Newport News Industrial

Quality Appendix AP-QA-100 NQA-1

(QAM-100)

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TABLE OF CONTENTS PAGE NO

1. QUALITY SCOPE ………………………………………………………………. 2 1.3 NNI Audits/Audit surveillance………………………………………….. 2 2. RESPONSIBILITIES ……………………………………………………………. 3 2.1 NNI……………………………………………………………………….. 3 2.2 SELLER…………………………………………………………………… 4 3. SPECIFICATION EFFECTIVITY …………………………………….....…….. 3 4. ORDER OF PRECEDENCE …………………………………………………… 4 5. COMMUNICATION……………………………………………………………… 5 5.2. General Communication………………………………………………… 5 5.3 Expression of Measurements…………………………………………… 5 6. DEFINITIONS……………………………………………………………………. 6 7. VENDOR INFORMATION REQUEST…...................................................... 6 8. QUALITY PROGRAM/SYSTEM……………………………………………… 7 8.1 General Quality Requirements………………………………………… 7 8.2 Quality System (SELLER AUDITS)……………………………………. 8 8.3 Quality System Flow Down (Sub-Contracting)……………………….. 9 8.4 Quality Assurance Records Management…………………………...... 10 9. NONCONFORMANCES………………………………………………………. 12 9.1 10CFR Part 21 Applicability and Reporting…………………….……. 12 9.2 10CRR50.55 (e) Applicability and Reporting…………………………. 12 9.3 Material Disposition…………………………………………………….... 13 9.4 Notice of Stop Work…………………………………………………….. 14 10. CORRECTIVE ACTION PROGRAM………………………………………….. 15 10.2 Identification and Review for Significance…………………………….. 15 10.3 Analyzing for Adverse Trends………………………………………….. 15 10.4 NNI Interface……………………………………………………………… 15 11. RESPONSIBILITIES FOR COUNTERFEIT OR FRAUDULENT ITEMS…... 16

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1. QUALITY SCOPE

1.1. This Appendix provides Quality Assurance requirements in addition to the basic quality requirements cited elsewhere in the purchase order. In all cases, the purchase order is the controlling document and takes precedence over all other documents, either written, implied or specified. It is the responsibility of the SELLER to transmit those portions of the purchase order that are applicable, including the substance of this specification to any and all sub-tier supplier's via a purchase order or some other contractual means.

1.2. SELLER's performing work or services in accordance with this specification shall establish and maintain a Quality System, which will assure the quality and adequacy of the item or service provided. A quality system refers to the activities carried out within an organization to satisfy the quality expectations of its customers. To ensure that a quality system is in place, NNI and its customer may insist that the organization demonstrate that the quality system conforms with the following:

1.2.1. 10CFR 50 Appendix B (QUALITY ASSURANCE CRITERIA FOR NUCLEAR POWER PLANTS AND FUEL REPROCESSING PLANTS)

1.2.2. 10CFR 50.55 (e) (CONDITIONS OF CONSTRUCTION PERMITS, EARLY SITE PERMITS, COMBINED LICENSES, AND MANUFACTURING LICENSES)

1.2.3. 10CFR Part 21 (REPORTING OF DEFECTS AND NONCOMPLIANCE)

1.2.4. NRC Regulatory Guide 1.28, Quality Assurance Program Requirements (Design and Construction)

1.2.5. ASME NQA-1 1994 Edition, 1995 Addenda, Supplement and Non-Mandatory Appendices (Nuclear Quality Assurance-1)

1.2.6. ASME NQA-1 2008 with 2009 Addenda, Supplement and Non-Mandatory Appendices (Nuclear Quality Assurance-1)

1.3. NNI AUDITS/AUDIT SURVEILLANCE

1.3.1. NNI and NNI’s Customer reserve the right to audit processes and systems and to verify the conformance of the item(s) and services to the purchase order at any location including sub-tier suppliers at any stage of development or manufacture at least annually and triennial for NNI approved supplier list renewal.

1.3.2. NNI may perform annual audits of SELLER and SELLER’s Sub-Suppliers.

1.3.3. The Owner, their agent, or NNI’s customer or one of its affiliated organizations, or third parties, may perform additional audits of SELLER and SELLER’s Sub-Suppliers.

1.3.4. The United States Nuclear Regulatory Commission (NRC), Department of Energy (DOE), etc., to the extent applicable under 10 CFR 50, may perform additional audits and inspections of SELLER and SELLER’s Sub-Suppliers.

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2. RESPONSIBILITIES

2.1. NNI

2.1.1. Certify the SELLER is executing the quality system required by this purchase order.

2.1.2. Notify the SELLER when material or objective quality evidence is found to be non-conforming with the requirements of this purchase order.

2.1.3. Coordinate with the SELLER to resolve non-conforming material and software.

2.1.4. Providing onsite inspection and oversight of the SELLER’s Quality Assurance Program and Fabrication and Manufacture of Shield Building Products.

2.2. SELLER

2.2.1. The SELLER shall be responsible for mandatory compliance and provisions of Part 21 of Chapter 1 to Title 10 of the United States of America Code of Federal Regulations Code (CFR) (10CFR21).

2.2.2. The SELLER shall be responsible for mandatory compliance and provisions of United States of America (CFR) l0CFR50 Appendix B.

2.2.3. The SELLER shall be responsible for mandatory compliance and provisions of United States of America (CFR) l0CFR50.55 (e).

2.2.4. The SELLER shall be responsible for notifying NNI when material or Objective Quality Evidence (OQE) is found to be non-conforming with the requirements of this purchase order.

2.2.4.1. The SELLER shall coordinate with NNI to resolve non-conforming material and OQE.

2.2.5. The SELLER shall be responsible for providing (i.e. manufacture, fabricate, service, distribute, etc.) products which conform to NNI’s drawings, specifications, and purchase order requirements with no deviations unless previously approved by NNI.

2.2.6. The SELLER shall ensure products that products complete are and that all applicable destructive and Non-Destructive Examinations (NDE) are accomplished prior to shipment, such that products are ready for installation.

2.2.7. The SELLER shall be responsible for shipping and to provide adequate protection against shipping damage.

2.2.8. The SELLER Personnel

2.2.8.1. The SELLER shall assign qualified personnel to manage various functional details including as a minimum: management representative, purchasing, fabrication process, quality assurance and quality control.

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2.2.8.2. The SELLER shall be responsible for assuring adequate training, qualification, and certification to contractual and Code requirements for all personnel performing work which may impact the performance of products and components including but not exclusive to; Quality, Non-Destructive Examination (NDE), Welding, Fabrication, Lifting Handling, Engineering, etc.

2.2.9. Resources and Facilities

2.2.9.1. The SELLER shall provide the resources and facilities needed to achieve conformity NNI’s contract specifications. Resources shall include, but are not limited to, qualified and experienced personnel, buildings, workspace and associated utilities, fixtures, and process equipment (both hardware and OQE) etc.

3. SPECIFICATION EFFECTIVITY

3.1. NNI does not, in all cases, procure to the latest revision of the specification or approved drawing. The required revision is that revision specified in the purchase order. If the Supplier intends to deviate from the invoked revision, permission must be obtained from the Purchaser on a VIR.

3.2. When sub-tier specifications are invoked in the primary document (i.e., the drawing or specification listed in the purchase order references sub-tier specifications and the revision are not indicated) the revision in effect is the latest revision prior to the “Effective Date” indicated on the purchase order. Request to use earlier or later revisions of sub-tier specifications shall be submitted on a VIR to NNI for approval.

4. ORDER OF PRECEDENCE

4.1. In the event of any inconsistency in NNI ordering data, purchase order, or contract, the inconsistency shall be resolved giving precedence in the following order:

4.1.1. The Purchase Order (PO).

4.1.2. United States Code of Federal Regulations (CFR)

4.1.3. Duly authorized and approved Vendor Information Request (VIR) or PO supplement.

4.1.4. The Component Specification.

4.1.5. Primary Reference Specifications.

4.1.6. The Fabrication Drawing

4.1.7. Sub-tier Specifications.

4.2. If a conflict arises between contract requirements specified within the Purchase Order, Design Document Requirements or with non-contract communications (e.g. VIRs, Project letters, and email.) the conflict shall immediately be brought to the attention of NNI for resolution.

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4.3. If any discrepancy, differences, or conflict exist between the ordering data and the drawings and specifications or between the drawings and specifications; a VIR is to submitted to resolve the conflict, and the SELLER shall not proceed except at THE SELLER’s own risk at no cost to NNI

5. COMMUNICATION

5.1. The SELLER shall provide to NNI immediate verbal notice and subsequent written documentation of all communications relative to Quality, including:

5.1.1. Significant management, quality system, or policy changes.

5.1.2. Changes in Company ownership.

5.1.3. Changes in plant location.

5.1.4. Changes in upper management.

5.1.5. Non-conformities or latent defects discovered after delivery and acceptance by NNI, including findings noted by third party (external) and internal audits which affect delivery or delivered product and documentation.

5.2. GENERAL COMMUNICATION

5.2.1. Methods of communication shall be in accordance with the following:

5.2.1.1. All methods of communication and certification shall be American English, also called United States English or U.S. English.

5.2.1.2. Dual language Communication and Certification is prohibited.

5.2.1.3. Verbal notice by telephone.

5.2.1.4. Vendor Information Request (VIR)

5.2.1.5. Letter of Advisement for non-conformities or latent defects on official company letter head.

5.2.1.6. Email. (Note: When identified by NNI, electronic encryption maybe required.)

5.3. EXPRESSION MEASUREMENTS

5.3.1. All fabrication drawings, manufacturing sketches, shop drawings (if utilized), OQE, documentation, certification, inspection, testing, temperature, time and date calibration of equipment, dimensions, and measurements shall be made in United States Customary Units.

5.3.2. All recorded Unites of measurements for all documentation, certification, procedures, measurements, inspection, etc., shall be made in United States Customary Units (United States Weights and Measures).

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5.3.3. Where not otherwise contractually invoked, all specified limits for machining services and for dimensional control of deliverable parts and assemblies shall be interpreted as absolute limits as defined by ASTM E29, Standard Practice for Using Significant Digits in Test Data to Determine Compliance with Specifications. Unless otherwise specified in the contract, for all other observed, measured or calculated product characteristics (e.g. for material suppliers, material distributors, services other than machining), specified limits shall be interpreted using round-off method as defined by ASTM E29.

6. DEFINITIONS

6.1. Quality System – The organizational structure, policies, procedures, processes and resources needed to implement quality management, including the quality assurance manual. Referenced documents that refer to “quality program”, “quality management system”, etc., shall be considered synonymous with “quality system.”

6.2. Responsible Management – A person or group of people who direct and control an organization at the highest level.

6.3. United States Customary Units –System of measurements utilized in the United States of America, though developed from are considered different from English/Imperial Units of Measure. The United States National Institute of Standards and Technology (NIST) shall be the governing and interpreting United States Customary Units.

6.4. Objective Quality Evidence (OQE) – OQE includes, but is not exclusive to procedures, instructions, reports, records, training records, weld records, qualifications, certified material test reports (CMTR’s), certifications, document packages, test reports, Nondestructive Examination Reports, certificates of conformance, certificates of compliance, or other OQE as specified or requested by NNI or NNI’s customer to substantiate material quality.

7. VENDOR INFORMATION REQUEST (NNI Form VIR-1)

7.1. Requests for interpretation or clarification of any purchase order requirements, changes to drawings or specifications, and/or requests for acceptance of a non-conforming conditions and repair welding authorizations (when required) shall be submitted on a VIR (NNI Form VIR-1).

7.1.1. Copies of each VIR submitted against the item being offered for delivery shall be included in the certification data package, which accompanies the item.

7.1.2. For items accepted at source inspection, the copies shall be provided to the source inspector for review when the items are presented for source

7.2. All Non-destructive Testing (LP, MP, UT, VT, RT), Alloy Identity, Welding and Brazing (production and repair) and special processes (e.g. forging, 1st article) must be performed in accordance with approved written procedures.

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7.2.1. These procedures shall be submitted to NNI for approval on a VIR. This VIR shall be submitted and approved prior to performance of the applicable task. Failure to comply will be cause for rejection.

8. QUALITY PROGRAM/SYSTEM

8.1. GENERAL QUALITY REQUIREMENTS

8.1.1. The SELLER’s Quality Assurance Program shall be documented and available for review by NNI prior to initiation of production and throughout the life of the Purchase Order. All changes to the Quality Assurance Program and Manual shall be documented and copies furnished to NNI.

8.1.2. The SELLER shall provide for and maintain a Quality Assurance Program and Manual which conforms to all requirements of US 10CFR50 Appendix B, ASME NQA-1 and Non-Mandatory Appendices, US NRC Regulatory Guide 1.28, Rev. 3, supplementary quality assurance requirements and by specified codes and standards.

8.1.3. The SELLER’s Quality Assurance Program and Manual shall ensure that the product meets the contract requirements and that is acceptable to NNI and NNI’s customer.

8.1.4. The SELLER’s shall submit two (2) controlled copies of the Quality Assurance Manual(s) to NNI for approval and routing to NNI’s customer, if required, for approval.

8.1.4.1. Changes made to the SELLER’s QA Assurance Program and Manual, after approval, shall be submitted to NNI and shall be accepted and approved by NNI prior to implementation. The accepted changes to the SELLER’s QA Assurance Program and Manual may be audited by NNI and NNI’s Customer Representative

8.1.4.2. Changes made to the SELLER QA Assurance Program and Manual as a result of Corrective Actions and Audit Findings, will be made with no increase of cost to NNI for implementation.

8.1.5. The SELLER shall implement the latest NNI approved QA Program for all tasking included within this Appendix.

8.1.6. When a Quality Management/Inspection System specification, such as ASME Section III, ANSI/ASME NQA-1, AISC, ISO or other quality specification is invoked in the body of a NNI Purchase Order, either directly or through an Industry Specification, or Government Regulation, etc., the SELLER's Quality Management/Inspection System must conform to all of the requirements of the invoked specification and all individual contract requirements.

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8.1.6.1. Additionally, when procurement specifications, drawings, or other documents referenced by the purchase order invoke NQA-1 quality system, the SELLER’s Quality Management/Inspection System must also comply with the supplemental quality system requirements contained within the Non-Mandatory Appendices.

8.1.6.2. No increase in price will be allowed if THE SELLER elects to use a Quality Program/System more stringent than required.

8.1.7. The SELLER shall make available to NNI and NNI’s Customer reports of any nonconformance (NCR) which affects NNI material and shall (when requested) require the SELLER to coordinate with NNI on corrective action.

8.1.8. The SELLER’s calibrated measuring and testing equipment (M&TE) shall be made available for use by NNI and NNI’s Customer site representative(s) to determine conformance of product with contract requirements during site surveillances. In addition, if conditions warrant, the SELLER’s personnel shall be made available for operation of such devices and for verification of their accuracy and condition.

8.1.9. Statistical techniques or sampling inspection procedures used for product acceptance shall be subject to approval by NNI.

8.1.10. If the SELLER develops and/or utilizes computer software to perform the required technical activities addressed by this scope of work, the program(s) shall conform to ASME NQA-1-1994, Subpart 2.7, and the SELLER shall establish and implement Software Quality Assurance Program(s)/plan(s) for the development, supply and maintenance of computer software which is to be applied to the design, analysis, operation and maintenance of the facilities of nuclear power plants.

8.2. QUALITY SYSTEM (THE SELLER AUDITS)

8.2.1. The SELLER shall perform internal audits of the SELLER activates at least annually and of external the SELLER Sub-Suppliers activities at least once every three years to ensure compliance with their Quality Assurance program.

8.2.1.1. When requested by NNI, the SELLER shall provide a copy of the audit reports for each of the audits performed by the SELLER or the SELLER’s appointed auditing agency.

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8.3. QUALITY SYSTEM FLOW DOWN (SUB-CONTRACTING)

8.3.1. All THE SELLER subcontracting for material and services shall be approved in advance by NNI; however, the SELLER and the SELLER suppliers have full responsibility for assuring product quality and maintaining adequate control of their suppliers, the quality programs of said suppliers are also subject to on-site audits and survey by NNI and NNI’s Customer

8.3.1.1. Such audits and surveys will be conducted with the knowledge of the SELLER and the SELLER’s Suppliers.

8.3.2. The SELLER Suppliers of material and services shall have an effective quality system that complies with this specification and the requirements of the purchase order.

8.3.3. The SELLER shall procure all materials from an approved United States domestic supplier only unless approved by NNI. All material shall be produced (i.e. mill melt, heat, heat treated, tested, roll, form, etc.) within the United States in accordance with all requirements, regulations, and law specified within the Terms and Conditions.

8.3.3.1. Utilization of Non-Domestic Suppliers shall be approved NNI.

8.3.4. The SELLER shall attempt to procure basic components (as defined in US 10CFR21) from Appendix B Sub-Suppliers with approved US 10CFR50 Appendix B, ASME NQA-1-1994 QA Programs.

8.3.4.1. If non-Appendix B Sub-Suppliers are utilized for commercial grade products and services that will be procured for use in safety-related applications or procured as services in support of safety related applications, the SELLER will act as the dedicating entity (i.e. Commercial Grade Dedication shall be performed) , and comply with the requirements of 10CFR 21.21(c) and 10CFR 50.55(e).

8.3.4.2. If the SELLER utilizes an NQA-1 Supplier and/or Sub-Supplier procures commercial grade calibration services from accredited calibration laboratories (accredited by US accreditation Bodies recognized by ILAC MRA i.e. A2LA, ISO/IEC 17025:2005, NAVLAP.), the SELLER commercial grade dedication process shall be followed to dedicate the calibration service; except that the performance of commercial grade survey is not required.

8.3.5. All weld filler material shall be procured as ASME Section III material or from an NQA-1 (10CFR50 Appendix B) the SELLER approved supplier invoking production of the weld wire under their NQA-1 Quality Program satisfying all requirements specified in the design and purchase order documents.

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8.3.6. Quality system requirements shall be established and maintained to assure that the SELLER sub-tier suppliers also have effective systems for controlling material including traceability to Objective Quality Evidence (OQE).

8.3.7. The SELLER’s supplier system must assure that OQE is established and controlled in accordance with the requirements of this APPENDIX. Special quality provisions, along with the applicable specifications and/or drawing requirements, shall be included in the purchase order to the SELLER’s sub-tier Suppliers.

8.3.8. The SELLER’s sub tier Suppliers shall pass on all relevant NNI Purchase Order requirements applicable to the product being procured.

8.3.8.1. These requirements include, but are not limited to specifications, drawings, source inspection requirements, CFR’s, United States Federal Acquisition Requirement (FAR) clauses, and other clauses as stated within NNI’s Purchase Order and Contract.

8.3.9. The SELLER suppliers shall ensure that their suppliers are fulfilling the requirements of this APPENDIX and other appendices and/or specifications invoked by the Purchase Order.

8.3.10. Prior to shipping material from the SELLER or the SELLER’s supplier facilities or drop shipped from the SELLER supplier, to NNI or NNI’s Customer, the SELLER shall review all Objective Quality Evidence (OQE) obtained from its suppliers for adequacy and accuracy. Discrepant OQE shall be corrected prior to shipping material from either location. Acceptable OQE shall be forwarded to NNI as required by this APPENDIX and Purchase Order. Copies shall be maintained in an auditable fashion and available for NNI and NNI’s Customer for review.

8.3.11. When a quality management/Inspection system specification is invoked in the body of a NNI Purchase Order, either directly or Industry Specification, the SELLER’s sub tier Suppliers are responsible for implementing and maintaining compliance with the requirements set forth in the invoked quality management/inspection system specification as it applies to the scope of work they perform. The SELLER’s Suppliers are also responsible for assuring that their suppliers implement and maintain compliance with the requirements set forth in the invoked quality system specification as it applies to the scope of work their Suppliers perform.

8.4. QUALITY ASSURANCE RECORDS MANAGEMENT

8.4.1. The SELLER shall assure that sufficient Quality Assurance (QA) records are maintained to furnish evidence of the quality of products and activities within the purchase order. For safety related items, all lifetime records (as defined by ASME Section III, NQA- 1-1994, Section 17 and Appendix 17 A-I or USNRC RG 1.28 Rev. 3 Table 1), which are not provided NNI, shall be

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maintained by the SELLER in accordance with USNRC RG 1.28 requirements.

8.4.2. All records required by the purchasing documents, applicable regulations, codes and standards or generated as a result of the SELLER’s QA Program shall be retained within the SELLER’s file in accordance with the USNRC RG 1.28 for a period of ten (10) years after the Purchase Order or Subcontract requirements for the manufacturer and/or installation have been complied with.

8.4.2.1. At the expiration of this ten (10) year period, NNI or its authorized agent shall be provided the option of receipt and/or the SELLER’s continued retention of the file contents.

8.4.2.2. No quality assurance records shall be destroyed or otherwise disposed of without written permission from NNI.

8.4.2.3. The SELLER shall assure that sufficient QA records are maintained to furnish evidence of the quality of the products and activities within the scope of work.

8.4.2.4. All lifetime records (as defined by USNRC RG 1.28 Table 1), which are not provided to NNI, shall be maintained.

8.4.3. Seller proprietary records

8.4.3.1. QA records which are developed by the SELLER to support the purchase order and contract which are not required to be submitted to NNI (i.e. considered by the SELLER as proprietary), the SELLER shall list the records, identify them as proprietary on the list, and shall responsible for their preservation.

8.4.3.1.1. Such records shall not be destroyed or otherwise disposed of without concurrence by NNI or by providing a copy of such records to NNI without cost.

8.4.3.2. When requested by NNI, the SELLER shall provide NNI with access to the SELLER's proprietary QA records that are applicable to the contract, at an office location that is acceptable to both the NNI and THE SELLER at no cost.

8.4.4. Reference Documentation/OQE

8.4.4.1. In addition to the SELLERs record retention as identified herein, the SELLER shall maintain reference documentation traceable to the products being supplied. This documentation shall contain completed Work Instructions/Shop Travelers and NCR’s (rework) used for fabrication for each product.

8.4.4.1.1. These records do not require acceptance review by NNI (not a required submittal), but are subject to review in the support of the data contained

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within the Documentation Packages including Weld Record Status Sheets, when applicable.

8.4.4.1.2. This documentation shall be readily available to support the review and approval of the specific product documentation package.

9. NONCONFORMANCE’S

9.1. 10CFR PART 21 APPLICABILITY AND REPORTING.

9.1.1. 10CFR Part 21 Applicability and Reporting – The services and products under this APPENDIX are basic components of a Nuclear Regulatory Commission (NRC) licensed facility or activity.

9.1.1.1. The SELLER shall be responsible for immediately reporting to NNI any conditions, that meet the definition of "significant defect", as defined in Part 21 of Title 10 of the United States of America CFR (10 CFR 21). In addition, the SELLER shall notify NNI within 5 days of identifying any deficiency, which is determined to be potentially reportable under 10 CFR 21

9.1.1.2. The SELLER shall be responsible for meeting the posting requirements of 10CFR21 and shall have a procedure in place that addresses their evaluation and reporting responsibilities in satisfaction of this Scope requirement and the requirements of 10CFR21.

9.1.1.3. A copy of any report furnished to the NRC in compliance with the provisions of 10CFR21 concerning the services and products provided under this Scope of Work shall be transmitted to NNI at the same time and in the same manner in which the report is furnished to the NRC.

9.2. 10CFR50.55 (e) APPLICABILITY AND REPORTING

9.2.1. 10CFR50.55 (e) Applicability and Reporting - The provisions of 10CFR50.55 (e) apply to the services and products addressed under this scope of work.

9.2.1.1. The SELLER shall be responsible for meeting the posting requirements of l0CFR50.55 (e) and for immediately reporting to NNI any conditions that meet the definition of a "deviation" or "failure to comply" that are potentially associated with a "substantial safety hazard" as defined in Part 21 of Title 10 of the United States of America Code of Federal Regulations (10CFR21).

9.2.1.2. The SELLER shall have a procedure in place that addresses their evaluation and reporting responsibilities in satisfaction of this specification requirement and the requirements of 10CFR50.55 (e).

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9.3. MATERIAL DISPOSITION

9.3.1. The SELLER shall provide for a means of capturing nonconforming conditions within a report (i.e. NCR).

9.3.2. All NCR’s required for piece part fabrication shall identify which plant and product the product is to be used. Use of piece parts on other products/plants not addressed in the NCR is strictly prohibited.

9.3.3. All NCR’s shall be tracked on through final assmebly, instaltion, and delivery.

9.3.4. If, in the SELLER’s evaluation, nonconforming material cannot be reworked, to conform to purchase order requirements. NNI approved procedures, etc., but is thought to be usable, the SELLER may submit a VIR or NCR for NNI’s approval.

9.3.4.1. The NCR shall include a complete description of the nonconformance, quantity affected, proposed repair (as applicable), technical justification for acceptance, and the overriding benefit to NNI for acceptance of the nonconformance.

9.3.4.2. Cause and corrective action shall also be addressed by the SELLER’s corrective action program, including action taken to prevent recurrence

9.3.5. The SELLER provide controls for the identification and segregation of nonconforming material.

9.3.6. NNI reserves the right to reject any nonconforming materials or services offered by the SELLER or THE SELLER’s Suppliers. When it becomes obvious that rejection of products or materials on this order will occur, either as a result of 100 percent inspection or statistical sampling inspection, inspection may be discontinued. NNI Quality Assurance or NNI’s Engineering will issue a Non-Conforming Condition Report (NCR), Corrective Action Report (CAR), or similar notice of nonconformance.

9.3.6.1. The SELLER shall not only correct the cited discrepancies, but also shall determine the extent of the nonconforming condition by performing additional inspections and tests as may be necessary to preclude further rejections.

9.3.6.2. A NNI representative will inform the Supplier of the nonconformance and shall coordinate resolution of the NCR/CR/etc., with the SELLER and other NNI departments, if necessary.

9.3.7. NNI’s acceptance of nonconforming materials for a specific or prior orders shall not relieve the SELLER of their obligation to furnish all remaining products or material on the order, in strict conformance to all requirements. Any acceptance of a nonconformance will not serve as a waiver of requirements or establish a precedence for performance, regarding

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subsequent deliveries under current or future orders.

9.3.8. The SELLER shall inform NNI during source inspection and prior to shipment of material of any and all nonconforming conditions and provide evidence of NNI’s acceptance (RFI/NCR disposition) of such conditions prior to offering material for delivery.

9.3.9. The SELLER has technical authority to resolve nonconforming conditions only if:

9.3.9.1. The nonconformance does not constitute a design change.

9.3.9.2. The nonconformance does not violate NNI’s Fabrication drawings or Manufacturing Sketches.

9.3.9.3. The nonconformance does not violate specification requirements.

9.3.9.4. Conditions for correction have been provided and previously approved within a NNI approved procedure.

9.3.9.5. The nonconformance does not impact provisioning parts procured as in-service repair parts or parts procured as a construction spare part.

9.3.9.6. Records and disposition of the non-conformance shall be retained and forwarded to NNI for review upon request.

9.3.9.7. Does not violate ASME Code requirements.

9.4. NOTICE OF STOP WORK

9.4.1. NNI reserves the right to issue a NOTICE OF STOP WORK (NSW) where, in the judgment of NNI’s Supplier Quality Representative (s) (SQR), other designated NNI representatives, the SELLER or the SELLER’s sub-suppliers are performing work contrary to the conditions and terms of the procurement documents, approved drawings, procedures or where continued operations could cause damage, preclude further inspection, or render remedial action ineffective for any product form/service provided by the SELLER or the SELLER’s supplier's sub-suppliers. Note: An OSW does not constitute a contract change and no costs shall be incurred by NNI as a result of the NSW or subsequent actions taken thereof.

9.4.1.1. When NNI SQR identifies the above condition, NNI will verbally notify and confirm in writing, to the SELLER the details of their observations. (Note: Verbal communication/notification shall be considered with the same consequence as communication in writing and will require immediate action if recommended by NNI SQR.)

9.4.1.2. If, after this notification the SELLER does not commence appropriate corrective action to mitigate and correct the noted conditions to the satisfaction of NNI, NNI may initiate an OSW

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on the specified product form/services and so notify THE SELLER in writing or email.

9.4.1.3. Upon receipt of an NSW, the SELLER and the SELLER’s sub-tier Suppliers shall cease operations, including shipments, on any specified product form/service to the extent stipulated by the OSW. Resumption of operations shall not be undertaken until the SELLER has obtained a written authorization from NNI. The written authorization to resume further operations shall only be granted upon approval of NNI and the SELLER's written commitment to correct those conditions productized on the OSW.

10. CORRECTIVE ACTION PROGRAM

10.1. The SELLER shall have in place appropriate controls that assure that conditions adverse to quality are reviewed and evaluated to assure an appropriate understanding of their potential significance and to identify the presence of adverse trends.

10.1.1. These controls shall be documented in the SELLER’s implementing procedure(s), including the required interfaces with NNI, and shall be submitted to NNI.

10.2. IDENTIFICATION AND REVIEW FOR SIGNIFICANCE

10.2.1. The SELLER’s implementing procedure(s) for the individual work process controls (e.g., inspections, nonconformance reporting, NDE, audits) shall assure that conditions adverse to quality are identified and appropriately reviewed to determine if the individual conditions should receive further review for significance, including those conditions when it cannot be readily determined by the group identifying the condition.

10.3. ANALYZING FOR ADVERSE TRENDS

10.3.1. Conditions adverse to quality identified through the individual work processes are to be periodically reviewed to identify the presence of adverse trends that represent generic issues, potential QA program deficiencies and vulnerabilities early in the work process before significant problems result.

10.3.2. If this analysis indicates an adverse trend exists, that trend result shall be entered into the SELLER’s Corrective Action System / Program for evaluation and establishment of appropriate corrective actions.

10.4. NNI INTERFACE

10.4.1. Copies of the SELLER’s documentation (e.g., Condition Report) initiated as a result of either: a condition adverse to quality requiring further evaluation for significance, potential adverse condition to quality or the presence of an adverse trend, shall be submitted to NNI within three (3) business days, or as agreed upon.

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10.4.2. Following the SELLER’s closure of these same document(s), the THE SELLER shall submit a copy of the completed document package(s) to NNI.

11. RESPONSIBILITIES FOR COUNTERFEIT OR FRAUDULENT ITEMS

11.1. The SELLER’s process for the evaluation of sub-supplier products to determine if those products are potentially counterfeit or fraudulent is considered to be an activity important for establishing the quality of products that will be supplied to nuclear customers as basic components (i.e., safety related). As such, the requirements of 10CFR50 Appendix B Criterion III, V, VII, X, XI and XV shall be applied to the process for detection of potentially counterfeit or fraudulent products.

11.2. The SELLER’s QA Program shall include measures to prevent the inadvertent use of counterfeit or fraudulent items. These measures shall include inspection and testing processes; such as those used during receipt, in-process, and final inspection, or testing; for identifying suspect (including counterfeit and fraudulent) material, items or components that may not be those ordered. Implementing procedural requirements and guidance shall be established for the detection of potentially counterfeit and fraudulent products during performance of product inspection activities. Inspection and testing processes shall identify and consider items with the following indications as suspect:

11.2.1. Altered manufacturer's name, logo, serial number, manufacturing date.

11.2.2. Items differing in configuration, dimensions. fit, finish, color, or other attributes from that expected.

11.2.3. Markings on items or documentation are missing, unusual, altered, or inconsistent with that expected.

11.2.4. Markings or documentation from country other than that of the sub-supplier.

11.2.5. Items, sold as new, exhibit evidence of prior use

11.2.6. Performance inconsistent with specifications, certification or test data furnished.