Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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BACKGROUND

In 2005, agency officials recognized that NRC’s Management Directives System2

needed improvements and formed a Management Directives Working Group. The 

Working Group was tasked to (1) review the agency’s current process for developing 

and revising management directives and (2) draft recommendations for enhancing the 

efficiency, effectiveness, and timeliness of the Management Directives System. One of 

the Working Group’s recommendations was that directives be reviewed and re-issued 

every 5 years. As a result, the Office of Administration (ADM) sent a memorandum to 

all agency offices requesting the status of management directives under their purview. 

In particular, the Office of Nuclear Reactor Regulation (NRR) responded to ADM’s 

request stating, among other things, that it wanted to eliminate Management Directive 

8.13, Reactor Oversight Process. 

PURPOSE

The objective of this audit was to determine if NRC has controls to ensure that the 

appropriate authorities, responsibilities, policies, and procedures remain in place for 

major functions of the agency when a management directive and handbook3 are 

eliminated. 

RESULTS

Although NRC has a process for eliminating management directives, additional controls 

are needed. Currently, NRC’s process for eliminating management directives is not 

obvious to agency staff because the guidance lacks specificity. Furthermore, NRC has 

a system of guidance documents and the correlation of these different types of 

guidance is not obvious because NRC does not have an official hierarchy of agency 

guidance. The results of not having clear direction or understanding can manifest into 

effectiveness and efficiency issues. Moreover, the agency may not retain necessary 

controls, including authorities, responsibilities, policies, and procedures, when a 

management directive is eliminated. 

Internal Controls: Policies, Requirements, and Procedures 

Policies and procedures are an integral part of an agency’s internal control process. 

Internal controls provide reasonable assurance that the agency: 

• Is in compliance with applicable laws and regulations. 

• Has effective and efficient operations. 

 

 

2

 NRC’s Management Directives System was established in 1990. 

3

 For purposes of this report, OIG will refer to both the management directive and handbook simply as the 

management directive. 
Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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NRC’s intention is to effectively communicate its basic policies, requirements, and 

procedures necessary for the agency to comply with Executive orders, pertinent laws, 

regulations, and the circulars and directives of other Federal agencies. As such, NRC 

prepares and issues management directives, as well as revisions to these documents, 

to cover major agency functions and programmatic responsibilities that may be under 

the purview of one or more organizational units within NRC at any particular time. 

Eliminating a Management Directive 

The guidance for eliminating management directives is available in Management 

Directive 1.1, NRC Management Directives System. Essentially, the guidance instructs 

NRC staff to submit to ADM an NRC Form 521, Request for Publication or Elimination 

of an NRC Management Directive [see Appendix A for a copy of NRC Form 521], and a 

copy of the directive and handbook to be eliminated. OIG and the Office of the General 

Counsel (OGC) must review every proposal to eliminate a directive. Upon receipt of the 

NRC Form 521, ADM officials will complete and submit NRC Form 522, Approval for 

Issuance or Elimination of an NRC Management Directive [see Appendix B for a copy of 

NRC Form 522], to the Chairman or the Executive Director for Operations, as 

appropriate. When NRC Form 522 has been approved, ADM will notify the affected 

NRC recipients and system custodians through the Management Directives System 

monthly update that the directive has been eliminated. ADM will also remove the title of 

the eliminated directive from the system and place “Reserved” beside its number for 

future use. 

Although the guidance provides the basic steps to be followed, it does not include 

direction for determining why a management directive should be eliminated or what 

might be used to replace the management directive. 

Proposal To Eliminate Management Directive 8.13 

NRR staff stated that the reason for proposing the elimination of Management Directive 

8.13 was because the reactor oversight process guidance is contained in several 

Inspection Manual Chapters4

 and does not need to be duplicated in a management 

directive. An NRR official stated that the process to update Inspection Manual Chapters 

is a formal process; but, it is easier than the process for updating management 

directives. As a result, NRR decided to proceed with its request to eliminate 

Management Directive 8.13. 

NRR staff notified ADM of its intentions and ADM instructed NRR to complete Form 

521. NRR completed the form and delivered it to ADM for a preliminary review. ADM 

informed NRR that OIG and OGC needed to review the management directive before 

the NRR Director signed Form 521 and officially submitted it to ADM. In the meanwhile, 

OIG learned about NRR’s proposal to eliminate Management Directive 8.13 and 

contacted NRR to learn the specifics. During that conversation, the NRR staff person 

sought to confirm that OIG needed to concur on the proposal to eliminate Management 

 

4

 Inspection Manual Chapters are documents containing written administrative or inspection program 

statements of policy. 
Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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Directive 8.13. An OIG official explained that OIG would review but not concur5 on such 

documents. The NRR staff person then called OGC to confirm whether that office 

needed to concur on the Form 521. The OGC official said that OGC did not need to 

concur prior to the Form 521 being sent to ADM. Based on this information, NRR 

prepared the package for ADM with a cover memo stating that NRR had “coordinated” 

the request with OIG and OGC. When NRR learned that OIG would be auditing the 

process for eliminating management directives, NRR managers decided to place the 

request to eliminate Management Directive 8.13 on hold pending OIG’s review. 

NRR staff stated that the process for eliminating management directives is not well 

understood, including the criteria for what requires a management directive in the first 

place. Without knowing the significance of management directives, it is difficult to know 

if or when a management directive can be eliminated. The Management Directives 

Working Group also recognized this issue and made a recommendation that the agency 

adopt and publicize threshold criteria and guidance for the creation and elimination of 

management directives. 

NRC’s System of Guidance Documents 

NRC has various types of guidance documents for both internal and external 

stakeholders. In the Code of Federal Regulations, NRC published a statement of its 

organization, policies, procedures, assignments of responsibility, and delegations of 

authority. NRC’s statement is that its Management Directives System and other NRC 

issuances (like local directives by Regional Offices, letters and memoranda containing 

directives, delegations of authority, etc.) are where NRC’s policies, requirements, and 

procedures are available. This statement is an explicit example of the system of 

guidance documents upon which NRC relies. And, the correlation of these different 

types of guidance, in particular the importance of management directives, is not 

obvious. 

Agency Guidance Needs To Be Improved 

NRC’s process for eliminating management directives and communicating its system of 

guidance documents needs improvement because: 

1. The management directive elimination process lacks specificity. 

2. The agency does not have an official hierarchy of guidance documents. 

As a result, the agency may not retain necessary controls, including authorities, 

responsibilities, policies, and procedures, when a management directive is eliminated. 

 

5

 According to the statutory language in the Inspector General Act, OIG reviews and provides comments 

on existing and proposed policies and legislation, such as management directives. OIG does not concur

(which means to have or express the same opinion) on proposals to eliminate management directives, or 

any agency documents. 
Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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Elimination Process Lacks Specificity

Although the one-paragraph guidance in Management Directive 1.1 for eliminating 

management directives basically covers the process, the guidance does not clearly 

provide the details for completing Form 521. For example, the form has pre-checked 

boxes requiring OIG and OGC reviews. However, it is not stated or obvious at what 

point in the process the reviews should take place. Furthermore, there is no instruction 

on how OIG or OGC should acknowledge that their review was completed. The Form 

521 does not provide a way for such acknowledgment by either office. 

The guidance for eliminating management directives lacks specificity and can cause 

confusion among staff and managers involved in the process. For example, efficiency 

is lost as staff try to determine the appropriate steps for eliminating a management 

directive. 

 No Official Agency Hierarchy of Guidance

Agency authorities, responsibilities, policies, and procedures are not always obvious to 

stakeholders because NRC has no official hierarchy for its system of guidance 

documents. NRC employees at all levels confirmed to the Management Directives 

Working Group the importance of an effective system of guidance to help them 

understand and carry out their responsibilities. However, NRC has not officially 

published a hierarchy of its guidance documents. For example, nowhere is it stated 

whether a management directive takes precedence over an inspection manual. Other 

Federal agencies, such as the Department of Energy, publish an official hierarchy of 

their guidance documents. 

Without an officially documented hierarchy of guidance, staff (particularly newer staff 

members) may rely on the wrong guidance documents, which could adversely impact 

their decisions. 

RECOMMENDATIONS

The Office of the Inspector General recommends that the Executive Director for 

Operations: 

1. Add specificity to the guidance in Management Directive 1.1 for eliminating 

 management directives. 

2. Develop and publish an official hierarchy of NRC guidance. 
Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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AGENCY COMMENTS

At an exit conference on July 9, 2008, NRC officials agreed with the report’s 

recommendations and provided editorial suggestions, which OIG incorporated as 

appropriate. 

Please provide information on actions taken or planned on the recommendations within 

30 days of the date of this memorandum. Actions taken or planned are subject to OIG 

followup, as stated in the attached instructions. 

SCOPE AND METHODOLOGY

To accomplish the audit’s objective, the OIG audit team reviewed management 

directives, the Management Directives Working Group’s final report, the Code of 

Federal Regulations, and other associated documents. The audit team also interviewed 

NRC personnel in the Office of the Executive Director for Operations, OGC, NRR, and 

ADM. 

OIG conducted this audit between March and May 2008 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 finding and conclusion based 

on our audit objective. The work was conducted by Sherri Miotla, Team Leader, and 

Michael Cash, Senior Technical Advisor. 

Attachment: As stated 

cc: Chairman Klein 

 Commissioner Jaczko 

 Commissioner Lyons 

Commissioner Svinicki 
Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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APPENDIX A 

NRC Form 521, Request for Publication or Elimination of an NRC Management 

Directive 
Audit of NRC’s Controls Over the Process for Eliminating Management Directives 

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APPENDIX B 

NRC Form 522, Approval for Issuance or Elimination of an NRC Management 

Directive 
Instructions for Responding to OIG Report Recommendations

Instructions for Action Offices

Action offices should provide a written response on each recommendation within 30 days of the 

date of the transmittal memorandum or letter accompanying the report. The concurrence or 

clearance of appropriate offices should be shown on the response. After the initial response, 

responses to subsequent OIG correspondence should be sent on a schedule agreed to with 

OIG. 

Please ensure the response includes: 

1. The report number and title, followed by each recommendation. List the 

recommendations by number, repeating its text verbatim. 

2. A management decision for each recommendation indicating agreement or 

disagreement with the recommended action. 

a. For agreement, include corrective actions taken or planned, and actual or 

target dates for completion. 

 

b. For disagreement, include reasons for disagreement, and any alternative 

proposals for corrective action. 

 

c. If questioned or unsupported costs are identified, state the amount that is 

determined to be disallowed and the plan to collect the disallowed funds. 

 

d. If funds put to better use are identified, then state the amount that can be 

put to better use (if these amounts differ from OIG’s, state the reasons). 

OIG Evaluation of Responses

If OIG concurs with a response to a recommendation, it will (1) note that a management 

decision has been made, (2) identify the recommendation as resolved, and (3) track the action 

office’s implementation measures until final action is accomplished and the recommendation is 

closed. 

If OIG does not concur with the action office’s proposed corrective action, or if the action office 

fails to respond to a recommendation or rejects it, OIG will identify the recommendation as 

unresolved (no management decision). OIG will attempt to resolve the disagreement at the 

action office level. However, if OIG determines that an impasse has been reached, it will refer 

the matter for adjudication to the Chairman. 

Semiannual Report to Congress

In accordance with the Inspector General Act of 1978, as amended, OIG is required to report to 

Congress semiannually on April 1 and October 1 of each year, a summary of each OIG report 

issued for which no management decision was made during the previous 6-month period. 

Heads of agencies are required to report to Congress on significant recommendations from 

previous OIG reports where final action has not been taken for more than one year from the 

date of management decision, together with an explanation of delays.