J r 'I -c STATES EN y COMMISSION UI ATOMIC WASHINGTON D C kJ IL FEB1 1 2 0545 I t tt •· Dear Chet I am writing in response to your letter of February 2 concerning your specific questions with respect to the determination of losses of materials at NUMECand also with respect to your observations on the relationship between safeguards and the problem of preventing the proliferation of nuclear weapons You may recall that in my letter of January 25 1966 in response to Mr Conway's letter of December 3 1965 we outlined the health and safety and materials accountability surveys performed of licensees and of fixed price contractors wno are also licensees In the context of that response I would like to answer your specific questions 1 What specific actions has the AEC taken since discovery of the NUMECloss to determine if similar situations exist at other licensed processing conversion and fabrication facilities Answer Process the AEC by other during tne past quic v resolved nuclear iliaterial normal operational losses and r a erials unaccounted for as reported to plants and res·cJ ting from accountability surveys made year have not raised questions which could not be to the AEC's satisfaction Our personnel conducting surveys have satisfied themselves that the reported limits losses were within acceptable nat is the basis of the statement in Mr Hollingsworth's letter no evidence has been developed tha t would suggest that the NUMEC losses occurred under circumstances that would indicate possible di version 2 that Answer The nuclear materials survey performed in November at NUMEC was s i 2cifically designed to ascertain the nature of the losses and the disposition of the materials This survey went far beyond that which is normally performed at contractor-licensee plants in that the physical inventory tests were more extensive That survey revealed no evidence which would lead us to believe or suspect that the material had been diverted I - ' t ··· - r r - -1 - ____aS Cll_ETARI U -________ Si ti' _ _- 326 c- ' r 1 A· - - J__ r _----------------- ·-er ·- '-- · ' · i· _____ -• ' i - -· rt l-· __ __ ----- - · -- t -- Honorable Chet Holifield - 2 - 3 H s tte AEC determined whether an inquiry by the of Inspection or the Federal Bureau of Investigation AEC's Division is warranted Answer In the absence of evidence or suspicion of violation of law we have determined that an inquiry by the FBI is not now warranted Our Division of Inspection is presently reviewing the survey report and a determination has not been made as to the need for further insuiry by that Division 4 What specific action has the AEC taken or does the AEC plan to take to improve the AEC's regulations requirements and procedures to help assure that losses such as those described above do not go undetected for long periods of time Answer 1he General 1anager and the Director of Regulation have underway a n wber 0£ studies jointly and cooperatively undertaken to ascertain the possible need for additional control by regulation or by direction 7hese studies are being pursued diligently with a view toward completion at the earliest possible time As soon as the Commission has completed its review we shall advise the Committee of any actions we intend to take - e have endeavored above to provide succinct answers to your specific questions We believe it is important however in order that there be no isunderstanding that these responses be considered in the context of the overall situation which may be summarized as follows 7he 61 kgs of L'-235 that cannot be accounted for represent cumulative losses charged to the WAJ '-iL contract It is not now possible to establish a point in ti e or even a definable period when the losses may have occurred or whether in fact the WAJ 11 material was used knowingly or inadvertently to offset losses on other contracts Further because the C EC records system was not set up to provide such data it is not possible to identify all losses with particular contracts Therefore it cannot be said unequivocally that theft or diversion has not taken place During however the recent extensive survey at NUMECthe principal possible loss mechanisms were examined in detail Based on that examination as well as an association with the NUMECoperation and pay over an eight year period during which period NUMECdid report for losses the most probable explanation is that NUMECconsistently underestimated its plant process losses and that the difference between actual and estimated losses was passed on from completed jobs to new jobs Thus the losses attributable to the WANLcontract probably include an accumulation of deferred losses over an eight year period There is evidence to support the Xu1' ECcarried values of material above theory The book inventory in residues and on filters higher at than r llonor blo Chet Holifield tho - ic 1 rc ulte d reflected - 3 - f -o i phys iccl n lyses For example NUMEC in its invc tory ecti stes of epproximately 31 gm of U-23S per filter G ' l S cctro ctry of over 700 such filters verified by chc icul r c lycic cf zQ plcs supported only an average of about 12 r ra pc filte r KJ cc ectimctcd that in e cess of 50 kg of U-235 w co i aincd in coi t r in teJ cquip i nt s nd various combustible wastas which hc d be cn cliccc C cd to buriel 'otmds When AEC directed that 6 the buri l pi tc be c '1u 1cd N Ui Cir cineratcd and analyzed represent • tivc s lcs - den its 0-h Il conclud J thet only about 5 to 6 kg would be r covcr J fro the itc Indc encle t analysis by AEC confirmed this lo - c tir - c t cld tio c lly tho consictcotly high rate of return on sc rC cc· c y cor- t -c tc cc ntribute s to the theory that NUMECdid not t c t'i e full 0 · cnt o lcsi c l S they occurrt d and co ipounded tham th oush cuc cs ive co tr cts Lcco dinsly it appears that the losses fer l ich Kj c i c no' l p yin u - · • r tc fir ncial responsibility re• o L d - cattention by NU1'U Cto c i c ily tl e rc ult ser e - lly - co _ r izcd 1· cri ls c · at r - hods It must also ba pointc i o t · u 2c i -- r t ins phy ic2 l security controls over enr chcd 'G-235 r o i- -0 c 1c Co ssicn is currently considering - ettc · c - y be -st2 c could end s · ould be taken which would add a r te i r 11 y hi · - c c 2 · C of cor fi ence to the judgments that may now be C - Jnfro v iL ' Jle in fo ·r t on t c · oc lc b n0 cl tL i cor cctio i with the most recent survey u o' 3- - cc - i - ic - c - e -co I UI·ZC ma '1 agem ent all of which s r £ tc d r S r st c 2 - i ch h v2 c lready been iin lemented - Ce - it tc o tr e Co zission's very deep cone prol £cr tion of nuclear weapons capability and th t ou safezu rds for nuclear materials are Cordially fSigned Glenn T Seaborg Chairman E no jle Chet Holifield c ir Joint Cc itte on Ato ic Co c s of the Unit d States Cong ECLro· n d 2 13 6 Rel Energy AGH DGM Distribution 8Pisirman 2bcc Cong Rel bee AGMA bee Regulation bee NMM 5ggf GM