U.S. Department of Energy 

Office of Inspector General 

Office of Audit Services 

Audit Report 

The Procurement of Safety 

Class/Safety-Significant Items at the 

Savannah River Site 

DOE/IG-0814 April 2009 
Department of Energy 

Washington, DC 20585 

April 23, 2009 

MEMORANDUM FOR THE SECRETARY 

 

FROM: Gregory H. Friedman 

Inspector General 

SUBJECT: INFORMATION: Audit Report on "Procurement of 

Safety-Class/Safety-Significant Items at the Savannah River 

Site" 

BACKGROUND

The Department of Energy operates several nuclear facilities at its Savannah River Site, 

and several additional facilities are under construction. This includes the National 

Nuclear Security Administration's Tritium Extraction Facility (TEF) which is designated 

to help maintain the reliability of the U.S. nuclear stockpile. The Mixed Oxide Fuel 

Fabrication Facility (MOX Facility) is being constructed to manufacture commercial 

nuclear reactor fuel assemblies from weapon-grade plutonium oxide and depleted 

uranium. The Interim Salt Processing (ISP) project, managed by the Office of 

Environmental Management, will treat radioactive waste. 

The Department has committed to procuring products and services for nuclear-related 

activities that meet or exceed recognized quality assurance standards. Such standards 

help to ensure the safety and performance of these facilities. To that end, it issued 

Departmental Order 414.1C, Quality Assurance (QA Order). The QA Order requires the 

application of Quality Assurance Requirements for Nuclear Facility Applications (NQA1) for nuclear-related activities. The NQA-1 standard provides requirements and 

guidelines for the establishment and execution of quality assurance programs during the 

siting, design, construction, operation, and decommissioning of nuclear facilities. These 

requirements, promulgated by the American Society of Mechanical Engineers, must be 

applied to "safety-class" and "safety-significant" structures, systems and components 

(SSCs). Safety-class SSCs are defined as those necessary to prevent exposure off site 

and to protect the public. Safety-significant SSCs are those whose failure could 

irreversibly impact worker safety such as a fatality, serious injury, or significant 

radiological or chemical exposure. Due to the importance of protecting the public, 

workers, and environment, we initiated an audit to determine whether the Department of 

Energy procured safety-class and safety-significant SSCs that met NQA-1 standards at 

the Savannah River Site. 

RESULTS OF AUDIT

Our review disclosed that the Department had procured and installed safety-class and 

safety-significant SSCs that did not meet NQA-1 quality standards. Specifically, we 

identified multiple instances in which critical components did not meet required quality 

and safety standards. For example:
2

• Three structural components were procured and installed by the prime contractor 

at Savannah River during construction of the MOX Facility that did not meet the 

technical specifications for items relied on for safety. These substandard items 

necessitated costly and time consuming remedial action to, among other things, 

ensure that nonconforming materials and equipment would function within safety 

margins; 

• In six instances, items used in the construction of TEF failed to satisfy quality 

standards. In one of these situations, operating procedures had to be modified to 

ensure that the problem item did not compromise safety; and, 

• Finally, at the ISP, one component that did not meet quality standards was 

procured. The failure of the item could have resulted in a spill of up to 15,000 

gallons of high-level radioactive waste. 

Based on an extensive examination of relevant internal controls and procurement 

practices, we concluded that these failures were attributable to inadequate attention to 

quality assurance at Savannah River. Simply put, Departmental controls were not 

adequate to prevent and/or detect quality assurance problems. For example, Federal and 

prime contractor officials did not expressly require that subcontractors or lower-tiered 

vendors comply with quality assurance requirements. Additionally, management did not 

effectively communicate quality assurance concerns between the several Departmental 

program elements operating at Savannah River. 

The procurement and installation of these nonconforming components resulted in cost 

increases. For example, as of October 2008, the MOX Facility had incurred costs of 

more than $680,000 due to problems associated with the procurement of $11 million of 

nonconforming safety-class reinforcing steel. In general, the internal control weaknesses 

we discovered could have permitted, without detection, the procurement and installation 

of safety critical components that did not meet quality assurance standards. In a worst 

case scenario, undetected, nonconforming components could fail and injure workers or 

the public. 

In certain instances, the Department took steps to ensure that the prime contractors at 

Savannah River began action to remediate nonconforming components and to strengthen 

policies and procedures. Additionally, the Department took actions to ensure that critical 

components necessary for projects worked as designed by requiring that the prime 

contractor place personnel at manufacturers' locations. Further, the Department had 

suspended work with certain other manufacturers due to quality assurance problems. 

Although these are positive steps, weaknesses in oversight and communication remain; 

therefore, additional action is necessary. For that reason, we made several 

recommendations designed to strengthen quality assurance at Savannah River. 

Finally, the matters discussed in this report provide valuable lessons learned as the 

Department implements the American Recovery and Reinvestment Act. Specifically, the 

Department will use massive amounts of Recovery Act stimulus funds to initiate new and 

to accelerate ongoing projects throughout its complex. All of this is to be done as 

expeditiously as possible to promote the stimulative impact of these expenditures. In 

such an environment, the Department must maintain a focus on quality assurance issues, 

such as those discussed in this report, to ensure the safety of its workforce and the public. 
3

MANAGEMENT REACTION

The Department's Office of Environmental Management (EM) supported the conclusions 

and the recommendations reached and told us that it had identified similar quality 

weaknesses at Savannah River. EM noted that it is taking steps to ameliorate the 

weaknesses identified in a manner consistent with the recommendations provided in our 

report. EM concluded that its efforts are expected to improve the procurement process 

for safety-class and safety-significant structures, systems, or components. 

The National Nuclear Security Administration (NNSA) agreed with the recommendations 

presented in the report; however, it did not agree with stated conclusions concerning the 

safety of the facilities, related cost impacts, nor did it agree with the tone of the report. 

NNSA further asserted that our audit did not take into consideration the fact that when 

the U.S. Nuclear Regulatory Commission (NRC) reviewed the MOX Facility it opined 

that the quality assurance problems were of low significance. 

We acknowledge that the Notice of Violation issued by the NRC for the MOX quality 

assurance problems was assigned NRC's lowest level of severity; however, we do not 

agree that the problems were of low significance. The NRC's findings were based on 

failures to meet regulatory and/or quality assurance criterion, and as such, are not 

inconsistent with our findings. Unless and until the Department resolves the internal 

control weaknesses that permitted the failures NRC identified at MOX, it is possible that 

non-conforming parts or components that do not meet safety standards could continue to 

be procured and installed in critical nuclear facilities. 

Management's comments are generally responsive to our recommendations and are 

attached as Appendix 3. We summarized management comments and our responses and 

have included them in the body of the report. 

Attachment 

cc: Office of the Deputy Secretary 

 Office of the Under Secretary of Energy 

 Acting Assistant Secretary, Office of Environmental Management 

 Administrator, National Nuclear Security Administration 

 Chief of Staff 

 Manager, Savannah River Operations Office 

Manager, Savannah River Site Office 
REPORT ON PROCUREMENT OF SAFETY-CLASS/SAFETYSIGNIFICANT ITEMS AT THE SAVANNAH RIVER SITE 

TABLE OF 

CONTENTS 

Procurement of Safety-Class/Safety-Significant Items

Details of Finding .............................................................................................................1

Recommendations ............................................................................................................9 

Comments .......................................................................................................................10 

Appendices 

1. Objective, Scope, and Methodology..........................................................................12 

2. Prior Report ..............................................................................................................14 

3. Management Comments ............................................................................................15 
PROCUREMENT OF SAFETY-CLASS/SAFETY-SIGNIFICANT 

ITEMS 

________________________________________________________________ 

Page 1 Details of Finding

Quality The Department of Energy (Department) is required by 

Requirements 10 CFR Part 830 and 10 CFR Part 50 to implement quality 

assurance standards for building and operating its nuclear 

facilities. The Department implements the quality 

assurance standards through its prime contractors. Prime 

contractors are required to develop and implement a quality 

assurance plan necessary to provide assurance that all 

structures, systems and components (SSCs) will perform as 

designed. The Department's prime contractors at the 

Savannah River Site (Savannah River) are required to 

adhere to American Society of Mechanical Engineers 

Quality Assurance Requirements for Nuclear Facility 

Applications (NQA-1) standards for their quality assurance 

programs. NQA-1 sets forth requirements and guidance for 

the establishment and execution of quality assurance 

programs. 

Relevant NQA-1 standards include requirements that prime 

contractors: 

• Evaluate subcontractors' capabilities to provide a 

SSC in accordance with specified requirements 

prior to contract award; 

• Perform periodic audits and inspections of 

subcontractors to ensure continued compliance with 

procurement requirements; 

• Ensure that quality assurance requirements are 

"flowed down" in procurement documents. 

Additionally, contracts shall provide for access to 

subcontractor facilities for audits and inspections; 

• Verify that the item procured conforms with 

procurement requirements prior to receiving and 

installing a SSC. This may be done through 

receiving inspections, source verifications, 

certificates of conformance, post installation tests or 

a combination of these methods; 

• Employ special processes that control or verify 

quality, such as those used in welding, heat treating, 

and nondestructive examination. These processes 

must be performed by qualified personnel using 

qualified procedures in accordance with specified 

requirements; and, 
 

________________________________________________________________ 

Page 2 Details of Finding 

• Ensure that items that do not conform to specified 

requirements are not inadvertently installed and 

used. 

As noted in the above requirements, it is important that 

NQA-1 requirements be followed to help ensure that SSCs 

meet safety and performance expectations. Therefore, 

when the prime contractor relies on subcontractors and 

lower-tiered vendors to supply safety-class or safetysignificant SSCs, it is the prime contractor's responsibility 

to ensure that the appropriate NQA-1 requirements are 

clearly “flowed down” to all lower-tiered vendors. 

Safety-Class/Safety- Our audit disclosed that, in a number of instances, the 

Significant Department's prime contractors at Savannah River 

Procurements procured and installed safety-class and safety-significant 

SSCs at major nuclear facilities that did not meet NQA-1 

standards. We reviewed ten procurements for three nuclear 

facilities at Savannah River where NQA-1 standards were 

required. In each of the ten procurements, we noted that 

NQA-1 requirements were either not met or could not be 

substantiated. 

Mixed Oxide Fuel Fabrication Facility 

Of the three procurements of safety-class SSCs for the 

Mixed Oxide Fuel Fabrication Facility (MOX Facility) at 

Savannah River that we evaluated, none met NQA-1 

standards. Construction of the MOX Facility, a $4.8 billion 

project managed by the Department's National Nuclear 

Security Administration (NNSA), began in 2007. When 

complete, the MOX Facility will convert surplus weapongrade plutonium into pellets for commercial reactor fuel 

assemblies. The project's prime contractor, Shaw/AREVA 

MOX Services, LLC (Shaw/AREVA) ordered more than 

$11 million of rebar1

 as well as $3.5 million in piping and 

embed plates2

, from subcontractors. While these 

subcontractors were on Shaw/AREVA's Approved 

Suppliers List, the Nuclear Regulatory Commission (NRC), 

in an inspection report dated May 20, 2008, discovered that 

 

1

 Reinforcing steel bar (rebar) is used to reinforce concrete. Reinforced concrete is composite material. 

The concrete provides the material's compressive strength, while the steel - in the form of embedded 

reinforcing bars - provides tensile strength. 

2

 Embed plates are steel plates set into the concrete during construction and are used to attach process 

equipment and structural components to concrete. 
 

________________________________________________________________ 

Page 3 Details of Finding 

the subcontractors had subsequently procured and delivered 

nonconforming SSCs from lower-tier vendors. 

Specifically: 

• Shaw/AREVA's subcontractor commercially 

procured 9,500 tons of rebar from a non-qualified 

NQA-1 vendor. The subcontractor in this case 

procured the rebar from a lower-tier vendor and had 

it shipped directly to the MOX Facility, failing to 

perform adequate inspections to verify conformance 

to specifications during fabrication. Although there 

had been previous reports of nonconformance with 

NQA-1 quality assurance requirements by the 

supplier for over one year, it was not until February 

2008 that it was discovered that the rebar did not 

meet the code specification for nuclear structures. 

During installation, rebar was identified that did not 

conform to a nuclear specification for a bend in the 

material that was relied on for safety. The 

nonconforming rebar was identified after a piece 

broke when struck by a sledgehammer. 

Subsequently, Shaw/AREVA determined the design 

of the MOX facility was sufficiently robust to 

tolerate the 14 tons of nonconforming rebar already 

embedded in concrete. Approximately 135 tons 

were cut to remove the nonconforming nuclear bend 

and were used as straight rebar, or in areas without 

structural concerns; however, 935 tons of 

nonconforming rebar were returned to the 

manufacturer. 

• The prime contractor for the MOX Facility, through 

a subcontractor, also procured commercial piping 

material used in applications relied on for safety 

from a non-qualified NQA-1 supplier. In this 

instance, Shaw/AREVA's subcontractor did not 

perform the necessary quality assurance reviews to 

provide reasonable assurance that the piping 

procured from a lower-tier vendor was suitable for 

use in nuclear applications. 

 

• In yet another example, a Shaw/AREVA 

subcontractor commercially procured steel plate 

material that did not meet NQA-1 standards. As in 

the preceding example, the subcontractor did not 
 

________________________________________________________________ 

Page 4 Details of Finding 

perform an adequate review to provide reasonable 

assurance that the commercial plate material was 

suitable for use in a nuclear facility. 

While Shaw/AREVA had conducted audits and 

surveillances of quality assurance at its subcontractors, it 

did not ensure that appropriate NQA-1 requirements were 

flowed down to lower-tier vendors. We noted that in each 

of the instances above, Shaw/AREVA had inadequate 

procurement and quality assurance procedures to ensure 

that NQA-1 requirements were passed down to all 

subcontractors and lower-tier vendors and that SSCs were 

suitable for use in nuclear facilities. It should be noted that 

on November 12, 2008, the NRC concluded that, overall, 

the construction of this facility was being performed safely 

and identified no specific areas needing improvement in the 

area of quality assurance. 

Tritium Extraction Facility

None of the six procurements of safety-significant SSCs we 

reviewed for the Tritium Extraction Facility (TEF) met 

quality assurance standards. The TEF, located at Savannah 

River and managed by Washington Savannah River 

Company (WSRC) for NNSA, is a $500 million one-of-akind facility operated to replenish the nation's stockpile of 

tritium. TEF handles highly radioactive substances, such as 

tritium, a radioactive form of hydrogen necessary for 

nuclear weapons. The TEF provides the capability to 

receive and extract gases containing tritium from irradiated 

rods. However, even though NQA-1 standards were clearly 

flowed down to its subcontractors, WSRC procured and 

installed safety-significant SSCs which did not meet NQA1 requirements in the facility. For example: 

• WSRC procured safety-significant gloveboxes from 

a subcontractor for more than $12 million. The 

gloveboxes were designed to be airtight and contain 

inert argon gas and equipment for processing 

tritium. Even though the subcontractor was audited 

and qualified by WSRC as an NQA-1 supplier, it 

failed to flow down NQA-1 requirements to all of 

its lower-tier vendors. Specifically, some of these 

vendors maintained only commercial quality 

programs while others were merely retail catalog 

vendors and did not have a quality program at all. 

Thus, the glovebox components were not procured 
 

________________________________________________________________ 

Page 5 Details of Finding 

under an NQA-1 program, a practice that increased 

the risk that items may not function as intended and, 

therefore, may not adequately protect workers from 

exposure to radioactive gas. The Department 

reported that in spite of the quality assurance 

problems, the gloveboxes in question were 

ultimately certified for operations during pre-startup using standard engineering procedures. 

• The prime contractor ordered furnace module doors, 

valued at approximately $690,000, from a 

subcontractor. These module doors were intended 

to provide a leak-tight seal for the Target Rod 

Preparation Furnace Modules and were part of the 

secondary confinement for the furnace modules 

used to extract tritium in a gaseous state. Even 

though the subcontractor was qualified by WSRC, 

certain SSCs supplied and used to manufacture the 

module doors did not meet NQA-1 standards. For 

example, NQA-1 requires that activities affecting 

quality must be prescribed by and performed in 

accordance with documented instructions, 

procedures, or drawings. However, the 

subcontractor failed to comply with documented 

instructions and, therefore, did not properly drill 

holes for the bolts that secured the module doors to 

the furnace modules. Management stated that 

subsequently, WSRC spent $100,000 to perform 

retroactive quality assurance procedures that 

permitted it to certify this equipment under NQA-1. 

 

• Additionally, WSRC procured approximately 

$140,000 worth of studs and nuts to secure the 

module doors to the furnace modules. WSRC 

flowed down NQA-1 requirements to its 

subcontractor; however, the subcontractor did not 

flow down these requirements to its lower-tier 

vendors. 

• WSRC also purchased a safety-significant robotic 

system for nearly $1.5 million. The robotic system 

is to be used in remote operations to eliminate 

human contact with radiological and chemical 

hazards. Again, while WSRC required the 

subcontractor to comply with NQA-1 requirements, 
 

________________________________________________________________ 

Page 6 Details of Finding 

the subcontractor did not flow down these 

requirements to its lower-tier vendors. 

Consequently, the lower-tier vendor procured the 

components commercially. 

We noted that in each of the instances above, WSRC 

procedures were inadequate in that they did not pass down 

appropriate quality assurance requirements to all 

subcontractors and lower-tier vendors to ensure that the 

SSCs were suitable for use in the facility. Additionally, 

WSRC had inadequate procedures to ensure that a 

subcontractor was qualified as a NQA-1 supplier prior to 

award. Specifically, WSRC procurement procedures do 

not require subcontractors to be audited and qualified to 

NQA-1 standards prior to contract award. WSRC 

procedures specify only that the supplier's quality assurance 

manual be reviewed during the bid evaluation for a 

particular component. In our review of safety-significant 

electronic SSCs for the gloveboxes in TEF, the 

subcontractor submitted its quality assurance manual; 

however, it was not reviewed by WSRC until four months 

after the contract award. Additionally, we found the 

subcontractor's quality assurance manual was inadequate 

because it did not incorporate the necessary methodology 

required by NQA-1 to meet safety and quality standards. 

Interim Salt Processing Project 

At the Interim Salt Processing (ISP) project our audit 

identified the procurement of one safety-class SSC that did 

not meet NQA-1 requirements. The ISP project was 

managed by the Office of Environmental Management 

(EM) and was designed to remove radionuclides and 

cesium from radioactive tank waste and facilitate its 

ultimate vitrification by the Defense Waste Processing 

Facility. WSRC procured stainless steel round bars that 

were machined into caps, designated as safety-class 

components, and used to support the transfer of radioactive 

salt waste. As with previous examples, the subcontractor 

had not “flowed down” NQA-1 requirements to lower-tier 

vendors and, therefore, the steel caps were not fabricated 

under a NQA-1 program. This subcontractor was the same 

one used by Shaw/AREVA to supply nonconforming SSCs 

to the MOX Facility. 
 

________________________________________________________________ 

Page 7 Details of Finding 

Oversight of The Department did not provide adequate oversight of the 

Quality Assurance prime contractors' quality assurance programs at Savannah 

Programs River. Particularly, the Department did not adequately 

establish and implement processes to detect and/or prevent 

quality problems. Additionally, the Department did not 

effectively communicate quality assurance issues between 

the programs operating or constructing major facilities at 

Savannah River. 

Detection/Prevention of Quality Problems

The Department did not establish adequate processes to 

detect and/or prevent quality problems from occurring at 

Savannah River. As previously noted, while the contractor 

had responsibility to implement quality assurance 

requirements, the Department must still provide the 

necessary oversight to ensure that the requirements are 

being followed. The Department, however, did not have a 

rigorous enough process in place to prevent and/or detect 

problems related to the flow down of NQA-1 requirements 

in purchase orders to subcontractors and lower-tier vendors. 

For example, the Department failed to detect quality 

assurance issues with the procurement of safety-class rebar 

at the MOX Facility until a piece of rebar broke during 

installation. Only then was oversight increased and 

management discovered that 9,500 tons of rebar was 

procured under a non-NQA-1 program. Even though the 

Department had procedures in place to detect and prevent 

quality problems, the Department and its contractors told us 

that they lacked adequate quality assurance resources to 

meet the required responsibilities. 

In another example, the Department failed to detect and 

prevent quality problems at TEF where, as early as October 

2003, the Department's Office of Enforcement noted 

quality assurance concerns and levied enforcement actions 

with the same subcontractor that provided the 

nonconforming furnace module doors at TEF. However, 

for both the TEF and ISP projects, which began hot 

operations in Fiscal Years 2007 and 2008 respectively, the 

Department continued to use the subcontractor for SSCs 

that were required to meet NQA-1 standards, but had not 

performed an adequate review of the subcontractor’s 

quality assurance program. In fact, these quality problems 

were not identified at Savannah River until a whistleblower 

reported quality assurance concerns to the Department. 
 

________________________________________________________________ 

Page 8 Details of Finding 

Communication Between Projects

The Department did not effectively communicate quality 

assurance issues between the various projects at Savannah 

River. Savannah River is considered a multi-programmatic 

site in that it includes EM and NNSA activities. Each of 

these programs maintains its own respective quality 

assurance oversight functions. However, quality assurance 

issues and concerns within these organizations were not 

communicated between the projects at the site. 

Specifically, the subcontractor that provided the 

nonconforming rebar for NNSA's MOX Facility also 

supplied nonconforming safety-class caps to EM's ISP 

project. When NNSA identified concerns with the rebar 

being provided to the MOX Facility, it failed to effectively 

communicate quality assurance problems with this 

subcontractor to EM officials at Savannah River Operations 

Office. In fact, the EM officials at Savannah River 

Operations Office were unaware of the quality issues with 

this subcontractor until we brought them to their attention. 

NNSA officials explained that they had included quality 

assurance problems with the rebar in the Department’s 

Occurrence and Processing System and NNSA’s Lessons 

Learned system. Our review, however, disclosed that the 

reports in these systems did not provide enough specificity, 

including the identification of the subcontractor, to be 

useful to other Departmental entities. 

Likewise, EM officials at the Savannah River Operations 

Office did not communicate quality assurance problems 

discovered at TEF to NNSA officials at the MOX Facility. 

The MOX Facility was in the process of procuring SSCs 

when it became aware, as a result of a complaint made 

from outside the Department, that the subcontractor had 

quality assurance deficiencies. After learning of the quality 

assurance deficiencies, Shaw/AREVA awarded the work to 

another subcontractor. 

According to officials, EM plans to develop a formal 

process to notify other Department offices about nuclear 

suppliers that do not meet quality assurance requirements. 

Effective implementation of such a process should 

significantly improve communication issues identified in 

this report, especially, if implemented on a Departmentwide basis. 
 

________________________________________________________________ 

Page 9 Recommendations 

Recent Actions Encouraging

To the Department's credit, it has taken steps to ensure that 

the contractors at Savannah River remediate 

nonconforming SSCs and strengthen policies and 

procedures. Specifically, at the MOX Facility, action has 

been taken to remediate nonconforming rebar. Because 

rebar had already been embedded in the concrete, 

subsequent alternative procedures were used and approved 

by the NRC to determine whether the rebar could be 

acceptable as safety-class material. Additionally, the 

Department had taken steps to ensure that critical 

components function as designed by requiring the 

contractor to increase quality controls and place personnel 

at the manufacturer's locations. For example, one full-time 

contractor employee has been at a subcontractor's facility 

since July 2008 providing oversight activities such as 

ensuring that engineering and quality requirements are 

adhered to and that the subcontractor flowed down quality 

assurance requirements to lower-tier vendors. Further, the 

Department has suspended work with other manufacturers 

due to quality assurance problems. While these actions are 

encouraging, it is imperative that the Department take 

action to improve oversight and communication throughout 

the various projects and strengthen quality assurance 

procedures to help prevent or detect additional problems. 

Cost and Procurement of SSCs that do not meet NQA-1 standards 

Programmatic Impacts can result in risk to the public, employees and the 

environment as well as increasing costs and causing 

operational delays and impacts to projects. In fact, the 

Department has experienced cost increases associated with 

recent quality assurance failures. For example, as of 

October 2008, the MOX Facility has experienced costs of 

more the $680,000 due to the procurement of $11 million 

of nonconforming safety-class rebar. Further, SSCs that do 

not meet NQA-1 quality requirements can result in 

programmatic delays and impacts. For example, failure of 

critical SSCs on the TEF project could result in an 

unwanted release of radioactive gases. Similarly, the 

failure of critical SSCs at the ISP could delay important 

tank waste remediation. 

RECOMMENDATIONS We recommend that the Administrator, NNSA, and 

Acting Assistant Secretary for EM strengthen quality 

assurance at Savannah River by: 
 

________________________________________________________________ 

Page 10 Comments 

1. Establishing more rigorous policies and procedures 

to detect and/or prevent quality problems; 

2. Evaluating safety-class/safety-significant 

procurements to determine whether the items will 

function as intended; and, 

3. Developing procedures to coordinate and 

communicate quality assurance issues between 

projects and among Departmental and contractor 

elements. 

MANAGEMENT EM supported the report's conclusions and the recommendations. 

REACTIONS EM stated that it had identified similar quality assurance 

weaknesses at the Savannah River and was taking steps to 

correct the weaknesses. EM committed to address future 

quality assurance problems in a manner consistent with the 

recommendations provided in our report. EM concluded 

that its efforts were expected to improve the procurement 

process for safety-class and safety-significant structures, 

systems or components. 

NNSA agreed with the recommendations presented in the 

report; however, it did not agree with stated conclusions 

concerning the safety of the facilities, related cost impacts, 

or with the tone of the report. NNSA further asserted that 

we had not taken into consideration the opinion of the U.S. 

Nuclear Regulatory Commission (NRC) or key documents. 

NNSA asserted that the NRC reviewed the same quality 

assurance issues at the MOX Facility and concluded that 

these issues were of low significance. 

AUDITOR We consider both the EM and NNSA management 

COMMENTS responses to be generally responsive to our recommendations. 

As NNSA management noted in its response to our draft 

report, the NRC ultimately determined that the specific 

quality assurance problems identified in our report had 

been corrected. Regarding the significance of quality 

assurance problems discussed in our report, the NRC issued 

the MOX Facility contractor a Notice of Violation after it 

concluded that the failure to meet requirements for a 

nonconforming material used in the MOX Facility 

constituted a Severity Level IV violation, the lowest of 

severity levels, of NRC requirements. NRC defines 

Severity Level IV as violations involving the failure to 

meet regulatory requirements, including one or more 

quality assurance criterion. We, therefore, concluded that 

the quality assurance problems at the MOX Facility were 
 

________________________________________________________________ 

Page 11 Objective, Scope, and Methodology 

significant in that such weaknesses could, if not corrected, 

permit the undetected procurement and installation of 

components in critical nuclear facilities that do not meet 

quality assurance standards. 

Comments provided by NNSA tend to indicate that it 

approaches the quality assurance issues at Savannah River 

from a practical point of view, i.e., that through remedial 

procedures it was able to resolve these particular 

procurement and installation problems. The fact that the 

materials were ultimately useable, however, does not 

detract from the fact that the problems were unlikely to 

have occurred if all quality assurance requirements had 

been satisfied. Such weaknesses could, if not corrected, 

permit the undetected procurement and installation of 

components that do not meet quality assurance standards.

We revised the report as appropriate to respond to 

management's technical comments. 

Management's verbatim comments are included in 

Appendix 3 of the report. 
Appendix 1 

OBJECTIVE The objective of this audit was to determine whether the 

Department of Energy (Department) procured safety-class and 

safety-significant structures, systems, and components that met 

NQA-1 standards at the Savannah River Site (Savannah River). 

SCOPE We conducted the audit from September 30, 2008, to April 8, 2009, 

at Savannah River in South Carolina. The scope of the audit 

covered procurements of safety-class/safety-significant structures, 

systems and components at Savannah River. Our review focused 

on the circumstances surrounding previously discovered suspect 

procurements. We also indentified several problems of which 

management was not aware. 

METHODOLOGY To accomplish the audit objective, we: 

• Obtained and reviewed quality assurance plans for 

Washington Savannah River Company, the Tritium 

Extraction Facility, and the Mixed Oxide Fuel 

Fabrication Facility; 

• Obtained and reviewed procurement documentation at 

Savannah River based on a judgmental sample of high 

dollar value or high-risk safety-class and safetysignificant structures, systems, and components that 

were procured; 

• Researched Federal, Departmental, and contractors 

regulations, policies and procedures; and, 

• Interviewed key personnel in the Office of 

Environmental Management, National Nuclear Security 

Administration, Savannah River Site Office, Savannah 

River Operations Office, Washington Savannah River 

Company, and Shaw/AREVA MOX Services, LLC. 

We conducted this performance audit in accordance with 

generally accepted Government auditing standards. Those 

standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis 

for our findings and conclusions based on our audit objectives. 

We believe that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit 

objective. The audit included tests of internal controls and 

compliance with laws and regulations to the extent necessary to 

satisfy the audit objective. Because our review was limited, it 

would not necessarily have disclosed all internal control 

________________________________________________________________ 

Page 12 Objective, Scope, and Methodology 
Appendix 1 (continued) 

deficiencies that may have existed at the time of our audit. 

Also, we considered the establishment of performance 

measures in accordance with the Government Performance and 

Results Act of 1993 as they related to the audit objective. We 

determined that no performance measures directly related to 

quality assurance. Finally, we did not rely on computerprocessed data to accomplish our audit objective. 

An exit conference was held with EM and NNSA on April 8, 

2009. 

________________________________________________________________ 

Page 13 Objective, Scope, and Methodology 
Appendix 2 

PRIOR REPORTS 

• Audit Report on Quality Assurance Standards for the Integrated Control Network at the 

Hanford Site's Waste Treatment Plant (DOE/IG-0764, May 2007). The audit found 

that the Waste Treatment Plant control system acquired by the Department of Energy 

(Department) did not meet applicable quality assurance standards – specifically, those 

required for "an activity affecting the immobilization of radioactive high-level waste." 

As a result, the system does not meet the stringent procedures, plans, specifications, or 

work practices associated with nuclear quality standards. Under the circumstances, we 

concluded that the Department cannot be sure that the Waste Treatment Plant's current 

system is suitable for processing nuclear waste. 

• Audit Report on the Department of Energy's Tritium Extraction Facility (DOE/IG0560, June 2002). The audit found that the Department was in jeopardy of not 

completing the Tritium Extraction Facility within its baseline cost, schedule, and 

scope. Some of the underlying reasons for this were that construction began before the 

design was complete, risk assessments and cost estimates were not adequately updated, 

insufficient documentation existed to allow management to review cost estimates and 

strategies, contingency funds were not adequate, and senior management direction 

focused on total project costs rather than project requirements. Given these 

circumstances, the Tritium Extraction Facility project would be completed well over 

cost and approximately a year later than scheduled. 

. 

___________________________________________________________________ 

Page 14 Prior Report 
Department of Energy 

Washington, DC 20585 

February 18, 2009 

MEMORANDUM FOR RICKEY R. HASS 

DEPUTY INSPECTOR GENERAL 

FOR AUDIT SERVICES 

OFFICE OF INSPECTOR ~ENERA~ . 

FROM: INES R. TRIAY 

ACTING ASSISTANT SECRETARY FOR 

ENVIRONMENTAL MANAGEMENT 

SUBJECT:	 Inspector General Report (Pre-Decisional Draft) "Procurement 

of Safety Class/Safety Significant Items at the Savannah River 

Site" 

The Office of Environmental Management (EM) acknowledges the Office of the 

Inspector General (OIG) for the opportunity to review and comment on the PreDecisional Draft Audit Report, "Procurement ofSafety Class/Safety Significant Items at 

the Savannah River Site." EM through its own audit process has identified similar quality 

weaknesses at the Savannah River Site (SR) and is taking steps to ameliorate the 

weaknesses. Therefore, EM supports the conclusions and recommendations reached by 

the OIG. 

EM has been proactive in identifying similar issues through quality oversight of EM 

construction and operational projects that have or are currently procuring safety-class, 

safety-significant structures, systems or components (SSCs). Any additional issues 

identified during these audits are being addressed in a manner consistent with the 

recommendations provided in your report. These efforts are expected to improve the 

procurement process for safety-class and safety-significant SSCs in addition to improving 

the oversight of our contractors. 

Three recommendations were offered within the Draft Audit Report. 

The actions below summarize some of the initial progress that EM and SR have made 

with respect to these recommendations. 

1.	 Establishing more rigorous policies and procedures to detect and/or prevent 

quality problems: 

The issues identified in this report represent a failure of contractors and 

subcontractors to properly implement existing requirements and policies. 

EM agrees that current practices can and should be enhanced to provide greater 

Federal and contractor oversight and assurance that requirements are being 

properly implemented. Specifically, with respect to SR, the site will focus on 

ensuring that "flow-down" of American Society of Mechanical Engineers Nuclear 

* Printed with soy ink on recycled paper 
Quality Assurance-l (NQA-l) requirements to vendors supplying safety related 

equipment and services is strictly enforced. The site Management and Operations 

(M&O) contractor has already completed an independent assessment of its 

Quality Assurance (QA) and Procurement process at SR and developed numerous 

actions to improve the process. As a result of EM Headquarters initiatives in 

early fiscal year (FY) 2008 to enhance QA performance, an EMJEnergy Facility 

Contractor Group (EFCOG) QA Improvement Initiative Project Plan was 

established. Further, all DOE and site contractor quality assurance plans are 

currently being evaluated and updated or revised to meet the new EM Corporate 

QA Program requirements. This effort is currently scheduled to be completed by 

the end of FY 2009. The FY 2008 SR staffing plan was also approved to increase 

the number of DOE QA oversight personnel from one to five and the site is in the 

process of filling these positions. This will enable SR Federal oversight to better 

assess QA implementation within ongoing projects, including subcontractors. 

Evaluating safety-class/safety-significant procurements to determine whether 

the items will function as intended: 

EM has placed each ofthe components discussed in this report under a rigorous 

startup testing program to verify its ability to perform the intended safety 

function. 

Developing procedures to coordinate and communicate quality assurance 

issues between projects and among Departmental and contractor elements at 

the Savannah River Site: 

EM agrees that there should be better coordination among QA organizations 

within DOE and National Nuclear Security Administration (NNSA) and is 

currently assessing options for improving procedures and processes. The 

following initial improvements have been made: 

a.	 SR with NNSA are hosting the 2009 Regional Nuclear Suppliers 

Outreach Event on March 17-19,2009, which is an opportunity for 

regional and international businesses to gain insights into the 

NNSA market for nuclear services and products as well as the QA 

requirements to enter this market. A four hour NQA-l 

requirements training course for suppliers will be offered at the 

meeting. In July 2008 the first annual nuclear suppliers outreach 

event was successfully held in Denver, CO, to address the 

worldwide need for qualified nuclear vendors and suppliers. 

b.	 SR and NNSA has established and staffed a Lessons Learned 

Coordinator position to ensure the dissemination oflessons 

learned, including QA issues, between NNSA and EM 

organizations at the SR Site. 

c.	 SR and NNSA are coordinating to strengthen oversight ofproject 

quality and ensure that new projects review QA lessons learned 

2.	 

3.	 
from past projects, including the operating experiences learned 

after startup, and incorporate them. 

d.	 SR's Office ofAcquisition Management will establish additional 

procedures and processes to tighten controls over existing 

contractors beginning with requiring approved QA plans for each 

step on existing scope before allowing additional work to proceed. 

e.	 SR will host monthly interface meetings with NNSA and 

other tenants on-site. The focus ofthe meetings will be to discuss 

site programs and processes specific to work activities and the 

associated QA requirements. 

The Department will apprise the IG of its progress in implementing the recommendations 

by using the process established in the DOE Audit Reporting and Tracking System. 

Please be assured, our first commitment is to the health and safety ofour workers and the 

public. If you have any questions, please call me at (202) 586-5216 or Mr. Dae Chung, 

Deputy Assistant Secretary for Safety Management and Operations, at (202) 586-5151. 

cc: 

J. Owendoff, EM-3 

C. Anderson, EM-3 

J. Fiore, EM-6 

J. Boone, EM-6 

J. Surash, EM-50 

J. Allison, SR 

C. Everatt, SR 

R. Speidel, NA-66 
Department of Energy 

National Nuclear Security Administration 

Washington DC 20585 

February 25,2009 OFFICE OF THE ADMINISTRATOR 

MEMORANDUM FOR: 

Deputy Inspector General 

for Audit Services 

FROM:	 William C. Ostendorff 

Principal Deputy Administrator 

SUBJECT:	 Comments to Draft Procurement of Safety-Class/ 

Safety-Significant Items; Job Code A08RL067; IDRMS 

No. 2008-03181 

Rickey R. Hass 

The National Nuclear Security Administration (NNSA) appreciates the opportunity to 

review the Inspector General's (IG) draft report, "Procurement of Safety-Class/SafetySignificant Items at the Savannah River Site." We understand that the purpose ofthis 

audit was to determine if the Department of Energy (DOE) had procured safety-class and 

safety-significant items that met appropriate quality standards at Savannah River. 

NNSA agrees with the recommendations presented in the report but does not agree with 

the stated conclusions concerning the safety of the facilities, related cost impacts or with 

the tone of the report. The actions that NNSA has taken or are being implemented will 

provide increased confidence to NNSA's program and project management in the 

continued improvement of procurement quality assurance (QA) systems. 

NNSA does not agree with the IG report's estimated cost impacts. For example, the 

report implies the TEF furnace module doors, valued at $690,000, were not useable due 

to the QA issues stated. In fact, these doors were fully certified using standard NQA-1 

approved engineering procedures at a cost ofless than $100,000. Similarly, the $12 

million glovebox, implied to be a complete loss, was fully certified using standard 

engineering procedures during pre-startup testing at no additional cost to the government. 

The report also fails to acknowledge that, while the auditors raised concerns about 

QA/Nuclear Quality Assurance (QAlNQA) at the MOX facility, they failed to 

acknowledge the opinion ofthe official federal regulatory authority over MOX as 

expressed in the Nuclear Regulatory Commission (NRC) letter that places the IG's 

concerns in perspective. It is important to reference that the NRC, by law, regulates the 

MOX facility, including quality. The IG report conclusions differ substantially from the 

official position ofthe NRC on precisely the same issues. 

I) Printed with soy ink on recycled paper 
2 

The report does not mention that the NRC issued the results of its assessment of the 

contractor's performance covering the time period of October 16, 2006 through 

September 30, 2008. The NRC had assessed the same issues that are included in this 

draft report and concluded that the same issues raised by the IG were "violations of low 

significance" and that the NRC's review did not identify any areas needing improvement 

in management measures, facility construction, or facility support. The review by NRC 

was significantly longer in duration and more in-depth than the audit that is being 

captured in this report. 

There are no indications that parts or components have been installed in the MOX facility 

that are inadequate to protect the public, employees and the environment as the report 

implies. All nonconforming material at issue in the MOX facility has been evaluated and 

technically justified as acceptable using appropriate "NQA-l" processes as outlined in 

the NRC-approved MOX Quality Assurance Plan and Procedures. 

Attached are the actions that we are taking in relation to the recommendations. 

Should you have questions about this response, please contact the Director, Policy and 

Internal Controls Management. NNSA has additional technical comments for the IG's 

consideration should the IG be receptive to receiving them. 

Attachment 

cc:	 Deputy Administrator for Defense Nuclear Nonproliferation 

Deputy Administrator for Defense Programs 

Senior Advisor for Environment, Safety and Health 

Assistant Deputy Administrator for Nuclear Safety and Operations 

Director, Service Center 

Senior Procurement Executive 
1 

Steps to be Taken as Related to the Recommendations in the IG's Draft Report on 

Procurement of Safety-Class/Safety-Significant Items (A08RL067) 

Regarding the recommendations, NNSA reiterates our agreement with the IG that quality 

assurance can always be strengthened. Therefore, the following actions related to the 

recommendations are in place. 

•	 Establishing more rigorous policies and procedures 

o	 The DOE-SR issues identified in the IG report are primarily the failure of 

contractors and subcontractors to properly implement existing 

requirements and policies. DOE-SR and the NNSA SRSO agree that 

current practices can and should be enhanced to provide greater Federal 

and contractor oversight and assurance that requirements are being 

properly implemented - with specific focus to ensure that "flow-down" of 

NQA-I requirements to vendors supplying safety related equipment and 

services is strictly enforced. The management and operating (M&O) 

contractor has already completed an independent assessment of its 

QA/procurement process at SRS and developed numerous actions to 

improve the process. As a result of DOE-EM Headquarters' initiatives in 

early FY 2008 to enhance QA performance, an EM complex-wide QA 

plan was established and all DOE and site contractor QA plans are 

currently being evaluated and updated or revised to meet the new EM 

requirements. That effort is currently scheduled to be completed by the 

end ofFY 2009. The FY 2008 DOE-SR staffing plan was also approved 

to increase the number of DOE QA oversight personnel from I to 5 and 

the site is in the process of filling these slots. This will enable DOE-SR to 

better assess QA implementation within ongoing projects, including 

subcontractors and procurements. 

o	 As stated above regarding the IG's concerns with the MOX facility, 

NNSA does not believe that more rigorous policies and procedures need to 

be established. However" NNSA does believe our oversight efforts 

needed to be improved and, accordingly, the MOX project has taken the 

following actions: 

•	 Increased oversight ofthe contractor by hiring a Senior QA 

Manager. This individual is conducting reviews and assessments 

ofMOX project activities and reports independently ofthe NA-26 

office directly managing the MOX project. 

•	 Implemented NNSA's latest performance evaluation and 

assessment tool to better track and ensure resolution ofissues. 

•	 Strengthened the MOX prime contractor's award fee criteria to 

increase emphasis on the critical nature ofNQA-1 compliance. 

•	 Upgraded the MOX project annual assessment plan to emphasize 

review of contractor and subcontractor QA procedures. 
2 

•	 Provided NQA-l lead auditor training for NNSA personnel 

directly overseeing the construction and procurement of the MOX 

project. 

•	 Procurement of safety-related equipment 

o	 NNSA's Office of Fissile Materials Disposition has taken significant 

action to improve assurance of quality in the MOX facility as indicated by 

the following: 

•	 Performed over 20 field assessments of suppliers (including those 

overseas) ofMOX equipment with many more assessments being 

performed by MOX prime contractor personnel to ensure that 

NQA-l requirements have been implemented. More assessments 

are being planned for the next 12 months. 

•	 Reduced the risk to project quality and functionality by approving 

a change in project strategy to assemble and test over 100 ofthe 

most complex safety-related process glove boxes at the site. Prime 

contractor personnel will perform the work according to the MOX 

QA procedure in lieu of subcontracting to outside suppliers. 

•	 Approved a greater than 100 percent increase in prime contractor 

QA staffing (from 35 to 75) to provide increased surveillance of 

supplier quality. 

•	 Developed a program in which the MOX prime contractor will 

locate QA personnel full-time at each key NQA-l supplier location 

until it has demonstrated high quality work. 

•	 Obtained lists of qualified suppliers ofNQA-l equipment from 

several DOE sites for use by the MOX project. 

o	 DOE-SR and SRSO both agree with the recommendation regarding the 

specific quality issues discussed in the IG report. Each issue has been 

reviewed by the M&O contractor's engineering staff to ensure there are no 

adverse affects on safety. Additionally, each of the components discussed 

in this report underwent a rigorous startup testing program which verified 

their ability to perform the intended safety function. 

o	 NNSA SRSO has also taken strong actions to improve its oversight of QA 

of safety significant items as demonstrated by these examples: 

•	 At the time the procurements associated with the TEF construction 

was being made, the SRSO QA Program was focused primarily on 

weapons and operating facility quality assurance. Since that time, 

a second quality engineer position has been added. 

•	 SRSO has also greatly increased its focus on the quality of 

purchased components used in NNSA's tritium facilities. For 

example, a SRSO quality engineer recently spent several weeks at 

a subcontractor's shop overseeing the construction of magnesium 

beds used in the TEF stripper system to ensure they were 

manufactured to meet quality requirements. 

•	 Additionally, the SRSO QA Assessment Program has been revised 

to include assessments of work being performed by subcontractors 

within their facilities to ensure quality requirements have been 
3 

properly flowed down from our M&O contractor to the 

subcontractors. 

•	 Communication of QA issues with other projects 

o	 NNSA's MOX program element is taking strong actions to improve 

communication of quality issues: 

•	 Conducted visits and lessons-learned exchanges between the MOX 

project team and other DOE nuclear projects including the Hanford 

Waste Treatment Plant, the Y-12 Highly Enriched Uranium 

Material Storage Facility, the Yucca Mountain project, and the Salt 

Waste Processing Facility project, to name a few. Additional visits 

and exchanges are being planned for the future. 

•	 Where appropriate, posted lessons-learned information in DOE's 

occurrence reporting system and on NNSA's project management 

website. In addition, the prime contractor has issued lessonslearned through the NRC process. 

•	 Met on a routine basis, usually weekly, with senior DOE managers 

at Savannah River to discuss the status of MOX project including 

QA issues and items. 

•	 Maintained an open communication with other DOE QA 

specialists at the Site to keep abreast ofthe latest information and 

Issues. 

o	 Similarly, DOE-SR and SRSO agree there should be better coordination 

between the entities on quality assurance issues. DOE-SR and SRSO are 

currently assessing the options for improving procedures and 

communications in the quality assurance arena, and will implement 

improvements where necessary. For example: 

•	 DOE-SR and NNSA are hosting the 2009 Nuclear Outreach 

Conference on March 17-19, which includes regional, field-wide 

and international involvement for training businesses in the NQA-l 

certification process. This program is sponsored by DOE EM-l in 

partnership with NNSA and addresses international shortages in 

qualified NQA-l contractors and suppliers. 

•	 SRSO has established and staffed a Lessons Learned Coordinator 

position which coordinates closely with DOE-SR personnel to 

ensure the dissemination oflessons-Iearned, including QA issues, 

between NNSA and EM organizations at the Savannah River Site. 

•	 SRSO is working with NNSA HQ to strengthen oversight of 

project quality and ensure that new projects review QA lessonslearned from past projects, including the operating experiences 

learned after startup, and incorporate them. 

•	 For the last year and a half, DOE-SR Office of Acquisition 

Management (OAM) has taken a more proactive role in oversight 

ofsafety related procurements, solicitations and awards. DAM 

intervened and prevented a subcontract award to a vendor currently 

under investigation by the OIG. 
4 

•	 DOE-SR OAM has also applied tight controls over an existing 

contractor by requiring approved QA plans for each step on 

existing scope before allowing additional work to proceed. 

Finally, NNSA Headquarters has established a partnership with the Energy Federal 

Contractors Group (EFCOG) to improve QA throughout the Nuclear Weapons Complex. 

This project is initially focusing on improving QA in nuclear construction projects and 

will address issues such as those in the IG report on a risk-prioritized basis. This project 

is being led by the Defense Programs QA Manager with a co-Project Manager from the 

EFCOG Integrated Safety Management/QA community. The project goal is to 

institutionalize processes and methods to ensure that construction project QA programs 

and efforts preclude recurrence of events that negatively impact the assurance of quality 

in our construction projects and work, in general. 
 IG Report No. DOE/IG-0814

CUSTOMER RESPONSE FORM 

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requirements, and, therefore, ask that you consider sharing your thoughts with us. On the 

back of this form, you may suggest improvements to enhance the effectiveness of future 

reports. Please include answers to the following questions if they are applicable to you: 

1. What additional background information about the selection, scheduling, scope, or 

procedures of the inspection would have been helpful to the reader in understanding 

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been included in the report to assist management in implementing corrective actions? 

3. What format, stylistic, or organizational changes might have made this report's 

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4. What additional actions could the Office of Inspector General have taken on the 

issues discussed in this report which would have been helpful? 

5. Please include your name and telephone number so that we may contact you should 

we have any questions about your comments. 

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When you have completed this form, you may telefax it to the Office of Inspector 

General at (202) 586-0948, or you may mail it to: 

Office of Inspector General (IG-1) 

Department of Energy 

Washington, DC 20585 

ATTN: Customer Relations 

If you wish to discuss this report or your comments with a staff member of the Office of 

Inspector General, please contact Judy Garland-Smith (202) 586-7828. 
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The Office of Inspector General wants to make the distribution of its reports as customer friendly 

and cost effective as possible. Therefore, this report will be available electronically through the 

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U.S. Department of Energy Office of Inspector General Home Page 

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Your comments would be appreciated and can be provided on the Customer Response Form.