Review of a contractor's tool program for WBN Unit 2 construction project

We reviewed a contractor's tool program for the Watts Bar Nuclear plant (WBN) Unit 2 construction project. Our objective was to assess the procedures and key control activities used to track and account for tools used in the Watts Bar Nuclear (WBN) Unit 2 construction project. Our review of the WBN Unit 2 tool program determined the contractor's inventory controls were not functioning as intended. Currently, there are significant weaknesses related to tools inventory, checked-out tools, and tools received but not entered into the system processes. Specifically, for the items sampled and reviewed from the contractor's tool inventory system, we could not locate 55 percent of the tools valued at $210,352. In addition, no controls existed to ensure (1) the tools taken from the tool room after hours were properly checked out and (2) random inventories were performed as required by the contractor's procedure. We also identified individuals with tools checked out in their name who (1) had 100 or more tools checked out, (2) had been terminated, or (3) could not locate the tools. Further, we determined 10,948 items totaling $328,137 were paid for but were not received into the contractor's inventory system and we also identified inaccurate information in the inventory system due to keying errors. In addition, we found many issues described above had been cited in previous audit work. We made recommendations to contractor management and TVA. TVA management agreed with most of our recommendations and plans to (1) conduct an inventory count of the tool room and sea land containers, (2) conduct routine cycle counts of large dollar items, (3) implement an exception report to identify inventory with negative quantities or costs in the tool inventory system, (4) properly account for tools removed from the tool room after hours, (5) timely update the tool inventory system for any items issued on paper, damaged, lost, or written off, (6) utilize the tool inventory system's capabilities to identify low inventory items for reorder, (7) perform a periodic review of the Tools Out reports, especially for those individuals with 100 or more tools checked out for large dollar tools, (8) transition the responsibility for managing Measuring & Testing Equipment (M&TE) to Watts Bar Unit 1 personnel and use the Watts Bar Unit 1 program for tracking, (9) create a tool room within the Radiologically Controlled Area (RCA) to track and issue tools, (10) monitor the Tool Crib Clearance process by creating an exception report for identifying all individuals who have been terminated but still have tools checked out in their name, (11) communicate and enforce the use of a lost tool form and update the tool inventory system for damaged, lost, or stolen items timely for large dollar items, and (12) implement a process to ensure all tools on all purchase orders (PO) are processed and received in both the warehouse and the tool inventory system, except consumables. TVA management did not agree with our recommendations to (1) create a formal review process by a second person to verify data entered in the tool inventory system or (2) properly account for all tools from historical POs. In addtion, TVA management did not agree with our recommendation to hold (1) TVA employees and contractors signing out tools accountable for tool loss/theft and/or (2) supervisors with approval authority accountable when the tools were not returned. According to WBN Unit 2 management, the Project Maintenance and Modifications Agreement does not allow employees to be charged for tools used while performing their respective duties. TVA management did not address our recommendation to review the inventories performed by the contractor and any corresponding write-offs. Summary Only