MISSION

License and regulate the Nation’s civilian use of byproduct, source, 

and special nuclear materials to ensure adequate protection of 

public health and safety, promote the common defense and security, 

and protect the environment.

VISION 

Excellence in regulating the safe and secure use and management 

of radioactive materials for the public good.

Paperwork Reduction Act Statement

Th e information collections contained in this document are subject to the Paperwork Reduction Act of 1995

(44 U.S.C. 3501 et seq.), which were approved by the Offi ce of Management and Budget (OMB), approval 

numbers 3150-0002, 3150-0003, 3150-0004, 3150-0009, 3150-0011, 3150-0012, 3150-0014, 3150-0058, 

3150-0104, 3150-0123, 3150-0139, and 3150-0197.

Public Protection Notifi cation

Th e NRC may not conduct or sponsor, and a person is not required to respond to, a request for information 

or an information collection requirement unless the requesting document displays a currently valid OMB 

control number.
TABLE OF CONTENTS

A MESSAGE FROM THE CHAIRMAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

CHAPTER 1: MANAGEMENT’S DISCUSSION AND ANALYSIS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

About Th e NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Program Performance Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Program Performance Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Future Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

President’s Management Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Financial Performance Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Systems, Controls, and Legal Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

CHAPTER 2: PROGRAM PERFORMANCE

Measuring and Reporting Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Goals and Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Safety Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Security Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

Costing to Goals, PART Reviews, and Program Evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Data Sources and Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

CHAPTER 3: FINANCIAL STATEMENTS AND AUDITORS’ REPORT

A Message From the Chief Financial Offi cer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57

Principal Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Notes to the Principal Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

Independent Auditors’ Report on the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80

Management’s Response to the Independent Auditors’ Report on the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .86

APPENDICES

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

Facing the NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

B Management Decisions and Final Actions on OIG Audit Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

C Summary of Financial Statement Audit and Management Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

D Verifi cation and Validation of NRC’s Measures and Metrics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

E Agreement States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

F NRC Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

G Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

ii

From left to right, Commissioner Kristine L. Svinicki, Commissioner Gregory B. Jaczko, Chairman Dale E. Klein, 

and Commissioner Peter B. Lyons.
iii

A MESSAGE FROM THE CHAIRMAN

I am pleased to present the U.S. Nuclear Regulatory Commission’s (NRC’s) Performance 

and Accountability Report for fi scal year (FY) 2008. Th e report highlights our achievements in 

meeting the two strategic goals—safety and security—while adhering to the principles of good 

regulation—independence, openness, effi ciency, clarity, and reliability. Continuing with our 

trend of excellence in reporting, the NRC received a seventh consecutive Certifi cate of Excellence 

in Accountability Reporting from the Association of Government Accountants (AGA) for the FY 

2007 Performance and Accountability Report. 

In 2008, the NRC continued to provide eff ective and effi cient regulatory oversight of the 

nuclear industry as it embarks upon a period of signifi cant growth and development. Th e agency 

is currently reviewing 17 combined license applications to build and operate 26 new nuclear 

power plants. Th ese proposed nuclear power plants, if approved and constructed, would be the fi rst new plants to be built in 

over 30 years, and are of critical importance to the industry and the Nation. Th e NRC has streamlined its application process to 

ensure that nuclear power plants are able to contribute safely to meeting the growing demand for electricity while minimizing 

the cost and time required to receive regulatory approval for new plants, consistent with safety and security requirements. 

In FY 2008, the NRC received the U.S. Department of Energy’s application for construction of the Nation’s fi rst geologic 

repository for high-level nuclear waste at Yucca Mountain, NV. Th e NRC has found that the application is suffi ciently complete 

for the agency to begin its full technical review. 

Commensurate with NRC’s programmatic achievements is a commitment to prudently manage the resources entrusted to 

it by the American public. Th e NRC continues to position its resources and infrastructure to support our mission to “License 

and regulate the Nation’s civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of 

public health and safety, promote the common defense and security, and protect the environment.” Th e NRC is proud to 

have obtained an unqualifi ed opinion on the agency’s fi nancial statements for the fi ft h consecutive year. Th is report provides 

information that demonstrates that the agency’s fi nancial and performance data are reliable and complete.

Th e NRC has also made signifi cant strides in improving its fi nancial systems and business operations. A material weakness 

related to the Federal Information Security Management Act (FISMA) audit from FY 2007 has now been removed. Th e NRC 

continues to evaluate its internal controls and to implement internal control improvements, including those related to fi nancial 

reporting and fi nancial management systems, as required by the Federal Managers Financial Integrity Act (FMFIA). Based 

on these FISMA and FMFIA assessments, I have concluded that there is reasonable assurance that the NRC is in substantial 

compliance with the FMFIA. In support of the President’s Management Agenda, the NRC is currently cross-servicing its 

human resources, payroll, e-Travel, and accounting services. Th e agency is also in the process of integrating and modernizing 

its fi nancial systems to enhance internal controls, reporting, and decisionmaking.

Th e Commission is proud of this year’s performance in achieving the agency’s safety and security goals and looks forward 

to continuing its high-quality service to the American public in FY 2009 and beyond.

Dale E. Klein

November 14, 2008
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

iv

Th is Certifi cate of Excellence was presented by the Association of Government 

Accountants to the U.S. Nuclear Regulatory Commission for fi scal year 2007 

accountability reporting.

Th is Certifi cate of Excellence was presented by the Association of Government

 CERTIFICATE OF 

 EXCELLENCE IN 

ACCOUNTABILITY

 REPORTING®

Presented to the

In recognition of your outstanding efforts 

preparing NRC’s Performance and 

Accountability Report for the fiscal 

year ended September 30, 2007.

A Certificate of Excellence in Accountability Reporting is presented

by AGA to federal government agencies whose annual 

Performance and Accountability Reports achieve the 

highest standards demonstrating accountability 

and communicating results.

U.S. Nuclear

Regulatory

Commission

John H. Hummel, CGFM 

Chair, Certificate of Excellence 

in Accountability Reporting Board

Relmond P. Van Daniker, DBA, CPA

Executive Director, AGA
Chapter 1 ■ Management’s Discussion and Analysis

CHAPTER 1

MANAGEMENT’S DISCUSSION

AND ANALYSIS
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

2

Photo Courtesy of NRC Photo Library.

U.S. Nuclear Regulatory Commission headquarters in Rockville, MD.
3

Chapter 1 ■ Management’s Discussion and Analysis

INTRODUCTION

Th e U.S. Nuclear Regulatory Commission (NRC) Performance and Accountability Report presents the agency’s program 

performance and fi nancial management information during fi scal year (FY) 2008. Th e annual report provides an opportunity 

for the public to assess how eff ectively the NRC uses its funds to achieve results. When preparing this report, the NRC staff 

followed the requirements of the Chief Financial Offi cers Act, as amended by the Reports Consolidation Act, Government 

Management Reform Act of 1994, and Government Performance Results Act of 1993. Th is Performance and Accountability 

Report covers activities from October 1, 2007, to September 30, 2008.

Th e NRC emphasizes keeping the public informed of its activities. Visit our Web site at http://www.nrc.gov to access this 

report and to learn more about who we are and what we do to serve the American public.

Chapter 1, “Management’s Discussion and Analysis,” provides an overview of the NRC and its accomplishments during 

FY 2008. Chapter 1 consists of the following seven sections: “About the NRC” describes the agency’s mission, organizational 

structure, and regulatory responsibility; “Program Performance Overview” summarizes the agency’s success in achieving 

its strategic goals, which are further described in Chapter 2; “Program Performance Results” shows the agency’s program 

performance results; “Future Challenges” includes forward-looking information; “President’s Management Agenda” describes 

the agency progress in fi ve management initiatives; “Financial Performance Overview” highlights the NRC’s fi nancial position 

and audit results contained in Chapter 3; and “Systems, Controls, and Legal Compliance” describes the agency’s compliance 

with key legal and regulatory requirements.

ABOUT THE NRC

Th e U.S. Congress established the NRC on January 19, 1975, as an independent Federal agency regulating the commercial 

and institutional uses of nuclear materials. Th e Atomic Energy Act, as amended, and the Energy Reorganization Act, as 

amended, defi ne the NRC’s purpose. Th ese acts provide the foundation for the NRC’s mission to regulate the Nation’s civilian 

use of byproduct, source, and special nuclear materials to ensure adequate protection of public health and safety, to promote 

the common defense and security, and to protect the environment.

To fulfi ll its responsibility to protect public health and safety, the NRC performs the following three principal regulatory 

functions:

(1) Establishes standards and regulations.

(2) Issues licenses for nuclear facilities and users of nuclear materials.

(3) Inspects facilities and users of nuclear materials to ensure compliance with regulatory requirements.

Th e agency regulates civilian nuclear power plants, other nuclear facilities, as well as other uses of nuclear materials. 

Th ese other uses include nuclear medicine programs at hospitals; academic activities at educational institutions; research work;

industrial applications, such as gauges and testing equipment; and the transport, storage, and disposal of nuclear materials and 

wastes.

ORGANIZATION

Th e NRC is headed by a Commission composed of fi ve members, with one member designated by the President to serve 

as Chairman. With the advice and consent of the Senate, the President appoints each member to serve a 5-year term. Th e 

Chairman is the principal executive offi cer and offi cial spokesman for the Commission. Th e Executive Director for Operations 

carries out program policies and decisions made by the Commission.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

4

Th e NRC’s headquarters is located in Rockville, MD. Four 

regional offi ces are located in King of Prussia, PA; Atlanta, 

GA; Lisle, IL; and Arlington, TX. Th e NRC’s technical 

training center is located in Chattanooga, TN. Th e NRC 

also employs at least two resident inspectors at each of the 

Nation’s nuclear power reactor sites. Th e NRC’s Operations 

Center, located at the headquarters building in Rockville, 

MD, is the focal point for the agency’s communications 

with its licensees, State agencies, and other Federal agencies 

concerning operating events in the commercial nuclear 

sector. NRC operations offi cers staff the Operations Center 

24 hours a day. Appendix F to this report presents the NRC 

organization chart.

Th e NRC’s budget for FY 2008 was $926.1 million (see 

Figure 1) with 3,707 full-time equivalent staff (see Figure 2). 

Th e NRC recovers approximately 90% of its appropriations 

from fees paid by NRC licensees.

THE NUCLEAR INDUSTRY

Th e NRC regulates the commercial use of radioactive 

materials. Th e nuclear material cycle begins with the mining 

and production of nuclear fuel, continues with the use of 

nuclear fuel to power the Nation’s 104 nuclear power plants, 

and ends with the safe transportation and storage of spent 

nuclear fuel and other nuclear waste. Th e NRC’s regulatory 

programs ensure that radioactive materials are used safely 

and securely at every stage in the nuclear material cycle. 

Under the NRC’s Agreement State program, 35 States 

have assumed primary regulatory responsibility over the 

industrial, medical, and other smaller users of nuclear 

materials in their States. Th e NRC works closely with these 

States to ensure that they maintain public safety. To address 

safety and security issues, the NRC has developed regulatory 

practices, knowledge, and expertise specifi c to each activity 

in the nuclear material cycle.

Approximately 20 percent of the Nation’s electricity is 

generated by the 104 NRC-licensed commercial nuclear 

reactors operating in 31 States (see Figure 3). Since 1996, 

nuclear electric generation has increased by approximately 

20 percent. Th e NRC oversees 3,738 licenses for medical, 

academic, industrial, and general uses of nuclear materials 

(see Figure 4). Th e agency conducts approximately 1,287 

health and safety inspections of its nuclear materials licensees 

annually. In addition, the 35 Agreement States oversee 18,700 

licenses.

2003 2004 2005 2006

NRC BUDGETARY AUTHORITY, FY 2003–2008

(Dollars in Millions)

Figure 1

$625.6

$741.5

2007

$824.9

$584.6

$669.3

2008

$926.1

2003 2004 2005 2006 2007

3,040

2,906

3,108

NRC PERSONNEL CEILING, FY 2003–2008

(Staff)

Figure 2

3,270

2008

3,707

3,434
5

Chapter 1 ■ Management’s Discussion and Analysis

Th e NRC, Agreement States, and their licensees share a 

common responsibility to protect public health and safety.

FUEL FACILITIES

Th e production of nuclear fuel begins at uranium mines 

where milled uranium ore is used to produce a uranium 

concentrate called “yellow cake.” At a special facility, the 

yellow cake is converted into uranium hexafl uoride gas and 

loaded into cylinders. Th e cylinders are sent to a gaseous 

diff usion plant, where uranium is enriched for use as reactor 

fuel. Th e enriched uranium is then converted into oxide 

powder, fabricated into fuel pellets (each about the size of a 

fi ngertip), loaded into metal fuel rods about 3.5 meters long, 

and bundled into reactor fuel assemblies at a fuel fabrication 

facility. Assemblies are then transported to nuclear power 

plants, nonpower research reactor facilities, and naval 

propulsion reactors for use as fuel. Th e NRC licenses eight 

major fuel fabrication and production facilities and three 

enrichment facilities in the United States. Because they 

handle extremely hazardous material, these facilities take 

special precautions to prevent theft , diversion by terrorists, 

and dangerous exposures to workers and the public from this 

nuclear material.

REACTORS

Power plants change one form of energy into another. 

Electrical generating plants convert heat energy, the kinetic 

energy of wind or falling water, or solar energy, into 

electricity. A nuclear power plant converts heat energy 

into electricity. Other types of heat-conversion plants burn 

coal, oil, or gas to produce heat energy that is then used to 

produce electricity. Nuclear energy cannot be seen. Th ere is 

no burning of fuel in the usual sense. Rather, energy is given 

off by the nuclear fuel as certain types of atoms split in a 

process called nuclear fi ssion. Th is energy is in the form of 

fast-moving particles and invisible radiation. As the particles 

and radiation move through the fuel and surrounding water, 

the energy is converted into heat. Th e radiation energy can be 

hazardous, and facilities take special precautions to protect 

people and the environment from these hazards.

Because the fi ssion reaction produces potentially 

hazardous radioactive materials, nuclear power plants are 

equipped with safety systems to protect workers, the public, 

and the environment. Radioactive materials require careful 

use because they produce radiation, a form of energy that can 

damage human cells. Depending on the amount and duration 

of the exposure, radiation can potentially cause cancer. In 

U.S. COMMERCIAL NUCLEAR 

POWER REACTORS

Figure 3

Licensed to Operate (104)

NRC Agreement States

U.S. MATERIALS LICENSEES

Figure 4

2003

21,422

16,625

4,797

21,601

2004

17,109

4,492

2005

21,809

17,298

4,511

22,132

2006

17,604

4,528

22,176

2007

17,807

4,369

22,438

2008

3,738

18,700
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

6

a nuclear reactor, most hazardous radioactive substances, 

called fi ssion byproducts, are trapped in the fuel pellets or 

in the sealed metal tubes holding the fuel. However, small 

amounts of these radioactive fi ssion byproducts, principally 

gases, become mixed with the water passing through the 

reactor. Other impurities in the water also become radioactive 

as they pass through the reactor. Th e facility processes and 

fi lters the water to remove these radioactive impurities and 

then returns the water to the reactor cooling system.

MATERIALS USERS

Th e medical, academic, and industrial fi elds all 

use nuclear materials. For example, about one-third of 

all patients admitted to U.S. hospitals are diagnosed or 

treated using radioisotopes. Most major hospitals have 

specifi c departments dedicated to nuclear medicine. In all, 

about 112 million nuclear medicine or radiation therapy 

procedures are performed annually, with the vast majority 

used in diagnoses. Radioactive materials used as a diagnostic 

tool can identify the status of a disease and minimize the 

need for surgery. Radioisotopes give doctors the ability to 

look inside the body and observe soft tissues and organs, 

in a manner similar to the way X-rays provide images of 

bones. Radioisotopes carried in the blood also allow doctors 

to detect clogged arteries or check the functioning of the 

circulatory system.

Th e same property that makes radiation hazardous can 

also make it useful in treating certain diseases like cancer. 

When living tissue is exposed to high levels of radiation, cells 

can be destroyed or damaged. Doctors can selectively expose 

cancerous cells (cells that are dividing uncontrollably) to 

radiation to either destroy these cells or damage them so they 

can no longer reproduce.

Many of today’s industrial processes also use nuclear 

materials. High-tech methods that ensure the quality of 

manufactured products oft en rely on radiation generated by 

radioisotopes. To determine whether a well drilled deep into 

the ground has the potential for producing oil, geologists 

use nuclear well-logging, a technique that employs radiation 

from a radioisotope inside the well to detect the presence of 

diff erent materials. Radioisotopes are also used to sterilize 

instruments; fi nd fl aws in critical steel parts and welds that go 

into automobiles and modern buildings; authenticate valuable 

works of art; and solve crimes by spotting trace elements of 

poison. Radioisotopes can also eliminate dust from fi lm and 

compact discs and reduce static electricity (which may create 

a fi re hazard) from can labels. In manufacturing, radiation 

can change the characteristics of materials, oft en giving 

them features that are highly desirable. For example, wood 

and plastic composites treated with gamma radiation resist 

abrasion and require low maintenance. As a result, they are 

used for some fl ooring in high-traffi c areas of department 

stores, airports, hotels, and churches.

WASTE DISPOSAL

During normal operations, a nuclear power plant 

generates the following two types of radioactive waste: 

high-level waste, which consists of used fuel (usually called 

spent fuel), and low-level waste, which includes contaminated 

equipment, fi lters, maintenance materials, and resins used in 

purifying water for the reactor cooling system. Other users of 

radioactive materials also generate low-level waste.

Nuclear power plants handle each type of radioactive 

waste diff erently. Th ey must use special procedures in the 

SCHEMATIC OF A NUCLEAR POWER REACTOR

Figure 5
7

Chapter 1 ■ Management’s Discussion and Analysis

handling of the spent fuel because it contains the highly 

radioactive fi ssion byproducts created while the reactor was 

operating. Typically, the spent fuel from nuclear power plants 

is stored in water-fi lled pools at each reactor site or at a storage 

facility in Illinois. Th e water in the spent fuel storage pool 

provides cooling and adequately shields and protects workers 

from the radiation. Several nuclear power plants have also 

begun using dry casks to store spent fuel. Th ese heavy metal 

or concrete casks rest on concrete pads adjacent to the reactor 

facility. Th e thick layers of concrete and steel in these casks 

shield workers and the public from radiation.

Currently most spent fuel in the United States remains 

stored at individual plants. Permanent disposal of spent fuel 

from nuclear power plants requires a disposal facility that 

can provide reasonable assurance that the waste will remain 

isolated for thousands of years. Th e U.S. Department of 

Energy submitted an application for a permanent disposal 

facility at Yucca Mountain, NV, for spent fuel, which is 

docketed and under review.

Licensees oft en store low-level waste onsite until its 

radioactivity has decayed and the waste can be disposed 

of as ordinary trash, or until amounts are large enough for 

shipment to a low-level waste disposal site in containers 

approved by the U.S. Department of Transportation. Th e 

NRC has developed a waste classifi cation system for lowlevel radioactive waste based on its potential hazards, and 

has specifi ed disposal and waste form requirements for each 

of the following general classes of waste: Class A, Class B, 

and Class C waste. Generally, Class A waste contains lower 

concentrations of radioactive material than Class B and Class 

C wastes. Th ere are two low-level disposal facilities that 

accept a broad range of low-level wastes. Th ey are located in 

Barnwell, SC, and Richland, WA. 

PROGRAM PERFORMANCE 

OVERVIEW

Th e NRC’s FY 2008–2013 Strategic Plan determines the 

agency’s long-term goals and strategic direction. Th e agency 

has two strategic goals: safety and security. To achieve its 

goals, the agency is organized into two major programs: the 

Nuclear Reactor Safety Program, and Nuclear Materials and 

Waste Safety Program.

NUCLEAR REACTOR SAFETY PROGRAM

Th e Nuclear Reactor Safety Program encompasses all 

NRC eff orts to ensure that civilian nuclear power reactor 

facilities and research and test reactors are licensed and 

operated in a manner that adequately protects the public 

health and safety, preserves the environment, and protects 

against radiological sabotage and theft or diversion of special 

nuclear materials. 

NUCLEAR MATERIALS AND WASTE

SAFETY PROGRAM

Th e Nuclear Materials and Waste Safety Program 

focuses on the safe and secure use of remaining radioactive 

materials. Th e Nuclear Materials and Waste Safety Program 

regulates fuel facilities, medical and industrial nuclear 

materials users, the disposal of both high-level and low-level 

waste, the decommissioning of power plants, and the storage 

and transportation of spent nuclear fuel. 

Nuclear Materials and

Waste Safety

Fuel Facilities 

High-Level Waste Repository 

Nuclear Materials Users

Decommissioning and

Low-Level Waste 

Spent Fuel Storage and 

Transportation
NRC PERFORMANCE MEASURE RESULTS

FY 2008 Safety Goal

Performance Measures 2003 2004 2005 2006 2007 2008

1 Number of new conditions evaluated as red by the Reactor Oversight 

Process is ≤3. 110000

2. Number of significant accident sequence precursors of a nuclear reactor 

accident is zero. 000000

3. Number of operating reactors with integrated performance that entered the 

Manual Chapter 0350 process, or the multiple/repetitive degraded cornerstone 

column, or the unacceptable performance column of the Reactor Oversight 

Process Action Matrix, with no performance exceeding Abnormal Occurrence 

Criterion I.D.4 is ≤4. 

210010

4. Number of signifi cant adverse trends in industry safety performance with no trend 

exceeding the Abnormal Occurrence Criterion I.D.4 is ≤1. 000000

5. Number of events with radiation exposures to the public and occupational 

workers that exceed Abnormal Occurrence Criterion I.A is:

 Reactors: 0

 Materials: ≤3

 Waste: 0 

0

0

0

0

0

0

0

1

0

0

0

0

0

0

0

0

0

0

6. Number of radiological releases to the environment that exceed applicable 

regulatory limits is:

 Reactor: ≤3

Materials: ≤2

Waste: 0

0

0

0

0

1

0

0

0

0

0

0

0

0

0

0

0

0

0

FY 2008 Security Goal

Performance Measures 2003 2004 2005 2006 2007 2008

1. Number of Unrecovered losses or thefts of risk-significant radioactive sources is 

zero. 000000

2. Number of substantiated cases of theft or diversion of licensed, risk-significant 

radioactive sources or formula quantities of special nuclear material, or number 

of attacks that result in radiological sabotage, is zero.

000000

3. Number of substantiated losses of formula quantities of special nuclear material 

or substantiated inventory discrepancies of formula quantities of special nuclear 

material that are caused by theft or diversion or by substantial breakdown of the 

accountability system sabotage is zero.

000000

4. Number of substantial breakdowns of physical security or material control that 

significantly weaken the protection against theft, diversion, or sabotage is less 

than one.

000000

5. Number of significant, unauthorized disclosures of classified and/or safeguards 

information is zero. 000000

8

Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov
Chapter 1 ■ Management’s Discussion and Analysis

FY 2008 Organizational Excellence Objectives and Associated Measures

Measure 2003 2004 2005 2006 2007 2008

Organizational Excellence Objective 1: Openness

1. Eighty-eight percent of selected openness output measures achieve performance 

targets. 50% 66% 80%

a. Ninety percent of stakeholder formal requests for information receive an NRC response within 60 days of receipt. 100% 100% 100%

b. Ninety percent of non-sensitive, unclassified regulatory documents generated by the NRC and sent to the agency’s Document Processing Center are 

released to the public by the 6th working day after the date of the document. 

63% 75% 82%

c. Ninety percent of non-sensitive, unclassified regulatory documents received by the NRC that are released to the public by the 6th working day after the 

document is added to the ADAMS main library. 

77% 87% 66%

d. The NRC achieves a 71% user satisfaction score for the agency’s public Web site greater than or equal to the Federal Agency Mean score based on results 

of the yearly American Customer Satisfaction Index for Federal Web sites. 

70% 71% 71%

e. Complete 50% of Freedom of Information Act requests in 20 days (median). 61% 67% 71%

f. Issue 90% of Director’s Decisions under 10 CFR 2.206 within 120 days. 100% 100% 100%

g. Make 90% of Final Significance Determination Process determinations within 90 days for all potentially greater-than-green findings. 92% 100% 100%

h. Ninety percent of stakeholders believe they were given sufficient opportunity to ask questions or express their views. 90% 96% 97%

i. At least 90% of Category 2 and 3 meetings on regulatory issues for which public notices are issued at least 10 days in advance of the meeting. 92% 93% 90%

j. Complete all of the key stakeholder and public interactions for the reactor performance assessment cycle. Met

Organizational Excellence Objective 2: Eff ectiveness

1. Ninety percent of selected processes deliver efficiency improvements. 25% 60% 80%

a. Reduce the average age at closure for licensing actions by 2.5%. Not Met

b. At the rate of one per year, Category III license renewal applications will be considered for a 40-year license. Not 

Met

Not 

Met Met

c. Improve the timeliness of the review process for nuclear power reactor License Termination Plans by at least 30 percent over 3 years 

(FY 2006-FY 2008) as compared to the historical average. 

38%

d. Implement process enhancements to permit improvement for the reactor rulemaking petition timeliness by 2.5%. 5% Met

f. Reduce the staff cost for letters to DOE by 5%. 40%

2. No more than one instance per program where licensing or regulatory activities unnecessarily impede the safe and beneficial uses of radioactive materials. 000

Organizational Excellence Objective 3: Operational Excellence

1. Ninety percent of selected support processes deliver efficiency improvements. 50% 0% 0%

a. Five percent reduction of agency FTE used to develop and submit the FY 2008 and FY 2009 performance budgets. 0% 2%*

increase

6% 

increase

b. Issue offer letter 80% of the time within 45 work days of the closing date of the announcement. 67% 31% 56%

2. Eighty percent of selected NRC management programs deliver intended 

outcomes. 60% 80% 100% 100%

a. Infrastructure management program. 100% 100% 100% 100%

b. Financial Management & Budget and Performance Integration program. 67% 67% 88% 100%

c. Expanded electronic government program. 50% 75% 75% 75%

d. Management of Human Capital program. 80% 100% 80% 100%

9

*FY 2007 PAR showed 12%. Data were error and recalculated to be 2%.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

10

PROGRAM PERFORMANCE 

RESULTS

STRATEGIC GOAL 1: SAFETY

Ensure Adequate Protection of Public

Health and Safety and the Environment

Safety is the primary goal of the NRC. Th e agency 

achieves this goal by ensuring that the performance of 

licensees is at or above acceptable safety levels. NRC safety 

programs work in conjunction with our licensees in a 

partnership. Th e NRC licensees are responsible for designing, 

constructing, and operating nuclear facilities safely. Th e NRC 

is responsible for regulatory oversight of the licensees. NRC 

safety goal activities are designed to create the following 

strategic outcomes.

Strategic Outcomes:

• Prevent the occurrence of any nuclear reactor accidents.

• Prevent the occurrence of any inadvertent criticality 

events. 

• Prevent the occurrence of any acute radiation exposures 

resulting in fatalities.

• Prevent the occurrence of any releases of radioactive 

materials that result in signifi cant radiation exposures.

• Prevent the occurrence of any releases of radioactive 

materials that cause signifi cant adverse environmental 

impacts.

FY 2008 RESULTS

In FY 2008, the NRC achieved all fi ve of its safety goal 

strategic outcomes. Th e NRC also uses six performance 

measures to determine whether it has met its safety goal. Th e 

agency met all six performance measure targets in FY 2008.

Th ree of the performance measures focus on performance 

at individual nuclear power plants. Inspection results show 

that all of the nuclear power plants are operating safely. Th e 

fourth measure tracks the trends of several key indicators 

of nuclear power plant safety. Th is mea sure is the broadest 

measure of the safety of nuclear power plants, incorporating 

the performance results from all plants to determine industry 

average results. Th e measure results show that there were no 

statistically signifi cant adverse trends in any of the indicators 

in FY 2008.

Th e last two safety performance measures track harmful 

radiation exposures to the public and occupational workers, 

and radiation exposures that harm the environment. None of 

these measures exceeded their targets in FY 2008.

STRATEGIC GOAL 2: SECURITY

Ensure Adequate Protection in the Secure 

Use and Management of Radioactive Materials

Th e NRC must remain vigilant in ensuring the security 

of nuclear facilities and materials in an elevated threat 

environment. Th e agency achieves its common defense and 

security goal using licensing and oversight programs similar 

to those employed in achieving its safety goal.

Strategic Outcome:

• Prevent any instances where licensed radioactive materials 

are used domestically in a manner hostile to the security of 

the United States.

FY 2008 RESULTS

In FY 2008, the NRC achieved its security goal strategic 

outcome. Th e NRC also uses fi ve security goal performance 

measures to determine whether the agency has met its 

security goal. Th e agency met all fi ve performance measure 

targets in FY 2008. Th e fi rst performance measure tracks 

unrecovered losses or theft s of risk-signifi cant radioactive 

sources. Th e measure ensures that those radioactive sources 

that the agency has determined to be risk-signifi cant to the 

public health and safety are accounted for at all times. Th e 

ability to account for these sources is critical to secure the 

nation from “dirty bomb” attacks or other means of radiation 

dispersal.

Th e second, third, and fourth performance measures 

evaluate the number of signifi cant security events and 

incidents that occur at NRC-licensed facilities. Th ese 

measures determine whether nuclear facilities maintain 
11

Chapter 1 ■ Management’s Discussion and Analysis

adequate protective forces to prevent theft or diversion of 

nuclear material or sabotage; whether systems in place at 

licensee plants accurately account for the type and amount 

of materials processed, utilized, or stored; and whether the 

facilities account for special nuclear material at all times with 

no losses of this material. Th ere were no events that met the 

conditions for this measure in FY 2008.

Th e last security measure tracks signifi cant unauthorized 

disclosures of classifi ed and/or safeguards information that 

may cause damage to national security or public safety. 

Th is measure focuses on whether classifi ed information 

or safeguards information is stored and utilized in such 

a way as to prevent its disclosure to the public, terrorist 

organizations, other nations, or personnel without a need to 

know. Unauthorized disclosures can harm national security 

or compromise public health and safety. Th e measure 

also focuses on whether controls are in place to maintain 

and secure the various devices and systems (electronic 

or paper based) which the agency and its licensees use to 

store, transmit, and utilize this information. Th ere were no 

documented disclosures of this type of information during 

FY 2008.

ORGANIZATIONAL EXCELLENCE OBJECTIVES

Openness, Effectiveness, and 

Operational Excellence

Th is FY 2008 Performance and Accountability Report 

refl ects the agency’s new FY 2008–2013 Strategic Plan. 

Under this new strategic plan, the former goals of openness, 

eff ectiveness, and operational excellence are now considered 

to be organizational excellence objectives because they 

support achievement of the agency’s two strategic goals of 

safety and security. Th e performance measures related to 

these three former strategic goals remain in eff ect in FY 2008, 

as required by the Government Performance Results Act 

(GPRA). Th ese measures will not be reported aft er this year’s 

report.

Openness

Th e agency missed its openness measure target requiring 

that 88 percent of selected openness output measures achieve 

their goals. Th e agency achieved a score on this measure of 

80 percent, missing 2 out of 10 output measure targets.

Th e agency missed the output measure target that 

called for 90 percent of nonsensitive, unclassifi ed regulatory 

documents generated by the NRC and sent to the agency’s 

Document Processing Center be released to the public by the 

6th working day aft er the date of the document. However, 

the agency has improved since FY 2006, increasing from 

63 percent to 75 percent in FY 2007 and 82 percent in FY 2008. 

Th e agency continues to struggle to meet this measure 

because of the time it takes to conduct its internal document 

review processes. Th e agency will continue to review these 

processes to fi nd additional effi ciencies to reduce the amount 

of time necessary to release documents.

Th e agency also missed the output measure target 

requiring 90 percent of nonsensitive, unclassifi ed regulatory 

documents to be released by the 6th working day aft er the 

document is added to the Agencywide Documents Access 

and Management System (ADAMS). Th e results declined 

from 87 percent in FY 2007 to 66 percent in FY 2008. As with 

the previous measure, the NRC needs to fi nd effi ciencies to 

reduce the time to process documents. Th e agency is also 

engaging in activities to increase staff training as a means to 

close the gap on this measure.

Effectiveness

Th e agency successfully met the targets for its two 

performance measures for eff ectiveness. Th e eff ectiveness 

measures focus on achieving effi ciencies in agency 

processes. 

Operational Excellence

Th e agency achieved one of two operational excellence 

performance measures. Th e fi rst measure, to deliver effi ciency 

improvements for selected support processes, was not

achieved. Th e agency set a target to reduce the agency staff 

hours used to develop its performance budget by 5 percent. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

12

However, the NRC experienced a large growth in staff due to 

the New Reactor Program ramping up to receive applications 

from licensees to develop and construct new reactors. As 

a result, additional budget staff was hired to manage the 

program. Th e agency is developing a new budget process that 

is expected to generate effi ciencies that will reduce budget 

staff hours in FY 2009. In addition the agency was unable to 

issue an off er letter to new employees within 45 work days 

of the closing date of the employment announcement 80 

percent of the time. Off er letters were issued within 45 days 

only 56 percent of the time in FY 2008. As a result, the NRC 

undertook a Lean Six Sigma study, a corporate improvement 

methodology, during the second quarter of FY 2007 to evaluate 

the hiring process from the closing date of the announcement 

to the off er date and develop recommendations to help 

streamline that process. Th e agency is currently leading a 

separate eff ort to implement the recommendations made by 

the Lean Six Sigma study workgroup and to develop a plan to 

assess the NRC’s progress towards reducing the hiring time 

frame to meet the 45-day target.

Th e second operational excellence performance 

measure assessed the agency’s performance in delivering 

outcomes in four management programs: infrastructure 

management, fi nancial management, information technology 

management, and human capital management. Th ese 

programs were able to meet their intended outcomes. 

DATA COMPLETENESS AND

RELIABILITY

Th e NRC considers the data contained in this report to 

be complete, reliable, and relevant. Th e data are complete 

because the agency reports actual performance data for every 

performance goal and indicator in the report. Th e agency also 

considers the data in this report reliable and relevant, because 

it has been validated and verifi ed. Appendix D, “Verifi cation 

and Validation of NRC’s Measures and Metrics,” contains 

the processes the agency uses to collect, validate, and verify 

performance data in this report.

PROGRAM ASSESSMENT RATING TOOL

RESULTS

Th ere were no Program Assessment Rating Tool (PART) 

reviews conducted by the agency during FYs 2006 and 2008. 

Th e following table shows the results of the agency’s PART 

scores from FY 2003 to FY 2007.

Program Year Score Rating

Reactor Inspection and

Performance Assessment 2003 89 Eff ective

Fuel Facilities Licensing

and Inspection 2003 89 Eff ective

Nuclear Materials Users

Licensing and Inspection 2004 93 Eff ective

Reactor Licensing 2005 74 Moderately

Eff ective

Spent Fuel Storage and

Transportation Licensing

and Inspection

2005 89 Eff ective

Decommissioning and

Low-Level Waste 2007 91 Eff ective

High-Level Waste

Repository 2007 87 Eff ective

FUTURE CHALLENGES

Th e NRC ensures that the health and safety of the 

American public and the environment are adequately 

protected from any harmful eff ects of using nuclear materials. 

Th e industry has experienced a substantial improvement in 

safety at nuclear power plants over the past 20 years as both 

the nuclear industry and the NRC have gained substantial 

experience in the operation and maintenance of nuclear power 

facilities. Improvements in safety have occurred at a time 

when nuclear power generation has increased signifi cantly 

from 675,000 gigawatt hours in calendar year (CY) 1996 to 

approximately 806,000 gigawatt hours in CY 2007. However, 
13

Chapter 1 ■ Management’s Discussion and Analysis

despite the excellent safety and security record of the 

industry, the agency cannot rest on its achievements. Th e 

primary challenges the agency faces are the large number 

of new nuclear plants expected to apply for licenses, the safe 

disposal of high-level nuclear waste, and the need to ensure 

security at nuclear facilities.

NEW NUCLEAR POWER PLANTS

With increased concerns about the continued availability 

and cost of oil as well as concerns over the environmental 

damage caused by coal-burning electrical plants, the amount 

of electricity supplied by nuclear power is likely to increase 

substantially in the future. Th e NRC last issued a nuclear 

power plant construction permit in 1977. To date, the agency 

has received a total of 17 Combined Operating License (COL) 

applications for sites across the country. Th e agency’s primary 

challenge is to license new reactors to ensure that they will 

operate safely as they provide electricity required by the 

Nation for economic growth. However, before licensing any 

new nuclear reactor, the agency requires a detailed analysis 

of new reactor designs. Th is analysis includes a study of the 

reactor’s vulnerability to accidents and security compromises. 

It also includes the development of inspection procedures, 

tests, analyses, and acceptable criteria for construction. Th e 

NRC is also evaluating commercial gas centrifuge facilities 

that utilize new methods of enriching nuclear fuel for 

reactors.

SAFE DISPOSAL OF HIGH-LEVEL WASTE

Safely disposing of the waste from nuclear power plants 

is vital to protecting public health and the environment. Lack 

of storage options would become a major road block for the 

continued growth of the industry. Earlier in FY 2008, the 

U.S. Department of Energy (DOE) fi led a license application 

to establish the Nation’s fi rst repository for high-level 

radioactive waste at Yucca Mountain, NV. Th e NRC staff 

accepted and docketed the application. Th e agency has begun 

a review to evaluate a wide range of technical and scientifi c 

issues and will attempt to resolve regulatory concerns. In the 

meantime, the agency must ensure safe and secure interim 

storage capacity until a repository is licensed and ready to 

receive high-level nuclear waste. Most nuclear waste is now 

safely and securely stored at reactor sites. In addition to the 

storage of nuclear waste, safely transporting spent nuclear 

fuel is a signifi cant issue for the public and the agency. More 

than 1,300 spent fuel shipments regulated by the NRC have 

been safely transported in the United States in the past 25 

years. Th e NRC anticipates that the bulk of nuclear waste 

now stored at the reactor sites will eventually be moved to 

a permanent storage site. Th erefore, the agency must be able 

to assure the public that all movements of nuclear waste, 

including those to a permanent storage site, will be safe and 

secure.

SECURITY AT NUCLEAR FACILITIES

In addition to safety, the security of nuclear materials is 

of paramount importance to the Nation. Nuclear facilities 

are among the most secure facilities in the Nation. Th e NRC, 

in concert with other Federal agencies, constantly monitors 

intelligence to determine the level of threat faced by nuclear 

facilities. Th e agency continues to improve the regulatory 

requirements to better ensure the security of nuclear 

materials and facilities. Th e threat faced by the Nation from 

those seeking to steal classifi ed information has become more 

urgent in recent years. Nuclear facilities have implemented 

increased security measures, including “force-on-force” 

training exercises, to help ensure protection of this vital 

national infrastructure.

PRESIDENT’S MANAGEMENT 

AGENDA

One of the agency’s biggest challenges is training the more 

than 1,531 new staff members hired between October 2004 

and October 2008. While many of these new employees 

come to the NRC with experience and a variety of valuable 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

14

skills, many others have a solid educational background but 

little or no experience. Th is means that the agency will have 

to conduct extensive training for many staff members while 

at the same time working to orient them in the regulatory 

culture of the agency.

In FY 2008, the staff implemented a comprehensive 

knowledge management (KM) program. NRC headquarters 

and regional offi ces have developed their own KM plans. 

Staff have designed these KM plans to achieve the following 

three goals: 

(1) Maintain human resource processes, policies, and 

practices to attract and retain knowledgeable staff .

(2) Share best practices in KM to build a culture of 

knowledge retention.

(3) Use information technology application to facilitate 

the acquisition, storage, and sharing of knowledge.

Th e agency has created a KM Steering Committee 

composed of managers and staff and chaired by senior 

leadership, hired a full-time KM expert from industry, 

designed a Web-based “KM Dashboard” to facilitate 

knowledge sharing about successful KM activities across 

the agency, and designed an expertise exchange program 

that formalizes the mentoring of newer employees by more 

experienced staff .

Th e NRC continues to make progress in integrating 

its budget and performance management processes. Th is 

progress includes improved management of agency 

performance resulting from a revised agency Strategic Plan, 

accurate monitoring of agency program performance, and 

integrated performance goal and cost information.

Th e NRC will continue this progress by updating

and improving the agency’s fi nancial systems. Th e agency 

is replacing its core accounting system, as well as its 

License Fee Billing System, Cost Accounting System, 

Allotment/Allowance Financial Plan System, and Capitalized 

Property System. At the same time, the agency is aligning 

its budget and accounting structures. Th is will enable the 

NRC to use cost and other fi nancial data together to evaluate 

agency program performance. Th e integration of fi nancial, 

budget, and performance data will provide managers the 

kinds of information that can be used to drive improved 

agency performance.

One of the NRC’s corporate management strategies is 

to acquire goods and services effi ciently. To achieve this, the 

NRC established output measures associated with the 

competitive sourcing initiative of the President’s Management 

Agenda, adopted a performance-based approach to 

contracting, and posted procurement synopses on the 

agency’s Web site.

Th e NRC uploaded its Year 2008 Federal Activities 

Inventory Reform Act inventory spreadsheet to the Offi ce of 

Management and Budget’s Workforce Inventories Tracking 

System on June 30, 2008. In accordance with the NRC’s 

Competitive Sourcing Plan, the agency completed four 

business case analyses of commercial activities that were 

available for competition in FY 2008.

Th e NRC has aligned its IT investments with the 

Federal Government’s Electronic Government (e-Gov) 

program. Th e NRC has transitioned to a number of e-Gov 

services and is in the process of transitioning to others. 

Th e agency has also institutionalized internal processes 

to ensure the eff ective use of, and compliance with, e-Gov 

initiatives. Th e NRC emphasizes enterprise architecture 

in its systems development lifecycle methodology. It has a 

project management methodology in place that provides 

full lifecycle guidance for the agency in terms of enterprise 

architecture, capital planning and investment control, 
15

Chapter 1 ■ Management’s Discussion and Analysis

infrastructure development, and lifecycle management 

processes. Th e Information Technology Senior Advisory 

Council, comprised of senior business managers, plays an 

integral role in establishing priorities and ensuring that 

technology investments align with the agency’s mission and 

goals.

Th e agency’s goals for improved fi nancial management 

include providing reliable, transparent, useful, and timely 

information for stakeholder knowledge and for management 

decisionmaking; maintaining eff ective internal controls; and 

implementing integrated and compliant systems to meet the 

agency’s reporting needs. Th ese strategies will ensure that the 

agency adequately protects its fi nancial assets, consistent with 

risk. Over the next 2 years, the agency will be conducting 

a major fi nancial systems modernization project that will 

impact all NRC fi nancial systems. Th e project will consolidate 

the NRC’s fi nancial systems into a single integrated fi nancial 

management system that a shared service provider will 

host and maintain. Th is single integrated system will result 

in more effi cient transaction processing using electronic 

workfl ow, greater access to information through the use 

of ad hoc reporting tools, and improved overall system 

performance. An integrated fi nancial management system 

will also improve internal controls in the following two ways: 

(1) It will eliminate multiple data transfers between standalone systems. (2) It will also eliminate the resultant manual 

reconciliations that staff currently perform to ensure data 

integrity.

FINANCIAL PERFORMANCE 

OVERVIEW

As of September 30, 2008, the fi nancial condition of the 

NRC was sound with respect to having suffi cient funds to 

meet program needs and adequate control of these funds in 

place to ensure obligations did not exceed budget authority. 

Th e NRC prepared its fi nancial statements in accordance 

with the accounting standards codifi ed in the Statements 

of Federal Financial Accounting Standards (SFFAS) and 

Offi ce of Management and Budget (OMB) Circular A-136, 

“Financial Reporting Requirements.”

SOURCES OF FUNDS

Th e NRC has two appropriations, salaries and expenses 

and Offi ce of the Inspector General. Funds for both 

appropriations are available until expended. Th e NRC’s total 

new FY 2008 budget authority was $926.1 million. Of this 

amount, $917.3 million was for the salaries and expenses 

appropriation, and $8.7 million was for the Offi ce of the 

Inspector General appropriation. Th is represents an increase 

in new budget authority of $101.2 million over FY 2007 

($100.8 million for the Salaries and Expenses appropriation 

and $0.4 million for the Offi ce of the Inspector General 

appropriation). In addition, $87.6 million from prior-year 

appropriations, $6.3 million from prior-year reimbursable 

work, and $8.8 million for new reimbursable work to be 

performed for others was available to obligate in FY 2008. 

Th e sum of all funds available to obligate for FY 2008 was 

$1,028.8 million, which is a $117.9 million increase over the 

FY 2007 amount of $910.9 million. 

Material

Fees

Nuclear

Waste Fund

Other

Fees 

General

Fund

Reactor

Fees

$45.8 $29.0

$0.5 $13.3

$608.3

$109.8 $133.5

$60.5 $67.2

FY 2007 FY 2008

SOURCES OF FUNDS

Figure 6

(In Millions)

$683.1
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

16

Th e Omnibus Budget Reconciliation Act of 1990 

(OBRA-90), as amended, requires the NRC to collect fees to 

off set approximately 90 percent of its new budget authority, 

less the amount appropriated to the NRC from the Nuclear 

Waste Fund and amounts appropriated for waste incidental 

to reprocessing and generic homeland security for FY 2008. 

Th e NRC recovered $763.6 million in fees in FY 2008. Th is is 

98 percent of the fee recovery requirement. 

USES OF FUNDS BY FUNCTION

Th e NRC incurred obligations of $949.8 million in 

FY 2008, which was an increase of $111.0 million over 

FY 2007. Approximately 55 percent of obligations were used 

for salaries and benefi ts. Th e remaining 45 percent was 

used to obtain technical assistance for the NRC’s principal 

regulatory programs, to conduct confi rmatory safety 

research, to cover operating expenses, (e.g., building rentals, 

transportation, printing, security services, supplies, offi ce 

automation, and training), staff travel, and reimbursable 

work. Th e unobligated budget authority available at the 

end of FY 2008 of $79.0 million, increased compared to the 

FY 2007 amount of $72.2 million. Of this $79.0 million, 

$7.3 million is for reimbursable work and $71.7 million is 

available to fund critical NRC needs in FY 2009.

AUDIT RESULTS

Th e NRC received an unqualifi ed audit opinion on 

its FY 2008 fi nancial statements. In FY 2007, the auditors 

identifi ed a continuing material weakness in the agency’s 

information systemwide security controls related to 

an Offi ce of the Inspector General (OIG) independent 

evaluation of the NRC’s implementation of the Federal 

Information Security Management Act (FISMA). Th e 

FISMA report identifi ed two signifi cant defi ciencies related 

to a lack of contingency plan testing for information security 

systems, and a lack of certifi cation and accreditation for most 

of the agency’s major information systems. Th ese defi ciencies 

were also identifi ed as a material weakness in the agency’s 

FY 2007 Federal Managers’ Financial Integrity Act (Integrity 

Act) assurance statement. In FY 2008, during the FISMA 

evaluation, the OIG found that improvements in contingency 

plan testing, and certifi cation and accreditation had been 

suffi cient enough to remove the signifi cant defi ciency. As a 

result, the NRC reported no material weaknesses for internal 

control in the Integrity Act assurance statement.

In FY 2004, FY 2005, and FY 2006, the auditors identifi ed 

a material weakness concerning the Fee Billing System and 

the quality assurance process over fee billing. In FY 2007, the 

auditors downgraded this fi nding to a signifi cant defi ciency 

due to successful implementation of quality assurance 

procedures over fee billing. In FY 2008, the auditors closed 

this signifi cant defi ciency due to continued diligence in 

performing quality assurance eff orts.

In FY 2008, the auditors identifi ed a signifi cant 

defi ciency related to the method by which the NRC estimates 

the accounts payable balance which represents costs for 

billed and unbilled goods and services received (prior to 

year end) that are unpaid. Prior to FY 2008, the NRC used 

an algorithm that recognized accounts payable as a specifi c 

percentage of NRC’s total expenses to date. Once this 

percentage was calculated, it was applied to an annualized 

expense fi gure. In FY 2008, the NRC implemented a revised 

methodology to calculate the accounts payable estimate. 

Th e new methodology involves analyzing the actual activity 

$4.6

Travel Reimbursable

Work

Contract

Support

Salaries and

Benefits

USES OF FUNDS BY FUNCTION

Figure 7

(In Millions)

FY 2007 FY 2008

$20.8 $25.0 $7.9

$467.5

$519.1

$345.9

$397.8
17

Chapter 1 ■ Management’s Discussion and Analysis

for the largest obligations to include in the estimate. For 

the remaining smaller obligations, the actual activity of a 

percentage of the obligations was analyzed and an algorithm 

was developed to estimate the total amount to include in the 

accounts payable balance. In FY 2009, the NRC will continue 

to refi ne this new estimation methodology to ensure 

accuracy.

In FY 2007, the Fee Billing System was also identifi ed 

as a substantial noncompliance with the Federal Financial 

Management Improvement Act (Improvement Act). In 

FY 2008, the Fee Billing System continues to be substantially 

noncompliant with the Improvement Act due to a lack of 

current certifi cation and accreditation. Although there may 

be a potential risk with security controls, there are a number 

of existing mitigating controls that provide NRC management 

reasonable assurance that the fi nancial data resulting from 

fi nancial management systems is accurate. NRC plans to 

complete certifi cation and accreditation activities for the Fee 

Billing System in FY 2009.

A summary of the Financial Statement Audit Results is 

included in Appendix C.

LIMITATIONS OF THE

FINANCIAL STATEMENTS

Staff have prepared principal statement to report the 

fi nancial position and results of operations of the NRC, 

pursuant to the requirements of 31 U.S.C. 3515(b). While the 

statements have been prepared from the books and records of 

the NRC in accordance with Generally Accepted Accounting 

Principles (GAAP) for Federal Entities and the formats 

prescribed by the Offi ce of Management and Budget (OMB), 

the statements are in addition to the fi nancial reports used to 

monitor and control budgetary resources, which are prepared 

from the same books and records. Th e statements should be 

read with the realization that they are for a component of the 

U.S. Government, a sovereign entity. 

FINANCIAL STATEMENT HIGHLIGHTS

Th e NRC’s fi nancial statements summarize the 

fi nancial activity and fi nancial position of the agency. Th e 

fi nancial statements, footnotes, and required supplementary 

information appear in Chapter 3, “Financial Statements 

and Auditors’ Report.” Analysis of the principal statements 

follows.

Analysis of the Balance Sheet

Th e NRC’s assets were $554.5 million as of September 

30, 2008. Th is is an increase of $69.1 million from the end 

of FY 2007. Th e assets reported in NRC’s Balance Sheet are 

summarized in the accompanying table.

ASSET SUMMARY 

(In Millions)

FY 2008 FY 2007

Fund Balance 

with Treasury $393.5 $356.4

Accounts 

Receivable, Net $121.4 $93.9

Property & 

Equipment, Net $35.5 $31.8

Other $4.1 $3.3

Total Assets $554.5 $485.4

Th e fund balance with the U.S. Department of the 

Treasury (Treasury) represents the NRC’s largest asset of $393.5 

million as of September 30, 2008, an increase of $37.1 million 

from the FY 2007 year-end balance. Th is balance accounts 

for 71 percent of Total Assets and represents appropriated 

funds, collected license fees, and other funds maintained at 

the Treasury to pay current liabilities. Th e increase in Fund 

Balance with Treasury is primarily due to $926.1 million 

in new budget authority and $8.3 million in reimbursable 

collections which are off set by $884.0 million in expenditures 

and a $13.3 million decrease in fee overcollections.

Accounts Receivable, Net, as of September 30, 2008, 

was $121.4 million, which includes an off setting allowance 

for doubtful accounts of $1.7 million. Th is is a 29 percent 

increase from the FY 2007 year-end Accounts Receivable, 

Net, balance of $93.9 million. Th e increase is primarily due 

to fees for new reactor licensing, and materials and facilities 

inspections. Th e value of Property and Equipment, Net, was 

$35.5 million, representing 6 percent of Total Assets. Th e 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

18

majority of this balance represents information technology 

soft ware and leasehold improvements.

LIABILITIES SUMMARY 

(In Millions)

FY 2008 FY 2007

Accounts Payable $54.1 $27.7

Federal Employee Benefi ts 7.1 6.8

Other Liabilities 75.8 169.7

Total Liabilities $137.0 $204.2

Th e NRC’s liabilities were $137.0 million as of 

September 30, 2008. Th e accompanying table shows a 

decrease in Total Liabilities of $67.2 million from the FY 

2007 year-end balance of $204.2 million. Th is decrease is 

primarily due to a decrease of $93.9 million as a result of a 

change in accounting for fee revenue and the corresponding 

transfer of fee revenue collections to Treasury. Beginning 

in FY 2008, this liability is no longer being recorded. Th e 

decrease is off set by an increase of $26.4 million in Accounts 

Payable for new reactors and existing reactor and materials 

licensing tasks. Of the agency’s liabilities, $52.5 million were 

not covered by budgetary resources, which is a 12 percent 

increase over the balance of $46.8 million as of September 

30, 2007. Th e liabilities not covered by budgetary resources 

include unfunded accrued annual leave and future workers’ 

compensation.

NET POSITION SUMMARY

(In Millions)

FY 2008 FY 2007

Unexpended Appropriations $289.3 $254.0

Cumulative Results of 

Operations

128.2 27.2

Total Net Position $417.5 $281.2

Th e diff erence between Total Assets and Total Liabilities, 

Net Position, was $417.5 million as of September 30, 2008. 

Th is is an increase of $136.3 million from the FY 2007 

year-end balance. Net Position is comprised of two 

components: Unexpended Appropriations and Cumulative 

Results of Operations as shown in the accompanying table. 

Unexpended Appropriations is the amount of authority 

granted by Congress that has not been expended. Th e increase 

of Unexpended Appropriations of $35.3 million for FY 2008 

is primarily due to funding for expected added volume 

of new reactor licensing activities. Cumulative Results of 

Operations represents the cumulative excess of fi nancing 

sources over expenses. Th e increase is due primarily to a 

change in accounting for fee revenue and the corresponding 

transfer of fee revenue collections to Treasury.

Analysis of the Statement of Net Cost

Th e Statement of Net Cost presents the net cost of NRC’s 

two programs as identifi ed in the NRC Annual Performance 

Plan. Th e purpose of this statement is to link program 

performance to the cost of programs. Th e NRC’s Net Cost 

of Operations for the year ended September 30, 2008, was 

$146.5 million, which is an increase of $53.1 million over the 

FY 2007 net cost of $93.4 million. Net costs by program are 

shown in the following table. 

NET COST OF OPERATIONS 

(In Millions)

FY 2008 FY 2007

Nuclear Reactor Safety and uclear Reactor Safety and

Security ecurity

$(20.0) $(30.6)

Nuclear Materials & Waste uclear Materials & Waste

Safety and Security afety and Security

166.5 124.0

Net Cost of Operations et Cost of Operations $146.5 $93.4

Net Costs are gross costs off set by earned revenue. Gross 

costs increased in Nuclear Reactor Safety and Security in 

the areas of new reactor and existing licensing tasks and 

in Nuclear Materials & Waste Safety and Security due to 

contract support for high-level waste, nuclear materials 

licenses, fuel facilities, and spent fuel storage and transport. 

Earned revenue increased primarily because of the increase 

in appropriations for NRC activities, of which the NRC is 

required to collect 90 percent through fee billing. 
19

Chapter 1 ■ Management’s Discussion and Analysis

Total earned revenue for the year ended September 

30, 2008, was $797.6 million, which is an increase of $104.3 

million from the earned revenue of $693.3 million for the 

year ended September 30, 2007. Earned revenue is derived 

from fees for reactor and materials licensing and inspections 

in accordance with Title 10 of the Code of Federal Regulations 

(10 CFR) Part 170, “Fees for Facilities, Materials, Import 

and Export Licenses, and Other Regulatory Services under 

the Atomic Energy Act of 1954, as Amended,” and 10 

CFR Part 171, “Annual Fees for Reactor Licenses and Fuel 

Cycle Licenses and Materials Licenses, Including Holders 

of Certifi cates of Compliance, Registrations, and Quality 

Assurance Program Approvals and Government Agencies 

Licensed by the NRC.”

Analysis of Statement of Changes in Net 

Position

Th e Statement of Changes in Net Position reports the 

change in net position during the reporting period. Net 

position is aff ected by changes in its two components—

Cumulative Results of Operations and Unexpended 

Appropriations. Th e increase in Net Position of $136.3 million 

from FY 2007 to FY 2008 is due primarily to an increase 

in the net change in Cumulative Results of Operations of 

$101.0 million primarily due to the change in accounting for 

fee revenue and the corresponding transfer of fee revenue 

collections to Treasury. Th e increase in Unexpended 

Appropriations of $35.3 million is primarily due to the 

increase in the appropriation for FY 2008 for the expected 

added volume of new reactor licensing activities.

Analysis of the Statement of Budgetary 

Resources

Th e Statement of Budgetary Resources reports the 

source and status of budgetary resources at the end of the 

period. It presents the relationship between budget authority 

and budget outlays, and the reconciliation of obligations 

to total outlays. For FY 2008, NRC had Total Budgetary 

Resources available of $1,028.8 million, the majority of which 

was derived from new budget authority. Th is represents 

a 13 percent increase over FY 2007 budgetary resources 

available of $910.9 million. Th e increase provides funding for 

growth in new reactor licensing including costs for staffi ng 

and offi ce space.

For FY 2008, the NRC had Obligations Incurred of 

$949.8 million, compared to FY 2007 Obligations Incurred 

of $838.8 million. Th is increase was due primarily to the 

increase of appropriations received for new and existing 

reactor licensing activities. Gross outlays for FY 2008 were 

$884.0 million, which represents a $119.6 million increase 

from FY 2007 total outlays of $764.4 million. Th e increase 

is primarily due to the increase in spending in the area of 

Nuclear Reactor Safety and Security for new reactor and 

existing reactor licensing programs.

SYSTEMS, CONTROLS, AND 

LEGAL COMPLIANCE

MANAGEMENT ASSURANCES

Th is section provides information on the NRC’s 

compliance with the Federal Managers’ Financial Integrity 

Act, the Offi ce of Management and Budget (OMB) Circular 

A-123, “Management’s Responsibility for Internal Control,” 

and the Federal Financial Management Improvement 

Act. Appendix C, “Summary of Financial Statement Audit 

and Management Assurances,” includes a summary of 

management assurances.

Federal Managers Financial Integrity Act

Th e Federal Managers Financial Integrity Act (Integrity 

Act) mandates that agencies establish controls that 

reasonably ensure that (1) obligations and costs comply 

with applicable law; (2) assets are safeguarded against 

waste, loss, unauthorized use, or misappropriation; and 

(3) revenues and expenditures are properly accounted for 

and recorded. Th e Integrity Act encompasses program, 

operational, and administrative areas as well as accounting 

and fi nancial management. It also requires the Chairman to 

provide an assurance statement on the adequacy of internal 

controls and on the conformance of fi nancial systems with 

governmentwide standards.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

20

Management Control Review Program

Managers throughout the NRC are responsible for 

implementing eff ective controls in their areas of responsibility. 

Each Offi ce Director and Regional Administrator prepares 

an annual assurance statement that identifi es any control 

weaknesses requiring the attention of the NRC’s Executive 

Committee on Internal Control (ECIC). Th ese statements are 

based on various sources, including management knowledge 

gained from the daily operation of agency programs and 

reviews, management reviews, program evaluations, audits 

of fi nancial statements, reviews of fi nancial systems, annual 

performance plans, Inspector General and U.S. Government 

Accountability Offi ce reports, and reports and other 

information provided by the congressional committees of 

jurisdiction.

Th e NRC’s ECIC includes senior executives from 

the offi ces of the Chief Financial 

Offi cer and the Executive Director 

of Operations, with the Offi ce of the 

General Counsel and the Offi ce of the 

Inspector General participating as 

advisors. Th e ECIC met and reviewed 

the assurance statements provided by 

the offi ces and regions. Th e ECIC then 

informed the Chairman as to whether 

the NRC had any internal control 

defi ciencies serious enough to require 

reporting as a material weakness or 

material noncompliance.

Th e NRC’s ongoing internal 

control program requires, among other 

things, that reports on internal control 

defi ciencies be integrated into the 

offi ces’ and regions’ annual operating 

plans. Th e operating plan process 

provides for periodic updates and 

ensures that key issues receive senior 

management attention. Combined with 

the individual assurance statements 

discussed previously, the internal 

control information in these plans 

provides the framework for monitoring 

and improving the agency’s internal 

controls on an ongoing basis.

FY 2008 Integrity Act Results

Th e NRC evaluated its internal 

control systems for the fi scal year 

ending September 30, 2008. Th e 

o

G

I

a

t

t

in

t

d

r

m

c

t

d

o

p

p

e

m

t

d

c

p

a

c

F

c

e

U.S. NUCLEAR REGULATORY COMMISSION

FEDERAL MANAGERS’ FINANCIAL INTEGRITY ACT

STATEMENT FOR FY 2008

The U.S. Nuclear Regulatory Commission’s (NRC) management is responsible 

for establishing and maintaining effective internal control and fi nancial 

management systems that meet the objectives of the Federal Managers 

Financial Integrity Act (FMFIA). The NRC conducted its assessment of internal 

control over the effectiveness and effi ciency of operations and compliance 

with applicable laws and regulations, and in accordance with OMB Circular 

A-123, “Management’s Responsibility for Internal Control.” Based on the results 

of this evaluation, the NRC can provide reasonable assurance that its internal 

control over the effectiveness and effi ciency of operations and compliance 

with applicable laws and regulations as of September 30, 2008, was operating 

effectively and no material weaknesses were found in the design or operation 

of internal control.

In addition, the NRC conducted its assessment of the effectiveness of internal 

control over fi nancial reporting, which includes safeguarding of assets and 

compliance with applicable laws and regulations, in accordance with the 

requirements of Appendix A of OMB Circular A-123. Based on the results of the 

evaluation, the NRC can provide reasonable assurance that NRC’s internal 

control over fi nancial reporting as of June 30, 2008, was operating effectively, 

and no material weaknesses were found in the design or operation of the 

internal control over fi nancial reporting.

Dale E. Klein

Chairman

U.S. Nuclear Regulatory Commission

November 14, 2008
21

Chapter 1 ■ Management’s Discussion and Analysis

NRC is able to provide a statement of assurance, based on 

this evaluation, that the internal controls and fi nancial 

management systems meet the objectives of the Integrity Act. 

Th e NRC has reasonable assurance that its internal controls 

are eff ective and that its fi nancial management systems 

conform to governmentwide standards.

Resolution of FY 2007 Material Weakness

Th e FY 2007 independent evaluation of the NRC’s 

Implementation of the Federal Information Security 

Management Act (FISMA) identifi ed the following two 

signifi cant defi ciencies in the NRC’s information technology 

(IT) security program:

• Only 2 of 30 operational NRC information systems have 

a current certifi cation and accreditation, and only 4 out 

of the 11 systems used or operated by a contractor or 

other organization on behalf of the agency have a current 

certifi cation and accreditation.

• Annual contingency plan testing is still not being performed 

for all of the NRC’s operational information systems.

Th e NRC reported these two fi ndings as one material 

weakness associated with the Agency’s overall IT security 

program under the provisions of the Integrity Act.

Th e Offi ce of the Inspector General performed an 

independent evaluation of the NRC’s implementation of the 

Federal Information Security Management Act for FY 2008. 

Th e independent evaluator no longer considers either of these 

items as signifi cant defi ciencies, since one-half of the systems 

have a current certifi cation and accreditation, and annual 

contingency plan testing was completed for all systems. As a 

result of this evaluation, the NRC no longer considers this a 

material weakness.

Office of Management and Budget Circular 

A-123, “Management’s Responsibility for 

Internal Control,” Including Appendix A, 

“Internal Control over Financial Reporting”

In FY 2006, the NRC implemented the requirements of 

the Offi ce of Management and Budget revised Circular A-123, 

which defi ned and strengthened management’s responsibility 

for internal control in Federal agencies. Th e revised Circular 

included updated internal control standards. A new section, 

Appendix A, “Internal Control over Financial Reporting,” 

required Federal agencies to assess the eff ectiveness of 

internal control over their fi nancial reporting and to prepare 

a separate statement of assurance as of June 30, every year.

In FY 2008, the NRC continued its assessment of internal 

control over fi nancial reporting. Th e scope of fi nancial 

reports, materiality values, risk assessments, key processes, 

and key controls was reevaluated. A 3-year rotational testing 

plan was adopted last year in FY 2007. Th ree of the original 

nine key processes were determined to be signifi cant enough 

to be included in the testing each year of the 3-year cycle. Th e 

remaining six key processes will be tested once in the 3-year 

cycle, two each year. Based on the results of this evaluation, 

the NRC can provide reasonable assurance that its internal 

control over fi nancial reporting was operating eff ectively as 

of June 30, 2008, and that the evaluation found no material 

weaknesses in the design or operation of the internal controls 

over fi nancial reporting.

Federal Financial Management 

Improvement Act

Th e Federal Financial Management Improvement Act 

(Improvement Act) requires each agency to implement and 

maintain systems that comply substantially with (1) Federal 

fi nancial management system requirements, (2) applicable 

Federal accounting standards, and (3) the standard general 

ledger at the transaction level. Th e Improvement Act requires 

the Chairman to determine whether the agency’s fi nancial 

management systems comply with the Improvement Act 

and to develop remediation plans for systems that do not 

comply.

FY 2008 Improvement Act Results

As of September 30, 2008, the NRC evaluated its 

fi nancial systems to determine if they complied with 

applicable Federal requirements and accounting standards 

required by the Improvement Act. Th e NRC evaluated 

the following eight systems: the Federal Financial System, 

Federal Personnel Payroll Systems, Human Resources 

Management System, Cost Accounting System, Advice of 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

22

Allotments/Financial Plan System, Capitalized Property 

System, Fee Billing System, and Controller Resource 

Database System.

As of September 30, 2008, the agency’s fi nancial 

management systems are in substantial compliance with 

the Improvement Act, except for one system which is in 

substantial noncompliance because of a FISMA fi nding 

related to a lack of current certifi cation and accreditation. Th e 

NRC plans to complete the certifi cation and accreditation 

activities by March 31, 2009, and to request an authority to 

operate. In making this determination, the NRC considered 

all the information available, including the report from the 

NRC ECIC on the eff ectiveness of internal controls, the 

Offi ce of the Inspector General audit reports, and the results 

of the agency’s fi nancial management systems reviews. 

Th e agency also relied on the Department of the Interior 

National Business Center (DOI-NBC) annual reasonable 

assurance statement, which concluded that, for FY 2008, the 

cross-serviced fi nancial systems are in substantial compliance 

with Federal fi nancial management system requirements.

Th e Inspector General auditors identifi ed the Fee 

Billing System as an Improvement Act noncompliance in the 

FY 2004 through FY 2006 Financial Statement Audit. Th e 

NRC took a number of additional remedial actions during 

FY 2007 to improve quality assurance over license fee billing 

processes and eliminated the noncompliance issue related 

to these fee billing processes. Th e NRC continues to defi ne 

and implement compensating controls over this system, to 

maintain quality assurance procedures, and to reduce the 

risk that errors will go undetected.

PROMPT PAYMENT

Th e Prompt Payment Act requires Federal agencies to 

make timely payments to vendors for supplies and services, 

to pay interest penalties when payments are made aft er 

the due date, and to take cash discounts when they are 

economically justifi ed. In FY 2008, the NRC paid 93 percent 

of the 10,368 invoices subject to the Prompt Payment Act on 

time (see Figure 8). Th e NRC incurred $20,852 in interest 

penalties during FY 2008.

IMPROPER PAYMENTS

Th e NRC remains at low risk of making improper 

payments. At the present time, the NRC’s payments consist of 

commercial vendor, interagency, and travel reimbursements. 

Th e NRC monitors and reports improper payments within 

its programs and continues to evaluate internal controls 

guarding against improper payments. Th e NRC continues 

to perform annual risk assessments for each of these areas. 

Based on the FY 2008 risk assessments, the number and 

amount of improper payments fall below the external 

reporting requirement established by OMB guidance on 

what is considered a signifi cant risk. Th e NRC awards less 

than $500 million in annual contracts, and, therefore, is not 

subject to annual reporting under the Recovery Auditing Act. 

2004 2005 2006 2007 2008

94% 96% 95% 93% 95%

PROMPT PAYMENT

(Percentage)

Figure 8
23

Chapter 1 ■ Management’s Discussion and Analysis

Th e DOI-NBC’s Federal Personnel/Payroll System, as the 

system of record for payroll disbursements, is responsible for 

monitoring and reporting on any improper payroll-related 

payments.

DEBT COLLECTION

Th e Debt Collection Improvement Act enhances the 

ability of the Federal Government to service and collect 

debts. Th e agency’s goal is to maintain the level of delinquent 

debt owed to the NRC at year end to less than 1 percent of 

its annual billings. Th e NRC continues to meet this goal, 

and at the end of FY 2008, delinquent debt was $2.0 million 

(Figure 9). Th e NRC continues to pursue the collection of 

delinquent debt and refers all eligible debt over 180 days 

delinquent to the Treasury for collection.

BIENNIAL REVIEW OF USER FEES

Th e Chief Financial Offi cers Act requires agencies to 

conduct a biennial review of fees, royalties, rents, and other 

charges imposed by agencies, and to make revisions to cover 

program and administrative costs incurred. Each year, the 

NRC revises the hourly rates for license and inspection 

fees and adjusts the annual fees to meet the fee collection 

requirements of the Omnibus Budget Reconciliation Act of 

1990, as amended. Th e most recent changes to the license, 

inspection, and annual fees are described in the Federal 

Register (73 FR 32385, June 6, 2008). 

In order to more appropriately recover actual costs, 

the NRC revised the fees and charges for the Material 

Access Authorization Program, for the Information Access 

Authorization Program, and for administrative charges for 

delinquent debt. Th e NRC conducted no other reviews this 

year. 

INSPECTOR GENERAL ACT

Th e agency has established and continues to maintain 

an excellent record in resolving and implementing Offi ce 

of the Inspector General open audit recommendations. 

Appendix B includes this information, as well as data 

concerning disallowed costs determined through contract 

audits conducted by the Defense Contract Audit Agency. 2004 2005 2006 2007 2008

DELINQUENT DEBT

(In Millions)

Figure 9

$2.0

$0.5 $0.45

$0.9

$1.4
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

24

NRC Chairman Dale E. Klein and University of Illinois at Urbana Champaign (UI) Head of the Department of Nuclear, 

Plasma, and Radiological Engineering, Professor Jim Stubbins, hold a ceremonial check representing the nearly $740,000 in 

grants the NRC recently provided for nuclear-related education at UI. Chairman Klein was on campus to observe a forum 

marking the 50th anniversary of nuclear engineering on campus.

Photo Courtesy of NRC Photo Library.
Chapter 2 ■ Program Performance

CHAPTER 2

PROGRAM PERFORMANCE
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

26

St. Lucie Nuclear Power Plant near Ft. Pierce, FL. Th is facility is run by the Florida Power and Light Company.

Photo Courtesy of Florida Power and Light Company.
27

Chapter 2 ■ Program Performance

MEASURING AND REPORTING 

PERFORMANCE

Th is chapter presents information on the U.S. Nuclear 

Regulatory Commission’s (NRC’s) performance in achieving 

its mission during fi scal year (FY) 2008. Th e agency’s 

mission is to license and regulate the Nation’s civilian use of 

byproduct, source, and special nuclear materials to ensure 

adequate protection of public health and safety, promote the 

common defense and security, and protect the environment.

Th is chapter also describes the NRC’s achievements 

in accomplishing its two strategic goals of safety and 

security. Th e safety goal discussion addresses the NRC’s key 

activities of reactor licensing, new reactor licensing, reactor 

inspection, fuel facilities, material users, high-level waste 

repository, decommissioning and low-level waste, and spent 

fuel storage and transportation. Th e security goal discussion 

addresses security activities in the Nuclear Reactor Safety 

and Nuclear Materials and Waste Safety Programs. Lastly, 

it describes information on data sources, data quality, and 

the completeness and reliability of performance data. Th e 

discussion focuses primarily on the NRC’s methods for 

collecting and analyzing data, ensuring data security, and 

improving the agency’s performance measures and the 

quality of its data during the current reporting period.

GOALS AND PERFORMANCE 

MEASURES

STRATEGIC GOAL 1: SAFETY

Ensure Adequate Protection of Public

Health and Safety and the Environment

Strategic Outcomes

Th e NRC has fi ve strategic outcomes associated with the 

safety goal that determine whether the agency has achieved 

its objective to ensure adequate protection of public health 

and safety and the environment. Th e following are the fi ve 

strategic outcomes:

• Prevent the occurrence of any nuclear reactor accidents.

• Prevent the occurrence of any inadvertent criticality 

events.

• Prevent the occurrence of any acute radiation exposures 

resulting in fatalities.

• Prevent the occurrence of any releases of radioactive 

materials that result in signifi cant radiation exposures.

• Prevent the occurrence of any releases of radioactive 

materials that cause signifi cant adverse environmental 

impacts.

RESULTS: In FY 2008, the NRC achieved all of its safety 

goal strategic outcomes.

PERFORMANCE MEASURES

Th e table on the next page lists the agency’s annual 

performance measures and their outcomes over the past 

6 years. Th e NRC uses these performance measures to 

determine its success in achieving the safety goal.

Chairman Dale E. Klein (center), tours Shearon Harris 

nuclear power plant near Raleigh, NC, with congressional staff 

members who represent Representative David Price, D-NC, 

and Senator Richard Burr, R-NC.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

28

FY 2008 SAFETY GOAL PERFORMANCE MEASURES

Measure 2003 2004 2005 2006 2007 2008

1. Number of new conditions evaluated as red by the 

Reactor Oversight Process is ≤3. 110000

2. Number of significant accident sequence 

precursors of a nuclear reactor accident is zero. 000000

3. Number of operating reactors with integrated 

performance that entered the Manual Chapter 

0350 process, or the multiple/repetitive degraded 

cornerstone column or the unacceptable 

performance column of the Reactor Oversight 

Process Action Matrix, with no performance 

exceeding Abnormal Occurrence Criterion I.D.4 

is ≤4. 

210010

4. Number of significant adverse trends in industry 

safety performance with no trend exceeding the 

Abnormal Occurrence Criterion I.D.4 is ≤1. 

000000

5. Number of events with radiation exposures to 

the public and occupational workers that exceed 

Abnormal Occurrence Criterion I.A is:

Reactors: 0 0 0 0 0 0 0

Materials: ≤3 0 0 1 0 0 0

Waste: 0 0 0 0 0 0 0

6. Number of radiological releases to the environment 

that exceed applicable regulatory limits is:

Reactor: ≤3 0 0 0 0 0 0

Materials: ≤2 0 1 0 0 0 0

Waste: 0 0 0 0 0 0 0
29

Chapter 2 ■ Program Performance

ANALYSIS OF FY 2008 RESULTS

1. Reactor Oversight Process: Th e NRC reactor inspection 

program monitors nuclear power plant performance in 

three broad areas—reactor safety, radiation safety, and 

security. Plant performance is analyzed based on many 

performance indicators and inspection fi ndings. Each 

fi nding is then divided into one of four categories—red, 

yellow, white, green. Red fi ndings indicate a fi nding of 

high safety signifi cance. Th ere were no red performance 

indicators or fi ndings in FY 2008.

2. Reactor signifi cant precursors: Th e second measure 

tracks signifi cant precursor events. Th is statistical 

measure of risk determines the likelihood of an event 

impacting safety adversely. A signifi cant precursor is an 

event that has a probability of 1 in 1000 (or greater) of 

leading to substantial damage to the reactor fuel. Based 

on screening reviews, the NRC has not identifi ed any 

signifi cant precursor events in FY 2008.

3. Reactor performance: Th e conditions in this measure 

indicate whether the NRC fi nds signifi cant performance 

issues in a plant during an inspection or from performance 

indicators under the reactor oversight process. If any of 

the conditions in this measure are met, the NRC will 

take action to ensure that plant safety is improved. Th ere 

were no reactors that met the conditions in this measure 

in FY 2008. Palo Verde Nuclear Generation Station in 

Toponah, AZ, met the conditions in this measure during 

FY 2007. Th e agency applied signifi cant oversight for that 

plant in FY 2008 to ensure improved performance.

4. Reactor safety trends: Th is measure tracks trends for 

several key indicators of industry safety performance. 

Th ese indicators provide insights into major areas of 

reactor performance, including reactor safety, radiation 

safety, and emergency preparedness. Statistical analysis 

techniques are applied to each indicator to calculate 

long-term trends. Th ese trends represent industry 

averages rather than individual plant performance. 

No statistically signifi cant adverse trends have been 

identifi ed for any of the indicators in FY 2008.

5. Nuclear material radiation exposures: Th is measure 

tracks the number of radiation exposures to the public and 

occupational workers that exceed Abnormal Occurrence 

Criterion I.A.3, which is defi ned as those events that 

produce unintended permanent functional damage to 

an organ or a physiological system, as determined by a 

physician. Th is measure tracks both nuclear reactors 

and other nuclear material users, such as hospitals and 

industrial users. No radiation exposures exceeding 

Abnormal Occurrence Criterion I.A.3 occurred in 

FY 2008.

6. Nuclear material releases to the environment: Th is 

measure indicates the eff ectiveness of the NRC’s 

nuclear material environmental regulatory programs. 

Exceeding the applicable regulatory limits is defi ned as 

a total eff ective radiation dose equivalent to individual 

members of the public that is attributable to a licensed 

user of nuclear materials but does not exceed 0.1 rem in 

a year, exclusive of dose contributions from background 

radiation. No nuclear material releases to the environment 

that exceeded regulatory limits occurred in FY 2008.

THE INDUSTRY TRENDS PROGRAM

Th e NRC measures the eff ectiveness of its Nuclear 

Reactor Safety Program activities based on the continued 

safe operation of the Nation’s nuclear power plants. Th e NRC 

compiles data on overall safety performance using several 

industry-level performance indicators, a number of which 

are addressed in the following pages. Th ese indicators (except 

precursor occurrence rate) show signifi cant improvement in 

the long-term trends for safety performance of nuclear power 

plants since 1988, the baseline year for the statistical analyses. 

Plant operating experience data have yielded a steady stream 

of improvements in the reliability of plant systems and 

components, plant operating procedures, training of power 

plant operators, and regulatory oversight. For ease of viewing, 

all the charts in this section display data since 1993. 

Th e industry safety indicators are derived through 

engineering and scientifi c analyses by the NRC’s Offi ce of 

Nuclear Reactor Regulation and Offi ce of Nuclear Regulatory 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

30

Research. Th e analyses of the events for FY 2008 are still 

ongoing. Th e performance indicator results are subject to 

minor variations as licensees submit revisions to the source 

data and may diff er slightly from data reported in previous 

years as a result of refi nements in data quality. Th e results of 

these analyses are reported annually both to the Commission 

and to Congress.

1993

0.3

0.25

0.2

0.15

0.1

0.05

0

1995 1999 2005 2003 2007

1994 1996

1997

1998 2000

2001

2002 2006 2004 2008

SIGNIFICANT EVENTS

(Per Reactor)

Figure 10

Significant events meet specific criteria such as degradation of important 

safety equipment. The agency reviews operating events and assesses their 

safety significance. The number of significant events has declined since 

1993.

1993

300

250

200

150

100

50

0

1995 1999 2005 2003 2007

1994 1996

1997

1998 2000

2001

2002 2006 2004 2008

RADIATION EXPOSURE

(Exposure - Person cSv)

Figure 11

The total (collective) radiation dose received by workers is an indication 

of the radiological challenges of maintaining and operating nuclear power 

plants. The trend shows a reduction in collective dose since 1988 and 

demonstrates the effectiveness of the controls on radiation exposure.
31

Chapter 2 ■ Program Performance

1993

0.9

0.8

0.7

0.6

0.5

0.4

0.2

0.1

0.3

0

1995 1999 2005 2003 2007

1994 1996

1997

1998 2000

2001

2002 2006 2004 2008

SAFETY SYSTEM ACTUATIONS

(Per Reactor)

Figure 12

Safety systems mitigate off-normal events, such as the widespread power 

blackout in August 2003, by providing reactor core cooling and water 

addition. Actuations of safety systems that are monitored include certain 

emergency core cooling and emergency electrical power systems. Actuations 

can occur as a result of “false alarms” (such as testing errors) or in response 

to actual events.

1993

1.4

1.2

1

0.8

0.4

0.2

0.6

0

1995 1999 2005 2003 2007

1994 1996

1997

1998 2000

2001

2002 2006 2004 2008

AUTOMATIC SCRAMS

(Per Reactor)

Figure 13

A scram is a basic reactor protection safety function that shuts down the 

reactor by inserting control rods into the reactor core. Scrams can result 

from events that range from relatively minor incidents to precursors of 

accidents. The massive power blackout in August 2003 accounts for most 

of the increase in FY 2003, but it has not affected the statistical trend for 

number of scrams, which has been declining steadily since 1988.

1993

0.25

0.2

0.15

0.05

0.1

0

1995 1999 2005 2003 2007

1994 1996

1997

1998 2000

2001

2002 2006 2004 2008

PRECURSOR OCCURENCE RATE

(Per Reactor)

Figure 14

A precursor event is an event that has a probability of greater than 1 in 

1 million of leading to substantial damage to the reactor fuel. There is no 

statistically significant adverse trend in the occurrence rate of precursor 

events since 1993, the baseline year for the statistical analysis. Because of the 

complexities associated with evaluating precursor events, the data always lag 

behind other indicators. 

1993

3.5

3

1.5

0.5

1

2.5

2

0

1995 1999 2005 2003 2007

1994 1996

1997

1998 2000

2001

2002 2006 2004 2008

SAFETY SYSTEM FAILURES

(Per Reactor)

Figure 15

Safety system failures include any events or conditions that could prevent 

a safety system from fulfilling its safety function. The statistical trend for 

the number of safety system failures across the industry has declined since 

1988.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

32

NUCLEAR REACTOR LICENSING

ACTIVITY

Th e agency’s nuclear reactor licensing activity ensures that 

civilian nuclear power reactors and test and research reactors 

are operated in a manner that adequately protects public 

health and safety and the environment while safeguarding 

special nuclear materials used in reactors. Safety at nuclear 

power plants has improved substantially over the past 

20 years, as both the nuclear industry and the NRC have been 

proactive in identifying and correcting problems to improve 

the operation and maintenance of nuclear power facilities. 

Th e combined eff orts of the nuclear industry and the NRC 

led to this improvement in the safety performance of nuclear 

power plants.

Th e NRC had completed 1,054 reactor licensing actions 

(see Figure 16). Th e Offi ce of Nuclear Reactor Regulation has 

experienced a signifi cant decrease in the number of licensing 

action submittals in the past 2 years. Th e agency received 

only 1,270 actions in 2007, compared with an average of 1,630 

submittals since 2003

Th e NRC continues to complete licensing actions in a 

timely manner. Th e staff completed approximately 96 percent 

of the licensing actions in the agency’s inventory within 1 year 

of receipt and 100 percent within 2 years (see Figure 17).

Th e NRC also evaluates nuclear reactor power uprate 

applications, which allow licensees to increase the power 

output of their plants. Th e NRC reviews focus on the potential 

impacts of the proposed power uprate on overall plant safety 

and evaluate whether plant operation at the increased power 

level is safe. During FY 2008 , the NRC completed the reviews 

of 11 power uprate licensing actions, which will add about 

740 megawatts electric to the grid. Th is brings the cumulative 

additional power from all power uprates approved since 1977 

to about 5,640 megawatts electric. Th e NRC currently has 

fi ve power uprates under review, which if approved, will add 

about 519 megawatts electric to the grid. Th e NRC expects to 

receive 23 new power uprate applications in the next 5 years, 

which if approved, will add about 1,712 megawatts electric to 

the grid.

During FY 2008, the NRC undertook several rulemaking 

activities to improve protection of public health and safety 

and the environment and to reduce unnecessary regulatory 

burden. Th e agency published a proposed rule on alternate 

fracture toughness requirements for protection against 

pressurized thermal shock events in reactor vessels using 

updated analysis methods. Th e agency also published a fi nal 

rule on occupational exposure reporting and recordkeeping 

requirements that reduces regulatory burden to such an 

2000

1500

1000

500

0

LICENSING ACTIONS COMPLETED

(Number of Actions)

Figure 16

2000 2002 2004 2006 2008 2001 2003 2005 2007

1,574 1,560

1,741

1,492

1,054

1,617

1,774

1,609

1,270

100

80

60

40

20

0

Percent less than 1 Year Old Percent less than 2 Years Old

LICENSING ACTION AGE

Figure 17

2000 2002 2004 2006 2008 2001 2003 2005 2007
33

Chapter 2 ■ Program Performance

extent that licensees will save more than $100 million 

each year.

NEW REACTOR LICENSING

Th e NRC published a major revision to Title 10, Part 52, 

“Early Site Permits; Standard Design Certifi cations; and

Combined Licenses for Nuclear Power Plants,” of the Code 

of Federal Regulations (10 CFR Part 52). In addition, the 

NRC updated Regulatory Guide 1.206, “Combined License 

Applications for Nuclear Power Plants (LWR Edition),” and 

issued a major revision to NUREG-0800, “Standard Review 

Plan for the Review of Safety Analysis Reports for Nuclear 

Power Plants.” To date, the NRC has received 17 combined 

license (COL) applications from the nuclear power industry 

for sites across the country. Of the applications received, 10 

have been accepted and docketed and are currently under 

review. In addition, the industry has indicated that it will 

submit three more COL applications in CY 2009 and 2010.

Th e NRC is continuing to develop an eff ective and 

effi cient construction inspection program for plants to be 

licensed under 10 CFR Part 52. Th ese activities include (1) the 

creation of a working group on the closure of inspections, 

tests, analyses, and acceptance criteria (ITAAC) to resolve 

policy issues and develop resulting processes and procedures; 

(2) inspector development and training; (3) development 

of information technology systems to capture inspection 

results and track ITAAC closure; (4) issuance of inspection 

procedures; (5) development of generic inspection schedules, 

and (6) development of an assessment and enforcement 

program. Vendor inspections are already taking place to 

support increased fabrication activities domestically and 

internationally in response to new reactor construction 

plans. Th e NRC conducts these inspections to ensure the 

eff ective implementation of the high-quality standards set for 

components by the agency to protect the public.

On June 12, 2008, the agency issued Regulatory 

Guide 4.21, “Minimization of Contamination and Radioactive Waste Generation: Life-Cycle Planning,” which aff ects 

both design, certifi cation and COL application reviews. 

Th is guide provides an acceptable method for minimizing 

contamination and radioactive waste generation over the 

total life cycle of a facility, from initial facility layout and 

design, through procedures for operation, and concluding 

with fi nal decontamination and dismantling at the time of 

decommissioning.

COL APPLICATIONS ACCEPTED IN FY 2008

Site Name (units) State Company Date 

Submitted Accepted

Calvert Cliffs (1 unit) MD UNISTAR 7/13/07

3/13/08

1/25/081

6/3/08

South Texas Project 

(2 units) TX NRG Energy 9/20/07 11/29/07

Bellefonte (2 units) AL NuStart Energy 10/30/07 1/18/08

North Anna (1 unit) VA Dominion 11/27/07 1/28/08

William Lee Nuclear 

Station (2 units) SC Duke 12/13/07 2/25/08

Shearon Harris (2 units) NC Progress Energy 2/19/08 4/17/08

Grand Gulf (1 unit) MS NuStart Energy 2/27/08 4/17/08

Vogtle (2 units) SC Southern Nuclear 

Operating Co. 3/31/08 5/30/08

Summer (2 units) SC South Carolina 

E&G 3/31/08 7/31/08

Callaway (1 unit) MO AmerenUE 7/24/08 Pending

Levy County (2 units) FL Progress Energy 7/30/08 10/06/08

Victoria County 

(2 units) TX Exelon 9/03/08 Pending

Fermi (1 unit) MI Detroit Edison 09/18/08 Pending

Comanche Peak 

(2 units) TX Luminant Power 09/19/08 Pending

River Bend (1 unit) LA Entergy 9/25/08 Pending

Nine Mile Point (1 unit) NY Unistar 9/30/08 Pending

Bell Bond (1 unit) PA PPL Generation 10/10/08 Pending

1 The Calvert Cliffs Combined Operating License application was received in 

two parts; the first part was accepted for review on January 25, 2008, and 

the second part was accepted on June 3, 2008.

For the licensing of new reactors, a proposed rule was 

published that would require applicants for new reactor 

designs to perform a design-specifi c assessment of the eff ect 

of the impact of a large commercial aircraft . Applicants 

would have to perform a rigorous assessment of the design to 

identify design features and functional capabilities that could 

provide additional inherent protection to avoid or mitigate 

the eff ects of an aircraft impact to the extent practicable with 

reduced reliance on operator actions.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

34

New Reactor Designs

Th e NRC is actively reviewing several nuclear reactor 

designs and plans to conclude these reviews with a design 

certifi cation rulemaking. By referencing a certifi ed design, 

the license application review can proceed in a way that 

promotes safety and minimizes undue regulatory burden 

and delays.

Th e NRC is currently performing the design certifi cation 

review of the General Electric Economic Simplifi ed 

Boiling-Water Reactor (ESBWR), AREVA Evolutionary 

Power Reactor (EPR), and Mitsubishi’s U.S. Advanced 

Pressurized-Water Reactor (USAPWR). Th e agency is also 

in the process of amending a design certifi cation for the 

Westinghouse AP1000 design. In addition, vendors for four 

small reactors have requested preapplication discussions with 

the NRC. Th e NRC has had public preapplication meetings 

with these vendors to help the NRC staff understand the 

designs of the various reactors.

Early Site Permits

An early site permit is a permit for partial construction. 

Early site permits are valid for 10 to 20 years and can be 

renewed for an additional 10 to 20 years. Th e NRC review of 

an early site permit application addresses site safety issues, 

environmental protection issues, and plans for coping with 

emergencies, independent of the review of a specifi c nuclear 

plant design. Th e agency issued early site permits to the 

Clinton site in Illinois on March 15, 2007, the Grand Gulf 

site in Mississippi on April 5, 2007, and the North Anna site 

in Virginia on November 27, 2007. Th e NRC is currently 

reviewing the early site permit for the Vogtle site in Georgia.

LICENSE RENEWAL

Reactor operating licenses for nuclear reactors are 

granted for 40 years and can be renewed for an additional 20 

years. Th e review process for renewal applications is designed 

to assess whether a reactor can continue to be operated safely 

during the extended period of operation.

To renew a license, the utility must demonstrate that 

the eff ects of aging will not adversely aff ect structures or 

components important to safety during the renewal period. 

Such structures and components include the reactor vessel, 

piping, electrical cabling, containment structure, and steam 

generators. For some structures or components, additional 

action may be needed to ensure adequate margins of safety. 

Additionally, the agency assesses the potential impacts of 

the extended period of operation on the environment to 

verify that the impacts are not so great as to preclude license 

renewal.

Th e NRC has received applications to renew the licenses 

for 67 units at 40 sites since the license renewal program 

began in 2000 and has renewed licenses for 49 units at 27 

sites during that time (see Figure 18). Th e NRC is currently 

reviewing applications to renew the licenses for 18 units at 13 

sites. Th e agency expects that almost all of the licensees for 

currently licensed units will ultimately apply to renew their 

licenses.

NUCLEAR REACTOR INSPECTION

Th e NRC’s Reactor Oversight Process outlines the 

agency’s actions to verify that nuclear plants are being 

operated safely and in accordance with the NRC’s rules and 

regulations. Th e NRC has full authority to demand that a 

licensee take immediate action for any conditions that result 

2000

80

60

40

20

0

2001 2003 2005 2007 2002 2004 2006 2008

Cumulative Number of License Renewals Received

Cumulative Number of License Renewals Completed

LICENSE RENEWAL APPLICATIONS

Figure 18
35

Chapter 2 ■ Program Performance

in excess risk to the public, including requiring a plant to shut 

down if necessary. Th e agency evaluates inspection fi ndings 

and performance indicators to assess the safety performance 

of each operating nuclear power plant. Th e NRC performs 

a rigorous program of inspections at each plant and may 

perform supplemental inspections and take additional 

actions to ensure that the plants address signifi cant safety 

issues. Th e results of NRC inspection fi ndings for each plant 

are available to the public at http://www.nrc.gov/NRR/

OVERSIGHT/ASSESS/pim_summary.html. Th e NRC also 

conducts public meetings with licensees to discuss the results 

of the NRC’s assessments of its safety performance.

In FY 2008, all of the Nation’s nuclear power plants 

were operated within NRC safety requirements. Th e safety 

indicators for nuclear plants as a whole showed no adverse 

trends, and more than 99 percent of plant safety indicators 

were rated green in FY 2008.

Th e NRC continued to improve the Reactor Oversight 

Process in FY 2008. Agency assessments confi rm that the 

Reactor Oversight Process has resulted in a more objective, 

risk-informed, and predictable regulatory process that focuses 

NRC and licensee resources on aspects of plant performance 

that have the greatest impact on safe plant operations.

Investigations and Enforcement

Compliance with NRC requirements plays an important 

role in giving the agency confi dence that reactor safety is 

being maintained. NRC policies deter noncompliance and 

encourage prompt identifi cation and timely, comprehensive 

corrections. Licensees, contractors, and their employees 

who do not achieve the high standard of compliance 

expected by the NRC are subject to enforcement sanctions. 

Each enforcement action depends on the circumstances 

of the case. Th e NRC will not permit licensees to continue 

to conduct licensed activities if they cannot achieve and 

maintain adequate levels of safety. In FY 2008, there were 

37 escalated enforcement actions with $1,053,000 in fi nes 

assessed. Allegations of reactor-related wrongdoing are 

referred to the Offi ce of Investigation for evaluation and 

recommendations regarding further enforcement action.

FUEL FACILITIES

Th e NRC licenses and inspects all commercial nuclear 

fuel facilities that process and fabricate uranium ore into 

reactor fuel. Th is fuel is the manufactured material that 

powers the Nation’s nuclear reactors. Licensing and inspection 

activities include detailed health, safety, safeguards, and 

environmental licensing reviews, as well as inspections of 

licensee programs, procedures, operations, and facilities to 

ensure safe and secure operations.

Th e NRC conducted several signifi cant fuel cycle 

licensing reviews in FY 2008. Th e agency completed the 

process of recognizing the transfer of ownership of General 

Electric nuclear power plants to General Electric-Hitachi. To 

ensure that the fuel facilities are operating safely and securely, 

the agency reviewed, among other issues, safety analyses for 

controlling hazardous materials and the engineered and 

human performance barriers relied on to control hazardous 

materials. Th e NRC also conducted comprehensive reviews of 

fuel cycle licensees, including a review of licensees’ integrated 

safety analyses (ISA). Th e ISA describes the management 

measures to ensure that the selected controls are available 

and reliable. Th e ISA allows a licensee to use risk information 

to identify hazards and to develop the engineered and 

human performance barriers relied on to control and 

mitigate hazards. Th e NRC completed ISA summary and 

environmental reviews for Areva Richland and Global 

Nuclear Fuels-America. Th e NRC also completed a review of 

the annual ISA updates for all fuel facilities.

Th e NRC received applications from the United 

States Enrichment Corporation (USEC) for the renewal of 

certifi cates of compliance for gaseous diff usion plants located 

near Paducah, KY, and Piketon, OH. Gaseous diff usion is a 

technology used to produce enriched uranium by forcing 

gaseous uranium hexafl uoride through semipermeable 

membranes. By use of a large cascade of many stages, high 

separations can be achieved. Gaseous diff usion was the fi rst 

economical enrichment process to be developed successfully. 

Th e gaseous diff usion plant certifi cates were renewed in 2003 

and expire in 2008. USEC has requested renewal for a 5-year 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

36

period. Th e NRC held public meetings near both of the 

facilities to allow for public input on the certifi cate renewal 

process.

To support growing industry interest in potential 

recycling or reprocessing of spent nuclear fuel, the NRC began 

analyzing existing regulations during FY 2008 to address 

changes that must be made for these types of plants to ensure 

adequate protection of the public and the environment. Th e 

purpose of the agency’s activity is to establish an eff ective 

regulatory framework for licensing a spent nuclear fuel 

recycling facility that considers technology-neutral regulatory 

approaches, innovative designs, and an advanced fuel cycle.

Th e Conference Report for the Consolidated 

Appropriations Act, 2008 directed the NRC to review 

the regulatory process for the U.S. Department of Energy 

(DOE) Hanford Waste Treatment Plant. In most cases, the 

regulations and requirements that DOE has in place are 

similar to those of the NRC. Th e NRC has determined that the 

DOE program, if properly implemented, is adequate to ensure 

the protection of public health and safety. Nevertheless, based 

on its review, the NRC made several suggestions in a report 

for DOE consideration. Th e NRC delivered the report to the 

Secretary of Energy and the House and Senate Committees 

on Appropriations in August 2008. Th e NRC suggested that 

DOE evaluate the way its requirements are implemented and 

consider improving the transparency of its decisions and 

actions regarding the plant. Th e NRC also suggested that DOE 

consider the list of issues identifi ed in a table in the report and 

the specifi c safety and regulatory issues in an appendix to the 

report. Finally, the NRC suggested that DOE explore ways to 

gain and maintain more independence between regulatory 

oversight and project management functions.

Investigations and Enforcement

Compliance with NRC requirements plays an 

important role in giving the agency confi dence that safety of 

fuel-cycle facilities is being maintained. NRC policies deter 

noncompliance and encourage prompt identifi cation and 

timely, comprehensive corrections. Licensees, contractors, 

and their employees who do not achieve the high standard of 

compliance expected by the NRC are subject to enforcement 

sanctions. Each enforcement action depends on the 

circumstances of the case. Th e NRC will not permit licensees 

to continue to conduct licensed activities if they cannot 

achieve and maintain adequate levels of safety. In FY 2008, 

there were four escalated enforcement actions with $48,750 

in fi nes assessed.

NUCLEAR MATERIALS USERS

Th e NRC licenses and inspects the commercial use 

of nuclear material for industrial, medical, and academic 

purposes. Commercial uses of nuclear materials include 

medical diagnosis and therapy, medical and biological 

research, academic training and research, industrial 

gauging and nondestructive testing, production of 

radiopharmaceuticals, and fabrication of commercial 

products (such as smoke detectors) and other radioactive 

sealed sources and devices. Th e NRC and 35 Agreement 

States regulate more than 22,000 specifi c materials licensees 

and 150,000 general materials licensees. Th e NRC currently 

regulates and inspects approximately 3,750 specifi c licensees 

for the use of nuclear byproduct and other radioactive 

materials.

Detailed health and safety reviews of license applications, 

as well as inspections of licensee procedures, operations, and 

facilities, provide reasonable assurance of safe operations 

and the production of safe products. Th e NRC routinely 

inspects nuclear materials licensees to ensure that they are 

using nuclear materials safely, maintaining accountability of 

those materials, and protecting public health and safety. Th e 

agency also analyzes operational experience from NRC and 

Agreement State licensees and regularly evaluates the safety 

signifi cance of events reported by licensees and Agreement 

States.

In FY 2008, the NRC completed reviews of 2,952 

materials licensing actions and 1,229 materials program 

inspections. From 2003 through 2008, the NRC maintained 

the timeliness of its reviews of nuclear materials license 

renewals and sealed source and device designs. In addition, 

the NRC completed 94 percent of the requests for license 

renewal and sealed source and device design reviews within 
37

Chapter 2 ■ Program Performance

180 days of receipt and 98 percent of new applications and 

license amendments within 90 days.

Th e NRC worked with DOE to recover unwanted 

or orphaned radioactive sources. Th e source recovery 

program removes radioactive sources and aids in preventing 

inadvertent source melts or malevolent uses of sources. Since 

the inception of this program in 1997, more than 17,700 

radioactive sources have been recovered from more than 

690 sites within the United States.

Th e NRC is assisting U.S. Customs and Border 

Protection in fulfi lling its congressional mandate to verify 

the legitimacy of radioactive material shipments coming 

into the United States through established ports of entry. 

Th e NRC regularly provides U.S. Customs and Border 

Protection with information on the licensing of radioactive 

materials, including import and export licensing data, and 

has established processes to provide around-the-clock 

technical support for the verifi cation of the licensing status 

for materials in transit.

Th e NRC completed an update of the inventory of 

high-risk sources, defi ned as International Atomic Energy 

Agency (IAEA) Category 1 and Category 2 sources. Th e 

NRC also used the inventory to enhance the safety, security, 

and control of radioactive sources, including the issuance of 

increased control orders.

In addition to continuing to evaluate the need to 

enhance security at byproduct material licensees in FY 2008, 

the NRC is inspecting licensee compliance with these safety 

and security measures and coordinating with Agreement 

States to identify and resolve any implementation issues. 

Th e NRC also issued security orders to irradiator facilities, 

manufacturer and distributor facilities, and licensees 

shipping IAEA Category 1 quantities, including orders 

requiring this group of licensees to implement a program to 

fi ngerprint and conduct a criminal history check for access 

to safeguards information and access to material. Th e NRC 

and the Agreement States issued orders and legally binding 

agreements to licensees subject to increased controls that 

require fi ngerprinting and criminal history checks for access 

to material. Th e NRC and Agreement States will continue to 

inspect these licensees to ensure the proper implementation 

of the increased control orders and other associated 

requirements. Th e NRC revised its screening process for new 

license applications to increase assurance that the material 

will be used as intended.

Th e NRC also works with international counterparts, 

both bilaterally and through multilateral organizations, 

to enhance the safety and security of radioactive sources. 

Examples of these activities include participating in ongoing 

meetings of countries implementing the IAEA Code of 

Conduct on the Safety and Security of Radioactive Sources 

to ensure harmonized national approaches, developing and 

implementing a memorandum of understanding with Canada 

for coordinated export and import licensing of sources, 

and bilateral work with countries of the Commonwealth 

of Independent States to support regulatory control over 

high-risk sources of concern. Th e section on international 

activities (pages 42-43) contains additional details.

Rulemaking Activities

In FY 2008, the NRC undertook several rulemaking 

activities to allow the use of radioactive materials while 

protecting public health and safety and the environment. 

Th ese activities included publishing several rules that certify 

the safety of casks for the storage of spent nuclear fuel and 

implementing improvements to the licensing and distribution 

of byproduct materials. Th e agency also published a rule 

ensuring that its database of special nuclear materials contains 

the most accurate information possible for each licensee.

NRC is updating 10 CFR Part 110 , “Export and Import 

of Nuclear Equipment and Material,” to revise the defi nition 

of radioactive waste, incorporate changes to Appendix P, 

“Category 1 and 2 Radioactive Material,” based on experience 

gained in 2005-2008, and rewrite or clarify Part 110.23 

“General License for the Export of Byproduct Material.” 

Investigation and Enforcement

Out of approximately 929 inspections, 77 resulted in 

escalated actions, including the issuance of civil penalties. 

Violations included exporting licensed material in 

nonconforming packages, failing to maintain a minimum of 

two independent controls to secure a portable gauging device, 

transferring a portable gauging device containing radioactive 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

38

material to a company not licensed to receive the material, and 

failing to secure licensed material from unauthorized access. 

Th e NRC issued associated civil penalties in the amount of 

$124,000. Allegations of materials-related wrongdoing are 

referred to the Offi ce of Investigation for evaluation and 

recommendation regarding further enforcement action.

HIGH-LEVEL WASTE REPOSITORY

Th e NRC formally docketed the U.S. Department of 

Energy (DOE) license application for the proposed highlevel nuclear waste repository at Yucca Mountain, NV. Th e 

decision to docket the application follows the NRC staff ’s 

determination that the application, submitted June 3, 2008, 

is suffi ciently complete for the staff to begin its full technical 

review. Docketing the application triggers a 3-year deadline, 

with a possible 1-year extension, set by Congress for the NRC 

to decide whether to grant a construction authorization. 

Aft er reviewing the DOE environmental impact 

statement and its supplements, the NRC staff determined 

that it would be practicable for the agency to adopt the DOE 

report. However, the staff is requesting that DOE supplement 

some aspects of its ground water analyses. 

A subsequent Federal Register notice, to be published 

in early FY 2009, will provide an opportunity for interested 

parties to seek an adjudicatory hearing before the NRC’s 

Atomic Safety and Licensing Board regarding the NRC’s 

adoption of the environmental impact statement or the 

substance of the license application. Th is will include 

allegation processing, investigations of wrongdoing, and 

inspections and fi eld reviews. Th e NRC also conducted public 

outreach activities and meetings during FY 2008 to make the 

regulatory process accessible to interested stakeholders. 

Th e NRC continued to interact with DOE to assess 

technical and regulatory issues related to its spent fuel 

management program, which will use standardized 

transportation, aging, and disposal (TAD) canisters. In 

June 2007, DOE issued fi nal performance specifi cations for 

the disposal canister, and in May 2008, DOE awarded two 

contracts for the design, licensing, and demonstration of the 

TAD canister system. Th e TAD canister will be the primary 

means for packaging spent nuclear fuel for interim storage 

and for transportation to and disposal in the proposed 

repository at Yucca Mountain, NV.

DECOMMISSIONING AND LOW-LEVEL

WASTE

Th e NRC oversaw decommissioning activities at 15 

power and early demonstration reactors, 11 research and test 

reactors, 32 uranium recovery sites, and 28 complex material 

and fuel cycle facilities that are undergoing decommissioning 

in FY 2008. Decommissioning removes radioactive 

contamination from buildings, equipment, ground water, 

and soil, achieving levels that permit the release of the 

property, with or without restrictions on its future use by the 

public. Th e NRC terminates the licenses for decommissioned 

facilities aft er the licensees demonstrate that the residual 

onsite radioactivity is within regulatory limits and suffi ciently 

low to protect the health and safety of the public and the 

environment. In addition to the uranium recovery sites 

undergoing decommissioning, the NRC conducts regulatory 

oversight at fi ve operational uranium recovery sites.

Th e U.S. Department of Energy’s license application for 

the proposed Yucca Mountain high-level waste repository 

is formally presented by DOE’s Edward Sproat (front, 

right), Director of the Offi ce of Civilian Radioactive Waste 

Management, to Michael F. Weber (front, left ), Director of 

NRC’s Offi ce of Nuclear Material Safety and Safeguards. 
39

Chapter 2 ■ Program Performance

In FY 2008, the NRC reviewed the applications for seven 

new, expanding, or restarting uranium recovery facilities, 

including initiating four environmental reviews. Th e NRC 

also reviewed the DOE remedial action plan for the Moab 

uranium tailings pile. Additionally, the NRC conducted 

a number of regulatory activities to help ensure the safe 

management and disposal of the low-level radioactive waste 

generated by users of radioactive materials, nuclear power 

plants, and other NRC licensees.

Th e NRC has overseen decommissioning activities at 

numerous complex materials sites and power reactor sites. 

In FY 2008, the NRC terminated the licenses or completed 

regulatory oversight activities at one power reactor, one 

research and test reactor, and six complex materials sites. 

Completion of decommissioning, environmental, and 

performance assessment activities enables sites to return to 

productive use while ensuring that residual radioactivity 

does not pose an unacceptable risk to the public. Th e agency 

completed NUREG-1888, “Environmental Impact Statement 

for the Reclamation of the Sequoyah Fuels Corporation Site 

in Gore, Oklahoma.”

In FY 2008, the NRC initiated an Annual Waste 

Incidental to Reprocessing Monitoring Report. Th e agency 

performed the fi rst Savannah River Site (SRS) Saltstone 

facility monitoring visit and issued an SRS monitoring report. 

Th e NRC also worked with DOE, the U.S. Department of 

State, and the U.S. Environmental Protection Agency (EPA) 

to develop an enhanced consultation process for future 

waste determinations at SRS. In FY 2008, the staff issued 

the Commission paper on the low-level waste strategic 

assessment.

SPENT FUEL STORAGE AND

TRANSPORTATION

Th e NRC ensures that reactor spent fuel is safely 

stored to support continued reactor operations and is safely 

transported when necessary. Th e NRC conducts licensing 

and certifi cation reviews to ensure (1) the compliance of 

storage designs with NRC regulations for the storage of 

reactor spent fuel and (2) the safe transport of domestic and 

international shipments of nuclear reactor spent fuel and 

other risk-signifi cant radioactive materials.

Shipments of radioactive materials are safely and 

securely transported each year within the United States. 

Several Federal agencies share responsibility for regulating 

the safety and security of those shipments. Th e NRC closely 

coordinates its transportation-related activities with those 

of the U.S. Department of Transportation (DOT) and, as 

appropriate, DOE. To help ensure the safety and security of 

both spent fuel storage and transportation, the NRC inspects 

vendors, fabricators, and licensees using transport container 

packages, spent fuel storage casks, and interim storage of 

spent fuel both at and away from reactor sites.

In FY 2008, the NRC completed 78 transport package 

design reviews and 11 storage container and installation 

design reviews. Th e NRC review of transportation and interim 

storage licensing requests ensures that shipments are made 

in NRC-approved packages that meet rigorous performance 

requirements and verifi es that spent fuel is safely stored, 

thereby enabling continued reactor and decommissioning 

operations. Th e NRC also conducted 18 inspections of 

activities related to material package certifi cate holders, spent 

2000

140

120

100

20

40

60

80

0

1998 1999 2003 2005 2007 2001 2002 2004 2006 2008

Transportation Container Design Reviews

Storage Container/Installation Design Reviews

STORAGE AND TRANSPORTATION DESIGN 

REVIEWS COMPLETED

Figure 19
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

40

fuel storage container certifi cate holders, and preoperational 

activities and initial operations at independent spent fuel 

storage facilities to ensure that casks are being fabricated 

according to approved safety requirements.

Th e NRC, DOE, and DOT cosponsored the 15th 

International Symposium on Packaging and Transportation 

of Radioactive Materials (PATRAM) in October 2007. 

PATRAM is an international symposium held to exchange 

information on all aspects of the packaging and 

transportation of radioactive materials. Th is conference 

brought together representatives of the domestically and 

internationally regulated communities.

In addition, the NRC will broaden the scope of the 

license term rulemaking related to 10 CFR Part 72, “Licensing 

Requirements for the Independent Storage of Spent Nuclear 

Fuel and High-Level Radioactive Waste, and Reactor-Related 

Greater Th an Class C Waste.”

Th is expanded-scope of this rulemaking will provide 

a streamlined process to resolve noncompliance issues for 

general licensees who have implemented new procedures for 

casks already in service.

In February 2008, the NRC staff from several offi ces 

presented topics and participated in discussions as part of 

an internal workshop on burnup credit. Burnup credit is 

the use of the reduced reactivity of spent fuel in criticality 

safety analyses. At the February workshop, the following 

was discussed: (1) criticality and isotopic validation, 

including examining available data to support the validation, 

(2) alternatives to burnup measurements for spent nuclear 

fuel, and (3) the risk related to the transport of spent 

nuclear fuel. In March 2008, the staff briefed the Advisory 

Committee on Nuclear Waste and Materials (ACNW&M) on 

the status of burnup credit. Additionally, the staff updated 

the Commission on its activities to expand the technical 

basis for burnup credit in spent fuel transportation packages 

in July 2008.

RESEARCH ACTIVITIES

Th e NRC’s safety research program evaluates and 

resolves safety issues for nuclear power plants and other 

facilities regulated by the NRC; provides the basis for 

regulatory changes and improvements; develops technical 

bases and tools to address emerging issues and new and 

advanced reactor designs; coordinates NRC activities related 

to consensus and voluntary standards for agency use; and 

assesses operational events to identify accident precursors. 

Th e agency conducts its research program to evaluate existing 

and potential safety issues; supply independent expertise, 

information, and technical judgments to support timely 

and realistic regulatory decisions; reduce uncertainties in 

risk assessments; and develop technical regulations and 

standards. When possible, the NRC engages in cooperative 

research with other Government agencies, the nuclear 

industry, universities, and international partners.

During the past year, the NRC research program has 

addressed key areas that support the agency’s safety mission, 

including verifi cation and validation of fi re safety models 

for nuclear power plant applications, completion of the 

development of a licensing strategy for the next generation 

nuclear plant, a proactive material degradation assessment 

of reactor system and pressure boundary components and 

their susceptibility to known and potential degradation 

mechanisms, research to support the licensing of new digital 

instrumentation and control systems, and research on seismic 

hazard issues to support the evaluation of new reactor sites 

and of the seismic safety of existing nuclear facilities.

Fire Safety

Th e NRC’s fi re safety research program supports 

regulatory activities related to fi re protection and fi re 

risk analysis. During FY 2008, this program focused on 

risk-informed fi re protection activities such as the fi re 

protection rule, 10 CFR 50.48(c), “National Fire Protection 

Association Standard NFPA 805,” and the fi re protection 

inspection signifi cance determination process. Work has 

also continued on fi re modeling activities, including a fi re 

modeling phenomena identifi cation and ranking table issued 

in the summer of 2008 and a fi re modeling users’ guide for 

nuclear power plant applications, scheduled to be released in 

FY 2009. Th e NRC also issued the fi nal NUREG/CR-6931, 
41

Chapter 2 ■ Program Performance

“Cable Response to Live Fire (CAROLFIRE),” which provides 

research results on cable confi gurations that were identifi ed as 

needing further study and gives the necessary data to develop 

a cable response model to reduce the uncertainty in predicting 

electrical cable damage in the performance of fi re modeling 

analyses. Th e NRC, in partnership with Electric Power 

Research Institute, has been developing human reliability 

analysis methodology to determine operator performance 

during fi re events. Th e NRC’s fi re safety research in FY 2008 

has also focused on fuel cycle issues, including potential “red 

oil” fi re hazards in the proposed mixed-oxide facility, and 

the performance of spent nuclear fuel transportation cask 

seals in beyond-design-basis fi res, such as the Harbor Tunnel 

fi re in Baltimore, MD.

Licensing of the Next Generation Nuclear Plant

Th e Energy Policy Act of 2005 (EPAct) specifi es that 

the Secretary of DOE and the NRC Chairman must jointly 

submit a licensing strategy for the next generation nuclear 

plant (NGNP) project within 3 years of enactment of the 

EPAct. Th e NGNP project consists of research, development, 

design, construction, licensing, and operation of a very-hightemperature prototype nuclear plant, which can be used to 

generate electricity, hydrogen, or both. In addition, the EPAct 

provides that the NRC shall have licensing and regulatory 

authority for any reactor authorized under the EPAct.

Th e jointly developed Report to Congress, submitted in 

August 2008, summarizes the licensing strategy developed 

by DOE and the NRC for the NGNP.

Materials Degradation

Th e NRC continues to conduct research on materials 

degradation to identify susceptible materials and components 

in light-water reactors. Th e NRC developed advanced fracture 

mechanics tools to demonstrate the adequate structural 

integrity of reactor coolant system pressure boundary 

components. Th e NRC performed extensive nondestructive 

and destructive examination of some examination of some 

of these components in decommissioned nuclear reactors to 

assess the progression of stress-corrosion damage mechanisms 

and to validate the advanced fracture mechanics models. Th e 

research was directly applied to demonstrate adequate safety 

margins in operating plants.

Digital Instrumentation and Control

Th e NRC’s research supports the licensing of new digital 

instrumentation and control systems planned for retrofi ts in 

operating reactors and for use in new reactors. Th e NRC is 

also actively engaged in ongoing cyber research to ultimately 

provide regulatory guidance and tools for evaluating digital 

systems for cyber vulnerabilities, including potential 

vulnerabilities in digital electrical protection relaying that 

may aff ect the electrical grid.

Seismic Research (Earth Sciences)

Th e NRC is conducting research on seismic hazard 

issues to support the siting of new reactors and the evaluation 

of the seismic safety of existing nuclear facilities. Th e agency 

is performing research to develop the next generation of 

probabilistic seismic hazard assessment methods for the 

central and eastern United States. In cooperation with 

academic institutions, other Federal and State agencies, and 

industry, the NRC has initiated a program to develop ground 

motion propagation and earthquake source zone models. Th e 

NRC has also undertaken a study of the potential tsunami 

hazards for the east and gulf coasts, in cooperation with the 

U.S. Geological Survey and the National Oceanographic and 

Atmospheric Administration.

State-of-the-Art Reactor Consequence 

Analysis

Th e NRC is developing a method to estimate more 

accurately the off site consequences from hypothetical severe 

accidents for operating commercial nuclear power plants in 

order to provide the public with more realistic information 

regarding the risk associated with commercial nuclear power 

plants. 

Th e NRC, the U.S. nuclear industry, and the international 

nuclear community have performed extensive severe accident 

research to improve their understanding of the phenomena of 

severe accidents; the performance of the plants’ systems and 

components under these conditions; the timing, magnitude, 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

42

and composition of the fi ssion product release; and the 

eff ectiveness of diff erent design and mitigative measures, 

including emergency preparedness.

Th e Commission directed the staff to produce a 

policy paper for a Commission decision regarding how 

guidance from the EPA’s Protection Action Guides 

manual could be incorporated into an improved economic 

consequence model. Th e Commission directed staff to use 

the Commission decision resulting from this policy paper 

to update a computer code with an improved economic 

consequence model. Th e resulting economic consequence 

model may be applied to the State-of-the-Art Reactor 

Consequence Analyses (SOARCA) results if so directed by 

the Commission.

EMERGENCY PREPAREDNESS AND

INCIDENT RESPONSE

Th e NRC emergency preparedness and incident response 

activities ensure that the agency can respond eff ectively 

to events at its licensees’ sites and that adequate protective 

measures can be taken to mitigate plant damage and to 

minimize possible radiation doses to members of the public. 

Th e agency is currently engaged in a rulemaking eff ort 

that will update 11 areas in the emergency preparedness 

regulations.

In FY 2008, the NRC worked with States to address 

replenishment of potassium iodide supplies as a supplement 

to public protective action plans within the 16 kilometers 

(10-miles) emergency planning zones around nuclear power 

plants. 

In FY 2008, the NRC completed the fi rst phase of the 

Emergency Response Data System modernization eff ort. 

Th is phase involved conversion from proprietary server and 

client soft ware to a commercial off -the-shelf system that can 

be accessed using a Web browser. Th e agency worked with 

aff ected States to ensure that the modernization eff ort did 

not adversely aff ect their ability to access data from facilities 

for which they have responsibility. Th e agency is currently 

negotiating memoranda of understanding to provide 

additional interested States with access to the Emergency 

Response Data System.

Th e agency completed numerous improvements to its 

Headquarters Operations Center, including installation of 

additional audiovisual equipment and the replacement of 

all computer workstations. Th e agency continues to pursue a 

strategy of modernization that incorporates lessons learned 

from use of the facility, as well as best practices from other 

agencies.

In FY 2008, NRC emergency responders participated in 

14 exercises with licensee sites, 6 of which involved the NRC 

Headquarters response team, including 1 fuel cycle facility 

exercise and 1 unannounced exercise. In addition, the NRC 

participated in two Governmentwide interagency exercises 

and one intraagency tabletop drill. Th e NRC has also 

attended six hostile-action-based emergency preparedness 

drills hosted voluntarily by nuclear power plants to 

demonstrate responses to the unique challenges posed by 

security-based events.

INTERNATIONAL ACTIVITIES

Th e NRC’s international responsibilities involve 

participation in activities that support U.S. Government 

compliance with international treaties and agreements; 

export and import licensing of nuclear facilities, equipment 

and materials; programs of bilateral nuclear cooperation 

and assistance; and support for multinational nuclear safety 

organizations such as the IAEA and the Organization for 

Economic Cooperation and Development’s Nuclear Energy 

Agency (NEA).

Notable accomplishments in FY 2008 in the area of 

international treaties and agreements include high-level 

NRC participation in the April 2008 Review Meeting 

of Contracting Parties to the Convention on Nuclear 

Safety, preparations for the April 2009 Review Meeting of 

Contracting Parties to the Joint Convention on the Safety of 

Spent Fuel Management and the Safety of Radioactive Waste 

Management, and Commission review of U.S. Government 

agreements for peaceful uses of nuclear energy with Turkey, 

Russia, India, and the United Emirates. Th e Commission 

also approved the proposed adherence of the United States 

to the Protocol Additional to the Agreement between the 
43

Chapter 2 ■ Program Performance

United States of America and the IAEA and is working with 

NRC licensees and through rulemaking to prepare for new 

reporting requirements.

In the area of export and import licensing, the NRC 

continued to work both domestically and internationally to 

enhance nuclear safety and security through the regulatory 

oversight of radioactive sources (see the section on nuclear 

materials users for specifi c examples). In May 2008, the NRC 

attended an IAEA open-ended meeting of technical and legal 

experts for sharing of information on lessons learned from 

States’ implementation of the Supplementary Guidance on 

Import and Export of Radioactive Sources. Th e United States 

and 36 other States provided papers and six States provided 

presentations on their experiences at this meeting, which was 

attended by 167 experts from 88 IAEA member states.

Accomplishments in the area of bilateral activities 

during FY 2008 include an information exchange agreement 

that the NRC concluded with the National Nuclear Safety 

Administration of China. Th is arrangement is the fi rst to 

include provisions with the Intellectual Property Rights 

(IPR) with China. Th e NRC also concluded an information 

exchange arrangement with the Vietnam Agency for Radiation 

and Nuclear Safety and Control (VARANSAC). Under this 

arrangement, the NRC will help VARANSAC develop its 

regulatory structure, exchange nuclear safety information, 

and assist in training technical staff . Additionally, the NRC 

signed a memorandum of cooperation (MOC) with the 

Canadian Nuclear Safety Commission (CNSC) for the Import 

and Export of Certain Radioactive Sources. Th is MOC was 

the fi rst of its kind for both the United States and Canada. 

It resolves regulatory diff erences between the NRC and the 

CNSC regarding the implementation of the IAEA Code of 

Conduct. Th e MOC is expected to be used as a model for other 

countries interested in entering into an agreement with the 

NRC regarding the import and export of certain radioactive 

sources. Th e NRC developed pilot reactor licensing-related 

assistance projects that focus on helping select countries 

of the Commonwealth of Independent States establish the 

nuclear safety and security regulatory infrastructure needed 

for the design, construction, and operation of new nuclear 

power plants. Th e NRC supported State Department-led 

eff orts to discuss their intentions and plans for developing 

nuclear power programs with countries of the Middle East. 

Th e NRC continues to support the development and 

implementation of programs focused on leveraging the 

knowledge and resources within the international regulatory 

community in the licensing of new reactor designs. In the 

multilateral context, the NRC continues its leadership role 

in the Multinational Design Evaluation Program (MDEP), 

through which regulatory authorities in over a dozen 

countries share expertise and resources in reviewing new 

and future reactor designs. Th e Nuclear Energy Agency 

(NEA) serves as secretariat for the multilateral MDEP 

activities. At its meeting in March 2008, the MDEP Policy 

Group approved continuation of the program, merging 

the current three stages into a single program. Some key 

accomplishments over the year include: the performance of 

the fi rst joint vendor inspection; initiation of a project with 

the code organizations to compare the pressure boundary 

codes of four member countries; and the establishment of 

the MDEP library to collect and share regulatory documents 

of common interest that describe design requirements and 

guidance, review process and inspection program of new 

reactors.

Th e NRC has worked both domestically and 

internationally to enhance nuclear safety and security 

through the regulatory oversight of radioactive sources. For 

FY 2008, the NRC received a signifi cant budget increase from 

Congress to support these eff orts, which enabled the NRC 

to expand ongoing or planned radioactive-source-related 

assistance eff orts for the regulatory authorities of the 

Commonwealth of Independent States, expand assistance 

provided to the Iraqi Radioactive Source Regulatory 

Authority, establish initial assistance eff orts for select 

regulatory authorities in Africa, and enhance support for 

and coordination with sources-related assistance activities 

conducted by the IAEA. Th e NRC has also worked with 

the Executive Branch agencies and the IAEA to develop 

international security guidance documents for materials 

control, accounting, and physical protection.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

44

Th e NRC participated in a working group with 

representatives of DOT and the CNSC to develop draft 

NUREG-1886, “Joint Canada-United States Guide for 

Approval of Type B(U) and Fissile Material Transportation 

Packages,” which was issued for comment in May 2008. Th is 

NUREG will provide the framework for U.S. and Canadian 

cooperation and acceptance of each country’s Type B(U) and 

fi ssile materials transportation package design approvals 

for export and import. Th e NRC expects to publish a fi nal 

regulation in FY 2009, aft er parallel review and comment in 

the United States and Canada.

Considerable eff ort has gone into bilateral inspection 

training activities, especially with regard to actions in 

Finland, Japan, South Korea, and Taiwan. In Finland, an 

NRC inspector spent two months observing at the Olkiluoto 3 

construction site and participated in a technical exchange 

concerning quality assurance. Th e NRC participated in a 

dual vendor inspection of Dousan Heavy Industries while in 

South Korea in May 2008. Also in May, the vendor inspection 

team performed a vendor inspection at Mitsubishi Heavy 

Industries in Japan. Additionally, an NRC inspector observed 

the Lungmen Nuclear Power Plant construction project for 

1 month in Taiwan. Future cooperation with these countries’ 

regulatory bodies is expected as more vendors become active 

in the nuclear market.

STRATEGIC GOAL 2: SECURITY

Ensure Adequate Protection in the Secure 

Use and Management of Radioactive Materials

Strategic Outcome

Th e NRC has the following strategic outcome associated 

with the agency’s goal to ensure the secure use and 

management of radioactive materials. Prevent any instances 

where licensed radioactive materials are used domestically in 

a manner hostile to the security of the United States.

RESULTS: In FY 2008, the NRC achieved its security 

goal strategic outcome.

PERFORMANCE MEASURES

Th e table on the following page lists the agency’s annual 

performance measures and their outcomes for the past 6 

years. Th e performance measures are used to determine 

the agency’s success in achieving its security goal. Th e NRC 

met all of the FY 2008 security goal performance measure 

targets.

Analysis of FY 2008 Results

1. Unrecovered losses or theft s: Th is measure includes any 

loss or theft of radioactive nuclear sources that the NRC 

has determined to be risk signifi cant. Th e measure tracks 

the NRC’s performance in ensuring that those radioactive 

sources that the agency has determined to be risk signifi cant 

for the public health and safety are accounted for at all 

times. Th e ability to account for these sources is vital to 

securing the Nation’s critical infrastructure from “dirty 

bomb” attacks or other means of radioactive material 

dispersal. Th ere was no loss or theft of radioactive nuclear 

material that the NRC determined to be risk signifi cant 

during FY 2008. 

2. Th eft s or diversion: Th is measure includes the ability of 

NRC-licensed facilities to maintain adequate protective 

capabilities to prevent theft or diversion of nuclear material 

or sabotage that could result in harm to the public health 

and safety. Th ere were no substantiated cases of theft or 

diversion of licensed, risk-signifi cant radioactive sources 

or formula quantities of special nuclear material or attacks 

that resulted in radiological sabotage during FY 2008.

3. Loss or inventory discrepancy: Th is measure includes 

ensuring that special nuclear material is accounted for 

at all times and that no losses of this material occur that 

could lead to the creation of an improvised nuclear device 

or other type of nuclear device. Furthermore, the measure 

tracks whether the systems in place at NRC-licensed 

facilities maintain accurate inventories of special nuclear 

material that the facilities process, use, or store. Th ere were 

no substantiated losses of formula quantities of special 

nuclear material or substantiated inventory discrepancies 
45

Chapter 2 ■ Program Performance

of formula quantities of special nuclear material that were 

caused by theft or diversion or by substantial breakdown 

of the accountability system during FY 2008.

4. Substantial breakdowns of physical security: Th is 

measure includes any breakdowns in access control, 

containment, or accountability systems that signifi cantly 

weakened the protection against theft , diversion, or 

sabotage for nuclear materials that the Commission has 

determined to be risk signifi cant. Th ere were no substantial 

breakdowns of physical security during FY 2008.

5. Signifi cant unauthorized disclosures: Th is measure 

includes signifi cant unauthorized disclosures of classifi ed 

or safeguards information that cause damage to national 

security or public safety. Th is measure tracks whether 

information that can harm national security (classifi ed 

information) or cause damage to the public health and 

safety (safeguards information) has been stored and used 

in such a way as to prevent its disclosure to the public, 

terrorist organizations, other nations, or personnel without 

a need to know. Th ere were no signifi cant disclosures that 

caused damage to national security or public safety during 

FY 2008.

SECURITY ACTIVITIES

Security Inspections

Th e NRC continued to maintain vigilant oversight of 

security in the nuclear industry and to implement the agency’s 

security procedures. Th ere were no substantial breakdowns 

of physical security at any commercial nuclear power plant. 

Th is was determined by the NRC’s implementation of its 

baseline security inspection program. Th is inspection eff ort 

resides within the “security cornerstone” of the agency’s 

Reactor Oversight Process. Th e security cornerstone focuses 

on the following fi ve key licensee performance attributes: 

access authorization, access control, physical protection 

systems, material control and accounting, and response to 

contingency events. Th rough the results obtained from all 

FY 2008 SECURITY GOAL PERFORMANCE MEASURES

Measure 2003 2004 2005 2006 2007 2008

1. Number of unrecovered losses or thefts of risk-significant 

radioactive sources is zero. 0 0 0 0 0 0

2. Number of substantiated cases of theft or diversion of licensed, 

risk-significant radioactive sources or formula quantities of 

special nuclear material, or attacks that result in radiological 

sabotage is zero.

 0 0 0 0 0 0

3. Number of substantiated losses of formula quantities of special 

nuclear material or substantiated inventory discrepancies of 

formula quantities of special nuclear material that are judged to 

be caused by theft or diversion or by substantial breakdown of the 

accountability system is zero.

 0 0 0 0 0 0

4. Number of substantial breakdowns of physical security or 

material control (i.e., access control containment or accountability 

systems) that significantly weaken the protection against theft, 

diversion, or sabotage is less than one.

0 0 0 0 0 0

5. Number of significant unauthorized disclosures of classified 

and/or safeguards information is zero. 000000
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

46

oversight activities, including baseline security inspections 

and performance indicators, the NRC determines whether 

licensees comply with requirements and can provide high 

assurance of adequate protection against the design-basis 

threat for radiological sabotage.

Th e NRC regularly carries out force-on-force inspections 

at commercial operating nuclear power plants as part of its 

comprehensive security program. Th e agency uses these 

inspections to evaluate and improve the eff ectiveness of 

plant security programs to prevent radiological sabotage. 

Th e agency conducts force-on–force inspections at least once 

every 3 years at each commercial nuclear power plant and 

fuel facility. 

Force-on-force inspections assess a nuclear power 

plant’s ability to defend against the design-basis threat, which 

characterizes the adversary against which plant owners must 

design appropriate defenses, such as physical protection 

systems and response strategies. A full force-on-force 

inspection, spanning 2 weeks, includes both tabletop drills 

and simulated combat between a mock commando-type 

adversary force and the nuclear plant’s security force. During 

the attack, the adversary force attempts to reach and damage 

key safety systems and components that protect the reactor’s 

core (containing radioactive fuel) or the spent nuclear 

fuel pool, potentially causing a radioactive release to the 

environment. Th e nuclear power plant’s security force seeks to 

stop the adversaries from reaching the plant’s equipment. In 

FY 2008, the agency completed 24 force-on-force inspections 

and submitted its third annual Report to Congress on the 

results of the security inspection program. 

Th e agency also pursued recommended enhancements 

to its allegation and inspection programs based on a 

lessons-learned review that followed an agency investigation 

into reports of inattentive security offi cers at the Peach 

Bottom nuclear power plant in Pennsylvania.

Security Rulemaking

During FY 2008, the NRC continued security 

rulemaking activities to increase the stability of the security 

requirements that it has placed on its licensees. Th e proposed 

security rulemakings are intended to make security practices 

generically applicable and generically acceptable security 

practices. Th e rulemakings address the lessons learned from 

requirements imposed by Orders on licensees following the 

events of September 11, 2001, as well as addressing lessons 

learned from operating experience and force-on-force 

exercises. Th e NRC has nearly completed the rulemakings for 

10 CFR Part 73, “Physical Protection of Plants and Materials,” 

on security requirements and the requirements for new 

reactors to assess aircraft impact. Th e agency is developing 

draft regulatory guides to support these rulemakings. 

Th is proposed rule was published in the Federal Register 

in October 2006 (71 FR 62664). Th e fi nal rule will fulfi ll 

the Commission’s intent to complete a thorough review 

of physical protection program requirements and orders 

issued aft er September 11, 2001, and make them generically 

applicable security requirements. Th e agency completed 

the fi tness-for-duty rule, proposed revisions to the access 

authorization and physical protection rule, published a 

fi nal rule revising the design-basis threats, and published 

a proposed rule for Nuclear Materials Management and 

Safeguards System database reporting. Th e agency also 

implemented interim fi ngerprinting requirements. Other 

signifi cant additions to the security regulations include 

requirements for cyber security, mitigative strategies and 

response procedures for potential or actual aircraft attacks, 

and assessment and management of the interface between 

safety and security.

In addition, the agency made signifi cant progress in 

the development of security infrastructure for new reactor 

licensing. Th e infrastructure includes the development 

of standard review plans for early site permits, design 

certifi cation, and combined operating licenses as well as 

security assessment format and content guides. Th e NRC 

continued interactions with the U.S. Department of Homeland 

Security (DHS) on security infrastructure through periodic 

meetings. Th e NRC also completed its initial security review 

for the design certifi cation of the General Electric ESBWR, 

provided technical support for a draft combined operating 

license regulatory guide, and completed its security review of 

the early site permit for the Vogtle plant. 

Th e NRC continued to improve and formalize its working 

relationships with other Federal agencies. Th ese activities 
47

Chapter 2 ■ Program Performance

included the development of a memorandum of agreement 

between the NRC and the U.S. Department of Energy on the 

harboring of transport vehicles at NRC-licensed sites. Th e 

NRC recognizes the importance of a coordinated approach 

to security among the agencies in the Federal Government 

charged with homeland security responsibilities.

Control of Radioactive Sources

In FY 2008, the NRC maintained its eff orts to identify 

and mitigate the risk of terrorist threats through enhanced 

security and controls for the use, storage, and transportation 

of byproduct materials and spent nuclear fuel. In collaboration 

with the DHS, DOE, and other Federal, State, and local 

agencies, the NRC continued to assess the potential use of 

risk-signifi cant sources in radiological dispersal devices and 

to coordinate eff orts to enhance radioactive source protection 

and security. 

Th e NRC worked with Agreement States to implement 

requirements imposed on licensees that enhance the 

security and control of risk-signifi cant radioactive material, 

including development of an inspection program to verify 

the implementation of these measures. In FY 2008, the NRC 

and Agreement States issued orders or other regulatory 

requirements to these licensees to require fi ngerprinting 

for those persons with unescorted access to risk-signifi cant 

radioactive material. Th e NRC also continued activities 

to implement the National Source Tracking rule, which 

requires licensees to report information that will be 

maintained in a database for tracking possession of risksignifi cant radioactive sources. Th e rule requires NRC and 

Agreement State licensees to report transactions involving 

the manufacture, transfer, receipt, and disposal of nationally 

tracked sources (i.e., Category 1 and 2 sources from the IAEA 

Code of Conduct for the Safety and Security of Radioactive 

Sources). In response to two U.S. Government Accountability 

Offi ce (GAO) reports recommending the development of a 

tracking system for radioactive sources, the NRC developed 

and annually updates an interim database of nationally 

tracked sources. In response to a GAO investigation of the 

ease of obtaining a new license for radioactive sources, the 

NRC and Agreement States have implemented a process to 

screen new license applications or applicants to determine, 

with reasonable assurance, that the requested materials will 

be used as intended. 

Th e NRC continued its signifi cant participation in 

implementing portions of the International Atomic Energy 

Agency Code (IAEA) of Conduct on the Safety and Security 

of Radioactive Sources, as well as its participation in IAEA 

committees that are developing guidance documents for 

the security of radioactive sources during use, storage, and 

transport. Th e NRC’s involvement in these committees 

enhances security and public safety and contributes to 

international and domestic regulatory consistency. Under 

10 CFR Part 110, which was revised in December 2005, the 

NRC issued 50 licenses for the export of Category 1 and 2 

materials as defi ned by the Code. Th e NRC is also developing 

plans to expand the National Source Tracking System to 

include Category 3 sources.

In FY 2008, the agency conducted an operational 

readiness review of the Enrichment Technology U.S., Inc., 

(ETUS) location at the Louisiana Energy Services (LES) site 

in Eunice, NM. Th e purpose of the readiness review was to 

determine if ETUS’s program for the protection of classifi ed 

matter was consistent with its NRC-approved Standard 

Practice Procedures Plan (SPPP) for the protection of 

Gary Holahan, Deputy Director, Offi ce of New Reactors, 

participating in an emergency preparedness exercise at the 

Waterford Nuclear Power Plant near New Orleans, LA.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

48

classifi ed matter. Based on the results of the review, the NRC 

determined that the ETUS classifi ed matter program was in 

compliance with its approved SPPP. Th erefore, the NRC issued 

a facility security clearance for the use and storage of classifi ed 

matter up to and including confi dential-restricted data. Th e 

agency also conducted a protection of classifi ed matter review 

of the LES International Standards Organization Container 

Storage (ISO) Pad in order to determine if the ISO Pad was 

suffi cient for the temporary storage of classifi ed matter and 

participated in an accreditation of the LES classifi ed CROON 

Training network with the Department of Energy. Th e ISO 

Pad was built and added to the LES SPPP aft er NRC granted 

LES its initial facility security clearance. Th erefore, the NRC 

performed an on site review of the LES ISO Pad to determine 

if it met the requirements for the protection of classifi ed 

matter as described in the LES SPPP. Based on the ISO Pad 

review, the NRC notifi ed LES that the Pad was approved 

for the temporary storage of classifi ed matter. Th e agency 

also conducted an operational readiness review of General 

Electric-Hitachi’s Separation of Isotopes by Laser Excitation 

(Silex) Test Loop Facility in Wilmington, NC, and Textron 

Defense Systems, a contractor to General Electric-Hitachi, 

who will be milling and refurbishing classifi ed parts. In 

both cases, the agency granted facility security clearances for 

the use and storage of classifi ed matter up to and including 

secret-restricted data. 

In addition to operational readiness reviews that were 

conducted in support of classifi ed storage programs for 

FY 2008, the agency also conducted safeguards information 

program reviews in support of the four advanced reactor 

vendors. Th e NRC conducted hands-on inspections at six 

diff erent facilities operated by the four vendors in Virginia, 

Pennsylvania, North Carolina, and Japan and accredited the 

day-to-day safekeeping and storage practices for safeguards 

information. Th e safeguards information program reviews

are intended to ensure compliance capabilities exist as 

directed by NRC information security standards. An 

engineering company in North Carolina was also visited by 

the NRC to evaluate its request for a safeguards information 

program.

SPENT FUEL

In FY 2008, the agency completed six security plan 

reviews for proposed independent spent fuel storage 

installations and issued security orders to fi ve new 

independent spent fuel storage installation licensees. 

Th e NRC also reviewed and approved fi ve spent fuel 

transportation routes.

ORGANIZATIONAL EXCELLENCE OBJECTIVES

Openness, Effectiveness, and 

Operational Excellence

Th e agency’s Organizational Excellence objectives 

of Openness, Eff ectiveness, and Operational Excellence 

and their associated performance measures are shown 

below, as well as descriptions of agency actions that will be 

undertaken to address those measures that did not meet 

their targets. Th is will be the last year these objectives and 

performance measures will be reported in the Performance 

and Accountability Report since they are being discontinued 

aft er FY 2008.

Openness Objective measures not met and actions to 

resolve problem. 

1b. & 1c. Th e requirements were not met. Th e agency 

continues to review internal procedures to improve 

agency timeliness in providing documents to 

the public. Internal processes are currently being 

reviewed, and improvements are being implemented 

to meet the timelines measure. 

Eff ectiveness Objective measures not met and action to 

resolve problem.

1.a. Th ere has been an increasing trend in the number of 

complex licensing action requests, reduced number 

of lower complexity actions such as orders, and 

reductions in effi ciency caused by new staff and loss 

of experienced staff to attrition and movement within 

the agency. NRR did not see expected results of 

process enhancements because of the trend in more 

complex safety reviews.
49

Chapter 2 ■ Program Performance

ORGANIZATIONAL EXCELLENCE OBJECTIVES AND ASSOCIATED PERFORMANCE MEASURES

Measure 2003 2004 2005 2006 2007 2008

Objective 1: Openness

1. Eighty-eight percent of selected openness output measures 

(below) achieve performance targets. New measure in FY 2006 50% 66% 80%

a. Ninety percent of stakeholder formal requests for information 

receive an NRC response within 60 days of receipt. New measure in FY 2006 100% 100% 100% 

b. Ninety percent of nonsensitive, unclassified regulatory 

documents generated by the NRC and sent to the agency’s 

Document Processing Center are released to the public 

by the 6th working day after the date of the document.

New measure in FY 2006 63% 75% 82%

c. Ninety percent of nonsensitive, unclassified regulatory 

documents received by the NRC are released to the public 

by the 6th working day after the document is added to the 

ADAMS main library.

New measure in FY 2006 77% 87% 66%

d. The NRC achieves a 71% user satisfaction score for the 

agency’s public Web site greater than or equal to the Federal 

Agency Mean score based on results of the yearly American 

Customer Satisfaction Index for Federal Web sites.

New measure in FY 2006 70% 71% 71%

e. Complete 50% of Freedom of Information Act requests in 

20 days (median). New measure in FY 2006 61% 67% 71%

f. Issue ninety percent of Director’s Decisions under 10 CFR 2.206, 

“Requests for Action under this Subpart,” within 120 days. New measure in FY 2006 100% 100% 100%

g. Make 90% of final significance determination 

process determinations within 90 days for all potentially 

greater-than-green findings.

New measure in FY 2006 92% 100% 100%

h. Ninety percent of stakeholders believe they were given sufficient 

opportunity to ask questions or express their views.

New measure in FY 2006 90% 96% 97%

Operational Excellence Objective measures not met and 

actions to resolve problems. 

1.a. Th e agency has experienced a large growth in FTEs 

within the last year due to the New Reactor Program 

ramping up to receive applications from licensees 

to develop and construct new reactors. As a result, 

additional budget staff was hired to manage the 

program, which resulted in the agency exceeding the 

target for this measure. However, the Offi ce of the Chief 

Financial Offi cer is currently developing a new budget 

process as directed by the Commission. 

1.b. Th e NRC has initiated several actions to improve this 

measure. Th e Offi ce of Human Resources has published 

“Staffi ng Process Enhancements” to speed up the hiring 

process. Additionally, a new element and standard 

covering the 45-day measure has been created for all 

Senior Executive Service positions. 

 Another signifi cant issue in meeting the standard was 

the high volume of NRC hiring. For FY 2008, 521 new 

employees were hired. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

50

Measure 2003 2004 2005 2006 2007 2008

i. At least 90% of Category 1, 2, and 3 meetings on 

regulatory issues for which public notices are issued at least 

10 days in advance of the meeting.

New measure in FY 2006 92% 93% 90%

j. Complete all of the key stakeholder and public interactions for 

the reactor performance assessment cycle. New measure in FY 2008 Met

Objective 2: Effectiveness

1. Seventy percent of selected processes deliver efficiency 

improvements. New measure in FY 2006 25% 60% 80%

a. Reduce the average age at closure for licensing actions by 2.5%. New measure in FY 2008 Not

Met

b. At the rate of one per year, Category III license renewal 

applications will be considered for a 40-year license. New measure in FY 2006 NotMet

Not

Met Met

c. Improve the timeliness of the review process for nuclear power 

reactor License Termination Plans by at least 30% over 

3 years (FY 2006-FY 2008) as compared to the historical 

average. 

New measure in FY 2006 38%

d. Implement process enhancements to permit improvement for 

the reactor rulemaking petition timeliness by 2.5%. New measure in FY 2007 5% Met

e. Reduce the staff cost for letters to DOE by 5%. New measure in FY 2008 40% 

2. No more than one instance per program where licensing or 

regulatory activities unnecessarily impede the safe and beneficial 

uses of radioactive materials. 

New measure in FY 2006 0 0 0

Objective 3: Operational Excellence

1. Ninety percent of selected support processes deliver efficiency 

improvements. New measure in FY 2006 50% 0% 0%

a. Five percent reduction of agency FTE used to develop and 

submit the FY 2008 and FY 2009 performance budgets. New measure in FY 2006 0% 2%*

increase 

6%

increase

b. Issue offer letter 80% of the time within 45 work 

days of the closing date of the announcement. New measure in FY 2006 67% 31% 56%

2. Eighty percent of selected NRC management programs deliver 

intended outcomes. 

New measure in 

FY 2005 60% 80% 100% 100%

a. Infrastructure management program: 80% of activities achieve 

their targets.

New measure in 

FY 2005 100% 100% 100% 100%

b. Financial Management & Budget and Performance Integration 

program: 70% of activities achieve their targets.

New measure in 

FY 2005 67% 67% 88% 100%

c. Expanded electronic government program: 75% of activities 

achieve their targets.

New measure in 

FY 2005 50% 75% 75% 75%

d. Management of Human Capital program: 80% of activities 

achieve their targets.

New measure in 

FY 2005 80% 100% 80% 100%

* FY 2007 PAR showed 12%. The data were error and recalculated to be 2%.
51

Chapter 2 ■ Program Performance

COSTING TO GOALS, PART 

REVIEWS, AND PROGRAM 

EVALUATIONS

COSTING TO GOALS

Th e NRC is working to improve its cost management 

capabilities to better align its costs with desired outcomes. 

Th is year’s Performance and Accountability Report presents 

the full cost of achieving the safety and security goals for 

two of the agency’s programs, Nuclear Reactor Safety and 

Nuclear Materials Safety. Th e cost of achieving the agency’s 

safety goal was $904.2 million, and the cost of achieving the 

agency’s security goal was $39.9 million (see Figure 20).

PROGRAM ASSESSMENT RATING TOOL

Th e Offi ce of Management and Budget (OMB) has 

conducted joint reviews with the NRC using the program 

assessment rating tool (PART) for all seven of the agency’s 

major activities. Th e Offi ce of Management and Budget has 

scored six of the programs as eff ective, the highest rating 

available, and one as moderately eff ective. Th ere were no 

PART reviews in FYs 2006 and 2008. Th e following table 

shows the results of the NRC PART reviews:

NRC PART REVIEW RESULTS

Program Year Part Rating

Reactor Inspection and 

Performance Assessment FY 2003 Effective

Fuel Facilities Licensing and 

Inspection FY 2003 Effective

Nuclear Materials Users 

Licensing and Inspection FY 2004 Effective

Reactor Licensing FY 2005 Moderately 

Effective

Spent Fuel Storage and 

Transportation Licensing and 

Inspection

FY 2005 Effective

Decommissioning and 

Low-Level Waste FY 2007 Effective

High-Level Waste Repository FY 2007 Effective

PROGRAM EVALUATIONS

Th e NRC conducted a number of important 

self-assessments of its regulatory operations in FY 2008. Th e 

Offi ce of Nuclear Reactor Regulation performed evaluations 

on operating licensing program, Reactor Oversight Process, 

and management work planning process. 

Operator Licensing Program

A NRC review team evaluated the overall eff ectiveness of 

the Region II and Region III operator licensing programs and 

their adherence to the guidance contained in NUREG-1021, 

“Operator Licensing Examination Standards for Power 

Reactors,” and other policy documents. Th e operator 

licensing programs are broken down into seven functional 

areas that are rated as “signifi cant strength,” “satisfactory,” 

or “needs improvement.” Overall, the operator licensing 

program in both Region II and Region III are being conducted 

in accordance with the examination standards. For both 

regions, six functional areas were assessed as satisfactory; 

one area—licensing assistant activities—was evaluated as a 

signifi cant strength. Th e review team also commended the 

NRC SAFETY AND SECURITY COSTS

(In Millions)

Figure 20

Safety Security

$904.2

$39.9
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

52

regions’ eff orts to improve the quality of their Agencywide 

Documents Access and Management System examination 

packages.

Reactor Oversight Process

Th e NRC completed the 2007 Reactor Oversight 

Process (ROP) self-assessment in April 2008. Th e report, 

SECY-08-0046, “Reactor Oversight Process Self-Assessment 

for Calendar Year 2007,” is available through the NRC public 

Web site.

Th e results of the CY 2007 self-assessment indicated that 

the ROP met its program goals and achieved its intended 

outcomes. Th e staff found the ROP objective, risk informed, 

understandable, and predictable, and the ROP met the agency 

goals of ensuring safety, openness, and eff ectiveness as listed in 

the NRC’s Strategic Plan for Fiscal Years (FY) 2004–2009. Th e 

NRC staff maintained its focus on stakeholder involvement 

and continued to improve various aspects of the ROP. Th e 

staff implemented several ROP improvements in CY 2007 to 

address issues raised by the Commission, recommended by 

independent reviews, or obtained from internal and external 

stakeholder feedback.

Th e NRC inspection and assessment program 

independently verifi ed that nuclear power plants were 

operated safely and securely. During the year, the staff made 

several improvements to the ROP, including the timeliness 

of signifi cance determination process results, implementing 

enhancements to more fully address safety culture and 

oversight of licensees with performance problems, realigning 

inspection resources to improve eff ectiveness, and making 

changes to some performance indicators to better identify 

declining safety performance. However, the staff recognizes 

the need for further enhancements to the ROP and will 

continue to actively solicit input from the NRC’s internal and 

external stakeholders. For example, the staff plans to explore 

ways in which substantive cross-cutting issues, traditional 

enforcement actions, and other insights could be used more 

eff ectively in the ROP.

Management Work Planning Process

In July 2007, the NRC engaged an independent 

management consulting fi rm to help assess its centralized 

work planning (CWP) eff orts and make recommendations 

to improve the eff ectiveness of those eff orts. Th e CWP is a 

signifi cant initiative to implement CWP and project support 

within the Offi ce of Nuclear Reactor Regulation (NRR). Its 

initial inception in 1999 changed the way many projects were 

initiated and managed in the NRR. Th e CWP eff ort was 

established with the following goals: 

• Provide clear and consistent expectations and 

accountability for NRR work processes and products. 

• Provide up-to-date, accessible workload information 

for planning, budgeting, and measuring work and 

organizational performance. 

• Optimize the effi ciency of NRR work processes by 

reducing process variances. 

• Establish objective means of allocating and tracking the 

workload so that NRR resources are fully leveraged. 

Th e consultants concluded that while the CWP eff ort 

has had a positive impact on project quality and execution, 

the agency can improve the quality of work and project 

planning, tracking, and management within NRR. Th e 

consultants recommended that the agency expand the 

organizational capacity of the CWP by adding additional 

project management support and business intelligence 

capabilities. In addition, the consultant recommended the 

agency migrate from its current information technology 

systems to an enterprise project management team.

DATA SOURCES AND QUALITY

Th e NRC’s data collection and analysis methods are 

driven largely by the regulatory mandate that Congress 

entrusted to the agency. Specifi cally, the NRC’s mission is to 

regulate the Nation’s civilian use of byproduct, source, and 

special nuclear materials to ensure adequate protection of public 

health and safety, protect the environment, and promote the 

common defense and security. In undertaking this mission, 

the NRC oversees nuclear power plants, nonpower reactors, 

nuclear fuel facilities, interim spent fuel storage, radioactive 
53

Chapter 2 ■ Program Performance

material transportation, disposal of nuclear waste, and the 

industrial and medical uses of nuclear materials. Section 208 

of the Energy Reorganization Act of 1974, as amended, 

requires the NRC to inform Congress of incidents or events 

that the Commission determines to be signifi cant from the 

standpoint of public health and safety. To comply with the 

Energy Reorganization Act and to determine which events 

should be considered signifi cant, the NRC developed the 

abnormal occurrence criteria. Based on those criteria, 

the NRC prepares the annual NUREG-0090, “Report to 

Congress on Abnormal Occurrences,” which is available 

on the agency’s public Web site at http://www.nrc.gov/

reading-rm/doc-collections/nuregs/staff /sr0090.

One important characteristic of this report is that the 

data presented normally originate from external sources 

such as Agreement States and NRC licensees. Th e NRC 

fi nds these data credible because (1) agency regulations 

require Agreement States, licensees, and other external 

sources to report the necessary information; (2) the NRC 

maintains an aggressive inspection program that, among 

other activities, includes auditing licensee programs and 

evaluating Agreement State programs to ensure that they 

are reporting the necessary information as required by the 

agency’s regulations; and (3) the agency has established 

procedures for inspecting and evaluating licensees. Th e NRC 

employs multiple database systems to support this process, 

including the Licensee Event Report Search System, the 

Accident Sequence Precursor Database, the Nuclear Materials 

Events Database, and the Radiation Exposure Information 

Report System. In addition, nonsensitive reports submitted 

by Agreement States and NRC licensees are available to the 

public through the NRC’s Agencywide Documents Access 

and Management System accessible through the agency’s 

public Web site http://www.nrc.gov. 

As stated above, the NRC has established procedures for 

the systematic review and evaluation of events reported by 

both NRC and Agreement State licensees. Th e NRC’s objective 

is to identify events that are signifi cant from the standpoint of 

public health and safety, based on criteria that include specifi c 

thresholds. Th e NRC verifi es the reliability and technical 

accuracy of event information reported to the agency. Th e 

NRC periodically inspects licensees and reviews Agreement 

State programs. In addition, the NRC headquarters, regional 

offi ces, and Agreement States hold periodic conference calls 

to discuss event information. Events identifi ed as meeting 

the abnormal occurrence criteria are validated and verifi ed 

before being reported to Congress.

DATA SECURITY

Data security is ensured by the agency’s automated 

information security program, which provides 

administrative, technical, and physical security measures 

to protect the agency’s information, automated information 

systems, and information technology infrastructure. 

Specifi cally, these measures include the policies, processes, 

and technical mechanisms used to protect classifi ed 

information, unclassifi ed safeguards information, and 

sensitive unclassifi ed information that is processed, stored, 

or produced on the agency’s automated information systems. 

Data security for information maintained outside the 

NRC’s infrastructure is provided by the hosting contractor 

or organization.

PERFORMANCE DATA COMPLETENESS

AND RELIABILITY

To manage for results, it is essential for the agency 

to assess the completeness and reliability of the NRC 

performance data. Comparisons of actual performance 

with the projected levels are possible only if the data 

used to measure performance are complete and reliable. 

Consequently, the Reports Consolidation Act of 2000 

requires the Chairman of the NRC to assess the completeness 

and reliability of the performance data used in this report. Th e 

process for ensuring the data is complete and reliable is that 

offi ces are required to complete a template for submission to 

the Chief Financial Offi cer for every performance measure, 

certifying the data submitted has been approved by the 

applicable Offi ce Director. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

54

Waterford Nuclear Power Plant in St. Charles Parish, Killona, LA.

DATA COMPLETENESS

Th e agency considers data to be complete if the agency 

reports actual performance data for every performance 

goal and indicator in the annual plan. Actual performance 

data include preliminary data if those are the only data 

available when the agency sends its report to the President 

and Congress. Th e NRC has reported actual or preliminary 

data for every strategic and performance goal measure; 

consequently, the data presented in this report meet these 

requirements for data completeness.

DATA RELIABILITY

Th e agency considers data to be reliable when agency 

managers and decisionmakers do not demonstrate either a 

refusal or a marked reluctance to use the data in carrying out 

their responsibilities. Th e data presented in this report meet 

this requirement for data reliability, since NRC managers and 

senior leaders regularly use the reported data in the course of 

their duties.

Photo Courtesy of the NRC Photo Library.
Chapter 3 ■ Financial Statements and Auditors’ Report

CHAPTER 3

FINANCIAL STATEMENTS

AND AUDITORS’ REPORT
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

56

NRC staff visiting the proposed high-level waste repository site at Yucca Mountain, NV.

Photo Courtesy of the NRC Image Library.
57

Chapter 3 ■ Financial Statements and Auditors’ Report

A MESSAGE FROM THE 

CHIEF FINANCIAL OFFICER

I am pleased to present the fi nancial statements for the U.S. Nuclear Regulatory Commission 

(NRC) fi scal year (FY) 2008 Performance and Accountability Report. For the fi ft h consecutive 

year, an independent auditor has rendered an unqualifi ed opinion on the NRC fi nancial 

statements. Th is past year, the NRC successfully implemented the corrective actions necessary 

to improve its information system security controls and eliminated the last remaining internal 

control material weakness identifi ed during prior audits.

Furthermore, the NRC continues to meet the requirements of Offi ce of Management and 

Budget (OMB) Circular A-123, Appendix A, “Internal Controls Over Financial Reporting.” During FY 2008, NRC assessed 

nine key processes and tested 56 controls in fi ve of these key processes to meet the OMB circular requirements. For the third 

consecutive year, no material weaknesses were identifi ed for NRC fi nancial reporting.

During FY 2008, the agency continued implementing the President’s Management Agenda and further improving its 

fi nancial systems and processes. Some specifi c NRC accomplishments include the following:

• Outsourcing the NRC payment function to a shared service provider, reducing transaction costs, and improving payment 

accuracy and timeliness.

• Completing the Federal Information Security Management Act (FISMA) certifi cation and accreditation for the NRC time 

and labor system.

• Establishing an educational grant program payment process with the U.S. Department of the Treasury’s Automated 

Standard Application for Payment System that allows award recipients more timely access to grant funds.

• Implementing a streamlined process with a new information technology system for budget formulation that resulted in 

improved transparency and coordination during the FY 2010 budget development process.

In the future, the NRC plans to complete additional initiatives to achieve its fi nancial management goals of improving 

controls while providing more timely and accurate information to stakeholders. Th e most signifi cant initiative in this area 

involves the replacement of several legacy systems with an integrated Web-based fi nancial management system hosted by a 

Government shared service provider. In FY 2008, NRC established an interagency agreement with a shared service provider 

and is currently defi ning system requirements working towards implementing this new core fi nancial system by FY 2011. In 

conjunction with this eff ort, the NRC is also streamlining its business processes and modernizing its time and labor system to 

create more robust and user-friendly systems. Th ese process changes and replacement systems will improve the NRC’s effi ciency 

and provide agency managers with substantially greater access to fi nancial information for improved decisionmaking. 

Th e NRC is proud of its fi nancial management accomplishments in FY 2008 and looks forward to continued improvement 

in FY 2009 and beyond. Th e agency takes its responsibility for eff ective stewardship of taxpayer money very seriously. Th e NRC 

is committed to eff ective and effi cient management of Government resources to achieve its strategic goals for ensuring the safety 

and security of the Nation’s civilian use of nuclear materials. 

J.E. Dyer

Chief Financial Offi cer

November 14, 2008
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

58

PRINCIPAL STATEMENTS

BALANCE SHEET (IN THOUSANDS)

As of September 30, 2008 2007

Assets

Intragovernmental

Fund balance with Treasury (Note 2) $ 393,478 $ 356,399 

Accounts receivable (Note 3) 4,692 5,228 

Other—advances and prepayments 4,121 3,244 

Total intragovernmental 402,291 364,871 

Accounts receivable, net (Note 3) 116,684 88,666 

Property and equipment, net (Note 4) 35,475 31,832 

Other 28 39 

Total Assets $ 554,478 $ 485,408 

Liabilities

Intragovernmental

Accounts payable $ 12,360 $ 9,038 

Other (Note 5) 4,844 110,797 

Total intragovernmental 17,204 119,835 

Accounts payable 41,763 18,672 

Federal employee benefi ts (Note 6) 7,059 6,833 

Other (Note 5) 70,948 58,877 

Total Liabilities 136,974 204,217 

Net Position

Unexpended appropriations 289,269 254,027

Cumulative results of operations (Note 8) 128,235 27,164 

Total Net Position 417,504 281,191 

Total Liabilities and Net Position $ 554,478 $ 485,408 

Th e accompanying notes to the principal statements are an integral part of this statement.
59

Chapter 3 ■ Financial Statements and Auditors’ Report

STATEMENT OF NET COST (IN THOUSANDS)

For the years ended September 30, 2008 2007

Nuclear Reactor Safety and Security

Gross costs $ 705,832 $ 582,212 

Less: Earned revenue (725,840) (612,769)

Total Net Cost of Nuclear Reactor Safety and Security (Note 9) (20,008) (30,557)

Nuclear Materials and Waste Safety and Security

Gross costs 238,219 204,495 

Less: Earned revenue (71,740) (80,490)

Total Net Cost of Nuclear Materials and Waste Safety and 

Security (Note 9) 166,479 124,005 

Net Cost of Operations $ 146,471 $ 93,448 

Th e accompanying notes to the principal statements are an integral part of this statement.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

60

STATEMENT OF CHANGES IN NET POSITION (IN THOUSANDS)

For the years ended September 30, 2008 2007

Cumulative Results of Operations

Beginning Balance $ 27,164 $ 18,899

Budgetary Financing Sources

Appropriations used 98,172 46,646

Non-exchange revenue (Note 11) - -

Transfers-in/out without reimbursement 29,025 45,826

Other Financing Sources

Imputed fi nancing from costs absorbed by others (Note 11) 26,911 27,627

Other—Revenue from excess collections 93,434 (18,386)

 Total Financing Sources 247,542 101,713

Net Cost of Operations (146,471) (93,448) 

Net Change 101,071 8,265

Cumulative Results of Operations $ 128,235 $ 27,164

Unexpended Appropriations 

Beginning Balance $ 254,027 $ 193,694

Adjustments:

 Change in accounting principle (Note 14) - (2,838)

Beginning Balance, as adjusted 254,027 190,856

Budgetary Financing Sources 

Appropriations received 133,414 109,817

Appropriations used (98,172) (46,646)

Total Budgetary Financing Sources 35,242 63,171

Total Unexpended Appropriations 289,269 254,027

Net Position $ 417,504 $ 281,191

Th e accompanying notes to the principal statements are an integral part of this statement.
61

Chapter 3 ■ Financial Statements and Auditors’ Report

STATEMENT OF BUDGETARY RESOURCES (IN THOUSANDS)

For the years ended September 30, 2008 2007

Budgetary Resources

Unobligated balance, brought forward, October 1 $ 72,160 $ 74,255 

Recoveries of prior year unpaid obligations

 Actual 21,937 5,691 

Budget authority

 Appropriation 926,074 824,893 

 Spending authority from off setting collections

 Reimbursements earned—Collected 6,709 4,381 

 Reimbursements earned—Change in receivables 222 371 

 Change in unfi lled customer orders—Advance received 1,645 1,433 

 Change in unfi lled customer orders—Without advance 65 (93)

 Subtotal—Spending authority from off setting collections 8,641 6,092 

Total Budgetary Resources $ 1,028,812 $ 910,931 

Status of Budgetary Resources

Obligations incurred (Note 12)

 Direct $ 941,942 $ 834,126 

 Reimbursable 7,880 4,645 

Subtotal 949,822 838,771 

Unobligated balance

 Apportioned 69,024 45,438 

 Exempt from apportionment 9,853 26,722 

Subtotal 78,877 72,160 

Unobligated balance, not available 113 -

Total Status of Budgetary Resources $ 1,028,812 $ 910,931 

Change in Obligated Balance

Obligated balance, net

Unpaid obligations brought forward, October 1 $ 270,894 $ 202,446 

Obligations incurred, net 949,822 838,771 

Gross outlays (884,004) (764,354)

Recoveries of prior year unpaid obligations, actual (21,937) (5,691)

Change in uncollected customer payments, from Federal sources (287) (278)

Obligated balance, net, end of period

 Unpaid obligations 318,626 274,745 

 Uncollected customer payments, from Federal sources (4,138) (3,851)

Total unpaid obligated balance, net, end of period $ 314,488 $ 270,894 

Net outlays

 Gross outlays $ 884,004 $ 764,354 

 Off setting collections (8,354) (5,814)

 Distributed off setting receipts (763,640) (669,245)

 Net Outlays $ 112,010 $ 89,295 

Th e accompanying notes to the principal statements are an integral part of this statement.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

62

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (ALL TABLES ARE PRESENTED IN THOUSANDS)

A. REPORTING ENTITY

Th e U.S. Nuclear Regulatory Commission (NRC) is an independent regulatory agency of the Federal Government that 

was created by the U.S. Congress to regulate the Nation’s civilian use of byproduct, source, and special nuclear materials to 

ensure adequate protection of the public health and safety, to promote the common defense and security, and to protect the 

environment. Its purposes are defi ned by the Energy Reorganization Act of 1974, as amended, along with the Atomic Energy 

Act of 1954, as amended, which provide the foundation for regulating the Nation’s civilian use of nuclear materials.

Th e NRC operates through the execution of its congressionally approved appropriations for Salaries and Expenses and 

for the Offi ce of the Inspector General, including funds derived from the Nuclear Waste Fund. In addition, the U.S. Agency 

for International Development (USAID) provides transfer appropriations to develop nuclear safety, regulatory authorities, and 

independent oversight of nuclear reactors in Russia, Ukraine, Kazakhstan, and Armenia. 

B. BASIS OF PRESENTATION

Th ese principal statements were prepared to report the fi nancial position and results of operations of the NRC as required by 

the Chief Financial Offi cers Act of 1990 and the Government Management Reform Act of 1994. Th ese fi nancial statements were 

prepared from the books and records of the NRC in conformance with generally accepted accounting principles (GAAP) of the 

United States, and the form and content for entity fi nancial statements were specifi ed by the Offi ce of Management and Budget 

(OMB) in Circular No. A-136, “Financial Reporting Requirements.” GAAP for Federal entities are the standards prescribed 

by the Federal Accounting Standards Advisory Board, which is the offi cial body for setting the accounting standards of the 

U.S. Government. Th ese statements are, therefore, diff erent from the fi nancial reports, also prepared by the NRC pursuant to 

OMB directives, which are used to monitor and control NRC’s use of budgetary resources.

Th e NRC has not presented a Statement of Custodial Activity because the amounts involved are immaterial and incidental 

to its operations and mission.

C. BUDGETS AND BUDGETARY ACCOUNTING

Budgetary accounting measures the appropriation and consumption of budget spending authority or other budgetary 

resources and facilitates compliance with legal constraints and controls over the use of Federal funds. Under budgetary 

reporting principles, budgetary resources are consumed at the time of purchase. Assets and liabilities, which do not consume 

current budgetary resources, are not reported, and only those liabilities for which valid obligations have been established are

considered to consume budgetary resources. 

For the past 34 years, Congress has enacted no-year appropriations, which are available for obligation by the NRC until 

expended. For FY 2008, the Consolidated Appropriations Act of 2008 requires the NRC to recover approximately 90 percent 

of its new budget authority of $926.1 million by assessing fees. Under Public Law 110-161, the agency does not have to recover 

the $29 million for the Nuclear Waste Fund, $2 million for waste incidental to reprocessing, and $29.4 for generic homeland 

security. Th e $926.1 million does not include any amounts transferred from the U.S. Agency for International Development. 

For FY 2007, the NRC recovered approximately 90 percent of its budget authority of $824.9 million less amounts derived 

from the Nuclear Waste Fund of $45.8 million, waste incidental to reprocessing of $2.5 million, and generic homeland security 

of $33.0 million.

NOTES TO PRINCIPAL STATEMENTS
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Chapter 3 ■ Financial Statements and Auditors’ Report

D. BASIS OF ACCOUNTING

Th ese fi nancial statements refl ect both accrual and budgetary accounting transactions. Under the accrual method, revenues 

are recognized when earned and expenses are recognized when a liability is incurred, without regard to receipt or payment 

of cash. Budgetary accounting is also used to record the obligation of funds prior to the accrual-based transaction. Interest 

on borrowings of the U.S. Department of the Treasury (Treasury) is not included as a cost to the NRC’s programs and is not 

included in the accompanying fi nancial statements.

E. REVENUES AND OTHER FINANCING SOURCES

Th e NRC is required to off set its appropriations by revenue received during the fi scal year from the assessment of fees. Th e 

NRC assesses two types of fees to recover its budget authority: (1) fees assessed under Title 10 of the Code of Federal Regulations 

(10 CFR), Part 170, “Fees for Facilities, Materials, Import and Export Licenses, and Other Regulatory Services under the Atomic

Energy Act of 1954, as Amended,” for licensing, inspection, and other services under the authority of the Independent Offi ces 

Appropriation Act of 1952 to recover the NRC’s costs of providing individually identifi able services to specifi c applicants and 

licensees; and (2) annual fees assessed for nuclear facilities and materials licensees under 10 CFR Part 171, “Packaging and 

Transportation of Radioactive Material.” All fees, with the exception of civil penalties, are exchange revenues in accordance 

with Statement of Federal Financial Accounting Standards No. 7, “Accounting for Revenue and Other Financing Sources and 

Concepts for Reconciling Budgetary and Financial Accounting.” 

For accounting purposes, appropriations are recognized as fi nancing sources (appropriations used) at the time expenses 

are accrued. At the end of the fi scal year, appropriations recognized are reduced by the amount of assessed fees collected during 

the fi scal year to the extent of new budget authority for the year. Collections which exceed the new budget authority are held to 

off set subsequent years’ appropriations. Appropriations expended for property and equipment are recognized as expenses when 

the asset is consumed in operations (depreciation and amortization). 

As stated in Section C of this note, the NRC is required to recover approximately 90 percent of its budget authority through 

fee billing and to return the collections to the Treasury. In FY 2007 when fee revenue was recorded, the NRC also recorded a 

corresponding liability to the Treasury for the eventual collections. As the actual collections were returned to the Treasury, 

the liability was reduced. In FY 2008, a change was made to the accounting treatment for recording fee revenue and the 

corresponding transfer of fee revenue collections to Treasury. Th e NRC no longer records the liability to the Treasury when fee 

revenue is recorded and no longer reduces the liability as the collections are returned to Treasury. Th ese changes were made to 

refl ect appropriations law and to ensure U.S. Standard General Ledger (USSGL) compliance and consistency.

F. FUND BALANCE WITH TREASURY

Th e NRC’s cash receipts and disbursements are processed by the Treasury. Th e fund balances with the Treasury are primarily 

appropriated funds that are available to pay current liabilities and to fi nance authorized purchase commitments. Funds with 

Treasury represent NRC’s right to draw on the Treasury for allowable expenditures. All amounts are available to NRC for 

current use.

G. ACCOUNTS RECEIVABLE

Accounts receivable consist of amounts owed to the NRC by other Federal agencies and the public. Amounts due from the 

public are presented net of an allowance for uncollectible accounts. Th e allowance is based on an analysis of the outstanding 

balances. Receivables from Federal agencies are expected to be collected; therefore, there is no allowance for uncollectible 

accounts.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

64

H. NONENTITY ASSETS

Accounts receivable include nonentity assets of $28 thousand and $22 thousand at September 30, 2008, and 2007, 

respectively, and consist of miscellaneous penalties and interest due from the public, which, when collected, must be transferred 

to the Treasury.

I. PROPERTY AND EQUIPMENT

Property and equipment consist primarily of typical offi ce furnishings, leasehold improvements, nuclear reactor 

simulators, and computer hardware and soft ware. Th e costs of internal use soft ware include the full cost of salaries and benefi ts 

from agency personnel involved in soft ware development. Th e Agency has no real property. Th e land and buildings in which 

NRC operates are provided by the General Services Administration (GSA), which charges NRC rent that approximates the 

commercial rental rates for similar properties. 

Property with a cost of $50 thousand or more per unit and a useful life of 2 years or more is capitalized at cost and 

depreciated using the straight-line method over the useful life. Other property items are expensed when purchased. Normal 

repairs and maintenance are charged to expense as incurred.

J. ACCOUNTS PAYABLE

Th e NRC uses an estimation methodology to calculate the accounts payable balance which represents costs for billed 

and unbilled goods and services received (prior to year end) that are unpaid. In FY 2007, the NRC used an algorithm that 

recognized accounts payable was a specifi c percentage of NRC’s total expenses to date. Once this percentage was calculated, 

it was applied to an annualized expense fi gure. In FY 2008, the NRC implemented a revised methodology to calculate the 

accounts payable estimate. Th e new methodology involves analyzing the actual activity for the largest obligations to include in 

the estimate. For the remaining smaller obligations, the actual activity of a percentage of the obligations was analyzed, and an 

algorithm was developed to estimate the total amount to include in the accounts payable balance.

K. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities represent the amount of monies or other resources that are likely to be paid by the NRC as the result of a 

transaction or event that has already occurred. No liability can be paid by the NRC absent an appropriation. Liabilities for 

which an appropriation has not been enacted are classifi ed as “Liabilities Not Covered by Budgetary Resources.” Also, the NRC 

liabilities arising from sources other than contracts can be abrogated by the Government acting in its sovereign capacity.

INTRAGOVERNMENTAL

Th e U.S. Department of Labor (DOL) paid Federal Employees Compensation Act (FECA) benefi ts on behalf of NRC 

which had not been billed or paid by the NRC as of September 30, 2008, and 2007, respectively.

FEDERAL EMPLOYEE BENEFITS

Federal employee benefi ts represent the actuarial liability for estimated future FECA disability benefi ts. Th e future 

workers’ compensation estimate was generated by DOL from an application of actuarial procedures developed to 

estimate the liability for FECA, which includes the expected liability for death, disability, medical, and miscellaneous 

costs for approved compensation cases. Th e liability was calculated using historical benefi t payment patterns related 

to a specifi c incurred period to predict the ultimate payments related to that period. Th ese projected annual benefi t 

payments were discounted to present value. Th e interest rate assumptions utilized for discounting benefi ts were 

4.37 percent and 5.17 percent for FY 2008 and FY 2007, respectively.

OTHER

Accrued annual leave represents the amount of annual leave earned by NRC employees but not yet taken.
65

Chapter 3 ■ Financial Statements and Auditors’ Report

L. CONTINGENCIES

Contingent liabilities are those where the existence or amount of the liability cannot be determined with certainty pending 

the outcome of future events. Th e NRC is a party to various administrative proceedings, legal actions, environmental suits, and 

claims brought by or against it. Based on the advice of legal counsel concerning contingencies, it is the opinion of management

that the ultimate resolution of these proceedings, actions, suits, and claims will not materially aff ect the agency’s fi nancial 

statements.

M. ANNUAL, SICK, AND OTHER LEAVE

Annual leave is accrued as it is earned, and the accrual is reduced as leave is taken. Each year, the balance in the accrued 

annual leave liability account is adjusted to refl ect current pay rates. To the extent that current or prior year funding is not 

available to cover annual leave earned but not taken, funding will be obtained from future fi nancing sources. Sick leave and 

other types of nonvested leave are expensed as taken.

N. RETIREMENT PLANS

Th e NRC employees belong to either the Federal Employees Retirement System (FERS) or the Civil Service Retirement 

System (CSRS). For FY 2008 and FY 2007, for employees belonging to FERS, the NRC withheld 0.8 percent of base pay 

earnings, in addition to Federal Insurance Contribution Act (FICA) withholdings, and matched the withholdings with an 

11.2 percent contribution. Th e sum is transferred to the Federal Employees Retirement Fund. For employees covered by CSRS, 

NRC withholds 7 percent of base pay earnings. Th e NRC matched this withholding with a 7 percent contribution in FY 2008 

and FY 2007.

Th e Th rift Savings Plan (TSP) is a retirement savings and investment plan for employees belonging to either FERS or 

CSRS. For employees belonging to FERS, NRC automatically contributes 1 percent of base pay to their account and matches 

contributions up to an additional 4 percent. Th e maximum percentage of base pay that an employee participating in FERS may 

contribute is unlimited in fi scal years 2008 and 2007. Th e Th rift Savings Plan (TSP) is a retirement savings and investment plan 

for employees belonging to either FERS or CSRS. Th e maximum percentage of base pay that an employee participating in FERS 

or CSRS may contribute is unlimited in fi scal years 2008 and 2007, subject to the maximum contribution of $15.5 thousand 

for both years. For employees participating in FERS, the NRC automatically contributes one percent of base pay to their 

account and matches contributions up to an additional four percent. For employees participating in CSRS, there is no NRC 

matching of the contribution. Th e sum of the employees’ and NRC’s contributions are transferred to the Federal Retirement 

Th rift Investment Board. Th e sum of the employees’ and NRC’s contributions are transferred to the Federal Retirement Th rift 

Investment Board.

Th e NRC does not report on its fi nancial statements FERS and CSRS assets, accumulated plan benefi ts, or unfunded 

liabilities, if any, applicable to its employees. Reporting such amounts is the responsibility of the U.S. Offi ce of Personnel 

Management. Th e portion of the current and estimated future outlays for CSRS not paid by NRC is, in accordance with 

Statement of Federal Financial Accounting Standards No. 5, “Accounting for Liabilities of the Federal Government,” included 

in NRC’s fi nancial statements as an imputed fi nancing source. 

O. LEASES

Th e total capital lease liability is funded on an annual basis and included in NRC’s annual budget. Th e NRC’s capital leases 

are for personal property consisting of reproduction equipment which is installed at the NRC headquarters. For FY 2008 there 

are eight capital leases with terms of 5 years, consisting of two new capital leases added in FY 2008 with an interest rate of 

3.99 percent, two capital leases that were added in FY 2007 with an interest rate of 4.58 percent, one capital lease in FY 2006

with an interest rate of 4.25 percent, and three capital leases for FY 2005 with an interest rate of 4.13 percent. Th e reproduction 

equipment is depreciated over 5 years using the straight-line method with no salvage value. 

Operating leases consist of real property leases with GSA. Th e leases are for NRC’s headquarters and regional offi ces. Th e 

GSA charges NRC lease rates which approximate commercial rates for comparable space.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

66

P. U.S. DEPARTMENT OF ENERGY CHARGES

Financial transactions between the U.S. Department of Energy (DOE) and the NRC are fully automated through the 

U.S. Treasury’s Intragovernmental Payment and Collection (IPAC) System. Th e IPAC System allows DOE to collect amounts 

due from NRC directly from the NRC’s account at the Treasury for goods or services rendered. Project manager verifi cation of 

goods or services received is subsequently accomplished through a system-generated voucher approval process. Th e vouchers 

are returned to the Offi ce of the Chief Financial Offi cer documenting that the charges have been accepted.

Q. PRICING POLICY

Th e NRC provides goods and services to the public and other Government entities. In accordance with OMB Circular 

No. A-25, “User Charges,” and the Independent Offi ces Appropriation Act of 1952, NRC assesses fees under 10 CFR Part 170 

for licensing and inspection activities to recover the full cost of providing individually identifi able services. 

Th e NRC’s policy is to recover the full cost of goods and services provided to other Government entities where (1) the 

services performed are not part of its statutory mission and (2) the NRC has not received appropriations for those services. Fees 

for reimbursable work are assessed at the 10 CFR Part 170 rate with minor exceptions for programs that are nominal activities 

of the NRC. 

R. NET POSITION

Th e NRC’s net position consists of unexpended appropriations and cumulative results of operations. Unexpended 

appropriations represent appropriated spending authority that is unobligated and has not been withdrawn by the U.S. Treasury, 

and obligations that have not been paid. Cumulative results of operations represent the excess of fi nancing sources over expenses 

since inception.

S. USE OF MANAGEMENT ESTIMATES

Th e preparation of the accompanying fi nancial statements in accordance with generally accepted accounting principles 

requires management to make certain estimates and assumptions that aff ect the reported amounts of assets, liabilities, revenues, 

and expenses. Actual results could diff er from those estimates.

T. APPROPRIATION TRANSFERS

Th e NRC is a party to allocation transfers with another Federal agency (parent) as a receiving (child) entity. Allocation 

transfers are legal delegations by one agency of its authority to obligate budget authority and outlay funds to another agency.

A separate fund account (allocation account) is created in the U.S. Treasury as a subset of the parent fund account for tracking 

and reporting purposes. All allocation transfers of balances are credited to this account, and subsequent obligations and outlays 

incurred by the child entity are charged to this allocation account as they execute the delegated activity on behalf of the parent 

entity. All fi nancial activity related to these allocation transfers (e.g., budget authority, obligations, and outlays) is reported 

in the fi nancial statements of the parent entity from which the underlying legislative authority, appropriations, and budget 

apportionments are derived. Th e NRC receives allocation transfers, as the child, from U.S. Agency for International Development 

(USAID). Th ese transfers are for the international development of nuclear safety and regulatory authorities in Russia, Ukraine, 

Kazakhstan, Georgia, and Armenia for the startup, operation, shutdown, and decommissioning of Soviet-designed nuclear 

power plants; the safe and secure use of radioactive materials; and the accounting for and protection of nuclear materials.
67

Chapter 3 ■ Financial Statements and Auditors’ Report

NOTE 2. FUND BALANCE WITH TREASURY

2008 2007

Fund Balances

Appropriated funds $ 371,714 $ 301,751 

Nuclear Waste Fund 21,764 41,300 

Other fund types - 13,348 

 Total $ 393,478 $ 356,399 

Status of Fund Balance with Treasury

Unobligated balance

 Available

 Appropriated funds $ 78,877 $ 72,160

 Unavailable 113 -

Obligated balance not yet disbursed 314,488 270,894 

Nonbudgetary funds with Treasury - 13,345 

 Total $ 393,478 $ 356,399

Th e Fund Balance with Treasury consists of unobligated and obligated balance budgetary accounts. It includes Nuclear Waste 

Fund activity. Th e Nuclear Waste Fund unobligated balance is $9.9 million and $26.7 million as of September 30, 2008, and 

2007, respectively.

NOTE 3. ACCOUNTS RECEIVABLE

2008 2007

Intragovernmental

Receivables and reimbursements $ 4,692 $ 5,228

Receivables with the Public

Materials and facilities fees—billed $ 2,204 $ 2,533

Materials and facilities fees—unbilled 116,162 90,718

Other 67 86

 Total Accounts Receivable 118,433 93,337

Less: Allowance for uncollectible accounts (1,749) (4,671)

Accounts Receivable, Net $ 116,684 $ 88,666 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

68

NOTE 4. PROPERTY AND EQUIPMENT, NET

Fixed Assets 

Class

Service

Years

Acquisition

Value

Accumulated

Depreciation

and

Amortization

2008

Net Book

Value

2007

Net Book

Value

Equipment 5-8 $ 11,864 $ (10,578) $ 1,286 $ 1,138 

Leased equipment 5-8 1,712 (473) 1,239 841 

IT soft ware 5 50,907 (43,726) 7,181 4,686 

IT soft ware under development - 1 2 , 110 - 12,110 12,988 

Leasehold improvements 20 27,819 (17,738) 10,081 9,558 

Leasehold improvements in progress - 3 , 5 7 8 - 3,578 2,621 

Total $ 107,990 $ (72,515) $ 35,475 $ 31,832 

NOTE 5. OTHER LIABILITIES

2008 2007

Intragovernmental

Liability to off set net accounts receivable for fees assessed $ - $ 93,434

Liability from fees collected which will off set current year’s 

appropriations - 13,340

Liability to off set miscellaneous accounts receivable 28 22

Liability for advances from other agencies 74 88

Accrued workers’ compensation 1,710 1,659

Accrued unemployment compensation 27 6

Employee benefi t contributions 3,005 2,248

Total Intragovernmental Other Liabilities $ 4,844 $ 110,797

Th e liability to off set the net accounts receivable for fees assessed represents amounts which, when collected, will be 

transferred to the Treasury to off set NRC’s appropriations in the year collected. Beginning in 2008, this liability is no longer 

being recorded due to a change in methodology for fees recorded and transferred. See Note 1. 

2008 2007

Accrued annual leave $ 43,675 $ 38,327

Accrued salaries 19,683 15,962

Contract holdbacks, advances, and other 6,929 4,588

Grants payable 661 -

Total Other Liabilities $ 70,948 $ 58,877

Other liabilities, except accrued annual leave, contract holdbacks, and advances from others are current.
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Chapter 3 ■ Financial Statements and Auditors’ Report

NOTE 6. LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

 2008 2007

Intragovernmental

 FECA paid by DOL $ 1,710 $ 1,659 

 Accrued unemployment compensation 27 6 

Federal Employee Benefi ts

 Future FECA 7,059 6,833 

Other

 Accrued annual leave 43,675 38,327 

 Total Liabilities not Covered by Budgetary Resources $ 52,471 $ 46,825 

NOTE 7. LEASES

2008 2007

Assets under capital leases:

 Copiers and booklet maker $ 1,712 $ 1,638

 Accumulated depreciation (473) (797)

Net assets under capital leases $ 1,239 $ 841

Future Lease Payments Due:

Fiscal Year Capital Operating 2008 2007

 2008 $ - $ - $ - $ 23,447 

 2009 362 32,322 32,684 20,778 

 2010 336 32,518 32,854 20,836 

 2011 284 32,353 32,637 20,537 

 2012 272 30,236 30,508 18,403 

 2013 and thereaft er 14 48,603 48,617 23,412 

 Total Lease Liability 1,268 176,032 177,300 127,413 

Add: Imputed Interest 107 - 107 86 

 Total Future Lease Payments $ 1,375 $ 176,032 $ 177,407 $ 127,499 

Th e capital lease liability of $1,268 thousand is included in Other Liabilities (Note 5).
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

70

NOTE 8. CUMULATIVE RESULTS OF OPERATIONS

2008 2007

Future funding requirements $ (52,471) $ (46,825)

Investment in property and equipment, net 35,475 31,832 

Contributions from foreign cooperative research agreements 3,054 3,184 

Change in Nuclear Waste Fund 21,439 38,933 

Other 120,738 40 

Cumulative Results of Operations $ 128,235 $ 27,164 

Future funding requirements represent the amount of future funding needed to pay the accrued unfunded expenses as of 

September 30, 2008, and 2007. Th ese accruals are not funded from current or prior-year appropriations and assessments, but 

rather should be funded from future appropriations and assessments. Accordingly, future funding requirements have been 

recognized for the expenses that will be paid from future appropriations.

NOTE 9. STATEMENT OF NET COST

Th e programs as presented on the “Statement of Net Cost” are based on the annual performance budget and are described 

as follows:

Nuclear Reactor Safety and Security encompasses all NRC eff orts to ensure that civilian nuclear power reactor facilities 

and research and test reactors are licensed and operated in a manner that adequately protects the public health and safety, 

the environment, and protects against radiological sabotage and theft or diversion of special nuclear materials. Th e Nuclear 

Reactor Safety and Security program contains the following activities: new reactors, nuclear reactor licensing and rulemaking, 

and nuclear reactor oversight, and incident response.

Nuclear Materials and Waste Safety and Security encompasses all NRC eff orts to protect the public health and safety 

and the environment, and ensures the secure use and management of radioactive materials. Th e Nuclear Materials and Waste 

Safety and Security program contains fi ve activities: fuel facilities licensing and inspection, nuclear materials users licensing 

and inspection, high-level waste repository, decommissioning and low-level waste, and spent fuel storage and transportation 

licensing and inspection.

For intragovernmental gross costs, the buyers and sellers are both Federal entities. For earned revenues from the public, 

the buyers of the goods or services are non-Federal entities.
71

Chapter 3 ■ Financial Statements and Auditors’ Report

NOTE 9. STATEMENT OF NET COST (CONTINUED)

For the years ended September 30, 2008 2007

Nuclear Reactor Safety

Intragovernmental gross costs $ 205,183 $ 157,582 

Less: Intragovernmental earned revenue (32,710) (36,519)

 Intragovernmental net costs 172,473 121,063 

Gross costs with the public 500,649 424,630 

Less: Earned revenues from the public (693,130) (576,250)

 Net costs with the public (192,481) (151,620)

Total Net Cost of Nuclear Reactor Safety $ (20,008) $ (30,557)

Nuclear Materials and Waste Safety

Intragovernmental gross costs $ 54,978 $ 45,287 

Less: Intragovernmental earned revenue (6,011) (7,154)

 Intragovernmental net costs 48,967 38,133 

Gross costs with the public 183,241 159,208 

Less: Earned revenues from the public (65,729) (73,336)

 Net costs with the public 117,512 85,872 

Total Net Cost of Nuclear Materials and Waste Safety $ 166,479 $ 124,005 

NOTE 10. EXCHANGE REVENUES

2008 2007

Fees for licensing, inspection, and other services $ 790,910 $ 687,632 

Revenue from reimbursable work 6,670 5,627 

Total Exchange Revenues $ 797,580 $ 693,259 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

72

NOTE 11. FINANCING SOURCES OTHER THAN EXCHANGE REVENUE

Appropriations Used

Collections were used to reduce the fi scal year’s appropriations recognized:

2008 2007

Funds consumed $ 908,330 $ 757,892 

Less: Collection from fees assessed (763,640) (669,246)

Less: Nuclear Waste Funding Used (46,518) (42,000)

Appropriations Used $ 98,172 $ 46,646 

Funds consumed include $72.2 million and $74.3 million through September 30, 2008, and 2007, respectively, of available 

funds from prior years.

Non-Exchange Revenue

2008 2007

Civil penalties $ 1,102 $ 450

Miscellaneous receipts 211 1,681

Contra-Revenue (1,313) (2,131)

Total Non-Exchange Revenue $ - $ -

Imputed Financing

2008 2007

Civil Service Retirement System $ 10,239 $ 10,593

Federal Employee Health Benefi t 16,589 16,956

Federal Employee Group Life Insurance 79 71

Judgements Awards 4 7

Total Imputed Financing $ 26,911 $ 27,627
73

Chapter 3 ■ Financial Statements and Auditors’ Report

NOTE 12. TOTAL OBLIGATIONS INCURRED

2008 2007

Direct Obligations

Category A $ 895,751 $ 788,875 

Exempt from Apportionment 46,191 45,251 

Total Direct Obligations 941,942 834,126 

Reimbursable Obligations 7,880 4,645 

Total Obligations Incurred $ 949,822 $ 838,771 

Obligations exempt from apportionment are the result of funds derived from the Nuclear Waste Fund. Category A 

obligations consist of NRC appropriations only. Undelivered orders for the Nuclear Waste Fund are $ 11.6 million and 

$12.2 million, salaries and expenses are $ 228.4 million and $215.0 million, and the Offi ce of the Inspector General are $ 1.5 

million and $1.7 million through September 30, 2008, and 2007, respectively.

NOTE 13. NUCLEAR WASTE FUND

Included in the NRC’s budget for FY 2008 and 2007 are $29.0 million and $45.8 million, respectively, provided from 

the Nuclear Waste Fund. Statement of Federal Financial Accounting Standards (SFFAS) No. 27, “Identifying and Reporting 

Earmarked Funds,” lists three defi ning criteria for an earmarked fund. Generally, an earmarked fund is established by law to 

use specifi cally identifi ed fi nancing sources only for designated activities, and the statute provides explicit authority to retain 

current, unused revenues for future use. Also, the law includes a requirement to account for and report on the receipt and use 

of the fi nancing sources as distinguished from general revenues.

In 1982, Congress passed the Nuclear Waste Policy Act of 1982 (Public Law 97-425) establishing the Nuclear Waste Fund 

(NWF) to be administered by the U.S. Department of Energy (DOE) (42 U.S.C. 10222). Given the terms of the statute, the 

NWF clearly meets the defi nition of an earmarked fund from DOE’s perspective, and DOE does indeed report the NWF as an 

earmarked fund in its Performance and Accountability Report (PAR). 

However, to the NRC, the NWF transfer is a source of fi nancing; its receipt of NWF funds is a use of NWF resources. Th e 

NRC collects no revenue on behalf of the NWF and has no administrative control over it. Furthermore, the Treasury has no 

separate fund symbol for the NWF under the NRC’s agency location code (ALC). Th e receipt and expenditure of NWF money 

is reported to Treasury under the NRC’s primary Salaries and Expenses fund (X0200).

Based on these facts, the NWF is not an earmarked fund from NRC’s perspective. However, in order to provide additional 

information to the users of these fi nancial statements, enhanced disclosure of the fund is presented below. 

Th e funding provided to the NRC in FY 2008 and 2007 was for the purpose of performing activities associated with 

DOE’s application for a high-level waste repository at Yucca Mountain, NV. Th ese activities included assistance to DOE with 

the application, review of the application, the conduct of thorough safety and security evaluations, preparation of the safety 

evaluation report, initiation of the inspection program, ensuring that the regulation process was made available to stakeholders 

and the general public, and to provide legal advice and representation for staff reviews and Commission actions.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

74

Th e NWF amounts received, expended, obligated, and unobligated balances as of September 30, 2008, and 2007, are shown 

in the following:

2008 2007

Appropriations Received $ 29,025 $ 45,826 

Expended Appropriations $ 48,885 $ 45,640 

Obligations Incurred $ 46,191 $ 45,247 

Unobligated Balances $ 9,853 $ 26,717 

NOTE 14. CHANGE IN ACCOUNTING PRINCIPLE

As discussed in Note 1T, the NRC receives allocation transfers from USAID. In prior years, the NRC appropriately reported 

the proprietary activity related to the allocation transfers on its fi nancial statements. 

Eff ective in FY 2007, OMB Circular A-136, “Financial Reporting Requirements,” mandated that a parent entity must 

report all budgetary and proprietary activity in its fi nancial statements, whether material to a child entity or not. Th e eff ect 

of this reporting change on prior periods should be reported as a change in accounting principle consistent with SFFAS 21, 

“Reporting Corrections of Errors and Changes in Accounting Principles.” Th e cumulative eff ect of the change on beginning 

unexpended appropriations is reported in the accompanying FY 2007 Statement of Changes in Net Position as follows:

Unexpended Appropriations:

 Beginning Balances, October 1, 2006 $ 193,694

 Less: USAID Allocation transfers (2,838)

Restated beginning balance, October 1, 2006 $ 190,856

NOTE 15. EXPLANATION OF DIFFERENCES BETWEEN THE STATEMENT OF BUDGETARY RESOURCES

AND THE BUDGET OF THE U.S. GOVERNMENT

Statement of Federal Financial Standards (SFFAS) No. 7, “Accounting for Revenue and Other Financing Sources,” requires 

the NRC to reconcile the budgetary resources reported on the Statement of Budgetary Resources to the prior fi scal year 

actual budgetary resources presented in the Budget of the U.S. Government and to explain any material diff erences. Th e NRC 

does not have any material diff erences between the Statement of Budgetary Resources and the Budget of the U.S. Government. 

Th e President’s Budget with actual results for the NRC has not been published for FY 2008. It is expected to be published 

in February 2009.
75

Chapter 3 ■ Financial Statements and Auditors’ Report

NOTE 16. RECONCILIATION OF NET COST OF OPERATIONS TO BUDGETARY RESOURCES

For the years ended June 30, 2008 2007

Budgetary Resources Obligated

 Obligations incurred (Note 12) $ 949,822 $ 838,771 

 Less: Spending authority from off setting collections and recoveries (30,578) (11,783)

 Less: Distributed off setting receipts (763,640) (669,245)

 Net Obligations 155,604 157,743 

Other Resources

 Imputed fi nancing from costs absorbed by others 26,911 27,627 

 Other—Revenue from excess collections 93,434 (18,386)

 Non-Exchange Revenue - - 

 Net Other Resources Used to Finance Activities 120,345 9,241 

 Total Resources Used to Finance Activities 275,949 166,984 

Resources Used to Finance Items not Part of the Net Cost of Operations (19,841) (79,278)

 Total Resources Used to Finance the Net Cost of Operations 256,108 87,706 

Components of the Net Cost of Operations that will not Require or Generate 

Resources in the Current Period (109,637) 5,742 

Net Cost of Operations $ 146,471 $ 93,448
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

76

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF BUDGETARY RESOURCES (IN THOUSANDS) 

For the year ended September 30, 2008

Salaries 

& Expenses

X0200

Offi ce of 

Inspector General

X0300

Nuclear

Facility Fees

X5280 Total 

Budgetary Resources

Unobligated balances, brought forward, October 1 $ 71,610 $ 546 $ 4 $ 72,160 

Recoveries of prior year obligations

 Actual 21,624 313 - 21,937 

Budget authority

 Appropriation 917,335 8,743 (4) 926,074 

 Spending authority from off setting collections

 Reimbursements earned—Collected 6,709 - - 6,709 

 Reimbursements earned—Change in receivables 222 - - 222 

 Change in unfi lled customer orders—Advance received 1,645 - - 1,645 

 Change in unfi lled customer orders—Without advance 65 - - 65 

 Subtotal—Spending authority from off setting collections 8,641 - - 8,641 

 Total Budgetary Resources $ 1,019,210 $9,602 $ - $ 1,028,812 

Status of Budgetary Resources

Obligations incurred (Note 12)

 Direct $ 933,139 $ 8,803 $ - $ 941,942 

 Reimbursable 7,880 - - 7,880 

Subtotal 941,019 8,803 - 949,822 

Unobligated balance 

 Apportioned 68,338 686 - 69,024 

 Exempt from apportionment 9,853 - - 9,853 

Subtotal 78,191 686 - 78,877 

Unobligated balance, not available - 113 - 113

 Total Status of Budgetary Resources $ 1,019,210 $ 9,602 $ - $ 1,028,812 

Change in Obligated Balance

Obligated balance, net

Unpaid obligations, brought forward, October 1 $ 269,637 $ 1,257 $ - $ 270,894 

Obligations incurred, net 941,019 8,803 - 949,822 

Gross outlays (875,172) (8,832) - (884,004)

Recoveries of prior year obligations, actual (21,624) (313) - (21,937)

Change in uncollected customer payments, from Federal sources (287) - - (287)

Obligated balance, net, end of period

 Unpaid obligations 317,711 915 318,626 

 Uncollected customer payments, from Federal sources (4,138) - - (4,138)

 Total unpaid obligated balance, net , end of period $ 313,573 $ 915 $ - $ 314,488 

Net outlays

Gross outlays $ 875,172 $ 8,832 $ - $ 884,004 

Off setting collections (8,354) - - (8,354)

Distributed off setting receipts - - (763,640) (763,640)

 Net Outlays $ 866,818 $ 8,832 $ (763,640) $ 112,010 
77

Chapter 3 ■ Financial Statements and Auditors’ Report

AUDITOR’S REPORT

 November 10, 2008

MEMORANDUM TO: Chairman Klein

FROM: Hubert T. Bell

 Inspector General

SUBJECT: RESULTS OF THE AUDIT OF THE UNITED STATES NUCLEAR REGULATORY 

COMMISSION’S FINANCIAL STATEMENTS FOR FISCAL YEAR 2008 

 (OIG-09-A-01)

Th e Chief Financial Offi cers Act of 1990, as amended (CFO Act), requires the Inspector General (IG) or an independent 

external auditor, as determined by the IG, to annually audit the U.S. Nuclear Regulatory Commission’s (NRC) fi nancial 

statements in accordance with applicable standards. In compliance with this requirement, Urbach Kahn & Werlin, LLP (UKW) 

was retained by the Offi ce of the Inspector General (OIG) to conduct this annual audit. Transmitted with this memorandum 

are the following UKW reports:

• Opinion on the Principal Statements.

• Opinion on Internal Control.

• Compliance with Laws and Regulations

NRC’s Performance and Accountability Report includes comparative fi nancial statements for FY 2008 and FY 2007. 

Th erefore, it is important to note that R. Navarro & Associates, Inc. performed the audit of NRC’s FY 2007 fi nancial 

statements.

Objective of a Financial Statement Audit

Th e objective of a fi nancial statement audit is to determine whether the audited entity’s fi nancial statements are free of 

material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in 

the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by 

management as well as evaluating the overall fi nancial statement presentation.

UKW’s audit and examination were made in accordance with auditing standards generally accepted in the United States of 

America; Government Auditing Standards issued by the Comptroller General of the United States; and Offi ce of Management 

and Budget (OMB) Bulletin No. 07-04, Audit Requirements for Federal Financial Statements, as amended. Th e audit included 

obtaining an understanding of the internal controls over fi nancial reporting and testing and evaluating the design and operating 

eff ectiveness of the internal controls. Because of inherent limitations in any internal control, there is a risk that errors or fraud 

may occur and not be detected. Also, projections of an evaluation of internal control over fi nancial reporting to future periods 

are subject to the risk that the internal control may become inadequate because of changes in conditions, or that the degree of

compliance with policies or procedures may deteriorate.

OFFICE OF THE

INSPECTOR GENERAL

UNITED STATES

NUCLEAR REGULATORY COMMISSION

WASHINGTON, DC 20555-0001
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

78

FY 2008 AUDIT RESULTS

Th e results are as follows:

Financial Statements

• Unqualifi ed opinion

Internal Controls

• Unqualifi ed opinion

• Signifi cant Defi ciency

 – Estimation of accounts payable year-end balance

Compliance with Laws and Regulations

• Substantial noncompliance:

 – License Fee Billing System lack of certifi cation and accreditation

OFFICE OF THE INSPECTOR GENERAL OVERSIGHT OF UKW PERFORMANCE

To fulfi ll our responsibilities under the CFO Act and related legislation for ensuring the quality of the audit work performed, 

we monitored UKW’s audit of NRC’s FY 2008 fi nancial statements by:

• Reviewing UKW’s audit approach and planning.

• Evaluating the qualifi cations and independence of UKW’s auditors.

• Monitoring audit progress at key points.

• Examining the working papers related to planning and performing the audit and assessing NRC’s internal controls.

• Reviewing UKW’s audit reports to ensure compliance with Government Auditing Standards and OMB Bulletin 

No. 07-04, as amended.

• Coordinating the issuance of the audit reports.

• Performing other procedures deemed necessary.

UKW is responsible for the attached auditors’ reports, dated November 7, 2008, and the conclusions expressed therein. 

OIG is responsible for technical and administrative oversight regarding the fi rm’s performance under the terms of the contract. 

Our review, as diff erentiated from an audit in conformance with Government Auditing Standards, was not intended to enable 

us to express, and accordingly we do not express, an opinion on:

• NRC’s fi nancial statements.

• Th e eff ectiveness of NRC’s internal control over fi nancial reporting.

• NRC’s compliance with laws and regulations.
79

Chapter 3 ■ Financial Statements and Auditors’ Report

However, our monitoring review, as described above, disclosed no instances where UKW did not comply, in all material 

respects, with applicable auditing standards.

It is noted that OIG performed similar oversight of R. Navarro & Associates, Inc.’s audit of NRC’s FY 2007 fi nancial 

statements.

Meeting with the Chief Financial Officer

At the exit conference on November 7, 2008, representatives of the Offi ce of the Chief Financial Offi cer, OIG, and UKW 

discussed the issues in the report related to the results of the audit.

Comments of the Chief Financial Officer

In his response, the Chief Financial Offi cer (CFO) generally agreed with the auditors’ recommendations. We will follow 

up on the CFO’s implementation of planned corrective actions during FY 2009. Th e full text of the CFO’s response follows this 

report. 

We appreciate NRC staff ’s cooperation and continued interest in improving fi nancial management within NRC.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

80

Inspector General

United States Nuclear Regulatory Commission

Chairman

United States Nuclear Regulatory Commission

We have audited the accompanying balance sheet of the United States Nuclear Regulatory Commission (NRC), as of 

September 30, 2008, and the related statements of net cost, changes in net position, and budgetary resources (Principal 

Statements) for the year then ended. Th e Principal Statements of NRC as of and for the year ended September 30, 2007 were 

audited by other auditors. We also examined the NRC’s internal control over fi nancial reporting as of September 30, 2008.

SUMMARY

We concluded that the NRC’s 2008 Principal Statements are presented fairly, in all material respects, in conformity with 

accounting principles generally accepted in the United States of America. We also concluded that, although improvements are 

needed as noted below, the NRC had eff ective internal control over fi nancial reporting (including the safeguarding of assets):

• Th e NRC should continue to enhance its procedures for determining accounts payable

We found one reportable instance of noncompliance with laws and regulations. 

Th is report (including Appendices A through D) discusses: (1) these conclusions and our conclusions relating to other 

information presented in the Performance and Accountability Report, (2) management’s responsibilities, (3) our objectives, 

scope and methodology, (4) management’s response and our evaluation of their response, and (5) the current status of prior 

year fi ndings and recommendations.

OPINION ON THE PRINCIPAL STATEMENTS

In our opinion, the Principal Statements referred to above present fairly, in all material respects, the fi nancial position of 

the NRC as of September 30, 2008, and its net cost, changes in net position, and budgetary resources for the year then ended, 

in conformity with accounting principles generally accepted in the United States of America. Th e Principal Statements of NRC 

INDEPENDENT AUDITORS’ REPORT ON THE FINANCIAL 

STATEMENTS
81

Chapter 3 ■ Financial Statements and Auditors’ Report

as of and for the year ended September 30, 2007 were audited 

by other auditors, whose report, dated November 7, 2007, 

expressed an unqualifi ed opinion on those statements.

As described in footnote 1 of the Principal Statements, 

the NRC revised its methodology for accounting for accounts 

payable as of September 30, 2008. We have not determined 

what impact, if any, this revised methodology may have had 

on the Principal Statements if applied in the prior year.

OPINION ON INTERNAL CONTROL

In our opinion, the NRC maintained, in all material 

respects, eff ective control over fi nancial reporting (including 

safeguarding of assets) as of September 30, 2008 that 

provided reasonable assurance that misstatements, losses 

or noncompliance material in relation to the fi nancial 

statements would be prevented on a timely basis. Our opinion 

is based on criteria established under 31 U.S.C. 3512 (c), 

(d), the Federal Managers’ Financial Integrity Act, and the 

Offi ce of Management and Budget (OMB) Circular A-123, 

Management’s Responsibility for Internal Control.

However, we noted the matter summarized below and 

more fully described in Appendix A, involving the internal 

control and its operation that we consider to be a signifi cant 

defi ciency.

A control defi ciency exists when the design or operation 

of a control does not allow management or employees, in the 

normal course of performing their assigned functions, to 

prevent or detect misstatements on a timely basis. A signifi cant 

defi ciency is a defi ciency in internal control, or a combination 

of defi ciencies, that adversely aff ects the NRC’s ability to 

initiate, authorize, record, process, or report fi nancial data 

reliably in accordance with generally accepted accounting 

principles such that there is more than a remote likelihood 

that a misstatement of the NRC’s Principal Statements that is 

more than inconsequential will not be prevented or detected 

by the NRC’s internal control. 

Th e NRC should continue to enhance its procedures 

for determining accrued accounts payable

Th e NRC currently does not have a business process 

to record accounts payable and related accrued 

expenses in the general ledger at the transaction 

level. For the last several years, the NRC used 

an estimation methodology based on historical 

expenses to estimate these balances. Because of 

material variances in their prior estimates, and 

because the NRC transferred its bill paying function 

to the Department of Interior’s National Business 

Center during fi scal year 2008, the NRC did not have 

adequate historical data to fully support its estimate 

recorded as of September 30, 2008. For September 

30, 2008, the NRC requested its program managers 

to calculate, confi rm or estimate the amounts of 

goods and services received but not yet paid for its 

200 largest open obligations. An estimated amount 

for unbilled and/or unpaid goods and services was 

applied to the remaining balances based on the 

results of a sample of smaller obligations. We were 

able to perform adequate compensating procedures 

to determine the potential eff ect of this defi ciency.

Specifi c details and the related recommendations for this 

fi nding are provided in Appendix A of this report. 

A material weakness is a signifi cant defi ciency, or 

combination of signifi cant defi ciencies, that result in a more 

than remote likelihood that a material misstatement of the 

Principal Statements will not be prevented or detected by the 

NRC’s internal control. We do not consider this matter to be 

a material weakness. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

82

COMPLIANCE WITH LAWS AND

REGULATIONS

Th e results of our tests of compliance with laws and 

regulations, exclusive of those referred to under the Federal 

Financial Management Improvement Act (FFMIA), disclosed 

no instances of noncompliance that are required to be 

reported under Government Auditing Standards and OMB 

Bulletin No. 07-04, Audit Requirements for Federal Financial 

Statements, as amended. Providing an opinion on compliance 

with laws and regulations was not an objective of our audit 

and, accordingly, we do not express such an opinion.

Under FFMIA, we are required to report whether the 

NRC’s fi nancial management systems substantially comply 

with the federal fi nancial management systems requirements, 

applicable Federal accounting standards, and the United 

States Government Standard general ledger at the transaction 

level. To meet this requirement, we performed tests of 

compliance with the provisions of FFMIA section 803(a). Th e 

results of our tests disclosed one substantial noncompliance 

with federal fi nancial management systems requirements. 

Th e NRC did not complete its certifi cation and 

accreditation (C&A) for the License Fee Billing 

System (FEES). Th e NRC is currently reevaluating 

its process for the modernization of its fi nancial 

management systems as part of the core fi nancial 

system replacement and has delayed the timeline 

for the replacement of FEES. Management intends 

to complete the C&A for the system by the end of 

the second quarter of FY 2009.

Th e current status of prior year fi ndings and 

recommendations is included in Appendix B.

OTHER INFORMATION

Th e information in the Management’s Discussion 

and Analysis section of the NRC’s Performance and 

Accountability Report is not a required part of the Principal 

Statements, but is supplementary information required by 

accounting principles generally accepted in the United States 

of America. We have applied certain limited procedures, 

which consisted principally of inquiries of management 

regarding the methods of measurement and presentation of 

the supplementary information. However, we did not audit 

the information and express no opinion on it.

Th e Program Performance and Appendices listed in 

the table of contents are presented for additional analysis 

and are not a required part of the fi nancial statements. 

Such information has not been subjected to the auditing 

procedures applied in the audit of the fi nancial statements 

and, accordingly, we express no opinion on them.

MANAGEMENT RESPONSIBILITIES

Management is responsible for (1) preparing the Principal 

Statements in conformity with accounting principles generally 

accepted in the United States of America, (2) establishing, 

maintaining and assessing internal control to provide 

reasonable assurance that the broad control objectives of the 

Federal Managers Financial Integrity Act of 1982 are met; 

(3) ensuring that the NRC’s fi nancial management systems 

substantially comply with FFMIA; and (4) complying with 

applicable laws and regulations.

OBJECTIVES, SCOPE AND

METHODOLOGY

We are responsible for planning and performing our 

audit to obtain reasonable assurance about whether the 

fi nancial statements are free of material misstatement. An 
83

Chapter 3 ■ Financial Statements and Auditors’ Report

audit includes examining, on a test basis, evidence supporting 

the amounts and disclosures in the fi nancial statements. An 

audit also includes assessing the accounting principles used 

and signifi cant estimates made by management, as well as 

evaluating the overall fi nancial statement presentation.

We are responsible for planning and performing our 

examination to obtain reasonable assurance about whether 

management maintained eff ective internal control over 

fi nancial reporting (including safeguarding of assets) and 

compliance with applicable laws and regulations based on 

criteria established under 31 U.S.C. 3512 (c), (d), the Federal 

Managers’ Financial Integrity Act, and OMB Circular A-123, 

Management’s Responsibility for Internal Control. Our 

examination included obtaining an understanding of internal 

control related to fi nancial reporting (including safeguarding 

assets) and compliance with laws and regulations (including 

execution of transactions in accordance with budget 

authority); testing relevant internal controls over fi nancial 

reporting (including safeguarding assets) and compliance, 

evaluating the design and operating eff ectiveness of internal 

control; and performing such other procedures as we 

considered necessary in the circumstances. We did not test all 

internal controls relevant to operating objectives as broadly 

defi ned by the Federal Managers’ Financial Integrity Act.

Because of inherent limitations in any internal control, 

misstatements due to error or fraud may occur and not be 

detected. Also, projections of any evaluation of the internal 

control to future periods are subject to the risk that the 

internal control may become inadequate because of changes 

in conditions, or that the degree of compliance with the 

policies or procedures may deteriorate.

We are also responsible for testing compliance with 

selected provisions of laws and regulations that have a direct 

and material eff ect on the fi nancial statements. We did not 

test compliance with all laws and regulations applicable to the 

NRC. We limited our tests of compliance to those laws and 

regulations required by OMB audit guidance that we deemed 

applicable to the fi nancial statements for the fi scal year ended 

September 30, 2008. We caution that noncompliance may 

occur and not be detected by these tests and that such testing 

may not be suffi cient for other purposes.

We conducted our audit and examinations in accordance 

with auditing standards generally accepted in the United 

States of America; Government Auditing Standards, issued 

by the Comptroller General of the United States; attestation 

standards established by the American Institute of Certifi ed 

Public Accountants; and OMB Bulletin No. 07-04, Audit 

Requirements for Federal Financial Statements, as amended. 

We believe that our audit and examinations provide a 

reasonable basis for our opinions.

We also noted other less signifi cant matters involving 

the NRC’s internal control and its operation, which we have 

reported to the management of the NRC in a separate letter, 

dated November 7, 2008.

Th is report is intended solely for the information and 

use of the NRC OIG, the management of NRC, OMB, the 

Government Accountability Offi ce and the Congress of the 

United States, and is not intended to be and should not be 

used by anyone other than these specifi ed parties.

Arlington, Virginia

November 7, 2008
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

84

APPENDIX A – SIGNIFICANT DEFICIENCY

In our report dated November 7, 2008, we described the 

results of our audit of the consolidated balance sheet of the 

Nuclear Regulatory Commission (NRC), as of September 

30, 2008, and the related consolidated statements of net 

cost, changes in net position, and the combined statement of 

budgetary resources (Principal Statements) for the year then 

ended. Th e objective of our audit was to express an opinion 

on these fi nancial statements. In connection with our audit, 

we also considered the NRC’s internal control over fi nancial 

reporting and tested the NRC’s compliance with certain 

provisions of applicable laws and regulations that could have 

a direct and material eff ect on its fi nancial statements. Th e 

following presents additional detail on the internal control 

defi ciency discussed in that report.

1. Th e NRC should continue to enhance its procedures 

for determining accrued accounts payable.

Th e NRC currently does not have a business process to 

record accounts payable and related accrued expenses in the 

general ledger at the transaction level. For the last few years, the 

NRC has used an estimation methodology based on historical 

average percentage of actual accounts payable to expenses. 

Th e actual amount of accounts payable for a prior period was 

calculated through a review of subsequent disbursements. 

During fi scal year 2008, the NRC’s management identifi ed 

errors in its subsequent review procedures and found 

that their methodology was not reliable in estimating the 

September 30, 2007 non-federal accounts payable balance. 

During fi scal year 2008, the NRC also transferred its 

bill paying function to the Department of Interior’s National 

Business Center. Although management does not believe this 

transition has materially impacted its bill paying patterns for 

the fi scal year end, they did not have suffi cient time to analyze 

this data to support their historical estimation methodology 

for the current fi scal year end.

 For September 30, 2008, the NRC requested its program 

managers to calculate, confi rm or estimate the amounts of 

goods and services received but not yet paid for its 200 largest 

open obligations. An estimated amount for unbilled and/

or unpaid goods and services was applied to the remaining 

balances based on the results of a sample of smaller 

obligations. 

While this new methodology should reduce the risk 

of misstatements in the recorded balance for non-federal 

accounts payable, the NRC has not fully documented its 

business processes and policies related to this methodology. 

In addition, the NRC has not established historical 

relationships between the accrued accounts payable balances 

and unliquidated obligations in order to corroborate the 

results of this process. We were able to perform adequate 

compensating procedures to determine the potential eff ect of 

this defi ciency.

Without eff ective documented procedures and historical 

analysis, management cannot adequately ensure that the 

potential misstatement related to using this methodology 

rather than recording accounts payable and the related 

accrued expenses at the transaction level is appropriately 

immaterial. 

We recommend that the NRC’s Chief Financial Offi cer:

1. Ensure the NRC’s long term plans for replacing the 

core fi nancial management system evaluate the system 

requirements for recording accounts payable and related 

accrued expenses at the transaction level. (New)

2. Document the NRC’s policies and procedures for 

calculating, estimating and recording accounts payable 

for the largest obligations quarterly. (New)

3. Consider the accounts payable process a high risk area 

in connection with the agency’s management control 

program and conduct reviews and testing of the interim 

quarters for FY 2009 accordingly. (New)

4. Establish historical relationships between accrued 

expenses and unliquidated obligation levels that may 

support near term calculations of accounts payable and 

related accrued expenses. (New) 
85

Chapter 3 ■ Financial Statements and Auditors’ Report

Our assessment of the current status of reportable conditions and material weaknesses identifi ed in prior year audits is 

presented below:

Prior Recommendation Type Fiscal Year 2008 

Status

1. Th e NRC CFO should coordinate with the Offi ce of 

Information Services and the Executive Director for 

Operations to ensure that any vulnerabilities of the 

general support systems and the fi nancial management 

systems are addressed and resolved timely.

2007 Material Weakness/

Substantial Noncompliance 

with Laws and Regulations

Closed.

2. Th e NRC CFO should continue to defi ne, design and 

implement compensating controls over the fee billing 

system.

2007 Signifi cant 

Defi ciency

Closed.

APPENDIX B – STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

86

 November 7, 2008

MEMORANDUM TO: Stephen D. Dingbaum

 Assistant Inspector General for Audits

 Offi ce of the Inspector General

FROM: J. E. Dyer 

 Chief Financial Offi cer

SUBJECT: AUDIT OF THE FISCAL YEAR 2008 FINANCIAL STATEMENTS

We appreciate the collaborative relationship between the Offi ce of the Inspector General, the auditors, and the Offi ce of the 

Chief Financial Offi cer in supporting our continuing eff ort to improve fi nancial reporting. We have reviewed the independent 

auditors’ report of the agency’s fi scal year 2008 fi nancial statements and are in general agreement with the report and overall 

fi ndings.

Our responses to the recommendations follow:

RECOMMENDATION 1

Ensure the NRC’s long term plans for replacing the core fi nancial management system evaluate the system requirements for 

recording accounts payable and related accrued expenses at the transaction level.

RESPONSE

Agree. Th e Offi ce of the Chief Financial Offi cer (OCFO) will include system requirements for recording accounts payable and 

related accrued expenses at the transaction level in the functional requirements of the new core fi nancial system.

OFFICE OF THE

CHIEF FINANCIAL OFFICER

UNITED STATES

NUCLEAR REGULATORY COMMISSION

WASHINGTON, D.C. 20555-0001

MANAGEMENT’S RESPONSE TO THE INDEPENDENT AUDITORS’ 

REPORT ON THE FINANCIAL STATEMENTS
87

Chapter 3 ■ Financial Statements and Auditors’ Report

RECOMMENDATION 2

Document the NRC’s policies and procedures for calculating, estimating, and recording accounts payable for the largest 

obligations quarterly. 

RESPONSE

Agree. Th e OCFO will document the policies and procedures for calculating, estimating and recording accounts payable for 

the largest obligations quarterly.

RECOMMENDATION 3

Consider the accounts payable process a high-risk area in connection with the agency’s management control program and 

conduct reviews and testing of the interim quarters for FY 2009 accordingly. 

RESPONSE

Agree. While we do not consider the accounts payable process to be a high-risk area in connection with our management 

control program, it merits the continued attention of management. NRC will conduct reviews and testing of the interim 

quarters for FY 2009 accordingly. 

RECOMMENDATION 4

Establish historical relationships between accrued expenses and unliquidated obligation levels that may support near term 

calculations of accounts payable and related accrued expenses.

RESPONSE

Agree. Th e OCFO will begin to establish our understanding of the historical relationship between accrued expenses and 

unliquidated obligation levels through various means including trend analysis.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

88
Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

APPENDICES

A INSPECTOR GENERAL’S ASSESSMENT OF THE MOST

SERIOUS MANAGEMENT AND PERFORMANCE CHALLENGES

FACING THE NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

B MANAGEMENT DECISIONS AND FINAL ACTIONS ON OIG AUDIT

RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

C SUMMARY OF FINANCIAL STATEMENT AUDIT AND

MANAGEMENT ASSURANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

D VERIFICATION AND VALIDATION OF NRC’S MEASURES

AND METRICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

E AGREEMENT STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

F NRC ORGANIZATIONAL CHART . . . . . . . . . . . . . . . . . . . . . . . . . . 163

G ACRONYMS AND ABBREVIATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 167

GENERAL’S ASSESSMENT OF THE MOST

ANAGEMENT AND PERFORMANCE CHALLENGES

E NRC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

NT DECISIONS AND FINAL ACTIONS ON OIG AUDIT

DATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

F FINANCIAL STATEMENT AUDIT AND

NT ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133

ON AND VALIDATION OF NRC’S MEASURES

CS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

90

NRC Region IV inspector Linda Gersey (right) surveys for gamma radiation at the Smith Ranch in situ leach 

uranium recovery facility, owned by Power Resources Inc., in eastern Wyoming. NRC staff conducted an 

unannounced inspection of the facility on September 23-25, 2008.

Photo Courtesy of NRC Image Library.
91

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

APPENDIX A

INSPECTOR GENERAL’S ASSESSMENT OF 

THE MOST SERIOUS MANAGEMENT AND 

PERFORMANCE CHALLENGES FACING 

THE NRC
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

92

APPENDIX A TABLE OF CONTENTS

Executive Summary .......................................................................................................................................................................... 93

Abbreviations and Acronyms ......................................................................................................................................................... 94

I. Background ................................................................................................................................................................................... 95

II. Purpose ........................................................................................................................................................................................... 95

III. Evaluation Results ..................................................................................................................................................................... 95

Challenge 1 – Protection of nuclear material used for civilian purposes ................................................................................ 96

Challenge 2 – Managing information to balance security with openness and accountability ............................................ 97

Challenge 3 – Implementation of a risk-informed and performance-based regulatory approach ...................................... 98

Challenge 4 – Ability to modify regulatory processes to meet a changing environment, to include 

the licensing of new nuclear facilities .................................................................................................................. 99

Challenge 5 – Oversight of radiological waste .......................................................................................................................... 100

Challenge 6 – Implementation of information technology and information security measures .......................................101

Challenge 7 – Administration of all aspects of fi nancial management ................................................................................. 102

Challenge 8 – Managing human capital ......................................................................................................................................103

IV. Conclusion ...............................................................................................................................................................104

Scope and Methodology ................................................................................................................................................................. 104
93

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

EXECUTIVE SUMMARY

BACKGROUND

Th e Reports Consolidation Act of 2000 requires the Inspector General (IG) of each Federal agency to summarize annually 

what he or she considers to be the most serious management and performance challenges facing the agency and to assess the 

agency’s progress in addressing those challenges. 

PURPOSE

In accordance with the act’s provisions, the Inspector General of the NRC updated what he considers to be the most 

serious management and performance challenges facing NRC. Th e IG evaluated the overall work of the Offi ce of the Inspector 

General (OIG), the OIG staff ’s general knowledge of agency operations, and other relevant information to develop and update 

his list of management and performance challenges. As part of the evaluation, OIG staff sought input from NRC’s Chairman, 

Commissioners, and management to obtain their views on what challenges the agency is facing and what eff orts the agency has 

taken to address previously identifi ed management and performance challenges.

RESULTS IN BRIEF

Th e IG identifi ed eight challenges that he considers the most serious management and performance challenges facing NRC. 

Th e challenges he identifi ed represent critical areas or diffi cult tasks that warrant high-level NRC management attention. 

Th is year’s list of challenges refl ects several changes from last year’s list. 

Prior challenge 2, “Appropriate handling of information,” was combined with prior challenge 7, “Communication with 

external stakeholders throughout NRC regulatory activities.” Th e consolidation of these challenges resulted in the following 

description for new challenge 2, “Managing information to balance security with openness and accountability,” which captures 

the need for both openness and protection of information. 

Prior challenge 3, “Development and implementation of a risk-informed and performance-based regulatory approach,” 

was revised to the current challenge 3, “Implementation of a risk-informed and performance-based regulatory approach.” 

Th is change refl ects the relative maturity of NRC’s risk-informed and performance-based regulatory programs and their 

advancement beyond developmental eff orts to implementation activities. 

Prior challenge 4, “Ability to modify regulatory processes to meet a changing environment,” specifi cally the potential for 

a nuclear renaissance, was reworded to more precisely focus on licensing issues. Current challenge 4 now states, “Ability to 

modify regulatory processes to meet a changing environment, to include the licensing of new nuclear facilities.” Waste issues, 

formerly covered in challenge 4, are refl ected in a new challenge 5, “Oversight of radiological waste.”

Prior challenge 5, “Implementation of information technology,” was reworded to current challenge 6, “Implementation 

of information technology and information security measures,” to emphasize the need to ensure that information technology 

resources use technological solutions for information security when appropriate.

Th e chart that follows provides an overview of the eight most serious management and performance challenges as of 

September 30, 2008.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

94

MOST SERIOUS MANAGEMENT AND

PERFORMANCE CHALLENGES FACING THE

NUCLEAR REGULATORY COMMISSION* 

AS OF SEPTEMBER 30, 2008

(AS IDENTIFIED BY THE INSPECTOR GENERAL)

Challenge 1 Protection of nuclear material used for 

civilian purposes.

Challenge 2 Managing information to balance security 

with openness and accountability.

Challenge 3 Implementation of a risk-informed and 

performance-based regulatory approach.

Challenge 4 Ability to modify regulatory processes to 

meet a changing environment, to include 

the licensing of new nuclear facilities.

Challenge 5 Oversight of radiological waste.

Challenge 6 Implementation of information 

technology and information security 

measures.

Challenge 7 Administration of all aspects of fi nancial 

management.

Challenge 8 Managing human capital.

*The most serious management and performance challenges are not ranked 

in any order of importance.

CONCLUSION

Th e eight challenges contained in this report are distinct, 

yet interdependent relative to the accomplishment of NRC’s 

mission. For example, the challenge of managing human 

capital aff ects all other management and performance 

challenges. 

Th e agency’s continued progress in taking actions to 

address the challenges presented should facilitate successfully 

achieving the agency’s mission and goals.

ABBREVIATIONS AND 

ACRONYMS

CFR Code of Federal Regulations

COL combined operating license

CUI controlled unclassifi ed information

DOE U.S. Department of Energy

FY fi scal year

IG Inspector General

IT information technology

MC&A material control and accounting

NMSS Offi ce of Nuclear Material Safety and 

Safeguards

NMMSS Nuclear Materials Management and 

Safeguards System

NRC U.S. Nuclear Regulatory Commission

NSTS National Source Tracking System

OIG Offi ce of the Inspector General

T&L time and labor
95

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

I. BACKGROUND

On January 24, 2000, Congress enacted the Reports 

Consolidation Act of 2000, requiring Federal agencies to 

provide fi nancial and performance management information 

in a more meaningful and useful format for Congress, the 

President, and the public. Th e act requires the Inspector 

General (IG) of each Federal agency to summarize annually 

what he or she considers to be the most serious management 

and performance challenges facing the agency and to assess 

the agency’s progress in addressing those challenges.

II. PURPOSE

In accordance with the act’s provisions, the NRC IG 

updated what he considers to be the most serious management 

and performance challenges facing the agency. Th e IG 

evaluated the overall work of the Offi ce of the Inspector 

General (OIG), the OIG staff ’s general knowledge of agency 

operations, and other relevant information to develop and 

update his list of management and performance challenges.

In addition, OIG sought input from NRC’s Chairman, 

Commissioners, and management to obtain their views on 

what challenges the agency is facing and what eff orts the 

agency has taken or planned to address previously identifi ed 

management and performance challenges.

III. EVALUATION RESULTS

Th e NRC’s mission is to regulate the Nation’s civilian use 

of byproduct, source, and special nuclear materials to ensure 

adequate protection of public health and safety, promote the 

common defense and security, and protect the environment. 

Like other Federal agencies, NRC faces management and 

performance challenges in carrying out its mission.

DETERMINATION OF MANAGEMENT AND

PERFORMANCE CHALLENGES

Congress left the determination and threshold of what 

constitutes a most serious management and performance 

challenge to the discretion of the Inspectors General. As a 

result, the IG applied the following defi nition in identifying 

challenges:

Serious management and performance challenges are 

mission critical areas or programs that have the potential 

for a perennial weakness or vulnerability that, without 

substantial management attention, would seriously impact 

agency operations or strategic goals.

Based on this defi nition, the IG revised his list of the 

most serious management and performance challenges 

facing NRC. Th e challenges identifi ed represent critical areas 

or diffi cult tasks that warrant high-level NRC management 

attention. Th e following chart provides an overview of the 

eight management challenges. Th e sections that follow provide 

more detailed descriptions of the challenges, descriptive 

examples related to the challenges, and examples of eff orts 

that the agency has taken or are underway to address the 

challenges. 

MOST SERIOUS MANAGEMENT AND

PERFORMANCE CHALLENGES FACING THE

NUCLEAR REGULATORY COMMISSION* 

AS OF SEPTEMBER 30, 2008

(AS IDENTIFIED BY THE INSPECTOR GENERAL)

Challenge 1 Protection of nuclear material used for 

civilian purposes.

Challenge 2 Managing information to balance security 

with openness and accountability.

Challenge 3 Implementation of a risk-informed and 

performance-based regulatory approach.

Challenge 4

Ability to modify regulatory processes to 

meet a changing environment, to include 

the licensing of new nuclear facilities.

Challenge 5 Oversight of radiological waste.

Challenge 6 Implementation of information technology 

and information security measures.

Challenge 7 Administration of all aspects of fi nancial 

management.

Challenge 8 Managing human capital.

*The most serious management and performance challenges are not ranked 

in any order of importance.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

96

CHANGES TO MANAGEMENT

CHALLENGES

Th is year’s list of challenges refl ects several changes from 

last year’s list. 

CONSOLIDATION OF TWO CHALLENGES

Prior challenges 2 and 7 were combined to form 

challenge 2, “Managing information to balance security with 

openness and accountability,” which captures the need for 

both openness and protection of information.1

NEW WORDING FOR THREE

CHALLENGES

Prior challenge 3 was revised to the current challenge 

3 language, “Implementation of a risk-informed and 

performance-based regulatory approach.”2

 Th is change 

refl ects the relative maturity of NRC’s risk-informed 

and performance-based regulatory programs and 

their advancement beyond developmental eff orts to 

implementation activities. 

Prior challenge 4 was reworded to more precisely focus 

on licensing issues.3

 New challenge 4 states, “Ability to modify 

regulatory processes to meet a changing environment, to 

include the licensing of new nuclear facilities.”

Prior challenge 5 was reworded to current challenge 6, 

“Implementation of information technology and information 

security measures,” to include emphasis on ensuring that 

information technology (IT) resources use technological 

solutions for information security when appropriate.4

1 2007 challenge 2, “Appropriate handling of information.” 2007 

challenge 7, “Communication with external stakeholders throughout 

NRC regulatory activities.”

2 2007 challenge 3, “Development and implementation of a 

risk-informed and performance-based regulatory approach.”

3 2007 challenge 4, “Ability to modify regulatory processes to meet 

a changing environment, specifically the potential for a nuclear 

renaissance.”

4 2007 challenge 5, “Implementation of information technology.”

NEW CHALLENGE

Waste issues, formerly covered in the writeup 

corresponding to challenge 4, are refl ected in a new 

challenge 5, “Oversight of radiological waste.” Managing 

current and future waste is a major issue for the nuclear 

industry and the Nation, and NRC must be prepared to 

support safe, sound, and long-lasting solutions for high- and 

low-level nuclear waste.

NRC is authorized to grant licenses for the possession 

and use of radioactive materials and establishes regulations 

to govern the possession and use of those materials. NRC’s 

regulations require that certain material licensees have 

extensive material control and accounting (MC&A) programs 

as a condition of their licenses. All other license applications 

(including those requesting authorization to possess small 

quantities of special nuclear materials) must develop 

and implement plans that demonstrate a commitment to 

accurately control and account for radioactive materials.

Th e issues facing NRC and the agency’s actions to address 

each issue include the following: 

Issue: Ensure that radioactive material is adequately 

protected to preclude its use for malicious 

purposes.

Action: NRC is enhancing its material licensing processes, 

including a new policy for onsite visits for issuing 

new material licenses, examinations of existing 

licenses to determine their legitimacy, and the 

formation of a working group to update and revise 

existing material licensing guidance. 

Issue: Ensure adequate inspections to verify licensees’ 

commitments to their material control and 

accounting programs.

Action: NRC is enhancing its inspection program. 

Currently, fuel cycle MC&A inspections are 
97

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

a shared responsibility between the Offi ce of 

Nuclear Material Safety and Safeguards (NMSS) 

and Region II, with two MC&A inspectors in each 

location. Additionally, the Commission approved 

a staff proposed rulemaking eff ort to include 

enhancements to MC&A inspection frequency and 

on April 25, 2008, the staff provided its rulemaking 

plan to the Commission. Th e rulemaking is ongoing 

under the sponsorship of NMSS and the Offi ce of 

Federal and State Materials and Environmental 

Management Programs.

Issue: Ensure reliable accounting of special nuclear 

materials in the NRC and U.S. Department 

of Energy’s (DOE’s) jointly managed Nuclear 

Materials Management and Safeguards System 

(NMMSS).

Action: NRC has been working since 2003 to resolve issues 

of material control and accounting in response 

to OIG-03-A-15, “Audit of NRC’s Regulatory 

Oversight of Special Nuclear Materials.” To improve 

the accuracy of material inventory information 

maintained in NMMSS, NRC approved the fi nal 

rule on February 7, 2008, amending the Code of 

Federal Regulations (CFR) Title 10, Parts 40, 72, 74, 

and 150. Th is added requirements to track smaller 

quantities of special nuclear material. However, 

the Commission approved a DOE request to delay 

implementation by 1 year. 

Issue: Implement the National Source Tracking System 

(NSTS) to ensure the accurate tracking of 

byproduct material, especially those materials with 

the greatest potential to impact public health and 

safety. 

Action: NRC expects to have NSTS on line by 

December 31, 2008, initially populating the system 

with data submitted into an interim database 

by licensees during 2008. In addition, NRC has 

initiated several rulemakings to expand the 

materials tracked in NSTS.

Issue: Ensure that Agreement State programs are 

adequate to protect public health and safety and 

the environment, and are compatible with NRC’s 

program.

Action: NRC continues to conduct about 10 to 12 reviews 

per year of Agreement State radioactive materials 

programs under NRC’s integrated materials 

performance evaluation program.

NRC employees create and work with a signifi cant 

amount of sensitive information that needs to be protected. 

Such information includes sensitive unclassifi ed information 

and classifi ed national security information contained in 

written documents and various electronic databases.

In addressing continuing terrorist activity worldwide, 

NRC continually reexamines its information management 

policies and procedures. NRC faces the challenge of attempting 

to balance the need to protect sensitive information from 

inappropriate disclosure with the agency’s goal of openness 

in its regulatory processes. Over the past year, NRC has made 

various eff orts to improve public access to information while 

protecting sensitive information, including security-related 

information, from inappropriate disclosure.

Th e issues facing NRC and the agency’s actions to address 

each issue include the following: 

Issue: Manage information in accordance with new 

Federal Government policies for designating, 

marking, safeguarding, and disseminating 

controlled unclassifi ed information (CUI). 

Action: NRC will implement new CUI policies and 

procedures over a 5-year period once guidance 

has been issued by the National Archives and 

Records Administration. Safeguards information is 

exempt from the new regulations; therefore, NRC 

will continue to manage safeguards information 

according to current policies. 

Issue: Ensure that sensitive information is handled in 

accordance with agency policies and procedures for 

public disclosure.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

98

Action: NRC responded to congressional and public 

concern regarding an incident at a Nuclear Fuel 

Services, Inc., facility by reviewing and releasing 

a number of pertinent agency documents that had 

not been made publicly available. In addition, the 

NRC resumed public meetings on the facility’s 

performance during the fall of 2007. 

Action: NRC issued multiple announcements related to 

the appropriate handling of information. It also 

completed reviews of shared network drives and 

offi ce fi les to ensure that personally identifi able 

information and Privacy Act information was 

adequately protected or removed if unnecessary.

Issue: Provide external stakeholders with clear and 

accurate information about regulatory programs 

and facilitate public participation in the regulatory 

process.

Action: Th e staff conducted monthly, public, working-level 

meetings with industry and public stakeholders to 

discuss ongoing changes to the Reactor Oversight 

Process. Th e staff also conducted public meetings 

near each operating reactor to discuss results of 

the NRC’s annual assessment of the licensee’s 

performance. Further, staff held an annual public 

meeting in November 2007, to present information 

on the overall security performance of the 

commercial reactor industry, and to respond to 

questions and solicit comments on nuclear security 

issues. Lastly, in November 2007, staff issued a 

revised communications plan for engaging Federal, 

Tribal, State, and local government stakeholders.

NRC’s intent is to increase its safety focus on 

licensing and oversight activities through the application 

of a balanced combination of experience, deterministic 

models, and probabilistic analysis. Th is approach is known 

as risk-informed and performance-based regulation. 

Incorporating risk analysis into regulatory decisions is 

intended to improve the regulatory process by focusing both 

NRC and licensee attention and activities on the areas of 

highest risk.

Th e issues facing NRC and the agency’s actions to address 

each issue include the following: 

Issue: Ensure that the appropriate level of focus on 

risk-informed and performance-based regulation 

is maintained.

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

risk-informed performance-based plan, including 

a recent expansion of the plan’s objectives to 

more fully achieve a holistic, risk-informed, and 

performance-based regulatory structure. 

Issue: Develop and implement risk-informed and 

performance-based regulation for fuel cycle 

facilities.

Action: Th e agency conducted risk analyses during an 

application review for a proposed gas centrifuge 

facility and continued implementation of an 

enhanced fuel cycle facility oversight process.

Issue: Ensure that the Reactor Oversight Process meets 

the agency’s regulatory needs.

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

the Reactor Oversight Process to better identify 

signifi cant performance issues and to ensure that 

licensees take appropriate actions to maintain 

acceptable safety performance. 

Issue: Ensure that research programs enhance the validity 

of current risk models, and also develop risk 

insights for new technologies, including program 

areas transitioning to risk-informed regulation.

Action: NRC continues to make progress in developing risk 

assessments. For example, NRC completed a review 

of the fi re probabilistic risk assessment for two 

nuclear power plants. Th e agency also continues to 

develop tools that allow staff to make complex and 

probabilistic risk-assessment calculations on their 

desktop computers. 
99

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

NRC faces the challenge of maintaining its core 

regulatory programs while adapting to changes in its 

regulatory environment. NRC must address a growing 

interest in licensing and constructing new nuclear power 

plants to meet the Nation’s demand for energy production. 

By August 2008, NRC had received 12 combined operating 

license (COL) applications (Calvert Cliff s, South Texas 

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

Gulf, Vogtle, V.C. Summer, Comanche Peak, Levy County, 

and Victoria County). NRC expects to receive additional 

COL applications.

While responding to the emerging demands associated 

with licensing and regulating new reactors, NRC must 

maintain focus and eff ectively carry out its current regulatory 

responsibilities, such as inspections of the current fl eet of 

operating nuclear reactors and fuel cycle facilities. 

Th e challenges facing NRC and the agency’s actions to 

address each challenge include the following: 

NEW FACILITIES

Issue: Instituting a Construction Inspection Program.

■ Developing strong control processes for project 

management to ensure the agency meets its new 

reactor review and licensing objectives.

■ Developing technical review processes.

■ Ensuring a comprehensive standard review plan 

and adequately documented safety evaluation 

reports.

Action: NRC is taking a design-centered review approach 

to optimize the COL application review process. 

Th e Offi ce of New Reactors is in the process of 

developing a new construction inspection program 

in accordance with 10 CFR 52. Th e new program of 

“inspections, tests, analyses, and acceptance criteria” 

has been integrated into the 10 CFR Part 52 licensing 

process to create a design-specifi c, preapproved set 

of performance standards. Licensees must meet 

these standards and the Commission must fi nd that 

the standards have been met before the licensee can 

load fuel and operate the plant.

Issue: Ensure that the process for reviewing applications 

for new facilities meets the public’s demand for 

new energy sources while focusing on safety and 

eff ectiveness.

Action: NRC’s preparations have been focused on issuing 

reactor design certifi cations, revising the regulation 

that governs early site permits, and engaging in 

ongoing interactions with nuclear plant designers 

and utilities regarding prospective new reactor 

applications and licensing activities.

EXISTING FLEET

Issue: Ensure the ability to review licensee applications 

for license renewals and power uprates submitted 

by industry in response to the Nation’s demand for 

energy production. 

Action: NRC continues to work with plant licensees 

to develop a schedule of anticipated license 

amendment requests for license renewals and power 

uprates. Th e agency has implemented a number of 

recommendations to improve the license renewal 

review process, to include closer management 

oversight of the renewal process, as well as to 

provide additional guidance to standardize the 

content of NRC’s license renewal review reports.

Issue: Respond to a heightened public focus on license 

renewals resulting in contested hearings.

Action: NRC has open dialogs with the industry, licensees, 

and stakeholders, and appropriate comments 

have been incorporated into new inspection 

procedures. NRC staff explained details of the new 

procedures during breakout sessions at the agency’s 

2008 Regulatory Information Conference.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

100

Issue: Address increasing quantities of radiological waste 

requiring interim or permanent disposal sites.

Action: NRC developed and implemented a risk-informed 

decisionmaking framework in connection with a 

wide range of nuclear waste storage issues. Th e NRC 

has conducted reviews using the framework for dry 

cask waste storage systems and concluded that such 

systems provide a safe means to store spent nuclear 

fuel with exceedingly low risk.

Issue: Address issues regarding the license application to 

construct a high-level radioactive waste repository 

at Yucca Mountain, NV.

Action: Th e NRC received the Yucca Mountain license 

application from DOE in June 2008. Consistent with 

direction in the Nuclear Waste Policy Act and the 

Energy Policy Act, the agency has been conducting 

high-level waste prelicensing activities to ensure 

appropriate standards and regulatory guidance are 

in place. Additionally, NRC is interacting with the 

applicant, the DOE, such that the licensing review 

for a potential Yucca Mountain high-level waste 

repository can be conducted in 3 to 4 years as directed 

by Congress. NRC is also preparing to publish 

a fi nal revision to 10 CFR Part 63 to align agency 

regulations to new U.S. Environmental Protection 

Agency standards for radiation protection at a 

high-level waste repository. 

Issue: Oversight of low-level waste disposal, including 

low-level radioactive waste disposal sites.

Action: NRC has informed fuel cycle and materials licensees 

about the potential need to store some low-level 

radioactive waste onsite for an extended period aft er 

the low-level waste disposal facility in Barnwell, SC, 

closed. NRC-updated guidance advises licensees to 

consider ways to minimize production of Class B 

and C low-level waste.

Issue: Oversight of nuclear waste issues associated with the 

decommissioning and cleanup of nuclear reactor 

sites and other facilities.

Issue: Ensure the ability to identify emerging operating and 

safety issues at all plants, including issues associated 

with extended and uprated licenses; consistently 

apply regulatory and review changes in response 

to these emerging issues across the existing fl eet of 

reactors.

Action: Annually, agency staff communicate the status of the 

power uprate program to the Commission. Th e staff 

is currently revising Inspection Procedure 71004 to 

provide additional guidance on inspection planning, 

implementation, and documentation. 

Issue: Establish and maintain eff ective, stable, and 

predictable regulatory programs or policies for all 

programs.

Action: NRC continues to interface with stakeholders, 

develop regulatory policy, update rules and technical 

guidance, provide technical lead and management 

for the Reactor Oversight Process, and support 

the development of programmatic changes when 

needed.

High-level radioactive waste is primarily in the form of 

spent nuclear fuel generated from commercial nuclear power 

reactors. NRC faces signifi cant issues involving the potential 

licensing of the proposed Yucca Mountain, NV, repository for 

storing high-level radioactive waste. Additional challenges in 

the high-level waste area include the interim storage of spent 

nuclear fuel, certifi cation of storage and transportation casks, 

and the oversight of decommissioned reactors and other 

nuclear sites.

Additionally, the amount of low-level waste continues 

to grow; however, no new disposal facilities have been built 

since the 1980s and unresolved issues will grow as the 

once-operational disposal facilities shut down.

Th e challenges facing NRC and the agency’s actions to 

address each challenge include the following: 
101

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

Action: NRC continues to hold public meetings with 

stakeholders and licensees to explore safe and secure 

storage options associated with decommissioning of 

plants, such as transitioning from spent pool storage 

to dry cask storage.

NRC needs to continue upgrading and modernizing its 

IT capabilities both for employees and for public access to the 

regulatory process. Recognizing the need to modernize, the 

Offi ce of Information Services established goals to improve 

the productivity, effi ciency, and eff ectiveness of agency 

programs and operations, and enhance the use of information 

for all users inside and outside the agency. NRC also needs to 

ensure that system security controls are in place to protect 

the agency’s information systems against misuse.

Th e issues related to this challenge and the agency’s 

actions to address each issue include the following:

Issue: Upgrade and manage IT activities to improve the 

productivity, effi ciency, and eff ectiveness of agency 

programs and operations.

Action: NRC recognizes that it continues to lag behind 

many other Federal agencies in terms of its IT 

infrastructure. For example, it recently upgraded 

soft ware applications to include Microsoft Offi ce 

Suite and Microsoft Outlook—both commonly used 

in the private and public sectors. In addition, the 

agency has begun to address longstanding telephone 

problems by upgrading the telephone system 

performance both with new enhanced features and 

service as well as bandwidth capabilities. 

Issue: Implement a program to provide program offi ce 

laptop computers with enhanced functionality, 

security, and support. 

Action: Th e agency has set goals concerning laptops for 

the Offi ce of Information Services to implement 

in the next several years. Th e agency has identifi ed 

and is addressing its needs to (1) develop policies 

and standards for the use of laptop computers, 

(2) implement enterprise encryption and updating 

of operating systems to support the laptop program, 

and (3) provide secure wireless capability access. 

Th e use of laptop computers is expected to increase 

in the coming years. 

Issue: Ensure that information systems are protected.

Action Th e NRC Computer Security Offi ce was formed 

to provide an increased capability to oversee the 

integration of security controls into all IT projects 

and operations and to improve the security of 

automated information. Th e position of Chief 

Information Security Offi cer was established as the 

head of this offi ce.

Action: NRC has made progress in correcting the two 

signifi cant defi ciencies identifi ed in the 2007 

evaluation of the Federal Information Security 

Management Act concerning its information 

systemwide security controls. As of August 2008, 

more than half of the agency’s systems were certifi ed 

and accredited; however, the agency needs to 

certify and accredit all of its systems. Th e agency is 

working towards this goal and expects to complete 

all certifi cations and accreditations by the end of 

FY 2009. 

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

advance the organization’s strengthening of security 

controls that protect NRC’s information systems and 

information using a certifi cation and accreditation 

process. By implementing this contract, NRC hopes 

to ensure that security controls for information 

systems are adequate, and that unauthorized 

access, use, disclosure, disruption, modifi cation, or 

destruction of NRC’s information systems or data 

can be detected and prevented. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

102

NRC management is responsible for establishing 

and maintaining eff ective internal controls and fi nancial 

management systems that meet the objectives of several 

statutes including the Federal Managers’ Financial Integrity 

Act. Th is act mandates that NRC reasonably ensure that 

(1) obligations and costs comply with applicable law; (2) assets 

are safeguarded against waste, loss, unauthorized use, or 

misappropriation; and (3) revenues and expenditures are 

properly recorded and accounted for. Th is act encompasses 

programmatic and administrative areas, as well as accounting 

and fi nancial management.

Th e issues related to this challenge and the agency’s 

actions to address each issue include the following:

Issue: Replace or upgrade the agency’s current fi nancial 

systems, which are obsolete, overly complex, and 

ineffi cient.

Action: In June 2008, the Chairman approved 

the Financial Accounting and Integrated 

Management Information System 

Implementation project. Th e new system, which 

will replace fi ve aging fi nancial systems5

 with 

a single integrated core fi nancial system, is expected 

to be operational in October 2010. 

Action: NRC completed the eTravel pilot. eTravel is a 

Governmentwide initiative to improve internal 

effi ciency. Th e paperless system will automate travel 

documentation and approval routing of most travel 

arrangements. Th e lessons learned from the pilot 

are currently under review and may result in a delay 

of full implementation from the planned date of 

December 2008. 

Action: NRC plans to implement the upgrade to the Time 

and Labor (T&L) System during the second half 

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

System, Allotment/Allowance Financial Plan System, Cost Accounting 

System, and the Capitalized Property System.

of FY 2009. Th e upgrade will provide a modern, 

Web-enabled version of the existing PeopleSoft

T&L soft ware. Th e system will include electronic 

approval of time, as well as other forms associated 

with leave, overtime, and compensatory time. 

Action: In response to a business process improvement 

study that focused on time and labor and fee billing 

processes, the agency developed guidance for 

managing reporting codes. Initially, the number of 

reporting codes was reduced to fewer than 10,000; 

however, since January 2008, the number of codes 

has grown to approximately 20,000. Th e agency has 

issued further guidance and instituted a periodic 

review process to ensure that the new policy is 

consistently observed.

Issue: Ensure that the agency continues its eff orts to 

monitor the eff ectiveness of existing controls over 

the fee billing process and implement additional 

controls to address weaknesses identifi ed. 

Action: NRC improved its internal control over fee billing 

by implementing additional detection controls. 

As a result, the agency’s independent auditors 

downgraded the material weakness related to NRC’s 

legacy Fee Billing System to a signifi cant defi ciency. 

Th e agency continues to conduct reviews to ensure 

that detection controls are working as intended and 

to seek ways to improve the fee billing certifi cation 

process. Th ese reviews have identifi ed areas needing 

improvement. 

In addition to the issues noted above, the agency has taken 

several steps to meet the challenge of administering all aspects 

of fi nancial management. Th ose steps include implementing 

cross-servicing agreements for travel and contract support 

payment with an outside provider, evaluating the expansion 

of the cross-servicing eff ort to other NRC fi nancial activities, 

and engaging in a thorough review of unliquidated funds, 

which resulted in funds being made available to fund high 

priority activities. 
103

Appendix A ■ Inspector General’s Assessment of the Most Serious Management 

and Performance Challenges Facing the NRC

NRC’s human capital needs are changing due to the 

receipt of (1) applications to construct and operate the next 

generation of nuclear reactors, (2) DOE’s license application 

to construct a nuclear waste repository, and (3) industry 

applications to increase the number of fuel cycle facilities. To 

eff ectively manage human capital as these changes progress, 

while continuing to accomplish the agency’s mission, NRC 

must rigorously implement the following initiatives:

■ Timely personnel security adjudication

■ Space planning

■ Recruitment and knowledge management

Th e issues related to this challenge and the agency’s 

actions to address each issue include the following:

Issue: Achieve timely personnel security adjudication. 

Work start dates for NRC employees, contractors, 

and licensees are frequently delayed due to the 

time-consuming personnel security adjudication 

process currently in place for granting access 

authorization.

Action: Th e agency is reviewing its hiring process for 

external applicants, which includes the entire hiring 

and security process that occurs from identifi cation 

of an active vacancy through the entrance-on-duty 

date, and will develop recommendations to expedite 

the process. 

Action: In accordance with Executive Order 13467 dated 

June 30, 2008, “Reforming Processes Related to 

Suitability for Government Employment, Fitness 

for Contractor Employees, and Eligibility for Access 

to Classifi ed National Security Information,” NRC 

must develop reciprocity processes and procedures 

to accept applicable investigations and adjudications 

conducted by other Federal agencies. 

Action: In November 2007, the Offi ce of Administration 

hired two additional personnel security specialists 

for the adjudication of personnel security cases. 

Th ree additional personnel security specialists were 

brought on board during the summer of 2008.

Action: Th e Human Resources Recruitment Activity 

Tracking System was modifi ed to include security 

processing and adjudication status information. 

Reports from this system are shared with the 

program offi ces to keep managers informed of the 

status of their new hires.

Issue: NRC must continue to accomplish the agency’s 

mission during workspace related changes 

agencywide. In headquarters, changes involve the 

use of multiple headquarters offi ce buildings at 

various sites in Montgomery County, MD.

Action: NRC is implementing a Headquarters Strategic 

Housing Plan designed to meet space needs through 

FY 2009. Th is plan addresses workspace needs, 

workfl ow, and business processing structures. 

Beginning in 2013, the agency expects to begin 

occupying a new permanent building in an eff ort 

to reconsolidate headquarters staff . Once the moves 

to the new permanent building are complete, the 

agency will have headquarters staff consolidated in 

three buildings within the White Flint Complex in 

Rockville, MD. Furthermore, most NRC regional 

offi ces are seeking new offi ce space for additional 

staff in order to meet increased workload demands.

Issue: NRC must continue to address anticipated increased 

workload demands and retirements with recruitment 

and knowledge management strategies.

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

added to the workforce.6

 In FY 2007, the agency 

exceeded its hiring goal of a 200 net gain of staff by 

bringing on board 417 new employees. During FY 

2008, NRC is projected to bring on board 495 new 

employees with an estimated net gain of more 

than 200.

6 As of August 30, 2008, there were approximately 3,791 NRC staff.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

104

Action: NRC maintains a recruitment program that includes 

participation in approximately 80 recruitment 

events each year at colleges, universities, and 

professional conferences. Other initiatives include 

developing new recruitment displays and videos to 

show at recruitment events, hiring additional human 

resource staff to perform critical human resources 

work, and upgrading the agency’s Web-based job 

application tool.

Action: NRC is implementing knowledge management 

strategies7

 that include mentoring, early replacement 

hiring, and rehiring annuitants with or without 

use of a pension off set as applicable.8

 Th e agency 

also developed a knowledge management Web site, 

expressly for the purpose of retaining knowledge 

before key employees are promoted or retire.

IV. CONCLUSION

Th e eight challenges contained in this report are distinct, 

yet interdependent relative to the accomplishment of NRC’s 

mission. For example, the challenge of managing human 

capital aff ects all other management and performance 

challenges. 

Th e agency’s continued progress in taking actions to 

address the challenges presented should facilitate successfully 

achieving the agency’s mission and goals.

7 Knowledge management involves capturing critical information and 

making the right information available to the right people at the right 

time to assure that knowledge and experience of the current staff is 

passed on to the next generation of NRC staff.

8 This flexibility allows NRC to rehire a retiree to fill a position at full 

pay if the agency has experienced difficulty in filling a position, or if a 

temporary emergency exists.

SCOPE AND METHODOLOGY

Th is evaluation focused on the IG’s annual assessment of 

the most serious management and performance challenges 

facing the NRC. Th e challenges represent critical areas or 

diffi cult tasks that warrant high-level management attention. 

To accomplish this work, OIG focused on determining 

(1) current challenges, (2) the agency’s eff orts to address the 

challenges during FY 2008, and (3) future agency eff orts to 

address the challenges.

OIG reviewed and analyzed pertinent laws and 

authoritative guidance, agency documents, and OIG 

reports, and sought input from NRC offi cials concerning 

agency accomplishments relative to the challenge areas and 

suggestions they had for updating the challenges. Specifi cally, 

because challenges aff ect mission critical areas or programs 

that have the potential to impact agency operations or strategic 

goals, NRC Commission members, offi ces that report to the 

Commission, the Executive Director for Operations, and 

the Chief Financial Offi cer were aff orded the opportunity to 

share any information and insights on this subject. 

OIG conducted this evaluation from June through August 

2008. Th e major contributors to this report were Deputy 

Assistant Inspector General for Audits Anthony Lipuma, 

Team Leader Steven Zane, Team Leader Beth Serepca, Team 

Leader Sherri Miotla, and Senior Analyst Judy Gordon.
Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

APPENDIX B

MANAGEMENT DECISIONS 

AND FINAL ACTIONS 

ON OIG AUDIT 

RECOMMENDATIONS
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

106
107

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

Th e U.S. Nuclear Regulatory Commission (NRC) maintains an excellent record in resolving and implementing NRC 

Offi ce of the Inspector General’s (OIG) audit recommendations. Section 5(b) of the Inspector General Act of 1978, as amended, 

requires agencies to report on fi nal actions taken on OIG audit recommendations. Th e following table gives the dollar value 

of disallowed costs determined through contract audits conducted by the Defense Contract Audit Agency and NRC’s OIG. 

Because of the sensitivity of contractual negotiations, the agency will not provide details of these contract audits in this report. 

As of September 30, 2008, there were no outstanding audits recommending that funds be put to better use. 

MANAGEMENT REPORT ON OFFICE OF THE INSPECTOR GENERAL AUDITS 

WITH DISALLOWED COSTS

For the period October 1, 2007–September 30, 2008

Category

Number of 

Audit Reports

Questioned 

Costs

Unsupported 

Costs

1. Audit reports with management decisions on which fi nal action had 

not been taken at the beginning of this reporting period. 0 $0 $0

2. Audit reports on which management decisions were made during 

this period. 1 $193,585 $0

3. Audit reports on which fi nal action was taken during this report period.

(i) Disallowed costs that were recovered by management through 

collection, off set, property in lieu of cash, or otherwise.

(ii) Disallowed costs that were written off by management.

0

0

$0

$0

$0

$0

4. Reports for which no fi nal action had been taken by the end of the 

reporting period. 1 $193,585 $0
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

108

MANAGEMENT DECISIONS NOT IMPLEMENTED WITHIN 1 YEAR

For the OIG audit reports listed in the following tables, the NRC made management decisions before October 1, 2007. As 

of September 30, 2008, NRC had not taken fi nal action, including OIG fi nal review and closure, on some issues. Completion 

of the activities listed in the column “Actions Pending” will complete agency action on the listed OIG audit and evaluation 

recommendations. 

GOVERNMENT PERFORMANCE AND RESULTS ACT: REVIEW OF THE FY 1999 PERFORMANCE

REPORT (OIG-01-A-03)

February 23, 2001

Th e OIG conducted this audit at the request of the chairman of the Senate Committee on Governmental Aff airs to 

determine if NRC’s FY 1999 performance data were valid and reliable and if the FY 2000 performance data would be 

more valid and reliable. Th e audit found that while NRC was improving and strengthening its performance reporting 

process, as interim policy guidance, the agency needed to institute management control procedures to produce valid and 

reliable data. Th e agency should then institutionalize the procedures in an NRC management directive (MD). 

Open Recommendations Actions Pending

1. Develop an NRC management 

directive (MD) to provide 

the management controls 

needed to ensure that the NRC 

produces credible Government 

Performance and Results Act 

(GPRA) documents. 

The NRC issued interim guidance for performance management and reporting 

performance information in July 2001, consistent with GPRA requirements. In July 

2002, the NRC issued a new MD and Handbook 4.8, “Performance Measurements,” 

for intraagency review and comment. Staff subsequently decided that the agency 

should address performance measurement in the broader context of budget and 

performance integration. Therefore, the NRC decided to incorporate MD 4.8 into 

a revision of MD and Handbook 4.7, which will be titled “Planning, Budgeting, and 

Performance Management.” Revised MD 4.7 and Handbook will clarify the roles 

and responsibilities in setting the agency’s strategic direction, determining planned 

activities and resources, measuring and monitoring performance, and assessing 

performance. 

In August 2007, the Commission directed the Chief Financial Officer, in coordination 

with staff, to provide options for improving the agency’s budget formulation process. 

Staff developed and implemented a new top-down budget process in formulating the 

agency’s FY 2010 budget. 

Since a major section of MD and Handbook 4.7 addresses roles and responsibilities 

in the agency’s budget formulation process, staff pushed back the update of MD 

and Handbook 4.7 to factor in lessons learned from the FY 2010 budget process. In 

late FY 2008, staff is considering lessons learned as part of an NRC task force that is 

reviewing the agency’s budget formulation process and budget structure. 

Based on the task force’s current schedule for issuing guidance on the agency’s budget 

formulation process, staff expects to publish the MD and Handbook 4.7 in June 2009.

3. Include guidance on reporting 

unmet goals in both the 

management directive and the 

interim policy guidance on 

implementing GPRA initiatives.
109

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

REVIEW OF NRC’S HANDLING AND MARKING OF SENSITIVE UNCLASSIFIED INFORMATION

(OIG-03-A-01)

October 16, 2002

This OIG conducted this audit to assess NRC’s program for handling, marking, and protecting of official use only (OUO) 

information, a category of sensitive unclassified information. The audit found that NRC’s program and guidance for the handling

and marking of sensitive unclassified information may not adequately protect OUO information from inadvertent public disclosure. 

The audit also found and that the agency does provide training on a regular basis to all NRC employees and contractors on 

handling and protecting sensitive unclassified information. 

Open Recommendations Actions Pending

1. Update the guidance for OUO documents 

to require clear identification of sensitive 

unclassified information to prevent its 

inadvertent disclosure.

Agency corrective actions require issuance of a revised management 

directive (MD) covering sensitive unclassified, nonsafeguards 

information (SUNSI) and a new MD covering safeguards information 

(SGI). The NRC issued MD 12.7, “NRC Safeguards Information 

Security Program,” on SGI on June 25, 2008. The revision of SUNSI 

is on hold pending the issuance of standard Federal guidance on 

Controlled Unclassified Information (CUI) by the National Archives 

and Records Administration, which is the executive agent for 

implementing the CUI policy. NRC will revise SUNSI policy to align 

it with the CUI guidance. Updated guidance is currently due on 

October 31, 2009. 

2. Mandate consistent use of defined markings 

on documents containing OUO information 

and clarify the markings that should be used on 

sensitive unclassified information. 

AUDIT OF NRC’S REGULATORY OVERSIGHT OF SPECIAL NUCLEAR MATERIALS (OIG-03-A-15) 

May 23, 2003

The OIG conducted this audit to determine whether NRC adequately ensures that its licensees control and account for special 

nuclear material (SNM). The audit found that NRC’s current levels of oversight of licensees’ material control and accounting 

(MC&A) activities do not provide adequate assurance that all licensees properly control and account for SNM. The audit reported

that NRC performs only limited inspections of licensees’ MC&A activities and thus cannot assure the reliability of data in the 

Nuclear Materials Management and Safeguards System. The U.S. Department of Energy manages this computer database and 

shares it with the NRC as the national system for tracking certain private- and Government-owned nuclear materials. 

Open Recommendations Actions Pending

1. Conduct periodic inspections to verify 

that material licensees comply with 

MC&A requirements, including but not 

limited to visual inspections of licensees’ 

SNM inventories and validation of report 

information. 

NRC expects to issue a proposed rule in late 2009, with issuance 

of the final rule by December 2010. The final rule will enhance 

MC&A regulations, inspections, and the licensing process. 

The work on the rulemaking will include documentation of 

the technical basis for risk-informing the MC&A program and 

how the rulemaking will be applied to the program. By July 

2011, NRC expects to have completed the application of riskinforming the MC&A program. The agency will determine 

inspection resources and frequencies for all types of materials 

licensees’ MC&A inspections for SNM.

3. Document the basis of the approach 

used to risk-inform NRC’s oversight of 

MC&A activities for all types of materials 

licensees. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

110

AUDIT OF NRC’S INCIDENT RESPONSE PROGRAM (OIG-04-A-20)

September 16, 2004

The OIG conducted this audit to determine whether the NRC performs its incident response program in a timely and effective 

manner, provides adequate support to licensees, and maintains readiness and qualifications of staff. The audit found that 

while NRC has improved its program since the Three Mile Island 2 accident on March 29, 1979, the agency needs to do more 

to ensure that the program is performed consistently, is more fully understood by licensees, and maintains a well-defined 

process for demonstrating staff are qualified and ready to respond. 

Open Recommendations Actions Pending

4. Periodically review regional incident 

response programs to ensure NRC’s 

incident response program is carried 

out consistently across the agency.

To implement the Incident Response Self-Assessment Program, the agency 

began by developing a self-assessment plan that was tested in NRC Region II. In 

April 2008, the agency performed a self-assessment in Region I. Another selfassessment was completed for Region IV in October 2008. By July 2009, the 

NRC plans to institute self-assessments in all of the NRC regions.

INDEPENDENT EVALUATION OF NRC’S IMPLEMENTATION OF THE FEDERAL INFORMATION SECURITY

MANAGEMENT ACT FOR FY 2004 (OIG-04-A-22) 

September 30, 2004

This was an independent evaluation of NRC’s implementation of the Federal Information Security Management Act for FY 2004. 

The review found that while NRC had made improvements to its automated information security program, the agency still needs to 

make additional improvements. 

Open Recommendations Actions Pending

Two of the original 16 recommendations 

remain open.

Due to the sensitive nature of the OIG’s review and recommendations in 

this area, the agency will not include specific details in this report. As of 

September 30, 2008, completion of agency actions on this OIG audit report 

requires recertification and reaccreditation of some systems and updating of a 

business continuity plan. The NRC is completing these actions in accordance 

with a prioritization of information technology security activities, based on a 

mission perspective and security risk. Consequently, most of these activities 

were completed in the first half of FY 2008, but completion of the recertification 

and reaccreditation of the telecommunication system will be delayed until 

early FY 2009. Staff will track these agency plans to completion through NRC’s 

FY 2008 Plan of Action and Milestones required by the Federal Information 

Security Management Act. 
111

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

SYSTEM EVALUATION OF THE GENERAL LICENSE TRACKING SYSTEM (OIG-04-A-24) 

September 30, 2004

The OIG conducted this evaluation as part of the OIG’s review of NRC’s implementation of the Federal Information Security 

Management Act for FY 2004. The objective was to review and evaluate the managerial, operational, and technical controls for 

the General License Tracking System (GLTS). The GLTS facilitates the tracking and accountability of NRC general licensees and 

generally licensed devices. The review found that the GLTS’s security documentation did not always follow required guidelines, that 

security protection requirements were not consistent within the security documentation, and that NRC was not tracking all action 

items resulting from testing the system’s security controls. 

Open Recommendations Actions Pending

1. Update the GLTS Security Plan to describe 

all controls currently in place. In-place 

controls are those marked at least at Level 3 

in the self-assessment and that were 

documented as “passed” in the last Security 

Test and Evaluation Report, or in any test 

and evaluation on controls added since 

publication of that report. 

As of September 30, 2008, the agency has completed all documents 

required for the GLTS certification and accreditation (C&A) effort. The 

newly revised GLTS system security plan describes all controls, currently 

in place, inherited from the General Support System on which it resides 

and planned controls. GLTS has been through the security test and 

evaluation (ST&E). The ST&E report has been received and reviewed. 

Staff will compile the C&A documentation, place it into ADAMS, and 

formally submit it to the designated approval authority for approval 

through the Computer Security Office for authority-to-operate.

3. Update the GLTS Business Continuity Plan. The agency updated the GLTS contingency (business continuity) plan in 

May 2008. The agency tested the GLTS contingency plan and reported 

results to the Computer Security Office on June 10, 2008.

4. Update the GLTS Security Plan and GLTS 

self-assessment to consistently define the 

protection requirements (confidentiality, 

integrity, and availability). 

During development of the updated GLTS System Security Plan (SSP), 

the NRC advised the contractor of the need to ensure consistency in 

defining the protection requirements and controls. With completion 

of the revised SSP and security test and evaluation, the annual security 

self-assessment was not required for FY 2008. However, during the next 

3-year cycle before the agency reevaluates the SSP, the annual security 

self-assessments will be required and FSME will ensure that controls and 

protection requirements continue to be consistently defined. The security 

categorization prepared for the current C&A effort determined that GLTS 

is a major application, with a moderate security categorization for each 

protection objective (confidentiality, integrity, and availability).
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

112

SYSTEM EVALUATION OF THE INTEGRATED PERSONNEL SECURITY SYSTEM (OIG-05-A-08)

January 14, 2005

The OIG conducted this evaluation as part of its review of NRC’s implementation of the Federal Information Security Management 

Act for FY 2004. The objective was to review and evaluate the management, operational, and technical controls for the Integrated 

Personnel Security System (IPSS), which replaced NRC employee security information contained in paper files and in a less-capable 

automated data system. The review found that the IPSS’s security test and evaluation were not comprehensive and independent, 

security documentation was not always consistent with National Institute of Standards and Technology (NIST) guidelines, and 

security protection requirements were not consistent within the security documentation. 

Open Recommendations Actions Pending

1. Recertify and reaccredit IPSS based on an 

independent, comprehensive, and fully documented 

assessment of all management, operational, and 

technical controls. 

The agency has established completion dates in order to 

integrate the certification and accreditation of IPSS with the 

implementation of Homeland Security Presidential Directive 12 

and to allow time for resolution of operational issues. Therefore, 

staff expects certification and accreditation of IPSS to be 

completed by March 31, 2009.

2. Update the IPSS Risk Assessment Report to include 

listed changes. 

NRC staff expects to update the IPSS Risk Assessment Report to 

include the specified items by December 31, 2008. 

3. Update the IPSS System Security Plan to include 

listed changes. 

NRC staff expects to update the IPSS Security Plan to include the 

specified items by December 31, 2008. 

4. Update the IPSS System Security Plan to include a 

section on planning for security in the life cycle and 

a section on incident response capability. 

NRC staff expects to update the IPSS Security Plan by 

December 31, 2008. It will include sections on planning for 

security in the life cycle and incident response capability. 

5. Update the IPSS System Security Plan to describe 

all controls currently in place. In-place controls 

are those marked at least at Level 3 in the 

self-assessment and that were documented as 

passed in the last Security Test and Evaluation 

Report (or in any test and evaluation on controls 

added since publication of that report.)

The agency expects to update the IPSS Security Plan by 

December 31, 2008, and will describe all controls currently in 

place. 

8. Update the IPSS System Security Plan and IPSS 

self-assessment to consistently define the protection 

requirements (confidentiality, integrity, and 

availability). 

The agency expects to update the security plan and IPSS 

self-assessment by December 31, 2008, to consistently define 

protection requirements. 
113

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

AUDIT OF NRC’S BUDGET FORMULATION PROCESS (OIG-05-A-09) 

January 31, 2005

The OIG conducted the audit to determine whether the budget formulation portion of the NRC’s Planning, Budgeting, and 

Performance Management process is effectively used to develop and collect data to align resources with strategic goals and is 

efficiently and effectively coordinated with program and support offices. The audit found that NRC effectively develops and collects 

data to align resources with strategic goals, prepares the budget in alignment with the Strategic Plan, and successfully conducts 

Office of Management and Budget-required program assessment rating tool evaluations. The audit also found the agency needed 

additional internal coordination and communication efforts. 

Open Recommendations Actions Pending

1. Clarify the roles and responsibilities of the 

Chief Financial Officer and the Executive 

Director for Operations in the budget 

formulation process. 

A revision of MD and Handbook 4.7, “Planning, Budgeting, and 

Performance Management,” will clarify roles and responsibilities and 

document the budget formulation process, including decisionmaking, 

and will provide for a logical, comprehensive sequencing of events for 

obtaining early Commission direction and approval.

In August 2007, the Commission directed the Chief Financial Officer, 

in coordination with staff, to provide options for improving the agency’s 

budget formulation process. Staff developed and implemented a new 

top-down budget process in formulating the agency’s FY 2010 budget. 

Since a major section of MD and Handbook 4.7 addresses roles and 

responsibilities in the agency’s budget formulation process, the agency 

decided that the update of the MD and Handbook 4.7 should be pushed 

back to factor in lessons learned from the FY 2010 budget process. In 

late FY 2008, NRC staff were considering lessons learned as part of an 

NRC task force that is reviewing the agency’s budget formulation process 

and budget structure. 

Based on the task force’s current schedule for issuing guidance on the 

agency’s budget formulation process, the agency expects to publish the 

MD and Handbook 4.7 in June 2009. (MD and Handbook 4.7 will also 

address the decisionmaking roles and responsibilities of the program 

review committee.)

2. Document the decisionmaking process 

and the roles and responsibilities of the 

program review committee. 

3. Document the budget formulation 

process to ensure a logical, comprehensive 

sequencing of events that provides for 

obtaining early Commission direction and 

approval. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

114

AUDIT OF NRC’S TELECOMMUNICATIONS PROGRAM (OIG-05-A-13)

June 7, 2005

The OIG conducted this audit to evaluate controls over the use of NRC telecommunications services and the physical security of 

NRC telecommunications systems. The OIG found that the agency needs to strengthen controls over the use of telecommunications 

services and the physical security of NRC telecommunications systems. 

Open Recommendation Action Pending

3. Revise Management Directive and MD 

Handbook 2.3 “Telecommunications” to 

include effective management controls 

over NRC headquarters staff use of agency 

telecommunications services. 

The revised management directive and handbook is in final 

concurrence for publication by February 27, 2009. 

AUDIT OF NRC’S DECOMMISSIONING PROGRAM (OIG-05-A-17) 

September 21, 2005

The OIG conducted this audit to determine whether NRC’s decommissioning program achieves desired performance results as 

stated in the Strategic Plan and reported in the Performance and Accountability Report. The audit found that while NRC’s 

decommissioning program has processes in place to monitor, evaluate, and report on performance, some performance results could 

not be verified. In addition, although staff implemented most of the recommendations from an FY 2003 self-evaluation of the 

program, the agency had not made progress on a few recommendations. 

Open Recommendation Action Pending

1. Clarify and disseminate expectations for 

generating and maintaining supporting 

documentation for performance data to staff 

responsible for preparing and collecting 

performance data. 

Revised Management Directive 4.7, “Planning, Budgeting, and 

Performance Management,” will include clarifications of expectations 

for generating and maintaining supporting documentation for 

performance data. 

In August 2007, the Commission directed the Chief Financial Officer, 

in coordination with staff, to provide options for improving the agency’s 

budget formulation process. The agency developed and implemented a 

new top-down budget process in formulating the FY 2010 budget. 

Since a major section of MD and Handbook 4.7 addresses roles and 

responsibilities in the agency’s budget formulation process, staff decided 

to postpone update of MD and Handbook 4.7 to include a lessons 

learned from the FY 2010 budget process. In late FY 2008, lessons 

learned were being considered by an NRC task force that is reviewing 

the agency’s budget formulation process and budget structure. 

Based on the task force’s current schedule for issuing guidance on the 

agency’s budget formulation process, staff expects to publish MD and 

Handbook 4.7 in June 2009.

 
115

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

SYSTEM EVALUATION OF SECURITY CONTROLS FOR STANDALONE PERSONAL COMPUTERS AND

LAPTOPS (OIG-05-A-18) 

September 22, 2005

The OIG conducted this evaluation as part of their review of NRC’s implementation of the Federal Information Security 

Management Act for FY 2005, with the objectives of evaluating the effectiveness of NRC security policies, procedures, practices, and 

controls for standalone personal computers (PCs) and laptop computers. The review found that security controls for standalone 

PCs and laptops were not adequate, that the devices were not monitored for compliance with Federal regulations, and agency 

information technology coordinators’ understanding of disposal practices for these devices were not consistent. 

Open Recommendations Actions Pending

2. Develop and require users to sign a 

rules-of-behavior agreement accepting 

responsibility for implementing security 

controls on standalone PCs and laptops. 

The agency has developed standard rules of behavior that the Office of 

Human Resources and the National Treasury Employees Union (NTEU) 

have been reviewing since the beginning of May 2008. Upon completion 

of the review, the NRC will implement new rules. The agency will 

require all NRC system users to sign the rules annually. Staff will make 

rules available by the first quarter of fiscal year 2009.

3. Develop and implement procedures for 

verifying all required security controls 

are implemented on standalone PCs and 

laptops. 

The Computer Security Office (CSO) is finalizing procedures for 

verifying security controls for standalone PCs and laptops and expects to 

have them completed in the first quarter of fiscal year 2009. 

4. Provide users with guidance 

on compliance with Executive 

Order (EO) 13103, “Computer Software 

Piracy,” for standalone PCs and laptops. 

The agency will develop and disseminate clear guidance on compliance 

with EO 13103 for standalone PCs and laptops as part of the standard 

rules of behavior as discussed above under Recommendation 2. The 

agency will develop the rules of behavior, including review by the 

National Treasury Employees Union, by the end of FY 2009. 

5. Develop and require users to sign 

a rules-of-behavior agreement 

acknowledging their compliance with 

EO 13103, “Computer Software Piracy,” 

for standalone PCs and laptops. 

As part of the development of the standard rules of behavior as discussed 

above under Recommendation 2 and Recommendation 4, a standard 

rules-of-behavior agreement for users to acknowledge their compliance 

with EO 13103 for standalone PCs and laptops will be developed, and 

offices will be notified of the requirement for all users of such devices to 

sign the agreement as a condition of using the devices. The agency will 

develop the rules of behavior, including review by the National Treasury 

Employees Union, by the end of FY 2009. 

6. Develop and implement procedures for 

monitoring compliance with EO 13103, 

“Computer Software Piracy,” for 

standalone PCs and laptops. 

Procedures for monitoring compliance with EO 13103 for standalone 

PCs and laptops will be developed and issued as part of the standard 

rules of behavior as discussed above under Recommendation 2. The 

agency will develop the rules of behavior, including review by the 

National Treasury Employees Union, by the end of FY 2009. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

116

NRC’S GENERIC COMMUNICATIONS PROGRAM (OIG-05-A-19) 

September 30, 2005

The OIG conducted this audit to assess the effectiveness of the Generic Communications Program, specifically whether NRC generic 

communications are issued in accordance with the Generic Communications Program and other regulatory requirements, and how 

NRC tracks licensee actions on generic communications. The audit found that NRC has an established framework for developing 

and issuing certain generic communications, but that weaknesses exist in NRC’s internal controls over generic communications in 

controls for oversight of licensee actions. 

Open Recommendations Actions Pending

1. Include safeguards advisories, as well 

as any other agency communication 

tool that meets the definition of a 

generic communication, in the formal 

Generic Communications Program 

to ensure compliance with regulatory 

requirements. 

Proposed new Management Directive (MD) 8.18, “NRC Generic 

Communications Program,” defines the scope of NRC’s generic 

communications, defines organizational roles and responsibilities for 

each generic communications product, and establishes security advisories 

and information assessment team advisories as additional agency generic 

communications products. The MD is in final concurrence. The agency 

expects to issue it in FY 2009. 

3. Implement controls to ensure a 

systematic, consistent tracking 

methodology from initiation to 

closure for each agency-issued 

generic communication. 

In June 2006, NRC established an interoffice working group to evaluate 

the current process for initiating, developing, tracking, and distributing 

generic communications, and to recommend process changes. The 

working group decided to incorporate the tracking system into the project 

tracking NRO requests for additional information (licensee responses 

and inquiries). The agency has completed final acceptance testing of 

the generic communication tracking system. The agency expects to 

implement the system in FY 2009. 

4. Direct the development of a 

methodology that will allow the 

staff to gauge the effectiveness 

of agency-issued generic 

communications. 

Proposed new MD 8.18, “NRC Generic Communications Program,” 

defines the scope of NRC’s generic communications and defines 

organizational roles and responsibilities for each generic communications 

product, including the conduct of effectiveness reviews. In addition, it 

clearly identifies those generic communications that require effectiveness 

reviews. The MD is in final concurrence. The agency expects to issue it 

in FY 2009.
117

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

AUDIT OF NRC’S OFFICE OF NUCLEAR SECURITY AND INCIDENT RESPONSE (OIG-06-A-09) 

February 16, 2006

This audit was an independent evaluation of the operations of the Office of Nuclear Security and Incident Response (NSIR), 

formed in April 2002, specifically focusing on NSIR’s management of emergent work, communications with stakeholders, and 

implementation of the recommendations from the organizational assessment performed in 2003. The audit found that while NSIR 

accomplished a great deal since its inception, it needed to focus on refining and formalizing its day-to-day operations to improve its 

ability to meet its mission. 

Open Recommendations Actions Pending

2. Review the Emergent Work Process 

to ensure emergent work is accurately 

documented to assist with workforce and 

budget decisions. 

NSIR is integrating this system into its work planning management system. 

The Electronic Document and Action Tracking System (EDATS) will track 

emergent and unbudgeted work. This recommendation will be completed 

when the NRC fully implements EDATS throughout the agency.

AUDIT OF THE BYPRODUCT MATERIALS LICENSE APPLICATION & REVIEW PROCESS (OIG-06-A-11)

March 10, 2006

As part of a larger effort to determine whether NRC’s oversight of byproduct material provides reasonable assurance that licensees 

account for and control the materials, the OIG directed this audit towards determining if NRC ensures, through its license 

application and review process, that only legitimate entities receive NRC byproduct material licenses. It concluded that because 

NRC has not conducted vulnerability assessments of all aspects of the materials program, there may be vulnerabilities in the license 

application and review process that could be exploited by individuals with malevolent intent. 

Open Recommendations Actions Pending

1. Conduct a complete vulnerability 

assessment of the materials program, 

including the license application and 

review process, and the methods used by 

licensees to purchase byproduct material 

from sellers. 

In September 2007, the Commission approved a comprehensive plan 

to address needed changes in NRC’s process for issuing licenses for 

radioactive sources. The plan called for an independent, external review 

panel to identify potential weaknesses or security gaps in the NRC’s 

materials licensing program. The plan also called for the establishment 

of a materials program working group to provide recommendations to 

address any identified security gaps or weaknesses. The independent 

panel issued its report and recommendations on the NRC’s materials 

licensing program in March 2008. Staff has incorporated the panel’s 

recommendations into the overall corrective action plan for the materials 

licensing program. The materials program working group expects to 

issue its report in October 2008.

continued
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

118

AUDIT OF THE BYPRODUCT MATERIALS LICENSE APPLICATION & REVIEW PROCESS (OIG-06-A-11) 

continued

Open Recommendations Actions Pending

2. Modify the license application 

and review process to mitigate 

the risks identified in the 

vulnerability assessment. 

Staff issued revised prelicensing guidance in September 2008, to directly address the 

vulnerability demonstrated by the U.S. Government Accountability Office’s covert 

investigation of the NRC’s materials licensing process. As noted in action pending 

above, two additional groups, an independent external review panel and a materials 

working group, have made recommendations to enhance the NRC’s materials 

licensing program. The agency has incorporated some of these recommendations 

into an overall corrective action plan for the materials licensing program. The agency 

is still evaluating other solutions.

NRC’S BASELINE SECURITY AND SAFEGUARDS INSPECTION PROGRAM (OIG-06-A-21)

September 8, 2006

The audit of NRC’s drug testing program found that the NRC‘s Drug-Free Workplace Plan was not in compliance with Federal 

guidance that requires the plan to receive U.S. Department of Health and Human Services’s (HHS’s) approval and that it was 

missing a required clause. 

Open Recommendations Actions Pending

1. Provide the required initial 

and refresher security training 

courses for regional security 

inspectors at the frequency 

needed to support qualification 

requirements. 

Phase 1 of NRC’s corrective actions is to develop foundation security courses such 

as “Security Fundamentals” and “Reactor Technology for Security.” The Security 

Fundamentals course is under review with expected delivery in FY 2008. Both 

courses have been reviewed and delivered. 

A pilot for the “Reactor Technology for Security” course was completed in June 2007 

and is under review based on comments received from course participants and 

lessons learned. The expected delivery was in FY 2008. The course has been reviewed 

and delivered. Complete.

A 3-day annual security refresher course for security inspectors from all four 

NRC regions was conducted in November 2006, and was scheduled for 

November 13–15, 2007. Complete. 

This course is now listed in the NRC course catalog. Phase 2 of NRC’s corrective 

action is to develop four modules of advanced security field courses. These are being 

reviewed, and NRC is pursuing contracts with outside Federal agencies to provide 

portions of this specialized training. The agency expects Phase 2 courses to be 

available by FY 2009. All Phase 2 courses have been developed and are scheduled in 

FY 2009.

continued
119

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

NRC’S BASELINE SECURITY AND SAFEGUARDS INSPECTION PROGRAM (OIG-06-A-21) continued

Open Recommendations Actions Pending

4. Update the security inspector 

training program to ensure course 

material is current and relevant. 

Staff are developing revisions of the training requirements in NRC Manual Chapter 

(MC) 1245, Appendix C4, “Safeguards Inspector Technical Proficiency Training 

and Qualification Journal,” and Office of Nuclear Security and Incident Response 

Office Procedure ADM-109, “Training Development and Qualification Programs.” 

The agency expects to issue these materials in FY 2009. As the agency finalizes 

and publishes the courses in response to Recommendation 1 in the NRC Training 

Catalog, staff will also update MC 1245 and ADM-109. The agency continues to 

develop revisions. Staff anticipates completing action in FY 2009.

6. Include guidance in the baseline 

security and safeguards inspection 

procedures to ensure inspectors 

review an adequate number 

of sample items to assess the 

effectiveness of the licensee’s 

security program. 

As a result of the inspection program assessment process, and on the basis of 

recommendations received from the IG Audit conducted in 2006, the agency 

has revised security baseline inspection procedures. The revision effort, which 

included standardizing the inspection procedure sample sizes, was completed on 

October 6, 2008. The NRR inspection manual chapter coordinator possesses these 

procedures, and they are in the change management and declaration process with 

a projected publication date of mid-November 2008. The program implementation 

schedule is for January, 1 2009 (to coincide with the beginning of the calendar year 

inspection cycle).

7. Implement training on how to 

select an adequate number of 

sample items. 

Along with the effort to revise the security baseline inspection procedures, NSIR 

provided training and familiarization on the standardization and determination of 

sample sizes through presentation and open discussion during the annual counterpart 

conference in November 2007. The agency provided further familiarization by 

allowing the inspectors to continue to review the revised procedures prior to 

finalization and implementation.

AUDIT OF THE NRC’S PROCESS FOR RELEASING COMMISSION DECISION DOCUMENTS

(OIG-06-A-22) 

September 8, 2006

This audit assessed the NRC’s process for evaluating SECY papers and staff requirements memoranda for public release pursuant 

to relevant legal and regulatory requirements. The audit concluded that while the NRC has a process for handling Freedom of 

Information Act (FOIA) requests, there are weaknesses in the internal controls needed to ensure full compliance with the FOIA. 

Open Recommendations Actions Pending

1. Develop a program to ensure 

NRC compliance with the 

FOIA’s automatic disclosure 

requirements. 

The Commission has modified procedures; however, closure of this recommendation 

requires the revision of Management Directive (MD) 3.4, “Release of Information to 

the Public,” to address document screening for compliance with Title 5 of the United 

States Code, 5 U.S.C. 552 (a)(1) and (a)(2). The Commission expects to issue revised 

MD 3.4 by December 31, 2008. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

120

EVALUATION OF THE NRC’S USE OF PROBABILISTIC RISK ASSESSMENT IN REGULATING THE

COMMERCIAL NUCLEAR POWER INDUSTRY (OIG-06-A-24) 

September 29, 2006

This evaluation determined if the NRC follows prevailing good practices in probabilistic risk assessment (PRA) methods and data

in its use of PRA, uses prevailing good practices in PRA methods and uses data appropriately in its regulation of nuclear power

plant licensees, and achieves the objectives of the PRA policy statement. The evaluation concluded that although the NRC employs 

prevailing good practices in the regulation of nuclear power plants, the NRC lacks formal, documented processes and associated 

configuration control for PRA computer models and software. 

Open Recommendations Actions Pending

3. Conduct a full verification and validation 

(V&V) of the Systems Analysis Program 

for Hands-On Integrated Reliability 

Evaluations (SAPHIRE) Version 7.2 

and the Graphical Evaluation Module 

(GEM). (SAPHIRE and GEM are software 

programs used to perform evaluations of 

SPAR models and to provide risk results 

based on the events or initiators evaluated.)

Because development of SAPHIRE Version 8 is in progress, a full 

V&V of SAPHIRE Version 7.2 would not be an effective use of 

resources. Therefore, the release of SAPHIRE, Version 8, for general 

use by April 2010 will close this recommendation, allowing sufficient 

time to complete independent V&V activities.

AUDIT OF THE NRC’S TECHNICAL TRAINING CENTER (OIG-O7-A-05) 

January 9, 2007

This audit identified opportunities to improve the economy, efficiency, and effectiveness of the Technical Training Center’s operations.

Open Recommendations Actions Pending

1. Revise MD 13.1 to require that property 

inventories should include independent 

verification of the property by someone 

other than the property holder.

All property custodians received interim guidance requiring property 

inventories to include independent verification by someone other than the 

property holder, in preparation for the FY 2008 biennial inventory, which 

is currently ongoing. The FY 2008 biennial inventory plan was developed 

and executed to comply with this requirement. Staff assigned to revise 

Management Directive (MD) 13.1 have also been conducting the biennial 

inventory and have been unable to dedicate sufficient time to complete 

the MD revision. Additional required changes to MD 13.1 were identified 

since the last update provided to the Office of the Inspector General 

on February 29, 2008, (e.g., definition of sensitive items). An update to 

MD 13.1 incorporating all the required changes is currently under staff 

review. Staff will complete the review and incorporation of comments by 

August 31, 2008, at which time they will transmit the MD revision to offices 

and regions for review and comment. The final approval process concludes 

February 27, 2009.

continued
121

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

AUDIT OF THE NRC’S TECHNICAL TRAINING CENTER (OIG-O7-A-05) continued

Open Recommendations Actions Pending

3. Update and finalize training policies 

and procedures.

Staff completed procedures by the dates reported in the NRC’s response to the 

OIG, with the following exceptions:

• OP-401, “Course Scheduling.” The original scheduled completion date was 

September 28, 2008. Procedure development is now tied to the resolution 

of Recommendations 6 and 7 of IG Evaluation (Audit) OIG 08-A-13, 

action on which should conclude on June 30, 2009.

• OP-402, “Course Registration.” The implementation of iLearn (the NRC’s 

Learning Management System) has automated the process previously 

performed by staff and, as a result, rendered the subject procedure 

unnecessary. 

• OP-403, “Course Administration.” An update to the procedure reflecting 

the implementation of LMS is due on December 20, 2008.

9. Periodically rotate cognizant 

instructor responsibilities.

OP-404, “Training Materials Control” addresses this recommendation 

in part. By memorandum dated August 25, 2008, the OIG stated that 

this recommendation will close upon development and implementation 

of additional policy requiring periodic rotation of cognizant instructor 

responsibilities. 

10. Establish a more formal method to 

track and trend Technical Training 

Center course evaluations and 

periodically analyze trends for 

appropriate action.

Staff will modify OP-403 (or develop a new procedure) to address this 

recommendation by December 20, 2008.

11. Include questions specific to 

instructor performance on all course 

evaluations.

Staff will modify OP-403 (or develop a new procedure) to address this 

recommendation by December 20, 2008.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

122

AUDIT OF THE NRC’S REGULATION OF NUCLEAR FUEL CYCLE FACILITIES (OIG-07-A-06) 

January 10, 2007

This audit determined whether the NRC has an effective and efficient approach to fuel cycle facility oversight. The audit found that 

the NRC could enhance the current Fuel Cycle Facility Oversight Program by developing and implementing a framework modeled 

after a structured process, such as the Reactor Oversight Process (ROP).

Open Recommendations Actions Pending

1. Fully develop and implement a 

framework for the Fuel Cycle Facility 

Oversight Program (FCFOP) that is 

consistent with a structured process, 

such as the Reactor Oversight Process 

(ROP).

Agency corrective actions consist of initiatives related to improving fuel cycle 

oversight, including performing a structured evaluation of integrated safety 

analysis (ISA) annual updates, providing fuel cycle input to a revision of NRC 

enforcement policy, and completing a safety culture pilot plan. The staff has 

completed the review of the 2007 ISA annual updates and has developed 

changes to the review process. The ISA update review will conclude following 

the review of the next annual updates at the end of 2008. The staff has drafted 

proposed changes to the NRC enforcement policy to align the policy with 

revisions to Title 10 of the Code of Federal Regulations, Part 70, “Domestic 

Licensing of Special Nuclear Material,” (10 CFR Part 70). The staff is 

conducting public meetings with fuel cycle industry representatives to develop 

final comments. Enforcement policy revision will conclude when staff issues 

the new policy at the end of 2008. The most lengthy corrective action is the 

two-phase NMSS Safety Culture Project Plan. Phase I consists of information 

gathering, which is complete. Phase II consists of developing a strategic plan 

to implement the pilot, followed by implementation. The safety culture pilot 

will conclude when Phase II ends in August of 2009.
123

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

AUDIT OF THE NRC’S BADGE ACCESS SYSTEM (OIG-07-A-10) 

January 23, 2007

This audit determined whether the current badge access system meets its required operational capabilities and provides for 

the security, availability, and integrity of the system data.

Open Recommendations Actions Pending

8. Write and implement badge access 

system operating procedures that 

provide system user guidance 

and address Recommendations 5 

through 7.

The badge access system operating procedures were updated to enhance system 

user guidance as part of the updated manual for both the personnel security 

branch and the facilities security branch in November 2007. An update to 

Recommendation 8 is currently scheduled for December 29, 2008.

10. Replace the current visitor badges 

with expiring paper badges.

The NRC was unsuccessful in utilizing paper badges in the past (sticker-type 

badges damaged clothing or simply fell off). As part of the consulting services 

contract for Homeland Security Presidential Directive 12 (HSPD-12), the 

contractor recommended that temporary date-stamped, clip-on visitor badges 

could be a feasible alternative to the current permanent visitor badges. The clipon temporary visitor badges would be date-stamped and valid only for 1 day at a 

time. The NRC will make the decision whether to convert to the clip-on visitor 

badge by June 30, 2009.

13. In accordance with NRC 

requirements for listed systems, 

develop an access system security 

plan, and appoint an information 

system security officer.

ADM received several security categorization documents for updating to newer 

templates, causing a delay in the process. Since ACCESS is a listed system on a 

fully enclosed network, the Office of Information Systems (OIS) contractor did 

not give this task a high priority, causing additional delay. Once approved, the 

staff will forward the security categorization documentation, which officially 

lists the Information System Security Officer for ACCESS, with the remainder of 

the certification and accreditation (C&A) documentation. Since ACCESS is not 

on the agency priority list for C&A this fiscal year, the staff should provide the 

C&A package for approval by March 31, 2009. 

15. Complete the actions necessary 

to address the access weaknesses 

contained in the penetration test 

reports.

ACCESS is on a fully enclosed network environment and does not connect 

to any other system or the Internet. Due to other high priorities, ADM has 

determined that it is not cost-effective or imperative to correct the findings from 

the penetration tests with the current, closed network, since the implementation 

of HSPD-12 will result in system upgrade or replacement. Many of the findings 

were related to weaknesses present only if the system is connected to other 

systems or to the Internet. ADM will work with the CSO to ensure that CSO 

corrects any issues during system upgrade or replacement. The Division of 

Facilities and Security (DFS) will then determine a schedule to correct those 

actions impacting any weaknesses still in the upgraded system. An update to 

Recommendation 15 is currently scheduled for December 29, 2008.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

124

AUDIT OF THE NRC’S NUCLEAR MATERIALS EVENTS DATABASE (OIG-07-A-11) 

March 23, 2007

Open Recommendations Actions Pending

1. Develop and implement written 

procedures for the operation of 

the Fuel Cycle Nuclear Material 

Event Database (FCNMED) to 

ensure that the mechanism is 

available for staff to share and 

access data on Category I fuel 

cycle facilities.

In January–April 2008, the staff reviewed event reports in FCNMED to identify 

and redact SUNSI and other sensitive information. The staff placed redacted event 

reports in public ADAMS on May 13, 2008. The Nuclear Materials Events Database 

(NMED) contractor placed them in NMED very soon after.

The staff has created an automated system whereby each event report from a 

Category I fuel cycle facility is withheld from public disclosure until after the project 

staff has reviewed the report and released it in its entirety or in a redacted form.

The new Idaho National Laboratory (INL) contract, which started October 1, 2008, 

includes the retirement of FCNMED by February 2009.

3. Conduct a quality assurance 

review of the FCNMED data to 

ensure that the database includes 

all pertinent data.

The staff will complete by January 12, 2009, a quality assurance review of NMED 

data to assure that all redacted FCNMED reports and pertinent data are available in 

NMED.

SUMMARY REPORT AND PERSPECTIVES ON BYPRODUCT MATERIAL SECURITY AND CONTROL

(OIG-07-A-12) 

March 30, 2007

While the NRC has implemented or planned a variety of measures to regulate and provide for the security of byproduct material in 

the post-September 11 era, the agency in its approach to byproduct material security, has not adequately identified and evaluated 

byproduct material security risks. Specifically, the NRC has not conducted an impartial and comprehensive look inwards at its 

own business and regulatory processes. Consequently, the agency is not aware of potential weaknesses and vulnerabilities in its 

byproduct material security program. Furthermore, the NRC’s approach has resulted in agency policy and practices that do not 

consider the full range of potential consequences of a radiological dispersal device (RDD, or “dirty bomb”).

Open Recommendations Actions Pending

1. Convene an independent panel 

of experts external to the agency 

to identify agency vulnerabilities 

concerning the NRC’s materials 

licensing and tracking programs, 

and to validate the agency’s ongoing 

byproduct-material security efforts.

In September 2007, the Commission approved a comprehensive plan to address 

needed changes in the NRC’s process for issuing licenses for radioactive 

sources. The plan called for an independent, external review panel to identify 

potential weaknesses or security gaps in the NRC’s materials licensing program. 

The independent panel issued its report and recommendations on the NRC’s 

materials licensing program in March 2008. The staff has incorporated the 

panel’s recommendations into the overall corrective action plan for the materials 

licensing program.
125

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

AUDIT OF THE NRC’S NONCAPITALIZED PROPERTY (OIG-07-A-14) 

July 12, 2007

This audit determined whether the NRC has established and implemented an effective system of management controls for 

maintaining accountability and control of noncapitalized property.

Open Recommendations Actions Pending

2. Incorporate property 

management duties and 

responsibilities into all 

property custodian and 

alternate property custodian 

performance evaluations.

The NRC offices received the third memorandum on this subject on 

October 30, 2007. All offices have responded, and all but two have completed 

the requested action. The remaining offices are targeted to incorporate property 

management duties and responsibilities into all property custodian and alternative 

property custodian (if applicable) performance plans by October 31, 2008. 

7. Modify MD 13.1, “Property 

Management,” to reference, 

where applicable, MD 

12.5, “NRC Automated 

Information Security 

Program,” to include 

procedures for coordinating 

with OIS regarding missing 

property that contains or may 

contain personally identifiable 

information (PII).

Staff assigned to revise MD 13.1 have also been conducting the biennial inventory 

and so have been unable to dedicate sufficient time to complete the MD revision. 

Additional required changes to MD 13.1 were identified since the last update 

provided to the Office of the Inspector General on February 29, 2008 (e.g., definition 

of sensitive items). The staff is currently reviewing an update to MD 13.1 

incorporating all the required changes. The review and incorporation of comments 

should conclude by August 31, 2008, at which time the offices and regions will review 

and comment on the MD 13.1 revision. The final approval process should conclude 

by February 27, 2009. The modified NRC Form 395 “Report of Property for Survey” 

now includes a requirement to report any missing property containing PII to the 

CSO. An update to Recommendation 7 is scheduled for February 27, 2009.

11. Work with the OIG to 

modify MD 13.1 to develop 

a process for notifying the 

OIG Assistant Inspector 

General for Investigations of 

all reports (Form 395 “Report 

of Property for Survey”) of 

missing sensitive property 

and missing nonsensitive 

property with a current value 

of at least $1,000.

Staff has worked in collaboration with the OIG Assistant Inspector General for 

Investigations and has agreed to forward all completed NRC Form 395s reporting 

missing property with a depreciated value of $1,000 or more to his organization. 

The revision of MD 13.1 will include this notification process. As stated in 

Recommendation 7, the anticipated date for final issuance of MD 13.1 is 

February 27, 2009.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

126

THE NRC’S STATUS OF RECOMMENDATIONS: AUDIT OF THE NRC’S LICENSE RENEWAL PROGRAM

(OIG-07-A-15) 

September 5, 2007

The Office of the Inspector General conducted an audit of the license renewal review program, and while acknowledging the 

existence of a comprehensive license renewal review process, the OIG identified several areas where improvements would 

enhance program operations and made eight recommendations. The Office of Executive Director issued a status report on 

September 11, 2008, which indicated Recommendations 1, 2, 5, 6, and 8 are closed, and Recommendations 3, 4, and 7 are resolved. 

An update of the status of the recommendations is due by February 27, 2008.

Open Recommendations Actions Pending

3. Clarify guidance and adjust 

procedures for auditor’s 

and inspector’s removal of 

licensee-provided documents 

from license-renewal sites.

The license renewal staff, in a joint effort with the inspection program staff, 

the regions, and the Office of General Counsel developed consistent guidance 

for removal of applicant or licensee documents from applicant or licensee sites.

4. Establish requirements and 

management controls to 

standardize the conduct and 

depth of license renewal 

operating experience reviews. 

The staff provided additional guidance and management controls to 

standardize the conduct and depth of license renewal operating experience 

reviews. The Project Manager Handbook includes enhanced guidance 

in “Operating Experience Review Responsibilities.” All regional offices 

participated in a conference call to ensure consistent implementation of 

these expectations. The OIG will close this recommendation once additional 

guidance is provided to reflect management’s expectations that license 

renewal audit teams will independently verify that the operating experience 

information is provided by the licensee in its application.

7. Establish a review process 

to determine whether or 

not Interim Staff Guidance 

(ISG) meets the provisions of 

10 CFR 54.37 (b), “Additional 

Records and Recordkeeping 

Requirements,” and document 

accordingly. 

The staff continues to enhance the current guidance, “Process for Interim 

Guidance Development and Implementation,” to determine and document 

whether the ISG meets the provisions of 10 CFR 54.37(b). The staff plans to 

issue the approved ISG by March 31, 2009. 
127

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

REVIEW OF THE NRC’S PROCESS FOR PLACING DOCUMENTS IN THE ADAMS PUBLIC AND

NONPUBLIC LIBRARIES (OIG-07-A-16) 

September 6, 2007 

This audit determined the effectiveness and consistency with which staff profiles and processes documents for entry into the public 

or nonpublic ADAMS libraries.

Open Recommendations Actions Pending

1. Update MD 3.4 so that it reflects the 

underlying principles of how to determine 

whether an official agency record should 

be public or nonpublic, and describes the 

relationship with other agency reviews for 

information sensitivity (e.g., personally 

identifiable information, SUNSI).

The staff has updated Management Directive (MD) 3.4, “Release of 

Information to the Public.” MD 3.4 now reflects the underlying principles 

of how to determine if an official agency record (OAR) should be made 

public or remain nonpublic. It further explains the relationship with 

other agency reviews for information sensitivity. On May 1, 2008, the 

staff sent MD 3.4 to the Office of the Commission (OCM) for review and 

concurrence. On August 4, 2008, OIS received 10 questions on the MD. 

OIS provided the Office of Executive Director of Operations (EDO) with 

responses to the questions for review. Publication of the updated MD 3.4 is 

targeted for the second quarter of FY 2009.

2. Create a supplemental guidance 

document that is updated routinely 

to include, to the extent practicable, 

categories of information routinely not 

made public. 

The staff has completed a supplemental guidance document titled 

“Guidance for Determining the Public Availability of NRC Documents,” 

which identifies the categories of documents that are routinely not made 

public. Additionally, the guidance document includes the categories of 

information that are routinely made public. The OIS maintains the final 

version of this new guidance document, referenced in the revised MD 3.4 

and on the NRC internal Web site at http://www.internal.nrc.gov/2008_

MD-Companion-Doc.pdf. The updated MD 3.4 will require all offices to 

routinely monitor the guidance document and notify OIS when it requires 

modification. Offices will review and update the supplemental guidance 

document on an annual basis. Interim changes will also be accommodated. 

3. After MD 3.4 and supporting guidance 

are updated and consolidated, conduct 

a training-needs analysis and develop 

appropriate training for staff with 

responsibility for determining whether 

ADAMS records should be publicly or 

non-publicly available.

OIS staff is working with the Office of Human Resources to develop 

appropriate training for staff with responsibility for determining whether 

ADAMS records should be publicly or nonpublicly available. Once the 

training is developed, it will become a part of the existing ADAMS training 

program available to staff at the Professional Development Center. Once 

implemented, the staff will make informed decisions when determining 

whether documents should be publicly or nonpublicly available. We 

currently estimate that the revised training courses will be available in the 

second quarter of FY 2009.

continued
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

128

REVIEW OF THE NRC’S PROCESS FOR PLACING DOCUMENTS IN THE ADAMS PUBLIC AND

NONPUBLIC LIBRARIES (OIG-07-A-16) continued

Open Recommendations Actions Pending

4. Develop a mechanism to indicate the 

rationale for designating a document as 

public or nonpublic. This rationale should 

be sufficiently detailed to allow for an 

assessment of whether the staff applies 

agency criteria correctly.

During the MD 3.4 concurrence phase, the Office of General Counsel 

(OGC) recommended that staff must document the rationale only for 

nonpublic designated documents. The OIS discussed this with Office 

of the Inspector General (OIG) staff and OIG agreed with the OGC 

recommendation. To document the rationale for nonpublic designations 

in the ADAMS document profile, staff must reference the appropriate item 

number in the “Guidance for Determining the Public Availability of NRC 

Documents.” The rationale tag will be a permanent part of each OAR’s 

metadata and will permit an assessment of whether agency criteria are 

being applied correctly. On May 1, 2008, OIS sent MD 3.4 to the Office of 

the Commission (OCM) for review and concurrence. On August 4, 2008, 

OIS received 10 questions on the MD and provided responses to the 

questions to the Office of the Executive Director for Operations (EDO) for 

review. Publication is targeted for the second quarter of FY 2009.

5. Require offices to use the 

mechanism developed in response 

to Recommendation 4 to provide 

the rationale for public or nonpublic 

designation of official agency records.

The revised MD 3.4 requires all staff to use the mechanism described in our 

response to Recommendation 4. Publication of the MD will communicate 

this to agency staff. On May 1, 2008, MD 3.4 went to the OCM for review 

and concurrence. On August 4, 2008, the OIS received 10 questions on the 

MD. The OIS provided responses to the questions to the EDO for their 

review. Publication is targeted for the second quarter of FY 2009. 

6. Conduct periodic assessments of the 

accuracy with which NRC staff apply the 

agency’s criteria for designating records as 

public or nonpublic by assessing a random 

sample of records against the agency’s 

criteria for making these determinations.

The NRC will conduct annual assessments of the accuracy with which 

the staff applies the agency criteria for designating records as public or 

nonpublic by assessing a random sample of records against the agency 

criteria for making these determinations after the issuance of MD 3.4. 

On May 1, 2008, MD 3.4 went to the OCM for review and concurrence. 

On August 4, 2008, the OIS received 10 questions on the MD. The OIS 

provided responses to the questions to the Office of the Executive Director 

for Operations (EDO) for review. Publication is targeted for the second 

quarter of FY 2009.

8. Add a nonpublic pending review category 

to the electronic regulatory information 

distribution system (ERIDS) notifications 

and clarify the language in the 

notifications to convey the need to finalize 

the document availability as either public 

or nonpublic. 

The updated ADAMS software now includes a change that clearly identifies 

documents with “Non-Public Pending Review” status in the ERIDS 

notifications sent to staff. This update, ADAMS Release 4.7, was deployed 

to staff in August and September 2008.
129

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

AUDIT OF ASSESSMENT OF SECURITY AT NRC BUILDINGS IN ROCKVILLE AND BETHESDA, MD 

AND LAS VEGAS, NV (OIG-07-A-18) 

September 25, 2007

These security assessments determined the adequacy of physical security and emergency planning measures of the identified 

NRC buildings.

Open Recommendations Actions Pending

10. Apply Mylar film to any remaining 

exterior doors and windows where it 

has not yet been installed.

Staff prepared a statement of work and reimbursable work order on 

September 12, 2008, for the operation and maintenance contractor to place 

the additional Mylar film on any remaining exterior doors and windows. 

The contractor has installed Mylar film on all remaining exterior doors and 

windows as of October 2, 2008. The staff has completed actions related to this 

recommendation, pending closure by OIG.

11. Post signs near vehicle entrance 

directing pedestrians further west 

along Marinelli Avenue, and paint 

“Crosswalk” to direct pedestrians along 

a safe path to two controlled entry 

points.

Implementation of HSPD-12 included an overall assessment of physical 

access controls at the headquarters complex. An NRC consultant completed 

an assessment of Recommendation 11 on February 29, 2008. Based on that 

assessment, staff is preparing a proposed plan and cost analysis to install 

a security fence to enclose the rear of the complex. The fence will control 

pedestrian traffic entering at the P1 levels to the One White Flint North 

and Two White Flint North buildings. Due to the complexity of the terrain 

and associated easements with the NRC property, the NRC awarded an 

architectural and engineering contract to Oudens & Knoop on 

September 26, 2008. Oudens & Knoop anticipate completing the design phase 

of this project in 45 days. The construction phase of this project will start 

in the spring of 2009. Recommendation 11 is scheduled for completion on 

June 30, 2009.

13. Refresh and increase width of painted 

pedestrian walkways in garage, and add 

additional lighting.

Repainting the walkways and crosswalks was completed on May 30, 2008. 

To enhance the garage lighting in walkways and crosswalks, Administration 

has ordered additional, more energy–efficient LED (light-emitting diode) 

lights. These lights are capable of providing more lumens and will enhance 

lighting for pedestrians. Recommendation 13 is scheduled for completion on 

November 17, 2008.

21. Develop post orders for guards that 

specifically address contingency plans 

for events that may occur.

NRC staff attended a meeting with the Federal Protective Service (FPS) and 

the onsite guard force on May 2, 2008, to complete and update the Las Vegas 

Hearing Facility Guard Post Orders.

continued
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

130

AUDIT OF ASSESSMENT OF SECURITY AT NRC BUILDINGS IN ROCKVILLE AND BETHESDA, MD 

AND LAS VEGAS, NV (OIG-07-A-18) continued

Open Recommendations Actions Pending

23. Develop and refine operational and 

security plans in preparation for future 

public hearings.

NRC staff supported the development of an NRC Information Guide 

for Atomic Safety and Licensing Board Proceedings at the Las Vegas 

Hearing Facility. This document is in pamphlet form and will serve as 

an informational handout for members of the public who wish to attend 

an adjudicatory proceeding. The pamphlet includes requirements for 

entrance and screening, prohibited items, etiquette, and parking. The 

pamphlet was published in December 2007.

As stated in the response to Recommendation 21, on May 2, 2008, the 

NRC has coordinated Guard Post Orders and contingency plans with FPS 

and the security force. 

26. Develop implementing procedures for 

specific topics too sensitive to include in 

the occupant emergency plan.

As stated in the responses to Recommendations 21 and 23, administration 

coordinated the revised operational, security, and contingency plans with 

the FPS and the onsite guard force to include sensitive topics not included 

in the occupant emergency plan.

27. Conduct tabletop, functional, or full-scale 

exercises to assess ability to respond to 

large demonstrations, evacuations, a large 

influx of personnel attending hearings, 

media control, etc.

On June 16, 2008, the staff conducted a 4-hour table-top exercise, testing 

security and crisis response capabilities with Las Vegas Hearing Facility 

personnel, local law enforcement, and the FPS regional commander.
131

Appendix B ■ Management Decisions and Final Actions

on OIG Audit Recommendations

INDEPENDENT EVALUATION OF THE NRC’S IMPLEMENTATION OF THE FEDERAL INFORMATION

SECURITY MANAGEMENT ACT FOR FY 2007 (OIG-07-A-19) 

September 28, 2007

An independent evaluation of the NRC’s implementation of the Federal Information Security Management Act for FY 2007 found 

that the NRC information security program needed improvements. 

Open Recommendation Action Pending

1. Review and correct as needed all security 

categorizations so that they consistently reflect 

the information types that reside on the systems.

The OIG’s recommendation is now part of the agency’s security 

categorization process by reviewing current line of business or service 

type, subfunction or service component, and any other related 

mission types. 

2. Categorize all NRC major applications and 

general support systems in accordance with 

Federal Information Processing Standard (FIPS) 

199, “Standards for Security Categorization of 

Federal Information and Information Systems.” 

The agency has completed categorization of all major applications and 

general support systems in accordance with FIPS 199. 

3. Conduct annual self-assessments in accordance 

with current Office of Management and Budget 

and the National Institute for Standards and 

Technology guidance.

The agency has completed annual control testing on all NRC-owned 

major applications and general support systems.

10. Develop and implement a methodology for 

identifying which listed systems reside on the 

NRC network and which do not.

The agency continues to update the system inventory database 

reporting tool to reflect which listed systems reside on the NRC 

network and which do not. The OIS works with system owners on 

the procedure to ensure the system database reflects changes in a 

timely and efficient fashion. Currently, 95 percent of our systems in 

inventory reflect the correct system type. The NRC is also working 

on restructuring its database to make reporting and data entry more 

efficient. Database restructuring is now complete, pending closure by 

OIG.

11. Develop and implement quality assurance 

procedures for the Plan of Action and 

Milestones (POA&Ms).

In addition to documenting the procedures, CSO will also undertake 

other steps related to improving the quality of POA&M information. 

This will include:

• documentation of procedures for conducting independent 

verification and validation of POA&M to assure their 

adequacy as part of the security assessment review process 

• acquiring additional contract support to assist in establishing 

a compliance review process in which CSO will review 

security documentation, conduct vulnerability scanning, and 

meet with each system owner on an annual basis to verify

continued
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

132

INDEPENDENT EVALUATION OF THE NRC’S IMPLEMENTATION OF THE FEDERAL INFORMATION

SECURITY MANAGEMENT ACT FOR FY 2007 (OIG-07-A-19) continued

Open Recommendation Action Pending

11. Develop and implement quality assurance 

procedures for the Plan of Action and 

Milestones (POA&Ms). continued

the status of remediation efforts; to assess the comprehensiveness 

of planned corrective action; and to validate the accuracy of tasks, 

responsibilities, and milestones for each outstanding weakness. 

These activities will take place quarterly targeting approximately 

25 percent of the overall number of POA&M. The estimated completion 

date is fourth quarter FY 2009.

12. Follow NIST guidance and only issue 

Interim Approval to Operate (IATO) with 

documentation that includes accurate 

identification of risks, risk mitigation 

plans, and security plans.

The NRC has implemented the change in the C&A process and has 

posted relevant accreditation decision process information on the 

project management methodology (PMM) Web site. The agency’s new 

designated approving authority (DAA) makes a decision based on the 

results of the security certification package, which provides the DAA with 

the essential information needed to make a credible, risk-based decision 

for authorization to operate, interim approval to operate (IATO), or 

denial of authorization to operate information systems. All systems with 

IATO will be revisited to ensure a new procedure is followed before the 

issuing of IATO.

13. Develop and implement quality assurance 

procedures to ensure that certification and 

accreditation documentation is consistent 

with NIST guidance.

The NRC has developed an evaluation criteria checklist for three 

additional documents. The agency will continue to develop the 

evaluation checklist and will distribute the checklist to all system owners 

and certifying agents. The NRC is currently soliciting feedback from 

certifying agents and system owners on the checklist as developed so far. 

The NRC also plans to use contract support for reviewing and providing 

feedback on documents and packages to system owners.

14. Develop and implement procedures for 

ensuring that employees and contractors 

with significant IT security responsibilities 

are identified, that they receive security 

awareness and training, and that the 

individual and associated training are 

readily correlated. This recommendation 

replaces Recommendation 10 from 

OIG-05-A-21, “Independent Evaluation 

of NRC’s Implementation of FISMA for 

Fiscal Year 2005.”

All NRC offices have provided their identification of individuals 

with significant IT security responsibilities to CSO. CSO will request 

updates on the identification on an annual basis. CSO provided system 

administrators with a Microsoft Windows server security course, and 

14 staff members attended the course. CSO also provided system owner 

training to system owners in August and September 2008. Fifty-four 

percent of system owners attended the course. The iLearn system will 

list the course, enabling others to take it. CSO is developing a role-based 

training plan and expects to have the plan completed by the end of the 

first quarter of FY 2009.
Appendix C ■ Summary of Financial Statement 

Audit and Management Assurances

APPENDIX C

SUMMARY OF FINANCIAL 

STATEMENT AUDIT AND 

MANAGEMENT ASSURANCES
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

134

Th e Enrico Fermi Nuclear Generating Station, a nuclear power plant on the shore of Lake Erie, in Frenchtown 

Charter Township, Monroe County, MI.

Photo Courtesy of DTE Energy.
135

Appendix C ■ Summary of Financial Statement 

Audit and Management Assurances

SUMMARY OF FINANCIAL STATEMENT AUDIT

Audit Opinion—Unqualifi ed

Restatement—No 

Material Weaknesses Beginning 

Balance New Resolved Consolidated Ending Balance

Information Systemwide Security 

Controls 1 - (1) - -

Total Material Weaknesses 1 - (1) - -

SUMMARY OF MANAGEMENT ASSURANCES

Eff ectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance—Unqualifi ed

Th ere are no Material Weaknesses for Internal Control Over Financial Reporting.

Eff ectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance—Unqualifi ed

Material Weaknesses Beginning 

Balance New Resolved Consolidated Reassessed Ending Balance

Information Systemwide Security 

Controls 1 - (1) - - -

Total Material Weaknesses 1 - (1) - - -

Conformance with Financial Management System Requirements (FMFIA § 4)

Statement of Assurance—Systems Conform to Financial Management System Requirements

Th ere are no nonconformances with Financial Management System Requirements.

Compliance with Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

Overall Substantial Compliance No No

1. Systems Requirements No No

2. Accounting Standards Yes Yes

3. United States Standard General 

Ledger at Transaction Level Yes Yes

SUMMARY OF FINANCIAL STATEMENT AUDIT AND MANAGEMENT ASSURANCES
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

136

Michael Johnson, front row right, Director of the Offi ce of New Reactors, and members of his staff receive the Victoria County 

application from Ken Ainger, center, of Exelon.

Photo Courtesy of NRC Photo Library.
Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

APPENDIX D

VERIFICATION AND VALIDATION 

OF NRC’S MEASURES AND 

METRICS
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

138

Arkansas Nuclear One is the only nuclear power plant in Arkansas. It is a two-unit, pressurized-water reactor located in 

Russellville, AR.

Photo Courtesy of the Entergy Corporation.
139

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

THE NRC’S DATA COLLECTION PROCEDURES 

In the Performance and Accountability Report, the U.S. Nuclear Regulatory Commission (NRC) measures the agency’s 

performance against its strategic goals related to safety and security. Th e agency obtained or derived most of the data used 

in this measurement from the NRC’s abnormal occurrence (AO) data and from reports submitted by licensees. Th e agency 

has amended the AO criteria to ensure that the criteria are consistent with both the NRC Strategic Plan for fi scal years 

(FY) 2008–2013 and the NRC rulemaking on Title 10 of the Code of Federal Regulations (10 CFR) Part 35, “Medical Use of 

Byproduct Materials.”

Th e NRC developed its AO criteria to comply with Section 208 of the Energy Reorganization Act of 1974, as amended. Th e 

Act requires the NRC to inform Congress of unscheduled incidents or events that the Commission determines to be signifi cant 

to public health and safety. Th e agency includes events that meet the AO criteria in the yearly publication of NUREG-0090, 

“Report to Congress on Abnormal Occurrences.” In 1997, the Commission determined NUREG-0090 should also include 

events that meet AO criteria that occur at Agreement State-licensed facilities. Th erefore, all events, whether they occur at an 

Agreement State-licensed facility or an NRC-licensed or regulated facility, fall under the agency’s AO criteria and reporting 

requirements. 

Data for AOs originate from external sources, such as Agreement States and NRC licensees. Th e NRC has established 

procedures for the systematic review and evaluation of events reported by NRC licensees and Agreement State licensees. Th e 

NRC believes these data are credible for the following reasons: 

(1) Regulations require that external sources, such as Agreement States and licensees, report the needed information to the 

NRC.

(2) Th e NRC maintains an aggressive inspection program that audits licensees and evaluates Agreement State programs to 

determine whether they are reporting information as required by regulations.

(3) Th e NRC has procedures for reviewing and evaluating licensees. 

Th e NRC database systems that support this process include the Licensee Event Report Search System (LERSearch), the 

Accident Sequence Precursor (ASP) Database, the Nuclear Materials Event Database (NMED), and the Radiation Exposure 

Information Report System. 

Th e objective of this systematic review and evaluation of licensee and Agreement State data is to identify events that are 

signifi cant from the standpoint of public health and safety, based on criteria that include specifi c thresholds. Th e NRC uses 

a number of sources to determine the reliability and the technical accuracy of event information reported by licensees and 

Agreement States. Such sources include (1) NRC licensee reports, (2) NRC inspection reports, (3) Agreement State reports, 

(4) periodic review of Agreement State regulatory programs, (5) NRC consultant and contractor reports, and (6) U.S. 

Department of Energy operating experience weekly summaries. In addition, there are daily interactions and exchanges of 

event information between headquarters and the regional offi ces, as well as periodic conference calls between headquarters, 

the regions, and Agreement States to discuss event information. Th e NRC headquarters program offi ces, regional offi ces, and 

agency management validate and verify events that meet the AO criteria before submission of the information to Congress.

Th e agency action review meeting provides another opportunity for the NRC’s senior management to discuss signifi cant 

events, licensee performance issues, trends, and the actions the NRC needs to take to mitigate recurrences.

Th e NRC’s computer security program maintains strict data protection. It also provides administrative, technical, and 

physical security measures to protect the agency’s information, automated information systems, and information technology 

infrastructure. Th ese measures include special safeguards to protect classifi ed information, unclassifi ed safeguards information, 

and sensitive unclassifi ed information that are processed, stored, or produced on designated automated information systems.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

140

NUCLEAR REACTOR SAFETY

Strategic Outcomes: 

■ Prevent the occurrence of any nuclear reactor accidents.

■ Prevent the occurrence of any inadvertent criticality 

events. 

■ Prevent the occurrence of any acute radiation exposures 

resulting in fatalities.

■ Prevent the occurrence of any releases of radioactive 

materials that result in signifi cant radiation exposures.

■ Prevent the occurrence of any releases of radioactive 

materials that cause signifi cant adverse environmental 

impacts.

VERIFICATION:

Licensees report any nuclear reactor events at their 

facilities in licensee event reports (LERs). Th rough review 

of LERs, the NRC staff would identify any nuclear reactor 

accidents, deaths from acute radiation exposures, events 

that result in signifi cant radiation exposure or releases 

of radioactive materials that cause signifi cant adverse 

environmental impacts that meet the criterion for an 

abnormal event. During periodic meetings, NRC’s AO 

coordinators discuss each potential AO to determine whether 

it meets the AO reporting criteria. In addition, the NRC 

specialists periodically conduct inspections to assess licensee 

compliance with reporting criteria as well as radiological 

and environmental release criteria. If a licensee reports an 

event involving core damage, NRC inspectors carefully 

investigate the event to ensure the validity of the information 

in the report. Providing an additional layer of verifi cation, 

an NRC-employed resident inspector monitors each reactor 

facility on a real-time basis. Th e resident inspector verifi es 

the safe operation of the facility and is aware of any instances 

in which core damage has occurred or radiation has been 

released from the reactor in excess of reporting limits.

Th e NRC staff evaluates potential AO events using 

specifi c criteria. Th e NRC’s Offi ce of Nuclear Regulatory 

Research makes the fi nal determination of which events 

should be recommended to the Commission as abnormal 

occurrences. NRC Management Directive 8.1, “Abnormal 

Occurrence Reporting Procedure,” describes the abnormal 

occurrence reporting process.

VALIDATION: 

Prevent the occurrence of any nuclear reactor 

accidents. Th e NRC Severe Accident Policy Statement 

defi nes nuclear reactor accidents as those events that result in 

substantial damage to the reactor fuel, whether or not serious 

off site consequences occur. 

Prevent the occurrence of any inadvertent criticality 

events. Events collected under this strategic outcome are 

actual occurrences of accidental criticality. Such events could 

compromise public health and safety, the environment, and 

the common defense and security. Events of this magnitude 

are rare. If such an event occurred, the NRC would conduct 

a prompt and thorough investigation to determine root 

causes and consequences of the event. Th e agency would also 

take necessary actions to mitigate the situation and prevent 

recurrence. 

Prevent the occurrence of any acute radiation 

exposures resulting in fatalities. Determining whether 

or not any deaths result from acute radiation exposure is 

essential to protecting public health and safety. Events of this 

magnitude are rare. If such an unlikely event occurred, the 

NRC would conduct a prompt and thorough investigation 

to determine root causes and consequences of the event. Th e 

agency would also take any necessary actions to mitigate 

the situation and prevent recurrence. Th is strategic outcome 

measure is a direct measurement of the occurrence of 

radiation-related deaths at nuclear reactors.

Prevent the occurrence of any releases of radioactive 

materials that result in signifi cant radiation exposures. 

Nuclear power generation produces radiation, a form of energy 

that can be harmful if not properly controlled. Measuring the 

number of events resulting in signifi cant radiation exposures, 

as well as any deaths from radiation exposure, indicates 
141

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

whether radiation-related deaths and illness are being 

prevented. Th e NRC defi nes signifi cant radiation exposures 

as those that result in unintended permanent functional 

damage to an organ or a physiological system. Th is should 

be determined by a physician, in accordance with Abnormal 

Occurrence Criterion I.A.3. 

Prevent the occurrence of any releases of radioactive 

materials that cause signifi cant adverse environmental 

impacts. Th e radiation produced in the process of generating 

power from nuclear materials can also harm the environment 

if it is not properly controlled. A radiation release that has 

the potential to adversely aff ect the environment is currently 

undefi ned. As a surrogate for this performance measure, the 

NRC collects data on the frequency with which radioactive 

material is released into the environment in excess of specifi ed 

limits. NUREG-0090, Appendix A, Criterion I.B.1, defi nes 

such releases as those involving, “the release of radioactive 

material to an unrestricted area in concentrations which, if 

averaged over a period of 24 hours, exceed 5,000 times the 

values specifi ed in Table 2 of Appendix B [Annual Limits 

on Intake (ALIs) and Derived Air Concentrations (DACs) 

of Radionuclides for Occupational Exposure; Effl uent 

Concentrations; Concentrations for Release to Sewerage.] 

to 10 CFR Part 20, unless the licensee has demonstrated 

compliance with 20.1301 [10 CFR 20.1301, “Dose Limits for 

Individual Members of the Public,”] using 20.1302(b)(1) or 

20.1302 (b)(2)(ii).” Th e essence of the criterion is that events 

that result in unintended permanent functional damage 

to an organ or a physiological system, as determined by a 

physician, are used as the measure for events that result in 

releases of radioactive material causing an adverse impact 

on the environment. Licensees report such events in LERs, 

which are sent to the NRC as reportable occurrences. Th is 

strategic outcome measure is a direct measurement of 

instances in which harmful impacts on the environment 

occur from nuclear reactors. 

Performance Measures:

■ Number of new conditions evaluated as red (high safety 

signifi cance) by the NRC’s Reactor Oversight Process (ROP). 

Reactor Safety Target: Less than or equal to 3

VERIFICATION:

 Th e NRC collects data for this performance measure in 

two ways as part of the agency’s Reactor Oversight Process 

(ROP). Th e NRC inspectors collect inspection fi ndings at 

least once every 3 months. Inspectors use formal, detailed 

inspection procedures to review plant operations and 

maintenance. As part of the ROP signifi cance determination 

process, NRC managers review inspection fi ndings. Licensees 

collect the data for performance indicators and submit them 

to the NRC at least once every 3 months. Th e signifi cance 

of the data is determined by thresholds for each indicator. 

Th e NRC conducts inspections of licensees’ processes for 

collecting and submitting the data to ensure completeness, 

accuracy, consistency, timeliness, and validity.

Th e NRC enhances the quality of its inspections through 

inspector feedback, periodic reviews of results, and a rigorous 

inspector qualifi cation program. Th e quality of performance 

indicators is improved through continuous feedback from 

licensees and inspectors that is incorporated into guidance 

documents. Th e NRC publishes the inspection fi ndings 

and performance indicators on the agency’s Web site and 

incorporates feedback received from all stakeholders, as 

appropriate.

VALIDATION: 

Th e inspection fi ndings and performance indicators 

used by the ROP cover a broad range of plant operations and 

maintenance. Th e NRC managers review signifi cant issues 

that are identifi ed and inspectors conduct supplemental 

inspections of selected aspects of plant operations, as 

appropriate. Plants that are identifi ed as having performance 

issues, as well as a self-assessment of the ROP, are reviewed by 

senior agency managers on an annual basis, and the results 

are reported to the Commission.

Th is measure is the number of new red inspection 

fi ndings during the fi scal year plus the number of new red 

performance indicators during the fi scal year. Programmatic 

issues at multiunit sites that result in red fi ndings for each 

individual unit are considered separate conditions for 

purposes of reporting for this measure. A red performance 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

142

indicator and a red inspection fi nding that are due to an issue 

with the same underlying causes are also considered separate 

conditions for purposes of reporting for this measure. Red 

inspection fi ndings are included in the fi scal year in which the 

fi nal signifi cance determination was made. Red performance 

indicators are included in the fi scal year in which the ROP 

external Web page was updated to show the red indicator. 

■ Number of signifi cant accident sequence precursors 

(ASPs) of a nuclear accident. 

Reactor Safety Target: Zero

VERIFICATION: 

Th e Commission has an ASP program to systematically 

evaluate United States nuclear power plant operating 

experience to identify, document, and rank those operating 

events that were most signifi cant in terms of the potential for 

inadequate core cooling and core damage (i.e., precursors). 

Th e ASP program evaluation process has fi ve steps. First, the 

NRC screens operating experience data to identify events 

or conditions that may be potential precursors to a nuclear 

accident. Th e data the NRC evaluates include LERs from a 

Licensee Event Report Search System (LERSearch) database; 

incident investigation team or augmented inspection team 

reviews; the NRC’s daily screening of operational events; and 

other events the NRC staff identifi es as candidates. Second, 

the NRC conducts an engineering review, using specifi c 

criteria, to identify those events requiring detailed analyses 

as candidate precursors. Th ird, the NRC staff calculates a 

conditional core damage probability by mapping failures 

observed during the event to accident sequences in risk 

models. Fourth, the preliminary potential precursor analyses 

are provided to the NRC staff and the licensee for independent 

peer review. However, for ASP analyses of noncontroversial, 

low-risk precursors in which the ASP results reasonably agree 

with the signifi cant determination process (SDP) results, 

formal peer reviews by licensees may not be performed. 

Th e NRC staff will continue to perform an in-house review 

process for all analyses. Lastly, the NRC provides fi ndings 

from the analyses to the licensee and the public.

It must also be noted that there is a time lag in obtaining 

ASP analysis results since they are oft en based on LERs 

(submitted up to 60 days aft er an event) and most analyses 

take approximately 6 months to fi nalize. Final data will be 

reported in the year in which the event occurred. 

VALIDATION:

Th e ASP program identifi es signifi cant precursors as 

those events that have a 1,000 (10-3) or greater probability 

of leading to a nuclear reactor accident. Signifi cant accident 

sequence precursor events have a conditional core damage 

probability (CCDP) or ΔCDP of > 1x 10-3. 

■ Number of operating reactors whose integrated 

performance entered the Manual Chapter 0350 process, 

the multiple/repetitive degraded cornerstone column, 

or the unacceptable performance column of the Reactor 

Oversight Process (ROP) Action Matrix. 

Reactor Safety Target: Less than or equal to 3

VERIFICATION: 

Th e NRC uses the ROP to collect data for this performance 

measure on a continuous basis and publishes it every 

3 months. NRC inspectors use detailed formal procedures 

to conduct inspections of licensee performance; the NRC 

managers review the results to ensure the completeness, 

accuracy, consistency, timeliness, and validity of the data.

Th e NRC enhances the quality of its inspections through 

inspector feedback, periodic reviews of results, and a rigorous 

inspector qualifi cation program. Th e agency also improves 

inspection quality through continuous feedback from 

licensees and inspectors that is incorporated into guidance 

documents. Th e NRC publishes the data on the agency’s Web 

site and incorporates feedback received from all stakeholders, 

as appropriate.

VALIDATION: 

Th e information collected by the ROP covers a broad 

range of plant operations and maintenance. Th e NRC 

managers review signifi cant issues and inspectors conduct 

supplemental inspections of selected aspects of plant 

operations, as appropriate. Plants that are identifi ed as 

having performance issues are reviewed by senior agency 
143

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

managers on an annual basis, and the results are reported 

to the Commission. Th e same is true of the agency’s selfassessment of the ROP. 

Th is measure is the number of plants that have entered 

the Manual Chapter 0350 process, the multiple/repetitive 

degraded cornerstone column, or the unacceptable 

performance column during the fi scal year (i.e., were not 

in these columns or process the previous fi scal year). Data 

for this measure are obtained from the NRC external Web 

action matrix summary page that provides a matrix of the 

fi ve columns with the plants listed within their applicable 

column and notes the plants in the Manual Chapter 0350 

process. For reporting purposes, plants that are the subject 

of an approved deviation from the action matrix are included 

in the column or process in which they appear on the Web 

page.

■ Number of signifi cant adverse trends in industry safety 

performance. 

Reactor Safety Target: Less than or equal to 1

VERIFICATION: 

Th e NRC derives data for this performance measure 

from data supplied by all power plant licensees in LERs, from 

monthly operating reports, as well as from performance 

indicator data submitted for the ROP. Th ese data are required 

by by 10 CFR 50.73, Section 50.73, “Licensee Event Report 

System,” plant-specifi c technical specifi cations, or the ROP. 

Detailed NRC guidelines and procedures are in place to 

control each of these reporting processes. Th e NRC reviews 

these procedures for appropriateness both periodically and 

in response to licensee feedback. Th e NRC also conducts 

periodic inspections of licensees’ processes for collecting 

and submitting the data to ensure completeness, accuracy, 

consistency, timeliness, and validity.

All licensees report the data at least once every 3 months. 

Th e NRC staff reviews all of the data and conducts inspections 

to verify safety signifi cant information. Th e NRC also 

employs a contractor to review the licensee data, input them 

into a database, and compile them into various indicators. 

Th e agency has established quality assurance processes for 

this work and included these in the statement of work for the 

contract. Th e agency controls the experience and training of 

key personnel through the administration of the contract. 

Th e contractor identifi es discrepancies to both licensees and 

the NRC for resolution. Th e NRC reviews the indicators and 

publishes them on the agency’s Web site on a quarterly basis. 

When appropriate, the agency also incorporates feedback 

from licensees and the public.

Th e NRC sets the target value based on the expected 

addition of several indicators and a change in the long-term 

trending methodology.

VALIDATION: 

Th e data and indicators that support reporting against 

this performance measure provide a broad range of 

information on nuclear power plant performance. Th e NRC 

staff tracks indicators and applies statistical techniques to 

provide an indication of whether industry performance is 

improving, remaining steady, or degrading over time. If the 

staff identifi es any adverse trends, the NRC addresses the 

problem through its processes for addressing generic safety 

issues and issuing generic communications to licensees. Th e 

NRC is developing additional, risk-informed indicators to 

enhance the current set of indicators. In doing so, the staff 

considers the costs and benefi ts of collecting the data through 

ongoing, extensive interactions with industry regarding the 

indicators. Th e Industry Trends Program is reviewed by 

senior agency managers on an annual basis, and the staff 

reports the results to the Commission.

■ Number of events with radiation exposures to the 

public and occupational workers from nuclear reactors 

that exceed Abnormal Occurrence Criteria I.A.

Reactor Safety Target: Zero

VERIFICATION: 

Licensees report overexposures through the Sequence 

Coding and Search System (SCSS) LER database. Th e Oak 

Ridge National Laboratory maintains the database by 

receiving all LERs and coding them into the searchable 

database. Th e SCSS LER database is used to identify those 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

144

LERs that report overexposures. Th e NRC resident inspectors 

stationed at each nuclear power plant provide a high degree 

of assurance that plants do, in fact, report all events that 

meet reporting criteria. In addition, the NRC conducts 

inspections if there is any indication that an exposure 

exceeded, or could have exceeded, a regulatory limit. 

Finally, areas of the facility that may be subject to radiation 

contamination have monitors that record radiation levels. 

Th ese monitors would immediately reveal any instances of 

high levels of radiation exposure. 

VALIDATION: 

Overexposure to radiation is a potential danger from 

the operation of nuclear power plants. Such exposure to 

radiation in excess of the applicable regulatory limits may 

potentially occur through either a nuclear accident or 

other malfunctions at the plant. Consequently, tracking the 

number of overexposures that occur at nuclear reactors is an 

important indicator of the degree to which safety is being 

maintained.

■ Number of radiological releases to the environment 

from nuclear reactors that exceed applicable regulatory 

limits. 

Reactor Safety Target: 0

VERIFICATION: 

As with worker overexposures, licensees report 

environmental releases of radioactive materials that are 

in excess of regulations or license conditions through the 

SCSS LER database maintained at the Oak Ridge National 

Laboratory. Th e NRC uses the SCSS database to identify those 

LERs reporting releases and applies the number of reported 

releases to this measure. Th e NRC also conducts periodic 

inspections of licensees to ensure that they properly monitor 

and control releases to the environment through effl uent 

pathways. In addition, onsite monitors record any instances 

in which the plant releases radiation into the environment. 

If the inspections or the monitors reveal any indication of 

an accident or an inadvertent release, the NRC conducts 

followup inspections.

VALIDATION: 

Th e generation of nuclear power creates radioactive 

materials. Nuclear power plants release these radioactive 

materials into the environment in a strictly controlled 

manner. Th e NRC has established regulatory controls that 

limit the amount of radioactive material released and the 

resultant dose to members of the public. Because releases in 

excess of regulatory limits have the potential to endanger public 

safety and harm the environment, the NRC tracks all releases 

of radioactive materials. Th e NRC inspects every nuclear 

power plant for compliance with regulatory requirements 

and specifi c license conditions related to radioactive releases. 

If the licensee violates regulations or license conditions, the 

inspection program includes escalating enforcement actions 

based on the severity of the event. 

Th is performance measure includes dose values that are 

classifi ed as being as low as reasonably achievable (ALARA), 

contained in 10 CFR Part 50, Appendix I, “Numerical 

Guides for Design Objectives and Limiting Conditions for 

Operation to Meet the Criterion ‘As Low as is Reasonably 

Achievable’ for Radioactive Material in Light-Water-Cooled 

Nuclear Power Reactor Effl uents,” as well as the public 

dose limits contained in 10 CFR Part 20, “Standards for 

Protection Against Radiation.” Because the performance 

measure includes ALARA values, which are not safety limits, 

and because Appendix I to 10 CFR Part 50 allows licensees 

to temporarily exceed, for good reason, the ALARA dose 

values, the performance measure is set to 2. 

NUCLEAR MATERIALS AND WASTE SAFETY

Strategic Outcomes:

■ Prevent the occurrence of any inadvertent criticality 

events. 

■ Prevent the occurrence of any acute radiation exposures 

resulting in fatalities. 
145

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

■ Prevent the occurrence of any releases of radioactive 

materials that result in signifi cant radiation exposures.

■ Prevent the occurrence of any releases of radioactive 

materials that cause signifi cant adverse environmental 

impacts.

VERIFICATION: 

Prevent the occurrence of any inadvertent criticality 

events. Inadvertent criticality events must be reported, 

regardless of whether they result in exposures or injuries to 

workers or the public, and regardless of whether they result in 

adverse impacts to the environment. Licensees immediately 

report criticality events to the NRC Headquarters Operations 

Center by telephone through the cognizant licensee safety 

offi cer. Th e licensee must submit followup written reports 

to the NRC within 30 days of the initial report. Th e written 

report must contain specifi c information concerning 

the event, as specifi ed by 10 CFR 70.50(c)(2) and 

10 CFR 76.120(d)(2). Th e NRC then dispatches an inspection 

team to confi rm the reliability of the data. Th e agency also 

tracks the event through the Nuclear Materials Event Database 

(NMED). Th e NRC would immediately investigate an event 

of this nature. Should an event meeting this threshold occur, 

it would be reported to the NRC through a number of sources 

but primarily through required licensee notifi cations. Th ese 

events are summarized in event notifi cations and preliminary 

notifi cations, which are used to widely disseminate the 

information to internal and external stakeholders. 

Th e fuel facilities, materials, high-level waste repository, 

decommissioning, and spent fuel storage and transportation 

inspection programs are key elements in verifying the 

completeness and accuracy of licensee reports. Th e integrated 

materials performance evaluation program (IMPEP) also 

provides a mechanism to verify that NRC regions are 

consistently and properly collecting and reporting events 

received from the licensees, and entering them into NMED.

Th e NRC has taken a number of steps to improve the 

timeliness and completeness of materials event data. Th ese 

steps include assessment of the NMED data during monthly 

staff reviews, emphasis and analysis during the IMPEP 

reviews, NMED training in headquarters, the regions, 

and Agreement States, and discussions at all meetings of 

Agreement States and of the conference of radiation control 

program directors (CRCPD). 

VALIDATION: 

Events collected under this strategic outcome are actual 

occurrences of accidental criticality. Such events could 

compromise public health and safety, the environment, and 

the common defense and security. Events of this magnitude 

are rare. If such an event occurred, it would result in prompt 

and thorough investigation to determine root causes, 

consequences, and actions that would mitigate the situation 

and prevent recurrence. Th erefore, the strategic outcome of 

“no inadvertent criticalities” represents a valid measure of 

whether the NRC has ensured the adequate protection of 

public health and safety. 

In assessing the validity of the data being collected as 

appropriate for the strategic outcome, the staff has determined 

that there is a logical relationship between the data collected 

and the strategic outcome. Given the magnitude and rarity 

of a criticality event, the NRC believes the probability that 

it would not be aware of an inadvertent criticality is very 

small.

VERIFICATION: 

Prevent the occurrence of any acute radiation 

exposures resulting in fatalities. Determining whether or 

not a death resulted from acute radiation exposure is essential 

to the protection of public health and safety. Should an event 

meeting this threshold occur, it would be reported to the NRC, 

the Agreement State, or both through a number of sources 

but primarily through required licensee notifi cations. Th ese 

events are summarized in event notifi cations and preliminary 

notifi cations, which are used to widely disseminate the 

information to internal and external stakeholders. 

Th e fuel facilities, materials, high-level waste repository, 

decommissioning, and spent fuel storage and transportation 

inspection programs are key elements in verifying the 

completeness and accuracy of licensee reports. Th e IMPEP 

also provides a mechanism to verify that Agreement States 

and NRC regions are consistently collecting and reporting 

events received from the licensees, and entering them into 

NMED. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

146

Th e NRC has taken a number of steps to improve the 

timeliness and completeness of materials event data. Th ese 

steps include assessment of the NMED data during monthly 

staff reviews, emphasis and analysis during the IMPEP 

reviews, NMED training in headquarters, the regions, and 

Agreement States, and discussions at all Agreement States 

and conference of radiation control program directors 

(CRCPD) meetings. 

VALIDATION: 

Th e NRC had designed its regulatory process (including 

licensing, inspection, guidance, regulations, and enforcement 

activities) to ensure that there are no fatalities caused by acute 

radiation exposure. In the unlikely event that a death should 

occur, NRC or Agreement State technical specialists, with 

input from expert consultants, will decide whether the cause 

of a death is acute radiation exposure or exposure to other 

radioactive hazardous materials (for fuel cycle activities, this 

extends to other hazardous materials used with, or produced 

from, licensed material, consistent with 10 CFR Part 70, 

“Domestic Licensing of Special Nuclear Material”).

NRC believes the data collected to meet this strategic 

outcome are free from bias. NRC does not use statistical 

sampling of data to determine results. Rather, the agency 

reviews all events data to determine if it has met the strategic 

outcome. Two important data limitations in determining this 

strategic outcome are (1) delay time for receiving information 

and (2) failure of NRC to become aware of an event that results 

in a fatality. To address the fi rst limitation, NRC regulations 

and procedures associated with event reporting include 

specifi c requirements for timely notifi cations; however, there 

is a lag time separating the occurrence of an event and the 

known consequences of an event. 

On the second limitation, the NRC believes the 

probability that it would not be aware of a fatality caused 

by acute radiation exposure is very small. Periodic licensee 

inspections and regulatory reporting requirements are 

suffi cient to ensure that the agency would be aware of an 

event of this magnitude. 

If such an event occurred, it would result in a prompt 

and thorough investigation of the event to determine its 

root causes and consequences as well as actions that would 

mitigate the situation and prevent recurrence. In addition to 

these immediate actions, the NRC holds periodic meetings 

where staff and management review events that appear to 

meet this strategic outcome.

VERIFICATION: 

Prevent the occurrence of any releases of radioactive 

materials that result in signifi cant radiation exposures. 

Th e NRC defi nes this strategic outcome as any discharge or 

dispersal of radioactive materials from the intended place 

of confi nement, or discharge or dispersal of radioactive 

wastes during storage, transport, or disposal, which causes 

signifi cant radiation exposures to a member of the public or 

an occupational worker. A signifi cant radiation exposure is 

one that directly results in unintended permanent functional 

damage to an organ or physiological system, as determined 

by a physician, in accordance with AO Criterion I.A.3. (Th is 

metric does not include exposures from sealed sources. 

Exposure from sealed sources would be counted under the 

performance measure, “Number of events with radiation 

exposures to the public and occupational workers from 

radioactive material that exceed AO Criterion I.A.”)

Should an event meeting this threshold occur, it would 

be reported to the NRC, the Agreement State, or both 

through a number of sources but primarily through required 

licensee notifi cations. Th ese events are summarized in event 

notifi cations and preliminary notifi cations, which are used to 

widely disseminate the information to internal and external 

stakeholders. Th e NMED is an essential system for the NRC 

Offi ce .... (NMSS) and Offi ce... (FSME) to collect information 

on such events.

Th e fuel facilities, materials, high-level waste repository, 

decommissioning, and spent fuel storage and transportation 

inspection programs are key elements in verifying the 

completeness and accuracy of licensee reports. Th e IMPEP 

also provides a mechanism to verify that Agreement States 

and NRC regions are consistently collecting and reporting 

events received from the licensees, and entering them into 

NMED.
147

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

Th e NRC has taken a number of steps to improve the 

timeliness and completeness of materials event data. Th ese 

steps include assessment of the NMED data during monthly 

staff reviews, emphasis and analysis during the IMPEP 

reviews, NMED training in headquarters, the regions and 

Agreement States, and discussions at all Agreement State and 

CRCPD meetings. 

VALIDATION: 

Signifi cant radiation exposures are exposures that result 

in unintended permanent functional damage to an organ 

or a physiological system, as determined by a physician, 

in accordance with AO Criterion I.A.3. Events of this 

magnitude are rare. In the unlikely event that a signifi cant 

exposure should occur, NRC or Agreement State technical 

specialists, with input from expert consultants, decide if the 

permanent functional damage is caused by conditions related 

to acute radiation exposures or exposure to other radioactive 

hazardous materials (for fuel cycle activities, this extends 

to other hazardous materials used with, or produced from, 

licensed material, consistent with consistent with 10 CFR 

Part 70, “Domestic Licensing of Special Nuclear Material”).

NRC does not use statistical sampling of data to 

determine results. Rather, the agency reviews all event data 

to determine if the strategic outcome has been met. Two 

important data limitations in determining this strategic 

outcome are (1) delay time for receiving information and 

(2) failure of NRC to become aware of an event that results in 

a fatality. To address the fi rst limitation, the NRC regulations 

and procedures associated with event reporting include 

specifi c requirements for timely notifi cations; however, there 

is a lag time separating the occurrence of an event and the 

known consequences of an event. On the second limitation, 

NRC believes the probability that it would not be aware of a 

fatality due to acute radiation exposure is very small. Periodic 

licensee inspections and regulatory reporting requirements 

are suffi cient to ensure that the agency would be aware of an 

event of this magnitude. 

If such an event occurred, it would result in a prompt 

and thorough investigation to determine root causes, 

consequences, and actions that would mitigate the situation 

and prevent recurrence. In addition to these immediate 

actions, the NRC holds periodic meetings, where staff and 

management review events that appear to meet this strategic 

outcome. 

VERIFICATION: 

Prevent the occurrence of any releases of radioactive 

materials that cause signifi cant adverse environmental 

impacts. Releases that have the potential to cause adverse 

environmental impact are currently undefi ned. As a 

surrogate, we will use any discharge or dispersal of 

radioactive materials from the intended place of confi nement 

or discharge or dispersal of radioactive wastes during storage, 

transport, or disposal that exceeds the limits for reporting 

abnormal occurrences as given in Abnormal Occurrence 

Criterion 1.B.1.

Should an event meeting this threshold occur, it would 

be reported to the NRC, the Agreement State, or both 

through a number of sources but primarily through required 

licensee notifi cations. Th ese events are summarized in event 

notifi cations and preliminary notifi cations, which are used to 

widely disseminate the information to internal and external 

stakeholders. 

Th e fuel facilities, materials, high-level waste repository, 

decommissioning, and spent fuel storage and transportation 

inspection programs are key elements in verifying the 

completeness and accuracy of licensee reports. Th e IMPEP 

also provides a mechanism to verify that Agreement States 

and NRC regions are consistently collecting and report events 

received from the licensees and entering them into NMED.

Th e NRC has taken a number of steps to improve the 

timeliness and completeness of materials event data. Th ese 

steps include assessment of the NMED data during monthly 

staff reviews, emphasis and analysis during the IMPEP 

reviews, NMED training in headquarters, the regions, and 

Agreement States, and discussions at all Agreement State and 

CRCPD meetings. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

148

VALIDATION: 

Releases that have the potential to cause an adverse 

environmental impact are those that exceed the limits 

for reporting abnormal occurrences as given by AO 

Criterion 1.B.1. Th e NRC has designed its regulatory process 

(including licensing, inspection, guidance, regulations, and 

enforcement activities) to ensure that there are no releases 

of radioactive materials that cause signifi cant adverse 

environmental impacts.

Events of this magnitude are rare. In the unlikely event of 

a release of radioactive materials (for fuel cycle activities, this 

extends to other hazardous materials used with, or produced 

from, licensed material, consistent with 10 CFR Part 70), 

NRC and Agreement State technical experts, with possible 

input from expert consultants, decide whether the release 

caused a signifi cant adverse environmental impact.

Th e NRC does not look at statistical sampling of data to 

determine results. Rather, the agency reviews all event data 

to determine if the strategic outcome has been met. Two 

important data limitations in determining this strategic 

outcome are (1) delay time for receiving information and 

(2) failure of NRC to become aware of an event that results in 

a fatality. To address the fi rst limitation, NRC regulations and 

procedures associated with event reporting include specifi c 

requirements for timely notifi cations; however, there is a lag 

time separating the occurrence of an event and the known 

consequences of an event. On the second limitation, the NRC 

believes the probability that it would not be aware of a fatality 

caused by acute radiation exposure is very small. Periodic 

licensee inspections and regulatory reporting requirements 

are suffi cient to ensure that the agency would be aware of an 

event of this magnitude. 

If such an event occurred, the NRC would promptly 

investigate the event to determine its root causes, 

consequences, and actions that would mitigate the situation 

and prevent recurrence. In addition to these immediate 

actions, the NRC holds periodic meetings, where staff and 

management review events that appear to meet this strategic 

outcome. 

Performance Measures:

■ Number of events with radiation exposures to the 

public or occupational workers from radioactive 

material that exceed AO Criteria I.A.

 Materials Safety Target: Less than or equal to 2 

 Waste Safety Target: Zero

VERIFICATION: 

Th is performance measure includes any event involving 

licensed radioactive materials that results in signifi cant 

radiation exposures to members of the public or occupational 

workers that exceed the dose limits of the AO reporting 

criteria. Th e NRC defi nes signifi cant radiation exposure as 

exposure that results in unintended permanent functional 

damage to an organ or a physiological system, as determined 

by a physician, according to AO Criterion 1.A. However, this 

excepts some medical applications of radioactive materials 

that involve the intentional application of extremely high 

doses of radioactive materials. 

Should an event meeting this threshold occur, it would 

be reported to the NRC, the Agreement State, or both 

through a number of sources, but primarily through required 

licensee notifi cations. Th ese events are summarized in event 

notifi cations and preliminary notifi cations, which are used to 

widely disseminate the information to internal and external 

stakeholders. 

Th e fuel facilities, materials, high-level waste repository, 

decommissioning, and spent fuel storage and transportation, 

inspection programs are key elements in verifying the 

completeness and accuracy of licensee reports. Th e IMPEP 

also provides a mechanism to verify that Agreement States 

and NRC regions consistently collect and report such events 

and enter them into NMED.

Th e NRC has taken a number of steps to improve the 

timeliness and completeness of materials event data. Th ese 

steps include assessment of the NMED data during monthly 

staff reviews; emphasis and analysis during the IMPEP 

reviews; NMED training in headquarters, the regions, and 

Agreement States; and discussions at all Agreement State and 

CRCPD meetings. 
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Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

VALIDATION: 

Th ere is a logical basis for using events involving radiation 

exposures that exceed AO Criteria I.A. as a performance 

measure for ensuring the protection of public health and 

safety. Th e NRC considers an event an abnormal occurrence 

if it signifi cantly impacts public health or safety. Th e NRC 

has designed its regulatory process (including licensing, 

inspection, guidance, regulations, and enforcement activities) 

to mitigate the likelihood of an event that would exceed AO 

Criteria I.A.

Events of this magnitude are rare. In the unlikely 

event that an abnormal occurrence should occur, NRC or 

Agreement State technical specialists will confi rm whether 

the criteria were met, with input provided by expert 

consultants, as necessary.

Th e NRC does not use statistical sampling of data to 

determine results. Rather, the agency reviews all event data 

to determine if the performance measure has been met. Two 

important data limitations in determining this strategic 

outcome are (1) delay time for receiving information and 

(2) failure of NRC to become aware of an event that results 

in a fatality. To address the fi rst limitation, NMSS and 

FSME procedures and NRC regulations associated with 

event reporting include specifi c requirements for timely 

notifi cations; however, there is a lag time separating the 

occurrence of an event and the known consequences of an 

event.

On the second limitation, the probability of the NRC 

being unaware of a fatality caused by acute radiation 

exposure is very small. Periodic licensee inspections and 

regulatory reporting requirements are suffi cient to ensure 

that the agency would be aware of an event of this magnitude. 

If such an event occurred, the NRC would promptly and 

thoroughly investigate the event to determine its root 

causes, consequences, and actions to mitigate the situation 

and prevent recurrence. In addition to these immediate 

actions, the NRC holds periodic meetings where staff and 

management validate the occurrence of these events.

■ Number of radiological releases to the environment 

that exceed applicable regulatory limits.

Materials Safety Target: Less than or equal to 2

 Waste Safety Target: Zero

VERIFICATION:

Th is performance measure is defi ned as a radiological 

release to the environment from any of the following 

activities: fuel facilities process and fabrication, nuclear 

materials licensing, high-level waste repository licensing, 

decommissioning, spent fuel storage and transportation, 

as well as other activities that exceed applicable regulations 

as defi ned in 10 CFR 20.2203(a)(3). A 30-day written report 

is required on such releases. Th e nuclear materials safety 

performance measure target is to have no more than fi ve 

releases a year that meet these reporting criteria. Th e nuclear 

waste safety target is to have no releases that meet the 

reporting criteria.

Should an event meeting this threshold occur, it would 

be reported to the NRC, the Agreement State, or both 

through a number of sources but primarily through required 

licensee notifi cations. Th ese events are summarized in event 

notifi cations and preliminary notifi cations, which are used to 

widely disseminate the information to internal and external 

stakeholders. 

Th e fuel facilities, materials, high-level waste repository, 

decommissioning, and spent fuel storage and transportation 

inspection programs are key elements in verifying the 

completeness and accuracy of licensee reports. Th e IMPEP 

also provides a mechanism to verify that Agreement States 

and NRC regions are consistently collecting and reporting 

events received from the licensees and entering them into 

NMED.

Th e NRC has taken a number of steps to improve the 

timeliness and completeness of materials event data. Th ese 

steps include assessment of the NMED data during monthly 

staff reviews; emphasis and analysis during the IMPEP 

reviews; NMED training in headquarters, the regions, and 

Agreement States; and discussions at all Agreement State and 

CRCPD meetings. 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

150

VALIDATION: 

Th e regulations in 10 CFR Part 20 provide standards 

for protection against radiation. Th ere is a logical basis for 

tracking releases subject to the 30-day reporting requirement 

under 10 CFR 20.2203(a)(3)(ii) as a performance measure 

for ensuring the protection of the environment. Th e 

NRC designed its regulatory process (including licensing, 

inspection, guidance, regulations, and enforcement activities) 

to ensure that releases of radioactive materials that exceed 

regulatory limits are infrequent. 

In the unlikely event that a release to the environment 

exceeds regulatory limits, NRC or Agreement State technical 

specialists, with input from expert consultants, will confi rm 

whether the criteria were met. 

Th e NRC does not look at statistical sampling of data to 

determine results. Rather, the agency reviews all event data 

to determine if the strategic outcome has been met. Two 

important data limitations in determining this strategic 

outcome are (1) delay time for receiving information and 

(2) failure of NRC to become aware of an event that results 

in a fatality. To address the fi rst limitation, NMSS and 

FSME procedures and NRC regulations associated with 

event reporting include specifi c requirements for timely 

notifi cations; however, there is a lag time separating the 

occurrence of an event and the known consequences of an 

event.

On the second limitation, it is unlikely that the NRC 

would be unaware of a fatality caused by acute radiation 

exposure. Periodic licensee inspections and regulatory 

reporting requirements are suffi cient to ensure that the 

agency would be aware of an event of this magnitude. 

If such an event occurred, the NRC would promptly 

investigate the event to determine its root causes, 

consequences, and actions that would mitigate the situation 

and prevent recurrence. In addition to these immediate 

actions, the NRC holds periodic meetings where staff and 

management review events that appear to meet this strategic 

outcome. 

Strategic Outcome:

■ Prevent instances where licensed radioactive materials 

are used domestically in a manner hostile to the 

security of the United States. 

Performance Measures:

■ Unrecovered losses or theft s of risk-signifi cant 

radioactive sources are 0.

Under AO Criterion I.C.1, the agency counts any 

unrecovered lost, stolen, or abandoned sources that exceed 

the values listed in 10 CFR Part 110, Appendix P, “Category 1 

and 2 Radioactive Material.” Excluded from reporting under 

this criterion are events involving sources that are lost, stolen, 

or abandoned under the following conditions:

(1) Sources abandoned in accordance with the 

requirements of 10 CFR 39.77(c).

(2) Sealed sources contained in labeled, rugged source 

housing.

(3) Recovered sources with suffi cient indication that doses 

in excess of the reporting thresholds specifi ed in AO 

Criteria I.A.1 and I.A.2 did not occur during the time 

the source was missing.

(4) Unrecoverable sources lost under such conditions that 

doses in excess of the reporting thresholds specifi ed 

in AO Criteria I.A.1 and I.A.2 were not known to have 

occurred.

(5) Other sources that are lost or abandoned and declared 

unrecoverable; for which the agency has determined 

that the risk-signifi cance of the source is low based 

on the location (e.g., water depth) or physical 

characteristics (e.g., half-life, housing) of the source 

and its surroundings; where all reasonable eff orts have 

been made to recover the source; and where it has 

been determined that the source is not recoverable and 

would not be considered a realistic safety or security 

risk under this measure.
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Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

VERIFICATION: 

Losses or theft s of radioactive materials that are greater 

than or equal to 1,000 times the quantity specifi ed in 

10 CFR Part 20, Appendix C, “Quantities of Licensed 

Material Requiring Labeling,” must be reported (following 

the guidelines of 10 CFR 20.2201(a)) by telephone to the 

NRC Headquarters Operations Center or Agreement State 

immediately (within 4 hours) if the licensee believes that 

an exposure could result to persons in unrestricted areas. 

If an event meeting the thresholds described above occurs, 

it would be reported through a number of sources but 

primarily through this required licensee notifi cation. Events 

that are publicly available are then entered and tracked in 

NMED, which is an essential system used to collect and store 

information on such events. Separate methods are used to track 

events that are not publicly available. Additionally, licensees 

must meet the reporting and accounting requirements in 10 

CFR Part 73, “Physical Protection of Plants and Materials,” 

and 10 CFR Part 74, “Material Control and Accounting of 

Special Nuclear Material.”

Th e NRC’s inspection programs are key elements 

in verifying the completeness and accuracy of licensee 

reports. Th e IMPEP also provides a mechanism to verify 

that Agreement States and NRC regions are consistently 

collecting and reporting events received from the licensees 

and are entering these events in NMED. In some cases, upon 

receiving a report, the NRC or Agreement State initiates an 

independent investigation that verifi es the reliability of the 

reported information. 

Th e regulation in 10 CFR 20.2201(b) requires a a written 

report within 30 days for lost or stolen sources that are 

greater than or equal to 10 times the quantity specifi ed in 

Appendix C to 10 CFR Part 20 if the source is still missing at 

that time. In addition, 10 CFR 20.2201(d) requires a second 

written report within 30 days of a licensee learning any 

additional substantive information. Th e NRC interprets this 

requirement as including reporting the recovery of sources.

Th e NRC issued guidance in the form of a regulatory 

issue summary (RIS 2005-21, “Clarifi cation of the Report 

Requirements in 10 CFR 20.2201”) to clarify the current 10 

CFR 20.2201(d) requirement for reporting the recovery of a 

risk-signifi cant source. FSME will ask the Agreement States 

to send copies of the RIS (or equivalent document) to their 

licensees. Th e NRC issued the National Source Tracking 

System fi nal rule in November 2006. Implementation 

of this system will create and maintain an inventory of 

risk-signifi cant sources. Th is rulemaking codifi es and 

clarifi es reporting requirements for risk-signifi cant sources 

(including reporting timeframes) by adding specifi c 

requirements to 10 CFR 20.2201, “Reports of Th eft or 

Loss of Licensed Material,” for risk-signifi cant sources, 

including a requirement for licensees to report the recovery 

of a risk-signifi cant source within 30 days of recovery. In 

conjunction with this rulemaking, FSME will modify its 

Procedure SA-300 to specifi cally require Agreement States to 

report the recovery of a risk-signifi cant source to the NRC 

Headquarters Operations Center immediately aft er being 

notifi ed by a licensee.

VALIDATION: 

Events collected under this performance measure are 

actual losses, theft s, or diversions of materials described above. 

Such events could compromise public health and safety, the 

environment, and the common defense and security. Events 

of this magnitude are expected to be rare. Th e information 

reported under 10 CFR Part 73 and 10 CFR Part 74 is required 

so that the NRC is aware of events that could endanger 

public health and safety or national security. Any failures 

at the level of the strategic plan would result in immediate 

investigation.

If an event subject to the reporting requirements 

described above occurs, the NRC would promptly and 

thoroughly investigate of the event to determine root causes, 

consequences, and actions to mitigate the situation and 

prevent recurrence. 

■ Number of substantiated cases of actual theft or 

diversion of licensed risk-signifi cant radioactive sources 

or a formula quantity of special nuclear material or 

number of acts that result in radiological sabotage is 0.
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

152

VERIFICATION: 

In AO Criterion I.C.2, a “substantiated” case means 

a situation that requires additional action by the agency or 

other proper authorities because of an indication of loss, 

theft , or unlawful diversion that cannot be refuted following 

an investigation. Such a situation might include an allegation 

of diversion, a report of lost or stolen material, a statistical 

processing diff erence, or other indication of loss of material 

control or accountability. Section 70.4, “Defi nitions,” of 

10 CFR defi nes a “formula quantity of special nuclear 

material.” Radiological sabotage is defi ned in 10 CFR 73.2, 

“Defi nitions.” Within 1 hour of an occurrence, licensees 

subject to the requirements of 10 CFR Part 73 must call 

the NRC to report any breaches of security or other event 

that may potentially lead to theft or diversion of material 

or to sabotage at a nuclear facility. Th e NRC’s safeguards 

requirements are described in 10 CFR 73.71, “Reporting of 

Safeguards Events”; 10 CFR Part 73, Appendix G, “Reportable 

Safeguards Events”; and 10 CFR 74.11, “Reports of Loss or 

Th eft or Attempted Th eft or Unauthorized Production of 

Special Nuclear Material.” An information assessment team 

composed of NRC headquarters and regional staff members 

would immediately assess any signifi cant events to determine 

further actions such as coordination with the intelligence 

community and law enforcement. In accordance with 10 

CFR 73.71(d), the licensee must also fi le a written report 

within 60 days of the incident, describing the event and the 

steps that the licensee took to protect the nuclear facility. 

Th is information will enable the NRC to adequately assess 

whether radiological sabotage has occurred. 

VALIDATION: 

Events subject to reporting requirements are those that 

endanger the public health and safety and the environment 

through deliberate acts of theft or diversion of material or 

through sabotage directed against the nuclear facilities 

that the agency licenses. Events of this type are extremely 

rare. If such an event occurs, it would result in a prompt 

and thorough investigation of the event to determine root 

causes, consequences, and actions to mitigate the situation 

and prevent recurrence. Th e investigation both ensures the 

validity of the information and assesses the signifi cance of 

the event.

■ Number of substantiated losses of a formula quantity 

of special nuclear material or substantiated inventory 

discrepancies of a formula quantity of special nuclear 

material that are judged to be signifi cant relative to 

normally expected performance or regulatory limits 

and that are judged to be caused by theft or diversion or 

substantial breakdown of the accountability system is 0.

VERIFICATION: 

Licensees must record events associated with AO 

Criterion I.C.3 within 24 hours of the identifi ed event in a 

safeguards log maintained by the licensee. Th e licensee must 

retain the log as a record for 3 years aft er the last entry is 

made or until termination of the license. Th e NRC relies on 

its safeguards inspection program to ensure the reliability of 

recorded data. Th e NRC makes a determination of whether 

a substantiated breakdown has resulted in a vulnerability 

to radiological sabotage, theft , diversion, or unauthorized 

enrichment of special nuclear material. When making 

substantiated breakdown determinations, the NRC evaluates 

the materials event data to ensure that licensees are reporting 

and collecting the proper event data. 

VALIDATION: 

“Substantiated” means a situation that requires 

additional action by the agency or other proper authorities 

because of an indication of loss, theft , or unlawful diversion 

that cannot be refuted following an investigation. Such a 

situation may include an allegation of diversion, a report 

of lost or stolen material, a statistical processing diff erence, 

a system breakdown closely related to the material control 

and accounting program (such as an item control system 

associated with the licensee’s facility information technology 

system), or other indication of loss of material control or 

accountability. Section 70.4 of 10 CFR defi nes a formula 

quantity of special nuclear material. Events collected under 
153

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

this performance measure may indicate a vulnerability 

to radiological sabotage, theft , diversion, or loss of special 

nuclear materials. Such events could compromise public 

health and safety, the environment, and the common defense 

and security. Th e NRC relies on its safeguards inspection 

program to help validate the reliability of recorded data and 

determine whether a breakdown of a physical protection or 

material control and accounting system has actually resulted 

in vulnerability.

■ Number of substantial breakdowns of physical security 

or material control (i.e., access control containment or 

accountability systems) that signifi cantly weaken the 

protection against theft , diversion, or sabotage is 0.

VERIFICATION: 

AO Criterion I.C.4 defi nes “substantial breakdown” as a 

red fi nding in the security oversight program or signifi cant 

performance problems and operational events resulting in 

a determination of overall unacceptable performance or in 

a shutdown condition (inimical to the eff ective functioning 

of the Nation’s critical infrastructure). Radiological sabotage 

is defi ned in 10 CFR 73.2. Immediately aft er a known 

occurrence, the NRC requires licensees to report any known 

breakdowns of physical security, based on the requirements in 

10 CFR 73.71 and Appendix G to 10 CFR Part 73. If a licensee 

reports such an event, the headquarters operations offi cer 

prepares an offi cial record of the initial event report. Upon 

notifi cation of such an event, the NRC immediately begins 

responding with the activation of its information assessment 

team. A licensee must follow its initial telephone notifi cation 

with a written report submitted to the NRC within 30 days.

Th e licensee maintains a safeguards log in which it 

records breakdowns of physical protection resulting in a 

vulnerability to radiological sabotage, theft , diversion, or 

loss of special nuclear materials or radioactive waste within 

24 hours in a safeguards log maintained by the licensee. Th e 

licensee must retain the log as a record for 3 years aft er the last 

entry is made or until termination of the license. Licensees 

subject to 10 CFR Part 73 must also meet the reporting 

requirements detailed in 10 CFR 73.71. Th e NRC evaluates all 

of the reported events, based on the criteria in 10 CFR 73.71 

and Appendix G to 10 CFR Part 73. Th e NRC also maintains 

and relies on its safeguards inspection program to ensure the 

reliability of recorded and reported data. 

VALIDATION: 

Events assessed under this performance measure are 

those that threaten nuclear activities by deliberate acts, such 

as radiological sabotage, directed against facilities. If a 

licensee reports such an event, the information assessment 

team evaluates and validates the initial report and 

determines any further actions that may be necessary. 

Tracking breakdowns of physical security indicates whether 

the licensee is taking the necessary security precautions to 

protect the public, given the potential consequences of a 

nuclear accident attributable to sabotage or the inappropriate 

use of nuclear material either in this country or abroad.

Events collected under this performance measure 

may indicate a vulnerability to radiological sabotage, theft , 

diversion, or loss of special nuclear materials or radioactive 

waste. Such events could compromise public health and 

safety, the environment, and the common defense and 

security. Th e NRC relies on its safeguards inspection 

program to help validate the reliability of recorded data and 

determine whether a breakdown of a physical protection or 

material control and accounting system has actually resulted 

in a vulnerability.

■ Number of signifi cant unauthorized disclosures (loss, 

theft , or deliberate acts) of classifi ed or safeguards 

information is 0.

VERIFICATION: 

With regard to AO Criterion I.C.5, any alleged or 

suspected violations by NRC licensees of the Atomic Energy 

Act, Espionage Act, or other Federal statutes related to 

classifi ed or safeguards information must be reported to 

the NRC under the requirements of 10 CFR 95.57(a) (for 

classifi ed information), 10 CFR Part 73 (for safeguards 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

154

information), and NRC orders (for safeguards information 

subject to modifi ed handling requirements). However, for 

performance reporting, the NRC would only count those 

disclosures or compromises that actually cause damage to 

the national security or to public health and safety. Such 

events would be reported to the cognizant security agency 

(i.e., the security agency with jurisdiction) and the regional 

administrator of the appropriate NRC regional offi ce, as 

listed in Appendix A, “U.S. Nuclear Regulatory Commission 

Offi ces and Classifi ed Mailing Addresses,” to 10 CFR Part 73. 

Th e regional administrator would then contact the Division 

of Security Operations at NRC headquarters, which would 

assess the violation and notify other NRC offi ces and other 

Government agencies, as appropriate. A determination 

would be made as to whether the compromise damaged 

the national security or public health and safety. Th e NRC 

would immediately investigate any unauthorized disclosures 

or compromises of classifi ed or safeguards information that 

damaged the national security or public health and safety. In 

addition, NRC inspections will verify that licensees’ routine 

handling of classifi ed and safeguards information (including 

safeguards information subject to modifi ed handling 

requirements) conforms to established security information 

management requirements.

Any alleged or suspected violations of this performance 

measure by NRC employees, contractors, or other personnel 

would be reported in accordance with NRC procedures to 

the Director of Division of Facilities and Security at NRC 

headquarters. Th e NRC maintains a strong system of controls 

over national security and safeguards information, including 

(1) annual required training for all employees, (2) safe and 

secure document storage, and (3) physical access control in 

the form of guards and badged access.

VALIDATION: 

Events collected under this performance measure 

are unauthorized disclosures of classifi ed or safeguards 

information that damage the national security or public 

health and safety. Events of this magnitude are rare. If such 

an event occurs, the NRC would promptly investigate to 

determine root causes, consequences, and actions to mitigate 

the situation and prevent recurrence. Th e NRC investigation 

teams also validate the materials event data to ensure that 

licensees are reporting and collecting the proper data.

ORGANIZATIONAL EXCELLENCE

OBJECTIVE 1 – OPENNESS

Ensure openness in our regulatory process

Performance Measure:

■ Percentage of selected openness output measures that 

achieve performance targets is equal to or greater than 

88 percent. 

VERIFICATION: 

Th e NRC views nuclear regulation as the public’s 

business. Nuclear regulation should be transacted openly 

and candidly to maintain the public’s confi dence. Th e goal 

to ensure openness explicitly recognizes that the public must 

be informed about, and have a reasonable opportunity to 

participate meaningfully in, the NRC’s regulatory processes. 

In assessing how the NRC will gauge its openness with 

its stakeholders, the NRC will (1) provide accurate and 

timely information to the public about the uses and risks 

of radioactive materials; (2) enhance the awareness of the 

NRC’s independent role in protecting public health and 

safety and the environment; (3) provide accurate and timely 

information about the safety performance of the licensees 

regulated by the NRC; (4) provide a fair and timely process to 

allow public involvement in NRC decisionmaking in matters 

not involving sensitive unclassifi ed, safeguards, classifi ed, or 

proprietary information; (5) provide a fair and timely process 

to allow authorized (appropriately cleared with a need to 

know) stakeholders to participate in NRC decisionmaking 

in matters involving sensitive unclassifi ed, safeguards, 

classifi ed, or proprietary information; and (6) obtain early 

public involvement on issues most likely to generate substantial 

interest and promote two-way communication to enhance 

public confi dence in the NRC’s regulatory processes. 
155

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

VALIDATION: 

Th e NRC will measure overall actual performance 

by determining the percentage of the associated output 

measures that delivered their intended openness outcome. At 

a minimum, to meet the overall target, the agency must meet 

8 percent of the output measure targets.

Th e process of collecting the data and making sure the 

information is complete, accurate, and consistent will be 

the responsibility of the individual offi ce director who will 

review and approve the data submitted by staff .

ORGANIZATIONAL EXCELLENCE

OBJECTIVE 2 – EFFECTIVENESS

Ensure that NRC actions are effective,

efficient, realistic, and timely

Performance Measures:

■ Th e percentage of selected processes that deliver the 

desired effi ciency improvement is greater than 70 

percent. (Th e goal is greater than 90 by 2008).

VERIFICATION: 

Initiatives such as the Government Performance and 

Results Act challenge Federal agencies to become more 

eff ective and effi cient and to justify their budget requests 

with demonstrated program results. Th e drive to improve 

performance in Government, coupled with increasing 

demands on the NRC’s fi nite resources, clearly indicates a 

need for the agency to become more eff ective and effi cient. 

Th e NRC has established a performance measure to improve 

effi ciency, which supports the two primary goals of safety 

and security and also addresses management excellence. 

On an annual basis, candidate processes would be 

selected as part of this performance measure. For the 

purposes of this measure, the desired effi ciency improvement 

of a process is defi ned as a positive change in its cost, quality, 

productivity, or timeliness. A desired effi ciency improvement 

would be expressed as resource savings or cost avoidance for 

the agency or as a positive benefi t to external stakeholders 

with respect to eff ectiveness, effi ciency, or realism. 

Offi ces will use the following process to identify and 

report on desired effi ciency improvements:

(1) Select and defi ne a candidate process. Offi ces will 

identify processes at the beginning of each fi scal 

year that they will measure for desired effi ciency 

improvement. 

(2) Analyze process for areas in need of improvement. Th is 

could include cost reduction, quality, timeliness, or 

other unique factors that can be measured for desired 

effi ciency improvement.

(3) Establish targets for effi ciency improvements. Based on 

past experience and if previous trend data is available, 

offi ces will identify specifi c desired targets that they 

feel are challenging but achievable. Th e targets could 

involve improvements in cost, quality, productivity, or 

timeliness.

(4) Report progress annually. Offi ces will report the actual 

data at the end of each fi scal year and may adjust the 

target accordingly, based on the results from previous 

years. 

VALIDATION: 

Overall actual performance will be measured by 

determining the percentage of the processes selected 

annually that delivered their intended desired effi ciency 

improvement. At a minimum, the agency must achieve its 

target in 70 percent of the selected processes. 

Th e process of collecting the data and ensuring the 

information is complete, accurate, and consistent will be 

the responsibility of the individual Offi ce Director who will 

review and approve the data submitted by staff . 

■ No more than one instance per program where 

licensing or regulatory activities unnecessarily impede 

the safe and benefi cial uses of radioactive materials. 

 Target: Reactor Program = 2 (1 in each Tier II program)

 Materials/Waste Program = 5 (1 in each Tier II program)

VERIFICATION AND VALIDATION: 

Th is measure is intended to serve as a precursor to 

the strategic-level outcome of “no signifi cant licensing or 
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

156

regulatory impediments to the safe and benefi cial uses of 

radioactive materials.” Th e purpose of the measure is to 

provide an indication of overall agency performance with 

respect to the strategic objective of enabling the safe use of 

radioactive materials for benefi cial civilian purposes. 

Th e following table describes how the agency fulfi lls its 

role in enabling various phases of the business cycle:

Phase of Business 

Cycle

Intent of enabling in 

each category

Potential 

applicants

Provide an eff ective and effi cient 

regulatory infrastructure so that 

this group is inclined to pursue 

licenses if they so choose. Ensure 

that the NRC is not a barrier 

to entry due to unnecessary 

regulatory burden. 

Applicants

Provide stable and predictable 

processes so that applicants can 

enter the business in a timely 

fashion, only constrained by 

their ability to operate safely 

and securely (i.e., abide by NRC 

regulations).

Current 

licensees

Ensure that the regulation do not 

pose an unnecessary regulatory 

burden.

Th e key diff erence between this performance measure 

and the related strategic outcome is that the strategic 

outcome focuses on signifi cant impediments, while the 

performance measure does not contain this qualifi er. Th us, 

the performance measure is designed to capture lower-level 

instances where NRC programs may have unnecessarily 

created impediments. Th e following types of examples could 

count against this performance measure (and possibly against 

the strategic outcome as well, depending on severity): 

■ missing a key timeliness measure (e.g., for fuelcycle licensing actions or reactor power uprates) or 

milestone (e.g., termination of a license for complex 

decommissioning cases)

■ failing to adjust the regulatory framework to support 

new technologies or otherwise respond to signifi cant 

changes in the regulatory environment

■ imposing an unnecessary regulatory burden on 

licensees or applicants to the extent that the NRC 

becomes a barrier to entry or sustainability 

Eff orts to risk inform regulatory programs, improve 

programmatic eff ectiveness and effi ciency, and reduce 

unnecessary regulatory burden are all positive steps that can 

be taken to enable the safe use of radioactive materials.

Because the NRC does not have prior experience 

in applying this type of measure, the metric will likely 

require adjustment over the fi rst few years. Th e intent is 

to set aggressive annual targets that refl ect the agency’s 

commitment to continuous improvement. Consequently, 

it should be expected that some impediments will occur at 

the performance level due to resource limitations, emergent 

high-priority demands, or other circumstances beyond the 

control of program managers. Exceptions reported under 

this measure are considered in the agency’s assessment of the 

related strategic outcome. 

ORGANIZATIONAL EXCELLENCE

OBJECTIVE 3 – OPERATIONAL EXCELLENCE

Ensure excellence in agency management to

carry out the NRC’s strategic objective

Performance Measures:

■ Percentage of selected NRC management programs 

reported by support offi ces to have delivered intended 

outcomes is equal to or greater than 80 percent. 

VERIFICATION: 

Th e NRC considered the management and support 

needed to achieve the agency’s mission, preexisting 

management challenges, and other initiatives. Th is 

goal includes strategies for the management of human 

capital, infrastructure management, improved fi nancial 
157

Appendix D ■ Verification and Validation of NRC’s Measures and Metrics

performance, expanded electronic government, budget and 

performance integration, and internal communications. 

Th e process of collecting the data and making sure the 

information is complete, accurate, and consistent will be 

the responsibility of the individual Offi ce Director, who will 

review and approve the data submitted by staff . 

VALIDATION: 

Overall actual performance will be measured by 

determining the percentage of the four programs that 

delivered their intended management outcomes. At a 

minimum, to meet the overall target of 80 percent, all four 

programs must achieve an average score of 75 percent of the 

activity targets. 

■ Th e percentage of selected processes reported by 

support offi ces that deliver desired effi ciency 

improvement is equal to or greater than 90 percent. 

(Goal is greater than 90 percent by 2008.)

VERIFICATION: 

Initiatives such as the Government Performance and 

Results Act are challenging Federal agencies to become more 

eff ective and effi cient and to justify their budget requests 

with demonstrated program results. Th e drive to improve 

performance in Government, coupled with increasing 

demands on the NRC’s fi nite resources, clearly indicates a 

need for the agency to become more eff ective and effi cient. 

Th e NRC has established a performance measure to improve 

effi ciency, which supports the two primary goals of safety and 

security, and also addresses management excellence. 

On an annual basis, the agency will select candidate 

processes as part of this performance measure. For the 

purposes of this measure, the desired effi ciency improvement 

of a process is defi ned as a positive change in its cost, quality, 

productivity, or timeliness. Desired effi ciency improvement 

would be expressed as resource savings or cost avoidance for 

the agency or as a positive benefi t to external stakeholders 

with respect to eff ectiveness, effi ciency, or realism. 

Support offi ces will use the following process to identify 

and report on desired effi ciency improvements:

(1) Select and defi ne a candidate process. Offi ces will 

identify processes at the beginning of each fi scal 

year that they will measure for desired effi ciency 

improvement. 

(2) Analyze process for areas in need of improvement. 

Th is could include cost reduction, quality, timeliness, 

or other unique factors as appropriate that can be 

measured for desired effi ciency improvement.

(3) Establish targets for effi ciency improvements. Based on 

past experience and if previous trend data is available, 

offi ces will identify specifi c desired targets that they 

feel are challenging but can be achieved. Th e target 

improvements could involve cost, quality, productivity, 

or timeliness.

(4) Report progress annually. Offi ces will report the actual 

data at the end of each fi scal year and may adjust the 

target accordingly, based on the results from previous 

years. 

VALIDATION: 

Overall actual performance will be measured by 

determining the percentage of the processes selected annually 

that delivered their intended desired effi ciency improvement. 

At a minimum, 90 percent of the selected processes must 

have achieved their targets. 

Th e process of collecting the data and ensuring the 

information is complete, accurate, and consistent will be 

the responsibility of the individual Offi ce Director, who will 

review and approve the data submitted by staff .
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

158

Photo Courtesy of Progress Energy Corporation.

Th e Brunswick nuclear power plant, named for the county in which it is located, covers 4.86 sq km (1,200 acres). Th e site is 

adjacent to the town of Southport, NC, and to wetlands and woodlands.
Appendix E ■ Agreement States

APPENDIX E

AGREEMENT STATES

(AS OF APRIL 2008)
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

160

Grand Gulf nuclear power station uses a General Electric boiling-water reactor near Port Gibson, MS. Th e 

plant has a 156.5-meter (520-foot) cooling tower and is situated on a wooded site with two lakes.

Photo Courtesy of the Entergy Corporation.
161

Appendix E ■ Agreement States

AK

HI

MA

CT

RI

ME NH

VT

NY

PA

NJ OH

MD

DE

VA

WV

MI

IN

KY

NC TN

IL

SC

GA AL

FL

MS

MO

AR

TX

OK

KS

LA

IA NE

WI

MN

ND

SD

WY

MT

CO

NM

AZ

CA

NV

UT

ID

OR

WA

Agreement States (35)

NRC States (12)

NRC States that have expressed 

intent to sign Agreement (3)

AGREEMENT STATES (AS OF APRIL 2008)
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

162

Th e Kewaunee Power Station in Carlton, WI, 43 km (27 miles) southeast of Green Bay, WI. Th e Kewaunee Power Station was 

the fourth nuclear plant built in Wisconsin and the 44th built in the United States.

Photo Courtesy of the NRC Photo Library.
Appendix F ■ NRC Organizational Chart

APPENDIX F

NRC ORGANIZATIONAL CHART

(AS OF NOVEMBER 2008)
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

164

Chairman

Dale E. Klein

Commissioner

Gregory B. Jaczko

Commissioner

Kristine L. Svinicki

The Commission

Deputy Executive Director

for Reactor and

Preparedness Programs

Bruce S. Mallett

Regional

Administrator

Region I

Samuel J. Collins

Regional

Administrator

Region II

Luis A. Reyes

Regional

Administrator

Region III

James L. Caldwell

Regional

Administrator

Region IV

Elmo E. Collins

Director,

Office of

New Reactors

Michael R. Johnson

Director, Office of

Nuclear Security and

Incident Response

Roy P. Zimmerman

Director, Office of

Nuclear Reactor

Regulation

Eric J. Leeds

Director,

Office of

Human Resources

James F. McDermott

Director, Office

of Small Business

and Civil Rights

Corenthis B. Kelley

November 4, 2008

Director,

Office of Public Affairs

Eliot B. Brenner

Director, Office of

Congressional Affairs

Rebecca L. Schmidt

Chief Administrative

Judge (Chairman),

Atomic Safety and

Licensing Board Panel

E. Roy Hawkens

Director, Office of

Commission Appellate

Adjudication

Brooke D. Poole

Executive Director,

Advisory Committee on

Reactor Safeguards

Edwin M. Hackett

U.S. NUCLEAR REGULATORY COMMISSION
165

Appendix F ■ NRC Organizational Chart

Vacant

Commissioner

Peter B. Lyons

Commissioner

Chief Financial

Officer

Jim Dyer

Inspector General

Hubert T. Bell

Deputy Executive Director

for Materials, Waste, Research, State,

Tribal and Compliance Programs

Martin J. Virgilio

Deputy Executive Director

for Corporate Management

Darren B. Ash

Director, Office of

Nuclear Regulatory

Research

Brian W. Sheron

Director,

Office of

Enforcement

Cynthia A. Carpenter

Director, Office of

Nuclear Material

Safety and Safeguards

Michael F. Weber

Director, Office of

Investigations

Director, Office of

Federal and State

Materials and

Environmental

Management Programs

Guy P. Caputo Charles L. Miller

Director, Office

of Information

Services

Thomas M. Boyce

Director, Office of

Administration

Timothy F. Hagan

Executive Director

for Operations

R. William Borchardt

General Counsel

Karen D. Cyr

Director, Office 

of International Programs

Margaret M. Doane

Secretary of

the Commission

Annette L. Vietti-Cook

Assistant

for Operations

Vonna L. Ordaz

Director, Computer

Security Office

Patrick D. Howard
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

166

Gamma Knife© device used for treating brain tumors with focused radiation beams.

Photo Courtesy of Elekta.
Appendix G ■ Acronyms and Abbreviations

APPENDIX G

ACRONYMS AND 

ABBREVIATIONS
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

168
169

Appendix G ■ Acronyms and Abbreviations

Acronym

10 CFR Title 10 of the Code of Federal Regulations 

ACNW&M Advisory Committee on Nuclear Waste 

and Materials

ADAMS Agencywide Documents Access and 

Management System

AICOA American Institute of Certifi ed Public 

Accountants

ALARA as low as reasonably achievable

ALC agency location code 

AO abnormal occurrence 

ASP accident sequence precursor 

C&A certifi cation and accreditation

CAROLFIRE Cable Response to Live Fire 

CCDP conditional core damage probability 

CFO Chief Financial Offi cer

CFR Code of Federal Regulations 

COL combined operating license 

CRCPD conference of radiation control program 

directors

CSO Computer Security Offi ce

CSRS Civil Service Retirement System 

CUI controlled unclassifi ed information 

CWP centralized work planning 

CY calendar year 

DAA designated approving authority

DBT design basis threat

DFS Division of Facilities and Security 

DHS U.S. Department of Homeland Security

DOE U.S. Department of Energy 

DOI-NBC Department of the Interior National 

Business Center 

DOL U.S. Department of Labor 

DOT U.S. Department of Transportation 

ECIC Executive Committee on Internal 

Control

Acronym

EDATS Electronic Document and Action 

Tracking System

EDO Executive Director for Operations

e-Gov Federal Government’s Electronic 

Government 

EO executive order

EPAct Energy Policy Act of 2005

EPR Evolutionary Power Reactor

EPRI Electric Power Research Institute

ERIDS Electronic Regulatory Information 

Distribution System

ESBWR Economic Simplifi ed Boiling-Water 

Reactor 

ETUS Enrichment Technology U.S., Inc.

FCFOP Fuel Cycle Facility Oversight Program

FCNMED Fuel Cycle Nuclear Material Event 

Database

FECA Federal Employees Compensation Act 

FERS Federal Employees Retirement System 

FFMIA Federal Financial Management 

Improvement Act 

FICA Federal Insurance Contribution Act

FIPS Federal Information Processing Standard

FISMA Federal Information Security 

Management Act 

FMFIA Federal Managers Financial Integrity 

Act 

FOIA Freedom of Information Act

FPS Federal Protective Service

FR Federal Register

FTE full-time equivalent

FY fi scal year 

GAAP generally accepted accounting 

principles

GAO U.S. Government Accountability Offi ce
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

170

Acronym

GEM graphical evaluation module 

GLTS General License Tracking System

GPRA Government Performance and Results 

Act

GSA General Services Administration 

HHS U.S. Department of Health and Human 

Services

HSPD Homeland Security Presidential Directive

IAEA International Atomic Energy Agency 

IATO interim approval to operate

IG Inspector General

IMPEP integrated materials performance 

evaluation program 

Improvement 

Act

Federal Financial Management 

Improvement Act

INL Idaho National Laboratory 

Integrity Act Federal Managers Financial Integrity Act

IPAC Intragovernmental Payment and 

Collection System

IPR intellectual property rights 

IPSS Integrated Personnel Security System

ISA integrated safety analysis

ISG interim staff guidance

ISO International Standards Organization

IT information technology 

ITAAC inspections, tests, analyses, and 

acceptance criteria 

KM knowledge management 

LER licensee event report

LERSearch Licensee Event Report Search System 

LES Louisiana Energy Services 

MC NRC Manual Chapter

MC&A material control and accounting

Acronym

MD management directive 

MDEP Multinational Design Evaluation 

Program 

MOC memorandum of cooperation 

NEA Nuclear Energy Agency 

NGNP next generation nuclear plant

NIST National Institute of Standards and 

Technology

NMED Nuclear Materials Event Database 

NMMSS Nuclear Materials Management and 

Safeguards System

NMSS Offi ce of Nuclear Material Safety and 

Safeguards 

NNSA National Nuclear Safety Administration 

of China 

NRC U.S. Nuclear Regulatory Commission 

NRR Offi ce of Nuclear Reactor Regulation

NSIR Offi ce of Nuclear Security and Incident 

Response 

NSTS National Source Tracking System

NTEU National Treasury Employees Union

NWF Nuclear Waste Fund

OAR offi cial agency record

OBRA-90 Th e Omnibus Budget Reconciliation Act 

of 1990

OCM Offi ce of the Commission

OGC Offi ce of General Counsel 

OHR Offi ce of Human Resources 

OIG Offi ce of the Inspector General 

OIS Offi ce of Information Services

OMB Offi ce of Management and Budget

OUO offi cial use only 

PAR Performance and Accountability Report 
171

Appendix G ■ Acronyms and Abbreviations

Acronym

PART Program Assessment Rating Tool 

PATRAM 

2007

Th e International Symposium on 

Packaging and Transportation of 

Radioactive Materials

PC personal computer

PI performance indicators

PII personally identifi able information 

PMM project management methodology

POA&M plan of action and milestones 

PRA probabilistic risk assessment 

RDD radiological dispersal device

RIS regulatory issue summary 

ROP Reactor Oversight Process

SAPHIRE Systems Analysis Program for Hands-On 

Integrated Reliability Evaluations 

SCSS Sequence Coding and Search System 

SDP signifi cant determination process 

SES senior executive service

SFFAS Statements of Federal Financial 

Accounting Standards 

SGI safeguards information 

Silex separation of isotopes by laser 

excitation

SNM special nuclear material

SOARCA State-of-the-Art Reactor Consequence 

Analyses 

SPPP Standard Practice Procedures Plan 

SRS Savannah River Site 

SSP (GLTA) System Security Plan

ST&E security test and evaluation

SUNSI sensitive unclassifi ed, nonsafeguards 

information 

T&L time and labor 

Acronym

TAD transportation, aging, and disposal 

TSP Th rift Savings Plan 

UF6 uranium hexafl uoride

USAID U.S. Agency for International 

Development 

USAPWR U.S. Advanced Pressurized-Water 

Reactor 

USEC United States Enrichment Corporation 

USSGL United States Standard General Ledger

V&V verifi cation and validation

VARANSAC Vietnam Agency for Radiation and 

Nuclear Safety and Control
Performance and Accountability Report ■ FY 2008 ■ www.nrc.gov

172

BIBLIOGRAPHIC DATA SHEET

(See instructions on the reverse)

NRC FORM 335

(9-2004)

NRCMD 3.7

U.S. NUCLEAR REGULATORY COMMISSION 1. REPORT NUMBER

(Assigned by NRC, Add Vol., Supp., Rev.,

 and Addendum Numbers, if any.)

NUREG-1542, Vol. 14

3. DATE REPORT PUBLISHED

MONTH

November

YEAR

2008

4. FIN OR GRANT NUMBER

n/a

2. TITLE AND SUBTITLE

U.S. Nuclear Regulatory Commission

Performance and Accountability Report

FY 2008

5. AUTHOR(S)

Richard Rough, et. al

6. TYPE OF REPORT

Annual

7. PERIOD COVERED (Inclusive Dates)

FY 2008

8. PERFORMING ORGANIZATION - NAME AND ADDRESS (If NRC, provide Division, Office or Region, U.S. Nuclear Regulatory Commission, and mailing address; if contractor,

Resource Management and Support Staff

9. SPONSORING ORGANIZATION - NAME AND ADDRESS (If NRC, type "Same as above"; if contractor, provide NRC Division, Office or Region, U.S. Nuclear Regulatory Commission, 

Same as 8, above

provide name and mailing address.)

and mailing address.)

10. SUPPLEMENTARY NOTES

11. ABSTRACT (200 words or less)

The FY 2008 Performance and Accountability Report provides performance results and audited financial statements that enable

Congress, the President, and the public to assess the performance of the agency in achieving its mission and stewardship of its

resources. The report contains a concise overview, management's discussion and analysis, as well as performance and

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NUREG-1542, Vol. 14

November 2008