NATIONAL COMMUNICATIONS SYSTEM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00107A000100030002-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 14, 2016
• Document Release Date: March 28, 2003
• Sequence Number: 2
• Publication Date: March 13, 1964
• Content Type: REPORT

"CRE
Approved FoPKelease 2003 P79-001 OZA000100030002-8
13 March 1964
NATIONAL COMMUNICATIONS SYSTEM
FOR COMMUNICATIONS:
1. Would like the Office of Communications to list
those actions which we have taken to comply with NCS
objectives or tasks regarding:
A. Equipment.
B. Installation of additional lines beyond
anticipated CIA needs.
C. Hiring or placing of additional people.
D. Specific actions or participation in Tasks 2,
4, and 10 of the Initial Tasks assigned by Secretary
McNamara to the Manager, NCS.
E. Information we have provided NCS regarding
funding of any sort.
F. Any other information we have given NCS which
would provide NCS with specific information relative
to CIA.
G. Information we have given NCS regarding
circuitry, trunks, switching, voice facilities,
installations, instruction programs, plans, and
numbers of CIA people at various posts.
Approved For Release 2003/05/14: CIA-R
25X1
ILLEGIB
25X1
SECRET
 Approved Fo elease 20039M CE J DI
000100030002-8
2. What percentage of Agency communications in dollars
and people can be identified as cost incurred in behalf of
the NCS. If it is not possible because, as we have claimed,.
thereis no clear division between staff and clandestine
communications, how did we arrive at the $3.5 million figure
back in December 1962 which we identified to Secretary
McNamara as cost incurred by CIA in behalf of the NCS?
3. What actions must the Office of Communications
clear with the NCS prior to implementation regarding Agency
communication?
4. List what assurances we can give the NCS to indicate
that we have complied with the spirit and directives of the
NCS.
FOR FINANCE/BUDGET:
1. What financial information or budget information
have we provided the NCS and what information do we plan
to give them relative to 64-65 budgets?
2. Is it possible under the directives which Manager,
NCS, have received in NSAM 252 and subsequent instructions
from Secretary McNamara for the Manager, NCS, to fulfill
his responsibilities if CIA does not provide him'with com-
plete budgetary and financial information relative to the
NCS portion of Agency communications?
Approved For Release 2003/05/14 :6A-RDP79-00107A000100030002-8
SECRET
 Approved Fo1elease 2007W1q CTATDP79-001 000100030002-8
3. Assuming that of the five alternatives which the
Bureau of the Budget has suggested regarding funding of
the NCS we chose Number'1 (i.e., separate appropriations
to each agency), is it conceivable for the Agency to
withhold budgetary information from the NCS?
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
SECRET
 Approved Fo elease 2003 5T1 CfA- DP79-0010PAb00100030002-8
POINTS WORTHY OF NOTE
1. NS.M-252 was coordinated in draft with CIA; no
objection made to wording.
2. NSAM-252, which established the NCS, indicated that
the NCS would be developed "by linking together communications
facilities of various Federal agencies"and that it was gen-
erally conceived the NCS would be comprised primarily of the
long-haul, point to point, trunk communications.
initial Tasks also coordinated with CIA without
objection.
4. BOB is charged in NSAM-252 with prescribing general
guidelines and procedures for reviewing financing in the NCSO
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
SECRET
 Approved Fo *elease 2003/019/". CIA'16179-0010M000100030002-8
AGENCY'S POSITION REGARDING NCS
1. On 19 February 1962 the DCI concurred in a BOB
proposal of developing a single overseas telemetry system.
In his memorandum to Deputy Director, Bureau of the Budget,
Staats, Mr. McCone concurred in principle, subject to the
understanding that the system would be operated by CIA;
otherwise, as Mr. McCone said, "I do not believe that it would
be possible for the Director of CIA to properly discharge his
statutory responsibilities for the protection of intelligence
sources and methods from unauthorized disclosure as prescribed
in Section 6 of Public Law 110."
2. This same position was reiterated to the House
Appropriations Committee in an unsigned memorandum, dated
21 February 1962, and delivered to the House on 16 March 1962.
3. Memorandum from Irvin to William Orrick on 9 November
1962 setting forth plans and procedures for a National Communica-
tions System; Appendix F, relating to funding for the NCS,
stated that the NCS will provide global long-lines communica-
tions capability terminating at nodal points. From these
nodal points, specialized nets or subsystems should emanate
under the exclusive control of the operating agency. It
further stated that the NCS Executive Agent should be respon-
sible for funding capital equipment in all operating costs to
all nodal points. The individual user agency should be respon-
sible for funding all costs of the local tail from the nodal
point to its terminal. Irvin went on to state that the total
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
SECRET
 Approved F r Release 200 /03/1"4 RTRDP79-00"1A000100030002-8
fiscal program for each year, with a breakout of funding
requirements of each user and the NCS Executive Agent, should
receive normal budgetary review and Presidential approval as
a package and subsequently be submitted to Congress through
regular agency budgets. He cautioned that the Bureau of the
Budget should consider ways of highlighting the communications
portions of Department or Agency budgets to insure that Con-
gressional actions are taken with full knowledge of the impact
on a national communications system.
On 29 November 1962 in response to a memorandum from
the Deputy Director of BOB relative to a draft to develop and
coordinate a world-wide communications system, the DCI con-.
curred in principle to the desirability of establishing a
proposed organization mechanism and in the concept and objec-
tives of the proposed NCS with the proviso that the NCS
enhance, not degrade, the communications capability currently
available to CIA and not impair the security of a comm.ilnica-
tions system. Again,.he pointed out the importance to CIA of
privacy of communication and his responsibility for the pro-
tection of intelligence sources and methods from unauthorized
disclosure provided in Section 102 (D) (3) of the National
Security Act of 1947. In addition, he added "In assessing
this Agency's ability to contribute and participate, it should
be recognized that a significant portion of Agency communica-
tions assets are utilized in direct support of clandestine
Approved For Release 2003/05/14 - IA-RDP79-00107A000100030002-8
SECRET
 Approved Fo elease 20036Z:IA=P79-001000100030002-8
operations and thus are not available for inclusion in
the NCS."
5. In a meeting on 11 December 1962 with BOB personnel,
Mr. Pettibone of BOB was informed that the Director's position
was that CIA must control its facility for clandestine com-
munications.
6. On 6 December 1963, CIA advised the NCS Task Officer,
through
that the purpose of the NCS was to link
the systems together and not to make or force the individual
systems into a uniform mold.
7. On 3 January 1964 in a memorandum from
to the Executive Agent NCS, he pointed out that
as indicated by DCI to the Secretary of Defense on 12 December
1963, CIA must keep its commitments (to the NCS) relative in
size to the overall role and mission of CIA.
3. On 24 July 1963 inierence made by
was that Mr. Horwitz did not see DOD taking over functions or
operations which were already being performed by other govern-
ment agencies and that he (Mr. Horwitz) did not believe that
the NCS should have a single consolidated budget, although he
did express the need for the Secretary of Defense to be in
position to assure the Administration that the NCS programming
was coordinated.
Approved For Release 2003/05/14: -dA-RDP79-00107AO001 00030002-8
SECRET
25X1
25X1
 Approved For F elease 2003/04478 Mp79-0010710100030002-8
POSITIONS FOR CENTRALIZED FUNDING
explained that the
25X1
Orrick Co mittee at that point was accepting CIA's inter-
preration of the law (relative to control of its facilities)
with respect to this security requirement, but that it might
be necessary later to get a decision at a higher level.
2. NSAM-252 charged that the BOB in consultation with the
Special Assistant to the President for Telemetry Communications,
the Executive Agent, and the Administrator of-General Services
would prescribe general guidelines and procedures for reviewing
the financing of the NCS within the budgetary process and for
preparation of budget estimates by the participating agencies.
S. See Paragraph 8 in Agency's Position Regarding NCS.
On 6 August 1963 Secretary McNamara assigned ten
initial tasks to the Manager NCS. Task 2 stated: "Prepare
simultaneously recommendations for me regarding which govern-
ment department or agency should have responsibility for
installation, operation, maintenance, modification (including
budgeting and funding responsibility) of each subsystem or
components." Task 4 requested the preparation of a near-term
plan for FY 1964 budget guidance and a long-term plan for
modification and improvement of NCS. Task 10 requested
preparation and submission of recommended revisions as
necessary in organization structure, manpower needs, and
financial requirements for you to accomplish your responsi-
ilities. This would be based on early consultation and
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
SECRET
 Approvedior Release A'9Md5i'1V{`CiA-RDP79-O'07A000100030002-8
coordination with the designated representatives of other
a-encies.
5. On 22 August 1963 in response to Secretary McNamara
the DCI failed to mention any concern with the financial
~sws of the NCS Manager's responsibilities, but only
one of security which he felt confident could be resolved
without difficulty.
6. On 25 February 19631 advised DCI
that the Secretary of Defense was recommending inclusion of,
CIA network as a subsystem for the NCS.
On 20 December 1963 in response to considerable
objection from agencies representatives to furnish budgetary.
information requested by the Manager NCS, Mr. May of General
Starbird's Staff explained that the Administrator of the NCS
in order to do an adequate job should know the value of his
assets and the cost of his operations. The DCA representa-
tive stated that as a long-range goal the NCS might be operated
-~xiith a single budget and the using agencies would file require-
r gents. The privacy question was also challenged.
-2-
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
25X1
SECRET
 25X1 Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
 Approved For !(ease 2 14I) AJ 1 t: 00107A$010003000?,, ' 6z; 7`"_ 'I3
Longer-term alternatives
The longer-term financing approach adopted should support the basic NCS
objective of improving management of Federal communications resources.
It should also provide flexibility to meet operational needs and consistency
in treatment of NCS customers.
In addressing the alternatives, several basic questions will have to be
considered:
a. Should agencies pay for their own communications? It has been
general Bureau policy that, to the extent practicable, user agencies should
pay for services received. In this way, communications requirements are
weighed and screened against other requirements by the agency involved.
b. If agencies are charged for NCS services, should the charges
reflect full cost on a message basis or gross allocations of cost based on
sampling of traffic volume? A detailed and comprehensive accounting system
for NCS to support.billing on a message basis could add significantly to
total Government communications costs. For example, the Bell System
accounting and billing costs run an estimated 5% of total revenues, (and
it is possible that Government costs for this purpose would exceed this
rate).
c. What degree of centralized financial control should be exercised
wHay~
over the NCS? If significant progress toward the goal of a single communi-
ILLEGIB
cations system is to be made, a major degree of financial centralization
Approved For Release 2003 1' ~I~AF -1P - 07 000100030002-8
 Approved Folease 2003/0 1d ''b~AZ`~' 00100030002
.4 0 1 -
d. What kind and amount of information is required to enable the
President (and the Congress) to be informed of NCS progress in an accurate
and timely fashion? The President and the Special Assistant, as well as
the Executive Agent will need to know the status of the NCS tasks assigned
to the agencies.
We are continuing to examine, with OBR and staff of other Divisions,
alternative methods of financing the NCS which might be appropriate for
the longer term. Five principle alternatives are as follows. (Discussion
of the pros and cons based on preliminary analysis are set forth in the
attachment. )
1. Retain present agency funding patterns with slight adjustments
in operational and budgeting responsibilities based on the NCS planning
process. This approach to the NCS would be similar to present Defense
practice with respect to the DCS. The pattern would include direct
appropriations to agencies operating their own communications and to
agencies who reimburse GSA and other agencies (the latter category
would be expected to grow).
Z. Establish a single appropriation to the President for building
and operating the NCS, reducing agency appropriations accordingly.
Allocations might be made by the Bureau, on recommendation of the
Executive Agent to the agencies operating networks.
3. Establish a single appropriation to the Executive Agent reducing
agency appropriations accordingly.
Approved For Release 2003/05/14: CIA-RDP79 Q,1'N I (D7A000100030002-8
CO'IF. I
 Approved For*efiease 200 ft5/t4: CIA-RbPf91f10107 0100030002-1/
4. Establish a revolving fund administered by the Executive Agent
from which the NCS would be built and operated. Agencies would reimburse
the fund for services received.
5. Establish it management fund into which agencies at the beginning
of each fiscal year would transfer funds appropriated to them for commu-
nications to be satisfied through the NCS. The fund would be administered
by the Executive Agent.
Conclusion and recommendations
We are not in a position to recommend major NCS funding changes in the
1965 budget. The NCS definition has not yet been determined, and we have
not yet pulled together a complete picture of operating and costing practices
for the various possible components of NCS. With experience gained in
developing the initial NCS definition, the Near Term 1965 Plan, the 1965
budget, and the first Long-Range Plan (due April 1, 1964), the Bureau
should be in a position to make a more complete assessment in time to
~e reflected in the 1966 budget. Any major change will have to be vw rked
out carefully with a large number of Executive Agencies and checked
informally with the Appropriations and other interested Committees.
Approved For Release 200/
F- I 4.:, IA P79-00107A000100030002-8
 73
Co.
Approved For1ease 2003/05/14 CIA-
0107`0100030002-87
Preliminary Analysis of Five Alternative
Approaches to Funding the NCS
The analysis summarized below attempts to sketch the pros and cons
involved in five main alternatives for financing the National Communications
System (NCS) over the long-term. This is based upon a preliminary assess-
ment of the problem and is designed to aid in the further consideration of
the alternatives.
Alternative 1
Retain present agency funding patterns with slight adjustments in budgeting.
responsibilities based on the NCS planning process. This is similar to
the approach now employed with respect to the Defense Communications
System (DCS), where DCA "tasks" the Services with building, operating,
and funding various portions of the DCS. Under this alternative, each
agency would develop its funding requirements (for approval in the NCS
planning process) and would seek appropriations from Congress in the
normal manner. It would include direct appropriations to agencies
operating their own communications and to agencies who reimburse GSA
and others for services. It would be expected that GSA services through
the FTS would continue to grow.
Pros. This is the simplest solution. It would cause the least
disturbance to the existing appropriation structures and agency relation-
ships with the Congress. With adequate cost reporting and centralized
ARrovefd For. Releat a J003/0~,5dl hG - fP g%lpj! 1 PCRM@2-8
manag en review, i ap _
i 'u, O1'F-I E I i
 Approved ForlWease 2003/05/14: CIA-RDP79-00107400100030002-8
Cons. This pattern would tend to leave more control over commu-
nications programming with the operating agencies. The NCS would probably
tend to remain for a longer period a loose confederation of agency networks,
).V l d y fh O. G+A1..
like the DCS, and the evolution to centralized management would tend to
be prolonged. As an example, it would be harder to prevent agency repro-
gramming of funds budgeted for essential NCS tasks to other purposes.
Also, agencies might resist absorbing additional NCS tasks dropped by
another agency through reprogramming or cut by Congress. Certainly the
general task of following the implementation of the NCS program through
many agencies and appropriations will be more difficult for the :Bureau
and other NCS review agencies. Also, present inconsistencies in charges
to other agencies for communications services (as between Defense and
GSA) might tend to be continued.
Alternative 2
Establish a single appropriation to the President for building and operating
the NCS, reducing agency appropriations accordingly. Funds could be
allocated to the implementing agencies by the Bureau, on recommendation
of the Executive Agent and approval of the President in the same way that
foreign aid appropriations are handled.
Pros. This would emphasize the national character of the system
and its responsiveness to the needs of the President. It would provide a
given amount of funds for the NCS and give central authorities flexibility
in managing the system, specifically in adjusting to congressional actions
Approved For Release 200 17 0107A000100030002-8
 Approved Forlease 2003'/'1`4 : GtiA -RDP79-0010A0100030002-8
or emergencies and new requirements. Only one set of congressional
appropriations committees would be involved.
Cons. It might be difficult to obtain congressional approval for
the single appropriation. Certain subcommittees of the Appropriations
Committees would lose control over communications programs. Defense
and other agencies would object to having communications funds separated
from the rest of their communications and other programs. It :might be
more difficult to keep stated user requirements at a rational level when
the user has no funding, management, or congressional justification
responsibilities. A complex reporting system might be required. In
addition, there might be legal difficulties with this approach, where
statutory authorities are vested with various agency heads, rather than
the President (the appropriation might be subject to a point-of -order).
Alternative 3
Establish a single appropriation to the Executive Agent for building and
operating the NCS, reducing agency appropriations accordingly. The
Executive Agent would develop a program, cost it, and request funds
from Congress. He could then obligate the funds directly or request
other agencies to undertake specific tasks for which funds would be
allocated. Allocations might be made by the Executive Agent subject
to review by the Special Assistant and the Bureau of the Budget and approval
of the President.
Pros. This approach would have approximately the same advantages
Approved For Release 2003/05/ 000100030002-8
f~do j~,rh'1
 Approved Forease 2003/1 9ID? - 01
0700100030002-8
as listed under 2 above. The detailed funding control and reporting
system would be administered by the Executive Agent.
Cons. Placing the single appropriation for the NCS With the
Executive Agent, who normally has about 80% of the total anyway, would
probably reduce some objections to the single appropriation. However,
the Services would probably object to a single centralized appropriation
to Defense for their long-haul communications which are in the DCS
and the NCS. Other agencies, especially GSA, and some members of
Congress might object to giving the Secretary of Defense this additional
control over communications of civil agencies. The problem of keeping
user agency requirements within bounds, where the agencies have no
financial responsibilities, would also be a problem. In addition, this
alternative might involve the legal difficulties cited under 2 above and might
involve conflict with GSA's authorities to provide and operate communi-
cations services for certain civil agencies.
Alternative 4
Establish a revolving fund for the NCS to be administered by t: he Executive
Agent. Agencies would continue to seek appropriations for their communi-
cations needs and reimburse the fund for services received, GSA's
Federal Telecommunications fund is an example of this.type of operation.
Pros. The revolving fund, with the necessary working capital,
would provide the desired flexibility in planning and undertaking improve-
ments to the system in advance of the actual need and meeting unforeseen
Approved For Release 2003/05/14: CIA-RDP79-00107A000100030002-8
 'Approved Fdfm~Release 2003/x/' 4I ark W0~6000100030002-8
contingencies. It would insure centralized financial management and
consistency in treatment of NCS users. Since commercial-type
accounting is required, it would permit both Congress and the executive
branch to review the financing of the system as a whole and to know the
financial status of the NCS on a profit-loss basis.
Cons. The use of a revolving fund implies that the Executive
Agent would provide all services to the users, thereby shifting the
responsibility for operating communications systems from various user
agencies to a single agency. The administrative difficulties of such a, take
over would be immense. The records and. accounting necessary to bill
the users accurately could be very complex and costly. The revolving
fund would have to be established in law and would have to be reconciled
to present GSA authorities and the Federal Telecommunications fund.
The initial working capital appropriation required would probably be
$200-$400 million, which might be difficult to obtain.
/7`~ AJ ?}-63~v~cr pIUOR, 7/ r ~?fi`f?T , -
0-04c-i2 A4e te t P,-eCTIIJ1' ~` 4-V0 ca~o,r~rutc4y N1bI-e /r9 ci? t) CU.~,~rar
Alternative 5
Establish a management fund in to which agencies would at the beginning
of each fiscal year transfer appropriations to them for communications
n
services to be furnished through the NCS. The Executive Agent would i1
administer the fund, assign funding responsibilities to the user agencies
for various tasks, and assist the agencies in justifying the funds requested
from Congress. The Navy Special Projects Office has operated such a
fund for the Polaris system, into which were transferred appropriations
for r e'na4d4r&Fk@ f/ P11~9-~OsOs~0~0$~-r8ement.
 Approved Fofrelease 200 f4 Fft 10Y4000100030002-8
Pros. With a management fund, there would be little change in
agency relationship with the Congress. There would be considerable
flexibility in administration of the NCS program so that the various parts
could go forward in balance. There would also be opportunity for
centralized management and review of the status of the program. The
contributing agencies would still. have some financial stake in the NCS.
Cons. A large number of congressional committees would be
involved in the program, each of which might be able to cut vital parts
of the program. The Executive Agent would require a fairly large staff
to control funds contributed from many types of appropriations (which
would include mixtures of no-year and annual funds, and various language
limitations). The present agency reporting systems would probably have
to be standardized. The management fund would probably have to be
established in an appropriation act.
Approved For Release 2003/0 %rQl9~-f~A000100030002-8
4