nuclear power. However, INPO alone cannot accomplish this goal.

The active support and commitment of each nuclear power plant licensee to

achieving excellence are needed. No regulation can achieve its full potential

effect unless the regulatees comply with it because they believe in it, not just

because they have to.

(2) The nuclear industry needs to treat quality assurance as a management

tool, not as just another regulatory requirement, or as a substitute for

active management oversight of a project.

The words of one NRC Regional Administrator are particularly appropriate on this

.point and merit repeating. He wrote:

NRC's failure is in not effectively communicating to licensees

that 10 CFR 50, Appendix B, describes a comprehensive closed loop

management control system that is worthy of adoption as an overall

construction management system. Consequently, managers often rely

on inspecting quality into a plant rather than doing it-right the

first time. We believe additional NRC effort is warranted in

establishing QA principles as an integral part of licensee construction management philosophy.

Quality assurance as a discipline cannot achieve or assure quality. In some

organizations, management views QA as being responsible for quality and fires

the QA manager if quality is not achieved. This study concluded that too often

top utility management assessed blame in the wrong place and fired the wrong

person(s). Top management, and through them, intermediate management and the

workers, are primarily responsible for quality. Quality assurance is a

management tool to provide feedback on how well quality objectives are being

attained. Achieving quality requires effective management of the design and

2-41
construction process and placing quality as a high priority. The 18 criteria

of Appendix B could just as easily be entitled "elements for effective

management of a project" as "quality assurance criteria." Because they really

are elements-of effective management, they must be implemented; similarly,

they will not serve as substitutes for active line management involvement in

their implementation.

(3) Additional emphasis must be placed on aspects of licensee QA programs

that identify problems and trends, including the processing of noncompliance reports and design changes.

In the past, neither the utilities nor the NRC have done well in analyzing

trends and recognizing the root causes of quality problems. Several activities

to improve NRC's capability in this regard are described in Section 2.2 and

Chapter 7. Management of ongoing construction projects should develop trend

analysis capabilities of their own, improve their ability to determine the root

causes of identified problems, and do both of these in a more timely manner.

The NRC should share the results of its industry-wide and generic analyses

described in Section 2.4 with licensees so that both can enhance their

programs.

Table 2.3 summarizes NRC and industry actions under way and actions proposed to

be taken as well as the NRC/industry program for the assurance of quality in

place when the major quality-related problems occurred (pre-1980).

2-42
TABLE 2.3. Comparison of Major Features of Former, Present

and Proposed NRC and Industry Programs for Assurance

of Quality in the Design and Construction of Nuclear

Power Plants

Former Program

(Pre 1980)

'Appendix B Rqmts.

'Licensing Review

°Regional-Based

Insp.

Present Program

(1982-83)

Application

to Current

or Future

Future Program CP Holders

NRC ACTIVITY

°Appendix'B Rqmts.

'Licensing Review

'Regional-Based Insp.

°Resident Insp. Prog.

'CAT Inspections-4/yr

°IDI Inspections-3/yr

'Appendix B Rqmts.

'Performance Objectives

for QA Programs

'Revised Regional-Based

Inspection

'Expanded Resident Insp.

Program

'Interim Expanded CAT

Inspection Program

°IDI Inspections-3/yr

'Enhanced Pre-CP Rev.

(Mgmt & Adv. Board)

°Post-CP Demonstrations

as Condition of

License

°NRC Mgmt Assessments/

CAT Adjunct

*Periodic Third-Party

Audits

Both

Both

Both

Both

Both

Both

Future

Only

Future

Only

Both

Both

INDUSTRY ACTIVITY

'Licensee QA Program

°ASME Audits

'NB Audits

*Licensee QA Program

°ASME Audits

°NB Audits

°INPO Constr. Eval.

°IDVP Program

°Licensee QA Program

°ASME Audits

°NB Audits

°INPO Audits

*Interim IDVP Program

Pending Third-Party

Audit Rule

Both

Both

Both

Both

Current

Note: The NRC actions that have been identified and recommended by the study

are extremely comprehensive, and several of them could consume all of NRC's

current budget and manpower allocated to development of the quality assurance

program. It will be necessary to prioritize the quality assurance issues

within the other issues faced by the NRC and to make resource allocations. As

a result, some of the recommended actions may necessarily be deferred until the

higher priority actions are completed.

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2.6 POSSIBLE LEGISLATIVE INITIATIVES

Many knowledgeable people believe that any long-term solution to the problems

of nuclear power in the U.S. involve major institutional changes to the

structure of the nuclear industry itself. The institutional changes may

require substantial legislative changes. This study confined itself only to

the question of what changes, legislative or otherwise, should be made to

improve quality and the assurance of quality in the conmnercial nuclear

industry. Given this narrow scope, the study does not make any legislative

recommendations at this time. However, further analysis of the impact of state

Public Utility Commission decisions on construction quality and the issue of

project ownership and management arrangements may require that legislation be

proposed in the future. The relationship of state PUC actions to construction

quality must be better understood before the need for a legislative proposal

can be determined. Also, if further research indicates that public health and

safety interests would be significantly better served if the owning, building,

and operation of nuclear power plants were consolidated in the hands of fewer

and stronger institutions, then legislation removing barriers to consolidating

such interests might be proposed. Consolidation has long been widely discussed

as a way of improving the quality of planning, financing, managing, designing,

building and operating nuclear plants, but little concrete action has been

taken in this area. Further analysis is clearly required and is proceeding.

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3.0 QUALITY ASSURANCE CASE STUDIES AT CONSTRUCTION PROJECTS

To improve quality and quality assurance in the commercial nuclear industry, it

is important to understand what caused the major quality-related problems of

the past several years, and why some nuclear construction projects have apparently

been successful in achieving quality and others have not without significant

remedial action. In an August 1982 paper to the Commission (Secy-82-352,

"Assurance of Quality"), the NRC staff proposed a long-term review and study of

the quality problems in the nuclear industry. A key feature of this long-term

review was a series of analyses of nuclear construction projects that have had

varying degrees of success in achieving project quality in order to identify

the underlying causal factors or root causes of quality success or failure.

These analyses, which included site visits, were called case studies. They

began in November 1982 and continued through August 1983. The case study

activity was used by the NRC to satisfy a provision in the Ford Amendment

requiring that successful quality assurance and quality control programs at

representative sites be analyzed and that the reasons for their success be

assessed. The case studies also provided the same analysis for projects that

had had significant quality problems.

The utilities participating in the case study analysis and the projects

analyzed were as follows:

Utility Project

Arizona Public Service Palo Verde

Florida Power and Light St. Lucie 2

Georgia Power Vogtle

Houston Lighting and Power South Texas

Pacific Gas and Electric Diablo Canyon

Public Service of Indiana Marble Hill

A management analysis of a seventh project, Cincinnati Gas and Electric's

Zimmer plant, was performed in 1983 by Torrey Pines Technology (TPT). Because

the TPT findings on Zimmer are relevant to the questions addressed by the NRC

case studies and the Ford Amendment alternatives, the results of TPT's

evaluation of Zimmer are included as a part of this analysis.

This chapter describes the main findings from the case studies. Characteristics of projects that have had major quality problems and some that have not

are highlighted, including root causes of apparent success or lack of it. Like

all case study analyses, these findings are based on detailed analysis of a

subset of a larger population, and the results may not be entirely generalizable to the population as a whole. In the case study analyses, four of the

five projects identified in the legislative history of the Ford Amendment as

having had major quality problems are examined, whereas the study examines only

three of about sixty projects completed or under construction and not identified

as having major quality problems in design or construction. There is always

the possibility that as-yet-undiscovered problems would move projects from the

"no significant problems" category to the "problem" category. Still, when

similar characteristics are found consistently across disparate sites,

confidence in them is increased. The case study conclusions have relied most

heavily on these consistent findings. The case study approach, program,

3-1
projects visited and results are described in more detail in Appendix A to this

report.

3.1 PURPOSE

The primary purpose of the case studies was to determine the essential characteristics of both successful and less-than-successful commercial nuclear power

plant construction projects, and to derive a set of lessons learned, good

and bad, regarding the design and construction of commercial nuclear power

plants. The studies are intended to provide a historical perspective on why

certain licensees have had extensive quality problems while others have not. A

by-product objective is to use the information to develop project organization

and management criteria that may be applied to any future applicant for a

construction permit (CP). The criteria, if properly applied, could result in

applicants strengthening their programs and organizations before beginning the

difficult job of constructing a nuclear power plant.. When applied to projects

currently under construction, the lessons learned from the case studies may

also indicate projects that have a higher probability of incurring quality

problems in design and construction and that should receive increased NRC

scrutiny. Management appraisals, based on lessons learned from the case

studies, are planned as an adjunct to future Construction Appraisal Team (CAT)

inspections. See Section 2.3.1.

The purpose of the case studies was to answer "why", not "how". Accordingly,

the case studies were not audits or inspections, so did not focus on such

tangible items as records, manuals, and procedures. Rather, they focused more

on other factors, some intangible, such as corporate attitude and commitment,

management support for quality, utility management's understanding of the

project and its responsibilities, project accountability, level of teamwork,

appropriateness of staffing, and flow of project information horizontally and

vertically. As a result of the intangibility of many of the aspects examined

in the case studies, the results are also less tangible than inspection

findings (e.g., poor project management vs. missing rebar).

By using actual examples, case study results tend to confirm the correctness of

several widely held explanations for the major quality problems, e.g., shortcomings in utility and project management, lack of corporate commitment to

quality, fossil approach to nuclear construction, and others. Case study

results have also been useful in refuting some other widely held beliefs; e.g.,

the problem is craftsmanship. While poor craftsmanship was found to play a

role in some of the quality problems studied, it was not the root cause.

Craftsmanship problems observed were more the result of poor project management

than lack of skill on the part of the craftsman. Craftsmanship is discussed in

more detail in Section 2.1.1, Section 3.4 and in Chapter 8.

The case studies focused in particular on developing answers to the two

underlying questions that were considered to be central to the study:

1. Why have certain nuclear construction projects experienced significant

quality-related problems while others have not?

2. Why have the NRC and the utilities failed or been slow to detect and/or

respond to these quality-related problems?

3-2
The first question is answered in two parts, in Sections 3.2 and 3.4. The

second question is answered in Section 3.3.

3.2 WHY HAVE SEVERAL NUCLEAR CONSTRUCTION PROJECTS EXPERIENCED SIGNIFICANT

QUALITY-RELATED PROBLEMS?

To determine the answers to this question, the NRC performed case study

analysis on three of the five projects cited earlier as having experienced

major quality problems in design or construction. These projects were Marble

Hill, Diablo Canyon, and South Texas. Torrey Pines Technology (TPT) performed

a management analysis of the Zimmer project, and the results of that review

will also be used in this analysis. Of the .five projects cited in the legislative

history of the Ford Amendment as having experienced major quality problems,

only Midland was not subjected to a complete case study analysis (by the NRC or

others). This was due to time constraints. However, the study did include a

review of inspection, licensing, and hearing records on Midland and interviews

with cognizant NRC inspection personnel and management, past and present. The

results of this partial analysis provided some insights into the quality

problems experienced by the Midland project, but they are not as complete or in

as much depth as were the results of the other four analyses.

Where appropriate, the results of this limited Midland analysis are factored

into the following discussion. Information related to the Atomic Safety and

Licensing Board (ASLB) decision not to issue 'an operating license to

Commonwealth Edison for the Byron Station because of inadequacies in Commonwealth's quality assurance (QA) program is not included in the discussion. The

ASLB decision in the Byron case is a licensing matter still to be considered by

the Commission.

This section will focus on the results of the case study analysis of four

projects (Marble Hill, Diablo Canyon, South Texas, and Zimmer) rather than on

the background or history of these projects. Each project's history, the

development of its quality-related problems, and theroot causes of the

problems as determined by the case studies or TPT are discussed in detail in

Appendix A.

3.2.1 Lack of Prior Nuclear Experience

A common thread running through each of the four projects was a lack of prior

nuclear experience of some key members of the project team (i.e., owner utility,

architect-engineer (A/E), construction manager (CM), and constructor) in the

role(s) they had assumed in the project. Moreover, in three of the four cases,

lack of prior nuclear experience of the owner utility and/or other members of

the project team in their assumed roles was a major contributor to the qualityrelated problems that developed.

While the study did conclude that assumption by project team members of

project roles consistent with their prior nuclear design and construction

experience seems necessary for project success in the future, it is not

sufficient (see discussion at the end of this section and also Section 3.4.1).

Three of the four subject utilities were constructing their first nuclear

plant. However, this by itself should not have precluded them from successfully completing their projects without developing major quality problems.

Each owner utility of the approximately 80 nuclear plants now in operation

3-3
in the U.S. was at some time a first-time owner. However, it is noteworthy

that the first commercial nuclear reactor plant in the U.S. (Shippingport) was.

constructed under the management of people who had extensive prior nuclear

design and construction experience in the Navy nuclear program. Moreover, a

number of the early reactor plants constructed in the U.S. were "turnkey"

plants, the construction of which was managed by a few large A/E and NSSS

(nuclear steam supply system) firms. These firms, whose first reactor plants

were far simpler than those of today, had developed a base of experience from

which they could draw in constructing the increasingly more complex reactor

plants that were ordered in the future.

In the early to mid-1970s when three of the four subject projects were conceived, there was a large block of orders for new reactor plants, and the demand

for personnel and organizations with successful prior nuclear design and

construction experience exceeded the supply. As a result, new or prospective

owner utilities generally faced a choice of picking key project team members

from either the "fourth or fifth team" of an experienced firm (i.e., personnel

lacking depth and breadth of applicable experience) or the "first team" from a

firm that was inexperienced in nuclear design and construction but that wanted

to expand its business into the nuclear area.

This supply and demand problem for prior nuclear experience of non-owner

members of the project team, coupled with the inexperience of the new owners

themselves, led to situations in which some key members of the project team

assumed project roles inappropriate with their past nuclear experience and

exceeding their capabilities. The owner's inexperience is important because in

at least three of the four cases the owner underestimated the complexity and

difficulty of the nuclear project and treated it much as it would have another

fossil project. As a result, the owner utilities followed management practices

and project approaches that had been successful in non-nuclear projects but

which, in retrospect, were not appropriate to successfully complete a nuclear

project in the U.S. today.

In effect, these first-time owners were trying to construct a full-scale

production facility of a new design without having overseen the construction of

a prototype. Although such a task is possible in today's complex nuclear

environment (see Section 3.4), it seems to require an owner utility who

(1) fully appreciates that construction of nuclear plants is sufficiently

"different" from construction of fossil plants, (2) is willing to change its

corporate management approach to accommodate the project, and (3) requires

strong nuclear experience of the other (non-owner) members of the project team.

Public Service of Indiana (Marble Hill) is a first-time nuclear utility that

selected an A/E with nuclear experience, but selected as civil constructor a

firm without prior nuclear experience in that role. In addition, Public

Service of Indiana assumed the role of CM for the project, a role inconsistent

with its lack of prior nuclear construction experience. Houston Lighting and

Power (South Texas) is also a first-time nuclear utility. The utility assumed

a project role consistent with its experience, that of project oversight, and

delegated the A/E, CM and constructor functions to another firm. However, the

firm selected as A/E, CM and constructor had prior nuclear experience only as

a constructor, working under the management of another firm. Cincinnati Gas

and Electric (Zimmer), also a first-time nuclear utility, assumed a project

3-4
role consistent with its lack of expertise and experience, i.e., oversight only

and selected an experienced A/E. However, it selected as CM and constructor a

firm inexperienced in constructing commercial nuclear power plants.

Pacific Gas and Electric (PG&E) (Diablo Canyon) had a somewhat different

situation. Its quality problem was in design (control of design documents),

and it did not experience construction quality problems as did the other three

projects. PG&E was not a first-time nuclear utility; it owned and operated a

small turnkey reactor plant (Humboldt Bay) constructed by Bechtel in the early

1960s. PG&E had assumed an oversight role only on the Humboldt Bay project.

For Diablo Canyon, PG&E assumed the roles of owner, CM and A/E. PG&E had

extensive non-nuclear experience as CM and A/E, but no prior nuclear experience

in these roles. As contractors, PG&E selected firms with prior nuclear construction experience.

For the other three plants, the case studies determined that assumption of a

project role by one or more project team members who lacked appropriate prior

nuclear experience was a causal factor in the development of the quality

problem. For Diablo Canyon, it was a coincidental factor, but not a causal

factor. Extensive reviews by NRC and independent auditors have shown that PG&E

discharged its duties as A/E and CM well. The root of PG&E's quality problem

was management oversight of the design process during a period of extensive

design changes.

Table 3.1 summarizes the relationship of the project role to prior nuclear

experience for each of the four project teams at the time the project's quality

problem occurred. It should be noted that some inexperienced project team

members at several of these projects have subsequently been replaced by more

experienced organizations.

TABLE 3.1. Summary of Relationship of Project Role to Prior Nuclear

Experience at the Time Quality Problems Occurred

Project

Marble South Diablo

Characteristics, Hill Texas Zimmer Canyon

Design quality problem(s) X X

Construction quality problem(s) X X X

First nuclear project X X X

Inexperienced nuclear A/E X X

Inexperienced nuclear CM X X X X

Inexperienced nuclear constructor X X

Some member(s) of project team X X X X

inexperienced in role assumed

Inexperience of project team X X X

member contributed to quality

problem

3-5
The issue of prior nuclear design and construction experience of key personnel

of the project team is related to the issue of prior nuclear construction

experience of corporate members of the project team. An inexperienced utility

can compensate for its lack of prior corporate nuclear construction experience

by hiring key personnel with appropriate prior experience, and by taking other

management actions. For a more detailed discussion of this point, see the

discussion of the Palo Verde project in Section 3.4. The key study finding

on this issue is that while prior nuclear design and construction experience is

important for all corporate members of the project team, it is essential for

the key project individuals who work for them.

Given that lack of prior nuclear construction experience seems so important

to the development of quality problems, it is reasonable to ask what additional

insights the Midland project brings to the experience issue. Like PG&E, the

owner utility for this project (Consumers Power) had prior nuclear experience.

In addition, it selected an experienced A/E, CM. and constructor.

Consumers Power has as operating plants Big Rock Point, a small (63 MW) GE-Bechtel

turnkey plant that received its operating license in 1962, and Palisades, a

medium-size (740 MW) plant designed and constructed for Consumers by Bechtel

that went into commercial operation in 1971. In both cases, Bechtel was the

A/E, CM and constructor; Consumers assumed an oversight role only and was not

actively involved in managing the project. In effect, although Consumers

had two operating plants, it had minimal nuclear construction experience, and

Bechtel had been in firm control of the earlier projects. The respective roles

of Consumers and Bechtel changed for the Midland project. Consumers took a

more active management role in the project and Bechtel's management role was

proportionately reduced. This was a major change in the roles of each from the

prior projects, and it was a change to which neither adjusted quickly. NRC

actions by the Midland ASLB hearing board and by the regional office thrust

much more project and QA responsibility on Consumers for Midland than had been

the case with the earlier plants. Consumers had limited experience within its

staff to successfully discharge this responsibility.

A lesson of the Midland project is that while prior nuclear construction

experience of each member of the project team may be necessary to avoid the

development of quality-related problems and to successfully complete a

commercial nuclear power plant in the U.S., experience alone is not sufficient.

Many other factors, including management commitment to quality, effective

oversight of contractors, qualifications of project staff, and a management

attitude that does not view NRC requirements as the ultimate goals for performance, are important also. These and other factors will be discussed in

subsequent sections.

3.2.2 Project Management Shortcomings

As suggested above, some utilities' lack of prior nuclear experience contributed

to their failure to fully appreciate the complexity and difficulty of building

or overseeing the construction of a large nuclear power plant. This inexperience contributed to but is not entirely the cause of several managerial

mistakes or shortcomings that led to the quality problems at these four

projects.

3-6
The principal finding of this study is that nuclear construction projects

having significant problems in the quality of design or construction are

characterized by the failure to effectively implement a management system that

ensures adequate control over all aspects of a project.

To understand why utility management errors and shortcomings are such a

dominant contributor to quality problems on construction projects, especially

when coupled with lack of nuclear experience, it is useful to understand the

underlying philosophy and character of a utility embarking on its first nuclear

construction project. The following excerpt from one of the case studies

explains one first-time owner's approach to nuclear power:

Utility Character and Background

Like many utilities, this utility had and has a conservative

management philosophy and is adverse to taking unnecessary

risks. As with many utilities, this one is quasi monopolistic,

being protected from competition by public utility commiission

policies and practices. With this protection from competition,

however, comes close scrutiny from the public utility commission

regarding how the utility spends money and handles their

finances. These factors contribute, in part, to a cost and

schedule consciousness on the part of the utility. For many

years the utility's hiring procedures provided for review and

approval by several levels of management, including the chief

executive officer for all new hires. All their contracts,-

including those for construction of generating plants, were fixed

price contracts.

The utility's prior construction experience consisted of about

twenty fossil-fired plants.* In some cases the utility had served

as construction manager. The utility had a construction department headed by a vice president, which was responsible for

all construction utility wide. Over the years the utility

developed a close working relationship with, and confidence in,

several of the major construction contractors that worked on

their fossil projects. The utility's fossil construction success

was a source of pride: each plant had come on line on or before

schedule and at or within budget. Each plant was of acceptable

quality; after a few early bugs were worked out, each plant

operated safely and reliably. This quality, incidentally, was

something put into the plant by the builders - there was no

formal program for quality or the assurance of quality. To the

utility, quality was something that happened if you put good

people on the project.

Reflecting the generally conservative management philosophy of

the company was an adherence to tradition: if something seems to

work, stick with it. The traditional way of building fossil

plants seemed to be successful, and the company carried over many

of its fossil construction practices to its nuclear project;

e.g., the utility served as construction manager, and several of

their key contractors on fossil plants were retained (although

the utility had no nuclear experience and their contractors had

3-7
limited nuclear experience); only fixed price contracts were

let; the construction department was responsible for construction

management except for a few people permanently assigned to the

project; personnel from existing departments in the utility were

matrixed in to work on the project as needed. They reported

administratively and to some degree functionally to their

department head, not to the project manager; the project was

managed from corporate headquarters with a minimal utility

presence at the site; and hiring and recruitment actions

continued to be reviewed at the highest levels of the company.

This excerpt applies in varying degrees to the other utilities that had quality

problems. In general, these utilities had managed or overseen the construction

•f several successful fossil projects. They approached their nuclear projects

• extensions of the earlier fossil construction activity, i.e., to be managed,

:affed, and contracted out in much the same way as fossil projects. The

_.:ilities did not fully appreciate or understand the differences in complexity,

quality requirements, and regulations between fossil and nuclear projects and

tended to treat the nuclear projects mentally and managerially as just another

construction project.

One chief executive termed his utility's first planned nuclear plant as "just

another tea kettle", i.e., just an alternative way to generate steam (this was

before major quality problems arose at his project). Managerially, the

utilities fit their nuclear projects into their corporations' traditional

project management scheme, which, in retrospect, may not have been well suited

for nuclear work. Generally, the utilities' lack of experience in and understanding of nuclear construction manifested itself in some subset of the

following characteristics (not all apply to each of the four utilities):

(1) inadequate staffing for the project, in numbers, in qualifications,

and in applicable nuclear experience

(2) selection of contractors who may have been used successfully in building

fossil plants but who had very limited applicable nuclear construction

experience

(3) over-reliance on these same contractors in managing the project and

evaluating its status and progress

(4) use of contracts that emphasized cost and schedule to the detriment of

quality

(5) lack of management commitment to and understanding of how to achieve

quality

(6) lack of management support for the quality program

(7) oversight of the project from corporate headquarters with only a minimal

utility presence at the construction site

(8) lack of appreciation of ASME codes and other nuclear-related standards

3-8
(9) diffusion of project responsibility and diluted project accountability

(10) failure to delegate authority commnensurate with responsibility

(11) misunderstanding of the NRC, its practices, its authority, and its role in

nuclear safety

(12) tendency to view NRC requirements as performance goals, not lower

thresholds of performance

(13) inability to recognize that recurring problems in the quality of construction were merely symptoms of much deeper, underlying programmnatic

deficiencies in the project, including project management.

Each of the four utilities had varying degrees of understanding of the p roject,

its complexity, their role in it and how it should be managed. In several

cases, utility management did not understand what was required for successful

project completion and consequently could not provide effective oversight or

leadership of their contractors. In some cases, no one was managing the

project; the project had inertia but no guidance or direction. In several

cases, the utility's project management approach failed to provide effective

oversight of several aspects of the project, including planning, scheduling,

procurement, cost control, degree of design completion, and quality. It is

important to note that problems in quality and quality assurance were not the

only management shortcomings at several of the projects; they fit into a larger

pattern that evidences lack of effective overall project management. While

some of the four projects studied had experienced extensive management problems,

all had had problems implementing the quality assurance program, a key management control program for any complex project. Each nuclear construction

project studied that had significant problems in the quality of design or

construction was characterized by the failure to effectively implement a

management system that provided effective oversight over all aspects of the

project.

The pattern described above, which emerged from the four case studies (including

the TPT study), fits the Midland project. A 1982 NRC staff report to the ACRS

on Midland stated:

The Region III inspection staff believes problems have kept

recurring at Midland for the following reasons: (1) overreliance

on the architect-engineer, (2) failure to recognize and correct

root causes, (3) failure to recognize the significance of isolated

events (4) failure to review isolated events for their generic

application, and (5) lack of an aggressive quality assurance

attitude.

Each of these five reasons was seen at one or more of the case study projects

that experienced quality problems. The applicability of reasons (2), (3), and

(4) to the case study projects is discussed in more detail in Section 3.3.

3.2.3 Shortcomings in .NRC's Screening of Construction Permit Applications

Previous sections of this report have identified lack of prior nuclear experience and management shortcomings as two primary root causes of the major

problems that led to this study. Given these findings, it is reasonable to ask

3-9
what were the NRC/AEC screening practices for addressing experience and

management capability when the construction permits (CPs) were issued for the

ilants that developed quality problems, and what were the results. Chapters 4

and 7 will address the former question. The latter question was addressed by

the case studies.

As evidenced by the substantial remedial programs the NRC has required of

several utilities after significant quality-related problems were discovered, it

is clear in retrospect that some utilities that were granted CPs in the past

would not, based on the same qualifications, be granted a CP today without

substantial personnel and organizational improvements in experience level and

management approach. In retrospect, it is apparent that NRC's screening process

for these CP applicants failed to adequately address either the experience or

management issue. This finding is relevant to at least three of the four

projects in the case study population that experienced major quality problems.

The following excerpts from one of the case studies illustrate and provide

background for this finding:

For construction permits, NRC licensing review is limited

largely to technical and engineering issues. NRC does not and

did not in the case of the licensee, evaluate whether the

applicant and his contractors had the experience, knowledge,

staffing, or ability to effectively manage and consummate a

project as complex as the construction of a nuclear power plant.

NRC's licensing review for a construction permit is largely

limited to technical issues and conformance with 10 CFR 50. NRC

does not (and did not in the case of this utility) perform a

formal review of the applicant's ability to manage, and carry

through to completion, the construction of a nuclear reactor.

The issues in this case are management capabilities and lack of

experience, and NRC's formal licensing process failed to

adequately address either.

NRC contributed to the turnaround [after quality-related

problems were uncovered], and its extent in a significant way by

setting high standards for the resumption of the project. NRC's

requirements for total restart of the project contained "hold

points" corresponding to the different stages of recovery, each

of which would be subject to intensive scrutiny by NRC inspectors.

NRC's requirements for resumption of construction were more

stringent than were NRC's initial requirements for CP issuance.

For resumption of construction, NRC focused more on the issues

of management and management capability, and required demonstrations of capability rather than statements of intent.

NRC, in granting a CP, should look beyond the plant design,

seismic criteria, and financial status to determine whether the

utility is capable of managing a project having the scope and

complexity of construction of a nuclear project.

Opinions expressed by both regional and headquarters NRC

personnel as well as licensee personnel suggest that the NRC

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could have been more effective in some respects in avoiding the

problems which occurred at this project. A recurrent theme was

that the NRC licensing process does not do enough to address the

ability and experience of project management as it relates to

managing a nuclear construction project. The inspection process

also tends to ignore management issues.

Although these excerpts are from one case study, they apply equally to three of

the four case study projects that experienced major quality problems.

3.2.4 Other Factors Contributing to Major Quality Problems

Several other factors contributed to the development of major quality problems

at the four projects studied. They include, but are not limited to the

following: the changing regulatory, political, and economic environment

surrounding nuclear power over the past several years and some licensees'

inability to recognize and adjust to the changes as they were occurring; the

failure of some licensees to treat quality assurance as a management tool,

rather than as a paperwork exercise; and NRC's lack of effectiveness in

convincing all licensees of the necessity to implement their quality assurance

programs.

The major design quality problems that have arisen were related to shortcomings

in management oversight of the design process, including failure to implement

over the design process quality assurance controls that were adequate to

prevent or detect mistakes in an environment of many design changes. Appendix

A, the individual case study working papers, and the TPT report on Zimmer

provide the basis for more information on these findings.

3.3 WHY HAVE THE NRC AND THE UTILITIES FAILED OR BEEN SLOW TO DETECT AND/OR

RESPOND TO THESE QUALITY-RELATED PROBLEMS?

Determining answers to this question was part of the case study focus of the

analysis of the four projects experiencing major quality problems. As with the

first question (Section 3.2), several common threads emerged from the different

case studies. Generally, thesethreads can be identified as shortcomings in

utility programs and practices and shortcomings in NRC programs and practices.

3.3.1 Shortcomings in Utility Programs and Practices

The shortcomings in utility programs and practices that led to the utilities'

failure or slowness to detect and/or respond to quality problems are largely

outgrowths of the findings on lack of experience and management capability,

discussed in the preceding section. As previously stated, the experience and

management problems resulted in, among other problems, failure to adequately

implement the quality assurance program. In 1969, the NRC established 18

criteria for an effective quality assurance program, and all subsequent license

applications were required to describe a quality assurance program that met the

18 criteria. In some cases, these programs were simply not implemented. It is

not surprising that those projects that failed to effectively implement a

quality assurance program also did not detect or act on major quality problems

in a timely fashion. The quality assurance program is the management system

whose primary purpose is detecting and correcting such problems.

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In several cases the poorly functioning quality assurance program had its

roots in lack of management appreciation of or support for the quality

function. This lack of support manifested itself in failure to adequately

staff the quality assurance function in numbers, qualifications and nuclear

experience. In each case senior management wanted a quality plant but

generally did not see the quality function and quality assurance program

as a vehicle to help achieve that end. Instead of seeing quality assurance as

a management tool to help them exercise control over the project, some managers

saw it as an extra government requirement that was not present in the construction of other (non-nuclear) projects. In one case, senior utility

management had been warned that the quality assurance manager might try to

establish a quality assurance "empire," and it consistently rejected his

requests for additional quality control inspectors. Subsequent events proved

the QA manager's requests to have been squarely on target. Cost and schedule

considerations also contributed to weak management support for the quality

function. Some senior managers saw quality assurance as an overhead expense

that also had the potential for slowing the rate of construction.

The single most damaging manifestation of the lack of management support for

quality assurance and the quality function is that in several cases management

was not aware of vital information on the quality of construction which was

known to the quality assurance staff. In some cases, management had pertinent

information offered by the quality assurance organization (e.g., improper

patching of concrete) but, seemingly, did not listen to it or believe it. In

other cases the management chain, from the site quality assurance manager to

the senior corporate official responsible for the project, contained so many

layers (three to four) that vital information on inferior construction and

design quality was severely attenuated when or if it reached top management.

The utilities studied did not take action on problems sooner because they

generally had difficulty in aggregating seemingly isolated quality problems

into a coherent picture that indicated the quality breakdown was pervasive and

programmatic. The NRC suffered from this problem also (see Section 3.3.2).

3.3.2 Shortcomings in NRC's Programs and Practices

The case studies developed several findings on NRC's failure or slowness to

detect and/or respond to quality problems in design and/or construction.

When the construction mistakes studied for this report were made, the then

current Atomic Energy Commission (AEC)/NRC inspection program provided sporadic

NRC inspection at construction sites. Each of the five major quality problems

began or occurred before the resident inspector program for construction was

implemented. The earlier sporadic NRC presence at construction sites made it

unlikely that an NRC inspector would discover a quality problem on. his own. It

also meant that information on a project's performance was transmitted to

NRC regional and headquarters offices in bits and pieces, making it difficult

to aggregate and determine whether reported problems were isolated events or

part of a larger problem pervading the project. Although individual inspectors

may have sensed a pervasive quality problem at a site months or years before

the NRC as an agency recognized it, isolated information from different

inspectors in different disciplines inspecting at different times generally was

not effectively aggregated and analyzed.

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In most of the projects having major quality problems, neither the NRC nor the

licensee adequately traced the more obvious quality problems to their root

causes and devised a correction program. No project is without errors. These

errors can be large or small, or there can be such an accumulation of small

errors that the cumulative effect becomes large. The NRC treats small errors

or "findings" as items that can be corrected within a licensee's normal quality

assurance program. However, large errors question the adequacy of the licensee's

entire quality assurance program. The point at which an inspection finding

leaves the realm of "small" and becomes "large" is referred to as the inspection

"threshold." Without a particularly glaring deficiency, it would take some

time for the NRC to aggregate individual findings into a general conclusion

that the overall construction effort was deficient. The inspection threshold

has generally been higher for plants under construction than for operating

plants; the rationale was that any major safety problems would be caught

prior to operation through an intense pre-operational testing program. This

approach was based upon upon the observation that a plant does not represent

any potential hazard to public health and safety until it goes into operation.

For several of the projects having quality problems, the extent and magnitude

of the quality problem was finally established by the NRC through a comprehensive NRC team inspection involving several inspectors in different disciplines

and requiring several weeks of field work. In some cases, this kind of inspection effort was only applied after allegations of poor quality assurance were

raised by parties independent of the NRC. Such comprehensive team inspections

provide an opportunity for frequent interchange of information in a short

period of time among inspectors looking at different areas. Team inspections

facilitate the synthesis and integration of findings and the development of

project-wide conclusions. These team-type inspections have now been made a

regular part of the NRC inspection effort (see Chapters 2 and 7).

Historically, the NRC also did not perform inspections of any depth or

frequency in the design area. Design was afforded less inspection attention

than construction and construction less inspection attention than operating

reactors. Reactors under construction were not afforded the degree of scrutiny

given to operating reactors for the same reason the threshold for construction

was set higher, as explained above. The lack of NRC inspection attention in

the design area was due, in part, (1) to the need to prioritize the allocation

of reactor inspection resources among operations, construction, and design,

(2) to a shortage of inspectors technically qualified to review the design

process, and (3) to a perception that design engineers did not need NRC

inspection oversight as much as construction workers did.

In addition to NRC's slowness to recognize the extent of major quality

problems, the NRC was slow to take strong enforcement action in some cases

where such quality problems were identified. Historically, AEC/NRC has been

slower to take enforcement action for construction problems than for operations

problems since there is no immediate threat to the public health and safety

posed by a plant that has no fuel or radioactive contamination. Problems

identified by the NRC during construction were tracked and corrective action

required before an operating license was issued. As explained above, it was

believed that other quality-related problems that might affect plant safety

would be detected during pre-operational testing of the plant. The NRC took

strong action (shutdown of work, civil penalties, issuance of Show Cause

3-13
Orders) for significant construction quality deficiencies only after the

quality problems were shown to be pervasive rather than isolated and to affect

several aspects of the project. For the most part, such quality breakdowns

were finally established through comprehensive NRC team inspections, not

through the routine inspection program. The comprehensive team inspections in

turn were often triggered by allegations of improper workmanship or poor

quality of construction. In two cases, inspection findings by the National

Board of Boiler and Pressure Vessel Inspectors on improper ASME code piping

work were instrumental in the NRC eventually recognizing the extent and

magnitude of the quality breakdown.

3.4 WHY HAVE SOME NUCLEAR CONSTRUCTION PROJECTS APPARENTLY BEEN SUCCESSFUL

IN ACHIEVING QUALITY WHILE OTHERS HAVE NOT?

Determining answers to this question was a major part of the case study

activity at each of the projects analyzed, both those having had major quality

problems and those that had not. Note that the question uses the qualifier "apparently". The case studies did not demonstrate, nor were they intended

to demonstrate, that the projects visited that had not experienced major

quality problems were in some absolute sense "quality successes", while the

other projects analyzed as case studies were not. The case study effort took

as a given that the five projects specified in the legislative history of

the Ford Amendment would form one category of projects for study and that

all projects not in that set of five would form another category for study.

Within the second category, one consideration was to select projects that had

not experienced known design or construction problems to an extent greater than

other projects under construction. No nuclear construction project is completed without some quality problems developing during construction, and

identifying and correcting such problems can be a measure of success of

the project and its quality program. It was assumed that all nuclear construction projects will experience some quality problems during their construction (which should be corrected before operation). Vogtle, St. Lucie 2

and Palo Verde were not expected to be exceptions. Thus, the the analysis

focused on comparing their approaches to project management and quality

assurance with those of Marble Hill, South Texas, Zimmer, and Diablo Canyon,

and determining what lessons can be learned from the differences and

similarities.

The case studies took as a given that Vogtle, St. Lucie 2 and Palo Verde were

apparently successful projects from a quality perspective, even though each had

experienced some minor quality problems. For these three projects, the case

study findings tended to be almost a direct converse of the findings of the

plants experiencing major quality problems. The main findings are contained in

subsequent sections.

3.4.1 Prior Nuclear Experience

As discussed earlier, an essential characteristic of a successful nuclear

construction project is the collective prior nuclear construction experience of

the project team (utility owner, A/E, CM, and constructors). Within the

project team, it is also essential that individual team members assume roles

consistent with their prior level of nuclear experience and not overstep their

capabilities. Prior nuclear construction experience of the utility owner is

particularly helpful, although not mandatory if the rest of the project team is

sufficiently experienced, and if the utility and the other members of the

3-14
project team assume project roles consistent with their respective levels of

nuclear experience. The following paragraphs discuss the experience levels for

the three apparently successful projects.

Vogtle is the project of Georgia Power Company (GPC). GPC has two medium-si'zed

operating plants, Hatch 1 and 2, which went into commercial operation in 1975

and 1979, respectively. GPC is part of the Southern Company, a consortium of

four southern utilities that also own and operate the two Farley nuclear

units (Alabama Power Company). The Southern Company has its own engineering

arm, Southern Company Services, which supports the nuclear and non-nuclear

engineering and construction activities of the four member utilities. The

A/E for the Vogtle project and the other four Southern Company reactors is

Bechtel. GPC started construction on Vogtle before the Hatch project was

completed and has been able to maintain a core of personnel experienced in

nuclear construction within the utility. The same is true of the Southern

Company and Southern Company Services. GPC is the construction manager for the

Vogtle project. All the major construction contractors (civil, mechanical and

electrical) have had significant nuclear plant construction experience, as have

many of the smaller contractors. In this project, each of the project team

members has assumed a project role consistent with his level of nuclear

experience and capability.

St. Lucie 2 is the fourth nuclear reactor constructed by Florida Power and

Light (FP&L). The first two, Turkey Point 3 and 4, are medium-sized turnkey

reactors constructed for FP&L by Bechtel Power Corporation. They were completed in 1972 and 1973, respectively. FP&L's role in their construction was

oversight only, although they did participate in the startup activities. St.

Lucie 1, which was completed in 1976, was designed and constructed for FP&L

by Ebasco. FP&L was much more involved in the construction of St. Lucie 1

(although still in an oversight capacity) than in the construction of the

Turkey Point plants. FP&L used all three projects as points on a learning

curve, both as a corporation and for training utility personnel.

FP&L began construction of St. Lucie 2 shortly after St. Lucie 1 was finished.

This was an advantage because the continuity of experienced FP&L and Ebasco

project team personnel could be maintained from one project to the next.

Another advantage was that the designs of St. Lucie 2 and St. Lucie 1 were very

similar, so FP&L started the second project with a very advanced design. The

nearly' completed design and the construction experience gained from having

completed an almost identical unit, together with a nine-month licensing delay,

enabled FP&L to perform an unusually extensive amount of planning, scheduling,

and procurement activity before actual construction of St. Lucie 2 began. This

up-front planning was a significant contributor to the completion of St.

Lucie 2 in a six-year period. During the licensing delay, FP&L decided to

construct St. Lucie 2 with an integrated project team of experienced FP&L and

Ebasco personnel, with FP&L assuming the role of CM. Ebasco was A/E and

constructor. Again in this project, project team members assumed a project

role consistent with their levels of experience and capability.

By the time five of the case studies had been completed, it was apparent that

prior nuclear construction experience was a key factor in project success or

lack of success. The Palo Verde project appeared to contradict the working

hypothesis that prior nuclear construction experience of the owner was necessary

in the present environment, so a case study was performed at the Palo Verde

3-15
project to determine the reasons for this apparent anomaly. The Summer project

was considered also for the same reason (apparently successful first-time

owner/utility), but time did not permit case studies of both Palo Verde and

Summer. Subsequent staff analysis of the Summer project indicates striking

similarities to key aspects of the Palo Verde project.

Palo Verde is the first nuclear project of Arizona Public Service (APS).

From the project's outset, senior APS management felt strongly that nuclear

construction was sufficiently different from fossil construction that it would

have to be managed differently. The utility did not have previous nuclear

experience as a corporation, but it recruited a technically capable core group

of project personnel with prior nuclear construction and A/E experience,

reorganized the corporation to create a separate division dedicated to the

nuclear construction project, and contracted for extensive applicable

corporate and individual experience in each of the key project organizational

roles of A/E, CM, and constructor. Bechtel occupies all three of these roles

for the Palo Verde project. APS's role is one of oversight and active management involvement. Recognizing that the project oversight role requires managing

the interfaces among the other project team members and recognizing its own

inexperience, APS consolidated the roles of all the other project team members

under one very experienced contractor to minimize problems across those interfaces.

In the construction portion of the Palo Verde project, each of the project

team members assumed a project role consistent with his level of experience.

However, this did not hold true as the operational phase approached. In the

transition from construction to operations, APS appeared to commit managerial

mistakes similar to those committed in the construction phase at some other

plants studied.

At the time of the case study, APS was experiencing some difficulty in moving

from the construction phase to the operation phase. These difficulties were

not well known and were in addition to the highly publicized pump problem experienced by APS. Unlike construction, in which the owner-utility usually

hires contractors to design and build the plant, the owner normally operates

the plant itself. In this project, APS had assumed the responsibility for

pre-operational checks and startup of the plant. However, APS did not apply

all of the good management practices it had used in construction to startup and

operations. Operational responsibility for the Palo Verde plant was not

established in an organization separate from the rest of APS operations, and an

.existing APS vice president having only fossil experience was initially placed

in charge of Palo Verde operations, before being replaced by someone with

extensive nuclear operations experience. Both of these actions are in contrast

to the APS construction project management decisions, and both contributed in

part to the startup problems at Palo Verde.

The problems with startup were not anticipated and some delays ensued until APS

recognized the nature of its problem. It separated Palo Verde operations from

the remainder of APS operations and placed a senior-level APS management team

with nuclear operations experience at the site. These startup problems were

largely masked by technical problems with the reactor coolant pumps, but they

served to support the study conclusion (see Section 3.4.2) that a separate

nuclear organization staffed with personnel whose experience is consistent with

the chosen project role is a key determinant for project success. The startup

3-16
problems of this first-time utility underscored and corroborated the study

findings on the importance of prior corporate nuclear experience and the

necessity for personnel in key positions to have nuclear experience.

Subsequent to the case study., a regional CAT-type inspection was performed of the

Palo Verde project. The CAT identified four major areas having deficiencies

sufficient to warrant enforcement action, including civil penalties. Three of

the four enforcement items dealt with start-up problems; the fourth was a

collection of several individually minor construction quality program deficiencies. No programm~atic deficiencies or breakdowns were found in construction

The proposed civil penalties arising for this special inspection were the first

fines levied against APS in the life of the construction project.

After the case study and the CAT inspection, APS reorganized the management of

the Palo Verde project to provide for more centralized control over construction,

startup, and operations at a lower level in the organization, In effect, the

Vice President who had been responsible for construction became responsible

also for startup and operation.

3.4.2 Utility Management's Understanding of and Involvement in the Project

Another essential characteristic of a successful nuclear construction project

is a project management approach that shows an understanding and appreciation

of the complexities and difficulties of nuclear construction. Such an approach

includes adequate financial and staffing support for the project, good planning

and scheduling, and close management oversight of the project.

Management of two of the three apparently successful projects had nuclear

construction experience and were able to develop an understanding and

appreciation of the complexities and difficulties of nuclear construction.

Senior management at the third project, Palo Verde, recognized from the outset

that nuclear power plant construction-was significantly different from fossil

plant construction. As a result, APS changed project management practice to

accommnodate the nuclear project and its unique demands. APS management ensured

that it had a full understanding of what the nuclear project entailed before

committing to it. The following excerpt from one of the case studies

illustrates how one licensee prepared itself for its first nuclear project:

Information provided by the Licensee showed that the project

wa-s started in the early 1970's. with a small staff, all of whom

were experienced in nuclear plant construction. This group

analyzed what had gone wrong on the other nuclear projects and

arrived at conclusions which played an important role in how the

project was organized and carried out. First, it was important

that~there be a long-term conmmitment of qualified people to a

project, both from the licensee as well as its contractors.

Second, utilities typically tended to do the'wrong things and

get involved in the wrong places, such as wanting to approve

everything. They often believed they knew more about all aspects

of the projects than anyone else. Third, it was found that

utilities were often very untimely in their actions and decisions,

which caused costly delays. Fourth, they perceived that utilities

have the wrong type of organization. For nuclear projects, the

organization must be managed and detail oriented. Based on these

3-17
general conclusions, the Licensee's staff came up with some

recommendations which formed the basis for the project organization. First, there should be a strong project concept, both

within the Licensee's and architect-engineer's (A-E's) organizations, but with a singleness of purpose. Second, the Licensee

should manage the interfaces. Third, there should be single

points of entry for all correspondence to each organization, and

the communication channels should be monitored to ensure effectiveness. Fourth, clearly written design criteria should be

established and maintained current as changes were made. Fifth,

the Licensee should establish which documents produced by the A-E,

and others, it would review. Sixth, the Licensee should be responsible for obtaining all project permits and licenses. Seventh,

purchasing and construction work should be controlled through

administrative procedures (such as having standard terms and

conditions for contracts and purchase orders), a qualified bidders

list, and work initiation procedures. Eighth, safet and quality

must come ahead of schedule and cost, not only for the Licensee,

but its contractors, also. These priorities must also be conveyed

to the project regulators. Ninth, adequate systems and procedures

must be established to monitor the project.

Of the projects studied that had not experienced major quality problems, the

preferred project management approach was to set up a separate nuclear

division responsible only for nuclear construction (and/or operations). This

division had adequate financial and staffing resources to accomplish its

mission and had administrative as well as functional control over project

personnel (i.e., not a matrix arrangement). This approach contrasts that of

several projects experiencing quality problems. The latter group generally

tried to fit the nuclear project into an existing corporate framework for

project management. In this case, the nuclear project did not have personnel

or resources dedicated both functional-ly and administratively to the project

and had to compete with other corporate activities for personnel and funding.

After the discovery of significant quality problems and follow-on analysis of

the causes of those problems, several of the projects with quality problems

changed their project management approach to one similar to that preferred by

the other group of utilities. In general, utilities that started their nuclear

projects with other organizational forms eventually adopted the independent

project form of organization.*

For the most part, the utilities that experienced major quality problems also

experienced problems in other managerial aspects of the project, including

planning and scheduling, procurement, oversight of vendors, material availability, etc. High-level attention to these management functions, including

planning and scheduling, was a characteristic of the projects that did not

experience quality problems.

*Electric Power Research Institute. 1983. "An Analysis of Power Plant

Construction Lead Times.". Vol. 1, Chapter 4, EPRI EA-2880, Palo Alto,

California.

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Another general characteristic of the projects not experiencing major quality

problems was close management oversight of the project and the project's contractors. In general, this was not the case with projects that experienced

major quality problems. In each of the three projects that have not experienced major quality problems, utility management was heavily involved in

managing the project, was knowledgeable about the project, and had a strong

appreciation for the differences between nuclear and fossil construction

projects.

Licensing, design, engineering, construction management, construction, and

startup are'all much more difficult for nuclear plants than for conventional

plants. More management attention and involvement is necessary (1) to understand the added complexities of nuclear construction, and (2) to take action to

address small problems before they grow into big ones. Cost and schedule are

project activities that compete with quality; they cannot be properly balanced

without the licensee's strong management control and involvement. A licensee's

contractors have neither the same overall responsibility that the licensee has

nor the same authority and resources to deal with quality-related problems.

When a licensee abdicates its role, some aspect of quality, cost and/or

schedule is likely to be compromised.

In recent years, licensees have been forced to take more active roles in

upgrading many aspects of the nuclear industry because of regulatory requirements--especially those aspects related to the quality of products or work from

equipment suppliers and construction contractors. This has not been a role

traditionally required of licensees for their fossil fuel plants. Where

licensees have followed fossil fuel practices and have chosen not to be

involved in supplier and contractor activities, quality-related problems were

more prone to occur. The experience of several of the case study projects

having quality problems strongly supports these findings.

3.4.3 Rising Standard of Performance/Conmitment to Excellence

Of the projects studied there tended to be a direct correlation between the

project's success and the utility's view of NRC requirements: more successful

utilities tended to view NRC requirements as minimum levels of performance, not

maximum, and they strove to establish and meet increasingly higher, selfimposed goals. This attitude covered all aspects of the project, including

quality and quality assurance.

The following excerpts from one of the case study working papers illustrate

this finding, as well as top management's commitment to quality, which

filtered down to the worker level:

The Licensee has an orientation toward, and an attitude supportive

of quality-in their nuclear project. The stated management

philosophy of insisting on quality was not simply to satisfy the

Nuclear Regulatory Commission (NRC), but to go beyond those

requirements to have a reliable and safe operating plant. At

higher levels in the management structure, the conviction appeared

to prevail that public safety and company profitability demand

quality in the construction (and operation) of nuclear plants,

and that it is less expensive in the long run to "do the job

right the first time." From the interviews conducted, both at

the corporate offices and the site, it was evident that a sense of

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commitment to quality pervades the Licensee's organization at all

levels. The Licensee volunteered to participate in the first INPO

construction pilot audit and has expanded on it with their own selfinitiated evaluation. The quality assurance staff has direct

access to an executive vice president. There was no indication

from the interviews of cost/schedule overriding QA/QC. At lower

levels, there was an expressed feeling that the company wants to

do the job right. Employees at all levels appeared to have a

constructive attitude toward the need for quality in general, and

quality assurance, in specific. A pro-company attitude and good

morale on the part of the employees appears to exist.

The Licensee is proactive in looking for improvements in its

assurance-of-quality practices. Key line managers were taken on

a retreat by the Executive Vice President for Power to consider new

approaches to the assurance-of-quality problem. This Licensee

volunteered to be the first to be evaluated under 10 CFR 50

Appendix B requirements in the early 1970s. Their own QA

organization was asked by senior utility management to study the QA

programs of other licensees for possible improvement as early as

1978.

While the Licensee's management seems very much aware of the importance

of complying with NRC requirements, the comment was made, "satisfy the

NRC and everything is okay is not true, you have to satisfy yourself."

There was recognition that a utility can be at considerable financial

risk with a nuclear plant, beginning at the highest levels of the

corporation and flowing downwards.

Other examples of how some utilities implemented their desire to improve their

standard of performance include improving programs by seeking information and

the benefit of other utilities' experience on a wide range of matters; creating

a work atmosphere that encourages looking for problems and solving them, rather

than ignoring them or putting them off; and expanding the quality assurance

program used for their nuclear plants to their non-nuclear plants.

3.4.4 Other Characteristics of Apparently Successful Projects

The case studies identified several other characteristics generally shared

by the projects that had not experienced major quality problems; these

characteristics were generally not evident when quality problems occurred at

the other projects. Some of these characteristics are summarized below.

Appendix A-and the individual case study working papers provide additional

details on them.

Strong project management is required, with clearly defined responsibilities

and authorities. The personnel responsible for the project must have sufficient authority to accomplish their mission. Other characteristics

include management orientation toward quality and visible support of the

quality assurance program, including staffing and resources; an emphasis on

"doing it right the first time"; a philosophy that quality is everyone's

responsibility, especially the doer's, and that quality cannot be "inspected

in" by the QA/QC program; achievement of a minimal number of project interfaces; good public relations; constructive working relationships with the

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NRC; appropriate contracting practices and labor relationships; careful

selection of contractors; development of a project commitment and sense of team

work on the part of the project staff, including contractors; and an ability to

adjust to the changing political, economic, and regulatory environment

surrounding nuclear power over the past decade.

Some individual members of senior management at utilities that had not experienced significant quality problems expressed the opinion that construction

problems experienced by others in the nuclear industry could largely be attributed to management problems, not to regulatory requirements or to changes in

requirements. A characteristic of the projects that had not experienced

quality problems was a constructive working relationship with and understanding

of the NRC. For example, Florida Power and Light established a special office

in Bethesda staffed by engineers to facilitate exchange of information with the

NRC during the St. Lucie 2 licensing process. Also, senior management of

Arizona Public Service has established the following policies concerning the

NRC:

Don't treat NRC as an adversary; NRC is not here to bother us --

they see many more plants than the licensee sees; inform NRC of

what we (APS) are doing and keep everything up front; and nuclear

safety is more important than schedule.

3.4.5 Design Completion and Project Planning

The St. Lucie 2 experience results in several important lessons. The construction time for St. Lucie 2 was approximately half the industry average, and the

cost to complete the plant will be less than half of that for some plants

started before St. Lucie 2 and yet to be completed. St. Lucie 2 has been

subjected to the identical regulatory process faced by plants yet to be

completed. The case studies showed that the experience of the project team

greatly aided the project, but this factor alone does not account for the

atypical experience of St. Lucie 2.

The very complete design and the project planning and scheduling done during

the nine-month delay in construction start were found to significantly

contribute to the short construction time for St. Lucie 2. A 1979 study

performed by the University of Texas for the Department of Energy* investigated

declining work productivity and management of resources at ten single or

multiple-unit power plants under construction and contained the following

information:

. D. Borcherding and D. F. Gardner, University of Texas. 1979. "Work Force

Motivation and Productivity on Large Jobs." Prepared for the U.S.

Department of Energy, Washington, D.C.

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Average

Time Losses in Hours

Per Craftsman. Per Week

Material Availability 6.27

Redoing Work 5.70

Overcrowded Work Areas 5.00

Total Availability 3.80

Crew Interfacing 3.29

Inspection Delays 2.66

TOTAL 26.72

Although other time losses were listed, the above listed losses are directly

related to project planning and scheduling and were the kinds of losses that

were minimized at St. Lucie 2 through the intensive project planning effort

before construction started. It is important to note that the degree of

project planning accomplished could not have been done if the design for St.

Lucie 2 had not been at such an advanced stage.

Another lesson of St. Lucie 2 may be that it is not the regulatory process

that causes the delays and poor quality of many commercial nuclear power plant

construction projects. The results of St. Lucie 2 and the other case studies

suggest that shortcomings in project management play a much larger role.

Examples of project management shortcomings that can affect all three elements

of cost, schedule, and quality include the following: starting construction

before design is sufficiently complete; redoing work when there are interfaces

between systems already built and systems whose designs are completed later;

failure to supply construction materials and components to the job site when

the workmen need them; failure to supply toolsto workmen when they need them;

scheduling two work crews to work in the same confined work spaces at the same

time; and inability to get a QC inspector to a job in a timely manner when a

task is finished.

The case study analysis concluded that pervasive quality problems were usually

found in concert with other project management problems and that quality

program performance was just one measure of the overall quality of the

project management.

St. Lucie 2 demonstrates that even in today's regulatory environment, capable,

experienced management with a very complete design and with adequate project

planning can construct a quality nuclear plant, at a reasonably predictable.

cost, and in very little more actual construction time than is needed to construct a coal plant. FP&L management identified to the case study team what it

thought to be the ten most important factors in completing the St. Lucie 2

plant essentially on schedule, within cost, and without major quality-related

problems:

(1) management commitment

(2) a realistic and firm schedule

(3) clear decision-making authority

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(4) flexible project control tools

(5) team work

(6) maintaining engineering ahead of construction

(7) early startup involvement

(8) organizational flexibility

(9) ongoing critique of the project

(10) close coordination with the NRC.

3.5 THE OVERLAP BETWEEN QA AND PROJECT MANAGEMENT

One consistent study finding was that shortcomings in quality assurance program

implementation were linked to shortcomings in project management, and vice

versa. This linkage is not surprising when one views QA in its simplest form:

QA is a management tool for ensuring that a product is built as designed and

that defects are corrected. Even if a formal QA program did not exist, prudent

management of a complex project requires a management feedback system to know

whether the product is being made correctly. Prudent managers would devise

such a system because the information it provided would be essential to them in

their role as managers. They would want such a management tool to contain

features such as feedback on whether the design was being implemented correctly;

whether design changes were reflected everywhere and when they should be;

whether parts purchased from others were made properly and met specifications;

whether appropriate corrective action was taken when mistakes or nonconformances

were found; and whether the management feedback system itself was reliable and

correct - all features that are required as part of a QA program for a nuclear

plant.

Given that prudent management would create a system having many of the features

of the required QA as part-of their total project management system, why were

there examples of management failure to listen to what their QA program was

telling them, failure to adequately staff the QA program either in numbers or

qualifications, and failure to support the QA program in general? Why were

there repeated examples of lack of management commritment to QA?

There are several reasons. In most cases the answer is a combination of these

reasons. The first reason is lack of prudence--not all the managers would have

been sufficiently prudent to set up an effective management feedback system for

the quality of the project if it were not required. These same managers

would also fail to see the potential of the required QA program to fill this

management need because they did not fully recognize the need. (The need is

greater in nuclear than in fossil because the projects are more complex, the

quality standards and requirements are more stringent, and the management

challenges are greater.)

The second reason is th at the QA program was a requirement. Some managers

would treat the requirement as just a hurdle to be crossed. This perception

leads management to focus not on the intent of the program, but on its details,

e.g., a written manual, an independent QA manager, layers of procedures. Some

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managers honestly felt they had met their responsibility when they had attended

to such details.

A third reason is that some viewed QA/QC not only as a requirement, but as an

adversary. A strong QC program can slow down construction and a rift sometimes

develops between construction workers and QC. FP&L addressed this by making QC

a part of construction and overchecking QC with QA. There was still a rift,

but it was at the QA-QC interface, and construction workers did not see QC as

the enemy. Some managers at other projects studied had viewed QA/QC as an

enemy: as previously noted, one utility executive had been warned by others to

watch the manager of the newly established QA/QC program to be sure he did not

create a QA/QC "empire".

The third point illustrates the fourth point: QA can be a management tool,

but to be so, it must be part of the team of engineering, construction management, and project management. To be effective as a management tool, QA must be

integrated into the project. A key lesson from the study of outside QA programs

(NASA, Gaseous Centrifuge Evolvement Plan, see Appendix D) is that not only

should QA be integrated into the project, it should be integrated early, at the

design phase.

The fifth reason is not so obvious as the others, but may be as important.

It is just the opposite of the first four findings: some managements have

recognized that QA is a management tool but have failed to execute some of the

project control that is appropriately their responsibility because they felt QA

would take care of it. That is, some managers have felt there were certain

aspects of the project they did not have to address because the QA system would

take care of them. In such a situation, attenuation of information flowing

from the QC program at the site to top management can be disasterous. Even if

such attentuation does not exist, reliance on the QA program to manage part of

the project can also be disasterous if top executives (1) do not fully understand the limitations and scope of the QA program; (2) are not personally

involved in oversight of the QA program at the detail level; (3) do not provide

for direct feedback from the program down to the QC inspector level; (4) do not

fully understand how the QA program relates to engineering, construction, and

the rest of project management; (5) do not integrate QA into the project,

making QA part of the team, (6) do not staff the QA function with qualified,

capable, motivated people; and (7) do not inspect the implementation of the

program personally.

3.6 IMPLICATIONS OF THE CASE STUDIES FOR FUTURE PLANTS

Having described the salient features and practices of those projects that

did and did not experience major quality problems in construction, it is

important to note that neither group did all things right or all things wrong.

The projects without major quality problems experienced quality failures and

project inefficiencies, and much of the work of the projects with major quality

failures appears to have been of good quality. The former did not have

experienced, dedicated personnel in every position, and their procedural

controls were not flawless. It cannot be said that their projects are exempt

from quality errors--only that the probability of the errors going uncorrected

and developing into a major quality breakdown was less because of appropriate

prior nuclear experience, management understanding of and involvement in the

project, dedication to quality, a problem-seeking and solving orientation, and

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a view of a quality assurance program as a management tool rather than just a

requirement.

The case studies have focused on what has happened in the past, or is happening

now, to derive lessons to apply in the future. The increased industry and NRC

experience and the lessons learned, if applied properly, should decrease the

probability of major quality problems in future generations of nuclear plants.

However, there are several conditions under which major quality problems might

recur. These include the following:

(1) a first-time utility with a staff or A/E, CM, or constructor that have

inadequate nuclear design and construction experience

(2) a very large growth in the number of nuclear plants being constructed that

(again) overwhelms the industry's and NRC's capabilities

(3) a long delay before nuclear plant construction activities start agains,

resulting in a dearth of experience in the industry

(4) regulatory actions at federal and state levels that undercut quality.

The NRC. and the nuclear industry need to be aware of the implications for

quality that these possibilities hold.

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4.0 PILOT PROGRAMS: QUALITY ASSURANCE AUDITS

PERFORMED BY INDEPENDENT INSPECTORS

Section 13(c) of the-Ford Amendment directs the NRC to conduct a pilot program

to better assess the feasibility and benefits of implementing alternatives

13(b)(1) - 13(b)(5). In particular, Section 13(c) directed that alternative

b(5), which proposes the use of third-party audits, be tested through a pilot

program. The text of the pilot program requirement is as follows:

Pilot Program

... the Commission shall undertake a pilot program to review and

evaluate programs that include one or more of the alternative

concepts identified in subsection (b) for the purposes of

assessing the feasibility and benefits of their implementation.

The pilot program shall include programs that use independent

inspectors for auditing quality assurance responsibilities of

the licensee for the construction of commercial nuclear power

plants . ...

The pilot program shall include at least three sites at which

commercial nuclear powerplants are under construction. The

Commission shall select at least one site at which quality

assurance and quality control programs have operated satisfactorily, and at least two sites with remedial programs underway at which major construction, quality assurance or quality

control deficiencies (or any combination thereof) have been

identified in the past.

Before conducting the pilot program, the NRC staff reviewed the feasibility of

testing each of the alternative concepts in a pilot program, with the following

conclusions

Alternative b(1): More prescriptive architectural and engineering (A&E) criteria.

Because reactor plants under construction are in advanced stages of construction, a pilot program for testing the feasibility and benefits of more prescriptive A&E criteria could not be implemented. However, the NRC staff did analyze

this alternative (Chapter 6).

Alternative b(2): Conditioning the construction permit (CP) on the applicant's

demonstration of its ability to independently manage a quality assurance (QA)

program.

No CP applications are currently pending, so this concept could not be tested

on a current CP applicant, nor could a current CP application be conditioned on

this requirement. This study considered two types of demonstrations of QA

management capability. The first is a pre-CP issuance assessment, which

evaluates potential management capability prospectively. The second is a

post-CP demonstration, which assesses management capability and QA program

effectiveness based on a review of the implementation of the QA program over

some previous period of time. Because there are no new CP applicants

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currently, the pre-CP assessment could not be done as part of a pilot program.

However, a post-CP test could be performed of this concept and was included as

part of the pilot program.

Alternative b(3): Improved audits by associations of professionals.

The institute of Nuclear Power Operations (INPO) has developed a new Construction Project Evaluation (CPE) Program, which represents a significant

improvement in the capability of professional organizations to provide comprehensive evaluations of construction projects. To assess the new program's

feasibility and benefits, senior NRC design and construction inspection staff

monitored three INPO CPEs--Beaver Valley 2, Limerick, and Millstone 3. At

these projects, INPO's methodology, and its depth and breadth were evaluated.

Although NRC review of these INPO evaluations might be considered pilot

programs, they are not treated as such in this report for two reasons: (1) the

three plants covered do not meet the Ford Amendment pilot program criterion

that at least two of the projects covered by the pilot have remedial programs

under way, and (2) the CPE was past the pilot stage. INPO had tested an

earlier version of their CPE program as a pilot in early 1982, and the industry

had tested it later in 1982. The CPE program is now a routine INPO program,

not a trial program. The role of INPO in the assurance of quality and NRC's

analysis of the INPO CPE program are discussed in Chapter 5.

Alternative b(4): Improvements to NRC programs.

Several improvements to NRC's programs have been tested and implemented. Both

the Construction Appraisal Team (CAT) and the Integrated Design Inspection

(IDI) programs were fully implemented in June of 1983 after a pilot period that

included several trial inspections. Chapter 7 discusses the CAT and IDI

programs and several other improvements to the NRC program that were subject to

trial periods before they were implemented, including the Resident Inspector

Program and the Systematic Assessment of Licensee Performance (SALP) Program.

Other future improvements to the NRC program suggested in Chapter 7, such as

performance objectives for QA programs, will be subjected to a trial program

before they are fully implemented. The case studies (see Chapter 3) also may be

considered as a pilot for future NRC management assessments. However, for this

study, the above activities are not treated as pilot programs in the sense of

the Ford Amendment and are covered elsewhere in the report.

Alternative b(5): Conditioning the issuance of CPs for commercial nuclear power

plants on the permittee entering into contracts or other arrangements with an

independent auditor to audit the quality assurance program to verify quality

assurance performance.

The Ford Amendment'required that this alternative be tested as part of the

pilot program. The Ford Amendment stipulated that at least two projects from

the set consisting of Marble Hill, Midland, Zimmer, Diablo Canyon, and South

Texas be selected for the pilot program, as well as at least one other project.

These five projects were identified in the legislative history of the Ford

Amendment as having had major quality-related problems.

4-2
In selecting sites for the pilot program, the NRC staff relied heavily on the

legislative history of the Ford Amendment to try to be as fully responsive as

possible to the intent of Congress. Statements made by sponsors of the Ford

Amendment in introducing the amendment contributed heavily to developing the

following general criteria for selecting sites for the pilot program:

(1) To the extent possible, sites will be selected that have qualifying

programs already under way or that have in the past conducted such

programs.

(2) To the extent possible, programs and sites will be selected to minimally

disrupt ongoing construction activities.

(3) To the extent possible, sites will be selected whose owners will

participate willingly in the pilot program. The legislative provision in Section 13 that allows the NRC to order participation

would be used only if necessary.

(4) To the extent possible, sites will be selected with different architect/

engineer (A/E), constructor, and project management arrangements. Testing

the pilot programs with a variety of participants should better indicate

an alternative's potential.

Based on these criteria and the Congressional guidance that at least two sites

must come from the list of five plants mentioned earlier, NRC staff contacted

four utilities and obtained agreement from each to participate in the pilot

program. The projects selected for the pilot program test of the third-party

audit alternative, and the third-party auditor that each selected, are as

follows:

Project Auditor

Palo Verde Torrey Pines Technology

Marble Hill Torrey Pines Technology

South Texas Gilbert Commonwealth Associates

Midland TERA Incorporated

Each utility that participated in the pilot program did so willingly. Moreover,

the four selection criteria were met in almost every case. The only exception

was that Marble Hill did not meet criterion (1). The utility, Public Service

of Indiana, did not have a qualifying program under way and contracted for this

special review specifically in response to the NRC request that they participate in the pilot program. Two of the other three projects were conducting or

had conducted a third-party review as part of the Independent Design Verification Program (IDVP). In these cases, the completed or ongoing IDVP was used

as the third-party audit evaluated in the pilot program.

4.1 TECHNICAL APPROACH AND FINDINGS

As with NRC's evaluation of.the INPO CPE methodology for this report (Chapter 5),

the four third-party audits were monitored and/or reviewed by senior NRC

inspectors having extensive construction, design, QA, and management backgrounds. For each NRC evaluation, the activities of the third-party auditor

4-3
were monitored for several weeks at the plant site, at utility corporate

headquarters, and/or at the offices of the A/E and the third party-auditor.

The NRC evaluated the quality of the individual audits based on (1) the audit

team's qualifications, (2) the audit team's competence and professionalism as

demonstrated in the field, (3) the scope and depth of audit coverage in design,

design control, construction procedures, completed construction work, quality

assurance program implementation, and project management competence and capability, (4) the substance of audit findings, (5) the procedures used for

reviewing and dispositioning audit findings, (6) the quality and content of the

audit report, and (7) the independence of the inspector.

In conjunction with evaluating the quality of each audit, the NRC evaluated

each audit considering the following questions:

(1) If this audit, or one like it, had taken place at an appropriate time

in the project history of any of the five plants that experienced major

quality-related problem(s), would the quality-related problem(s) at that

plant have been detected earlier?

(2) Is this audit structured and conducted in such a way that it effectively

verifies quality assurance program performance [i.e., alternative b(5)]?

(3) Could this audit, or some reasonable variation of it, be a way for a

licensee to demonstrate that it is capable of independently managing the

effective performance of all quality assurance and quality control

responsibilities for the power plant [i.e., alternative b(2)]?

(4) Does this audit provide prevention, detection, and assurance capability

beyond that provided by the NRC inspection program?

(5) If the answer to (4) is yes, are there more cost effective ways to bring

about a comparable level of added detection and assurance capability?

(6) How often should such audits be conducted?

(7) Should such audits apply to future plants, to current CP holders, to

both, or to neither?

The evaluation process led to the following conclusions and recommendations:

(1) Comprehensive audits of nuclear construction projects by qualified thirdparties (independent inspectors) can significantly increase prevention and

detection capability beyond that provided by the present NRC program.

Such audits can also increase assurance that plants are built according to

their.design and licensing commitments.

(2) Alternative b(5) offers significant benefits over current and past

practice. It should be adopted and applied to both future plants and

current CP holders.

(3) Comprehensive third-party audits such as those examined in the pilot

program, if modified to focus more on project management competence,

present a viable mechanism for a new applicant to demonstrate in a post-CP

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audit whether it can independently manage its QA program responsibilities

and effectively manage the project. That is, an alternative b(5) audit

could be used to satisfy the demonstration requirements of alternative

b(2).

(4) Comprehensive audits of a construction project should be conducted about

every two years.

(5) The present NRC CAT and IDI programs are limited in the extent of their

coverage (4 CATs/yr, 3 IDIs/yr). Instituting a program of periodic

third-party audits to supplement the present NRC program appears to be a

more cost effective long-term approach than expanding NRC's program to a

level that would provide the same degree of prevention, detection, and

assurance coverage.

(6) The CAT and IDI programs should be used as overchecks of the third-party

audit program.

(7) The NRC should develop criteria for independence of the third-party

auditors and other criteria for the independent audit program, including

qualifications of auditors, scope and depth of coverage, etc. Input from

professionals having appropriate expertise and from other interested

parties should be sought in developing these criteria.

(8) The NRC should monitor the actual performance of each audit and review its

results.

(9) The depth and scope of each audit should be uniform and consistent to

establish confidence in the third-party audit program. To achieve these

goals and others, the third-party audit program should become a regulatory

requirement.

4.2 PARAMETERS OF FUTURE THIRD-PARTY AUDITS

As a result of this study, the NRC staff has concluded that to provide sufficient preventive, detection, and assurance capability to feasibly supplement

the NRC inspection program and affirmatively answer the first four questions in

Section 4.1, the comprehensive independent audits recommended in the last

section should, as a minimum, review the following areas in depth:

(1) experience, capability, and effectiveness of project management

(2) construction management

(3) management support of quality

(4) quality assurance program implementation

(5) qualifications of project personnel

(6) design process (A/E)

(7) design changes and control (A/E and site)

(8) quality of construction.

These categories are major areas relating to the ability of safety-related

structures, systems, and components to function as required while in service.

Other parts of this study also have identified other areas as being areas of

weakness in the past (see Chapter 3, Case Studies). Design- and construc4-5
tion-related reviews in such an audit program should concentrate on whether the

end product (design or system hardware) conforms with the technical requirements in the specifications and regulations, with licensee commitments made

during the licensing process, and with the design basis. Such audits would

measure the quality of the project team, project management, construction

management, engineering, and the end results achieved by quality assurance

programs. The design and construction quality reviews would be complemented by

quality assurance program reviews that focused on implementing the procedural requirements of 10 CFR 50, Appendix B.

These reviews would be performed in conjunction with management reviews

designed to assess the project team's effectiveness in managing all aspects of

the project, including quality. The reviews should be both end-product

oriented and process oriented. For example, designs would 'not only be audited

to determine if they have been verified (a process required by Appendix B) but

also reviewed for their technical adequacy (the end product). If the end

product had deficiencies, then the process should be examined for generic

implications. In the past, the NRC inspection program has concentrated too

heavily on the quality program process and paper and not heavily enough on

construction work in progress and the quality of the end product. Other

measures being taken to address these shortcomings are discussed in Chapter 7.

Within the framework of the audit areas described above, a third-party audit

should include sufficient review to satisfy the following performance

objectives:

(1) assurance that the project team is capable of and is dedicated to

constructing a nuclear power plant that, when operational, will not

endanger public health and safety because of quality deficiencies that

occurred during construction

(2) assurance that the project's progranmmatic controls for design and

construction are adequate and have been adequately implemented

(3) assurance that the actual construction has been according to the design,

and that design bases conmmitted to by the applicant and approved by NRC

have been translated correctly into the design

(4) assurance that the audit sample is broad enough to be reasonably

representative of the plant as a whole.

Analysis of the results from the four independent audits revealed that while

each has covered a part of the above proposed parameters and performance

requirements for a third-party audit program, none has met all of them. Torrey

Pines' construction assessment of Palo Verde did not include enough hardware

verification, and Torrey Pines' assessment of the Marble Hill Project did not

provide enough design or management review. The Gilbert review of South Texas

was limited to programmnatic controls, and the TERA review of Midland has not

covered the areas of quality assurance or project management in enough detail.

A review of the four separate audit pl ans and their differences demonstrates

that for future consideration NRC should develop audit criteria and should

review in advance the audit plan of each auditor preparing for a third-party

4-6
audit to determine adequacy of coverage. Also, in determining the audit's

scope, the NRC should consider such factors as percent of design completion,

significant types of work in progress, results of previous third-party audits

at this and other plants, NRC inspection results, and the state of project

completion. This approach is supported by the NRC's experience over the past

two years both in its implementation of a program of independent design and

construction reviews for those plants in the near-term operating license mode

(IDVP program--see Chapter 7) and through the CAT and IDI programs (see

Chapter 7).

Periodic audits by independent inspectors throughout the construction period

are strongly preferred over a single audit occurring late in a project after

design and construction are essentially complete, as is the case presently for

most plants (for IDVP and generally for CAT and IDI programs).

4.2.1 Frequency of Future Third-Party Audits

For each of the plants at which serious construction quality-related problems

developed, symptoms of the quality problem were evident early in the project.

Based on the experience of those plants, the proposed third-party audit program

should be conducted no later than two years into construction and preferably

sooner to achieve maximum effectiveness. For example, Marble Hill was shut

down for construction quality problems 16 months after the CP was issued.

Viewed as a prevention measure, the third-party audit should be conducted as

soon as construction work begins, before poor practices become ingrained in the

project. Viewed as a detection measure and a way to satisfy alternative b(2)'s

concept of a demonstration of management and QA effectiveness, the licensee

must have enough time to make its program work before the first audit. Based

on these considerations and the assumption that in the future, applicants would

receive a much more searching pre-CP review by NRC (see Chapters 2 and 7),

which should help prevent unqualified project teams from beginning construction,

the study concludes that the first of the third-party audits should be

conducted 12 to 20 months into the construction project. This timing is early

enough that the audit would still have some prevention value but not so early

that the project team's capability and its quality program effectiveness cannot

be meaningfully evaluated.

In determining the frequency of subsequent audits, several factors were

considered: changes in projects, project personnel, contractors, and level of

project activity in different areas. (A project proceeds through a sequence in

which the level of activity in the following areas is high at one project phase

and low at others: civil/structural, mechanical, electrical, instrumentation

and control, testing and startup, etc.) The study concluded that subsequent

audits should be conducted about every two years, depending on those factors.

The last third-party audit should focus heavily on design implementation

(hardware and process) as well as startup and testing activities. However,

the final audit would focus less heavily on design issues than the present

IDVP program because the present program provides, on a case-by-case basis,

a single third-party audit near the end of construction to confirm the quality

of design and/or construction from the project outset. Under the proposed

program, a less retrospective look would be required by the final audit because

a comprehensive audit would have been conducted about every two years over the

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project's life. Several Of the areas covered by a current IDVP would have been

covered under the new program in earlier audits. Those earlier audits would

reduce the intensity of the final audit in some aspects from present practice.

This reduced intensity would partly offset the increased effort the new program

would require on the final audit in the areas of startup and testing, and

management oversight of the transition from construction to operations. (For

some background on transition problems, see Section 3.4.)

4.3. APPLICABILITY OF THE THIRD-PARTY AUDIT PROGRAM TO ALTERNATIVE b(2)

Section 13(b) of the Ford Amendment directs that the NRC analyze the following

alternative approach to improving quality assurance and quality control in the

construction of commercial nuclear power plants:

Conditioning the issuance of construction permits for commercial

nuclear power plants on a demonstration by the licensee that the

licensee is capable of independently managing the effective performance of all quality assurance and quality control responsibilities for the powerplant.

The pilot program analysis included an evaluation of whether the third-party

audit program proposed by alternative b(5) could also be used to satisfy the

demonstration provision of this alternative. The study concluded that the

first periodic audit conducted under the third-party audit program could be

tailored to meet the demonstration requirement of alternative b(2) and that a

third-party confirmation at this early point in construction was preferred to

an NRC confirmation.

Including the b(2) demonstration as part of the third-party audit program

is not the only way a licensee could achieve the performance objective implicit

in alternative b(2). For example, the licensee could demonstrate this

objective by an intensive NRC team-inspection, such as a CAT modified to more

directly address the issues of management capability and competence. However,

the future program proposed by this study envisions a more rigorous screening

by NRC before a CP is-issued and an improved inspection program during construction. A third-party audit of the project 12 to 20 months into actual

construction would not only provide assurance that the licensee's program is

effective, but it would provide an independent test.of the effectiveness of

NRC's modified licensing and inspection programs. Such a third-party audit

would provide Congress and the public increased assurance that not only the

licensee but also the NRC met their responsibilities effectively.

When implemented, a post-CP demonstration of management capability and QA

program effectiveness would significantly shift from present practice the

method of determining whether the QA/QC program is being implemented as

described in the Preliminary Safety Analysis Report (PSAR) and is producing an

adequate level of quality. Including as a condition of the CP that such a

demonstration occur 12 to 20 months after the CP is issued would place a

"trip-wire" in front of the CP holder and the NRC. In effect, that "trip-wire"

would specify that certain capabilities must have been demonstrated for plant

construction to proceed beyond that point. Continuing construction activities

would be contingent on the licensee successfully demonstrating its capability

and program effectiveness in this post-CP audit. The licensee and the NRC

4-8
would be fully aware at the onset of construction that such a demonstration was

upcoming. This awareness could result in several significant and beneficial

changes from current practices:

(1) The CP holder should better understand the necessity to provide trained and

qualified personnel and commit sufficient resources to the project at the

beginning of construction activity.

(2) The CP holder would have to act rather than to react. Not only would a

management system and quality program have to be instituted, but the CP

holder would also have to critically evaluate its performance and convince

itself of its effectiveness in order to be prepared to convincingly

demonstrate its adequacy to others.

(3) Under such a CP condition, especially if the alternative b(2) audit were

to be conducted by an independent third party, the NRC would be motivated

to more closely monitor the project's management effectiveness, the QA

program's effectiveness, and overall construction quality before the first

audit. Besides doing a better job than under current practice for

achieving prevention, detection, and assurance objectives, the NRC would

have current information and an understanding of management of quality

program weaknesses and possible needed changes. Such information would

help NRC evaluate the CP holder's demonstration of management and QA

effectiveness, whoever performs the confirming audit.

4.4 DESCRIPTION OF THE FOUR THIRD-PARTY AUDITS

This section describes the independent inspection programs at each of the four

sites selected and discusses improvements that could be made in future reviews

by independent inspectors. Each program is summarized, and Table 4.1 at the end

of the chapter provides a summary comparison of the characteristics of each.

The title of the independent audit and the name of the auditing firm is listed

in the title of each section. Copies of each audit are available from each

licensee and should also be held in NRC's Public Document Room. Presently, on

a case-by-case basis (see Chapter 7 discussion of IDVP programs), the NRC staff

formally reviews and evaluates independent audits, including corrective actions

for any identified deficiencies, as part of the process leading up to issuing

an operating license.

Two of the four audits, Palo Verde and Midland, were conducted under the

auspices of the IDVP program. The. NRC review described in this section was

separate from the routine NRC review of IDVPs for licensing purposes; it was

for the broader purpose of assessing the utility of comprehensive third-party

audits as a supplement to the regular NRC inspection program. In particular,

the analysis focused on whether third-party audits represented a viable

improvement over current practice and whether such audits by independent

inspectors should be required by regulation for all plants under construction.

The audits were intended as examples for which this evaluation was performed

and while adequate for their intended purpose, some did not cover areas that

a comprehensive audit would be required to cover. These areas have been

identified in Table 4.1 under the heading "Comprehensiveness".

4-9
4.4.1. Independent Construction Review of Marble Hill Nuclear Generating Station

Units 1 and 2, Torrey Pines Technology, San Diego, California, 1983

Early in its construction, the Marble Hill project experienced problems with

work being-performed by the concrete contractor. The problem was attributed

to breakdowns in the utility's and the contractor's management of the quality

assurance programs and eventually resulted in an NRC Stop Work Order. After an

18-month investigation and a remedial action program, which included instituting stronger management and quality assurance programs, safety-related

construction work was permitted to restart. This project was particularly

relevant for the pilot program because of the early stage in which the

Stop Work Order was issued and the apparent success of the remedial action

program. (For further discussion on the dramatic improvement in the Marble

Hill program, see Appendix A.)

Torrey Pines Technology (TPT) was selected as the independent consultant

to conduct the audit. TPT was experienced as a third-party auditor, having

performed similar reviews for other plants, including San Onofre and Palo

Verde. The objective of the TPT program was to conduct an independent audit of

the quality of construction of the Marble Hill Nuclear Power Station and to

evaluate compliance with approved design documents for systems, hardware, and

structures. This construction audit program consisted of a detailed evaluation

in five task areas:

(1) evaluation of QA organization and management policies toward QA

(2) construction design control and implementation

(3) physical verification of plant hardware and structures

(4) testing and inspection of ASME piping welds and concrete

(5) construction document review.

As a result of the review, several deficiencies were identified and referred to

Public Service of Indiana for corrective action. The proposed corrective

actions were reviewed and approved by TPT and further evaluated by the NRC

pilot program review team. The corrective actions appeared to be satisfactory.

The NRC reviewers judged the TPT methodology, amount of hardware inspected, and

detail of inspection to be satisfactory. The absence of significant electrical

construction review is consistent with the plant construction status and is not

viewed as a deficiency. This independent construction review was considered to

be representative of a comprehensive third-party construction verification

effort of a plant at this stage of construction. TPT conducted a limited, but

beneficial, design review effort at Marble Hill; however, it would-not

constitute adequate coverage of the design process when compared to other

plants in the pilot study. The NRC pilot program reviewers judged the TPT

assessment of the Marble Hill project to be adequate in the five areas reviewed

by TPT. Design was not reviewed by TPT as a part of this audit because a

similar plant of essentially the same design and having the same A/E had

undergone an extensive design review by the NRC IDI team in June 1983.

4-10
The management assessment was confined mainly to the quality assurance

organization and functions. Management issues would have to be more broadly

evaluated to meet the evaluation parameters for future third-party audits

described in Section 4.2.

4.4.2 Independent Design and Construction Verification Program - Midland

Units I and 2, Monthly Status Reports Numbers I through 6, TERA

Corporation, Bethesda, Maryland, 1983

The Midland Plant has experienced several quality-related problems during its

construction, including excessive settlement of the diesel generator building

and other safety-related structures. The licensee is currently conducting an

extensive correction program to correct all deficiencies.

The TERA Corporation was selected to perform this review, which is still

ongoing. TERA Corporation is a professional services and systems engineering

organization that provides engineering and environmental consulting, project

management, and software to industry and government.

The objective of the TERA review is to conduct an independent assessment of the

quality of design and construction of the Midland Plant. The utility, TERA,

and NRC staff defined the scope of review. The approach selected by TERA

is to review and evaluate a detailed "vertical slice" (indepth review of many

aspects of a selected system from design assumptions through completed construction, in contrast to a "horizontal slice," which looks at a few

similar aspects of several systems) of three safety-related systems, and

extrapolate from this review an overall assessment of the adequacy of the

plant's design and construction.

Three areas were examined in the design assessment: the design criteria and

commitments, their accuracy and consistency, and the implementing documents for

design. Original calculations were checked, alternative calculations performed, and completed designs, including drawings and specifications, verified.

Independent calculations performed by TERA incorporated both similar and

different methods from the original design calculations.

The construction program review looked at supplier documentation, storage and

maintenance documentation, and construction and installation documentation, and

physically verified configuration and installation of selected systems and

components.

As of January 1984, about 50% of the work scope of the TERA review had been

completed, covering mainly Auxiliary Feedwater System design verification.

Several deviations and deficiencies have been identified and some will require

corrective action by the licensee. The disposition of these will be reviewed

by the staff before the license is issued.

The TERA methodology, extent of design review, and the amount of hardware

inspected were found to be satisfactory. TERA's review of the Consumers Power

Company's (the utility) quality assurance program and management was limited,

however. Coverage in these areas would have to be expanded to meet the

parameters of future third-party audits described in Section 4.2. The use of

checklists, periodic quality assurance audits of the independent inspectors,

4-11
and critiques of the TERA audit by senior level TERA management should result

in a satisfactory review for the scope it covers. A final assessment of the

adequacy of this audit will be made when it is completed.

4.4.3 Evaluation of South Texas Project - Units I and 2 Construction

Project, Gilbert Commonwealth Associates, et al., 1983

The South Texas Project experienced several design and construction deficiencies in the late 1970s. These problems and allegations, some of which were

later substantiated, and decisions by Houston Lighting and Power led to the

replacement of the project's original A/E and construction manager (CM), Brown

& Root. The engineering effort was transferred to the Bechtel Power Corporation, which was also designated as the CM, and Ebasco was assigned the constructor responsibilities.

Gilbert-Commonwealth Associates was selected as the independent audit team

manager. Nineteen persons from Gilbert-Commonwealth Associates, Management

Analysis Company, Nutech, and Energy Incorporated were selected to conduct the

evaluation. The objective of the evaluation was to conduct an independent

quality assurance evaluation of the South Texas Plant to ensure the adequacy of

the design and construction. This audit was unique among the four in that the

INPO evaluation criteria were used.

Two methods were used in the detailed design examination. First, INPO criteria

were used to analyze the control of each step of the design process to

determine whether it was sound and if it met the established requirements.

Second, the evaluators reviewed a "vertical slice" of design activity. The

system reviewed, the Component Cooling Water System, was examined in detail.

The design team, in cooperation with the construction team, conducted a

walkdown of the Component Cooling Water System to verify that it was constructed as the design specified. In addition, various in-process work

activities were observed. The independent audit revealed weaknesses in design

controls in interfaces with other contractors, engineering responses to Field

Change Requests, construction drawings that were incomplete, and the utility's

limited control of design changes. Several construction weaknesses were also

identified.

The audit of the South Texas Project used the INPO performance objectives and

criteria, which are mainly programmatic. The audit preparation, competence of

evaluators, and review techniques were judged to be satisfactory. In the

construction evaluation, only a limited number of weld radiographs were reviewed

by the team. In the design evaluation, the scope of the review devoted to

design was judged to be limited. Because of the known engineering problems of

this site, a more substantial effort could have been performed in this area.

In that regard, the staff understands that the licensee has a separate,

continuing audit process for design. This audit would have to expand its

coverage in these areas, as well as in management, to meet the parameters of

future third-party audits (see Section 4.2).

4-12
4.4.4 Independent Quality Assurance Evaluation of Palo Verde Nuclear

Generating Station, Units 1, 2, ano 3, Torrey Pines Technology,

San Diego, California, 1983

The Palo Verde Nuclear Generating Station is considered to be an example of a

site at which quality assurance and quality control programs have operated

satisfactorily.

TPT was also selected to perform this review. The overall objective of this

effort was to independently evaluate project organization, management, quality

assurance, design, and construction activities. The scope of TPT's review

included activities of Arizona Public Service (APS) Company, Bechtel Power

Corporation, and Combustion Engineering Corporation (the owner, A-E/CM, and

nuclear steam supply system vendor, respectively). In the overall audit plan,

which incorporated NRC comments and was approved by the NRC, five task areas

were to be evaluated in detail:

(I) evaluation of project management organization

(2) evaluation of management's policies toward quality assurance

(3) evaluation of quality assurance activities

(4) design verification

(5) construction verification.

The objective of the first task was to evaluate APS's project management

organization to determine the adequacy of its structure and organization and

whether it could assure that the high standards required for nuclear power

plant design, procurement, and construction had been met. The objectives of the

second and third tasks were to review APS management policies that affect

quality assurance and to assess the degree to which the policies ensure an

effective quality assurance program. Also, specific elements of the APS

quality assurance program were evaluated to determine if those elements were

adequately defined and implemented.

The goal of the design verification, the fourth task, was to verify that the

design bases contained in the Final Safety Analysis Report (FSAR) had been

adequately converted into design documents for the constructor and fabricator.

This task was divided into three subtasks consisting of design procedure

review, design procedure implementation review, and a detailed technical

review.

The final task, the construction verification review, was to verify the

compliance of construction-related quality assurance procedures and controls

with NRC requirements. Compliance was verified to evaluate the implementation

of these procedures and controls and to determine whether selected safetyrelated systems and components were constructed according to design documents.

Valid deficiencies were referred to APS and their proposed corrective action

was reviewed and approved by the TPT. The NRC review team further reviewed the

corrective action, which appeared to be satisfactory.

4-13
The scope of review could have been broader. Specific areas not covered in

this review are listed in Table 4.1, whic& summarizes the comparison of the

independent audits of the four pilot progi-ms. For example, more coverage of

management issues, including the managemen: of transition from construction to

operations, would be required for this audit to meet the parameters for future

third-party audits (see Section 4.2).

4-14
TABLE 4.1. Summary Comparison of Pilot Program Independent Audits

Project Construction

and Utility A/E Manager Constructor

Marble Hill, Sargent & Utility Various Contractors

Public Service of Lundy

Indiana

Midland, Bechtel Bechtel Bechtel

Consumers Power (Ann Arbor) (Ann Arbor) (Ann Arbor)

Company

South Texas Project, Bechtel (San Bechtel (San Ebasco (was

Houston Lighting & Francisco) Francisco) Brown & Root)

Power (was Brown & (was Brown &

Root) Root)

Palo Verde, Bechtel Bechtel Bechtel

Arizona Public (Los Angeles) (Los Angeles) (Los Angeles)

Service

4-15
Project

and Utility

Evaluation

Consultant

Evaluation Schedule

and Level of Effort

Marble Hill,

Public Service of

Indiana

Torrey Pines Technology

(TPT)

Average nuclear experience

per team member was 10

years and each had participated in one or more similar

evaluations..

6/3 - 7/23/83

8,000 person-hours

total effort

Midland, TERA 6/83 - Mid 84

Consumers Power Total effort as of

Company 9/83 estimated to be

Average nuclear experience 20,000 person-hours

per team member is 10 years

with most of team having an

average of 15 years.

South Texas Project, Gilbert-Commonwealth, 8/22 - 9/2/83

Houston Lighting Management Analysis Company 4,000 person-hours

and Power NuTech, and Energy, Inc. total effort

Average nuclear experience

per team member was 17 years.

Members had on average

participated in two similar

evaluations.

Palo Verde, Torrey Pines Technology 6/82 - 11/82

Arizona Public (TPT) 16,000 person-hours

Service total effort

Average years of nuclear

experience not identified -

however, the Project Team

Leader and key inspection

team members were interviewed by NRC and found

to be qualified and

sufficiently experienced.

4-16
Project

A~d Utility Evaluation ScoDe

Marble Hill,

Public Service of

Indiana

o QA organization & management policies

o Construction design control & implementation o Physical verification of plant hardware - Reactor coolant - Auxiliary feedwater - Component cooling - RHR - Fuel handling & auxiliary building - Ultimate heat sink o Testing & inspection of ASME piping welds

o Construction document review

Midland,

Consumers Power

Company

Design verification & construction

Verification

Auxiliary feedwater, standby electric

power, control room HVAC systems examined

South Texas Project, Design & construction'evaluation

Houston Lighting - Component Cooling Water System

and Power - Used INPO methodology

Palo-Verde, ° Project management organization

Arizona Public 0 Management's policies towards QA

Service 0 QA activities °, Design verification

0 Construction verification

4-17
Project

and Utility Physical Verification Statistics

Marble Hill,

Public Service of

Indiana

0 21,000+ documents reviewed o 13,000+ checks performed

o 56 welds visually inspected

o 49 weld radiographs reviewed

0 11 welders & welding inspector qualifications reviewed o 67 hangers - installation features inspected o 70 valves inspected

o 34 structural members inspected (beams,

columns, guides, bracings, etc.) 0 34 areas of rebar inspected for proper

location o 50 areas of concrete tested for strength

o 22 hangers - detail verification o 16 pieces of equipment inspected

o 25 cable tray hangers inspected

o 1800 feet of piping runs inspected

Midland, 0 50% of work scope conducted at time of

Consumers Power preparation of this report; therefore,

Company physical verification statistics not

available

South Texas Project, 0 165 welds visually inspected

Houston Lighting 0 '25 radiographs reviewed

and Power 0 15 welder qualifications reviewed o 3000 feet of piping runs inspected

o 850 feet of cable trays inspected

0 140 pipe supports and cable tray hangers

inspected

0 160 valves inspected o 45 pumps inspected

Palo Verde,

Arizona Public

Service

0

0

0

0

0

0

0

0

0

0

0

15,000+ documents reviewed

15,000+ checks performed

55 welds visually inspected

48 welder or inspector qualifications reviewed

900 feet of piping runs inspected

68 hangers inspected

7 pieces of equipment inspected

50 feet of cable tray inspected

132 valves inspected

15 instrument wiring terminations inspected

55 instrument sensing elements, indicators

and transmitters inspected

4-18
Project

and lltil ity

Deficiencies Identified

Rv Cnnsult~nt

Marble Hill, 19 Potential Deficiencies

Public Service of - 2 Valid

Indiana - 8 Invalid - 9 Observations

Midland, 50% of work scope conducted at time of

Consumers Power this report. Number of deficiencies

Company identified to date is 10.

South Texas Project, 0 43 Potential Deficiencies

Houston Lighting - 13 safety-related

and Power - 30 nonsafety-related

Palo Verde, 0 89 Potential Deficiencies

Arizona Public - 17 Valid

Service - 31 Invalid - 41 Observations

Note: The four independent audits differed in scope, depth, and number

of manhours (range of 4,000 to 20,000). Moreover, the evaluation

criteria and the definitions of deficiencies varied from audit to

audit. The reader should be aware of these nonuniformities in

audits in evaluating the statistics on this page. The proposed

third-party audit program would establish uniform audit criteria

that would reduce the variations among audits and permit a more

valid comparison among projects.

4-19
Project

and Utility Evaluation Program

Strengths Comprehensiveness

Marble Hill,

Public Service

of Indiana

Methodology, amount of

hardware inspected and

detail of inspections

were judged to be

satisfactory (absence of

significant electrical

construction review

consistent with project

status), and representative of a comprehensive

third-party construction

verification effort.

Limited, but beneficial

design review effort.

However, the coverage

afforded was not comparable to other programs evaluated under

the pilot program.

Management assessment

was limited.

0

Midland,

Consumers Power

Company

Program plan, methodology, extent of design

review, amount of hardware inspected, use of

checklists, use of periodic program plan QA

audits and critiques by

senior level management

were judged to be satisfactory. A final

assessment of the

evaluation's adequacy

will be conducted when

the evaluation program

is completed.

Quality assurance and

project management

could have been reviewed

in greater detail.

Evaluation Program continued on next page.

4-20
Project

and Utility Evaluation Program

Strengths Comprehensiveness

South Texas

Project,

Houston Lighting

and Power

Preparation, competence

of evaluators and

inspection techniques

were judged to be

satisfactory.

0 In construction evaluation a limited number of

radiographs were reviewed.

0 Limited level of effort

devoted to design evaluati.on.

o Limited coverage of

design controls and

their implementation

by the NSSS vendor.-

0 Review was limited to

programmatic controls.

Palo Verde,

Arizona Public

Service

Methodology, competence

of evaluators, conduct

of review under a QA

program, which included

periodic audits and

reviews by a senior

technical review committee and use of

checklists for design

review and physical

verifications, were

judged as satisfactory.

The following areas

would be expanded in the

contemplated independent

audit program: crosssection of welder

qualifications, sample

of weld radiographs,

HVAC contractor's QA

program, fire protection

design, and broader look

at critical equipment

supplied by the NSSS

vendor.

4-21

5.0 AUDITS BY ASSOCIATIONS OF PROFESSIONALS

Section 13(b) of the Ford Amendment directs the NRC to analyze the

following alternative approach to improving quality assurance and quality

control in the construction of commercial nuclear power plants:

Alternative b(3)

Evaluations, inspections or audits of commercial nuclear power

plant construction by organizations comprised of professionals

having expertise in appropriate fields which evaluations,

inspections, or audits are more effective than those under

current practice.

The major associations of professionals currently conducting evaluations,

inspections or audits of commercial nuclear power plants are the Institute

of Nuclear Power Operations (INPO), the American Society of Mechanical

Engineers (ASME), and the National Board of Boiler & Pressure Vessel Inspectors

(NB). The analysis of alternative b(3) included an evaluation of the audits

conducted by these organizations.

Many U.S. associations of professionals also participate in developing

national consensus standards for different aspects of quality assurance.

Applicable national standards are endorsed by the NRC and represent the core of

many inspections and audits. However, no changes to this process are contemplated, and these standard-making activities are not covered in the analysis of

alternative b(3) because they do not constitute audits, inspections or

evaluations.

The evaluation, inspection, and audit activities of the three organizations

identified above supplement NRC inspection activities and provide detection and

assurance capability beyond that provided by NRC's inspection program. For

example, in the early phases of construction at Marble Hill, the NB confirmed

ASME code compliance problems with piping installation and brought this quality

problem to NRC's attention. At Zimmer, the ASME identified and brought to

NRC's attention problems in the quality of safety-related piping welds.

During the past two years, INPO has tested and implemented an extensive

evaluation program of plants under construction. Because of NRC's familiarity

with the long-established ASME and NB programs, the relative newness of the

INPO program, and the broader spectrum of construction activities examined by

the INPO program, field work to support the analysis of Congressional

Alternative b(3) concentrated on the INPO evaluation activity. The analysis

of all three organizations sought to determine how these efforts can best be

used to enhance the overall level of assurance provided the public. Some

consideration was given to whether any of these programs could.act as a

surrogate for the NRC program, rather than as a complement to the program, but

this was a secondary consideration. Section 5.1 presents the conclusions and

recommendations resulting from this analysis, and Section 5.2 describes the

separate analyses.

5-1
5.1 CONCLUSIONS AND RECOMMENDATIONS

In this section, the conclusions and recommendations of an analysis of ASME's

and NB's audits and inspections are discussed first, followed by a more detailed

discussion of the analysis of INPO's Construction Project Evaluation program.

5.1.1 ASME/NB Audits and Inspections

The ASME and NB audit and inspection programs cover a limited number of areas

in more depth than the routine NRC inspection program, thereby providing a

valuable supplement to the NRC inspection program. The ASME and NB audit and

inspection programs have a proven record of providing detection and assurance

capability beyond that provided by the routine NRC program. The NRC should

continue to use this narrower but deeper oversight capability in the limited

areas in which they work, thus permitting better focus of NRC resources in

other areas.

The NRC, ASME and NB should continue earlier efforts to coordinate selected

inspection activity to avoid unnecessary duplication. However, the ASME and NB

effort provides a valuable additional independent measure of assurance beyond

the NRC inspection program, and any coordination initiatives should not compromise the independence of the ASME and NB nuclear inspection program.

5.1.2 INPO Construction Project Evaluation Program

The new INPO Construction Project Evaluation (CPE) program fits the

alternative b(3) criteria of "evaluations.. .by organizations comprised

of professionals having expertise in appropriate fields which evaluations...

are more effective than those under current practice." INPO implemented

its CPE program after enactment of Public Law 97-415, and this program

represents a significant enhancement of efforts by the nuclear industry to

improve quality assurance and quality control in design and construction.

The CPE program is consistent with INPO's stated mission of promoting the

highest levels of safety and reliability and encouraging excellence in all

phases of construction, design control, and operation.

Consideration was given to suggesting alterations in the CPE program to make it

more like NRC construction audits and thereby to allow the INPO program to

directly substitute for portions of NRC's inspection program. However, this

idea was rejected on the basis that INPO's current mission of improving

industry performance and raising the industry's standards better serves the

public interest. The NRC can and does set minimum standards that meet the

requirements of law, but a regulatory agency is not equipped to adopt the

counseling and advisory role required to move industry practice above those

minimums. INPO was established for just such an advisory and counseling role.

The study concluded that any attempt to use INPO as a surrogate for NRC

construction inspections would limit the ability of INPO's CPE program to

provide candid assessments to licensees and would damage this industryinitiated mechanism for improving overall performance of the nuclear industry

for establishing industry-wide standards of excellence.

Some consideration was also given to INPO's ability to qualify as an

independent auditor for performance of independent audits similar to those

tested in the pilot projects. The apparent weakness of this proposal--INPO's

5-2
"independence" from the licensee--becomes INPO's strength in the counseling

and advisory role.

The study concluded that public health and safety interests seem best served

presently by INPO continuing in its role of "inside" independent auditor for

the nuclear utilities--which is useful and necessary in assuring excellence and

upgrading of industry's programs for achieving and assuring safety and quality.

INPO is seen as a very important contributor to this result, rather than as a

substitute for NRC regulation and inspection of the utilities' safety and QA

programs and results thereof. However, NRC's and INPO's respective roles,

which presently are fixed and separate, are not immutable and over time they

may change.

This study has confirmed a widely held impression that INPO is developing into

an effective industry instrument with significant potential for raising the

quality of design and construction of nuclear power plants. Because INPO's

potential is not yet fully realized, the NRC should remain alert to future

changes in INPO's program that would justify NRC's placing greater reliance on

it and which would lessen the combined impact on the industry of NRC Construction Appraisal Team (CAT) inspections, INPO CPE evaluations, and the

proposed program of periodic third-party audits. Such action is not without

precedent. Past successes in the INPO program for operating reactors have

allowed NRC to reduce some inspection activity because industry improvements

attributable to INPO resulted in a less intensive inspection presence needed by

the NRC. Improved industry performance resulting from INPO activities at

operating reactors led to a reduction in NRC Performance Appraisal Team (PAT)

inspections from 14 to 4 per year.

5.2 TECHNICAL APPROACH IN EVALUATING ORGANIZATIONS OF PROFESSIONALS

Letters were sent to 15 organizations having various nuclear-related interests

to draw their attention to the NRC study required by the Ford Amendment. Each

letter provided a copy of the Federal Register Notice requesting public

comments and information about the alternative programs in the NRC study. The

letter requested their review and comments on methods to improve quality in the

construction of nuclear power plants. Among those organizations receiving

letters were the ASME, the Institute of Electrical and Electronics Engineers

(IEEE), the National Board, the American Welding Society (AWS), INPO, and the

American Society for Quality Control (ASQC).

The programs of the ASME, NB, and INPO were selected for evaluation because

they were in place and either currently do supplement or have the potential

to supplement the NRC inspection program. The IEEE, which was suggested for

consideration as a possible candidate professional organization for conducting

audits when the Ford Amendment was debated in Congress, recommended instead

that ASME and INPO perform the evaluations by organizations of professionals.

The IEEE stated that alternative b(3) was already in effect:

The evaluations performed by INPO and the ASME 'N' Stamp Program

in addition to independent verifications for near-term license

plants have been quite effective in identifying and correcting

areas requiring attention. There is evidence in the reports

generated by each of these that the programs provide an adequate

and effective means of monitoring and evaluating licensee's quality

5-3
assurance program in addition to the Commission's evaluations.

We recommend the use of these programs to satisfy this alternative.

This section describes NRC's process of evaluating the potential of each of

these three organizations of professionals (1) for supplmenting NRC's

inspection program for nuclear power plant construction, and/or (2) for acting

as a third party, and (3) for performing comprehensive construction audits

similar to those recommended for the future in Chapters 2 and 4.

5.2.1 ASME/NB

ASME's and the NB's current audit and inspection programs provide-valuable

supplements to NRC's inspection program. In areas such as ASME code work and

pressure vessel and primary coolant boundary welding, these programs inspect in

more depth than the NRC inspection program, except for CAT or other special

inspections. However, the ASME/NB programs are narrower in focus than the

overall NRC inspection program and do not cover many of the areas covered by

the NRC. Because there is some overlap between the ASME/NB, and NRC inspection

programs, each carl use the results of the other's audits and inspections to

check the effectiveness of its own program.

Because of the current narrower focus of the ASME and NB programs, they are not

considered to be viable substitutes for the comprehensive third-party audits

described in Ford Amendment Alternative b(5) and the pilot program analysis in

Chapter 4. The ASME/NB programs would have to be considerably expanded in scope

to reach the level of comprehensiveness of the recommended third-party audit

program. Such expansion is not considered to be as feasible as adoption of

alternative b(5) with private companies performing the audits because of the

start-up time and additional ASME/NB resources that would be required. In

either case, the NRC has no control over the ASME/NB inspection programs. In

contrast, a third-party program such as that recommended from the pilot program

has already been partially implemented (the Independent Design Verification

Program). Moreover, expanding the ASME/NB program rather than implementing

the recommended comprehensive third-party audit program is considered to

have less 6verall benefit because the total level of detection capability

and assurance provided by an expanded ASME/NB program and the NRC program would

be less than that provided collectively by the present ASME/NB programs, the NRC

program, and the recommended third-party audit program. The NRC has the necessary

authority to require third-party audits.

5.2.2 Institute of Nuclear Power Operations (INPO)

INPO, a utility-sponsored and funded organization, was established in 1979

to promote improved safety and reliability in operating nuclear power plants.

INPO's Institutional Plan (May 1983) states that INPO's mission "is to promote

the highest level of safety and reliability in the operation of electric

generating plants. In carrying out its mission, the Institute strives to

encourage excellence in all phases of construction, design control, and

operation..."

In 1982, INPO developed performance objectives and criteria to evaluate design

control, construction activities and other related areas in the construction of

nuclear plants. INPO initiated and conducted a pilot program consisting of

several evaluations. Following training sessions with utilities on the new

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evaluation methodology, about 20 self-initiated evaluations were conducted by

utilities to evaluate their construction performance using INPO criteria.

Subsequently, in early 1983, INPO began a formal program of INPO construction

evaluations. This program was named the Construction Projects Evaluation (CPE)

Program, and evaluations of 22 plants in an 18-month period are planned under

this program. INPO further established guidelines that plants under construction would be evaluated every 18 months thereafter, except those in the

near-term operating license phase. The CPE evaluations are conducted by INPO

evaluation teams, which may be supplemented by utility-appointed personnel or

by third-party evaluation teams contracted by the utility and monitored by

INPO.

The NRC's evaluation of the INPO effort for this Congressional study is

based on NRC staff observation and review of the Beaver Valley 2, Limerick

and Millstone 3 evaluation efforts. These efforts were conducted in the

following time frames:

Beaver Valley 2 - May 16 through May 27, 1983

Limerick - July 11 through July 22, 1983

Millstone 3 - August 22 through September 2, 1983

This new INPO program and NRC's evaluation of it was in a sense a pilot program

as defined in the Ford Amendment. However, the three plants reviewed did not

include projects identified as having had major quality-related problems.

Therefore, the INPO CPE program is discussed here rather than in the discussion

of pilot programs in Chapter 4.

The INPO performance objectives and criteria require review of the following

areas: Licensee Organization and Administration, Design Control, Construction

Control, Project Support, Training, Quality Programs and Test Control. INPO's

design review is essentially an effort to identify in the management control

systems deficiencies and weaknesses that could permit design or construction

deficiencies to occur. This approach is different from the NRC integrated

design inspections (IDI) methodology, which includes detailed examination of

equipment and system design, including the checking of design calculations.

INPO's position is that programmatic review is superior and more productive

than a verification approach, which consists of examining a limited sample of

design details.

INPO's construction review emphasizes observation of work "in-process" as well

as detailed review of programmatic controls to determine the effectiveness of

management control of the construction process. INPO limits its review of

actual construction to work in progress during the course of the two weeks the

INPO team is on site. There is a limited retrospective look at completed

work to assure that installed hardware conforms to design and specifications,

which is a characteristic of the new NRC construction and design inspection

programs (CAT and IDI). INPO's findings concentrate on ways to improve the

construction process and are not, in many cases, directly applicable to

assessing that completed work conforms to NRC requirements. Therefore, NRC's

ability to rely on these evaluations in support of the licensing process is

limited.

The INPO teams used for an evaluation usually consist of a team leader plus 4

or 5 evaluators for the design review at the A/E's office and a team leader and

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10 to 12 evaluators at the site for the construction evaluation. INPO prepares

detailed work schedules for each evaluator so that each of the INPO performance

objectives and criteria are reviewed. The licensee provides any pre-licensing

documentation needed. Approximately two weeks after the evaluation is completed,

an exit meeting is held with the utility to discuss in detail the evaluation

team's findings and to permit utility management to respond to those findings.

The utility further responds in writing to each finding and prepares a corrective action plan that is reviewed by INPO. INPO then prepares a final

report and sends it to the utility. INPO encourages licensees to make the

report available to the public, but the member utility may withhold the report

from the NRC and the public. To date, the NRC has received a copy of all final

reports that have been prepared.

To be an acceptable alternative to the third-party audits recommended under

alternative b(5), INPO's CPE methodology would have to be modified and

expanded. The current program focuses on identifying deficiencies and

weaknesses in the management control system. While management control is a key

factor in the design and construction of nuclear power plants, an acceptable

comprehensive audit must also examine the end product in depth to be assured

that it meets the design intent and is of acceptable quality. The design

review program would need to be more comprehensive and include checks of the

calculation of selected design features. Where there are subcontractors to the

A/E, the INPO evaluation would also need to review their activities. In the

construction area, the programmatic and "in-process" observations would have to

be supplemented by an increased retrospective detailed examination of representative plant hardware. For example, various sample sizes of welds, radiographs, structural steel, concrete, pipe runs, hangers, mechanical equipment,

cables, terminations, cable trays, tray supports and other representive hardware would have to selected and inspected. The final INPO report would have to

be comprehensive enough to include not only the current information provided,

but the amount and condition of hardware and equipment inspected and the

detailed findings. The reports would also have to be made available to the

public, without exception.

This analysis has been presumptive in that it hypothesized that INPO's Board of

Directors may find it in their organization's best interests to act as a

third-party auditor, part of whose mission is to confirm compliance with NRC

'regulations. Such action was not envisioned by INPO's founders, nor does it

necessarily seem to be in the public interest to have INPO act as such a third

party or as a substitute for NRC. This study concludes that there is great

value in having a separate industry-sponsored body that performs, in effect,

management reviews and project diagnoses for the nuclear industry and then

provides advice and support in a cooperative atmosphere for improvement.

Assumption of a quasi-regulatory role would significantly hamper self-improvement activities. The great value of INPO is its acceptance by utilities as a

peer that they believe is there to help. The study concludes that NRC should

not attempt to burden INPO at this time with roles that are inconsistent with

this very valuable aspect of its mission.

A thoughtful analysis of the relationship between NRC and INPO was offered

by Robert V. Laney, a member of the special review group established to provide

advice to the study staff on this project. Excerpts from his comments on the

analyses leading to this report appear below. The full text of Mr. Laney's

comments may be found in Section 10.4.

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Fostering an effective relationship between the NRC and INPO,

one which allows each to do that which it can do best, should

continue to be a constant goal of both organizations. This

consideration is most compelling during a period of changing

roles and expanding activities, such as that described in the

NRC study. It is desirable for the NRC to allow ample scope

to the industry's move to improve construction quality represented by INPO's Construction Project Evaluations (CPE).

INPO is the central feature of industry's determined commitment

to self-improvement and self-regulation. Simultaneously, INPO

is the industry's chosen instrument for achieving rising standards of performance in all phases of nuclear power, including,

most recently, design and construction. Thus it is particularly

important that, when setting a new agenda for strengthening the

quality of nuclear construction, all Concerned should recognize

that INPO is similarly engaged. In deciding what inspections,

audits, or evaluations it will do, the NRC should encourage INPO

to do those which INPO might do as well or better. If this

requires modifying the scope or methods INPO now uses, as the

CPE's, NRC should discuss this possibility with INPO, as an

alternative to continuing both CAT's and CPE's.

The present study includes...excellent descriptions and discussions of the respective NRC and INPO roles in achieving construction quality. The study concludes that the present role

differentiation should continue, with INPO in a "counseling and

advisory role" and the NRC in its statutory role of setting

standards and inspecting to assure that those standards are met.

This may be the appropriate conclusion at the present time.

However, in my opinion, this section of the report would be

improved if it were amplified to recognize that there are

circumstances which, in the future, might argue for adjusting

the NRC/INPO interface and their respective inspection activites.

... INPO is exploring ways by which it might exert pressure on

member utilities to respond constructively to correct faults

revealed by INPO's evaluations. In addition, INPO appears to be

moving towards a performance "ranking" system which will provide

a utility management with a specific measure of relative success

in achieving rising standards. These and related INPO initiatives, as they mature, will benefit from NRC recognition and a

willingness to consider role adjustment as appropriate."

RECOMMENDATION. This report is the appropriate place for

the NRC to acknowledge that (1) INPO is developing into an

effective industry instrument for raising the quality of

operations and construction, and (2) since INPO's potential

is not yet fully realized, the NRC should remain alert to

future improvement in INPO's program which would justify

the NRC's placing greater reliance on it.

The study concurs in this recommendation and carries it forward to the study

findings, conclusions, and recommendations appearing in Chapter 2.

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6.0 MORE PRESCRIPTIVE ARCHITECTURAL AND ENGINEERING CRITERIA

Section 13(b)(1) of the Ford Amendment directs the NRC to analyze the following

alternative approach to improving quality assurance and quality control in the

construction of commercial nuclear power plants:

Alternative (b)(1)

Providing a basis for quality assurance and quality control,

inspection, and enforcement actions through the adoption of

an approach which is more prescriptive than that currently in

practice for defining principal architectural and engineering

criteria for the construction of commercial nuclear power plants.

The discussion of the amendment contained in the Congressional Record indicates

that some of the amendment's sponsors had in mind an approach similar to NRC's

technical specifications for operating plants. The NRC provides guidance for

developing technical specifications as part of the process leading up to

issuing an operating license; the applicant/licensee develops them for the

specific plant; and the NRC reviews and, subject to further review and

revision, approves them. Any licensee desiring to continue operating under a

condition that does not comply with its technical specifications must receive

prior NRC approval. For the construction process, the NRC does not have

similar requirements for controlling licensee performance. In particular,

design and construction commitments made in the Preliminary Safety Analysis

Report (PSAR) are not equivalent to technical specifications in terms of

requiring licensee compliance with them.

Under the current regulatory process, the applicant for a construction permit

(CP) generally submits required information in the application and makes

whatever commitments are necessary to have the CP application accepted and

issued. The design description contained in the application (which includes a

PSAR) includes the principal architectural and engineering (A&E) criteria.

Although not defined in the regulations, these A&E criteria may be thought of

as the performance specifications for the safety systems and major components,

and for commitments to consensus codes and standards, NRC branch technical

positions, and NRC regulatory guides. The applicant then commits to implementing the design and to constructing the plant as described in the application. Under current regulatory procedures, the CP holder can unilaterally

modify those portions of the PSAR that are not explicitly stated to be conditions of the CP without notifying the NRC. All changes to the PSAR must be

included in the Final Safety Analysis Report (FSAR), which must be submitted as

part of the process of applying for an operating license, but the FSAR is

submitted after much of the plant construction has already been completed.

Under current practice, detailed information and prescriptive commitments, in

general, and A&E criteria, in particular, usually are not conditions of the CP.

6.1 SUMMARY, CONCLUSIONS, AND FINDINGS

The NRC's case study analyses of quality assurance and quality control programs

at selected sites having had satisfactory programs and at sites that have not

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did not show a direct connection between prescriptive criteria (A&E or otherwise) and the achieved level of quality in the design and construction of

nuclear power plants. Rather, the analyses have shown that changes in the

design basis or the design, for whatever reason, increase the likelihood of

reduced quality in construction. Several NRC initiatives (see Section 6.2.2)

are under way to systematically reduce opportunities for either the NRC or the

licensee to change a design, once completed and approved. These initiatives

require a stringent review of the impact of required design changes and encourage a much greater degree of design completion at the time of CP application.

This study concluded that requiring a substantially completed design, including

design changes made because of initial procurement activity, before construction begins would significantly enhance the achievement of quality during

construction. Such a requirement would significantly reduce the amount of

change associated with completing the design after construction has begun,

thus enhancing design/construction interfaces, reducing rework, improving the

basis for planning and scheduling, and generally making it much easier for the

project to cope with and manage change. However, more prescriptive criteria,

short of a requirement for a completed design before construction, would have

proportionally less effect on controlling the level of change and hence on

improving the environment for achieving quality.

Current practice does not provide a strong basis for NRC inspection of PSAR

commitments or any resulting enforcement activities during the construction

phase. A much improved basis for NRC inspection activity in this regard can be

established by adopting an approach that makes a licensee's significant commitments in its PSAR conditions of the CP. This study recommends that staff

review practice be changed to provide that, during NRC's review of the licensee's

quality assurance program, the licensee's commitments to certain codes, standards

and regulatory guide positions in the PSAR would be reviewed for inspectability

and enforceability. Selected commitments would be designated as mandatory and

made conditions of the CP. The designated commitments would then be binding

and readily inspectable and enforceable. It should be noted that any changes

to such commitments would require a license amendment and a concomitant notice

procedure under Section 189a of the Atomic Energy Act. This would result in a

reopened CP hearing under Section 189a if one were requested by an interested

party.

This study also recommends that the NRC further evaluate the impact of changes

in general (regulatory, technical, procedural, etc.) on the NRC, industry and

project management structure to develop further guidelines for controlling

unnecessary changes and for better managing ngcessary changes. The study also

recommends that NRC should further examine the feasibility and benefits of

requiring a substantially completed design at the time of CP application. See

Chapters 3 and 9 for more discussion of the enhancement to quality available

with an advanced design early in the construction process.

6.2 ANALYSIS

The issue of more prescriptive A&E criteria has been approached from two

aspects: (1) should the requirements to which licensees are committed during

design and construction be more prescriptive? and (2) should the NRC be more

prescriptive in its procedures dealing with changes to those commitments?

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This section discusses earlier attempts to define "principal A&E criteria",

current initiatives concerning prescriptiveness, the relationship of A&E

criteria to major quality-related problems, and the industry's management

of change. Also discussed are NRC's inspectability and enforceability of

changes to design criteria and other licensee commitments, and the amount

of prescriptiveness that is appropriate in regulations.

6.2.1 Earlier Attempts to Define "Principal A&E Criteria"

For some time the NRC has been aware of the need for better controls on the

licensee's type of design commitment and the extent of changes to design

commitments and of NRC's changes to the design basis. The first attempt at

improving the situation took place in 1969 as part of an effort to stabilize

the licensing process. As part of the proposed rule on backfitting, 10 CFR

50.109, the staff included a more prescriptive definition of principal A&E

criteria. However, when the final rule was issued, the more prescriptive

definition was not included because the Commission decided that the definition

needed further study. As a result of this determination, two studies were

conducted to define principal A&E criteria. The results of the first report

were published in December 1975 and the results of the second in March 1977.

No formal staff action on these studies was taken because of difficulties with

implementing the recommended definition and because of other priorities.

While the earlier action did deal with more prescriptive A&E criteria, a

December 1979 action addressed the issue of control of design changes. As

part of the Commission's decision on the need for a hearing and/or a CP

amendment on the Bailey Nuclear Station short pile issue (SECY-A-79-24 and

24A), the staff was requested to prepare a proposal on precisely what design

and other changes a CP holder Could make without (a) notifying the NRC, (b)

securing prior NRC staff approval, and/or (c) obtaining a CP amendment. In

response to the Commission's-request, the staff developed Commission Paper

SECY-80-90, which detailed the historical background (the 1969 proposed rule,

the 1975 and the 1977 studies) and proposed five alternatives for addressing

the problem:

(1) Maintain the status quo.

(2) Borrowing from 10 CFR Part 50.55(e) (dealing with notifications of

significant deficiencies having safety significance) and 50.59 (dealing

with changes to previously approved designs having safety significance),

adopt a rule that establishes general criteria for determining

circumstances requiring a CP amendment.

(3) Adopt a rule defining "principal architectural and engineering criteria"

(in effect reviving the 1969 rulemaking on this subject) using information

learned to date, including the 1975 and 1977 staff studies.

(4) Adopt a rule stipulating that all details of the application, including

the PSAR, be made conditions of the CP and may not be changed without

prior NRC approval.

(5) Restructure the licensing process to require that complete plant design

details be provided in the PSAR (i.e., essentially a final design), which,

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upon review and approval, would be made conditions of the CP and could not

be changed without prior NRC approval.

The staff then presented the five alternatives to the Commission for publica- tion for public comment as an Advance Notice of Proposed Rulemaking. In

approving the publication of the Advance Notice of Proposed Rulemaking, the

Commission added the following statement: "The Commission tentatively prefers

Alternative 3 now, with a shift to Alternative 5 in three years."

6.2.2 Current Initiatives

The specific rulemaking described above has been subsumed into a series of

new initiatives. The initiatives include, in order of occurrence, establishing the Committee to Review Generic Requirements, submitting legislation on

one-step licensing, issuing a proposed policy statement on severe accidents,

which includes standardization of design, and issuing an Advance Notice of

Proposed Rulemaking on the backfitting of new requirements to operating plants

and plants under construction. All requirements proposed by the staff for

imposition on one or more classes of power reactors is reviewed by the

Committee to Review Generic Requirements, which compares the improvement in

operational safety to the cost of the change and recommends their approval or

disapproval to the Executive Director for Operations.

Both the legislation on one-step licensing submitted to Congress and the policy

statement on standardization contained in the proposed severe accident policy

statement would require that a much more complete design be submitted for

approval at the CP application stage. However, both would stop short of

requiring that the design be cQmplete to the point that it incorporate changes

made to the initial design as a result of feedback from the procurement process.

(To accommodate available equipment that may not satisfy initial design assump- tions and to provide an acceptable level of safety, the design may have to be

changed.) The most prescriptive A&E criterion, of course, would be requiring a

complete design including the characteristics of specific components to be

submitted as part of the CP application. The design approval granted under the

one-step licensing proposal would be for 10 years, and the design could not be

changed in that time frame by either the licensee or the NRC without going

through the hearing process again. The Advance Notice of Proposed Rulemaking

on backfitting would require the NRC staff to justify any change in requirements

they wish to impose on operating plants. The incremental improvement to

operating safety would have to be weighed against the cost of the change in

terms of dollars and exposure.

6.2.3 Relationship of A&E Criteria to Major Quality-Related Problems

Previous NRC efforts in the area of more prescriptive A&E criteria have been

directed towards stabilizing the licensing process rather than towards

improving the basis for quality control, quality assurance, inspection and

enforcement actions. While more prescriptive A&E criteria may be the answer to

the licensing issue, this study did not show them to be an answer to quality

problems. NRC's case studies and regional inspections have shown that the

welding and masonry construction problems at Zimmer, the soil compaction

problems at Midland, and the voids in the concrete at Marble Hill were not

related to either the prescriptiveness or the enforceability of the principal

A&E criteria. In these three cases, the problems were caused by inadequate

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management of the construction process to assure that-the design criteria were

met. See Chapter 3 and Appendix A for more discussion of this point.

I

South Texas had both design and construction problems. The design problems

resulted from failure to effectively manage the design process and to keep the

design sufficiently ahead of construction to avoid redesign and rework due to

physical interferences. The problem was not so much that the design did not

meet the NRC's criteria, but that design changes coupled with an improperly

managed design/construction interface made construction problems almost a

certainty.

The errors identified in the seismic analysis at Diablo Canyon are generally

considered to be an example of design errors. However, those errors occurred

mainly in areas that had to be redesigned after a previously unknown geologic

fault was discovered. The errors occurred because of needed design changes,

coupled with deficiencies in management oversight of the design process, rather

than from a lack of prescriptiveness in A&E criteria.

6.2.4 Management of Change

As the South Texas and Diablo Canyon cases illustrate, the difficulties

inherent in managing complex projects are exacerbated by having to deal also

with a rapidly changing project environment. Besides design changes, management

of a nuclear power plant construction project must also cope with technical,

regulatory, and procedural changes. The following excerpt from a letter

written by a member of the study's special review group, Dr. George Coulbourn,

expresses the author's viewpoint on the analyses leading to this report (see

Section 10.4 for the text of entire letter):

There is a level of change action (technical, regulatory, and

procedural) beyond which any program management structure can

no longer prosecute its program. Utility management has consistently been faulted for quality assurance breakdowns. In some

instances, the charge is well founded. However, in most instances,

I believe the root cause is found in the circumstances which

produced rampant, uncontrolled change. I submit that most of

the utility management structures assembled to build the nuclear

power plants of the past decade could have performed adequately

in a more stable design and construction environment.

While not endorsing Dr. Coulbourn's position in total, the study has concluded

that historically neither the industry nor the Atomic Energy Commission

(AEC)/NRC have done a good job in managing change. The nuclear industry grew

rapidly and was subject to rapid changes in technology and sizing of reactors.

Also having to make these chdnges were several established industries comfortable with their routine methods of operation and not always amenable to the

changes to their way of doing business required by the new and developing

technology. These industries include the utilities, A/E firms, construction

firms, and power plant equipment suppliers (see Section 9.2 for more discussion

of this point).

The quality problems of several licensees can be directly attributed to their

inability to foresee and adapt to changes to their traditional methods of power

plant construction and project management required for nuclear construction

(see Chapter 3 for more discussion of this point). The AEC's understanding of

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safety issues grew along with the industry, and new requirements were provided

at an increasing rate as the nuclear power "state of the art" developed,

increasing the difficulty for either licensees or regulators to stay current.

During study interviews, licensee management and staff most frequently mentioned

stabilizing the process that had produced the constantly changing (and

increasing) level of requirements as being an area in which NRC programs and

policies could be improved. Issuance of new requirements reached a peak

after the 1979 accident at Three Mile Island. To control the flow of requirements and to examine them for benefits and feasibility, the Commission

established the Committee to Review Generic Requirements, discussed earlier.

That committee is generally credited with providing a rigorous analysis of new

requirements over the past two years and with bringing a much greater degree of

stability to the regulatory process. In so doing, it has reduced the impact of

change on both the industry and regulators, making it somewhat easier for both

to manage and to cope with the level of remaining change.

Dr. Coulbourn's thoughts on the management of change conclude with the

following recommendation, which the study endorses:

Accordingly, I recommend that NRC commission an examination of

the change management process itself, both within NRC and in the

other parts of the industry. This examination should focus on

both the management of change as a discipline (elsewhere called

configuration management) and upon the reduction of the volume

of change. The latter can have numerous constituents; for example,

higher percent design completion prior to start of construction,

more restraint regarding in-process change, standardization, etc.

All of these constituents require disciplined and consistent

management.

6.2.5 Inspectability and Enforceability

When considering the use of criteria that are more prescriptive to improve

inspection and enforcement, it becomes apparent that existing procedures for

handling changes to design criteria and other licensee commitments do not

provide a strong basis for inspections and enforcement against PSAR commitments

during the construction phase. The NRC's enforcement policy contained in

10 CFR 2, Appendix C -"General Policy and Procedures for NRC enforcement

actions," paragraph IV.E(3) states:

Notices of Deviation are written notices describing a licensee's

or vendor's failure to satisfy a commitment. The commitment

involved has not been made a legally binding requirement. The

notice of deviation requests the licensee or vendor to provide a

written explanation or statement describing corrective steps

taken (or planned), the results achieved, and the date when

corrective action will be completed.

Because the licensee can unilaterally modify the PSAR commitments that are not

conditions of the CP and therefore not legally binding, a licensee's answer to

a Notice of Deviation may be nothing but a change in the commitment. Changes

in commitments should be based on factors other than a desire to legitimize

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nonconforming work. The basis for NRC inspection and resulting enforcement

action can be improved by adopting an approach that makes significant licensee

PSAR commitments conditions of the CP.

6.2.6 Prescriptiveness

One of the difficulties faced by regulators is determining the amount of

prescriptiveness appropriate in regulations. In recent years, the NRC has

favored performance-oriented regulations that state the level of performance

to be achieved but not the way to achieve that level. To provide supplementary

guidance, NRC regulatory guides are also issued to describe acceptable ways the

performance objective may be met, but those guides do not require any one method

to be used. Maintaining this separation between saying what must be achieved

and how it is to be done is fundamental to preserving the existing statutory

roles of NRC and the industry. The industry is primarily responsible for the

safety of nuclear power (e.g., reactor operators are employees of a utility,

not the NRC), and the NRC is responsible for regulating the use of nuclear

power in a manner consistent with maintaining public health and safety.

In this context, the NRC has two strong reasons to be careful about being more

prescriptive in its regulations for design criteria. First, there is usually

more than one satisfactory way to perform most design activities, and prescription would unreasonably limit the designer's choices. Second, too much prescription tends to put the NRC into an industry management role, where it does

not belong, and tends to shift some of the licensee's responsibility for safety

to the NRC.

These arguments against prescriptiveness apply to areas other than design also,

e.g., quality assurance. Although the study concluded that the NRC could provide

better guidance to licensees on acceptable ways to meet NRC QA requirements,

the study did not find that the QA requirements should be made more prescriptive.

The study recommends the opposite: rather than more prescriptive requirements

that say "how" something should be done, the study concluded that present QA

programs should be reoriented to meet performance objectives based on Appendix B,

which say what is to be achieved but do not specify how it should be done.

See Section 2.3.1.

6.2.7 Summary

The study has concluded that increased quality in the construction of nuclear

power plants will result from a more careful coordination of changes in design

criteria and design during construction rather than from more prescriptive

criteria. Several initiatives are under way to systematically reduce opportunities for either the NRC or the licensee to change a design, once completed

and approved.

The study has also concluded that the basis for inspection and enforcement

during construction would be improved by including certain licensee commitments

contained in the PSAR as conditions of the CP and that staff review practice

should be revised to provide such conditioning. Such procedures should only

apply to new CP applicants. The study concluded that this condition does not

need to be applied to plants currently under construction because they will

have passed the point where changes to principal A&E criteria are likely to

occur by the time implementing regulations could be made effective.

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The study also concluded that the NRC should examine the change management

process itself, both within the NRC and the nuclear industry, to evaluate the

.impact of changes on the collective NRC-industry regulatory and project management

structure. The goal of this examination would be to develop further guidelines for controlling excessive change and for better management of necessary

change. The aerospace industry's apparently successful approach to configuration management should be a principal focus of study in this area (see Chapter

9 and Appendix D). Moreover, the study concluded that NRC should further

analyze the feasibility and benefits resulting from requiring that plant

design of future CP applicants be substantially complete before construction

activities begin.

6-8
7.0 REVIEW OF NRC'S PROGRAM FOR ASSURANCE OF QUALITY

Section 13(b) of the Ford Amendment directs the NRC to analyze the following

alternative approach to improving quality assurance (QA) and quality control

(QC) in the construction of commercial nuclear power plants:

Alternative b(4)

Improvement of the Commission's organization, methods, and programs

for quality assurance development, review, and inspection.

This chapter presents the analysis and findings of the study for this alternative. In Sections 13(b)(1), (b)(2), (b)(3), and (b)(5) of the Ford Amendment,

Congress was specific in identifying the alternative concepts for NRC to

analyze. Specific improvements to NRC's organization, methods, and programs

were not specified in 13(b)(4), although several improvements are suggested by

the other alternatives and by the debate during Congress' consideration of the

Ford Amendment. However, a review of the legislative history of the Ford

Amendment did not indicate that the sponsors had any specific NRC program

improvements in mind other than those already described in Section 13(b).

Because there is no specific direction of possible improvements to. pursue in

analyzing this alternative and because events have shown that NRC's approach to

the assurance of quality in the design and construction of nuclear power plants

needs improvement, this study interpreted alternative b(4) as a broad mandate

to determine shortcomings in NRC's approach to QA and to recommend improvements. While the charter of alternative b(4) was interpreted as being limited

to assurance of quality in design and construction, some of the results have

implications for more than just the NRC's QA program. In devising a study

approach to address alternative b(4), the NRC used the following question

introduced in Chapter 1 as a study focus:

What changes should be made to the current policies, practices,

and procedures governing commercial nuclear power plant design,

construction, and regulation to prevent major quality problems

in the future or to provide more timely detection and correction

of problems that have occurred?

This question directly addresses the issues of prevention and detection and,

as a corollary, assurance. These objectives of the NRC QA program were

introduced in Section 2.2.

7.1 TECHNICAL APPROACH

To determine how to prevent major quality-related problems in the future and to

provide more timely detection and correction of developing problems, the study

first tried to determine why these problems occurred and why they were not

discovered and corrected earlier. A series of case studies, which are

described in Chapter 3 and Appendix A, was the primary means for answering "why." (See in particular Sections 3.2, 3.3 and 3.4.)

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This analysis (see Chapters 2 and 3) showed that in prevention the NRC's

underlying shortcoming was in its pre- and post-construction permit (CP)

licensing reviews and inspections. The NRC had not performed searching

analyses of (1) the applicant's capability to. manage or provide effective

management oversight over a nuclear construction project, or (2) whether

project team members have the requisite nuclear construction experience to

properly execute their various project roles. Several improvements to the NRC

program were identified to address this prevention problem: enhancing pre-CP

review by NRC staff; establishing a special advisory committee to help screen

new applicants; conditioning the CP on a licensee's satisfactory post-CP

demonstration that it can effectively manage all quality-related aspects of the

project; and directing more NRC attention in general to the issues of management capability and prior applicable experience of members of the project team

and their project staffs. These improvements are addressed in more detail in

Chapters 2 and 4 and in the remainder of this chapter.

The NRC was also slow to detect and/or take strong action for significant

quality problems that developed at each of the five projects cited as experiencing major quality problems. Reasons for this slowness included the

following: (1) sporadic, NRC inspection presence at construction sites (before

the NRC resident inspector program was implemented), (2) inability of the NRC

inspection program to coalesce scattered quality program-related inspection

findings coming in over a period of time into a comprehensive picture of a

project-wide breakdown, (3) a prioritization of limited NRC inspection

resources to address operations first, construction second, and design last,

which resulted in an almost total neglect of design and the design process, (4)

setting the threshold for reacting to construction-related problems higher than

for operational problems because of the lack of an immediate threat to health

and safety, because of an attitude that construction problems would be found

during an intensive period of startup testing before an operating license was

issued, and because of an attitude that required the demonstration of a

project-wide breakdown before enforcement action would be taken for construction quality problems, (5) an orientation of the inspection program to focus

heavily on programmatic matters and paperwork at the expense of examining

actual work in progress and program implementation, and (6) the NRC's reluctance to address the issue of capability of utility management until problems

grew so large that a remedial program became necessary.

Several improvements to the NRC program were identified to address these

detection problems: expanding the resident inspector program; increasing

team inspections; training inspectors and supervisors to better relate individual inspection findings to programmatic weaknesses; increasing inspection

attention to construction and design; reorienting the inspection program to

emphasize paper less and hardware quality more; and increasing inspection

attention to management issues. These improvements are discussed in more

detail in Chapter 2 and later in this chapter.

Although the case studies were useful in identifying why the prevention and

detection problems occurred and in suggesting possible fixes, the overall study

plan called for a broader analysis by an outside organization of the NRC's

organization, methods, and programs for QA. This outside analysis was

purposely lagged behind the first several case studies so that information from

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the case studies would be available as input to the outside analysis. The

desirability of such an analysis was emphasized by the comments of the individual review group members at the June 1983 review group meeting. The next

section discusses the results of that analysis.

The firm selected to perform the management analysis of the NRC's QA program

was N. C. Kist and Associates, a management consulting firm experienced in

performing QA audits and program reviews for industry-but which had not done

work for the NRC prior to the Ford Amendment Study. Senior members of Kist

Associatesiparticipated as team members in each case study. This experience

enhanced their understanding of the problem under study and helped them to

focus on weaknesses in NRC's approach to QA. Although the NRC staff provided

logistical support to Kist in their analysis of NRC's QA activities and participated in some of the interviews., the Kist Report is entirely the product of N. C.

Kist and Associates. The Kist Report further confirms and supports many of

this study's findings and identifies several areas for improvements not

identified in the case studies or other project activities. The major recommendations of the Kist Report are summarized in the next section, along with

planned NRC actions or responses. The Kist Report is included in its entirety

as AppendixB to this report. The findings upon which the Kist Report recommendations are based are found on pages 5-11 of Appendix B.

7.2 ABSTRACT OF APPENDIX B, THE KIST REPORT

Appendix B reports the results of Kist's review of the NRC's QA organization,

methods, policies and programs. Kist's management analysis of NRC's QA program

was based on (1) review of literature pertaining to past and present Atomic

Energy Commission (AEC)/NRC programs for assurance of quality in design and

construction of commercial nuclear power plants, including previous studies of

those programs, (2) participation in the NRC case studies, and (3) interviews

with the staff of the Office of Inspection and Enforcement (IE) in Bethesda,

Maryland; Region II offices in Atlanta, Georgia; Region III offices in Glen

Ellyn, Illinois; Region IV offices in Arlington, Texas; and Region V offices in

Walnut Creek, California. The management analysis was limited to NRC programs

for assurance of quality in design and construction of commercial nuclear power

plants and did not include other NRC programs. The analysis included the

perceptions of licensees, contractors, and NRC inspection staff and management

regarding problems with the NRC and QA program. It also included suggestions

for improvements obtained during the NRC case studies described in Chapter 3 and

Appendix A.

Based on this review, several items were identified as candidate areas for

revision, deletion and/or development to improve the NRC's policies and

programs for the assurance of quality in the design and construction of nuclear

power plants. These areas are summarized in the following section.

7.2.1 Recommendations of the Kist Report for Improvements in NRC's

Organization, Methods, and Programs for Quality Assurance

Development, Review, and Inspection

N. C. Kist and Associates' analysis of (1) NRC's implementation of management

programs and practices for QA, past and present, and (2) the root causes of the

NRC's inability to prevent problems and slowness to. identify and act on

problems resulted in the following Kist recommendations:

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(1) Stabilize the regulatory process through more preventive action and

planning.

(2) Streamline regulations and guidance documents and make them more

prescriptive and definitive in terms of required elements of control

without specifying how the elements of control must be implemented.

Regulations that can stand on their own would eliminate the need for

many guidance documents. Clearly defin~e the applicability of quality

program requirements, safety-related items and items important to safety.

(3) Make t'he quality assurance program and licensee commitments a condition

of authorizations and permits.

(4) Replace the licensing review of the quality assurance program described

in the Preliminary Safety Analysis Report (PSAR) with a licensing or IE

review of the licensee's quality assurance manual and require the manual

to detail how the quality assurance program shall be implemented. Require

licensing or IE approval of quality assurance manual changes. Establish

definitive acceptance criteria for. manual reviews, specifying required

elements of control but not methods for accomplishing them. Do not permit

work to be performed until the quality assurance manual is approved.

(5) Evaluate licensee and contractor experience, attitude and management

capability before authorizations and permits are issued. Establish

parameters of acceptance criteria.

(6) Require demonstration of the licensee's capability to implement the

quality assurance program before authorizations or permits are issued.

(7) Devote greater attention to design activities.

(8) Develop programs based upon what must be done and then obtain the

necessary resources to implement the programs.

(9) Establish mandatory requirements in inspection programs and reduce

dependency upon individual engineering judgment.

(10) Require an Inspection Plan of licensees and contractors and establish

NRC hold points.

(11) Re-evaluate NRC personnel practices, including salaries.

(12) Change regulations to permit industry organizations rather than individual

licensees to evaluate vendors and monitor their activities or establish

licensing or certification programs for vendors. Extend the program to

include material manufacturers and suppliers.

(13) Take stronger enforcement action. Require expeditious handling of

corrective action, including determining the magnitude of problems

and correcting their root causes.

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(14) Perform detailed annual audits of the licensee's implementation of the

i quality assurance program.

(15) Review functions to be performed by the Quality Assurance Branch and

Construction Programs Branches of IE to assure that efforts are not

duplicated.

(16) Eliminate differences inbasic regional officestructures and job

titles to assure uniformity of functional responsibilities.

(17) Increase the training of inspectors in quality assurance, auditing, and

implementation of inspection modules. Broaden the inspectors' capabilities to encompass all disciplines or provide additional support.

(18) Establish an audit program of NRC activities, using qualified personnel

not having responsibility in the areas audited.

(19) Establish a quality assurance program within the NRC.

These areas for improvement of NRC's QA policies and programs were extracted

from pages 11 to 13 of Appendix B. The findings that form the bases for these

recommendations are discussed in detail in Appendix B and are summarized on

pages 5 to 11. The findings cover the following areas: organization; management practices; the QA standards program; the QA licensing program; the QA

inspection program; the licensee, contractor and vendor inspection program; the

QA enforcement program; and NRC's inability to prevent problems and slowness to

identify and act on problems.

Many of Kist's recommendations are consistent with results from the NRC

case study reviews (Chapter 3 and Appendix A) and the review of the quality and

quality assurance programs of other government agencies and industries (Chapter

9 and Appendix D). For example, recommendations 1, 5, 6, 7, 13 and 14 corroborate case study findings and have been carried forward into Chapter 2 as major

recommendations of the report. Recommendations 1, 2, 3, 4, 10, 12, and 17 are

consistent'with results of the study of outside programs (Chapter 9), and

further action and/or analysis is planned in each area.

Recent NRC actions also address several of Kist's findings. For example, as

discussed earlier, the Committee to Review Generic Requirements was established

in 1981 to, among other purposes, stabilize the flow of new and/or revised NRC

regulatory requirements and to ensure that the impact and resultant benefits of

regulatory changes are fully assessed (recommendation 1). Also, in recent

years, the NRC enforcement program has been bolstered by Congressional legislation that permits stronger enforcement and penalties for licensees' failure

to comply with NRC requirements (recommendation 13). Another example of recent

improvements is two new training courses developed in 1983 in the area of QA

for operations, construction, and modification (recommendation 17).

Not all of Kist's findings were considered of sufficient importance to be

carried forward into Chapter 2. In some cases, the recommendations and their

feasibility need to be further evaluated. Each of the above findings will be

evaluated and pursued, collectively, with the findings of other QA study reviews

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(the pilot program, the case studies, analyses of Alternatives b(1) - b(5) and

review of outside programs), to identify the most effective areas for improving

NRC's policies and programs for assurance of quality.

Section 7.3 identifies actions that the study recommends to improve NRC's

programs for assurance of quality and Sections 7.4 and.7.5 identify additional

improvements to NRC's QA policies and programs that have recently been implemented or are under development, respectively. Several of the actions discussed

in those sections address Kist's recommendations; those that are not addressed

will be analyzed by the NRC staff and may result in subsequent action.

7.3 ACTIONS RECOMMENDED TO IMPROVE NRC PROGRAMS

This section discusses two groups of actions recommended to improve NRC

programs. The first group discusses the recommendations resulting from the NRC

case studies, the review of NRC QA policies and programs, and a review of

outside programs. The second group discusses additional areas identified in the

study and needing further consideration.

7.3.1 Recommendations of NRC Case Studies, Review of NRC QA Policies and

Programs, and Review of Outside Programs

The findings from the NRC case studies (Chapter 3), review of NRC QA policies

and programs (the Kist Report), and the review of outside programs (Chapter 9)

form the basis for the following recommended changes to NRC's program for the

assurance of quality. Recommended changes (1) to (6) address the prevention

issue, changes (7) to (9) address the detection issue, and change (10) addresses

the assurance issue (see Chapter 2 for a discussion of prevention, detection,

and assurance). Because much of the rest of this report addresses improvements

to NRC's program, this section will reference other parts of the report in

which certain improvements are more fully discussed.

(1) Enhanced Pre-Construction Permit Reviews

The study recommends that NRC improve its pre-CP review of an applicant's

capability for managing or overseeing the management of a commercial

nuclear reactor construction project. In particular, future NRC reviews

of CP applicants should focus much more heavily on the project team's

prior nuclear construction experience and on management capability. The

pre-CP reviewshould also cover planning, design, design control and

planned construction control processes. This recommendation is described

in more detail in Chapter 4 (Pilot Programs) and in Section 2.4.1.

(2) Post-CP Demonstrations of Ability to Manage an Effective Program.

As a condition of their CP, new applicants should be required to successfully demonstrate their ability to manage the implementation of an effective quality assurance and quality control program. This capability

should be demonstrated and verified in the first periodic independent

audit, approximately 12 to 20 months after the CP is issued. This recommended action is also described in more detail in Chapter 4 (Pilot

Programs) and in Section 2.4.1.

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(3) Performance Objectives for QA Programs

NRC currently establishes prescriptive review requirements for a "QA

program" in Chapter 17 of the Standard Review Plan (SRP). Once NRC has

approved a licensee's QA program description of how 10 CFR 50 Appendix B

will be met, the licensee develops a set of detailed implementation

procedures that'the licensee's employees use in performing their jobs.

A licensee is inspected against the requirements of Appendix B to 10 CFR 50

and against the commitments made by that licensee in its approved QA

program description. The QA program must address each of- the elements

described in the SRP. If licensees elect to describe a QA program that.

has elements going beyond the SRP requirements, the NRC regards those

additional elements as commitments that are also subject to enforcement.

Because of this, licensees have tended to maintain their QA programs at a

level designed to satisfy NRC requirements only, i.e., the minimum required

to protect public health and safety. It is inevitable that human endeavor

will sometimes fall short of targeted performance. If the target is NRC's

requirements, licensees will inevitably fail to meet these requirements on

occasion. NRC's current QA licensing practices can thus be counterproductive to 100% attainment of NRC objectives.

The NRC should consider revising current practices by developing a set of

inspectable performance objectives and criteria that would meet NRC's

requirements for a QA program. These inspectable performance objectives

would describe what NRC wants the licensee's QA activities to actually

accomplish. The licensee would then develop detailed procedures designed

to meet or exceed NRC's performance objectives. NRC's intermediate step

of reviewing and accepting an applicant's QA program description would

therefore be eliminated. The performance objectives would replace the

current Chapter 17 of the SRP. A licensee could elect to establish procedures that exceed NRC's performance objectives. However, inspection and

enforcement of a licensee's actual performance would be against NRC's

performance criteria rather than the procedures, which could exceed NRC's

performance objectives.

If the NRC evaluates a licensee's actions against a nationally uniform set

of inspectable performance criteria rather than against the licensee's

commitments (which are different for each licensee and sometimes for

each plant), there is a greater likelihood that licensees will set their

targets (i.e., the detailed procedures) higher than NRC's minimums.

There would then be a greater likelihood of licensees consistently

exceeding NRC's minimums, even when their actual performance sometimes

falls short of their targets. This practice would also indicate to

licensees that the NRC is more concerned with what a QA program accomplishes rather than with how it is described, as some believe.

A reform of NRC's current practice for quality assurance becomes even more

important if current legislative initiatives are enacted to revise the

licensing process by limiting the operating license hearing essentially to

operator qualifications and quality assurance matters. The effectiveness

of the licensee's quality assurance activities will be vitally important

to that kind of process. This recommendation is also discussed in Section

2.4.1.

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t4) Management Appraisals by NRC

The study recommends that NRC address the issue of management competence

more directly. The NRC should incorporate management lessons learned from

the case studies, remedial program experience and other sources into the

NRC inspection program to improve NRC's capability to assess the capability and effectiveness of utility and project management. In particular,

NRC should (1) develop an inspection module to evaluate the capability,

effectiveness, understanding and qualifications of utility management, and

(2) implement this management inspection approach by applying it to plants

currently under construction.

This recommendation would address a shortcoming in the NRC inspection

program. Although this study and years of NRC inspection experience

suggest that a primary cause of problems in construction and operation

is shortcomings in some utility management, the NRC inspection programs'

focus on compliance with requirements addresses the management issue, at

best, indirectly and generally after the fact. Developing an inspection

approach that looks primarily at the sources of problems rather than the

effects should lead to earlier detection and possibly prevention. This

recommendation is discussed in more detail in Section 2.4.1.

(5) Retrospective Look/Inspection Prioritization of Plants Currently Under

Construction

Besides applying management lessons, the NRC should apply the Ford study

lessons to analyze plants currently under construction to improve NRC's

and licensee's diagnostic capability and to better prioritize the NRC

inspection effort. In particular, the NRC should examine the current

population of plants under construction.to determine which seem to most

exhibit the characteristics of plants that had major quality problems

in the past and use this information to help prioritize its inspection

program for those plants. Although at the beginning this prioritization

would be based upon Ford study lessons, it should be sharpened over time

by feedback from the inspection program and the development of a trend

analysis capability (discussed below). This recommendation is discussed

in Section 2.4.1.

(6) Perform Trend Analysis of Construction Indicators

The NRC has been slow to detect major quality breakdowns in the past. One

cause of this slowness has been its inability to synthesize scattered bits

of information into a comprehensive picture of the health of a construction project. To synthesize information and to develop a closer picture

of management effectiveness, the NRC should develop a set of construction

performance indicators that could be monitored, trended, and evaluated by

the licensee and the NRC. Such indicators should be oriented toward

measuring the effectiveness of activities that contribute to, control, or

verify construction quality.

Efforts in this area are presently under way (1) to analyze inspection

program data, including manhours per site per activity vs. inspection

findings, and (2) to develop a computerized NRC capability to analyze

licensee construction events and vendor events reported to the NRC under

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10 CFR 50.55(e) and 10 CFR 21, respectively. This recommended action

would combine these efforts with analyses of other indicators, some

arising from the case studies and some yet to be determined, into a comprehensive NRC management information capability.

Besides using the system for observing trends, NRC inspection groups will

be able to use data in the system as followup for determining whether

plants acceptably resolve outstanding reports and whether deficiencies

reported by one plant may potentially apply to other plants. The quality

of licensee management of safety deficiency reporting in design and

construction may be used as one measure of its commitment to quality

and the effectiveness of its QA program.

Some NRC resources need to be redirected to this area, including training,

to ensure close attention to detecting problems. QA problems at any site

should be clearly and accurately identified, including root causes, and

that information should be provided to all sites immediately. Competent

and prompt followup to ensure that proper actions are taken is mandatory.

Knowledge of the problems by NRC managers is vital and should be stressed.

Success of this program will be enhanced by selecting results-oriented

NRC managers to lead this activity. -See Section 2.4.1 for more discussion

of this recommendation.

(7) Independent Audits

Periodic independent audits should be required of all commercial nuclear

power plants under construction. This requirement should be imposed on

both all current construction permittees and all future applicants by

conditioning the CP on the applicant's agreement to employ periodic

independent audits. See Chapter 4 and Section 2.4.2 for a complete

discussion of the third-party audit recommendations.

(8) Regional Inspections

The regional inspection program should be supplemented with additional

contradtor support for its regular inspection program. Such support

would allow more NRC staff time for reactive inspections such as allegation followup, remedial program inspections, and special regional

construction team inspections. Increased use of regional team inspections

is being tested in one NRC regional office. Pending results of this trial

program, the NRC inspection program in all regions may be reoriented to

greater emphasize team inspections. This recommendation is discussed in

more detail in Section 2.4.2.

(9) Resident Inspectors

The study found that for new applicants or for the restart of construction

at projects presently delayed, resident inspectors should be assigned to

the site as early as possible, preferably before the CP is issued and

before safety-related construction activities are started. This study

finding will be considered for NRC's future policy on placing residents at

construction sites. The NRC is also in the process of establishing a

pilot program in one of its regional offices. That program would place

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more resident inspectors at plant sites and correspondingly reduce the

size of the regional inspection staff. Pending the outcome of this trial

program, the NRC inspection program may be reoriented to more heavily

emphasize resident inspectors. See Section 2.4.2 for more discussion of

this recommendation.

(10) Audits of Implementation of NRC Programs

The NRC should strengthen its programs for conductinq audits of NRC

Program and Regional Offices to assure that NRC programs are being

implemented consistently, adequately, and uniformly. Besides providing

information to NRC management on the status of that implementation, the

audits could be an evaluation tool for feedback on appropriate areas for

program revision and as an aid for prioritizing programs. NRC should also

arrange for periodic independent management audits of the NRC program relating to QA. See Section 2.4.3 for a discussion of this recommendation.

7.3.2 Additional Areas Requiring Further Evaluation

In the review of NRC programs, sonme additional areas were identified which the

NRC should further consider and evaluate as potential methods for improving

NRC's program for the assurance of quality in the design and construction of

nuclear power plants. These areas include the following:

(1) Inspection Planning

Better methods of planning quality assurance inspections should be pursued

to plan and use the limited inspection resources in these most important

areas. Possible methods include applicability of probabilistic risk

analysis and qualitative and deterministic risk assessments and.development of an overall "inspection plan" that would bring coherence to NRC

headquarter's inspections, regional inspections, resident inspections,

independent audits and the licensee's regular inspection program.

(2) Readiness Reviews

The NRC should consider requiring formal "readiness reviews" during

nuclear power plant construction. Plant designers, construction managers,

owner/operators, and possibly the NRC could participate in the reviews,

which would be required at key points in the project, beginning with

"design ready for construction". The reviews' purpose would be to ensure

the coordination of all parties involved and the readiness of the project

team to proceed with each new construction phase. This recommendation is

also discussed in Chapter 9 and Section 2.4.5.

(3) Training

The NRC should consider additional training for the NRC staff in quality

assurance, auditing, conduct of inspections, and analysis of inspection

findings to determine programmatic weaknesses. These training programs

would help the staff to implement the inspection program more effectively

and to develop the ability to detect more readily causes of problems that

go beyond surface symptoms. This recommendation is also discussed in

Chapter 9, Appendixes B and D, and Section 2.4.1 (item 6).

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(4) Control Over Vendors

The NRC holds the licensee responsible for all aspects of the nuclear

power plant, including all parts and equipment furnished from vendors and

suppliers. The NRC's current vendor program and near-term focus are

discussed in Chapter 2. The longer-term implications of the changing

supplier-vendor-contractor-utility infrastructure is changing with unknown

implications for the future. The NRC should be aware of these changes and

their implications so that it can take prudent action to prevent future

problems rather than react to them. Assurance of the quality of vendor

and supplier activities could be improved by the NRC's stricter enforcement against deficiencies in the licensee's required vendor control and

inspection programs and by more NRC inspection of the licensee's control

of vendors and suppliers. The NRC should explore different institutional

arrangements for oversight of component suppliers, such as changing

regulations to permit industry organizations to be responsible for evaluating component suppliers (see the Kist Report). The NRC should support

continued development of a data bank on performance of and problems with

vendor-supplied components, as suggested by the Battelle report on outside

QA programs (Chapter 9 and Appendix D).

(5) Design Completion

NRC should consider requiring that plant designs be well advanced before

construction activities begin. Besides permitting better construction

planning and scheduling, the more completed design should result in fewer

design changes and better design interfaces. See Chapter 6 and Sections

2.2 and 2.4.5 for more discussion of this recommendation.

7.4 RECENT IMPROVEMENTS TO NRC'S QA PROGRAM

After a series of quality-related problems were identified in the design or

construction of several nuclear power plants, the NRC staff initiated a series

of QA improvements to the NRC QA program designed to improve the assurance of

quality in the design and construction of nuclear power plants. The following

paragraphs discuss recent improvements to NRC's QA programs stemming from these

initiatives as well as some improvements that were already in place, such as

the resident inspector program and the Systematic Assessment of Licensee

Performance (SALP) Program. As noted earlier, many of these improvements

specifically address some of Kist's findings.

(1) Resident Inspector Program

In the 1960s and early to mid-1970s, the reactor inspection program was

carried out by inspectors assigned to NRC Regional Offices. In 1974, a

two-year trial resident inspection program was initiated to test the

concept of placing NRC inspectors at a nuclear power plant site. The

program's purpose was to derive benefits accruing from increased onsite

inspection time, to improve NRC's awareness of site activities and status,

and to increase inspector efficiency. The program demonstrated that the

resident inspector concept was viable, and in 1977 the NRC adopted the

program as a central feature of the inspection program. At first,

resident inspectors were placed at operating reactors, and in 1979 they

began to be stationed at nuclear power plants under construction.

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The resident inspector program currently includes one inspector for each

reactor site at which plant construction is more than 15% complete and one

for each operating reactor. The resident inspector performs a significant

part of the total inspection effort. As'a "generalist" (as opposed to a "specialist"), the resident inspector monitors day-to-day activities and

performs the parts of the inspection program in which he is knowledgeable.

Specialists from the regional office conduct inspections in specific

technical areas to complement the resident inspector's activities.

This study found the resident inspector program to be the backbone of the

current NRC inspection program. The resident's constant presence at a

site enables him to more comprehensively understand the project's health

and status and better enables NRC to analyze individual inspection

findings to determine if they represent only isolated deficiencies, a

programmatic problem, or a quality assurance breakdown.

The resident program is one aspect of NRC's approach to improving its

detection (and prevention) capabilities. The study recommends that for

future CP applicants, experienced NRC residents should be assigned to thesite before the CP is issued, as soon as preliminary site work begins.

The resident inspector program and recommendations above are discussed

further in Section 2.4.2.

(2) Construction Appraisal Teams

In 1980, on a trial basis the NRC initiated Construction Appraisal Team

(CAT) inspections to provide in-depth inspections of the quality of the

implementation of management and quality controls at a nuclear construction project. In a CAT iDspection, a multi-disciplinary team of specialists assess program implementation by examining safety-related hardware

after it is installed and after the licensee's QA/QC inspection] is :ompleted. The principal objective of the CAT program is to evaluate the

effectiveness of design controls, construction practices, and other

management controls used to ensure that as-built conditions are according

to the plant's design.

During 1980-1981, eight trial CAT inspections were performed by 5-man teams

from Regional Offices. Each inspection included about 2 weeks of onsite

inspection time. In 1982-1983, the CAT program was revised and CAT

inspections are now performed by NRC headquarters using teams of NRC

personnel and consultants. A team generally consists of a team leader and

10 engineers and spends approximately 4 weeks at the site. Each inspection

entails approximately 1,600 to 2,000 manhours of direct inspection time

onsite. In 1982-83 NRC performed about 4 CAT inspections per year.

The CAT inspection program is another aspect of NRC's effort to improve

its detection capabilities and to address the "threshold" problem for

taking action for quality problems in construction. The headquartersbased CAT inspection partially, but not completely, addresses Kist

recommendations 18 and 19, serving as both an audit of the performance of

the licensee inspected and as an overcheck of the implementation of the

NRC resident and regional-based inspection program. The CAT program is

further discussed in Section 2.4.2.

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(3) Systematic Assessment of Licensee Performance

Following the Three Mile Island accident, the NRC initiated a program for

the Systematic Assessment of Licensee Performance (SALP). The SALP

program consists of periodic reviews of regulatory performance of nuclear

power plants (both under construction and in operation) by a team of

inspectors, licensing staff and regional supervisors and management. The

SALP assessment is intended to be sufficiently diagnostic to provide a

rational basis for assessing licensee performance, for allocating NRC

inspection resources, and for providing meaningful guidance to licensee

management. The SALP assessment is based on a review of inspection data,

licensing staff input, licensee performance in areas such as deficiency

reports (Licensee Event Reports and reports submitted pursuant to 10 CFR 21

and 10 CFR 50.55e reporting requirements), and licensee responsiveness to

Inspection and Enforcement Bulletins and other suggestions for improvement. Each of nine or ten functional areas is evaluated and is assigned

to one of three categories to indicate whether more, less, or about the

same level of NRC inspection attention and licensee attention is appropriate for the coming period. The SALP program represents an effort by

the NRC inspection program to better address management capability and

competence. The SALP program is also discussed in Section 2.4.1.

(4) Integrated Design Inspection (IDI)

NRC has recently developed a special design inspection program to assess

the quality of design activities. The design area has received little

inspection attention in the past, and recent experience ha.s suggested that

it should receive greater attention. This design inspection program also

uses the team approach and encompasses the total design process on a

sqlected system, from formulating design and A&E criteria through developing and translating the design to actually performing site construction.

While the NRC staff evaluates a great deal of basic design information in

the licensing reviews, it has not previously verified that this basic

information has been properly incorporated in the actual design drawings.

This new design inspection program examines the adequacy and consistency

of the integration of all the design details within a selected sample

area. The focus of the inspection is on the completed drawings and

includes such things as independent calculations to verify piping and tank

sizes, seismic support strengths and failure modes. Where errors are

found in designs, the design process is examined to determine if there are

generic problems. It is believed that conclusions about the adequacy of

the overall design process can be drawn from this very detailed audit of a

selected sample. Each IDI requires about twelve persons and four months

to complete. Current plans are to conduct three IDIs per year.

The IDI program is the main NRC initiative aimed at addressing the problem

of insufficient past NRC inspection attention to design. The IDI program

Jis another aspect of NRC's effort to improve its detection capability. The

IDI program is also discussed in Section 2.4.2.

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,5) Revised Construction Inspection Program

The construction inspection program was recently revised for two reasons:

(1) a recognition that inspection requirements exceeded inspection

resources; and (2) programmatic review was being emphasized at the expense

of observing work and inspecting hardware. In 1982 the NRC staff began

revising the individual inspection procedures in the construction inspection program to.better match the budgeted resources. The main goals of

the revision program, which is to be an ongoing program of review with

the first cycle of review to be completed in the spring of 1984, are as

follows: (1) to shift emphasis of inspection from reviewing records to

observing work; (2) to facilitate performance of certain procedures by

resident inspectors; (3) to re-examine the scope and frequency of some

inspections based on limitations of inspector resources; and (4) to

eliminate redundancies in the procedures. With current plans, the first

review cycle will consolidate 115 inspection procedures to 61 procedures. *The revised inspection program is also discussed in Section 2.4.2.

(6) Quality Assurance Staff Consolidation

In the fall of 1982, the quality assurance responsibility and functions of

the NRC Office of Research were assigned to the Office of Inspection and

Enforcement (IE). These responsibilities included regulatory development,

standards development, liaison with code and standards making organizations, and research. In January of 1983, the quality assurance licensing

functions for power reactors were also assigned from NRC's Office of

Nuclear Reactor Regulation to IE. These re-assignments of personnel and

functions are intended to consolidate responsibility for all NRC quality

assurance matters in one NRC line office. Consolidating NRC QA functions

and responsibilities has been a long-standing issue within the AEC and the

NRC. Programmatic weaknesses in the AEC's QA program resulting from

diffusion of QA responsibilities among several AEC program offices was

first identified as an issue in a 1973 assessment of QA regulatory programs.*

(7) Independent Design Verification Program (IDVP)

On a case-by-case basis, the NRC staff has requested that an applicant for

an operating license provide additional assurance that the design process

used in constructing the plant has fully complied with NRC regulations and

licensing commitments. Many licensees have responded by initiating a

design review through an independent third-party contractor. This review

program has been termed the Independent Design Verification Program

(IDVP). The independent review evaluates the quality of design based on a

detailed examination of a small sample. The independent review has also

addressed programmatic areas, for example, classification of systems and

components, design and verification records, interface control and interdisciplinary review, consistency with the Final Safety Analysis Report

(FSAR), nonconformances and corrective actions, and audit findings and

*Davis, J. G. and H. H. Brown. 1973. "Quality Assurance and the Utilities:

Is Regulatory Doing Enough?" Prepared for the Director of Regulation.

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resolutions. The review includes verifying specific design features by

independent calculations and by comparing installations against as-built

drawings. The NRC staff reviews the selection of the independent review

organization and the audit plan before they are implemented, reviews the

completed report, and assesses the applicant's response to the audit

findings. In all cases to date, the NRC staff has concluded that the

applicant has complied with NRC regulations and licensing commitments.

Some licensees have expanded their IDVP to cover construction quality

as well as design, and these are referred to as Independent Design and

Construction Verification Programs (IDCVP). THE IDCVP conducted at Palo

Verde and the one in process at Midland were selected for special review

by the NRC staff in conjunction with the Ford Amendment Pilot Program (see

Chapter 4). The scope of the IDVPs (IDCVPs) has varied from plant to

plant. THE IDCVP at Palo Verde was of greater scope than the average and

involved about 120 manmonths of review.

The third parties selected to perform the IDVPs or IDCVPs must meet strict

NRC-established criteria to ensure they are independent of the licensee.

In particular, the organization selected and each individual participating

in the review must not have had any responsibility for or involvement in

the project's design or construction, and safeguards are established

around the review of draft inspection reports. Plants that have received

an IDI or that are replicates of plants that have already been subjected

to an independent design review have generally been able to provide

sufficient assurance that the design process has complied with NRC

requirements without performing a second design review.

The usefulness of these audits has varied from site to site because of the

variability among each audit's scope and methodology. With the transfer

of IDVP responsibility to the same NRC program officeý (IE) responsible for

the IDI program, future IDVPs will be patterned more like IDIs and the

variability should decrease.

This study concluded that a series of comprehensive third-party audits,

using a clearly established set of audit criteria, will better enable the

NRC to meet its responsibilities than the current IDVP practice. Until

this regulation has been established, however, the NRC Should continue to

encourage licensees to perform voluntary independent design reviews. This

recommendation is discussed in more detail in Chapter 4 and Sections 2.2

and 2.4.2. The IDVP program is also discussed in Sections 2.4.2 and

2.4.3.

(8) Quality Assurance Surveys on Computer Code Development and Use

Since 1978, the NRC has been developing and implementing a program to

assure that vendors, national laboratories and utilities that develop or

use thermal-hydraulic computer codes apply quality assurance programs that

provide traceability and independent review of calculations used for the

design of plant systems.

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The licensing staff, with the assistance of Region IV, has conducted

inspections at vendor facilities, national laboratories, and selected

utilities. These inspections have not revealed any major deficiencies

in the quality of the work performed with various codes. However, QA

practices applied in developing and using codes varied significantly

among national laboratories, while the practices of vendors and utilities

were consistent with staff and industry guidelines. As a result of work

done to date, the staff is in the process of proposing a uniform QA

program for the national laboratories and will continue the inspection of

vendors and utilities with an expanded scope that will include other types

of codes (e.g., seismic, radiological).

7.5 PROGRAMS UNDER DEVELOPMENT

The previous section identified NRC initiatives that the staff has implemented as methods to improve NRC's assurance of the quality in the design

and construction of nuclear power plants, The initiatives presented in this

section are additional efforts that the staff has under preparation, in varying

stages of development and implementation. These efforts are in addition to the

areas identified in Section 7.3.2.

(1) Regional Administrator's Evaluation

To provide additional confidence in the quality of design and construction

to the regions, the NRC staff has taken steps to improve its guidance in

the NRC program of pre-operating license review. In this program the NRC

Regional Administrator comprehensively evaluates the licensee's performance and plant construction status shortly before an operating license is

issued. Based on inspection and enforcement history and other licensee

performance information, the new evaluation guidance helps identify areas

requiring additional inspections. A report of this evaluation is forwarded from the cognizant Regional Administrator to the Director of the

Office of Nuclear Reactor Regulation (NRR) to provide information relevant

to NRR's considerations in plant licensing. This procedure is currently

being revised to incorporate the results of the periodic SALP evaluations.

(2) Qualification and Certification of QA/QC Personnel

Inadequate qualifications of some personnel working in quality assurance

areas have been noted as a contributing factor to quality-related problems

in NRC investigations or inspections of quality problems at Marble Hill,

South Texas, Zimmer, and Midland. To better understand and characterize

the significance of this issue, the NRC is conducting a study to determine

the extent and magnitude of the problem, the underlying causes for it, and

the extent and quality of existing standards for QA/QC personnel qualifications to develop recommended actions for NRC program improvement. The

staff also has efforts under way to direct more NRC attention to enforcing

the existing standards for qualifications of quality assurance personnel,

to work with the industry in developing improved qualification standards,

and to further consider the benefits and feasibility of requiring formal

qualification and certification of QA/QC personnel.

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(3) Craftsmanship and the Importance of Feeling Personally Responsible for

Qual i ty

The NRC recognizes the important role that craftsmanship plays in putting

quality into a product. Improving craftsmanship in nuclear construction

is a high priority. The study concluded that improving management will

improve craftsmanship more than any other single factor. The University

of Texas study of craft productivity in power plant construction cited in

Chapter 3 strongly supports this conclusion.

Clearly, ultimate responsibility for performing high-quality work rests

with the actual doer. However, management must provide the directions and

supporting conditions that allow and encourage the individual to attain

quality. The individual must feel personally responsible for attaining

quality. If management does not carry out its responsibilities such as,

for construction, giving a qualified craftsman a complete and accurate set

of drawings, the proper tools and materials, valid acceptance criteria and

confidence that enough time is available to do the job correctly, the

craftsman is unlikely to feel the degree of personal responsibility that

has the greatest probability of yielding quality work. The primary role

of the quality control inspector then shifts from providing assurance that

the work has been done properly to screening out improperly performed

work. While it has been established that many nuclear power plant

construction projects suffer from poor craftsmanship, this report

concludes that improving management in nuclear construction is a necessary

precursor to significantly improving the job done by the craftsman.

The importance of feeling responsible for quality extends from the

craftsman upward to all levels of management, including first-line

supervisors. First-line and higher supervisors should be held accountable for the quality of work under their direction. These supervisors

should be appropriately trained to provide instruction on how to

achieve quality work and to recognize project activities or practices

that may degrade quality.

The feeling of personal responsibility for the successful outcome of a

project, whether it is large or small, applies equally to the NRC. NRC

management is also required to establish a framework for its inspectors

in which those inspectors feel a sense of personal responsibility for

determining the effectiveness of the QA programs of their assigned plants.

During this study, some labor unions involved in nuclear construction were

contacted to explore potential methods and incentives to enhance the

crafts role in assuring the quality of construction activities. Meetings

with union officials and discussion with union training officials

highlighted the following points:

(1) Craftsmen are generally not well informed of their role in the QA/QC

process.

(2) Continuous rework because of changes has a demoralizing effect on

craftsmen and affects the quality of the final work.

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(3) Utilities and contractors have not provided adequate training on

quality for craftsmen.

(4) Utilities are not convinced that quality assurance is a cost-effective

approach to construction. Labor perceived that utilities think

QA/QC is a "high-cost" item rather than a "cost-saving" tool.

(5) Improved front-end engineering and procurement would reduce the

amount of change and rework.

The staff has used this input from the unions and crafts in preparing

the changes to NRC programs discussed in this report. The NRC will

further study improving the management of crafts.

(4) Improved NRC Management Reviews

The case studies identified management experience, competence, and commitment to quality as fundamental for assuring an effective quality assurance

program on a nuclear project. CPs have been issued to licensees who, in

retrospect, experienced difficulty in managing their projects, including

the quality program, because of inexperienced personnel in major project

organizations and lack of understanding of the complexity of designing,

constructing, and licensing a nuclear plant. Moreover, the NRC has been

slow to determine the extent and magnitude of the results of inadequate

management.

The SALP program discussed above performs periodic appraisals of the

quality of licensee and licensee management performance, based on inspection findings and other indicators. CAT inspections and Performance

Appraisal Team (PAT) inspections for operating plants also measure management effectiveness. The NRC staff is currently examining how to incorporate lessons learned from the case studies into the inspection program to

improve NRC's capability to assess the quality and effectiveness of

utility and project management. See Section 2.4.1.

Chapters ? and 4 discuss some of the improvements being considered

(enhanced pre-CP reviews, post-CP demonstrations, and third-party audits),

to improve (1) the focus of the NRC review of management capabilities

before a CP is issued, (2) confirmation of management capabilities shortly

after site construction is begun, and (3) management effectiveness

throughout the project.

(5) Prioritization of QA Efforts and Integration of QA

The NRC has three QA research projects planned or under way to address the

applicability of QA requirements to various structures, systems, and

components in a nuclear power plant. One project is attempting to develop

a methodology to prioritize QA coverage commensurate with the relative

importance of equipment and components to prevent or mitigate postulated

accidents. The second project is a test application to a nuclear power

plant of the National Aeronautics and Space Administration's (NASA)

approach to analyzing system safety and reliability. The NASA approach

7-18
requires establishing safety and reliability goals and objectives, analyzing the system's capability to meet those goals and objectives, and

developing a quality plan to specify the QA requirements necessary to

obtain the safety and reliability goals and objectives. A third project

planned for this area is an NRC survey of existing utility practices for

applying QA to nonsafety-related items. The goals of the project are

(1M to increase NRC staff understanding of current industry practice,

2 to identify strengths of existing programs, and (3) to establish a

practical basis for considering any generic actions in this area.

It is hoped that the three projects will help NRC identify the optimum

areas'for applying QA requirements, the extent to which QA should be

applied, and a more quantified basis for applying QA. The end objective

is for the nuclear industry to have definitive guidance on practical ways

to prioritize QA measures. Prioritization of QA efforts is discussed

also in Section 2.4.5.

(6) Designated Representatives

The Federal Aviation Administration (FAA) uses a system of designated

representatives (DR) to achieve extensive oversight of the design and

manufacture of commercial aircraft. These representatives, who are

employees of the manufacturer but are certified by the FAA, perform

examinations, inspections, and tests on behalf of the FAA and report

results of such activities to the manufacturer and the FAA. The NRC is

considering variations of a DR program to increase NRC inspection capabilities. Several legal, technical, and programmatic issues remain to be

addressed before NRC decides whether an FAA-like DR program or some

variant of it is feasible.

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8.0 CONTRACTUAL, ORGANIZATIONAL, AND INSTITUTIONAL ISSUES

In the course of conducting the quality assurance study mandated by the Ford

Amendment, it became clear that a study of some of the indirect factors that

shape the environment in which utility management must operate during the

design and construction of nuclear power plants would be desirable. Such a

study would contribute to a better understanding of the management capability

issue and would provide a broader base of information from which to develop

approaches to improve the achievement of quality. Battelle Memorial

Institute's Human Affairs Research Center (HARC) was selected as the lead

contractor to conduct this study, and their interim report constitutes

Appendix C to this report. This chapter summarizes the study approach of this

special review and its preliminary findings and conclusions. Where appropriate, these findings and conclusions have been incorporated into the findings

and conclusions of Chapter 2. From this special review, some issues that merit

futher study were also identified in Chapter 2.

8.1 ABSTRACT OF APPENDIX C

Appendix C presents preliminary findings, analyses, and conclusions of a study

of the contracting and procurement process used in constructing nuclear power

plants and selected organizational and institutional issues associated with

nuclear construction. The objectives of the study were as follows:

(1) to characterize the aspects of contracts and procurement that appear

to affect the quality during construction of a nuclear power plant

(2) to determine the types of contract and procurement provisions and

arrangements that could contribute most to enhanced quality

(3) to develop guidelines for construction contracts and procurement that

could assist in achieving overall quality objectives

(4) to examine the contributions of selected organizational and

institutional arrangements to nuclear construction projects.

To accomplish these objectives, a series of site visits to utilities

constructing nuclear power plants, architectural-engineering (A/E) firms,

constructors, and subtier contractors was planned and partially implemented.

(The study is still in process.) Specific contractual, organizational, and

institutional factors were investigated at each site. The findings and

conclusions contained in Appendix C and summarized here are based upon four

such visits (three to nuclear construction projects and one to an A/E firm).

Also, much information used in the analyses was obtained from secondary source

materials and from telephone and personal contacts with informed sources,

including 16 state Public Utility Commissions (PUCs).

8.2 PRELIMINARY FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

From the Appendix C study by HARC, the following preliminary findings and

conclusions were reached:

8-1
(1) Previous nuclear experience appears to provide a significant advantage

in a nuclear construction effort. Utilities that do not possess such

experience internally should consider hiring either a project staff or

contractors who can provide such expertise.

(2) A nuclear construction project appears to benefit when its procurement

entity is large enough and experienced enough to exert "marketplace

presence". A large procurement entity offers the advantages of market

familiarity and commercial power (based upon frequency and continuity of

purchasing) as well as the expertise needed to secure satisfactory

performance on procurements.

(3) Bid evaluation and selection processes should be based upon functional

criteria related to the work to be performed.

(4) To achieve quality objectives in contracting and procurement, clearly

defined requirements, program implementation and oversight are important.

" The level of detail in QA/QC requirements in procurement documents

is extremely important.

o A contractors' ability to perform to these requirements must be

evaluated before issuing a contract.

o Followup is essential to evaluate contractors' and subcontractors'

performance against these requirements.

(5) Because designs are usually not complete before construction is begun and

nuclear construction projects are subject to unanticipated changes due to

changes in the state of the art and regulatory requirements, fixed-price

contracting for most aspects of nuclear power plant construction projects

is not appropriate. Instead, cost-reimbursable contracts with fixed fees

are recommended most frequently by those involved in nuclear construction

projects, particularly for assuring quality performance. Except in

special cases where the work scope can be clearly specified in advance

and wil'l not be impacted by change, fixed-price contracting for nuclear

construction work tends to be a disincentive to achieving high quality

because under a fixed-price contract, the contractor has to pay for rework

out of his profits.

(6) Along with the NRC, state PUCs provide a major source of regulatory

oversight for nuclear construction projects. Regulatory influence in this

case is exercised through the rate base treatment of such projects.

Historically, state PUCs do not appear to have been active in disallowing

construction costs that may have resulted from lapses in quality assurance

or project management. This position results in shifting the risks of

quality lapses from the utility to its ratepayers. Recent actions by

several PUCs suggest that this position is changing with unknown

implications for the course of nuclear projects under construction.

Possible recommendations resulting from these preliminary findings and the

Appendix C study by HARC are given below. This study has adopted several of

these recommendations and the more important ones appear, in the same or in a

similar form, in Chapter 2.

8-2
(1) As part of its management review, the NRC should consider requiring

applicants for construction permits to explain their proposed contracting methods, their bid evaluation and selection procedures, and

their reasons for choosing them.

Given the overwhelming consensus about contractor selection processes

and cost-reimbursement contracting, this item clearly seems to warrant

NRC attention. The contracts study found that utilities would be well

advised to require bidders to demonstrate their approach and commitment to

a project, and that NRC should require the same of licensees. This would

force the potential licensee to think through the contracting process with

all its implications for risk sharing, cost control, and quality performance requirements.

(2) The NRC should examine methods to focus more attention on the way a

licensee proposes to ensure that quality work is being performed

rather than on the documents that describe general QA and QC programs.

An overemphasis on what is written about quality assurance and quality

control appears to contribute little to the actual assurance of quality

and may be detrimental. This is particularly true if such an emphasis

diverts attention from how the elements of QA and QC programs will be

implemented. The issue here is the difference between examining a

utility's written QA program description and examining the number and

qualifications of the staff it assigns to QA functions. The former

audits writing ability; the latter contributes to an assessment of the

capacity to carry out a QA objective.

(3) The NRC should examine the implications for its own mission of state PUC

scrutiny of and policies toward nuclear construction project costs and

management.

State PUCs appear to be taking more action in' examining and disallowing

what they view as unnecessary and unwarranted expenses. How this new

posture affects execution of the NRC's safety mission, PUCs expectations

of the NRC, and the assurance of quality in nuclear construction projects

is not yet clear. This shift represents what may be a major change in the

institutional environment of nuclear power plant construction; thus, the

NRC should carefully examine its implications.

(4) Nuclear construction projects appear to benefit significantly when the

owners and members of the project team possess strong management capabilities, seasoned by prior nuclear construction experience. The advantages

to a project under these circumstances appear great enough to warrant

NRC's examination of how such beneficial ownership and management arrangements can be stimulated and fostered.

One suggestion frequently made is toencourage greater consolidation within

the nuclear industry (along the lines of the more centralized nuclear

industries in foreign countries, for example). However, before any course

is adopted, the specific advantages/disadvantages of various ownership and

management arrangements for assuring safe and successful nuclear projects

need careful study.

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9.0 REVIEW OF OTHER EXISTING AND ALTERNATIVE PROGRAMS

FOR THE ASSURANCE OF QUALITY

In conducting the quality assurance study mandated by the Ford Amendment to the

NRC Authorization Act, it became clear that a review of the programs for

assurance of quality of other government agencies, other industries, and

foreign countries would provide a broader base of information from which to

develop approaches to improving NRC's program for assurance of quality.

Pacific Northwest Laboratory (PNL) was selected as the lead contractor for this

review. A PNL-prepared report on this review constitutes Appendix D to this

report. This chapter summarizes the study approach of the outside program

review and its findings and conclusions. Where appropriate, these findings'and

conclusions have been incorporated into the findings and conclusions of this

report in Chapter 2. Some issues that merit further study from this special

review are also identified in Chapter 2.

9.1 ABSTRACT OF APPENDIX D

Appendix D reports the results of a study of the assurance of quality programs

of five other U.S. government agencies and of NRC counterparts in six foreign

countries. Based on features found in these outside programs, several items

were identified as deserving of further consideration to potentially enhance

the program to assure quality in the design and construction of nuclear power

plants in the United States.

An important element in the study of outside QA programs is selecting the

industries and programs to be examined. One organizational category of interest

is nuclear endeavors that are not under NRC jurisdiction. This category includes

the Department of Energy (DOE) and the nuclear programs in foreign countries.

A second organizational category is non-nuclear endeavors that involve highly

complex technology requiring high-quality standards in design and manufacture

and that strive for low failure probability because the consequences of failure

may be substantial. This category includes aircraft manufacturing regulated by

the Federal Aviation Administration (FAA); non-nuclear shi pbuilding under both

the U.S. Navy (USN) and the Maritime Administration (MarAd); and spacecraft

under the National Aeronautics and Space Administration (NASA).

The DOE, NASA and the USN parts of the shipbuilding industry represent examples

in which a government agency is the owner and/or operator of products or

facilities generally produced by the private sector under government contract.

The FAA and the MarAd are examples of private sector endeavors regulated by a

government agency. The foreign nuclear programs reviewed include both government and private ownership and operation of nuclear power plants. The foreign

nuclear programs examined were those in Canada, the Federal Republic of

Germany, France, Japan, Sweden, and the United Kingdom.

The Appendix D study by PNL was conducted by reviewing published information on

each of the programs selected for study and supplementing this review with

information obtained from interviews with FAA and DOE representatives. Limited

interviews were also conducted with the NASA staff in Washington, D.C.

Published information and interviews with those in the private sector organizations corresponding with these government agencies were also used.

9-1
The reviews of the foreign nuclear programs were based almost entirely on

publicly available information. Subcontractors with experience in the

countries of interest conducted these reviews. There were also limited

contacts with foreign nationals in developing the necessary information.

Studies of the shipbuilding programs in the United States, both USN and

commercial, were conducted entirely through reviews of publicly available

documents.

The Appendix D study was not intended to, nor did it attempt to, evaluate the

effectiveness of the other programs studied. Rather, it focused on identifying

features in those programs that had the potential to improve and translate to

the NRC program. In general, these were features that program administrators

viewed as positive factors in their respective programs.

9.2 RESULTS AND-RECOMMENDATIONS

There are several significant differences among the programs investigated

in Appendix D:

(1) The nature and extent of the interfaces differ between the government

sector and the private sector.

(2) The incentive systems for achieving quality vary.

(3) In some cases, the major thrust for quality needs arises from safety

considerations; in others, it arises from a need for reliable performance.

However, safety and reliability are frequently closely intermixed.

Each of the programs reviewed in Appendix D operates within its own cultural

environment and such differences profoundly affect the resulting program for

assuring quality. This is particularly evident in the foreign nuclear programs.

In spite of such differences, there are also identifiable areas of commonality.

For example, all of the programs studied are quite dynamic. Although each

program has experienced its own evolutionary process and some are much older

than others, changes aimed at improving the effectiveness of the quality

assurance programs are ongoing.

One observation from Appendix D is that the FAA, NASA, USN and MarAd shipbuilding regulatory programs are directed towards industries that have evolved

as specific entities. These industries are, respectively, the aircraft

manufacturing industry, the aerospace industry, and the shipbuilding industry.

Design and fabrication are normally performed by industrial sectors that have

generally evolved in parallel with the corresponding regulatory programs. In

contrast, the NRC program is directed towards.regulating the "nuclear

industry"--a construct that has never evolved as a specific industrial entity

in the traditional sense. Nuclear power plants are designed and constructed as

an offshoot activity from several traditionally established industries, i.e.,

the electrical utilities, the architect-engineers (A/Es), the major power plant

equipment suppliers, and the construction industry. Each has its own

historical methods of doing business. Implementing the NRC program in these

industries has required major changes in traditional practices for what might

be a limited segment of total activities. Furthermore, NRC's regulations

9-2
are directly applied only to the utility that chooses to build a nuclear power

plant with the stipulation that it will be responsible for all other participants' compliance with NRC's regulations.

One result of the complex institutional arrangement for building nuclear power

plants has been that major changes in long-established ways of doing business

have been imposed across many business-management interfaces. Pursuing such a

complex issue to the point of developing recommendations was beyond the scope

of the PNL study; however, PNL reported it as an issue deserving further study.

Although significant differences exist between the NRC's assurance of quality

program and the other programs reviewed, some elements of the other programs

may be applicable to the NRC program. The major results in Appendix D were

derived from studies of the various individual programs. It must be emphasized

that the scope of these studies was limited to general concepts. Therefore,

these findings should be viewed as features deserving NRC consideration for its

assurance of quality program, rather than as features that should be immediately adopted.

In formulating these results, consideration was given to the institutional

differences that exist between the NRC and the outside programs reviewed.

For example, the relationship between the government and the private sector is

regulatory in some cases (FAA, NRC, MarAd) and contractual in others (DOE,

NASA, USN). Other intrinsic aspects of the various programs studied include

cultural differences, as observed in the foreign nuclear programs, and national

commitment to developing the product, as observed in the USN shipbuilding, NASA, and foreign nuclear programs.

Results and recommendations for further study arising from Appendix D are

categorized below by design and quality engineering, quality programs, program

reviews, vendors, inspection programs and making management more responsible

for quality. The NRC agreed with many of these recommendations, and the most

important appear, in the same or shortened form, in Chapter 2.

9.2.1 Design and Quality Engineering

The NRC should consider requiring that plant design be well advanced before

initiating construction activities. Design requirements should include the

completion of safety, reliability, and availability analyses including failure

mode and effect analyses, fault tree and hazards analyses, and safety analyses.

The analyses should be integrated with QA and should be completed before

construction begins. This recommendation is based upon findings from the DOE,

NASA, FAA, foreign nuclear, and shipbuilding programs.

9.2.2 Quality Programs

The NRC should consider requiring the establishment of a QA system that

prioritizes quality efforts, quality measures and QA coverage commensurate with

the relative importance of equipment, components and systems. This importance

would be determined by the safety, reliability and availability analyses

discussed under "Design and Quality Engineering" above. This recommendation

derives from findings of the DOE, NASA, and shipbuilding programs.

9-3
9.2.3 Program Reviews

The NRC should consider adopting the following recommendations relating to

program reviews:

(1) The NRC program should require "readiness reviews" during nuclear power

plant construction. In some industries, readiness reviews are conducted

before embarking on a major new phase of a project to ensure that appropriate planning, coordination and necessary previous work has been

completed and that the project team is "ready" to proceed to the new

phase. These reviews might involve plant designers, construction

managers, owner-operators, and (possibly) NRC staff and should be required

at key points in the project, beginning with "design ready for construction". Additional reviews at selected key milestone points may be useful.

This recommendation is based upon findings from the DOE, NASA, and

shipbuilding programs.

(2) The NRC should study ways to better integrate NRC inspection functions

with system design reviews, test program reviews, and test program

evaluations. This recommendation is based upon findings from the USN,

FAA, DOE, and NASA programs.

9.2.4 Vendors

Consideration should be given to enhancing the NRC's vendor inspection program.

The licensee should continue to be held fully responsible for vendor-supplied'

items, with necessary enforcement actions relevant to vendors applied to the

licensee. The NRC should continue supporting the development of a data bank on

performance of and problems with vendor-supplied components. These data should

be analyzed and the results published periodically. This recommnendation is

based on findings from the FAA, the USN, and the foreign nuclear programs.

9.2.5 Inspection Programs

The NRC should consider adopting the following inspection-related suggestions:

(1) The NRC should expand its inspector training program to increase emphasis

on "how to inspect". The training program should concentrate on such

areas as conducting inspections and use of time, and should include

specific guidance on identifying possible indicators of developing

problems. This recommendation is based upon findings from the USN

program.

(2) The NRC should consider requiring inspections of nuclear power plants

by independent inspecting agencies. This recommendation is based on

findings from the foreign nuclear programs.

9-4
9.2.6 Making Management More Responsible For Quality

The NRC should re-examine its posture on quality assurance to emphasize to the

licensee that quality and assurance of quality are responsibilities of overall

management rather than responsibilities that can be delegated to the QA/QC

organization. This recommendation is based on findings from the DOE and NASA

programs.

9-5

10.0 PUBLIC COMMENTS

Section 13(b) requires the NRC to obtain comments on the Ford Amendment from

the public, licensees of nuclear power plants, the Advisory Committee on

Reactor Safeguards (ACRS), and organizations comprised of professionals having

expertise in appropriate fields. In response to that requirement, the NRC took

the following actions:

(1) on March 3, 1983, published a Federal Register Notice (FRN) that detailed

Sections 13(b), (c), and (d) of the Ford Amendment and requested comments

by May 1, 1983

(2) issued a public announcement detailing the Ford Amendment requirements and

requesting comments by May 1, 1983

(3) sent copies of the FRN to fifteen organizations of professionals as an

enclosure to a letter requesting comments by May 1, 1983

(4) on July 18, 1983, briefed an ACRS Subcommittee in a public meeting about

the Ford Amendment study plan. On December 6, 1983, briefed an ACRS

Subcommittee in a public meeting on progress made toward completing the

study. On February 24, 1984, briefed an ACRS subcommittee on the results

of the study. On March 15, 1984, briefed the ACRS on the results of the

study.

Thirty-four sets of comments were received as a result of these actions--nine

from private citizens, five from citizen organizations, seven from licensees,

three from professional organizations, nine from other industry groups, and

comments from both members of the ACRS and the ACRS. The NRC also established a

review group of distinguished professionals having a broad range of expertise

in related fields to provide an ongoing peer review of the study while it was

in progress. Comments from the public, licensees and associations appear in

Section 10.2. ACRS comments appear in Section 10.3, and written comments from

the review group appear in Section 10.4. For convenience, the public comments

are consolidated and grouped according to each of the alternatives contained in

Sections 13(b)(1) through (b)(5) of the Ford Amendment. In addition to

comments on Sections 13(b)(1) through 13(b)(5) and 13(c), comments were

received on a variety of related and unrelated subjects. These comments are

included in Section 10.2.7, General Comments. The NRC response appears below

each comment. The source(s) of each comment appears to the right of the

comment. The commenters and abbreviations used in the discussions are listed

and categorized just before the comments in Section 10.2.

One public comment concerned NRC's failure to provide both a program plan in

the Federal Register Notice for the conduct of the Ford Amendment study and an

opportunity for comment on that program plan. Such a study plan had not been

completed at the time of request for comments. Moreover, the NRC staff wished

to use the comme'nts received on the Ford Amendment as part of the study plan

development process. Once the plan was developed, it was presented to the ACRS

at a public meeting. To provide an ongoing review of the study by persons

outside the NRC and the government, the NRC staff established the review group

of professionals mentioned earlier to review the study's plans and progress.

This review was performed by nine distinguished professionals having expertise

10-1
in nuclear power plant quality assurance, project management, engineering, and

other relevant areas. The review group represented a broad spectrum of

expertise, experience and viewpoints. Section 10.4 provides the names and

positions of the reviewers and a summary of their comments on major issues.

Public and other comments were sought early in the study effort. Several of

those comments were used in conducting the study and many of the study conclusions supported comments received. As a result, many of the comments

received have been adopted within NRC's planned actions or included in issues

slated for further study.

10.1 TEXT OF THE AMENDMENT

The Federal Register Notice contained Sections 13(b), (c), and (d) of the Ford

Amendment. The accompanying text of the Federal Register Notice invited the

public to provide to the NRC any comments on the quality assurance study by

May 1, 1983. For convenience, the text of Sections 13(b), (c), and (d) is

reproduced below:

Sec. 13(b) The Commission shall conduct a study of existing and

alternative programs for improving quality assurance and quality

control in the construction of commercial nuclear powerplants.

In conducting the study, the Commission shall obtain the comments of the public, licensees of nuclear powerplants, the

Advisory Committee on Reactor Safeguards, and organizations

comprised of professionals having expertise in appropriate

fields. The study shall include an analysis of the following:

(1) providing a basis for quality assurance and quality

control, inspection, and enforcement actions through the

adoption of an approach which is more prescriptive than

that currently in practice for defining principal architectural and engineering criteria for the construction of

commercial nuclear powerplants;

(2) conditioning the issuance of construction permits for

commercial nuclear powerplants on a demonstration by the

licensee that the licensee is capable of independently

managing the effective performance of all quality assurance

and quality control responsibilities for the powerplant;

(3) evaluations, inspections, or audits of commercial

nuclear powerplant construction by organizations comprised

of professionals having expertise in appropriate fields

which evaluations, inspections, or audits are more effective than those under current practice;

(4) improvement of the Commission's organization, methods,

and programs for quality assurance development, review, and

inspection; and

(5) conditioning the issuance of construction permits for

commercial nuclear powerplants on the permittee entering

into contracts or other arrangements with an independent

inspector to audit the quality assurance program to verify

quality assurance performance.

10-2
For purposes of paragraph (5), the term "independent inspector"

means a person or~other entity having no responsibility for the

design or construction of the plant involved. The study shall

also include an analysis of quality assurance and quality

control programs at representative sites at which such programs

are operating satisfactorily and an assessment of the reasons

therefor.

(c) For purposes of --

(1) determining the best means of assuring that commercial

nuclear powerplants are constructed in accordance with the

applicable safety requirements in effect pursuant to the

Atomic Energy Act of 1954; and

(2) assessing the feasibility and benefits of the various

means listed in subsection (b);

the Commission shall undertake a pilot program to review and

evaluate programs that include one or more of the alternative

concepts identified in subsection (b) for the purposes of

assessing the feasibility and benefits of their implementation.

The pilot program shall include programs that use independent

inspectors for auditing quality assurance responsibilities of

the licensee for the construction of commercial nuclear powerplants, as described in paragraph (5) of subsection (b). The

pilot program shall include at least three sites at which

commercial nuclear powerplants are under construction. The

Commission shall select at least one site at which quality

assurance and quality control programs have operated satisfactorily, and at least two sites with remedial programs underway at which major construction,- quality assurance, or quality

control deficiencies (or any combination thereof) have been

identified in the past. The Commission may require any changes

in existing quality assurance and quality control organizations

and relationships that may be necessary at the selected sites to

implement the pilot program.

(d) Not later than fifteen months after the date of the enactment of this Act, the Commission shall complete the study

required under subsection (b) and submit to the United States

Senate and House of Representatives a report setting forth the

results of the study. The report shall include a brief summary

of the information received from the public and from other

persons referred to in subsection (b) and a statement of the

Commission's response to the significant comments received. The

report shall also set forth an analysis of the results of the

pilot program required under subsection (c). The report shall

be accompanied by the recommendations of the Commission,

including any legislative recommendations, and a description of

any administrative actions that the Commission has undertaken or

intends to undertake, for improving quality assurance and

quality control programs that are applicable during the construction of nuclear powerplants.

10-3
10.2 COMMENTS OF THE PUBLIC, LICENSEES OF NUCLEAR POWER PLANTS,

ORGANIZATIONS OF PROFESSIONALS AND OTHERS, AND NRC S RESPONSE TO

THESE COMMENTS

The following is a listing of the persons and organizations providing

comments to the March 3, 1983, Federal Register Notice:

Private Citizens (P.C.)

Christine Simmers, MD

Marvin Lewis, PA

L. H. Wilkie, Jr., AZ

Daniel Garland, WA

Nancy Compton, TN

L. D. Gustafson, WA

John O'Neill, MI

Wells Eddleman, NC

Scott Bullock, NY

Citizen Organizations (C.O.)

Suffolk Nuclear Study Group (SNSG), NY

Union of Concerned Scientists (UCS), DC

Audubon Society, The Indiana Sassafras (ISAS), IN

Sinnissippi Alliance for the Environment (SAFE), IL

Ohio Citizens for Responsible Energy (OCFRE), OH

Utilities/Licensees

San Diego Gas and Electric (SDG&E), CA

Public Service Electric and Gas (PSG&E), NJ

Houston Lighting and Power (HL&P), TX

Florida Power and Light (FP&L), FL

Duke Power Company, NC

Baltimore Gas and Electric (BG&E), MD

Cleveland Electric-Illuminating Co. (CEI), OH

Professional Organizations (P.O.)

The National Board of Boiler and PV Inspectors (NB), OH

American Society of Mechanical Engineers (ASME), NY

Institute of Electrical and Electronics Engineers (IEEE), NY

Nuclear Power Engineering Committee (NPEC)

Other Industry Groups (Other)

Toownsend & Bottum, MI

Automatic Switch Co (ASC), NY

Stone and Webster (S&W), MA

Atomic Industrial Forum (AIF), D.C.

Management Analysis Corp. (MAC), CA

Institute of Nuclear Power Operations (INPO), GA

American Nuclear Insurers (ANI), CN

Edison Electric Institute (EEl), D.C.

Commonwealth-Lord J.V.C. (CWL), IN

10-4
10.2.1 Section 13(b)(1): More Prescriptive Architectural and

Engineering Criteria

Comment Commenter *

(1) The NRC should establish more prescriptive requirements 1 utility

for QC inspections, process control, records, etc. 1 other

Response: The NRC is in the process of endorsing an American National

Standard (ANSI), ANSI/ASME, NQA-1, "Quality Assurance Program Requirements

for Nuclear Power Plants," which includes requirements and guidance for

establishing and carrying out quality assurance programs during the

design, construction, operation, and decommissioning of nuclear facilities. The NRC intends to continue to work with ANSI to produce needed

standards. The NRC also is initiating research efforts to analyze

alternative approaches to inspection planning and prioritization. The

appropriate level of prescriptiveness in required inspection activities

will be one of the issues considered in the research. See the response to

Comment 2 on standardizing QA/QC paperwork.

(2) The NRC should standardize all QA/QC paperwork. 1 other

Response: The NRC has certain minimum reporting and recordkeeping

requirements and attempts to standardize its own requirements. Each

project is sufficiently different that it would be difficult, if not

impossible, to devise a system of standardized QA/QC paperwork that would

be appropriate for all projects. Prescribing paperwork at the QA/QC

record level would have the effect of putting the NRC into a quasimanagement rather than an oversight role. The NRC should set standards

and performance objectives for QA/QC systems and their paperwork but

should not prescribe how to achieve those objectives. If the NRC were to

standardize all QA/QC paperwork, the flexibility of licensees would be

limited in recording any additional data for their own needs. This could

lead to the licensees developing a second set of records for this

additional data. Duplicate records markedly increase the chances for

errors and would also increase costs without an increase in safety.

(3) The NRC should require scale models and computer- 2 utilities

assisted drawings.

Response: With the advancement of computer modeling, scale models may

find less use. Computer-assisted drawings are currently used at some

plants and should be considered for all future plants primarily because of

the technique's economics. This study also strongly endorses the use of

models and found them to be extremely useful in helping some licensees

manage the construction of their projects. The use of models would be

considered to be a good project management practice. The NRC's follow-on

research to this study will further evaluate this suggestion.

*For abbreviations and codes used to identify commenters, see Section 10.2.

10-5
(4) NRC should institute more prescriptive architectural 1 P.C.

and engineering (A&E) criteria. 1 C.O.

Response: The topic of more prescriptive A&E criteria is discussed at

lengthin the report. In particular, see Chapters 2 and 6. The study

found that more prescriptive A&E criteria would not have prevented or led

to earlier detection of the five major quality-related problems that

stimulated this study. The QA study did find that a more complete plant

design would help facilitate better planning and scheduling, would

minimize design changes and potentially would reduce rework caused by the

design not being far enough ahead of construction. This study suggests

further efforts to improve the management of change in nuclear design and

construction and to examine whether future applicants should be required

to submit an essentially complete design at the construction permit (CP)

application stage.

(5) One-step licensing and more prescriptive criteria 1 utility

are a logical combination.

Response: The study agrees, see Chapter 6.

(6) The QA study should investigate the amount of 1 C.O.

engineering and design review the NRC could perform.

Response: The case studies, pilot programs, and NRC inspections have

shown that most often design interfaces and implementation are the

problems, not the design itself. To address this problem, the NRC

initiated a new program for integrated design inspections (IDI) in 1983.

The IDIs examine the design interfaces and implementation as well as

provide selected overchecks for the design itself. The IDI program is

described in greater detail in Chapters 2 and 7. As with construction

and operation, the licensee is primarily responsible for ensuring that

the design and engineering work is adequate. The IDI program is an NRC

overcheck of the effectiveness of the design and engineering review and

process of the licensee and its architect-engineer A/E), and it in no way

relieves the licensee and contractors of their design responsibilities,

nor does it replace any licensee activity.

(7) More prescriptive A&E criteria will not solve the 1 P.C.

quality problem; do not add more requirements. 2 other

4 utilities

Response: The study agrees. As noted in the report (see Chapters 2 and

6), the design quality problem does not appear to be with the criteria for

the plant design as much as with design changes and with design and

engineering work not staying sufficiently ahead of construction work.

(8) More prescriptive criteria would negate designers' 1 other

flexibility and creativity and may also lead to less 1 utility

rigorous design and more reliance on the NRC. I P.O.

10-6
SResponse: The study agrees. A significant level of design completion

at the outset of construction, e.g., through the procurement phase,

was found to be more important in avoiding quality problems than

rigorous adherence to specific criteria. See Chapter 6.

10.2.2 Section 13(b)(2):, Demonstration of Capability to Independently

and Effectively Manage the QA/QC Function

Comment Commenter *

(1) Licensees should be required to demonstrate their 2 utilities

capability to independently and effectively manage 1 P.C.

the QA/QC function. 1 P.O.

1 other

1 C.O.

Response: The study agrees. The study reco nuiends increasing NRC's

efforts in reviewing the applicant's management capability before CP

issuance, which presumably would include an audit of pre-CP design

activities. The study also recommends requiring an independent review in

the first 12 to 20 months of construction in which the licensee and the

project team must demonstrate their capability to independently and

effectively manage the project, including the quality function.

Subsequent NRC or third-party audits would be conducted about every two

years thereafter, and management capability would be one of the areas of

appraisal. See Chapters 2 and 4.

(2) The NRC should perform a cost/benefit analysis 1 utility

on requiring a demonstration of QA/QC management

capability.

Response: A cost/benefit analysis is a routine administrative requirement

for the NRC when it performs a regulatory analysis of proposed changes to

NRC requirements. A cost/benefit analysis will be performed as a part of

the regulatory analysis for any rulemaking activity in this area.

(3) Adequate provisions are already in place to 1 utility

evaluate management's capability to manage 1 P.O.

a QA/QC program.

Response: The requirement for the NRC to evaluate management capability

is already in place. However, the method, criteria, and approach for

implementing the requirement to evaluate management's capability should

be revised to reflect the results of this study. The study showed that

the NRC has historically performed little pre-CP evaluation of management

capability and has not focused on management issues in inspection until

after major problems have occurred. The study recommends that NRC focus

more on the management capability issue both before and after the CP is

issued. See Chapters 2 and 3.

*For abbreviations and codes used to identify commenters, see Section 10.2.

10-7
(4) Evaluation criteria for management capability 1 other

should be flexible enough to permit the Institute

of Nuclear Power Operations (INPO) to perform

this function.

Response: The study has concluded that using INPO to perform a quasiregulatory function is not consistent with INPO's current mission or in

the best interests of improving quality and the assurance of quality in

the nuclear industry. INPO is in the process of seeking to raise the

overall standard of performance and to achieve excellence in the nuclear

industry through evaluation, education, and counseling. Placing INPO in a

position where it would be a determinant in the licensing process could

significantly damage its primary function. See discussion of INPO in

Chapters 2 and 5.

(5) Requiring the licensee to demonstrate its 1 utility

management of the quality function would unnecessarily

restrict the owner/licensee to managing the project

itself.

Response: The study has not interpreted this provision as a requirement

for the licensee to solely manage the project. There are varying arrangements under which the licensee can choose to manage-the project. The case

studies (Chapter 3.0 and Appendix A) provide examples of different

organizational arrangements that have worked, including the owner/licensees

in an oversight role. However, this study has indicated that certain

functions must be retained by the licensee to properly discharge its

responsibilities. The ability to independently confirm that an effective

quality assurance and quality control program is in place and is being

properly implemented is one of those functions. Criterion I to 10 CFR 50,

Appendix B, specifically states that although a licensee may delegate

establishment and execution of its QA program to contractors, the licensee

is still responsible for it. Both this Ford Amendment alternative and the

study's recommendations are consistent with this criterion. See discussion of this alternative in Chapter 2.

10.2.3 Section 13(b)(3): Evaluations by Organizations of Professionals

Which are More Effective Than Those Currently Performed

Comment Commenter *

(1) The NRC should establish a requirement similar to I other

ASME "N" Stamp for electrical equipment and eliminate

utility audits.

Response: The American Society of Mechanical Engineers (ASME) "N" stamp

program was initiated and implemented by the nuclear industry and was not

an NRC requirement. If any other professional association wants to

implement such a program, the NRC could participate in its development

*For abbreviations and codes used to identify commenters, see Section 10.2.

10-8
and consider endorsing such a program through a regulatory guide or its

regulations, as the NRC has done for the Boiler and Pressure Vessel Code.

It is NRC policy to adopt national consensus standards wherever possible

and to the greatest extent possible.

(2) QA programs should have independent review groups 1 P.C.

whose overview would constitute independent design

review.

Response: The study analysis of alternatives 13(b)(3) and (b)(5) and the

conduct of the pilot program found that periodic independent audits of

construction projects, of which QA would be one aspect examined, would

be useful and would assist the NRC, as well as the licensee, in establishing an assurance of quality in the design and construction of the nuclear

power plant. In the regulatory analysis preceding implementation of such

a regulatory requirement, the NRC will consider establishing procedures

and criteria that will allow certain of these independent audits to also

serve the purpose of independent design review.

(3) Independent audits should be conducted at set stages 1 P.O.

of construction completion, such as 25%, 50%, and 75%.

Response: The recommendation for an independent review mentioned in the

response to Comment 2 above would be conducted at predetermined stages

throughout construction. The stages may be based on percent of plant

construction and/or time (years). The study recommends that the independent reviews should occur about every two years. See Chapters 2 and 4.

(4) The independent auditing group should be selected by 1 P.O.

jurisdictional authority or by the NRC, not by the

utility.

Response: If independent audits are established through NRC regulation,

it is anticipated that the auditors would have to meet criteria established by the NRC and would have to be approved by the NRC. However, the

option of the utility to freely select and contract with an acceptable

auditor should be preserved.

(5) The NRC should require independent audits that are 1 C.0.

based on the Preliminary Safety Analysis Report (PSAR).

Respgnse: PSAR commitments that are not conditions of the construction

permit currently are not enforceable. Chapter 6 addresses this problem

and recommends that certain PSAR commitments should be made conditions of

future construction permits. These commitments could then be included in

the scope of coverage for the independent audits.

(6) INPO is a professional organization that 4 utilities

already provides such audits. 1 other

1 P.O.

10-9
Response: Study staff observation and reviews of INPO evaluations have

revealed areas that would need to be altered before the NRC could accept

the results of INPO evaluations as part of the NRC inspection process.

However, as noted under 10.2.2, Comment 4, assumption of such a quasiregulatory role by INPO would damage INPO's ability to act as the

industry's medium for improving and seeking excellence in industry

performance. This study concluded that this loss would be irreplaceable,

whereas the independent audit function can be performed by many organizations. See discussion of INPO in Chapters 2 and 6.

(7) INPO, the ASME, and the National Board 2 P.O.

are organizations of professionals that 1 other

already provide evaluations. 1 utility

Response: The study has interpreted this alternative [Alternative b(3)]

to represent Congress' desire to examine whether audits currently

performed by the above-mentioned organizations or other professional

associations could be expanded, thereby increasing their effectiveness.

In its review, including polling of the organizations, the study found

that only INPO evaluations covered more than one professional discipline.

Although all of these programs were capable of expansion within that

discipline, and the NRC would welcome their doing so, the INPO program was

studied most extensively because of its wide scope and closest correspondence to what the study believed to be Congressional intent of

Alternative b(3). Therefore, the study did not believe that the abovelisted organizations already provided the evaluations that Congress

had envisioned. See Chapter 6.

(8) An additional layer of inspection will not solve the I utility

industry's quality problems.

Response: The study agrees. The focus should be on better inspections,

not on more inspections. The pilot program study demonstrated that the

independent audits were not an additional layer of inspection but provided

inspection coverage in areas such as design, for which little inspection

has been accomplished in the past. The independent audits were also shown

to be an augmentation of NRC's regular inspection program rather than an

additional layer. The independent audits would allow NRC to expand its

current areas of inspections without a commensurate increase in NRC staff

and would allow the NRC more flexibility in prioritizing its inspection

effort to areas that appear to warrant increased coverage.

(9) There are too many yearly audits of component suppliers 1 other

already. The ratio of product costs to audit costs is

way out of line. Audit frequency should be a function of

product complexity.

Response: The study agrees that inspections and audits should be a

function of project/product complexity. NRC has initiated two separate

research projects directed toward developing greater guidance for acceptable ways to implement a QA program whose requirements are commensurate

with the product's safety significance. This area has not received the

attention it should have received in the past and is now a priority

research effort. See Chapters 2 and 7.

10-10
10.2.4 Section 13(b)(4): Improvements to NRC's Programs, Methods and

Organization

Comment Commenter *

(1) NRC puts too much emphasis on procedures and docu- 3 P.C., 2 C.O.

mentation and not enough on implementation and 2 P.O.

product quality. 2 other

1 utility

Response: The study found that this has been a significant shortcoming in

the NRC inspection program, The NRC has started to shift emphasis of

the inspection program away from the QA process and documentation, and

toward implementation and product quality. This subject is covered in

considerable detail in the report (especially Chapters 2 and 7). The

large number of comments in this area made it of particular concern during

the conduct of the study.

(2) Although serious problems have been overlooked 1 utility

under current NRC programs, existing programs 1 C.O.

can be effective. The NRC should concentrate

on enforcing existing programs.

Response: NRC's existing programs have not detected some problems at a

sufficiently early stage. Considerable effort was devoted during the

conduct of this study to determine if quality-related problems in design

and construction were due to a basic, fault in the NRC licensing and

inspection programs or to licensee's implementation of the programs. The

study concluded that the problem has been in both rather than a basic

fault in either program. This study outlines a course of action intended

to strengthen each area. See Chapters 2, 3, and 7.

(3) NRC should inspect both safety-related and 1 P.C.

nonsafety-related work. 2 C.O.

Response: The NRC currently has research efforts under way to address

whether a change is required in NRC's methods for selecting

which structures, systems, and components should be inspected and the

appropriate quality assurance measures that should be applied. The

research is directed toward providing better guidance on the prioritization of quality assurance measures to be applied to structures, systems,

and components that are considered either "safety-related" or "important

to safety". This is a priority issue and more guidance should be

available when research is complete. See Chapters 2 and 7.

(4) The NRC has not exercised sufficient control to prevent 3 P.C.

danger to public health and safety by assuring quality 5 C.O.

of plant design and construction. The NRC should

increase the number of resident inspectors to 20-30 per

site and should be responsible for plant quality.

*For abbreviations and codes used to identify commenters, see Section 10.2.

10-11
Response: Having the NRC directly responsible for plant quality rather than

the licensee would represent a fundamental change from the private ownership and responsibility course the U.S. embarked on in 1954. Such a

change would represent a fundamental change in this country's public

policy and in NRC's regulatory policy and would require legislative

changes, as well as a substantial increase in Congressionally authorized

funding and personnel limits. As this comment correctly observes, such

change would require very significant increases in the numbers of NRC

imispectors. It is doubted that even 20-30 per site would be enough. The

study does not conclude that current circumstances warrant such a

fundamental change.

(5) NRC fines are hidden in future rate increases 1 P.C.

and therefore are not an incentive for improved 1 C.O.

performance.

Response: Most Public Utility Commissions (PUCs) do not allow fines to be

passed through to the ratepayer. However, this study did examine the

effects of state PUCs on the NRC mission. This study concluded that some

PUC actions have had a previously unappreciated impact on NRC's mission

and are likely to have a different but equally significant impact in the

future. This area is discussed in Chapter 8 and Appendix C. Further

study is under way.

(6) The NRC does not properly investigate or evaluate 2 C.O.

allegations.

Response: The NRC has included additional resources in its budget for

investigating allegations and has formed a new Office of Investigations to

handle many of the allegations received. Also, in 1982, the NRC developed

a computerized tracking system to track the receipt and disposition of all

allegations received by the NRC to ensure their proper treatment. Use of

third-party audits for increased coverage of NRC's regular inspection

program is expected to allow more staff time for reactive inspections such

as those arising from allegations.

(7) The NRC should use statistically based sampling IP.C.

techniques. 1 C.O.

Response: Statistically based sampling techniques are used when it is

not possible to inspect all of or a substantial part of some activity.

A licensee's QA/QC programs essentially provide for 100% inspection

coverage of safety-related structures, systems and components, so a

"sampling" process is not applicable to the licensee's QA/QC process.

Because the NRC is not responsible for direct inspection, as is the

licensee, but for auditing the licensee's compliance with the QA/QC

program, the NRC performs only a very limited sampling of the licensee's

efforts. Current estimates are that the NRC directly verifies no more

than 1 to 2% of a licensee's activities. A sampling of such small size

does not lend itself well to a statistically derived process.

10-12
For direct NRC inspection, the NRC inspection program has historically

used engineering judgment to select items that best indicate the total

process or that will have the greatest impact on plant safety. Also, the

NRC wants to hear any allegations of improper practices from plant

workers. The NRC inspection program continues to be based on the belief

that the application of engineering judgment is superior to a mechanistic

sampling technique. However, the study concludes that NRC's methods for

implementing engneering Judgment should be improved, .. and research is

under way to improve current methods for classifying structures, systems

and components according to their safety significance. See Chapter 2 and

Section.7.4.

(8) NRC inspectors are technical specialists with little 1 utility

QA knowledge and have problems relating findings to 1 P.O.

QA program weaknesses.

Response: This comment highlights a finding of this report.. Inspectors

require technical training in QA, just as technical training is required

in other technical and scientific fields. In 1983 the NRC instituted

formal QA training courses for its inspectors in construction, operations,

and modifications. This study has identified additional topics that

appear to be needed for inspector training, including improving inspector

and supervisor skills in relating inspection findings to QA program

weaknesses and project management shortcomings. The study believes that a

technical specialist appropriately trained in QA and management disciplines can be more effective for NRC inspection purposes than a QA

professional without appropriate specialty training. See Chapters 2 and 7.

10.2.5 Section 13(b)(5): Audits by Third-Party Independent Inspectors

Comment Commenter *

(1) Independent inspectors should be independent of 2 P.C.

the nuclear industry, not just the utility, to 2 C.O.

avoid conflict of interest.

Response: Independent inspectors must have the necessary qualifications

to perform the audit. The best qualified personnel would be those 4ith

nuclear industry experience. The study recommends that the NRC establish

criteria that include measures of the objectivity of the independent

inspectors. See Chapters 2 and 4.

(2) Independent auditors and QA personnel should report 2 P.C.

to the NRC Resident Inspector. 1 C.O.

Response: The NRC should not assume the licensee's responsibility for

quality of construction. The study recommends that the NRC review the

efforts and results of the proposed independent audits. If the NRC were

not satisfied with the independent audit, appropriate actions would have

to be taken.

*For abbreviations and codes used to identify commenters, see Section 10.2.

10-13
(3) The NRC should increase the use of independent 2 C.O.

inspectors. 2 P.C.

Response: As noted under the comments for 13(b)(3) (Section 10.2.3) and

the above comments, the study has found that independent auditors/inspectors

can be a useful addition to NRC's program for assurance of quality and

recommends their use be increased.

(4) More independent inspectors will not solve the 1 P.O.

problem of poor quality and quality assurance 1 utility

in the nuclear industry.

Response: It is not necessarily a question of more or fewer inspectors,

bu-thow resources are used. A major finding of this study has been that

some utility managements have not implemented an effective QA/QC program.

Where this lack of implementation has resulted from a lack of commitment

to an effective QA/QC program, the study agrees that more inspectors will

not solve the problem of poor QA/QC in the nuclear industry. Whatever the

case, the NRC must be capable of detecting that a QA/QC program is not

being effectively implemented. Given NRC's current inspection resources

and increasing reactive inspection workload, its detection capability is

questionable. This problem becomes particularly evident when it appears

that team inspections must be increased to solve the "threshold" problem.

Use of independent inspectors to augment NRC's regular inspection program

is considered to be the most feasible way to address this problem. Until

a third-party program can be put in place, the study recommends an

expanded Construction Appraisal Team (CAT) program. See Chapters 2 and 7.

(5) INPO programs provide sufficient independent 2 utilities

inspectors. 2 other

Response: See response to Comment 6 under 13(b)(3) (Section 10.2.3) and

Comment 4 under 13(b)(2) (Section 10.2.2).

(6) INPO,.ASME, and the NRC currently provide sufficient 3 utilities

independent inspectors.

Response: See response to Comment 7 under 13(b)(3) (Section 10.2.3) and

response to Comment 4 in this section.

10.2.6 Section 13(c): Pilot Programs

Comment Commenter *

(1) Pilot programs are of questionable value because 1 other

people provide quality and people at each site are

different.

*For abbreviations and codes used to identify commenters, see Section 10.2.,

10-14
Response: The study agrees that qualified, capable people are crucial to

achieving quality. One of the major points that the case studies found

to be important was the quality of the people associated with the project,

particularly the management. One of the major differences between

apparently successful projects and unsuccessful projects was the capability and experience of a few key members of management and their

commitment to and knowledge of achieving quality in construction. The

pilot programs were intended to test the concept of using independent

auditors as part of NRC's process of confirming that licensees have

implemented an effective QA/QC program. As a test of the concept, the

pilot programs were of considerable value. As would be expected in any

test program, strengths and weaknesses of individuals and organizations

resulted in differences among the pilot programs, but the test of the

concept was successful.

As a result of the pilot programs, the study concluded that independent

audits are a useful addition to the NRC program and that guidelines for

what constitutes an effective audit can be developed. See Chapters 2, 3,

and 4.

(2) A few revoked construction permits (CPs) would do I C.O.

more to emphasize quality than any pilot program.

Response: The NRC is required by law to issue licenses to qualified

applicants, and it cannot arbitrarily revoke CPs for deficiencies or

violations without giving the licenseee an opportunity to correct

deficiencies and to conform to requirements. If a licensee is willing to

upgrade QA/QC efforts to correct deficiencies so that the NRC's minimum

criteria are met, there is no reason to revoke a CP. If the NRC's

criteria are not met, the plant should not be issued a CP at the outset,

and, if criteria are consistently not met after the the CP is issued, then

revoking or suspending a CP may be the correct action.

(3) Midland, Zimmer, South Texas and Diablo Canyon 1 P.C.

should be included in the pilot program. 1 C.O.

Response: The Midland, South Texas, and Marble Hill projects were

included in the pilot program. An independent audit of Zimmer was

incorporated in the case studies, and Diablo Canyon was examined in the

case studies. See Chapters 3 and 4.

(4) The pilot program-emphasis should be on quality 1 other

control, including training and qualification.

Response: NRC's evaluation of the pilot programs puts great emphasis on

the licensee's quality assurance program, including the quality control

portion. Training and qualifications of quality control inspectors have

been identified as areas of special NRC concern, and research is currently

under way to assess the nature and extent of problems in these areas for

possible NRC action. See Section 7.4. While training and certification

of quality control inspectors are obviously of great importance to the NRC,

10-15
the pilot programs were not viewed as the most effective place to solve

the many questions that have arisen in this area, so they were not the

area of greatest emphasis.

10.2.7 General Comments

Comment Commenter *

(1) The study should recognize that three interrelated 1 utility

parties are responsible for assuring quality and

reliability: (a) owner/licensee, (b) A/E, constructor,

contractors, labor unions, vendors, and (c) the NRC.

Response: The owner/licensee is ultimately responsible for assuring

quality and reliability of the plant. The A/E, constructor, contractors,

labor unions and vendors are responsible to the licensee to the extent

that the owner delegated responsibility. However, ultimate responsibility, even though delegated, is retained by the licensee. The NRC is

responsible for the health and safety of the public. The NRC attitude

in the past has been that if the licensee has not fulfilled its responsibility for building a safe plant, the NRC can still fulfill its responsibility by denying an operating license. Rather than passively relying on

the possibility of such a strong action after a plant is essentially

complete, the study has recommended a more active ongoing NRC program for

ensuring quality in design and construction aimed first at prevention and

second at detection. See Chapter 2.

(2) Quality is not bad at all nuclear plants. 1 utility

Excessive emphasis has been placed on a

few bad examples.

Response: The study agrees that quality is not bad at all plants. NRC's

programs set minimum standards for all plants. Plants that cannot meet

those standards should receive additional emphasis as is required.

Plants that have experienced general breakdowns of their quality assurance programs should receive even greater NRC inspection and enforcement

attention. This attention is necessary for NRC to fulfill its responsibility to protect public health and safety, and it is not believed that

this emphasis has been excessive. See Chapter 3.

(3) Quality would be better served by assuring competence 1 other

of doers rather than overemphasis on competence of the

verifier. The NRC should require certification of

management, designers, field engineers, and others.

Response: The study agrees that both the doer and the verifier have to be

qualified to produce and assure quality work. For example, the NRC staff

*For abbreviations and codes used to identify commenters, see Section 10.2.

10-16
is currently working to establish a positive method of welder identification to ensure that only welders who have passed the qualification

criteria actually perform the work. The staff is also working to

establish revised standards for qualification of nondestructive examination personnel. Other such areas will also be examined. The study does

not recommend establishing criteria for individual management positions or

for the licensing of individual managers. However, this study has

indicated that the NRC should develop criteria to evaluate the "management

team". This area will receive much greater NRC attention in the future.

See Sections 7.4.3 and 7.4.4.

(4) The Federal Register Notice did not contain specific

proposals. These should be commented on, not just the

Ford Amendment. The NRC should publish preliminary

results of studies after 9-12 months for public

comment.

I utility

1 C.0.

Response: Because of the relatively short time available to prepare the

report for Congress (15 months), time was not available to publish

preliminary findings for public comment. Also in the interests of time,

NRC elected to request public comments at the beginning of the study so

that the comments could be used in devising the study plan. The NRC did

not want to develop a study plan and discover, through the public comment

process, that-a significant item had been missed but could not be added

because of time. The eventual study plan was presented at a public meeting

of an ACRS Subcommittee in July 1983. To provide a broad range of expert

advice and guidance in conducting the study, a review group of distinguished

professionals from outside the NRC was established. See discussion of the

review group and individual members' comments in Section 10.4.

(5) The NRC should provide incentive programs for

craft workers to improve quality.

1 utility

Response: Although the study

have the potential to improve

should mandate by regulation.

programs if they so desire.

agrees that incentive programs for craftsmen

quality, they are not something the NRC

Licensees may elect to use incentive

(6) The NRC should require a greater degree of mandatory

personnel qualification and requalification than

is presently the case.

1 Utility

Response: See response to Comment 4 under Pilot Programs (Section 10.2.6)

and response to Comment 5 above. Also see Section 7.4.

(7) All personnel from management down to craft

workers should receive training in quality.

1 utility

Response: The study agrees. Training in the areas of quality, QA, and QC

is important to foster a better understanding of how quality programs can

benefit all involved, from managers to craftsmen. INPO is currently

conducting periodic seminars covering these subject areas for senior

utility management. NRC senior staff have participated and should

10-17
continue to participate in these seminars. The study recommends more

training in quality for NRC staff. See Chapters 2 and 7.

(8) Quality assurance would be improved if the 1 other

industry's attitude were improved.

Response: The study agrees. See the response to Comment 1 under

Pilot Programs (Section 10.2.6), and Comments 3 and 7, above. See also

Section 2.5.

(9) QA/QC is not always effectively used 1 other

as a tool by management.

Response: The study agrees. The case study analyses (Chapter 3) of

nuclear power plants under construction examined the premise advanced by

this comment in great detail and give examples where QA/QC was used

effectively as a management tool and where it was not. The study has

proposed revisions in NRC programs to correct this deficiency. See

Section 2.4.1.

(10) The Congressional Amendment doesn't provide enough 1 other

guidance. Studies are being undertaken without

identifying the problem they are supposed to

study.

Response: The study does not agree. The study understands the problem to

bea search for improved ways to ensure the achievement of quality in the

design and construction of commercial nuclear power plants. The study

activity resulting from the Ford Amendment was designed to identify the

root causes of cases of both poor and good design and construction quality

and to devise programs that would provide greater assurance that achieved

design and construction quality is at least equal to NRC's mininum

requirements.

10.3 ACRS COMMENTS

The ACRS Subcommittee on Quality and Quality Assurance in Design and Construction was briefed twice in open meetings by the NRC staff on the Ford

Amendment project, the study approach and preliminary results. These

briefings, which took place on July 18, 1983, and December 6, 1983, were

announced in advance in the Federal Register and were attended by members of

the public.

In addit'ion, the ACRS Subcommittee reviewed and commented on an earlier

revision of this report. They provided oral comments to the NRC in a closed

briefing on February 24, 1984. The comments have been incorporated into this

report at the end of this chaper. The full ACRS reviewed an earlier version of

this report and was briefed on the study findings and recommendations in a

open briefing on March 15, 1984. The text of the ACRS letter to the NRC

Commissioners regarding this report follows.

10-18
UNITED STATES

NUCLEAR REGULATORY COMMISSION

z ADVISORY COMMITTEE ON REACTOR SAFEGUARDS

WASH4INGTON, D. C. 2065

March 21, 1984

The Honorable Nunzio J. Palladino

Chal man

U.S. Nuclear Regulatory Commnission

Washington, D.C. 20555

Dear Dr. Palladino:

SUBJECT: ACRS REPORT ON DRAFT NRC REPORT TO CONGRESS ON IMPROVING

QUALITY AND THE ASSURANCE OF QUALITY IN.THE DESIGN AND

CONSTRUCTION OF COMMERCIAL NUCLEAR POWER PLANTS

During its 287th meeting, March 15-17, 1984, the Advisory Commiittee on

Reactor Safeguards reviewed the draft NRC report to Congress, "Improving

Quality and the Assurance of Quality in the Design and Construction of

Commercial Nuclear Power Plants," Revision 3, dated March 13, 1984.

An earlier version of the draft report was considered during a meeting

of the ACRS Subcommittee on Quality and Quality Assurance in Design and

Construction held in Washington, D.C. on February 24, 1984. In addition, the Subcommittee reviewed and discussed the NRC's quality-related

initiatives during meetings held on July 18, 1983 and December 6, 1983.

The report is both useful and constructive. It gives thoughtful attention to the five alternatives which the Commission was required to

consider under Section 13(b) of the Ford Amendment (Public Law 97-415)

and reaches well-reasoned conclusions on each. Further, the results of

the pilot program mandated under Section 13(c) of the Ford Amendment

substantiate the conclusion that comprehensive audits of nuclear construction projects by qualified third parties can provide significant

additional preventive and detection capability as well as enhanced

assurance that nuclear plants are built in accordance with their design

and licensing commitments. The report is candid in conceding errors of

omission or commission on the part of the NRC which have contributed to

quality assurance deficiencies in the past.

During the Subcommittee's early review of the study, it suggested that

the Commission take advantage of the opportunity presented by Congress

and expand the scope of the study to address issues beyond those mandated. We are pleased that the report provides a more comprehensive

picture of the Commission's actions and initiatives.

Although the report is well written, it is voluminous and repetitious.

A concise executive summary would improve the report. Thi s can be

accomplished without delaying the submission of the report to Congress.

The lessons learned from past problems in the design and construction of

commercial nuclear power plants are described. As indicated in the

report, little is said about the operation of plants although many of

10-19
Honorable Nunzio J. Palladino 2 - March 21, 1984

the same observations and lessons should apply. Many of the problems

described relate to the inability, or the difficulty, of assuring the

quality of some plants as a result of shortcomings in quality assurance

aqd/or quality control programs during design and construction. Not

addressed is whether the QA/QC shortcomings had an effect on quality or

had significant effect on public safety/risk.

The distinctions among quality, quality assurance and quality control,

and their relationship to public safety/risk are, at times, not made

clear in the report. This is compounded by the NRC's continued inability to clearly identify those systems and components for which quality is

essential to public safety and thus for which programs to control and to

assure quality are necessary. Probabilistic risk assessments (PRAs)

could help in this regard. We encourage the NRC to expedite the collection of the data necessary to clarify these issues.

Further, although recommendations are based on the findings of the case

studies, pilot programs, and other initiatives, it is not clear whether

their implementation will actually improve quality or enhance public

safety or whether they will merely improve the public's perception of

safety. We recommend that the NRC Staff undertake to determine the

relative risk significance of the various recommendations and proposed

actions as well as determine whether safety would be enhanced by the

proposed actions. The NRC should then concentrate its efforts on

actions which will enhance public safety.

The report does not contain priorities or schedules for further development of the various recommendations or proposed actions. We believe

that the NRC Staff needs to develop more specific recommendations

following the submission of the report to Congress. We recommend that

in forwarding this report to Congress, the Commission make clear its

intention to develop a plan for achieving the assurance of quality in

the design, construction, and operation of nuclear power plants.

However, we caution that the development of a program plan should not be

allowed to interfere with proceeding expeditiously with those actions

found to improve public safety significantly.

The NRC Staff has identified management as a major factor affecting the

success or failure in assuring the quality and safety of nuclear power

plants. While we agree that a poor quality assurance program is an

indication of poor management, an apparently good quality assurance

program does not necessarily imply the presence of good management. We

see the need for an organizationally independent quality assurance

department that reports to senior management; however, we fear that the

emphasis on independence has in some cases led to the belief that the

assurance of quality is someone else's responsibility. To assure

quality and public safety, a strong sense of the need for and the

benefits from quality, the assurance of quality, and professionalism

should permeate a licensee's and/or a vendor's entire organization. The

10-20
A Lý

Honorable Nunzio J. Palladino - 3 - March 21, 1984

NRC should continue its efforts to stimulate this kind of professionalism in the nuclear industry.

One of the recommendations from the management analysis conducted by

N. C. Kist & Associates, Inc. is to establish a quality assurance

program within the NRC. Although noted in passing in the report, it

remains a fallow recommendation. The report does contain a recommendation for performance audits of NRC QA activities. However, we believe

that the relationship between QA and prudent management, as discussed in

Section 3.5 of the report and in this letter above, is equally applicable to the entire NRC. Therefore, we suggest that the Commission give

prompt and careful consideration to the recommendation that the NRC

establish a program to assure the quality of its activities. We do not

believe, however, that a formal QA program is necessary or desirable.

The recommendation that the NRC establish a body of experts to advise

the Commission on the capability of applicants to effectively manage a

nuclear construction project is worthy of further consideration. The

ACRS currently does not contain extensive expertise of the types envisioned for the proposed advisory body, and to establish such expertise

within the ACRS membership might sacrifice other requisite expertise.

The report has also recommended that future construction permits be

conditioned on a demonstration of the licensee's continuing ability to

effectively manage the project. Those responsible for the development

of these recommendations should consider the difficulties associated

with judging such-management capabilities.

The ACRS supports the NRC Staff's shift ir inspection emphasis from

looking at the content of quality assurance plans to looking at actual

plant quality and at-the implementation and effectiveness of programs to

assure quality. However, we believe that the NRC Staff will experience

difficulties implementing the modified inspection program until performance criteria are established.

Useful insights have been obtained from Integrated Design Inspections

(IDIs), Independent Design Verification Programs (IDVPs), and Construction Appraisal Team (CAT) inspections. We recommend that for the

present these inspection programs continue.

The concept of using designated representatives is worthy of further

consideration. In addition to augmenting NRC resources, it may be a way

of stimulating and rewarding professionalism and dedication to quality

in the workplace. We would like to be kept apprised of the NRC Staff's

efforts regarding the designated representative concept and other QA

initiatives, and we would appreciate the opportunity to comment on them

at a later date.

10-21
Honorable Nunzio J. Palladino -4 - March 21, 1984

Additional comments by ACRS Member Glenn A. Reed are presented below.

Sincerely,

Jesse C. Ebersole

Chairman

Additional Comments by ACRS Member Glenn A. Reed

I consider the report to Congress to be deficient in its study of

Alternative b(4), and I am concerned that Congress may continue endorsing regulatory approaches that are too similar in many ways to those

that have in the past proved ineffective. I concur with this ACRS

report concerning the above referenced report to Congress in most

aspects, but in my opinion it does not go far enough, and is not critical enough with respect to the following:

1. The ACRS report states that the report to Congress "gives thoughtful attention to the five alternatives .... " I disagree that

thoughtful or appropriate in-depth attention was given toAlternative b(4), which addresses improvements in the NRC's organization,

methods, and programs for quality assurance.

2. The report to Congress recommends that a body of experts be established to advise the Commission on an applicant's management

capabilities. The ACRS report states that this recommendation is

worthy of further consideration. I disagree, and do not feel such

expertise, with the time and objectivity, could be constituted to

undertake this activity. Further, I disagree that such a body of

experts is even desirable or necessary if a more astute study of

Alternative b(4) is made.

3 What the ACRS report does not address, or recommend, is more

in-depth consideration of the NRC's organizational structure, and

what obstacles this present structure may place in the path of

achieving quality in design and construction. The present NRC

structure does not motivate professionalism and craftsmanship in

the workplace. In my opinion, high quality can only be achieved by

the enthusiastic and dedicated action of real professionals and

crafts people who are motivated to standards of excellence by a

regulatory structure that better recognizes human factors. I am

aware of and have read an NRC Staff report which addresses the FAA

designated representative (DR) system. In my opinion, the report

to Congress should not have glossed over the FAA's DR program, but

should have included a detailed study of that system and its

potential for correcting the adversarial climate that is growing in

the nuclear workplace. Given the current structures of the nuclear

10-22
Honorable Nunzio J. Palladino -5 - March 21, 1984

industry and the NRC, the genuine professionals and crafts people

are somewhat overwhelmed by top brass and regulations, yet the

answers for real quality in this highly technical nuclear industry

lie with those professionals.

In my opinion, the achievement of a high degree of design and

construction quality can come from a modified version of the FAA

system of DRs in design and architect-engineer organizations and in

manufacturer and constructor shops. I would consider it appropriate for these DRs to be nominated by their peers, approved by

their employers and perhaps the NRC, then established in a quasi- regulatory role while continuing their regular duties. Along

similar lines, the NRC might consider structuring some licensed

personnel in nuclear power plants into a DR system somewhat similar

to the way in which the Massachusetts Department of Public Safety

has incorporated licensed operating engineers into its regulatory

structure.

References:

1. Public Law 97-415, NRC Authorization Act for Fiscal Years 1982 and

1983, Section 13 on Quality Assurance, dated January 4, 1983.

2. Draft NRC report to Congress, "Improving Quality and the Assurance

of Quality in the Design and Construction of Commercial Nuclear

Power Plants," Revision 3, dated March 13, 1984.

10-23

10.4 REVIEW GROUP

Expert review of the NRC study on quality assurance was provided by the

individuals listed below. Two day meetings were held with NRC staff in June

and September 1983 to provide comments on efforts to date and to help provide

direction to future work. A third meeting was held in January 1984 to review

the tentative conclusions and recommendations.

The meeting format was used as the most efficient way of informing the

individuals of the information that was available and of receiving their oral

comments. Individual comments were formally provided by individual members

after each briefing. All of these individual comments were used to help guide

the conduct of the study.

" Fred Albaugh

Chairman

O John Amaral

" Spencer Bush

" Thomas Cochran

" George Coulbourn

Independent Consultant, Past Director, Battelle

Pacific Northwest Laboratories. Manhattan Project. GE.

Corporate Manager of Quality Assurance, Bechtel

Power Corporation. Former Chairman, Energy

Division, American Society for Quality Control.

Consultant, Review and Synthesis Associates. Former

Consultant, Battelle, Pacific Northwest Laboratories.

Member, Advisory Committee on Reactor Safeguards,

1966-77 (Chairman 1971). Manhattan Project.

Senior Staff Scientist, Natural Resources Defense Council.

Director, Nuclear Power Systems, Boeing.

Former Vice-President, Boeing Construction.

Former Construction Manager, Indian Point #3.

0 John Gray Chairman, International

Chairman, Energy Policy

of U.S. Former Manager,

Energy Associates Limited.

Committee, Atlantic Council

Shippingport. GE, Westinghouse.

O John Hansel

o Robert V. Laney

o Leland Bohl

Independent Consultant. Former Project Manager,

Gaseous Centrifuge Enrichment Plant, System

Development Corporation. Former Director,

Quality Assurance, Apollo Spacecraft, Space Shuttle

Orbiter, and Launch Operations. President-Elect,

American Society for Quality Control.

Independent Consultant. Retired Deputy Director,

Argonne National Laboratory. Project Manager,

Seawolf prototype. Bettis Laboratory. Former

Vice-President, General Dynamics.

Manager, Quality Assurance and Reliability, General

Electric Nuclear Energy Group.

10-25
10.4.1 Review Group Comments on this Report

An earlier version of this report was reviewed by the members of the review

group in a meeting with NRC staff on January 10-11, 1984. Each of the review

group members provided oral comments on the report during the meeting. Six of

the nine review group members also provided written comments. The report was

revised to reflect many of the comments offered, both oral and written. The

written comments follow.

10-26
POST MEETING

COMMENTARIES

OF

GROUP MEMBERS

THIRD REVIEW GROUP MEETING

JANUARY 11-12, 1984

10-27

0,,. Baflelle

Pacific Northwest Laboratories

P.O. Box 999

Richland, Washington U.S.A. 99352

Telephone (509) 375-2575

January 16, 1984 Telex 15-2874

Dr. W. D. Altman, Project Manager

Special Study on Nuclear QA

U.S. Nuclear Regulatory Commission

Washington, D.C. 20555

COMMENTS ON DRAFT REPORT - "IMPROVING QUALITY AND THE

ASSURANCE OF QUALITY IN THE DESIGN AND CONSTRUCTION OF

COMMERCIAL NUCLEAR POWER PLANTS"

These written comments will supplement the discussion and critique of

the subject draft report which took place at the meeting of the NRC's

QA Program Review Group in San Francisco on January 11 and 12. It does

not seem useful or practical at this point to attemDt line-by-line

correction, but general comments will be made on the study as a whole

and on a number of topical items.

The report is, in this reviewer's opinion, a good report which, if

vigorously implemented, could substantially improve the regulation and

practice of assurance of quality of commercial power reactors. It is

responsive to the directives of Public Law 97-415 which mandated the

study. It reaches useful and generally unambiguous conclusions on which

of a number of possible measures to improve quality are likely to improve

assurance of quality and which are not likely to. It is, for the most

part, refreshingly candid in conceding errors of omission or commission

on the part of NRC that have contributed to quality assurance deficiencies

of the past. At the same time, it does not overplay its hand by offering

solutions to matters which, even if relevant to quality concerns, are

clearly beyond the normal role of the Inspection and Enforcement Division

to recommend or decide. Finally, subject to a major rewrite of one

section, the draft reviewed on January 11 and 12 promised a well-reasoned

and well-written report.

1. Management Commitment to Quality

The conclusion that the foremost requirement for a quality

reactor project is that utility top management and its project

management team be fully committed to quality and knowledgeable

of the methods and discipline required to achieve it is one with

10-29
Dr. W. D. Altman

January 16, 1984

Page 2

which this reviewer completely agrees. Corollaries are that

CP's have undoubtedly been granted in the past that should

never have been granted, and that NRC should move diligently to

identify such cases, to ascertain their present commitment and

attitudes toward quality practices, and to bring about change as

needed by persuasion, peer pressures, education, use of regulatory

san'ctions for observed transgressions and other means. However,

this reviewer does not believe that NRC should have the authority

to revoke a license, once given, on suspicion alone with the burden

of proof placed upon the licensee to show that it should not be so.

This could too easily lead to abuse of regulatory authority

amounting to arbitrary confiscation of private property.

2. Audits and Inspections

A second major thrust of the study is that NRC enforcement of QA

regulations will in the future be based less on monitoring compliance

with approved prescriptive procedures and more on the results of

audits of design quality and construction quality to be conducted

by the licensee; by INPO, an industry organization; by NRC teams

and by independent third parties. This is a major improvement on

past practices, focusing as.it does, on actual end-results observed

in the field, rather than on mere statements of good intentions.

This panelist has one rLservation about the plan for augmented inspection effort. Will less critical time-consuming QA reporting

and test requirements imposed on licensees be eliminated or

modified to compensate, at least in part, for the extra time

required of the licensee in connection with the new and enlarged

audit program? To this observer the draft is ambiguous on this

matter and regulators are always more prone to add new regulations

than to eliminate old ones of marginal value.

3. Standardized Designs and Requirements for High Percentage Completion

of Design Before Construction

These two measures are closely related and both seek to avoid or

minimize the need for major changes in design criteria or QA

regulations after a project is underway. The record seems persuasive

that such changes invite quality problems, project delays and cost

overruns and the logic of this proposed requirement can scarcely be

questioned. However, it is also true that the degree to which

design criteria and regulations may be stabilized depends on the

depth of technical understanding of reactor systems and of reactor

health and safety hazards and also upon prevailing socio-political

attitudes toward nuclear power.

10-30
Dr. W. D. Altman

January 16, 1984

Page 3

Research and development studies, design development studies and

other relevant work is planned by NRC and the nuclear industry to

provide an improved basis for standardization and this is to be

commended. However, until these studies have provided the needed

information and NRC can thereby provide assurance against major

backfitting requirements no utility can be expected to commit the

funds needed for a complete design without the protection of a

Construction Permit in hand.

4. Development of a Prioritized System of QA Requirements

This a commendable program which inferentially acknowledges the

ad hoc or reactive nature of many QA regulatory practices of the

past and looks'to future development of systematic, objective

criteria to guide QA priorities and the extent of QA requirements.

Like 3) above, its success will depend upon results obtained in

safety studies, design studies and the general advancement of

technical understanding of reactor systems. The program is necessary

for a stable, long-range future of commercial nuclear power.

5. Adversarial Attitudes

It is the opinion'of this observer that adversarial attitudes that

have often prevailed between NRC and a licensee have substantially

contributed to quality problems by negating the possibility of

cooperative efforts to identify and solve problems of mutual concern

and for one of the two parties to understand and appreciate facets

of a problem peculiarly important to the other. Without belaboring

the origins of this situation, be it sufficient to say that it does

not have to be so. The report cites examples of cooperative yet

effective regulation in other nations and by other regulatory agencies

of the United States.

The QA report reviewed here chooses to say little about this issue

on the grounds that its effective correction is beyond the powers

of NRC/I&E to correct. Granted that this is true, the report does

offer an opportunity to call forceful attention to the issue, an

opportunity that should not be neglected.

6. More Prescriptive Regulation

The conclusion of the report that more prescriptive regulation is

not the key to elimination of quality problems is unequivocally

correct. No amount of prescribed QC testing, required procedures

and the like can ever eliminate the possibility of human error or

10-31
Dr. W. D. Altman

January 16, 1984

Page 4

random mechanical failure. Rather it is the role of the regulator

to set basic performance criteria and then to audit the licensee

and his work to assure that his organization, personnel, designs,

methods and procedures provide appropriate safeguards against

threats to public health and safety.

F. W. Albaugh

Review Group,

Special Study on Nuclear QA

cc: JA Christensen

.10-32
Review & Synthesis Associates

Spencer H. Bush, P.E. e 630 Cedar / Richland, Washington 99352

January 16, 1984

Mr. James A. Christensen

Battelle-Northwest

P. 0. Box 999

Richland, Washington 99352

Dear Jim:

COMMENTS ON DRAFT REPORT, "IMPROVING QUALITY AND THE ASSURANCE OF

QUALITY IN THE DESIGN AND CONSTRUCTION OF COMMERCIAL NUCLEAR POWER

PLANTS - A REPORT TO CONGRESS"

Executive Summary

I do not consider this an Executive Summary. It is a rearrangement, principally of Chapter 2 with most paragraphs lifted in toto.

To me, an Executive Summary is a terse overview of the significant

content of the entire report, with emphasis on conclusions and

recommendations.

P. 6, III.A

Basically, this action item says nothing will be done. If not,

say so succinctl-.

PP. 7-9, Re: Advisory Committee

I feel you would have a more viable committee if its scope were

broader and more vague. Also, I'm not so sure regarding the pro's

and con's of statutory vs. non-statutory.

P. 12, Line 4

This tends to look down on ASME/NB. I suggest replacing ",...and

that.... continued" with "and they provide a valuable and continuing contribution."

P. 13, D.

"...prior nuclear construction experience...in its.... (insert word)

P. 18, Top of Page

What does "in-house inspection process" mean?

Telephone: Business- (509) 375-2223 & 375-3749 / Home -(509) 943-0233

"u-"33
Mr. Christensen

January 16, 1984

Page 2

P. 24, IV.A

This is a very open-ended item entailing a great deal of effort and

it appears to be advanced with little or no justification.

Table of Contents

9) Other Agency and Foreign Quality Assurance Programs (not titles

of chapters).

P. 3, Chapter 1

Should Executive Summary mirror Item C, Compliance with the Pilot

Program, as being accomplished?

Chapter 2

Comme:nt. are prinmr1I, in tho Executive Summary heading uf this mero.

P. 37, 2.3.3.A

You use many words elsewhere to explain and justify a position.

Here, you casually suggest requirements that will cost millions.

If you wish to cite the movement of the NRC toward expanded use

PRA as a reason, I'll buy it.

Chapter 3

P. 3, 3.2

"....develop management criteria...". What does management indicate? Is it necessary? In the bottom two lines, "...having construction...."--do you mean QA/QC or construction or both?

Also, I'm not sure regarding your projection of management criteria;

e.g., experienced management. For example, Consumers Power/Midland.

(N.B. I agree experience is very important.)

P. 8, Top ¶, Last 6 Lines

I suggest deletion of Diablo. I doubt that any plant with a CP in

the same time frame and now operating could come through an in-depth

construction audit unscathed. I was there to approve an OL more

than ten years ago.

P. 9, Bottom

... quasiO...

P. 14, ¶15

I realize this is a quote. Even so, I doubt that it was just seismic criteria. I thought it was siting criteria.

10-34
Mr. Christensen

January 16, 1984

Page 3

P. 36

These comments tend to be snide. Why go out of your way to make

enemies?

Chapter 4

Much of this chapter could go-into an appendix, a la Appendix A.

Then you could highlight the important items.

PP. 1-3

Why do you flip back and forth between what's in this chapter and

what's in other chapters? This, in my estimation, should be done

in Chapter 1.

P. 5

"End-product" vs. ."process:' is not clear. Th.ls means diffezent thi:

to different people. Clarify.

P. 5, Bottom Item

You presume the PSAR's and FSAR's are O.K.--which isn't necessarily

the case.

P. 6, Third. Bullet

Wouldn't sequential sampling solve the scope problem?

P. 3, fliddle I

Fifteen percent doesn't sound like much; however, large sums are

committed in procurement, etc., that may not be recoverable.

P. 9, Item b

Unclear. I don't know what "reduced" and "promote" mean.

P. 20, Task D

Is concrete intended to be inside or outside ASME's scope? It will

be different.

Chapter 5, ¶1

The paragraph. is ambiguous. It talks of these activities not constituting audits, etc. If it still refers to ASME, it isn't true.

If it refers to other standards, it would be clearer if a paragraph

starts at "Applicable national standards ..... ".

Section 5.2.A, Last Line, il

"...and (to?) the nuclear industry..."? You might indicate that

10-35
Mr. Christensen

January 16, 1984

Page 4

the broad audits could take credit for the narrow (and deeper)

ASME/NB audits in the delimited areas permitting a better focus

elsewhere.

P. 5, Middle ¶

In line 1, "qualit(f?)y"?

Chapter 6

P. 3, 6.2

",..either the NRC or the Licensee." This is significant and could

be strengthened to emphasize that it is essential for both parties

to be severely constrained if this is to work.

P. 8, Last ¶

What existed was a difference in the PSAR versus design drawings.

This doesn't come through.

Chapter 7

A fairly tight chapter. No basic comments.

Chapters 8 and 9

No comments.

Chapter 10

Did not review.

General

There is a generic class of QC/QA breakdown that you have not

touched on. For example, the low toughness support problem in my

estimation has more true safety implications than several others

discussed. This represents a breakdown across utilities ratheg

than within utilities.

A concerted effort should be made to condense the body by deletion,

shifting to appendices, etc. The repetition tends to dilute and

results in a loss of focus.

In the Executive Summary, it would be helpful to tie items to

appropriate chapters, sections and pages.

The ultimate text would gain with a more definitive chapter structure (regarding headings, subheadings, sub-subheadings, etc.) with

numbers to identify headings.

The report or sections thereof would be in better focus by graphing

or placing in tabular format such items as chronology, interactions,

key actions, etc. 10-36
Mr. Christensen

January 16, 1984

Page 5

Please, at a minimum, cite by reference the program planned for

operating reactors. This will close the loop.

Incidentally, under 10.4, I'm not BMI-PNL. I'm Consultant, Review

& Synthesis Associates, ex-BMI-PNL.

Very truly yours,

Spencer H. Bush, P.E., Ph.D.

Consultant

REVIEW & SYNTHESIS ASSOCIATES

SHB:dp

cc: Dr. W. D. Altman, USIIRC/OI&E S

10-37

BOEING ENGINEERING COMPANY

P.O. Box 3707

Seattle, Washington 98124-2207

January 17, 1984

Mr. James A. Christensen

Battel le

Pacific Northwest Laboratories

P.O. Box 999

Richland, WA 99352

Dear Mr. Christensen:

I would again like to express my appreciation for the work done by Battelle in

arranging our third meeting. Whatever contribution we may have made was

enhanced by your efforts.

As this is expected to be my final report on the NRC QA analysis required by

the Ford Amendment, I have elected to provide several classes of comment.

First, specific comments on the draft information provided during the process

were provided verbally during our group review. These and other comments

specific to your draft are provided directly on the enclosed document by means

of marginal notes. Secondly, I have attached some general comments regarding

the form and substance of your draft report (Attachment 1). Finally, attached

are some more general thoughts concerning the current regulatory environment

which are of a somewhat broader perspective (Attachment 2), but directly

related to the scope of the study.

In retrospect, I feel that Congress has presented the NRC with an

extraordinary opportunity. My condensation of the charge under the Ford

Amendment takes the following form: "NRC, there has been a QA problem with

some current nuclear power plant construction projects. You appear to be part

of the problem. Examine the current organization relationships and practices

and recommend improvements." I consider this an extraordinary opportunity

because it provides a Congressional mandate for improvement; a convergence of

recognized need, and requisite action with high visibility and transcending

normal organizational inertia. I am hopeful that the NRC will respond with

the bold initiatives clearly needed to restore the fundamental promise of safe

and economical nuclear power to the nation.

Sincerely,

G. I. Coulbourn

Attachments

cc: W. D. Altman, NRC

10-39
ATTACHMENT 1

FORMAT AND SUBSTANCE FOR THE NRC RESPONSE UNDER THE FORD AMENDMENT

1. The final fore of the document should allow the reader to easily determine

what is being recommended. It should provide direction into the body of

the document to the findings and rationale behind the recommendations, to

allow further study, if desired, by the reader. Copious detail should be

placed in appendices.

2. An important portion of the Ford Amendement instructions involved

examination of the effect organization relationships had on the

achievement of quality. The draft document to date is weak addressing the

effectiveness of the NRC organization, especially as it relates to its

internal activities. It is also weak in analyzing the'manner in which the

various participants in the process organize, both to work with each

other, and to accomplish their own responsibilities. As the draft

document is currently written, it focuses primarily on two findings: (a)

that utility management is weak, and (b) that more and better inspections

are needed. As discussed elsewhere, the first is only one element of the

problem, and then only in certain instances. I am apprehensive that

failure to identify weaknesses in the NRC organization itself which impact

quality assurance may reduce the credibility of the report. At this

point, perhaps further study of the current organization structure is a

means of addressing the issue.

3. NRC should step back and assess the total impact of the summation of all

inspections, requests for information, and other technical and procedural

interfaces between NRC and the utilities. It is likely that even a

rudimentary cost-benefit analysis will disclose duplication and marginal

use of resources. The opportunity to integrate multiple instructions

should be examined prior to incorporating an additional overlay of

inspection.

10-40
ATTACHMENT 1, Page 2

4. It should be clearly stated that the NRC cannot and should not be expected

to achieve quality in design, construction, and operation directly. All

the NRC can do is assure that quality is achieved by others by selective

audit and followup. It appears that this fundamental precept is not

generally recognized by others not involved in the process.

5. Careful attention is needed in establishing the acceptance criteria before

third-party audits become a part of the overall process. There appears to

be a dichotomy between the experience needed and the independence desired.

For example, if a person has substantial experience in the nuclear power

industry, in some quartershe is suspect as not being independent. On the

other hand, one cannot expect competent inspection work to be performed by

people without substantial experience.

6. The term, "principal AE criteria," is used in several instances in the

document. This term is undefined and may not be clearly definable. If

that is the case, then meaningful regulatory requirements relating to the

definition of these criteria may be difficult to achieve. This appears to

need further investigation.

7. It was observed that NRC has operated on the assumption that industry was

uniformly competent, while considerable variation existed and the level of

competency was changing (both improving and deteriorating). It is

essential that NRC recognize that a variation in competence and approach

exists within the various utilities building and operating nuclear power

plants. It will clearly be counter-productive to the achievement of

quality and to the cost-effective production of electricity to require all

operating utilities to respond to the problems of the lowest common

demoninator. Selectivity will be a very difficult goal to achieve, but

should be adopted from the onset.

8. It was observed that some utilities do not appear to support quality

assurance because, for them, it is a cost item versus a cost savings or

management tool. If this allegation is correct, then it would seem to be

essential to determine why quality assurance in some instances is merely a

cost item versus a useful tool.

10-41
ATTACHMENT 1, Page 3

9. It is suggested that NRC management, n conducting its review of the fln;l

draft, critically assess the extent to which the method and manner of

implementation of the actions identified is described. In many instances

in earlier drafts, very attractive objectives and action items were

identified, but the text lacked a description of how they were to be

implemented. During the discussions of some of these action items,

concerns regarding the manner of implementation were raised and left

unanswe red.

10-42
ATTACHMENT 2

GENERAL OBSERVATIONS REGARDING THE CURRENT REGULATORY ENVIRONM•ENT

The laws of physics have not been repealed. The combination of relatively

abundant, low-cost fuel with no higher use and very low environmental impact

are inherent. The fundamental economic promise of nuclear power remains

available to any society with the determination to achieve it. However, the

manaqement process in the United States has allowed the development of a

regulatory environment wherein these benefits are currently no longer

available. It is unlikely that any domestic utility will consider ordering a

nuclear power plant so long as this environment persists. Following is my

assessment of the fundamental problems within the context of the Ford

Amendment study which appeared to warrant consideration.

1. Management of Change: There is a level of change action (technical,

regulatory, and procedural) beyond which any program management

structure can no longer prosecute its program. Utifity management has

consistently been faulted for quality assurance breakdowns. In some

instances, the charge is well fodnded. However, in most instances, I

believe the root cause is found in the circumstances which produced

rampant, uncontrolled change. I submit that most of the utility

management structures assembled to build the nuclear power plants of

the past decade could have performed adequately in a more stable

design and construction environment.

Accordingly, I recommend that NRC commission an examination of the

change management process itself, both within NRC and in the other

parts of the industry. This examination should focus on both the

management of change as a discipline (elsewhere called configuration

management) and upon the reduction of the volume of change. The latter

can have numerous constituents; for example, higher percent design

completion prior to start of construction, more restraint regarding

In-process change,'standardization, etc. All of these constituents

require disciplined and consistent management.

10-43
ATTACHMENT 2, Page 2

2. Signal-to-Noise R :10: The uncontrolled application of successive

overlays of requirments and procedures has evolved into a

data-management problem of major proportions. NRC can no longer

quickly and consistently isolate important information from the trivial

because of the mass of paperwork currently required. Frequently the

system forces the paper to become the product, such that the

correspondence between documentation and documented quality is lost.

This problem should be attacked from two perspectives. The volume of

extraneous data currently required must be reduced by selectively

culling that which is not clearly required. And, improved methods for

isolating important information at an early stage must be implemented.

I recommend that NRC commission an independent effort to examine these

two objectives. This cannot be accomplished from within the

organizations affected because of their limited perspectives and

organizational inertia.

3. Long-Range Plan: I question whether an organization such as NRC can

function effectively, lacking a comprehensive long-range plan. How can

staffing plans be formed? What skills will be needed, when, and where?

What levels? 'What are some of the technical and institutional trends

likely to impact NRC obligations a few years hence? How should they be

met?

At this time, a number of trends appear evident to me:

0 There will be no new plant orders for some time.

o There will be further cancellations.

o Plants which encountered serious design and construction quality

assurance will likely have difficulty in the operating phase.

The source term issue must be addressed and benefits

i ncorporated.

10-44
ATTACHMENT 2, Page 3

0 The PUC's role is in transition.

° Utility operating groups appear inevitable.

I recommend that NRC develop and maintain a long-range plan.

4. Misuse of the Regulatory Process: Congress has been unable to

establish and maintain a consistent energy policy for the nation. A

subset of this failure is the abandonment of policy regarding the

development and use of nuclear power. In the resulting void, the

nuclear regulatory process is being used by individuals and special

interest groups to formulate energy policy in accordance with their

interests. An obvious example is the public hearing and public comment

process. Public interaction processes are important and should be used

to inform and enhance safety, but not to set energy policy. These

conflicting uses create guarded, adversary relationships detrimental to

information exchange and inevitably impacting quality itself.

I recommend that a part of the NRC's response under the Ford Amendment

requirements suggest that Congress reexamine the fundamental role of

the NRC respecting nuclear power, in recognition of the manner in

which the regulatory process is currently being used. If a national

debate is desired, then it should be decoupled from the regulatory

process charged with preserving the health and safety of the public.

The mission of the NRC should be restated. The purposes, forms, and

mechanisms for the public interaction process should be clarified.

10-45

I NTERNATIONAL

ENERGY

ASSOCIATES

LIMITED

January 16, 1984

Dr. Willard D. Altman

Project Manager

Special Study of Nuclear Quality Assurance

Office of Inspection and Enforcement

Mail: EWS-305A

U.S. Nuclear Regulatory Commission

Washington, D.C. 20555

Dear Dr. Altman,

As requested, I return herewith copies of the draft documents which we

reviewed in San Francisco on January 10 and 11. 1 have not attempted

to duplicate the comments I made during the meeting, having confidence

in your capacity to glean from what was said by me and others which

thoughts you may care to use.

My reaction to the documents was, and is:

1. The Executive Summary needs to be rewritten in its entirety

and especially cries for up-front balance on the treatment of

NRC/Industry culpability and credit.

2. Chapters 1 through 10 presented a complete and thoughtful

analysis, findings, conclusions, and recommendations as well as

some background material. Substantively, with editing and

changes we discussed, you appear to have in hand a very useful

and constructive product. You are aware of the organization,

redundancy, and material changes suggested.

3. I gave to you at the meeting suggested simplification of page

27 - F. Project Ownership and Management Arrangements and

page 30 - Possible Legislative Initiative - both in the Executive

Summary. If those sections do not survive in the Summary,

my suggestions may be carried into the body of the report.

2600 VIRGINIA AVENUE, N.W.

WASHINGTON. D.C. 20037

202 - 342 - 6700

Telex 89-2680 Cable IEAL WASHDC

10-47
Dr. Willard D. Altman

January 16, 1984

Page 2.

We discussed the desirability of eliminating the "scrunity" of State PUCs

on the premise that their impacts on utility decision making on QA

could be dealt with in the prospective study of arrangements for utility

ownership, financing, design, construction, and operation.

I subsequently recommended to you that any recommendations for a

study such as the latter include provision for determining what desirable

changes are possible "within the present system", and not requiring legislation, as well as determining what possibly desirable changes .would

require legislation.

Good luck as you proceed to wrap up this very interesting study. I've

enjoyed working with you and the other key NRC staff, as well as with

the other consultants to the Study.

Sincerely,

John E. Gray

Chairman

JEG:kd

enclosures (3)

10-48
104 Humbolt Ct.

Oak Ridge, TN 37830

Dr. J. A. Christensen

Sigma III Bldg./3000 Area

Batelle Pacific Northwest Laboratories

Post Office Box 999

Richland, WA 99352

Dear Jim:

I wish to thank you and other Battelle personnel for having had the opportunity

to serve on this panel. The panel's efforts have been productive and I believe

will prove to be beneficial to the NRC. I thank you for a fine job of coordinating our meetings and the arrangements - they have been superb.

As requested, I am providing you with written comments on the material reviewed

this week. I will not repeat a lot of the comments, but only expand on those

that I feel to be most significant from my standpoint. Dr. Altman kept a good

set of notes and should have all remaining comments and suggestions.

Comments:

1. The Executive Summary should be shortened and enhanced by some graphs or

charts that tell the complete story in a few pages.

2. A better balance is required between the NRC and utilities. This statement

applies to both good and bad aspects. Both are to blame for past, problems,

but both have also taken a lot of positive steps to improve the construction

process. The report also needs to address which initiatives/actions can/

will apply to the operational phase.

3. The report addresses a lot of planned and proposed actions/improvements.

When studied closely, they have taken a giant step toward development of a

quality system, this message does not come out loud and clear. Graphics

would again be beneficial.

Likewise, the plans also will create a need for future plans/studies, i.e.,

classification of characteristics for NRC and licensees, and a true

evaluation/definition of inspection needs. They will be in a better

position to define the number of inspections, frequency, number and type

of inspectors and training requirements.

10-49
4. I have been confused on the intent of IDI's. Perhaps others are also

not aware of their significance. Report needs clarification and

expansion.

5. A number of inspections, audits, units, reviews are suggested. I suggest

a time line covering design, construction and start-up. Overlay this

with all of the plans/checks to determine if a proper approach is being

taken and is it balanced.

6. Drop discussion on graded approach or change terminology and add more

clarification as to what you are trying to accomplish.

7. Chapter 2, page 16 is confusing. Split into at least (3) bullets.

" The level of detail in QA/QC requirements in procurement documents

is extremely important.

" It is essential ,to follow up to evaluate subcontractors' performance

against these requirements.

o Necessary to evaluate a contractor's ability to perform to-these

requirements prior to issuing a contract.

8. Better define the intent of readiness reviews and the fact that they will

be tied to milestones.

9. Chapter 7, pages 4 and 5. Items 2 and 5 need to also be listed in the

Executive Summary.

Hopefully the above comments will prove helpful. Please contact me by phone

if required at (615)482-3981.

Sincerely,

'John /L. Hansel

cc: Willard D. Altman, NRC

10-50
Robert V. Laney

Consultant 24 Trout Farm Lane

Enxergyroject Management Duxbury. Massachusetts 02332

Phone (617) 585-8912

January 16, 1984

Mr. William D. Altman

Project Manager

U. S. Nuclear Regulatory Commission

Office of Inspection and Enforcement, Room 305

4340 East West Highway

Bethesda, MD 20014

Dear Bill:

The draft NRC report to Congress on Improving Quality

in the Design and Construction of Commercial Nuclear Power

Plants, dated January 6, 1984, is returned herewith. You

will find a number of comments written in the margins on

those pages which have paper clips on them. These are

largely editorial. More important comments are included in

the body of this letter.

On the whole, I consider the report to be very good.

You give thoughtful attention to the five possible courses

of action which you were asked to consider, and you reach

a well founded conclusion for each. Beyond this you provide

the Congress a wider perspective on the status of the problem,

its causes, and remedial actions. The case studies are

especially useful inasmuch as they focus attention on real

people and events and make us realize that the problems which

led. to this study are seldom as simple or one-dimensioned

as sometimes portrayed.

The remainder of this letter is devoted to five subjects drawn from reading the draft report. For each I offer

comments followed by a recommendation for improving the next

draft.

Assessment of Blame

It is not a primary purpose of the report to assess

blame for the quality problems which gave rise to the Ford

Amendment and this study. However, in studying problem

cases and alternative programs for improving quality, you

have necessarily looked for root causes, made findings, and

implied blame. To contribute to better understanding and

to assure wider acceptance of the report, it is important that

10-51
Mr. William D. Altman

January 16, 1984

Page 2

it be even handed in assessing blame. We could not have

confidence in a program of improvement unless it derives

from a recognition of all significant causes.

In Section 2.2.2, pages 10, 11, and 12, the study finds

shortcomings in project and corporate management and in NRC's

slowness in detecting these shortcomings and taking enforcement actions. Clearly these are root causes which contributed to the scale of the problem. Not mentioned, however, are,

(1) the failure by the NRC to make a searching evaluation

of licensee management competence before issuing a Construction Permit, and (2) failure by the NRC to foresee that even

an otherwise adequate management could be swamped and demoralized by numerous regulatory and hardware changes mandated

in the midst of construction.

RECOMMENDATION. Without reducing or moderating the

reported shortcomings of project and corporate management, point out the contributing effect of the two NRC

shortcomings identified above. This will, incidentally,

lay the groundwork for the action proposed in Section

2.2.3A(l) and (2) on page 14.

Relationship Between NRC and INPO

Fostering an effective relationship between the NRC and

INPO, one which allows each to do that which it can do best,

should continue to be a constant goal of both organizations.

This consideration is most compelling during a period of

changing roles and expanding activities, such as that

described in the NRC study. It is desirable for the NRC to

allow ample scope to the industry's move to improve construction quality represented by INPO's Reconstruction

Projects Evaluations (CPE).

INPO is the central feature of industry's determined

commitment to self-improvement and'self-regulation. Simultaneously, INPO is the industry's chosen instrument for achieving

rising standards of performance in all phases of nuclear power,

including, most recently, design and construction. Thus it

is particularly important that, when setting a new agenda

for strengthening the quality of nuclear construction, all

concerned should recognize that INPO is similarly engaged.

In deciding what inspections, audits, or evaluations it will

do, the NRC should encourage INPO to do those which INPO

might do as well or better. If this requires modifying the

scope or methods INPO now uses, as the CPE's, NRC should discuss

this possibility with INPO, as an alternative to continuing

both CAT's and CPE's.

10-52
Mr. William D. Altman

January 16, 1984

Page 3

The present study includes, in Section 5.2B, page 4-6,

and 9.3.1, pages 8-13, excellent descriptions and discussions

of the respective NRC and INPO roles in achieving construction

quality. The study concludes that the present role differentiation should continue, with INPO in a "counseling and advisory

role," and the NRC in its statutory role of setting standards

and inspecting to assure that those standards are met. This

may be the appropriate conclusion at the present time. However, in my opinion, this section of the report would be

improved if it were amplified to recognize that there are

circumstances which, in the future, might argue for adjusting

the NRC/INPO interface and their respective inspection activities.

First, INPO is exploring ways by which it might exert

pressure on member utilities to respond constructively to

correct faults revealed by INPO's evaluations. In addition,

INPO appears to be moving towards a performance "ranking"

system which will provide a utility management with a

specific measure of relative success in achieving rising

standards. These and related INPO initiatives, as they

mature, will benefit from NRC recognition and a willingness

to consider role adjustment as appropriate.

Second, in concluding that NRC and INPO roles are, for

the present at least, fixed and separate, the study accepts

the indefinite imposition of two similar design and construction evaluation programs with resulting duplication of demands

on licensees.

RECOMMENDATION. This report is the appropriate place

for the NRC to acknowledge that (1) INPO is developing

into an effective industry instrument for raising the

quality of operations and construction, and (2) since

INPO's potential is not yet fully realized, the NRC

should remain alert to future improvement in INPO's

program which would justify the NRC's placing greater

reliance on it.

On Being More Prescriptive

In Section 2.1, page 2, the study rejects the use of

more prescriptive A/E criteria, observing that degree of

prescriptiveness was not a contributing factor in any of the

projects reviewed. Since prescriptiveness is a favorite

remedy of many who do not.understand the complexity of the

design process, it will probably be proposed again and again

as a remedy for some perceived regulatory or enforcement lack.

10-53
Mr. William D. Altman

January 16, 1984

Page 4

RECOMMENDATION. Use Section 2.1 to inform readers of

the study that there are two good reasons for the NRC

to avoid being more prescriptive. First, there is

more than one satisfactory way to perform most design

activities, and prescription would unreasonably limit

the licensee's choices. Second, too much prescription

of "how-to-do-it" by the NRC tends to put the government

into a management role where they do not belong and do

not want to be.

Assessment of Corporate and Project Management Capability

In commenting on Alternative b(3), Section 2.1, page 2,

and in Section 2.2.3A(l) and (2), page 14, the study advocates

substantive assessments of corporate and project experience

and management capability as a condition of issuing future

Construction Permits. The study proposes developing criteria

of management fitness to be used for this purpose, but does

not indicate whether or in what manner these would be applied

to present CP holders. NRC staff discussions with the Study

Group on January 10-11, 1984, indicated that, in some manner,

perhaps by third party audits as in Alternative b(5), the

same criteria would be used in a capability assessment.

RECOMMENDATION. The study proposes developing criteria

of management fitness for future CP applicants. It

should provide an answer to the obvious question concerning their applicability to present CP holders. I believe they must be written so as to be applicable to

present CP holders, for otherwise their present usefulness is quite small. If the criteria consist, as I

believe they should, of a small number of basic

principles of sound operation, if they are capable of

objective verification by experienced observers, and if

they are developed with the assistance of the industry,

it should be possible to test present CP holders against

them without significant claims of unfairness.

Use of Terms "Quality Assurance" and "Management"

These two terms are used throughout the report as

though their meanings are approximately the same. The

principal finding (page 2, Section IA of the Executive

Summary) recognizes the difference. Since management failure,

including QA failures, is reported to be the principal culprit,

the report would be clarified by more careful use of these

terms.

10-54
Mr. William D. Altman

January 16, 1984

Page 5

RECOMMENDATION. As noted above.

I compliment you and the NRC/BNL staff for the thorough

preparation and presentation of the material on which the

Study Group was asked to comment. The meetings were conducted

with efficiency and you provided us with every reasonable

opportunity to assist you. I sincerely hope that my suggestions

are useful.

Since,ý&

Robert V. Laney

RVL:pb

enc

cc: Dr. Fred W. Albaugh

Mr. James A. Christensen

10-55

APPENDIX A

CASE STUDIES OF QUALITY AND qUALITY ASSURANCE IN THE DESIGN

AND CONSTRUCTION OF NUCLEAR POWER PLANTS

PRINCIPAL CONTRIBUTORS

W.

H.

K.

D. Altman (a)

Harty (b)

C. Carroll (d)

M. G. Patrick (b)

J. L. Heidenreich (c)

L. D. Kubicek (d)

PREPARED BY

H. Harty

March 1984

Prepared for

Division of Quality Assurance, Safeguards,

and Inspection Programs

Office of Inspection and Enforcement

U.S. Nuclear Regulatory Commission

Washington, D.C. 20555

Pacific Northwest Laboratory

Richland, Washington 99352

(a) Nuclear Regulatory Commission

(b) Pacific Northwest Laboratory

(c) N. C. Kist and Associates

(d) EG&G Idaho, Inc.

EXECUTIVE SUMMARY

Quality-related problems in the construction and/or design of several

nuclear power plant projects have received much publicity in recent years.

Because of the perceived severity of the problems and the consequent publicity

and expressed public concern, the Congress and the Nuclear Regulatory Commission (NRC) determined that the NRC staff needed to conduct a comprehensive

study of alternative approaches to assuring quality of construction at nuclear

plants.

This appendix describes the results of six case studies of nuclear power

plant construction projects, three that experienced major quality-related problems and three that did not. The objective of the case studies is to identify

the reasons (the root causes) why some plants had quality problems and some did

not. Based upon the findings, the conclusions made are aimed at improving the

assurance of quality of nuclear power plant construction.

The differences between nuclear power plant projects that have experienced

major quality-related problems and those that have not are shown primarily in

four factors: comparative levels of nuclear experience, extent of management

control of a project, depth of commitment to quality, and the maturity of formalized procedures for controlling a project. Also, utilities experiencing

quality-related problems failed to fully appreciate the complexity, special

conditions, and requirements of nuclear construction. Utilities not experiencing quality-related problems may have had a stronger emphasis on plant reliability. The NRC (or predecessor agency) also contributed to quality failures,

or failed to mitigate them, by inadequately evaluating whether a utility applicant had the necessary capabilities to undertake a nuclear project, or by not

requiring an appropriate upgrading of capabilities before issuing a construction permit.

Because utility management could reasonably be expected to be aware of the

importance of these factors, why then did some utilities experience severe

quality problems? Several reasons stand out. Most nuclear utilities had a

successful fossil background. Seeing that others had made the fossil-tonuclear transition with apparent success, they naturally assumed they could do

likewise. In evaluating their approach to nuclear plant construction, they

appear to have assumed that nuclear plant construction was not significantly

different than fossil plant construction. That belief would tend to influence

several important decisions. For example, utilities felt they could rely upon

their existing organizational structure, staffing, contracting methods, and

construction methods for nuclear projects with only minor modification. One

interviewee noted, "One might need a few additional nuclear experienced staff,

but they could be fitted in." Also, utilities thought they could depend upon

their traditional contractors and architect-engineers (A-Es) to construct the

plants correctly and on schedule, even though they might not fully understand

requirements of the nuclear industry.

In the case studies, utilities not experiencing major quality problems did

several things differently. They separated the nuclear project(s) from their

iii
traditional power plant organization. A representative from one utility said,

"The old system of discipline and functional responsibilities won't work for

nuclear plants, not even for new fossil fuel plants now." They staffed their

organizations with people who had appropriate nuclear experience and hired

experienced A-Es and contractors. Conversely, some of the utilities experiencing problems began their programs at the height of the nuclear generation boom

(mid-1970s), when there was a shortage of experienced personnel and firms.

These utilities were understaffed and/or hired inexperienced firms, resulting

in problems and/or inefficiencies.

Another factor affecting whether quality-related problems had occurred was

the extent of management control of a project. In the projects not experiencing major quality problems (or ones that had turned around their qualityrelated problems), the utilities managed the projects, not only in name but in

actuality. They were aggressively involved in the projects. There was no

question of who was in control. They took the responsibility for licensing

actions and for NRC relationships. They were deeply involved in cost, schedule

and productivity considerations, as well as in quality. They made appropriate

changes in the project organization and approaches as conditions warranted.

They monitored their contractors closely or sometimes were the contractors

themselves. These utilities set performance standards for the project rather

than delegate this responsibility to their A-E or contractors. They approved

key design drawings and established criteria and procedures or assured that

their contractors did.

Utilities successful in constructing plants (in terms of project cost,

schedule and quality) had a few (sometimes only two or three) leaders who controlled the project. During interviews, the utility staff, A-Es, and construction staff at all levels often singled out a vice-president in charge of the

project, the project construction manager, or a team as being the source of

quality for the project or the driving force behind the project. Sometimes

multiple teams were being used. No similar figures or teams emerged in the

projects experiencing major quality problems; leadership appeared to be diffuse. Aggressive leadership could also be clearly Identified in those plants

which, after early difficulties, had turned around their quality-related problems.

Utility control is not the only approach to successful nuclear plant construction. The "turnkey" projects of the 1960s where the vendors exercised

unified control was an alternative method capable of success. However, fragmented approaches to management control as allowed by some utilities was a

characteristic that correlated with whether major quality problems had occurred. When asked, "Why is it necessary for the utility to become so involved in

riclear projects?" one chief engineer said, "I don't really understand it. An

A-E should be able to do the job once given direction by the utility--at least

iv
the better A-Es should. But they can't seem to do it •n more. They don't

have the same interest and they don't have the drive."'a Others had similar

comments.

Commitment to quality was a third important factor. Utility managements

involved in the six case studies said they were committed to quality in their

plants and always had been. Almost without exception, management at all levels

said quality and safety took priority over project cost and schedule. However,

in view of the quality problems experienced, commitment to quality is reflected

more in aggressive action to control the project than in verbal endorsement of

quality.

Achieving quality did not derive from any unique organizational structures

or quality assurance (QA) and quality control (QC). Rather, the six cases presented various organizational arrangements for these functions. Staffs varied

greatly in size and reported at various levels in the utility/contractor organizations. Some had effective stop work authority and some did not. Some participated in construction activity planning and some were separated from the

day-to-day activities. Some projects had multiple QA/QC programs and some had

a single program for most of the construction activities. Some organizations

had multiple QA layers that audited lower levels. No pattern of QA/QC organizational structure or delegation correlated whether plants had experienced

major quality problems. However, a common characteristic of all successful

projects was strong commitment to quality at all levels and elements of organization.

Two characteristics of licensees seemed to accompany quality problems.

One characteristic was responding to NRC requirements not by objectively examining the substantive issue involved but by seeking to placate the NRC as

easily as possible. Although hard to prove, cases of this attitude are

certainly present. Conversely, an obvious characteristic of utilities without

quality problems is an aggressive position in responding to NRC requirements

and questions. On projects free of major quality problems, it was the licensee

itself and. not a contractor that primarily responded to and interfaced with the

NRC.

The second characteristic of licensees with quality problems was failure

to make plant reliability a major driving consideration in the plant design and

construction. Two of the projects (and possibly three) that had not experienced major quality problems (and none that had) had a strong emphasis on plant

reliability. In both cases, the utilities would be rewarded for improved operating efficiencies by their public utility commissions. Reliability is a more

tangible goal than quality and appears to compete well with schedule and cost

for management attention. Quality, on these projects, was not an end in

itself; it flowed from other considerations, e.g., achieve reliability and

quality goals will be met.

(a) Quotations are approximate but are believed to convey the intent.

v
A fourth factor affecting quality was the maturity of formalized procedures for controlling a project. The successes of those plants without major

quality problems (and the failures of those with) can be attributed in part to

having adequate (or inadequate) procedures for all aspects of the project which

were rigorously adhered to (or ignored). All of the case studies substantiated

this requirement. Nuclear power plants are both complex and subject to change

during construction, requiring appropriate procedure-related disciplines. In

response to the question, "Why has there been quality in the design?" one A-E's

project engineer singled out, "A proceduralized approach was adopted early in

the project for calculations, specifications and procurement" with "rigid

internal audits." The six case studies revealed a wide range of sophistication

in specifying, applying and auditing procedures used in QA, construction,

design, procurement and other aspects of nuclear projects. It almost appeared

that each project had to create and apply its own procedures. Greater sharing

the state-of-the-art in this area among licensees would be beneficial to assurance of quality.

NRC actions, or inactions, also contributed to quality-related problems.

The NRC's overriding failures were its inability to evaluate adequately whether

a utility had the requisite capability to undertake construction of a nuclear

power plant and its failure to require an appropriate upgrading of capabilities

before issuing a construction permit. The NRC was also tardy in conveying its

quality concerns to some licensees, giving them the perception that qualityrelated problems were not serious. Some licensees said in retrospect that the

NRC waited too long to force suspension of construction.

The case studies reinforced the need for plant designs that are substantially completed before construction is started. Designs that are largely completed would help reduce the opportunities for quality deficiencies and would

also help reduce inefficiencies in licensing and construction. Standardized

plant designs can aid in achieving this objective and in reducing design and

construction times, which would support another need--maintaining the."team"

throughout the project. Extended project times lead to personnel turnover and

increased opportunities for quality problems. Major gains in nuclear plant

quality (and productivity) would also be achieved if the teams remained intact

from project to project, rather than being dispersed and reformed into new

groups for new projects.

Concurrent with the case studies, an independent evaluation of the Zimmer

nuclear project was conducted by Torrey Pines Technology. The findings from

the Zimmer evaluation closely parallel those of the six case studies.

Having described the salient features and practices of those projects that

did and did not experience major quality problems in construction, it is important to note that neither group did all things right or all things wrong. The

projects without major quality problems experienced quality failures and project inefficiencies; much of the work of the projects with major quality failures appears to have been of good quality. The former did not have experienced, dedicated personnel in every position, and their procedural controls

were not flawless. It cannot be said that their projects are exempt from

vi
quality failures--only that the probability and extent of failure was less

because of appropriate experience, management involvement, dedication to

quality, and procedural controls.

The case studies have focused on what has happened in the past or is happening now, not on what is likely to happen in the future. The increased

industry and NRC experience and the lessons learned greatly decrease the

probability of major quality problems, especially in future generations of

nuclear plants. However, there are several conditions under which major

quality problems might recur. These include:

* a first-time utility with a staff or A-E/constructor that have inadequate nuclear experience.

* a very large growth in the number of nuclear plants being constructed

that (again) overwhelms the industry's capabilities

* a long delay before nuclear plant construction activities start

again, resulting in a dearth of experience in the industry

* regulatory actions at federal and state levels which undercut quality.

The NRC and the nuclear industry need to be aware of the implications for quality that these possibilities hold.

vii

ACKNOWLEDGMENTS

The case studies documented in this report were performed as a cooperative

effort by multidisciplinary teams led by the NRC project manager. The principal contributors to these efforts were: W. D. Altman, NRC Project Manager;

H. Harty, PNL Project Manager; M. G. Patrick, PNL; J. Heidenreich, Kist Project

Manager; K. C. Carroll, EG&G Project Manager; and L. D. Kubicek, EG&G. Others

who contributed to these efforts in lesser but significant degrees include

E. W. Brach (NRC), E. Bradford (EG&G), R. M. Kleckner (Kist), D. T. Ross

(EG&G), G. T. Ankrum (NRC), J. A. Christensen (PNL), R. Dellon (Dellon Assoc.),

J. E. Kennedy (NRC), H. J. Kirschenman (EG&G), M. McGuire (PNL), R. J. Sorenson

(PNL), and M. E. Walsh (PNL).

This study would not have been possible without the willing cooperation of

the six utilities involved:

Public Service of Indiana Georgia Power Company

Houston Lighting and Power Company Pacific Gas and Electric Company

Arizona Public Service Company Florida Power and Light Company

Each of these utilities consented to sharing with its case study staff

their experiences and the insights gained from them in the design and construction of nuclear power plants. They did so in order to. benefit other

similar projects and to provide a solid, factual foundation for improving

quality and the assurance of quality in the nuclear industry. The purpose of

this report is not to critize or compliment any specific utility. Rather, it

is an attempt to evaluate the generic lessons arising from the experience and

insights of the utilities involved.

ix

CONTENTS

EXECUTIVE SUMMARY ................ ... . ............. *.* ............. iii

APPENDIX A: CASE STUDIES OF QUALITY AND QUALITY ASSURANCE IN THE

DESIGN AND CONSTRUCTION OF NUCLEAR POWER PLANTS .......... A.1

A.1. INTRODUCTION .............. . . . . . . . . . . . . . . . . . . . A.1.

A.1.1 Background ..................................... .. ........ A.1

A.1.2 Purpose ................................................... A.2

A.1.3 Technical Approach ........................................ A.2

A.2 CONCLUSIONS AND FINDINGS ..................... ..................... A.4

A.3 DISCUSSION ....... ..................... ............. A.7

A.3.1 Case Studies .............................................. A.7

Case Study A ................................................ A.7

Case Study E ................................................ A.11

Case Study C ........................... ... A.14

Case Study D ................................................ A.18

Case Study E ................................................ A.24

Case Study F ......... . . . . . .. . . . . . . . . . .. . A..28

The Zimmer Case Study .... o.......................... ......... A.32

A.3.2 Summary of Case Study Findings ............................ A.38

A.4 REFERENCES .................. .**........... . . . ... .. ....... A.43

xi

APPENDIX A

CASE STUDIES OF QUALITY AND QUALITY ASSURANCE IN THE

DESIGN AND CONSTRUCTION OF NUCLEAR POWER PLANTS

A.1 INTRODUCTION

This appendix describes the results of six case studies of nuclear power

plant construction projects in the United States. Three of the projects

experienced major quality-related problems in design or construction and three

did not. The root causes of the performance of each group are identified.

Section A.1 presents introductory material on the study's background, purpose,

and technical approach. Section A.2 presents conclusions and findings. Section A.3 describes the case study process and summarizes the major findings

from each of the case studies. Results of an independent study of the Zimmer

nuclear power plant construction project are included in Section A.3 for comparison purposes. References are provided in Section A.4.

A.1.1 Background

In recent years, there has been a series of well-publicized problems relating to the quality of construction and/or design at several nuclear power

plant projects in the United States. It is important to understand what caused

these problems and why some nuclear construction projects have been more successful in achieving quality than others. In an August 1982 paper to the Commission (NRC 1982), the NRC staff proposed a long-term review and study of the

quality problems in the nuclear industry. A key feature of this long-term

review was a series of analyses of representative nuclear construction projects

having had varying degrees of success with respect to project quality to ascertain the underlying causal factors, or root causes of quality success or failure in nuclear construction projects. These analyses, which included site

visits, were called case studies. They began in November 1982 and continued

through August 1983. Six case studies were completed: three at projects that

had experienced major quality-related problems and three at projects that had

not. Three projects were in the range of 25-50% completed; three were recently

completed or essentially completed. The projects were located in four of the

five NRC regions.

An analysis of Cincinnati Gas and Electric's Zimmer plant was performed

recently by Torrey Pines Technology (TPT). Because of the relevance of the TPT

findings on Zimmer to the questions addressed by the NRC case studies, results

of TPT's evaluation of Zimmer (TPT 1983) are also included in this appendix.

The case studies were not inspections, investigations, or audits, and thus

were conducted outside the normal regulatory process of the NRC. For the most

A.1
part they were limited to the construction sites and licensees' offices (and

NRC regional offices); assurance of quality in the design and procurement processes was not examined in the same detail as the construction process.

A.1.2 Purpose

The purpose of the case studies was to determine the essential differences

between nuclear power plant projects that hadexperienced major quality problems in design and/or construction and those that had not, and to highlight the

lessons learned. These lessons provide a basis for considering changes to the

NRC's activities supporting assurance of quality in nuclear power plant projects.

A.1.3 Technical Approach

Each case study had three phases: a pre-field activity, a field activity,

and a post-field activity. The pre-field activity consisted of a general

familiarization with the licensee and project, including the project quality

assurance program and its history. Relevant NRC inspection and investigation

reports and licensing documents were reviewed. Postulated root causes for successes or failures were developed to provide a framework for the subsequent

interviewing process.

The field portion of the case studies typically commenced with briefings

from the NRC regional offices and from licensee management to two of the case

study team members prior to the full-team visit. Then the entire team would

meet with the licensee's management at the start of the five-day site visit.

During this meeting (and typically as a preface to each individual interview

with licensee and contractor personnel), the purpose of the case studies was

described. All were told that the case studies were not inspections or audits.

The case study teams were comprised of NRC and contractor personnel who

collectively have experience in nuclear plant engineering and design, project

management, construction management, operations, systems analysis, quality

engineering, quality control, and quality, management. Contractor personnel

were selected from two national laboratories and from two consultant firms. To

assure consistency in each case study, three team members, including the NRC

case studies project manager, participated in all the case studies. Three

others were assigned on a rotational basis. These six individuals comprised

the core group for the case studies.

Twelve other staff from the national laboratories, NRC, and consulting

firms participated in selected case studies to provide fresh ideas and perspectives. These individuals included management-level personnel qualified to

critique the process. To further ensure that no key elements were being missed

in the case study process, the results were periodically reviewed by a peer

panel consisting of noted experts in their fields.

A.2
In the early case studies, three subteams of two personnel were used; one

subteam concentrated on construction management and investigated the interfaces

between the licensee and the contractors, paying particular attention to the

quality control of construction. The second focused on project engineering and

design processes and on interfaces with the architect-engineer, construction

management, and quality assurance aspects of the project. The third concentrated on the quality assurance program, its organization, and personnel qualifications and training. A fourth subteam that was added later concentrated on

corporate management's functions in the project and its approaches to the

assurance of quality for the project.

Typically, 40 to 60 people, from top management to crafts and QC inspectors, were interviewed in each case study. The QA program was reviewed

together with selected records, and a plant walk-through was conducted. The

case studies did not include any technical review or evaluation of adequacy of

plant design or construction. Apart from the plant walk-through, during which

time team members were able to talk to additional craft workers, field engineers, and inspectors, no physical inspection of the plant was performed.

The field work concluded at the end of the week with an exit briefing for

senior licensee management and staff. In a typical briefing, the case studies

project manager presented the team's tentative findings regarding root causes

of quality-related problems, or the absence of them, and related information.

The NRC initiatives and the Congressional alternatives for improving quality

were also discussed, as were the team's perspectives for the licensee to consider to further enhance its quality program. The licensee exit briefing

afforded the opportunity to offer additional information, corrections of fact,

and agreement or disagreement with the team's tentative findings and conclusions. The exit briefings were typically two to three hours long.

Post-field activity consisted of the preparation of a draft working

paper. Subteams compiled individual reports which were incorporated into a

case study draft working paper. The draft working papers served as resources

for this study.

The information obtained through the interview process was taken at face

value; however, several mechanisms for establishing confidence in cogent data

were utilized. Generally, the findings and insights were corroborated by comparing information from more than one source:

" by interviewing personnel from a vertical cut of the project organization

" by extensive review of NRC file documents and other sources of data

" by interviews with regional and resident NRC personnel familiar with

the project and its history

" by sharing and examining data at daily team caucus meetings.

A.3
Further confidence in the primary findings of the case studies can be

gained from their similarity to those of the Torrey Pines Technology study conducted for the Zimmer nuclear plant (TPT 1983). The latter study used a different approach and was conducted in greater depth. It is summarized in Section A.3.1.

A.2 CONCLUSIONS AND FINDINGS

1. The single most important factor in assuring quality in nuclear power

plant construction is prior nuclear construction experience (i.e.,

licensee experience in having constructed previous nuclear power plants,

personnel who have learned how to construct them, experienced architectengineers, experienced constructors, and experienced NRC inspectors).

" This experience brings with it knowledge of the complexity of

nuclear plant construction, understanding of regulatory-related

quality requirements, the need for management leadership, and

many other factors. These factors are poorly understood by

those without experience and this lack of understanding leads to

quality-related problems. Where licensees had marginal experience in critical areas (e.g., in the transition from construction to operation), they were prone to quality-related

problems. The broader their inexperience, the more severe the

problems were likely to be.

" A high degree of design and engineering completion prior to construction, together with regulatory stability, might partially

compensate for a lack of experience. There are some data

showing that plants having higher design and engineering

completion may have fewer construction-related quality problems

arising from rework or extended project schedules. Standardization may produce comparable results.

2. A factor that ranks close to experience in importance is licensee management involvement in and control of the project. The project activities

that compete with quality (i.e., cost and schedule) are not properly

balanced without strong licensee management control and involvement.

* Licensee contractors do not have the same overall responsibility

that the licensee has nor do they have the same authority and

resources to deal with quality-related problems. When a licensee abdicates its role, some aspect of quality, cost and/or

schedule is likely to be compromised.

* Licensees are also being forced to take more active roles in

upgrading many aspects of the nuclear industry because of regulatory requirements--especially those aspects related to the

quality of products or work from equipment suppliers and construction contractors. This has not been a role traditionally

filled by licensees for their fossil-fuel (or other types of)

A.4
plants. Where licensees have followed fossil-fuel practices and

chosen not to be involved in supplier and contractor activities,

quality-related problems were more likely to occur.

* Some licensees are now exercising the right to approve key A-E/C

personnel for their projects to help assure quality and maintain

project efficiency.

3. Another essential factor is a management commitment to quality. This

is essential to facilitate activities that support quality of construction.

" All management claims to support quality, but verbal support is

not sufficient. An understanding is required of why quality is

important (e.g., as an important adjunct to achieve an acceptable level of safety, reliability, or scheduled completion) and

how to obtain it. That understanding must be disseminated

through the entire project team by training, personal contact,

audit appraisals, support of QA/QC staff, incentives and other

means.

" A commitment to quality seems encouraged by financial incentives. These may take the forms of an improved rate of return

for high levels of operating efficiency, reduced maintenance

costs, etc.--factors that may more than compensate for added

construction costs incurred in the interest of quality or

enhanced safety of operation. The role of public utility commissions in providing incentives for improved performance (a

measure of quality) and adherence to NRC regulations needs to be

considered.

* Safety by itself does not appear to be a sufficient motivation

for ensuring good quality. For the most part, industry has been

lagging the NRC with respect to assurance of quality. This is

evidenced by the fact that industry does not appear to feel that

greater attention to quality is needed. That situation is

likely to change only when the utility industry focuses on an

objective that is more meaningful to them--one that includes

safety, perhaps reliability. Licensees seem to believe that

their plants are (or will be) safer than the NRC credits them to

be; thus, assurance of quality requirements often appear excessive to licensees.

4. Maintaining and documenting adequate quality requires appropriate procedures for all aspects of the project (i.e., construction, design, procurement, etc.). These procedures must be understood, rigorously applied, and

adhered to at all levels of the project.

e There is a spectrum of assurance-of-quality practices ranging

from outstanding to marginal in the nuclear industry. The superior practices appear slow to be propagated throughout the

industry.

A.5
" The source of much contention about the adequacy of quality control in construction is the recordkeeping aspects of procedures. These need not be sophisticated, computer-based methods,

but licensees with experience advocate the use of computer-based

systems.

" The hiatus in new nuclear plant construction offers the NRC and

the industry an opportunity to establish and disseminate

improved practices with respect to procedures and records.

5. The case studies revealed several shortcomings in past or present NRC programs that have an effect on assurance of quality:

" The licensing focus with respect to assurance of quality has

been on form, not substance; the NRC's inspection focus has

tended to be on records rather than on quality of product.

" There has been little assessment of management capability as

part of the construction permit review.

" The NRC's inspection presence at construction sites in the past

has tended to be irregular and nonconstant and continues to be

so in the initial stages of construction.

" The NRC's construction.site resident inspection staff is too

small to be expert in all phases of nuclear plant construction

and construction management.

" The NRC has been slow to take action on management issues that

are often at the root of quality-related problems.

* The NRC has failed to treat or sell QA as a management tool.

" Changing regulatory requirements have resulted in qualityrelated problems, and this factor has not been adequately

addressed by the NRC.

" The NRC has done inadequate review or auditing in the past to

verify quality in nuclear plant design processes.

6. Nuclear utilities are changing. Utility managements are becoming more

aware of the special requirements for nuclear plants vis-a-vis other generating methods. Licensee nuclear staffs are increasing in size and capability. The utility industry seems to be assuming a larger role in the

engineering services for operations. The transition from A-E to licensee

for engineering services and the adequacy of the licensee to perform these

services may need to be evaluated by the NRC.

7. The case study approach proved to be a useful tool for identifying and

comparing assurance-of-quality practices. NRC regional and site personnel

could benefit from case-type studies at other locations to gain insights

A.6
into alternative practices and to help avoid regional differences in

approaches to quality.

A.3 DISCUSSION

This section describes the case study process and summarizes the major

findings from each of the six case studies. The circumstances of each case

study are described and the root causes of the quality-related problems--or

lack of them--are identified. An independent study of the Zimmer nuclear power

project is also summarized.

A.3.1 Case Studies

Case Study A

The licensee of Case Study A is constructing its first nuclear station,

which consists of two large (>1000 MWe) units. Unit 1 is presently half completed; Unit 2 is about one-third completed. Construction permits (CPs) were

issued in the late 1970s. Initial planning and site selection work commenced

in the mid-1970s. Placement of safety-related concrete commenced in 1978.

The attitude of the licensee from the outset was one of confidence and

adherence to practices that had worked in constructing previous fossil-fired

plants. There was some recognition that nuclear projects would be different

from fossil projects, but the differences were thought not to be great and

could be largely overcome by hiring some managers and staff with prior nuclear

experience. Also, the use of a nuclear plant design that was already well into

construction at another location was a very positive factor. Completing the

project on time and within budget was an important goal.

The licensee's prior construction experience consisted of about 20 fossilfired plants. In some cases, the licensee had served as construction manager. The licensee had a construction department headed by a vice-president

who was responsible for all utility construction. Over the years, the licensee

had developed a close working relationship with, and confidence in, several

major construction contractors who worked on its fossil-fired plants. The

licensee's construction success for fossil-fired plants was a source of justifiable pride. Each plant had come on-line before schedule and within budget.

The plants were of acceptable quality after the usual startup problems, and

each plant operated safely and reliably. Quality was something put into the

plant by the builders--there was no formal program for quality or the assurance

of quality. To the licensee, quality was something that happened if you put

good people on the project.

This licensee, in common with others in the industry, had a conservative

management philosophy and was adverse to taking unnecessary risks. Contributing to this conservatism is the scrutiny of the public utility commission

regarding how the licensee spends money and handles finances. These factors

supported the licensee's cost and schedule consciousness.

A.7
Given the inherent conservatism of the licensee and the risks and uncertainties associated with nuclear power, why did it elect to build a nuclear

plant? Many factors appear to have been involved, including projections of

future energy demands, the price of oil and its future availability, the fact

that other utilities, including first-timers, had built nuclear plants with

apparent success, and analysis showing nuclear power to be not only cost effective but reasonably risk free. Going nuclear may have been a break with tradition, but it still represented a conservative decision.

The project was started under a Limited Work Authorization (LWA), which

permitted non-safety-related work to be conducted prior to CP issuance. The

licensee was the general contractor for the project. A firm experienced in the

design and engineering of nuclear projects was retained as architect-engineer

(A-E). A construction company that had previously participated in the construction of several fossil-fired plants for the utility was retained as the

civil engineering contractor for the project. The civil contractor's nuclear

experience was limited to providing workers for projects managed by other

firms. It had never been the prime civil engineering contractor for a nuclear

project. The licensee contracted with other firms for the mechanical, electrical and other aspects of the project. In the early phases of the project,

the civil work fell behind schedule, and considerable pressure was applied by

the Licensee to regain lost time.

About one year after CP issuance, the NRC identified deficiencies in the

quality of the concrete work; e.g., severe cases of segregation and/or honeycombing. There had been many nonconformance reports filed regarding the concrete work since the start of the project. The utility agreed to upgrade its

quality assurance program for concrete work and to determine through testing if

previously poured concrete was adequate. About one month later, a former

employee of the civil contractor alleged that surface defects in the concrete

had been improperly patched. Concurrently, but independently, the National

Board of Boiler and Pressure Vessel Inspectors confirmed code compliance problems with piping installations previously identified by a mechanical subcontractor.

The concrete deficiencies and the National Board findings led to an intensive NRC team inspection, which resulted in shutdown of all safety-related construction activities. The NRC determined there were programmatic questions

concerning the licensee's project management, construction management, and

quality assurance programs sufficient to warrant stoppage of safety-related

construction work until they could be satisfactorily resolved.

The licensee retained a management consulting firm to perform an in-depth

analysis of the project. The consulting firm confirmed the existence of, and

helped identify, underlying programmatic deficiencies in the project. Their

report outlined a 20-point plan to restructure and improve the project. Subsequent to that report, the licensee detailed to the NRC its effort to upgrade

and implement its revised program for project and construction management and

the assurance of quality.

A.8
To assure that the licensee's corrective actions were properly and effectively implemented, the NRC approved a five-step plan for gradual rescission of

the shutdown order.

The licensee was permitted to resume receipt inspections of materials at

the construction site about one year after the stop work order and after

restructuring its project and construction management and quality assurance

programs. Limited electrical and pipe installation work resumed six months

later, followed by all remaining safety-related work, including concrete placement, in another four months. Unrestricted authority to continue the work was

granted when the utility successfully demonstrated to the NRC that its revised

project and construction management and quality assurance programs were implemented properly. The total time period from work stoppage to full resumption

of all construction activity was about two and one-half years. Substantial

non-safety-related civil work was completed while the stop work order was in

effect.

During this period, the licensee substantially restructured its project

management, construction management, and quality assurance programs (including

records management). Substantial numbers of well-qualified people were

hired. A nuclear division, whose sole responsibility was the nuclear construction project, was formed. The division manager, a senior vice-president, was

located at the plant site. Morale improved considerably and team spirit and

project determination pervaded the project.

Three years after the quality problems became so pervasive that all

safety-related construction work was halted, the cognizant NRC regional office

rated the licensee's QA program "outstanding" (the highest rating) on the

annual NRC Systematic Assessment of Licensee Performance (SALP) review. The

licensee received the rating of "Outstanding" the subsequent year also.

The Case A study team identified the following root causes to be significant in contributing to the major quality failures experienced by the licensee.

The licensee's inexperience in nuclear power plant construction projects,

and its failure to appreciate and understand the difference in difficulty and

regulatory requirements between fossil and nuclear construction projects. The

licensee had managed or overseen the construction of several successful fossil

projects and it approached the nuclear project as an extension of the earlier

fossil construction activity; i.e., to be managed, staffed, and contracted out

in much the same ways as fossil projects. The licensee did not appreciate or

understand the difference in complexity and regulation between fossil and

nuclear projects and treated the nuclear project largely as just another construction project. The licensee's lack of experience in and understanding of

nuclear construction requirements manifested itself as follows: lack of adequate staffing for the project, both in numbers, qualifications, and applicable

nuclear experience; selection of contractors the licensee had used previously

in building fossil plants, but who had very limited nuclear construction

experience; over-reliance on these contractors for the management of the project and evaluation of its status and progress; use of fixed-price contracts

where scope of work was inadequately defined; oversight of the project from

A.9
corporate headquarters, with only minimal presence at the site; a lack of

appreciation for the importance of ASME codes and other nuclear-related standards; a misunderstanding of the NRC, its practices, its authority, and its

role in nuclear safety; and an inability to recognize that the piping and

recurring concrete quality problems were merely manifestations or symptoms of

much deeper underlying programmatic deficiencies in the management of the project.

The licensee's failure to understand and appreciate the potential merit of

a formal program to assure quality. The licensee had built fossil units successfully in the past without having a formal program for the assurance of

quality. For the nuclear project, NRC regulations required the establishment

of a formal quality assurance (QA) program. The licensee viewed this requirement as just another government agency-imposed requirement necessary to obtain

a license and treated it accordingly. The licensee inadequately staffed the QA

function, in numbers, qualifications, and nuclear experience, and failed to

listen to the QA organization when it reported quality problems and it (and

other project components) asked for additional resources. Senior management

was skeptical about formal QA programs; earlier, successful fossil projects had

been completed without a QA program, and there were concerns about the QA

organization trying to build an "empire." Quality, they felt, was something

that came naturally to their projects.

The licensee's false sense of security in moving from fossil to nuclear

construction. The licensee was unaware of the seriousness of the quality problem up to the issuance of the stop work order and had developed a false sense

of security resulting in part from the following: past fossil plant successes;

use of many of the same contractors who had worked on fossil units; belieing

the contractors when they indicated that the project had no major problems;

believing that similar concrete placement practices and problems were common in

nuclear construction; assuming that serious problems would not likely occur

since the project's nuclear units were replicates of other plants being constructed by a more experienced utility; and believing that there were no major

problems with the project since NRC inspection findings (until the inspection

resulting in the stop work action) revealed none, having focused on details and

minor problems. The licensee had little concept of the effect that regulatory

changes were having on the "replicated" design.

The licensee's failure to adequately manage the project from the outset.

This cause is related to the first cause; i.e., inexperience. In retrospect,

the project was not being adequately managed by anyone. In the project structure, the role of project manager belonged to the licensee. The licensee acted

as general contractor and construction manager, but managed the project more in

an overview role. The licensee managed the project from corporate headquarters

with minimal site presence and without effective control over its contractors.

Accountability for the project was delegated among several organizations within

the licensee's organization. The replication of design contributed in some

degree to the failure to manage; the licensee felt that any major problem would

develop first at the project being replicated, and it would have time to make

adjustments on this project.

A.1O
NRC licensin9 and inspection deficiencies. For construction permits, NRC

licensing review is limited largely to technical and engineering issues. The

NRC does not and did not in the case of the licensee, evaluate whether it and

its contractors had the experience, knowledge, staffing, or ability to effectively manage and complete a project as complex as the construction of a

nuclear reactor. Moreover, the NRC's inspection activity at the site was

irregular and nonconstant, with several inspectors in different disciplines

visiting individually for only short periods of time, and with no one (until

the inspection resulting in the stop work action) recognizing that the reported

deficiencies were symptoms of deep programmatic assurance of quality problems. The first resident inspector was not assigned to the site until four

months after the stop work order. Just as the NRC, through its regional

inspection program, was slow to put together the comments and evaluations coming from individual inspectors, so too was the licensee slow to recognize the

extent of the programmatic quality assurance problems. Indeed, the licensee

interpreted NRC's early narrow inspection findings as an indication that there

were no major problems, and the licensee had some difficulty comprehending the

stronger, more pervasively negative findings of the NRC inspection.

At the time of the Case Study A site review, the licensee had effectively

implemented substantial modifications and improvements to the management of the

project, and the project was regarded by cognizant regional NRC officials as

having been turned around and as being something of a model project. The Case

Study A team findings supported this assessment.

Case Study B

The licensee of Case Study B has one nuclear station in operation and a

second under construction. Both consist of two large units (-1,000 MWe each).

The former station has been in operation since the mid-1970s. The latter station is less than half completed. Its CPs were issued in the mid-1970s.

Licensee fiscal problems required an approximate 18-month showdown in the

construction of the station, so commercial operation is not anticipated until

the latter half of this decade.

The licensee is the construction manager for the project. The major construction contractors--civil, mechanical, and electrical--all have had significant nuclear plant construction experience, as have many of the smaller contractors.

The A-E for the Case B nuclear station has had extensive experience in the

design and construction of nuclear power plants. Some of the non-safetyrelated design is being done by the engineering staff of the licensee's holding

company.

The licensee has experienced no major quality problems to date in the

construction of this nuclear station (and, as far as the case study team knows,

none occurred in the construction of the first station, either). There have

been minor quality problems in the areas of engineering and construction, but

the licensee has taken positive action to correct them. There has not been

significant public intervention in the construction permit licensing or

A.11
construction phases of the Case B nuclear station. No significant fines have

been levied against the licensee for nonconformance violations or quality

deficiencies.

The Case B study team identified the following root causes to be significant in contributing to the absence of major quality failures.

The licensee has an experienced design, construction, and construction

management team. The licensee has had prior experience with a previous nuclear

station, and many of the personnel who worked on it are now involved in the

present project. This experience has given them an understanding and appreciation of the complexity of large nuclear station construction activities. Many

of the staff have 5-15 years experience in nuclear work. The persons contacted, in general, had good qualifications for their assignments. There is a

substantial training program and an overall impression of a high level of dedication and enthusiasm to the project. Early in the construction process, it

was recognized that craft personnel available in the area needed further training on the special requirements of nuclear work, and this resulted in a comprehensive craft training program. The QA/QC staff is broad and deep in experience and qualifications.

The A-E has designed (and constructed) many nuclear power stations.

The major construction contractors (especially the mechanical and electrical contractors) and the smaller contractors have had previous experience in

construction of nuclear projects.

The licensee has an orientation toward, and an attitude supportive of,

quality' in its nuclear project. The stated management philosophy of insisting

on quality was not simply to satisfy the NRC, but to go beyond those requirements to have a reliable and safe operating plant. At higher levels in the

management structure, the conviction appeared to prevail that public safety and

company profitability demand assurance of quality in the construction (and

operation) of nuclear plants, and that it is less expensive in the long run to

"do the job right the first time." From the interviews conducted, both at the

corporate'offices and the site, it was evident that a sense of commitment to

quality pervades the licensee's organization at all levels. The licensee

volunteered to participate in the first Institute of Nuclear Power Operations

(INPO) construction pilot audit and has expanded on it with its own selfinitiated evaluation. The quality assurance staff has direct access to an

executive vice-president. There was no indication from the interviews of

cost/schedule overriding QA/QC. At lower levels, there was an expressed feeling that the company wants to do the job right. Employees at all levels

appeared to have a constructive attitude toward the need for quality in

general, and the proper application of quality assurance, in specific. A procompany attitude and good morale on the part of the employees appear to exist.

The licensee manages the project, has clearly defined the responsibilities

and authorities of the participants, and has provided adequate procedures to

ensure compliance, especially at the interfaces. This is manifest most clearly

in day-to-day activities at the site. The licensee is running the job. The

licensee does not rely on the major contractors to perform overall management

A.12
functions. There are limited and defined points of contact through which the

licensee directs the work of its contractors. It is also manifest by the fact

that the direction for the overall quality assurance program comes from the

licensee and not from its subcontractors. Personnel within the licensee's and

the major subcontractors' staffs were knowledgeable of their own, as well as

others', responsibilities and authorities. (This, despite the fact that the

organizational structure is quite complicated and not easily understood at

first review; however, within the plant project team, the organizational structure is straightforward). Large geographical separation of some of the major

organizations from the site; e.g., the A-E and the Nuclear Steam Supply System

(NSSS) contractors' home offices, in particular, was seen to hamper communication.

The licensee supports its quality assurance program with adequate

resources and backin . This is manifest by a Product Management Board comprised of senior utility management, senior project management, and senior A-E

and NSSS representatives. The Board reviews the project, examines problems and

maintains cognizance of nuclear matters. Quality does not seem to be sacrificed for schedule and cost considerations. (The case study team did not have

occasion to evaluate schedule and cost pressures, however.) As previously mentioned, the licensee and contractors have good training programs for crafts and

quality control personnel. The planning, scheduling, and budgeting activities

appear to allow for adequate resources to do the job properly. Chronic delays

were not evident. Procedure compliance was stressed at all levels and daily

work schedules appear realistic enough to allow work to be completed in accordance with those procedures.

The licensee is proactive in looking for improvement in its assurance-ofquality practices. Key line managers were taken on a retreat by an executive

vice-president to consider new approaches for assuring quality. This licensee

volunteered to be the first to be evaluated under 10 CFR 50 Appendix B requirements in the early 1970s. Its own QA organization was asked by senior management to study the QA programs of other licensees for possible improvement as

early as 1978. The licensee has been involved in one of the pilot studies for

the INPO audits. It has also participated in self-initiated evaluations.

There were numerous comments and indications in the interviews that problems,

deficiencies, and areas of improvement can be surfaced without punitive

actions.

The licensee's QA/QC function is active in reviewing, witnessing, and

verify-ing contractors' work and in helping assure that corrective action is

implemented. A well-staffed program with good procedures exists to ensure that

construction conforms to the design. Licensee construction coordinators, many

of whom have been quality control inspectors, do a preinspection of craft work

prior to formal inspection by QC. There is feedback of lessons learned from

earlier construction experience and from other projects. The licensee and its

contractors have an effective corrective action program that brings about

needed change. Design reviews by the licensee for constructability and operability were thorough. Licensee management interviewed indicated that they

encouraged their staff to surface problems as soon as possible. In the long

run, it was more beneficial and cost effective to do it earlier than later.

A.13
Case Study C

The licensee of the Case C study had established its own in-house engineering and construction management capability in the 1930s. During the late

1940s and early 1950s, outside A-E firms were used because of unusually large

(post-WW II) system expansion requirements. In the mid-1950s, the licensee's

earlier practice of doing its own engineering and construction management was

resumed.

During the late 1950s and early 1960s, the licensee planned an ambitious

program to construct several nuclear power stations. Nuclear power was recognized as a new technology and the licensee took actions to prepare itself for

entry into this field. These actions included having observers at the construction sites of some early nuclear power plants, participating in the design

of a test reactor, and studying A-Es' designs of proposed nuclear plants. The

licensee decided to build its first nuclear plant--a small (<100 MWe) power

reactor--through a "turnkey" contract for design and construction. The plant

was completed in the early 1960s, and the licensee operated it successfully for

about 15 years until it was retired. The licensee capitalized on the turnkey

design and construction activity to familiarize its staff with nuclear activities and to enable it to engineer and construct subsequent nuclear plants. The

licensee had been successful in engineering and construction activities on a

variety of generating technologies and related electrical transmission systems.

During the early- and mid-1960s, the licensee announced plans for several

nuclear plants. Environmental and/or seismic problems, coupled with intense

intervention, resulted in all but the Case C nuclear station being canceled.

These factors were also present in the Case C project, resulting in significant

delays and cost increases.

The Case C nuclear station is comprised of two large (>1000 MWe) units.

The licensee announced Units 1 and 2 in the mid-to-late 1960s. Construction

permits were issued in the late 1960s and early 1970s. Unit 1 of the nuclear

station was largely completed by the mid-1970s and fuel was received onsite for

both units in 1975 and 1976.

Then a series of required modifications to the nuclear station delayed its

completion. These were promulgated by NRC regulations such as pipe-break-outside-containment which necessitated, among other things, relocation of several

conduits (1973-75); identification and/or reconsideration of a seismic fault

which required such modifications as column stiffening, tank bracing, revised

piping changes and equipment supports, diaphragm stiffening, buttressing and

foundation changes (1978-79); the Brown's Ferry incident, which required modifications related to cable spreading, inerting atmosphere, new decking, and

extensive concrete anchor bolt installation (1980); and the TMI accident, which

required installation of extensive additional wiring, sub-cooling monitors,

hydrogen recombiners, and other modifications (1981).

It is important to note that, over the time span of about eight years, one

of the two units had been within a few months of being ready for fuel loading

A.14
on several occasions. Thus far, Unit 1 has undergone three hot functional

tests and three containment leak tests. Unit 2 has undergone one containment

leak test.

In 1981, the licensee received a low-power license for Unit 1. It was

suspended two months later following notification by the Licensee to the NRC

that the diagrams used to locate the vertical seismic floor response spectra in

the Unit 1 containment annulus area were in error. Briefly, the error occurred

as follows. The licensee had transmitted to its seismic consultant a sketch

with piping loads depicted from which the consultant was to determine the seismic response spectra. There was no indication on the sketch which unit the

loadings applied to, although the consultant understood (correctly) that they

were for Unit 2. The consultant thought that Unit 1 was a slidealong unit

(instead of a mirror-image unit) and performed the analysis on Unit 1 based on

that assumption. The information returned to the licensee was marked as

"Unit 1." (In fact, the analysis applied to Unit 2, not Unit 1.) The licensee

accepted the data at face value as being for Unit 1 and, because it knew the

plants to be mirror-image plants, "flipped" the data so as to be applicable to

Unit 2. (In fact, the data in the "flipped" condition were correct for Unit 1,

not Unit 2.) The seismic response spectra were now incorrect for both Units 1

and 2.

Upon confirmation that wrong diagrams were used in developing Unit 1

design requirements, the licensee reanalyzed the design requirements for Unit 1

using the appropriate containment annulus frame orientation diagrams and determined that, as a result of the error, modifications were required to be made on

several Unit 1 pipe supports. These modifications involved such actions as

adding snubbers, changing the snubber size, adding braces, replacing structural

members, and stiffening base plates.

In an inspection report of seismic-related errors, the NRC stated that the

basic cause of this problem appeared to be the informal manner in which the

subject data were developed by the licensee and transmitted to its seismic consultant, and the lack of independent review of the data within the licensee's

organization prior to submittal to that consultant.

The licensee had been the architect-engineer/construction manager for the

Case C nuclear power station. One of the major actions that the licensee took

as a result of the aforementioned error was the formation of a Project Completion Team comprised of the licensee's engineering/construction personnel and

personnel from a newly hired A-E firm.

An extensive Independent Design Verification Program (IDVP) was initiated

in early 1982 in response to the seismic errors discovered in 1981. The Project Completion Team also conducted a concurrent design verification program.

As of January 1983, much of the design and construction required as a

result of a wide range of reviews spawned by discovery of the seismic diagram

error had been completed. The licensee had applied for reinstatement of the

low-power operating license.

A.15
At the time of the case study, neither the IDVP nor the licensee's design

verification program had revealed significant further deficiencies in the

design or construction of the nuclear station. The design errors that were

identified were not considered to have prevented the affected systems from per- ?orming their functions satisfactorily.

The Case C study team identified the following root causes to be significant in contributing to the quality failures experienced by the licensee.

The primary root cause of the design-related quality problem was the

licensee's failure to plan, establish, and effectively imp ement a management

sy-stem which provided adequate control and oversight over all aspects of the

project. The licensee failed to fully control the flow of information across

alTThe interfaces inherent in the engineering/design process and failed to

provide appropriate reviews of the information transmitted.

Several factors appear to have contributed to this failure. Using the

experience gained from their earlier turnkey plant and participation of the

staff in other nuclear projects, the licensee, after considerable evaluation,

assumed the role of A-E for this nuclear project. As previously stated, the

licensee had good success with various types of generating projects it had

engineered and managed over the years. The nuclear project was fitted into a

design, engineering, and management system that may not have been adequately

modified to handle all aspects of nuclear work, including the control of quality at design interfaces. Generally, it has been more difficult to apply QA to

the engineering process than to the construction process; historically it has

not been done effectively and the licensee had similar difficulty. Even though

QA was apparently rigorously applied to the construction of the project in

question (and growing in strength as NRC requirements and guidance evolved),

the licensee did not implement NRC quality requirements for engineering as

intensely as it did for construction. The licensee's attitude seemed to be

that the engineering organization was comprised of professionals capable of

doing what is right without overlaying a stringent formal quality assurance

program beyond the normal controls considered part of good engineering prac- tice.

Another factor in the problem of assuring quality in engineering dealt

with changes in NRC requirements that occurred between the late-1960s and the

late-1970s. It appears that the licensee did not completely understand the

implications of the changes as they occurred; hence, an engineering QA program

that the Atomic Energy Commission (the predecessor agency to the NRC) might

have found acceptable early in the project might not pass NRC scrutiny in the

late 1970s.

Secondary root causes also contributed to the quality failures. These

included the following.

a. Failure to understand and appreciate the potential merit of a formal

institutionalized QA program. This is suggested by the fact that the

Project Completion Team adopted the A-E's quality assurance program, even

though they were concerned about imposing a new system on the project at a

A.16
late date. (The licensee's engineering procedures were maintained, however.) Examples of program deficiencies (drawn from various reports on

the project and discussions with NRC inspectors) that had occurred during

the project and the key indications of these deficiencies were as follows:

Design Control:

* The licensee's engineering staff did not always document important data transmitted to subcontractors.

* Design information was orally transferred to subcontractors.

* Assigned cognizant engineers were sometimes bypassed in the

information or approval process.

* Adequate internal communications among the disciplines did not

always exist within the licensee's organization.

* Requirements for independent reviews were not always followed.

Control of Instructions, Procedures, and Drawings/Document Control:

" The licensee's engineering management did not develop and/or

implement formalized procedures to comply with early QA program

requirements.

" In some cases, outdated drawings were used to establish seismic

criteria.

" In some cases, diagrams in lieu of released drawings were used--

a contributing factor to the seismic problem.

Control of Service Contracts:

* Proceduralized activities for service contracts were lacking to

control all interfaces with some subcontractors.

* Informal "letter-type" contracts and documents were used.

e Service contracts were not treated as formally as hardware contracts.

* Formal quality requirements were not placed on some subcontractors until the late 1970s.

b. NRC's failure to sell QA as a management tool. The NRC requirement for

quality assurance seemed to come across as just another requirement. The

emphasis from the NRC seemed to be on externals--the trappings of a QA

program, rather than its substance: develop a QA manual, set up a QA

organization, have the QA manager report high in the organization, etc.

The NRC tended to lose sight of what it was trying to achieve and failed

to provide adequate guidance on what a quality assurance program should

A.17
be. The NRC failed to inspect against QA requirements in the engineering

area to the extent they inspected against *QA requirements for construction.

Case Study D

Early in the 1970s, the Case D licensee decided to construct nuclear generating plants. A possible natural gas shortage, the favorable economics of

nuclear power, and public acceptance of nuclear power were reasons the nuclear

option was deemed by the licensee to be a logical choice. Two projects were

initiated, one in which the licensee would be sole owner (and which was later

canceled) and the other a joint partnership with the licensee as project manager for all aspects of engineering design, construction, and operation. This

latter project comprised two large (>1000 MWe) units. The first-unit operation

was projected for the 1981-1982 timeframe, with second-unit operation to follow

about two years later. Both have been delayed.

The licensee had no prior nuclear experience, but this was not seen as an

insurmountable obstacle. Many other utilities were (or had been) in the same

position, and the leaders in the industry were viewed as not having that much

more experience.

In selecting an architect-engineer/construction manager/constructor

(AE/CM/C), the licensee had compiled a candidate list that included

the firm selected. Because many nuclear plants had been on order in the late

1960s and early 1970s, most A-E firms were committed and the licensee realized

there would not be an opportunity to select from a large number of firms. It

selected a large engineering and construction firm as both A-E, construction

manager and constructor, one that had performed well for the licensee in nonnuclear projects. This firm was noted for its ability to complete large

construction projects within cost and schedule. Its primary forte up to the

early 1970s, however, had been in other than nuclear work. It did not have as

extensive nuclear experience as many other A-E or constructor firms. This

would be its first major nuclear engineering and design project, and the first

nuclear project for which it was construction manager.

When the licensee applied for a construction permit in the mid-1970s, it

was received about 6-8 months earlier than either the licensee or its A-E/C

expected. While this may have been the result of a national emphasis to

streamline the licensing process (a few years previously, the oil embargo had

taken place and there was national concern over energy independence), it also

had the effect of confirming, in the eyes of the licensee, the effectiveness of

the AE/CM/C. The licensee maintained (during the site visit) that rapid

licensing resulted in construction being started before an adequate amount of

design-and engineering (estimated at less than 25%) had been completed.

During the early phases of the project, the licensee was also staffing its

own project management organization to fulfill its commitments to the project. Early in the project, the licensee used a matrix-type organization to

manage the project. The approach was recognized to be embryonic, but thought

capable of doing the job. The licensee recognized that managing a nuclear

plant construction project would require a greater involvement than that

A.18
required for a fossil plant. Project management rested on an organization that

had responsibility for both nuclear and fossil projects.

In the course of the project activities, the licensee's staff had to issue

some stop work orders to the A-E/C on specific tasks, e.g., work on concrete

and on welding on the containment vessel liner. The licensee became concerned

that the A-E/C was not accurate in its estimates of cost and schedule status of

the project. Further, according to the licensee, the A-E/C was not demonstrating an adequate understanding of quality assurance or how it should be applied

to a nuclear plant. The A-E/C wanted to do a good job, but it was not effectively balancing costs, schedule, and quality, according to the licensee. At

about this time (mid-to-late .1970s), and perhaps coincident with the cancellation of many nuclear plants, the licensee believes there was a waning of

interest by the A-E/C in the project, with a consequent loss of engineering and

management resources.

In late-1978, the licensee initiated a six-month study of whether the

A-E/C should be replaced. Consultations with other A-Es and constructors led

the licensee to conclude that it would do best to support and improve the A-E/C

organization and to become more involved in the design and construction activities. Thus, during the course of the project and up into the early 1980s, the

licensee increased its involvement in the A-E/C activities. In 1978, following

a consultant report that there was a high likelihood of both cost and schedule

overruns, the licensee acted to strengthen its project management. It made the

power plant engineering and construction manager the nuclear project manager

and created a project management team reporting directly to him. About 30

experienced personnel were added from a consultant organization until the

licensee could replace them with comparable personnel.

In 1979, the licensee expressed written concern about the A-E/C's performance and directed it to take several actions in the areas of construction

supervision, planning, scheduling, control of construction work, labor productivity, and site housekeeping. The A-E/C agreed in large measure with the

licensee's assessment and already had begun corrective measures to improve its

performance. While some concerns were promptly resolved, others continued to

require the attention of the licensee.

Thereupon, the licensee took a stronger stance by trying to help the A-E/C

recognize its responsibilities and by injecting more licensee personnel into

the contractor's realm of operation in an effort to compensate for the difficulties being experienced. It became more obvious to the licensee as time went

on that the A-E/C's strength in this project was as a constructor, and not as

an A-E because the engineering effort was not sufficiently leading the construction effort. Instead, construction was essentially driving the engineering portion of the project.

Symptoms of QA program breakdown gradually appeared at the construction

site as the project became more involved in complex work. There were allegations of quality control (QC) inspectors having to rush through or overlook

A. 19
inspection functions, being intimidated and threatened by construction personnel, and lacking backing by their site supervisors. There were also allegations about bad construction practices, workmanship, and falsification of

records.

Concurrently, the NRC initiated an investigation through its regional

office in response to the allegations. Ten allegations were investigated from

July 1977 to November 1979. The results of these investigations substantiated

the allegations of harassment, intimidation, and lack of support of QC inspectors. The investigation demonstrated shortcomings in the project management

and that the implementation of the QA/QC program did not meet the standards

required to assure that the facility would be constructed to NRC requirements.

In April 1980, following a lengthy investigation of improper construction

procedures and alleged inadequacies in construction and inspection, the NRC

issued a Show Cause Order for safety-related sections of the plant. In total,

31 allegations of impropriety were made, and 19 were substantiated. The Show

Cause Order findings are summarized in the following partial quotation:

"This investigation has determined through the examination of current

work activities and interviews with over 100 personnel onsite that

the QA/QC program at the project is impaired ... Allegations of

harassment, threats and intimidations of OC inspectors by construction personnel that were common knowledge through rumors have been

substantiated ... Difficulties in controlling structural concrete

activities and quality problems in completed portions of structures

have been continuing problems at the project since 1977 ... Procedures lacking in clarity, qualitative acceptance criteria, personnel

with inadequate training, experience and/or education, production

pressures, harassment, and intimidation have all contributed to this

situation ...

"That the project QA management may not fully recognize the requirements for QA/QC organizational freedom is evidenced by a January 4,

1980.lecture by the A-E/C project QA manager ... " "... strongly

emphasized the fact that a A-E/C QC inspector's decisions are subject

to question, challenge, and supervisory review and reversal ... "

"In the area of soil foundations, serious questions remain as to

whether the implaced compacted backfill has met the required densities ... "

"Although safety-related welding activities are at an early stage at

the project, serious problems were identified in the areas of welder

qualification, welder process controls, and NDE performance interpretation ... "

"Further, although not reviewed during this investigation, Licensee

personnel indicated significant problems relative to the storage and

maintenance of equipment and processing of quality records ... "

A.20
In July 1980, the licensee responded to the Show Cause Order in which it

claimed that it had undertaken, along with the A-E/C, a comprehensive examination of their organizations with the intent of enhancing their combined capability to design and construct the plant to conform with all applicable standards and commitments. Both had undertaken major changes in organization, personnel, and procedures to meet this objective.

The licensee contended that these improvements by itself and the A-E/C

revitalized the project's QA program.

In spite of efforts to reconcile differences and to establish a credible

program, the relationship between the licensee and the A-E/C continued to

deteriorate. This culminated in the termination of the A-E and construction

management parts of the A-E/C's contract by the licensee in the fall of 1980.

According to the licensee, the A-E/C subsequently terminated its construction

contract as well.

In September 1981, the licensee replaced the A-E/C with another A-E/C and

an independent constructor. The latter was given responsibility for QC and QA

activities, reporting directly to the constructor's offsite corporate headquarters. QA/QC activities on the part of the constructor were to be monitored

by an independent QA department maintained by the A-E/C. An overview of all

QA/QC activities was to be maintained by the licensee. This management system

was intended to provide checks and balances to avoid a recurrence of the types

of problems that had occurred previously.

Within the licensee's organization, additional changes were made to

strengthen the project and to improve oversight over both the A-E/C and the

constructor.

Safety-related work resumed in the fall of 1982. Construction completion

goal dates for the two units were rescheduled to the mid-to-late 1980s.

The Case D study team identified the following root causes to be significant in contributing to the major quality and quality assurance problems

experienced by this project.

The primary root cause for the construction difficulties was the inexperience of the project team. While the licensee had extensive experience in constructing and operating fossil fuel-fired plants, it had not been involved with

constructing a nuclear plant. It apparently failed to appreciate the difference in scope and complexity between the two, as reflected in the management

methods and procedures applied to the project by both itself and the prime contractor.

The licensee's lack of nuclear experience was further aggravated by the

lack of experience of key individuals involved with the construction project.

This project was the first nuclear project for the project manager, project

engineering manager, and the quality assurance manager. The licensee was organized by technical discipline into a matrixed fossil-nuclear organization.

Personnel were shuffled from fossil to nuclear and vice-versa as.the need for a

particular discipline arose. As. a consequence, a requisite core of full-time

A.21
professionals was slow in developing. The licensee did hire some staff with

nuclear experience; however, they were not sufficient to provide the necessary

core of competence.

Another problem resulted from the three management levels between the site

quality assurance organization and the executive vice-president responsible for

the project. -The delay and filtration of information caused by this managerial

superstructure .contributed to incomplete understanding at the executive level

of the problems that were developing.

Historically, the licensee had depended upon its contractors to do the

bulk of the planning and execution of fossil plant construction jobs. The

licensee assumed that this same approach would be appropriate for the nuclear

project.and, consequently, placed too much reliance on the prime contractor.

While not adequately involved at higher levels of management, in some

respects the licensee became too involved at lower levels. Licensee personnel

found themselves directly in the approval chain for A-E/C design approvals and

other documents. This had the effect of-unduly restricting work flow. Everyone in the chain had veto authority, and everyone had to agree. Toward the end

of the A-E/C's tenure, the licensee assumed nearly all of the contractor's

responsibility in an intensive but vain effort to help the contractor's effectiveness. In effect, the engineering work that was performed was the product

of the A-E and the licensee instead of the product of the A-E with licensee

overview.

The A-E/C, like the licensee, had inadequate nuclear experience. As a

consequence, according to the licensee, the A-E/C did not understand the comp'exity of nuclear plant design and construction and did not bring to bear the

ntzessary technical and management skills. These problems were aggravated by

tne earlier-than-expected approval of the construction permit and, therefore,

the A-E/C did not have the planned time to come up to speed on design and personnel competence.

Design. work proceeded slowly and specifications and procedures were inadequate and formatted in complex ways. There appears to have been insufficient

engineering support for design and construction. The capabilities that the

A-E/C did have were channeled into those areas in which it had experience, to

the neglect of other equally important areas, according to the licensee.

Engineering efforts were scheduled based upon dictates from construction. This

led to unrealistic demands on the engineering groups. Quality assurance and

quality control were also dominated by construction. There were many conflicts

between QA/QC and construction in which construction generally prevailed.

Project management di'd not have an adequate understanding of the interfaces and

responsibilities for such functions as QA/QC, engineering, design, and construction. As a result, the constructor did not react in a timely, effective

way to problems and did not employ proper management systems to reveal the

causes of problems and to prevent them from recurring.

There was inadequate management support of quality. Neither-the licensee

nor its A-E/C appeared to have had a full understanding of quality and quality

A.22
assurance concepts as they applied to nuclear plant construction. Although

both made verbal commitments to quality, these were not actualized in the construction process. The licensee was not appropriately involved in monitoring

the total scope and details of activities and did not know how to take effective corrective action to prevent recurrence of problems. The A-E/C did not

sufficiently insulate QA/QC from cost and schedule demands, nor shield them

from intimidation or harassment. Consequently, construction supervisors dominated the QA/QC functions, both in the field and in the form of published

policy, which emphasized minimizing cost and maintaining schedule. The long

chain of command filtered information and introduced inefficiencies into the

decisionmaking and implementing processes. To further compound these problems,

the licensee had none of its own QA inspectors at the site until 1980. This

gave low visibility to management support of quality, which may have been

interpreted as a lack of backing from top management for quality.

There was an insufficient review by NRC of the licensee's (and its A-E/C)

experience in nuclear plant construction, and an inadequate involvement in the

inspection process in the early phases of construction. A recurrent theme was

that the NRC licensing process did not adequately address the ability and

experience of the project management, nor was there adequate evaluation of

whether the nuclear industry had over-extended itself at the time this plant

was contracted. The inspection process-also tended to ignore management

issues. The irregular presence of NRC inspectors at the site early in the

project was cited as a contributing factor. The process used by NRC in identifying and dealing with problems was cumbersome and required excessive amounts

of time. In effect, the NRC approach was one of allowing troublesome situations to progress to the point that a case could be built for taking the drastic action represented by a Show Cause Order. Some of the problems involving

the NRC required up to two years to resolve.

The changing environment of the nuclear industry was a contributing factor

to quality-related problems. The rapid proliferation of regulations during the

mid-1970s was cited as particularly troublesome, especially since the design of

this particular plant was probably less than 25% complete when construction

began in 1975 and proceeded more slowly than it should have in relation to construction activities. Regulatory changes from the TMI and Brown's Ferry

incidents were also a severe blow to the project, according to the licensee.

Declining energy projections and increasing interest rates made funding

plant construction more difficult. Incidents within the industry, such as TMI

and Brown's Ferry, reflected into changed design requirements. All of these

changes coming in rapid succession further complicated the task for the relatively inexperienced nuclear staff of the A-E/C and its A-E/C licenseeconstructor.

A.23
Case Study E

The licensee had previously constructed two large (-700 MWe) turnkey

nuclear projects in the late 1960s. CPs were issued in 1967 for both units,

with one unit achieving commercial operation in 1972 and the other in 1973.

The licensee assigned a small group of its own engineers to the project to

begin to accumulate a nuclear experience base.

The licensee's next nuclear project was the construction of two 810-MWe

units of similar design. Construction of the first unit began in 1969 and commercial operation was achieved in 1976. Unit 2 (Case Study E) was announced in

1971, but major construction did not commence until 1977. The licensee contracted design and construction management (including QA/QC) on Unit I to an

A-E firm with considerable experience in design and construction of nuclear

projects. The licensee performed a project overview function.

The rapid rise in oil prices brought on by the Arab oil crisis, in the

early 1970s motivated the licensee to restart construction of Unit 2. In 1976,

construction of Unit 2 was proceeding under a Limited Work Authorization (LWA);

however, work was halted for 15 months by court injunction. After this injunction was resolved, the NRC issued a CP in June 1977 and major construction commenced.

The 15-month delay had advantages. During this period, the integrated

management team was structured, a detailed master project schedule was developed, design completion was advanced, procurement of engineered components was

continued, and a much more detailed level of planning was achieved. These factors were identified by the licensee as major contributors to the project's

success. The licensee recognized that it had the talent to assume full management of the project and made the decision to do so. An integrated management

organization using personnel from the licensee and A-E for key positions was

established. The integrated management concept worked well and a spirit of

teamwork, commitment, and loyalty to the project was achieved.

Advancement of the design was a particularly significant item. The design

was approximately 75% complete when construction resumed. Vendor drawings on

equipment were available, and construction drawings reflected correct equipment

installation details. Some nuclear projects have experienced significant problems because designs were not sufficiently advanced for construction to proceed

efficiently. Typically, construction begins with designs about 50% completed,

sometimes less.

During the 15-month delay, the licensee had its field engineering work

force develop many of the construction activities in considerable detail. This

information was used in preparing procedures and was integrated into the

design. The licensee also used the time to prepare effective procedures to

control the project, including refinement of its own QC procedures.

A.24
The licensee had decided to continue procurement of engineered materials

during the 15-month delay. This decision resulted in vendor drawings being

available to the A-E and to field forces well in advance of equipment installation or construction-related activities.

As a result of its experience and these factors, the project achieved a

59-month time span from start of concrete to completion of cold hydro, static

testing, 35 months better than current industry averages.

The licensee experienced no major quality problems during construction;

however, on several occasions during construction, extensive reinspection

efforts were required because adequate inspection records were not available.

For example, an NRC inspection resulted in 12,000 socket welds having to be

reworked and reinspected. Other quality-related problems typical of large construction projects also occurred. The licensee provided its QA organization

with the following authorities as a check on its QC operations, which reported

directly to the construction organization:

" QA held the "N" Stamp for the Licensee, which strengthened its overview function through access to records and the authorized nuclear

inspector (ANI).

* QA performed daily surveillance of construction work, including formal audits of the entire project function.

" QA was responsible for the records vault, and through this activity

monitored QC inspections.

The licensee stated that having QC report to construction permitted a better working relationship between crafts and QC, and thus better project

results. While this action resulted in a more-or-less adversarial relationship

between QA and QC, management's message on quality was "do it right the first

time." This message supported the licensee's effort to stay on schedule.

The licensee identified what it thought to be the ten most important factors in completing the plant essentially on schedule, within cost, and without

major quality-related problems:

1. management commitment

2. a realistic and firm schedule

3. clear decision-making authority

4. flexible project control tools

5. teamwork

6. maintaining engineering ahead of construction

7. early startup involvement

8. organizational flexibility

9. ongoing critique of the project

10. close coordination with the NRC.

Apart fromthe initial 15-month licensing delay there were no other significant licensing delays. No significant public intervention occurred in the

construction phases of the Case Study E nuclear station. No fines were levied

A.25
against the licensee for nonconformance violations or quality deficiencies during construction and startup of the project.

The Case E study team identified the following to be significant in contributing to the absence of major quality failures.

The licensee had an experienced design, construction and construction

management team. A major factor in the project's success was the nuclear

experience of the licensee and its staff and contractors. The Case E project

had a seasoned group of managers and a tried, although evolving, set of project

controls. The A-E commented that an estimated 75% of the skilled labor force

carried over from the Unit 1 project to Unit 2. Early in the previous project,

an extensive training program was instituted to develop additional craft persons, a factor important to achieving quality. An estimated 50% of the A-E

supervision also continued from the previous project.

The licensee recognized the need for effective planning and implemented

it. During the 15-month licensing delay, effort was redirected towards

7eveloping detailed plans and schedules to facilitate the construction phase.

The requirements were integrated into the design and procurement process to

minimize disruption of the construction process later. A realistic and firm

schedule resulted from the planning process.

The licensee exercised control of the project through strong owner

involvement, commitment of resources, and an effective integrated organization. An important root cause for this project's success was the licensee's

?lT-i management, including providing all of the onsite quality control and

quality assurance functions. Clear decision-making authority was placed at the

proper level. The licensee established a matrix organization comprised of its

staff and of the A-E/constructor staff that created an environment of affiliation and loyalty to the project.

The project became the priority project for the licensee, who committed

the necessary resources for the project. The licensee committed to a project

schedule of 65 months (from first concrete to core load) and consistently

invested additional resources to maintain or recover schedule whenever needed.

Recognition of the need for early startup involvement. The Case E construction plan had startup logic involved in it with the decision to involve

operating personnel at an early time. That decision reflected into certain

innovative construction approaches on the project. In previous projects,

operations personnel were not involved until the project, or at least major

systems, were essentially completed. The operations involvement took place

over an 18-month period and included about 60 personnel. There were 494 turnover packages. Early turnover helped resolve problems, including qualityrelated problems early on.

Problem identification and solution was an important part of the licensee's management phi1osophy. lhe licensee followed a policy of resolving problems at the earliest possible time. As problems or changed conditions confronted the licensee, it formed teams to resolve them in a timely manner. An

A. 26
independent engineering verification program was instituted about a year before

fuel loading. The A-E maintained a larger field force than on previous plants

to process field change requests, nonconformance reports, etc., more rapidly.

The licensee had task forces examining how impending changes might impact

construction. To help circumvent delays that might arise from regulatory matters, it maintained three engineering personnel at NRC Headquarters, some at

the utility's engineering office, and three at the site to interface with NRC

personnel and provide timely responses to licensing questions. It avoided

adversarial relationships. On the NRC side, its inspection surfaced problems

early, thereby avoiding major issues that might continue long into the

construction period.

The licensee achieved a high level of teamwork on the project. In discussing teamwork, the licensee stated that all of the participants in the project

worked to meet the project objectives, not their own (sub)-objectives. Heavy

emphasis was placed on integrating work with NRC, EPA, trade councils, etc.

The entire state Congressional delegation supported the licensing schedule.

There were quarterly labor-management meetings (there has been no work stoppage

of significance since 1980). Labor was involved in improving productivity.

Interviews with personnel on this project revealed a positive orientation

toward the project. They were proud of what they had accomplished--they identified with the project. The reduced number of individual contractors on the

job may have been a factor in achieving the Strong team effort.

The licensee recognized the merits of an institutionalized QA program and

was innovative in structuring and implementing its QA program. This root cause

was manifest as follows:

a. The licensee established a single.QA/QC program for the project. A single

program reduced confusion through fewer interfaces and uniformity of

requirements. The A-E made the comment that a single QA/QC program was an

asset that avoided gaps in the program with the increased possibility of

things falling through the cracks.

b. The licensee had a corporate commitment to quality. The licensee extended

its QA program to programs other than nuclear, which indicates 'its recognition of QA as an effective management tool. It is involved in a program

with eight other utilities that audit one another's QA program.

The licensee's QA organization became the ASME "N" Stamp holder for

Case E, which permits greater control of the inspection process and a different perspective than provided by NRC inspection.

c. The licensee balanced schedule and QA commitments. The licensee responded

to several setbacks by defining solutions and applying whatever resources

it took to resolve each problem and recover schedule. Emphasis on maintaining schedule did not compromise quality. Good management practices

can produce quality amidst commitment to schedule.

A.27
Case Study F

The Case F nuclear power project was organized in mid-1974 and an application for a construction permit was filed with the NRC for three 1,270-MWe generating units. The construction permit was granted in the spring of 1976 and

construction began in June of that year. At the time of the case study (August

1983), the status of the three plants was as follows: hot functional tests

were performed on Unit 1 in mid-1983. During these tests, reactor coolant pump

problems developed, and cracking was noted in the control element assembly

guide tubes, as discussed later. Unit 2 hot functionals are scheduled for

early 1984. Unit 3 is about three-fourths completed, with commercial operation

expected in 1986.

Several utilities participate in the project with ownerships ranging from

about 10-30%. One of them was selected to be the licensee who would manage the

project and operate the plant on behalf of the others. The utility selected

had no prior nuclear construction experience, but at least one of the presently

participating utilities had constructed and operated nuclear plants.

Information provided by the licensee showed that the project was conceived

in the early 1970s. The initial planning was done by the licensee with a small

staff it had assembled for that purpose, all of whom were experienced in the

nuclear field. This staff analyzed what had gone wrong at other nuclear projects and arrived at findings that played an important role in organizing and

carrying out the Case F project. They felt that a long-term commitment of

qualified people to the project was important, both from the licensee as well

as its contractors. They noted that utilities typically tended to do the wrong

things and get involved in the wrong places in nuclear projects, such as wanting to approve everything. Utilities often believed they knew more about all

aspects of the projects than their contractors or the regulator. It was found

that utilities were often very untimely in their actions and decisions, which

caused costly delays. Finally, they perceived that utilities often have the

wrong type of organization. For nuclear projects, they found that the organization must be both management and detail oriented.

Based on these general findings, the licensee's staff came up with some

recommendations that formed the basis for its project organization. First,

there should be a strong project concept, both within the licensee's and A-E's

organizations--but with a singleness of purpose. Second, the licensee should

manage the interfaces. Third, there should be single points of entry for all

correspondence to each organization, and the communication channels should be

monitored to ensure effectiveness. Fourth, clearly written design criteria

should be established and maintained current as changes occurred. Fifth, the

licensee should establish which documents produced by the A-E and others it

would review. Sixth, the licensee should be responsible for obtaining all

project permits and licenses. Seventh, purchasing and construction work should

be controlled through administrative procedures (such as having standard terms

and conditions for contracts and purchase orders), a qualified bidders list,

and work initiation procedures. Eighth, safety and quality must come ahead of

schedule and cost, not only for the licensee, but for its contractors, also.

A.28
These priorities must also be conveyed to the project regulators. Ninth, adequate systems and procedures must be established to monitor the project.

Based on discussions with the licensee, it was determined that these early

recommendations were implemented as follows:

1. An A-E construction manager/constructor experienced in nuclear construction was hired.

2. Contracts with major contractors required a long-term commitment of

key personnel.

3. Interfaces were defined and procedures were developed to ensure the

proper flow and interpretation of information and to permit monitoring.

4. Frequent meetings were held with the major contractors' senior management to discuss project problems and to facilitate decisions.

5. Contractor responsibilities were defined for design, specifications,

purchasing materials, and hiring and managing labor forces.

6. The licensee set up a strong project organization with staff hired

from other utilities, architect-engineers, vendors, and the NRC. The

head of the licensee's nuclear project had considerable experience

with designing and constructing commercial nuclear reactor projects. The licensee's organization actively overviewed and closely

monitored its contractors. Construction input was provided early in

the design effort. Operations input occurred early in the design

effort, also.

7. Licensing activities were assigned to executive levels to help ensure

prompt decision making. It was the licensee's philosophy to be

responsive to the regulators.

In the context of these recommendations, the Case F project was implemented.

To date, no major quality problems have arisen in the construction of the

Case F nuclear power station. Also, no significant public intervention has

occurred in the licensing or construction phases of the station. As previously

mentioned, significant primary pump problems have occurred in startup

operations, and other startup problems have surfaced as well.

The licensee has experienced construction problems typical of large construction projects. Poor communication about project completion existed

between the licensee and its contractors, and the licensee took the necessary

steps to reorganize the scheduling function. Poor productivity had to be overcome, and the licensee insisted on changes in personnel and organization of its

A-E/C. The turnover rate was considered high for the field engineering staff,

and the licensee found it difficult to retain a good staff. System walkdowns

revealed quality deficiencies that required rework. Unit 1 experienced major

A.29
problems in the transition from construction to operations. The good

management practices that led to construction success were not applied equally

to the transition from construction to operation. Unit 1 hot functionals have

revealed the primary pump deficiencies. While major quality-related problems

have not been experienced in construction, there is a strong possibility that

the design verification process supporting new components, such as the primary

punips, was not adequately explored.

The Case F study team identified the following root causes to be significant in contributing to the absence of major quality failures in construction.

The licensee determined in advance the important factors in constructing a

nuclear project and took the necessary actions to achieve them, including hiring key personnel with nuclear experience, retaining an experienced A-E/C, and

creating an organization appropriate for the project. The licensee recognized

from the outset that construction of a nuclear power plant would be different

from previous projects it had undertaken. This realization resulted in several

key decisions that were strong contributors in avoiding significant quality

problems in construction. First was the recognition that fossil fuel plant

experience alone would not be adequate for the project staff; selective

recruiting of personnel for key positions with nuclear plant construction

experience was essential. Second was the licensee's action in retaining an

experienced architect-engineer/construction manager/constructor for the project. Third was the recognition that it would not be appropriate for the

nuclear construction project to be fitted into an existing organization component; a separate, strong project organization would be required--one which

could closely monitor and actively overview the management of the project. The

combined experience resulted in many actions appropriate for controlling and

monitoring the project. One action that was singled out by the licensee and

its A-E-was the development of a detailed scale design model (costing several

million dollars) of the plant to supplement design drawings as a basis for configuration control. This model, together with a design that was estimated at

about 60% complete when construction started, was credited by the licensee and

its contractors as being instrumental in facilitating the construction activities and avoiding many problems experienced in other nuclear projects.

On the other hand, a lack of experience has led to confusion and inefficiencies in the startup testing program on Unit 1. That activity does not

appear to reflect the same degree of understanding, planning, and preparation

that was applied to the construction phases. The startup testing program has

been restructured more than once in the past several years. There appears to

have been a lack of appreciation that nuclear is a more complex startup process

,than fossil plant startup, and that turnover from a strong construction manager

requires a well thought out transition plan and startup program. The transition was to have the constructor do the prerequisite tests and the operations

staff perform the preoperational tests. That did not work satisfactorily for

several reasons, but probably primarily due to a lack of a well thought out

plan. Startup of the subsequent units involved an operations/construction team

involved in both prerequisites/preoperational tests at an earlier stage, with a

greater focus on completion of systems (versus the area concept of completion).

A.30
During hot functional tests on Unit 1, the pump problems occurred because

of a clearance problem between the pump impeller and diffuser, and perhaps compounded by flow conditions that existed during the tests. Previous factory

tests of shorter duration had not revealed a similar problem. Cracking in the

control element assembly tubes, which occurred during the initial startup

tests, also appeared to be associated with the flow conditions. First-of-akind equipment, such as the pumps, frequently require modification in the

start-up phases of operation. The licensee stated that it had been relying on

prior orders for similar components by other licensees to work out the "bugs"

on the first-of-a-kind equipment. Nuclear plant delays or cancellations

invalidated this approach. Experience would have suggested that a revised

approach to permit more extensive design verification testing of such equipment

prior to installation would be prudent.

The licensee pursued several management practices, especially the working

involvement of upper management, which permitted the project team to function

effectively. The working involvement of upper management was important in many

respects. They were sufficiently involved that when corrective action was

needed, it could be taken in a timely and decisive manner. They set the tone

for the project's orientation toward quality, expressed in several ways, but

importantly in terms of high plant reliability goals, as well as maintaining

quality standards for non-safety systems and for temporary construction. They

established a philosophy of good public relations and a nonadversarial working

relationship with the NRC. They arranged for appropriate contracting practices

and labor relations. They minimized the number of contractors on the project,

clearly defined responsibilities of the participants, and established sound

procedures for design and construction activities. Finally, they helped assure

uninterrupted financial resources for the project. Good management practices

appropriate to nuclear projects were clearly another root cause in avoiding

significant quality problems in construction.

A relatively high design completion at the start of construction of Unit 1

and the replication of the design for the two subsequent units permitted problems experienced in Unit 1 to be corrected in advance in Units 2 and 3. An

example is the transition from construction to operation described previously. The design completion was estimated at about 60% when construction was

started. The use of the model as a design model also helped to reduce interferences and resulting field changes. Construction planning activities were

enhanced. The licensee adjusted well to the changing regulatory environment

over the life of the project.

The responsibility for quality was placed at the working level. Field

engineers were required to sign off on inspection hold points before involving

the QC inspector. This also helped preclude QA/QC personnel directing the work

through the inspection process. The licensee established its QA requirements

sufficiently broader than NRC requirements (though with appropriate cognizance)

so if the latter were changed, the former would remain unchanged.

The attitude of senior project management that the NRC could help the

project helped avoid unnecessary confrontations that were counterproductive.

e licensee, as a matter of policy, established a constructive nonadversarial

A.31
worKing relationship with the NRC. The vice-president of the Nuclear Department has been the licensee's prime contact in licensing matters and has set the

criteria and guidelines for interactions with the NRC. The independent design

reviews conducted by the licensee has NRC staff as listeners/observers.

The proceduralized approach to design and construction was an important

contributor in avoiding major quality-related problems. The project had workable procedures to control calculations, specifications, procurement, and other

facets of the construction process that had been adopted early in the project. The licensee established design criteria for the project in conjunction

with the A-E, and they have been the governing guidelines for the project. The

document specifying the criteria has been the control document for the life of

the project, which extends into operation.

The A-E's resident engineer said that the basis for quality at the project

was that the quality control procedures were specific. "It is an expensive

process," he said, "but it works."

The constructor prepares work planning procedures/quality control instructions, which control safety-related work for non-safety balance of plant items,

though less inspection is applied.

The Zimmer Case Study

Concurrent with the case studies, an independent analysis was made of Cincinnati Gas and Electric Company's (CG&E) Zimmer Unit 1 nuclear project (TPT

1983). The study was mandated by the NRC in a Show Cause Order to CG&E in

November 1982. One of the provisions of the Show Cause Order was the requirement that CG&E have a qualified consultant conduct an independent review of the

project management of the Zimmer project. Torrey Pines Technology (TPT) was

retained by CG&E to conduct this independent review, including CG&E's quality

assurance program and its quality confirmation program. The review was to

identify the organizational changes needed to ensure that construction of the

Zimmer 1 plant can be completed in conformance with the NRC regulations and the

construction permit. This section of the case studies report summarizes the

TPT findings. The summary is intended to provide additional information from a

second perspective on the root causes of quality-related failures in nuclear

plant construction.

The selection of TPT was subject to the NRC approval of its independence

and capability to perform the review. Several public meetings were held, and

the NRC reviewed TPT's proposed program plan for conducting the review. As a

result of the program plan review, greater emphasis was placed on evaluating

CG&E's management of the Zimmer project and less on a detailed review of procedures, specifications, records, etc. The program plan was also revised to

include the evaluation of the Zimmer project management from the inception of

the project to the present. The revised program plan was approved by the NRC

in a public meeting with TPT on May 26, 1983, with a provision that TPT include

an evaluation of the relationship between CG&E and Reactor Controls, Inc., one

of the contractors.

A.32
The basic approach used in the TPT study was to separately examine key

characteristics and aspects of the Zimmer poject management and QA programs.

As a cross-check, selected "case studies"a.( were also examined to assess the

collective role and behavior of management in response to specific problems

and/or series of events. The specific areas reviewed were as follows:

o CG&E management attitude toward "whistle blowers"

e structural steel in the control room

0 2400 feet of small-bore piping

o welder qualifications.

TPT reviewed the organizational structure, policies and procedures, and QA

activities of CG&E, including its interfaces with its contractors: Sargent and

Lundy (S&L), Henry J. Kaiser Company (HJK), General Electric Company (GE),

Catalytic Incorporated (CI), and Reactor Controls, Incorporated (RCI), The

review was divided into four periods: 1) project inception to the assumption

of increased construction responsibilities by CG&E in 1976, 2) from 1976 to the

Immediate Action Letter in early 1981, 3) from the Immediate Action Letter to

the Show Cause Order in November 1982, and 4) subsequent to the Show Cause

Order.

Information was obtained by interviewing CG&E's Zimmer project management

staff, representatives of contractor organizations, and representatives of

related organizations such as the NRC, National Board of Inspectors, and intervenor groups. The interviews included past and present management and other

individuals having information pertinent to this review. Selected records and

files were examined to obtain relevant documents/information to supplement and

verify the information obtained in the interviews. The interviewees and the

supplemental documents. were selected on the basis of TPT's professional judgment.

The total program effort was approximately 60 man-months; over 3200 documents were reviewed; and approximately 100 people were interviewed, several

more than once. The investigation did not include any technical review or

evaluation of the adequacy of the Zimmer plant design and construction. No

physical inspection of the plant was performed.

The TPT study of the Zimmer project (TPT 1983) showed the following factors to be the important causes of the quality-related problems experienced.

The Licensee and its constructor lacked prior nuclear experience. The TPT

report states:

U.,. CG&E and, to a large extent, its constructor HJK, lacked prior

experience in its assigned roles in this nuclear power plant project. Although in the early 1970s numerous other utilities also

lacked prior nuclear experience, the constructor (HJK) of the Zimmer

(a) Term used by TPT to identify a portion of its review requiring in-depth

documentation review, which should not be confused with the NRC "case

studies ."

A.33
project was unique from the standpoint that it did not have, nor did

it later obtain, any additional commercial nuclear power plant prime

construction contracts. Consequently, it appears that neither CG&E

nor HJK had sufficient experience or the external interactions necessary in order to respond in a timely and effective manner to the

rapidly evolving, more stringent interpretations of NRC requirements. As a result, it was not recognized until very far along in

the Zimmer project that a much more formalized, rigorous approach was

needed to control and document the quality of the design and construction of a nuclear plant than that required for the design and

construction of a fossil fuel plant. This was probably the single,

most significant factor contributing to the present situation at the

Zimmer plant ... " (Vol. 1, p. 4).

"... CG&E attempted to use a project management approach at Zimmer

that had been previously used successfully in the construction of

fossil fuel plants. The approach, which was not unusual at that

time, was to rely on a small, dedicated management team using relatively informal management systems and techniques ... " (Vol. 1,

pp. 6-7).

The Licensee did not have an adequately sized staff, nor 'one with adequate

experience. The TPT report states:

"... In comparison with other nuclear utility companies, staffing of

both CG&E and the subcontractor organizations was inadequate throughout the 1970s. The CG&E management and professional staff was of

inadequate size and had insufficient experience and training in tbe

design and construction of nuclear power plants. After the IAL(a) in

April 1981, additional staff was recruited, including a large proportion of temporary employees--some in management positions. A small

number of CG&E personnel wilgprior nuclear experience has been added

to the staff since the SCO, u)but it still remains understaffed, and

this situation needs to be corrected ... (Vol. 1, pp. 7-8).

The Licensee failed to manage the project. The TPT report states:

Key managers and professional staff were not dedicated solely to

the Zimmer project. Several key managers had conflicting responsibilities that detracted from their management overview of Zimmer.

Except for short periods of time, the CG&E manager responsible for

the entire Zimmer project was not located at the site. These conditions, coupled with the lack of an integrated project management

system, contributed to the creation of informal autonomous organizations within the project with lines of communication that were not

always consistent with the published project organization charts.

Also, there was a too-heavy reliance on contractors for project

(a) Immediate Action Letter.

(b) Show Cause Order.

A.34
management and control. The CG&E policy of delegating the

responsibility of major elements of the work to reputable experienced

contractors is not inconsistent with the approach taken. by other

utilities in the construction of nuclear power plants; however, CG&E

does not have the management system, implementing procedures, and

staff required to control the work performed by its subcontractors.

The net result was to impair the visibility of the project to CG&E

top management ... " (Vol. 1, p. 8).

"... CG&E top management appeared to lack an adequate degree of

involvement in, and commitment toward, QA at Zimmer. Up until 1981,

the president of CG&E appeared to be insulated from an accurate picture of the status and inadequacies of the Zimmer QA program. The

CG&E project organization provided minimal executive summary information to management on overall quality problems, status, and QA program effectiveness. Executive reports generally addressed details

and highlighted 'brush-fires,' rather than providing a management

perspective ... " (Vol. 1, p. 9).

'... Up to 1'981, CG&E lacked effective control over the design function. More audit emphasis should have been placed by CG&E on field

design control procedures. This could have helped to identify and

correct, in a timely manner, the design control problems experienced

at Zimmer. CG&E initiated an intensive effort after the SCO to get

this system back on track ... " (Vol. 1, p. 11).

"... CG&E did not provide sufficient direction and support for the

establishment of a comprehensive audit program executed in accordance

with the requirements and intent of 1OCFR50, Appendix B. Consequently, the CG&E QA audit program appeared to be ineffective. Individual problems were attacked, but the magnitude and extent of problems apparently remained largely undetected. Many noncompliances

detected by outside audit groups should have been found by the CG&E

QA audit group ... " (Vol. 1, pp. 11-12).

"... In general, review of subcontractor's activities appears to have

occurred aggressively only between CG&E and HJK. There is little

evidence that S&L, RCI, or CI activities were effectively reviewed,

monitored, audited, or critiqued by CG&E. This CG&E policy of delegating the responsibility for major elements of the work to reputable

experienced contractors is not inconsistent with the approach taken

by other utilities for the construction of nuclear power plants;

however, CG&E does not have the management system, implementing procedures, and staff required to control the work performed by its subcontractors ... " (Vol. 1, p. 18).

The Licensee failed to elevate its commitment to quality and quality

assurance to an equal status with cost and schedule. The TPT report states:

". CG&E had a corporate fiscal policy that minimized expenditures. Such a policy, taken in the proper perspective, benefits both

A.35
the ratepayers and the stockholders of the Company; however, this

emphasis completely dominated other important priorities, such as

quality and quality assurance. Cost reduction and schedule maintenance was encouraged to the extent that construction forces worked

only to compliance with the minimum NRC standards and regulations.

This approach, combined with the rapidly evolving and more stringent

interpretation of these regulations over the years, contributed significantly to the current problems at the Zimmer project ... "

(Vol. 1, p. 4).

".. The emphasis was on getting the plant built on schedule, at the

minimum cost ... " (Vol. 1, p. 7).

°... Management at Zimmer had not done an adequate job in highlighting the QA program as one of the key elements in the successful construction of a nuclear power plant, or in providing the appropriate

level of support that would ensure effective program implementation.

The level and status of the CG&E QA organization through the years

was generally inadequate to provide an effective nuclear QA program. The major shortcomings in this area are the small and inexperienced CG&E QA staff, cost and schedule pressures on the QA organizations, and failure to effectively correct and prevent recurrence of

problems. CG&E management generally did not establish definitive

policies, verbal or written, concerning QA at Zimmer, and no strong

message by CG&E management in support of quality and quality assurance was evident.. Instead, CG&E management policy insisted that all

concerned (CG&E and subcontractors) minimize the time and money spent

on QA programs ... " (Vol. 1, p. 9).

"... There exists no effective assurance that documents to be maintained as records are complete, accurate, valid, or readily retrievable. It would also appear that management did not take effective

action early enough in the construction project to ensure the validity and availability of these documents. A centralized records center was set up after the IAL, and the turnover of documents from

other site locations is in progress. However, progress is slow and

it is not being accomplished in a thorough manner.

From the beginning of construction until the present, the corrective

action system was generally not effective in assuring that identified

discrepancies in material/systems/procedures were investigated in a

timely manner, analyzed to determine root causes, and corrected by

priority actions to prevent recurrence. Standard management tools to

collect relevant data, analyze the data relating to the problem, propose alternatives on the basis of analyzed data and the operating

environment, and select solutions were available, but were apparently

not utilized or, at the least, were not effective. In addition,

there is little evidence to indicate that management established an

effective system to track 'open' items to assure their completion

... U (Vol. 1, p. 12).

A.36
The NRC failed to impress on the Licensee the importance of quality. The

TPT report states:

"..o Quality problems existed during the early stages of construction

which remained uncorrected during that period due, in part, to a lack

of attention and follow-through on a corrective action course by the

NRC. Althpugh CG&E QA was generally responsive to NRC concerns,

these concerns were neither extensively nor aggressively pursued by

the NRC. Consequently, CG&E management failed to recognize the

underlying message in the Inspection Reports (IRs) relating to the

problems that existed at Zimmer. As a result, corrective action was

not taken in an effective or timely manner. CG&E was allowed to continue construction while being lulled into a false sense of satisfactory performance until the late 1970s and early 1980s ... "

(Vol. 1, p. 5).

The Licensee did not have adequate procedures to control the project, nor

were those in effect adequately implemented. The TPT report states:

"... CG&E established an Owners Project Procedures (OPP) Manual for

the Zimmer project in 1972 which delineated the project organization,

including reporting lines within CG&E, for the major subcontractors

(HJK, S&L, GE); defined the responsibilities and authority of the

various positions; and named the personnel who would act in those

positions. These formal overall project policies concerning responsibility and authority over the functions at Zimmer appear to have

been adequate, but they were not implemented adequately by project

personnel.

CG&E did not have an integrated, comprehensive set of project management procedures documented and implemented to ensure that all elements of the project (e.g., Construction, Engineering, Quality Assurance, Licensing, Cost, Scheduling, etc.) were coordinated. This

impaired communication between departments and, in some instances,

resulted in conflicting requirements and/or a duplication of effort

... " (Vol. 1, p. 7).

... CG&E project management and control systems, including performance measurement and document control, were inadequate. The systems

utilized did not integrate the planning and scheduling of various

project management activities such as construction, QA, engineering,

and, subsequently, the transition to operations. Management reporting systems were also poor .,." (Vol. 1, p. 8).

"CG&E's control of the process of developing, maintaining, and implementing subtier procedures, instructions for work, and inspections

that affect quality has been less than effective from the start of

construction to the present. There are many instances of inadequate

control over design documents, design document changes, welding

A.37
forms, inspection methods/procedures, documentation of work accomplished, conformance to work procedures, and QA procedures

(Vol. 1, pp. 10-11).

A.3.2 Summary of Case Study Findings

Although no single factor distinguishes nuclear, plants that have experienced major'quality-related problems from those that have not, a combination of

utility/contractor experience and/or personnel experience in nuclear plant construction provides the greatest assurance that quality-related problems will be

avoided. Based on the six case studies (and substantiated by the independent

review of the Zimmer project), if a utility had constructed previous nuclear

plants or if it hired experienced personnel for its own staff and had an

experienced A-E/C, it tended to avoid major quality problems. Where the utility depended on non-nuclear, e.g., fossil experience of its staff and its

A-E/constructor, it was prone to experience major quality problems. Experience

by itself may not preclude major quality problems, e.g., Midland, with an

experienced utility and architect-engineer, still it is probably the greatest

assurance factor in achieving quality of construction.

Because this study was limited to six case studies (and a review of a

seventh), it did not evaluate in-depth a larger grouping of other utilities

that have built nuclear plants without apparent major quality problems, and as

first-time ventures. However, experience would be expected to be a significant

factor, especially in the timeframe of the projects studied for this report.

A second important factor that emerges is the importance of the licensee

actively managing the construction-project. Projects experiencing major quality problems placed too much reliance on their contractors or their own

in-house capability, a reliance that was not justified based on previous experience. The licensee failed to effectively implement a management system that

provided adequate control and oversight over all project aspects. Those projects not experiencing major quality problems "ran the project." They were

deeply involved in planning, establishing criteria and procedures, approving

important drawings and specifications, overviewing their contractors' activities, and identifying and solving problems. They clearly defined the responsibilities and authorities of the participants and monitored the interfaces to

assure that responsibilities were being properly discharged. There was often a

working involvement of upper management or, failing that, a good understanding

of the project's needs in terms of finances, manpower, autonomy (from prevailing practices, etc.) which were provided. As with experience, some nuclear

plants may have been constructed where the licensee did not actively "manage"

the project (such as in the turnkey projects), but in the present timeframe and

based on the case studies, licensee management involvement and control are

important factors in constructing plants without major quality problems. Constructing nuclear plants in the 1970s with the many regulatory changes that

occurred, with a supporting nuclear industry in which the most experienced

A-Es, constructors, and major contractors were stretched to capacity, with the

increased complexity of the larger plants, and with rapidly escalating costs,

was in a far different environment than those constructed earlier. The

requirements that assured success in nuclear construction also escalated.

A.38
Success in constructing fossil-fuel plants, together with a little nuclear

experience, was no longer sufficient to guarantee that the nuclear project

could be completed without major problems (in quality, cost, or schedule).

Utilities with only those qualifications, but which avoided major problems,

probably had good fortune and astute management who were able to discern

impending difficulties and compensate for them accordingly.

Active management of the construction project was clearly shown in those

projects that had experienced major quality-related problems, but that had

since turned them around. Those which had not completely turned their projects

around tended to maintain that "we always managed the project," "it was someone

else's' fault," or, "it was a fluke." With those which had, there was a change

in management involvement. Project leadership emerged clearly. There was no

question who was providing project leadership. Senior management was often

relieved of other utility responsibilities to devote sole attention to the

project; they often moved to the construction site; their project staffs were

divorced from those responsible for more traditional generating plants; and

substantial additional experienced personnel were hired. Procedures were

strengthened and enforced. There was more active involvement with the NRC,

especially by upper management. Where necessary, modifications were made to

contracting methods to give the licensee more control over quality (fixed-price

contracts were often converted to cost-type contracts); there was substantial

strengthening of the QA function within contractor organizations. These types

of actions are also manifest by those utilities that have not had major

quality-related problems.

As utilities gain experience in nuclear project management and develop a

core of experienced personnel, they appear able to delegate the project management successfully to lower management without lessening the utility's active

involvement in the project. As regulatory stability is achieved and plant

designs become more standardized (or plants are more fully designed before construction commences), the more experienced A-E/C probably can assume an

increasing degree of responsibility for plant construction without such intense

utility involvement.

A third important factor relates to the licensee's commitment to quality,

or perhaps to plant reliability. While all (or almost all) personnel interviewed believed quality was important, ranking with safety, those licensees

(and their contractors) that had experienced quality-related problems tended

not to appreciate that quality assurance was a management tool that would help

assure quality in nuclear plant construction. Those who had not experienced

major quality-related problems supported their quality assurance programs with

adequate resources and backing, and tended to take proactive roles in seeking

improvements in their quality assurance programs. They were prone to put

responsibility (and authority) at the level where the know-how was and emphasized doing it right the first time. They seemed to place more stress on plant

reliability than those who had experienced major quality problems. That is,

plant reliability was a more evident concern that surfaced frequently in discussions with the licensees' staffs.

A.39
There did not seem to be a particular QA/QC organizational structure,

function, authority, etc., that characterized plants with or without qualityrelated problems. Rather, the six cases presented a variety of organizational

arrangements for these functions. Staffs varied in size over a considerable

range. QA staffs reported at various levels in the utility/contractor organizations. Some had stop work authority and some did not. Some participated in

construction activity planning and some were separated from the day-to-day

activities. Some projects had multiple QA/QC programs and some had a single

program for most of the construction activities. Some organizations had multiple layers of QA which audited lower levels. No pattern of QA/QC organizational structure or delegation correlated with whether plants had experienced

major quality problems or not. Projects having major quality-related problems

in construction, when once turned around, tended to establish a strong QA function as their main line of defense against (further) quality failures, whereas

those not having major quality-related problems in construction (perhaps arising from their greater experience) emphasized craftsmanship responsibility for

quality as their main line of defense.

A fourth important factor relates to procedures. All licensees have procedures, but there was a difference in what was done with them. For those with

quality-related problems, one or more of the following conditions existed:

they lacked adequate procedures; they had procedures, but did not rigorously

follow them; or they relied on them to do what is a management function of

overview and control. Those without major quality-related' problems spoke of

the use of detailed procedures for design, procurement, construction, and

inspection activities, and of the need for adherence to them. They seemed to

have a better appreciation of their value and limitations than those with

quality-related problems. In the six case studies, there was a wide range of

sophistication in specifying, using, and auditing procedures. Some qualityrelated problems could probably be avoided by helping licensees appreciate

state-of-the-art applications of procedures and related controls.

The presence of four factors--experience, management control, commitment

to quality, and properly implemented procedures--should be sufficient to avoid

quality-related problems in nuclear plant construction. There is overlap in

the factors; that is, experience will tend to assure that the other factors are

appropriately implemented. Evaluation of these factors by the NRC will be difficult because there is a large subjective aspect to them. One senior vicepresident suggested that the NRC might appoint a panel of experienced nuclear

utility executives to evaluate whether a first-time licensee has the requisite

capability to construct a nuclear plant successfully. Their own experience

should permit them to adequately evaluate the subjective aspects.

Not all licensees and their contractors fully appreciated the requirements

of the regulatory process, nor coped well with the changing regulatory environment. All of the nuclear plants considered in the case studies were under construction during a period of considerable regulatory change (the 1970s). One

difference between projects with and without major quality problems lay in how

much they relied upon the NRC (or other bodies such as ASME or INPO) as an

indicator of construction quality at their projects, and how they related to

the NRC. As a class, those with problems seemed to assume that (a) a lack of

A.40
NRC prompting or (b) a lack of dramatic action by the NRC on quality-related

matters meant no significant quality problems existed. Those without problems

were proactive in resolving regulatory matters and anticipating regulatory

changes. Those licensees represented themselves (i.e., they were the spokesmen) in dealings with the NRC. They took the initiative and the lead in

licensing matters--not their contractors. They understood the implications of

the impending decisions. Some licensees stationed personnel at NRC offices to

promote rapid resolution of regulatory problems. Those without problems had

two other characteristics: they had non-adversarial relationships with the

NRC, and they attempted to anticipate the effects of impending regulatory

changes on their construction projects. All aspects of this factor could be

attributed to one or both of the first two factors--experience and management

control.

A factor that does not seem to be recognized by either the licensees or

the NRC is that the longer the construction period, the greater the risk of a

quality failure, and the greater the need for additional attention to quality

matters. The problem has two interrelated facets. First, the longer the construction period, the more regulatory change a licensee will have to cope

with. Regulatory changes often result in design changes and rework. These

changes and rework are often made under less than optimum conditions, conditions not conducive to quality workmanship. Second, the personnel making the

changes may not be the ones who did the (design or construction) work the first

time and may not understand all of the assumptions, interactions, or special

conditions considered initially. a) Also, there is some impact on morale from

having to make changes, especially if thought to be marginal ones. For projects that have been under construction for an extended period (perhaps eight to

ten years or more), special attention to quality matters may be appropriate.

NRC actions, or inactions, also contributed to quality problems that

licensees experienced. Quality problems arising from regulatory changes have

already been discussed. The NRC's failure (or i6ability) to adequately evaluate a licensee's management capability to undertake a nuclear project and its

understanding of its required role is a major shortcoming in the licensing

process. Clearly, some licensees should not have been granted a license under

the prevailing environment and conditions, nor with the teams they assembled

for their projects.

The NRC's failure to take action with the licensees on a more timely and

firm basis allowed poor quality practices to exist and possibly proliferate in

the industry while the licensees assumed NRC inaction meant the practices were

approved or at least not sufficiently bad to make a big issue of them. In at

least some cases, the NRC's presence at the site in the early phases of construction was sufficiently sporadic that the developing poor quality practices

were not fully appreciated. Licensees generally believed that an NRC presence

was needed at the site continuously from the start of construction.

(a) Modifications- to operating reactors may be made under even less optimum

circumstances, but the special conditions are less unexpected and

potentially better planned for.

A.41
Other factors may have played a role in assurance of quality matters, such

as failure to appreciate that quality failures were symptomatic of major problems, communication problems, the level of intervention, use of innovative

practices, use of detailed design models, etc., but they are considered secondary to those cited earlier. These secondary causes may be useful as indicators that primary root problems may exist. For instance, failure to appreciate

that quality failures may be symptomatic of greater deficiencies might point to

management failure to understand the merit of a formal institutionalized QA

program, or to NRC's failure to convince the licensee that QA is an important

management tool. A long period between the inception of construction and

operation may be indicative of a failure to manage the project. A failure to

respond effectively to NRC quality-related findings may be indicative that the

licensee has developed a false sense of security.

The case studies presented a wide variety of approaches and techniques for

constructing nuclear power plants. Some of these have been described previously. No single project combined all of the most advanced, efficient

approaches and techniques. Some had highly computerized methods for tracking

all design, specification, and record information. Others used largely manual

tracking systems. Some had a large (100-150) contingent of A-E staff on site

to facilitate engineering support; others had a small (-25) contingent

(although the trend was towards larger on-site design staffs).

Some projects had detailed, highly computerized, systems-oriented

approaches to measuring cost and schedule status. Others used more traditional

"bulk" methods or manual systems for tracking. Some had innovative approaches

to construction; e.g., concrete placement or sequencing. Other used more commonplace approaches. The effect of those various approaches in achieving quality in nuclear plant construction could not be evaluated. At lower levels of

management and at working levels, innovative and efficient approaches and techniques used at other nuclear sites are not generally-known. The fast pace and

required commitment to a single construction project seems to impede dissemination of good practices. Better dissemination of the more effective procedures

and methods is needed in the industry to promote quality.

It appears to take considerable time for a project team to finally "get it

all together," unless the project is an immediate follow-on from a similar

plant. At least most licensees stated that "things got better" as the project

continued. In the latter phases of the project, working relationships were

well understood and construction activities tended to flow more efficiently.

Unfortunately, when a project is completed, most "teams" are disbanded. A new

team has to form when the next project is initiated and, again, it takes time

to "get it all together." Much more cost-effective plants, and probably plants

with better quality, could be constructed if therewas more continuity in the

whole nuclear construction (design/construction/startup) process.

The case studies focused on quality-related problems that had occurred in

the past and on present practices at projects that had not experienced qualityrelated problems. The NRC and the nuclear construction industry has changed

and is changing. Promulgation of new regulations to address the root causes of

what has happened in the past, but which are judged unlikely to occur again,

A.42
may be counter-productive. In this context, it might be useful to consider the

conditions under which major quality problems might recur. These could include

the following:

" a first-time utility with a staff or A-E/constructor that have inadequate nuclear experience. This could result in a replay of some of

the case studies reported here. NRC attention to licensee's experience, the experience of the licensee's team, and the other important

factors identified in the case studies would preclude this situation

from recurring.

" a very large growth in the number of nuclear plants being constructed/modified that (again) overwhelms the industry's capabilities.

Sufficient data are available to estimate the industry's capabilities

at present. These estimates can be adjusted to account for the

effects of a nuclear hiatus, retirements, etc. If the capabilities

appear to be exceeded, special care can be taken in granting additional construction permits.

" a long delay before nuclear plant construction activities start

again, resulting in a dearth of experience in the industry. This

situation is similar in nature to that described in the preceding

case.

" regulatory actions at federal and state levels which undercut

quality. Possible actions range from excessive ratcheting of NRC

regulations to state regulatory utility commission actions which are

counterproductive to quality. In addition to being evaluated for

their effect on cost or safety, regulatory actions should be evaluated for their effect on quality.

The NRC and the nuclear industry need to be aware of the implications for

quality that these and similar possibilities hold.

A.4 REFERENCES

Torrey Pines Technology (TPT). 1983. Independent Review of Zimmer Project

Management. General Atomic Project 2474, Torrey Pines Technology, San Diego,

California.

U.S. Nuclear Regulatory Commission (NRC). 1982. Assurance of Quality.

SECY 82-352, Washington, D.C.

A.43

APPENDIX B

MANAGEMENT. ANALYSIS: U.S. NUCLEAR REGULATORY COMMISSION

PROGRAMS FOR ASSURANCE OF QUALITY IN DESIGN AND CONSTRUCTION

OF NUCLEAR POWER PLANTS

PRINCIPAL CONTRIBUTORS

J. L. Heidenreich

December 1983

Prepared for

Division of Quality Assurance, Safeguards,

and Inspection Programs

Office of Inspection and Enforcement

U.S. Nuclear.Regulatory Commission

Washington, D.C. 20555

N. C. Kist and Associates, Inc.

Napierville, Illinois '60540

EXECUTIVE SUMMARY

A series of problems in the quality of construction at commercial nuclear

power plants has resulted in Congress requiring the NRC to conduct a study of

existing and alternative programs for improving quality assurance and quality

control during design and construction. Included in NRC initiatives to assure

quality in design and construction was a review of NRC quality assurance

activities.

This management analysis was performed in conjunction with other NRC

activities related to the Congressional legislation and NRC initiatives and

included a review of implementation of management practices, past and present

programs for assurance of quality in design and construction, organizational

relationships between the Office of Inspection and Enforcement and Regional

Offices, and a determination of root causes of the NRC's inability to prevent

problems and slowness to identify and act on problems at the Diablo Canyon,

Marble Hill, Midland, South Texas, and Zimmer nuclear power plants. The

analysis was performed by reviewing literature provided by the Quality

Assurance Brapch of the Office of Inspection and Enforcement and by limited

interviews with NRC personnel at the Office of Inspection and Enforcement. and

Regions II, III, IV and V. Time did not permit a visit to Region I.

The AEC/NRC have made the commercial nuclear power plant industry

responsible for assuring the safety of its operations and have monitored the

industry on a limited sampling basis. The construction of nuclear power

plants has been a learning process for the AEC/NRC and the nuclear industry.

NRC programs for assurance of quality during design and construction have

evolved along with the nuclear industry and in response to adverse industry

events. Although 10 CFR 50 became a regulation in 1954, it was not until 1967

that Appendix A of 10 CFR 50, containing the first mention of a Quality

Assurance Program requirement, was published for comment and 1970 that

Appendix.B of 10 CER 50, defining criteria of Quality Assurance Programs, was

issued. From 1970 to about 1975, guidance documents for establishing and

implementing quality assurance programs and AEC/NRC programs for assurance of

quality were developed and implemented. Over the years, experience and

adverse industry events, such as the Browns Ferry fire and the accident at

Three Mile Island, have resulted in efforts to increase the safety of plants

under construction and in operation. Instability in the regulatory process,

caused by imposition of additional regulations and guidance, has contributed'

to longer construction times and increased opportunities for errors. Better

preventive action and planning of programs would minimize the instability.

Regulations pertaining to quality assurance have not been sufficiently

prescriptive or definitive to assure their clear understanding. As a result,

many guidance documents have been developed. However, guidance documents have

been neither mandatory nor sufficiently prescriptive or definitive to assure

their understanding. The original intent of Appendix B of 10 CFR 50 applying

to all aspects of a reactor without separate classes of applicability f or

safety-related items and items important to safety has not been fulfilled and

regulations have not adequately defined safety-related items, items important

to safety, and applicability of quality program requirements. Regulations

should be more prescriptive and definitive in elements of control. Better

regulations would eliminate the need for many guidance documents.

iii
Licensing programs have been deficient in reviews of quality assurance

programs prior to issuance of authorizations and Construction Permits and in

evaluation of licensee and contractor experience, attitude, and management

capability. Quality assurance programs have not been a condition of

authorizations and Construction Permits and there was no requirement f or

submittal of program changes for NRC approval until 1983.

AEC/NRC monitoring of design and construction activities on too limited

of a basis has caused inability to prevent problems and slowness to identify

and act on problems. Little inspection was performed during construction

prior to 1968. The direct inspection effort of the regionally based

inspection program used until 1980 was about 16 days a year at each plant.

Inspection orientation was towards documentation and records review until

about 1979 when it changed towards hardware and results. A mindset existed

that there was no immediate threat to the health and safety of the public

until a nuclear power plant became operational and that plants would not be

licensed until ready for operation as determined by pre-operational and

startup tests. A Resident Inspector was assigne 'd to each construction site

starting in 1980. For multiple plant sites, one Resident Inspector covers all

of the plants. An average of 1.5 man-years/unit is devoted to inspection

during design and construction.

Budget and manpower restraints have precluded implementation of programs.

Approximately 1.0% of NRC personnel are Resident Inspectors assigned to

construction sites and 0.6% conduct the Licensee Contractor and Vendor

Inspection Program. About 12% of the NRC budget is allocated to Inspection

and Enforcement, of which inspection of design and construction is but a small

part. The current inspection program is being rewritten with a goal of

reducing it by 40% in recognition of budget and manpower restraints. Team

inspections (PAT, CAT and.IDI) are limited to a small number of plants because

of budget and manpower constraints. Inspection programs appear to be designed

around available resources. Inspection programs need to be designed around

what must be done and the necessary resources to implement the programs need

to be provided. The use of licensee inspection plans and establishment of

hold points should be included.

Inspection procedures and modules have been intended as guidance andreliance has been placed on the engineering judgment of the inspector and

Regional Office management for proper implementation. The degree of

inspection program implementation has varied across the Regions dependent upon

management's approach to regulations and the capability of personnel.

Inspector experience has decreased over the years and it appears that training

in quality assurance and performing inspections has been insufficient.

Salaries have not been competitive with the industry, which has resulted in

the loss of trained and experienced personnel to the industry and difficulty

in attracting and keeping personnel. Inspection modules need to identify

mandatory requirements and inspectors should receive additional training in

quality assurance and in performing inspections. Less reliance on individual

engineering judgment results in greater uniformity of implementation.

The NRC assumed part of licensee responsibility for evaluation of vendors

through implementation of the Licensee Contractor and Vendor Inspection Program.

The legal base for direct NRC inspection of vendors and any resultant I

enforcement action is not clearly addressed in regulations. The LCVIP does

i V
not include material manufacturers or material suppliers, sources of many

material related problems during construction. The NRC has been slow to

respond to findings and recommendations of previous studies of the LCVIP.

Regulations should be changed to permit industry organizations to evaluate

vendors with NRC overview or to establish licensing or certification programs

for vendors, including material manufacturers and suppliers.

Enforcement programs have not been aggressively implemented and have not

encouraged conformance to commitments. Early enforcement action consisted of

"jawboning" sessions and issuance of routine enforcement letters. A mindset

existed that there was no immediate threat to the health and safety of the

public until a plant became operational. Programs havetended to result in

categorization of nonconformances to the lowest action levels. The action

point system, categorizing of nonconformances to lower action levels, and

limited monitoring of design and construction activities resulted in inability

to raise problems to thresholds of stronger enforcement action. The AEC/NRC

have placed insufficient importance on procedural matters and have had a

tendency to accept a fix to a specific problem without requiring determination

of the magnitude of the problem and correction of the root cause. They have

had difficulty in recognizing the significance, magnitude, and complexity of

problems and did not consistently require expeditious handling of corrective

action. Management has been hesitant to take strong enforcement action.

The deficiencies previously discussed were causes of NRC inability to

prevent problems and slowness to identify and act on problems at the Diablo

Canyon, Marble Hill, Midland, South Texas and Zimmer nuclear plants. In

particular, the root cause at Diablo Canyon was insufficient attention in the

area of design; the root causes at Marble Hill were inadequate review of

experience and management capability, irregular NRC presence, and inability to

recognize the significance and magnitude of problems; the root causes at

Midland were irregular presence, reluctance to take enforcement action, and

the mindset that the plant would not be licensed until ready for operation as

determined by pre-operational and startup tests; the root causes at South

Texas were inadequate review of experience and management capability,

irregular presence, inability to recognize the significance and magnitude of

problems, and the mindset that the plant would not be licensed until ready for

operation as determined by pre-operational and startup tests; and the root

causes at Zimmer were inadequate review of experience and management

capability, failure to require licensee review of problems to determine their

magnitude and correct their root cause, inability to recognize the

significance and magnitude of problems, loss of inspection experience in the

Region, and the mindset that the plant would not be licensed until ready for

operation as determined by pre-operational and startup tests.

Commercial nuclear power plants under construction have been built during

a period of learning and understanding the beneficial effects of an effective

quality assurance program. Caution must be used in judging design and

construction activities of the past against the standards of today. The next

generation of nuclear plants will have the benefit of many man years of

construction quality assurance experience. It is vital that the knowledge and

understanding gained to date be properly incorporated in the NRC requirements

for future nuclear installations.

V

TABLE OF CONTENTS

Executive Summary .....................................................

1.0 Introduction .....................................................

1.1 Purpose of Management Analysis .............................

1.2 Scope ......................................................

1.3 Background ..................................................

1.4 Technical Approach .........................................

1.5 Limitations of Management Analysis ..........................

2.0 Summary and Conclusions .........................................

2.1 General ....................................................

2.2 Organization ...............................................

2.3 Management Practices .......................................

2.4 Standards Program for Assurance of Quality .................

2.5 Licensing Program for Assurance of Quality ..................

2.6 Inspection Program for Assurance of Quality .................

2.7 Licensee Contractor and Vendor Inspection Program ..........

2.8 Enforcement Program for Assurance of Quality ...............

2.9 NRC Inability to Prevent Problems and Slowness to

Identify and Act on Problems .............................

iii

B. 1

B. 1

B.1

B. 1

B.2

B.4

B.5

B.5

B.5

B.5

B.6

B.6

B.7

B.8

B.9

B. 10

B. 14

B. 14

B.17

B.25

B. 30

B. 38

B. 45

B. 67

B.73

B.83

B. 89

B. 90

B.91

3.0 Main

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

Discussion ..................................................

Enabling Legislation .......................................

Organization ...............................................

Management Practices ........................................

Standards Program for Assurance of Quality .................

Licensing Program for Assurance of Quality .................

Inspection Program for Assurance of Quality ................

Licensee Contractor and Vendor Inspector Program ...........

Enforcement Program for Assurance of Quality ...............

NRC Inability to Prevent Problems and Slowness to

Identify and Act on Problems ............................

4.0 Study Group .....................................................

5.0 List of Acronyms ................................................

6.0 References .......................................................

vii

MANAGEMENT ANALYSIS

OF

U.S. NUCLEAR REGULATORY COMMISSION

1.0 INTRODUCTION

1.1 PURPOSE OF MANAGEMENT ANALYSIS

To determine shortcomings in the U.S. Nuclear Regulatory Commission (NRC)

policies and programs for assurance of quality in the design and construction

of commercial nuclear power plants and improvements that could be made.

1.2 SCOPE

The scope of this management analysis of NRC policies and programs for

assurance of .quality in the design and construction of commercial nuclear

power plants was:

to review and analyze implementation of management practices

to review and analyze past and present programs for assurance of

quality in design and construction

to review and analyze organizational relationships between the

Office of Inspection and Enforcement and Regional Offices

to determine root causes of the NRC's inability to prevent problems

and slowness to identify and act on problems at the Diablo Canyon,

Marble Hill, Midland, South Texas and Zimmer nuclear plants.

1.3 BACKGROUND

During the past several years, there have been a series of well

publicized problems in the quality of construction of commercial nuclear power

plants.

At Midland, excessive settlement of the diesel generating building was

observed in 1978. Investigation revealed that the settlement was a result of

inadequate and poorly compacted soil and that other safety-related systems and

structures were affected. Design and construction specifications for

placement of soil fill materials had not been followed and there was

insufficient control and supervision of soil placement activities by the

utility and its contractors. In 1979, a civil penalty of $38,000 was issued

for HVAC problems and in 1982, a civil penalty of $120,000 was issued for

breakdown of the Quality Assurance Program.

At Marble Hill, all safety-related work was halted in 1979 because of

concrete consolidation problems, improper repair of the imperfections,

inadequate or nonexistent records traceable to the repairs, inadequate

B.1
training and supervision of personnel responsible for the repairs, and

insufficient awareness of the problems and control by the licensee.

At South Texas, safety-related work was halted in 1980 because of

problems with ccncrete placement, welding, procedural violations, records

falsification, personnel qualification, harassment and intimidation of

inspectors, and insufficient design work. NRC investigations revealed

shortcomings in management and implementation of the QA/QC Program.

At Zimmer, construction was nearly completed when in 1981 allegations

prompted investigation of quality problems. Following the investigations, the

NRC issued a $200,000 fine for quality assurance breakdowns. In 1982,

safety-related work was halted. The major problems were identified as QC

documentation, procedure violations, inadequate nonconformance reporting

system, deficiencies in drawings, specifications, instructions and procedures,

material control, and licensee audits and corrective action. Additional

investigations reported inadequate management controls and inadequacies in

administration of the Quality Assurance Program.

At Diablo Canyon, the NRC issued an Operating License in September of

1981 and revoked it two months later following licensee identification of

errors in the seismic design of some piping and equipment restraints. NRC

investigations revealed that proper quality assurance controls were not

implemented in technical and procurement communications with service-type

contractors and document control was inadequate to assure ready access to the

most recent information available.

This series of problems in the quality of construction resulted in

Congress requiring the NRC to conduct a study of existing and alternative

programs for improving quality assurance and quality control in the

construction of commercial nuclear power plants (U.S. Congress 1983).

In recognition of the problems and in anticipation of the Congressional

mandate, the NRC established a series of initiatives designed to assure

quality in design and construction of nuclear power plants and the NRC's

ability to monitor and evaluate it (NRC 1982). Included in the initiatives

was a revidw of NRC quality assurance activities to determine shortcomings and

improvements that could be made.

This management analysis of NRC programs for assurance of quality in

desistl and construction of commercial nuclear power plants was performed in

response to the Congressional legislation and the NRC initiative.

1.4 TECHNICAL APPROACH

This management analysis was performed by reviewing literature pertaining

to past and present AEC/NRC programs for assurance of quality in design and

construction of commercial nuclear power plants and previous studies of those

programs, and by limited interviews with the staff of the Office of Inspection

and Enforcement in Bethesda, Maryland, Region II offices in Atlanta, Georgia,

Region III offices in Glen Ellyn, Illinois, Region IV offices in Arlington,

Texas and Region V offices in Walnut Creek, California. Personnel interviewed

at the Office of Inspection and Enforcement were:

B.2
Deputy Director, Division of Quality Assurance, Safeguards, and

Inspection Programs

* Chief, Construction Inspection Branch

* Chief, Operating Reactor Programs Section

* Chief, Construction, Vendor and Special Programs Section

. Chief, Licensing Section of Quality Assurance Branch

From 12 to 16 personnel were interviewed at the Regional Offices.

Personnel interviewed had the following job titles:

* Regional Administrator

* Deputy Regional Administrator

Director

- Division of Project and Resident Programs - Division of Engineering

- *Division of Vendor and Technical Programs

- Division of Resident, Reactor Project and Engineering Programs

- Division of Reactor Safety and Reactor Projects

- Enforcement

Branch Chief

- Engineering Programs

- Reactor Projects

- Construction

- Vendor

Section Chief

- Management Programs

- Plant Systems

- Materials and Mechanical,

- Reactor Projects

- Reactor Systems

- Reactive and Components

- Program Support

- Project Operations

* Enforcement Officer

Engineer

- Nuclear (Reactor Licensing)

- Reactor

- Project

S..Inspector

- Reactor

- Project

- Electrical Construction

The analysis includes licensee, contractor, and NRC Resident Inspector

perceptions of problems with the NRC and suggestions for improvement obtained

during NRC Site Assessment Case Studies performed in response to the

Congressional legislation (U.S. Congress 1973).

B.3
1.5 LIMITATIONS OF THE MANAGEMENT ANALYSIS

The management analysis has been limited to NRC programs for assurance of

quality in design and construction of commercial nuclear power plants and does

not include other NRC programs.

The analysis has been based solely upon literature reviewed and

information obtained during interviews. N.C. Kist & Associates, Inc. has not

performed activities to authenticate the information obtained and makes no

representations to this effect.

The study of NRC programs has been performed in conjunction with and not

independent from the NRC. The Quality Assurance Branch of the Division of

Quality Assurance, Safeguards, and Inspection Programs of the NRC Office of

Inspection and Enforcement provided the literature reviewed, scheduled trips

and interviews, and participated in the trips and interviews. The NRC did

not, however, participate in the analysis of the information obtained or in

the preparation of this report.

Limited interviews of personnel were performed. Two days were spent at

the Office of Inspection and Enforcement in Bethesda, Maryland and two days

were spent at each of the Regional Offices visited.

N.C. Kist & Associates, Inc. expended approximately two man-months of

effort in performing the analysis.

B.4
2.0 SUMMARY AND CONCLUSIONS

2.1 General

This analysis of implementation of basic management practices, past and

present programs for assurance of quality in design and construction of

commercial nuclear power plants, organizational relationships between the

Office of Inspection and Enforcement and Regional Offices, and root causes of

the NRC's inability to prevent problems and slowness to identify and act on

problems has revealed the following shortcomings in NRC Volicies and programs.

2.2 Organization

Allocated resources have been insufficient for effective

implementation of programs.

Several functions of the Quality Assurance Branch of the Office of

Inspection and Enforcement appear to duplicate functions of the

Reactor Programs Construction Branch.

- developing inspection procedures

- performing assessments of inspection program inplementation

- coordinating with industry the development of overview

programs.

Organizationally, there i-s no single overview of Resident Inspector

and Speciality Inspector activities below the level of Deputy.

Administrator or Administrator in Regions I, II, and III, which may

create a potential for inadequate consolidation of inspection

information.

Differences exist in Regional Office organizational structures and

job titles for personnel assigned similar positions, which may lead

to differences in job descriptions and understanding of

responsibilities.

2.3 Management Practices

• The following basic management practices have not been effectively

implemented:

- clearly defining objectives to assure their understanding

- providing clear and constant direction

- establishing a firm and expeditious decision-making process

- providing adequate resources

- performing meaningful regular assessments of the adequacy and

effectiveness of NRC activities

B.5
taking prompt, forceful corrective action in response to

problems and deficiencies.

2.4 Standards Program for Assui/ance of Quality

The development and application of quality assurance standards have

evolved with the growth of the nuclear industry and there has been

insufficient preventive action and planning.

The original intent of Appendix B of 10 CFR 50 being applicable to

all aspects of a reactor, without separate classes of applicability

for items important to safety and safety-related items, has not been

fulfilled.

Regulations have not adequately defined safety-related items, items

important to safety, and the applicability of quality program

requirements and have not been sufficiently prescriptive or

definitive to assure their clear understanding.

Guidance documents have been neither mandatory nor sufficiently

prescriptive to assure their understanding.

Instability in the regulatory process has resulted in longer

construction times and more opportunities for error.

2.5 Licensing Program for Assurance of Quality

Licensing Programs have been insufficient to help assure quality

during design and construction.

- prior to 1970, there was no documented guidance for review of

Quality Assurance Programs before issuance of permits

- from 1970 until 1975, guidance documents for review of Quality

Assurance Program descriptions did not require a description of

the complete program nor a detailed description of how the

commitments were to be implemented

- reviews of Quality Assurance Program descriptions have

emphasized completeness in addressing requirements of Appendix

B of 10 CFR 50 without detailed evaluation of how the program

would be implemented

- regional personnel responsible for reviewing QA Manuals were

not trained in reviewing manuals

- the Quality Assurance Program has not been a condition of

authorizations and Construction Permits

- until 1983, submittal of PSAR changes for NRC approval was not

required

- design work and procurement of major components has been

permitted prior to submittal of Quality Assurance Program

descriptions

B.6
•, approval of Quality Assurance Program descriptions has been

heavily based on reviewer judgment as opposed to clearly

defined acceptance criteria

there has been inadequate evaluation of licensee and contractor

experience, attitude and management capability.

2.6 Inspection Program for Assurance of Quality

There has been insufficient AEC/NRC inspection during design and

construction

- little inspection was performed prior to 1968

- there was irregular and non-constant presence until 1980 (a

minimum of six inspections a year were to be performed and

inspections were performed by regional personnel of varying

disciplines)

- the annual direct inspection effort of the regionally based

inspection program was about 16 days at each plant

until 1979, inspection orientation was towards documentation

and records review

- GAO concluded in 1978 that the NRC's inspection program cannot

independently assure that nuclear power plants are constructed

adequately

- inadequate attention has been given to design activities

- a national average of 1.5 man-years/unit is devoted to

inspection during design and construction.

- approximately 1% of all NRC personnel are Resident Inspectors

assigned to construction and 0.6% are in the Licensee

Contractor and Vendor Inspection Program

- for multiple plant sites, one Resident Inspector covers all the

plants during construction.

Budget and manpower restraints have precluded complete

implementation of inspection programs.

- the regionally-based inspection program

- the resident inspection program

- Performance Appraisal Teams

- Construction Assessment Teams

- Independent Design Inspections

B. 7
- the Licensee Contractor and Vendor Inspection Program

the current inspection program is being rewritten with a goal

of a 40% reduction in recognition of budget and manpower

restraints

diverting inspection personnel to investigate allegations and

team inspection findings has resulted in missing inspection "windows of opportunity" and inability to complete inspection

modules

Pre-Construction Permit activities have been insufficient in their:

- attention to design activities

- review of Quality Assurance Programs and their implementation

- evaluation of licensee and contractor experience, attitude', and

management capability.

Inspection Programs appear to have been designed around available

resources instead of determining what must be done and obtaining the

resources to do it.

Regional and resident inspection programs have been intended as

guidance, not as mandatory requirements, and have been based upon

the use of individual engineering judgment regarding the adequacy of

activities performed.

The degree of implementation of inspection programs has varied

across the Regions dependent upon management's approach to

regulations and the capability of personnel.

Insufficient attention has been paid to personnel matters.

- Inspector experience has decreased over the years and it

appears training in quality assurance and performing

inspections has been inadequate

- NRC salaries have not remained competitive with the industry.

Inspection Programs have not included hold points designating

activities requiring NRC inspection.

2.7 Licensee Contractor and Vendor Inspection Program

The Licensee Contractor and Vendor Inspection Program LCVIP evolved

as a result of the learning process and of licensee inability to

assure the quality of items and services supplied by their vendors.

- Prior to 1969, vendor qualification and monitoring was viewed

as the licensee's responsibility.

B.8
In 1970, regional inspectors evaluated licensee vendor

inspection programs.

In 1973, a trial vendor inspection program was initiated for

fuel fabricators.

In 1974, a trial LCVIP was initiated because 63% of

construction and operation problems were traceable to vendor

errors in design or fabrication.

In 1974, a task force recommended expansion of the LCVIP as a

result of increases in vendor-related problems.

- In 1977, electrical equipment was added to the program.

In 1978, the effectiveness of vendor design programs began

being evaluated.

In 1979, inspections became reactionary as a result of Three

Mile Island.

The legal base for direct NRC inspections of vendors and resultant

enforcement action is not clearly addressed in regulations.

The NRC has been slow to respond to findings and recommendations of

previous studies of the LCVIP.

The NRC has assumed licensee responsibility for evaluation of

vendors through the LCVIP and has not taken sufficient enforcement

action with licensees to force them to fulfill their

responsibilities.

The LCVIP does not apply to material manufacturers and suppliers.

2.8 Enforcement Program for Assurance of Quality

* Enforcement Programs have not been aggressively implemented.

- early enforcement action consisted of "Jawboning" sessions and

routine enforcement letters

- mindset existed that there was no immediate threat to the

health and safety of the public until a nuclear power plant

became operational

- tendency of nonconformances in design and construction to be

categorized to the lower action levels since the safety

function or integrity could not be clearly shown to be impaired

or lost

- the action point system, categorizing of nonconformances to the

lower action levels, and periodic nature of inspections

resulted in inability to raise problems to thresholds of

stronger enforcement action

B.9
failure to recognize the significance, magnitude and complexity

of problems

tendency to accept a fix to a specific problem without

requiring a determination of the magnitude of the problem and

correction of the root cause

failure to force expeditious handling of corrective action

AEC/NRC management hesitancy to take action.

Enforcement Programs have not encouraged conformance to commitments.

Failure to conform to commitments, such as PSAR, Regulatory

Guides, etc., when lack of conformance did not constitute an

item of noncompliance, was considered a deviation, the lowest

level of categorization. Commitments are not regulatory

requirements and have not been binding. NRC approval has not

been required to cancel or change commitments.

The AEC/NRC have had difficulty in recognizing Quality Assurance

Program breakdowns because of:

- the periodic nature of inspections

- categorizing of noncompliances to lower action levels

- low level of attention afforded commitments

- insufficient significance attached to procedural matters.

2.9 NRC Inability to Prevent Problems and Slowness to Identify and Act on Problems

The root causes of NRC inability to prevent problems and slowness to

identify and act on problems at Diablo Canyon, Marble Hill, Midland, South

Texas and Zimmer nuclear plants follows.

Diablo Canyon

- insufficient attention in the area of design.

Marble Hill

- inadequate review of licensee and contractor experience and

capability to manage construction of a nuclear power plant

- irregular, non-constant presence

- inability to recognize the significance and magnitude of

problems

Midland

- irregular, non-constant presence

B. 10
- reluctance to take enforcement action

loss of inspection experience in the Region

mindset that it was the licensee's responsibility to properly

construct the plant and it would nct be licensed until ready

for operation as determined by pre-operational and startup

tests.

South Texas

- inadequate review of licensee and contractor experience and

capability to manage construction of a nuclear power plant

- irregular, non-constant presence

- inability to recognize the significance and magnitude of the

problems

mindset that it was the licensee's responsibility to properly

construct the plant and it would not be licensed until ready

for operation as determined by pre-operational and startup

tests.

• Zimmer

- inadequate review of licensee and contractor experience and

ability to manage construction of a nuclear power plant

- failure to require licensee reviews of problems to determine

their extent and to take corrective action regarding the cause

of the problem

S - inability to recognize the significance and magnitude of the

problems

- loss of inspection experience in the Region

- mindset that it was the licensee's responsibility to properly

construct the plant and it would not be licensed until ready

for operation as determined by pre-operational and startup

tests.

The following improvements could be made in NRC policies and programs for

assurance of quality during design and construction of commercial nuclear

power plants.

Stabilize the regulatory process through more preventive action and

planning.

Streamline regulations and guidance documents and make them more

prescriptive and definitive in terms of required elements of control

without specifying how the elements of control must be implemented.

Regulations that can stand on their own would eliminate the need for

many guidance documents. Clearly define the applicability of

B.11
quality program requirements, safety-related items and items

important to safety.

Make the Quality Assurance Program and licensee commitments a

condition of authorizations and permits.

Replace Licensing review of the Quality Assurance Program

description as presented in the Preliminary Safety Analysis Report

with a Licensing or Office of Inspection and Enforcement review of

the licensee Quality Assurance Manual and require the Manual to

detail how the Quality Assurance Program shall be implemented.

Require Licensing or Office of Inspection and Enforcement approval

of Quality Assurance Manual changes. Establish definitive

acceptance criteria for Manual reviews specifying required elements

of control but not methods of accomplishing them. Do not permit

work to be performed until approval of the Quality Assurance Manual.

Evaluate licensee and contractor experience, attitude and management

capability prior to issuance of authorizations and permits.

Establish parameters and acceptance criteria.

Require demonstration of capability to implement the Quality

Assurance Program prior to issuance of authorizations or permits.

Devote greater attention to design activities.

Develop programs based upon what must be done and then obtain the

necessary resources to implement the programs.

Establish mandatory requirements in inspection programs and reduce

dependency upon individual engineering judgement..

Require an Inspection Plan of licensees and contractors and

establish NRC hold points.

Reevaluate personnel practices, including salaries.

Change regulations to permit industry organizations to evaluate

vendors instead of individual licensees and monitor their activities

or establish licensing or certification programs for vendors.

Extend the program to include material manufacturers and material

suppliers.

Take stronger enforcement action. Require expeditious handling of

corrective action, including determination of the magnitude of

problems and correction of their root causes.

Perform detailed annual audits of licensee Quality Assurance Program

implementation

Review functions to be performed by the Quality Assurance Branch and

Construction Programs Branches of the Office of Inspection and

Enforcement to assure efforts are not duplicated.

B.12
Eliminate differences in basic Regional Office structures and job

titles to assure uniformity of functional responsibilities.

Increase the training of inspectors in the areas of quality

assurance, auditing, and implementation of inspection modules.

Broaden the capabilities of inspectors to encompass all disciplines

or provide additional support.

Establish an audit program of NRC activities utilizing qualified

personnel not having responsibility in the areas audited.

Establish a Quality Assurance Program withinrthe NRC.

B.13
3.0 MAIN DISCUSSION

_).1 ENABLING LEGISLATION

3.1.1 Description

3.1.1.1 Atomic Energy Act of 1946

The Atomic Energy Act of 1946 created the Atomic Energy Commission (AEC),

empowered it to control all aspects of atomic energy, rand forbade private

ownership of nuclear materials. The AEC's primary activities related to the

control of nuclear weapons.

2.1.1.2 Atomic Energy Act of 1954

The Atomic Energy Act of 1954 empowered and directed the AEC to promote

nuclear energy and to regulate the nuclear industry. Among the provisions of

the Act were to issue licenses to private companies to build and operate

commercial nuclear power stations and to adopt whatever regulations it deemed

necessary tb protect the health and safety of the public.

'.1.1.3 Energy Reorganization Act of 1974

The Energy Reorganization Act of 1974 abolished the AEC and eliminated

the conflict of interest of promoting and regulating nuclear energy by

creating the Energy Research and Development Administration (ERDA) and the

Nuclear Regulatory Commission (NRC).

ERDA was responsible to bring together and direct Federal activities

relating to research and development of various sources of energy, to increase

the efficiency and reliability in the use of energy, and to carry out the

performance of other functions, including but not limited to AEC's military

and production activities and its general basic research activities (U.S.

Congress 1974).

NRC was responsible for all the licensing and related regulatory functions of the AEC and the functions of. the Atomic Safety and Licensing Board

Panel and the Atomic Safety and Licensing Appeal Board (U.S. Congress 1974).

NRC's licensing and related regulatory authority (U.S. Congress 1974)

extend to:

Demonstration Liquid Metal Fast Breeder reactors when operated as

part of the power generation facilities of an electric utility

system or when operated to demonstrate the suitability for commercial application of such a reactor.

Other demonstration nuclear reactors except those in existence

before the effective date of the Energy Reorganization Act of 1974

when operated as stated above.

B.14
Facilities used primarily for the receipt and storage of high-level

radioactive wastes resulting from activities licensed.

Retrievable Surface Storage facilities and other facilities authorized for the express purpose of subsequent long-term storage of

high-level radioactive waste generated by the Administration, which

are not used for, or part of, research and development activities.

The Energy Reorganization Act of 1974 (U.S. Congress 1974) established

the organization of the Commission and Offices of Nuclear Reactor Regulation,

Nuclear Material Safety and Safeguards, and Nuclear Regulatory Rsearch.

The Commission is composed of five members appointed by the President, by

and with advice and consent of the Senate. Appointments must be made in such

a manner that not more than 3 members are of the same political party. Each

member serves a 5-year term with terms expiring in consecutive years. The

President designates one member as chairman to serve during the pleasure of

the President and any member may be removed by the President for inefficiency,

neglect of duty or malfeasance in office. Each member has equal

responsibility and authority in all decisions and actions, has full access to

all information relating to his duties or responsibilities, and has 1 vote.

Action of the NRC is determined by a majority vote of members present.

The Office of Nuclear Reactor Regulation is responsible for such functions as the NRC delegates (U.S. Congress 1974) including:

principal licensing and regulation of all facilities and materials

licensed under the Atomic Energy Act of 1954, as amended

review of the safety and safeguards of all such facilities, materials and activities, including but not limited to monitoring,

testing and recommending upgrading of systems designed to prevent

substantial health or safety hazards and evaluating methods of

transporting nuclear materials and transporting and storing high

level radioactive wastes

recommending research necessary for the discharge of the functions

of the NRC.

The Office of Nuclear Material Safety and Safeguards is responsible for

such functions as the NRC delegates (U.S. Congress 1974) including:

principal licensing and regulation involving all facilities and

materials, licensed under the Atomic Energy Act of 1954, as amended,

associated with the processing, transport, and handling of nuclear

materials, including the provision and maintenance of safeguards

against threats, thefts, and sabotage of such licensed facilities,

and materials

review of safety and safeguards of all such facilities and materials, including, but not limited to monitoring, testing, and

recommending upgrading of internal accounting systems for special

nuclear and other nuclear materials and developing contingency plans

for dealing with threats, thefts, and sabotage relating to special

B.15
nuclear materials, high-level radioactive wastes and nuclear facilities

recommending research to enable the NRC to more effectively perform

its functions.

The Office of Nuclear Regulatory Research is responsible for such functions as the NRC delegates (U.S. Congress 1974) including:

developing recommendations for research deemed necessary for performance by the Commission of its licensing and related regulatory

functions

engaging in or contracting for research which the Commission deems

necessary for the performance of its licensing and related

regulatory functions.

The Energy Reorganization Act of 1974 also included a survey to locate

and identify possible nuclear energy center sites, quarterly submittal by the

Commission to Congress of a report listing abnormal occurrences at or associated with any facility licensed or regulated and dissemination of such

information to the public within fifteen days of Commission receipt of such

information, development of a plan for the specification and analysis of

unresolved safety issues, employee protection against discharge and discrimination because the employee commenced or participated in a proceeding under

the Act or the Atomic Energy Act of 1954, including investigation of such

charges by the Secretary of Labor, annual authorization of appropriations to

the Commission which reflect the need for effective licensing and other regulation of the nuclear power industry in relation to the growth of such industry, and Comptroller General of the United States audit, review and evaluation

of implementation of the provisions of the Act pertaining to the Nuclear Regulatory Commission not later than 60 days after the effective date of the Act.

3.1.1.4 Additional Enabling Legislation

Congress provides additional enabling legislation as part of its annual

authorization of appropriations.

3.1.2 Analysis

Until the Energy Reorganization Act of 1974, the AEC was empowered and

directed to promote nuclear energy and to regulate the nuclear industry. This

dual responsibility created an inherent conflict of interest which resulted in

widespread criticism of the AEC emphasizing their promoting role at the

expense of their regulating role.

The Energy Reorganization Act of 1974 eliminated the inherent conflict of,

interest by making the NRC responsible for all licensing and related

regulatory functions and ERDA responsible for directing Federal activities

related to research and development of various sources of energy.

Enabling legislation has provided the AEC/NRC adequate authority for

fulfilling its responsibilities. This study has not identified a need for

changes to enabling legislation.

B. 16
3.2 ORGANIZATION

3.2.1 Description

3.2.1.1 General

The Energy Reorganization Act of 1974 (U.S. Congress 1974) transferred to

NRC the Chairman and members of the AEC, the General Counsel, and other

officers and components of the Commission except functions, officers,

components, and personnel transferred to ERDA.

The Commission is responsible for licensing and regulating nuclear

facilities and materials and for conducting research in support of the licensing and regulatory process, including protecting public health and safety,

protecting the environment, protecting and safeguarding materials and plants

in the interest of national security, and assuring conformity with antitrust

laws (NRC 1983). To fulfill its responsibilities, the Commission has used;

standards setting and rule making; technical reviews and studies; conduct of

public hearings; issuance of authorizations, permits and licenses; inspection,

investigation, and enforcement; evaluation of operating experience; and

confirmatory research. The Commissioners are described under Enabling

Legislation in this section of the report. Reporting to the Commissioners are

the:

* Office of Public Affairs

Office of Congressional Affairs

• Atomic Safety and Licensing Board Panel

Atomic Safety and Licensing Appeal Panel

• Advisory Committee on Reactor Safeguards

* Office of Investigations

* Office of Inspector and Auditor

Office of Policy Evaluation

* Office of the General Counsel

. Office of the Secretary

Executive Director for Operations.

The Executive Director of Operations (EDO) performs functions as the

Chairman or Commission directs and is governed by policies and decisions of

the Commission (NRC 1983). Reporting to the Executive Director for Operations

are the:

• Office of Administration

. Office of the Executive Legal Director

S.Office of Resource Management

Office of Small and Disadvantaged Business Utilization and Civil

Rights

Office for Analysis and Evaluation of Operational Data

* Office of International Programs

. Office of State Programs

. Regional Offices

Office of Nuclear Material Safety and Safeguards

B.17
Office of Nuclear Reactor Regulation

Office of Nuclear Regulatory Research

Office of Inspection and Enforcement.

The NRC has operated with a budget ranging from 333 million dollars to

513 million dollars over the past five years. The annual Congressional

authorization specifies the'amounts that will be used for specific activities.

The following summary shows the average allocation of funding to each

specified area of activity during the last five year period (U.S. Congress

1983 et al).

Area of Activity Average % of Total Appropriation

Nuclear Regulatory Research 49.7

Nuclear Reactor Regulation 15.4

Inspection and Enforcement 12.0

Nuclear Material Safety and Safeguards 8.4

Program Direction and Administration 8.3

Technical Support 4.2

*Standards 4.1

*1979 and 1980 only. Not listed as a separate category after 1980.

The elements of the organization primarily involved in NRC programs for

assurance of quality during the design and construction of nuclear power

plants are the Office of Nuclear Reactor Regulation, the Office of Nuclear

Regulatory Research, the Office of Inspection and Enforcement and the Regional

Offices.

The Office of Nuclear Reactor Regulation develops and administers regulations, policies and procedures. The Division of Licensing directs and

administers the licensing process for all utilization facilities including

safety and environmental evaluations of reactors required to be licensed for

operation. It directs and supervises the processing of applications and

petitions for license amendments and issues, denies, and amends all limited

work authorizations, permits and licenses for reactors, administers the

3tandardization Program, and serves as NRR coordinator with the Office of

inspection and Enforcement (NRC 1983).

The Office of Nuclear Regulatory Research plans, recommends and implements the programs of Nuclear regulatory research necessary for performance of

licensing and related regulatory functions. The Division of Engineering

Technology plans, develops, and directs research programs and develops standards for the design, qualification, construction, inspection, testing,

operations and decommissioning of nuclear power plants (NRC 1983).

3.2.1.2 Office of Inspection and Enforcement

The Office of Inspection and Enforcement was formed by the Commission

during the Energy Reorganization Act of 1974. Its function (NRC 1983) is to

develop policies and programs for enforcement and inspection of licensees,

applicants, and their contractors and suppliers to:

B.18
ascertain whether they are complying with NRC regulations, rules,

orders, and license conditions

identify conditions that may adversely affect public health and

safety, the environment, or the safeguarding of nuclear materials

and facilities

provide a basis for recommending issuance or denial of an

authorization, permit or license

determine whether quality assurance programs meet NRC criteria

recommend or take appropriate action regarding incidents or

accidents

• develop policies and implement a program of enforcement action

• direct emergency preparedness activities

• provide guidance to Regional Offices on program matters

appraise program performance in terms of effectiveness and

uniformity.

In January 1983, several organizational and functional changes were made

in the Office of Inspection and Enforcement because of their expanded role in

quality assurance.

1) The Division of Reactor Programs was redesignated the Division of

Quality Assurance, Safeguards, and Inspection Programs. Primary

emphasis continues to be placed on quality assurance while integrating quality assurance concerns and principles into the reactor

construction and operating reactor inspection programs.

2) The Division of Engineering and Quality Assurance was redesignated

the Division of Emergency Preparedness and Engineering Response.

3) The Reactor Training Center became the Technical Training Center.

Quality assurance functions of Nuclear Reactor Regulation and Nuclear

Reactor Research were transferred to the Quality Assurance Branch of the

Office of Inspection and Enforcement. Within the Division of Quality Assurance, Safeguards, and Inspection Programs, the Quality Assurance Branch

consists of 12 personnel and performs the following functions (De Young 1982):

Develops a comprehensive NRC program for Quality Assurance of

licensee facilities to be applied to design, fabrication, construction, testing and operation. This encompasses licensees, vendors,

architect-engineers, constructors, and other licensee agents.

Develops requirements and standards based upon regulatory experience

and industry coordination.

Reviews existing requirements and standards to clarify and optimize

the effectiveness of QA requirements and standards.

B. 19
Reviews existing office programs to optimize the effectiveness of QA

activities.

Responsible for developing QA-related inspection procedures and for

performing assessments of QA inspection program implementation by

the regional Offices.

Develops and coordinates with the regional and other headquarters

offices, NRC initiatives to confirm the management effectiveness of

licensees in assuring the quality of licensee and contractor activities during design, fabrication, construction, testing and operation.

Develops and coordinates with the regional and other headquarters

offices, NRC initiatives to independently verify the quality of

construction at selected utilities.

Coordinates with industry the development of overview programs for

improving the effectiveness of QA programs and their implementation.

The Reactor Construction Programs Branch consists of 21 personnel and

performs the following functions (De Young 1982):

Develops the NRC inspection policies and programs for reactor

projects from the time of an application for a construction authorization or permit to the time the operating license is issued.

Includes inspection programs for associated nuclear steam suppliers,

architect-engineers, constructors and component vendors. Excluded

from the branch responsibilities are the preoperational preparations

that do not pertain to the actual construction of the plant. The

policies, strategies, and programs will be revised principally to

improve staff resource effectiveness by integrating applicable

licensing procedures and experiences with those from the office

inspection activities.

Based on the results of assessments of program implementation and on

recommendations from regional offices, NRR, and NMSS, revises

established programs, as necessary, to increase their effectiveness

to better coordinate inspection activity with licensing policy and

objectives, and to tailor the programs to anticipated resources.

Develops estimates of resources that are needed to perform the

various elements of the programs which have been established, or

which are under consideration.

Represents NRC to outside agencies and technical organizations such

as INPO, ASME, and IEEE, in order to further the development of

integrated construction inspection programs and to make best use of

available resources of NRC, licensees, and associated organizations.

Develops and maintains the Construction Appraisal Team (CAT) programs for reactors under construction including assessment of

regional office implementation. Conducts CAT team inspections at

licensee facilities.

B. 20
Assesses regional office implementation of established inspection

programs to determine to what degree program requirements are being

met. Assesses the effectiveness of each established program and

determines whether the regions are implementing the programs in a

technically adequate and consistent manner. This process will

include field observations and examinations at licensee sites and at

licensee and regional offices. Providesguidance to the regions

regarding areas of program implementation which need improved

performance and areas where the program can be cut back to better

fit available resources.

3.2.1.3 Regional Offices

The Regional Offices execute established NRC policies and assigned

programs relating to inspection, enforcement, licensing, state agreements,

state liaison, and emergency response within Regional boundaries. Regional

Office activities include project and resident inspection programs, engineering, radiological safety, emergency preparedness, and materials safety programs. Region IV is responsible for implementation of the Licensee Contractor

and Vendor Inspection Program. In 1980, the NRC began to expand the scope of

functions of Regional Offices to create an agencywide regional operation which

includes licensing as well as inspection and enforcement functions.

Regional Administrators have managerial and supervisory responsibility

for all functions and personnel assigned to their Region. Regional organizations include an Administrator; Deputy Administrator; Enforcement Director,

Coordinator, or Specialist; Counsel or Attorney; Public Affairs Officer;

Division Directors; Branch Chiefs, Section Chiefs; Resident Inspectors;

Specialty Inspectors and support personnel.

The two Regional Office groups of major interest to this study are the

Division of Project and Resident Inspector Programs, which administers

assigned project and resident inspectors, and the Division of Engineering,

which provides technical or speciality inspectors to perform work such as

quality assurance reviews or nondestructive examinations.

In Regions IV and V, inspection responsibilities of these two divisions

is consolidated in the Division of Resident Reactor Project and Engineering

Programs.

Each division is comprised of two branches supervised by Branch Chiefs

who are responsible for providing management of the division's functions for

assigned facilities within the Region. Each branch is comprised of sections

supervised by Section Chiefs who are responsible for providing management of

functions at from three to five nuclear power plant sites. Within sections

are Project Inspectors who are responsible for overseeing implementation of

the inspection program at one or more sites and helping to coordinate regional

activity at the sites. Also within sections are Resident Inspectors who are

responsible for implementation of the inspection program at their assigned

site.

Of the 3300 employees working for the NRC, 890 are located at the

Regional Offices and of these, 460 are classified as inspectors. Of the 460

B.21
inspectors, 32 are Resident Inspectors for construction and 22 are involved

in the Licensee Contractor & Vendor Inspection Program.

A more detailed breakdown of inspector personnel by Region follows: (Blaha

1983):

Total Personnel Total Inspectors Resident Inspectors-Construction

Region Actual Budgeted Actual Budgeted Actual Budgeted

1 211 218 118 124.5 6 7

II 21-3 222 118 125 5 7

III 222.3 216 116 118 14 10

IV 151 139 64 67.5 4 4

V 93 92 44 47.5 3 4

TOTALS 890.3 887 460 482.5 32 32

3.2.2 Analysis

3.2.2.1 General

The scope of this study limited organizational analysis to relationships

between the Office of Inspection and Enforcement and Regional Offices.

Additional study of other NRC offices involved in the assurance of quality

during design and construction of nuclear power plants is warranted.

Communications between NRC headquarters and Regional Offices appear to be

adequate, although more personal'unscheduled meetings in handling problems and

suggestions should be encouraged. Complaints were heard that by the time a

suggestion travels from a Resident Inspector upwards through the Regional

Office and then downward in the I and E chain to the QA Division, much of its

effectiveness is lost. Regular meetings of individuals involved with standards and inspection modules would be beneficial.

Over the past five years, an average of 12 percent of the NRC budget has

been allocated to all inspection and enforcement activities. The portion of

the 12 percent assigned to inspection of design and construction activities

was not readily obtainable, but would be small. Allocated resources have been

insufficient for effective implementation of programs and is discussed under

the programs in this report. In order to assure quality during design and

construction,. additional budget allocations to inspection activities appears

necessary.

3.2.2.2 Office of Inspection and Enforcement

Recent changes in the Bethesda, 1D headquarters organization have shifted

the quality assurance functions from other offices to the Office of Inspection

and Enforcement Division of Quality Assurance, Safeguards, and Inspection

Programs. The consolidation of these functions within a central group should

provide more effective management of the functions. The functions to be

performed by the Quality Assurance Branch and Construction Programs Branch

appear adequate to assure quality in design and construction of commercial

B.22
nuclear power plants. However, the effectiveness of the NRC will be dependent

upon the implementation of the functions. Additional guidance, describing in

more detail the implementation of each function, appears to be necessary.

Some of the functions appear to duplicate efforts. The Quality Assurance

Branch is responsible f or developing QA-related inspection procedures and for

performing assessments of QA inspection program implementation by the Regional

Offices. The Reactor Programs Construction Branch is responsible to develop

the NRC inspection policies and programs and t~o assess Regional Office implementation of established inspection programs. The Quality Assurance Branch is

to coordinate with industry the development of overview programs for improving

the effectiveness of QA programs and their implementation. The Reactor

Construction Programs Branch is to represent the NRC to outside agencies and

technical organizations such as INPO, ASI4E, and IEEE, in order to further the

development of integrated construction inspection programs and to make best

use of available resources of NRC, licensees, and associated organizations.

These functions should be reviewed to assure efforts are not being duplicated.

3.2.2.3 Regional Offices

Each Region does not have the same organizational structure and job

titles for personnel assigned similar positions. For example, Regions I, II

and III, have two separate divisions for Project and Resident Programs and

Engineering while these activities are combined into one division in Regions

IV and V. The responsibility of implementing enforcement policies and procedures is held by an Enforcement Specialist in Region I, a Director of Enforcement in Regions 1I and IV, an Enforcement Coordinator in Region III, and an

Enforcement Officer in Region V. Differences in organization and job titles

may lead to differences in job descriptions and misunderstandings of

responsibilities. Regional Office organizational structures should be

standardized for identical functions.

In Regions I, II, and III, project and resident inspectors are part of

the Division of Project and Resident Programs and specialty inspectors are

part of the Division of Engineering. Organizationally, there is no single

overview of all inspector activities below the level of Deputy Administrator

or Administrator. Functionally, interaction between the inspection personnel,

Section Chiefs, Branch Chiefs, and Division Directors may provide overview of

all inspector activities, but the organization would indicate a potential for

inadequate consolidation of inspection information. Consideration should be

given to providing a single overview of all inspector activities below the

level of Deputy Administrator or Admini'strator.

The organizational s tructure of Regions results in four levels of supervision between an inspector and the Regional Administrator, which could result

in attenuation of information. Regional personnel indicated there was little

attenuation of information between the inspectors and the Administrator on

anything of significance. A formal NRC policy was placed into effect following Three Mile Island to permit submittal of differing professional opinions

to the Commission over Regional management.

Personnel allocation to inspection activities during design and

construction of Nuclear power plants has been insufficient. Of the total

number of NRC personnel, approximately 1.0 percent are Resident Inspectors

B. 23
assigned to construction sites and approximately 0.6 percent are involved in

the Licensee Contractor and Vendor Inspection Program. Current NRC

headquarters personnel estimates of manpower performing inspections during

design and construction is 1.5 man-years/unit. At the time of pre-operational

activities, inspection effort increases to about five to seven man-years.

The EDO stated in SECY-82-352:

"Although a resident inspector is now assigned to every site at

which construction is more than 15 percent complete, the NRC is

limited in its ability to assure compliance with all NRC

requirements because of the limited inspection resources."

Inability to fully implement past and present programs as a result of

budget and manpower restraints has been a contributing factor to the AEC/NRC

inability to prevent problems and slowness to identify and act on problems.

Additional discussion of resource allocation pertaining to past and present

programs may be found in other sections of this report. In order to assure

quality during design and construction, additional allocation of personnel to

inspection activities is necessary.

B.24
3.3 MANAGEMENT PRACTICES

3.3.1 General

To effectively regulate and control the commercial nuclear power plant

industry in the United States, it is necessary for the NRC to implement basic

management practices, such as:

. clearly defining objectives and philosophy

. assuring clear understanding of objectives and philosophy

* defining organizational structure, functional responsibilities,

authorities, and interfaces

* defining a detailed approach towards accomplishing objectives in

instructions, procedures and other documents which may be easily

understood

. providing clear and constant direction

. establishing a firm and expeditious decision-making process

. assuring good communications

. providing adequate resources

. performing meaningful, regular assessments of the adequacy and

effectiveness of the organization's activities

* taking prompt, forceful corrective action in response to problems or

deficiencies.

The results of this study provides the following information regarding

implementation of basic management practices.

3.3.2 Objectives and Philosophy

The objectives and philosophy of the AEC and NRC have been clearly stated

and well understood by the industry and AEC/NRC. Objectives have included:

to protect the public health and safety

to protect the environment

to protect and safeguard materials and plants in the interest of

national security

to assure conformity with antitrust laws.

The basic philosophy has been to make the nuclear power plant industry

responsible for assuring the safety of its operations and to monitor the

industry on a limited sampling basis to verify its fulfilling of this

responsibility.

B. 25
Although the objectives have been clearly stated, the subjective terminology used and vagueness in defining their meaning has resulted in different

perceptions by Congress, the public, the nuclear power plant industry, and the

AEC/NRC of what has been expected in meeting the objectives.

3.3.3 Organization

The organizational structure, functional responsibilities, authorities

and interfaces have been clearly defined and documented in organization charts

and procedures.

3.3.4 Approach

The approach towards accomplishing objectives has been clearly defined in

procedures and other documents which may be easily understood.

3.3.5 Direction

Clear and constant direction has not always been provided to regulatory

personnel and the industry. The AEC and NRC have learned along with the

industry during years of construction and operation of nuclear power plants.

Programs for assurance of quality during design and construction evolved as a

result of the learning process and in reaction to adverse industry events.

There has been insufficient preventive action and planning of programs.

Regulations pertaining to quality assurance and guidance documents for

their implementation have not been sufficiently prescriptive or definitive to

assure their clear understanding by the industry, the AEC and the NRC. Regulations have not adequately defined the applicability of quality program

requirements. Additional discussion of regulations and guidance documents is

included under the Standards Program for Assurance of Quality in this section

of the report.

Licensing activities have not assured that licensees have developed and

implemented adequate quality assurance programs before performing activities

affecting quality. Licensee commitments at the Preliminary Safety Analysis

Report stage have not been made a condition of the Construction Permit.

Additional discussion of licensing is included under the Licensing Program for

Assurance of Quality in this section of the report.

Inspection programs have been intended to serve as guidance to the

inspectors and implementation of the programs has been dependent upon the

engineering judgment of regional management and each individual inspector.

The degree of implementation of inspection programs has varied across the

Regions dependent upon management's approach to regulations and programs and

the capability of personnel.

3.3.6 Decision Making

The decision making process has not always been firm and expeditious.

Licensee and contractor personnel indicated during the NRC Case Studies that:

B.26
• the industry needed decisions from the NRC and was guessing for

years what to do following Three Mile Island

the NRC took too long to resolve problems and questions and took one

to two years in some instances

appeal boards resulted in long hearings with few design-changes

anyone can second guess the NRC and hold up utility programs for

years

the NRC needs to accept the technical views of experts and not hold

up work due to unqualified intervenors.

Regional personnel indicated that headquarters was often more of an

obstacle than a help. Upon identifying problems, regional personnel would get

little assistance from headquarters. Some regulations were viewed as

encouraging slow decisions. It was indicated that it may take a year to

resolve a 50.55 (e) finding after it is reported. A need for more

accountability within the NRC was also expressed.

3.3.7 Communications

Generally, there appears to be good communication within and between NRC

headquarters and Regions. Regional personnel did indicate, however, that

feedback to Regions on suggestions made by regional personnel was poor,

resulting in a reduction of incentive to make suggestions for improvements.

3.3.8 Resources

Adequate resources have not been provided to assure quality in design and

construction of nuclear power plants. Budget and manpower restraints have

precluded adequate development and implementation of AEC and NRC programs.

Programs have tended to be prepared on the basis of available resources

instead of defining what must be done to assure quality in design and construction and then obtaining the necessary resources to assure the required

activities are uniformly implemented at each facility. Diverting manpower

from the inspection program to perform reactionary inspections, investigate

allegations and follow-up on special inspection findings, has resulted in

missing inspection "windows of opportunity", periods of construction during

which an inspection must be performed because it cannot be performed later.

Licensee and contractor personnel indicated during the NRC Case Studies that:

the NRC needs more resident inspectors or roving teams to support

all disciplines

there should be a resident for each discipline

they questioned the capability of the NRC staff to do adequate

technical reviews

the NRC staff has to be equal or competitive with the utility's and

architect engineer's

B.27
Regional personnel indicated a need to assure the NRC staff is qualified

to perform their jobs and that many auditors from the NRC didn't know enough

about the subject being audited to perform meaningful audits. They also

indicated that:

if Regions are to perform all activities for which now responsible,

increased resources will be required

* the level of inspector experience has decreased over the years

the NRC has not remained competitive with the industry regarding

salaries

the NRC needs to hire people with actual experience

additional training is needed for inspectors, headquarters, and

regional personnel.

3.3.9 Assessment of Activities

Although there have been numerous studies of the AEC and NRC, there have

not been meaningful, regular internal assessments of the adequacy and effectiveness of AEC/NRC programs for assurance of quality in design and construction of nuclear power plants. No NRC organization has been responsible

for auditing all of the activities of the NRC. Review functions of the

Quality Assurance Branch and Reactor Construction Branches of the Office of

Inspection and Enforcement do not include audits of implementation of NRC

programs and the Office of Inspector and Auditor has not fulfilled this

function. Findings regarding the accident at Three Mile Island (NRC 1980)

included:

There appears to be no internal technical audit function in NRC.

The I&E in Washington, D.C. does review the activities of its

inspectors, but there does not appear to be any organization

responsible for reviewing and auditing the overall utility overview

process. The Office of Iispector and Audit appears to be a legal

and administrative audit only, not involved in technical reviews.

There is no assignment within the NRC organization for overview of

critical functions such as problems reporting, failure analysis, and

corrective action; systems engineering; and the role of the operator

and human factors in plant safety.

No NRC organization is identified as being responsible for auditing

the project management, engineering, and inspection functions of the

NRC.

The NRC needs to correct this situation by establishing an audit program that

utilizes qualified personnel not having responsibility in the areas audited.

B. 28
3.3.10 Corrective Action

Forceful action has been taken in response to many problems and deficiencies. However, the promptness of action has been slowed by the organizational structure and procedures of the AEC/NRC and the action taken has tended

to be additional requirements resulting from specific events and has not

sufficiently included corrective actions regarding the causes of the problems

and deficiencies.

B.29
3.4 STANDARDS PROGRAM FOR ASSURANCE OF QUALITY

3.4.1 Description

In 1955 and 1956, the AEC issued a set of basic regulations for the

civilian nuclear industry. Chairman Strauss emphasized that the regulations

were not intended to restrain the industry but to "open the way to all who are

interested in engaging in research and development of commercial activities in

the atomic energy field" (Langstaff 1982). Providing facilities which did not

endanger thq health and safety of the employees andf the public was to be the

industry's responsibility.

In 1967, the AEC published for comment 70 General Design Criteria for

Nuclear Power Plant.Construction Permits (Appendix A of 10 CFR 50). Criterion

1 specified the quality expected to be incorporated in all aspects of nuclear

facilities and required a QA Program "be established and implemented in order

to provide adequate-assurance that these structures, systems and components

will satisfactorily perform their safety functions." Specific criteria for a

QA Program were not included.

The need for more definitive QA regulatory criteria was strongly emphasized at the Atomic Safety Licensing Appeal Board hearing on Zion Nuclear

Station in 1968.

The following year, the AEC published Appendix B of 10 CFR 50 for

comment, which specifically defined the requirements of the licensee's Quality

Assurance program.

Interviews with NRC headquarters personnel revealed that when Appendix B

of 10 CFR 50 was published for comment, the criteria were meant to elaborate

on the Quality Assurance Program requirements of Appendix A with no intention

of separate classes of applicability for items important to safety and safetyrelated items. Appendix B was to complement Appendix A and apply to all

aspects of a reactor, not just seismic category 1. Appendix B was published

as an effective rule in 1970 and Appendix.A was published as an effective rule

in 1971. Since Appendix B was published while Appendix A was still in draft

form, references to Appendix A were dropped, including language that indicated

Appendix B was to apply to the general design criteria. When Appendix A was

published, there was no attempt to revise Appendix B to clarify the intent of

applicability. Appendix B was interpreted by AEC staff performing Safety

Analysis Reviews to apply to seismic category 1, and was not applicable to any

broader class of equipment, systems, or components.

As the AEC reviewed individual nuclear plants, the resolution of issues

were negotiated with owners. AEC staff positions gradually emerged in the

form of Safety Guides. In 1970, the AEC began to publish Regulatory Guides

which clarified the AEC's position and replaced the Safety Guides. A primary

purpose of Regulatory Guides (AEC 1972) was to describe and make available to

the public methods acceptable to the AEC Regulatory Staff of implementing

specific parts of regulations and to provide guidance to applicants concerning

information needed by the staff in 'review of applications for permits and

licenses. The Guides were not intended as substitutes for regulations and

compliance was not required. Different methods and solutions were acceptable

B. 30
if they provided a basis for findings requisite to the issuance of a permit or

license. The AEC delegated the work of devising needed rules to industry

committees who would prepare a standard governing a certain aspect of plant

design. The AEC would then write a Regulatory Guide that adopted the standard

in whole or in part. There are currently 153 Regulatory Guides.

In a report regarding the status and application of ANSI N45.2 Standards

(Bernsen and Hellman 1973), the following observations regarding the

philosophy of the ANSI Standards were made with assistance from the N45.2

Subcommittee membership:

"Each of the standards issued by the N 45.2 Subcommittee has

been subject to an extremely intensive preparation and review

process and is believed to contain precise statements of acceptable

current practices for commercial nuclear power plants-practices

which are practical, currently available and judged necessary to

achieve required levels of quality."

"Whereas AEC regulations and the Code are mandatory regulations

establishing firm requirements for the areas they cover, and hence,

include assignments of responsibilities, the N45.2 series are not

written as self-sufficient regulatory documents and are intended to

be supplemented by:

a. a regulatory requirement prescribing its use (i.e., the

AEC's codes and standards rules 10 CFR Part 50 or other

statements of AEC requirements, such as the AEC Regulatory

Guides)

b. a power plant applicant's license commitments or

c. an appropriate procurement document.

Another significant difference between the ANSI standards and

the regulations is that the ANSI standards are intended to apply to

features of the plant which affect operational reliability as well

as those which are important to safety. Naturally, the extent to

which these standards would be applied to plant features which

affect reliability is a matter for determination by the utility and

hopefully a mutual agreement between the utility and his principal

contractors; but there appears to be a general consensus of opinion

that judicious application of quality standards to the total plant

will prove beneficial."

In 1971, ANSI N45.2 was published, basically repeating Appendix B of 10

CFR 50 but describing the requirements in more detail. Shortly thereafter the

AEC issued Regulatory Guide 1.28 endorsing ANSI N45.2-1971.

In 1973 and 1974, the AEC Regulatory Staff issued "Guidance on Quality

Assurance Requirements During Design and Procurement Phase of Nuclear Power

Plants" (Gray Book) and "Guidance on Quality Assurance Requirements During the

Construction Phase of Nuclear Power Plants" (Green Book) to provide guidance

for establishing and implementing Quality Assurance Programs. Most of the

guidance was in the form of AEC regulations, Regulatory Guides, and draft

B.31
standards developed by the American National Standards Institute Subcommittee

N45.2.

In 1973, it was recommended to the Director of Regulation (Davis and

Brown 1973) that Regulatory host a series of conferences for utilities with

participation of the Commissioners to demonstrate the Commission's commitment

to QA and to explain the mini-review procedure. During July of 1973, AEC

senior staff, including two Commissioners, participated in regional one-day

cc ,Lferences with utilities to explain the role of quality assurance in design,

construction and operation of nuclear power plants.

The AEC also announced that it would hold meetings with prospective

applicants to discuss in detail the quality assurance criteria in sufficient

time for the utility to include the requirements in contracts for design and

procurement.

In 1975, the NRC issued a Standard Review Plan to define the scope'of

review and acceptance criteria for the NRC's approval of Safety Analysis

Reports.

The NRC continues to use Appendix B of 10 CFR 50 as the primary requirements for Quality Assurance Programs and supplements Appendix B with

Regulatory Guides.

3.4.2 Analysis

3.4.2.1 Evolution of Standards

The role of the AEC, and subsequently the NRC, as a regulator of the

commercial nuclear industry has been ill defined since the origin of the

program. The primary guidance to the regulators was to protect the "health

and safety of the employees and the public". Early AEC interpretation of this

mandate minimized specific quality assurance controls, which undoubtedly

reflected the then current attitude towards safety in fossil plants or the

military nuclear program. The development and application of quality assurance

standards have evolved with the growth of the nuclear industry. The role of

the AEC and NRC has been a reactive one as both the industry and its regulators have grown to understand the significance of quality assurance.

Although 10 CFR 50 became a regulation in 1954, it was not until 1967

that Appendix A of 10 CFR 50, containing the first mention of a quality

assurance program requirement, was published for comment. Until 1967, AEC

regulations were intended to encourage research and development of commercial

activities and to let the commercial nuclear power industry regulate itself.

The AEC recognized the need for defining specific criteria of quality assurance programs as a result of hearings on the Zion Nuclear Station in 1968 and

as a result, issued Appendix B of 10 CFR 50 in 1970.

The industry ANSI Standard N45.2 was being prepared about the same time

with similar quality assurance requirements. By the use of Regulatory Guides,

the NRC has modified the ANSI 45.2 Standard and further defined the Appendix B

requirements.

B. 32
3.4.2.2 Applicability of Standards

The AEC and NRC have failed to fulfill the original intent of Appendix B

to 10 CFR 50. As Appendix A and Appendix B of 10 CFR 50 were published,

Appendix B was to complement Appendix A and thereby apply to all aspects of a

reactor, without separate classes of applicability for items important to

safety and safety-related items. The AEC and NRC have failed to clearly

define safety-related items and items'important to safety and have not adequately defined the applicability of quality assurance program requirements in

its regulations. The determination of how andto what extent quality assurance requirements are applied has been left to the discretion of the

applicant. Although the applicant must identify safety-related systems in the

PSAR, there is no requirement to identify specific safety-related items within

the systems and there is no NRC review of classification of such items for

completeness or adequacy. Each applicant determines which items it considers

safety-related, resulting in lack of uniformity of classification of items as

safety-related and lack of uniformity in quality assurance program

application.

Several previous studies have suggested that changes be made in the

methods used in defining safety related and importance to safety classifications of components and systems.

NUREG 0321 (A Study of the Nuclear Regulatory Commission Quality Assurance Program - 1977) stated:

"10 CFR 50 Appendix B should be used in the regulation of all

areas of power reactor design, construction and operation which

are judged to have sufficient importance to safety to fall under

NRC regulation. The selective application of QA elements now

applied to safety-significant items not interpreted as falling

under Appendix B should be replaced by an approach in the degree

to which the 18 Criteria of Appendix B are applied would reflect

the safety significance of the item."

The Staff Report to the Presidential Commission on the Accident at Three

Mile Island - Volume IV - 1979 also addressed the subject as follows:

"Quality assurance requirements apply only to a narrow portion

of the plant defined as safety-related or safety-grade. Many

items vital to the safe and reliable operation of the plant are

not covered by the quality assurance program because of this

definition." And also

"Safety and reliability requirements and analysis are not required to be applied to many plant systems which may be vital

to the safe operation of the plant but are not labeled safetyrelated."

NUREG/CR-1250, Volume II, Part 1 (Three Mile Island: A Report to the

Commission and the Public - 1980) stated:

"Although the requirements of Appendix B are sufficiently broad

to adequately address most aspects of acceptable quality assurance

programmatic requirements, one important shortcoming of the reguB. 33
latory program arises from the absence of a definition of "safetyrelated," a concept central to the entire structure. Although

Appendix B contains numerous references and applications of "safetygrade equipment," "safety-related equipment," and "equipment

required for safety-related functions," NRC regulations contain no

definition of "safety-related" or comparable terms. No other

general regulatory guidance for defining or applying these terms is

found and NRC staff members have different interpretations of these

terms. Failure to define "safety-related" has restricted the scope

of the NRC's quality assurance programs. Identification of

particular "safety-related" structures, components, and systems is

the responsibility of the applicant utility. The absence of

definitional guidance supports the applicant's narrow interpretation

and, correspondingly, decreases the staff's ability to insist that a

particular system or function is "safety-related."

"This lack of clarity has generated staff disagreement concerning the identification of equipment to which Appendix B should be

applied and concerning the differences and similarities between

Appendix A, which applies to components that are "important to

safety" and require a graduated quality standard, and Appendix B,

which imposes a higher quality standard on the systems and functions

to which it applies. This disagreement has frustrated efforts to

formulate a regulatory guide for implementing Appendix B."

Regarding the applicability of quality assurance programs, the EDO stated

in SECY-82-352:

"Current rules are not specific on whether or not a licensee or

permit holder is required to notify the NRC of changes to the

quality assurance program description previously accepted by the NRC

in the Safety Analysis Report (SAR). Additionally, current

regulations do not explicitly require licensees or permit holders to

implement the accepted NRC SAR quality assurance program

description. Rulemaking action is currently in progress which will

clarify the NRC staff position regarding the types of changes to the

licensees' and applicants' quality assurance program descriptions

that can be made without informing the NRC and clarify, in the

regulations, the requirement to implement the accepted quality

assurance program description."

The NRC should more clearly define the applicability of quality assurance

program requirements in regulations.

3.4.2.3 Prescriptiveness

Regulations concerning quality assurance have not been sufficiently

prescriptive to assure their clear understanding by the nuclear industry, the

AEC and the NRC. Because both Appendix A and Appendix B of 10 CFR 50 were

vague and contained undefined subjective terminology, there were misunderstandings and differences of opinion in what the requirements were and how to

comply with them. As a result, the Gray and Green Books, Safety Guides and

later Regulatory Guides were established to clarify the AEC and NRC positions.

B.34
In 1973, it was recommended to the Director of Regulation (Davis and

Brown 1973) that Regulatory explain precisely what the key QA criteria for

design and procurement mean. Davis and Brown reported:

"Some utilities do not know how to implement the 18 QA

Criteria. These utilities understand the intent of Appendix B, but,

without further guidance from the AEC, they continue at a loss to

put them into effect. This has been a problem since the AEC adopted

Appendix B, and many of the persons we interviewed emphasized it.

One industry representative, for example, stated that both the AEC

and the industry have 'all along been fumbling to explain the

criteria'."

"Until the 1972 reorgnization, the development of standard to

explain the application of Appendix B was not keyed specifically to

the practical needs and priorities of Licensing and Regulatory

Operations. Substantial efforts have been made since that time to

improve this situation by obtaining greater involvement of these

Directorates in the development of standards; but, there is still

not sufficient interplay among the Directorates in the entire

standards-setting process."

In 1976, the Advisory Committee on Reactor Safeguards wrote to the

chairman of the NRC (Moeller 1976):

"An increased effort between the NRC and appropriate code or

standards groups to develop better criteria and codes or standards

comparable to the ASHE Nuclear Codes for fire prevention, for

electrical systems, and for other safety-related components, is

desirable. Current requirements often are ill-defined and amorphous

so the "inspector" lacks adequate criteria to determine

acceptability. Until these criteria are better defined, there will

continue to be confusion concerning acceptable limits as evaluated

by the NRC-IE organization."

The difficulty in determining whether a quality assurance requirement is

applicable to a particular situation is compounded by the necessary cross

references required between the Standard Review Plan, the Safety Analysis

Report, the industry codes, the regulations and the Regulatory Guides.

Licensees, in compliance with Appendix B of 10 CFR 50, pass quality

requirements on to their contractors and vendors. This typically includes a

requirement to implement a quality assurance program that complies with

Appendix B of 10 CFR 50 for safety-related items. With approximately 1,000

vendors involved in supplying safety-related items to construction sites, a

wide variety of interpretations of requirements has resulted. Normally,

quality requirements passed, on to vendors have not required or even referenced

Regulatory Guides as a source of guidance to the vendors. They have, however,

often required compliance with or referenced ANSI Standards.

Utilities, contractors and NRC Regional personnel contacted during this

study stated that new regulations are not required, but that better definition

of requirements in existing regulations and guidance is necessary.

Regulations must be clear and criteria must be well defined. Regional

personnel stated that:

B.35
the NRC needs to put some teeth into ANSI standards or Regulatory

Guides

Technical Specifications and the Standard Review Plan need to be

upgraded

existing regulations fail to adequately address timeliness of

activities and corrective actions

requirements are vague enough to permit licensee interpretation to

fit their needs at any given time

regulations have encouraged slow decisions within the NRC (it may

take a year to resolve a 50.55(e) finding after it has been

reported)

clear definitions of safety-related items and items important to

safety are needed.

The NRC should better define requirements in regulations to assure their

clear understanding.

3.4.2.4 Guidance Documents

Guidance documents are not mandatory and have not been sufficiently

prescriptive to assure their clear understanding by the nuclear industry, the

AEC and the NRC. The Safety Guides and Regulatory Guides adopted industry

standards, either in whole or in part. Industry Standards were written by the

nuclear industry and tended to reflect the state of the art, not necessarily

stringent requirements that might be necessary to assure the health and safety

of the public. Guidance documents heavily contain the word "should" and not

"shall". Even though utilities commit to using the Gray and Green Books and

Regulatory Guides in their Preliminary Safety Analysis Report, confusion has

resulted when inspectors tried to verify compliance. Utilities have agreed

they committed to use the guidance documents and have then argued it is just

guidance and is not even considered mandatory by the AEC or NRC. The need to

hold conferences and meetings to define requirements and the need to produce

so many industry standards, and guidance documents indicates the regulations

themselves have not been in sufficient detail to assure their clear understanding.

3.4.2.5 Changing Standards

Many of the uncompleted nuclear plants have been under construction for a

number of years. As a result, current reviews by the NRC may be against

standards or regulations that were moderately enforced or non-existent six to

eight years ago. With loosely written or reviewed safety analysis report

requirements serving as a base, many arguments and discussions between the

licensee and the NRC revolve around interpretation of the original commitments

and agreements made by the licensee.

The situation is further exerbated by the so called ratcheting or backfitting requirements. With an increasing number of plants becoming

B.36
operational, the experience and knowledge level of the NRC has increased. As

a result, efforts have continually been made to increase the safety and reliability of the plants under construction and in operation. However, there is

a need to establish more stability in the regulatory process. From 1970

through 1979, there were a total of 216 regulatory criteria issued or changed.

Design changes and construction modifications made to meet the criteria

resulted in longer construction time and more opportunities for errors.

Utilities and contractors indicated during the NRC Case Studies that the cost

of a nuclear plant had increased significantly in the last 10 to 15 years as a

result of AEC/NRC requirements. They questioned whether all the requirements

and retrofits were really necessary. They indicated there was too much

uncertainty in'the regulatory process and there were donstantly changing

targets. Regional personnel indicated that as construction times increased,

there were problems resulting from changes in site personnel and procedures.

The quantity of criteria changes indicates insufficient preventive action and

planning.

The NRC needs to devote greater attention to preventive action and

planning and to establish stability in the regulatory process.

While discussing the effect changing regulations and standards have had

on the nuclear industry, it must be kept in mind that two different environments currently exist. The plants now under construction have been built

during a period of learning and understanding the beneficial effects of an

effective quality assurance program. The requirements have been and will

continue to be changing. Therefore, the end result will be somewhat less than

had the current requirements been in effect throughout the entire project. We

must not judge the entire developing program by the standards we have today.

The next generation of nuclear plants will have the benefit of many man

years of construction quality assurance experience. It is vital that the

knowledge and understanding gained to date be properly incorporated in the NRC

requirements for future nuclear installations.

B. 37
3.5 LICENSING PROGRAM FOR ASSURANCE OF QUALITY

3.5.1 Description

Prior to 1970, the AEC performed little review of applications before

issuance of permits and there was no documented guidance for reviews of

Quality Assurance Programs.

Following issuance of Appendix B of 10 CFR 50, the AEC developed a

Quality Assurance Program Review Checklist for Nuclear Power Plants and used

it in their review of applications. The checklist was based upon Appendix B

requirements and provided guidance through defining what was to be included in

Quality Assurance Programs. The judgment of the individual reviewers was the

determining factor in deciding if the quality assurance information in the

application was adequate.

In 1971, 10 CFR 50.34(a)(7) became mandatory requiring applicants to

submit a description of their Quality Assurance Program for design, procurement and construction in a Preliminary Safety Analysis Report (PSAR) to the

AEC. The program had to satisfy the requirements of Appendix B of 10 CFR 50.

In 1973, it was recommended to the Director of Regulations (Davis and

Brown 1973) that:

"Regulatory docket an application only if the utility has a

satisfactorily implemented QA Program for existing design and

procurement activities and Regulatory upgrade its mini-review of the

program."

At that time, the AEC Regulatory Staff initiated the practice of refusing

to docket a Construction Permit application until it was determined that it

was complete enough to permit substantive review. The reviews performed of

the Quality Assurance Program descriptions were primarily a screening for completeness.

In 1973, regulatory procedures were issued which included review by the

Directorate of Licensing of the applicant's QA Program description as it

applied to design and procurement activities for satisfying requirements of

Appendix B of 10 CFR 50. Inspection hy Regional Offices of the implementation

of the QA Program for these activities was also started.

Regulatory Guide i.70 was issued covering the preparation of Safety

Analysis Reports and included a Standard Format for the Content of Safety

Analysis Reports. Chapter 17.0 indicated that the applicant was to provide a

description of the Quality Assurance Program which he intended to establish

and implement during design and construction. The program was to be started

at the earliest practical time consistent with the schedule for accomplishing

the activity and the applicant was to provide a schedule for implementation of

the portions of the program not yet established at the time the PSAR was

prepared. The program was to address each criteria of Appendix B of 10 CFR 50

and could reference appropriate portions of other sections of the PSAR.

B. 38
In an effort to further define the Quality Assurance Program requirements, the Rainbow Books were issued in 1974. Each book covered a different

area of quality assurance -- gray - design and procurement; orange -

operations; and green - construction. The books were intended to provide

guidance for establishing and implementing an acceptable Quality Assurance

Program. The PSAR was to specifically state which portions of the books were

used. The applicant was to indicate any specific alternate methods of

accomplishing the Appendix B objectives that were not in conformance with the

recommendation of the Rainbow Books.

In 1975, the NRC issued a Standard Review Plan to be used as a reference

for evaluating the applicant's PSAR submittal. It also served as a guide

which the applicant could use during the preparation of the PSAR. Chapter 17

established the criteria to be used in approving the applicant's Quality

Assurance Program. The Plan has been modified several times to reflect the

changing conditions in the industry.

In 1979, after the Three Mile Island incident, the NRC added Chapter 13

to the Standard Review Plan. Chapter 13 required the applicant to include

information in the PSAR about the organizational structure that was to be used

during the construction and operation of the facility. Included was to be a

description of the corporate management structure and controls. Further, the

responsibilities and duties of any technical staffs was to be stated. There

was to be a description of the applicant's past experience in design and

construction of nuclear plants or projects of equal magnitude. A program for

planning and implementing design and construction activities and responsibilities was to be included. The applicant was to identify the general

qualification requirements for certain specified positions or classes of

positions as well as assigned management and supervisory positions. Required

educational backgrounds and experience was to be included for each position.

3.5.2 Analysis

3.5.2.1 Guidance Documents

Prior to 1970, there was no documented guidance for licensing review of

Quality Assurance Programs before issuance of permits. Following issuance of

Appendix B of 10 CFR 50, early guidance documents for reviews of Quality

Assurance Program descriptions indicated that neither the complete program nor

a detailed description of how the applicants commitments were to be

implemented had to be described. The Quality Assurance Program Review

Checklist stated:

''"It should also be noted that the applicant is required to.... ......

submit only "...a description of the quality assurance program..."

and not the full program documentation. An appropriate designation

for this description of the QA program is the "Quality Assurance

Program Plan"; however, the use of this term is not mandatory."

"The QA Program Plan presented in the PSAR should contain

sufficient information to enable to reviewer to decide whether an

appropriate basis has been established for a detailed QA program

which meets the requirements of Appendix B. DRL approves the QA

program at an early stage, before it is completely documented,

B.39
solely on the basis of a description of the program (Quality Assurance Program Plan). Later the detailed QA program (QAP) and its

implementation will be under the surveillance of CO. If the QA

program or its implementation fails to meet the requirements of

Appendix B, this will be duly noted by CO and brought to the attention of DRL. This relieves DRIL of a time-consuming review of a

detailed program and permits the applicant to set up the program in

the course of coordinating the operations of the participating

organizations in the project at the appropriate stages."

Guidance for Submittal of Quality Assurance Program Description - Section

17 of PSAR stated:

"To demonstrate the framework for the implementation of 10 CFR

50 Appendix B criteria, a listing of the QA Program procedures which

describe the implementation of each of the 10 CFR Part 50 Appendix B

criteria, should be provided in the PSAR and identified to the

applicable corresponding criterion. In the event that certain

required procedures are not established a schedule for their preparation should be provided in the PSAR."

The Standard Review Plan issued in 1975 required evaluation of the entire

Quality Assurance Program description included in the PSAR. Section 17.0 of

the Standard Review Plan states:

"Prior to docketing a CP application, the NRC performs a

substantive review of the applicant's QA program description relative to ongoing design and procurement activities."

"The pre-docketing substantive review places particular emphasis on the areas of organization, QA program, design control,

procurement document control, and audit. The application is not

docketed unless the established and implemented program in these

areas has no substantive deviation from NRC QA guidance applicable

to activities conducted prior to docketing."

"Where an NRC-accepted QA topical report is referenced in the

application, the referenced QA program is not re-reviewed except for

conformance to the applicable Regulatory Guides in effect at the

time of tendering the application. For the case of CP applications

referencing a standard design that includes an approved QA program

directly or by reference, the applicant need not conform to new

Regulatory Guides unless they contain regulatory positions determined to be significant to safety."

"The QAB review, after docketing, covers the QA controls to be

applied by the applicant and principal contractors to activities

that may affect the quality of structures, systems, and components

important to safety. These activities include site testing and

evaluation (starting with evaluation of exposed excavated surfaces,

soil compaction, and testing), designing, purchasing, fabricating,

constructing, handling, shipping, storing, cleaning, erecting,

installing, inspecting, and testing. This review extends to the

determination of how the applicable requirements of the eighteen

B.40
criteria of Appendix B-to 10 CFR 50 are satisfied by the proposed QA

program."

"The acceptance criteria include a commitment to comply with

the regulatory positions presented in the appropriate issue of the

Regulatory Guides including the requirements of ANSI Standard

N45.2.12 and Branch Technical Position listed in subsection V.

Thus, the commitment constitutes an integral part of the QA program

description and requirements. Exceptions and alternatives to these

acceptance criteria may be adopted by applicants provided adequate

justification is given; the QAB review allows for considerable

flexibility in defining methods and controls while still satisfying

pertinent regulations. When the QA program description meets the

applicable acceptance criteria of this subsection or provides

acceptable exceptions or alternatives, the program is considered to

be in compliance with pertinent NRC regulations."

The applicant and its contractors were to prepare Quality Assurance

Manuals and implementing procedures to fulfill commitments made in the PSAR

and to describe the actual program in more detail. The responsibility for

reviewing the more detailed Quality Assurance Manuals and implementing procedures to determine if the program to be used complies with the requirements of

Appendix B of 10 CFR 50 had been assigned to the Regional Offices.

3.5.2.2 Quality Assurance Program Review

Reviews of Quality Assurance Program descriptions have primarily

consisted of determining the completeness of PSAR commitments in meeting the

requirements of Appendix B of 10 CFR 50.

A study in 1980 (NUREG/CR-1250) contained the following appraisal of PSAk

reviews:

"The review conducted by the Quality Assurance Branch (QAB) in

NRC's Division of Project Management is limited to an evaluation of

the description of the applicant's QA program in the PSAR and FSAR,

and an assessment of whether that proram complies with the 18

criteria of Appendix B. However, no attempt is made by the QAB to

determine how or to what extent the QA programmatic requirements are

applied. This determination is left to the discretion of the

applicant, who is responsible for identifying safety-related items,

determining the extent that QA requirements are applied to these

items, identifying the activities to which Appendix B applies, and

imposing QA requirements on its contractors and vendors. The

majority of the applicant's QA programs are found in its implementation procedures, which are not even submitted to the NRC for review

or approval. These implementing procedures, which constitute

several volumes of documents, are retained by the utility."

"The QAB does not review the applicant's procedures that

implement its QA program. Review of implementation is the responsibility of IE. However, IE does not review the substance of the

utility's procedures to determine their adequacy or to give NRC

approval. The IE review assumes that the utility's procedures for

B.41
implementing its QA program are adequate, and simply attempt to

determine whether they are being followed."

Contrary to the above, regional personnel generally indicated during this

study that adequacy of Manuals was reviewed in addition to their compliance

with PSAR commitments. However, there were difficulties in determining

between commitments and requirements and personnel did not receive training in

how to review the Manuals. Procedures were reviewed by project inspectors on

a sample basis and the procedures reviewed were documented in inspection

reports. There was no formal overview performed to assure all appropriate

procedures were reviewed prior to permitting work to proceed.

NRC regulations have not required the QA Program to be included as a

condition of the permit and once Licensing approved the PSAR, submittal of

changes to the Quality Assurance Program description, for Licensing's review

and approval, were not required. A regulation change in 1983 requires that

changes to Quality Assurance Program descriptions in PSAR's be submitted to

Regional Offices for review. If in the opinion of the licensee, a reduction

of commitment to quality occurs, then changes must be submitted prior to their

use. Otherwise the licensee has one year in which to make the submittal.

Permitting the licensee to make such a determination may result in differences

of opinion between the NRC and licensee after the fact. The NRC should

consider requiring submittal of all changes for NRC acceptance prior to their

use.

Regional personnel stated during this study that there is a great lack of

uniformity in what is required during the PSAR review from one reactor to

another, especially in the Q-Lists defining safety-related systems, and that

too much depends on the whims of the NRC Project Manager and what the licensee

is able to negotiate or get by with in the licensing process.

Opinions were expressed that applicants were allowed to do an excessive

amount of general design work and purchasing of major components prior to

submittal of the PSAR. The applicant's Quality Assurance Program in effect

during this period of time has not been reviewed until submittal of the PSAR.

Considerable pressure could be placed on Licensing to accept a less than

satisfactory applicant Quality Assurance Program if the major components were

partially fabricated or areas of design completed. It was suggested that the

WRC be involved at the very start of the applicant's work.

3.5.2.3 Management Capability

The NRC has not placed sufficient importance on licensee and contractor

attitude and management capability. In 1973, it was reported to the Director

of Regulations (Davis and Brown 1973) that:

"The AEC's visible QA efforts date back to the mid-1960's, and

there has been some success: a growing number of utilities have

responded with improved QA programs. However, it is clear that this

success has been gained only through the continuous efforts of the

AEC with the utility industry. It is indeed fair to conclude that,

throughout this period, status quo considerations have strongly

influenced the utilities' attitudes on QA. Today, virtually all

B.42
utilities are aware that QA is important--but there is still.no

widespread sense of urgency."

"Some utilities are not philosophically committed--with

attitude and resources--to a high level of QA. They do not

acknowledge that nuclear technology is in substance different from

conventional power technology, and that a new order of management

involvement is required. These utilities have successfully

constructed and operated fossil fuel plants with unstructured QA

programs. They believe that these programs are equally applicable

to nuclear reactors."

Following Three Mile Island, it was reported in 1979, (NRC 1979) that:

"There is little I&E assessment of the utility's management capabilities."

In an analysis of the experience at problem plants, the EDO stated (NRC

82) that primary problems included:

"failure of the project management team to provide adequate

management controls to prevent a significant breakdown in quality

from occurring"

"failure of the owner's quality assurance program to detect the

breakdown in a timely manner and to obtain the necessary corrective

action"

He also stated:

"The problem areas are fundamentally derived from a lack of

total management commitment to quality at the nuclear projects

inception. This lack of commitment has been exacerbated by the lack

of understanding of the role of quality assurance in project

management and the lack of total understanding of what is required

by personnel at all levels of the process."

"Historically, the NRC's licensing and construction inspection

programs have not sufficiently examined the project management

controls at sites under construction, but have been oriented towards

establishing adequacy within major technical and functional areas,

e.g., concrete, electrical, etc. The systematic assessment of

management performance and evaluation of all other available

information have not received the same level of effort as operating

sites."

The NRC Case Studies have revealed that the NRC has not sufficiently

evaluated whether licensees and their contractors had the experience,

knowledge, staffing or ability to effectively manage the design and

construction of a commercial nuclear power plant.

Several adverse comments were received about the vague subjective terminology used in Standard Review Plan 13.1.1-Management and Technical Support

Organizations. Phrases such as "clear unambiguous management control and

communications exist between organizational units" and "substantive breadth

and level of experience and availability of manpower to implement the responsibility for the project" used as acceptance criteria makes evaluation on a

B.43
uniform basis difficult. Evaluation criteria for management and all elements

of Quality Assurance Programs need to be prescriptive enough to permit a

meaningful review.

B.44
3.6 INSPECTION PROGRAM FOR ASSURANCE OF QUALITY

3.6.1 Description

3.6.1.1 General

Prior to 1968, the AEC performed little inspection at nuclear power

plants under construction. Few inspection procedures and minimal guidance

were available to inspectors. There were 4 or 5 inspectors in each Region (a

total of about 20 inspectors) who had nuclear research or nuclear navy experience and were expected to know how to perform adequate inspection.

As a result of many quality related problems at nuclear power plants,

including serious problems at Oyster Creek, the AEC recognized a need to look

at construction activities and develop more formalized programs. The AEC

moved inspectors from operations to construction and later hired personnel

with construction background. As the number of inspectors increased, the need

arose for more guidance. The AEC began developing a "General Facility Under

Construction Inspection Program" and writing inspection procedures. In late

1969, the AEC issued a directive to implement the procedures.

In the early 1970's as Appendix B of 10 CFR 50 became mandatory, there

was lack of coordination between the existing inspection procedures and

requirements of Appendix B. In 1972, a procedure titled "QA During Design and

Construction" was issued addressing Appendix B of 10 CFR 50 and requiring a

review of the licensee's Quality Assurance Manual, a meeting with corporate

utility management, and an initial inspection subsequent to docketing a

Construction Permit application. In 1973, procedures were issued covering

pre-docketing and pre-construction permit inspections. The AEC initiated

preparation of a more comprehensive inspection program, which was later taken

over by the NRC and issued in 1975 as the Inspection and Enforcement Manual.

The NRC used regionally based inspectors to implement the construction

inspection program. A generalist inspector, possessing a broad range of

technical knowledge and often specific expertise, had overall responsibility

for a given plant and assisted in inspecting other plants. Specialist inspectors expert in specific technical areas conducted inspections in their technical specialties at the various plants within their Region. A minimum of six

inspections a year were to be performed at construction sites. Until the

incident at Three Mile Island, inspections tended to be oriented toward

documentation and records review. In 1979, inspection orientation began

moving more towards hardware and results.

As a result of numerous problems at construction sites, the NRC regionally based inspection program was criticized for too few inspections, too

little of an inspector's time being spent on site, too much onsite time being

spent reviewing records instead of observing work in process or conducting

independent measurements and tests, and too little evaluation of licensee

performance with appropriate NRC response. A General Accounting Office report

(GAO. 1978) stated:

"We believe that NRC's inspection process needs to provide a

more thorough and independent evaluation of the quality of

B.-45
powerplant construction work. Without such an evaluation, NRC has

to rely to an undue extent on the credibility or validity of evaluations made by utility companies. Thus NRC's inspection program

cannot independently assure that nuclear powerplants are constructed

adequately. The following simple description of the enormity of

nuclear powerplant construction activities and the current NRC

inspection level underscores our position."

"Seventy-eight nuclear powerplants are now in various stages of

construction. A typical powerplant construction site may involve

several thousand construction workers and supervisory personnel--in

many cases, working 24 hours a day, 7 days a week. A single powerplant requires making about 25,000 welds, pouring about 360,000 tons

of concrete, and using 726 tons of copper and 34,662 tons of iron.

Many complex electrical and computerized systems are also involved."

"In answer to our questionnaire to NRC inspectors, the 63

respondents indicated that collectively they each spend only about

22 percent of their official working time, or about 50 days per

year, at construction sites. They further indicated that they used

only about 34 percent of that time (about 16 days per year) to

determine for themselves the quality of construction by performing

or observing tests of completed construction work, observing construction work in progress, and talking with construction workers.

Therefore, in 1 year, all 76 NRC construction inspectors and supervisors spent about 1,216 staffdays--or about 5-1/2 staffyears

effort--in direct inspection work. At each of the 78 powerplants

then, NRC's annual direct inspection is about 16 days."

"For most of the past 2-years, however, NRC has been reevaluating its inspection philosophy and approaches. It recognizes many of

the shortcomings of the present system, such as the limited amount

of direct inspections and verification and the limited time its

inspectors spend onsite observing construction work and talking with

construction workers. NRC is evaluating the need to perform some

type of independent verification of the quality of construction work

and is instituting a program to assign resident inspectors to

powerplant sites--both under construction and in operation. This,

NRC anticipates, will increase an inspector's onsite inspection time

from about 22 percent to 75 percent, will permit greater observation

and surveillance of construction activities, and will make its

inspectors more accessible to construction craftsmen."

"NRC plans to have 20 such inspectors at plant sites by October

1978. Five of these will be assigned to powerplants under construction. Depending on congressional approval, NRC plans to expand the

program and provide a resident inspector at every powerplant in

operation or under construction by 1981. Currently, a request is

before Congress for a supplemental appropriation in fiscal year 1978

to provide 61 people and $2.65 million to get the program started.

These people have to be hired now, according to NRC, because it will

take a minimum of 2 years of training and experience before they are

qualified to take over a resident site. In the meantime, existing

NRC inspectors will fill the resident positions."

B.46
Due to budgetary restrictions, plans did not envision putting a resident

inspector at a construction site until the later stages of construction, when

the critical safety-related construction work was being done.

In 1978, the NRC began revising the inspection program. The objectives

remained the same but the means of achieving them changed.

Resident inspectors were placedionsite on a full time basis to increase

the amount of time spent directly verifying licensee activities and performing

independent measurements and to motivate licensees to improve their performance. Resident inspectors were placed at operating plants during 1978-1980

and at construction sites in 1980. The resident is the-principal inspector

for the site and is supported by specialist inspectors at the Regional offices.

Regional'offices provide supervisory and administrative support and process

noncompliances found by the residents. The current policy is that every

construction site have one resident and every operating site have one resident

for each operating plant. Residents file a monthly summary inspection report

with headquarters and regional inspectors file trip reports.

Residents perform both planned and reactive inspections, with planned inspections budgeted for two-thirds of the inspector's time and reactive inspections

budgeted for one-third of the time.

In addition to the resident inspectors, the NRC initiated the following

inspection activities:

Performance Appraisal Teams in 1978 to obtain a National perspective

of evaluating the effectiveness of the inspection process, assessing

licensee performance, and evaluating the objectivity of residents

Systematic Assessment of Licensee Performance in 1979 to provide an

annual review of regulatory performance of licensees

Construction Assessment Teams in 1980 to provide periodic in-depth

inspections of the overall construction project

Independent Design Verification Program in 1981 to verify design

Integrated Design Inspection in 1982 to verify the implementation of

the licensee's quality assurance program during the design process

A more detailed discussion of the elements of the inspection program

follows.

3.6.1.2 Pre-CP Phase

The Light Water Reactor Inspection Program - Pre-CP Phase, issued in Hay

of 1975, is applicable from the time the NRC receives formal notification of a

utility's intentions to build a plant, up to issuance of the construction

permit, Principal areas covered include inspection of the establishment,

execution and administration of the QA Program relating to Preliminary Safety

Analysis Report development, design, procurement and construction.

B.47
The Light Water Reactor Inspection Program (NRC 1975) provided for

examination of objective evidence to determine whether the applicant, consultants, and the constructor have placed into effect:

Planning and scheduling necessary to assure timely implementation of

organizational staffing, procedures and instructions, quality

assuring activities and administrative controls consistent with NRC

requirements and the description of the quality assurance program

provided in the application for a construction permit.

An implemented quality assurance program consistent with NRC application requirements, which has translated the PSAR commitments into

an aggregate collection of procedures and instructions (QA Manual),

and is being executed as required for each organization performing

and/or verifying the attainment of quality objectives established

for the design, procurement and construction of safety-related

structures, systems and components of the nuclear facility.

The means to ascertain and document the adequacy and utilization of

procedures and instructions necessary to achieve quality objectives.

The means to evaluate and document the effectiveness of the implemented quality assurance program for each organizational element

assigned responsibility for attainment or verification of safetyrelated quality objectives.

Until docketing of the application, the inspector was to use the "Guidance on Quality Assurance Requirements During Design and Procurement Phase of

Nuclear Power Plants" (Gray Book) as guidance in evaluating activities. After

docketing he was to use the PSAR commitments. QA Manual inspection was to be

performed at the Regional Office prior to conducting implemention inspection.

Inspection Procedure 35100B (Review of QA Manual), issued in March of

1975, had the objective of ascertaining whether quality assurance plans,

instructions and procedures have been established in the QA Manual and conform

to PSAR eommitments for organizational structure and QA personnel, audits,

quality requirements, work and quality inspection procedures, control of

material, control of processes, corrective action, document control, test

control and control of test equipment and quality records.

Inspection procedure 35003B (QA Manual Review), issued in May of 1975,

had the objective of providing for uniform application of IE inspection

requirements when reviewing and examining procedures and instructions of the

implemented QA Program. The inspector was to complete review requirements of

the procedure only when another procedure of the LWR Inspection Program Pre-CP

Phase or other MC 2500 program referenced the procedure as a requirement for

that inspection activity. The procedure referenced three attachments to be

considered in reviewing the QA Manual of the applicant where major elements of

the applicant organization perform a significant part of design, procurement

and construction but identified all three as being under development. The

same procedure is currently in the IE Manual without the specified attachments. Enclosure 1 to the procedure was identified as partially completed and

still exists in that same form.

B.48
Inspection Procedure 35016B (Initial Pre-CP QA Inspection), issued in May

of 1975, had the objective of determining if the establishment and execution

of the quality assurance program for activities of design, procurement and

planning for construction was consistent with the status of the project and

the program described in the application. A Quality Assurance manual review

was to be performed during the fourth month after docketing and an inspection

of program implementation was to be performed following the manual review.

Inspection Procedure 35004B (Initial Predocketing QA Inspection), issued

in October of 1976, had the objective of determining if the establishment and

execution of the quality assurance program relating to criteria 1-VII and

XVI-XVIII of Appendix B of 10 CFR 50 was being implemented consistent with the

status of activities of PSAR development, design and procurement without

substantive deviations from NRC QA guidance for design and procurement. A

Quality Assurance Manual review was to be performed with deficient findings

forwarded to IE headquarters for submittal to NRR before the application was

tendered. If serious deficiencies did not exist, an inspection of the program

implementation was to be performed and results were to be forwarded to IE

headquarters for submittal to NRR.

Inspection Procedure 35012B (Second Predocketing QA Inspection), issued

in July of 1975, had the objective of repeating initial predocketing activities for areas determined deficient after applicant corrective action.

Implementation reviews were to include availability of instructions,

understanding of their content and purpose by personnel using them, establishment of in-process and permanent files for records, acceptable implementation

of the program, and consistency of the planning and scheduling of program

implementation with engineering schedules.

Inspection Procedure 35100 (Review of QA Manual) issued in 1983 has the

objective to determine whether quality assurance plans, instructions, and

procedures for specific safety-related activities have been established in the

QA Manual and implementing procedures and whether these documents conform to

the QA Program as described in Chapter 17 of the facility Safety Analysis

Report (SAR). The review is to be performed by the inspector, who is to refer

deficient items to the Region for resolution.

3.6.1.3 Construction Phase

The Light Water Reactor Inspection Program - Construction Program, issued

in March of 1975 and effective in October of 1975, is applicable from the time

a Construction Permit or Limited Work Authorization is issued until issuance

of an Operating License... Final activities of the program overlap with the

preoperational testing and operational preparedness phase activities, which

are covered by another program.

Upon notification that a utility intends to seek a license for construction of a nuclear power plant, the NRC meets with the utility to describe the

NRC inspection program and procedures and gives the utility a copy of the NRC

Standard Review Plan to be used in the review of the utilities Preliminary

Safety Analysis Report (PSAR).

B. 49
Upon receipt of an application for a Construction Permit and the PSAR,

the NRC reviews PSAR commitments for compliance with regulations and accepts

or rejects the application. The Division of Licensing of the Office of

Nuclear Reactor Regulation directs a program for safety and environmental

review and evaluation of applications, including a review of organizational

structure of the utility, qualification of management and acceptability of the

Quality Assurance Program description.

Following acceptance of an application, Inspection and Enforcement

performs a review of implementation of the organizational structure and

management controls over design, procurement and project management of the

utility, Architect Engineer (AE) and Nuclear Steam System Supplier (NSSS) to

ensure programmatic controls are in place prior to their use. If the same AE

or NSSS was recently reviewed on another project, it has not been necessary to

review them again.

If a Limited Work Authorization is requested, the implementation review

includes verification of capability to perform the work identified in the

request.

During design, procurement and construction activities, Inspection and

Enforcement's efforts have been about equally divided between reviewing

programmatic controls, observing work in process and reviewing records. As a

result of criticisms of looking too much at paper and not enough at hardware,

the emphasis has changed to expending 60% of the effort observing work and 20%

c1 the effort in reviewing programmatic controls and 20% in reviewing records.

The Inspection Manual consists of inspection modules prepared by Inspection and Enforcement at headquarters and provides a framework for inspection.

Inspections are performed to the commitments of the licensee, which can be a

different vintage for different plants. As regulatory standards are upgraded,

backfit is often required of older plants. Old plants then have mixtures of

old and new standards to comply with. Implementation of changes in the

inspection program is determined by the Regions based upon the construction

status of the plant.

About two years prior to fuel loading, the NRC begins inspection of

startup operational procedures. The project passes from construction to

operations within the NRC at the time of hydrostatic tests and an additional

resident inspector is assigned for preoperational and startup activities. The

Division of Licensing reviews the Final Safety Analysis Report (FSAR) commitments for compliance with regulations. The preoperational inspection program

consists of verifying implementation of FSAR commitments covering preoperational tests and startup, reviewing test procedures, witnessing tests, evaluating test results, and reviewing management control systems for operations.

Normally the resident inspector assigned for preoperational and.startup

activities becomes the resident inspector for operations.

At the end of preoperational activities, the Regional Administrator sends

a report to the Office of Nuclear Reactor Regulation indicating the status of

construction and preoperational and startup inspection programs, identifying a

list of open items, recommending any conditions for the Operating License and

stating the reactor can startup.

B.50
Following issuance of an Operating License, NRC holdpoints are established for fuel load, low power testing, power ascention testing, and full

power testing. The resident inspector for operations performs operations

inspections.

The objective of construction inspections is to ascertain whether construction and installation of safety-related components, structures and

systems meet applicable requirements. Since inspection activities must be

coordinated with construction activities, inspectors must be cognizant of

construction status and must plan their inspections in the proper sequence of

activities. Inspection procedures identify frequency of inspections and time

frames for completion based upon milestones relating to the status of work

activities. Inspectors are to conduct inspections outside the Scope of the

program and are to annually determine if QA Manual changes have been made, and

if such changes are appropriate and adequate. For multi-unit sites, inspection

is required for each unit under construction. Records for material or items

are to be reviewed prior to use or installation.

Limitations on construction inspection resources has precluded completion

of all procedures at all sites. To provide guidance to inspectors concerning

which procedures and portions of procedures should be completed, a Construction Inspection Program Priority Plan was established which varied emphasis on

different facets during the construction period. The use of the plan was

optional but preferred.

On the basis that the amount of inspection required to assure the same

degree of confidence that construction was adequate would vary from site to

site and that different types of activity at the same site may require varying

levels of inspection to provide the same degree of assurance, Regional management has been permitted to modify the priority plan. Reductions or additions

in inspections could be initiated by an inspector with concurrence of his

supervisor.

Regional Section Chiefs have been responsible for the inspection program

implementation and inspection status for their assigned plants.

The construction inspection program has been intended to provide the

framework for managing resources without being totally prescriptive. Inspectors have been expected to apply judgment regarding the need to complete each

line item of inspection procedures.

3.6.1.4 Performance Appraisal Teams

Performance Appraisal Teams (PAT) were established in 197.8 to obtain a

national perspective of evaluating the effectiveness of the inspection process, assessing licensee performance and evaluating the objectivity of residents'.

Inspections were designed to determine how well all levels of licensee

management and operational personnel understood and performed their duties.

Inspections were conducted through a series of interviews with both

corporate and operations personnel, and' review of licensee-generated records,

B.51
logs, and other documents. For each functional area examined, the PAT determined whether:

the licensee had written policies, procedures, or instructions to

provide management controls

the policies, procedures, and instructions were adequate to assure

compliance with NRC regulatory requirements

the personnel with responsibility in any given area were adequately

qualified, trained, and retrained to perform their duties

the individuals assigned responsibilities in a given area understood

their responsibilities

the requirements for a given'area were implemented to achieve full

compliance and appropriately documented

As part of PAT, the NRC established the "Module Sample Performance

Inspection" as the means of assessing the adequacy of the NRC's modular

inspection program and to determine if the NRC's current sampling rates were

adequate for detecting noncompliance. Inspections were performed for procedures previously performed by regional inspectors. The time period reviewed

and the procedures used were identical to those used by the regional inspectors in every aspect except the sampling rate, which was much higher.

The NRC planned to have four teams of five or six personnel each, performing about six inspections a year and appraising each operating plant every

three to four years. PAT activities were interrupted as a result of Three

Mile Island and resumed in 1980. In 1981, there were two teams performing 10

to 12 inspections a year. In 1981-1982, the Institute of Nuclear Power

Operations (INFO) initiated programs fqr inspecting operating plants every 15

months. The NRC entered into agreements with INPO, reviewed their program,

participated in their inspections as observers and backed off the PAT program.

Currently, there is one team performing 3 or 4 PAT inspections a year with the

objectives being to assess Regional performance and the inspection program and

to determine the effectiveness of INPO activities. PAT monitors INPO by

reviewing their reports, talking to INPO personnel and performing inspections

after INPO has performed their inspection at a site. PAT findings are followed up by Regional personnel.

The NRC requires corrective action for PAT findings within the NRC

inspect-ion program and presents findings outside the NRC inspection program as

weaknesses without requiring corrective action.

3.6.1.5 Systematic Assessment of Licensee Performance

Following problems at Three Mile Island, the NRC initiated a program for

Systematic Assessment of Licensee Performance (SALP), consisting of annual

reviews of regulatory performance of licensees by a team of inspectors and

regional supervisors involved at the site and headquarters personnel.

Chapter 0516 of the NRC Manual addresses the Systematic Assessment of

Licensee Performance (SALP) program and identifies the objectives to be:

B.52
* to improve the NRC Regulatory Program with emphasis on resource

allocation

* to improve licensee performance

• to collect available observations on an annual basis and evaluate

licensee performance based on those observations.

The SALP assessment is intended to be sufficiently diagnostic to provide

a rational basis for allocating NRC resources and to provide meaningful

guidance to licensee management.

For construction activities, the functional areas reviewed are:

* soils and foundation

* containment and other safety-related structures

* piping systems and supports--including welding, NDE and preservice

inspection

* safety related components--includes vessel, internals, pumps

. support systems--includes HVAC, radwaste, fire protection

* electrical power supply and distribution

* instrumentation and control systems

. licensing activities

* others (as needed).

For reactors in the preoperational phase, functional areas from the

listing for either Operating Reactors or Reactors under Construction are

selected as appropriate for evaluation.

The evaluation criteria are as follows:

* management involvement in assuring quality

. approach to resolution of technical issues from safety standpoint

* responsiveness to NRC initiatives

* enforcement history

* reporting and analysis of reportable events

* staffing (including management)

. training effectiveness and qualification.

The evaluation process is comprised of a SALP Board assessment, a meeting

with licensee management to discuss the assessment, and issuance of the

B.53
report. To provide a consistent evaluation, attributes associated with each

criterion are listed in the procedure to describe characteristics applicable

t, rhe three categories. The attributes are intended only as guidance.

Each functional area evaluated is assigned a Category. Not all functional

areas need be covered in a given review. If a functional area appropriate to

a licensee is not covered, the reasons are to be given in the report. The

functional area being evaluated may have some attributes that would place the

evaluation in Category 1 and others that would place it in either Category 2

or 3. The final rating for each functional area is a composite of the attributes tempered with judgment as to significance of individual items.

Performance Categories

Category 1. Reduced NRC attention may be appropriate. Licensee management attention and involvement are aggressive and oriented toward nuclear

safety; licensee resources are ample and effectively used such that a

high level of performance with'respect to operational safety or construction is being achieved.

Category 2. NRC attention should be maintained at normal levels.

Licensee management attention and involvement are evident and are concerned with nuclear safety; licensee resources are adequate and are

reasonably effective suzh that satisfactory performance with respect to

operational safety or construction is being achieved.

Category 3. Both NRC and licensee attention should be increased.

Licensee management attention or involvement is acceptable and considers

nuclear safety, but weaknesses are evident;-licensee resources appear to

be strained or not effectively used such that minimally satisfactory

performance with respect to operational safety or construction is being

achieved.

Regional Administrators are responsible for implementing the SALP Board

assessment including the following activities:

obtaining assessment data from NRR, AEOD and NMSS applicable to the

appraisal period

tabulating and analyzing the data obtained, including sumary of

numbers and types of inspections performed and findings, number of

LER's submitted under eadh cause category, number of Construction

Deficiency Reports and Part 21 reports submitted, abnormal occurrences, and number and nature of unplanned trips

developing the performance analysis for each functional area

conducting the SALP Board meeting with senior regional management,

the NRR Project Manager, resident inspectors and others as determined by the Regional Administrator to review the analysis and

supporting data and to develop the report

conducting meetings with licensees to provide assessment findings to

utility management

B.54
after considering the licensee's oral and written comments, transmitting the report by letter to the licensee with the letter including a characterization of overall safety performance.

3.6.1.6 Construction Assessment Teams

In 1980, the NRC initiated Construction Assessment Team inspections to

provide periodic in-depth inspections of the overall construction project by

concentrating on the examination of safety-related hardware after installation

and the licensee's inspection is completed. Objectives of the CAT program

(NRC 1982. SECY-82-150A) are:

to evaluate the effectiveness of design controls and construction

practices used to ensure that as-built conditions are in accordance

with the design basis

to provide a means of monitoring the progress of INPO activities

related to construction reviews performed by INPO and the INPOsponsored utility self-evaluation program

to assess the effectiveness of regional implementation of the IE

inspection program at reactors under construction.

During 1980-1981, eight trial CAT inspections of two weeks onsite were

performed by five man teams from Regional offices. The inspections obtained

useful results but strained Regional resources and reduced normal inspection

efforts. In 1982-1983, the CAT program was revised and CAT inspections are

now performed out of headquarters by teams of Inspection and Enforcement

personnel and consultants with Regional participation. A team consists of one

leader and 10 engineers and consultants and spends two weeks at the site, one

week at headquarters and two more weeks at the site. The NRC plans to perform

four CAT inspections a year and is monitoring the INPO Construction Project

Evaluation Program.

3.6.1.7 Independent Design Verification Program

The Independent Design Verification Program (IDVP) was created in 1981 as

a method of design verification after a serious design error was discovered in

a nearly completed nuclear plant.

Although originally intended to be a program to review the one error, the

verification process revealed that other design errors had occurred at the

same plant. As a result, the NRC concluded that other plants nearing completion should be considered for adesign review. The NRC examines-several

factors about a licensee in deciding if a review is necessary. Included is

previous plant construction experience of the licensee, architect engineer and

constructor, the complexity of the design interfaces, the general plant

construction record and the length of time since the Construction Permit was

issued.

The qualifications of the Independent Design Verification team is carefully reviewed by the NRC. Technical competence and complete objectivity are

of major importance.

B. 55
The program, to date, has revealed some design inadequacies but nothing

of major proportions. The NRC is currently using the IDVP approach as an

interim one and intends to utilize the continuing IDI/CAT program for long

term license review. The NRC does suggest that the licensees institute their

own ongoing IDVP program for their own benefit.

3.6.1.8 Integrated Design Inspection

The Integrated Design Inspection (IDI) program was started in 1982 as a

means to verify the implementation of the licensee's quality assurance program

during the design process. IDI teams consisting of personnel from the Office

of Inspection and Enforcement, Office of Nuclear Reactor Regulation, the

applicable Region, and consultants spend about four weeks examining procedures

records, and training of design personnel and inspecting a system as installed

in the plant. Emphasis is placed upon reviewing the adequacy of design

details as a means of measuring how well the design process functioned for the

selected system. Sample systems are chosen from five major disciplines.

Common areas with in these disciplines are examined for adequacy and consistency of design details.

The results of the IDI program are being used with similar information

from the CAT program to evaluate the licensee's compliance to commitments.

Three Integrated Design Inspections are currently planned per year and are to

be performed midway through the plant construction period.

3.6.1.9 AEC and NRC Philosophy

The basic philosophy of the AEC and NRC has not changed significantly

over the years. IE Office Procedure 0300 presents the current philosophy and

policy upon which the IE program is based. The philosophy can best be stated

that the industry is responsible for the safety of its activities and safeguarding of nuclear facilities and materials used in its operation and the NRC

ensures the industry adequately discharges this responsibility.

Inspection is on a planned sampling basis with the focus on areas of

greatest safety significance in order to evaluate the overall adequacy and

effectiveness of licensee performance. Objectives of inspection are: to

provide a basis for recommending issuance, denial, continuation, modification,

or revocation of an NRC permit or license; to identify conditions within areas

inspected that may adversely affect public safety; and to ascertain the status

of compliance with NRC regulations, licenses and orders.

Enforcement actions are to ensure licensees comply with Commission

requirements with a goal of making noncompliance more expensive than compliance. Objectives of enforcement are to assure maximum compliance practicable

with Commission requirements through consistent application of reasonable

enforcement actions in accordance with established and well understood procedures and to ensure that licensees who do not comply with regulatory requirements will promptly implement corrective action to do so.

Regional Administrators have the authority to modify the inspection

program at individual facilities based upon licensee's performance during the

SALP process. The scope, depth and emphasis of inspection is affected by the

B.56
program requirements in NRC rules and regulations, the relative safety significance of licensee functions and aspects of operations being inspected, and

the budgeted inspector resources to perform the program.

Inspection requirements and guidance is expressed in the form of performance objectives and evaluation criteria.

3.6.1.10 Inspector Qualification

Inspectors receive regional, formal classroom and on-the-job training.

Inspectors must attend required training classes or successfully complete a

written equivalency examination. The passing grade for examinations is 70%.

Training activities encompass regulatory, administrative and technical practices pertinent to each area of inspection. Self-study is required in the

subjects of the Code of Federal Regulations, NRC and IE Manual Chapters,

technical areas of inspection, methods and knowledge.

If regional management evaluates the background and performance of an

individual inspector and concludes the inspector has demonstrated an ability

to perform inspections in specific areas, it can authorize the individual to

perform inspections in those areas while completing training.

Training at the site or regional offices consists of:

Regional and/or Site Orientation

Code of Federal Regulations

* Final Safety Analysis Report

. Regulatory Guides

NRC/IE Manual

Industry Codes and Standards

Onsite Training

Construction Inspection Accompaniments

Training at the NRC Technical Training Center consists of:

BWR Technology Course

PWR Technology Course

Concrete Technology and Codes Course

Welding Technology and Codes Course

NDE Technology and Codes Course

Electrical Technology and Codes Course

B.57
Instrumentation Technology and Codes Course

. Fundamentals of Inspection Course

Optional courses, dependent upon the inspector's previous work experience

and planned inspection activities, are required for performing inspections in

specific areas. For resident inspectors in construction, optional courses

consist of:

. Inservice Inspection Course

Radiation Contamination Protection Course or equivalent plant

training

• Quality Assurance Construction Course

* Quality Assurance Modifications Course

Personnel assigned as resident inspectors after January 1, 1984, must

complete the training/qualification requirements for self-study, on-the-job

training, and required training identified in the Regional Training and

Qualification Journal.

Inspectors who have been trained/qualified under existing Regional

Inspector Journals do not have to requalify under the Regional Training and

Qualification Journal.

At the discretion of regional management, inspectors currently working to

complete their training/qualification under existing Regional Inspector

Journals may transfer appropriate self-study, on-the-job training, and required training courses to the Regional Training and Qualification Journal.

All newly hired personnel and new assignees are required to complete the

required regional training activities or take and pass equivalency examination(s) within the first 24 months after being assigned.

Refresher training is required in concrete technology and welding technology every 48 to 60 months after completion of the concrete and welding

courses and in NDE 36 to 48 months after completion of the NDE course.

3.6.2 Analysis

3.6.2.1 .General

Inspection Programs of the AEC and NRC have evolved as a result of the

learning process and in reaction to industry events.

Prior to 1968, the AEC performed little inspection at construction

-sites.

Following quality problems at construction sites, including Oyster

Creek, the AEC formalized inspection programs.

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* As a result of the Zion hearings in 1968, the AEC issued Appendix B

of 10 CFR 50 in 1970, specifying quality assurance criteria.

Two years after issuance of Appendix B of 10 CFR 50, the AEC issued

an inspection procedure addressing its requirements.

Three years after issuance of Appendix B of 10 CFR 50, the AEC

issued procedures for pre-docketing and pre-Construction Permit

inspections and developed a more comprehensive inspection program.

Following the Browns Ferry Fire in 1975, the NRC developed additional

programs for fire protection.

Following problems at construction sites and criticism of the

regionally based inspection program, the NRC began revising the

inspection program in 1978 and initiated Performance Appraisal

Teams.

Following problems at construction sites and at Three Mile Island in

1979, the NRC initiated Systematic Assessment of Licensee Performance,

Construction Assessment Team, Independent Design Verification, and

Integrated Design Inspection programs.

Budget and manpower restraints have generally precluded completion of

construction inspection programs. In recognition of this problem, the NRC

established a Construction Program Priority Plan varying the emphasis on

different facets of activity during the construction period.

The regionally based inspection program was changed in 1978 as a result

of too few inspections, too much of an inspector's time being spent reviewing

records instead of observing work in process or conducting independent measurements and tests and too little evaluation of licensee performance.

The current inspection program is being rewritten in recognition of

budget and manpower restraints. A goal in rewriting the inspection program is

to reduce it by 40% to bring it in line with available resources.

Regional personnel stated during this study that:

the level of resources is inadequate for the inspection required

completion of the inspection program has ranged from 60-70% to

90-100%

inability to complete the program has resulted from diverting

personnel from the program to perform reactionary inspections,

investigate allegations and follow-up findings of team inspections

and program evaluations (10 man-years of effort at one site and 14

.man-years of effort at another site)

diverting of personnel has resulted in missing inspection "windows

of opportunity", periods of construction during which an inspection

must be performed because it cannot be performed later (i.e.,

placement of rebar before pouring concrete)

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about 50% of the inspection program was being implemented at most

sites in one Region as a result of diverting personnel to other

sites

a Construction Assessment Team inspection at one site took three

times as many man-hours as was budgeted for program inspections for

a year and it was expected follow-up activities would take as long.

The impact of investigating allegations of poor construction work on

normal inspection work was reported in an earlier study (GAO. 1978).

"Commission inspectors are spending more of their time investigating

allegations of improper construction activities, often at the

expense of their normal inspection activities. A new regulation

requires utility companies to post notices informing workers that

they may report suspected defective work to the Commission. This

new publicity will increase the number of allegations received by

the Commission. However, the Commission should review organizational

elements and seek additional staff to investigate these allegations

without disrupting the normal inspection work."

3.6.2.2 Pre-CP Phase

The AEC and NRC have done too little too late in the pre-Construction

Permit stage. Pre-Construction Permit inspection activities are designed to

verify the establishment, execution and administration of the quality assurance program relating to PSAR development, design, procurement and construction activities before issuance of a Construction Permit. Inadequate attention

has been paid to design and the inspection program for design has not been

changed two years after the problems at Diablo Canyon. General design work

may be performed and major components may be purchased 18 months ahead of

issuance of a Construction Permit, without prior review of the applicable

Quality Assurance Program. Reviews of Preliminary Safety Analysis Report

quality assurance commitments have been to assure completeness in addressing

requiremehts of Appendix B of 10 CFR 50. Project Inspector reviews of licensee

quality assurance manuals and procedures have been for ongoing work only and

have tended to be cursory in nature in determining the compliance of management controls with PSAR commitments. Evaluations of licensee and contractor

management have not been adequate to assure management had the ability to

assure quality in design and construction activities. It was previously

recommended to the Director of Regulation (NRC 1974) that inspection effort be

increased in the management of QA inspection programs.

During this study, regional personnel stated that quality assurance

manuals are so general that procedures can be changed by deleting requirements

and yet still comply with the manual. There are also difficulties in differentiating between commitments and requirements and manual and procedures

reviewers have received little training in how to perform their tasks. The

review of manuals and procedures by a number of inadequately trained inspectors has produced inconsistent results.

The AEC and NRC have not made adherence to Preliminary Safety An alysis

Report commitments a condition of the Construction Permit and until 1983 did

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not require submittal of PSAR changes for acceptance. Once the PSAR was

accepted by the NRC, licensees could change their commitments.

3.6.2.3 Construction Phase

Inspection programs have been viewed more as guidance than mandatory

requirements. The AEC and NRC have relied on qualified engineers to use their

best judgment in determining which inspections are to be performed and the

degree of inspection necessary. During the 1960's and early 1970's, inspections were performed by inspectors with years of broad experience in research

or Navy reactors using little procedural guidance. 'These inspectors were

expected to have good engineering judgment and to know what to do and how to

do it. As the number of plants to be inspected increased and more inspectors

were required, additional guidance was provided through written programs. The

inspection program permits Regional management to adjust the priority plan of

inspection to meet the specific needs required at each site. This may cause

the level of inspection activities to vary from site to site and different

types of activities at the same site may receive varying amounts of inspection. Ultimately each inspector is responsible for determining the total

inspection effort he feels is necessary.

The Reactor Inspection Program states:

"The credibility of the inspection program is based upon

completion of inspection procedures and the conduct of each procedure in a technically adequate manner."

"Line items in inspection procedures reflect the collective

judgment and experience of personnel responsible for program development and personnel responsible for program implementation. Line

items are to be placed in the perspective of the objective of the

inspection and considered in the inspector's evaluation of whether

activities are safe and in compliance with requirements."

"Failure to complete the inspection program is inferred that

less than the desired level of assurance is obtained and the Division Director's decision to relax inspection program requirements is

to be governed by whether the resulting level of safety assurance

remains adequate to allow issuance of a license."

Implementation of inspection programs has varied among the Regions as a

result of management's attitude toward regulations and programs and the

capability of personnel. In some Regions, all problems are documented and

reported to regional management, while in other Regions some problems are

handled more informally at an inspector/craft level. Meaningful NRC data on

inspection program implementation was difficult to obtain during this study.

Regions which have tracked the status of the completion of inspection modules

can produce computer printouts listing the modules implemented. However, the

degree of implementation of the modules cannot be easily determined. As the

inspection program has evolved over the years, it has been possible to inspect

an area once, close out the inspection module as complete, and never go back

and inspect that area again. Since many construction activities may extend

for a period of years, personnel performing the activity and procedures may

have changed. Initial acceptance of the adequacy of the activity does not

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ensure continued adequacy. When plants drag out in time, this situation

becomes more acute. Instructions to Regional personnel in implementing the

inspection programs have varied. Some Regions have relied more heavily upon

engineering judgment than I-aperwork while othe- Regions have placed more

emphasis on paperwork. Portions of inspection modules may be worked over a

long period of time by as many as four different inspectors resulting in a

need for good recordkeeping so that each inspector is aware of the effort

previously expended . Inspections of continuous activities generally need to

be performed throughout the duration of the activities. Licensee and contractor

personnel indicated during the NRC Case Studies that legality was often a

matter of geography and compliance was a matter of where you are.

There is a general feeling within Regions that the inspection program has

been too fragmented and more attention should be paid to meshing inspection

requirements more closely with the construction schedule.

3.6.2.4 Performance Appraisal Teams

To. supplement the resident inspection program, and to obtain a national

perspective of inspection activities, Performance Appraisal Team inspections

were initiated. The Performance Appraisal Team Program has been an effective

method of measuring one aspect of operating plant performance. The program

does not apply to plants under construction. Most of the subjects covered

during the review relate to the licensee management and are therefore not

covered during the normal inspection program.

Due to budget and manpower restraints, the program has not been implemented as intended and has been modified to utilize INPO efforts. The use of

INPO teams with NRC observers and later spot follow-up of an NRC team has been

successful.

3.6.2.5 Systematic Assessment of Licensee Performance

The Systematic Assessment of Licensee Performance is an annual review of

licensee performance by inspectors and supervisors involved at the site and by

headquarters personnel. Available observations on licensee performance is

collected and evaluated to provide a rational basis for allocating NRC resources and to provide meaningful guidance to licensee management. While

being a trend analysis of licensee performance, SALP is limited in effectiveness to the available observations. If the observations are inadequate or

misleading, the SALP results will also be inadequate or misleading.

3.6.2.6 Construction Assessment Teams

To provide periodic in-depth inspections of overall construction, the NRC

initiated Construction Assessment Team inspections in 1980. These inspections

concentrate on examination of safety-related hardware after installation and

license inspection is completed. The inspections have obtained useful results

but have been resource intensive. Initial CAT inspections were performed by

Regions and reduced the normal inspection efforts by diverting personnel to

the CAT inspections. Now personnel for the inspections is furnished by

headquarters. Performing follow-up activities resulting from CAT findings has

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been found by regional personnel to take as much time as was spent in performing the original CAT inspection. Current inspections are taking five weeks to

perform. At one site, the CAT inspection took three times as many man-hours

as was budgeted for routine inspections for one year. The performance of four

CAT inspections a year will result in all plants under construction not having

a CAT before construction is completed. It appears that budget and manpower

restraints will prohibit the CAT program from being effective at all plants

under construction. Sites selected for CAT's may feel singled out for unwarranted extra NRC inspection.

3.6.2.7 Independent Design Verification Program

The Independent Design Verificatibn Program (IDVP) is another positive

step in NRC review of the design process. It is to be applied on a selective

basis at the near term operating license period. All plants under construction will not have an IDVP inspection before being granted an operating

licence. It appears that budget and manpower restraints will prohibit the

IDVP from being effective at all plants and that sites selected for IDVP's may

feel singled out for unwarranted extra NRC inspections.

3.6.2.8 Integrated Design Inspection

The Integrated Design Inspection program is a positive step in NRC review

of the design process and 'inspections performed to date have produced meaningful results. Since the inspections are of a limited portion of work, problems

detected are an indicator of potential problems on a more widespread basis.

The NRC needs to assure that licensee's response to adverse findings include a

review of similar activities in other areas or systems and root causes of the

problems are identified and corrected.

The IDI is to be performed midway through the plant construction period.

Since much of the design work is completed before or early into construction

and extensive design changes tend to complicate attaining assurance of quality

during design and construction, the NRC should supplement the IDI with a

program performed earlier in the design process. Thorough review of the

design process at the Pre-Construction Permit stage or before would result in

early detection of design process deficiencies and permit their correction

before the start of construction.

Three IDI's are to be performed a year. Such a limited number of inspections will result in all plants under construction not having an IDI before

their construction is completed. It appears that budget and manpower restraints

will prohibit the DI program from being effective at all plants under construction. Sites selected for the IDI's may feel singled out for unwarranted

extra NRC inspection.

3.6.2.9 AEC/iNRC Philosophy

Regulatory agencies in other industries are generally perceived to be on

the side of the general public. Because the original AEC mandate was to both

promote and regulate nuclear power the NRC has struggled with the image that

they are more favorably inclined towards the nuclear industry than the general

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public. Even though the NRC has an adversarial role and, through its enforcement actions, has levied large fines, any attempt made by the NRC to work with

the industry is taken as showing favoritism.

Changing such incorrect perceptions is a lengthy but worthwhile process.

It can best be accomplished by maintaining a vigorous enforcement program and

implementing it in the design and construction areas.

The AEC and NRC have made nuclear utilities responsible for assuring that

the health and safety of the public is not adversely affected by the operation

of their nuclear plants. The role of the NRC as a regulator has been to see

that the industry discharges that responsibility. The NRC performs its

function through inspections and reviews during design, construction and

operation activities. The extent of the overview is governed by engineering

juagment and available resources.

It was stated by headquarters and regional personnel that about one

percent of the licensee design and construction activities are currently

reviewed by the NRC. Budgetary limitations may cause this level of inspection

to remain about the same in the future.

In order to achieve maximum benefit from the current program it becomes

imperative that ways be found to:

allocate additional resources.

Upgrade the quality of inspectors.

Provide the inspector with a workscope which will best utilize his

time and knowledge.

Require the licensee to perform more effective internal audits and

utilize more outside organizations to review their operations. The

scope of such audits and reviews should be controlled by the NRC.

Upgrade the status and earning potential of the resident inspector.

Provide all inspectors and other employees involved in this area an

opportunity to contribute to the identification and solution of

problems.

The AEC and NRC attitude toward construction deficiencies and inadequacies

has been that there is no threat to the health and safety of the public until

a plant becomes operational. If construction deficiencies were found and

rework was required, even on a repetitive basis, it was not an area of great

concern. Plants would not be licensed for operation unless ready for operations, which would be determined by prerequisite, preoperational and start up

testing. As a result, the threshold for enforcement action in some Regions

was too high.

This study found that there was still resistance to recognizing the

importance of quality assurance in both the NRC and the licensee organization.

The NRC must continue to work with all employees of the Commission by having

lectures, workshops and training sessions on the subject. Meetings should be

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held between NRC and licensee management to verify that the proper quality

attitude is present on the licensee organization.

The AEC and NRC have often been unable to identify specific problems as a

symptom of a larger system problem. Hardware problems have been easier to

isolate and identify. It has been necessary to build a history and volume of

hardware problems before recognition of a system problem. The NRC must

recognize that problems found during inspections on limited sampling of work

activities and records is an indicator of more widespread problems and must

require licensees to determine the extent of the problem and to take effective

action to correct the cause of the problem.

One of the recommendations included in the Staff Report to the Presidential Commission on the Accident at Three Mile Island - Volume IV 1979 stated:

"Region's on-site inspections appear to miss signals and

symptoms that indicate potential plant operating problems

and weak utility management."

NRC management didn't recognize the significance, magnitude or complexity

of problems. Licensee, AEC and NRC management has tended not to listen unless

there has been a major problem or a "smoking gun." Management has tended to

think quality control instead of quality assurance. The AEC and NRC have not

forced expeditious handling of corrective action.

The AEC and NRC has had a lack of understanding of quality assurance.

The Compliance Manual didn't address quality assurance. Appendix B of 10 CFR

50 was not initially used as the basis of inspections. Quality Assurance for

operations has only been required since 1977-1978. It was stated during this

study that the practice was to look at quality assurance up front and then not

look at it again.

3.6.2.10 Inspector Qualifications

A part of the training program requires self study in the Code of Federal

Regulations, NRC and IE Manual chapters, and various other technical areas.

Self study has been recognized as a' means of obtaining basic information and

knowledge, however, it does not provide adequate training in how to apply the

basic information.

AEC and NRC training programs have not kept pace with the increasing

needs of the organization. It was stated during this study that the level of

experience of inspectors has declined over the last 10 years.

This has been partially attributed to:

expansion of the nuclear industry in the early 1970's and the

resulting need for more inspectors

implementation of the resident inspection program, in which experienced inspectors were initially placed at operating sites and

replaced with less experienced inspectors

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promotion of good inspectors as part of a career path and replacement with less experienced inspectors

NRC inability to remain competitive with the industry in salaries.

An NRC Office of Personnel and Management study indicated NRC inspection

salaries to be 21 percent below an industry average. Frequently, inspectors

have left the NRC for higher salaried positions in the utility industry. This

is particularly disturbing if it occurs right after they have completed the

initial training period and are just becoming a major part of the NRC program.

Early training to Appendix B of 10 CFR 50 was through on the job training

with experienced personnel. In 1975, training in Appendix B consisted of

self-reading. In 1976, one hour of a fragmented course whose schedule was

d4 verted by the class, was allocated to Appendix B. A longer formalized

course on Appendix B was not developed until 1983. During this study, it was

stated there is a great need for more training in quality assurance, standards

and Appendix B of 10 CFR 50. It was also stated that there was practically no

training in how to apply modules or how to do inspections. These skills come

mainly from on-the-job training. More training is needed to improve the

caliber and qualifications of inspectors.

Regional personnel stated during this study that inspectors in one

discipline have been assigned duties in disciplines for which they have not

been trained and that they would like more guidance from headquarters to

better understand their responsibilities.

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3.7 LICENSEE CONTRACTOR AND VENDOR INSPECTION PROGRAM

3.7.1 Description

Prior to 1969, AEC philosophy regarding vendor activities was that

qualification and monitoring of vendors was the licensee's responsibility. If

problems with vendor equipment existed, they would be identified during start

up testing.

Major quality problems in the reactor pressure vessel, piping systems and

installation of second hand, non-pedigree valves at Oyster Creek and subsequent problems having safety significance at other facilities, made the need

to re-evaluate the NRC policy evident.

AEC recognized that new standards needed to be written, old standards

needed to be upgraded, and all standards needed to be enforced. They also

recognized that inspection of work and enforcement of standards cannot always

wait until final assembly at the site and that it was frequently impossible to

make a repair at the site without compromising the final quality of the

product.

In 1970, 10 CFR 50 Appendix B introduced the quality assurance concept

and made the licensee responsible for the evaluation and selection of procurement sources. Regional site construction inspectors were directed to evaluate

licensee vendor inspection programs as part of evaluating the licensee's QA

Program and to periodically accompany selected licensees on their inspections

of selected vendors. This "Host - Concept" didn't work well and was discriminatory in that the selected licensees were expected to follow through on

corrective action of generic type problems for all licensees. Inspections

were difficult to coordinate and administrate and were ineffective. The

presence of the NRC inspector as an observer inhibited the detection of

deficiencies.

In 1973, the AEC initiated a trial vendor inspection program covering

fuel fabricators and discovered that greater conformance to quality standards

and a subsequent reduction in major quality problems could be achieved through

an effective direct vendor inspection program.

Analysis of Licensee Event Reports indicated that about 63% of construction and operation problems were traceable to vendor errors in design or

fabrication performed off-site during the design and construction stages and

indicated a need for improved vendor performance.

In 1974, the NRC initiated the Licensee Contractor and Vendor Inspection

Program (LCVIP) as a 2-year trial program covering all types of vendors. The

program was administered by Region IV in Arlington, Texas. In about the same

time frame, a special Regulatory Task Force study (Study of Quality Verification and Budget Impact) recommended expansion of the trial vendor inspection

program as a result of increases in the number of reported problems and

difficulties experienced in performing inspections of vendors.

With the large number of vendors and suppliers worldwide involved in the

U.S. Nuclear industry and with budget and manpower restraints, a priority for

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inspection of vendors was established. Emphasis was placed on vendors supplying important safety-related products or services, such as the 5 Nuclear Steam

System Suppliers (NSSS), fifteen Architect Engineers (AE) firms and approximately 120 suppliers of ASlE class I and other safety-related parts or components.

Vendors of NSSS and AE services were inspected to assure their Topical

Reports, previously approved by the Office of Nuclear Reactor Regulation

(NRR), were transferred into procedures and the procedures were implemented.

Vendors without Topical Reports were inspected to PSAR commitments.

Vendors of mechanical components having ASME Certification were inspected

to their ASME program and vendors without ASME Certification were inspected

for the same type of detail required by the ASNE. Vendors to be inspected

were selected based upon their doing a large volume of business on a continuing

basis.

In 1977, the importance of inspecting electrical equipment vendors was

recognized and two inspectors with electrical experience began a limited

program of reviewing 4 to 5 Quality Assurance Program areas of vendors every 2

to 3 years. Inspections were often performed to draft procedures and some

procedures were never formally issued.

In 1978, the LCVIP began looking at the effectiveness of vendor design

programs, including verification of design inputs and checking design calculations at suppliers of NSSS and AE services.

Until 1978, the LCVIP functioned under an edict of not identifying the

project or site to which the vendor being inspected was supplying equipment or

services, resulting in the inability of Regions, headquarters and resident

inspectors to correlate problems to the sites under their responsibility. In

1978, the policy was changed to identify such sites.

In 1979, following the problems of Three Mile Island, the LCVIP began

getting requests for performing reactive inspections and follow-ups at vendors. There was no guidance for these inspections so Region IV prepared a

program which was issued through headquarters. Vendors are chosen for reactive inspections based on the number of requests for inspections and the

significance of problems. As a result of more sensitivity within the NRC,

there has-been an upward trend in requests for reactive inspections, increasing to about 200 requests in 1981 and about 350 requests in 1982.

The NRC issues a Letter of Acceptance to NSSS, AE, and Fuel Fabricator

organizations verifying the capability of their program to meet PSAR Commitments and uses withdrawal of the letter to obtain corrective action. Licensees may accept the NRC Letter of Acceptance as evidence of qualification of

the vendors but must retain the final responsibility for acceptability of the

product or service provided.

If a utility performs its own engineering function, the Region in which

it is located has the responsibility for inspection activities, including

reactive inspections.

Inspections of vendors are performed 1 to 4 times a year on a 3-year

repetitive cycle with a detailed review of the QA Program and its

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implementation in the first year and sampling the quality of work to determine

QA Program effectiveness in the second and third years. There is no scheduled

interface of the LCVIP with the licensing process.

The NRC is currently re-evaluating the LCVIP and is studying the licensing of vendors as well as utilization of third party inspection.

3.7.2 Analysis

The Licensee Contractor and Vendor Inspection Program (LCVIP) evolved as

a result of the learning process and of licensee inability to assure the

quality of items and services supplied by their vendors.

Prior to 1969, vendor qualification and monitoring was viewed as the

licensee's responsibility.

In 1970, regional inspectors evaluated licensee vendor inspection

programs.

In 1973, a trial vendor inspection program was initiated for fuel

fabricators.

In 1974, a trial LCVIP was initiated because 63% of construction and

operation problems were traceable to vendor errors in design or

fabrication.

In 1974, a task force recommended expansion of the LCVIP as a result

of increases in vendor-related problems.

In 1977, electrical equipment was added to the program.

In 1978, the effectiveness of vendor design programs began being

evaluated.

In 1979, inspections became reactionary as a result of Three Mile

Island.

The legal base for direct NRC inspections of vendors and enforcement is

not clearly addressed in Section 206 of the Energy Reorganization Act of 1974

or in 10 CFR 50 Part 21, which results in difficulty in taking enforcement

action with vendors. It is not easy to determine, for example, if an executive willingly and knowingly fails to report a deficiency. The NRC may

conduct reasonable inspections to insure compliance with part 21. However,

corrective action must occur through the licensee. There has only been one

civil penalty issued as a result of 10 CFR 50 Part-21. That penalty was

issued to Babcock & Wilcox for failure to notify the NRC of precursor events

to Three Mile Island.

The NRC has been slow to respond to findings and recommendations of

previous studies of the LCVIP.

In 1977, it was recommended (F. Muller and others. 1977) that:

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* NRC take steps to assure each vendor inspected under the LCVIP is

aware of the responsibility and authority of the licensee

* vendors to be inspected under the LCVIP be selected on a basis which

ensures every vendor has a likelihood of being inspected

* IE inspection of material produced under the ASME Code be eliminated

provided ASME requirements are expanded to include operation.

In a report to Congress in 1978 (Controller General 1978) it was stated

that:

" the LCVIP has had a positive effect but improvements were needed in

inspector's reporting practices, attention to inspection details,

documentation of inspections and in investigations

" there was no systematic method of selecting vendors for inspection

and all vendors of safety related equipment were not identified

vendors manufacturing electrical components and instruments controlling critical operations were neglected

more inspectors be assigned to vendor inspector activity. (There

were 11 inspectors reviewing over 200 suppliers at the time)

In a report to the NRC in 1978 (TRW 1978) it was reported that over 50%

of a plant by dollar value was designed and/or fabricated off site, that a

review of Licensee Event Reports between January 1975 and September 1977

indicated that 60.8% of problems were related to component failures and design

errors, (51.2% component and 9.6Z design) and that on-site inspection was

roughly four times off-site efforts. The report conclusions and recommendations included:

NRC should perform independent inspections of nuclear contractors

and vendors

third party inspection would supplement and extend vendor inspection

effort

the NRC program should be functionally integrated with programs of

licensees

formalized procedures were necessary for selecting vendors for

inspection based on the operating record of the product, previous

inspection findings and the safety significance of the product

emphasis of inspections should be changed from systems administration and management to evaluation of procedures used, implementation of procedures, and quality of resulting product

reporting include a mechanism through the White Books for licensee

acquisition of inspection reports, data relating to vendor performance, and statements pertaining to program compliance with Appendix

B and implementation of the program

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documentation of the LCVIP in a Topical Report

• there was under representation of several skill areas among inspectors

inspection bases other than Appendix B were used prior to 1977

sampling was based on coverage of prior inspections and areas of

suspected weakness

the statistical adequacy of the sampling process and sample size

were not determined

the LCVIP was not implemented in accordance with MC-2700 of the IE

Manual in that suggested schedules weren't followed, no explicit

verifications of program content or implementation were issued for

competent vendors, and little product sampling was performed.

The LCVIP was being implemented by 21 personnel who in 1977 conducted 236

inspections with about 25% being reactive inspections. The TRW report identified the following issues as needing to be addressed by the NRC:

NRC must decide who is to perform certification of vendor's Quality

Assurance Manuals for conformance with Appendix B

NRC must determine whether some group should certify that a vendor

is implementing its Quality Assurance Program

In addition, the report included an analysis of several alternative

approaches in certifying and monitoring vendors.

The current NRC re-evaluation of the LCVIP includes consideration of

findings and recommendations of previous reports, but iS being performed five

years after the last report. Coordination of vendor qualification activities

with a third party, the American Society of Mechanical Engineers (ASME) has

been ongoing since 1972.

The NRC has assumed licensee responsibility for evaluation of vendors

through implementation of the LCVIP. Appendix B of 10 CFR 50 places the

responsibility of assuring the quality of vendor supplied items and services,

including evaluation and selection of procurement sources, on licensees. The

NRC has concentrated its efforts in resolving quality problems with vendor

supplied items and services by conducting evaluations and inspections of

vendors and has not taken enforcement action against licensees to force them

to fulfill their responsibility. Whenever the NRC performs a function that

falls within the licensees responsibility, the NRC assumesat least a partial

responsibility for the success or failure of that function.

The perception that because the NRC has a "Vendor Inspection Program" it

is inspecting all vendors leads to greater expectations by the general public

than can be realized. The failure of any vendor therefore, becomes a reflection of the perceived NRC inadequacies to do its job and, hence, the public's

health and safety are endangered. As a regulator, the NRC can only monitor

that the licensee is performing its functions in a proper and correct manner

and take enforcement action when deemed necessary.

B.71
It would appear that the requirements of Appendix B of 10 CFR 50 pertaining to the evaluation of procurement sources warrants revision. Multiple

evaluations of vendors by licensee and contractors has resulted in ineffective

redundancy.

A solution to this problem could be in the establishment of a more

intensive vendor evaluation and monitoring program using CASE (Coordinating

Agency for Supplier Evaluation) or INPO, or by a Certification program administered by the NRC or a third party.

Standard evaluations could be conducted for different levels of contractors and suppliers, incorporating a graded inspection of "Important to Safety"

items as well as the full inspection of safety related products. If a vendor

licensing program was installed, the NRC I&E office could certify the licensees,

AE's and NSSS vendors with a third party certifying the balance.

The subject of licensing vendors met with a mixed reaction from licensees,

contractors and regional personnel. The general attitude seemed to be to try

licensing all AE and NSSS vendors but restrict it to that level. Licensing of

vendors at lower levels would tend to force vendors out of the industry.

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3.8 ENFORCEMENT PROGRAM FOR ASSURANCE OF QUALITY

3.8.1 Description

3.8.1.1 General

Initial AEC enforcement actions consisted of providing written notification of nonconformances to licensees and requesting corrective action.

Licensees responded with action to be taken and correspondence continued

between the licensee and AEC until the nonconformance was resolved.

In 1970, the AEC issued the Enforcement Procedure For Reactors Under

Construction (0700/3), which provided general guidance for the Regions on

enforcement actions. The criteria used to determine enforcement action and

categories of noncompliance were first published in 1972 (37 FR 21962).

In 1973, the AEC issued Chapter 0800 -- Enforcement Actions to describe

the policy and guidelines for the enforcement Program implementation.

In 1975, the criteria used to determine enforcement action and categories

of noncompliance was revised (40 FR 820) and the NRC reissued Chapter 0800 --

Enforcement Actions as part of the IE Manual.

In December of 1979, following Three Mile Island, the NRC again revised

the criteria used to determine enforcement action and categories of noncompliance (44 FR 77135).

The approval of Public Law 96-295 in June of 1980 amended section 234 of

the Atomic Energy Act and raised the maximum civil penalty from $5,000 to

$100,000 and eliminated the provision limiting the total civil penalties

payable in any 30-day period to $25,000.

In October of 1980, the NRC issued the Proposed General Statement of

Policy and Procedure for Enforcement Actions (45 FR 66754) for implementation

and public comment. In March of 1982, a revised policy statement, based upon

experience gained in implementing the proposed policy statement and comments

received during and following public meetings on the policy, was adopted and

codified as Appendix C to Part 1 of Title 10 of the Code of Federal Regulations.

The fundamental basis of the revised policy remained the same as the proposed

policy with changes made in how the steps are accomplished and'in clarifying

the language.

..A more detailed discussion of.enforcement.,programs follows. .

3.8.1.2 Chapter 0800

The NRC defined a noncompliance as a failure to comply with a regulatory

requirement and categorized noncompliances by severity levels into violations,

infractions and deficiencies.

Fabrication, construction, or testing of a Seismic Category I system or

structure in such a manner that the safety function or integrity was lost was

B. 73
a violation. Fabrication, construction or testing of a Seismic Category I

system or structure in such a manr'-r that the safety function of integrity was

impired and inadequate managemen- .r procedural controls in the QA implementation was an infraction. A defic.;.ency was an item of noncompliance in which

the threat to the health, safety, or interest of the public or the common

defense and security was remote and no undue expenditure of time or resources

to implement corrective action was required. When a licensee failed to

conform to commitments which were not licensee requirements, it was referred

to as a deviation.

Enforcement actions consisted of notices of violations, civil penalties,

and orders.

A Notice of Violation was a written notice to a licensee of a nonconformance. Deviations were identified in the cover letter transmitting a Notice

of Violation, on a separate page forwarded with a Notice of Violation or by

separate correspondence.

If an acceptable response was not received from the licensee or if items

were uncorrected, repeated, or chronic, an enforcement conference was held

and/or a strong Notice of Violation from headquarters bearing the signature of

the Director of Field Operations or higher authority was issued. An enforcement conference was a meeting arranged by supervision or management of an IE

Regional office to discuss with representatives of a licensee's management the

status of its compliance with regulatory requirements, the licensee's proposed

corrective measures and schedules for implementing corrective action, and the

enforcement options available to the Commission. Enforcement conferences

could be held at the licensee's facility, in the Regional Office, at IE

Headquarters or in any mutually designated place.

If the licensee's program was not brought into compliance with regulatory

requirements, a civil penalty could be issued. Civil penalties were monetary

penalties to be issued for chronic, deliberate, or repetitive items of noncompliance where a Notice of Violation was not effective and for first of a kind

violations if considered serious. Failure to meet licensee commitments was

not a basis of a civil penalty but could aggravate items of noncompliance.

The NRC had authority to issue orders to "cease and desist," and orders

to suspend, modify, or revoke licenses. Such orders were to be ordinarly

preceded by a written Notice of Violation to the licensee providing him with

an opportunity to respond as to the corrective measures being taken. In the

event the licensee failed to respond to the notice or to demonstrate that

satisfactory corrective action was being taken, an order to show cause could

be issued requiring the licensee to show why the order should not be made

effective. In some instances where the health, safety, or interest of employees

or the public so require or deliberate noncompliance with the Commission's

regulations was involved, the notice provision could be dispensed with and the

particular order could be made immediately effective pending further order.

The signatory of enforcement correspondence was to be escalated as the

importance of the enforcement action was escalated. Forms signed by the

inspector who performed the inspection and routine notices of violation from

the Regional Offices were signed by the appropriate Branch Chief. The Branch

Chief escalated the enforcement correspondence with the signature by the

Regional Director if difficulties concerning enforcement matters were

B. 74
encountered with the licensee or when a reply was required to significant

items of noncompliance of safety items. Notices of violation escalated to the

Headquarters level were to be signed by the Director of Field Operations or by

higher authority. Notices of intent to impose civil penalties and orders to

invoke civil penalties, to cease and desist, or to suspend, modify or revoke a

license were to be signed by the Executive Director for Operations, the

Director of Inspection and Enforcement, the Director of Nuclear Reactor

Regulation of the Director of Nuclear Material Safety and Safeguards as

appropriate.

Inspection and Enforcement Bulletins could be issued for a group of

licensees to inspect, report and make commitments to implement certain dontrols or remedial actions as a result of safety, safeguards, or security

related conditions resulting if inadequacies or failures that have occurred at

the same or a similar facility, or in similar operations. If a licensee did

not make commitments for remedial action as specified in a Bulletin, the NRC

could issue an order to require the proposed action.

Inspection and Enforcement Immediate Action Letters could be issued by

the Regional Director (with Headquarters' concurrence) for a licensee to

inspect, report and make commitments to implement certain controls or remedial

actions as a result of safety, safeguards, or security related conditions

resulting from inadequacies or equipment failures at the licensee's facility.

If a licensee did not respond to an Immediate Action Letter, the NRC could

issue an order to make the proposed action a requirement of the license. The

Immediate Action Letter was also used to confirm verbal commitments by licensees

to take immediate action.

Chapter 0800 also contained guidance to elaborate upon the proper application of the enforcement criteria. Each item of noncompliance was to be

categorized as a violation, infraction or deficiency. A review of the licensee's

history of noncompliances was to be performed to determine if items identified

involved the same basic requirement as items identified during other inspections

or investigations based on the last several inspections and generally covering

a period of one to three years. Each item of noncompliance was assigned

action points. A violation was assigned 100 points, an infraction 10 points

and a deficiency 2 points. For a repeated or uncorrected item of noncompliance with the same basic requirement, action points were to be successively

increased by a factor of two each time it occurred. When a total of 100

action points or more resulted from an inspection or investigation and items

of noncompliance included one or more violations or repetitive infractions or

deficiencies, the regional office staff was to review the case to determine

whether a civil penalty or show cause was warranted. As a general rule, a

civil penalty was to be imposed for noncompliances which did not represent an

immediate threat to the health and safety of the public and orders were to be

issued for noncompliance that did. Where civil penalties or orders-were not

issued for violations or cases having 100 or more action points, the mitigating

conditions or circumstances were to be documented. A civil penalty or Notice

of Violation from Headquarters was to be issued when one letter identified

several items of noncompliance in the infraction and deficiency categories

with a total of 100 points or more.

An order to suspend, modify or revoke a license was appropriate when

there was an apparent breakdown in the licensee's Quality Assurance program,

based on the significant nature and number of items of noncompliance resulting

B.75
in construction of discrepant Seismic Category I structures, systems, and/or

components. The items of noncompliance were generally in the infraction

category. It was to be considered a breakdown if there were several significant items of noncompliance with several of the Appendix B of 10 CFR 50

criteria. Procedural matters in themselves were not generally considered to

be of prime significance. Failure of a system or failure to implement a

program due to failure to develop, review and approve procedures was considered a manifestation of QA breakdown. If several items of noncompliance

constituted a QA breakdown, the sanction was to be selected as follows:

"If the licensee cannot demonstrate that the quality of Seismic Category

I systems, components or structures under construction or undergoing maintenAnce meet the stated requirements, an order may be issued to suspend operations or activities which have resulted in doubtful quality. The activities

in question will not be resumed until the licensee has properly demonstrated

that quality meets the requirements for Seismic Category I structures, systems

or components."

"An order to suspend or modify a license may also be issued for a breakdown in quality assurance program implementation which results in a threat to

the health, safety or interest of the public or the common defense and

security."

"If inspection or investigation findings demonstrate that the quality

assurance breakdown has not placed the quality of Seismic Category I systems

or components in doubt and that there is no immediate threat to the health,

safety, or interest of the public, or the common defense and security, a civil

penalty may be the appropriate sanction."

"A civil penalty is the appropriate sanction in those cases where a

licensee's history is one of chronic and numerous violations which do not

involve an immediate threat to the health, safety, or interest of the public

or the common defense and security, and provided that (as a general rule) the

licensee's management has been properly apprised of the items of noncompliance.

Normally this is done through enforcement conferences."

"The progression of the enforcement conferences resulting from inspections

of such cases will normally include, in addition to the inspector's review of

his findings with management, a meeting of the appropriate Branch Chief with

an appropriate representative of the licensee's management at the site and a

telephone discussion or a meeting at the Regional Office, or other designated

place, between the Regional Director and the president or a corporate vice

president who has authority to implement corrective measures. The Director or

Deputy Director of the Office of Inspection and Enforcement may attend enforcement conferences with corporate management in appropriate situations."

"Since one of the basic parameters for civil penalty is items of noncompliance which represent a significant threat (but not immediate) to the health

and safety of people or the common defense and security, the basis for this

sanction is those items of noncompliance with regulatory requirements in the

violation and infraction categories. However, the additive effect of deficiencies in the third category is one of the parameters considered in selecting this sanction. Each item of noncompliance with a regulatory requirement

may carry a monetary penalty. Deviations from the provisions of commitments,

codes, guides and standards will be listed separately and will carry no

B.76
monetary penalty. Civil penalties based exclusively on deficiencies would be

difficult to justify and their use for such items of noncompliance, while not

excluded, is highly unlikely. Civil penalty or a "Notice of Violation" from

Headquarters is the appropriate sanction when one enforcement letter identifies

several items of noncompliance in the infractions and deficiencies categories

with a total of 100 action points or more. The determination as to which

sanction will be used is based on whether the licensee has been duly notified

of the probability of such sanctions in previous correspondence and enforcement

conferences, and on such judgment factors as the severity of the items of

noncompliance, the nature and number of such items, the licensee's past

performance, the frequency of noncompliance, and length of time the items of

noncompliance have existed, the steps taken to correct them and the licensee's

stated intentions of performance in correcting them promptly."

"A Notice of Violation will be issued from the Regional Office for all

other items of noncompliance or combinations of items of noncompliance (a Form

AEC-591 will be issued in the field by the inspector as appropriate for cases

involving materials). The total sanction points for items of noncompliance in

such notices from the Regional Offices may, on occasions, be greater than

100."

The above considerations were guidelines and Regional Directors could

recommend any enforcement action available if the rationale was provided to

support the recommendation.

3.8.1.3 General Statement of Policy and Procedure for Enforcement Actions

Appendix C to Part 1 of Title. 10 of the Code of Federal Regulations

describes the purpose of the enforcement program as:

"The purpose of the NRC enforcement program is to promote and protect the

radiological health and safety of the public, including employees' health and

safety, the common defense and security, and the environment by:

* Ensuring compliance with NRC regulations and license conditions;

* Obtaining prompt correction of noncompliance;

• Deterring future noncompliance;

Encouraging improvement of licensee performance, and by example,

that of industry, including the prompt identification and reporting

of potential safety problems.

Consistent with the purpose of this program, prompt and vigorous enforcement action will be taken when dealing with licensees who do not achieve the

necessary meticulous attention to detail and the high standard of compliance

which the NRC expects of its licensees. It is the Commission's intent that

noncompliance should be more expensive than compliance. Each enforcement

action is dependent on the circumstances of the case and requires the exercise

of discretion after consideration of these policies and procedures. In no

case, however, will licensees who cannot achieve and maintain adequate levels

of protection be permitted to conduct licensed activities."

B.77
The first step in the enforcement process is to identify the relative

importance of each violation. Violations are categorized in five levels of

severity as described in Appendix C. Severity Level I has been assigned to

violations that are the most significant and Severity Level V violations are

the least significant. Severity Level I and II violations are of very significant regulatory concern. In general, violations that are includied in these

severity categories involve actual or high potential impact on the public.

Severity Level III violations are cause for significant concern. Severity

Level IV violations are less serious but are of more than minor concern, i.e.,

if left uncorrected, they could lead to a more serious concern. Severity

Level V violations are of minor safety or environmental concern.

The severity level of a violation may be increased for careless disregard

of requirements, deception, or other indications of willfulness. The severity

level of a violation involving failure to make a required report to the NRC is

based on the significance of and circumstances surrounding the matter.

A Notice of Violation is the standard method for formalizing the existence

of a violation and is to normally require the licensee to provide a written

statement describing corrective action taken and results achieved, steps taken

to prevent recurrence, and the date full compliance will be attained. The NRC

does not generally issue a Notice of Violation for a violation identified as

severity level IV or V if it was reported, if required, it was or will becorrected within a reasonable time, including measures to prevent recurrence,

and if it was reasonably not expected to have been preventable by action to a

previous violation.

A Civil Penalty is a monetary penalty generally imposed for Severity

Level I and 11 violations, considered and usually imposed for Severity Level

III violations, and may be imposed~ for Severity Level IV violations that are

similar to violations discussed in a previous enforcement conference.

Enforcement conferences are normally to be conducted for all Severity

Level I, 11 and III violations and for Severity Level IV violations considered

symptomatic of program deficiencies.

The NRC imposes different levels of civil penalties for different severity

level violations, taking into account the gravity of the violation as a

primary consideration and ability to pay as a secondary consideration. Civil

penalties are not intended to put a licensee out of business or to adversely

affect his ability to safely conduct licensed activities. Orders are used

when the intent is to terminate licensed activities. The NRC considers

increases or decreases to base civil penalties on a case-by-case basis. Civil

penalties for continuing violations may be issued on a per day basis up to

$100,000 per violation per day. Civil penalties may be increased by as much

as 25% based upon enforcement history, prior notice of similar events, multiple occurrences and if initiation of corrective action is not prompt or the

action is minimally acceptable. Civil penalties may be decreased by as much.

as 50% based upon prompt identification and reporting and prompt and extensive

correction action.

An order is a written NRC directive to modify, suspend, or revoke a

license; to cease and desist from a given practice or activity; or to take

such other action as may be proper. Orders are effective immediately without

a hearing when determined the public health, interest or safety so requires or

B. 78
for violations involving willfulness. Otherwise, a hearing is held for the

licensee to show cause why the order should not be issued in the proposed

manner. Where necessary, the NRC is to issue orders in conjunction with civil

penalties. Enforcement actions are to escalate for recurring similar violations.

In addition to Notice of Violation, civil penalties and orders, the NRC

uses enforcement conferences, bulletins, circulars, information notices,

generic letters, notices of deviation and confirmatory action letters. The

NRC expects licensees to adhere to any obligations and commitments resulting

from these processes and may issue orders to make sure such commitments are

met.

Alleged or suspected criminal violations of the Atomic Energy Act and

other relevant Federal laws are referred to the Department of Justice for

investigation.

The Director, Office of Inspection and Enforcement is the principal

enforcement officer of the NRC and has been delegated the authority to issue

Notices of Violation, civil penalties and orders.

The Severity Categories for facility construction as shown in Appendix C

are:

A. Severity I -- Very significant violations involving a structure of

system that is completed in such a manner that it would not have

satisfied its intended safety related purpose.

B. Severity II -- Very significant violations involving:

1. A breakdown in the quality assurance program as exemplified by

deficiencies in construction QA related to more than one work

activity (e.g., structural, piping, electrical, foundations).

Such deficiencies normally involve the licensee's failure to

conduct adequate audits or to take prompt corrective action on

the basis of such audits and normally involve multiple examples

of deficient construction or construction of unknown quality

due to inadequate program implementation; or

2. A structure or system that is completed in such a manner that

it could have an adverse effect on the safety of operations.

C. Severity III -- Significant violations involving:

1. A deficiency in a licensee quality assurance-program for

construction related to a single work activity (e.g., structural, piping, electrical or foundations). Such significant

deficiency normally involves the licensee's failure to conduct

adequate audits or to take prompt corrective action on the

basis of such audits, and normally involves multiple examples

of deficient construction or construction of unknown quality

due to inadequate program implementation.

B. 79
2. Failure to confirm the design safety requirements of a structure or system as a result of inadequate preoperational test

program implementation; or

3. Failure to make a required 10 CFR 50.55(e) report.

D. Severity IV -- Violations involving failure to meet regulatory

requirements including one or more Quality Assurance Criteria not

amounting to Severity Level I, II or III violations that have more

than minor safety or environmental significance.

E. Severity V -- Violations that have minor safety or environmental

significance.

3.8.2 Analysis

3.8.2.1 General

Early AEC enforcement action consisted of correspondence between the AEC

and the licensee.

In 1973, in a report to the Director of Regulation (Davis and Brown) it

was stated:

"The AEC has neither imposed civil penalties nor taken significant enforcement or procedural actions against utilities which fail

to implement the requirements of Appendix B. Regulatory's efforts

to upgrade utility QA programs have relied on "Jawboning" sessions

with utility executives and routine enforcement letters, while the

utilities have been permitted to continue construction or operation

of their facilities notwithstanding QA deficiencies."

In the 1970's, guidance was provided for enforcement action which permitted

issuance of Notices of Violation, civil penalties and orders and provided for

escalation of enforcement action if the licensee was nonresponsive or if

responses were not acceptable. However, the AEC and NRC did not aggressively

implement enforcement action and the emphasis of enforcement action was in the

area of operating plants.

3.8.2.2 Chapter 0800

The categorizing of each noncompliance required judgment of each inspector

and was more difficult in design and construction than in operations. To

categorize a nonconformance as a violation required determining that the

safety function or integrity of a Seismic Class I system or structure was lost

as a result of the noncompliance. To categorize a nonconformance as an

infraction required determining that the safety function or integrity of a

Seismic Class I system or structure was impaired as a result of the noncompliance. To categorize a nonconformance as a deficiency required determining

that the threat to the health, safety, or interest of the public on the common

defense or security was remote and no undue expenditure of time or resources

to implement corrective action was necessary. Since the plant was under construction and not being operated, there was'no immediate threat to the health

B.80
and safety of the public or interest of the public on the common defense or

security. In most cases, the safety function or integrity could not be

clearly shown to be impaired or lost. For these reasons, nonconformances in

design and construction tended to be categorized as deficiencies or deviations

with some infractions and few violations.

Inspections at construction sites during the 1970's were performed by

regional inspectors on a periodic basis of about six inspections a year at

each site. Inspections were planned and scheduled with the licensee in

accordance with construction schedules. It was not uncommon for an activity

to be inspected during one site visit and not to be inspected again for a year

or longer if at all. A relatively long period of time could elapse before a

history on noncompliances to the same basic requirement developed. The AEC

and NRC have tended to accept a fix to specific problems without requiring a

review for identifying the magnitude of the problem to other areas of activity

or action to prevent the problem from recurring.

The categorizing of noncompliances to lower action levels and the infrequency of inspections contributed to action point totals that were below the

level for issuance of civil penalties or orders. If the action point totals

did reach the levels for civil penalties or orders, AEC and NRC management

tended to hold enforcement conferences instead of issuing the civil penalty or

order.

The enforcement program did not encourage licensee conformance to commitments. Failure to conform to commitments such as the PSAR and provisions of

applicable guides, codes and standards, when such lack of conformance did not

constitute an item of noncompliance, was considered a deviation, the lowest

level of enforcement action.

The AEC and NRC had difficulty in recognizing breakdowns in quality

assurance programs and were hesitant to take permitted enforcement action. A

breakdown was to be determined based upon the significance and number of items

of noncompliance resulting in construction of discrepant Seismic Category I

structures, systems, and/or components and several significant items of

noncompliance with several criteria of Appendix B of 10 CFR 50 were required.

A civil penalty or an order could be issued for a quality assurance program

breakdown but neither were mandatory. The periodic nature of inspections,

categorizing of noncompliances, and low level of attention afforded nonconformances with licensee commitments resulted in difficulty in recognizing quality

assurance program breakdowns. The attitude that since the plant was not

operating there was no immediate danger to the health and safety of the public

and it was the licensee's responsibility to correct problems before an operating license would be issued resulted in hesitancy of NRC management to take

permitted enforcement action. The fact that the Atomic Energy Act specified a

maximum civil penalty of $5,000 and limited the total civil penalties payable

in any 30 day period to $25,000 may have further influenced management reluctance to issue a civil penalty. Further, investigation into civil penalties

and orders issued during the 1970's may be warranted.

Inadequate significance was attached to procedural matters. Procedural

matters were not generally considered to be of prime significance. Failure of

a system or failure to implement a program due to failure to develop, review

and approve procedures was considered a manifestation of a QA breakdown. The

failure to follow prescribed procedures is an indicator of potential problems.

B.81
Although primary concern is the adequacy of the end item, adherence to good

procedures enhances the attainment of the desired adequacy.

3.8.2.3 General Statement of Policy and Procedure for Enforcement Actions

Following Three Mile Island, Public Law 96-295 was issued raising the

maximum civil penalty from $5,000 to $100,000 and eliminating the limiting

provision of total civil penalties payable in any 30 day period. The raising

of civil penalties that could be issued put more strength into the enforcement

program.

The 1980 and 1982 NRC General Statements of Policy and Procedure for

Enforcement Actions also put more strength into the enforcement program. The

policies more clearly defined severity categories, eliminated the action point

system, and recognized quality assurance as an important aspect of construction

activities by mentioning it in three of five severity categories. The intent

of the new policies was that noncompliance should be more expensive than

compliance. Severity levels of noncompliances could be increased for careless

disregard -or requirements, deception, or other indications of willfulness.

Notices of Violation are to require the licensee to provide a written

statement describing corrective action taken, results achieved, steps taken to

prevent recurrence and the date full compliance will be attained. During this

study, regional personnel indicated that the AEC and NRC should have been more

aggressive in requiring licensee determination of the extent of problems and

correction of the cause of the problems and in following up of licensee open

action items. The Notice of Violation, if properly used, and prompt follow up

on all open action items can be strong points of the enforcement program.

Licensees are encouraged to report safety-related problems and the NRC

may decrease civil penalties by As much as 50% for prompt identification and

reporting of problems and for prompt and extensive corrective action. During

the NRC Case Studies, licensees indicated there was little incentive to

identify problems. The licensee would identify a problem, take corrective

action to eliminate the problem, promptly report the problem to the NRC and

then receive a fine from the NRC and publicity in the public media inferring

poor quality of construction. Licensees also indicated there vas lack of

uniformity in application of civil penalties and orders.

Past enforcement programs of the AEC and NRC were not as effective as

they could have been as a-result of inconsistency-in requiring licensees to

determine the extent of problems and to correct the causes of the problems,

inability to recognize that the problems detected were but symptoms of larger

problems, and inability to raise problems to the threshold of action. New

enforcement programs tend to correct these deficiencies. However,.the new

programs do not appear to encourage licensee conformance to commitments or

attach greater significance to procedural matters. The NRC should consider

making commitments a condition of a permit and placing greater emphasis on

procedural matters.

B. 82
3.9 NRC Inability To Prevent Problems And Slowness To Identify And Act On Problems

An analysis of the root causes of the inability of the NRC to prevent

problems and slowness to identify and act on problems at Diablo Canyon, Marble

Hill, Midland, South Texas and Zimmer nuclear plants follows.

3.9.1 Diablo Canyon

The major problem was identified as ineffective design control.

The licensee received its Construction permit in 1968. The NRC issued an

Operating License in 1981 and then revoked the license two months later

following identification by the licensee of-an error in seismic response

spectra for some piping and equipment restraints. NRC investigation

determined that the cause of the problem was informality in the procedures

used for design document control and lack of independent review of data by the

licensee prior to submittal to its seismic consultant. Prior to reinstatement

of its operating license, the licensee is required to complete an extensive

design verification program.

Appendix B of 10 CFR 50 was issued in 1970, some 2 years after the construction permit date and as a result there were no quality assurance program

requirements at the time much of the design work was performed.

The inspection program concentrated on construction activities and did

not focus attention in the area of design. Since PG&E was their own AE, the

Licensee Contractor and Vendor Inspection Program started in 1975 did not

apply to them.

Although the licensee had no commitment to implement an Appendix B type

of quality assurance program on Unit 1, he agreed to implement such a program,

as applicable.

Since the work had progressed beyond design and emphasis was on inspection of construction activities, design control activities were not reviewed

when Appendix B became applicable.

The root cause of NRC inability to prevent the problem and slowness to

identify and act on the problem is:

Insufficient attention in the design area.

B.83
3.9.2 Marble Hill

The major problems were identified as concrete consolidation, improper

repair of the imperfections, inadequate or nonexistent records traceable to

the repairs, inadequate training and supervision of personnel responsible for

the repairs, welding, and insufficient awareness of the problems and control

by the licensee. The NRC Case Study identified licensee inexperience to be a

root cause of the problems. The licensee had not built a nuclear power plant.

The licensee received its Construction Permit in 1978. In 1979, the NRC

shut down all safety-related construction activities.

The NRC had detected nonconformances in concrete work from the outset of

the project. About one year after CP issuance, the NRC requested the licensee

to upgrade its quality assurance program. The licensee agreed to upgrade the

program and determine if previously poured concrete was adequate.

About a month later, a former employee of the Civil Construction

contractor alleged that surface defects in concrete had been improperly

patched.

Concurrently, the National Board of Boiler and Pressure Vessel Inspectors

confiTmed problems with piping installation identified by a mechanical subcontractor.

These events led to an NRC team inspection which confirmed concrete

consolidation problems and improper repair of the imperfections and resulted

in the shut down of safety-related construction activities. Work was not

permitted to resume until the licensee upgraded its QA program and that of its

contractors and the adequacy of completed construction work was verified.

The root causes of NRC inability to prevent problems and slowness to

identify and act on the problems are:

Inadequate review of the licensee and contractor experience and

ability to manage construction of a nuclear power plant.

Irregular non-constant presence.

Inability to recognize the significance and magnitude of the problems.

B.84
3.9.3 Midland

The major problem was identified as settlement of the diesel generating

building in 1978 as a result of inadequate and poorly compacted soil.

Licensee investigation revealed that other safety-related systems and

structures were affected. NRC investigation determined specifications had not

been followed for soil fill activities and there was insufficient control and

supervision of the activities by the utility and its contractors.

The licensee received its construction permit in 1972. The NRC issued a

Show Cause Order regarding the soils problem in 1978-. Rework is in progress

and the application for an operating License is in litigation before a hearing

board.

NRC personnel were aware of problems at Midland. Between 1973 and 1978,

problems were reported with cadwelds, omitted rebar, tendon installation and

bulgeing of the containment liner. Problems were identified on multiple

occasions separated by about one year. There were meetings at the Region to

determine if action should be taken and meetings were held with Midland

management. Regional requests to stop work at Midland were not supported by

NRC headquarters until 1978. In response to the Show Cause Order, Midland

requested a hearing. The hearing process is still going on and Midland has

been permitted to continue soils work.

Since 1978, additional problems have been identified in HVAC welding,

reactor vessel anchor bolts, pipe supports and hangers, electrical cable

separation and in the diesel generator building inspection performed by the

licensee. Mechanical equipment, piping and electrical systems were poorly

installed and supervisors had ordered QC inspectors to suspend inspections if

they found too many deficiencies.. A civil penalty of $38,000 was issued in

1979 for the HVAC problem and a $120,000 civil penalty was issued in 1982 for

breakdown of the Quality Assurance Program. Reinspection and finishing of the

plant is to be performed in accordance with an NRC approved plan under the

oversight of an independent contractor.

The root causes of NRC inability to prevent problems and slowness to

identify and act on the problems are:

Irregular non-constant presence until 1980.

Reluctance to take enforcement action.

Mindset that it is the licensee's responsibility to properly construct the plant and it would not be licensed until ready for

operation as determined-by pre-operational and startuptests.

B.85
3.9.4 South Texas

The major problems were identified as concrete placement, welding activities, procedural violations, records falsification and personnel

qualification. Additional problems were identified as harassment and

intimidation of inspectors and insufficient design work to support

construction. The NRC Case Study identified licensee and AE/Constructor

inexperience to be a root cause of the problems. Neither the licensee nor the

AE/Constructor had built a nuclear power plant.

The licensee received its Construction permit .in 1975. The NRC issued

the licensee a $100,000 fine and show cause order in 1980. Work was allowed

to restart only after upgrading of QA for that area and verification by the

NRC.

In 1977, the NRC received reports of intimidation of QC inspectors at the

construction site. Between July of 1977 and November of 1979, the NRC

performed 10 investigations of allegations. In 1978, the NRC held a meeting

with licensee management to discuss morale problems. An FBI probe into

allegations of forged documentation in 1979 reported widespread problems. A

NRC special investigation was performed which determined shortcomings in

management and implepentation of the QA/QC Program.

A summary report (Gower 1981), prepared after reviewing headquarters

files of inspections performed from 1974 through 1979, stated there was good

inspections procedtUt coyerage of the major problem areas but the degree to

which the procedures would have turned up similar problems is strongly

influenced by the experience, practical knowledge ad technical depth of the

inspectors. In an analysis of 72 allegation relating to problems at the site,

the report indicated 34 were substantiated, 28 were refuted and 10 were

neither substantiated nor refuted. NRC inspections had detected problems

concerning procedures, records, personnel qualifications, audits, and concrete

and welding activities.

The root causes of NRC inability to prevent problems and slowness to

identify and act on the problems are:

Inadequate review of the licensee and contractor ability to manage

construction of a nuclear power plant.

Irregular non-constant presence.

Inability of the NRC to recognize the significance and magnitude of

the problems.

Mindset that it was the licensee's responsibility to properly

construct the plant and it would not be licensed until ready for

operation as determined by pre-operational and startup tests.

B.86
3.9.5 Zimmer.

The major problems were identified as Q.C. documentation, procedure

violations, inadequate nonconformance reporting system, deficiencies in

drawings, specifications, instructions and procedures, material control and

licensee audits and corrective action.

The licensee received its Construction Permit in late 1972. In November

of 1981, the NRC issued a $200,000 fine for Quality Assurance breakdowns

following investigation of allegations of shoddy construction practices. In

November of 1982, the NRC suspended all safety-related work in response to

concerns about the quality of construction and management controls. The

licensee has been required to complete a Quality Confirmation Program of the

as-built condition and to correct any problems before additional consideration

for an Operating License.

A summary report (Gower 1981), prepared as a result of reviewing headquarters inspection files and the draft report on investigation of Zimmer,

revealed inspection coverage appeared to be extensive and comprehensive,

inspections up through 1976 appeared to have been in line with the inspection

program, and that during 1977, 1978 and 1979, inspection-hours per year (600

to 1200) exceeded planned hours (400-500) and 12 to 16 different inspectors

contributed to the inspection effort during one year. Three to six different

inspectors were thought to be sufficient for adequate coverage. There were

signs of problems with the licensee/constructor audit programs in 1973, 1975,

1977 and 1979. Up to 1981, there were 13 investigations performed addressing

allegations in depth and dealing primarily with QA/QC problems. There were

numerous instances of enforcement citations in QC documentation, procedure

violations, materials control, and deficiencies in instructions, procedures

and specifications. The notices of violation were limited to the item 6f

noncompliance with little, if any, inference that the concern may be indicative of a larger more pervasive problem that should be looked into and corrective action taken.

Another study (Torrey Pines 1983), reported inadequate management controls of the project citing GC&E and H.V. Kaiser inexperience in building

nuclear plants as a cause of problems at Zimmer. The study reported inadequate staffing, procedures, and control systems and an ineffective audit

program. Problems remained uncorrected partly through a lack of attention and

follow through on corrective action by the NRC. CG&E was allowed to continue

construction while being lulled into a false sense of satisfactory performance

until the late 1970's.

An NRC report (NET 1983, NUREG-1969) indicated inspections and investigations revealed inadequacies in administration of the Quality Assurance Program

and that the quality of plant systems, structures and components was indeterminate.

During this study, Region III personnel indicated lots of the problems

were noted but they didn't reach a threshold of action. Reviews of the Action

Item Tracking List revealed every criteria of Appendix B of 10 CFR 50 was

cited in the first and last years of construction. They indicated that the

NRC failed to follow-up on open action items (approximately 12,000) and failed

to require reviews for determining the extent of problems and determination

and correction action regarding the cause of the problem. They also indicated

B. 87
that until 1974, teams of four or five cross-discipline inspectors performed

quarterly inspections. In 1974 and 1975, six experienced inspectors with

accumulated experience of about 120 years left the Region for other assignments and were replaced by less experienced, more specialized inspectors.

The root causes of the NRC inability to prevent problems and slowness to

identify and act on problems were:

Inadequate review of the licensee and its contractor's ability to

manage construction of a nuclear power plant.

Failure of the NRC to require licensee reviews of problems to

determine their extent and to take corrective action regarding the

cause of the problem.

Inability to recognize the significance and magnitude of the

problems.

* Loss of inspection experience in the Region.

Problems didn't reach the threshold for enforcement action.

Mindset that it was the licensee's responsibility to properly

construct the plant and it would not be licensed until ready for

operation as determined by pre-operational and startup tests.

B. 88
4.0 STUDY GROUP

4.1 GROUP MEMBERS

John L. Heidenreich - N. C. Kist & Associates

Robert W. Hubbard - N. C. Kist & Associates

Richard M. Kleckner - N. C. Kist & Associates

Willard D. Altman - Nuclear Regulatory Commission

E. William Brach - Nuclear Regulatory Commission

B. 89
5.0 LIST OF ACRONYMS

AE Architect Engineer

AEC Atomic Energy Commission

ANSI American National Standards Institute

ASME American Society of Mechanical Engineers

CAT Construction Assessment Team

EDO Executive Director of Operations

ERDA Energy Research and Development Administration

HVAC Heating, Ventilating, and Air Conditioning

I&E Office of Inspection and Enforcement

IEEE Institute of Electrical and Electronic Engineers

IDI Integrated Design Inspection

IDVP Independent Design Verification Program

INPO Institute of Nuclear Power Operations

LCVIP Licensee Contractor and Vendor Inspection Program

NMSS Office of Nuclear Material Safety and Safeguards

NRC -Nuclear Regulatory Commission

NRR Office of Nuclear Reactor Regulation

NSSS Nuclear Steam System Supplier

PAT Performance Appraisal Team

PSAR Preliminary Safety Analysis Report

RES Office of Nuclear Regulatory Research

SALP Systematic Assessment of Licensee Performance

SAR Safety Analysis Report

B. 90
6.0 REFERENCES

Bernsen, S. and Hellman, S. 1973. The Status and Application of ANSI N45.2

Standards, Revision 1. American National Standards Institute.

Blaha, J. Sept. 27, 1983. Management Information Report (MIR) Base Report

Through August 31, 1983. Memorandum. U.S. Nuclear Regulatory Commission.

Bland, W. and Reilly, D. 1979. Staff Reports to the President's Commission

on the Accident at Three Mile Island, Vol. IV. U.S. Government Printing

Office.

Davis, J. and Brown, H. 1973. Quality Assurance and the Utilities: Is

Regulatory Doing Enough? U.S. Atomic Energy Commission.

DeYoung. 1982. Organizational Changes In The Office of Inspection and

Enforcement. Memorandum. U.S. Nuclear Regulatory Commission.

Langstaff. October 25, 1982 and November 1, 1982. A Reporter At Large - The

Cult of The Atom. New Yorker.

Moeller, D. 1976. Report on Nuclear Reactor Inspections. U.S. Nuclear

Regulatory Commission.

Muller, F. et. al. 1977. A Study of the Nuclear Regulatory Commission

Quality Assurance Program. NUREG-0321. Sandia Laboratories.

Olds, F. June 1974. The AEC Bears Down on Nuclear Quality Assurance.

Power Engineering. 41-47.

Teknetron Research, Inc. 1981. Evaluation of NRC's Revised Inspection

Program. NUREG/CR-1904, Vol. 1. U.S. Nuclear Regulatory Commission.

Torrey Pines Technology. 1983. Independent Review of Zimmer Project

Management. GA-C17173. Torrey Pines Technology.

TRW. 1978. Report of a Study of the Licensee Contractor and Vendor

Inspection Program (LCVIP). NUREG/CR-0217. U.S. Regulatory Commission.

U.S. AEC. 1972. Preamble to Regulatory Guide Series. U.S. Atomic Energy

Commission.

U;S. AEC. 1974. Guidance on Quality Assurance.Requirements During Design and

Procurement Phase of Nuclear Power Plants. WASH 1283. U.S. Atomic Energy

Commission.

U.S. AEC. 1974. Guidance on Quality Assurance Requirements During the

Construction Phase of Nuclear Power Plants. WASH 1309. U.S. Atomic Energy

Commission.

U.S. AEC. 1974. Study of Quality Verification and Budget Impact. WASH 1292.

U.S. Atomic Energy Commission.

B.91
U.S. Congress, House and Senate. 1974. Energy Reorganization Act of 1974.

Public Law 93-438, 94-77, 95-39, 95-209, 95-238 and 95-601. U.S. Government

Printing Office.

U.S. Congress, House and Senate. 1983. Authorization of Appropriations -

Fiscal Years 1982-1983. Public Law 97-415. U.S. Government Printing Office.

U.S. General Accounting Office. 1978. The Nuclear Regulatory Commission

Needs to Aggressively Monitor and Independently Evaluate Nuclear Power Plant

Construction. U.S. General Accounting Office.

U.S. NRC. 1975. Inspection and Enforcement Manual. U.S. Nuclear Regulatory

Commission.

U.S. NRC. 1979. Review of the Continuing Implementation of NRC's Resident

Inspection Program. U.S. Nuclear Regulatory Commission.

U.S. NRC. 1980. Three Mile Island: A Report to the Commissioners and the

Public. NUREG/CR-1250, Volume II, Part 1. U.S. Nuclear Regulatory

Commission.

U.S. NRC. 1981. Standard Review Plan, Sections 13.11 and 17.1. NUREG-0800

(Formerly NUREG-75/087). U.S. Nuclear Regulatory Commission.

U.S. NRC. 1982. Title 10, Chapter 1, Code of Federal Regulations - Energy,

Part 2, Appendix C. U.S. Nuclear Regulatory Commission.

U.S. NRC. 1982. Assurance of Quality. SECY-82-352. U.S. Nuclear Regulatory

Commission.

U.S. NRC. 1983. U.S. Nuclear Regulatory Commission Functional Organization

Charts. NUREG-0325. U.S. Nuclear Regulatory Commission.

U.S. NRC. 1983. Title 10, Chapter 1, Code of Federal Regulations - Energy,

Part 50 - Domestic Licensing of Production and Utilization Facilities. U.S.

Nuclear Regulatory Commission.

U.S. NRC. March 1983. Licensee Contractor and Vendor Inspection Status

Report. NUREG-0040, Vol. 7, No. 1. U.S. Nuclear Regulatory Commission.

U.S. NRC. 1983. Report of the NRC Evaluation Team on the Quality of

Construction at the Zimmer Nuclear Power Station. NUREG-0969. U.S. Nuclear

Regulatory Commission.

U.S. NRC. 1988. Proposed General Statement of Policy and Procedure for

Enforcement Action. 45 FR 66754. U.S. Nuclear Regulatory Commission.

B. 92
APPENDIX C

ASSURANCE OF QUALITY IN NUCLEAR CONSTRUCTION PROJECTS:

AN EXAMINATION OF SELECTED CONTRACTUAL, ORGANIZATIONAL,

AND INSTITUTIONAL ISSUES

PRINCIPAL CONTRIBUTORS

M. E. Walsh (a)

M. V. McGuire (a)

B. L. Hansen (a)

January 1984

Prepared for

Division of Quality Assurance, Safeguards,

and Inspection Programs

Office of Inspection and Enforcement

.U.S. Nuclear Regulatory Commission

Washington, D.C. 20555

Pacific Northwest Laboratory

Richland, Washington 99352

(a) Battelle Human Affairs Research Centers

EXECUTIVE SUMMARY

This appendix presents preliminary analyses, findings, and conclusions of

a study on the contractingrand procurement process used for the construction of

nuclear power plants. The objectives of the study were:

" to characterize the aspects of contracts and procurement that appear

to affect the quality during construction of a nuclear power plant

* to determine the types of contract and procurement provisions and

arrangements that could contribute most to enhanced quality

* to develop guidelines for construction contracts and procurement that

could assist in achieving overall quality objectives

" to examine the contributions of selected organizational and institutional arrangements to nuclear construction projects.

To accomplish these objectives, a series of site visits to utilities constructing nuclear power plants, architectural-engineering firms, constructors,

and subtier contractors was planned and partially implemented. Specific contractual, organizational, and institutional factors were investigated at each

site. Findings and conclusions contained in this appendix are based upon four

such site visits (three to nuclear construction projects and one to an architectural-engineering firm) made to date. Information used in the analyses was

obtained in the field, from secondary source materials, and from telephone and

personal contacts with informed sources.

The following, preliminary findings and conclusions were reached:

* Bid evaluation and selection processes should be based upon functional criteria related to the work to be performed.

* Because designs are usually not complete before construction is

begun, fixed-price contracting for most aspects of nuclear power

plant construction projects is not appropriate. Instead, cost-reimbursable contracts with fixed fees are recommended most frequently by

those involved in nuclear construction projects, particularly for

assuring quality performance.

* In achieving quality objectives, the focus should be on the implementation of QA and QC programs rather than on the level of detail in

contract and procurement documents.

* Previous nuclear experience appears to provide a significant advantage in a nuclear construction effort. Utilities that do not possess

such experience internally should consider hiring either a project

staff or contractors who can provide such expertise.

iii
" Together with the NRC, state public utility commissions provide a

major source of regulatory oversight for nuclear construction projects. Historically, state pubic utility commissions have not

frequently disallowed construction costs that may have resulted from

lapses in quality assurance or project management. Recent developments suggest that this position is changing.

* A nuclear construction project appears to benefit when its

procurement agent is large enough and experienced enough to exert

"marketplace presence." A large procurement entity offers the

advantages of market familiarity and commercial power (based upon

frequency and continuity of purchasing) as well as the expertise

needed to secure satisfactory performance on procurements.

Possible recommendations resulting from these preliminary findings

include the following:

* As part of their management review, the NRC should require applicants

for construction permits to stipulate their proposed contracting

methods, bid evaluation and selection procedures, and their reason(s)

for choosing them.

" The NRC should examine methods to focus more attention on how a

licensee proposes to insure that quality work is being performed

rather than on the documents that describe general QA and QC programs.

• The NRC'should examine the implications for its own mission of state

public utility commission scrutiny of and policies toward nuclear

construction project costs and management.

iv
ACKNOWLEDGEMENTS

The authors wish to express their sincere appreciation to the following

individuals and organizations for their help in this effort:

" Dr. W. D. Altman, NRC Project Manager, for his tireless devotion

to, interest in, and support of this project.

" Mr. G. T. Ankrum, NRC Branch Chief, for his interest in raising

and exploring new issues.

" E. Baker, USNRC, and J. Heidenreich, N. C. Kist and Associates,

for their collaboration in conducting site visits.

" Members of the Review Group for their invaluable comments and

suggestions as well as their encouragement of our work.

" Ms. Jean Botcky, Ms. Christine Norell, and Mrs. Charleen Sager

for their skills, assistance, and support of the project.

" The management and staffs of the several utilities, construction

projects, and A-E firm visited, who gave so freely of their time

and shared so generously their insights and experiences.

Without the interest and support of these people, this work

could not have been done.

v

CONTENTS

EXECUTIVE SUMMARY .................................... . ..........*iii

ACKNOWLEDGMENTSo ...... .................................... oe........ v

APPENDIX C: ASSURANCE OF QUALITY IN NUCLEAR CONSTRUCTION

PROJECTS: AN EXAMINATION OF SELECTED CONTRACTUAL, ORGANIZATIONAL, AND INSTITUTIONAL ISSUES........ C.o

Col INTRODUCTIONo ...... .... ....................................... Col

C.1.1 Purpose and Objectives ... o............................. C.1

C.1.2 Background and Scope ............. .... ............... C.1

C.1.3 Technical Approach............. ............... ..... C.2

Co1.4 Study Limitations .... o...............o........ .o........ C.5

C.2 CONCLUSIONS, FINDINGS AND RECOMMENDATIONS ..................... C.5

C.2.1 General Conclusions........... ......................... C.6

C.2.2 Factors Affecting the Assurance of Quality in Nuclear

Construction Projects: Site Study Findings ............ C.7

C.2.3 Project Observations ..... ............................. C.9

C.2.4 Recommendations ........................................ C.10

C.3 CONTRACTUAL ISSUES ............................................ C.11

C.3.1 Bid Evaluation and Selection Procedures ................ C.11

C.3.2 Terms and Conditions of Contractual and

Procurement Documents ................. ................ C.14

C.3.3 Quality Assurance Provisions in Contracts and

Procurement Documents .................................. C.19

C.3.4 Contractual Issues--A Summaryo.... ...................... C.21

C.4 ORGANIZATIONAL ISSUES ...... ................................... C.22

C.4.1 Structure of Nuclear Power Plant Construction Efforts.. C.22

C.4.2 Owner's Role in the Construction Effort...... , ........ 0. C.24

C.4.3 Prior Nuclear Experience............................... C.26

vii
C.4.4 Labor Arrangements ..................................... C.27

C.4.5 Organizational Issues--A Summary....................... C.28

C.5 INSTITUTIONAL ISSUES ........... ............................ C.28

C.5.1 State PUC Policies Toward Nuclear

Construction Efforts ................................... C.29

C.5.2 Project Ownership Arrangements ......................... C.37

C.5.3 Institutional Issues--A Summary ......................... C.42

C.6 REFERENCES ................................................... C.43

C.7 BIBLIOGRAPHY ............ o • ............... ..... C.45

C.7.1 Sources Cited ......................................... . C.45

C.7.2 Sources Relied On But Not Cited ........................ C.47

viii
APPENDIX C

ASSURANCE OF QUALITY IN NUCLEAR CONSTRUCTION PROJECTS: AN EXAMINATION

OF SELECTED CONTRACTUAL, ORGANIZATIONAL, AND INSTITUTIONAL ISSUES

C.1 INTRODUCTION

This appendix summarizes and discusses the findings to date of a case

study project examining the contract and procurement processes at nuclear

power plants under construction. Section C.1 presents introductory material on the study's purpose and objectives, background and scope, technical approach and study limitations. Section C.2 summarizes project

findings, conclusions, and recommendations. Section C.3 examines QA contractual issues in nuclear power plant construction, focusing primarily on

insights gained at the sites visited. Section C.4 discusses organizational issues affecting quality assurance in nuclear power plant construction. Section C.5 examines institutional issues and their implications

for the course and success of nuclear construction projects. Section C.6

lists references, and a bibliography is provided in Section C.7.

C.1.1 Purpose and Objectives

This appendix is intended to serve several purposes: 1) to constitute

an extended progress report on project activities; 2) to communicate preliminary findings and suggest future directions; and 3) to form the basis

for developing NRC staff recommendations regarding a course of action to

improve the assurance of quality in nuclear power plant construction projects in response to Congressional directives in the FY 1982-83

Authorization Act. Because of this last purpose, project recommendations

are offered, although these are based upon preliminary findings and

conclusions.

C.1.2 Background and Scope

The complexity and extent of problems that have been identified in

recent years at some nuclear power plants under construction have raised

questions regarding the quality assurance (QA) programs required by the

NRC and implemented by NRC licensees. As part of an effort to better

understand and address these problems, the NRC initiated a study of the

contract and procurement process employed by licensees at nuclear power

plants under construction and of the organizational and institutional

environments in which such projects are initiated and financed.

The purpose of the study is to examine how "quality" responsibilities

are delegated, managed and controlled by the licensee in the contract and

procurement process. This study is also to determine what improvements

may or should be made to the QA programs required by the NRC, based on the

review and study of the contract and procurement process and of organizational and institutional arrangements in the nuclear power industry. The

C.1
NRC will use the study's results in their analyses of QA programs and

in the preparation of a report to Congress required by the FY 1982-83

Authorization Act.

Specific objectives of the study are to 1) characterize the aspects

of contract and procurement that appear to affect quality during construction of a nuclear power plant; 2) determine the types of contract and procurement provisions and arrangements that could contribute most to enhance

quality; 3) develop, to the extent possible, guidelines for construction

contracts and procurement that could assist in achieving overall quality

objectives; and 4) examine the contributions of selected organizational

and institutional arrangements to the quality and success of nuclear construction projects.

This project is one of several initiatives undertaken by the NRC to

improve the assurance of qualityin the design and construction of nuclear

power plants. The full range of initiatives that have been undertaken

involve the following issues or topic areas:

" Measures at Near-Term Operating License Facilities

* Industry Initiatives

" Construction Inspection Programs

" Qualification and Designation of QA/QC Personnel

* Management

* Long-Term Review.

This project is included in 'Long-Term Review." Three projects, also

part of the Long-Term Review, that are closely linked to this project are

described in Appendix A, "Quality. in the Design and Construction of

Nuclear Power Plants: Case Studies of Successes and Failures," Appendix

B, "Management Review of the NRC QA Program," and Appendix D, "Outside

Programs for Assurance of Quality in Design and Fabrication."

C.1.3 Technical Approach

The findings and recommendations in this appendix are based upon

insights gained through site visits, review and analyses of selected

secondary source materials, and other project activities including

telephone contacts with state regulatory personnel. These activities were

combined to allow the project team to examine both actual contracting and

procurement practices used by firms involved in nuclear construction projects and the organizational and institutional environments in which these

projects are initiated, guided, and completed. Approaches used to examine

these topics are described separately below.

Examination of Contracting and Procurement Practices

To examine contracting and procurement practices, the perspectives,

experiences, and practices of key groups involved in constructing nuclear

power plants were collected through site visits. The following criteria

were used to select the sites: geographic location, site reputation/

success, experience of site personnel, and structural, contractual, and

C.2
organizational arrangements of the site. Initially, four nuclear construction projects and the utilities constructing them, two architectengineering (A-E) firms, one constructor, and two subtier suppliers were

to be examined. However, because of time constraints, only a subset of

the planned site visits have been completed to date (three construction

projects and one A-E). During actual site visits, representatives of the

sites provided useful insights into the contracting and procurement

process and its relationship to the assurance of quality.

Site Visit Protocol. Each visit was conducted according to a site

visit protocol, which consisted of personal interviews with designated

individuals and examination of relevant documents and materials. Personnel interviewed included legal, contracting, and procurement specialists;

key managers invdlved in bid evaluation and selection; construction and

project managers; representatives of the utility's QA organization;

inspection and audit specialists; and contractor on-site managers.

The following documents were identified as important to obtain and

review (if possible): bid evaluation procedures/guidelines, standard procurement forms/guidelines, standard contracts for major project contractors (at construction sites visited), and special conditions for all major

contracts (if separate from standard contract document).

Contractual. Oranizational and Institutional Factors Examined at the

Sites. The site visit protocol was tested and revised on the basis of a

p1-lot site visit to a nuclear construction project. During the pilot

visit, a series of contractual, organizational, and institutional factors

thought to have potential significance for the assurance of quality was

examined.

Contractual factors investigated included the following:

" types of contracts executed

* the use of incentive provisions in contracts

" assignments of responsibilities and risk sharing relative to quality

between the utility and its contractors

" requirements for demonstration, review, and/or approval of QA programs

" procurement practices and procedures

" approaches used to communicate QA/QC requirements to subtier contractors and to monitor compliance with these requirements

" provisions for source and on-site inspections.

The following organizational factors were examined:

" prior nuclear experience

C.3
" project structure and participation in the engineering, construction

management, procurement and constructor roles

* owner involvement in the engineering, construction management, procurement and constructor roles

" labor arrangements.

Two institutional factors were examined:

" project ownership arrangements

" the effects of state public utility commission policies on nuclear

construction projects.

Profiles of Sites Visited. The site findings contained in this appendix

are based upon visits to four sites: three nuclear construction projects and

one A-E firm. Site 1 is a nuclear project being built by a relatively small

investor-owned utility, and a small rural electric cooperative, neither of

which has previous nuclear construction experience. The utility is being

assisted by an experienced A-E and contractors. Quality-related problems

identified at the site several years ago led the utility to stop construction

and change its contracting and project management style. Site 1 served as the

pilot site for this project.

Site 2 is a joint venture nuclear project being built by a group of utilities (four investor-owned and one public utility). The investor-owned utility

serving as project manager for the owners had no previous nuclear construction

experience. This utility is being assisted by a large, experienced prime contractor that serves as A-E and constructor and acts as the utility's agent for

procurement and the management of project subcontractors.

Site 3 is another joint venture nuclear project being constructed by three

small public utilities and one large investor-owned utility. The investorowned utility, the subsidiary of a large holding company, has previous nuclear

experience, owns just over 50% of the project and serves as the construction

manager and agent for the owners' group. The utility is assisted by an experienced A-E and many contractors. The utility controls all project procurement.

The project, which was delayed initially for financial reasons, has a solid

reputation within the industry.

Site 4 is a large and experienced A-E firm that has been a major force in

the nuclear construction industry. This firm has played all project roles

either alone or in combination with others for many nuclear construction

efforts. The firm has worked for owners and with contractors and suppliers

possessing a wide range of expertise and experience in nuclear construction.

Examination of Organizational and Institutional Environments

Investigation of organizational and institutional factors at the sites

visited, combined with findings from other NRC quality assurance studies

C.4
contained in the Long-Term Review, stimulated the NRC Project Monitor to

determine that the following two issues needed to be examined further:

1) effects of state public utility commission (PUC) policies on nuclear

construction efforts, and 2) effects of ownership arrangements on project

success. Subsequently, a separate set of project activities was initiated to

provide additional information on these issues.

First, the project team consulted a wide range of relevant secondary

sources pertaining to PUC actions and policies; and to the legal, organizational, and institutional parameters of the nuclear industry. All sources

examined by the project team are contained in the Bibliography.

To examine the actions of PUCs, secondary source materials were supported

by telephone contacts with state commissions having operating plants in their

jurisdictions. In several cases, members of commission staffs provided materials related to special commission actions. In other cases commission staffs

identified documents relevant to PUC decisions, and the project team obtained

them. These telephone contacts and materials provided additional insights into

the attitude of state PUCs toward nuclear construction projects.

Finally, the project's investigation of ownership arrangements in the

nuclear industry was assisted by the NRC Review Group, a ?roup of experts

advising the NRC on its entire program of QA initiatives. Ia Group members

provided insights from their own experiences and suggested sources of further

information.

C.1.4 Study Limitations

Several factors of timing and approach necessarily limit the breadth of

findings, conclusions, and recommendations discussed in this appendix. To

provide the NRC staff with preliminary findings and to assist in preparing the

Congressional report, the results had to be summarized based upon only a subset

of the planned field work. In addition, because examination of the public

utility commission and project ownership issues was initiated after completing

some of the site visit activities, they have not been thoroughly studied.

Finally, this project is based primarily on a series of case studies, which are

intensive examinations of the experience of individual firms and/or construction projects. Therefore, while the experience of these firms may not be

unique, it also may not be representative of, or generalizable to, other

nuclear construction projects.

C.2 CONCLUSIONS, FINDINGS AND RECOMMENDATIONS

Based upon insights drawn from site studies, secondary sources and other

project activities, the several general conclusions found below were reached.

Second, findings specifically related to the site studies are discussed. The

(a) J. Christensen. Draft. Pacific Northwest Laboratory, Richland,

Washington.

C.5
study team visited three nuclear construction sites and a large architectengineering firm. At each site, contractual, organizational and institutional

factors were examined to determine their relationship to and influence on the

assurance of quality in nuclear construction programs. For each of the factors

investigated, findings from the site visited are cited. Third, several

observations growing out of project activities, but requiring further

examination, are made. Finally, recommendations are offered, based upon the

project's preliminary findings and conclusions.

C.2.1 General Conclusions

Based upon the findings at the sites visited, examination of relevant

secondary sources, and other project activities, the project team has drawn

several general conclusions.

First, no substitute appears to exist for an objective bid evaluation and

selection process based upon relevant technical criteria. Where such criteria

are rejected in favor of "people we're familiar with" or "country club cousins"

problems can result. This is particularly significant for first-time owners

because the "people we're familiar with" are not likely to have nuclear experience. (See Section C.3.1.)

Second, without substantially more complete designs before construction is

begun, fixed-price contracting for most aspects of nuclear power plant construction projects does not appear to be justified. Instead, utilities

involved in nuclear projects most frequently recommend cost-reimbursable

contracts with fixed fees, particularly for assuring quality performance.

Although such contracting de-emphasizes cost, it may be most cost-effective in

that it is more likely to result in getting the job done correctly the first

time. (See Section C.3.2.)

Third, the level of detail of the QA and QC requirements in contract and

procurement documents is less important than the degree to which QA and OC programs are actually implemented. Actual checks of work done, source and on-site

inspections, the implementation of worker and supervisor training programs, and

required demonstrations of contractor expertise and commitments in both preand post-bid award periods are all examples of actions that demonstrate more

about QA/QC programs than do written QA/QC requirements. (See Section C.3.3.)

Fourth, previous nuclear experience appears to provide a significant

advantage in a nuclear construction effort. Utilities that do not have such

experience internally should hire either a project staff or contractors who can

provide such expertise. (See Section C.4.3.)

Fifth, with the NRC, state public utility commissions provide a major

source of regulatory oversight for nuclear construction projects. Regulatory

influence in this case is exercised through the rate base treatment of such

projects. Historically, state PUCs do not appear to have been active in disallowing construction costs that may have resulted from lapses in quality assurance or project management. This position results in shifting the risks of

C.6
quality lapses from the utility to its ratepayers. Recent developments suggest

that this position is changing. (See Section C.5.1.)

Sixth, a nuclear construction project appears to benefit when its procurement agent is large enough and experienced enough to exert "marketplace presence." A large procurement entity offers the advantages of market familiarity

and commercial power (based upon frequency and continuity of purchasing) as

well as the expertise needed to secure satisfactory performance on procurements. (See Section C.5.2.)

C.2.2 Factors Affecting the Assurance of Quality in Nuclear Construction

Projects: Site Study Findings

Contractual Factors

Site examination of contractual factors yielded the following findings:

" Kinds of contracts executed. The type of contract universally preferred for most aspects of nuclear power plant construction is the

cost-reimbursable contract. This contract type offers several advantages for assurance of quality: 1) it permits extensive monitoring

of contractor performance; 2) it encourages the taking of corrective

action; 3) it flexibly accommodates scope and design changes; and

4) it allows construction to begin before design work is complete.

(See Sections C.3.2 and C.3.4.)

* Use of incentive provisions in contracts. Incentive contracting is

used at only one of the sites visited.' In general, those interviewed

argued that incentive provisions tended to place too much emphasis on

cost and schedule, to the detriment of quality objectives. (See Sections C.3.2 and C.3.4.)

" Responsibilities and risk sharing between the utility and its

contractors relative to quality. By using cost-reimbursement contracts, which limit or remove contractor liability for rework and

errors, utilities assume virtually all the risks of completing

nuclear construction projects successfully and on time. Generally,

the owner's assumption of risk is reflected in relatively small fees

earned by contractors. (See Sections C.3.2 and C.3.4.)

" Requirements for demonstration, review, and/or approval of contractors' QA programs. In addition to the necessary review and approval

F contractors' QA programs, utilities visited felt that requiring

contractors to demonstrate their approach to assurance of quality was

important. The argument was that while some contractors might be

able to describe an acceptable QA program on paper, the only way to

evaluate their real understanding was to ask them to demonstrate how

they planned to implement such a program. At some sites, pre- and

post-award meetings with contractors were used for this purpose.

(See Section C.3.3.)

C.7
* Procurement practices and procedures. At all sites, procuring materials, supplies, and equipment was helpe~d by pre-screened and/or

evaluated suppliers' lists. Such lists are typically updated as project experience warrants. Where adequate resources are available,

surveillance programs may provide additional feedback on vendor performance. (See Section C.3.1.)

* Approaches used to communicate quality requirements to subtier contractors and to monitor their compliance. Communicating quality

requirements appears to be divided between two approaches. One

approach is to have detailed contract and procurement documents,

incorporating directly all applicable QA/QC requirements, codes, and

standards. The other approach relies on more general statements of

quality expectations in procurement documents. With this latter

approach, suppliers would be required to verify their compliance, for

example, through mutually agreed upon audit procedures or through the

submission of acceptable test and inspection data. In either case,

all utilities visited agreed that communicating requirements would

not assure quality unless compliance was actually monitored in some

way--quality assurance requires follow-through. (See Section C.3.3.)

* Provision for source and on-site inspections. Procurement documents

at all sites required suppliers to make their facilities available

for inspection. The provision relating to this issue was nearly

identical in documents reviewed at each site. Similarly, inspections

on receipt were standard practice at all sites. Sites differed, however, in the scope of receipt inspection activities performed and in

the resources available for inspections. In general, larger, more

commercially active purchasers possessed both the economic incentive

and resources to monitor systematically contractors' shops. (See

Sections C.3.1 and C.3.3.)

Organizational Factors

Site examination of organizational factors yielded the following findings:

* Various combinations of engineering, management, procurement, and

construction roles. The wide array of construction project role

arrangements in the U.S. nuclear industry suggests that no one

arrangement will insure success. External A-E firms performed engineering at all sites studied. Either the utilities or the A-E handled construction management. Procurements were managed by the A-E

with utility supervision or by the utility alone. Construction

arrangements at the sites studied varied greatly, ranging from one

prime contractor to more than 30. (See Section C.4.)

* Various combinations of engineering, management, procurement, and

construction roles for owners. Owners generally assumed the role of

project manager, combining this role with that of construction manager at two sites. Inýhouse engineering tended to be used only for

A-E oversight or non-safety-related designwork. Procurement was

C.8
generally a function shared by the owner with the A-E and contractors. Construction at all sites studied was performed by external

firms. (See Sections C.4.1 and C.4.2.)

" Prior nuclear experience. All sites recognized the value of previous

nuclear experience although only two of the sites visited had such

experience. In particular, previous experience increased familiarity

with quality requirements and expectations; improved the selection of

contractors; and permitted the utility, A-E, or contractor to anticipate the inexperience of others and to take steps to compensate for

it. (See Section C.4.3.)

" Different Labor arrangements. All of the construction projects

visited had negotiated broad labor agreements with major craft unions

and locals before the project began. Given the size, duration, and

complexity of nuclear projects, unions had sufficient incentive to

enter into such agreements. Generally, these agreements benefited

both sides: labor was guaranteed work for a long period of time, and

the utility/contractors won concessions on job rules, work interruptions, and walk-outs. (See Section C.4.4.)

Institutional Factors

Site examination of institutional factors yielded the following findings:

" State public utility commission (PUC) policies. At all sites

visited, state PUC policies were not reported to have been pivotal

either in the original decision to build a nuclear plant or in later

project and contracting decisions. (See Section C.5.1.)

" Project ownership arrangements. The sites visited exhibited a range

of ownership arrangements. No one arrangement appeared superior to

t-he others in producing project success. Joint projects did appear

to offer some advantage for financial stability. (See Section

C.5.2.)

C.2.3 Project Observations

In the course of project activities, the study team made a number of

observations deserving of mention here as well as of further investigation and

analysis. These observations are as follows:

The nuclear construction industry does not appear to make extensive use of

incentive contracting of either a reward or punitive nature. Therefore,

because most of the contracts are cost reimbursable, virtually all the risk

lies with the utilities. Further examination of incentive contracting might

reveal some particular advantages that would have implications for both the

quality and cost of nuclear power plants. (See Section C.3.2.)

State PUCs, while not particularly active in scrutinizing nuclear power

plant construction costs, appear quite aggressive in their examination of

C.9
operating and maintenance costs. It was suggested that this is because betteraccepted methodologies exist for evaluating costs associated with operations

and maintenance than are available to assess construction expenditures. If

this is the case, it would appear worthwhile to explore the development of such

a methodology for assessing construction costs. (See Section C.5.1.)

Several commentators have suggested the value of greater consolidation and

coordination 1f the nation's nuclear generating capacity. While initially

there do not appear to be legal barriers to such consolidation, neither do

there appear to be particular incentives to coordination. Should enhanced

coordination be deemed desirable, antitrust and other potential legal issues

would require more extensive examination. (See Section C.5.2.)

Finally, while some project ownership arrangements appear to have advantages over others, careful empirical examination of utility and project ownership arrangements and their relationship to construction project outcomes is

lacking. Further study could begin to identify some of the relative strengths

and weaknesses of different types of arrangements. Through such additional

study, it might also be possible to determine the appropriate vehicle for advocating increased coordination, assuming that further investigation offered

evidence of its merits. (See Section C.5.2.)

C.2.4 Recommendations

The focus of this project was on case studies of individual sites and

their nuclear construction experience. This approach necessarily limits both

the ability to generalize the project's findings and the development of recommended actions. With these limitations in mind, the following recommendations

are offered:

" As part of their management review, the NRC should consider requiring

applicants for construction permits to explain their proposed

contracting methods, bid evaluation and selection procedures, and

their reasons for choosing them.

Given the overwhelming consensus about contractor selection processes

and cost-reimbursement contracting, this item clearly seems to

warrant NRC attention. Utilities are advised to require bidders to

demonstrate their approach and commitment to a project, the NRC could

demand the same of licensees. This would force the potential licensee to think through the contracting process with all its implications for risk sharing, cost control, and quality performance

requirements.

* The NRC should examine methods to focus more attention on how a

licensee proposes to insure that quality work is being performed

rather than on the documents that describe general QA and QC programs.

C.10
An overemphasis on what is written about quality assurance and

quality control appears to contribute little to the actual assurance

of quality and may be detrimental. This is particularly true if such

an emphasis diverts attention from how the elements of QA and QC programs will be implemented. The issue here is the difference between

examining a utility's QA manual and examining the number and qualifications of the staff it assigns to QA functions. The former audits

writing ability; the latter contributes to an assessment of the capacity to carry out a QA objective.

S The NRC should examine the implications for its own mission of state

public utility commission scrutiny of and policies toward nuclear

construction project costs and management.

State PUCs appear to be taking more action in their examination and

disallowance of unnecessary and unwarranted expenses. How this new

posture affects execution of the NRC's safety mission, PUCs' expectations of the NRC, and the assurance of quality in nuclear construction projects is not yet clear. This shift represents what may be a

major change in the institutional environment of nuclear power plant

construction; thus, the NRC should examine carefully its implications.

C.3 CONTRACTUAL ISSUES

A key aspect of any major construction effort is the contracting and procurement process used. This process defines the scope and level of involvement

for all project participants, establishes their relationships with each other

as well as with the owner, and secures all of the materials, supplies, tools,

and equipment for building the plant.

At each of the study sites, several features of the contracting and procurement process were examined to determine their contribution to assurance of

quality in a nuclear construction project. Three aspects of the contracting

and procurement process were of particular interest: 1) the procedures used to

evaluate and select contractors and vendors; 2) the terms and conditions

(including incentives, if any) of contracts and procurement documents; and

3) the nature and scope of quality-related requirements incorporated in contracts and procurement documents. The project team's findings in each of these

areas are discussed below- A concluding section summarizes the findings.

C.3.1 Bid Evaluation and Selection Procedures

Selecting qualified contractors to perform construction tasks requires

more than careful drafting of contract documents. For this reason, contracting

and procurement guides typically view an objective bid evaluation and selection

process as fundamental to successful contracting (Cibinic and Nash 1981; Federal Procurement Regulations). Such a process has several characteristics. It

is independent of any particular procurement that is undertaken and involves

C .11
procedures that are clear and can be readily communicated. Finally, for contractor selection, it uses criteria that are rationally related to the product

or service being procured.

Recommended features of contractor and vendor bid evaluation and selection

procedures suggested by those interviewed are described in the following discussion. To clarify the discussion, the term "contracting" is used to denote

the process of selecting on-site suppliers of labor, expertise, and services.

The term "procurement," on the other hand, is used to denote the selection of

off-site suppliers/vendors of materials, supplies, and equipment.

Bid Evaluation and Selection Procedures for Project Contractors

The use of bid evaluation and selection procedures to select project contractors at the sites studied did not appear to affect the number of contracts

and vendor agreements executed. Two of the sites studied involved utilities

that had executed many contracts directly with construction contractors. One

of these sites (Site 3) uses a detailed bid selection procedure for all contracting. The other site (Site 1) indicated that it had selected its original

contractors because they were "people we were familiar with" from previous,

non-nuclear construction efforts. In the last case, lack of contractor experience appeared to play a role in quality-related problems that resulted in a

self-imposed work stoppage. Of the other two sites, Site 2 involved a utility

that executed one prime contract and relied on the prime contractor to use its

own bid evaluation and selection process to subcontract with others performing

services for the construction project. However, the utility's selection of the

prime contractor was highly formalized. At Site 4, the major A-E firm visited,

the staff interviewed gave several examples of unsatisfactory contractor performance that resulted from inappropriate contractor selection procedures. One

person noted that "hiring country club cousins" over technically or functionally superior bidders is not conducive to quality construction efforts.

Formalized bid evaluation and selection procedures were more likely to be

used if they were expected to improve bid outcomes. Those who adopted such

procedures stressed several important characteristics of an effective sound

bidder evaluation and selection.

First, criteria must be established for developing a bidders' list that

would not only restrict the number of proposals to be reviewed, but also prescreen prospective bidders. Having such criteria appeared more important than

the content of the criteria used. People interviewed at all sites visited gave

examples of problems that resulted from-unrestricted bidders' lists or improper

additions to such lists. One example involved a supplier added inappropriately

to a bidder's list. Although the firm was not selected for the procurement, it

was shortly revealed that the firm's president had been arrested for drug smuggling.

Those interviewed also felt it was important that bidders demonstrate

their expertise to undertake procurement tasks. This expertise could be demonstrated partly by prior experience. Staff at each site also stressed the value

C .12
of indicating the level of commitment of staff and other corporate resources

that prospective bidders were willing to devote to the buyer's project.

Another feature of bid evaluation and selection procedures found useful at

several of the sites was pre-award meetings with potential contractors. Such

meetings typically occur after initial selections have been made from all the

bidders. The purpose of these meetings is to provide the owner with a way to

judge technically acceptable bidders on the basis of formal presentations of

corporate capabilities and commitment to the project and staff to be committed

to the project. Because contracting for nuclear construction projects is

usually initiated before much of the design work is complete, contractors

cannot demonstrate how they would accomplish specific tasks. However, those

who used pre-award meetings as part of a bid selection process felt that the

meetings made a significant contribution to successful contracting.

A final recommended component of an effective bid evaluation and selection

process is establishing post-award meetings with the chosen contractor. The

purpose of these meetings is to work out the process to develop job-related

procedures, to communicate site-specific work rules, and to develop the details

of QA and QC plans. These meetings also provide a way for utility and contractor personnel to build a project team philosophy and approach since they will

be interacting regularly. Those who had used this process found both pre- and

post-award meetings to be very helpful in establishing positive contracting and

project relationships. (Specific benefits of the project team approach are

discussed further in Section C.4.2.)

Bid Evaluation and Selection Procedures for Vendors/Suppliers

As noted earlier, the procurement process in this chapter refers to

acquiring supplies and materials as opposed to acquiring labor and expertise.

All the sites visited use some degree of formalized vendor selection process.

In many cases this process is necessary because of the many potential vendors,

particularly for non-safety-related or non-Q-class items.

Each site had some type of evaluated supplier listing or supplier review

process. The formality and complexity of the process depended in part on the

size of the reviewing body. A larger and therefore more commercially active

reviewing body normally resulted in a more elaborate supplier selection and

evaluation process. At Site 3, for example, a large utility involved in

several construction efforts and servicing several operating plants performed

the procurement function; there was also a formal vendor selection and review

process. The A-E firm visited reflected a similar situation. Because of its

size, the firm has developed an extensive vendor evaluation process, combined

with quality surveillance procedures (discussed further in Section 5.3.3).

While the extent of the process varied, each site-attempted to maintain

information on vendors and suppliers to make informed commercial and technical

decisions in purchasing materials, supplies, and equipment.

The process for preparing purchase orders with suppliers was the same at

all sites studied. Technical specifications are usually developed by design

and engineering, reviewed by quality assurance, reviewed for commercial aspects

C .13
by procurement, and then sent out to a pre-established list of acceptable bidders. The same actors or functional groups are involved in the review of bids

received. If a supplier takes exception to any of the bid specifications,

those points must also be reviewed and resolved before a procurement can take

place. Subsequent changes generated by either the vendor or the purchaser are

Iso subjected to technical and administrative review procedures.

The purpose of procedures to review and make changes in procurements is to

ensure that necessary changes are made and reviewed in a timely manner so that

everyone is working with the most recent and accurate specifications. Site

visits indicated that success of this process depended upon the extent to which

,cimmercial aspects of a procurement were allowed to affect technical aspects.

For example, at Site 1 purchase orders were written in such a way that suppliers understood that they were to respond to the latest technical direction

given, with the commercial paperwork to follow. This was to avoid complete

renegotiation of a procurement every time a technical change occurred.

Interviewees stressed how critical it was for suppliers to be confident that

good faith performance, as requested, would be fully compensated. The dictum,

-"You never want your suppliers to be losing money," was noted time and again.

Depending on the grade of materials being procured, purchase orders generally prescribed the appropriate shop. inspection and monitoring provisions, as

required by specific codes or standards. Typically, such provisions consisted

of notifying vendors that their premises were to be available for inspection by

the purchaser or his agent. Sites differed in the extent to which these

inspection or monitoring provisions were followed. This is discussed further

in Section C.3.3. However, all sites tended to include the same qualityrelated specifications and provide for the same level of monitoring. They differed in the resources made available to perform shop inspections, audits,

and/or other monitoring activities. Again, the larger the entity executing the

purchase order, the more likely adequate resources will be available for vendor

surveillance activities.

C.3.2 Terms and Conditions of Contractual and Procurement Documents

Contractual documents themselves are generally not as important as the

expertise, experience, and attitude of the contracting parties. Nevertheless,

such documents often represent the only formal statement of the intended

relationships among project participants. The specific terms and conditions of

contractual documents may reflect not only the contracting parties' preferred

style of interaction, but also the contract writer's preferences and

experiences. In the absence of other formalized statements, the contracts set

the parameters for project relationships.

Three features of contractual documents were reviewed at the construction

sites visited: the primary type of contract being used to undertake construction tasks; some of the contract's general terms and provisions guiding project

relationships; and the use of incentive provisions to effect particular project

relationships or to achieve specific project goals.

C .14
Types of Contracts Used at the Sites Visited

The preferred form of contracting for nuclear power plant construction

appears to have gone through several cycles. Johnson et al. (1976) describe

contracting changes occurring in the nuclear power industry to date, indicating

that initially (early 1950s) power plant construction was executed by cost-type

contracts. By the late 1950s to mid-1960s, fixed-price, turn-key projects

became more typical. With more stringent licensing requirements imposed and

construction costs rising, modified fixed-price contracts with escalation

clauses came into prominence by the late 1960s (Johnson et al. 1976).

The projects visited all began construction in the early to mid-1970s. By

this time, fixed-price contracting was used only under special circumstances,

and cost-reimbursement contracts were the most frequently used type. This

preference remains strong today. For example, construction at Site 1 began in

the early 1970s, with most contractors working under fixed-price contracts.

During the project, several construction deficiencies were discovered, construction was halted, and the type of contracting used was changed completely. Resulting modifications to the original contracts transformed them

from fixed-price to cost-reimbursement (Johnson et al. 1976).

Changes in contract preference reflect as much a response to external conditions as to any changes in relationships among utility owners, constructors,

or design and engineering firms. Thus, fixed-price contracts are most appropriate under the following conditions: scope and specifications are known in

advance; few changes are expected; and/or costs are not expected to fluctuate

widely or increase substantially (Business Roundtable 1982). Cost-reimbursement contracts, on the other hand, are more appropriate in the following situations: full project scope is uncertain; changes and modifications are expected

during the project; and little exists on which to base a firm fixed-price bid

(Cibinic and Nash 1981; Business Roundtable 1982).

Since the mid-70s, cost-reimbursement has clearly been predominant in

nuclear power plant construction. The use of the cost-reimbursement contract,

then, reflects the industry's response to the situation in which power plant

construction begins before the design is complete, inflation results in the

expectation of widely fluctuating costs of materials and labor, and regulatory

and economic uncertainties make architect-engineers and contractors reluctant

to "lock in" fixed-price contracts.

Different forms of contracts also provide different levels of owner involvement with the contractor. The form of contract selected reflects the need of

the parties, particularly the owner, to monitor contractor performance (Cibinic

and Nash 1981). A fixed-price contract does not typically permit the owner

extensive surveillance and monitoring of contractor records and activities.

The owner has no basis for monitoring because performance is up to the contractor, within the parameters of the contract. In cost-reimbursement contracts,

however, the owner must be involved in monitoring both the schedule and expenditures because the contractor's payment is based on demonstrated expenses of

the work performed.

C.15
If quality of construction is the owner's primary goal, requiring owner

acceptance of all work is one useful approach. Where the owner requires

construction according to exact specifications, a contractual arrangement that

permits the owner to closely monitor the costs and quality of the construction,

i.e., the cost-reimbursement type contract, may be most appropriate (Cavanagh

1974).

The main difference between fixed-price and cost-reimbursement contracting

for assurance of quality is not the method used to compensate the contractor,

but the risks that each party assumes because of the method of compensation.

In the fixed-price contract, the contractor assumes virtually all of the

risk. He has made a firm bid and runs the risk of failing to perform as

expected within a given budget. In a cost-reimbursement contract, on the other

hand, the owner assumes the risk that the cost may exceed the estimate. Either

way, the contractor will expect to be reimbursed for any changes the owner

chooses to make. But with a fixed-price, lump-sum contract, additional compensation must be negotiated with the owner, or failing this, the contractor must

seek legal redress. With cost-reimbursement contracts, the mechanism for providing additional compensation is built in. Responsibilities for risk associated with timing, costs, and quality of performance, therefore, shift back to

the owner.

Many persons interviewed at the sites felt that utilities should assume

the risks associated with nuclear power plant construction because, as owners,

they clearly have the responsibility for the safety and quality of their

plants. Therefore, the use of cost-reimbursement contracts seemed consistent

with the owner's duties and obligations. The interviewees also preferred the

cost-reimbursement contract because of the number of design changes typically

involved in a nuclear project. Many of these changes were the result of the

evolutionary nature of most projects, with design substantially incomplete at

project initiation. Other changes were often the result of new regulatory

requirements or guidelines. Because of the many changes, it was felt that

these were risks that the owner, as licensee, should assume, rather than passing them on to contractors. Thus, it was viewed as unrealistic to expect contractors to anticipate the risks of unspecified changes by making firm price

bids. Instead, the course recommended by interviewees was for licensees to

recognize the likelihood of many regulatory and design changes and to plan to

reimburse contractors for incorporating those changes as they were executed.

It was agreed that this position not only serves time and budget needs but

quality objectives as well.

Convertible contracts have been suggested as a way to combine the advantages of both fixed-price and cost-reimbursement contracts (Business Roundtable

1982). This type of contract can be changed once a specified level of project

completion is reached. For example, in a nuclear project, such a contract

might begin as a cost-reimbursement type when scope and design are still not

completely defined. As the project continues and the design and scope of each

contractor's area of performance is more clearly defined, cost-reimbursement

contracts might be converted to fixed-price, target-price, or unit-price contracts to complete the job. Therefore, the owner would assume the risks

C.16
initially, but over time, as circumstances change, risks would shift to the

contractors in a well-defined and predetermined manner.

Convertible contracts pe.rmit some of the advantages of both major methods

of contracting. In addition, responsibilities and risks are assumed more

evenly by both parties. Ultimately, however, from NRC's point of view, the

responsibility for cons ,uction and construction quality lies with the licensee. Most licensees have found themselves recently in a situation of considerable uncertainty in nuclear construction projects, emanating not only from the

NRC but from the financial markets as well. In this environment, the costreimbursement form of contract has proven to be the most flexible.

In general, while a cost-reimbursement contract may be written in several

ways, the preferred style at the sites visited was cost-reimbursement with a

fixed-fee. This type of cost-reimbursement contract represents an attempt to

control costs because the contractor's fee, or profit, is not tied to the size

of the underlying contract, but is fixed. With this contract the contractor

does not have the incentive to enlarge his contract scope or to engage in

extensive rework to increase the amount of the contract and thereby increase

his profit. Even where a fixed percentage fee has been negotiated, such fees

are not typically large. To some extent, then, the contractor's guaranteed fee

or profit is reduced to reflect the owner's assumption of most of the risks

associated with project completion. Because of the duration of most nuclear

projects, some argue that large fees might be preferable, to avoid loss of contractor interest or commitment over time. At Site 3, this situation has been

addressed through periodic renegotiation of contractor fees to reflect current

project and external conditions.

Not all contracting at the sites studied is the cost-reimbursement type.

Fixed-price contracts continue for specific jobs associated with nuclear power

plants. Generally, for these jobs, the scope was known early enough for

detailed specifications to be written so that a realistic and firm price bid

could be solicited. Such jobs also reflect a situation where it is reasonable

for the contractor to assume the risks associated with executing the contract. Fixed-price contracts are frequently used for elements of heating, ventilating, and air conditioning work; and at one project, the cooling tower

contracts were fixed price as well.

The General Provisions of Contracts

Several provisions of the cost-reimbursement contracts negotiated at the

sites studied relate to quality assurance. Each of the sites visited dealt

with some of these provisions in similar ways, although the exact language used

differed. For example, each site visited had provisions on the assignment of

contractor's key personnel to the project. This type of provision reflects the

owner's interest in the assignment of individuals from the contractor's staff

(particularly for key management and supervisory positions). The reason for

inserting a key personnel clause appeared to be related to unpleasant experiences in prior nuclear projects or construction efforts where contractor personnel had proven difficult to work with or had demonstrated a level of commitment inconsistent with the owner's. In a nuclear construction project, trying

C.17
to work with problematic contractor personnel was not considered satisfactory.

Each project visited therefore included provisions in their contract reserving

the right to approve and pass judgment on contractor personnel involved in

their projects. At Site 1, the owner not only reserves the right to approve

such personnel but also requires the personnel to participate in a series of

team-building workshops to build project commitment.

Contractor liability for error, accident, or negligence by their personnel

is another provision affecting quality assurance.. In general, such liability

was limited and was restricted to gross negligence or deliberate actions, not

to typical errors or accidents since errors invariably occur. The utility at

Site 2, for example, views the contractor's personnel as an extension of its

own staff and expects the same level of errors among contractor personnel as

among its own staff.

Support for this position is found in a recent court case in Virginia. In the

case, a utility tried to avoid corporate liability by shifting responsibility

to its employees and their "human error." The court rejected that argument,

stating that "human error" was to be expected (Virginia Electric v. Division of

Consumer Counsel 1980). Many interviewed at the sites argue further that iT

contractors are liable for simple errors, there might be a tendency to cover up

problems, which could have serious quality-related implications. Therefore,

most owners choose to control primarily for gross or deliberate negligence of

contractor personnel and to accept simple error or accidental behavior as a

normal part of the project.

Other contract provisions relating to quality assurance concerned the

scope of contractor costs deemed reimbursable under a cost-reimbursement contract, for example, costs related to training. Site 3 placed particular emphasis on on-site training of craft and supervisory personnel and invested much

time and energy in training programs directly related to the project work. At

this site all contractor training costs were reimbursable. The utility felt

that incurring those costs, up front, increased the likelihood that the work

would be done properly. Thus, reimbursement for training costs was argued to

yield substantial savings because costly rework would be avoided. In general,

the scope of costs the owner is willing to reimburse reflects the importance

that owner places on various aspects.of the project. By reimbursing training

costs, the owner is stressing that the quality of work is more important than

cost or the schedule.

Incentive Provisions in Contracts

Site 1, when renegotiating contracts, developed some fairly detailed and

profitable incentive provisions concerning productivity and completing certain

key milestones on schedule. Of the sites visited, this was the only one, however, in which incentive provisions were extensively used.

Site 2 used negative incentives for contractor performance. The first

x-millions of dollars of rework became the contractor's responsibility, after

which the owner would begin to assume liability. Thus, there was a limited

C.18
penalty for mistakes or rework, but only up to a certain amount. These incentives operated somewhat like a deductible in a standard insurance policy.

Rework penalties constitute a financial check on unlimited contractor rework

and shift some risks back to the contractor. For that reason, they are often

suggested as important cost control leverage in cost-reimbursement contracts,

where the contractor may not otherwise have incentive to perform efficiently.

An alternative to rework penalties is the use of positive incentives,

i.e., rewarding the contractor for avoiding rework. Such provisions might be

based on rework avoided over time or on performance of specific tasks. The

efficiency of such provisions, however, depends on how well QA and QC programs

detect unsatisfactory performance.

To meet an incentive's objective, a contractor must be able to control

performance in that area of activity. This may require careful management of

other contractors and their relationships with the incentive work. If the contractor cannot control the performance of others, the construction manager must

adjust the incentive program. In a construction project with many contractors

and a great deal of interdependence, incentive contracts may not be practical.

Another problem with incentive contracting is establishing equitable

goals. Often cost-related targets are set because they seem easy to agree to,

but negotiating cost-related incentives may send an inappropriate message that

could negatively affect performance or other kinds of objectives. Thus, incentive contracting, despite its potential for cost efficiency, may actually

result in increased costs because of the additional project management and project administration required to monitor contractor performance.

The performance incentive, a type used at Site 1, may have some value as

the power plant nears completion. Such incentives encourage a contractor to

surpass particular performance targets by providing a reward for exceeding

them. Often such targets relate to overall contractor performance or completion of a particular installation or set of tasks. These incentives can aid in

the timely completion of a construction project. This is particularly important if the cost of money is significant and is expected to increase over time

and therefore could result in considerable savings.

Incentives typically are not developed for objectives that are essential

or required under the general contract provisions. Therefore, quality-linked

incentives in nuclear construction are inappropriate because quality is nonnegotiable. Construction is required to be completed according to quality

requirements and the design's technical specifications. Other aspects of contractor performance are more appropriate for incentive contracting than quality

objectives. Quality-related incentives might be considered if an owner wants a

level of performance exceeding the minimum contract standards.

C.3.3 Quality Assurance Provisions in Contracts and Procurement Documents

At the studied sites, several approaches were used to incorporate quality

assurance provisions in contracting and procurement documents. The approaches

varied mainly in the level of detail that quality requirements were stated in

C.19
the documents or in materials attached to those documents. In one case, the

contract's quality assurance provision stated that all work related to the project was to be accomplished in accordance with applicable NRC and utility QA/QC

standards. In another case, actual quality assurance manuals and quality control procedures were incorporated directly as appendices to a contracting document.

At sites where only general statements of quality assurance were contained

in contract documents, specific job-related quality requirements and procedures

were developed as work progressed. In this way, such requirements developed in

the context of the project itself before a set of tasks was begun. This also

permitted QA and QC procedures to be tied to the particular technical specifications guiding those tasks.

The logic behind handling quality requirements as work progressed is that

incorporating detail into contract documents is too rigid. In detailed contract documents, a QA or QC change would accompany every specification change

and requires a contract modification. To avoid these problems, at some sites a

contract document containing a statement of basic quality requirements was

developed, incorporating by reference whatever document or set of documents

(e.g., 10 CFR 50, Appendix B, ANSI standards, or ASME codes) are appropriate

for a contractor to consider. The contract therefore gives a general framework.

of quality expectations, with specific guidance on quality requirements coming

from job-related experience that would develop with the project.

The alternative point of view is that quality requirements should be made

very clear and explicit in contract documents. This argument led to a basic

contract document that refers to appendix materials, including intended quality

procedures and quality assurance manuals. In negotiating such contracts, the

appendix materials, as well as the body of the contract, have to be negotiated

and agreed upon by the parties.

In general, documents for procuring equipment and supplies incorporated

the appropriate standard or code provisions, stipulating that, if appropriate,

a supplier would be expected to have his premises open for inspection at the

discretion of the owner. The specific quality requirements are typically

contained in the technical specifications rather than in the general provisions

of the procurement documents.

Those interviewed generally felt that the written detail of the quality

requirements or their method and level of communication to a contractor or supplier is not as significant as the extent of QA/QC follow-through. The strong

feeling was that it was possible to produce documents that reflect detailed

quality control and quality assurance programs that might not ever be implemented. Real assurance of quality, it was argued, comes first from effective

people performing the work and then from actual checks being made, materials

actually being inspected and audits occurring at a supplier's facility or on a

job site. The fact, as well as the expectation, were the most important

aspects of a QA program.

C .20
The capacity to provide such effective QA/QC programs varies greatly,

depending on the parties' resources. An owner may require very specific quality standards of his contractors but not have the capacity to review contractor performance. At the sites visited, most generally understood the

requirements needed; for example, nearly every person could recite 10 CFR 50

Appendix B requirements. However, the sites had varying amounts of resources

to ensure that such requirements were being met. If an owner doesn't have the

resources to follow through on QA/QC requirements, some other mechanism is

needed to assure that the follow-through occurs. For example, a project structure and organization that can assure that a QA/QC program actually "lives" may be required. Issues such as project structure and organizational arrangements

are discussed in Section C.4.

C.3.4 Contractual Issues--A Summary

Three aspects of the assurance of quality in the contracting and procurement process were of particular interest during the site visits: 1) the proce- dures used to evaluate and select contractors and vendors; 2) the terms and

conditions (including incentives, if any) of contracting and procurement documents; and 3) the nature and scope of the quality-related requirements incorpo- rated in contracts and procurement documents.

An effective bid evaluation and selection process is fundamental to successful contracting. Those interviewed stressed the importance of developing a

bidders' list based on established technical criteria. The exact criteria were

regarded as less important than their implementation. It was felt that bidders

should be required to demonstrate their expertise, both by prior experience and

by a representation of the bidders' staff and other resources to be devoted to

the work. Several of the sites found pre-award meetings with the finalists

useful in assuring that the successful bidder would devote the required effort.

Post-award meetings were also felt to be very helpful for establishing contracting and project relationships.

A formalized vendor selection process was also thought helpful for procur- ing equipment and supplies. A large owner/utility or project manager is generally better able to conduct a thorough and formal selection process than a

small utility or "one-time" plant builder. This process can be successful

whether it is performed by a large utility or by a large or experienced A-E.

Interviewees recommended that purchase orders be written to allow suppliers to

make rapid technical changes before the commercial paperwork is completed.

The cost-reimbursement type of construction contract was favored by interviewees over the fixed-price, lump-sum contract, because of the large number of

changes in work during construction of nuclear generating facilities. Costreimbursement contracts typically include a fixed fee, set either as a lump sum

or as a percentage of base costs. Some suggested that the advantages of both

fixed-price and cost-reimbursement contracting can be realized by "convertible"

contracts, which change compensation from cost reimbursement to a fixed price

C.21
after the design is completed or at some other logical point. Where costreimbursement with fixed-fee contracts are used, provisions for renegotiating

the "fixed fee" have been useful to avoid loss of contractor interest or

commitment and to accommodate changed circumstances on the part of the owner or

contractor.

In general, reimbursing contractor expenses like those associated with

training indicates that how the work is performed is most important, not its

cost. Also, interviewees suggested that limiting the contractor's liability to

the owner for errors of key contractor personnel removes much of the incentive

that contractor staff may have to cover up discovered error, avoiding even more

costly rework and contributing to achieving quality objectives.

Positive incentives for exceeding performance expectations can be useful

id may be most effective when the project is nearly completed and many uncer-

.ainties have been removed. However, incentive provisions are generally inappropriate when developed around essential or required objectives (such as quality requirements).

The detail of QA provisions in contract and procurement documents has

varied from site to site. Generally, however, detail was not as important as

the implementation of QA/QC requirements by actual inspections, checks, and

tests, which require an adequate commitment of resources.

C.4 ORGANIZATIONAL ISSUES

One aspect of a major construction project that will influence the nature,

course, and outcome of that effort is its organizational framework. Therefore,

the relationships between the assurance of quality and four organizational

issues associated with contracting and procurement were examined: 1) the

structure of construction projects; 2) the owner's role in the construction

effort; 3) the owner's or utility's prior nuclear experience; and 4) arrangements for labor and labor relations. Each of these is discussed separately

below.

C.4.1 Structure of Nuclear Power Plant Construction Efforts

Nuclear construction projects involve four major roles or functions:

engineering, procurement, construction, and management. These roles may be

performed singly or in combination and by individual or multiple firms. The

U.S. nuclear industry demonstrates a wide array of project arrangements, suggesting that no one arrangement will insure success. However, some standard

practices appear to reflect the industry's collective experience.

The engineering role is generally filled by a single A-E firm. However,

the A-E may contract out parts of the engineering to other firms and maintain

overall responsibility. Also, the A-E may or may not be responsible for

on-site inspection of work during construction. If the utility has engineering

expertise, it may use that expertise to support the outside A-E or may use it

to design non-safety-related buildings and facilities. At each project

C.22
visited, external A-Es had been hired for the design and engineering functions.

One project, Site 3, used "in-house" engineering capabilities for non-power

block, non-safety-related work.

The engineering role is frequently combined with other project functions. For example, at Site 2, the A-E was also performing project procurement

functions and serving as construction manager and prime contractor for most of

the construction work (assisted by subcontractors). The A-E firm visited by

the project team, Site 4, had served in every conceivable role in nuclear construction projects, sometimes playing a single role and at other times undertaking responsibility for all project functions.

The only project functionoA-E personnel felt should be closely tied with

engineering was procurement. Here, there was a strong feeling that the A-E

should either undertake procurement as well or at least have direct input into

the procurement process. The reason given for this important linkage was that

the A-E knows to what extent the safety margin built into a design might be

eroded by suppliers. If the design cannot compensate for deviations in materials, the A-E can advise the procurement functionary of an unacceptable shipment and/or an unsuitable supplier.

As noted above, the A-E at Site 2 was also serving in the project procurement role. This was not true at the other sites, although the A-E had input

into procurement in each case. At Site 1, for example, each contractor provided his own materials and supplies, with major equipment purchases handled by

the utility with A-E consultation. At Site 3, all procurement was handled by

the utility itself, with the A-E providing the specifications and handling the

bid evaluation and selection process for many items.

The utility at Site 3 had strong feelings about the procurement role. In

the words of one top manager of the nuclear construction effort: "[Suppliers]

are notorious for not delivering on schedule. This can bring a construction

project to its knees. That's why we knew we wanted .to control procurement ourselves." This view is supported by a 1981 study of construction productivity

where the unavailability of needed materials, tools, and supplies was found

consistently to be the most frequent source of delay on the construction projects studied (Borcherding and Garner 1981).

The number of firms performing the wide range of construction tasks involved in a nuclear project varies greatly. Sites 1 and 3 reflect some of the

complexity that may characterize the constructor role. At both these sites,

about 30 contractors have been on the project site at the same time, performing

a variety of construction functions. At Site 2, on the other hand, a single

prime contractor serves as constructor, assisted by its subcontractors and a

few limited scope contractors.

Having many contractors on-site not only increases the numDer of participants in the construction effort but also increases the need for close coordination of contractor efforts. The coordination function is the responsibility of the construction manager, who must assure that the construction effort

progresses within time and budget constraints. Where a prime construction

C.23
contractor has been hired, the construction management role may also be assumed

by this firm since most of the project personnel already report to him as subcontractors. Construction management may also be combined with the engineering

function although some argue that in this arrangement no one oversees the A-E's

work.

At Sites 1 and 3, the utility is serving actively as construction and project manager and employs approximately 900 on-site staff to carry out the function. The largest and most experienced utility visited (at Site 3) views the

construction management function as one that the owner must play. As one of

the utility's key managers noted: "If you intend to build one of these plants,

you have to develop as well the expertise to build, license, and manage it."

In this view, a utility that can not manage the construction effort probably

would not be able to run the completed plant.

An entirely different approach exists at Site 2 where an experienced A-E

serves as construction manager and is overseen by the utility. There, an inexperienced utility, rather than incurring the substantial staff investment for

carrying out the construction management role, decided to take advantage of the

experience and expertise of its A-E and prime contractor.

Whether performed by the utility itself, an independent construction management firm, or another project participant, the best interests of a construction effort in terms of quality, safety, schedule, and cost are served when the

project has clear objectives and the resources to achieve them. The project

manager should exert his authority within the project itself, in his absolute

power to stop work, to order rework, and to mediate disputes. Personnel at all

sites visited expressed frustration at the often lackluster performance of vendors and contractors alike unless continued surveillance was maintained. Those

most successful in exacting contractor and vendor performance were the largest

and most experienced firms. As one key manager at Site 3 noted: "This is all

about tomorrow. They [suppliers and contractors] have to satisfy us because

we're part of their future."

Where the utility assumes the project management functions, it must commit

sufficient staff and resources to effectively direct, coordinate, and support

the contractors' work. In addition, because the construction manager must

assume a strong role, a weak owner (in terms of staff, economic backing,

expertise, or experience) may not be in a position to be an effective construction manager. If the construction manager is not strong, the contractors may

not be motivated enough to perform fully on the project, regardless of their

contractual obligations. The advantages and disadvantages of the various roles

of the owner are discussed in the next subsection.

C.4.2 Owner's Role in the Construction Effort

The extent of utility involvement in each of the job functions just discussed varies markedly. For example, the utility may handle all procurement

for the construction project, as did Site 3, or procurement might be managed by

the prime contractor with utility concurrence (Site 2). Similarly, the utility

-may assume little or no responsibility for construction management (Site 1,

C .24
initially), or the utility may take a very forceful and active role in managing

the construction project and its contractors (and subcontractors), as Site 1

does now.

The nature and level of utility involvement in construction projects typically falls into one of five categories that can be thought of as a continuum

(Theodore Barry and Associates 1979). First, the "project management" arrangement is one inWwhich the utility hires a project manager to select and coordinate project contractors and activities. In this case, the utility delegates

not only the project management function but much of the responsibility for the

project to its independent project management firm. This arrangement has been

used rarely in nuclear power plant construction.

A second level of owner involvement is the "design-build" arrangement, in

which the utility has a minimum of involvement in the project and contracts

with one firm to design and build the power plant. This firm ordinarily handles the design, construction, and procurement work for project scheduling or

auditing. Site 2 conforms most closely to this model.

A third category of owner involvement is the "general contractor" arrangement in which the utility enters into separate contracts for project

engineering and construction. This arrangement gives the utility greater

control over the project and requires greater staff involvement and commitment

by the utility than either of the first two arrangements.

A fourth type of owner relationship is the "prime specialty contractor"

arrangement, characterized by a utility that serves as its own construction

manager and general contractor, hiring all its prime contractors for each of

the major divisions of work. Sites 1 and 3 are variations of this organizational arrangement.

Finally, in the fifth category, the "in-house construction" arrangement,

the utility handles virtually all aspects of the project. In this case,

utility staff actually construct, if not design, the project. This arrangement

requires the development of a tremendous level of expertise within the utility

and a large utility staff.

As this discussion suggests, the level or degree of complexity involved in

construction project organization can vary dramatically. For example, a utility that hires one large engineering and construction firm to design and build

a nuclear plant ("design-build" arrangement) can be expected to evolve fairly

simple contractual and ,organizational relationships with its contractor, and

between the contractor and the subcontractors, vendors, and suppliers with

which it works. On the other hand, a project for which the utility contracts

directly with each contractor and subcontractor (a "prime speciality contractor" arrangement such as Site 1) is likely to involve a much more complicated

project structure.

Regardless of what role(s) the utility assumes, an extremely effective

strategy for coordinating the construction effort and for assuring a successful

construction project involves establishing a project team. A utility may

C.25
attempt to interact with its construction project through its traditional

departments and sections. However, a strong project team appears to facilitate

project relationships and to enhance performance.

The project team concept draws all participants in the construction project (utility, engineers, constructors, etc.) into a single unit focused on the

project itself, regardless of each actor's organizational or disciplinary background. Furthermore, the project team approach can support matrix management,

which allows team members to benefit from technical supervision and support

without diffusing responsibility or authority, which has caused some matrix

management arrangements to fail.

All of the sites visited had adopted a project team orientation, and utility staff were able to cite examples of how the team approach facilitated relatiL •hips among contractors, the utility, and construction managers. For

example, at Site 3, the assignment of procurement staff to the nuclear project

appeared to streamline the cost and administrative procedures involved in purchasing. The procurement staff were able to obtain guidance from corporate

procurement and simultaneously work closely with the construction project group

to assure that the project's procurement needs were being satisfied. The project team can create and maintain cooperation and clear lines of authority, two

ingredients that the Electrical Power Research Institute found in a recent

study to be important in assuring a successful construction project (Bauman,

Morris and Rice 1983).

C.-'.3 Prior Nuclear Experience

The value of experience in the construction of nuclear power plants was

frequently mentioned as important by individuals interviewed at all four sites

visited. Obviously, experience increases the ability to perform effectively in

most any activity.

Individuals at Site 4 suggested that experience of all project participants is particularly important because nuclear power plant construction is

unique in several respects. First, it is extremely complex. Construction

typically begins well before design work is completed. Also, design specifications change throughout the course of construction--not only in response to the

construction work itself, site characteristics, and contractor input, but also

because of changing regulatory requirements. A second reason nuclear construction differs-from other construction efforts is that the individuals and firms

involved in nuclear power plant design, construction, and operation comprise a

rather small community characterized by fairly effective channels of communication. Experience in nuclear construction establishes the utility, architectengineer, construction firm, or other contractors in the nuclear community;

facilitates the sharing of expertise and experience; and encourages working

effectively with that community and marketplace.

A third aspect that makes nuclear power plant construction unique is the

stringency of standards. While other types of construction projects are built

to exacting standards, the stringency of their standards may vary from discipline to discipline. In other construction, material substitutions may be

C.26
liberally permitted and documentation of work may be performed infrequently.

None of this is typical of a nuclear plant construction effort, and experience

with nuclear projects makes it possible to anticipate and deal with the potential inexperience of other project participants. Utility staff at Site 3, for

example, suggested that their prior nuclear experience made it possible for

them to effectively use contractors with strong disciplinary capabilities who

lacked specific nuclear experience.

Depending on the role the utility assumes in project management, particularly in procurement, the utility's nuclear experience becomes crucial. Some

argue that a utility considering construction of its first nuclear plant should

rethink its decision (Bauman, Morris and Rice 1983). However, experience indicates that a utility can have a successful first nuclear construction project

by hiring experienced, effective staff to serve on a project team and experienced contractors to act on its behalf. For example, combining the project

team concept, several strategic hiring decisions (extremely capable and highly

experienced individuals), and an experienced A-E/prime contractor has led to a

successful first nuclear construction project at Site 2. Although the utility

had no prior nuclear experience, project costs and schedules, as well as construction quality, benefited from the experience (and expertise) of the utility's project team and its prime contractor.

C.4.4 Labor Arrangements

The final organizational issue examined at the sites visited involved

labor arrangements and relationships at nuclear construction projects. Because

the project team visited only union-staffed projects, the team cannot comment

on the impact or influence of union vs. non-union vs. open shop arrangements.

However, an important insight concerning labor arrangements was gained from the

three projects visited: a carefully structured agreement with union organizations is very helpful in controlling project costs and schedules.

An example of this structured agreement is found at Site 2, where a nostrike, no-lock-out agreement was negotiated with unions. Under this agreement, work is disrupted minimally if a dispute occurs, and there is no risk of

other union groups slowing or halting work when a dispute arises with one particular union. Accordingly, project costs and schedules have been virtually

unaffected by work stoppages or slowdowns. In seven years of construction,

only nine days have been lost to labor disputes.

Size and duration of most nuclear construction projects create an advantage in negotiating these structured agreements. Craft unions and locals have

a strong incentive to enter into long-term agreements and to abide by projectspecific work rules and procedures when they can guarantee large numbers of

their members steady work for many years to come.

The complexity of nuclear construction projects may also be an advantage

in negotiating labor agreements. At Site 3, for example, the utility has

established extensive training programs for craft workers and supervisory

C.27
personnel, enabling union members to acquire new skills. While obviously benefiting the quality of the work done on the project, such programs also enhance

the skills and hence future marketability of union members at the utility's

expense.

Finally, these labor agreements give the construction projects stability.

Labor-management negotiations occur before the project begins and therefore

tend to stay outside the construction site itself. All project contractors are

bound by the agreement, assuring equity among classes of workers and similar

work environments and rules for all. These factors can'minimize disputes and

prevent the harmful effects of work stoppages and slowdowns.

C.4.5 Organizational Issues--A Summary

From the four organizational issues examined by the project team, several

insights are relevant to the assurance of quality in nuclear power plant construction. First, while the major roles in a nuclear construction project can

be executed through various organizational arrangements, all roles must be

played by strong and effective occupants.

Second, all objectives of a nuclear construction project appear to be

enhanced by the owner's establishing a project team. Normal organizational

departments and channels are not as effective as a project team, with established authority and lines of communication to the construction personnel.

Third, because of differences between nuclear construction and other types

of construction, experience is crucial in building a nuclear power plant. If

the utility/owner lacks experience, others should be hired to act on its

behalf. Experience helps in selecting competent project participants and in

anticipating and dealing effectively with emergent problems. Both these functions make important contributions to project success.

Finally, a nuclear construction projects' size, duration, and complexity

allow adoption of long-term, labor agreements. Such agreements can benefit not

only cost and schedule but the quality of work performed.

C.5 INSTITUTIONAL ISSUES

Nuclear power plant construction projects are defined by the contractual

obligations established as well as by the organizational arrangements that

govern their interactions. At the same time, a larger institutional environment exists in which these projects and their owners are regulated, financed,

and find competition. A full examination of the impact of the institutional

environment surrounding nuclear power plant construction projects was well

beyond the scope of this study. However, at each project visited, two institutional issues were examined: 1) state pubic utility commission (PUC) policies

toward nuclear power plant construction efforts; and 2) various types of ownership arrangements for nuclear power plant construction projects. The reasons

for examining both of these issues and the insights gained from the site interviews, secondary sources, and other project activities are described below.

C.28
C.5.1. State PUC Policies Toward Nuclear Construction Efforts

States have almost exclusive responsibility for determining the rates that

utililils may charge for the costs of constructing new generating facilities. aj The state PUCs are responsible for determining when (and whether)

costs of new plants are to be passed on to consumers by including such costs in

the utility's rate base. If a utility is to regain its investment in a nuclear

construction project, then it must be aware of its PUC's policies on

construction programs. Similarly, a PUC's policies potentially have significant impact upon the initiation, progress, and completion of a nuclear construction effort.

Rate Base Approaches to Costs of New Plant Construction

Over the years, the PUCs of the various states have developed generally

uniform rules concerning when costs, incurred by utilities for constructing new

generating facilities, can be passed on to customers as part of the rates charged for power usage. Recently, utilities and PUCs have responded to the economic pressures of nuclear power plant construction by advocating or adopting

changes in these rules.

Historically, a plant is not included in a utility's rate base until it is

placed in service, i.e., until it becomes "used and usable." Typically, a

utility's rate base includes the original or historic cost of bringing the

plant into service. Many jurisdictions have allowed some small amount of this

cost to be offset by "contributions in the aid of construction." These

contributions are non-refundable amounts that utilities have charged customers

for installing abnormally costly or extensive facilities, before such plant is

placed in service (Howe and Rasmussen 1982). The major offset to the cost 9 )a

plant in service in the rate base is accumulated appreciation on the plant.'u

Construction Work in Progress. Presently, much controversy exists on

whether construction work in progress should be included in the rate base.

Construction work in progress (CWIP) is the investment in the plant under construction. A recent nationwide survey of privately owned utility companies

concluded that, historically, approximately three-fourths of the commissions

allowed all or part of CWIP in the rate base, and that currently 27

commissions, approximately half, allow a 1 or some portion of CWIP in the rate

base (Edison Electric Institute 1 9 8 3 ).tc)

(a) An exception is sales of electricity between utilities (wholesale sales),

which are regulated by the Federal Energy Regulatory Commission under the

Federal Power Act (FPA) of 1935, 16 U.S.C. §§ 791a et seq . These wholesale sales account for approximately 10% of the "firm" power sales of

electricity in the U.S. (U.S. House of Representatives 1983).

(b) There are other offsets to the cost of a new plant, including refundable

customer advances for construction, certain deferred income taxes resulting from accelerated depreciation, and pre-1971 income tax credit and

customer deposit (Howe and Rasmussen 1982).

(c) The survey covers companies operating in all states except Nebraska, which

does- not have any investor-owned electric utilities, and the District of

Columbia.

C.29
The debate regarding CWIP has focused upon several issues: the unpredictability of nuclear plant construction costs; fairness to rate payers; and

financial hardship to utilities undertaking large and costly new plant construction (Edison Electric Institute 1983; U.S. House of Representatives

1983). Thus, the Edison Electric Institute (1983), an association of electric

companies, concludes that including CWIP in the rate base represents "sound

regulatory policy that has been shown to benefit both rate payers and utilities" (p. 1). The House Committee on Energy and Commerce (H.R. 555), on the

other hand, has concluded that CWIP is not favorable to consumers and has moved

to prohibit the Federal Energy Regulatory Commission (FERC) from allowing CWIP

to be included in the rate base of regulated utilities (U.S. House of Representatives 1983). State legislatures, expressing similar sentiments, have also

moved to prohibit inclusion of CWIP in the rate base (Edison Electric Institute

1983).

Although nuclear construction projects have figured prominently in the

CWIP debate, the focus has been on the total costs of such projects. Little

attention has been given to identifying and disaggregating unnecessary or

unwarranted costs stemming, for example, from quality assurance breakdowns.

Instead, advocates to the debate regard either all costs or no costs as

unreasonable.

Construction Cost "Phase In". A similar concept to that of including CWIP

in the rate base is that of phasing construction costs into the rate base

before a new plant is placed into service. Such "phase-in" plans include paybacks to consumers in the form of lower rate increases after the plant is constructed and in service. Connecticut has revised its law on rate-base treatment of electric plants under construction to allow "phase in" of costs associated with two nuclear ge~erating facilities, Millstone 3 and Seabrook 1,

before they are completed.Ia) This legislation requires the utilities

requesting "phase in" to show that serious financial difficulties are being

encountered by the utility or are likely to be encountered unless "phase in" is

allowed (State of Connecticut 1983).

Like CWIP, the "phase-in" approach allows the utility to collect funds

from rate payers for the new facility before it is placed in service. However,

the Connecticut "phase-in" legislation, for example, requires that the funds

are to be paid back within the same amount of time after the facility was completed as was allowed for collecting such funds from rate payers before the

facility was "used and useful for public service" (State of Connecticut

1983). CWIP differs in that payments made by customers are returned to them

over the full useful life of the facility. The 1983 application of Connecticut

(a) The New York Public Service Commission is reviewing a similar "rate

moderation" plan for the Shoreham nuclear plant (telephone interview with

Jack Treilsen, New York Public Service Commission Rate Section, November 8, 1983). In a separate proceeding, the New York Public Service Commission is also reviewing the prudence of utility management decisionmaking regarding Shoreham.

C.30
Light and Power Company to Connecticut's Department of Public Utility Control

suggests that consumers be refunded through lower rat~es within less than three

years after Millstone 3 is placed in service (Furland 1983).

As with CWIP, reimbursing a utility for quality-related construction cost

overruns has not been the focus of debate in the "phase-in" approach. Instead,

the focus has been on the financial condition of individual utilities as it has

been affected by nuclear construction projects. Proponents view "phase in" as

a reasonable and necessary financial assist to a utility; opponents see such

plans as unreasonable. Investigating individual cost items or types of costs

has had no place in such a discussion, to date.

Influence of PUC Policies on Sites Visited

Because of the potential impact of a PUC's policies on financing a nuclear

project and its effect on the financial integrity of the utility itself, this

aspect of the project's environment was examined. At each site visited, utility staff were asked what impact, if any, state PUC policies had on 1) the

initial decision to build the plant; 2) subsequent decisions on project

organization and progress; and 3) the contracting process generally and, in

particular, the requirements placed upon contractors and vendors.

At Sites 1 and 3, a single PUC had rate setting jurisdiction. At Site 2,

four state PUCs had rate setting authority. However, none of the interviewees

figured PUC policies prominently in their decisionmaking for the nuclear project. Instead, in their initial decisions to build the plants, all sites indicated that the major factor involved assessing projected load requirements and

existing capacity.

State PUCs were not reported as significant when major decisions were made

during the course of the projects, despite the fact that two of the sites had

themselves halted project construction for significant periods. At Site 1, the

institutional factor that most influenced the self-imposed work stoppage was

the NRC. At Site 3, on the other hand, the project was stopped early to secure

adequate financing. Also, none of the sites reported being influenced by PUC

policies in their contracting practices and requirements. Rather, the utilities' own contracting styles and preferences as well as various NRC and code

requirements appeared to have the greater impact on these project decisions.

Although a PUC's policies have a potential impact, the sites visited

appeared to have been -little affected by state regulators. This situation may

be a function of the particular PUCs and utilities visited, or it may typify .

the relationship between nuclear construction projects and their PUCs, generally. To examine this, several PUCs were contacted to determine their policies

toward the construction phase of nuclear power plants.

PUCs' Historic Position Toward Nuclear Power Plant Construction

Telephone contact was made with 24 PUCs involving states in which currently operating nuclear power plants are located. Each PUC contacted was

asked if any of the initial construction costs of operating nuclear plants had

C .31
been excluded from the rate base and, if so, which costs and why. The study

team hoped the survey would reveal the extent that quality-related breakdowns

were considered in PUC cost disallowance decisions.

Of the 24 PUCs contacted, only 6 instances were reported where any initial

construction costs had been disallowed. This was out of a possible 52 operating nuclear projects reviewed for rate-base treatment. In cases where costs

had been disallowed, they were generally small amounts ($1-2 million) when compared with the total cost of most nuclear plants. In addition, construction

cost disallowances typically involved special circumstances, e.g., warranty

litigation between the utility and major contractor, or the propriety of ratepayer reimbursement for a plant visitors' center. Specific conclusions about

breakdowns in project quality assurance, management, or oversight did not

appear to be considered in any of the PUCs' decisions to disallow construction

costs.

PUC treatment of construction costs appears to differ from their position

on CWIP and on operating and maintenance expenses. In these latter areas, several of the same PUCs that had never disallowed construction costs had taken

action on CWIP and/or disallowed replacement fuel costs or maintenance expenses. PUC disallowance of operating or maintenance costs appears to be based

primarily on its conclusion that utility management had been "imprudent,"

"improvident," or "unwise." Several of the PUCs indicated that they have not

disallowed construction costs because they are not convinced that current

methodologies can accurately determine whether costs should be disallowed.

This is less true in the operational phase of nuclear plants where PUCs report

feeling on firmer ground in reviewing the propriety and prudence of costs

incurred.

Recent Developments in PUC Scrutiny of Nuclear Power Plant

Construction Projects

The traditional rate-base treatment of nuclear construction costs by PUCs

appears to account for their reported significance by the projects visited.

However, recent developments in several states suggest that the traditional

position of PUCs toward nuclear power plant construction costs is changing and

in directions that could significantly impact such projects. Several of these

developments are summarized below.

New York's and New Jersey's Incentive Rate of Return Approach 9

The New York Public Service Commission (hereafter "PSC") has adopted an

innovative approach to including one nuclear plant's construction costs in the

rate base of participating utilities. This approach is known as the Incentive

Rate of Return (IROR). The New Jersey Board of Public Utilities has adopted a

similar plan, known as the "Incentive/Penalty Revenue Requirement Adjustment

Plan" (New Jersey Board of Public Utilities 1983).

The New York Commission's adoption of IROR resulted from its decision on

an inquiry into the cost implications of continued construction of the Nine

Mile Point No. 2 nuclear station. New York's inquiry was initiated in response

C .32
to public and PSC staff concerns regarding repeated increases in construction

cost estimates and repeated extensions of the estimated completion time of the

station. The New Jersey plan was proposed by the participating utilities to

ensure continued funding for the project.

The New York PSC adopted IROR from among several options under consideration. Another option included a shutdown of the project to prevent alleged

severe financizll and economic implications for both the participating utilities

and the affected rate payers. The PSC found that continuing with construction,

which had been under way for some time, was the best option, but only if there

was IROR to provide some assurance to rate payers that construction costs would

not continue to escalate and that the completion schedule would not continue to

slip.

The New York plan provides an incentive for the co-tenant utilities to

complete construction on or before the scheduled date and at a cost which is at

or below the PSC's tarMe: cost. Similarly,. a disincentive exists for exceeding

the "target cost" set. a If the completion cost exceeds the target cost, only

80% of such excess costs may be included in the co-tenants' rate base. The

remaining 20% will not be passed on to consumers. There is an incentive for

completing the station at less than the target cost, since 20% of any cost

underrun from such target costs will be allowed into the rate base under the

IROR plan (State of New York 1982).

New York's IROR approach allows for the target cost to be modified upward

or downward upon request, given "extraordinary events" (State of New York

1982). The PSC also limited any IROR-induced reduction in the return on common

equity, applicable to prospective investments in the station, to no more than

one-half the normal rate of return (State of New York 1982).

Two of the seven Public Service Commissioners dissented, arguing that the

target cost was set too high, that application of the 20% constant sharing factor allocated too great a risk to rate payers because it failed to take into

account different tax treatments afforded investors. The dissenters pointed

out that several events besides increased construction costs could render the

station uneconomic and contended that no meaningful risk sharing could result

under the plan unless the "extraordinary events" under which target costs could

be modified were clearly delineated (State of New York 1982).

Standard and Poor's, commenting during PSC proceedings, stated that IROR

"could have the harmful effect of weakening investor confidence in these utilities ands-ubjecting them to risks, over and above those inherent in-the heavy

nuclear construction program, particularly since the NRC looms as an immense,

exogenous variable" (Standard and Poor's Corporation 1983, p. 20). The

(a) The PSC set the "target cost" following public hearings and contested case

proceedings before an administrative law judge. The figure was arrived at

following review of time and cost estimates submitted by the co-tenants,

by PSC staff, and by an independent consulting firm retained at the PSC's

request and expense.

C .33
dissenters argued that such a "risk premium" would in turn lead to higher

rates. On the other hand, both the New York and New Jersey decisions conclude

that these plans would not adversely affect the utilities' ability to attract

outside financing at reasonable rates.

The New York dissenters also argued that, by including only capital and

interest costs in the target cost, the IROR approach would provide incentives

for the co-tenrants to cut necessary capital expenditures with resultant higher

operation and maintenance expenses. Finally, the New York dissenters contended

that IROR was legally questionable on two issues. First, the IROR purposed to

bind future commissions that would determine the actual rate base of the

co-tenants when construction is completed and secondly, the incentives/-

disincentives depart from what has legally been considered in the past to be a

just and reasonable rate of return.

At present, whether New York's IROR has affected the quality of construction at Nine Mile Point No. 2 positively or negatively is not known. The New

Jersey decision is also too recent to have produced any discernable effect upon

construction quality at Hope Creek 1. Some have argued that IROR plans have

the potential to negatively affect construction quality because they place

special emphasis on time and costs rather than on quality considerations.

Others welcome the scrutiny such plans introduce to nuclear project construction costs. In any case, the adoption of such plans reflects a more proactive

PUC position than has been the case historically.

Other PUC Decisions on Nuclear Construction Costs. The Ohio and California PUCs also have recently taken action on the construction costs of nuclear

plants under their jurisdiction. In November, 1982, the Ohio PUC decided that

only 25% of construction costs associated with the Zimmer plant should be

included in the rate base under Ohio's CWIP allowance (State of Ohio 1982).

The plant was 75% complete when the order was issued and was expected to be in

service by 1975 at a cost of $235 million. The total cost is now expected to

be $1.7 billion and a start-up date is still uncertain.

During 1981, the Ohio commission continued to permit inclusion of Zimmer

in the rate 6ase despite an NRC report that a widespread breakdown in implementing the Zimmer QA program had occurred. The plant had been included based on

assurances that no more breakdowns would occur. In this proceeding, the owners

argued that because the plant was 75% complete, the plant should be included on

the basis of a state statute that allowed costs to be entered into the rate

base when the plant was at least 75% complete. The PUC, however, exercised its

discretion to include only 25% of the total cost associated with Zimmer in the

CWIP allowance because the plant would not be providing service as soon as was

expected in previous proceedings, wherein CWIP allowances were set at higher

levels (State of Ohio 1982). The commission denied a request by a consumer

group for a management audit of construction of Zimmer but did not bar the possibility of a future audit.

The California PUC recently allowed only a very limited rate increase for

the San Onofre 2 nuclear plant. The PUC is planning a lengthy investigation of

the reasonableness of construction costs. Unit 2 has been on-line for some

C .34
time and is running close to full capacity. A spokesman for the PUC stated,

"...for the time being rate increases related to plant costs will be limited to

match decreases in rates associated with fuel savings produced by the plant.

Rate increases for plant costs that are beyond fuel savings will be held in

abeyance pending review of the prudency of construction costs." The PUC will

also review San Onofre Unit 3, which is due on-line shortly. (Energy Daily

1983).

These developments reflect once again a new PUC position of active

involvement in investigating the prudence of management decisions made during

the construction of nuclear power plants. The effects that these and other PUC

decisions may have on the quality of projects currently under construction,

however, are unknown.

The Relationship of the NRC to State Regulation of Nuclear Construction

Projects. PUC positions on nuclear construction projects was examined partly

to determine the extent to which the NRC was sharing, or could expect to share,

responsibility for construction quality assurance with state regulators. Some

recent PUC action and subsequent, litigation in Florida may indicate the

limits/possibilities of shared federal/state regulatory action.

The case involved a forced outage at Florida Power Corporation's Crystal

River 3 plant. The issue was whether planning and supervision of a work activity involving the use of a test weight device was deficient. The PUC first

ruled that the planning and supervision of the project was inadequate and that

Florida Power Corporation must bear the responsibility for the replacement fuel

costs. The PUC found that 55 days of the forced outage were attributable

to a dropped test weight, which corresponded with replacement fuel costs of

$11,056,000, plus interest. Florida Power Corporation then appealed the

decision to the Florida Supreme Court.

The Supreme Court reversed the PUC's decision and remanded the case to the

PUC for reconsideration. The court stated that the PUC had relied excessively

on an NRC notice of violation and a Nuclear General Review Committee (NGRC)

report. The court reasoned that use of the documents was analogous to using

evidence of subsequent repairs and design modifications to show that the

original design was faulty. The court independently reviewed the record and

held that the test weight incident was not, per se, safety-related. The court

further ruled that the NRC and NGRC reports were issued after the incident, and

hindsight should not be the basis for the PUC's decision.

On remand, the PUC re-examined the entire record and decided that an independent basis for disallowing the costs did exist. The PUC ruled that they

could rely on the NRC and NGRC reports as secondary sources of information for

their conclusion. The PUC's review states that the basis for finding imprudent

management was that Florida Power Corporation lacked a formal plan or written

firm directives specifying procedure in this type of situation. Additionally,

supervision of the work activity was lacking by management. Therefore, whether

C.35
or not the work should have been considered."safety-related", the PUC ruled

that the work was not adequately planned or supervised (State of Florida Public

Service Commission 1983).

The PUC stated that the Florida Supreme-Court exceeded the normal scope of

review, that is, whether substantial evidence supported the PUC's finding.

Instead, the court found it necessary to reweigh the evidence and conclude that

both the PUC and the NRC were wrong that repair work was safety-related. In

its defense, the PUC cited other states that have disallowed costs that were

over and above the costs of efficient opemations. These states included

Arkansas, New York, Iowa, and Virginia. a) In addition to these states, Ohio

has also disallowed operating expenses. According to the Ohio PUC, several

million dollars of every rate increase is disallowed on the Davis Besse plant

because of its poor operating history.

The Florida litigation suggests that while PUCs may be willing to follow

the NRC's lead and undertake special scrutiny of a utility where the NRC has

found problems, state courts may not view such a relationship favorably. Thus,

while there may appear to be a basis for parallel or complementary actions on

the part of PUCs and the NRC with respect to the quality of nuclear plant construction projects, this may only develop to the extent that their respective

missions are viewed as complimentary.

Recent State PUC Actions--An Overview

PUCs, such as those in Ohio and Florida, have actively investigated the

prudence of management decisions. Ohio investigated a plant's management during the construction phase; and the Florida PUC investigated management

decisions during operation of the plant. Although only a few state PUCs have

disallowed costs incurred during construction, several other states have, or

are considering, disallowing imprudently incurred operating expenses.

Two states, New York and New Jersey, have adopted a wholesale approach to

reviewing construction costs. The IROR approach, which does not involve active

examination of individual construction management decisions, affords some protection to consumers from further rate increases. Both New York's and New Jersey's PUCs state that their approaches do not involve relinquishing the Commission's authority to review and disallow imprudently incurred construction costs

when the plant is completed (New Jersey Board of Public Utilities 1983; State

of New York 1982).

The judicial system has become more involved in examining PUC decisions to

disallow costs arising from imprudent management decisions. The Florida

Supreme Court, for example, is examining more carefully PUC decisions that may

result in disallowing costs. The court is looking at whether the experts'

data, i.e., the NRC notice of violations and the NGRC report, are sufficient

basis for a PUC ruling to deny recoupment of costs incurred by the utility. In

(a) Florida Power Corporation has appealed and this case is, again, before the

Florida Supreme Court.

C.36
one case, the Florida Supreme Court distinguished between the NRC's and the

PUCs' primary function. In the Court's view, the NRC's primary function

relates to safety. A PUC judgment on the prudence of management decisions must

rely on information directly related to such a decision. NRC safety violation

reports were not viewed as an appropriate basis for such a PUC decision.

C.5.2 Project Ownership Arrangements

The second institutional issue examined at the construction sites visited

was the project ownership arrangement. This issue was examined to determine

what impact the ownership arrangement had on theconstruction effort and, in

particular, what benefits certain ownership configurations might have for

assuring quality in construction projects.

Of the three nuclear projects visited, Site 1 is joint-venture owned and

financed primarily by a small private utility, with participation of a small,

rural electric cooperative. Site 2 is a joint venture involving five separate

utilities (four investor-owned and one public cooperative) in four states.

Site 3 is also a joint venture of four utilities (one investor-owned and three

public utilities). This project is dominated by the largest owner, the investor-owned utility, which owns more than 50% of the project. In addition, the

investor-owned utility at Site 3 is the subsidiary of a larger holding company,

introducing further ownership variety.

Because of the differences among the sites, the benefits of various project ownership arrangements could be examined from the point of view of those

interviewed. However, the effects of such arrangements on construction quality

could not be assessed objectively. Nevertheless, changes in ownership arrangements, particularly those resulting in enhanced coordination, have been generally regarded as positive developments for the nuclear industry [Jaskow and

MacAvoy 1975; International Energy Associates Limited (IEAL) 1979].

Because various ownership arrangements are used in the U.S. nuclear industry, the current arrangements and the statutory and regulatory parameters that

shape them were examined. This examination was aided by insights gained at the

sites visited.

Current Ownership Arrangements in the Nuclear Industry

The three basic types of electric utility ownership in the United States

are investor-owned, government-owned, and cooperative. Investor-owned

utilities comprise about 84% of the nation's generating capacity and annual

electric power production. Government-owned utilities comprise 13.6% of the .

U.S. generating capacity, of which municipalities are the most frequently

encountered public owners (IEAL 1979). Cooperatives generate comparatively

little of the nation's electric power(3%), and only one currently operates a

nuclear plant (Osborn et al. 1983). a) ,

(a) According to this study, several cooperatives own shares in investor-owned

nuclear projects. For example, approximately 40 cooperatives own shares

in the financially troubled, publicly owned Washington Public Power Supply

System nuclear projects.

C.37
Investor-owned utilities vary in size and are organized in several different ways. Some utilities are owned directly by shareholders and some are subsidiaries of holding companies. These holding company arrangements also differ. For example, some parent companies sell power to the public, while others

have, no such role (with the subsidiary utility handling the sale of power).

The largest nuclear generating system in the country, Commonwealth Edison, owns

7 units, comprising 10% of the nation's nuclear generating capacity. Of the 69

U.S. nuclear power plants operating in June 1979, 60 were investor-owned (IEAL

1979).

Within this environment that supports a variety of ownership arrangements,

utilities appear to have recognized the importance of coordinating the planning

and operation of generating facilities, as well as other facilities, to

achieve, for example, more rational investment planning and to minimize dislocations caused by power outages (Breyer and MacAvoy 1973). Observers of the

nuclear industry also have noted the potential advantages of increased coordination (IEAL 1979; Gilinsky 1983).

Reviews of relevant statutes and regulations, literature, and information

collected during the site visits suggest that coordination is not precluded by

existing legal, or economic considerations. Neither, however, are there clear

incentives (particularly within statutory and regulatory frameworks) for

increased coordination. Therefore, despite the possible advantages, increases

in coordination are not expected without a compelling impetus, such as might be

provided by new legislation. Whether such an impetus is appropriate, however,

remains something of an open question.

The Statutory and Regulatory Parameters of Project

Ownership Arrangements

Several state and federal laws and regulatory agencies affect the financial and/or ownership arrangements of utilities with nuclear generating projects. Most of the laws and the agencies charged with enforcing these laws are

concerned with utilities generally, although certain procedures for enforcing

antitrust laws are found in the Atomic Energy Act and are specifically related

to the licensing of nuclear power generating facilities.

The number and variety of existing ownership arrangements suggest that

these laws and regulations have not prevented formation of varied, viable

ownership arrangements for nuclear power plant construction. None of the construction sites visited mentioned the existence of these laws and regulations

as a significant obstacle to the project's success. Two sites visited (Sites 2

and 3) indicated that antitrust concerns had been a factor encouraging joint

project participation. Nevertheless, while the Federal Power Act provides the

Federal Energy Regulatory Commission (FERC) with authority to increase the

amount of coordination and efficiency in the industry, this authority has not

been broad enoughto force changes in project planning and management by individual utilities. Thus, while no insurmountable obstacles to coordination are

C.38
present, there are also no real incentives in the legal and regulatory system

for increased cooperation in project planning and management.

In some foreign countries, nuclear plant ownership and regulatory arrangements differ dramatically from those in the U.S. For example, France has standardized nuclear power plants and just one operating company (Gilinsky 1983).

Plants in the Japanese nuclear industry, also highly centralized, experience

fewer automatic scrams than do U.S. plants (Dircks 1983). Nevertheless, foreign practices are not detailed here because they involve major changes in

industry structure that are generally considered unlikely to be implemented in

the U.S. (IEAL 1979; Johnson et al. 1976; Osborn et al. 1983).

The Effect of Federal Antitrust Laws on Project Ownership Arrangements.

Through Section 105 of the Atomic Energy Act the NRC is charged with three

forms of responsibility for enforcing federal antitrust laws. a) The NRC must

enforce antitrust judgments reached elsewhere, report any apparent antitrust

law violations to the Attorney General, and follow the procedure outlined in

Section 105 of the Act to solicit the views of the Attorney General on possible

antitrust implications of a construction permit application.

The antitrust provisions of Section 105 have been cited as a source of

costly delay in the licensing of new nuclear power generating facilities (IEAL

1979). The vast majority of antitrust reviews under Section 105 have resulted

in agreements among the utility or utilities, the Department of Justice, and

the NRC. staff for resolving antitrust concerns, usually in the form of license

conditions (Johnson et al. 1976).

Historically, where the NRC's licensing reviews have involved antitrust

concerns, the issue has been access to the generating capacity of the plant,

rather than the procurement of the design, construction, or supply of components for nuclear plants. Thus, license conditions that have arisen because of

antitrust concerns have been grouped into the following four categories

(Johnson et al. 1976):

1. Unit Access - involves arrangements for outside utilities to use a nuclear

facility.

2. Transmission Services - involves agreements about services to be provided

by the applicant to facilitate access.

3. Coordination - involves requirements for such things as emergency and

scheduled maintenance support and participation in joint planning and,

development.

4. Contractual Provisions - involves requirements that the applicant delete

discriminatory or restrictive conditions from its contracts, including

restrictions on interconnections and coordination agreements, power pool

membership, and use or resale of power.

C .39
Johnson et al. (1976), authors of this categorization, suggest that if,

for example, breeder plants were to be clustered in "nuclear energy centers"

resulting in much greater generating capacity than the nuclear plants currently

being constructed, special antitrust problems could arise. However, they

further suggest that "licensing conditions could probably be worked out to

assure equitable access by smaller utilities" (Johnson et al. 1976, p. 51).

Nevertheless, Johnson et al. (1976) speculate that such a clustered development

might lead to a more complex and time-consuming antitrust review process than

that experienced today by utilities with single plant proposals. It seems

certain that antitrust laws would have to be addressed by any legislation or

initiative providing the impetus for increased coordination in the nuclear

industry.

The Effects of Other Federal Legislation. In addition to the NRC, the

Federal Energy Regulatory Commission (FERC) and the Securities and Exchange

Commission (SEC) play roles in regulating public utility ownership arrangements. The SEC enforces the Public Utility Holding Company Act of 1935. This

legislation led to the breakup of several corporate empires that held diverse

utility assets in widely separated states and that had been effectively outside

the control of state public utility commissions (Breyer and MacAvoy 1973).

It has been suggested that the Public Utility Holding Company Act and SEC

review have impeded mergers of public utilities through stock acquisition

(Breyer and MacAvoy 1973). However, the thrust of governmental policy appears

to be in favor of pooling among individual utilities, not mergers of utility

ownership (Breyer and MacAvoy). Furthermore, the Act specifically encourages

mergers within the utility industry which would rationalize the production and

generation of electricity (Breyer and MacAvoy 1973; 15 U.S.C. 79z-4).

The FERC, formerly the Federal Power Commission, is authorized by Title II

of the Federal Power Act (15 U.S.C. 791 et seq.) to "divide the country into

regional districts for the voluntary interconnection and coordination of facilities for the generation, transmission and sale of electric energy" [16 U.S.C.

824(a)]. Under its power to regulate interstate commerce, the FERC has asserted jurisdiction over nearly all U.S. generating and transmitting electric

facilities because of the existing degree of interconnection among facilities

(Breyer and MacAvoy 1973).

The immediate practical effect of such jurisdiction is that companies,

including those that are primarily engaged in intrastate commerce, must now

obtain FERC approval before entering into mergers and certain security transactions, submit information that the FERC requests, and subject interstate

wholesale electricity rates to supervision by the FERC (Breyer and MacAvoy

1973). Although the FERC has authority over almost all utilities, its efforts

have been to promote voluntary interconnection within the industry, rather than

to compel interconnection or to seek additional legislative authority for compulsory pooling, interconnection, and planning of future generating projects.

(a) The Sherman and Clayton antitrust laws are made specifically applicable to

licensees by Section 105, 42 U.S.C. §2135..

C .40
Site 3 is a project undertaken by a subsidiary of a large parent firm that

is registered as a holding company under the Public Utility Holding Company Act

of 1935. This site is an example of a utility and a parent firm that are subject to regulation by the SEC under the Act. Also, certain aspects of the

holding company and subsidiary's operation are subject to regulation by the

FERC under the Federal Power Act, as discussed above. The other sites visited

are similarly subject to FERC regulation. In addition, virtually all significant utilities 'in this country are subject to state regulation of wholesale or

retail rates charged for power.

Insights into Ownership and Management Arrangements: The Effects

of Size and Market Power

The construction project management arrangements as well as the utilities'

size and nuclear experience varied at the three sites (see Section C.4). Site

1 was being constructed by a relatively small utility and a rural electric

cooperative with no prior nuclear experience. Site 2 was being undertaken

jointly by several investor-owned and public utilities, also without prior

nuclear experience. Site 3 was also a joint project undertaken by several

small public utilities and the subsidiary of a large parent firm, registered as

a holding company under the Public Utilities Holding Company Act of 1935. This

subsidiary (and another subsidiary of the parent firm) had previous nuclear

experience.

The site visits suggested that these project ownership arrangements are

feasible. However, the sample of Sites was small and it is not practical to

draw conclusions concerning different ownership and management arrangements.

For example, comparisons among investor-owned, government-owned, and cooperative ownership arrangements cannot be made since the site visits were restricted to investor-owned utilities or dominated by such entities.

The site visits did suggest that the presence of the utility or its agent

in the marketplace can impact the project. The subsidiary utility acting as

the agent for the owners' group at Site 3, closely linked to a large holding

company, was in a position to effectively negotiate with contractors,

suppliers, and vendors for the goods and services necessary to a successful,

high-quality project. The advantage of this association with a major parent

company is, in the words of one utility executive, "all about tomorrow." The

holding company and the utility are not only contracting for a nuclear project

today, they will also be contracting for construction and maintenance projects

for years to come. Furthermore, the utility's position is supported by prior

experience in nuclear construction projects, providing familiarity with the

marketplace and increased knowledge and expertise that can benefit the

project. Procurement and contracting are thereby facilitated, as is the

expertise necessary to secure satisfactory performance on the procurements and

contracts.

The joint owners at Site 2, without prior nuclear experience, took a different approach to meet its goals in the marketplace. They established a major

A-E firm as their agent. The A-E, with its well-established systems for evaluating and auditing suppliers' and contractors' bids, products, and performance,

C.41
has its own considerable market presence. Although the owners lacked nuclear

experience, they did not suffer from unfamiliarity in the marketplace. Rather,

they used the A-E's experience to the benefit of their project.

Size also is an issue in determining the economic viability of a particular construction project. A small utility beginning a necessarily complex and

costly nuclear project can find that the costs and investment in the construction project far exceed the utility's net assets. For this reason, economic

decisions within holding company systems may be typically made by the holding

company, considering the overall system rather than the operation of the particular subsidiary involved in the project (Breyer and MacAvoy 1973; Osborn et

al. 1983).

One of the reasons that most nuclear generating capacity in the United

States is owned by investor-owned utilities may be that many investor-owned

utilities are larger than government-owned or cooperative companies. Therefore, the investor-owned utilities may have resources that other utility companies lack to invest in nuclear projects (Osborn et al. 1973). Joint ventures

and holding companies may also provide necessary support and back-up for

nuclear projects, as at Sites 2 and 3 (Osborn et al. 1973). Thus, pooling

resources may represent one vehicle for increasing coordination within the

industry and for enabling initiation and continuation of a nuclear project that

might otherwise be fiscally, if not managerially, impossible. However, for

managing the project a joint venture requires an effective arrangement that

avoids.the difficulties often linked to management by committee (Breyer and

MacAvoy 1973).

C.5.3 Institutional Issues--A Summary

Nuclear power plant construction projects are affected to some extent by

the larger institutional environments in which these projects and their owners

are regulated, financed, and compete. Two aspects of this institutional environment were examined at the sites visited: 1) state PUC policies toward

nuclear power construction efforts; and 2) various types of ownership arrangements of nuclear power plant construction projects.

The utilities visited indicated that possible PUC disallowance of construction costs associated with quality problems has not been a significant

consideration in utility decisionmaking. This attitude reflects the fact that

in the past PUCs have been relatively uncritical of new plant construction

costs proposed for inclusion in the rate base. However, recent activity by

certain PUCs, such as those of New York, Florida, and California, creates a

potential for a significant deterrent to a laissez-faire owner attitude toward

contractors of new generating facilities.

While this potential trend may or may not result in better utility management of quality-related construction problems at nuclear projects, such rate

scrutiny by PUCs can seriously affect the financial health of utilities, as is

true of rate regulation policies generally. The negative side of the trend

toward PUC disallowance of quality-related construction cost overruns, then, is

that it may increase the risk of undertaking and completing nuclear stations to

C.42
the point utilities may find otherwise justified power generating projects to.

be uneconomical. Thus, the impact of a more active PUC posture toward nuclear

construction efforts remains unclear. Further examination of state regulatory

policy on the quality of nuclear construction projects, and of the NRC's relationship to that policy, is needed.

On the second issue examined, nuclear generating facilities being built or

in operation in the United States today reflect a wide variety of plant ownership arrangements also found in the electric utility industry generally. Statutory and regulatory parameters shaping project ownership arrangements in the

U.S. include federal and state antitrust laws, the Federal Power Act, and the

Public Utility Holding Company Act. These parameters do not appear to have

prevented the development of a great variety of project ownership and management arrangements, nor are they likely to prevent further efforts at coordination in the industry. However, antitrust laws could delay formation of more

consolidated ownership arrangements in the U.S. Furthermore, positive regulatory incentives for further coordination or consolidation within the industry

appear to be lacking.

Increased coordination may be desirable in ownership arrangements. While

some individuals have reviewed utility ownership arrangements and project management issues (Breyer and MacAvoy 1973), careful empirical examination of many

aspects of utility and project ownership arrangements and their relationship to

project outcomes is lacking (Osborn et al. 1983). The limited site work undertaken here, when combined with additional site work at government-owned or

cooperative utility companies, or the study of different construction management arrangements (such as one undertaken by a single, large utility company),

could begin to identify some of the relative strengths and weaknesses of different types of ownership and management arrangements. Through such additional

study, it might also be possible to determine the appropriate vehicle for advocating increased coordination within the industry, assuming that additional

investigation offered further evidence of the merits of coordination.

C.6 REFERENCES

Atomic Energy Act. U.S. Code. Title 42, Section 2135.

Bauman, D. S., P. A. Morris and T. R. Rice. 1983. An Analysis of Power Plant

Construction Lead Times, Vol. 1: Analysis and Results. Prepared by Applied

Decision Analysis, Inc. for Electric Power Research Institute, Palo Alto,-

California.

Borcherding, J. D. and D. F. Garner. 1981. "Work Force Motivation and Productivity on Large Jobs." Journal of the Construction Division, Proceedings of

the American Society of Civil Engineers. 107(C03):443-453.

Breyer, S. and P. W. MacAvoy. 1973. "The Federal Power Commission and the

Coordination Problem in the Electrical Power Industry." 46 So. Cal. L. Rev.

661.

C.43
Cavanagh, J. B. 1974. "Risks and Remedies--The Nature and Extent of Liability." In Risks and Remedies in Government Contracting. Proceeding of a

Briefing Conference held in Los Angeles (American Bar Association).

Cibinic, J., Jr., and R. C. Nash, Jr. 1981. Cost Reimbursement Contracting.

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C .48
APPENDIX D

PROGRAMS OF OTHER AGENCIES, INDUSTRIES, AND FOREIGN COUNTRIES

FOR THE ASSURANCE OF QUALITY

PRINCIPAL CONTRIBUTORS

E. W.

M. G.

W. J.

Brach (a)

Patrick (b)

Apley (b)

P. L. Hendrickson (b)

J. F. Nesbitt (b)

B. W. Smith (b)

PREPARED BY

M. G. Patrick

March 1984

Prepared for

Division of Quality Assurance, Safeguards,

and Inspection Programs

Office of Inspection and Enforcement

U.S. Nuclear Regulatory Commission

Washington, D.C. 20555

Pacific Northwest Laboratory

Richland, Washington. 99352

(a) Nuclear Regulatory Commission

(b) Pacific Northwest Laboratory

EXECUTIVE SUMMARY

The purpose of the study addressed in this appendix is to assist in the

formulation of the long-term direction of NRC's assurance of quality (AOQ)

policies and programs. This study is consistent with the direction provided

the NRC by Congress in the FY 1982-83 Authorization Act (Public Law 97-415,

Section 13) to study alternatives for improving the quality assurance (QA) and

quality control (QC) in the design and construction of nuclear power plants.

This study has three objectives:

" conduct a review of the AOQ programs and practices of the U.S.

nuclear power industry; of selected private industries and associated

regulatory agencies; and a limited review of the foreign nuclear

power industry

" identify some AOQ program aspects and practices of these industries

applicable to improving the U.S. nuclear power industry

* determine where changes may be appropriate to improve the NRC AOQ

program requirements and practices.

In addition to the NRC program, the AOQ programs of five other U.S.

government agencies and of six foreign countries were studied. The following

domestic programs were examined:

" the Federal Aviation Administration (FAA) program as applied to the

manufacture of large commercial transport aircraft

" the Department of Energy (DOE) program as applied to a governmentowned nuclear reactor project, the Fast Flux Test Facility, and a

nuclear project for enrichment of uranium, the Gas Centrifuge Enrichment Program

" the National Aeronautics and Space Administration (NASA) program as

applied to the aerospace industry

" the U.S. Navy (USN) program for shipbuilding under the Department of

Defense

" the Maritime Administration (MarAd) program for commercial shipbuilding under the Department of Transportation.

The foreign nuclear programs examined were those in Canada, the Federal

Republic of Germany, France, Japan, Sweden, and the United Kingdom.

The study was conducted by reviewing published information on each of the

programs selected for study and supplementing this review with information

obtained from interviews with representatives of the FAA, the DOE and the NRC,

both at Headquarters and at selected regional offices. Limited interviews were

iii
also conducted with the NASA Washington, D.C., staff. Published information

and interviews with those in the private sector organizations corresponding

with these government agencies were also utilized.

One of the principal investigators in this study also participated in the

case studies effort relative to the nuclear power plants; therefore, information obtained from the case studies was also utilized in this study.

The reviews of the foreign nuclear programs were based almost entirely on

publicly available information. Subcontractors with experience in the countries of interest conducted these reviews. There were also limited contacts

with foreign nationals in developing the necessary information.

The studies of the shipbuilding programs in the United States, both Naval

and commercial, were conducted entirely through reviews of publicly- available

documents.

Several findings from this study are considered worthy of more in-depth

study leading to their potential adoption in the NRC's assurance of quality

program. These are the following:

" The NRC should consider requiring that plant designs be well advanced

prior to initiating construction activities. Design requirements

should include the completion of safety, reliability, and availability analyses including failure mode and effect analyses, and

fault-tree and hazard analyses. The analyses should be integrated

with quality assurance and should be completed prior to the

initiation of construction. This recommendation is based upon

findings from the DOE, NASA, FAA, foreign nuclear, and shipbuilding

programs.

" The NRC should consider requiring establishment of a QA system that

prioritizes quality efforts. Systems and components should be

assigned to the various priority grades on the basis of the safety,

reliability and availability analyses. This recommendation is based

upon findings from the DOE, NASA, and shipbuilding programs.

" The NRC program should require "readiness reviews" during nuclear

power plant construction. These reviews might involve plant designers, construction managers, owner-operators, and (possibly) NRC staff

and should be required at key points in the project beginning with

"design ready for construction." It may be useful to have additional

reviews at selected key milestone points. This recommendation is

based upon findings from the DOE, NASA, and shipbuilding programs.

" The NRC should study ways to better integrate NRC inspection functions with system design reviews, test program reviews, and test program evaluations. This recommendation is based upon findings from

the USN, FAA, DOE, and NASA programs.

iv
" Consideration should be given to expanding the NRC's vendor inspection program. The licensee should continue to be held fully responsible for vendor-supplied items. Necessary enforcement actions relevant to vendors could be applied to the licensee. The NRC should

consider supporting, perhaps through the Institute of Nuclear Power

Operations (INPO), continued development of a data bank on performance of and problems with vendor-supplied components. These data

should lbe analyzed and the results published periodically. This

recommendation is based upon findings from the NRC, FAA, and USN

programs.

" The NRC should expand its inspector training program to increase

emphasis on "how to inspect." Such a program should concentrate on

such areas as conducting inspections, use of time, and interpersonal

skills and should include specific guidance on identifying possible

indicators of developing problems. This recommendation is based upon

findings from the USN program.

* The NRC should consider requiring inspections of nuclear power plants

by independent inspecting agencies. This recommendation is based

upon findings from the foreign nuclear programs.

" The NRC should re-examine its posture on quality assurance to emphasize to the licensees that quality and the assurance of quality are

responsibilities of overall management rather than responsibilities

of the QA/QC organizations. This recommendation is based upon findings from the DOE program.

V

ACKNOWLEDGMENTS

The authors wish to express their sincere appreciation to the following individuals and organizations for their help in this study:

" The staffs of NUS, Inc., Gaithersburg, Maryland, and Battelle Institute e.V., Frankfurt, Germany, for their studies of the nuclear programs in foreign countries, and to N. C. Kist and Associates for

specific information on the programs in Japan and Sweden.

" The staff of Comex, Inc. for drawing upon its extensive U.S. Navy

experience in assisting in the efforts to characterize the shipbuilding programs.

" The staffs of the Federal Aviation Administration (Washington, D.C.

and Seattle, Washington); the Department of Energy (Germantown, Maryland; Oak Ridge, Tennessee; Portsmouth, Ohio and Richland, Washington); the Nuclear Regulatory Commission (Bethesda, Maryland, Atlanta,

Georgia, Arlington, Texas and Walnut Creek, California); the Boeing

Co. (Seattle, Washington); Systems Development Co. (Oak Ridge, Tennessee and Portsmouth, Ohio); Stone and Webster, Inc. (Portsmouth,

Ohio); Union Carbide Co. (Oak Ridge, Tennessee); and Westinghouse

Hanford Co. (Richland, Washington) for their courteous and extreme

cooperation in sharing information about their respective programs.

vii

CONTENTS

EXECUTIVE SUMMARY ................ . . . .. . . . . .. . . . . . . . . iii

ACKNOWLEDGMENTS ......................................................... vii

APPENDIX D: PROGRAMS OF OTHER AGENCIES, INDUSTRIES, AND FOREIGN

COUNTRIES FOR THE ASSURANCE OF QUALITY ...................... D.1

D .1 1NTROD UC TIO0N .. o.. .. .. .. .. .... *o*6oo . . . .66o . . 4eeooo . . . . . . . ..... D. 1

D.1.1 Background ............................... ... ... ....... D.1

D.1.2 Purpose and Objectives .... o ......... o ...... .. ..... D.1

D.1.3 Technical Approach................................. .... D.2

D.2 CONCLUSIONS AND FINDINGS................................ . D.4

D.2.1 Design ........... o......o..................... ....... 0.... D.5

D.2.2 Assurance of Quality Programs .......................... D.5

D.2.3 Program Reviews........................................ D.6

D.2.4 Vendors . . . . . o.. .. .. .o . ... . .o o.. . .. D.6

D.2.5 Inspection Programs ........ o ..... ............. ....... D.6

D.2.6 Other..... ...... Do7

D.3 SIGNIFICANT FINDINGS FROM EACH PROGRAM .................. o....... D.7

D.3.1 FAA Program. ......... ............. *........... ....... D.7

D.3.2 DOE Program ... .................. ........... . ......... D.8

D.3.3 NASA Program .................................. ......... D.9

D.3.4 Shipbuilding Program................................... D.9

D.3.5 NRC Program... ..... . 0...................... D.IO

D.3.6 Nuclear Regulatory Programs in Other Countries ........ D.11

Canada.. oo ... ....... ................... ...... ............. 0.11

Federal Republic of Germany .............................. D.11

France ........................ o........o....o......o......... 0.12

ix
Japan .................................................... D.12

Sweden .................................................... D.13

Un itted Ki ngd om ........................ D0.13

D.4 SUMMARY OF ASSURANCE OF QUALITY (AOQ) PROGRAMS ................ D.14

D.4.1 FAA Assurance of Quality (AOQ) Program ................. D.14

D.4.2 DOE Assurance of Quality (AOQ) Program ................ D.21

Fast Flux Test Facility .................................. D.22

Gas Centrifuge Enrichment Program ........................ D.29

D.4.3 NASA Assurance of Quality (AOQ) Program ................ D.35.

D.4.4 U.S. SHipbuilding Assurance of Quality (AOQ) Programs.. D.44

U.S. Naval Shipbuilding AOQ Program ...................... D.45

U.S. Commercial Shipbuilding AOQ Program.....*............ D.54

D.4.5 NRC Assurance of Quality (AOQ) Program ................. 0.59

D.4.6 Foreign Nuclear Assurance of Quality (AOQ) Programs .... D.66

Can a da ... . , .. . .. . . . . . . . . . . . . . . . . . . .6 7

Federal Republic of Germany .............................. D.70

France ................................................... 0.73

Japan ...... o............................................ ,. D.78

Sweden ................................................... D.82

United Kingdom .......................................... . D.87 -

D.5 REFERENCES . . . . . . . . . . . . . . . . . . . . . . ..... D .94

X
TABLES

D.1 Descriptions of Quality Assurance Functions ....................... D.20

D.2 Definition of FFTF QA Classifications .............................. D.26

FIGURES

D.1 Organizational Tiers in Nuclear Field Programs ..................... D.23

D.2 Quality Assurance Elements ........................................ D.32

D.3 Regulations for the Assurance of Quality Program for the

U.S. Naval Ship Construction Program ............... D.47

D.4 U.S. Nuclear Regulatory Commission................................ D.63

xi

APPENDIX D

PROGRAMS OF OTHER AGENCIES, INDUSTRIES, AND FOREIGN COUNTRIES

FOR THE ASSURANCE OF QUALITY

D.1 INTRODUCTION

This appendix reports the results of a study of the assurance of quality

(AOQ) programs of five other U.S. government agencies and of NRC counterparts

in six foreign countries. Section D.1 presents introductory material on the

study's background, purpose and objectives, and technical approach. Conclusions and findings are presented in Section D.2. Section D.3 gives the significant findings from each program, and Section D.4 summarizes the studies of

the domestic and foreign programs. References are provided in Section 0.5.

Appendix D contains two similar terms, "Assurance of Quality" (AOQ) and

"Quality Assurance" (QA). The term "Quality Assurance" has been commonly used

in recent years to connote a rather specific, single element in an overall

management and/or regulatory process to provide both requisite quality and the

assurance that it has been attained. Since this appendix addresses both the QA

element and other related elements of these processes, the term "Assurance of

Quality" has been used to distinguish between the overall process and the

narrower, more specific part represented by "Quality Assurance."

D.1.1 Background

The complexity and extent of problems that have been identified in the

past few years at some of the commercial nuclear power plants under construction in the U.S. have caused concern regarding the quality of the design and

construction of these plants. Analyses of the experience at problem sites have

identified three primary problem areas: 1) failure of the project management

team to provide adequate management controls to prevent a significant breakdown

in quality from occurring; 2) failure of the owners' quality assurance program

to detect the breakdown in a timely manner and to obtain the appropriate corrective action; and 3) failure of the NRC's programs to recognize the true

extent and nature of the problems (Dircks 1982).

In response to these problems, the NRC developed several initiatives aimed

at bringing about effective improvements in the programs to assure quality. As

a part of this overall effort, the NRC initiated a long-term review for continuing evaluation of quality and QA problems related to design, construction,

testing and operation of nuclear power plants. Also included in this. review is

the evaluation of potential solutions to these problems and their impact on the

adequacy of QA policies and programs.

D.I.2 Purpose and Objectives

The purpose of the study addressed in this appendix is to assist in the

forumulation of the long-term direction of NRC AOQ policies and programs. This

study is consistent with the direction provided the NRC by Congress in the

D.1
FY 1982-83 Authorization Act (Public Law 97-415, Section 13) to study alternatives for improving the quality assurance and quality control in the design

and construction of nuclear power plants.

This study has three objectives:

" conduct a review of the AOQ programs and practices of the U.S.

nuclear power industry; of selected private industries and associated

regulatory agencies; and a limited review of the foreign nuclear

power industry

" identify some AOQ program aspects and practices of these industries

applicable to improving the U.S. nuclear power industry.

" determine where changes may be appropriate to improve the NRC AOQ

program requirements and practices.

The scope of this study is limited to design-, construction- or fabrication-related activities of the industries and programs selected for review.

Follow-on operational activities were not studied.

D.1.3 Technical Approach

At the initiation of this effort, an assessment plan was prepared to provide guidance in carrying out this study. This plan estatlished a methodology

for selecting industries to be studied, the content of the various reviews, and

the format of the final report.

An important element of this study is the selection of the industries and

programs to be examined. One organizational category of interest is nuclear

endeavors that are not under NRC jurisdiction. This category includes the

Department of Energy (DOE), the U.S. Navy (USN), and nuclear programs in foreign countries. A second organizational category of interest is nonnuclear

endeavors that involve highly complex technology that requires high-quality

standards in design and manufacture and that strives for low probability of

failure because the consequences of failure may be substantial. This category

,includes aircraft manufacturing regulated by the Federal Aviation Administration (FAA), shipbuilding under both the USN and the Maritime Administration

(MarAd), and spacecraft under the National Aeronautics and Space Administration

(NASA).

Included in these categories are two subcategories. One is represented by

situations where a government agency is the owner and/or operator of products

or facilities generally produced by the private sector under contract to the

government. These include the DOE, NASA, and the USN part of the shipbuilding

industry. The second subcategory is characterized by those instances of private sector endeavors being regulated by a government agency. Aircraft manufacturing and commercial shipbuilding are examples of this subcategory. Foreign nuclear programs reviewed include both government and private ownership

and operation of nuclear power plants.

D.2
The following domestic programs were studied:

" the Federal Aviation Administration (FAA) program as applied to the manufacture of large commercial transport aircraft

" the Department of Energy (DOE) program as applied to a government-owned

nuclear reactor project, the Fast Flux Test Facility, and a nuclear project for enrichment of uranium, the Gas Centrifuge Enrichment Program

" the National Aeronautics and Space Administration (NASA) program as

applied to the aerospace industry

" the U.S. Navy (USN) program for shipbuilding under the Department of

Defense

" the Maritime Administration (MarAd) program for commercial shipbuilding

under the Department of Transportation.

The programs have been studied to the extent that each can be characterized with respect to its AOQ features and activities and to identify specific

elements that may have potential application to the NRC program. Each program

was studied in sufficient depth to gain a good understanding of the total program to adequately analyze those particular features deemed pertinent to the

NRC program. No attempt was made to evaluate the effectiveness of these outside programs.

Each program was studied by reviewing the publicly available information

describing the program, including legislation, regulations, guides and miscellaneous instructions. The literature review was supplemented by interviews

with representatives from the government agencies and by interviews with pertinent private sector representatives involved in the DOE, FAA and NRC endeavors.

There were also limited contacts with NASA representatives. The'characterizations of the USN, MarAd, and foreign nuclear programs are based entirely upon

literature reviews, except for limited discussions between subcontractors and a

few people in the foreign countries. In the case of the USN and MarAd programs, an experienced, expert consultant assisted in developing the program

characterizations.

The studies of the foreign nuclear regulatory programs were conducted

primarily by subcontractors selected on the basis of their already existing

knowledge of the programs, their geographical locations, and their ability to

overcome language differences. The programs in West Germany, France and Sweden

were studied by Battelle Institute e.V. located in Frankfurt, Germany. The

programs in the United Kingdom, Japan and Canada were investigated by the NUS

Corporation, including their Japanese subsidiary, JANUS. Assistance in studying the programs in Sweden and Japan was provided by N. C. Kist and Associates.

The reviews of the foreign nuclear programs were based almost entirely

upon publicly available information. These reviews were supplemented with subcontractor knowledge of these programs. Because the information obtained in

D.3
this way is limited, it may be desirable that some of the foreign nuclear programs be selected for a more in-depth study-*at a later date.

It was also important to characterize the NRC program for assuring quality

in design and construction of nuclear power plants, in order to properly consider adopting features from other programs. The abundant literature available

on the NRC program was reviewed and supplemented with interviews of officials

in the NRC's Inspection and Enforcement Office and with interviews of staf~f in

regional offices for Regions 2, 4 and 5.

D.2 CONCLUSIONS AND FINDINGS

There are several significant differences among the programs, investigated

in this study:

" the 'nature and extent of the interfaces between the government sector

and the private sector differ

* the incentive systems for achieving quality vary

" in some cases, the major thrust for quality needs arises from safety

considerations; in others, from a need for reliable performance; however, safety and reliability are frequently closely intermixed.

Each of the programs reviewed in this appendix operates within its own "cultural ambience" and such differences profoundly affect the resulting program

for assuring quality. This is particularly evident in the foreign nuclear

programs.

In spite of such differences, there are also identifiable areas of conmmonality. One example is that all of the programs studied are quite dynamic.

Although each of the programs has experienced its own evolutionary process and

some are much older than others, changes aimed at improving the effectiveness

of the QA programs are ongoing.

One of the observations from this study is that the FAA, NASA, USN, and

MarAd shipbuilding regulatory programs are directed towards industries that

have evolved as specific entities. These are, respectively, the aircraft manufacturing industry, the aerospace industry, and the shipbuilding industry.

Each of these industrial sectors obtains equipment, materials and services from

other industrial sectors. Design and fabrication are normally performed by

industrial sectors that have evolved generally in parallel with the corresponding regulatory programs. In contrast, the NRC program is directed towards

regulating the "nuclear industry," which has never evolved as a specific industrial entity in the traditional sense. The design and construction of nuclear

power plants is accomplished as an offshoot activity from several traditionally

established industries, each with its own historical methods of doing business. These are the electric *al utilities, the architect-engineers, the major

power plant equipment suppliers, and the construction industry. Implementing

the NRC program in these industries has required major changes in traditional

0.4
practices. Furthermore, the NRC program is directly applied to eacn utility

that chooses to build a nuclear power plant with the stipulation that the

requirements be passed on to others.

One consequence of the complex institutional arrangement for building

nuclear power plants has been that major changes in long-established ways of

doing business have been imposed across a large number of business-management

interfaces. It is beyond the scope of this study to pursue such a complex

issue to the point of developing recommendations; however, it is reported here

as an issue that emerged from the study of other programs and is deserving of

further study.

Although significant differences exist between the NRC's AOQ program and

the other programs reviewed, some elements of the other programs may be applicable to the NRC program.

The major findings discussed in this appendix were derived from studies of

the various individual programs. It must be emphasized that these studies were

limited in scope to general concepts. Therefore, these findings should be

viewed as features worthy of consideration by the NRC for its assurance of

quality program rather than as features that should be immediately adopted.

In formulating these findings, consideration was given to the institutional differences that exist between the NRC and between the outside programs

reviewed. For example, the relationship between the government and the private

sector is of a regulatory nature in some cases (FAA, NRC, MarAd) and a contractual nature in others (DOE, NASA, USN). Other intrinsic aspects of the

programs studied include cultural differences, as observed in the foreign

nuclear programs, and a national commitment to developing the product, as

observed in the USN shipbuilding, NASA, and foreign nuclear programs.

Findings are categorized below by Design, Assurance of Quality Programs,

Program Reviews, Vendors, Inspection Programs and Craftsmanship.

D.2.1 Design

The NRC should consider requiring that plant designs be well advanced

prior to initiating construction activities. Design requirements should

include the completion of safety, reliability, and availability analyses

including failure mode and effect analyses, and fault-tree and hazard analyses. The analyses should be integrated with QA and should be completed prior

to the initiation of construction. This recommendation is based upon findings

from the DOE, NASA, FAA, foreign nuclear, and shipbuilding programs.

D.2.2 Assurance of Quality Programs

The NRC should consider establishing a QA system that prioritizes levels

of quality efforts. Systems and components should be assigned to the various

D.5
priority grades on the basis of the safety, reliability and availability analyses discussed under "Design" above. This recommendation is based upon findings

from the DOE, NASA, and shipbuilding programs.

D.2.3 Program Reviews

The NRC should consider adopting the following three recommendations,

which relate to program reviews:

1. The NRC program should require "readiness reviews" during nuclear

power plant construction. These reviews might involve plant

designers, construction managers, owner-operators, and (possibly) NRC

staff and should be required at key points in the project beginning

with "design ready for construction." It may be useful to have additional reviews at selected key milestone points. This recommendation

is based upon findings from the DOE, NASA, and shipbuilding programs.

2. The NRC should study ways to better integrate NRC inspection functions with system design reviews, test program reviews and test program evaluations. This recommendation is based upon findings from

the USN, FAA, DOE, and NASA programs.

D.2.4 Vendors

Consideration should be given to expanding the NRC's vendor inspection

program. The licensee should continue to be held fully responsible for vendorsupplied items. Necessary enforcement actions relevant to vendors could be

applied to the licensee. The NRC should consider supporting, perhaps through

the Institute of Nuclear Power Operat'ions (INPO), continued development of a

data bank on performance of and problems with vendor-supplied components.

These data should be analyzed and the results published periodically. This

recommendation is based upon findings from the FAA, USN, and foreign nuclear

programs.

D.2.5 Inspection Programs

The NRC should consider adopting the following inspection-related points:

1. The NRC should expand its inspector training program to increase the

emphasis on "how to inspect." Such a program should concentrate on

such areas as conducting inspections, use of time, and interpersonal

skills and should include specific guidance on identifying possible

indicators of developing problems. This recommendation is based upon

findings from the USN program.

2. The NRC should consider requiring inspections of nuclear power plants

by independent inspecting agencies. This recommendation is based

upon findings from the foreign nuclear programs.

D.6
D.2.6 Other

The NRC should re-examine its posture on assurance of quality to emphasize

to the licensees that quality and the assurance of quality are responsibilities

of overall management rather than responsibilities of the QA/QC organizations. This recommendation is based upon findings from the DOE program.

D.3 SIGNIFICANT FINDINGS FROM EACH PROGRAM

The intent of this study was not to evaluate the other programs studied

but, rather, to focus on identifying features with potential for improving the

NRC program. In general, these were features that were viewed as positive

factors in their respective programs by the administrators of those programs.

This section discusses the significant findings from each of the programs to

provide a basis for the major findings presented in Section D.2.

D.3.1 FAA Program

The portion of the FAA program that was reviewed is that relating directly

to the design and manufacture of large, commercial transport aircraft.

The following five items are considered to be significant findings from this

program relative to the NRC program.

1. The FAA closely reviews and monitors all of the design, fabrication

and flight testing of prototype airplanes. This involvement includes

flight tests by FAA pilots. It is only after these flight tests of

prototypes that the first FAA certificate, Type Certificate, is

issued for a new aircraft model. Both designated engineering, representatives and designated manufacturing and inspection representatives are utilized extensively throughout this process to supplement

the FAA's resources. These representatives are industry employees,

individually certified by the FAA to conduct certain review and

inspection activities on behalf of the government. This practice

reflects the very substantial FAA effort in this phase of producing a

new airplane.

2. The FAA reviews and approves all of the manufacturer's QA/QC, work

performance, and testing procedures prior to issuing a Production

Certificate. This permits the manufacturer to produce replicated

aircraft following the FAA issuance of a Type Certificate for that

model.

3. The aircraft manufacturer is held responsible for safety and quality

but the FAA accepts some responsibility for the certification program

being properly conducted.

4. The FAA issues certificates to vendors supplying parts for airplanes

but holds the prime manufacturer responsible during the manufacturing

process, including enforcement actions being applied to the prime

D.7
manufacturer rather than to the vendor. After airplanes are in service, the vendor certification program is of greater significance and

the FAA interfaces more directly with the vendors. When supplied

parts cannot be fully inspected after delivery, more attention is

devoted to the vendor's plant.

5. Although it is not required by the FAA, aircraft industry practice

requires that mechanics sign off completed work prior to QC inspection. Some items are also signed off as acceptable by FAA inspectors

or the designated representatives.

D.3.2 DOE Program

Two DOE projects were studied. One is the Fast Flux Test Facility (FFTF)

at Hanford, Washington. Operated under the control of the Richland Operations

Office of DOE, the FFTF was constructed in the 1970s. The basic element of

this facility is a fast reactor that achieved operational testing in 1980. The

other project is the Gas Centrifuge Enrichment Program (GCEP), which is currently under construction near Portsmouth, Ohio, under control of the Oak Ridge

Operations Office. The significant findings from these projects are as

follows.

1. Both projects used a prioritized quality assurance program. At the

FFTF three and later four levels of quality assurance were established. At GCEP two basic classifications used are "routine"' and

"special." A relatively standard QA program is applied to routine

items and specific quality assurance action plans are prepared for

special items which may incorporate additional variations, depending

upon the established degree of importance.

2. Thorough design reviews were conducted on both projects. In both

cases steps were taken to assure that all potentially impacted interests were represented in the design review process.

3. At GCEP the QA efforts are combined with a specific systems engineering effort early in the design process. This includes the use of

failure and effects modes analyses and reliability, availability, and

maintainability analyses. The developed listings of critical items

from these analyses provide a basis for determining the extent of the

graded QA/QC to be applied.

4. Both projects have used a form of "readiness reviews" prior to initiating the next or new project phases or activities. In both projects, care has been taken to include the plant owner, engineering

design, construction management, and operations interests in these

reviews.

5. Both projects have emphasized that quality is a line management

responsibility rather than the responsibility of the quality assurance organization. In other words, there has been a major effort to

integrate quality assurance into the overall management process of

both projects.

D.8
D.3.3 NASA Program

To date the study of the NASA program has been primarily limited to a

review of the available literature. Based upon this limited review, however,

the following findings have been identified as significant.

1. NASA applies an extensive" "systems approach" to safety and reliability considerations. This incorporates, for example, risk-offailure analysis, failure modes and effects analysis, single-failurepoint analysis, criticality analysis and hazards analysis, using

systems engineering techniques to identify the critical items for

application of more stringent QA/QC controls. This systems approach

is initiated early in the design phase and is ongoing throughout a

project.

2. NASA requires that detailed designs be essentially completed prior to

starting fabrication.

3. NASA's contractors are required to establish appropriate QA/QC programs and these programs are closely monitored by NASA.

4. NASA uses detailed, in-depth readiness reviews at predetermined

stages of the project. Among other things, these reviews verify that

any and all changes and discrepancies have been properly addressed

and dealt with.

D.3.4 Shipbuilding Program

The study of the shipbuilding industries was based entirely upon review of

publicly available information. The USN programs studied involved the design

and construction of both nuclear and nonnuclear ships. In this instance, the

USN is the owner, the operator, and the regulator.

In the case of the MarAd programs, the ships are designed, built and operated by private organizations. However, there is extensive financial participation by the federal government in constructing these ships. Consequently, a

single government agency, the Department of Transportation, simultaneously

promotes and regulates the design and construction of the vessels. The significant findings from both the shipbuilding programs are as follows.

1. A close and cooperative relationship has developed, apparently successfully, between the builders, buyers, regulators and standardssetting organizations.

2. In both the USN and the MarAd programs, the fabricating contractor is

held responsible for the assurance of quality, with a significant

inspection overview effort by USN inspectors for Naval vessels, and

by U.S. Coast Guard inspectors for Maritime ships.

3. Designs for ships are reviewed and approved by the responsible federal agency before construction begins. For the-Maritime ships,

D.A
design reviews by the American Bureau of Shipping may be accepted or

supplemented by U.S. Coast Guard reviews.

4. Design and fabrication is performed by a relatively small number of

shipyards with a work force considerably more stable than in the

general construction industries.

5. The standardization of ship design is a major policy of the Maritime

industry and the USN.

6. The USN uses a graded QA system to identify critical equipment, systems and/or material.

7. The USN provides specific guidance for its personnel and its contractors to prevent or detect deliberate malpractice and fraud.

8. The USN has developed a data bank for analyzing the performance of

vendor-supplied components.

.3.5 NRC Program

The NRC program for assuring quality in the design and construction

of nuclear power plants was not studied in great depth. The objective was

to investigate the NRC program sufficiently to have a good understanding

of the program as a basis for considering specific features identified in

the other programs. This understanding is important in determining those

features that deserve further investigation for potential adoption by the

NRC. This less-than-in-depth study did, however, identify the following

findings considered to be significant when considering the applicability

of findings from the other programs to the NRC program.

1. The NRC holds the licensee (the utility) totally responsible for

quality and safety in the design and construction of nuclear power

plants.

2. The "nuclear industry" does not exist in the United States as a specific entity in the traditional sense. Therefore, the regulation of

this industry has been more difficult because it has required bringing about significant major changes in traditional methods and practices of several industries that continued to perform other types of

work. These include the utilities, the architect-engineers, the

equipment suppliers, and the constructors. The regulatory process is

therefore applied to offshoots of several established industries by

focusing on one of them (the utilities) and requiring that the regulations be passed on to the others (i.e., the vendors, contractors

and suppliers).

D.1O
D.3.6 Nuclear Regulatory Programs in Other Countries

This section identifies the findings considered significant from the

studies of the AOQ programs for building nuclear power plants in six other

countries. These findings are identified below by the country of interest.

Canada

The significant findings of a study of the AOQ regulatory program in

Canada are as follows.

1. A graded approach is used with five levels. The level is determined

based upon an evaluation of six factors (design complexity, design

maturity, manufacturing complexity, item or service characteristics,

safety, and economics).

2. The regulatory process is a joint effort between national and provincial governments which relies on technical expertise of the utility,

except for critical pressure components.

3. The emphasis in design and construction is in establishing quality

engineering rather than documentation of existing practices. The

term "quality engineering" refers to the management decision process

which ensures that all parties involved communicate with each other

and clearly understand requirements and objectives throughout the

design and construction process.-

4. Suppliers are qualified by the utility before a contract award, and

the Canadian Standard Association has initiated a qualification program.

Federal Republic of Germany

The significant findings from a study of the assurance of quality

regulatory program in West Germany are as follows:

1. The regulatory process, including the setting of rules, is conducted

in more of a collaborative mode than an adversarial mode between

government and industry.

2. The utilities in West Germany contract with a single organization for

the total design and construction of a nuclear power plant on a turnkey basis. The contractor therefore bears full vendor's liability.

3. The onsite inspection functions to assure compliance with regulatory

requirements are performed by independent, not-for-profit organizations, Technische Uberwachungs-Vereine (TUVs). These are organizations which have a long history of providing inspection services in a

number of-business and industrial areas, and they are accepted as

highly competent and trustworthy.

D.11
4. The control measures and inspections are predominantly hardware- or

product-oriented. "Supplier Certificates" and "N" stamps are not

used, but the suppliers of equipment and plants must show to the

inspection authority's satisfaction that standards are met.

5. In addition to a safety report, the applicant for a license (the,

utility) must provide "factual statements enabling the examination of

the reliability and expert knowledge of the persons responsible for

the erection of the installation and the management and control of

its operation as well as factual statements enabling the examination

of the requisite-knowledge of all persons working on the installation." (From the License Procedure Ordinance, "AVerfVO.")

France

The signifcant findings from the study of the assurance of quality regulatory program in France are as follows:

1. The light water reactor power plants in France are designed and constructed under a turnkey arrangement with Framatome, a governmentowned corporation that designs the plants, manages the construction

and provides the nuclear steam supply system for the utility, which

is also government-owned.

2. A series of three standardized nuclear power plant designs have been

licensed. Additional licensing considerations for each plant are

restricted to consideration of siting issues.

3. The onsite inspection activities on behalf of the government are by

private individuals or small associations. These inspectors have not

only been qualified by the government and certified, but individually

take an oath of office and therefore function as government deputies.

4. The single utility, which operates all of the light water reactor

plants, has developed a sophisticated information system to gather

data on operating experience. These data are used as a basis for

improvements in plant designs and components.

Japan

The significant findings from the study of the assurance of quality regulatory program in Japan are as follows:

1. The government agency, Ministry of International Trade and Industry (MITI),

and licensees have a mutual trust and cooperation based upon a stated common

goal of safe operations. MITI has also licensed an independent nonprofit

organization, the Japan Power Plant Inspection Institute (JPPII), which is

D.12
funded by users to perform inspections of welds and hardware. When JPPII

performs an inspection, no additional inspection is performed by MITI.

MITI inspections are primarily programmnatic.

2. The QA practices emphasize the inspections and records rather than

the system. Certain inspections are required by law.

3. The current system does not include regulatory criteria for QA, but

the Japan Electric Association has published QA guidelines. MITI

established a QA Investigation Committee in 1980, which recommended a

QA program similar to those in the U.S. (10 CFR 50 Appendix B) and

Europe.

4. ASME Stamp Accreditation has been used in Japan since 1973. MITI

established a Committee for Nuclear Accreditation under the JPPII

which is an agency authorized to inspect nuclear power plant components

on behalf of MITI. The Committee has discussed the introduction of

an accreditation system similar to ASME "N" stamps and establishment

of a third-party agency to conduct surveys and audits.

Sweden

The significant findings from the study of the assurance of quality regulatory program in Sweden are as follows:

1. The program for constructing nuclear power plants in Sweden has taken

advantage of replicated basic designs.

2. The government regulatory agencies have relatively sm 'all staffs and

,rely heavily upon reviews and inspections performed by a nonprofit,

government-owned, third-party organization. This organization

reviews designs, inspection plans and work procedures, and inspects

hardware.

3. A "hold point" system is utilized by the independent inspection

agency at specific points in the construction program. The third

party must approve designs, inspection plans and work plans and procedures before construction is allowed to proceed with specific

activities.

United Kingdom

The significant findings of a study of the assurance of quality regulatory

program in the United Kingdom are as follows:

1.. A "hierarchical system" is used in which the extent of responsibility

and authority, and the lines of communication, are clearly defined

starting from the licensee through the main contractor and finally to

the smallest supplier. Although any higher-order organization may

D. 13
audit QA/QC practices of any lower organization, an organization is only

accountable to the organization immediately above it in the hierarchy.

2. The site license is granted only after design intent and safety principles and the construction design description are judged sufficiently complete that construction can proceed with small risk of

significant changes being subsequently required for safety reasons.

3. QA/QC procedures approval by the Nuclear Installations Inspectorate

(Nil) is a license condition.

4. Inspection and testing of major items may be carried out by the

licensee's own inspection organization or by recognized independent

inspecting agencies, but the arrangement requires Nil approval.

5. NIl inspectors visit each site to witness tests and examine test records,

and Nil consents are required at various major steps bebore construction

proceeds further.

6. There are four grades of QA requirements normally employed, namely: "Q" -

highest grade for safety class plant items; "N/S" - important to safety and

"N/O" - important to operational reliability items; "N/E" - lo'er class

items which still require significant design engineering; and ' /-" -the

lowest class of off-shelf, mass-produced items.

D.4 SUMMARY OF ASSURANCE OF QUALITY (AOQ) PROGRAMS

This section provides a brief summary of each of the AOQ programs studies

that resulted in the findings identified in Section D.3. Time restraints precluded the NRC staff from forwarding the summary descriptions to all the government agencies for their review, comment, and correction. As a result,

inaccuracies may exist in these summaries. If warranted, corrections to these

summaries will be made in future revisions or supplements to this report.

D.4.1 FAA Assurance of Quality,(AOQ) PROGRAM

This part of the study focused on the Federal Aviation Administration's

(FAA) program for assuring quality in the design and manufacture of large commercial transport aircraft. To obtain program information, publicly available

documents on this program were reviewed. FAA staff in Washington, D.C., and

staff in the Transport Airplane Certification Directorate Office, Seattle,

Washington, also were interviewed. Staff of the Boeing Co. also were interviewed, including a Designated Engineering Representative (DER) and a Designated Manufacturing Inspection Representative (DMIR). Finally, limited observations of aircraft manufacturing work in progress were conducted at Boeing.

The Assurance of quality (AOQ) program being applied to the licensing and

certification of large commercial aircraft is all-inclusive in that it

addresses all aspects of design, material fabrication, assembly and tests.

Like nuclear reactors, aircraft involve highly complex technology and

require high-quality standards in their design, construction and operation.

D. 14
Aircraft are complex structures that are fabricated of many lightweight systems

located in limited space. The aircraft must perform in a wide variety of environments for many years. Aircraft safety demands not only a design that is

tolerant of failure, but also careful production that is of the highest quality

and excellent maintenance following manufacturing.

The Federal Aviation Act of 1958 authorizes the FAA to issue certificates

for aircraft in the interest of safety. Section 603.A of the Act addresses the

requirements for a "Type Certificate" (design). The requirements for a "Production Certificate" (production) are covered in Section 603.B, while Section

603.C states the general requirements for an "Airworthiness Certificate"

(license for operation). Essentially, these sections of the Act address the

safety of or the assurance of quality for the aircraft.

D.4.1.1 Organization and Responsibilities

The responsibilities for an airworhtiness program in the, FAA involve both

headquarters and field operations. Headquarters is responsible for establishing rules, issuing directives, and distributing guidance publications. Field

operations are responsible for the receipt of applications, examination,

certification, surveillance, and enforcement.

Title VI of the Federal Aviation Act sets forth the responsibilities of

the basic certification processes. The interested party files an application,

and the FAA makes a finding and issues certificates as well as any regulatory

corrective action necessary. The FAA is also responsible for certificate

amendment, suspension, and revocati.on. The administrator is given the responsibility to issue minimum standards, rules, and regulations as well as the use

of various kinds of airworthiness inspectors. The responsibilities and duties

of the industry require "air carriers to perform their services with highest

possible degree of safety in the public interest."

Policy and guidance responsibilities are retained at FAA headquarters,

while the field offices develop and implement programs. Airworthiness programs

are carried out by four regional directorates located in Seattle, Washington

(commercial transport aircraft); Ft. Worth, Texas (rotary aircraft); Kansas

City, Kansas (general aircraft); and Boston, Massachusetts (engines and propellers). The Seattle office has responsibility for review and oversight of commercial transport aircraft design, production, determination of airworthiness,

and maintenance throughout the world.

The directorates were established to perform technical policy and ai rworthiness project management for the aircraft certification programs. The

directorates of the regional offices report to the Administrator. The directorates, while assigned specific policy and programmatic responsibilities, are

also responsible for implementation of the airworthiness programs within their

respective geographical boundaries.

D.4.1.2 Certification Program

In issuing certificates for aircraft, the FAA is responsible for exercising its powers and performing its duties to reduce or eliminate the possibility

D.15
of accidents in air transportation. This section discusses the three certification programs employed by the FAA to assure the quality of large commercial

transport aircraft: the Type Certificate, the Production Certifi~cate and the

Airworthiness Certificate.

TyeCriiae The first step in the FAA's certification of an aircraft is design approval or Type Certification. The Type Certificate is an FAA

approval of an aircraft design based on engineering review of reports,

drawings, and dIata, and on flight tests and tests of materials and parts. The

FAA review during the Type Certificate process is very detailed and includes a

design review of basically all parts and pieces of the aircraft. The Designated Engineering Representative (DER) activities are a very integral part of

this FAA review process. Designated Manufacturing Inspection Representatives

(DMIR) also provide support in the Type Certification program during the production of- prototype aircraft or parts for testing. The DMIR provides conformity inspection assistance to the FAA during the long proto-typing process which

precedes the Type Certificate.

Type Certificates are issued for complete aircraft, but they may also be

issued for components such as engines and propellers. Basically, the FAA

defines the minimum safety standards to be met, and the applicant develops,

defines, analyzes, tests and shows compliance with the requirements to obtain

design approval. Before a Type Certificate-is issued, the FAA evaluates the

applicant's compliance by design review, inspection of prototype fabrication,

and performance of flight tests.

All of the activities leading to a Type Certificate are monitored closely

by the FAA. The FAA has prepared ýnd issued a handbook (Order 8110.4 Tpe Cer

tification) to guide and assist All personnel in performing their responiTbilities and in efficiently accomplishing the assigned tasks.

Production Certificate. After the conditions of the Type Certification

program have been met, te Production Certification phase begins. To obtain a

Production Certificate, the the manufacturing facility and process for the

re plication of a Type Certificated aircraft, including the manufacturing qual-,

ity control system, must be approved by the FAA. In issuing the Production

Certificate, the Administrator can inspect and require any tests of the aircraft, aircraft engine, propeller, or appliance as is needed to assure that

each unit has been manufactured adequately according to program specifications. If the Administrator approves production duplicates of the aircraft,

aircraft engine, propeller, or appliance for which a Type Certificate has been

issued, then a Production Certificate is issued, authorizing the production of

such duplicates. In the Production Certificate program, the Administrator may

set the duration of the certificate and any other terms, conditions, and limitations required in the interest of safety.

Assuring the adequacy of the-production system involves various levels of

FAA quality control surveillance. FAA inspectors review and approve the company s manufacturing, QA/QC and testing procedures and processes.

Before the Production Certificate is issued, the FAA requires applicants

to demonstrate that a QA system will be established and maintained so that each

D.16
plane produced will meet the design provisions of the applicable Type Certificate. Each applicant for a Production Certificate must also submit to FAA for

approval the following information:

* a statement of QA organization and responsibilities

* a description of inspection procedures for materials, parts, and

supplies

* a description of the methods used for production inspection

* an outline of the materials' review system

* an outline of the system for informing QA inspectors of manufacturing

changes

* a chart showing the location of inspection stations

* information on delegation of inspection authority to subsidiary

manufacturers.

A holder of a Production Certificate must allow the FAA to make any inspections

it desires (including suppliers) to assure compliance with the above

requirements.

The FAA has considerable involvement in and control over a manufacturer's

processes through the requirements of Production Certificates. Also, the FAA

exercises a similar control over various suppliers and vendors who are considered an extension of the manufacturer or prime contractor. However, most

enforcement actions resulting from problems associated with vendors or suppliers are applied to or through the prime manufacturer of the aircraft. FAA

involvement occurs primarily through the manufacturer, the holders of a Type or

Production Certificate, through Parts Manufacturer's Approval (PMA), or through

a Technical Standard Order Authorization (TSOA). When parts supplied to a

manufacturer cannot be adequately inspected after delivery, the FAA may inspect

them at the supplier's location.

The PMA and TSOA are used primarily when parts are supplied for repair or

modifying aircraft in service. In both cases, the FAA issues an approval

(license) for the manufacture of certain parts to an approved design after FAA

approval of the process and the QA/QC program and procedures. These approvals

give the FAA the prerogative to inspect and audit the facilities, products, and

processes of a manufacturer and his suppliers.

Order 8120.2A, Production Approval and Surveillance Procedures, was prepared to guide personnel in accomplishing FAA's responsibilities for the evaluation, approval, and surveillance of the production activities of manufacturers

and their suppliers producing products, parts and appliances in accordance with

Code of Federal Regulations 14 CFR, Part 21.

Airworthiness Certificate. The third and major part of FAA's certification of an aircraft is the original Airworthiness Certification program. An

D.17
Airworthiness Certificate from the FAA is required for a U.S. registered aircraft to operate. Basically, the registered owner of any aircraft may file an

application for an Airworthiness Certificate with the Administrator. The Airworthiness Certificate is issued after the Administrator finds that the aircraft conforms to the Type Certificate, and if that aircraft is found to be in

condition for safe operation after inspection. The Administrator can set the

duration of the certificate, the type of service for which the aircraft may be

used, and any other terms, conditions, and limitations that are required in the

interest of safety. Each certificate is registered by the Administrator and

can include any information that the Administrator feels is necessary.

The FAA has issued Order 8130.2B, entitled Airworthiness Certification of

Aircraft and Related Approvals, which contains procedures and instructions for

personnel involved in issuing Airworthiness Certificates and related approvals.

D.4.1.3 Program Implementation: Designated Representatives (DR)

To ensure that the design and fabrication of a new airplane meets all

regulatory requirements, the FAA is assisted by specified independent persons

who also may be employees of the aircraft manufacturers. In accordance with

the Civil Aeronautics Act of 1938, examinations and reports could be accepted

from properly qualified private persons in place of those made by government

employees. In 1950, Congress passed bills authorizing the delegation of certain functions to properly qualified private persons (designated representatives). These functions include the examination, inspection, and testing

necessary for issuing certificates in accordance with properly established

standards.

These Designated Representatives (DR) review the design and fabrication

processes to ensure compliance with all aspects of the regulations. In 14 CFR,

Part 183, Representatives of the Administrator, the requirements are described

for designating private persons to act as representatives of the Administrator

in examining, inspecting, and testing persons and aircraft prior to the issuing

of airman and aircraft certificates. In addition, it states the privileges of

those representatives and prescribes rules for exercising those privileges.

The review of the Designated Representatives program focused on the following

two types:

" Designated Engineering Representative (DER). Individuals designated

to approve engineering information. Order 8110.37, DER Guidance

Handbook, identifies the policies, procedures, technical guidelines,

and limitations of authority for DERs. This information is amplified

in Chapter 5 of Order 8110.4, Type Certification.

" Designated Manufacturing and Inspection Representative (DMIR). Individuals designated to issue original airworthiness, export, ferry,

and experimental certificates. The qualifications, appointment,

responsibility, authority, etc. of DMIRs are identified in Chapter 8

of Order 8130.2B, Airworthiness Certification of Aircraft and Related

Approvals.

The DER principally supports the FAA in issuing Type Certificates. The

DMIR principally supports the FAA in issuing Airworthiness Certificates, and,

D.18
when necessary, the DMIR provides support for a Type Certificate during the

production of prototype aircraft or parts for testing.

The DER and DMIR are authorized to perform certain examinations, inspections, and tests on behalf of the FAA. Depending on the specific limitations

in their designation, they also provide FAA approval (sign-off) or recommend

approval by the FAA. DER activities focus on insuring compliance with the

requirements of the FAA regulations, whereas the DMIR principally ensures that

aircraft and components are manufactured according to FAA-approved designs,

specifications, and QC programs.

Designees are usually nominated by the applicant (aircraft manufacturer)

and are appointed by the FAA regional director after the director reviews their

personal and professional qualifications and experience. Once appointed, they

are delegated by the FAA Administrator, through the regional office, to represent the FAA in helping to determine that the aircraft complies with the relevant requirements of the regulations. In this capacity, designees are bound by

the "...same requirements, instructions, procedures, and interpretations as FAA

employees..." (FAA 1967). While designees perform considerable work for the

FAA, the agency reserves for itself the approval of the following necessary

elements in the certification process:

" the regulatory process

* analytical criteria to be used

" major design philosophy affecting safety

* all fault-type safety analyses

* all test proposals

* witnessing of all major tests

* all major flight testing

" all in-service safety problems

" aircraft flight manual

" QC manual

" surveillance of production facilities

* production certification of facilities and QC functions.

D.4.1.4 Industry's QA Program

As part of this study of FAA quality assurance programs, staff at one

plant were interviewed and work was observed. Each of the QA functions that

constitutes the foundation of the QA/QC system in the manufacture of large commercial transports is briefly described in Table D.1 (FAA 1976).

In reviewing the industry program it was noted that fabrication is tracked

by a very detailed operations and inspection record. After a particular item

of work has been completed, the record is initialed or stamped by the person

performing the activity. Then, inspections are performed by company employees

who are required to verify by formal record that the product meets the established standards. This record signifies who performed each task and that the

inspector stands behind the proper performance of the work. Also, articles are

tagged or stamped with marks that identify the individual inspector and ensure

that only inspected and accepted items are used in the finished product. For

D.19
TABLE D.1. Descriptions of Quality Assurance Functions (FAA 1976)

1. TECHNICAL DATA CONTROL--Assures that only the latest approved drawings,

drawing change notices, engineering data, etc. are available to. production

and inspection personnel and that obsolete drawings and data are promptly

removed from the production and inspection areas.

2. MANUFACTURING PROCESSES--Provides for selecting and controlling procedures

to ensure that all characteristics affecting safety will be inspected and

that products or processes conform to approved design data where specific

operations such as machining, riveting, welding, etc. are performed.

3. SPECIAL PROCESSES--Controls all processes and services such as welding,

heat treatment, bonding, plating, casting, forging, etc. where the material- being processed undergoes any physical, chemical, or metallurgical

transformation and the conformance to specifications cannot be verified by

external visual inspection.

4. INSPECTION/IDENTIFICATION--Ensures that only articles and processes that

have been accepted and that conform to approved design data are used in

the product. Items are identified with stamps or marks traceable to

qualified individuals.

5. NONDESTRUCTIVE INSPECTION--Establishes requirements for inspection methods

used to determine conformity to the design data through or by a means

which will not have a detrimental effect on a part. Example: Magnetic

particle, ultrasonic radiographic, etc.

6. TOOL AND GAUGE CONTROL--Establishes control of precision weight and measuring devices (tools, scales, gauges, fixtures, etc.) used in fabricating

and inspecting parts, assemblies, and complete products to assure conformity to type design data.

7. SUPPLIER CONTROL--Encompasses the purchasing, testing, and acceptance of

all materials, parts, and services furnished the manufacturer from an outside source, including proprietary items.

8. TESTING--Assures that all functional components and/or assemblies are subjected to tests that will ensure that the product will perform its intended function safely.

9. MATERIALS REVIEW--Identifies system of control for withholding, evaluating

and disposing of all materials, parts, etc. that do not conform to engineering design data.

10. STORAGE AND ISSUANCE--Assures proper protection and prevention of damage

and deterioration of materials, parts, assemblies, etc. that have passed

inspection while awaiting use. Also assures that only articles current

with applicable design changes are released for incorporation in the

product.

D.20
TABLE D.1. (contd)

11. AIRWORTHINESS CERTIFICATION--Identifies system for evaluation of the completed article or product and related documents to assure that all

required inspections and tests have been satisfactorily performed and that

it is in a condition for safe operation.

12. SERVICE DIFFICULTIES--Establishes a system for recording, investigating,

determining cause, and assuring corrective action on all known or reported

failures, malfunctions, or defects.

example, suitable "acceptable," "rework," or "rejection" stamps are placed on

articles subjected to heat treatment, welding, riveting, soldering, hardness

tests, laboratory analysis, and other tests. It should be noted that the signoff of completed work by the mechanic who did the work is not required by the

FAA, but is reportedly an aircraft industry practice.

D.4.2 Department of Energy (DOE) Assurance of Quality (AOQ) Program

The DOE, its predecessor organizations Energy Research and Development

Administration (ERDA) and the Atomic Energy Commission (AEC), and contractor

organizations and laboratories have been developing, constructing, and operating nuclear reactors and other nuclear facilities for some four decades. They

have developed and applied many methods and practices for safely carrying out

these activities. Many of the accepted and proven practices of nuclear technology, such as the nuclear application~of QA and engineering standards, were

pioneered in these endeavors. For this reason, two DOE nuclear projects were

selected for review in this study to determine whether there were attributes of

the DOE Program for assurance of quality which may be transferable to the NRC.

The first DOE project reviewed, the Fast Flux Test Facility (FFTF), is a

reactor facility that achieved initial start-up in 1980. The other one, the

Gas Centrifuge Enrichment Plant (GCEP) for uranium enrichment, is currently

under construction. The assurance of quality program for each project is

discussed separately in Sections D.4.2.2 and D.4.2.3. The following section

gives a brief overview of the DOE organization and responsibilities for nuclear

programs.

D.4.2.1 Background

The Atomic Energy Commission was disbanded by the Energy Reorganization

Act of 1974 and replaced by NRC and ERDA. Section 107(a) of the Energy Reorganization Act states that the nuclear functions of ERDA will be subject to the

Atomic Energy Act of 1954. All functions of ERDA were transferred in 1977 to

DOE by the DOE Organization Act. DOE is basically subject to the same directives regarding safety and AOQ in the Atomic Energy Act as the NRC.

The Atomic Energy Act has no specific language addressing AOQ. Indirectly, however, the act empowers DOE to regulate AOQ to protect health and

safety and to minimize danger to life and property. A basic purpose of the

Atomic Energy Act is to encourage widespread use of atomic energy, but only to

D.21
the extent that its use is consistent with the health and safety of the public. Section 161(b) of the Atomic Energy Act requires DOE as follows:

Establish by rule, regulation, or order, such standards and instructions to govern the possession and use of special nuclear material,

source material, and by-product material as may be deemed necessary

or desirable to promote the common defense and security or to protect health or to minimize danger to life or property.

DOE was formed in 1977 to centralize responsibility for national energy

policy and to continue and expand the energy research and development that was

transferred from the Energy and Research Development Administration (ERDA).

The DOE Organization Act of 1977 placed the operation of government-owned

nuclear plants and the independent safety overview function in a larger organization. Normally, these programs were administered through an agency headquarters group, and facilities were operated by a contractor at the site. A DOE

field office, located on or near the site, provides close oversight of the programs.

The organizational placement of nuclear energy activities in DOE can be

characterized as decentralized. Although essentially all duties of the Assistant Secretary for Nuclear Energy are nuclear related, other major nuclear

activities have been assigned to the Assistant Secretaries for Defense Programs; Environment Protection, Safety, and Emergency Preparedness; International Affairs; and to the Director of Energy Research.

The management of the DOE nuclear programs (including the FFTF and GCEP is

generally administered through three organizational tiers depicted in Figure D.1.

The DOE field organization and project officers have overall responsibility and authority for defining and assuring effective implementation of

required quality assurance (QA) activities to be established and implemented on

DOE programs by contractors under their direction. Any order or standard that

DOE adopts'can readily be made applicable to the activities of its contractors

simply by inserting an appropriate applicability clause in the contract.

D.4.2.2 Fast Flux Test Facility

In addition to reviewing pertinent project documents for the DOE's FFTF,

interviews were conducted with DOE headquarters staff in Germantown, Maryland,

and in the Richland Operations Office (RL), Richland, Washington. Staff at the

Westinghouse Hanford Corporation (WHC), which operates the facility, were also

i ntervi ewed.

Background. The FFTF is a 400 MW (thermal) sodium-cooled fast neutron

flux reactor designed for the irradiation testing of fuels, materials and components for fast breeder reactors.

0.22
FIGURE D.1. Organizational Tiers in Nuclear Field Programs

In the FFTF, fuels and materials are exposed to conditions typical of

those expected in future reactors and, in some cases, to conditions beyond

anticipated plant conditions to explore safety margins, to extend fuel technology and to build confidence in the design of future powee plants. The FFTF was

initially started up in 1980 and recently completed the third of its planned

cycles of operation. Performance to date has exceeded DOE's expectations and

program milestones.

The FFTF was designed and constructed to meet NRC license requirements,

although it is not licensed. A Preliminary Safety Analysis Report (PSAR) with

the required section on QA was submitted to AEC's Division of Reactor Licensing

in September 1970. Since the FFTF was owned by the AEC, the Commission had the

prerogative to proceed with the FFTF program even though the Regulatory Review

was not complete. The initial or limited work authorization was obtained in

July 1971, and the final construction authorization came in May 1973. A report

to the Advisory Committee on Reactor Safeguards (ACRS), dated December 29,

1971, and prepared by AEC Division of Reactor Licensing, stated: "Our review

of the Quality Assurance Program indicates that it meets the intent of Appendix B, 10 CFR Part 50, and that adequate quality control is available at the .

site'to assure quality in the safety-related structures."

Organization and Responsibilities Through nearly all of the design and

construction phase of the FFTF project, the responsibility for the AOQ program

was delegated directly from AEC/ERDA/DOE headquarters to the prime contractor,

Westinghouse Hanford Co. (WHC). Currently, the delegation of such

responsibilities is from DOE Headquarters through the DOE Richland Operations

Office (RL) to WHC as the prime operating contractor. The prime contractor

developed the details of the AOQ program and how it was to be applied to the

D.23
FFTF project. To assure the implementation and oversight of quality

responsibilities for the DOE Richland Operations Office (including FFTF), DOE

RL Order 5700.1, Quality Assurance (Fremling 1980), contains the following

responsibilities and authorities for QA in the DOE RL:

" Director, QA. The director develops and coordinates the RL QA program, ossures that each contractor establishes an appropriate QA

program according to the order's basic requirements, and assures,

together with the affected RL program or project manager, that each

contractor establishes an adequate QA plan for each program or project. The director also audits the RL and contractor QA activities

to evaluate their effectiveness and selectively reviews contractor

component and material contracts and purchase orders to assure optimum use of available offsite inspection services. The director

attends periodic forum meetings with contractor QA management to

review mutual QA practices and problems and to coordinate and standardize practices and procedures where appropriate. Finally, the

director conducts appraisals-of contractor QA activities to assure

compliance with applicable requirements.

" Division Directors and Project Managers. These directors and managers determine when special considerations require a QA plan that

may vary from the program required by this Order. They also verify

that the contractor has identified appropriate QA requirements for

individual systems, components, materials, processes, and services

and that QA requirements hlave been considered in conceptual stages

of construction projects. Finally, they verify that appropriate

quality requirements are established in project design criteria and

that contractor QA plans are effectively implemented.

" Director, Construction Division. This director determines when it

is appropriate to assign the responsibility for the items to a prime

contractor and formally delegates such responsibility and monitors

the performance of the operating contractor. The director reviews

and evaluates preliminary activities and plans for construction projects to verify that QA plans are appropriate and ensures that

appropriate QA requirements, in accordance with this Order, are

included in construction project contracts. The director also

reviews, evaluates, and assures that QA activities are effectively

implemented and reviews and approves key design and testing documents and plans for construction projects. Finally, the director

reviews and evaluates the satisfactory completion of all required

construction and testing activities before RL accepts a new facility

or major modification, and he/she accepts the facilities for the

government when all requirements are satisfied.

" Director, Procurement Division. This director takes the contractual

actions required to support the Directors, Quality Assurance, Construction and Program Divisions and Project Offices in implementing

the responsibilities and authorities delegated above.

D.24
* Responsibilities and Authorities of Contractors. The contractors

develop a generic QA program and implementing procedures for DOE and

other government agency-sponsored programs and projects performed in

accordance with this Order, and they prepare and implement QA plans

for assigned projects and programs. They also verify effective

implementation of the QA program and plans for assigned programs and

projects and monitor the performance of an A-E and/or construction

contractor, as delegated by the Director of the Construction

Division.

QAProgram. The basic requirements of the QA criteria used on the FFTF

project, RUT F-2-,2, Quality Assurance Program Requirements, and RDT F 2-4,

Quality Verification Program Requirements, are essentially the same as the

other recognized criteria given in Appendix B, 10 CFR 50, Quality Assurance

Criteria for Nuclear Power Plants and Fuel Reprocessing Plants. The AOQ program that has been applied on the FFTF project throughout its life is allinclusive (pertaining to the entire facility), yet flexible. This program and

the management philosophy established and followed during the design, construction, fuel fabrication, testing, and startup of the FFTF (i.e., that the line

organization has the responsibility and that QA is integral to the work) has

resulted in a plant that is exceeding its established operational goals.

During the review of the FFTF AOQ program, four QA functions were identified that appeared to be key to the project and that may have applicability to

the NRC. These functions are QA classifications, design review levels, datatype QA classifications, and readiness reviews, and are discussed separately

below.

9 A Classifications. QA classifications were established for varying

levels of effort necessary to provide a controlled system that assures a

safe and properly functioning facility or component. This enabled AOQ

efforts to be concentrated on the items and systems crucial to the reactor

and its supporting facility.

Items, components and systems provided for or used in the FFTF were

evaluated by a set of factors and assigned a QA classification or type.

These types/classifications were used as guidelines for applying

appropriate QA efforts for the various components and elements of the

system. During much of the construction phase, three levels of QA were

applied. The most extensive application was in accordance with RDT F 2-2,

the second was in accordance with RDT F 2-4, and the third represented

standard commercial practices. This was later expanded to four levels.

The four levels or types of QA classifications and the factors to be

considered in assigning QA classifications are shown in Table D.2,

extracted from the Westinghouse Hanford QA Manual.

D.25
TABLE 0.2: Definition of FFTF QA Classifications

(Hanford Engineering Development Laboratory 1982

The following definitions are established for the various QA classifications. They may be used in determining the level of quality assurance effort

necessary to provide a controlled system that will assure that the facilities

and/or components function safely and properly.

Some factors to be considered in assigning QA classifications include the

following:

1. the consequence of the item's malfunction or failure

2. the item's design and fabrication complexity or uniqueness

3. the need for special controls and surveillance over processes and

equipment

4. the degree to which functional compliance can be demonstrated by

inspection or test

5. the item's history and degree of standardization

6. the difficulty of the item's repair or replacement and the associated

cost, including procurement lead time.

DEFINITION OF QA CLASSIFICATIONS

Type I - Applies to items that are highly or moderately complex whose

failure can have a direct effect upon operability, performance or safety.

Items, which if failed, could cause or fail to prevent an incident affecting

health and safety, are also included in this classification. Typical examples of Type I include reactor core components, fuel handling equipment, and high- level radioactive waste systems.

uree ~II - Applies to items that are moderately complicated and whose failurecanhav asignificant impact on the validity of development test results,

operation, performance or safety. Items, which if failed, could cause an incident affecting the health and safety of personnel on the Hanford Site are also

included in this classification. Typical examples of Type II include radiation

monitors, pressure-retaining components, and HYAC equipment for contaminated

zones.

Type III - Applies to items of standard or customized design of a unique

but simpýnafture whose consequences of failure are unlikely to be severe,

and/or which can be readily controlled through simple inspections or tests.

Typical examples of Type III include standard electronic equipment and air sampling monitors.

.Typ IV- Appl ies to activities or items with minor consequences of failure, wihosequa lity is adequately assured through undocumented examination by

the requester, such as temporary buildings, roads and fences, and conmmercial

tools.

D.*26
SDesign Review. All FFTF design contractors and suppliers, as part of

ir QA programs, were required to submit a plan for performing

independent design reviews, for submitting design review reports, and

for assuring resolution of problems revealed by the design reviews.

Formal design reviews were identified in the design contractor's or

supplier's project planning documents, and the meetings were scheduled sufficiently in advance to avoid unnecessary delays in major

milestones. Design reviews were to be regarded as contract "HOLD"

points; for example, as a prerequisite to requesting approval of a

design package to be released for fabrication.

During the early stages of a design development, the FFTF cognizant engineer responsible for developing a design was required to review the preparation

of design drawings, preferably at the design contractor's office, and to verify

the understanding of the basic approach and the content of the design packages. The design contractor was required to notify WHC when a design had

reached the agreed-upon state for a meeting (Preliminary Design Review).

All principal design documents, such as specifications, drawings, and

analyses, were reviewed and evaluated by the cognizant design contractor,

before release, to verify the completeness and adequacy of design criteria and

contract requirements. When a document was submitted, FFTF project management

was required to verify consistency with the functional requirements of the system design descriptions and with the specific requirements of the design application and submit comments (when appropriate) to the originator.

Each design contractor was required to define a system for selecting

design review participants, for defining the design and data to be reviewed,

for stating proposed objectives and the agenda, and for identifying the review

chairman, and time and place of the meetings. After the design contractor

determined that a design had reached a point requiring project approval, the

responsible design organization was required to call the scheduled formal

design review meeting.

The cognizant design contractor or supplier was responsible for taking

appropriate action to ensure that all action items resulting from the design

review are promptly and adequately resolved.

The design review system was integrated with the design release control

system. Design review plans provided for successive reviews and corresponding

release depending upon the Data Type Classification. The lowest level was suppliers, next was the cognizant Design Contractor, then the FFTF Project, and

finally DOE. The most sensitive design terms were reviewed by each level and

required DOE approval. The least sensitive could be reviewed and approved by a

supplier. This is discussed further below.

* Data Type Classifications and Releases. The basic FFTF procedures and

requirements for data review and initial project release are discussed in

D.27
this section. To determine the level of approval required for initial

project release, all FFTF Principal Desi-gn Documents were divided into the

following data types:

- Data Type 1 included key controlling documents and drawings, such as

Safety Analysis Reports, System Design Descriptions, plot plans, piping

and instrument diagrams, major assemblies, and general plan arrangements.

- Data Type 2 included documents and drawings such as engineering studies,

design or stress reports, quality control procedures, piping and

mechanical layouts, radiation zoning, control logic diagrams, and

instrument locations.

- Data Type 3 included documents and drawings such as detailed design

drawings, and other supporting design documents not classified as Data

Type 1 or 2.

- Data Type 4 included supplier drawings or other documents not otherwise

classified as Data Types 1, 2, or 3.

All changes to principal design documents were subject to a categorization

program to determine the impact of the change and the appropriate level of

approval required for project release. The originator of the document change

made the first determination of the impact level. Three impact levels were

used in the classification. For impact level 1, the originator had to obtain

the FFTF cognizant engineer's and DOE's approval. Impact level 2 required

approval of the FFTF cognizant engineer while impact level 3 changes could be

approved and released by the design contractor.

* Readiness Reviews. Another AOQ or program management function used at the

FFTF is that of a project review board or readiness review. In a new or

modified facility or system, the coordination of many elements and

attention to every detail is required to assure that it is ready to

proceed to the next step safely and effectively. Project or readiness

review boards have been used at the FFTF since 1976. They were applied on

system startup tests and are now being used during reactor shutdowns and

startups. Guidance for the current readiness review process at FFTF is

given in detailed procedures. Those procedures basically direct that a

readiness review be conducted to document line management's certification

of the readiness of 1) the FFTF plant, 2) the operating staff, and 3) the

support groups to conduct startup and operation following a schedule

outage. In addition to FFTF line management, personnel from outside the

FFTF plant organization are on the Review Board. Each review is specific

and addresses the status of the Operations and Test Plan, the Reload

Design Report, refueling documentation, significant plant repair and

maintenance activities, major plant changes, engineering system readiness

assessments, reactor and industrial safety issues, technical

specification/procedural changes, and the plant's transition into the

operational mode.

In addition, special emphasis topics may be included in a review at the

discretion of the Review Board. Other assessments of a broader nature, such as

D.28
the-status and quality of engineering instructions, are performed as part of

the system of routine audits conducted by FFTF plant, safety, and quality

assurance organizations.

D.4.2.3 Gas Centrifuge Enrichment Program

This part of the study addresses the QA programs followed by DOE and associated organizations on the design, construction, testing, and startup of the

Gas Centrifuge Enrichment Plant (GCEP) and related development facilities. In

addition to reviewing the publicly available documents about the GCEP program,

interviews were conducted with DOE staff and some of their contractors at the

Oak Ridge Operations Office (ORO), Oak Ridge, Tennessee, and at the GCEP construction site near Portsmouth, Ohio. The Centrifuge Program Development

Facility (CPDF) was also visited.

Back round. Construction of the GCEP production facilities near

Portsmouth, Ohio, began in the spring of 1979. A "cascade" of production

machines is scheduled to go into operation in the spring of 1984. Certain

-aspects of the fabrication and construction activities have been reported to be

ahead of schedule. In 1982, the CPDF was placed in operation. Although

identified as a development facility, the CPDF is a large structure and its

startup was the culmination of an involved engineering and construction

effort. The project was completed ahead of schedule and under budget, and the

QA program that was applied during the CPDF project was felt to be a positive

factor in putting a workable facility in operation.

The QA program or system being applied on the GCEP is integrated into the

management realm where the QA elements are combined with other management

requirements. A series of documents has been developed to provide general

requirements on and specific instructions for establishing and executing the

various management aspects during the design, fabrication, construction,

installation, startup, operations and maintenance of structures, components and

systems of the GCEP.

Organization and Responsibilities. The DOE fieldý offices have the overall

responsibility and authority for assuring that the required QA activities of

contractors under their direction are implemented. Thus, the field offices

have a direct relationship with organizations such as Union Carbide or Stone

and Webster, which have prime contracts with DOE. For other suppliers, manufacturers, or contractors under contract to a prime contractor, DOE QA personnel have contact only through the prime contractor. The DOE can and does

authorize prime contractors to administer DOE contracts, including the QA functions, with other organizations.

Some DOE-ORO staff members who are involved in AOQ functions administratively report to the Quality Reliability Division under the Office of Assistant

Manager for Safety and Environment. Others functionally report to the various

divisions within an operational office such as Office of Assistant Manager for

Enriching Operations and Development. The majority of DOE-ORO staff involved

with the various GCEP QA functions are permanent personnel identified as professional QA or nuclear engineers. A member of the QA division is assigned to

D.29
GCEP QA on a full-time basis; however, those in the operations and development

office handle QA functions along with other engineering and program management

assignments.

The responsibilities and authorities for QA policy coordination and overview and for developing, implementing, or evaluating QA activities in support

of design and construction of DOE programs at Oak Ridge (including GCEP) are

contained in OR 5700.6 Quality Assurance - ORO Site Implementation Plan:

Contracting Officers and Contracting Officers Representatives (COs/CORs)

for AE and Construction. Provide contactors with QA requirements,

assessments, and plans for implementation. Obtain contractors' comments

and contributions to assessments and plans for follow-on participants.

Provide copies of assessments and plans to the Director, Q&R Division, for

comment and concurrence before approval. Report significant quality

problems and unusual occurrences. Obtain participation of cognizant

operating contractor personnel during design and construction to identify

potential problems with satisfactory performance in service.

* Director, Procurement and Contracts Division. Assure that contracts

contain provisions for AOQ of materials and services. For procurement

contracts exceeding $1,000,000, obtain concurrence of the Director, Q&R

Division, on requirement for AOQ.

* Director, Qualit' and Reliability Division. Manage the ORO QA program.

Establish QA policy for implementation by ORO program and project

divisions. Develop and provide specific guidance for application of QA to

all ORO programs and projects, eccept weapons components and assemblies.

Review and approve selected contractor pol'icies and plants for QA.

Maintain surveillance of contractor activities and assure compliance.

Perform management appraisals to verify adequacy and effectiveness of

contractor QA programs; coordinate appraisals with and utilize resources

of other cognizant DOE organizations, as appropriate. Investigate

significant quality problems, identify quality-related issues, and cause

corrective actions to be taken by responsible contractor organizations

through COs/CORs and project managers.

GCEP QA Program. The QA program that has been developed at Oak Ridge

Operations (ORO) and that is being applied on GCEP programs is an integral part

of the project's planning and management activities. QA is included in a

"systems" approach from the start of a particular activity. The systems

approach addresses the quality, safety, reliability, operability, and maintainability of all components, equipment, and processes involved. Each architectengineer (AE) or contractor must have a formal program for deliberately and

systematically assuring the performance of equipment and facilities. Each of

these programs must 1) show management support and concern of QA, 2) emphasize

prevention of major problems, 3) provide the means for all employees to understand their roles, and 4) provide a basis for measuring the effectiveness of

QA.

D.30
A main aspect of the GCEP QA program is the required evaluation of failure

consequences as well as the probability of failure of a component, equipment,

or process. This procedure provides the means to establish the criticality of

an item within a system and the relationship of that system to the project and

permits the concentration of QA activities where needed most.

If the risk of failure is high or unacceptable, special attention to prevent failure is required and specific QA actions are prepared to reduce the

risk to an acceptable level. Formal planning is required to prevent potential

quality problems when the risk of failure is not acceptable. These plans

assure adequate considerations of actions to prove quality of development,

design, procurement, fabrication, construction, operation, or maintenance and

to find quality problems in time to minimize their impact.

Another aspect of the GCEP systems QA program that is considered to be

beneficial is the requirement that all participating groups, including AEs,

take part in the early planning and participate in all the various phases of

the project.

The schematic in Figure D.2 depicts some of the QA elements which are fundamental to the ORO QA program. This figure shows that QA or the assurance of

quality is used in a much broader sense than the NRC traditional use of QA

requirements: the ORO approach incorporates the QA elements into the overall

management of the project.

QA Program Implementation GCEP QA methodology and responsibilities are

specified in ORO-EP-105, GCEP Quality Assurance Requirements. Overall responsibilities and authority of project participants are defined'in ORO-EP-103,

GCEP Project Management Plan, and ORO-EP-116, System Engineering Management

Plan. The Deputy Manager for Enrichment Expansion Projects is responsible for

es-t-lishing and executing the QA Program and assigning parts of it to other

organizations, although he retains responsibility for overall program effectiveness.

The basic elements of ORO-EP-105 are as follows:

" Each project participant must have a formal program for assuring

quality of equipment and facilities.

" Concern for quality must be visible and should receive management

attention comparable to that given to costs and schedules.

" To maximize effectiveness, the QA program must be selectively applied

to emphasize prevention of major problems.

" The program must include provisions that assure that each employee

clearly understands this role in providing assurance of quality.

" To provide a basis for judging the effectiveness of the QA program,

the costs of significant quality problems must be documented and presented to appropriate levels of management.

D.31
ASSESSMENT

READINESS

REVIEW

[ DATA COLLECTION- 1

AND ANALYSIS

INTERFACE ]

CON FIGURATION

CONTROL

INTEGRATED

SYSTEMS

TESTING

ACTION

PLAN

FAILURE MODES.

EFFECTS. AND

CRITICALITY ANALYSIS

RELIABILITY/

AVAILABILITY/'

)E IMAINTAINABILITY

DESIGN

j REVIEW

PRODUCT,, SYSTEM

ACCEPTANCE

AUDIT SOFARE

AUDITQUALITY ASSURANCE

FIGURE D.2. Quality Assurance Elements

The system engineering function for the GCEP covers all of the system

requirements for definition, analyses, verification, technical reviews, and

other system efforts, including QA, necessary to assure the optimum balance of

performance, safety, costs, and scheduling. The system engineering function

will support the design, installation, startup, and operational phases of the

GCEP. The principal objectives of the system engineering function are as

follows:

* to assure that the system requirements of the GCEP process are adequately specified and documented and that due consideration and

emphasis is given to all aspects of the project

* to provide system analyses of the designs as they progress to assure

that system requirements are met and that GCEP interfaces are compatible

* to assist in defining programs for the necessary and sufficient verification of GCEP systems

D.32
* to integrate reliability, maintainability, logistics, safety, producibility, and other related specialties into a total system effort.

QA Classification. At ORO, quality is defined as "fitness for intended

use." Accordingly, the GCEP project's basic approach to quality assurance is

to assure that the plant's equipment and facilities will be of a quality consistent with their importance to plant operation, reliability, and safety.

Therefore, a formal evaluation is required for each system or subsystem to

determine the consequence of failure of equipment and facilities. Those performing the assessments are required to consider the effects of failure on

safety, environment, cost, schedule, and plant reliability. If it is determined that a failure will have significant consequences and the risk of failure

is unknown or unacceptable, or that the consequences of failure.are so severe

as to be unacceptable under any circumstances, regardless of the probability of

occurrence, the item assessed is classified as "special" and a specific Quality

Assurance Action Plan (QAAP) is prepared. The requirements of the QAAP are

tailored to address the specific area of concern to assure that the equipment

or component will function as intended and required. Items determined not to

be special are classified as "routine" and come under the basic QA Plan.

QA Program Requirements. The requirements for application of QA by the

GCEP contractors are identified in ORO-EP-105, GCEP Quality Assurance

Requirements. This document identifies the quality responsibilities and programs for each contractor to implement. ORO-EP-105, GCEP Quality Assurance

Requirements, is also structured in two distinct categories: 1) basic QA program requirements, and 2) supplementary control systems in support of quality

assurance. The basic requirements apply to all major participants who are DOE

prime contractors and are the primary concern of QA personnel. The supplementary controls are administered by appropriate line management.

The basic requirements as identified in ORO-EP-105 are incorporated into a

QA program at the earliest practicable time consistent with GCEP schedules.

Personnel from all participating groups, including quality assurance and operations, contribute to the program plans. Operations personnel are involved in

the review of design and construction activities, and management of the participating organizations review the status and adequacy of the program parts.

Quality Assurance Action Plans (QAAP) are prepared by the responsible

design organization for those items identified as special by quality assessments. The implementing organization is responsible for developing the plan

and procedures required to accomplish the actions specified in the QAAP; for

items established as routine in the QA assessment, participants are required to

take appropriate steps to identify and prevent quality problems.

A Construction Critical Items List is made for each design package

released or certified for construction. This list is included in the construction package.

Participants document their basic QA program in a manual or program plan

and keep it current. Each manual or plan is reviewed and approved by management or upper-tier contractors.

D.33
Supplementary Control Systems in Support of QA. In ORO-EP-105, supplementary controls are grouped in the categories of design, procurement, manufacturing/fabrication, testing, and construction/installation. Under design, control

requirements are noted for QA-related systems that are selectively applied

based on the nature and scope of the work as well as the importance of the

items and services being provided. Included are such elements as assurance

that design requirements are correctly translated into design documents, interface control, design verification, design change control, and document control. ORO-EP-105 also provides appropriate quantitative and/or qualitative

criteria in the form of instructions, procedures, or drawings; corrective

action; quality records; and QA audits.

The procurement controls include procurement document control that provides for a supplier QA program, basic technical requirements, source inspection and audits, documentation requirements and lower-tier procurements. It

also includes control of purchased material, equipment and services; corrective

action; quality records; and audits of procurement activities.

For manufacturing/fabrication, the elements of instructions, procedures,

and drawings; document control; identification and control of materials, parts,

and components; control of special processes; inspection; and control of measuring and test equipment are noted. The elements of handling, storage and

shipping; inspection, test and operating status; nonconforming items; correcti action; quality records; and QA audits are covered.

Testing includes the elements of test control; instructions, procedures,

and drawings; document control; failure analysis; records; and QA audits.

Under construction/installation, the elements included are instructions,

procedures and drawings; document control; control of purchases, material,

equipment and services; identification and control of material, parts, and components; control of special processes, construction and installation inspection; and acceptance testing. The elements of control of measuring and test

equipment; handling, storage and shipping; inspection and test status; nonconforming items; corrective action; quality records; and QA audits are also

included.

The responsibility and authority to produce reliable GCEP machines and

systems are delegated to contractors. From a QA/QC viewpoint, the construction

management contractor, Stone and Webster, or the A-E overviews and monitors

activities of their subcontractors, as well as other construction contractors

under contract to the DOE. DOE Portsmouth contracts for and overviews the

activities of contractors such as Stone and Webster, while DOE-ORO audits the

QA activities of DOE Portsmouth and Stone and Webster.

Integration by DOIT Teams. A management team concept has been established

and placed in effect at GCEP for work execution and control including quality

D.34
assurance. This system is outlined in PPO-EP-104, GCEP Construction Work

Package Execution and Control System (DOIT). It also establishes appropriate

interactions among the many GCEP participants.

Working execution and control teams, or DOIT teams, are used to manage

defined pieces of work (work packages) so they can be completed cost effectively within prescribed parameters. Currently, at GCEP four DOIT centers are

in operation: DOIT-P (process facilities), DOIT-R (Recycle, Assembly, Centrifuge Training and Test Facilities), DOIT-S (site and support facilities), and

DOIT-F (feed and withdrawal). Each DOIT center or team includes representatives from each of the principal and responsible participating organizations.

These participants and their areas of responsibility are as follows:

Portsmouth Project Office (PPO) -. General Manager

Architect-Engineer (A-E) - Engineering and Design

Stone and Webster Engineering Corp. (SWEC) - Construction Management

Operating Contractor (OC/OCPO) - Startup and Operations

In the embryonic stage, a work package (WP) is equivalent to a design

package (DP). During its evolution it may encompass many DPs or combinations

thereof. Regardless of evolution, type of contract, work breakdown structure,

number, etc., the WP identifies a defined piece of work that is to be accomplished. Each WP includes technical requirements, quality standards, performance period, estimated cost, and how it is to interface with other WPs. The

WP identifies a certain portion of the facility design by the A-E and its

acceptable state before the Portsmouth Project Office (suboffice of DOE-ORO)

can accept it from the constructor and to turn it over to the operating contractor for custodianship.

D.4.3 NASA Assurance of Quality (AOQ) Program

In the review of the National Aeronautics and Space Administration's

(NASA) programs for safety, reliability, and quality assurance (SR&QA), extensive use has been made of previous studies on the NASA programs, which examined

the possible applicability or transfer of the NASA program concepts to the NRC

and nuclear power industry. These studies include Space and Missile Reliability and Safety Programs, prepared for the Nuclear Safety Analysis Center

(NSAC), 1981, and the Application of Space and Aviation Technology to Improve

the Safety and Reliability of Nuclear Power Plant Operations, prepared for the

Department of Energy (DOE), 1980. Additional information on the NASA programs

was obtained from published NASA documents and through meetings with NASA Headquarter's SR&QA staff.

The NASA approach for assuring the quality of their space and missile program is generally perceived as very successful. In only 25 years, the U.S. has

probed the reaches of outer space, has had men walking on the surface of the

moon, and has established a highway to space with space shuttle craft. These

space projects-have generally required advances in the technical state-of-theart In many systems and subsystems.

D.35
D.4.3.1 Background

NASA was formed in 1958 (by legislation commonly referred to as the Space

Act of 1958) and was given a Congressional mandate 1) to restore U.S. technological leadership,.and 2) to lead the world into the space age for its peaceful benefits. NASA inherited several field installations from the U.S. Army,

Navy, Air Force and the National Advisory Committee for Aeronautics. These

sites include the Marshall and Goddard Space Flight Centers, Jet Propulsion

Laboratory (California Institute of Technology), Cape Canaveral, Wallops

Island, and Langley Research Center (NSAC 1981).

Since its origin, NASA has generally operated as a decentralized agency

with the NASA headquarters responsible for the development of policy for field

use. The field offices develop programs to implement the NASA policy and

tailor the programs to fit and meet the peculiarities of the projects assigned

to the NASA field offices. In mid-1961, a separate quality assurance organization was formed. With approximately 90% of the NASA-sponsored work performed

by contractors, the QA organization initiated efforts to develop quality program requirement documents that would be used by the NASA Centers or field

installations to place QA requirements on the NASA contractors. These early QA

documents established basic QA policies that remain in effect today. These

policies are as follows:

" Quality is the overall responsibility of the NASA Centers and cannot

be delegated.

" Central direction is provided by a QA organization having responsibility and authority in each NASA Center.

* NASA QA requirements are included in NASA contracts.

" Assuring satisfactory performance in developing and maintaining system quality is the responsibility of the NASA procuring installation

(NSAC 1981).

In 1967, the Apollo fire more sharply focused NASA attention on the need

to assure system safety. The emphasis on systems engineering was increased.

The importance and relationship of safety, reliability, and quality was recognized, and the three disciplines were coordinated and integrated. In the late

1960's, revised policy documents were issued to address revised requirements

for system safety, reliability, and quality. These documents closely coordinated the safety analysis (such as hazard identification), reliability analysis

(such as failure mode and effect analysis), and the quality program requirements necessary to achieve the safety and reliability performance goals.

0.4.3.2 Organization and Responsibilities

The Chief Engineer at Headquarters and the Directors of the various NASA

Centers and laboratories all report directly to the NASA Administrator. The

NASA headquarters' safety, reliability and quality assurance staff report to

0.36
the Deputy Chief Engineer, whereas at the NASA Centers, the Director of the

Safety, Reliability and Quality Assurance staff generally reports to the Center

Director.

The basic responsibilities for planning, developing, conducting, and

evaluating NASA programs and other activities to ensure the achievement of

necessary levels of safety, reliability, and quality are identified in NHB

1700.1(V1.A), Basic Safety Manual, and NMI 5300.7B, Basic Policy and Responsibilities for Reliability and Quality Assurance. In addition, NASA documents

NHB 5300.4(1A), Reliability Program Provisions for Aeronautical and Space System Contractors, and NHB 5300.4(1B), Quality Program Provisions for Aeronautical and Space System Contractors, contain specific reliability and quality program requirements for NASA contractors, while the safety requirements of NHB

1700.1(V1.A) are also applicable to contractors.

The basic NASA policy for SR&QA, as stated in the NASA policy documents,

includes two objectives:

" Safety (NHB 1700.1(V1.A))

1. Avoid loss of life, injury to personnel, damage to or loss of

equipment or property, mission or test failure, and undue risk.

2. Promote safety by instilling safety awareness in all NASA employees and contractors.

3. Use an organized and systematic approach to identify and control

hazards ensuring that safety factors are fully considered from

conception to completion of'all agency activities.

" Reliability and Quality Assurance (NMI 5300.7B)

1. Plan and execute NASA activities to achieve levels of reliability and quality that are commensurate with mission objectives

and overall life-cycle costs.

2. Tailor the provisions of the reliability and quality assurance

manual to the extent needed and consistent with NASA program

planning. Use the NASA Procurement Regulation, NHB 5100.2, Part

14, in conjunction with the Reliability and Quality Assurance

Manual for contracted effort.

3. Define and assign reliability and quality assurance tasks to

minimize duplication of resources, make effective use of ground

and flight experience, and properly consider interfacing

disciplines.

4. Periodically review and evaluate plans, systems and activities

for achieving reliability and quality to ensure that objectives

will be met within available technology, funding and schedule

constraints.

D.37
D.4.3.3 Program Requirements

Each NASA Center has the responsibility to develop and tailor programs to

implement the NASA policy requirements for safety, reliability and quality for

the programs and project activities assigned to that Center. To characterize

the NASA program requirements for SR&QA, the NASA guidance documents for the

space shuttle program were selected as examples to illustrate both the coordination and integration of NASA SR&QA. The following statement is an excerpt

from the preface of NHB 5300.4(1D-1), Safety, Reliability, Maintainability and

Quality Provisions for the Space Shuttle Program:

This publication establishes common safety, reliability, maintainability and quality provisions for the Space Shuttle Program.

NASA Centers shall use this publication both as the basis for negotiating safety, reliability, maintainability and quality requirements

with Shuttle Program contractors and as the guideline for conduct of

program safety, reliability, maintainability and quality activities

at the Centers. Centers shall assure that applicable provisions of

this publication are imposed in lower tier contracts. Centers shall

give due regard to other Space Shuttle Program planning in order to

provide an integrated total Space Shuttle Program activity.

In the implementation of'safety, reliability, maintainability and

quality activities, consideration shall be given to hardware complexity, supplier experience, state of hardware development, unit cost,

and hardware use. The approach and methods for contractor implementation shall be described in the contractor's safety, reliability,

maintainability and quality plans.

This publication incorporates provisions of NASA documents: NHB

1700.1, NASA Safety Manual, Vol. I; NHB 5300.4(1A), Reliability Proram Provisions for Aeronautical and Space System Contractors; and

NHB 5300.4(1B), Quality Program Provisions for Aeronautic-al and Space

System Contractors. It has been tailored from the above documents

based on experience in other programs. It is intended that this publication be reviewed and revised, as appropriate, to reflect new

experience and to assure continuing viability.

NHB 5300.4(ID-1) stipulates the NASA approach for SR&QA, and requires the

following:

" thorough planning and effective management

" definition of the major safety, reliability, maintainability, and

quality assurance tasks and their place as an integral part of the

design and development process

• evaluation of hardware safety, reliability, maintainability and quality through analysis, test, review, and assessment

D.38
" timely status indication by formal documentation and other reporting

to facilitate implementation of the safety, reliability, maintainability, and quality assurance efforts

" compatible requirements among manufacturing, test and operational

sites.

The following three sections present an overview of the NASA program

requirements for safety, reliability and quality assurance for the space shuttle program.

Safet . According to NASA program requirements, a safety plan must be

developed and must include a description of the approach for identifying,

eliminating and/or controlling potential safety hazards that could lead to

injury, loss of personnel, and damage or loss of flight or ground hardware

throughout the program's complete cycle. The safety plan will integrate and

describe the relationship of all safety activities. The safety requirements

and tasks are to be reflected as appropriate in other program plans.

The basic elements of a NASA safety plan are summarized below (DOE 1980):

" System Safety Analysis. Establish and identify procedures and

instructions that will be used to execute all safety analyses. Perform system and safety analyses to assure the following:

- Safety is to be designed into the product. Known hazardous conditions that cannot be eliminated through equipment design or

operation procedures are to be controlled or reduced to an

acceptable level. Residual hazards shall be tracked and identified to NASA.

- Hazard level classifications are to be used to provide a continuous tracking and status of severity to reduce catastrophic

and critical hazards to controlled levels within the constraints

of risk management.

" System Safety Guidelines and CQnstraints. Develop and establish system safety guidelines, constraints, and requirements to guide the

vehicle system's design, ground support equipment design, and operations planning. These criteria shall satisfy programmatic guidelines .- and constraints, system safety goals, and other top-level safety

objectives.

e Safety and Trade Studies. Specific, inherently hazardous characteristics of the alternatives being considered shall be identified.

Rationale shall be documented to support the selected concept and to

demonstrate that it includes the optimum safety provisions consistent

with program objectives, risk management, performance, cost, and

schedule.

D.39
* Hazard Analysis. Perform a qualitative hazard analysis to identify

hazards and to assure their resolution. Hazards shall be defined and

classified by hazard levels. Conduct periodic performance and

refinement of hazard analysis and periodic assessment of achieved

versus specified requirements. All hazards, including those

resulting from failures, irrespective of subsystem or component

redundancy, shall be analyzed. In addition to hazards resulting from

failures, 'those emanating from normal or emergency equipment operations, environment, personnel error, design characteristics, and

credible accidents shall also be analyzed. Identify and eliminate or

control any failures or malfunctions that could independently or collectively present a hazard to interfacing hardware, and assure that

normal operation of a hardware, item cannot degrade the safety of

interfacing hardware or the total system. Early hazard analysis

emphasizing design shall be the baseline of an expanded analysis.

The hazard analysis shall be updated as the program progresses, providing continuity and covering the interrelated areas of design,

operations, and vehicle subsystem integration.

Human Engineering. Procedures shall be developed to assure the

application of safety-related human engineering principles during

design, development, manufacture, test, maintenance, and operation of

the system or subsystem to minimize human error.

" Interface with Other Program Functions. Safety shall be coordinated

and integrated with other program functions to avoid overlaps and

conflicts among the technical disciplines, and to establish an integrated effort. This coordination shall include the delineation of

responsibilities, management structures, joint analyses, reporting

procedures, feedback of test data and corrective actions, use of

failure mode and effects analyses, single failure point summaries, or

other analytical techniques to identify hazards.

* Waivers and Deviations. For proposed waivers and deviations, the

contractor shall establish a way to analyze the safety impact.

" Hazard Data Collection, Analysis, and Corrective Action. Using

existing data systems wherever practical, a system for reporting

hazards, data storage, and feedback of corrective action shall be

formulated.

* Specifications and Procedures Review. Specifications and procedures

for manufacturing, testing, and operations shall be reviewed to

assure that these activities do not negate the inherent safety of the

design.

* Review of Changes. When changes are proposed for equipment design or

procedures, identify and resolve hazards that may be introduced into

the system. Residual hazards shall be identified as part of the

engineering change evaluation.

D.40
* Postflight Evaluation. System safety organizations shall participate

in postflight reviews and a safety evaluation shall be made in cases

where anomalous conditions are revealed. This safety evaluation will

provide guidance in planning future missions and establishing necessary corrective action to reduce hazards.

Reliability. According to NASA program requirements, a reliability plan

is to be developed in conjunction with other program plans. Reliability is an

integrated part of the design and development process and is to include the

evaluation of hardware reliability through analysis, review, assessment, and

timely status reporting. The three major elements of the reliability program

are reliability management, reliability engineering, and testing [NHB

5300.4(ID-1)].

NHB 5300.4(1A), Reliability Program Provisions for Aeronautical and Space

Sstem Contractors, prescribes general reliability program requirements for

NASA contracts involving the design, development, fabrication, testing and/or

use of aeronautical and space systems and elements thereof. Basically, it

stipulates that the contractor will maintain a reliability activity planned and

developed in conjunction with other contractor elements. Reliability functions

will be an integral part of the design and development process and will include

the evaluation of hardware reliability through analysis, review, and assessment. The contractor will provide, maintain and implement a Reliability

Program Plan that describes how compliance will be ensured with the specified

reliability requirements of engineering, design, failure mode analyses, testing

and reliability assessments.

A summary of some of the major elements of the NASA reliability program is

given below (DOE 1980).

The reliability management task involves the identification of a

reliability organization that has unimpeded access to top management

-including main line and program managers ... [NASA requires] .each

contractor to conduct audits of their internal reliability and those

of his suppliers ... [to] evaluate progress and effectiveness and

determine the need for adjustments or changes in activities.

Each major contractor must ensure that the reliability of system elements from subcontractors and suppliers meets the requirements of the

overall system. The level of reliability is tailored to the

supplier.-

The reliability engineering tasks involve development of reliability

design criteria for each subsystem, a system for receiving and concurring on design specifications and changes, and assuring that no

subsystem or component specifications violate reliability design

criteria ...

The most in-depth analysis and example of reliability engineering

disciplines comes in the area of establishing a system for conducting

Failure Mode and Effects Analysis (FMEA) and the control of the

D.41
results of this analysis, which are in the form of Critical Item

Lists (CILs) of single failure points ....

NASA Reliability Engineering establishes the fundamental requirement

for contractors supplying major space components to prepare design

FMEAs at the lowest levels of system definition required to support

potential uses, e.g., testing, failure reporting and corrective

action, and preparation of mandatory inspection points. FMEAs must

be performed to the 'black box' level and within the 'black box' to

pursue all critical functions ... The FMEA includes an integration

of all flight hardware, including government furnished equipment and

essential launch ground equipment.

Contractors must support the internal and supplier's design reviews

at the system, subsystem, and component levels as well as NASA design

and readiness reviews. These reviews include the preliminary Design

Review (PDR) which covers the system concept; the Critical Design

Review (CDR) which is accomplished when the design is about 90% complete and components are ready for fabrication; the Design Certification Review (DCR) which is accomplished by NASA Headquarters; and,

finally, the Flight Readiness Review (FRR) which determines that the

equipment is ready for flight.

In summary, the NASA reliability technique includes:

* A well organized and managed reliability program.

* Defining and implementing tasks that prevent problems early in the

program.

* Establishment of programmatic controls with required formatted

documentati on.

" Establishment of key points in the program to check and review

progress and problems.

* Strict attention to detail by all organizations.

Quality Assurance. As for safety and reliability, a quality plan is to be

developed in conjunction with other program plans. The elements of the quality

plan are somewhat similar to the elements of 10 CFR 50, Appendix B, which is

required for nuclear power plants. The NASA quality program as outlined in NHB

5300.4(1D-1) and NHB 5300.4(1B) is to do the following:

* demonstrate recognition of the quality aspects of the contract and an

organized approach to achieve them.

* ensure that quality requirements are determined and satisfied

throughout all phases of contract performance, including preliminary

and engineering design, development, fabrication, processing, assembly, inspection, test, checkout, packaging, shipping, storage,

D.42
maintenance, field use, flight preparations, flight operations, and

post-flight analysis, as applicable.

* ensure that quality aspects are fully included in all designs and are

continuously maintained in the fabricated articles and during

operations.

* provide for the detection, documentation, and analysis of actual or

potential deficiencies, system incompatibility, marginal quality, and

trends or conditions which could result in unsatisfactory quality.

* provide timely and effective remedial and preventive action.

Also, the contractor will prepare, maintain, and implement a Quality Program Plan that describes how the contractor will ensure compliance with cited

quality requirements. The Quality Program Plan will be submitted as required

by the Request for Proposal or Contract. The plan format shall be readily

identified with each cited requirement. The plan shall cover all quality program activities for the time period or phase authorized, be updated periodically and resubmitted, as specified in the contract, and serve as the master

planning and control document.

NHB 5300.4(1B), Quality Program Provisions for Aeronautical and Space

System Contractors, identifies the quality program requirements for NASA aeronautical and space programs, systems, subsystems and related services. Basically, the contractor will maintain an effective and timely quality program

planned and developed in conjunction with all other contractor's functions

necessary to satisfy the contract requirements.

D.4.3.4 Program Implementation

NASA Centers are to invoke the requirements of the reliability and quality

assurance manual to the extent required and consistent with program planning in

procurements of aeronautical or space systems, launch vehicles, spacecraft,

associated ground support equipment or elements thereof to ensure the required

high quality of materials, parts, components and services; to design reliability into aeronautical and space systems; and to prevent degradation of the

design's reliability through the succeeding steps from fabrication to end use.

Because their programs require delivery of only small numbers of each system,

operate under tight schedules, and require high reliability in the first, as

well as subsequent systems, NASA has developed and implemented a program

wherein contractors and suppliers use a thoroughly disciplined, systematic

approach to safety, reliability, and quality.

NASA requires that engineering designs be essentially completed (90 to

100%) and reviewed prior to starting fabrication work. Further, in-depth,

detailed "readiness reviews" are conducted at key points in a program before

proceeding with the next phases or steps. These reviews assure that all

changes and discrepancies have been properly addressed and resolved.

D.43
D.4.3.5 Coordination of Programs

The emphasis of NASA on safety, reliability, and quality assurance programs appears to stem from the definite commitment to coordinate and integrate

these programs to achieve the common overall program objective--a safe,

reliable product with the necessary level of quality to meet program performance objectives. In DOE (1980) there is a discussion on the NASA system

safety approaches and reasoning or rationale behind these approaches. Listed

below are a few of these features that appear to be applicable to the "entire

systems". approach used by NASA to coordinate and integrate the safety, reliability and quality assurance programs and plans.

" The complexity of systems, subsystems, and components under extreme

and varying environment and application conditions places heavy

demand on safety systems. The inherent complexity of the NASA flight

hardware systems demands technical and analytical techniques of considerable sophistication to identify and solve-problems.

" The need to focus considerable attention on the safety considerations

arising out of total systems effects cannot be discovered by considering portions of the system independently.

* Assure that the safety aspects of the mission under normal conditions

and under mission failure conditions are adequate.

" Know the hazardous characteristics of the system, including operation

under all environmental conditions during design, manufacture, test,

transportation, storage, and operation. "System" includes the hardware, flight and ground support equipment/electrical support equipment, the facilities, and the procedures that are used to operate and

test the system.

" Eliminate, insofar as possible, these hazards. If the hazards cannot

be eliminated, take all practical steps to control them. These steps

include both hardware and software considerations.

* Recognize that the management responsibility for achieving system

safety flows along program organizational lines.

" Keep in mind that the desired results from system safety activities

are to minimize risks to the maximum practical extent and apply the

knowledge of these risks to management decisions. Also, assure an

understanding at all management levels as to the risks being incurred

by testing, transporting, or operating the system or portions of the

system.

D.4.4 U.S. Shipbuilding Assurance of Quality (AOQ) Programs

This section discusses the AOQ programs for both U.S. Naval shipbuilding

and commercial shipbuilding. For each, the program requirements and implementation are described.

D.44
This study was based totally on publicly available information obtained

from a comprehensive review (including computerized literature data base searches) of pertinent references. Sources for these references included the Naval

Sea Systems Command Library, the Naval Sea Systems Command Directives, the

Defense Logistics Agency, the National Technical Information Service, the U.S.

Department of Transportation Library (including both Maritime Administration

and U.S. Coast Guard Material), and the American Bureau of Shipping Library.

However, to validate more completely the material presented here, as well

as to expand the material collected so that it describes in greater detail how

the programmatic aspects actually work, an outside group with technical experience on U.S. commercial and naval shipyard operations (COMEX) reviewed and

expanded the material.

D.4.4.1 U.S. Naval Shipbuilding AOQ Program

The U.S. Naval shipbuilding program involves both nuclear and non-nuclear

ship construction. Such construction uses many of the same kinds of materials,

construction techniques, and skills used in the civilian commercial nuclear

industry. The potential for hazard to the general public and a strong governmental involvement closely relate the two programs.

Background. Before 1960, no formally established quality assurance

program existed in Naval or private shipyards. In November of 1960, the Bureau

of Ships (now Naval Sea Systems Command - "NAVSEA") published an instruction

that formally established a quality assurance program in the shipyards. A

Quality Assurance Division was formed in the Production Department (which is

primarily responsible for all phases of ship construction in the yard) partly

by bringing together existing functions, including inspection and test

sections, laboratory functions, and the welding engineers. In the Nuclear

Power Division that was set up in some shipyards, there was also a responsibility for quality control functions for all operations involving nuclear

power.

In 1966, the publication of a revised edition of the Standard Regulations

established a mandatory Quality and Reliability Assurance Department. From

1966 to 1975, various instructions, notices and publications addressing the

assurance of quality and reliability were promulgated by the Defense Department, NAVSEA, Naval shipyards, private shipyards and commercial vendors. By

1975 every Naval shipyard and all private shipyards performing work for the

Navy had quality-control and assurance instructions and manuals. Areas such as

the nuclear propulsion program or areas of specific interest or having special,

more rigorous requirements or problems had their own instructions, which amplified these basic manuals and directives.

Quality Program Organization and Requirements. The AOQ program for U.S.

Naval ship construction is based on Title 32 of the Code of Federal Regulations

(National Defense) DAR Section XIV, Procurement Quality Assurance. This

defines the government function by which it determines whether a contractor has

fulfilled its contract quality and quantity obligations. The contractor is

responsible for controlling product quality and for offering to the government

D.45
for acceptance only those supplies and services that conform to contract

requirements. When required, the contractor also must maintain and furnish

substantiating evidence of this conformance.

The organization responsible for technical requirements (e.g., specifications, drawings and standards) prescribes inspection, testing, or other contract quality requirements that are essential to assure the integrity of

products and services (32 CFR). Systematic control of manufacturing processes

by the producer is also an essential prerequisite for assuring the quality of

such items (32 CFR). However, criteria for applying contract quality requirements can be dependent on each item's character, importance, and application.

The general framework for the regulations currently governing the assurance of quality program for the U.S. Naval ship construction program, both

nuclear and non-nuclear, is shown in Figure D.3.

Three military standards/specifications form the implementing basis

(32 CFR) for Department of Defense assurance of quality programs:

MIL-STD-109B, Quality Assurance Terms and Definitions; MIL-Q-9858A, Quality

Program Requirements; and MIL-I-45208A, Inspection System Requirements.

" MIL-STD-109B Quality Assurance Terms and Definitions. The intent of this

standard is to ensure that the Department of Defense quality assurance

organizations are able to implement policies based on a commonality in

language.

* MIL-Q-9858A Quality Program Requirements. This specification is applicable to the Department of the Army, the Navy, the Air Force, and the

Defense Supply Agency. It requires the establishment of a quality program

by all contractors furnishing equipment, systems, subsystems, and/or services to the Department of Defense. Commonly referred to as "MIL-Q," this

document allows the Supervisor of Shipbuilding, Conversion, and Repair

(SUPSHIP) organizations to direct the contractor to establish a quality

control and assurance program for a specific procurement in excess of

standard contractual obligations. When invoked, MIL-Q requires the contractor to establish the programs and requires the Government Representative, in this case SUPSHIP, to approve and monitor the program.

The complexity of such a program varies, depending upon the work

being performed by the contractor. For example, private shipyards engaged

in construction of nuclear submarines typically have quality assurance

organizations and programs at least as sophisticated as those of Naval

shipyards. On the other hand, a private yard engaged only in constructing

or repairing small auxiliary vessels such as tugs and barges would not

need nearly as complex an organization to satisfy MIL-Q. In April 1965,

the Assistant Secretary of Defense (Installations and Logistics) published

the Quality and Reliability Assurance Handbook (H 50), which provides

general guidance to personnel responsible for evaluating a contractor's

quality program when Military Specification MIL-Q-9858A is invoked in the

contract.

D.46
I

Code of Federal Regulations

32 CFR XIV

"Procurement Quality Assurance"

MIL-STO-1098

Quality Assurance

Terms & Definitions

I

Military Standards

MIL-Q-9858A

Quality Program

Requirements

MIL-I-45208A

Inspection System

Requirements

I Department of Defense

Instruction on System Acquisition

DODI 5000.1 I """LIII":

I Secretary of the Navy

Instruction of System Acquisition

SECNAVINST 5000.1 I

I I

I

Naval Material Command

Instruction on QA

NAVMATINST 5455.69A I

I

I

Naval Sea Systems Command

Instruction on QA Program

NAVSEA INST 4855.5A I _______________________________________ I -

Implementi ng

NAVSEA Instructions

Organizational

Instructions and

Di rectories

I

General

or Training

Documents

Program for the FIGURE D.3. Regulations for the Assurance of Quality

U.S. Naval Ship Construction Program

0.47
* MIL-I-45208A - Inspection System Requirements. This specification

establishes requirements for the inspection and tests that the contractors

must perform to substantiate product conformance to drawings,

specifications and contract requirements and to all inspections and tests

required by the contract. These requirements are in addition to those

inspections and tests set forth in applicable specifications and other

contractual documents. Commonly referred to as "MIL-I," this document is

similar'to MIL-Q in intent, use and assignment of responsibility. Like

MIL-Q, the contractor's efforts to satisfy MIL-I requirements varies with

the specific procurement. Again, the contractor must satisfy SUPSHIP that

compliance has been achieved and is being maintained adequately. MIL-Q

and MIL-I interrelate in that in satisfying the requirements of MIL-Q, a

contractor may have also satisfied MIL-I requirements.

Program Implementation. The AOQ program is directly administered by the

Naval Material Command, Naval Sea Systems Command, and the Naval shipyards.

Within the Navy, the Naval Material Command implements the overall procurement QA program in accordance with NAVMATINST 4355.69A. This document is

identical to that used for the Defense Supply Agency (DSAM 8200.1). Army

(AR 702-4), Air Force (74-15) and Marine Corps (MCOP 4855.4A). The Deputy

Chief of Naval Material for Reliability, Maintainability and Quality Assurance

(MAT 06) is responsible for AOQ programs regarding the acquisition of naval

material, and has four components reporting to him: (1) Program Assessment

Division (MAT 061), (2) Reliability and Maintainability Division (MAT 062),

(3) Quality Assurance Division (MAT 063), and (4) Manufacturing Technology

Division (MAT 064).

The Naval Sea Systems Command reports to the Naval Material Command and

serves as the coordinator of shipbuilding, conversion, and repair for the

Department of Defense; and coordinator of ship repair and conversion of the

Department of Defense/Department of Commerce.

In July 1975, the Naval Shipyard Quality Program Manual, NAVSEA

0900-LP-083-0010, was promulgated (NAVSEA 1982). This manual established the

minimum quality program requirements for constructing, converting, modifying,

overhauling, and refurbishing Naval ships and craft. This generic document

addresses general responsibilities, technical data, work instructions and

authorizations, procurement quality control, material control, process controls, metrology and calibration, inspection and verification, corrective

action, preventive action, audits, and training. By mid-1977 the provisions of

this manual had been implemented in Naval and private shipyards.

Although the requirements for quality programs are reasonably well consolidated in NAVSEA 0900-LP-083-0010, countless amplifying documents and

instructions exist that are more specific, detailed or tailored to the specific

needs of ship operators, ship or system types. Separate programs that are distinct from the overall Navy AOQ exist, although they are generally consistent

with the overall objective of ensuring safe, reliable output from research and

development and operational activities. The SUBSAFE program, for example, is

an entire program amplifying the guidelines of the basic instruction to more

D.48
specifically address submarine safety. Another program, the Naval reactor

propulsion program, contains numerous specific quality assurance directives

addressing aspects of quality control and assurance ranging from identifying

and controlling materials suitable for reactor plant application to controlling

safety in reactor system and subsystem operations and testing.

The operational branches of NAVSEA include the Naval shipyards, Naval ship

repair facilities, and the offices providing the liaison between the Navy

Department and commercial shipyards and repair activities. The liaison offices

include the offices of the Supervisor of Shipbuilding, Conversion and Repair,

commonly referred to as SUPSHIP. The Naval Shipyard Commander and the Supervisor of a SUPSHIP organization share the responsibility for completing the

construction, repair or overhaul mission with the vessel's commanding officer. Frequently, the Naval Shipyard Commander is also the Supervisor of the

SUPSHIP office within his Naval District. The administration of the quality

program is assigned to the Quality Assurance Officer of the Naval Shipyard and

SUPSHIP organization.

The objectives and functions of a Defense Department contract administration activity such as a SUPSHIP office have several major distinctions from

those of a Naval shipyard quality assurance organization. The chief difference

is in the administration of quality control and assurance procedures. Commercial contractors performing work for the government are required by contracts

to assure compliance with the quality requirements of the specific contract

being performed. Certain basic minimum quality program requirements must be

met for a private firm to be qualified to perform certain types of government

work. For the types of work ordinarily performed under SUPSHIP cognizance,

these basic guidelines are required by the Master Ship Construction contract

(MSC) or the Master Ship Repair contract (MSR). To be eligible to bid for Navy

ship construction or repair work, a signator private firm must continuously

comply with the provisions of either the MSC or MSR contract regardless of

whether the company is presently performing government contract work. Among

these provisions are those addressing quality assurance and control.

The SUPSHIP organization acts as the liaison between the government customer and the commercial supplier in all matters including administering the

contract and control for quality. The Quality Assurance Office is guided by

two basic documents, which have extensive quality assurance supplements:

a. Ship Acquisition Contract Administration Manual (SACAM).- the governing document for use by SUPSHIP in contracting for tihe construction of vessels.

b. Ship Repair Contracting Manual (Repair Manual) - the governing document for use by SUPSHIP in contracting for ship repair.

Standard Naval shipyard organization for assurance of quality is specified

in NAVSEA instruction 5450.14, the Standard Naval Shipyard Organization Manual.

Any deviation must be approved by the Naval Sea Systems Command. Besides outlining the organizational structure of Naval shipyards, this organization also

describes the duties and responsibilities of staff within the organization.

D.49
Using excerpts from NAVSEA Instruction 5450.14, the following subsections

briefly discuss the duties and relationships of typical shipyard organizations. First, however, several key observations must be explained to adequately understand how the AOQ function actually works within the Naval

shipyard.

" There are parallel, complementary, organizations within the shipyard

for non-nuclear and nuclear matters.

" A DOE representative called "Naval Reactors Division of Naval Reactors Representative" is assigned to every Naval shipyard that performs nuclear reactor plant work. This representative reports to

the Director, Division of Naval Reactors, U.S. DOE, and provides the

Shipyard Commnander with an independent review and surveillance of

all shipyard work relating to Naval nuclear propulsion matters. The

Representative has free-access to all elements of the shipyard

dealing directly or indirectly with Naval nuclear propulsion. The

review and surveillance is not intended to detract from, change or

diminish the existing responsibility of the Nuclear Engineering

Manager or any other shipyard official. The Naval Reactors Representative is provided suitable and sufficient office space in the

shipyard and other administrative support to carry out the assigned

function.

" The USN puts the burden of proof for assurance of quality totally on the

contractor. USN inspections,' while extensive and involving both shipyard

and ship's force review, do not substitute for a contractor inspection,

and the use by the contractor of independent auditors is encouraged. The

intent is to allow the USN inspectors to selectively review phases of the

overall program rather than become immeshed in minute details of specific

technical areas.

9 The USN shipbuilding program requires readiness reviews at the shipyard

project level involving ship's force, shipyard departments, contractors,

and quality assurance staff at both periodic (e.g., weekly) intervals and

workphase points (e.g., pre-hydrostatic testing) (NAVSEA Instruction

5450.14).

" USN shipyard organizational structures have been mandated to ensure that

the QA manager and the onsite Naval reactors representative have direct

access and responsibility for reporting to senior shipyard management and

their respective directorates at Naval Sea Systems Command headquarters.

" A prioritization effort has been made in the USN program to base quality

requirements on and to direct audits to the equipment, systems, and/or

material which are most critical. A formal mechanism is established for

classifying or prioritizing quality efforts to ensure that attention

regarding assurance of quality is not placed only on what just happened

("squeaky wheel" syndrome). An important distinction is made, however,

that while the range and depth of requirements may change depending on the

importance of the component or system, no adjustment is made in the degree

of compliance (i.e., requirements must be met).

D.*50
* The USN has issued strong guidance for detecting and preventing deliberate

malpractice and fraud related to construction assurance of quality programs (NAVSEA 1976).

* Careful attention has been taken to ensure that onsite inspectors are not

overloaded with administrative responsibilities (i.e., duties are prioritized) such that they do no have the freedom or time to examine problem

areas as they arise.

" The USN has established a program to evaluate the quality of contractor

products and maintains a computerized data bank of vendor record and component performance information, accessible to both USN and commercial

staff. The vendor and component information collected in this data bank

is analyzed to identify and track potential items of concern. These

analyses have been characterized to look for "warning signs" or other

indicators to key inspection staff on aspects or features of assurance of

quality programs that need to be monitored in closer detail.

In the Naval shipyard, there are seven individuals whose functions

directly encompass the assurance of quality. Their responsibilities for

implementation of the quality programs are discussed below.

* Nuclear Engineering Manager. The Nuclear Engineering Manager is

responsible to the Shipyard Comnmander for resolving all nuclear reactor

plant technical matters. These responsibilities include the following:

- testing nuclear reactor plants and integrated propulsion plants

on nuclear powered ships

- advising responsible shipyard officials on quality control and

radiological controls of such work, including special

fabrication procedures, instructions, proper manning levels,

erection and overhaul schedules and sequences, estimates,

facilities, and industrial safety and security

- quality control engineering of nuclear reactor plant work.

* Head, Nuclear Quality Engineering Division. The Head of the Nuclear

Juality Engineering Division is responsible during the construction,

overhaul, testing, maintenance and refueling of Naval reactor plants for

the following:

- establishing or causing to be established quality control

procedures to be used for nuclear reactor plant work

- analyzing and assessing the quality of reactor plant work;

recommending remedial actions to correct and prevent recurrence

of errors in workmanship and procedures

D. 51
- providing information feedback to- NAVSEA for improving

specifications

- conducting irregular periodic audits of shipyard operations

related to nuclear reactor plant quality control matters

- performing the responsibilities of the "governmental inspector"

for reactor plant work, as defined in applicable NAVSEA

standards.

* Production Officer. The production department, headed by the Production

Officer, plans, schedules, and supervises all new ship construction work.

* Nuclear Production Manager. The Production Officer's nuclear area

supervisor is the Nuclear Production Manager, who also has direct access

to the Shipyard Commander. Duties include the following:

- exercising line authority as a deputy to the Production Officer

for the nuclear aspects of new construction, overhaul, testing,

refueling and core loading of concern to the Production

Department

- assuring that all nuclear production work is accomplished on

time, at reasonable cost, and in accordance with specified

technical requirements and good workmanship standards

assuring that lists of production personnel qualified for nuclear

work are maintained and concurring in such lists.

* Quality Assurance Officer. The Quality Assurance Officer reports directly

to the Shipyard Commander and is responsible for the following:

planning, executing and monitoring a quality assurance program

for the shipyard in accordance with applicable qualityassurance criteria and with due consideration to the safety of

ships, equipment and personnel

planning and managing a quality-cost measurement program for

the shipyard (prevention, appraisal and failure costs)

providing guidance, integration, and evaluation of the efforts

of the shipyard toward the prevention of product quality

degradati on

investigating and evaluating quality problems to determine the

fundamental cause, cost, scope, and significance of the

problems

directing a shipyard program to ensure calibration of measuring

and testing equipment; maintaining measurement standards and

performing calibration

D.52
- developing a quality assurance training program for the

shipyard

- performing quality assurance functions such as inspection,

physical and chemical testing, qualification testing, nondestructive testing; witnessing formal operational tests, as

assigned; performing audits of the procedures, conduct, and

records of inspections; and performing tests of weight-handling

equi pment

- making failure mode analyses and process capability studies

- establishing technical requirements for metal fabrication and

thermal joining processes

- managing to the shipyard quality assurance audit program, and

performing internal audits to determine shipyard compliance

with quality requirements

- executing such research, development, test and evaluation

programs as are assigned..

* Chief Quality Assurance Engineer. The Chief Quality Assurance Engineer

reports to the Quality Assurance Officers. Responsibilities includeperforming and coordinating all activities of the Quality Assurance

Office, with the exception of those functions performed by the Nuclear

Quality Assurance Manager.

* Nuclear Quality Assurance Manager. The Nuclear Quality Assurance Manager

exercises line authority as a deputy to the Quality Assurance Officer for

the nuclear quality assurance of new construction, overhaul, testing,

refueling and core loading of Naval reactor plants. The Nuclear Quality

Assurance Manager has direct access to the Shipyard Commander, and is

responsible for the following:

- confirming that nuclear work is performed to specifications and

procedures and recording required data to document that the

work is performed correctly, including maintenance of

documentati on files

- informing the appropriate- department heads and-the Shipyard

Commander of work not being performed to specified requirements

or not in accordance with safety practices

assuring that adequate planning and scheduling are provided for

the nuclear work performed under the responsibility of the

Quality Assurance Officer, including assuring that adequate

manpower resources and equipment are provided within the

Quality Assurance Office to prepare for and perform reactor

plant work

D.53
- keeping informed of the nuclear work performed under the

cognizance of the Chief Quality Assurance Engineer and assuring

that the Quality Assurance Officer and the Shipyard Commander

are advised of work not performed to required standards

- assuring that lists of Quality Assurance Office personnel

qualified for nuclear work are maintained and concurring in

such lists

- consistent with the above, seeing that all functions of the

Quality Assurance Office concerned with nuclear work are

accomplished on time and at reasonable cost.

D.4.4.2 U.S. Commercial Shipbuilding AOQ Program

In areas of complexity, potential for hazard to the general public, and

strong governmental involvement, the U.S. merchant marine shipbuilding program

can be related to the.U.S. commercial nuclear power plant construction

program. Vessels include supertankers, combined ore/bulk/oil (OBO) carriers,

and liquefied natural gas (LNG) carriers, in addition to containerships, barge

carriers and roll-on/roll-off van carriers (Maritime Administration 1982).

Because these ships are so large, so complex, and in many cases carry hazardous

cargos, assurance of quality in construction is essential.

Background. Private shipyards in the United States employ approximately

175,000 people, about two-thirds of whom are concentrated at 26 major shipyards

involved in constructing naval ships and/or major ocean-going or Great Lakes

merchant ships (Maritime Administration 1982). The deep-draft merchant vessels

being constructed represent the largest and most complex mobile structures

manufactured. Their assembly involves nearly every kind of material, draws on

the products of almost every industry, employs almost every skill, and is

intended to achieve a thirty-year life, which is comparable to that of a

commercial nuclear facility. Many of the ships being constructed represent

advanced designs that are equivalent to three to five of the older ships that

they replace.

Governmental regulatory bodies are involved in the assurance of quality

for U.S. merchant vessels for two major reasons:

* concern for the substantial hazard to life and property from commercial vessels in the case of an accident

" involvement of the U.S. Government in Construction Differential Subsidy (CDS).(a) (Although this was applicable to the program studied,

the subsidy has reportedly been discontinued except for contracts

existing in 1982.)

(a) In 1981 the Maritime Administration (MarAd) awarded CDS contracts to build

83 new merchant ships valued at $4.4 billion; the government's share,

including national defense features, was $1.74 billion (Maritime Administration 1982)0

D. 54
AOQ Program Organization and Requirements. The United States Coast Guard

(USCG) is responsible for enforcing rules and regulations set down in Title 46

(Shipping) of the Code of Federal Regulations necessary for the safe construction and operation of U.S. flag vessels. The USCG inspects and certifies

various tanker, passenger, cargo, and miscellaneous ships prior to their use.

The principal legislative authority for these inspection and certification

activities are fqund in 46 CFR 369 and 391. The USCG inspection and certification regulations apply to nearly all large vessels. Smaller vessels may or

may not be covered, depending on their size, capacity, and type of power. The

USCG Merchant Vessel Inspection Division in the Office of Merchant Marine

Safety administers the inspection and certification.

The USCG regulatory structure for each class of vessel is basically similar. Initially, the USCG must approve the plans for a proposed tanker [46 CFR

31.10-5(a)], passenger (46 CFR 71.20-10), or cargo (46 CFR 91.20-5) vessel.

When a vessel passes the initial inspection upon completion of construction,

the USCG issues a certificate of inspection. Several points relating to assurance of quality in the USCG program are worth noting:

" On a trial trip of each new or converted ship, an inspector is present'to observe safe operation (46 CFR 31.10-40).

" It has been conservatively estimated that 9 percent of the total

estimated construction costs of a vessel are due to U.S. government

regulation. The U.S. government requirements themselves, however,

are essentially the same in most cases as internationally recognized

standards (Ernst and Whinney 1979, pp. 7-12).

" A survey by Ernst and Whinney in 1979 found that most shipping and

shipbuilding companies (>80%) felt that regardless of current regulations, they would continue to perform the same inspections and

tests at the same frequency because of their concern for the safety

of the crew and ship. Because safety and the assurance of quality

were felt to be everyone's concern, including the vessel owner's,

mutual understanding and working relationships would be preferred

and should be in general more effective than the adversary position

that was sometimes felt to exist .between the Coast Guard and the

industry (Ernst and Whinney 1979, pp. 5-31).

* In the inspection of hulls, boilers, and machinery, the current

standards established by the American Bureau of Shipping (ABS) are

designated Rules for Building and Classing Steel Vessels. These

apply to materials and construction of hulls, boilers, and machinery, except as provided for by other regulations in Title 46, and

are accepted as standard by the USCG. The approved plans and certificate of the ABS, or other recognized classification societies

for classed vessels, may be accepted by the USCG as evidence of the

structural integrity of the hull and the reliability of vessels,

except as otherwise specified in 46 CFR 31.10-1.

D.55
" Since May 1965, the ABS has been designated as an organization duly

authorized to issue the "Cargo Ship Safety Construction Certificate"

to certain cargo ships on behalf of the United States of America as

provided in the regulations. At the option of the owner or agent of

a vessel and on direct application to the ABS, the ABS may issue to

a vessel a Cargo Ship Safety Construction Certificate having a

period of validity of not more than five years. If the ABS determines that a vessel that was issued a Cargo Ship Safety Construction

Certificate no longer complies with the ABS's applicable classification requirements, it will immediately furnish the USCG with all

the relevant information to determine whether the USCG will

withdraw, revoke or suspend the certificate (46 CFR 91.60-45).

" Before any construction or conversion is started on a vessel,. application for the approval of contract plants and specifications and

for a certificate of inspection is made in writing to the USCG, and

construction or conversion cannot proceed until approval is granted

(46 CFR 31.01-20).

" Triplicate copies of contract plans and specifications are forwarded

to the Officer in Charge, Marine Inspection, in whose district the

construction will take place, for submission to headquarters for

approval. However, if the vessel is to be classed, such plans and

specifications shall first be approved by a recognized classification society. If the plans and specifications are adequate, they

are approved. During construction and upon completion of construction, each vessel is inspected by the Officer in Charge, Marine

Inspection, to determine whether it has been built in accordance

with the approved plans and specifications (46 CFR 31.10-5).

AOQ Program Implementation. This section discusses the roles of the

MarAd, the ABS, the Ship Structure Committee and their interactions with the

USCG. However, before discussing the roles of each of these organizations, the

following are noted as significant factors in the assurance of quality for the

commercial shipbuilding program.

1. A cooperative relationship has been fostered between the builders, buyers,

regulators, and standards-setting groups. An emphasis has been placed by

the interested parties on maintaining cohesiveness rather than retaining

individual freedoms.. Involvement of the federal government with industry

through the active participation of staff members on standards and codes

committees and Memorandums of Understanding has been successful.

2. Both ABS and USCG have a corps of Inspectors/Surveyors adept at shipbuilding practices and interpretation and enforcement of their respective

rules. The autonomy of these Inspectors/Surveyors is generally accepted

by U.S. shipbuilders without the adversary relationship so common in other

programs. The reason for this acceptance, as outlined by Lisanby and Hass

(1981), lies in the commercial impact, since denial of certification is

accepted by the courts as proof of failure on the part of the shipbuilder

so that the commercial loss of the customer can be shifted to the

shipbuilder.

D.56
3. Standardization of ship design is a major industry policy, which has

greatly simplified assurance of quality.

* Maritime Administration. The MarAd, an agency of the U.S. Department of

Transportation since August 6, 1981, administers federal programs designed to

promote and maintain a merchant marine capable of meeting America's requirements for both commercial trade and national defense. From 1950 to 1981, MarAd

was part of the Commerce Department.

The MarAd is indirectly involved in assurance of quality, and is mainly an

economic and contractual, not a technical, organization whose purpose is to

ensure that subsidies (where applied) are not misspent. To accomplish this, it

has established policies and procedures for the conduct of subsidy condition

surveys (46 CFR 272.2-5). Besides requiring and specifying the extent of surveys necessary to validate subsidies, the MarAd also is involved in developing guidance to assist the maritime industry and in preparing detailed ship specifications. The MarAd's Standard Specifications for Merchant Ship Construction

(PB-290,400; January 1979) requires that the contractor submit working plans

within 60 days after the award of the contract, including schedules for readiness reviews. These plans identify which reviews are required, who will participate, and what will be reviewed, including change orders. Finally, the MarAd

is involved in promoting the U.S. maritime industry through its research and

development programs.

* American Bureau of Shipping. The American Bureau of Shipping (ABS) is a

nonprofit, nongovernmental ship classification society that establishes and

administers standards (which it refers to as Rules) for the design, construction and periodic surveillance of merchant ships and other marine structures.

Members of the society include naval architects, marine underwriters, shipowners, shipbuilders, and governmental representatives (including U.S. Department of the Navy, U.S. Coast Guard, and U.S. Maritime Administration). The ABS

acts as a self-regulatory agency to the maritime industry, not just in the

United States, but in over 90 countries.

The ABS's charter is to continually work to develop and update its rules

through a pyramidal committee structure that comprises 19 technical committees

and panels, whose members serve without compensation to ensure impartiality. Rule changes are initiated at the special committee or panel level, or by someone in the maritime field. If a special committee (e.g., Materials, Electrical

Engineering, Nuclear Applications, Welding, or Operations) recommends that a

rule be adopted or changed, such a proposal (depending on application) is forwarded to one of two full committees (Engineering or Naval Architecture).

This second committee will arbitrate whether such action should be taken,

then submit their recommendation to the technical committee, which has the

final say on each proposal's acceptability. These rules are published in an

array of documents that apply to ship construction. The basic implementing

document for most major ship construction is Rules for Buildiný and Classing

Steel Vessels, which is annually updated. This document is called out in

46 CFR 31=.1- regarding required USCG inspections accepted as standard by the

Coast Guard, except as appropriately noted in the regulations.

D.57
The following excerpt from the ABS description of classification describes

how the rules are administered:

The formal classification procedure begins when an official request

for the classification of a ship or marine structure is voluntarily

submitted to ABS. This usually results from an owner specifying a

desire for ABS classification to the shipyard whereupon the shipyard

contracts for classification serves with ABS.

The vessel design is then submitted to ABS for verification that the

plans conform to accept standards of good practice for vessel design

embodied in the 'ABS Rules for Building and Classing Steel Vessels,'

or other various ABS Rules listed earlier. So, in reviewing a given

set of design plans, ABS is comparing them with a compendium of

experience factors and proven scientific principles. In this way,

ABS is able to determine whether the design is adequate in its

structural and mechanical concept and, therefore, acceptable to be

translated into an actual vessel.

To conduct the plan review function, the classification society

employs technical staff surveyors trained in the skills of naval

architecture, marine engineering, and other associated disciplines. These specialists scrutinize the vessel's design to confirm

that the details comply with the standards set forth in the published Rules. Their review may also include sophisticated analytical procedures employing one of the many ABS computer programs.

If the design is found to be not in compliance with the Rules, ABS

amends the plans or notifies the owner or designer of the departures

from the Rule requirements. During the entire review process, ABS

is available for consultations with the owner and designer.

After a design has been reviewed by ABS technical surveyors and

found to be in conformance with the Rules, ABS field surveyors, who

are experienced in the construction of hulls and fabrication of

machinery and components, 'live with the vessel' at the shipyard

from keel laying to delivery. In so doing, they survey construction

to verify that the plans are followed, workmanship is of the best

quality, and the Rules are adhered to in all respects. Field surveyors also witness testing of material, machinery, and components

at manufacturers' plants and fabricators' shops to determine that

they also comply with the Rules. During the entire time of construction, ABS maintains an ongoing dialogue with the owner and

shipyard to make sure the Rules are understood and adhered to and

also to assist in resolving any differences that may arise.

When completed, a vessel undergoes sea trials and an ABS field surveyor attends the trials to verify that the vessel performs according to the requirements as specified in the Rules. In order for a

vessel to be formally classed, a report must be presented to the ABS

Classification Committee. This Committee, composed of prominent

D.58
individuals from the maritime industry who serve without compensation, meets twice a month to perform a final review of the vessel's 'credentials.' A vessel found to be acceptable in all respects

according to the Rules is then granted ABS classification by that

Committee and issued an official ABS classification certificate. In

granting class the Committee is saying, in essence, that the vessel

is in conformance with the ABS Rules and to that extent is mechanically and structurally fit for its intended service.

An additional item of some importance concerning the ABS involves a Memorandum of Understanding (MOU) signed by the ABS and the USCG in early 1982. As

stated in the 1982 ABS annual report, page 3:

One memorandum provides for Coast Guard acceptance of ABS admeasurement and tonnage certification of all U.S. flag versels. The other,

known as MOU II, is an expansion of an earlier Memorandum, known as

MOU I, signed in June of 1981, and provides for Coast Guard acceptance of ABS plan review and inspection of various hull and machinery

items for new construction of U.S. flag vessels built to the classification requirements of the Coast Guard.

In this regard, it was written into the memorandum that an orderly

and deliberate transition will be assured through a phasing-inprocess, thereby allowing ABS to augment its resources as necessary

and appropriate.

S Ship Structure Committee. To integrate research on marine transportation,

a committee involving most of the major participants was formed. As

stated by the Booz-Allen Study (1981), the mandate of the interagency Ship

Structure Committee (SSC) is to conduct an aggressive research program.

This program's objective is, in the light of changing technology in marine

transportation, to improve the design, materials and construction of the

hull structure of ships and other marine structures by extending knowledge

in these fields. Its ultimate purpose is to increase the safe and economic operation of all marine structures. The SSC is composed of one

senior official each from the USCG, Naval Sea Systems Command, Military

Sealift Command, MarAd, and the ABS. In 1977, the U.S. Geological Survey,

which is responsible for the personnel, safety and environmental aspects

associated with the offshore oil and mining industry, agreed to

participate.

The SSC formulates policy, approves program plans, and directs funds from

its member agencies into the research program. Four representatives from different divisions within each agency meet periodically as a Ship Structure Subcommittee to ensure achievement of the program goals and to evaluate the

results in terms of ship structural design, construction and operation.

D.4.5 NRC Assurance of Quality (AOQ) Program

This description of the NRC's program for assuring quality in the design

and construction of nuclear power plants has been developed by reviewing the

D.59
available literature and by conducting interviews with NRC staff both at the

headquarters of the Inspection and Enforcement Office and at regional offices

in Atlanta, Georgia; Arlington, Texas; and Walnut Creek, California. The purpose of this review is to provide a basis for evaluating the transferability of

AOQ program features and practices from other industries and agencies to the

NRC and the industries involved in building nuclear power plants.

D.4.5.1 Background

The nuclear industry originated with the U.S. Army Engineers' Manhattan

District Project in World War II. Shortly after the end of the war, a new

government agency, the Atomic Energy Commission (AEC), was formed and the

nuclear industry, which at that time involved only the federal government and

its contractors, was transferred from the military to the AEC. The expansion

into commercial applications by the private sector became possible with the

passage of the Atomic Energy Act of 1954. A separate arm of the AEC was established to r~egulate the private sector in these commercial applications.

The Energy Reorganization Act of 1974 further separated the regulatory

function from nuclear energy promotion by forming the Nuclear Regulatory Commission (NRC). This legislation also created the Energy Research and Development Administration (ERDA) to encourage and promote the commercial applications

of nuclear energy, with the NRC responsible for the regulatory functions.

Although a few new corporate organizations dedicated to activities in the

nuclear field came into being, the major thrust of the commercial industry was

carried by existing corporate organizations. These organizations were primarily the electrical utilities, power plant designers (the architect-engineer

firms), and their traditional suppliers of central station power plant equipment. The major corporations involved have tended to establish separate divisions or components directed to this new and evolving market place. In

general, however, major corporations dedicated primarily to commercial applications of nuclear energy have not evolved in the United States.

The regulatory challenge to the NRC and its predecessor, the AEC, has been

formidable. Nuclear technology has evolved very rapidly. In its short history, less than 30 years, the regulatory program and organization have experienced their own evolutionary processes while simultaneously regulating, the

"nuclear industry." This industry, however, has never existed as an entity in

the traditional sense such as the iron and steel industry, the automobile,

industry or the aircraft industry. By contrast, the "nuclear industry" exists

as an offshoot, almost a sideline, of several older, well-established industries, i.e., the utilities, the architect-engineers and the power plant equipment manufacturers. These industries had long been regulated to some extent by

codes and standards, public utility commissions, etc. However, the depth and

breadth of the NRC regulatory program certainly presented a major change from

traditional business and working environments. In essence, fully mature business enterprises with long, well-established methods of operating had to make

major (in some cases nearly revolutionary) changes in order to participate in

what appeared to 'be a growing market area. Some of these organizations have

made the necessary adjustments much more readily than others. Implementing and

D.60
maintaining an effective and consistent regulatory program throughout the U.S.

under these institutional circumstances has been difficult. This regulatory

situation appears much more difficult than, for example, regulation of the aircraft industry, in which the private sector and the regulatory process evolved

in parallel. In the latter situation, corporate business-traditions and practices evolved much more in concert with the government's regulatory program.

D.4.5.2 Organization and Responsibilities

When the NRC was formed in 1975, the major organizational components were

Reactor Licensing, Fuels and Materials Licensing, Inspection and Enforcement,

Regulatory Research, and Standards Development. The inspection and enforcement

arm included a staff at NRC headquarters and five regional offices.

Criteria for licensee QA programs were developed by the Office of Standards Development. The review of licensees' proposed QA programs was in the

licensing components of the Office of Reactor Licensing, and-the Office of

Inspection and Enforcement was responsible for ensuring that licensees carried

out their commitments as approved by NRC licensing and presented in the Safety

Analysis Report. The NRC's QA efforts for nuclear power plant construction;

therefore, were distributed among the three major organizational divisions.

In 1981, the regional offices were separated from the headquarters Office

of Inspection and Enforcement and began reporting directly to the NRC's Executive Director for Operations. In 1982 and 1983,,the NRC's headquarters staff

was reorganized (in a series of actions), and all QA efforts were assigned to

the Office of Insrection and Enforcement. Most of the NRC staff members interviewed felt that this was a very positive step; centralizing QA activities provided a mechanism to expedite the resolution of any differences or disagreements among the various functions within.the NRC. The organizational chart for

the NRC staff as of January 1, 1983, is shown in Figure D.4.

The headquarters Office of Inspection and Enforcement is now responsible

for developing criteria and standards for licensee QA programs, for reviewing

licensee QA programs, for licensing (QA issues) and establishing policies, and

for defining the program for inspecting licensees by the regional offices to

assure that the licensees' programs are carried out. It is responsible for

managing major enforcement actions through orders and civil penalties. Further, it recently took on the added responsibility of inspecting and evaluating

vendors, designers and suppli~ers wherever they may be located....

The five regional offices (see Figure D.4) are responsible for executing

the established NRC policies and assigned programs relating to inspection and

enforcement within their regional boundaries. The regional administrators have

the authority to stop any or all safety-related work during the construction

and/or operation of nuclear power plants.

In general, the regional offices conduct an inspection program that has

been basically defined by the headquarters Office of Inspection and Enforcement. However, the regional offices administratively report directly to the

Executive Director for Operations as does the headquarters Office of Inspection

and Enforcement.

D.61
Since the licenses are issued to the utilities to construct nuclear power

plants, the utility is held totally responsible by the NRC. If an enforcement

action concerning a construction contractor is deemed appropriate, the action

is taken with the utility, not directly with the contractor.

NRC's Relations with Others. The NRC has placed a resident inspector at

each of the nuclear power plants under construction. The inspector's efforts

are supplemented by periodic visits to the site by regional-office-based

inspectors who generally look at specialty areas. The total level of effort is

estimated to average about 1-1/2 persons for each reactor unit under

construction.

Resident inspectors are provided office space at the site and have ready

access to all documents, records and files pertaining to the assurance of quality and the licensee's commitments on quality. The NRC inspectors also observe

the work in progress. The basis for their authority, in general, is to assure

that the licensee fulfills the commitments made during the licensing process.

The NRC operates with a very high degree of public visibility. For example, individual inspection reports become public information, and extensive

public participation occurs in the licensing process, including the various

hearings that are conducted. Direct public access to NRC inspectors is provided and encourged.

Resources. As noted earlier, the actual NRC inspection effort for each

reactor unit under construction averages the equivalent of about 1-1/2 fulltime persons. Nearly all of the inspection staff is made up of engineers.

Special multi-week training programs on technical aspects of the inspection job

are provided by the NRC, with a one-week course on the fundamentals of

inspection.

This normal level of inspection effort is supplemented in some cases by

construction assessment teams (CATs) from NRC Office of Inspection and Enforcement staff supplemented by contractor or consultant experts. These teams perform three to four detailed inspection efforts per year. Each inspection

covers a four- to six-week period. A typical effort by a CAT amounts to about

14,000 man-hours per inspection.

The staffs of some regional offices were concerned with maintaining high

levels of proficiency and adequate numbers of persons in inspection, a concern

attributed to competing with industrial organizations for experienced people.

The NRC regional offices each have one or two mobile vans with nondestructive testing capability. The vans can be moved from site to site, which

provides some capability to perform independent nondestructive examinations in

special cases, generally at sites with major problems. This effort is supplemented by the use of contractors to assist in conducting independent examinations--both nondestructive and destructive.

D.62
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D.4.5.3 AOQ Program

The major thrust of the NRC's program to assure quality construction of

nuclear power plants is directed to the owners/operators of the plants. The

utilities that operate the plants include a government-owned corporation (TVA),

local government agencies (i.e., public utility districts, cooperatives) and

privately owned corporations. In any case, the utility must obtain a permit

from the NRC to construct a nuclear power plant. The application for such a

permit includes all of the information necessary to analyze safety, siting and

environmental issues, and the licensee's program for quality assurance. The QA

program for safety-related systems and equipment must meet the requirements of

the NRC's QA criteria contained in 10 CFR 50 Appendix B, which is the basis for

the NRC's program for quality assurance.

The NRC's Standard Review Plan describes the NRC review of a license

application for construction. Chapter 17.1 of the Standard Review Plan

outlines in considerable detail the requirements that a licensee must meet in

applying for a permit to construct a nuclear power plant. In essence, this

requires a description of the QA program that the licensee will implement

throughout the design and construction of the plant. This program description

becomes the basic commitment by the licensee and is therefore the basis for all

following QA inspection efforts.

In addition to the program description, the regional office inspection

staff will review the licensee's QA manual and the detailed procedures that are

to be applied to the project. The'results of this inspection are fed .into the

application review process.

The inspection program carried out by the five regional offices is in

accordance with the Inspection and Enforcement Manual issued by NRC's Office of

Inspection and Enforcement. The manual includes many comprehensive and

detailed Inspection Modules, ranging from "predocketing" inspection of the

licensee's QA manual and procedures to the details of inspecting specific

equipment, system and component areas. The modules indicate a minimum frequency for inspections, describe what to look for, and provide checklists of

what to look at. They also describe acceptable practices for work in progress. The major thrust of these inspection efforts is to review the documentation and the work being done on a sampling basis to determine if the licensee's program is being carried out effectively and in accordance with license

comml tments.

The NRC's inspection efforts may result in "deviations," or "violations."

A "violation" means that a non-compliance with requirements has been identified. A "deviation" identifies a departure from acceptable, standard practices. The licensee must formally respond to non-compliances by identifying

what is being or has been done to correct the item noted and what actions are

planned or have been implemented to preclude any further similar occurrences.

These required responses are to some extent viewed by the licensees as a form

of enforcement penalty because of the resources required to prepare the necessary responses. The corrective actions required may also represent new and

unplanned efforts and activities for the licensee and/or its contractors.

D.64
In more extreme cases, including those where corrective actions have been

ineffective or not adequately implemented so that the problems have continued,

or where so many difficulties arose that a major breakdown in the licensee's

program has occurred, the Regional Administrator has the authority to stop

work. Work cannot be resumed until the regional office has been satisfied that

appropriate changes have taken place and there is reasonable assurance that

requirements will be met.

Another task force type of effort provided by NRC headquarters is identified as the Integrated Design Inspection (IDI). This is generally done in

cases identified as near-term operating license situations. The IDI consists

of a detailed review of a sampling of the plant's design. The results of these

inspections are incorporated into the review process in preparing for the issuance of an operating license.

NRC regional offices also perform, annually, a Systematic Assessment of

Licensee Performance (SALP) for each construction plant site. This is an overall assessment of performance.

In some cases, a regional office forms a task force to conduct a detailed

construction assessment effort of selected systems or features at a site to

supplement the normal inspection activities.

Incorporated in the inspection effort is a review of the qualifications

and certifications of the quality assurance/quality control personnel of the

licensee and its contractors to assure that these staffs are properly qualified. The NRC provides technical training of its own inspectors with required

minimum grades on written examinations. Annual performance appraisals of NRC

inspectors are developed and provided.

In essence, the major focus of NRC's inspection efforts is to assure that

the licensee is conducting effective QA and QC programs in accordance with the

requirements of Appendix B to 10 CFR 50. This effort consists both of reviewing documentation and procedures and of observing work in progress for a review

of the actual implementation of the committed program. The NRC inspection

effort itself cannot assure that all design requirements are met in the resulting hardware. The inspecting of hardware and observing of construction work in

progress are parts of the NRC's effort to assure that the licensee's QA process

is functioning properly.

The NRC AOQ requirements permit the licensee to take a wide variety of

approaches in its QA program. One of the major variables is the degree of

delegation permitted by the licensee to its contractors. However, the licensee

is required to maintain a minimal level of QA activities with ready access to

the appropriate high levels of management in the licensee organization. Within

this framework, some licensees have chosen to delegate quality control inspections with supplementary QA activities to their construction contractors or

construction management contractor. Others have chosen to exercise all of

these functions under their own direct management control with, perhaps, supplementary staff provided by a contractor.

D.65
All AOO programs must conform to the criteria in 10 CFR 50, Appendix B.

This requires extensive documentation of the program, its procedures, resulting

records, and the management and control of the documentation for all activities

in plant construction. Independent periodic reviews and audits have become a

matter of standard practice and are required as is certification of certain QA

and QC staff personnel.

D.4.6 Foreign Nuclear Assurance of Ouality (AOQ) Programs

Summary descriptions of the AOQ regulatory programs for nuclear power

plant construction in six other countries are presented in this section. The

six programs studies are Canada, the Federal Republic of Germany, France,

Japan, Sweden and the United Kingdom. The summary descriptions were developed

almost exclusively from available literature. Time restraints precluded the

NRC staff from forwarding the summary description to the six foreign countries

for their review, comment, and correction. As a result, inaccuracies may

exist in these summaries. If warranted, corrections to these-summaries will

be made in future revisions-or supplements to this report.

The major efforts on these studies were provided by the NUS Corporation,

Gaithersburg, Maryland, and Battelle Institute e.V., Frankfurt, Germany. In

their studies of Canada, United Kingdom and Japan, NUS provided the advantages

of a staff member in residence in England, a staff member previously employed

in the Canadian nuclear program, and staff of their Japanese subsidiary

(JANUS). The Battelle Frankfurt Laboratory, in studying Germany, France and

Sweden, provided the benefits of their extensive research work in nuclear

matters pertaining to the European community. Since the studies were conducted

primarily by revi-ewing the available literature, these organizations were particularly helpful in overcoming the language barriers.

Since both NUS and Battelle have well-established relationships with the

nw 1ar industry sectors in various countries, it was possible for them to suppiement the literature review with a few discussions with non-government

individuals. The information available on Sweden and Japan was also supplemented with data obtained by a representative of N.C. Kist and Associates whose

visit to those countries coincided with the studies.

There are significant differences in the programs of the countries studies,

however, there are also common elements. Some of the commonalities are:

o Each has utilized the U.S. NRC's QA criteria, 10 CFR 50, Appendix B, in

developing its program.

O Each has utilized the International Atomic Energy Agency (IAEA) established Codes of Practice and Safety Guides for nuclear power plants.

O Each has incorporated the government regulatory functions for nuclear

power plants into agencies or departments with cognizance over non-nuclear

industries and activities not related to radioactive materials or devices.

The program in each country is discussed in the following subsections.

D. 66
D.4.6.1 Canada

The Canadian nuclear power program has been producing electricity since

1962. Canada has 14 operating reactors with 7,278 MWe capacity and 10 reactors

under construction, for a capacity of 14,469 MWe projected for operation in

1990. Currently, nuclear power plants produce 9.7% of Canada's electricity.

The annual load factors are among the highest in the world and have been

improving. The high annual load factor (77.1% in 1982) is partially the result

of the CANDU pressurized heavy water reactors' being refueled while

operating. Canada is currently building reactors with capacities of 516 MWe,

756 MWe and 881 MWe. Generally, four reactors of a given size and type are

built at a site.

Organization. The Atomic Energy Control Board (AECB) was created in 1946

to implement and administer the Atomic Energy Control Act of 1946 (amended in

1954). This act, in conjunction with the 1974 Atomic Energy Control Regulations (amended in 1978 anq 1979) and the Nuclear Liability Act, governs all

nuclear activities in Canada. The AECB reports to the Minister of Energy,

Mines and Resources and is composed of five members with a staff of 250

people. The AECB has not issued formal QA regulations for generic nuclear

power plants. QA requirements have been imposed as part of the licensing

activity for each plant. The AECB staff was reorganized in 1978 with the formation of a Quality Assurance and Standards Division. Formal QA regulations

and guidance are being prepared. The AECB power reactor safety criteria and

principles are defined in "Licensing and Safety of Nuclear Power Plants in

Canada" (AECB 1982).

The licensing process in Canada is the responsibility of the AECB, but

because of provincial concerns, the AECB has evolved a "joint regulatory process" that enables all concerned federal and provincial agencies and ministries

to participate. The AECB acts as the lead agency. However, the provincial

government can veto the proposed construction of a nuclear facility within its

borders. A veto only applies to a reactor site, not to an evaluation of plant

operation and safety. Additionally, provincial government agencies perform

reviews and inspection of pressure-retaining components to verify conformance

with ASME and Canadian Pressure Vessel Codes.

Subsequent to site acceptance, application for a construction license is

made. Primary documentation supporting the application consists of a Preliminary Safety Report (which includes site characteristics, design description,

and preliminary safety analyses), a Quality Assurance Program, and preliminary

plans for generation (including staffing and training plants). The AECB staff

reviews the supporting documents and, if satisfied, recommends to the Board the

issuance of a construction license. This review normally includes consultations with the provincial authorities, the applicant, and the applicants'

agents to obtain additional information that may be required.

As construction progresses, the AECB staff meets with the applicant and

resolves safety-related problems as they arise. During construction, authorization for acquiring and loading heavy water and fuel is issued by the AECB.

D.67
Quality Program Requirements. While formal regulations are still being

developed, the AECB has supported the development of national QA standards.

The Canadian Nuclear Association (CNA) has issued, under authority of the Canadian Standards Association (CSA), a series of standards for nuclear power

plants, with N286 being specific to quality assurance. The standard for quality assurance in manufacturing was developed by the CNA as a general standard,

CSA-2299, since the utilities wanted to use it for conventional as well as

nuclear equipment. In terms of the principles involved, the standards CSA-Z299

and CSA-N286 are similar to the IAEA Code of Practices and its supporting

Safety Guides and to 10 CFR 50 Appendix B. The most significant difference is

that CSA-Z299 uses a five-step, graded quality standard for component

manufacture and installation. Selection of the'appropriate quality program

standard is based on the sum of a four-level evaluation of six factors (design

complexity, design maturity, manufacturing complexity, item or service characteristics, safety and economics). Canada has also developed standards

.ýimilar to the ASME Codes, which provide criteria specific to Canadian design

and construction characteristics.

In its licensing of nuclear power reactors, the AECB sets basic criteria

and requires licensees to design, construct, and operate power reactors to meet

those criteria. Besides considering single failures, the licensing process

includes analysis of such dual-failure accidents as failure of a process system

coincident with failure of a safety system; e.g. occurrence of a large LOCA

simultaneously with unavailability of the emergency coolant injection system or

impairment of the containment system.

Onsite AECB inspectors monitor compliance with license conditions throughout the construction and into the operating stage. A licensee must submit to

the AECB an annual report on operation and maintenance of its nuclear power

plant. The report includes a numerical assessment of the reliability of

safety-related systems during the reporting period.

To ensure that provincial requirements are met by licensees, the AECB and

the provinces have developed a joint regulatory process that is operative from

the application stage through construction and facility operation. The AECB

licensees are inspected periodically to ensure compliance with license

conditions. Inspections may be carried out by AECB staff appointed as inspectors, or by provincial officers also appointed as AECB inspectors on agreement

with their provincial ministries or departments. Provincial inspectors so

nominated are supplied with an AECB inspector card that provides access to

nuclear facilities and users' properties. They inspect according to the AECB

regulations and report to the AECB as well as to their home office.

With respect to the design of pressure-retaining components, each province

where nuclear power plants are to be located has a Pressure Retaining Component

(PRC) Safety Department. The provincial PRC Safety Departments exercise general control over pressure vessel or boiler installation in each of the various

provinces of Canada. To the extent that these pressure vessels are related to

nuclear facility safety and under the AEC Act, the AECB makes use of provincial

expertise-to perform design examinations, and fabrication, installation and

D.68
operational inspections. Provinces rely on the AECB for much work that they

cannot cover, and there is joint consideration of all major matters.

Quality Program Implementation. Organizationally, Canada may be considered as a single utility for the purposes of comparison to other foreign

countries. Twenty-one of Canada's twenty-four plants are owned by Ontario

Hydro, two are owned by Hydro-Quebec, and one is owned by the New Brunswick

Electric Power Commission. The utilities are similar, with Ontario Hydro dominating nuclear power plant construction. All three utilities are provincial

corporations. The AECB holds the utility solely responsible for construction

of a nuclear power plant. Given its limited resources, the AECB relies on the

technical expertise of the utility and its vendors in implementing construction

criteria developed in the license. Most notable is the reliance on utility

inspections of suppliers. A system has been developed whereby suppliers' QA is

qualified by the utility before a contract is awarded. Ontario Hydro has

chosen to drop "Quality Assurance" in favor of "Quality Engineering" (QE). The

Quality Engineering Manual was produced in 1975 and issued formally in 1978.

Quality Engineering is defined as a planned and systematic application of

scientific and technical skills and management activities to achieve the

required level of quality and to provide assurance that this is being done

effectively and efficiently.

The Quality Engineering Program is administered by Level 3 managers (divisional directors). Specific responsibilities in each of the areas of design,

procurement, construction, commissioning and operation are defined consistent

with the line responsibilities for engineering activities in each area. The

Quality Engineering Department in the Design and Development Division is

responsible for providing the secretariat, including necessary staff support,

to the Quality Engineering Policy Committee.

The goal of the Quality Engineering Policy Committee is to promote a coordinated approach to quality engineering in the Operations Group and provide to

the executive vice-president, Operations, recommendations on QE policies,

objectives and strategies for all areas of design, procurement, construction

commissioning and operation; to provide advice to the committee chairman with

respect to the suitability of the QE procedures (for adherence to policies,

support of objectives, etc.); and to keep members mutually informed on QE

matters.

For each project, the project engineering and construction departments

under a project manager are assembled within the Generation Projects Division. These departments perform the detailed design, procurement and construction processes for that particular project. The project manager is

responsible for designing the project to the requirements specified by the

Design and Development Division. During this stage, the project manager is

responsible for the overall quality engineering program, engineering manager

for the part of the program related to quality engineering in design, including

procurement, and the construction manager for the part of the program related

to QE construction.

D.69
Prior to awarding a contract, equipment purchaser must ensure that a supplier can immediately perform in compliance with the relevant QA codes and

regulatory requirements, or alternatively, be able to so perform prior to commencement of the work. Ontario Hydro is qualifying suppliers' quality programs

either by a formal audit or by an evaluation by inspection. To minimize the

number of formal audits being performed, several utilities, consulting

engineering firms and regulatory agencies combine to carry out joint audits.

CSA has now embarked on a program of qualifying suppliers' programs to the Z229

Standards. A supplier will then be subjected to a periodic audit by CSA.

Product Engineers holds post-award meetings with major suppliers during

the life of the contract. Participation at these meetings might include other

functions within Ontario Hydro, along with the suppliers' representation from

Design, Project Management, Quality Assurance, Purchasing, Manufacturing, Production Control, Contract Administration or Management. The inspector assigned

to the contract attends the meeting to provide input from day-to-day surveillance of the contract. The purpose of the meeting is to ensure that the

supplier has planned for and carries out all aspects of the contract, including

development work, qualifications, submission of manufacturing, welding, nondestructive testing and shipping procedures, and submission of inspection and

test plans and history dockets.

D.4.6.2 Federal Republic of Germany

By early 1983, the Federal Republic of Germany (West Germany) had 15

nuclear power reactors in operation, with a total installed capacity-of 9,800

MWe. At that time, there were 12 additional units under construction which are

expected to add an additional 13,000 MWe installed capacity (Nuclear Engineering International 1983).

Organization. The legal base for QA/QC programs applying to the planning,

construction and operation of nuclear power plants in West Germany rests in the

Atomic Energy Act (ATG), last revised in 1976. However, the term "QA/QC" is

not defined in the ATG. The ATG provides the legal framework for the licensing

proceedings for nuclear power plants, details of which are prescribed in the

License Procedure Ordinance (AVerfVO). This ordinance states explicitly that

the applicant for a license provide a safety report, as well as

Factual statements'enabling the examination of the reliability and expert

knowledge of the persons responsible for the erection of the installation

and the management and control of its operation, as well as factual statements enabling the examination of the requisite knowledge of all persons

working on the installation.

These general requirements provide the basis of all ensuing QA/QC programs .imposed by the regulatory authorities.'

Nuclear power plants in West Germany are licensed by the individual federal states on behalf of the federal government under the supervision of the

Department of the Interior (BMI). With respect to nuclear power plants, the

BMI has three major advisory bodies: the .Committee for Reactor Safety, the

D.70
Committee for Radiological Protection, and the Committee for Nuclear Safety

Standards. There is also a State Committee for Nuclear Energy, which in 1982

issued a "standard set of information to be submitted to the licensing

authority in the course of licensing proceedings." In 1980, the Committee for

Nuclear Safety Standards (KTA) published the General Requirements for QA/QC.

These rules have the force of regulations.

Quality Program Requirements. The Committee for Reactor Safety (RSK) is a

consulting body set up by the BMI. RSK's findings are limited in that they

only have the force of recommendations (to the BMI, and, via BMI's supervisory

role, to the state authorities). The actual importance of these findings cannot be overstated, however. The RSK has recommended guidelines for pressurized

water reactors ("RSK-Leitlinein fur Druckwasserreaktoren," 3rd edition, October

1981) which constitute the framework of safety-related standards that must be

adhered to by an applicant. The RSK Guidelines consolidate a wealth of BMI

regulations and KTA rules supplemented by the RSK and its subcommittees. In

various instances, the extent, methods, and even specifications of QC test

procedures are detailed by the RSK guidelines. The RSK has set for itself the

duty of regularly revising and updating the Guidelines to keep them abreast of

"the up-to-date scientific and technical knowledge."

The Committee for Radiological Protection (SSK), is an important advisory

body to BMI, but has little direct involvement with the AOQ program.

The Committee for Nuclear Safety Standards (KTA) also reports to the

BMI. Its task is to establish safety-related standards and to further their

adoption in all sectors of nuclear technology. The KTA provides a highly collaborative approach to the development of the rules. Its membership includes

representatives from many sources: suppliers, vendors, utilities operating

nuclear power plants, Department of Interior, state licensing authorities,

expert institutions, other governmental departments, national nuclear laboratories, trade unions, insurance companies and the'Commission for Industrial

Standards.

In the context of licensing and surveillance of nuclear power plants, TUV

(Technische Uberwachungs-Vereine) and GRS (Gesellschaft fur Reaktorsicherheit)

organizations are of utmost importance. Historically, the TUV organizations

have been set up by industry as self-financing, independent agencies to act as

"watch dogs" on technical hazards in and through large industrial plants. They

have built an excellent reputation for technical scientific ability and trustworthiness. They inspect and test all kinds of technical installations (pressure vessels, lifting equipment, bridges, motor vehicles, etc.) or materials on

behalf of government authorities or act as supervisory or inspecting agencies

for industrial customers. Seven of the 11 TUV organizations have established

nuclear departments that work exclusively on inspections, controls, and audits

of nuclear power plants on behalf of the licensing authorities. The government

licensing authorities do not perform significant inspection activities at the,

construction sites.

TUV organizations, being independent expert institutions, are also called

upon frequently by buyers of complex industrial projects to act as auditors/QC

D.71
agents. This is also the case with regard to various nuclear power plant projects. However, though not explicitly excluded by law, a situation in which one

TUV organization would perform duties on behalf of both the licensee and the

licensing authority on the same project is avoided as a matter of principle.

The GRS is a semi-governmental, limited corporation (jointly owned by the

TUVs, the federal government and two state administrations). It is also active

in the field of licensing proceedings, either directly for the authorities or

in a supporting role to one of the TUV organizations. Except for questions

regarding prevention of human threat (sabotage or terrorist attack), the GRS

has little direct involvement with QA/QC matters.

Quality Program Implementation. Light water reactor plants are constructed under a turnkey arrangement, with a single corporation responsible for

plant design, procurement, construction-management and construction. This general contractor and the suppliers of parts, material and components are

required to establish their own QA/QC procedural systems. These QA/QC

procedure systems are considered the vendors' proprietary material and are not

published. They are, however, reviewed and approved by the authorities.

The licensing authority holds the licensee, a private sector utility,

totally responsible for the nuclear power plant. However, the general contractor is responsible to the utility to conform to all regulatory requirements and

provides a warranty for the plant as a "vendor liability."

One characteristic of the -regulatory QA/QC system in West Germany is that

control measures are predominantly hardware-oriented. There are no "supplier

certificates" or "N stamps." The burden of proof'for adequate quality of every

item rests on the supplier; who must satisfy inspection authorities that standards are met.

The required QC measures apply to all materials, parts, components and

systems deemed safety-related through all steps of assembly and erection.

" Pre-construction Audits: Audits of design and specifications

according to fixed criteria and standards.

* Inspection and Tests during Production Phase: Materials, production,

acceptance tests and functional testing on all assembly phases,

documented and certified by authorized inspectors.

" Commissioning: Functional testing and acceptance testing supervised

by authorized inspectors who have to release every system for

operational (hot) commissioning.

An important aspect of the principal philosophy of liability in the West

German nuclear industry is the fact that the (licensing) authorities perform

their control duties on behalf of the populace, which in turn can have the

administrative courts (three stages of appeal) control every administrative

act.

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The obligation of general contractors and suppliers of parts, materials or

components to establish in-house QA/QC systems is caused by the regulatory

requirements, which mandate a QA level satisfying all relevant safety issues;

and the warranty issues in context with the vendor's liability. In essence,

the regulatory QA/QC system.in West Germany can be characterized by three

elements:

" Control measures are predominantly object-oriented. There are no "suppliers certificates" or "N" stamps. The burden of proof for

adequate quality of every item rests on the supplier, who must

satisfy the inspection authorities that standards are met.

" The inspecting and controlling agency is not an administrative

(governmental) body; rather, it is the independent institution, TUV,

which has a long record in inspecting services in conventional fields

and is accepted as highly competent and trustworthy by all interested

parties.

" Basic contractual arrangements are supportive to clear-cut responsibilities and facilitate controls: one licensee/applicant, one

general contractor who sells the complete plant on a turnkey basis

and who bears full vendor's liability.

D.4.6.3 France

As of January 1, 1983, 32 reactor units were in operation in France.

Nuclear power accounts for approximately 40% of Frances electrical production

in 1981. Also, at the beginning of 1983, there were 25 additional power reactors under construction in France, one of which is a liquid metal fast breeder

reactor (NEI 1983).

All of the light water reactor plants are designed and built under a turnkey arrangement with Framatome, a government-owned corporation, for operation

by Elet *icitt de France (EDF), the government-owned utility. With few exceptions, a) the applicant for a construction and operating license of a nuclear

power plant in France is EdF. The EdF is the French monopolistic electric

utility that is organized and run like a public company, although it is 100%

state-owned.

A series of three standard pressurized water reactor plant designs have

been developed. The EDF has developed and utilizes an information system to

collect information on the operating experience in all of its plants. This

information is used as a basis for improvements in designs and in the overall

program. The designs are also modified as necessary to meet site-specific

needs.

(a) These exceptions include plants jointly owned and operated by EdF and

foreign utilities in locations near the French border, and the Phenix and

Super-Phenix fast breeder reactors.

D.73
Organization. There is no fundamental French law for regulation of

nuclear matters in an encompassing way like the U.S. Atomic Energy Act of

1954. When necessary, matters are settled on an ad-hoc basis via legally binding governmental decrees (decrets) that do not require parliamentary support.

Thus, the construction permit for an individual plant is granted by a special

decree that is signed by the Prime Minister.

Nearly all matters concerning nuclear activities in France are regulated

through government ordinances (degrets or arretes). The only legal act providing explicit legislative approval for nuclear matters is the Bill on Protection

and Control of Nuclear Materials of May 25, 1980. This act does not, however,

provide a general legal base for nuclear power plant regulation. Governmental

ordinances applicable to nuclear plants can be divided into two categories:

" ordinances concerning safety of nuclear installations in general or

safety in handling nuclear material in general

* special ordinances concerning individual installations (e.g.,

construction or operating licenses of named units).

Construction permits and operating licenses are, as a rule, granted by

governmental ordinances. General requirements prerequisite to a construction

permit are defined in a decree of December 11, 1963, as amended February 26,

1974, and December 6, 1974. These amending decrees address specifically the

issues related to pressurized water reactors.

The license to build and operate a nuclear power plant is granted by the

Department for Industry, which also acts as a supervisory authority for operating plants. The licensing proceedings take place in the national capitol.

Regionally, a public inquiry is held at the proposed location of a new plant.

This inquiry is headed by the regional administrator, and deals only with sitespecific aspects, e.g., water consumption or environmental matters.

Due to this centralized organization, responsibilities in nuclear matters

are organized vertically. Supervision and licensing of nuclear power plants

fall within the jurisdiction of the Department of Industry, which has a special

organizational unit, the Central Service for Safety of Nuclear Installations

(SCSIN). The SCSIN has two consulting bodies consisting of senior administrators and technical experts that report directly to it:

" The Section Permanente Nucleaire (SPN) has the task of developing the

rules and regulations concerning nuclear power plants.

" The Commission Centrale des Appareils a Pression (CCAP) has the task

of further developing rules and regulations regarding pressurized

systems in general.

Because most regulatory matters deal with nuclear power plant safety and

the complete range of handling fissionable materials (fabrication, transport,

marine propulsion, refabrication, etc.), an Interdepartmental Committee (CISN)

was established in 1975 to coordinate all governmental actions "to protect

D.74
people and property against dangers of any nature resulting from construction,

operation or dismantling of (stationary or mobile) nuclear installations as

well as all stages of handling of fissionable materials or radioactive wastes."

Of somewhat lower hierarchical rank, but still of eminent importance, is

the Atomic Energy Commission (CEA). Wholly state-owned, the CEA has become not

only the expert authority on all nuclear matters, but also the major economic

entity controlling a sizeable sector of all parts of the French nuclear market. Rules and regulations developed by the CEA or one of its organizational

units are adopted and made. official through the decrees, Official interpretations of decrees come from the Department of Industry. The various, supervisory

boards of the CEA encompass state representatives, public interest groups,

e.g., (trade unions), the EdF and major banking houses.

Quality Program Requirements. There is only one governmental ordinance

and its official interpretation (circulaire) that explicitly addresses QA/QC

matters at. nuclear installations: Both exist in draft form as of September

1983. The draft papers are as follows:

" Directive Regarding Quality Design, Construction and Operation of

Nuclear Installations

" Circular Regarding the Application of Regulations on Quality of

Design, Construction and Operation of Nuclear Installations.

The directive and circular define a general provision for the regulatory

authority to intervene in any particular case if there is a suspected shortcoming in safety or quality-related matters.

The directive places responsibility for quality assurance at a nuclear

installation on the applicant/licensee for all phases of design, construction

and operation. For each system or component, the level of quality to be guaranteed is correlated with its safety importance. The applicant/licensee must

install a QA system that takes into account:

" definition of safety requirements and quality standards system-bysystem, taking into account all applicable regulations and standards

" design of a QA system

" implementation of a QA system

o installation of a special organizational unit for quality assurance

" documentation of all measures taken

* provision for the required number of adequately trained personnel for

QA/QC activities

" provision for adequate technical resources

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" updating of the QA system itself in step with advancing technical

knowledge

" explicit and definitive procedures to be followed in case of offnormal events

" complete and readily accessible documentation of all steps taken.

Portions of the outlined QA procedure may be performed by suppliers of

parts and subsystems on behalf of the applicant/licensee. The applicant/licensee has then the duty to supervise and control the suppliers' QA/QC activities. In any case, the applicant is required to submit to the licensing and

supervisory authority (in this case, the Control Service for Safety of Nuclear

Installations, SCSIN) a (provisional) safety report on the installation. The

QA/QC system of the applicant and the ways and means of supervision of the suppliers' activities are defined in this report.

The chairman of the SCSIN may require additional measures to be taken by

the applicant/licensee and may control adherence to these measures. In case of

dispute, the applicant may appeal to the Minister of State for Research and

Industry.

In addition to the (provisional) safety report, the licensee is required

to assemble a QA manual defining all QA/QC measures (technical, organizational

and personnel) taken, including surveillance measures over suppliers.

The directive is officially interpreted by an accompanying circular. Of

special interest in the circular are the following points:

The applicant/licensee is in principle responsible for safety of the

installation through all stages of design, construction and operation. He

may delegate the responsibility for safety and quality of subsystems or

parts to suppliers, but ultimate responsibility remains with the applicant/licensee. The licensee must be sure that suppliers who perform QA

duties on his behalf strictly adhere to the approved procedures.

The applicant/licensee has some flexibility in defining the range and

extent of "safety-related activities" (including their application to

activities of subcontractors). The regulatory authorities do, however,

reserve judgment on the applicant's views through approval/disapproval

when the provisional safety report is submitted.

The applicant/licensee is assigned an important role in supervising the

activities of his suppliers. The supplier has to prove to the licensee's

satisfaction that he has an adequate QA system. The applicant/licensee

may transfer his duty of surveillance of suppliers' activities onto thirdparty independent experts or expert institutions. Authorized experts/

expert institutions are required to be independent of contractual or economic ties with suppliers they are to control.

0.76
The supplier of subsystems or parts may define adequate levels of safety

and quality for their products; however, the applicant/licensee having

ultimate responsibility for the safety of the installation must approve

them.

Quality Program Implementation. The licensee is, required to submit safety

reports that correspond to defined stages of the project:

" A preliminary report that gives an overview of general design

criteria aimed at safe operation of the plant

* A provisional safety report that gives detailed design information

(including safety and quality standards), demonstrates adherence to

applicable norms and regulations, and gives preliminary information

towards an operating license

" A final safety report that includes documentation of QA/QC during the

construction phase and commissioning test.

Again, the high level of standardization for "series type" PWR nuclear

power plants causes a high level of standardization in the safety reports and

the licensing proceedings.

During construction, an onsite resident government inspector overviews the

QA/QC activities. A major onsite quality control inspection effort is provided

by "authorized experts." These inspectors are individuals or staff from small

associations under contract to the utility who have been examined and certified

by the government's Nuclear Safety Inspectorate. In addition to the certification, the individual inspectors take an oath of office and essentially function

as government deputies. The utility also performs onsite quality control

inspections.

The Design and Construction Standards for nuclear power plants are planned

to be a comprehensive, self-contained set of standards. The AFCEN, an organization encompassing. representatives from industry and the EdF, set up the RCCcodes, a consistent system of rules and standards applying to all safety and

reliability aspects of nuclear installations. ' The RCC-Code is published

through the Association Francaise de Normalization (AFNOR), which is comparable

to the ANSI organization in the United States.

The RCC-Code refers to the nuclear island. Many rules of the RCC-Code are

similar to parts of -the ASME coade, which may-be explained by the fact-that..

Framatome developed its standard PWR from a Westinghouse design. One example

of the similarity between RCC and ASME codes is that the RCC-M code divides the

components of the nuclear island into three classes according to their safety

importance. Since the complete RCC-Code is not finalized, existing standards

from other technical fields and from the ASME Code are referenced for

convenience.

Like the ANSI in the U.S., the AFNOR in France defines general technical

standards and codes of practice and keeps them updated. The licensee is free

D.77
in principle to define the systems according to safety requirements as perceived by him. However, the regulatory authority, in this case primarily the

SCSIN, has to concur.

Overall, the French QA/OC system is characterized by three elements:

o Regulatory control measures are predominantly organizationoriented. They consist primarily of auditing and approving OA/QC

systems implemented by the applicant or by suppliers.

O With regard to PWRs, the high degree of standardization of plants

facilitates regulatory tasks. There are only two basic plant designs

(900 and 1300 MWe), one vendor (Framatome), and one applicant/licensee

(EdF). This assures maximum nuclear experience in all groups involved.

o The central role of the CEA (and all its organizational affiliates)

ensures that maximum experience on all technical or organizational

aspects is available.

D.4.6.4 Japan

Japan began using nuclear power plants to generate electricity in 1966.

As of March 1984, 25 reactors were in operation (18,277 MWe), 12 (11,804 MWe)

were under construction and 7 (6,053 MWe) were in planning. The annual capacity

factor has improved in recent years, to 71.5% for 1983. This is a significant

load factor considering the obligated three-month downtime for in-service

inspection. Nuclear power plants currently produce 20% of the electricity

generated in Japan.

The German system of Civil Law was introduced into Japan almost a century

ago. Over time, this system was developed and modified to fit Japanese customs. After World War 11, this system was exposed to a great amount of information from the U.S. In technical and administrative areas, where governmental

influence was not significant, many aspects of the U.S. system were .implemented, and today many of the Japanese codes and standards refer to the

technical requirements of U.S. codes and standards. Administrative areas in

Japan's heavy industries have not been so strongly influenced by the U.S.

system.

In the nuclear industry, Japan's QA program was introduced through U.S.

companies, such as General Electric and Westinghouse, which contracted with the

Japanese utilities to construct nuclear power plants. For the initial const-riction projects, the regulatory authority performed its duties similar to

practice with conventional power plants. QA practices were passed on to subtiered contractors through Japanese vendor-vendee relationships. These QA

practices emphasized inspections and records rather than system design and

performance.

Organization. The regulation of nuclear power plants in Japan is conducted in acconce with the Electric Utility Industry Law (EUILI and the Law

D. 78
for the Regulation of Nuclear Source Material, Nuclear Fuel Material and Reactors (LRNR2. The LRNR was established in 1957. Until 1978, the Japanese

Atomic Energy Commission (AEC) had the responsibility for both nuclear development and nuclear safety. The Law for Revision of the Atomic Energy Law enacted

in 1978, established the Nuclear Safety Commission (NSC) to control nuclear

safety. These laws do not include requirements for quality assurance: however, the Ministry of International Trade and Industry (MITI) has imposed

administrative guidelines requiring a QA program.

MITI has the authority to issue licenses for the construction and operation

of commercial nuclear power plants in Japan. The Prime Minister and Minister of

Transportation has the authority to issue licenses for the construction and

operation of research reactors and nuclear vessels respectively. Under the EUIL,

applicants for a license to construct a commercial nuclear power plant (research

and ship reactors are covered by different organizations) must submit siting

data for environmental impact review by the MITI. The MITI reviews the data

with consultation from the Committee on Environmental Matters, and then holds

public hearings where local governments and citizens participate. Once site

approval has been obtained from the local governments, the MITI submits the

application to the Electric Power Resources Development Coordination Council

for its approval. Before issuing a license for construction, the MITI also

consults with the-AEC and the NSC about the reactor design.

The Japanes nuclear power program has a large number of participants compared to many other countries. Nine private utilities have nuclear power

plants in Japan.

The Ministry of International Trade and Industry (MITI) also includes the

Agency of Natural Resources and Energy (ANRE) and advisory committees on both

environmental matters and nuclear power technology. MITI is responsible for

commercial nuclear plant licensing and safety regulations on all the construction, maintenance and operation stage. The MITI provides technical reviews

for the licensing of commercial reactors and conducts safety reviews of their

installation. The MITI inspects operating reactors. The MITI currently has

about 50 people on its staff who perform technical safety and licensing reviews

of commercial nuclear power plants in support of the STA's administrative

responsibility for licensing review. The MITI has approximately 100 people

qualified to perform inspections.

The Science and Technology Agency (STA) is an administrative body attached

to the Prime-Minister's office. The STA has both management and technical review

responsibility for research reactors and reactor systems still under development.

The Atomic Energy Commission (AEC), which is responsible for nuclear

development, is made up of five Commissioners appointed by the Prime Minister

with the consent of both houses of the Diet. The AEC is an advisory body to

the Prime Minister concerning the development and use of nuclear power.

D. 79
The Nuclear Safety Commission is also made up of five Commissioners and

is under the authority of the Prime Minister. This commission is an advisory

body to the Prime Minister concerning the safe use and regulatory requirements

of nuclear energy.

The Japanese Institute for Nuclear Safety (JINS) was recently formed

within the Nuclear Power Engineering Test Center (NUPEC) as a joint venture of

the MITI and the STA. The JINS assists the MITI and the STA in the technical

regulation, licensing, and standards development for nuclear power plants.

Quality Program Requirements. The laws governing construction and

operation of commercial nuclear power plants in Japan do not specifically

include quality assurance. Administrative guidelines imposed by the MITI on

licensees do, however, include some requirements for OA, but these guidelines

are not as specific as those in 10 CFR 50 Appendix B. Instead, the licensee's

QA program is expected to include those QA/OC elements that have evolved during

the development of Japan's nuclear power program. Certain inspections are

required by the EUIL and LRNR laws, including inspection of components and

structures during manufacture, installation and construction, and inspection

of welds.

In 1972, the first QA standard for construction of nuclear power plants

was published by the Japan Electric Association. The Nuclear Safety Standards

(NUSS) program established by the International Atomic Energy Agency (IAEA) in

1974 was another impact on both governmental agencies and utilities. The

Japan Electric Association revised the QA standard (JEAG-4101) according to

IAEA QA Code of Practice in 1981, and has been preparing additional QA guidances corresponding to IAEA safety guides. For domestic nuclear contracts,

JEAG-4101-1981 is referred to in procurement documents and is used as the criterion to survey, audit and quality the vendors.

ASME Stamp Association, starting from 1973, had a strong impact on

Japanese heavy industries, especially for nuclear installations. ASME survey

teams have taught QA concepts and importance of QA program maintenance. Now,

in Japan, many factories hold ASME Stamps and most of the sub-tiered contractors have QA manuals similar to the ASME QA manual.

In concert with the NUSS program of the IAEA, two programs have emerged.

The first program established a QA Investigation Committee under MITI, which is

the responsible regulatory and enforcement agency for construction and operation of nuclear power plants. Established in 1980, this committee 1) analyzes

nonconformities reported from utilities, 2) identifies QA problems with suppliers, and 3) investigates QA practices in the U.S. and Europe. The committee

recommended the introduction of QA programs recognized in the U.S. and in

European countries with some modifications suitable to Japanese industries.

D.80
The second program established the Committee for Nuclear Accreditation

organized under the Japan Power Plant Inspection Institute (JPPII), which is

authorized to inspect the nuclear power plant components on behalf of MITI.

MITI has the procedures and criteria to qualify the manufacturers of nuclear

power plant components concerning welding, but it is most concerned with the

capability of facilities and personnel, not with the details of the QA programs.

The committee has discussed the introduction of a system similar to the ASME

"N" Stamp Accreditation system, and is also considering establishing a thirdparty agency to conduct surveys and audits.

Quality Program Implementation. The initial phase of the inspection program takes place to following issuance of the license and prior to authorizing

construction. This plan includes details of the design (technical specifications),

methods of construction, and a general description of the QA program. As part

of the construction plan approval, the licensee must convince the MITI that the

QA program meets the MITI administrative guidelines for quality assurance. QA

program review at this stage is normally limited to the general description

with a limited review of procedures. While it may appear that, in the absence

of QA criteria, it would be difficult to meet the guidelines, the system apparently

works well due to a limited number of licensees, most of them having prior

nuclear experience.

The licensee has primary responsibility for QA inspections, and the MITI

performs inspections on an oversight basis as necessary to meet their legal

responsibilities. MITI i.nspections are normally a review of documentation,

with limited hardware inspection except for those specifically required by law,

e.g., reactor vessel, reactor cooling system, containment, etc. In addition to

the inspection of specific documentation, the MITI also performs audits of the

licensee's QA program to verify compliance with commitments made in the construction plan. If problems are discovered during the audit, the MITI may

choose to perform a more detailed inspection of documentation and hardware.

While the MITI has approximately 100 inspectors, the level of effort

expended on direct inspection activities is limited. Inspection activities at

construction sites consume about 200 man-days for each nuclear power unit

being constructed. The inspections are scheduled when required, depending on

construction activities being performed. At present, the MITI is trying to

relieve inspectors at each of the nuclear power plants. The MITI staff is

relatively fixed due to budgetary restraints, and the number of reactors is

increasing. Future inspections will be less technical and more programmatic

than current inspections, resulting in an inspection program that will be primarily an auditing activity.

The Electric Utility Industry Law requires inspection of welds in vessels

that contain radioactive fluids or that fulfill a safety-related function. The

MITI is responsible for inspection of such welds. The actual inspection is

performed by the JPPII, a non-profit organization established in 1970. The JPPII

performs inspection of welds and administers tests for welding procedure qualification and welder qualification. It is funded by the users of its inspection

D.81
services, who pay a fee for each inspection. The MITI has licensed the JPPII

to perform weld inspections and almost all other hardware-type inspections

of operating plants that the MITI is required by law to perform periodically. When the JPPII performs an inspection, no additional inspection is peformed by the MITI.

The JPPII has nore than 100 inspectors who perform required inspections

for new as well as for operating nuclear plants. No estimate was available

form the MITI as to the total JPPII effort expended per year for each nuclear

power unit under construction.

To further the effectiveness of the audit program, in the past year the

MI has instituted team inspections. These are audits by a team of three to

foL inspectors, conducted during a period of three to four days. The team

inspections are performed annually and, among other inspection activities,

review the QA program in more detial than was done previously. It was reported

that the team inspections (audits) have not uncovered any major problems.

The relationship between the MITI and licensees (and their contractors) is

one of mutual trust and cooperation. All parties share a common goal, to build

nuclear power plants that can be operated safely. The MITI stresses that their

role is to oversee the licensee; the licensee is responsible for controlling

activities of contractors.

Licensee requires submittal of detailed construction design approval

including QA program. Requirements for inspections, other than MITI-required

inspections, are the responsibility of the licensee. Therefore, the licensee

establishes the inspections to be performed by the licensee and by contractors. Likewise, qualificaiton of licensee/contractor inspection personnel is

the responsibility of the licensee. When the MITI requires specialized

knowledge for an inspection, they normally expect the licensee/contractor

inspectors to satisfy themselves that the technical requirements have been met.

D.4.6.5 Sweden

The S.iedish nuclear power program began producing electricity in 1972, and

by the end of 1982 had 10 operating reactors with a capacity of 7330 MWe. The

average annual load factor in 1982 was 68.3%, and nuclear power produced 39% of

the electricity in Sweden. Sweden currently has two power reactors under construction which will add 2110 MWe to the capacity. Three of the reactors were

supplied by Westinghouse, and ASEA/ATOM developed the remainder. ASEA/ATOM,

which is owned equally by ASEA and the Swedish government, designs and supplies

BWR systems and fuel. ASEA/ATOM has had a technical exchange program with the

General Electric Co. which has resulted in an American influence on Sweden's QA

programs. ASEA/ATOM also functions as the architect-engineer and construction

manager-contractor for the mech :iical systems. By popular vote in 1980, a

moratorium on nuclear power was approved which precludes the construction of

additional units beyond the two currently being built. When these two are completed, nuclear power will provide nearly 50% of Sweden's total electrical

energy (NEI 1983) Otganization. Nuclear installations in Sweden are governed

primarily by the Atomic Energy Act of 1956. Other acts regulating nuclear

D.82
power in Sweden are the Radiation Protection Act of 1958, the Emergency Preparedness Act of 1960, the Atomic Liability Act of 1968, and the act regulating

special permission to load nuclear, reactors (1977) (Stevenson and Thomas

1982). Another act relating to construction and considered applicable to

nuclear power plants is the Building Act of 1947.

Licenses for nuclear power reactors are issued by the Swedish government

according to the Atomic Energy Act of 1956. This Act places the responsibility

for licensing with the Ministry of Industry. The Swedish Nuclear Power Inspectorate (SKI) administers the licensing process and reports to the Ministry of

Industry. The granting of a license for a nuclear power plant by the Ministry

of Industry is subject to approval by the Parliament. The SKI uses 10 CFR 50

Appendix B from the United States as a guideline for the scope of the QA program. The SKI has issued control procedures relevant to quality assurance of

nuclear power plant construction.

There are six major participants in the Swedish nuclear power plant construction program:

" Ministry of Housing

* Swedish Nuclear Power Inspectorate (SKI)

" National Institute of Radiation Inspection (SSI)

" Swedish Plant Inspectors (SA)

" Utilities (SSPB, FKG, Sydkraft, and OKG)

" ASEA/ATOM.

If the proposed plant is to be constructed on a new site, the Building Act

states that permission is required from the concerned municipalities before

construction can began. The Building Act empowers local administrations to

regulate construction in the vicinity of nuclear power plants, and also applies

to establishing other types of industrial operations. The Licensing Board for

Environmental Protection issues conditions and directives.

Two government agencies in Sweden are involved in the licensing and

inspection of nuclear power plants. The SKI, under the Ministry of Industry,

is responsible for technical and safety aspects of the nuclear power program.

The other agency, the SSI, under the Ministry of Agriculture, reviews license

applications and inspects facilities with respect to radiation protection and

environmental impact of radioactive releases. Both agencies are relatively

small. The SKI currently has about 80 employees, and 17 of the total

150-person staff of the SSI are assigned to nuclear powers matters. Funding

for both agencies is provided by fees paid by the applicants or licensees. A

third agency, the Labour Protection Board (KAS), provides assurance of the

pressure circuits. The KAS regulates the design, manufacture, and construction

of all industrial plants which present potential hazards other than radiation.

The SKI is the component of the Ministry of Industry that is responsible

for administrat-ing the licensing process for nuclear power plants. The SKI

consists of five members appointed by the government, who are assisted by a

staff and advisory committees. The advisory committees consist of chairmen and

at least four members nominated by the government from the SKI and its staff.

D.83
The SKI's primary objective is to promote safety in nuclear power plants. It

reviews safety-assessments, inspects nuclear installations, and initiates

research and development (R&D) within the field of nuclear safety. The SSI is

the national authority for radiation protection for both occupational and

environmental exposures. Its scope includes external and internal environments, and emergency planning. The SS1 works with local authorities in preparing emergency plans.

The Swedish Plant Inspectorate (SA) is a nonprofit; government-owned com-

.pany, formed in 1975, which performs third-party inspection and testing. It

has a staff of 540 which is organized into pressure vessel engineering, machinery engineering, nuclear plant inspection, and four regional offices that perform inspections of shops, lifting devices, and pressure vessels. The SA is

funded by fees for specific inspection and testing activities. Until 1975,

there were two important nonprofit companies in Sweden which specialized in

quality verification. These companies had shareholders, some of whom were

involved in nuclear projects, and the government established SA based on the

existing organization of these two companies to ensure independence of the

project inspection agency.

Quality Program Requirements. The Swedish licensing procedure is

basically- a four-step system (Stevenson and Thomas 1982):

" The plant owner prepares a PSAR and applies for a construction permit. The SKI and the 551 grant permits for construction.

" The plant owner transmits-data to the SKI demonstrating capability to

meet conditions in approval license, and components and systems are

tested as the plant is constructed.

" The plant owner submits a FSAR, and after SKI approval a fuel loading

and reduced power pe~rmit is issued.

* The SSI reviews radiation protection and informs the SKI of its

approval, who if satisfied, issues the operational license.

The owner is required to establish a QA program which meets the formal

commnitments for QA in the PSAR and is approved by the SKI. The SKI has

utilized the criteria in 10-CFR 50 Appendix B as guidelines for quality

assurance. The RKS has developed guidelines specific to the Swedish

conditions, and, although not approved by the SKI, the utilities have been

using these guidelines as a basis for internal QA work.

General inspection plans for safety class items were originally established by the utilities and approved by the SKI. These plans then developed

into standardized inspection plans issued by the SKI. The general inspection

plan identifies the documentation, inspections, tests, and examinations which

are required for the various activities, and lists the responsibility for performing each. The SA has specified responsibilities to perform, review,

verify, and report on certain of the tests, inspections and examinations. The

SA inspects (including nondestructive testing) the pressure containment fea0.84
tures in the power plants in addition to such inspection by the utility. The

licensee may use independent inspection agencies, which includes SA, for its

inspection activities.

Plant designs, inspection plans, and fabrication/work plans and procedures

are all reviewed by the SA and approved before the licensee or vendor can prbceed with specific activities.- In essence, a "hold point" system is used and

enforced by the SA. The SA supervisor designated for each nuclear power plant

must be approved by the SKI. This supervisor must report to the SKI that the

plant is satisfactorily completed before fuel loading and start-up operations

can begin.

Quality Program Implementation. Four utilities operate or build nuclear

power plants In Sweden. One Is state owned, one is privately owned, and two

are consortiums of local governments. These consortiums were established specifically to build and operate nuclear power plants. As owners, they have the

overall responsibility for the design, construction, startup, and operation of

nuclear power plants. The four owners have formed the Nuclear Safety Board of

the Swedish Utilities (RKS), a joint body for collaboration in safety matters. The RKS collects, processes, and evaluates information on operational

disturbances and incidents at Swedish and foreign nuclear power plants, and

devises common policy and standards. Requirements for quality assurance were

established in 1982 and then received trial use. In 1983, the RKS sent the QA

requirements to the SKI and requested that they be designated as the reference

for quality assurance of nuclear power plants in place of 10 CFR 50 Appendix B.

The largest utility is the state-owned Swedish State Power Board (SSPB),

which provides approximately 45% of Sweden's capacity. The SSPB has five

operating reactors plus one under construction. The Thermal Design Department

has overall responsibility for quality assurance. It assigns QA functions to

other components of the SSPB, and reviews and approves both internal-and contractor procedures. The QC group is responsible for the quality of all mechanical equipment and assists In the preparation of specifications, reviews contractor proposals, prepares inspection plans and performs contractor surveillance for both manufacturer and site installations. The SSPB has a group to

collect and analyze operations information with the objective of improving

quality and reliability; arrangements have been made with the other Swedish

utilities and some foreign utilities to exchange operating data and reports on

failures, repairs, modifications and maintenance.

Sweden has used two systems for building nuclear power plants. The first

two plants were obtained on a turnkey basis. For the remaining plants, the

utilities used another system whereby the plants were divided into several

large packages with the utility as overall coordinator: nuclear island, turbine-generators, and structure. The construction contract is normally a costplus system combined with economic incentives.

The nuclear steam supply system for nine of the twelve plants was provided

by the same company, ASEA/ATOM. ASEA-ATOM's business is primarily the Swedish

nuclear power plants, but it has also supplied two reactors to Finland and is

supplying components to other countries in Western Europe. ASEA/ATOM's manager

D.85
I k

of design and development has overall responsibility for quality assurance and

is directly responsible for designcontrol. The production manager, is responsible for compliance with the QA program. The program is set up with one individual responsible for each type of component or equipment. Design criteria

are described in the design basis documentation which is included in a proposal

and negotiated as part of a contract. The contractual design basis documentation is subject to formal change controls and customer approval. Quality verification is contracted to an-independent inspection agency which prepares

detailed procedures. While performing quality verification, the inspection

agency compiles inspection reports on behalf of ASEA/ATOM.

For the remaining three plants, the steam supply system was supplied by

Westinghouse. This arrangement has facilitated the use of replicated designs,

with usually three or four units being built from the same basic design.

ASEA/ATOM's first unit was supplied on a turnkey basis, and for the others,

ASAE/ATOM functioned as the A-E for the mechanical systems that they supplied

and as the construction manager/contractor for the mechanical systems that they

subcontracted.

Most Swedish nuclear power plants have been built in a relatively short

time (four to six years), and most of the activity is performed by experienced

personnel who are with a job through completion. While there is a somewhat

adverse relationship between the regulators/inspectors (SKI, SSI, SA) and the

builders (the-utilities and ASEA/ATOM), the limited resources of a small country (eight million people) and stability of the industry result in the interaction being less formal than in other countries.

The fabricator-installer provides "special" inspection plans, based on the

general inspection plan, which cover the specific items being fabricated or

installed. Special inspection plans are submitted to ASEA/ATOM for approval

and for forwarding to the SA for approval. Following SA approval, the vendor

can proceed with the specific activity covered by the plan.

Official third-party inspections are required by statute for certain activities and-components and are performed by the SA. Further inspection and

testing not required by statute may be prescribed by the owner, and the owner

normally designates an independent agency to perform these inspections and

tests. The SA designates a supervisor for each nuclear plant. This supervisor, who must be approved by the SKI, is responsible for ensuring that the

plant meets codes, standards and requirements. The SKI has one inspector per

unit. This inspector is not a resident but keeps frequent contact with construction, utility and other SKI personnel.

The program for nuclear power plant construction in Sweden has taken

advantage of replicated designs and stability of personnel involved in the construction. The government regulatory agencies in Sweden have relatively small

staffs and rely on independent-third party reviews and inspections. The utilities and the nuclear steam supply system supplier have taken an active role in

formulating QA policy and in working with the regulators to adapt requirements

to the Swedish environment.

D.86
D.4.6.6 The United Kingdom

In 1956, the United Kingdom (UK) initiated commercial nuclear generation

of electricity when it began operating four 50-MWe reactors at Calder Hall.

Until 1968, the UK had the largest nuclear power capacity in the world with

17 reactors producing electricity. Currently, the UK has 32 reactors producing

16% of the country's electricity. Forty-two reactors are projected for 1990

with a capacity-of 12,514 MWe.

Unlike the United States, the UK regulatory agency does not prescribe the

detailed methods for the compliance and implementation of the QA/QC requirements as part of the statutory regulation. The regulatory agency promulgates

only the more general requirements in the form of guidelines for the safety and

quality assurance for licensing. The licensee (utility is responsible for

developing detailed requirements and for implementing safety and QA procedures

that will satisfy the broad requirements of the regulatory agency.

Although the UK nuclear industry has had over two decades of QA/QC programs for nuclear plant design and construction, the Heysham II AGR plant

(1978) is the first nuclear power plant in the UK with a license specification

(1978) containing a formal QA requirement. The UK's QA/QC program is in a

state of transition from gas-cooled reactor technology to PWR technology, and

the British are taking steps to incorporate U.S. QA/QC requirements into their

system. Therefore, the emerging UK QA/QC program will be a blend of U.S.

requirements and British industry practices.

Organization. The main legislative acts governing commercial nuclear

power plants in the UK are the Nuclear Installations Acts of 1965 and 1969 and

the associated provisions of the Health and Safety at Work etc. Act of 1974.

The Nuclear Installations Acts provide the regulatory framework for licensing

of commercial nuclear power plants by the Health and Safety Executive (HSE).

Under these Acts, no site may be used for the purpose of installing or operating a commercial nuclear installation unless a nuclear site license has been

granted-by the HSE. These Acts lay down only general requirements for the

safety of nuclear power plants, and impose an absolute liability upon the

licensee for any injury or damage caused by the release of radioactive material

from its installations. The licensee is also responsible under the Health and

Safety at Work Act for the safe desi'gn and operation of nuclear installations

to ensure the health and safety of employees and other persons.

There are a limited number of major participants in the UK nuclear power

program, and the character of those organizations has been changing in recent

years. A description of their roles, internal organization and interrelationships is presented here. The four major participants in the UK nuclear power

program are the HM Nuclear Installations Inspectorate (HMNII), the Central

Electricity Generating Board (CEGB), the National Nuclear Corporation (NNC),

and the major contractors (national and private). The Nuclear Installations

Inspectorate (NIl) was established in 1960 and became a part of the HSE when

that organization was set up in 1975. The HSE brought together a number of

existing inspectorates, including the Nuclear Installations Inspectorate, the

Factor Inspectorate, the Alkali and Clean Air Inspectorate, and the Mines and

D.87
Quarries Inspectorate.

The HSE is a corporate body able to take independent action on safety

enforcement, although it takes its general policy instructions from the Health

and Safety Commission (HSC). The HSC then reports to the Secretary of State

for Employment.

On nuclear safety matters, the HSC reports directly to the Secretary of

State for Energy and to the Secretary of State for Scotland. While these Ministers have a-limited power of directing, the NIl operates independently of any

government department.

The NII is organized under the Chief Inspector into four branches, each

headed by a Deputy Chief Inspector. Three branches are responsible for the

work on commercial nuclear power stations. Of these, one branch deals with

future systems, and at present gives priority to the Inspectorate's assessment

of the pressurized water reactor (PWR program). The fourth branch is responsible for the licensing of installations concerned with fuel fabrication and

reprocessing, isotope separation and waste management. Inspectors in each section carry out such detailed work such as design safety assessments, quality

assurance assessments, site inspections and other work connected with licensing. There are approximately 100 staff members, more or less evenly allocated

among the four branches.

In addition to the NIl, there is a further independent body, the Advisory

Committee for the Safety of Nuclear Installations (ACSNI), which advises the

HSC and the appropriate secretaries of State on major issues affecting the

safety of nuclear installations that are referred to it or that it considers in

need of attention. The ACSNI's function is to provide advice on policy matters

rather than become involved in the regulatory process.

The CEGB is the government-owned utility that is responsible for design,

construction and operation of nuclear power plants in England and Wales of the

UK. An equivalent role is played by the South of Scotland Electricity Board

(SSEB) for the regions of Scotland, but the scope and capacity of the SSEB is

much smaller than the CEGB. Since the governing laws and regulatory requirements for nuclear power generation are the same for both England and Scotland,

the SSEB practices are similar to these of the CEGB in licensing nuclear power

plants. Consequently, this discussion is limited to the CEGB and its roles in

the overall nuclear program of the UK.

The CEGB, as the owner and operator of commercial nuclear power plants, is

responsible for the safety of its employees and the public from any nuclear

hazard arising from its installations. This responsibility is formally defined

in the Nuclear Installations Acts of 1965 and 1969. These Acts impose an absolute liability upon the CEGB, as licensee, for any injury or damage caused by

the release of radioactive material from its installations. Recognizing this

responsibility, the CEGB is committed to maintaining the highest nuclear safety

standards to ensure the radiological protection of the employees and the public. The safety standards established by the CEGB are generally acceptable to

the NIl and are reviewed regularly in light of scientific and technical

D.88
developments.

Among the departments and divisions of the CEGB, the following organizations-have direct bearing on the safety of nuclear power plants:

* Health and Safety Department (HSD). The HSD is the primary interface

for the CEGB with the NII. It is independent of all other parts of

the CEGB organization, and its director reports directly to the

Chairman and Executive of the CEGB. The HSD is responsible for

assessing and monitoring the CEGB's activities to ensure a satisfactory standard of nuclear safety and compliance with regulatory

requirements during all phases of the project and the subsequent

operational lifetime and decommissioning. The HSD is also responsible for consultation and liaison with the NIl on all licensing matters, including quality assurance, to obtain formal approvals under

the nuclear site license.

* Generation Development and Construction Division (GDCD). The GDCD's

major responsibility is designing and constructing nuclear power

stations. Within the CEGB, the GDCD has total responsibility and

authority for the design, procurement, manufacture and construction

during the construction phase of a nuclear power station, responsibility including verification that QA/QC programs are satisfactorily

implemented in the constituent phases. The GDCD is also responsible

for developing and implementing relevant QA/QC program procedures

from design through to commissioning and for establishing appropriate

interface procedures for all principal participants.

* Technology Planning and Research Division (TPRD). The TPRD operates

three CEGB laboratories involved in research work associated with

nuclear technology, nuclear safety, fuel performance, materials science, thermal hydraulics, radiological protection and water

chemistry.

" Nuclear Operations Support Group (NOSG). The NOSG administrates the

CEGB's procedures to satisfy the conditions of the nuclear site

licenses and coordinates the preparation of safety submissions to the

Nuclear Safety Committee.

" Transmission and Technical Services Department (TTSD). The Engineering Services Department of TTSD is responsible for developing the

CEGB's corporate policy on QA practices and for providing certain QA

services to the GDCD.

" Nuclear Power Training Center (NPTC). The NPTC is used to train

nuclear plant operators. Training is conducted primarily with

simulators.

" Re ions. The immediate delegated responsibility for operating a

nuclear power station and for ensuring that QA practices are followed

during plant operation rests with the Station Manager. This person

D.89
is accountable through the CEGB's Regional line management to the

Regional Director-General.

Quality Program Requirements. Although the NII does not issue standards

or codes of practice for nuclear power plants, it does formulate and enforce

the general requirements for the safety and the quality of the plant design,

construction and operation. The NII's general requirements are set forth in a

document entitled A Guide to the Quality Assurance Program for Nuclear Power

Plants.

The NIl is responsible for ensuring that the licensee develops and maintains appropriate standards that meet the general requirements of the NII and

for monitoring and enforcing the quality of design, construction, and safe

operation of the plant. This responsibility includes inspecting for compliance

with the requirements at all stages of plant construction, operation, and

decommissioning.

The applicant is granted a nuclear site license following a satisfactory

outcome of the NII's review and assessment of the documents and preliminary

plant design submitted by the applicant. Granting of a site license signifies

that the NIl is satisfied that the design intent, safety principles, and contract design description are such that construction can proceed with little

risk of significant changes being subsequently required for safety reasons.

The NII maintains close surveillance, during construction, of the licensee's activities to ensure that the licensee follows appropriate QA/QC practices in construction. The NII's site inspector visits the site (average every

two to four weeks) for inspection purposes, witnessing tests and examining test

records. Where necessary, NIl inspectors visit manufacturers' shops to monitor

fabrication, witness tests and audit QA/QC procedures.

Some of the specific requirements and procedures that are followed during

the construction phase to ensure quality of construction are listed below:

* The ltcensee must make arrangements for inspection and testing of

major items of the plant both on-site and at manufacturer's shops.

These activities may be carried out either by recognized independent

inspecting agencies or by the licensees' own inspection organization,

but the arrangement requires approval of the NIl.

* The licensee must keep detailed case histories of the construction of

important items such as pressure vessels, which must be retained

throughout the life of the plant.

• The licensee must formulate appropriate QA/QC procedures that must be

approved by the NIl.

• The licensee must update the PCSR by a Station Safety Report (equivalent to U.S. FSAR) as the design and construction approach completion, which forms the basis of the NII's acceptance of the station

for commercial operation.

D. 90
* The licensee must obtain the NIl's consent to proceed further at various major steps in the construction phase.

The QA/QC practices of the UK nuclear industry are based on two primary

documents. These are BS-5882, Total Quality Assurance Programme for Nuclear

Power Plants (1980); and NII/R/38/78/Issue 2, Guide to the Quality Assurance

Programme for Nuclear Power Plants (1980).

BS-5882 closely parallels Appendix B to 10 CFR 50 and ANSI N45.2, and

establishes the QA principles for the UK nuclear industry. The implementation

methods of the principles are set out in another standard called BS-5750,

Quality Systems, that consists of six parts delineating specific procedures for

implementing the BS-5882 principles. NII/R/38/78 is the Guidelines document

issued by the NIl and is the Assessment Criteria Document for NII inspectors.

Quality Program Implementation. In implementing the QA program requirements of BS-5882 for design, procurement and construction of nuclear power

plants, a graded categorization system is applied to various items. The QA

category of an item or service is assigned according to its safety importance

or operational reliability and performance importance. Factors considered in

assigning the level of QA requirements for an item are as follows:

* the consequence of malfunction or failure of an item

" the design and fabrication complexity or novel features of an item

" the need for special controls and surveillance over processes and

equipment

" the degree to which functional compliance of an item can be demonstrated by inspection or test

* the quality history and degree of standardization of an item

" the difficulty of repairing or replacing an item, or its accessibility for in-service inspection.

Essentially there are two QA category levels assigned to various plant

items and services at a typical nuclear power station. The "Q" category is

assigned to items and services of safety class, and the U.N" category is

assigned to non-safety class items and services. However, in practice the UK

uses four grades of QA requirements to categorize control and verification

requirements at nuclear power stations. The various grades of QA requirements

for plant items and services are as follows:

M. Items and services categorized as "Q" are subjected to the

Tihest grade of control and verification requirements. These

include all safety class plant items and services of a nuclear power

plant.

D.91
* "N/S,1" N/O.8 1 "N/S" includes items and services "Important to

Safety." "N/O" includes items and services "Important to Operational

Rel i abi I i ty."

* "N/E." The "N/E" grade is assigned to those items and services that

are non-safety, non-operationally significant, but require significant design engineering by the contractor or manufacturer.

* "N/-." This grade is assigned to non-safety, non-operationally signiTT-cant, off-the-shelf items that are mass-produced by a routine

production process.

The "Q" graded items and services are required to satisfy BS-5882 QA program requirements. Items designated as "N" grade are not required to satisfy

the BS-5882 requirement but must meet standards of quality assurance appropriate to the contract specifications.

An important aspect of the UK QA/QC practices is the so-called "hierarchical system," in which the extent of responsibility and authority and the line

of communication channels are clearly defined in a descending order starting

from the licensee at the top, through the main contractor and finally to the

smallest supplier at the bottom. Although a higher-order organization may

audit the QA/QC practices of any lower-order organization,. an organization is

only accountable to the organization immediately above it in the hierarchy.

Under this hierarchical system, the CEGB interfaces with the National Nuclear

Corporation (NNC) on all matters concerning quality assurance within the UK PWR

program. The NNC was incorporated in 1974 as a partially government-funded

(35%) private nuclear engineering company, and is the only such company in the

UK. The NNC is a contractor to the CEGB, and is responsible for its own QA/QC

practices as well as for those of other suppliers. A Joint Project Team (JPT)

is formed, primarily of NNC and CEGB staff, and is responsible for developing,

coordinating, and monitoring the implementation of the project QA program at

all project stages. Contractors are responsible to the JPT for the quality of

the products and services they supply to the CEGB. Each purchaser, including

the NNC acting as the CEGB's agent, is responsible in turn for ensuring that

each supplier has acceptable QA/QC programs and procedures and for verifying

that the performance of each supplier against these procedures is appropriate.

An Independent Third Party Inspection Authority (ITPIA) is employed by the

GDCD to provide independent services involving all items procured to the intent

of Section III of the ASME Boiler and Pressure Vessel Code. The ITPIA undertakes the tasks ascribed to an "Authorized Inspection Agency" in Section III of

the ASME Code as adapted by the CEGB and NNC for use in the UK.

The underlying characteristic of regulatory practices in the UK is that

the regulatory agency emphasis is on the actual accomplishment of the licensee

in the safe design, quality construction, and safe operation of nuclear power

plants rather than on documentation requirements.

Another point of interest about regulatory practices in the UK is that the

responsibility for safety is placed on the licensee (utility), requiring it to

D.92
formulate the design safety criteria and standards, QA standards and implementing procedures. The UK approach to safety does not accept the premise that

designers and operators ensure safety by meeting a prescribed standard or guidance set by the regulatory agency.

D.93
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Gumley, P. N.D. Use of Fault Tree/Event Sequence Analyses in a Safety Review

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Hanford Engineering Development Laboratory (HEDL). 1982. Instructions for

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D.97

APPENDIX E

GLOSSARY OF ACRONYMS/ABBREVIATIONS

GLOSSARY OF ACRONYMS/ABBREVIATIONS

ACRS Advisory Committee on Reactor Safeguards

A/E architect-engineer

A&E architectural and engineering

AEC Atomic Energy Commission

ANSI American National Standards Institute

ASLB Atomic Safety and Licensing Board

ASME American Society of Mechanical Engineers

ASQC American Society for Quality Control

AWS American Welding Society

CAT Construction Appraisal Team

CM construction manager

CP construction permit

CPE Construction Project Evaluation

CRGR Committee to Review Generic Requirements

DOE Department of Energy

DR designated representative

FAA Federal Aviation Administration

FSAR Final Safety Analysis Report

HARC Human Affairs Research Center

IDCVP Independent Design and Construction Verification Program

IDI integrated design inspection

IDVP Independent Design Verification Program

IE Office of Inspection and Enforcement

IEEE Institute of Electrical and Electronics Engineers

INPO Institute of Nuclear Power Operations

MarAd Maritime Administration

E.1
NASA National Aeronautics and Space Administration

NB The National Board of Boiler and Pressure Vessel Inspectors

NRC Nuclear Regulatory Commission

NRR Office of Nuclear Reactor Regulation

NSSS nuclear steam supply system manufacturer

OTA Office of Technology Assessment

PAT Performance Appraisal Team

PNL Pacific Northwest Laboratory

PSAR Preliminary Safety Analysis Report

PUC Public Utility Commission

QA quality assurance

QC quality control

SALP Systematic Assessment of Licensee Performance

SRP Standard Review Plan

TPT Torrey Pines Technology

USN U.S. Navy

*U.S. cOVERI~NK FRUIMING OMICE: 1984-421-297:3941

E.2
NRC FORM 335 U.S. NUCLEAR REGULATORY COMMISSION 1. REPORT NUMBER (•ssigned by DD0C

BIBLIOGRAPHIC DATA SHEET NUREG-1055

4. TITLE AND SUBTITLE (Add Volume No.. iftappropriata) 2. (Leave blank I

Improving Quality and the Assurance of Quality in the

Design and Construction of Commercial Nuclear Power 3. RECIPIENT'S ACCESSION NO.

Plants - A Report To Congress

7. AUTHOR(S) 5. DATE REPORT COMPLETED

W. Altman, T. Ankrum, W. Brach NTH April 1984

9. PERFORMING ORGANIZATION NAME AND MAILING ADDRESS (Include Zip Code) DATE REPORT ISSUED

Quality Assurance Branch NTH YEAR

Division of Quality Assurance, Safeguards, and MO M ay E QR4

Inspection Programs, IE 6. (Leave bjank)

Washington, D.C. 20555 8. (Leave blank)

12. SPONSORING ORGANIZATION Quali NAME AND MAILING ADDRESS (Include Zip Code) Brnch10. t Assrane PROJECT/TASK/WORK UNIT NO.

Quality Assurance Branch

Division of Quality Assurance, Safeguards, and

Inspection Programs, IE 1. FINNO.

Washington, D.C. 20555

13. TYPE OF REPORT PERIOD COVERED (Inclusive dares)

Report to Congress

15. SUPPLEMENTARY NOTES 14. (Leave Blank)

16. ABSTRACT (200 words or less)

At the request of Congress, NRC conducted a study of existing and alternative

programs for improving quality and the assurance of quality in the design and

construction of commercial nuclear power plants. A primary focus of the

study-was to determine the underlying causes of major quality-related problems

in the construction of some nuclear power plants and the untimely detection

and correction of these problems. The study concluded that the root cause for

major quality-related problems was the failure or inability of some utility

managements to effectively implement a management system that ensured adequate

control over all aspects of the project. These management shortcomings arose in

part from inexperience on the part of some project teams in the construction of

nuclear power plants. As a corrollary, NRC's past licensing and inspection

practices did not adequately screen construction permit applicants for. overall

capability to manage or provide effective management oversight over the construction project. The study recommends a number of improvements in industry

and NRC programs.

17. KEY WORDS AND DOCUMENT ANALYSIS 17a. DESCRIPTORS

Quality Management Capability

Quality Assurance Prior Experience

Quality Control Architect-Engineer

Design Construction Manager

Construction Constructor

Commercial Nuclear Power Plants Utility

Ford Amendment

'b. IDENTIFIERS/OPEN-ENDED TERMS

18. AVAILABILITY STATEMENT 19. SECURITY CLASS (Ths repor,) 21. NO. OF PAGES

Unlimited 20. SECURITY CLASS (This page) 22. PRICE

S

NRC FORM 335 111-811




UNITED STATES

NUCLEAR REGULATORY COMMISSION

WASHINGTON, D.C. 20555

OFFICIAL BUSINESS

PENALTY FOR PRIVATE USE. $300

FIRS CAS MI

IPOSTAGE 6 FEES PAID 

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USNUCI

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