counterfeit, fraudulent and suspect items cog/oci/industry cfsi workshop toronto ontario ... and...

SUPPLY CHAIN

Counterfeit, Fraudulent and Suspect Items Canadian Activities to Prevent CFSI from entering the Nuclear Supply Chain

July 2016

Harry Hall Vice President, Supply Chain

SUPPLY CHAIN

Contents

• Introduction • Canadian Nuclear Operators • Canadian Power Generation Considerations • About Bruce Power • Canadian Regulatory Environment • Canadian CFSI Example • Conclusions • Questions

IAEA Vienna - July 2016

SUPPLY CHAIN

Canadian Nuclear Operators


FACILITY NET CAPACITY (MWe)

OPERATING STATUS START YEAR

Bruce A: Unit 1 772 Operating 1977 Bruce A: Unit 2 772 Operating 1977 Bruce A: Unit 3 730 Operating 1978 Bruce A: Unit 4 730 Operating 1979 Bruce B: Unit 5 817 Operating 1985 Bruce B: Unit 6 817 Operating 1984 Bruce B: Unit 7 817 Operating 1986 Bruce B: Unit 8 817 Operating 1987 Darlington: Unit 1 878 Operating 1992 Darlington: Unit 2 878 Operating 1990 Darlington: Unit 3 878 Operating 1993 Darlington: Unit 4 878 Operating 1993 Pickering A: Unit 1 515 Operating 1971 Pickering A: Unit 4 515 Operating 1973 Pickering B: Unit 1 516 Operating 1983 Pickering B: Unit 2 516 Operating 1984 Pickering B: Unit 3 516 Operating 1985 Pickering B: Unit 4 516 Operating 1986 Point Lepreau 635 Operating 1983

CANADA’S NUCLEAR POWER REACTORS

Canada was one of the first countries to produce power from nuclear. In 1962, the Nuclear Power Demonstration (NPD) reactor came online, producing 22 MWe. Douglas Point, Canada’s first full-scale power reactor came online in 1968, producing 220 MWe. Today, 19 CANDU reactors are in service at four different sites in Ontario and New Brunswick, supplying over 16% of Canada’s electricity.

DID YOU KNOW?

IN TOTAL, CANADA’S NUCLEAR FLEET PROVIDES ENOUGH ELECTRICITY FOR ALMOST 9 MILLION OF CANADA’S 13.3 MILLION HOUSEHOLDS.

SUPPLY CHAIN

Canadian Nuclear Operators


New Brunswick Point Lepreau

Quebec Gentilly 2 (Laying Up)

Ontario Darlington Pickering Bruce Power

SUPPLY CHAIN

Canadian Power Generation Considerations


NUCLEAR IN CANADA BY THE NUMBERS ELECTRICITY GENERATION IN CANADA IN 2014

There are 19 power reactors currently operating at 4 nuclear power generating stations in Canada. Nuclear power provided approximately 16.15% of Canada’s electricity in 2014. Hydro power is the most utilized source of electricity in Canada, generating approximately 63.32% in 2014. While coal was phased out in Ontario in 2014, it continues to be widely used elsewhere in the country, particularly in Alberta and Saskatchewan. Wind, solar, and tidal power combined to provide approximately 1.45% of Canada’s electricity in 2014.

DID YOU KNOW?

IN 2014, ONTARIO BECAME THE FIRST JURISDICTION IN NORTH AMERICA TO COMPLETELY PHASE OUT THE USE OF COAL-FIRED POWER PLANTS.

SOURCE: Statistics Canada.4

Hydro 63.32% Coal

14.65% Nuclear

16.15% Diesel

0.19% Natural gas

4.23% Wind 1.40%

Solar 0.05%

Hydro 63.32% Coal 14.65%

Nuclear 16.15% Diesel 0.19%

Natural Gas 4.23% Wind 1.40% Solar 0.05%

SUPPLY CHAIN

Canadian Power Generation Considerations

Canada’s base load energy resources not evenly distributed


BC Alberta Sask. Manitoba Ontario Quebec Atlantic Region

94% Hydro

97% Thermal

86% Thermal

99% Hydro

50% Nuclear

96% Hydro

67% Hydro

Climate change – Nuclear is near zero greenhouse gas emitting throughout its fuel cycle.

Cost competitiveness – New build and refurbishment is competitive with the lowest cost non-emitting alternatives.

Energy supply security – Uranium is viewed as having a stable supply chain. This is especially true for Canada as Saskatchewan has one of the largest uranium reserves in the world.

SUPPLY CHAIN

About Bruce Power

• Located in a rural area on the eastern shore of Lake Huron

• Canada’s only private nuclear generator

• 6,300 MW of capacity from eight operating units.

• 4,100 employees.

• Largest operating nuclear generating facility in the world

PUBLIC

SUPPLY CHAIN

About Bruce Power


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Canadian Regulatory Environment • Canadian Nuclear Safety Commission (CNSC) is Canada’s Nuclear

Regulator under which all Nuclear Facilities operate

• REGDOC-3.1.1, Reporting Requirements for Nuclear Power Plants, sets out the timing and information required to report to the CNSC to support the conditions of applicable Power Reactor Operating Licenses (PROL) including CFSI reporting requirements.

• CNSC shares lessons learned on CFSI internationally among regulatory bodies including:

– the Multinational Design Evaluation Program (MDEP)

– the Nuclear Energy Agency Committee on Nuclear Regulatory Activities (CNRA)

– Participation at CNRA Working Group on Operating Experience

• CNSC approach aligns with ASME NQA-1–2008/2009a “Requirement 7, Control of Purchased Items and Services.” Purchaser methods used to accept an item or service from a supplier include: a Supplier Certificate of Conformance, source verification, receiving inspection, or post installation test at the nuclear facility site, or a combination of these methods.


SUPPLY CHAIN IAEA Vienna - July 2016

PLAN

DO

CHECK

ACT

• Safety is Supply Chain’s #1 priority guiding decisions and actions • The business program is defined, planned, and controlled • The organization is defined and metrics identified

• Work is managed to safely supply materials and services • Resources are managed to support station requirements • Information and data is paramount to satisfy station demands

• Assessments are performed and actions taken to improve • CFAM and foundation provide oversight, reporting and metrics • Benchmarks and OPEX is sought, shared and used

CSA N286-05 Management System Requirements for Nuclear Facilities

• A Learning Organization that continuously improves processes and practices • Problems are identified and corrective actions taken to improve • Manage and control process and organizational changes

SUPPLY CHAIN

INPO 14-005 Principals for Excellence Developed by the INPO Supplier Participant Advisory Committee (SPAC), based on existing INPO principles. Several key suppliers are members of the SPAC. The 7 Principles in the following areas:

1. Nuclear safety culture 2. Materials, equipment, configuration control, and quality assurance 3. Human performance 4. Training and qualifications 5. Continuous improvement 6. Operating experience and lessons learned 7. Procurement and contracting of materials and services

Expectation the principles are implemented through the Supply Chain as a shared responsibility between suppliers and customer through:

1. Establishing expectations 2. Achieving acceptance 3. Verifying implementation

Complements the new INPO 12-013 ER.3 PO&C’s for Supply Chain, however, the oversight responsibilities to meet the expectations are quite significant.

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SUPPLY CHAIN

EPRI Guidelines on Detection of CFSI Vigilant Inspection

• Source Inspection • Pre-Receipt Inspection by Engineering and Receipt Inspection • Pre-Installation Inspection • Ad-Hoc Inspection and Discovery

Positive Identification Control

• Documented Process for Addressing a Suspect Item Incident • Generic Process for Controlling and Reporting Suspect Items

• Identification of Suspected CFI • Quarantine Suspect CFI • Gather Pertinent Item Information • Enter Incident in Corrective Action System

• Reporting Provisions • Disposition of Suspected or Confirmed Counterfeit and Fraudulent Items

Notify Manufacturer and Obtain Authentication Information • Notification of the Supplier • Notification of the Manufacturer

Report to Industry CFI Database(s) Regulatory Reporting Screening Notify Appropriate Enforcement Authority

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SUPPLY CHAIN

Canadian Perceptions on CFSI CFSI has many motivations: • Opportunistic, unscrupulous suppliers and individuals looking at a

tremendous profit opportunity (Greed); • Profiteering and financing of other criminal activity – Established

smuggling infrastructures • Globalization of Supply Chain – Origin of Counterfeits • Taking advantage of a lack of general awareness through established

supplier relationships; • Facilitating environment (e.g., lax procurement documentation

verification); • Pressure on suppliers to lower pricing; • Fewer nuclear suppliers in the market place;


SUPPLY CHAIN

Canadian Perceptions on CFSI CFSI has many motivations: • Increase in world-wide competition; • Time constraints - little time to properly substantiate

procurement requirements (need it now! Or yesterday!) • Deficiency of sufficient intrusive acceptance criteria; • Insufficient CFSI awareness and training of suppliers

procurement and inspection personnel; • OEM equipment may no longer be available leaving a plethora

of non-nuclear replacement being available on the market; • Returned goods, damaged and recycled goods; • Changes in technology – RoHS (reduction of hazardous

substance


SUPPLY CHAIN

Canadian History of CFSI Concerns • March 1989- U.S. NRC Generic Letter 89-02 Actions to Improve Detection of

Counterfeit and Fraudulently marked Products. • 1989-U.S. NRC SECY 89-010 Advanced Notice of Proposed Rulemaking

“Acceptance of Products Purchased for use in Nuclear Power Plant Structures, Systems, and Components.

• April 1990- U.S. NRC. Information Notice 89-70 Possible Indications of Misrepresented Vendor Products

• 1990 EPRI NP-6629 Guidelines for the Procurement and Receipt of Items for Nuclear Power Plants Appendix C, Identifying Substandard/Fraudulent Items

• 1998 Ontario Hydro ,Supply Inspection Departments ((Vendor and Audit Group out of Ontario Head Office) becomes aware of CFSI threat. Indicators of Misrepresentation may have been first introduced in procedures at that time.

• 2000 International Atomic Energy Association IAEA-TECDOC-1169, Managing suspect and counterfeit items in the nuclear Industry.

• 2009 EPRI Plant Support Engineering: Counterfeit, Fraudulent, and Substandard Items. Mitigating the Increasing Risk

•

SUPPLY CHAIN

Canadian History of CFSI Concerns • January 2010 U.S. DEPARTMENT OF COMMERCE BUREAU OF INDUSTRY

AND SECURITY OFFICE OF TECHNOLOGY EVALUATION DEFENSE INDUSTRIAL BASE ASSESSMENT: COUNTERFEIT ELECTRONICS

• March 2010 GAO-10-389, United States Government Accountability Office Report to Congressional Requesters, DEFENSE SUPPLIER BASE DOD Should Leverage Ongoing Initiatives in Developing Its Program to Mitigate Risk of Counterfeit Parts

• 2010 CFSI Initiative launched within COG SCMPG based upon EPRI and COG awareness initiatives

• 2012 Bruce Power / Industry completes initial implementation of CFSI Program • March 2015 – Vendor disclosure Letter on Suspect Valves – list of suspect valves

to CNSC • June 2015 – 2nd Status update on valves to CNSC • December 2015 - detailed reports/conclusions to CNSC • December 2015 – COG/OCI/Industry CFSI Workshop Toronto Ontario • Q1 2017 – Follow Up Industry CFSI Workshop Planned to Evaluate Progress


Supply Chain Program

• Management System Structure - GOSP Model – Is a process model to safely and efficiently achieve business objectives

• Developed effective and efficient program/process suite • Processes in place to meet licence and business requirements • Oversight and measures in place to determine performance of

program

“The processes of the management system that are needed to achieve the goals, provide the means to meet all requirements and deliver the products of the organization shall be identified and their development shall be planned, implemented, assessed and continually improved.” IAEA GS-R-3 section 5.1

SUPPLY CHAIN

Bruce Power CFSI Program Objective • Development of a CFSI Program within Bruce Power to create awareness, mitigate

and programmatically address Counterfeit, Fraudulent and Suspect Items entering the Nuclear Supply Chain

Actions • The following actions have been taken:

– Develop CFSI Response Plan and Procedure (BP-PROC-00609) - Implemented

– Internal Bruce Power CFSI Education (Training Program), Awareness and Responsibilities Program

• Supply Chain - Complete and Engineering being implemented • Rolling out to Operations & Maintenance Organizations

– Supplier Awareness • Expectation Letter to all suppliers/vendors – Completed Q2 2012 • CFSI Audit Checklist - Completed Q2 2012

– Inclusion of CFSI requirements on all T & C’s for Materials and Services • Completed Q3 2012

– CFSI Intranet Page as part of Bruce Power Performance Improvement OPEX • Includes industry links

SUPPLY CHAIN

Bruce Power Quality Programs • A robust QA program is the cornerstone for detecting and preventing

CFSI

• Canadian law “Combatting Counterfeit Products Act” – fines of up to $1,000,000 and/or imprisonment of up to five years; or, – on summary conviction, a fine of up to $25,000 and/or imprisonment of up to six months.



Sampling BP-PROC-00372

Documentation/ PO Review

BP-PROC-00609

Approved Supplier List Qualification

BP-PROC-00369

Physical/ Dimensional

BP-PROC-00609

CFSI /CGD Review BP-PROC-00609

Release to Inventory/Station or

Quarantine BP-PROC-00609

OSDD/NCR Process BP-PROC-00252 BP-PROC-00264

Quality Services – Receipt Inspection

SUPPLY CHAIN

Canadian CFSI Example


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Lessons out of Suspect Valve Experience How do you prevent fraudulent certifications originating deep in the Manufacturers Tier 2, Tier 3 manufacturing chain? • Manufacturers

– Awareness training at all levels – More intrusive auditing and qualifications of vendors – CANIAC – More invasive Random Audits to catch any discrepancies

• Utilities – Ensure compliance of recommended actions – Awareness from engineering, procurement, inspection, out to the

mechanic level, which is ultimately the last line of defence;

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SUPPLY CHAIN

Canadian Utility Current Actions • Purchasing Contracts - CFSI clauses in standard Terms and

Conditions for material and services purchasing agreements; • ASL / Vendor Audit - CFSI requirement checklist to qualify vendors on

the Approved Supplier List (ASL); • Procurement Engineering - Identification of commodities that may be

prone to CFSI risk and increased vigilance in these areas; • Inspection – OPEX, education and recurrent awareness training on

CFSI entering the Nuclear Supply Chain; • Training/Pre-Job Briefs – Use of education/ awareness/pre job brief

programs on CFSI throughout maintenance; • OPEX – Programmatic use of existing OPEX on CFSI’s • Reporting - action and reporting process in response to a CFSI

incident;

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SUPPLY CHAIN

Conclusion • CFSI is an Industry Problem; • Continued Open, Honest Exchange of OPEX and Actions

taken to Mitigate Future occurrences; • Alliance of Utilities and Suppliers through acknowledgement

of mutual dependency in battling this threat; • Continuous improvement into the Tier 2, Tier 3

manufacturing chain through invasive audits on the part of the OEM - in Canada CANIAC assist - with random verification audits on the part of the utilities;

• Continued development and implementation of better computer based training and awareness programs.

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Questions?

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