FY 66 FUNDS ALLOWANCES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T01148A000600050012-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 9, 2016
• Document Release Date: April 24, 2001
• Sequence Number: 12
• Publication Date: July 27, 1964
• Content Type: REPORT

I Approved For Release 2001/08/31
27 July 1964
FY 66 FUNDS ALLOWANCES
1. Starting with the FY 65 base and making adjustments
for changes in ceilin authorization, AE and construction
costs of new DD/ I has
to assign. additional
2. As a basis for making the assignments specifics
have been drawn from Office Assumption papers as far as
possible and also from the unbudgeted requirements column
in the FY 65 Operating Budget. Paragraphs 3 and 4 below
list these items. No consideration was given for increases
in positions.
3. From the Assumption papers the following programs
have been identified for additional funds some of which
are without specific dollar value: -- or ment the as it developsCand..ealsofforeoperatingfdually withctheogram
present EAM system.
as 1 a~~-+r-"1 ..-..,~",~ -F_~,.,,~
C. Translation services -- OCR cites $475,000
as an additional requirement which includes in part
personnel increases.
d.. NPIC -- equipment for oncoming systems and
analysis of increased input materials.
4. The following are selected unbudgeted requirements
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which offices would do in FY 65 if funds were available.
Again no increases for Position augmentation are included:
a. OO/Sovmat
b. NPIC
? to match the FY 64 level.
consisting of
to compensate for the reductions
itn h
eir R&D program in the
Con re 'onal Budget (About
savings in personal se-"vi
of this was made up
costs and ces
year end funds.)
for equipment
for contractual studies
yy?""" My recommendation is to
2 SPEC a=.ditional for it
give NPIC
s R&D
the Bala program and to give
e applied
o recommend that DDI creatL H rig. I
25X1A y of perhaps
by reserving portions of e a kidd.
two offices. this additional money in
.
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ORGANIZATIONAL CHANGES TO BE EXPLORED
CGS - Abolish Operations Center and have OCI Watch absorb
NMCC representation.
OBI - Abolish Regional Division and have Editorial Division
pick up function and part of positions.
- Abolish OBI as an office and provide for production
staff arrangement.
- Plan early review of program to consider further
retrenchment.
OCI - Transfer Graphics to ORR Cartographic Division.
- Watch to pick up NMCC representation.
- Reduce Military Division in favor of ORR Military-
Economic Research Area.
- Reduce basic intelligence effort.
- Explore merger of ONE and OCI military staffs.
25X1A
OCR - Eliminate
position.
- Reduce Acquisiti s Branch and transfer some of this
STATSPEC activity to
STATSPEC - Reduce FDD exploitation effort.
- Reduce FDD commitment in the
Possibly abolishing that offi effort,
STATSPEC - Eliminate the
this work don
and have some of
- Reduce cateloguing.
- Merge MD and SR/MB, and go to two shifts.
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DDI EVALUATION OF REDUCTION
The allocation to DDI of a quota of 36% of the proposed cut
is a serious error of judgment. Indeed no part of
this cut should be borne by the Directorate of Intelligence.
Inasmuch as NPIC is excepted, this cut means a reduction
of 6.1%, a matter of more consequence than this figure in the
abstract would indicate.
Production demands of the Government and the
DCI placed, upon the DDI have consistently increased.
Intelligence information requiring evaluation and
collation in order to meet these demands kQ-v-e
consistently increased.
Except for NPIC, resources placed at the disposal
of the DDI have been periodically reduced (adjusted.
for the transfer of OSI to DDS&T and excepting NPIC,
DDI personnel ceiling has over the last eleven
years dropped from
DDI has repeatedly brought to the attention of top
management the fallacy of favoring the vast expenditure
of funds for technical intelligence (which yields
disportionately lower returns) over the social sciences
(upon which all evaluation and, judgment ultimately
depend).
More concretely, added. technical collection means
more flow into the system, requiring more guidance,
more processing, more evaluation, more analysis and
more reporting, all or much of which must come from
the DDI (we have our experience with NPIC as one
case in point).
In short, we believe there now exists an imbalance (between
DDI on one hand and DDP and DDS&T on the other) which the present
cut accentuates to the detriment of the over-all intelligence
effort, noting in particular our statutory responsibilities and
those embraced in the services of common concern we have over
the years undertaken to provide.
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REFERENCES
A. DDI Planning Assumptions for the Period FY 1966-69,
transmitted to Executive Director-Comptroller under
cover of ADDI/M memorandum, 30 January 1964.
B. Briefing Notes on the Intelligence Directorate, dated.
January 1964.
C. DDI Admin Staff memorandum for Executive Director-
Comptroller, 7 January 1964, subject: End.-of-Year
Targets, FY1964 and FY1965.
D. ADDI/M memorandum for Executive Director-Comptroller,
31 December 1963, subject: Effect on DDI Programs
of Reducing FY65 to FY64 and FY63 Levels.
E. DDI memorandum for Executive Director-Comptroller,
14 December 1963, subject: President's Memorandum on
Government Economy.
F. DDI memorandum for DCI, 18 April 1960, subject: Reductions
and. Reallocation of Manpower in the DDI Area 1955-1960.
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STEPS TO BE TAKEN OR EXPLORED
IN ORDER TO MINIMIZE ADVERSE EFFECT OF
REDUCTION IN FORCE
1. We will seek to have more work done on a contract
basis, including possibly setting up a RAND-type facility to
do classified research and research support activities. The
trained to qualify for NPIC vacancies.
3. We shall identify individuals who, while not marginal
performers, are in this new situation surplus to our needs and
recommend their separation from DDI.
4. Organizational changes promising relief under the new
situation will be proposed, though we are conscious that changes
of this kind invariably create new problems which could aggravate
the situation beyond making implementation desirable.
5. We shall set up a reserve of slots in the DDI to be
used to give relief in those situations where the impact of
change has been more detrimental than anticipated either because
of errors in judgment or because of unforeseen developments.
is a going concern which may provide some of these
additional services.
2. We plan to facilitate the placement of displaced personnel
by reducing the rolls of personnel now or soon to be eligible
for retirement and to whom we have granted extensions for one
reason or another. We shall also count on attrition and upon
finding within the displaced those qualified, or who can be
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CONCEPTUAL BASIS FOR WEIGHING
COMPONENT PRORATED CUTS
The DDI basis for arriving at a conclusion that all programs
are not equally to be taxed for the cut is based upon the premise
that national intelligence warrants priority consideration over
USIB programs of common concern, Agency intelligence production,
and Agency services of common concern. Likewise, USIB services
of common concern have priority over Agency intelligence production,
which in turn rates ahead, of Agency services of common concern.
If we assume straight linear relative importance, we would
weigh relative cuts between pro
I. National
II. USIB Common Concern
III. Agency Production
IV. Agency Common Concern
In applying this formula, we would., for example, take a
1% cut entirely in category IV, or a 3% cut among categories II,
III, IV in the relative proportions of 1:2:3. In any case
involving a cut of 4% or over, all categories would sustain
reductions.
The particular case involves a reduction by FY66 of 6.1%
in selected areas (i.e., NPIC was specifically to be exempted).
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 IV.
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REARRANGED BY PRIORITY
WITHIN GROUPS
1. NATIONAL INTELLIGENCE
1. OCI
2. OBI
USIB SERVICE COMMON CONCERN
1. = STATSPEC
2. ORR/Econ
3. FDD
4. BR
5. Contact
6. LY/ A +: I
AGENCY INTELLIGENCE
1. ORR/Mil
2. RPB
3. GEO/RES
~.r I
4. ORR-OCI-RS STRAT
AGENCY COMMON CONCERN
-- 61
1. OCR/DD/DISEM-OCI/REG
2. OCI/Watch-CGS/OPS
UUU/ GEO/CART-OC I/GR -
OCR/SR
I`J
OCR/LY-ORR/GEO/MAP
tf
OCR/LS-ODDI/OS
CGS/CG
Quota
8. OCR/FIB
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Calculated Assigned
Quota
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OO/SOVMAT
OCR/GR/FILM
OCR/GR/PHOTO
Calculated Assigned.
Quota Quota
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 Approved For Release 2001/089. I P79T01148A000600050012-7 TAB B
SPECIFIC IMPACT OF CUT IN DDI
ON NATIONAL AND AGENCY PROGRAMS
NATIONAL INTELLIGENCE
- Reduction of production in OCI resulting in inability
to meet the accelerated schedule for the NIS only
recently approved by USIB. A reduction in OBI's key
role in the NIS program largely to be reflected in pro-
duction delays and in a drop in quality control.
25X6
USIB SERVICES OF COMMON CONCERN
The exploitation of foreign language publications will
be reduced by 10%, as will translation service. Even
with success at contracting out some of this work, the
net effect will be to provide Community analysts with less
coverage (already highly selective), have it less tailored
to needs, more condensed than at present, and less timely
(adding 1-2 weeks to production time).
coverage will be reduced by 10%,
in e z ie Unique reference service on
international conferences will be abolished.
- Economic research and analysis will be reduced 10%. This
will eliminate all commodity studies on the Free World,
virtually all industry studies on Communist economies,
and would require some cutback in aggregative research.
Primary impact would be in reduction of support for DCI,
the U.S. Advisory Committee on Export Policy, the Economic
Defense Advisory Committee, the U.S.-Soviet Exchange
Program, and the Clandestine Services.
G CRT
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AGENCY (DEPARTMENTAL) PRODUCTION
- Geographic research will be reduced by 10%, thereby
reducing the effort on the USSR (by 15%), Far East
(by 12%), and Europe (by 20%). This will decrease
operational support to DD/P and DD/S&T, and cut back
work on the Army's USSR mapping project (using TKH)
by 1/3.
- Basic Handbooks produced by OCI and ORR for the
of DDP will have to be
cut out altogether.
- We had planned to augment Military-Economic Research
and will still endeavor to do so in view of the
importance of this work to Mr. McNamara's efforts in
cost effectiveness. If we are unsuccessful in
increasing this program we plan to cut out military
research on Free World forces and concentrate on the
USSR.
AGENCY SERVICES OF COMMON CONCERN
- DDI Operations Center concept will be scrapped and an
attempt will be made to salvage some aspects of it by
augmenting the OCI Watch.
- Cartographic and graphic services in support of map
production programs, Clandestine Services counterinsurgency
programs, publications, and briefings will be reduced
slightly where we had planned to increase them.
- Film reference service to the Community, and in par-
ticular to Training and the Clandestine Services will
be reduced.
- Personality and Ground photo reference service in support
of the Community and in particular NPIC and Biographic
Register will be so reduced as to make probable the entire
elimination of this unique service and its valuable holdings.
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Memorandum of Conversation
DATE: I OCT 19 4
25X1A
25X1A
25X1A
25X1A
25X1A
SUBJECT ORR Contributions to Estimates of tiet Military Expenditures
and Economic Implications
PARTICIPANTS: Ray Cline, DD I;
an
o Guthe, ORR
DD/I, Ch/CIA/DIA JAG, Ch/E, Ch/M, Ch/D/A, ChIP/ME, AD/RR and
DAD/RR
explained in some detail the variety of requirements within the
DOD or es es of Soviet military expenditures through 1970 and the impact
or implications of these expenditures on the Soviet economy. Ha noted that Mr.
McNamara's whole philosophy of forward-planning with regard to US strategic and
defense forces required estimates of enemy forces and over-all capabilities.
referred to the correspondence between General Carroll and the DCI on
DIA's interest in military-economic analysis, between General Carter and General
Hawkins or Betts on CIA support to the Threat Analysis Study, and the recent
.request from DIA for more economic forecasting in the forthcoming NIE. In fact
this meeting, held on 6 October in Mr. Cline's office, was sparked by a written
request from General Maples to Mr. Cline requesting that duplicates of MRA's
computer tapes and programs on Soviet military expenditures be provided to the
DIA, but explained that General Taylor did not wish to have action
taken on Gener Maples' request until he could look into the matter over the
next two or three weeks. Mention was made of the reports of the JCS Chairman's
Special. Study Group, the interests of the Comptroller's office, and the Army's
R&D study relating to the Nike X. ,
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pointed out that the only components in or out of the Government
;,;h?hich have accumulated the data and competence to respond meaningfully to these
needs are the Military-Economic and Ec?pnomic Research Areas of ORR. Components
in the DOD, particularly in DIA, are forced to respond to requests for estimates
in these fields, and will turn more and more to external research contracts,
such as the current SRI and the imminent Rand contracts, if CIA cannot provide
the answers. The result of increasing dependence by the.DOD on external research
for obtaining these types of estimates could be harmful to our national sec-trity
and cause difficulties in coordination at national., intelligence levels.
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25X1A
It was generally recognized by the group that the resources which MRA and
ERA could devote to estimates of Soviet military costs and economic impact
were quite limited. In particular, the MRA could not, with its current staff,
provide what should amount to a service of common concern in the expenditures
field. As far as estimates of future Soviet economic developments and adjust-
ments to accommodate estimated military programs are concerned, ERA believes
that several cuts could be made in responding to this problem. To date little
meaningful work has been done on the problem of studying alternative choices
within the Soviet economy as they might develop in association with oncoming
Soviet military programs. As a first cut, stop-gap educated estimates are being
made for use at the national intelligence level. As a second cut, a small cadre
of experienced professional economists (6-10) would be needed to develop a
capability to provide a relatively effective ability to respond adequately to
a variety of requests from within the community for such estimates. As a third
cut, a substantial number of economists (15-20 or more) would have to be trained
in the subject matter, in appropriate methodologies, and in knowledge of the
source data in order to undertake a long-term systematic study of the economic
problem. Such a research group should, if possible, be "in-house." A captive
external research organization might permit adjustments in the organization of
the Agency's economic intelligence research to permit establishment of such a
group.
Mr. Cline expressed the wish that some of the assets available to DIA
could be utilized in solving the total problem.
With respect to the study of Soviet military expenditures, it was generally
agreed that the possibilit of establishing a center for this purpose should be
carefully considered. believed that General Taylor would be sympathetic
to this approach because he realizes that DIA does not have nor could it easily,
if ever, develop the competence required. MRA/CIA should administer the center;
should have a veto power regarding substantive matters of input and analysis, if
and when necessary; and CIA from outside the Directorate of Intelligence or the
DIA should provide approximately 10 slots to the center, the incumbents for
which would be selected by MRA.
With respect to the study of future Soviet economic developments and the
impact of military expenditures of the Soviet economy, it was agreed that the
second cut described above should be sought, with at least 5 slots to be pro-
vided from outside the Directorate of Intelligence, the incumbents of which
would be economists selected and--obtained through transfer or recruitment by
ERA.
`25X1A
was instructed to inform General Taylor that ways are being.
invessiga, e or responding to DIA's needs as set forth in General Maplest
25X1A
Assistant Direldtor
Research and Reports
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POSSIBLE QUESTIONS TO ASK TO DETERMINE' TIIE NEED
FOR A DETAILED MANAGBjENT SURVEY
1. What is my organization doing?
Do I know in detail the functions that my organization
is performing and the reasons that it is performing them.
2. What is my organization supposed to be doing and how does it
compare with what is being done?
Is my organization carrying out the letter and intent of
the NSCID, DCID, DD/I Instruction or whatever the enabling
authorities might be.
3. What is the cost, particularly in manpower, of the functions
now being performed?
Do I really know in detail how many men are performing what
functions and for what end.
4. What should it be costing me both now and projecting into the
future to accomplish the jobs which my organization was set up
to perform?
Have I any real method of determining what investments I
should make and will have to make in order to carry out my
responsibilities.
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IMPOIZTANNT POINTS IN TIIE CONDUCT OF THE MANAGEMENT SURVEY
1. Top Management Direction
The survey must receive the whole-hearted support and
personal direction of the AD or at a minimum the DAD.
2. Use Full Chain of Command
All senior managers and supervisors must play an active role
in the carrying out of the survey. This is no job for a staff
alone.
3. Set Objectives
The objectives of the study must be clearly spelled out ahead
of time and be fixed in the minds of all who participate. These
objectives, however worded, correspond closely to the questions
raised on the proceeding page.
4. Validate Responsibilities
It must be proven that the mission and functions being performed.
represent a valid discharge of the responsibilities assigned the
organization. If they cannot be proven necessary they probably should
be dropped.
5. Provide Basic Assumptions for Common Understanding
Everyone participating in the survey must work from a common
base. Estimates of on-coming workload, validation of functions to
be performed, priorities of work to be done, etc., should be
established, even if on an arbitrary basis.
6. Create Committees for Cross Check
A Steering Group, comprised of the several senior members of
the organization, can be established to direct and monitor the
overall activities of the survey. Sub-groups of division. chiefs
and/or branch chiefs can be used to survey the principal areas of
activity and functions being performed in the office. Through this
mechanism no individual is left to come up with unilateral
statements of facts or projections which cannot be verified.
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7. Use Detailed Functional Approach
The functions performed in the office should be isolated and
studied as opposed to the normal concept of reviewing the office
by sub-organization, namely, division, branch and section. Since
the organization was created presumably to carry out the functions
it is the functions themselves that are of primary interest.
8. Work in Man-hour Figures, Not Numbers of Personnel
Net man-hours required to perform a given job or function should
be determined and then converted to personnel. Estimating the
number of personnel can magnify the effect of error and make it
harder to determine just how much working time is required for a
given function.
9. Creating a Follow-up Mechanism
Sonic element should be given the responsibility to develop a
statistical approach for the continuing examination of the use of
manpower within the office. The need for this, the amount of
investment to be made and the practicality of producing meaningful
results will vary, of course, with the type of activity and size
of organization.
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Impact of Proposed T/O Cut on ORR
1. Since FY 1959 ORR has been cut (these and subse-
quent figures have all been adjusted and do not inc u e e sonnet
who have been transferred to the Collection Guidance Staff). Since
the beginning of FY 1964,
in addition,
would raise the total cut for ORR
The total reduction since the beginning of 196+ would be
-trlL U e Zr .r
2. These cuts have occurred during a period when ORR was
assigned substantial additional responsibilities and while the
workload of the Office was sharply increased. These new responsi-
bilities included:
a. Additional assignments in the field of military
intelligence.
b. A new assignment for coverage of Free World economies,
involving support for the NIS, NIETs, national policy papers,
and. OCI.
c. Tremendous increases in policy support generally
(there was a 40 percent rise in ad hoc requests on ERA/MRA
in the first six months of 1964).
d. New responsibilities for the Collation Project,
have been taken from ORR and,
positions have been '.deleted. The
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e. A large increase in geographic support to the
Clandestine Services.
In addition, requests on Cartography, Map Library Acquisitions,
as well as requests on the Map Library, have increased substantially.
3. Numerous adjustments have been made internally, overtime
is now running at 50,000 hours a year and there has been a large --
and indeed a dangerous -- cutback in our research effort. We
are now turning down important requests for assistance (which we
can list if you wish) and have cancelled or failed to undertake a
large number of research projects which will eventually be needed
in support of the policymakers (these, too, we can list if you wish).
4. If we are obliged to cut an additional No= the
trends referred to in the foregoing paragraph will Aaccentuated and
we will be obliged to turn down an additional number of important
requests in the future. This is to say nothing of the further
inroads on the research program. I am sure you realize that this
means a weakening of our ability, not only to do research on the
Free World and on military intelligence, but on subjects for which
we have been assigned primary responsibility under DCID 3/1 and
DCID 3/2.
OAD/RR
6 July 196+
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