CENTRAL INTELLIGENCE AGENCY ACT AMENDMENTS OF 1963 EXPLANATION AND JUSTIFICATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03721A000200010049-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 10
• Document Creation Date: December 12, 2016
• Document Release Date: February 20, 2002
• Sequence Number: 49
• Content Type: OUTLINE

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CEN!1 AL INTELLIGENCE AGENCY ACT AMEtH iTS OF 1963
EXPLANATION AND JUSTIFICATION
PART A. PURPOSE OF PROPOSED BILL
1. Improved Retirement System
The proposed bill permits the Agency to improve its retirement
program by authorizing the establishment of a retirement system corre-
sponding to that of the Foreign Service. The Central Intelligence
Agency needs-to attract and retain a force of highly motivated career-
ists who are intensively trained in unique skills. However, the Agency
is unable in fact to provide full-term careers for many individual
officers. In order to minimize the adverse effects of necessary pro-
grams of managed attrition and to preserve its ability to recruit and
retain the high-caliber personnel it needs, the Agency must make
reasonable provision for the futures of those individuals who must be
separated before completing a full-term career of thirty or so years.
Therefore, the proposed bill adds a new Title II to the Central Intel-
ligence Agency Act of 1949, as amended, which establishes for a Limited
number of Agency employees a retirement and disability system correspond-
ing to that established for persons serving in the Foreign Service of
the Department of State.
Section 4 of the Central Intelligence Agency Act was originally
drafted to extend to Agency employees serving abroad travel expenses and
overseas allowances similar to those extended to Foreign Service person-
nel. Section 2 of the proposed bill makes appropriate modifications in
Section 4 of the Central Intelligence Agency Act to bring it up to date
in this regard. Also included are certain other amendments which have
been determined to be necessary.
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1. Need for a Separate Retirement System for Certain Employees
a. Summary
All regular employees of the Central Intelligence Agency ,are at
present covered by the provisions of the Civil Service Retirement Act.
Such coverage is appropriate for those whose conditions, obligations,
and terms of service are comparable to those of federal employees gener-
ally. However, the Agency has a serious problem in its need to make
more adequate provision for certain of its employees who should be
retired at an earlier age and with a more equitable annuity than can be
provided under the Civil Service Retirement Act. This need stems from
the fact that the Agency cannot provide to or expect from many indi-
viduals in its service a full-term working career of thirty or so years.
b. Background
(1) The nature of the Agency's mission requires people who are
highly motivated and who develop unique and specialized abilities
through their continuing training and service over the years. A sub-
stantial proportion of Agency personnel accept, as do members of the
military service, the obligation to serve anywhere in the world at the
Agency's irection--not at their own will--and to be available for duty
on a 21+-hour-a-day basis. Further., the stresses and strains of uneven
and uncertain hours of work, of duty in unhealthful locations, and of
arduous assignments require people who have a high degree of vigor,
vitality, endurance, resilience, and adaptability.
(2) There are other factors pertaining to the individuals them-
selves which, over the years, limit their ability and desire to continue
in overseas service.
(a) Our experience has shown that many officers or members
of their families will in time incur physical impediments which limit or
preclude their further assignment overseas. The extreme climates and
inferior medical facilities of many foreign areas make living abroad
less healthful than in the United States. Also,. Americana, because of
the advances of sanitation and public health in this country, have
failed to develop the natural immunities which most foreigners develop.
Consequently, Americans are more susceptible than local inhabitants to
the diseases of an area.
(b) The wear and tear of repeated illness saps an indi-
vidual's strength and resilience and affects his longevity. Moreover,
ills which an employee encounters in one place often attach themselves
permanently as chronic and sometimes disabling conditions. This con-
tributes to the need for the earlier retirement provisions now pro-
posed.
(c) In some areas of the world, death and capture hang as
a threat over Agency employees. Some have died or have been killed as
a result of an official assignment; others have been arrested and impris-
oned for periods ranging from a few days to many years. Employees sent
to hazardous areas receive special instructions and training on avoiding
capture and, of course, the same people are not kept too long in such
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(d) Finally, there is "motivational exhaustion." This
term is used to describe a gradual lessening of interest and enthusiasm
of an officer as a result of impingements on his personal and family
life. These stem from the transient nature of his assignments, the
complications and restrictions of security requirements, and intrusions
on his family life.
(3) The dynamic nature of intelligence work produces sudden
and sometimes radical shifts in the types of personnel required and in
their deployment. For example, the Agency's responsibility for covert
cold war functions requires that much of its effort be directed to
troubled areas, wherever they may be. Civil troubles often bring about
a retrenchment of activity on the part of other U.S. Government agencies,
but a reorientation and intensification of that of the Agency. Comple-
tion of a mission of a temporary nature or a shift in emphasis or direc-
tion of operations may result in an excess of officers who are skilled
in a relatively narrow field. Their primary qualifications thus become
obsolete or unneeded and they become "occupationally surplus."
c. Man ower Control
(1) The Agency finds it increasingly necessary to impose man-
power controls to ensure appropriate alignment as to age, qualifications,
and other characteristics of its employees engaged in conducting or sup-
porting foreign intelligence operations. Insofar as possible, imbalances
should be and are corrected by the reassignment of officers who cannot,
or should not, continue in such work to other fields of work in the
Agency. However, encouraged and induced attrition will continue to be
necessary and a program of managed attrition is feasible only if it is
linked to a system of retirement benefits providing fair annuities to
those who have earned early retirement.
(2) The proposed bill would provide these individuals with a
more equitable annuity, beginning immediately upon their separation.
This would place them in a better position to accept less demanding and
probably lower-paid employment. It is often difficult for an Agency
employee to obtain other employment. The special skills required for
intelligence work, developed over the years by training and experience
within the Agency, are not directly applicable to other fields. This
situation is aggravated by security considerations which do not allow
an Agency employee to describe to a prospective employer the substance
of his Agency duties and responsibilities. There is also a reluctance
on the part of other employers, both Governmental and private, who are
engaged in business overseas to hire a former intelligence officer.
This attitude reflects their concern that the attitude of foreign offi-
cials toward their enterprises might be adversely affected if they were
known to employ former intelligence officers.
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(3) During the past year, the Agency has separated some 125
individuals as surplus to its needs because of the several factors
described above. These people had given years of competent and faith-
ful service to the Agency and to the.Government. The process of ter-
minating their employment was made the more painful because of the
relatively inadequate assistance which the Agency could offer them in
making occupational transfers or in retiring prematurely.
2. Proposed Retirement System
a. In order to minimize the adverse effects of such programs on the
Agency's ability to recruit and retain the caliber of personnel needed,
and particularly to minimize their effects on the dedicated personnel
already in the service of the Agency, better provision must be made for
the futures of those individuals who are separated before completing a
full-term career. An important means for doing so is to establish a
retirement system permitting earlier retirement with a more nearly ade-
quate and equitable annuity than is possible under the Civil Service
retirement system.
b. Careful study has been devoted to this matter. Recognizing the
difficulties in developing an entirely new retirement system, the Agency
examined existing systems. We have determined that the Foreign Service
system fulfills Agency requirements and is appropriate for those Agency
employees whose careers involve conditions of service comparable to
those of the Foreign Service personnel. Further, by adopting a system
corresponding to that of the Foreign Service, the Agency can take advan-
tage of the considerable study and experience which have gone into its
development.
c. Appendix II compares the pertinent provisions of the proposed
Agency retirement system and the Foreign Service and the Civil Service
retirement systems. In format, this chart is similar to one appearing
in the Report of the House Committee on Foreign Affairs in the second
session of the 86th Congress. It was prepared at that time in connection
with proposed amendments to the Foreign Service Act of 1946, as amended,
relating to the retirement system, which proposals were subsequently
enacted into law.
d. All of the Agency's employees do not serve under conditions
warranting other than the normal retirement considerations. Consequently,
the Agency does not intend to place all of its personnel under the pro-
posed new system. Those who are to be designated for coverage will
undergo a rigid selection process, the essential criteria for coverage
being as follows:
(1) Career employees whose duties and responsibilities are
predominantly concerned with the conduct and support of intelligence
operations in foreign countries.
(2) Career employees those duties are so specialized that they
are placed at an unusual disadvantage when required to seek other
employment.
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e. It is estimated that a maximum of of our total employees STATINTL
will qualify for coverage under the proposed system; civil service retire-
ment will remain the retirement system for all other employees. During
the past year, the average age of Agency personnel who retired under the
Civil Service retirement system was 66. We plan in time to lower the
average retirement age of those covered under the proposed system to
about 55 years, which is comparable to the average retirement age in the
Foreign Service.
f. The specific provisions of the proposed retirement system and
other amendments to the Central Intelligence Agency Act and explanatory
notes are contained in Appendix I, Sectional Analysis and Exp1aanation.
3. Cost Estimates
a. There will be certain increased costs for the administration of
the retirement system. For reasons of efficiency and security, it is
considered essential that full administration of the program be accom-
plished within the Agency. It is estimated that by the end of the first
five years the administration of the proposed program would cost approxi-
mately $85,000 per year including an increased staffing requirement of
approximately eight man-years. Internal administration of the program
would include determinations of eligibility and entitlements, payment of
retirement benefits, and all related administrative matters.
b. Program costs cannot be estimated with comparable precision.
However, a realistic estimate can be made of the increased payout in
basic annuity benefits under the proposed system over the civil service
retirement system for the next five fiscal years. The estimate assumes
a target rate of 67 retirements per year. Other assumptions, based
upon manpower studies and age and grade characteristics of the eligible
group, contemplate an average retirement age of 55 years with 25 years
of service and an average high-five salary at about the second step of
GS-13.
ESTIMATE OF TOTAL INCREASED ANNUITY PAYMENTS
Fiscal Year
Annuitants
(Cumulative Total)
Increased
Annuity Payments
(Annual Payout)
1961+ (j year) 34
$ 17, 612
1965
101
57,11+2
1966
168
100,022
1967
235
148,932
1968
302
197,842
Total Increased Annuity Payments
$ 521,550
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d. The chain of recruitment, reassignment, and promotion actions
created by this annual retirement of officers would result in a con-
siderable lapse in salary expenses. Assuming an average lag of six
months in this process, the reduction of expenditures would approximate
$2,516 per retirement and would total approximately $52,880 over a
five-year period. This amount would almost offset the estimated in-
crease in annuity payments for the first five years that the new
system was in operation.
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The purpose of section 2 is to bring up to date references to other
statutes and to update certain of the existing provisions of the Central
Intelligence Agency Act. Some of these are necessary to achieve desired
legal clarification and some are new authorities. Section 3 merely in-
serts new headings in the Agency Act for convenient reference and does
not require explanation. The following explanations all pertain to sub-
sections of Section 2.
2. Procurement Authorities ESubsections (1) and (P)7
The Central Intelligence Agency Act of 1949 authorized the Agency to
exercise certain specified authorities contained in the Armed Services
Procurement Act of 1947. Since that time the Armed Services Procurement
Act has been codified and enacted into positive law in Title 10 of the
United States Code. Consequently, the purpose of these subsections is
to provide corrected citations to the Armed Services Procurement Act.
3. Allowances and Benefits Subsection Of
Subsection (3) amends section 4 of the Central Intelligence Agency
Act of 1949 adding three new paragraphs, gi) (a), (1) (H), and (8).7.
The preceding paragraphs of section 4 were originally patterned after
allowances and benefits available to Foreign Service personnel. Our
new paragraphs are provisions which have been subsequently authorized
by the Congress for Foreign Service personnel and they are:
a. Rest and Recuperation Travel
Paragraph (1) Q permits the travel of employees and members of
their family at government expense from certain designated hardship
posts to an area where the employee and his family may relax and obtain
needed freedom from climatic and other conditions which caused his post
of assignment to be designated as a hardship post.
b. Dependents Accompanying Enployee on Temporary Duty
Not infrequently, an Agency employee, upon assignment to a per-
manent post of duty is directed to deviate to or stop at, another post
en route in order to receive orientation or training. Paragraph (1)(H)
would permit the dependents of the employee to travel concurrently and
remain with him at the temporary duty post with appropriate travel
expenses paid by the Agency. This authority would avoid requiring the
employee to choose between sending his family on to his permanent duty
station prior to his arrival or scheduling his departure from Washington
early in order to be at the post in time to meet his family upon their
arrival.
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c. Orientation and Lan a Training for Dependents
Paragraph will permit necessary orientation or language
training for members of the employee's family where this is deemed
necessary because of the circumstances of the prospective post of
assignment or because of contemplated duties of the employee.
4+. Eighteen month Home Leave subsection (1+)7
Existing authority to order employees to the United States from a
post abroad for home leave is conditioned upon "completion of two years'
continuous service abroad or as soon as possible thereafter." This
proposal extends the two-year period to three years and also permits
the Director, when hardship posts are involved, to order the employee
on home leave after completion of 18 months of continuous service. At
certain hardship posts it is highly desirable to return the employee
for home leave after eighteen months; on the other hand, at posts where
living conditions are more favorable, a tour of duty of three years is
more appropriate than a two-year tour. Therefore, this proposal will
give the Agency additional flexibility in managing the assignments of
employees on a world-wide basis.
5. Hospitalization and Travel for Medical Treatment 1 ubsection (517
a. Travel for Medical Treatment
Existing legislation permits the Agency to pay the travel
expenses of employees who suffer illness or injury abroad to the near-
est locality where a suitable hospital exists. The proposed legislation
removes the requirement of hospitalization and replaces it with a more
realistic standard permitting travel at government expense when travel
is required to obtain adequate medical care. In many places medical
care available locally is either nonexistent or is completely inadequate
by U.S. standards; consequently, while the illness or injury may not
require hospitalization, travel to a location where adequate medical
care is available becomes a necessity. In addition, this provision
includes the travel of dependents in the event of their illness or in-
jury on the same basis as for the employee.
b. Hospitalization or Similar Treatment
Existing authority permits the Agency to pay the cost of hos-
pitalization of an employee in the event of illness or injury incurred
abroad. The proposed legislation would broaden this standard slightly
by authorizing reimbursement not only for hospitalization but also for
costs of medical treatment where hospitalization is not required. In
many cases, although the illness or injury may not require hospitaliza-
tion, treatment which cannot be obtained locally is required to prevent
a more serious illness or aggravation of the injury. This proposed
legislation would also permit similar reimbursement for expenses of
dependents located abroad; however, for dependents there is a $35.00
deductible clause and a maximum limitation of 120 days of treatment for
each illness or injury. This maximum limitation will not apply in the
event it is determined that the illness or injury clearly is caused by
the fact of location of the dependent in the foreign area.
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6. Re-employment Rights and Claims Authority Subsection b
a. Re-employment Rights
This is a new authority for the Agency-which would permit an
individual to transfer from another department or agency to CIA for a
specified perdtod of time agreed upon by the two agencies and afford the
individual statutory protection in re-employment upon completion of his
Agency assignment. This authority is already available in slightly dif-
fering forms to such agencies as State Department and AID. It could be
of material assistance in fulfilling critical personnel requirements in
times of emergencies by giving employees transferring to CIA the assur-
ance that they can return to their parent agency upon completion of
their assignment to CIA.
b. Claims Authority
The Agency has found need for authority to process justifiable
claims arising at overseas installations. The proposed legislation
would permit the Agency to settle such claims of non-citizens in amounts
not exceeding $10,000 for any one claim. This authority would extend
to loss or damage to real or personal property or personal injury or
death. Claims would only be payable where it was established that the
loss arose abroad out of the act or omission of an Agency employee or a
person acting on behalf of the Agency. Similar authority in a somewhat
more extensive form is available to the military departments, Department
of State and other agencies.
7. Tax Exemption of Disability Annuities Jubeection (7)7
This authority is related to the establishment of the new CIA re-
tirement and disability system. It would exempt from gross income for
Federal income tax purposes a disability annuity payable under the pro-
p6sed CIA retirement system. Similar provision has been made for disa-
bility annuities under the Foreign Service retirement system. Disability
annuities for military personnel are likewise tax-free.
8. Authority to Accept Gifts Subsection (8)7
This subsection would authorize the Director to accept gifts and
bequests to the Agency for the benefit or welfare of employees of the
Agency or their dependents. It is anticipated that in future years
there will be gifts or bequests from donors who are interested in the
welfare of Agency employees and their dependents. For example, it is
hoped that such funds may become available for abholarships which
could be granted to children of Agency employees in deserving cases.
This type of authority is available in varying forms to many agencies
of Government today.
9. Cost Estimates
The foregoing provisions are based substantially on authorities avail-
able for Foreign Service personnel. When clearly justifiable and neces-
sary for the well-being of Agency personnel serving overseas, Agency
authorities for travel and medical care have been extended insofar as
possible to provide comparable benefits. Consequently, the additional
costs are so nominal that they are not measurableo
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