CONTACTS 
0201 - Dep Natrl Rscrs & Consvn           406 444 6699 fax 6721
020101 - Ms. Sarah Ann Bond, Esquire
020102 - Department Counsel =406 444 6660; Legal Division

SUBJECTS
Speed Increaser; Housing
Alternative Designs
Gear support bolting
Notice of Defects/Failure
Shaft Misalignment, 900916
Claims by Owner against Tudor
Contract closeouts, Turbine/Generator
Inspection & Approval of the Work
Speed Increaser

1211 -    ..
1212 - Summary/Objective
1213 -
121301 - Sarah talked to Walt this morning and he confirmed her
121302 - understanding mentioned yesterday, ref SDS 4 7392 that there are two
121303 - defect issues in Voith's speed increaser relating to bolting:
121304 -
121305 -    1.  The bolting that supports the inner ring gear from within the
121306 -        housing was installed from the top rather than from the bottom.
121307 -
121308 -    2.  The structural bolting that supports the speed increaser by
121309 -        connecting it to the rest of the system.  Voith's initial
121310 -        bolting scheme was to cantileaver the unit.  Later it provided
121311 -        support from the bottom.
121312 -
121313 - Only issue #1 was discussed in the Jun 25 and 26 meeting.  The other
121314 - matter was "corrected" by Voith some months after the unit ran for
121315 - awhile.
121316 -
121317 -      [On 911027 contract drawings don't show bolt details nor specs.
121318 -      ref SDS 5 0001]
121319 -
121320 -
121321 - DNRC Sep 89 Letter
121322 -
121323 - Norm Barnard asked Tudor, ref DIT 1, why the Engineer was not over-
121324 - seeing modifications Voith was making in the field.  Perphaps Norm's
121325 - letter pertained to the structural bolting matter, but Norm did not
121326 - say what was done, when, and how long it took.
121327 -
121328 -
121329 -       DNRC Objected to Inadequate Engineering Management
121330 -
121331 -       This is a separate issue raised by Norm's letter.  It is not
121332 -       clear why Tudor should not have been involved in the manner
121333 -       requested by DNRC.  It is not clear why DNRC did not demand
121334 -       Tudor perform, or what happened to the matter.  I suspect it is
121335 -       in the documents somewhere.
121336 -
121337 -
121338 -       Full Operation Date
121339 -
121340 -       Norm's letter cites separate 1 - 2 day shutdowns of plant for
121341 -       repairs.  The purpose is to remedy the excessive noise and
121342 -       vibration cited by Kurt Sholz in his memo of Jul 3, 1989.
121343 -
121344 -       Unfortunately Norm's letter does not state what work was done
121345 -       and when it was done or how long it actually took.
121346 -
121347 -
121348 -
121349 - Sarah indicated the meeting notes, ref SDS 2, should reflect the
121350 - distinction between bolt issues.
121351 -
121352 -     I incorporated this matter into the meeting notes, ref SDS 2 line
121353 -     050551 and 090970, so it can be worked in an orderly manner.
121354 -
121355 -
121356 - List of Defects
121357 -
121358 - Also created a new subject to track each defect in the speed
121359 - increaser.
121360 -
121361 - Sarah cited two items which require research:  leaking seam and
121362 - hydraulic bolts.
121363 -
121364 - Further research shows a shaft misalignment problem was noticed to
121365 - Voith on Sep 14, 1990, ref DIT 2.  What is the history on this.  Was
121366 - it designed, fixed and approved?
121367 -
121368 -
121369 -
1214 -

SUBJECTS
Welch DNRC Contract
Assignments, General

1305 - Summary
1306 -
130601 - Discussed best use of Welch time relative to contract management
130602 - support in light of serious nature of the problems arising from the
130603 - speed increaser matter and closing out the contract, as revealed in
130604 - the planning meeting, ref SDS 2.
130605 -
130606 - Sarah proposed that she discuss this with Wayne and Walt next week.  I
130607 - indicated this should not be presented in the vein that I take over
130608 - any part of Walt's duties, but as with Jeff Ghilardi in 88 and 89, I
130609 - supplement what is being done.  Tudor or some engineering firm should
130610 - be doing the engineering management, and I should be helping DNRC
130611 - manage Tudor or whoever else gets that job.
130612 -
130613 -     Sarah explained she has difficulty communicating with Walt on
130614 -     legal implications of formal communications and the need to demand
130615 -     that Voith perform its contract.  She has tried to convey to DNRC
130616 -     management the urgency of demanding Voith perform its contract,
130617 -     but this effort has not been well received.
130618 -
130619 -     I explained that this is the basis for the legal memo I have
130620 -     recommended she prepare, so DNRC mangement can see in stark terms
130621 -     the issues and alternatives on the horizon.
130622 -
130623 -
1307 -
1308 -
1309 - Analysis
1310 -
131001 - To focus on 2 year old claims that amount to $200K at most, apart from
131002 - presumed damages, while perhaps $2M plus is at issue on the speed
131003 - increser problem is distracting.  It may not be the best use of
131004 - resources, unless there is a specific legal deadline to meet.  This
131005 - was the basis for the suggestion to develop a legal strategy memo
131006 - showing what is needed when.
131007 -
131008 -
131009 - Old Claims v. New Large Issues
131010 -
131011 - The old claims have been noticed and the record such as it is remaims
131012 - in tact.  The resolution of same will likely hinge on the outcome of
131013 - the current issues.  That is, if the current problem is managed well,
131014 - the other will tag along as showing a continuous pattern of Voith
131015 - defective work and consequent entitlement for DNRC.  If we have good
131016 - documentation now, the lack of same on the prior matters will be
131017 - overlooked.
131018 -
131019 - Often it takes as much care and expense to evaluate a $5K - $30K claim
131020 - as it does to do a $300K or $3M claim.
131021 -
131022 -
131023 - Management Scope
131024 -
131025 - Right now DNRC has a contractor who is not performing.  The problem
131026 - seems to be getting bigger, but is being managed as a series of
131027 - discreet operational issues, i.e. let's fix this, then fix that.  What
131028 - actually appears to be the case is that Voith installed a speed
131029 - increaser that does not meet the contract requirments, and this was
131030 - caused because it was an unauthorized substitution of a prototype.
131031 - That fact must be faced.
131032 -
131033 - Solution
131034 -
131035 - DNRC needs a comprehensive history of the problem, its current status,
131036 - options, a plan of action and a management structure to implement it.
131037 -
131038 - This was begun with the meeting of Oct 23, 1991, but needs a lot more
131039 - work to get on top of the situation, so DNRC is not simply in a
131040 - reactive mode.  We need to be linking what actually occurs day by day
131041 - with contract commitments and the history of prior performance to show
131042 - patterns of failure to perform, entitlement and liability.
131043 -
131044 -      One example is expert opinions of defects in the original speed
131045 -      increaser.  We need to get these.
131046 -
131047 - The Welch practice is to take information that is received TODAY and
131048 - connect it to its history so, when we take a position, at any time we
131049 - can always go directly and immediately to the support that shows the
131050 - why and wherefore.  This avoids the current situation of some people
131051 - believing some things one day and something else at other times, and
131052 - other people believing other things, such that people are working at
131053 - cross purposes.
131054 -
131055 -
1311 -
1312 -