Investigation No.: I.12-10-013 Exhibit No.: SCE-28

(U 338-E)

Procurement and Material Control Audit, SCES-006-12

Before the Public Utilities Commission of the State of California

San Francisco California May 16, 2013

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D. Yarbrough R. L. Davis M. Reitzler S. Ordorica CDM - SONGS J. R. Pyles D. J. Evans B. Hargreaves L. B. Pritchett R. T Corbett P. J. Panek F. R. Nandy G. Ahn J. A. Madigan M. M. Lewis R. J. McWey S. Confalone S. M. Hoque A. S. Martinez A. D. Sistos D. A. Bigsby

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 4

AUDIT DETAILS 6

A. Training and Qualification 6

B. Procurement Document Control 7

C. Control of Purchased Material and Services 10

D. Nuclear Fuel Procurement 10

E. Line Receiving 10

F. Material Shipping, Handling and Storage 12

G. Identification and Control of Nonconforming Items 12

H. 10CFR72 for ISFSI Activities 13

I. Corrective Action and Self-Assessment 13

J. INPO Performance Objectives and Criteria 14

AUDIT PARTICIPANTS 16

AUDIT EXIT MEETING 18

ATTACHMENT A - AUDIT PROGRAM DEFINITIONS 19

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EXECUTIVE SUMMARY An audit of the Procurement and Material Control program was conducted by four SCE Nuclear Oversight auditors, one SCE Corporate auditor and one Technical Specialist from Fort Calhoun. The purpose of this audit was to verify that materials, equipment, parts and services are properly specified, procured, accepted, and stored in accordance with technical and quality requirements to satisfy SONGS operational needs. The audit covered the period from September 2010 to May 2012. The audit team concluded that overall performance of the organizations involved with Procurement and Material Control (P&MC) in implementing the requirements of the TQAM, site procedures, and applicable INPO performance elements is Satisfactory. The audit assessed ten program areas with satisfactory performance noted in all areas. Deficiencies are generally minor. Weaknesses exist, but the overall program is still considered to be effective. Routine corrective actions should resolve the identified problems. Three Findings were identified during the performance of this audit related to [a] work delays due to wrong or missing parts, [b] lack of submittal of Substitution Equivalency Evaluations (SEEs) and Technical Evaluations (TEs) to CDMC and [c] inconsistent change controls for specifications using Supplier Deviation Requests (SDRs). In addition, the audit team identified twenty-nine (29) Weaknesses in the areas of training and qualification, procurement document control, nuclear fuel procurement, receiving inspection, storage and shipping, identification and control of non-conforming items, corrective action and self-assessment. The weaknesses involved mostly lack of procedural compliance (10 instances), procedure deficiencies (7 instances), and CAP implementation issues (5 instances). In view of adverse trends in NRC cross-cutting themes H.4(b), Procedural Compliance and H.2(c). Procedures/Documentation, additional management attention is needed to reinforce standards in these areas. RCE 202064275 was recently initiated to further address an adverse trend in procedural compliance.

Notifications were issued to document and correct the three Findings and twenty-nine Weaknesses identified. AUDIT FINDINGS 1. Thirty-four work orders issued in the last eight months have material problems that have

caused work delays and schedule changes and have impacted work performance. DCEs 202053124 and 202053119 were issued to Design Engineering and Maintenance to address this condition.

2. Numerous examples were identified of SEEs and TEs approved by Procurement Engineering in 2010 – 2012 that have not been submitted to CDMC for retention. This is a repeat problem of low level issues identified in the 2010 audit. DCE 202033598 was issued to Design Engineering to address this condition.

3. Specification changes authorized by SCE approval of SDRs are not being consistently reviewed and approved by engineering personnel, incorporated into purchase order changes and provided to CDMC for retention in the specification file. DCE 202033589 was issued to Design Engineering to address this condition.

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AUDIT WEAKNESSES Configuration Management

1. Charging pump accumulator parts issue (NNs 201959968 and 2002027805 - Design Engineering)

2. Material master does not reference SONGS approved drawing (Design Engineering - resolved during audit)

Records Management

1. Missing Purchase Orders and Change Orders in CDMC (DCE 201978891 previously issued from document and records control audit SCES-003-12 for backlog of CDM records awaiting imaging. Also NN 202027883 was issued for procurement and material control audit deficiencies - Administration and Supply Management)

2. Fuel contracts not submitted to CDMC (NN 202041241 - Nuclear Fuel Management) Program/Procedure Compliance

1. NFPA 805 Purchase Orders are Non-Quality Affecting (NN 202020735 - Project Management and Engineering Programs)

2. Emergency diesel generator digital acquisition system procurement deficiencies (NN 202027808 - Design Engineering)

3. Specification change is not included in procurement engineering package or purchase order (NN 202037334 - Design Engineering)

4. Control of Problem Equipment (COPE) evaluations are missing information for disqualified equipment (NN 202041102 - Design Engineering)

5. Post installation testing process for equipment acceptance not described in procedures and not properly implemented (NNs 202028129 and 202032474 - Site Support Services)

6. Expired shelf-life for items in warehouse storage (NNs 202028854 and 202033628 - Design Engineering and Site Support Services)

7. Bird dropping in Mesa warehouse, does not meet procure cleanliness requirements(NN 202030709 - Site Support Services)

8. Canister shop material improperly stored (NN 202035307 - Site Support Services) 9. Vendor Information Review Program (VIRP) assessment not documented (NN 202058290 -

Design Engineering) 10. MDR relay test results are missing in commercial grade dedication (QM 100005240 - Design

Engineering and NOD)

Corrective Action Program

1. Inadequate closure of corrective actions on commercial grade dedication surveillance (NNs 202028778 and 202048057 - Nuclear Oversight; NN 202030131 - Site Support Services)

2. Untimely resolution of Quality Management (QM) Notifications (NN 202041443 - Design Engineering)

3. Inventory that is quarantined is not dispositioned in a timely manner (NNs 202024759 and 202024845 - Site Support Services)

4. ASME code material was lost and no measures were taken to prevent recurrence (NN 202041011 - Project Management)

5. Incomplete ACE corrective action implementation for storage procedure responsibilities (NN 202044950 - Site Procedure Group)

Engineering Decision Making

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Critical characteristics not clearly define in 4 commercial grade dedication packages (NN 202027811 - Design Engineering) Procedure Controls

1. Post installation testing process for equipment acceptance not described in procedures and not properly implemented (NNs 202028129 and 202032474 - Site Support Services)

2. Commercial grade dedication lab instruction controls (NN 202033815 - Nuclear Oversight) 3. Return to shipper forms are not in procedure (NN 202035401 - Site Support Services) 4. Chemistry procedure has unclear mix of "reference use" and "information use" sections (NN

202040579 - Chemistry) 5. Authorized Edison Representative and Procurement Agents are not updated in purchase

orders when they retire or a reassigned to another job (NN 202040981 - Supply Management)

6. Control of Problem Equipment (COPE) and Operating Experience (OE) procedures do not interface (NN 202041102 - Design Engineering and Performance Improvement)

7. Test results for receiving inspection criteria not consistently recorded (NNs 202027810 and 202028778 - Nuclear Oversight; NN 201750388 - Design Engineering)

Training Program

1. Deficiencies in Procurement Agent training records (NNs 2020266645 and 202033612 - Site Support Services)

2. Deficiencies in Warehouse training records (NN 202026654 - Site Support Services) INSIGHTS Due to the repetitive nature of the activities performed within the scope of the audit, procedures are not always consulted prior to and during use to assure consistent implementation of requirements. Practices utilized over long periods of time control performance. Self- assessment is performed but not at a frequency to identify all areas that need reinforcement and/or improvement. AUDIT DETAILS A. Training and Qualification Overall performance is satisfactory with two weaknesses identified. Training records for ten procurement agents, ten warehouse workers and sixteen procurement engineering personnel were reviewed to verify that individuals were trained and qualified to perform their job functions. The training program for these personnel was determined to be satisfactorily defined and implemented with certain exceptions as follows: 1. Procurement agent training not consistently recorded in eQIS (five out of ten personnel were

affected by this issue). In addition, errors in eQIS encodes (three out of five encodes were affected by this issue) - NN 202033612 and NN 202026645 issued to Site Support Services

2. Warehouse personnel training expired or not recorded (one out of ten personnel were affected by this issue) - NN 202026554 issued to Site Support Services

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In addition, supplier deviation request and specification deficiencies were identified during reviews conducted under the Procurement Document Control section of this audit that may be attributable to lack of training of design engineers. DCE 202033589 was issued related to this issue to Design Engineering. B. Procurement Document Control Overall performance is Satisfactory with 3 findings and 10 weaknesses identified Procurement documents reviewed as part of ongoing Nuclear Oversight observations since the last audit and as part of this audit satisfy the TQAM and procedural requirements in most cases. Exceptions are discussed in the following sections. The audit included review of 178 Purchase Orders (POs) and Change Orders (COs), 129 requisitions, 40 specifications, 65 Procurement Engineering Packages (PEPs), 44 receiving inspection reports (RSO/ILN), 28 Supplier Deviation Requests (SDRs), 18 supplier drawings/manuals, 7 Substitution Equivalency Evaluations (SEEs), 17 spare parts site impact assessments (SPIs), 17 Technical Evaluations (TEs), 22 Control of Problem Equipment (COPE) evaluations and 44 Nuclear Notifications (NNs). This area reviewed the following specific elements:

1. Technical and quality requirements in procurement documents (Satisfactory with exceptions - see weaknesses 1, 2 and 3 below)

2. Configuration review of spare and replacement parts (Satisfactory with exceptions - see weaknesses 1 and 4 below)

3. Procurement of quality affecting items utilizing a four level procurement system (Satisfactory with exceptions - see weaknesses 1, 2, 3 and 8 below)

4. Procurement documents with authorized approvals (Satisfactory with exceptions - see weakness 6 below)

5. Supplier prepared bid documents (Satisfactory) 6. Changes to procurement documents (Satisfactory with exceptions - see finding 3 below) 7. Procurement document transmittal to CDMC (Satisfactory with exceptions - see finding 2

and weakness 5 below) 8. ASME Section III procurements (Satisfactory with exceptions - see weakness 3 below) 9. Non-safety related item procurements (Satisfactory with exceptions - see weaknesses 2 and

6 below) 10. Substitution Equivalency Evaluation (SEE) process (Satisfactory with exceptions - see

finding 2 below) 11. Control of Problem Equipment (COPE) program (Satisfactory with exceptions - see

weaknesses 7 and 10 below) 12. Procurement of contractors performing on-site services (Satisfactory) 13. Procurement document control for packaging and transportation of radioactive waste

(Satisfactory with exceptions - see weakness 9 below) 14. Procurement document control for radiological effluent services, health physics/radiation

protection program services, chemistry/radiochemistry program services and safety related chemicals (Satisfactory with exceptions - see weakness 9 below)

15. Piece parts quality classification (Satisfactory) 16. Vendor Information Review Program (VIRP) (Satisfactory) 17. Procurement Engineering Packages (PEPs) (Satisfactory) 18. Quality Inspection Plans (QIPs) (Satisfactory with exceptions - see weakness 8 below)

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19. Technical Evaluations (TEs) (Satisfactory with exceptions - see finding 2 and weakness 8 below)

20. Specifications (Satisfactory with exceptions - see finding 3 and weaknesses 6 below) 21. Emergency procurement (Satisfactory) 22. Parts and material order systems (Satisfactory with exceptions - see finding 1 below) Audit Findings 1. Based on review of trending information generated from nuclear notifications, thirty-four

work orders issued in the last eight months have material problems that have caused work delays and schedule changes and have impacted work performance. Thirteen were related to procurement engineering issues and twenty one were related to maintenance planning issues. DCEs 202053124 and 202053119 were issued to Design Engineering and Maintenance to address this condition.

2. Numerous examples were identified of SEEs and TEs approved by Procurement

Engineering in 2010 – 2012 that have not been submitted to CDMC for retention. SEEs and TEs are approved in the MOSAIC Lite computer system but are not being copied and submitted to CDMC for entry into the SAP document control system which is the qualified document retention system for quality assurance records within CDMC. This is a repeat problem of low level issues identified in the 2010 audit. DCE 202033598 was issued to Design Engineering to address this condition.

3. Specification changes authorized by SCE approval of SDRs are not being consistently

reviewed and approved by engineering personnel, incorporated into purchase order changes and provided to CDMC for retention in the specification file. Two purchase orders for emergency diesel generator digital acquisition system hardware and ASME III Class 1 check valves were noted as examples of the above conditions. DCE 202033589 was issued to Design Engineering to address this condition.

Audit Weaknesses 1. A 1986 design change resulted in material changes to charging pump accumulator sinter

tube assemblies. The material changes were identified in a supplier parts sets drawing that was different than the accumulator assembly drawing. Neither the assembly drawing nor the spare parts data base was updated to reflect the material change. NNs 201959968 and 2002027805 were issued for Design Engineering action to update assembly drawing and the spare parts data base.

2. Three purchase orders for the NFPA 805 project were issued to engineering consultants but

were designated Non-Quality Affecting. This designation is not consistent with TQAM requirements for processing of service contracts for fire protection engineering services. The engineering services support a major update of fire protection program requirements to comply with new risk based methodology to satisfy NRC licensing criteria. The use of the Quality-Affecting designation for these purchase orders is needed to assure that applicable quality assurance program requirements are applied to these supplier activities. NN 202020735 was issued for Project Management and Engineering Programs action to issue change orders.

3. A purchase order was issued to procure ASME III Class 3 diesel generator flexible hose

assemblies. The purchase order invoked a Procurement Engineering Package (PEP) that

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referenced a design specification with a number of approved changes. One additional approved specification change had been issued by Design Engineering but had not been incorporated into the PEP due to an oversight by Procurement Engineering. NN 202037334 was issued to Design Engineering to correct the PEP and request a change to the purchase order to assure that the supplier certifies compliance with the latest design specification.

4. A material master for a valve roll pin referenced a supplier drawing that had not been

submitted or reviewed and approved by Design Engineering. Apparently, the supplier issues similar drawings for different contracts with different drawing numbers. The material master was updated during the audit by Design Engineering to reference a different drawing for the same type valve that had been approved previously.

5. A review of approximately 350 purchase orders and change orders in CDMC NDMS files

identified twenty four examples of missing purchase orders and change orders. All of the missing documents were submitted to CDMC to correct this deficiency during the audit. This condition is similar to a problem identified in the Document and Records Control Audit SCES-003-12 related to a large backlog of records awaiting imaging in NDMS files. DCE 201978891 was previously issued as a result of that audit with long term actions in progress to address the generic issues. NN 202027883 was issued for the specific Procurement and Material Control audit deficiencies to Administration and Supply Management to address processing issues unique to purchase orders and change orders.

6. The procurement documents for the emergency diesel generator digital acquisition system

were not consistently controlled. Problems were noted with missing engineering approvals on SDRs for specification changes; failure to incorporate the SDRs and specification revision into change orders to the purchase order; failure to file the SDRs in CDMC with the specification; lack of NOD review of a specification revision; failure to include the SDRs and specification revision in the purchase order file; failure to obtain a computer engineering supervisor approval for the requisition; and unclear training elements for Design Engineering related to requisition and SDR processing and approval. NN 202027808 was issued to Design Engineering to improve SDR and requisition processing in the electrical design group. DCE 202033589 was also issued as discussed above to address the generic problems with Design Engineering processing of SDRs.

7. A review of a sample of Control of Problem Equipment (COPE) evaluations identified that

there was basic test data entries required by the procedure that had not been entered into internal comment tab for disqualified equipment. Twelve examples were identified of this condition. NN 202041102 was issued Design Engineering to address this issue.

8. A sample review of eight commercial grade quality inspection plans and associated

technical evaluations identified four plans where critical characteristics could be improved to better define acceptance criteria. These involved mechanical inspection plans for grease and oil and electrical inspection plans for diodes and relays. NN 202027811 was issued to Design Engineering to update the inspection plans and technical evaluations.

9. A review of purchase orders for onsite services identified three purchase orders where the

Authorized Edison Representative and/or Procurement Agents had not been updated when these personnel retired or were reassigned to another job. Review of the controlling procedures for requisitioning of services indicated that this area was not specifically addressed. NN 202040981 was issued to Supply Management to update the procedures to better define and control this area.

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10. A review of Control of Problem Equipment (COPE) and Operating Experience (OE)

procedures indicated that there were not clear interfaces defined between these two processes. NN 202041102 was issued for Design Engineering and Performance Improvement action to [a] include a task in the OE procedure for evaluating the potentially affected COPE program by incoming 10CFR21 reports and [b] to add a reference in the COPE procedure to the OE procedure.

C. Control of Purchased Materials and Services Overall Performance in this area is Satisfactory. Suppliers for ASME III and XI items and services were verified to have ASME certificates of authorization and qualified for SONGS use by NOD Vendor Oversight based on a review of eleven suppliers issued purchase orders during the audit period. Technical qualification of suppliers was verified to be provided by Procurement Engineering for a sample five new suppliers issued purchase orders during the audit period. A review of a sample of eight DCEs and one nuclear notification, the process for supplier evaluation and resolution of supplier problems was concluded to be adequately implemented and the specific problems were adequately resolved. Documentary evidence to support compliance with SONGS procurement requirements is provided by suppliers and is contained within SONGS receiving inspection reports (RSOs/ILNs). A review of approximately 40 purchase orders and associated receiving inspection reports indicated that purchase order requirements were satisfactorily met. D. Nuclear Fuel Procurement Overall Performance in this area is Satisfactory with one weakness identified. Contracts for nuclear fuel and spent fuel transport packing and shipping services were verified to contain adequate technical and quality assurance requirements based on review of two nuclear fuel contracts and one spent fuel services contract. Suppliers for these contracts were verified to be qualified from a technical and quality assurance aspect. Review of submittal of contract documents to CDMC indicated that one nuclear fuel contract to AREVA had not been properly submitted in accordance with document processing procedures. NN 202041241 was issued to Nuclear Fuel Management to correct this oversight. E. Line Receiving Overall performance in this area is Satisfactory with seven weaknesses identified. Based on a sample of 30 receiving activities for quality-affecting activities, it was confirmed the activities were satisfactorily planned, performed and documented consistent with procedure requirements. A review of the commercial grade dedication process concluded that SONGS receipt inspectors were completing the required inspections as needed to ensure the items ordered met the purchase order requirements. The following weaknesses were identified during these reviews:

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1. Test results are not consistently documented and/or included in quality inspection plans. In addition, inspection tolerances are defined by a plus/minus value versus actual acceptance ranges. NNs 202027810 and 202028778 were issued to Nuclear Oversight to improve documentation of test results in inspection reports. NN 201750388 was also issued to Design Engineering to include actual acceptance ranges in quality inspection plans. (Weakness 1)

2. MDR relay test results are missing in commercial grade dedication report. QM Notification 100005240 was issued and resolved by Design Engineering and NOD by performance of additional testing to qualify the relay for use. (Weakness 2)

3. The post installation testing process for equipment acceptance is not described in the warehouse issue procedure. NN 202028129 was issued to Site Support Services to improve the process. It was also noted that material had been released to the station for post installation testing without QC Receiving review to assure that a work order was assigned to perform that activity. NN 202032474 was issued to Site Support Services to improve the process. (Weakness 3)

A prior review of the commercial grade item dedication lab testing activities in surveillance SOS-028-11 had identified a number of issues. Evaluation of the corrective actions taken identified the following areas that required additional action (these three areas were combined into one audit Weakness related to adequacy of corrective action implementation): 1. M&TE used was not documented in inspection reports. NN 202028778 was written to revise

the receiving inspection procedure to include recording of M&TE used.

2. Seismic restraint of lab equipment had not been evaluated. A Site Safety evaluation identified seven areas that could be improved. NN 202030131 was written for Site Support Services to provide the required seismic restraints.

3. Self-assessment of the CGI activities was not clearly defined. NN 202048057 was issued to Nuclear Oversight to document how the self-assessments would be performed.

4. (Weakness 4)

Based on a sample of 15 seismic qualification test plans and reports for quality affecting items, it was confirmed that activities were satisfactorily planned, performed and documented consistent with seismic qualification test plans and instructions. During these reviews, questions were raised regarding the control of CGI lab instructions and whether the local controls met the requirements of site procedures for control of quality affecting instructions and procedures. NN 202033815 was issued to Nuclear Oversight to evaluate this issue. (Weakness 5) A random sample of six items currently stored in the SONGS Mesa Warehouse quarantine area was conducted. It was noted that certain circuit breakers and hydrogen recombiners had been in quarantine for over one year without being dispositioned. NN 202024759 (replaced by NN 201213171) and NN 202024845 were issued for Site Support Services action on these items. (Weakness 6) A review of the implementation of procedures for delivery and sampling of bulk chemicals, gases, ion exchange resins and diesel fuel oil confirmed that these products are sampled and analyzed by Chemistry personnel for conformance to SONGS specifications. Results are entered into ACIDS and reported to applicable SONGS personnel to allow use of the chemical/product in the plant. Unacceptable results are reported in nuclear notifications so that

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corrective action can be implemented. During these reviews, a weakness was noted in that Chemistry procedure used for this process has an unclear mix of "reference use" and "information use" sections. NN 202040579 was issued to Chemistry to clarify the procedure. (Weakness 7) F. Material Shipping, Handling, and Storage Overall performance in this area is Satisfactory with six five weaknesses identified. Quality affecting items in storage were determined to be stored to meet ANSI N45.2.2 requirements. Control of access to storage areas is provided and fool, drink and tobacco are not permitted in the storage areas. Marking is provided to identify items in storage including those stored in crates and boxes. Outdoor storage provides for air circulation and protective coverings. Weaknesses were identified as follows:

1. Canister shop material in storage had torn covers. NN 202035307 was issued to Site Support Services to correct this condition. (Weakness 1)

2. The MESA warehouse has numerous areas where bird droppings had not been cleaned up adjacent to item in storage. NN 202030709 was issued to address this condition. (Weakness 2)

In-storage maintenance activities were performed where required for items in storage in a satisfactory manner. Shelf-life controls are also implemented in a satisfactory manner with the exception of two sets of capacitors that had exceeded their shelf life. NNs 202028854 and 202033628 were issued for Site Support Services and Design Engineering to disposition these items. (Weakness 3)

Storage controls were verified to be appropriately revised to response to prior issues identified in ACE 201390971 and SCE 201394790. During these reviews, it was noted that a prior notification on lost material had been closed without objective evidence of what action was taken. NN 202041011 was issued to Project Management to address storage controls for Fabrication Shop material. (Weakness 4)

Handling, packaging and shipping controls within the warehouse were reviewed and concluded to be implemented in a satisfactory manner. One weakness was identified related to shipping practices. Certain forms are used to control these activities but these forms are not included in the shipping procedure. NN 202035401 was issued to update the procedure. (Weakness 5) G. Identification and Control of Nonconforming Items Overall performance in this area is Satisfactory with one weakness identified. A sample of 20 receiving inspection documents were reviewed to verify that nonconformance were identified, documented in QM notifications and resolved in a timely manner consistent with the importance and use of the item in the plant. The process was concluded to be satisfactorily implemented. A review of the backlog of QM notifications identified that in mid-June 2012 there were 49 open notifications with 42 less than 90 days old. Seven of the notifications exceeded 90 days with some more than 250 days old. Actions were in progress by Procurement Engineering to obtain revised certification of compliance from a supplier; disposition of material that was required to be impacted tested but was not tested by the supplier; review and approval of load capacity

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data sheets by Design Engineering; and completion of a retest for items that failed testing. NN 202041443 was issued to Procurement Engineering to provide more timely resolution of QM notifications. Procurement Engineering took action during the audit to expedite resolution of these open notifications. H. 10CFR72 for ISFSI Activities Overall performance in this area is Satisfactory. Based on a review of material procurement of dry cask canister sub-components for the ISFSI (29 material masters, 15 procurement specifications and 12 SDRs), it was concluded that the procurement process was adequately implemented to support canister fabrication by SCE. In addition, the changes to the canister design and the storage modules were previously reviewed determined to be acceptable. I. Corrective Action and Self-Assessment Overall performance in this area is Satisfactory with one weakness identified. Corrective Action

A review of selected corrective actions from five Apparent Cause Evaluations (ACEs) four Direct Cause Evaluation (DCEs) and two Common Cause Evaluations (CCEs) associated with the procurement and material control program identified satisfactory implementation with one exception. A procedure change related to storage controls did not address all of the areas required by one of the corrective actions. NN 202044950 was issued for Site Procedure Group action to correct the procedure. In addition, based on a review of a selected sample of Significant Level 4 Nuclear Notifications, the audit team determined that the deficiencies were corrected and closure documentation is consistent with CAP standards. A review was also conducted of actions taken to resolve findings and weaknesses from the 2010 procurement and material control audit SCES-007-01. All corrective actions were verified to be satisfactorily implemented for the findings and all weaknesses were adequately resolved. Previous audit Findings were resolved as follows: 1. Conditions adverse to quality identified by the Supply Chain Organization were not

documented in the Station’s Corrective Action Program (ACE 201044865). This deficiency was resolved by revision of the Topical Report SCE-1, CAP procedure SO123-XV-50 and warehouse nonconformance procedure SO123-XXXII-3 to include the QM notification process within the Corrective Action Program. Review of these actions during the present audit indicated that the QM notification process was being implemented in a satisfactory manner except for certain QM notifications assigned to engineering that had not been resolved in a timely manner (see discussion in Section G above).

2. Ineffective SAP Minimum/Maximum reordering processes resulted in schedule delays and expediting fees (NNs 201079505 and NN 201261884). This deficiency was resolved by issuance of an inventory management guideline SSPG-SO23-G14. Review of this area during the audit indicated that the Minimum/Maximum reordering process is ensuring critical materials/parts are available when needed and expediting expenses are minimized. Inventory management analysts review the need for the planned reordering of items to

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assure that only needed items are ordered. Expediting fees are approved in accordance with established authorization levels for all procurements, are captured as line items in the purchase orders and are often reported to senior management at SONGS.

3. Ineffective supply chain processes, including a general lack of consistency and integration of work using SAP and other legacy software (NN 201080655). This deficiency was resolved by issuance of guideline SSPG-SO123-G-6. Review of this area during the audit indicated that personnel have gained experience using SAP for procurement of items and services. Further enhancements could be gained by integration of Procurement Engineering functions presently performed in the MOSAIC Lite software into appropriate SAP modules. This area is being studied based on benchmarking of Diablo Canyon's experience in using SAP for similar procurement engineering activities.

Self-Assessment

The audit team reviewed self-assessment activities performed by Site Support Services and Procurement Engineering (the Supply Management - Procurement group is not required to perform self-assessment at this time by the SONGS self-assessment program). A directed assessment of the Foreign Material Exclusion and Packaging and Storage programs were included in the Site Support Services self-assessment activities and were determined to be performed in satisfactory manner. Procurement Engineering had planned a directed assessment of the Vendor Information Review program but an alternative process was employed to review this area in response to a planned NRC inspection. This alternative process was determined to be acceptable to meet the goal of performing self-assessment of Procurement Engineering activities. Site Support Services and Engineering Technical Services quarterly performance assessment reports were also reviewed and determined to be satisfactory. In addition, as part of Section E above, reviews of self-assessment activities for receiving inspection activities associated with commercial grade items indicated a weakness in how self-assessments are defined and performed. NN 202033815 was issued to Nuclear Oversight to address this area. J. INPO Performance Objectives and Criteria Performance against INPO Performance Objective and Criteria (PO&C) ER.4.11, Work Management - Suitable materials and parts are available to support scheduled and emergent work activities, is generally Satisfactory, with exceptions (findings and weaknesses noted during the audit are referenced in the above sections). Engineering

Reviews of engineering products during the audit determined that they were accurate and complete in most cases. The following minor issues were identified during the reviews from the Procurement Document Control section: 1. Charging pump accumulator parts drawings conflict to support materials for 1986 design

change 2. Material Master for valve does not reference approved SONGS drawing 3. Supplier Deviation Requests not fully approved as specification changes 4. Quality Inspection Plans and Technical Evaluations could be enhanced to add certain critical

characteristics for commercial grade dedication

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5. Specification change not included in Procurement Engineering Package Work Management

Reviews of the procurement of materials and parts to support both scheduled and emergent work activities indicated that controls were adequate in most cases to provide the correct items for use in the plant. However, a trend was identified in Maintenance Planning and Procurement Engineering where certain parts and materials were not correctly ordered which caused delays in certain work activities. Thirty-four work orders issued in the last eight months have material problems that have caused work delays and schedule changes and have impacted work performance (DCE 202053124 - Design Engineering and DCE 202053119 - Maintenance). This is discussed in more detail the Procurement Document Control section. Configuration Control

Performance is generally consistent with INPO PO&C for Operational Configuration Control, CM.2.6, Parts and materials are procured to meet quality and design specifications, and they are controlled and stored to maintain traceability and quality. Reviews of parts and material procurement documents during the audit determined that the quality and design specifications were met in most instances. Problems were identified and resolved by suppliers using the Supplier Deviation Request process and during receiving inspection using the QM Notification process. Certain weaknesses in engineering documentation are discussed above under "Engineering". The timeliness QM notification resolution was noted as a weakness also and is discussed in the Identification and Control of Nonconforming Items section above. Warehouse storage of parts and materials were generally satisfactory except for certain conditions related to cleanliness, outside protective coverings, shelf-life controls and lost material that are discussed in the Material Shipping, Handling, and Storage section above.

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AUDIT PARTICIPANTS

Name - Organization

Entrance Meeting 6-4-12

Audit Exit Meeting 7-17-12

Doug Bauder - Site Management X X Tom McCool - Site Management X John Chang - Design Engineering X Tom Rak - Design Engineering X Sujit Roy - Design Engineering X Vincent Barone - Design Engineering X Tom Pierno - Design Engineering X X Frank Luna - Design Engineering X Hassan Kanpour - Design Engineering X Elmer Catalan - Design Engineering X Paul Wojtkowski - Design Engineering X Jon Findell - Design Engineering X Dan Humann - Design Engineering X Cyrus Vadoli - Design Engineering X Justin Hojati - Design Engineering X Robert McKenna - Design Engineering X Bruce Rausch - Design Engineering X X Riyad Qashu - Design Engineering X Mehdad Hojati - Design Engineering X Dave Brown - Design Engineering X Dave Perales - Design Engineering X Dan Costello - Design Engineering X Ruthie Fox - Design Engineering X Amy Olson - Design Engineering X Dave Pjontek - Design Engineering X Wayne Marsh - Plant Engineering X Dan Legare - Plant Engineering X B. Mariano - Plant Engineering X Vic Thomas - Plant Engineering X J. Cabral - Plant Engineering X Bob Richer - Engineering Programs X Roger Holmes - Engineering Programs X Sherm Shaw - Engineering Programs X Bruce Hartung - Site Support Services X X X Dan Bean - Site Support Services X X Ted Metz - Site Support Services X Gail Grischuk - Site Support Services X Mark Schaffer - Site Support Services X Mark Pawlaczyk - Site Support Services X James Johnson - Site Support Services X Raylene Werner - Site Support Services X Gerry King - Site Support Services X Linda Arce - Site Support Services X

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Name - Organization

Entrance Meeting 6-4-12

Audit Exit Meeting 7-17-12

Andy Van Derpol - Site Support Services X Sheila Theegte - Site Support Services X Steve Brooks - Site Support Services X Maria Fabianguisinger - Site Support Services X Karen Belinski - Site Support Services X Estella Guerra - Site Support Services X Mike Maben - Site Support Services X Sandy Meija - Site Support Services X Paul Couglin - Supply Management X X X Robert Allen - Supply Management X X Deborah Starr - Supply Management X Lorraine Bean - Supply Management X Cheryl Downe - Supply Management X Andy Yaros - Supply Management X Nick Pernaski - Supply Management X Linda Mote - Supply Management X Ben Benjamin - Supply Management X Owen Thomsen - Nuclear Fuel Management X X Michelle Carr - Nuclear Fuel Management X Gary Chung - Nuclear Fuel Management X Sam Hinds - Nuclear Fuel Management X Dominique Cyprian - Nuclear Fuel Management X Craig Bedore - Project Management X Sal Dolcemascolo - Project Management X Tim Larson - Project Management X Brain Willson - Nuclear Training X Sean Gawne - Nuclear Training X Marta McCann - Site Procedure Group X Rich St. Onge - NRA/EP X Gretha Solorazano - Performance Improvement Craig Stone - Health Physics X Alan Gray - Health Physics X Dennis Hansen - Maintenance X Mark Mahue - Maintenance X Mike Reitzler - Maintenance X Brian Bordelon - Maintenance X Sherri Minter - Maintenance X Tim Sarette - Chemistry X Dave Russell - Chemistry X Mike Johnson - Chemistry X Mark Hall - ITBU X Tracey Haynesworth - Engr & Tech Services X Loretta Muriel - Administration X Kevin Dale - Administration/CDMC X X Jaime Fluellen - Administration/CDMC X X C. Steele - Administration/CDMC X

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Name - Organization

Entrance Meeting 6-4-12

Audit Exit Meeting 7-17-12

J. Thigpen - Administration X X Judy Martin-Fischer - Administration X Brenda Hamlet - Administration X Midge Pauu - Administration X Jennifer Hamner - Administration X Patti Cooper - Administration X Scott Campbell - Human Performance X Bernard Hargreaves - Corporate Audits X Oscar Flores - Nuclear Oversight X Bob McWey - Nuclear Oversight X X Angel Sistos - Nuclear Oversight X X X Russ Nielsen - Nuclear Oversight X Hal Wood - Nuclear Oversight X Steve Perluss - Nuclear Oversight X Bill Kotteajkos - Nuclear Oversight X Jose Freire - Nuclear Oversight X Pete Watkins - Nuclear Oversight X Mike Jasurda - Nuclear Oversight X Mark Chavez - Nuclear Oversight X James Sawatzki - Nuclear Oversight X Mark Hottendorf - Nuclear Oversight X Dan Todd - Nuclear Oversight X Scott Stinson - Nuclear Oversight X Jim Thomas - Nuclear Oversight (+) X X X George Gwiazdowski - Nuclear Oversight (+) X X Sal Ordorica - Nuclear Oversight (+) X X Aijaz Husain - Nuclear Oversight (+) X X X Gabriel Ahn - Corporate Audits (+) X X Glen Sier - OPPD (Fort Calhoun) (+) X

(+) Audit Team AUDIT EXIT MEETING The audit exit meeting was held on July 17, 2012. At this time the results of the audit, including the findings and weaknesses, were discussed with personnel in attendance.

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ATTACHMENT A

AUDIT PROGRAM DEFINITIONS Finding - A problem identified during an Oversight audit, surveillance, field observation, or technical review that meets the Corrective Action Program threshold guidance for a direct, apparent, or root cause evaluation as defined in procedure SO123-XV-50.CAP-2.” Recommendation - Optional process or program enhancements that require organization, program, or process manager review and response. Weakness - A deficiency identified during an audit, surveillance, field observation or technical review that does not meet the definition of a Finding. Weaknesses include noncompliance of low significance, minor process deficiencies and other conditions that meet the criteria for Corrective Action. Excellent Performance - Represents superior and noteworthy performance that is considered to be an “industry leader.” Overall program consists of a number of strengths. All areas of the program are effectively implemented. Good Performance - Overall performance exceeds approved standards and the area being assessed is considered to be effective. Some strengths are identified and there are very few repetitive or long-standing problems. Deficiencies are minor. Satisfactory Performance - Overall performance meets and in some areas may exceed minimum standards. Overall performance falls within the broad band centered on “industry median.” Few strengths may be identified and some repetitive or long-standing problems may exist. Deficiencies are generally minor. Weaknesses exist, but the overall program is still considered to be effective. Routine corrective actions should resolve the identified problems. Supervisory level management required to address weaknesses. Adequate Performance - Meets minimum standards. However, the program and implementation meets regulatory requirements and commitments, performance is considered marginal compared to industry practice. Continual attention is recommended to preclude unsatisfactory performance to maintain ability to sustain an acceptable performance level. Manager or Senior Manager involvement is highly recommended to improve performance. Unsatisfactory - Overall program warrants significant improvement to ensure sustained performance. Program effectiveness is not consistent and program is considered deficient in meeting regulatory commitments. Performance is not directly impacting nuclear safety or operability, but such impact is possible dependent on area and if the performance weaknesses are not resolved in a timely manner. Problems may be considered representative of a significant programmatic breakdown. Immediate Management/Senior Manager attention is required.