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SF S~pA.i Head Office:

Via E. Berlinguer, 18 - 20872 Cornate d'Adda, MB . Italy. Ph. +39 039 6825201 - Fax +39 039 68252855I Pipes Factories:

Via Gandhi, 17/19 - 20010 Vittuone, MI - Italy. Ph. +39 02 9025131 - Fax +39 02 902513401 Fittings Factories

Via Bonina Est, 20. 29010 San Nicolb, PC . Italy . Ph. +39 0523 76641 • Fax +39 0523 766451

To: U.S. Nuclear Regulatory CommissionWashington, DC 20555-0001

Attn: Document Control Desk

c.c.: Chief, Mechanical Vendor BranchDivision of Construction Inspection and OperationalProgramsOffice of New Reactors

Subject: Reply to a Notice of NonconformanceYour ref.: NRC letter dated July 31, 2013NRC Inspection Report No. 9990142812013-201 and Notice of Nonconformance

Nonconformance No. 99901428t2013-201-02

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Q IEFms.pA.Head Office:

FVa BedlngUeL, 18- 20872 Conaw d'Adda, MB Italy - Ph. +390396825201 -Fax +3903968252855

Via Gandht 17/19- 20010Vlttuoe.s MI- Italy-. Ph. +3902 9025131 -Fax +390290251340Fittings Factories:

thapml ua-l g~tCt Via Borlna Est 20.29010San Nkolk, PC- Italy, Ph. +39052376641. Fax +390523766451

IBF ref.: QA1400004-NUC

1) Background

1.1 The U.S. Nuclear Regulatory Commission (NRC) staff conducted an inspection at the IBFS.p.A. facility (hereafter referred to as IBF) in San Nicolo, Italy, from June 17 to June 21, 2013.The purpose of this limited scope inspection was to assess IBF's compliance with the provisions ofTitle 10 of the Code of Federal Regulations 10 CFR Part 21, "Reporting of Defects andNoncompliance," and selected portions of Appendix B, "Quality Assurance Criteria for NuclearPower Plants and Fuel Reprocessing Plants," to 10 CFR Part 50, "Domestic Licensing ofProduction and Utilization Facilities."This inspection evaluated the implementation of IBF's quality assurance (QA) program with a focuson fabrication of reactor coolant piping for the API000 reactors and for other operating reactorplants.Based on the results of this inspection, the inspectors found that the implementation of IBF QAprogram failed to meet certain NRC requirements in the areas of procurement document control andcontrol of purchased material, equipment and services.Two NON N' 99901428/2013-201-01 and N' 99901428/2013-201-02 were issued by NRC.

1.2 After NRC inspection, IBF developed and implemented:- an Appendix 01 to its QSM Ed. 01 Rev. 03 clearly specifying in detail all requirements additionalto ASME NCA 3800 needed to be in compliance with 1OCFR50 Appendix B.Appendix 01 sect. 2.2.3(c) and 2.2.3(d) state that ASME NCA 3820(a) and 3855.3(c) are notapplicable under IOCFR50 Appendix B.Appendix 01 sect. 2.2.4 manages Procurement of Basic Component.- a specific procedure to cover Commercial Grade Dedication Process (PGQ-N95)- twelve Dedication Plans Standards covering all IBF Procurement affecting Quality (PGQ-N95).

1.3 NRC reviewed IBF implementations:- NRC conclusion is that IBF implementations are responsive to the NON 99901428/2013-

201-01 and N' 99901428/2013-201-02;- NRC asked IBF a review to determine if the detected failure to meet I OCRF50 Appendix B

requirements exist also for other activities, projects, programs, or components that were notaddressed in NRC inspection report.

1.4 Scope of this letter is to answer NRC review request about all Vendors and Procurement Ordersunder I OCFR50 Appendix B provision.

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2) Action Plan

IBF Quality System Manual (QSM) and Quality Procedures (PGQ-N) were originally written tospecifically support ASME Section III NCA-3800 code implementation activities and they includeall specific controls that implement the quality program requirements to meet ASME provisions.Before NRC inspection, IBF Program did not allow Procurement of Basic Component and managedProcurement of Commercial Grade only, in a way wrongly assumed to be in accordance withCommercial Grade Dedication requirements.

Required Action Plan is an historical overview on Vendors' Qualifications and Procurement Ordersfocused on three issues detected during NRC Inspection and corrected by IBF implementations:

a) IBF Quality System Manual (QSM) Section 11, "Control of Purchased Material Equipment andServices" and IBF Procedure PGQ-N25, "Qualification of Suppliers," allow IBF to procure materialand services based on American Society of Mechanical Engineers certification without verifyingimplementation of their quality assurance program through audit or other actions, as described inNRC Information Notice 86-21 and supplements 1 & 2.Action: IBF to audit all Vendors qualified by accepting ASME certification without verifyingimplementation of their quality assurance program.Audit reference standards: IOCFR21 and PS required in IBF PGQ-N95 "Commercial GradeDedication Process Procedure" as a minimum.

b) IBF QSM Section 11 adopts the provisions of Subsection NCA 3855.3(c) of Section III of theASME Boiler and Pressure Vessel Code that allows for the acceptance of commercial calibrationservices for use in safety-related applications without performing commercial-grade dedication,including the use of additional accrediting bodies not approved by the NRC and the use ofcalibration laboratories outside of the United States.Action: IBF to audit all Vendors qualified under provisions of Subsection NCA 3855.3(c) ofSection III of the ASME Boiler and Pressure Vessel Code.Audit reference standards: 10CFR2I and PS required in IBF PGQ-N95 "Commercial GradeDedication Process Procedure" as a minimum.

c) IBF procured commercial services without conducting appropriate oversight and commercial-grade dedication for these commercially procured services.

IBF Quality Assurance Program was written to respect ASME Section III NCA-3800 code and allspecific controls / activities that implement the quality program requirements to meet ASMErequirements were performed.A specific Procedure for Commercial Grade Dedication under provision of I OCFR50 appendix Bwas missing: therefore IBF issued PGQ-N95 "Commercial Grade Dedication Process Procedure"and QSM Ed. 01 Rev. 03 Appendix 01.

Related to Commercial Grade Dedication, these PGQ-N95 "Commercial Grade Dedication ProcessProcedure" and QSM Ed. 01 Rev. 03 Appendix 01 only formalize all controls / activities that werealready fully performed.

Page 3/5

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NRC stated that these changes are responsive to the NON documented in 99901428/2013-201-01and N' 99901428/2013-201-02.

As a general statement, IBF has therefore the reasonable assurance that all procured commercialgrade items / services respect I OCFR50 Appendix B Commercial Grade Dedication provisions.

Additionally, as per NRC's ML13255AI2 "IBF S p A Response to Nuclear RegulatoryCommission Inspection Report 99901428-2013-201 and Notice of Nonconformance" datedSeptember, 17 2013, specific actions to verify implementation of IBF quality assurance programwere adopted.

Action: IBF to specifically verify that all Vendors in Approved Vendor List and all issuedProcurement Orders are in accordance with PGQ-N95 "Commercial Grade Dedication ProcessProcedure" and QSM Ed. 01 Rev. 03 Appendix 01 provisions.

In detail:c-1) to verify that all Vendors are satisfactory audited versus IOCFR21 and PurchaseSpecification (PS) required in IBF PGQ-N95 "Commercial Grade Dedication ProcessProcedure" as a minimum.c-2) to verify that all Procurement Orders address 1 OCFR21 and PGQ-N95 "Commercial GradeDedication Process Procedure" provisions, as a minimum.c-3) to verify that all critical characteristics are checked and found acceptable, as per PGQ-N95Appendix A "Dedication Plans".

3) Action Results

3.1 "Approved Vendor Verification" file states results about review of all Vendors' Qualificationsunder I OCFR50 Appendix B provision.

All active Vendors were audited after NRC inspections or are going to be audited.- 15 active Vendors were audited;- 5 active Vendors are going to be audited.

For all active Vendors, former audits reports and former available quality program documentationwere reviewed.

No IOCFR21 reportable condition occurred: all audited Vendors satisfy 1OCFR21 and PGQ-N-95provisions.

Inactive vendors were evaluated reviewing former audits reports and/or former available qualityprogram documentation.

- 3 inactive Vendors were evaluated by former audits reports and former available qualityprogram documentation;

- 3 inactive Vendors were evaluated by former available quality program documentation only.

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Considering results of former audits and/or former available quality program documentation review,considering limited extent of items / services supplied, considering results of critical characteristicscontrols and further additional controls performed in IBF, IBF has the reasonable assurance that no1 OCFR21 reportable condition occurred.

This evaluation positively close action a), b) and c-I).

3.2 "Procurement Order Verification" file states results about review of all Procurement Ordersunder 1 OCFR50 Appendix B provision.

341 Procurement Orders were evaluated.

3.2.1 All Procurement Orders address 10CFR21 and PGQ-N95 "Commercial Grade DedicationProcess" applicable procedure.

I OCFR21 provisions are always satisfied:- invoking 1 0CFR21 explicitly in Procurement Order;- or invoking other Quality Documents that explicitly invoke IOCFR21- or invoking other Quality Documents that invoke a Non Conformance management system

in accordance with 1 OCFR21.

PGQ-N95 "Commercial Grade Dedication Process" provisions are always satisfied:- invoking related PS explicitly in Procurement Order;- or invoking other Quality Documents that explicitly invoke related PS- or invoking other Quality Documents that invoke Quality requirements in accordance with

related PS.

No 1 0CFR21 reportable condition occurred. This evaluation positively close action c-2).

3.2.2 For all Procurement Order, critical characteristics are checked and found acceptable.

Critical characteristics are checked and found acceptable under provision of Standards DedicationPlans (PGQ-N95 Appendix A) or by specific dedication plan applicable to specific ProcurementOrders only.

No 1 OCFR21 reportable condition occurred. This evaluation positively close action c-3).

4) ConclusionsIBF evaluated all Vendors Audits / Quality Program Documents and all Procurement Orders under1 OCRF50 appendix B provisions.

No I OCFR21 reportable condition occurred.

Enclosures:Encl.01 - "Procurement Order Verification"; Encl.02 - "Approved Vendor Verification"

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Pagina I di I

Claudio Scuratti

Da: GianCarlo Sprenger [g.sprenger@ibfgroup.it]

Inviato: lunedi 17 febbraio 2014 10:59

A: 'Claudio Scuratti'

Oggetto: I:: IBF S.p.A. RESPONSE TO NUCLEAR REGULATORY COMMISSION INSPECTIONREPORT 99901428/2013-201 AND NOTICE OF NONCOMFORMANCE

Allegati: QA1400004-NUC.pdf; Approved Vendors Verification Enclosure 02.pdf; Procurement OrderVerification Enclosure 01.pdf; ML13255A121 - IBF S p A Response to Nuclear RegulatoryCommission Inspection Report 99901428-2013-201 and Notice of Nonconformance pdf

Da: GianCarlo Sprenger [mailto:g.sprenger@ibfgroup.it]Inviato: domenica 16 febbraio 2014 20:46A: 'McIntyre, Richard'Cc: 'Crane, Samantha'; 'Roach, Edward'; 'c.scuratti@ibfgroup.com'Oggetto: R: : IBF S.p.A. RESPONSE TO NUCLEAR REGULATORY COMMISSION INSPECTION REPORT99901428/2013-201 AND NOTICE OF NONCOMFORMANCE

Dear all

In attached NRC letter ML13255A121 dated September, 17 2013 and IBF response QA1400004-NUC withtwo related Enclosures.

1. Conclusions of QA-1400004-NUC are valid so far, as some residual activities have not yet beencompleted - refer to QA1400004-NUC for details.

2. PGQ, PS and QSM cited in QA-1400004-NUC were already sent to NRC. If needed, they may be re-mailed.

3. All objective evidences of activities reported in QA-1400004-NUC are at your disposition and they willbe sent to you at your request.

A paper copy of QA-1400004-NUC and Enclosures is being DHLed to NRC Document control desk, cc:Mechanical Vendor Branch.

Best regards

G. Sprenger

QA / QC Director

17/02/2014