COVERT PERSONNEL CONTRACT PRACTICE

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP56-00071A000100060013-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: November 11, 2016
• Document Release Date: July 7, 1998
• Sequence Number: 13
• Content Type: REPORT

Approve. For Release IP56-0001000100060013-8
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SUBJECT: Covert Personnel Contract Practice
GENERAL:
1. The procurement of personal services of a covert nature requires
the use of contractual agreements, although in some cases personnel em-
ployment actions may also be necessary. In order to clarify the use of
contracts and reach a common understanding of their application, scope,
and effect, the following explanation and comments are provided for the
information of persons concerned. The approach is necessarily historical,
involving practices that have been followed in the past as well as those
that are in force at the present time. Recommendations of radical changes
are not presented, although improvements in the practice will be a necessary
consequence if a uniform policy is adopted.
2. A contract, of course, is simply a meeting of the minds of two
(or more) people to do - or not to do - certain things. The best proof
of that meeting or understanding is the written word of both parties at
a given moment of time; and except for those rare exceptions where the
preservation of security precludes a record, all agreements should be
reduced to writing. What the agreement covers depends on the nature and
duration'of the services to be provided. However, certain general cate-
gories of covert individuals with whom CIA has covert contractual relation-
ships have been evolved to provide a general raaiework for contractual
principles.
3. The committee has already defined these categories of covert
personnel as "Staff Agent," "Career Agent," "Agent," "Covert Consultant,"
and "Covert Detailed Personnel."
4. From a legal viewpoint, these persons are standing either in
employer-employee relationships or as independent contractors. An in-
dividual in an employee relationship to the Government is normally en-
titled to statutory benefits and rights bestowed by general legislation.
He obtains his rights as an incident to status. On the other hand, an
independent contractor has no status as an employee; he is sii:ply an
independent bargaining entity who receives whatever is agreed for his
services, and what is agreed is stipulated in a formal understanding.
The clandestine operations of this Agency, however, will often require
a person to assume the status, to the outside world, of an independent
contractor even though he is essentially an employee of the Government.
This is so in the case of Staff and Career Agents. We must look then
to the contract for the scope of the rights even though the rights may
be identical to those to which he would normally be entitled as an
employee. In a similar manner and depending on the amount of adminis-
trative control and the relationship of paym&nt to periodic intervals,
a consultant may be in fact either an independent contractor or an
employee. On the other hand, plain Agents arc independent contractors
essentially as well as ostensibly. "Detailed Personnel" are the re-
sponsibility of another agency and unless they fall within one of the
above groups, we normally have no contractual concern. The persons,
then, with whom we are concerned arc those Staff Agents, Career Agents,
Detailed Personnel, Agents, and Consultants whose relationships with
the Agency are either established by a contract or whose normal legal
rights are modified for operational reasons by a supplementary contract.
In other words, when necessary or when warranted, the rights, benefits
and restrictions pertaining to a given individual are established or
are modified by a contract.
5. The person whose intrinsic position is that of an employee
should generally be entitled to the rights and subject to the limita-
tions of an employee, even though he is not an appointed Government
employee in the Civil Service concept.. Presumab'y, there is a con-
tinuity to his status and he is under close administrative control.
By the same token, he is generally restricted to salary grades and
promotions established for permanent appointed epployeu s. As adminis-
trative control is reduced, the person becomes an independent player who
bargains for his rights. The picture is by no rse:ans sharply delineated,
however. Although there is no strict legal limitation on the benefits
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which may be extended to a plain Agent, as a matter of policy it would
appear that the basic residual rights of an employee},such as death and
disability benefits, leave, continuance of pay and allowances when miss-
ing, retirement, etc., should be reserved for the equivalent df an em-
ployee, Aside from this general division betwoeh employees and indepen-
dent contractors, the benefits to be granted one individual may well
vary from those given another. Depending on conditions of residence
and location, for example, it might be inappropriate. to grant certain
benefits to non-citizens although such benefits might well be required
for citizens. ubsequent paragraphs point out the most usual emolu-
ments and the essential criteria for granting them.
SALARY:
6. The primary consideration for scrvicesis usually direct basic
compensation in the form of salary. In the case of Staff and Career
Agents, this is generally equivalent to the salary for a. position estab-
lished under the Classification Act, with the qualification that approp-
riate offsets must be made in the case of Staff Agents and arc normally
made in the case of Career :agents to reflect income received from the
cover activity. Consultants arc limited. to per diem payments in accord-
ance with maximum limitations prescribed by general legislation or A?oncy
regulations. Beyond the dictates of corm-non sense and standard approach,
there is no limitation on the salary which can be extended to a plain
Agent, and such compensation may be either reduced by offsets from cover
income or augmented by profit participation or bonus. bdith the exception
of Consultants, each category here may be untitled to additional salary
incentives in the form of Foreign Post Differential for the period of
overseas service.
ALLQ ANCES:
7. When overseas service is contemplated, the individual may receive
relief from the added cost of existence through "living-quarters," "cott
of living" and the, as yet unapproved, "equaliz4tion" allowances. These
allowances are based on continuous studies by the Department of State
of the cost of maintaining living-quarters in foreign locations and the
estimated cost of living at a foreign post as compared with Washington,
D. C. Normally, these allowances will be granted only to personnel who
are U. b. citizens or alien residents of the U. S. who are required at
CIA direction to live in a foreign country. In general, such allowances
should be granted only to persons under "full" CIA control, meaning that
CIA is their dominant employer and has specified the place and area of
assignment as well as the duties to be performed. While certain indivi-
duals may be under "full" CIA control within the sense of this definition,
the sensitivity and insulation of their cover activity and difficulties
of communication may require distinctions in the forms these allowances
may take. Adherence to the Standardized Allowance Regulations is a re-
quirement for staff employees under Government cover and general conform-
ity is also a requirement for Staff Agents. adhere comparable allowances
are warranted for Agents, the amount of such allowances should be dictated
by the requirements of the situation but must nGt do violence to the basic
principles of Government allowances policies. t=x?ocedural compliance with
Government allowances regulations should generally be required of all
"installations" or "individuals" who have good communications with head-
quarters and who have field access to the necessary forms and regulations,
and administrative assistance. then there is a substantial security hazard,
in meeting such requirements, where cor;munications are poor, and whore forms,
regulations, and local administrative assistance are not available, these
requirements can be relaxed to sonic extent by authorizing maximum allow-
ance rates with the minimum procedural requirements necessary to establish
the period of eligibility. As a third alternative, a flat stun in an amount
founded upon some reasonable base may be determined by negotiation with
the individual. This may be required by the peculiar bargaining strength
of an individual for the particular requirements unposed by the cover
activity. This last alternative is the least desirable in that it does
not reflect changes in circumstances or status which may :result from the
transfer of the Agent or the rise and fall in the cost of living.
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OPERATIONAL E P.&NSES :
84 In addition to the allowances indicated above, funds can be
provided to meet the operational;, needs of entertainment, purchase of
information, etc. , Whenever pgssibley these should be subject to strict
accounting, but here again the preservation of security may open the
door. iahere cormnuna.cations arp extremely hazardous and detailed account-
ings cannot be submitted., provision can be made for the occasional sub-
missicn of a general accounting or even the grant of a flat sum for a
specified periodh
TRAVEL;
9. Travel expense is an item which is applicable to all the cate-
gories of personnel under consideration. Accounting in accordance with
CIA regulations is required in every situation e=xcept those where conununi-
cations are extremely hazardous, if not impossible. Exceptions must be
justified by a clear demonstration of the need in each particular case, and
the most approximate standard Government accounting requirements should be
sought. In cases where the difficulties of accounting are most extreme,
provision can be made for the payment of a flat sum based upon sound es-
timates of the cost of travel.
YJSCELLAdEOUS PROVISIONS:
10. All of the foregoing are tangible emoluments with a specific
monetary significance. There are, however, other contingent and con-
sequential benefits which appear either as concomitants of status or
specific grants of an agreement. As a Staff oe Career Agent, and there-
fore actually as an employee, the individual or his survivors, will be
entitled to oath and disability benefits, sick, annual, or home leave,
establishment of a retirement reserve, the continuance of pay and allow-
ances under the iviissing Persons Act, access to certain private overseas
Government employees' Insurance Plans, and rehabilitation assistance.
There is no strict legal limitation on the grant of some of those bene-
fits to the independently contracting agent, but indiscriminate largess
to such people could well destroy the incentives of a staff status. A
general policy to be followed is that the extent and complexity of Agency
contractual commitments should be in direct ratio to the degree of control
exercised over the agent, the anticipated permanency of the relationship,
the trustworthiness of the individual and the risks and hardships involved.
11. ode have described the rights and benefits bestowed on the in-
dividual. There are as well certain terms and restrictions placed on his
services which affect h4s obligations. He is, of course, subject to
rigid security conditions and is controlled at all times by briefing in-
structions which are incorporated by reference in his agreement. Although
his agreement provides for a definite tenure of service which may be
renewed, depending on the availability of appropriations, it may at any
time be terminated in the sole discretion of the Government, with or
without advance notice. In the event of voluntary termination by the
individual, or termination for cause by CIA, the individual may be re-
quired to forfeit return travel expenses to the United States and possibly
even incur a debt to the Government for the expenses of travel to the post
of duty overseas from the United States.
12. Insofar as the contract itself goes, the format and precise
pharsing is the responsibility of the legal staff and is being provided
at thu present time through the Coordinating and Contracting Unit.
Behind the face of the formal document, however, there must be a clear
marshalling of the facts to reflect the intentions of the Agency and
the individual. This can be best provided by a written memorandum which
will assure clear understanding. Por that purpose, it is suggested that
all pertinent data provided by the Foreign Division for review and
approval of the Planning Staff be forwarded to the: CCU with the request
for drafting of the agreement. It is assumed that the facts contained
in this agreement will reflect the selection of the best available per-
son for the job in mind and will provide a preconceived plan for pre-
servation of security and use of appropriate ccver. On the basis of this
"memorandum", an agree=ment can b ; prepared which will not only formalize
an understanding, but will also furnish a lucid and unequivocal instru-
ment for payment of funds and personnel administration.
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We suggest this data can be best sulrnarized by a "check list" in the
foria -attached.
13. To review the evolution of the contract, it commences with
preliminary negotiations between a case officer and a prospect. After
the suitable person is found, the check list is submitted to the Covert
Office sponsor and should be hand delivered and discussed with a member
of the . CCU, irho will collaborate in the preparation of the formal con-
tract. The; contract will be returned to the case Officer who is re-
sponsible for securing necessary approvals of his office and for securing
the acceptance of the principal. The contract is than finally executed
by the Contracting or Personnel Officer, and at this point, the contract
is an executed document and becomes effective in accordance with its
terms. The, original is submitted to CFD and a single copy is returned
to the Case Officer for the operations files.
14. The conditions under which the contract was first effected may
alter as time goes on. If this occurs, the agreement must be formally
revised and the cycle doscribd above should be repeated. However, the
detailed information required in the first chuck list should no longer bo
necessary. A i :er:iurandur i stating the nature and scope of the change do-
sired, together with the need and justification should suffice, prcvidud
that approval of the Covert Office sponsor is again obtained as in the
case of the basic agreei.ient.
15. This su iiaary is unfortunately soi.iowhat general. While certain
aspects will fall into recognized patterns, each contract :rust be tailored
to fit the facts. For that reason in particular, the CCU earnestly re-
quests verbal discussion, in addition to the- check list,
16. In passing, we should like to point out that the processing of
Covert Consultants has caused a good deal of confusion. Normally, it
would appear that they should be handled by established personnel actions,
and a contract should be justified only in those situations i,,*hore the
individual rust be denied access to CIA premises and property, or where
the security requirements of a particular project impose a condition of
extreme internal security.
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