REPORT ON REVIEW OF SELECTED ACTIVITIES OF THE CENTRAL INTELLIGENCE AGENCY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-01240A000100140112-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 65
• Document Creation Date: December 9, 2016
• Document Release Date: July 25, 2000
• Sequence Number: 112
• Publication Date: January 1, 1961
• Content Type: REPORT

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The data contained herein is classified as CONFIDENTIAL and is
for the use of the Comptroller General, the General Counsel,
and the Director, Civil Accounting and Auditing Division.
It cannot be maintained in the General Accounting Office
building, but Must be returned to the site audit staff.
OudNIVetti lie.
Review of this document by CIA has
&termined Mat
H 9d tEls no obfertIon to dielasS
r,,.f," it con;ainb information at CIA
ihai MOO remain
afOct at TS S
APnOViiIrl HR 10.2
1 tromaini nothing of CIA interest
3".r 5(../ Reviewer /11) 5AL;
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COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON 25
Honorable Paul J. Kildey, Chairman
Special Subcommittee, Central Intelligent:* Agency
Committee on Armed Services
House of Representatives
Dear Hr. Chairman:
Herewith is our report on rcviv or selected activities of the
Central Intelligence Agency, January 1961. The review vae made for
the purpose of determining vbether the scope of the audit of the
General Aacounting Office could be expanded sufficiently to make
reseoeably comprehensive evaluative& of CIA's activities that would
be helpful to the Congress.
This review, vas made pursuant to the interest indicated by the
Special Subcommittee at an executive hearing in Mow 1959. Following
several neetings between representatives of the General Aceounting
Office and the CIA, the Director of Central Intelligens* end the
Comptroller General in October 1959 had an exchange of correspondence
concerning the audit and concerning restrictions on reviews
in the area of sensitive security operations. Various steps were taken
by CIA to place the General Accounting Office in apositlin to maks a
comprehensive audit of the overt activities of CIA. Based en our
review, however, vs believe that under the existimg security restric-
tions on the General Accounting Office audit of CIA activities, we do
not hive sufficient access to make comprehensive review on a con-
tinuing basis that vould be pxoducrtive of evaluations helpful to the
Congress.
Our review of selected overt activities in the Intelligence Com-
ponent disclosed certain mattert Which have been broudht to the atten-
tion of the Agency, and which are discussed in detail in iippendix IV
to this report. These matters relate to (1) the Mancini by CIA of
certain Department of State activities which do net seem to be the
primary responsibility of CIA, sal sash flawing mey have the effect
of supplemeating the appropriations of the Department of State and
(2) the financing by CIA of certain Library of Congrese aetivitiee
Which substantially transcend CIA's interest and responsibility. CIA
officials advised us that corrective action is being taken.
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Inasmuch as is cannot, ih our opirion, eff accomplish
worthwhile audit objectives at CIA on a continuing basis, is plan
econtinue our audit of CIA activities.
We are prepared to discuss these setters with
sire.
A copy of this report iv b
Central Intelligence,
a you so
day to the Director of
Sincerely yours,
Caeptraller General
of the United Ststes
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ORGANIZATION AND MANAGEMENT
?reanimation of Centre/ Intelliene Agency
Director of Central Intelligence
Plans Component
Support Component
Intelligence Compoment
Financing of Central IuteUiice Auncy activities
BY TEE GENERAL ACC .rzi* OF1CL
Legal limitations on the audit of Cartintl
Intellimpince Agency activitiec
Audits of Federal departmentc ow:4 tsOsile.iet6
Agreement for extension of audits of
Centrwl Intelligence ALvnicl- activities
FINDINGS AND CONCLUSIONS
Plans Component activities
Support Component activitieo
Office of the Copptroller
Budget Division
Finance sndFiscel Livisious
Finance Division
Fiscal Division
Industrial Contract Audit Division
Vouchered lUnds expenditures...Charged
to confidential Ands allot/Eats
Office of Logistics
Procurement DivioL:L
Supply Division
Transportation Divisim
Printing Services DiviLioL
ternal revirumechanisim
Support Component
Audit Ste=
Osnagement Staff
Inspector General
Intelligence Component az;tivities
STATSPEC OffiloacesOf.to
Foreign Documents LlivitioL
Office of Central Refereuae
Liaison and Callao Lion Division
Documents Division
Machine Division
CIA Library
Biographic Register
Office of Basic Intelligence
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Letter dated 19591 to the C1mirn
of the Special ubctet, CeatL
Intelligence Agency, Committee Armod
Services, House of Represeatativea
Letter dated October 16, 1959, to the Comp-
troller General of the United States
Letter dated October 21, 1959, o tbe iirectJ
Central Intelligence Agency
Review of selected activ1tiec of C4fice of
Central Reference and Office of Baal
/ntelligence
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RiLACTSTIACTIVITilp OF
TRE CARTRAL /1111LLISINCZ
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sal** CC?1a2c$
The General Accounting Office has mnee a review of selected activities
of the Central Intelligenco Agency (CIA) for the purpose of detervdning
whether the scope o4 the Genera'. AccounUsg Office audit of CIA can be
expended sufficiently to make it productive of evaluations that wad, be
helpful to the Congress.
Our review included an eanmination of the basic lams leve CIA
activities, CIA regulations, nnstruotimas and other policy document* made
available to us. We revieved t interlal controls over tie utilization of
Amds, personnel, and. property pr 1.ctive basis to the extent peraitted.
under the audit limitations irpoeed, by the Director of Central Intelligence
in a letter dated October 16, 19594 Bemuse of the liadtatimu4 which are
summarized on pave 11 and 12 of this report, substantial Segments of the
review vere limited to disouesions with CIA officials responsible for the
direction of the activities selected for review, and there ,vas complete
denial of access for discussion in the arra of covert. intelligence operations
of the Plane Component. Comments on the epecific activities included in our
review are contained on page 13 of this report.
This review vas made pursuant to the interest iidicatt4 by the Special
Subcommittee on the Central Intelligente Agency of the Committee on Armed
Services, Nouse of Representatives, at an executive hearint in Nay 1959,
width MirnaliTtiktrefee /11.59M51054?: cfnelgiedITROSPreei4R12Pirect0r of
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to
and the Compixolle
h correspondence is
inc1w1t in the appendices to t'AilL report ne review vas started in
January 1960 and vas completed in January 1961.
Based on our review, ve believe that the security restrictions placed
on the General Accounting Office uudit of CIA activitieo will not permit
review of C/A activities sufficiently comprehensive to b6: productive of
evaluations helpful to the Congrets Detailed comment ox the effect of the
escurity restrictions on our audit aa-- oontained in the 3Zidths and Con-
clusions section of this report. (k 13 .)
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The Central lntsUigence Agangy vas established wider suthority con-
todned in the Mations:1 Security Act of 1941, for the purpooe of coordinating
the intelligence activities of tho Oovernment departments end:agencies in the
interest of national oecurity. Ao sot ?orth in this act, CIA is under the
direction of the National Security Counail, =4 it 1- the tuty of CIA to
advise on, and to make recommeniatiore for the coordiestioc of, intelligence
activities relating to the nationsl t&-car:.ty; t ooroeiaLe, 000luate, and
disseminate intelligence relatily; to tha oaoioaal seourityl to perform ser-
vices of a common concern to the Intelligence agenclos; ant. to perfOrm such
other functions as may be directed.
The authoTity necessary to ore edministration to2 CIA ties is pro-
vided in the Central Intelligenoo Ammo hat uf 1949. MOO e.ct provides CIA
'with the authority considered to e ess;J.u.3. to the adinir4tration of the
covert operations and intellioence Tunctiono of t'oe
OMGANIZATION OF CENTFAL ISTEUIJKlia
The activities of the Contrite Io.
?
carried out by
three major organizational convmente -.Plane, Into rt--
under the direction of the Director of .JeTtral InteiLigent. rnach of these
three major aomponents is headed by a Depoty Bilectoo obc is rensibie to
the Director.
Director of Central IntelligmE:i.
The Director of Central latelli elsoe i the ea.L a Lim Can
'Once Agency and ie responsible roo tee proper perfevmanco of the Agency
functions. The Deputy Director of Ceatoal Intelligence asOists the Director
in the performance of his duties and sets so bireotor in tte ohoence of the
Director.
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The Director' and the Deputy Director of Central Intelligence are ap-
pointed by the President by and vith the advice and comma; of the Senate.
either of these two positions Jew be held by commiesioned officers of the
armed services, but the two p3sir..icin,; ray mot be oceupied nimultaneoualy by
commisnioned officers.
The staff of the Director of Central Intelligeace includes an inspector
General who Is responsible to the Director for condacting inspections and
investigations throughout the Agorcy, inc:%uaing the survey and evaluation
of the assignment and perfornn3e f tha missions and functions for all CIA
components, and. the inveotigetion of irauml mitten of fends, conflicts of
interest and other mntters.
Piens Component
The nanc Component, or Clnndeetine Cervices sational
aecher4 by which the Agency's csidoneas, counterespionage, and other covert
operations are carried out. It is we the direction of the Deputy Director
(Plans).
Support Co5onen.
The Support Comment, under the &t rection of the Depty Director
(Support), in responsible for providing the overall itnistrstive and other
support necessary to the Agency's intelligence, operational, and related
activities. Support resoonsibiMttes include legal., fineuulial, communications,
transportation, equipment supply, personnel tzeining, seearity, sanegement,
and internal audit services and sctiv/ties.
IntellUence Conponen
The intelligence Component carries out the y's responsibilities for
the overt collection, systematic organization, production sad dirnatnation of
substantiosintelligence It is under the direction of the Deputy Director
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The fwctiona of the Intelligence Cemponent now be greaped in three
general categorises the overt collection of intelligence, the collation
Of intelligence, and the on and diesemination of ittelligence reports.
ES
r411-1?.
7*uds for the p.rfornce 1,1 CIA of Its sctivtes ar provided in the
appropriations by the Congress 'o other Government departments and agencies,
=dare transferred to CIA in accordance with the authority from the appro-
priation committees and the Approval of the Bureau of the tudget. The funds
so transferred are available to CIA. without regard to any ltatione on the
appropriations from which transferred.
CIA officials have advised us that the Amdamode available to finance
CIA activities are sUbject to annual review b special subcommittees of the
comadttees on samlopristions of the House of Representatives and the Senate.
We vire advised that the congressional reviews are JOAO in closed hearings
and are based on cartaintmdget data sUbeitted to the suteommittees and
testimony of appropriate CIA officials. We understand that the detersdna-
tions of the congressional abcaianittees are not subject to farther review
or approval by the Congress.
In addition to the funds providedannually to fleet the ;damned (budgeted)
needs of CIA, CIA has contingency reserve funds available to it. CIA offi-
cials have advised us that bemuse of the nature of their activities, it is
not possible in the advance planning of the normal budget cycle to provide
for all of the intelligence operating requirements in an ever changing world
situation. tor this reason, contingency reserve funds are available to C/A
to meet its emerIF
my mmeds. These contingency reserve folds are, in effect,
supplemental appropriations which are mmia in advance of the need therefor.
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d in use it has been de
CIA' a
supple.= ppropriation needs cannot be included in rnMlrnnwta1 appro-
priations to other Government deportment:a and agencies tBout leading to
the disclosure of the *mounts included therein for CIA t vities.
understand that the budget estimates for each year are Itted to
the Bureau of the Budget for reviers4 and. CIA Ands, including contingency
reser,. hinds, are subject to Bureau -f tbe Budget apportienment.
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of methods
which dc not always c law and. regmlatio is omen-
tial to a secure and effective intelligence service to withhold fiscal and
other information revealing the spacifir... ratare, scope, and methods of
telligence operatdcms, or the identity of persons so enmged floc= unauthor-
ized disclosure. 2he authority l'or CIA tc withhold such information is pro-
vided in the national Security Act of 1947, end the Central Intelligence
Agency Act of 1949.
Section 8 (b) of the Central Intelligence Agency Act provides the
authority for CIA to expend funds vithmxt regerd to Jew ant regulations, and
when made for objects of a confidential, extraordinary, or emergency nature,
such expenditures, when so certified to by the Director of Central Intelli-
gence, are not subject to review by the General Accounting CIffice.
Section 8 (b) of the act is quoted below.
"The sums made svailable to the Agency way be expendet without
regard to the provisions of law an4 regulations relating to the
expenditure of Government funds; and for objects of a confidential,
extraordinary, or emergency nature, such expenditures to be
secounted for solely on the certificate of the Directer and every
ouch certificate shall be deemed a sufficient voucher for the
amount therein certified."
Under this authority, CIA classifies the funds available to it as vouch.red
or unvouchered (confidential) funds. The vouchered funds are those funds
that can be expended in accordance with the provisions of the CIA Act of 1949
or the provisions of law and regUletions normally applicable to the expendi-
ture of Government funds, and, in the Director opinion, the vouchers and
related documents can generally be made available for audit by the General
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Accounting Office. Confidestal funds are those fw1s vied for necessary
official purposes of such a con:adsntial, extraordisem7, otemergency nature
that they should not be accounted for il mail outmode CIA. These confi-
dential Ands are obligated and expenMi under authaelties and regulations
prescribed by the Director. Detail accountings of such co.fidential funds
expenditures are not made cmtaide of tho Agency, out, fur the most part, are
accounted for outside CIA solely ea the certification of tis Mrector that
they expended for confidential., extremmlinary, or emergency purposes.
Section 102 (d)(3) of the National Security Act of 19/1-7, Provides in
pertinent part:
That the rnrector of Central Intel,ligence spormible
for protecting intelligeaco sources and method. frcaUnauthorised
disclosure."
this authority, CIA withholds iron our review carte.% activities,
de, and documeats, which, me have been advised, might reveal intelli
methods or operational locatiors retpardless of vouchimmd or oonl'i-
al classifications.
this authority, CIA also zevietm all visit
rial, including
this report, that is prepared in the course of our Rudit #>rk for dissemina-
tion to other than CIA officials. Thepurpose of such a review is to deter-
mine the proper security classittcetion of the information contained therein,
and to determine whether the person cr persons to -which thC material is
directed. *re properly cleared to receive and maintain such classified informa-
tion. Where, in the Director's opinion, any of the vilirtmetmaterial mi&t
disclose intelligence sources or intelligence methods; the Director has the
authority to require that all or part, cl the material will, not be disseminatedy
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egerdless of the security clearauceE of the person or perpons to which
thematerial is directed.
Prior to the agreement for the extenalon of the General Aceaunting
Office audits at Central nts1lince Agency to include reViews of its
activities (see page 10 )0 we examined certain CIA expemditures at the site.
This arrangement was made vita officials of the National Ihtelligence Author-
ity in August 1946, and has been continued with the succee0ing intelligence
agencies. This site audit of certain CIA expenditures was essentially
14m4ted to a review of fiscal olTieerat accounts, includi4 an eaWAnation
of certain related vouchers and other documents eviemecingthe expenditure
of appropriated funds to determine whether the expenditureo Imre made in
accordence with the provisions of the CIA Act of 19431? or with the laws and
regulations generally applicablo to Government expenditure0. In addition,
the site-audit staff performed liaison functions between CIA and the General
Accounting Office as requested by CIA officials. QuestionOle expenditures
were sUhmitted to our site-audit sta.= by CIA officials for review prior to
payment. Reports were not isuuld to anyone outside CIA, aild formal exceptions
to the expenditures made were no tam, but any expenditures that were
questioned in the audit were telem up informally with CIA Officials, The
site-audit activities were limitee to expenditures of CIA referred to as
vouchered funds.
AUW Cir UMW. FRARTIOW113A4D CJ
In 1946 when the sitegpaudit of central intelligence e4endituree was
first initiated, the General Accounting Office audit activities encompassed
generally the audit of expenditure rott4 related documents centrally and the
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sett3nt of sccounta of fiscal icers, the sedit of fSrazisl trans-
actions of Government corporations, ant the investigation of matters re-
lating to the receipt, dist:urn/mit upplication of foLds.
Mince the enactment of the Central TartelLigence Agency Act of l99,
however, the General Accounting lffIce bee broadened the etope of the audit
of the activities of most Gaverzetzt, uncles. Under our prompt audit
approach the basic purpose o telt: mat to review mad, evaluate the
manner in ehich the agency or act.iviJ under audit carriea out its financial
responsibilities and to reporv. o4r '..i.ndinds, opinions and recommendations to
the Congress, or agency officials, an appropriate. Finencial responsibilities
are construed to irclude the er,,e Ate of funds amid the utilieation of pro.
party and personnel only in the conduct authorised programs or activities
in an effective, efflient, and ,econouleaL
We ',mane, also, agency
practices and proceduresfoil1 i carr4ng outthe &gamy policien and
mahe selective eeaminations actus._ sut.vities and tranenctions an a means
of appraising the application of asincy pactices and, procedures
on the
a
to the Chairman,
al
oned.ttee
Commdttee on Arse:d. Services, Mouse
of spreeentativea, the CotroUer Ceneryl concluded that a broader type of
our ?remit audit approach at other Federal depart-
ments and agencies, is appropriate and clearable for our audit of CIA and
that the limited audit then being eohdhattd be disecutinueC? The belief
vas stated that the broader comprehensive audit is more litely to be pro-
ductive of evaluations of the adudnistr4tive functions, et4ch evaluations
audit
MOre
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would be helpful to the Congress and the Director of Central Intelligence.
It was concluded, also, that any broadening of our audit attivities should
not include an evaluation. of CIA intelligence activities.
It vas proposed that our audit work be expended to inaude em exesdna
tion of vouchered expenditures ad, at the outset, the controls and procedures
used in processing confidential expetdittreo. It 'wig PropPsed, also, to
make a limited examination of 't wepport for confidential expenditures in
accordance with such agreement 43 tO acoeus aa can be res4eKivith CIA. A
copy of this letter is includedav Append:Ie I to this repoi.t.
In a letter dated October 15, 1959, 74 the Came-troll* General, the
Director of Central Intelligence vet forth his Position aUany possible ex-
pansion of the General, AccountiaG Office audit of CIA activities. This posi-
tion is summarized in the next exceedieg paragraph. A copy of this letter
is included as Appendix II to tith, report.
The Generel Accounting Offic comprehensive type audit of CIA activities
will have to remain outside the area 04 sensitive aeurity activitiee regard,
less of whether the Director hal ilymi?xcl his special authcalty under Sec-
tion. 8 (b) of the Central Luta:Lit:awe Agency Act to make t final accounting
therefor. Although all funds aepropriated to the Agency ate technically on
an unvouchered (confidential) baxte, the exercise of the Mirector's authority
to make a final accounting thereor Lz been limited to those actieties which
in the national interest should have the vradasue security ixotectiou. CIA
expenditures are aide Where p,-)seillc usila7.' the genexel aullioritles of the
act without invoking the special auti.orj,kr, as a resIdtp certain,non-
sensitive activities support V coLfIdeuUal operations are funded under
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,11 1
the general authorities of the ac,:, Or the
a*thoriLee avaiiible to
Government agencies by various 31ututog. In such instaneen,
the cre-
hensiaudit of the General AccovntLue; a!Tice would have o in .0 side
the area of sensitive security Avt.ties.
In a letter dated October 2' 1959, the CoiztrGller athised the
Director of Central Intelligence 14m1; the Director's posi*on on the General
Accounting Office audit of CIA v!tiv;ifts presents problimel on sufficient
breadth of coverage and review of dedl Gr the purpose 4r reaching mound
evaluations, but that the General Account1ng Office is 1Lirg to broaden
its activities at CIA -within the principles eagressed in the Da:vetoes
letter dated October 16, 1959. The Compt:miler General advised, however, in
the event it appears after u trial period that the reviveare limited tc
such an extent that we cannot effectively and construetive4accomplith any
worthwhile audit objectives, we will have to consider whether the audit
should be continued. A copy of this letter is ineldied aeAppendix III to
this report.
The following report sections corktain our conts ozi the effect the
vithholding of fiscal and other irtorTeAon has in l?uitio. the General
Accounting Office audit at CIA.
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tIO
Our reviev of CIA activities ha e teal limited to selmeted activities
of the Support Component and ii Inee-elleersce Ccapostani. of CIA. The limita-
tions on our review are suomerlext oyk paipleu endiR of 44e report. We
have had no scams whatsoever to the eetteities of the Pleem Component of
CIA. In the Support Coot, revieTeed Helmeted activities of the Office
of the Comptroller, the Office of Loeietice, and the Audit Staff. In the
Intelligence Component ye revieeei. etleeted activitieu oi the Office oi
Operations, the Office of Centre:, Seferenee, fere the mice oe Basic
Intelligence. Thie report contaens brief commente (el the ectivities of the
Inspector General, but ve have hid no &mese ehateeever to the work of the
Inspector General or his staff:.
Based on our review, we believe that under the Ximitatione placed on
the General AcconnUng Office aerie oi CIA octivitiee lee the Director
letter dated October 16, 1959, it. is nit -possible to perfors comprehensive
review of CIA nctivitles that eculd. be productive of evaltAtions helpful to
the Cmagrese. It is not possible, i4 our opinion, fee' the leneral Account
ing Office to moke comprehensive reviee% acid *valuations of the activities
carried eue by the Piens CoUpt0401K wee the Support Componeme of CIA. It is
possible to make reasonably conelrelmneiee eeviews oX 4he eperi, activitiee of
the Intelligence Component, but mirth review, on a ccatinutee basis, in our
Opinion, would not be prodnntVre3 Erra-LustionS belptil to Congress.
COMMentS on our reviews are at.ntftiLed la the following sections of eeis
report.
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The Plans Component, or Claude
mechenism by which CIA's espionage,
operations are carried out.
The General Accounting Offiou
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rvice, is the organisational
spiceage, and. other covert
Plans Component or its activities, because aeons to condi
opera-
tions is denied to us. We would be permitted to make a v er..tijpe audit
of certain vouchered :funds transactions* -drincipal4 payroll* processed for
the Plans Component in the Fiscal Division of the Office o:,7 the Comptroller.
SUPPORT COMPOMINT ACEVITISB
Office of khe Comptroller
The Office of the Coztro1Jjs. is charged with the responsibility for
budgetary and financial operationc of the Agency, tacluding both overt and
covert (confidential) operations. This responsibility is carried out under
the direction of the Conptroller by five operating divisions and certain
staff units. The five operating divisione are the Budget, Finance* Fiscal,
Industrial Contract Audit, and the Machine Records Divisions.
BOICIMO the operating divisions of the Office of the Comptroller have
both overt and confidential operations and access to confidential operations
is denied to us, the General Accounting Office cannot effectively review and
evaluate the integrated activities carriet, out in the Offiee of the Comptroller.
The General Accounting Office could sake a vsucher-type site audit of trans-
actions processed in the Fiscal tivision, but such aUditsia our opinion,
would not be productive of any satisfactory conclusions or of results commen-
surate with the efforts involved.
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3 L.
wt.MOM NIP If X*
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IA1
is repsibie for
tration of
This responsibility is carr
Division, by /tire branches,
6Pvil1.OPsitot and admixd a-
ties* and prosrems for the entire Agency.
out under the direction of the Chief Budget
An Asol7mis Branch is responnible for the
developmet and administration of budget plan. and program of east of the
three major CIA components. A 13pecial Projects Branch operates entirely in
the area of clandestine activities and is responsible for carrying out the
budgetary responsibilities az they apply to CIA Proprietary and subsidy pro-
jects, including the review and analysis of corporate finencial statements of
the business entities awned or subsidized. by CIA, it order to evaluate the
fund requirements of each project. A Support Branch reinteins the budgetary
records, assembles the segments ot the budget estimates and justifications
presaredly the anslysie branches, and provides clerical avdtYPiog services.
The Genera Accounting ()Mott cannot review and evalnhte the activities
of the %diet Division and the budgetary controls exereisee.by the division
over CIA activities for the reasons stated in the following paregrephs.
All branches of the Budget Division are invelved in confidential funds
activities, and the General Accounting Office will be permitted only limited
access to any of the branches. We were advised by the Chief Budget Division,
that it would be necessary to remove records and documents concerning confi
dential funds activities fron the tiles before we scold be permitted to
review the activities of a branch.
The Chief, Budget Division, advised us that budget estLtes are pz'epere
by the Agency for submission to and review by the end the Bureau of
the Budget, and that these estimates disclose data nortally submitted by
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Govx'nt agencies to the Conreas un1 1 the Burem& o Budget. Th
estimates are prepared on an afl, wtdi basis idth sepemtion of vouchel
and confidential funds activittea MO n1srstand that cloarmipersonnel oi
the Bureau of the Budget review the detailed rseplrements throughout the
Agency on a continuing basis, and that the subcommittees e..,! the committees
on appropriations of the House of Representatives and. the Senate are fur-
shed full information about the Agancy'3 activities in any amount of detail
The Chief, Budget Levied aevised us that tle
estimatee could be made available for our review only on a selective basis
with the selection to be aede by the Agency. Two overall summary schedules
which include all funds of tho throe CIA efeeponents were nude available to
us and, in addition, the narrative justilleatioee sad organizationsa end
functional statements supporting the ttdeet estimates of anhatantially all
of the activities of the Intellijenco Cor onent were made nvallable to us.
/be budget material on the activitieb cr the Photographic nitelligence Center
of the Intelligence Component was withtald, however. The documents to which
we were given access were on an mll 47unds basis and do not disclose the
details of either contleentia:. yr vouchered fund activitien.
As previously mentianed, fa necesaary to meet CIA opera
ments are not appropriated direatly to CIA, tut are included in
priatdons made to certain other Govermmem departments and ege'eies and are
sebsequently transferred to CIA. The Chairmen of the Apprvpriations Com-
ttees of the Senate and the House of Representatives adie.se CIA and the
Bureau of the Budget by letter a: the aeounts appropriated for CIA activities,
and the appropriations in which the funds are included. The Chief, Budget
uire-
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sed us that such lettere setting forth CIA
be made available to the General Accounting ?flies for re. because
these letters disclose the sources o- C/A funds and would lead to the
daclosure of the methods by%thich the funds are made available to CIA.
Mdliscal Divillome
The division of financial responsibilities in the Office of the
Comptroller is generaly based on whether the activity is me a sensitive
security nature, vhich in order to protect intelligence methods, procedures,
or sources should not be accounted for outside the Agency, or whether the
activity is one usually found in other Goverment operations and the related
expenditures could be made in accordance vith the provisions of lav and
regulation usually applicable to Go:manumit transactions and, in the
opinion of the Director of Central Intelligence, can be audited by the
General Accounting Office. CIA funds alloted for einsitivn security
activities are designated as unvouchered ecofidential) rUeds and the res
ponsibility for the financial administration of theMe confidential funds is
assigned to the Finance Division. CIA funds slated to nceumositive activi-
ties are designated as vouchered fun& and the responsibility for the fin-
ancial sumgment of these fuada is assigned to the Fiscal Division.
CIA expenditures are pail '4y Goverment check dravn it the Treasury
Department Branch No. 2, of the Macula Division, or they are paid through
the covert disbursing systen of the Finance Division. Where the transaction
is of a nature that CIA or the Governmeat may be ideutifie4 vith a trans-
action, the payment will be made by Govertment check 'which will be drawn in
the Fiscal Division regardless te: the vauchered or confidestial funds classi-
fication. Substantially all vouchered funds transactions ire paid by
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Goverament check. Where the tressactimm is of such a nature that it
shomld not be identified with the kvernment, the payment is made through
the covert disbursing system. of the Finance Divieion.
Finance Xviedron
Finance Division responsibil ties include the preparation and
e of the financial records and accounts, amd the periodic financial
reports on confidential funds ilesertil activities; the adeinistrative
audit and certification for payment of elaims which are chs.reable to con.
fidential funds allotments; the operation of a -overt disbersing system; t.:he
preparation of covert payrolln; end related activities.
Officials of the Office of the Comptroller advised us that the Gener
Accounting Office would have no audit access whatmoever te the Finance
Division and. the activities perforse(1 Li that Divisibn. position is
based on the fact that all of the sctivfties of that Divisicn are confi-
dential activities and are therefore precluded fromreviee inder Section a (b)
of the Central Intelligence Agency Aot or 1949.
The Finance Division is respoasible tor the in
fCIA financial
property accounting records, regeriless of whether the property was acquired
with vouchered or confidential-Ands. 'item accounting records and controls
are not subject to review, because we axe not pereittodaudit access to
Flame? Division activities. Ail inventory, eacept edvdnitnrative supplies,
are conoiderved by CIA to be o sconfidential nature. AdUlnistrative supplies
are also conaidered to be of u confidential nature in soma: Instances, for
example, where such supplies are far overseas use.
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nacal. Division
Fiscal Division responsib ltiet incLude the preparation saimmintAmmnce
of the financial records and ant and the periodic repOrts on vouchered
financial activities; the admeistretive audit and dertifiCation for payment
of claims ibith are chargeable to voucherod funds allotment:A; the operation
of a Treasury Department Disbursement Eranehi the peevaratton of vouchered
funds payrolls; and related activities. In addition, all funds appropriated
to CIA =dell CIA disbursing funds are initially recorded on the records of
the Fiscal Division, and the Divieion is responsible for maintaining the
applicable overall allotment =I expendithre control recorMs. /n the case of
confidential funds, this overall control is maintained thrOugh a series of
reciprocal accounts on the reeorlr of both the Fleet' DiviSion and the
Finance Division, The detail control records for vouchered funds are main-
tained in the Fiscal Division.
The General Accoenting Office is permitted only liattOd audit access to
the records, accounts reports, doctrients? and filet prepeted and iaintained
in the Fiscal Division. This restriction has the effect of curtailing the
audit by the General AccountingOffice to a limited voucher-type audit of
transactions processed in the Fiscal Division. Our comments on these audit
limitations follet.
The central accounting records z&indned in the FiecUl Division include
a general ledger of vouchered funds accounts mbich ledger Mo supported by
certain detailed subsidiary acceunts and by four books of original entry. The
books Of original entry include registers for Cash Receipts, Cash Disburse-
ments Dille Rendered, and General Journal, and fora the 'Wide for monthly
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summary po tings to the general ledger accomits . In addition, an allotment
ledger to control the obligation and expenditure of vouchered funds allot-
ments is maintained in the Division.
CIA officials will perai. audit acoeia to the
not rmit audit access to ti, o of the books of original
be permitted to review the Register or Casks Receipts, or
but will
. We will not
General Journal.
Officials of the Office of the Comptroller advised us that the Register of
Cosh Receipts would disclose the sources cf funds vbich are made available
to CIA, and perhaps, the devious methods by vhich these fliads are made avail.
able to CIA. They advised us also that the General Journal night include
sufficient detail concerning the reserve for continipmcies, 'which detail
might be coupled vith intonation available elsewhere and eight lead to con-
clusions concerning the direction al sensitive security operations of CIA.
The officials stated that these limitations vere imposed 14 order to protect
intelligence sources and methods from unauthorized discloser..
Vouchered funds expenditure* are sot certified to by the xector of
Central Intelligence under Section 6 (b) of the Central Intelligence Agency
Act as being expenditures of a confideneiel, extraordinary, or emergency
nature vbich cannot be accounted f3r outside CIA. ROvever, the vouchere and
other documents supporting certain vouchered funds eupenditures processed in
the Pigtail Division are not available for comprehensive audit by the General
Accounting Office.
CIA veuchered funds eenditures fall into two general ca riea:
(1) vouchered funds expenditures tiie are chargeable: to vouchared funds
allotments, and (2) voucbered fueds expenditures which are obargeable to
confidential funds allotments.
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QtZiciaia f the Office of the CctOUera
and te supporting vouenem :AuJids espendiUir
able to vow-bored funds allotmeato Basy initLate the name?
of a project or activity which oennat, Lc 4/k:c1osed Outai4a
location,
Oe
officials stated that if such tramsaction4 sere selected ' sit, the
vouchers and supporting documents coulLibit be wade available to our audit
staff, We made a limited revive of oeleemed vouchered runes empenditurer
chargeable to vouchered funds allotments, and found that 4Prme of the trans
actions selected vere vithheld fro* our rovies. Officia:3 of the Support
Component subsegeently advised as tz oat, up: kik*, traaet.,:Limas chargeable
to membered funds allotments vW oe vitakeld fz.ot . our roviev on the con-
dition that the sensitive information, l* tiLthl in our atifit and is not
recorded in our audit larking papers
Officials of the Support Comment advised us that t*
other dog:marts sipporting wad:mitred 1\411413 expendi
to confidential funds allotments coulu be made available Zr
audit by the General Accounting Office, Imrt since these trussactio involve
activities that are of a confidential, crordinsz7, or emergency natmre,
rs
under the limitations set forth iuta
r s lt ter (*.WI October
1959, they are 'withheld frommegalkensivu audit nyt1 euerelAceounting
Office. PUrther comments on them: e nt.turee are j1ted on paces 24
through 28 of this report,
Officials of the Support Conponent advieed us that ttel general Accounting
Office meld be permitted audit &get* to tile records MIA aud documents
maintained in the Payroll Branca of the Plecal Division, but would be per-
mitted, only Limited access to the perm 1 files of indivtdmels included.
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on the voushered
personnel files of
would not be permitted to hew 40A*4 OD the pereonnel file of employees
engaged in clandestine otiVitj or direst osppott t ldeetine
activitlee. it is our understszadiag t this arrangemen-xnadpermit the
11. Wa vould be permitted access to the
Alti.0404,
purely overt astlyi4es but we
Oenerat Accounting uffiae to asiis..;
of the employees of the In' 11411E0 I;ouponent, xt would
review of such files of all an?loyaea tae Plans COMpamaM
cally all of the employees of be Stro?,xut Component.
Based upon the doilaP volume of louchsred funds trimasmrtions charged
vouchered funds allotments tkva major .11Al4ty of the Fi .aL Division is
payroll activity. Thenem/ Divitils personnel rervice uligations
against fiscal year 1959 vouclered fuads 114$ about 8( per aant of the total
vouchered funds obligations ohargel t) vouzhered funs allotments. The
personal services obli tions ott telligence Component however, repre
seated sly about 20 percent s-Z -1 7IA fiscal year 1 59 personal
services obligations or about 3.surcaat o the Pieced 1:1144ik:A4 fiscal
year 1959 personal services obligs;IYan.
The Chief, 1iscal Div/sic:14 aIr1344 U3 that prnevt
the vouchered funds payroll or. nes4 ired electrenic
Rovembe:: 1960. He further advised U4 %-.Lat the related .x.6404414 and proetbirea
necessary to the proposed chande baTe it jet been finalised.'
tically
ude tne
and of practi.
Fiscal Division,
changeover had not yet been
that at May 3, 1951 this proposed
a.
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It may be possible to pertorn a payroll audit of the woudhered funds
payroll activity under present audit limitations, but the ability to audit
payroll activity after October 1960, cannot be determined until the new
payroll system is installed. We de not believe, hovever? that the audit of
payroll activity would be productive of evaluations that mould be helpful
to the Congress.
Industrial Contract Aufit Division
The Industrial Contract Audit Division (ICAD) is chergtd with the respon-
sibility for the review of financial and cost data submitted in contract pro
posals for determining throug4 Id surveys the extent to 'dila the Agency
can rely upon a contractor's coat determinations and the fisancial ability of
a contractor to perform under contract; the administrative-pre-audit of all
vouchers under confidential binds contracts, and of all vo*Chers under
vouchered funds contracts, which will require a cost or price redetermination
audit; the field audit of all CIL cost and price relletenthisble contracts;
and the reconciliation of certain hank belanses of the covert disbursing
system of the Finance Division. The Chief, ICAD, advised us that the contract
audit work is performed entirely by ICA)) eapioyees, nest of Whom are stationed
at CIA Readvarters, and that without major exception the oontract audit work
follow the applicable provisions of the Armed Forces ProcUrement Regulations
and Contract Audit Manual of the Department of Defense.
Because substantially all of the ICAD activities pertaUl to confidential
funds activities, and access thereto would be denied, it would not be pos-
sible, in our opinion, for the General Accounting Office to review and
evaluate the activities of ICAD. Review' by the Genital Aconunting Office of
the audit activity of ICAD pertaining to vouChered fends cootracts would be
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ted. but it is only a
re tobla tan percent of
180-01240A000100140112-3
segment of ICAD activity. representing
dollar volume of cost and, price redstar-
t.
0102
penditures vill or
Act of 19
t be accountel
(a) o
?
of its ex
-
audit by.
the General Accounting Office. On this basis, CIA elassifies the fends
available to it as either voucherel funds or confidential tondo.
Vanchered funds are these Pends that can be expended *a accordance with
pro'irisicng of the CIA Act of 194$ 4r -)t' law and regulation izemally applicable
to the expenditure of Government fonds nay in the c4nion,of the Director of
Central Lutellisence? the vouchers /Lai related documents geeerelly can be made
available for audit by the General Aelounting Office. Cont.dential funds are
those Awds used for necessary official Femmes of such a. oonfitlentiel extra-
ordinary, or emergency nature that thee eamnat or should ret be accounted for
in detal. I outside CIA
Confidential funds trunsaations t 4.14 are diaburnta that are
aceounted for on the certificate reator of Central InteUigene
Sec 8 (b) of Pd.. 33. 3, alch 3rovides:
"(b) 2be sums made available to the Agency may be evended vith-
out regard to provisions of Invited regulations relatipg to the
expenditure of Govenment feed's; art ret, ?Weeds of a confidential,
extraardthary, or egssreatey untureo such expenditures t-o be accounted
for solely on the certificate 02 bbe lireCtOr aad such certificate
shall be deemed. a sufficient levechet :or the amount 4,0 certified.."
Voucherect funds trensactione are :Tt nitrattrted for os the at, cato of
the Director.
erk.411111..A.1
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Included in these vouchored and confidential fends tromactions are
certain transactions which are 'aid from. 'leuchered funds but are charged
to confidential funds allotnents. Offieials of the Office of the Cow-
troller, CIA, advised us that vorachereo. brads disbursementu Charged to
confidential funds allotments represent transactions that are not sensitive
until associated with CIA, that they are not accounted for on the certificate
of the Director, and that they are disbursements by Government check for
services, equipment and supplies obtained from or through other Government
agencies and commercial vendors. These officials initial* advised us that
these pgyeents were not being nade available for audit by the General Account-
ing Office staff assigned to the audit of CIA, but whore these transactions
were payments to other Government agenclea? the related disbursements by the
receiving saincy were subject t3 audit by any General Accounting Office staffs
that might be assigned to the audit of ouch agencies.
Disbursements by the receiving agencies of such CIA f.ind.smy be sub-
ject to our audit, but in any such audit we 'would be preclUded from know
ledge that the disbursements involved. C/A, or were to meet C/A requirements.
In our audits of other Government agencleo there heve beeu instances, however,
where CIA officials have requested that the General Accounting Office cease
certain audit activities. The Maputo' Comptroller advised us that the
instances eters the Gemeral Accounting Office has been requested to cease
audit activities 25X1C
25X1C Such contracts, we were ad-
vised, do not involve fund transfers t*ian CIA and other Goverment agencies.
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25X1A
25X1C
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tlun that these
ens
be about 15 psi' Cent of CIA'e total expenditures. TM toiz1 of these vou-
ts charged to conlidential funds allotments are
inei*t in various reports issued by the Ccieptroller as veuchered funds
transactions. The activity during the tvo immediately prior fiscal years
may be suemarised as set forth below.
sed us September 19, 1960, that if
agenciesher Go1mz1rt vere certified by the Dir-
t - uould be exempted
rrc* audit by the General Accounting Office. The disthunsisnts to other
fere, are not certified to by Director under
Section 8 (h) of P1L. 81-110 in order to permit audit by tte General Account-
ing Office of the asburseaserts by the receiving agency. The pertinent parts
of the Ocartroller's letter are net forth below.
by the memi
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25X1C
25X1C
25X1A
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wade to other totems
la matt es* so-
isthiseetwitr *et
vies wool
en *Wit is tied
are
free sety
by the
t tie dibmsente tc
fiemML years 1959 and
1960) ?-t o a ount-Log Office, because
the t cticnre euittv, . these ?Magic
advisedus, hamever, fiscal year 1961
tends the audit comp tion 8 (b) of P.ii. 81.410 eill be
'Wiled ani thc expenditures NAIL JO Apated for =dor %lie certificatior
of the Director.
DePut7
that there d
supporting
t)
funds allotments avallabla far-mnettme.typs anti
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d.
3, 1961
other
7
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Accounting Jftice. T4'iii ou1 t'
perZorni the sane voucher- ype aleit or ,glese 'Gran
prior to the Ultima= of thir
ce to
op possible
The Office of Lag!.tt1cs, v,itr the rectjon of the *rector
tics, is responsible for the :21111117UL; and 1e"rtstton c4 CIA I
support. This responsibility inoludos the iftWaviduil11
COMItadait' and disposition of 44E41 elpipment, ouppliee and re
the transportation of persor=1? eguipami, ai4 trApplies; and. Ute
Of printing, sail, and courier :services. Mese rosimasibilitios
chtreed through :MVO oporatin4, jj ic..ort.ain sta.ti` units.
operating divisions are Printintt Benelc-=
structluno %play, and Traneirrattior.
The General Accounting *Mee, in .fita' opinioa, kxta vale
and evaluations of the centralised at tib*ities of the Printing
ision. Booed On our reviews and discus:done with ofU.cini4 oi
Lo.atiee during fiscal year 1960, the lotaral Accomiting (fries
cannot review and evalunte the ektiv:ities ce the trocurenent,
d Transportation itivirt.ons. Imo:fors Carttlill CLI14160 in the policies,
practices, and procedures affi,v;ing the ac V.vities a -Ghost divisions are
presently being inpleer_nted attd. ere el.peeied to incrImse the General Account-
in Office
access to these activitieL
Effective littlyr 1.0 1960, CIA setob
pexit the use of vouebored funde 431otara.
curet tent vith CIA watrity recothoommts.
peratte d funds to be usod for 4.,ifertpr:ie rcial
vendors in thenom of CIA vbero thedo.--urentb atupcvting the transaction do
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GUICR
to Reel getate
cal
Sc.
of
poliatec and
rocedures to
property Pro
ff?finetrallY
28
rtv-tE%-nrAmIt
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ti
or
voudhered funds procurement
development onntracts and to
vas housekeeping and Janitorial
make additional newly actions and
by the General Accounting Office,
into the utilisation of sua
gOnce Component.
t of ma
ting orricc 'iu ix X,eraitted to at* access for review
tic.e, and procedural applicable to nencov.rt CIA pro-
but any veriiicationc thereof mould bi limited to
t actions, lisadonixters vouchafteltmds jrocure-
dted certain research and derelopont contracts and
rocureuent of 0,014 strative, bousekfivina and Janitorial
t in fiscal. year 196(). All other fiseal yvar 1960 pro-
fund transactions, or vtuabered fund
ntial allotments.
of prcur*nt activity during the 6canuth period ended
tte General Accounting Office would
to de
see to evaluate tbeaeprocuremant activities. We found
that 330 contracts authorising the expenditure of about $5.8 nillion of CIA
funds re entered into during tbis periot vith nowlgovarmient contractors.
Teenty of those contracts obligating about $1.4 million or ranclummal funda
ilere gagage4siss jpoigcall: ceargoitgiggrom 1101143 tpe
k
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obligating about $164 million mem contracts paid, from oonridential funds
or trait vow:hared funds but charged to confidential allotments. This
review did not include standard purchase order agreements entered into vitk,
non.governmental souroes, or any cOnialactbmi. agreements with other Govern
ant AISOncies.
SMOLX 14Vitsion
The Supply ivision, under -tie dtrecl4oii of the Chief, Supply
is responsible for planning and implementution of the CIA 049179=gram.
inc1zdiz the accountability for, and the receiving, inspocticc4 storage,
maintenumm issue and final disposition of CIA material.
Officials of the Supply Division adWIsed us that the femoral Accounting
Office woul4 have no access Vhateosvea' to the physical assets of CIA that
are under the control of the Supply Division. We would be permitted to make
*sleeted reviews of the unit accountability records maintatned in the Supply
Division, with the selection to be made /7 CIA. We liccildlot be permitted
to make any overall review of these records. The General Accounting Office
would be permitted to review the policies, practices and procedures under
wtich the supp4 program is carried Gut, but any verifications thereof would
be limited to the documents and records OVidanCiAglitouchertd funds ections.
Headquarters vouchered, fends supply actions during fiscal year 1960 re
nutted to administrative, bouseskeeping end janitorial seeplies, Berrie
and equipmmatimed,the blanket order acquleition of are parts and petroleum
products. All other Headoarters supply actions in fiscal year 1960 were
confidential funds transactions.
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In tradition) of tints atfiess of the Comptroller advised us
reeirdless of etherthe pervert, um acclaim. frau voulthered
eonftmtjii3. fonds the General Ameounties office could not have any access
to the financial property ecostualdng merits.
MONIESS.USSAWISS
The enorteti fls1aa,under the di of tile Chief Wane
tion Division) is resocassiliky fur the tmennortation of CIA peroccue3.,
equ1rut, and mplies, and. the operation of CIA motor vehicles end a
tor pool
Officials of the Traespartatical 111414011 advised me that the fpist bulk
of CIA tivaaportation shipmate are cleadisartiza arweeents vide under the
mover of other Qoyerrreint swam 1320 dreatiments evidencing these ship-
are not euts4stet to review the amoral Acovaiting (Mae as CIA
treateactions. The documents evidencing elsipments aide under the cover of
other loverrieent species sus $ubject) Iracever) to maistralised, audit by the
Transpnriatien Divisica of the Citmeral Accouating Seim. This centrilized
audit relates Mbolly to the ilocumats submitted to ids General Actomulting
Offices which cersot be identified idth CIA, and ewer as movements of the
Goverment agency used. for stover imposes? Such as audit eammot be wed as
a beads for the evaluation of CIA transportation aetivities?
hapjanagals
Tiro Printing Services) Divisiato ander the directicie of
Servioes Division) is responsible for the dirsatide of
including the operation and usiutenenee of stoutish
facilities at liegelyetrters. and the furaisiming of technical
on specialprinting and ruproduetion fticihties LA other ileadvartai
wriPlanational units.
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\ 0
Approved For Release 2001,a,
id bave
0-01240A000100140112-3
te
operated by the Division. Be &blow alsu that we could
practices, and procedures under Nellola thee plants are opera
we wad have access to the records And docussnts upon ehiuh the cets of
these facilities are estimated and charged to the various users of the
service within CIA and the other Com-meat agencies. Boviover, the distri-
bution of the cost of the printinc services to users vithiu CIA are to
confidential funds cost records Bud w would be prolluded from verifyinz
the distribution of such charms to the related cost recoras.
INTORNSh MVO! AMPA4MME
ClAmasegement controls include three internal review aocba
the Support Component, an Audit StafT is responsible for conduc
audits of CIA financial and.pwacert, activities, and a Naollammon
responsible for conducting; mems4pmem revs. An Inspectur General
Staff of the Director is responsible for conducting inspections end,investi
tions of C/A activities.
or Cot
Audit Staf!
The Chief of the Audi
Director (Support) for an md p enta
receipt and d bient, and a ication of
CIA. This responsibilit7 includet the c territion as to
In
rl
13
"P is re
&matte a
the
to
and property of an activity audited are uned in an econceital, efficient,
and. proper manner, and. vbether calls use in in furtherance et an, activity
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21141/99404.?
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'
Approved For Relean
kr-RDP80-01240A000100140112-3
authorized
internal audit may be 1itei ?z ord
cover, and to adequately pro+
In carrying out its responsibf..lil
give:
**count
ittlities
enstodar., and of
other rebated adod.n.istratt
Deports on the results of tbe
of au
mad security
atipiss of auditiwis
titelernes of aeoeteralmg
feeds
and ptopert$
teres end respetua
relation to the reipts
and. other assets; ind
cos."
performed $16re directed to the
ornization audited, the Deputy Directo' (SuPport), and., Where appropriates
to the Director of Central Intelilenco.
TheDeputy tgrector (Support) seviet.
Of the Audit Staff hen been in 121.4o area or claudeettne Sc
advised that internal audits upport activities lavolvitg both oonfldea-
tisi. and vouebered activities &14 not septirete the cionfidettial frole the
voumbered activities. Officiale of the Audit staff.adviseC us that about
90 percent of their audit effort IA in Ube area of alandostios activities.
In our reviews o, the nreal Division and the frocurenent Eivieion, we
wre gill= access to pertinent aunt reports because the ruports did not
disclose any semeitive inforsatim. W Notre reiluiedaccesps however, to the
dir1ijing working per on i-;h3 u*dtt Gf the Procurement becaune
the confidential es4vouohered ooted not be sapeauted. In our review
of an activity of the intellidesee (Jjc4nent,we vere giosn access to the audit
reports and.to the related verldne papers svplicelat to vmehered funds
ire e' fort
itataer
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33
Approved For Release 20 11A1P80-01240A000100140112-3
Without complete access to U13 autIt program,
the General Accounting tf Me a (=unapt, in ow
effective evaluation of the CIA Internal suit activity
0#01,4Wa. $4.t.t
Pr
The Clief, lemegement fits
to impreve management art offi
other tango reviews of the orginitetica, tis eyat, methods
zation of personnel o tho various CIA organies onal units.
performed at the cequent oi the officials 41 the various CIA
ts. Based on rue* reviews the Wadimmet Staff submits
tions resuittto. t..7oe. such revives ts the interested
eral4ou and rd $X7 action.
f activities of the /ate:Inmate Compoem
d. recommendalsas regattas from such WInagement reviev.
041COS8 to repor
of the In
Ingector Gen,rstl
The Inspector
Component
is responsible for
investigations on. 'behalf of the D4ree:b4:-:' of CeWaal -
the Agency, including the survvaldeinAluatton t1s ae;at arid. per
formence of the missions and furxtt.orkF4 all cowmen
the investigation of fraud, *tense of funds, conflicts of laterest, and other
matters.
144 were advteed by the Deptliy :
tug Office welad have no access ghltsoever te the reports $nd **icLn papers
of the Inspector General.
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Approved For Release 2 DR80-01240A000100140112-3
CCWOMIST ACTiV;MIS
The activities of the intelligeace Component may be grouped in three
general categories: the overt colieceon of itel.U.gance infcawmtlon, the
indexing and collation of such infernation, and the produation and dissemi-
nation of intelligence reports baled au this intonation. In addition,
certain covert (confidential) actvities are performed in this Component
The activities of the Component are oarrielout under the direction of the
Deputy Director (intelligence) by a aenioc Research Statfoil International
Communion, a Photographic Intelligence *sitars and the seven operating
officen referred to as Offices of Operations, Central Reference, Basic
Intelligence, Research and Roport4; lietimal Estimates, Current Intelltgence,
and Scientific Intelligence.
The activities of the notaipisphic inimaligence Center are confidential
and ve have had no audit access thereto but sabetantially all of the activi.
ties of the seven operating offices are overt. The Office of Operations has
primary responsibility for the overt collection of intelligence information
and the Office of Central Reference has primery responsibility for indexing
end collating intelligence inaermation? The five remaining operating offices
are primarily responsible for the production and dieseedration of intelligence
reports. The Office of Basics intelligence for example, responsible for
oordinating the production and maintenance of the Notional Intelligence
Survey, a comprebenaive digest of 'mate intelligence on feesign areas.
Our reviews of the overt activities or the IntelliemeatCWmponeet were
mde in the Offices of Operations, Centnal Zeferebeep and Susie Intelligence
to termlne on a selective basis ubwlher these activities ure effectively
and economically carried out aadare acoordance with hastc authorizing
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Approved For Release 2001102QA.:..ql&Bpp.80-01240A000100140112-3
Utittlin I la
legtalation. National Security Council Intelligence Directives sad other
regmlatiens, end whether adequate atininistrative procedures aro used to
guide and control the activities of these ciliate.
Booed en our reviews me believe that there is
to is rwvievi of overt operatioss of the intalligenos COsponeat. In our
opinion, however, sudb reviews vill net be, productive of eigpdammut evalu.
*tie* priacipally because Ve aannot feaeibly evaluate the extent to Which
needed overt inlOrmation is available bur collection ordetermine ths need
for the intelligence information selected for collation and use la the pro-
duction of intelligence reports. Bemuse of the great guilnktty of infbr-
MUM* available, out 90 percent of %he annual expanditeras of the Intelli-
gens* Cempommat relates to pmyroll end other contractual payments fOr personal
services rendered in selecting or the bowls of pareonal jpigement under broad
guidelines established by the intelligence community US* Stossitis lafersstiss
to be colleatedo colleted* and uesd in the production of intentional, reports.
Our reviews in the /ntellignace Component disclosed certain natters
raIntlng to: (1) the finsmcing by CIA of certain Dsperineet of State
activities which do not seem to be the primary respossibiaty of CIA and such
tineneingney here the effect of supplementing the ansual apprearlatioss of
the Department of State sad (2) the fineralag by CIA of certain Library of
Csadrsas sotivitle* Allah substantially transcoad CIA's isterest and respon-
sibility.
ear osamats sad findings on mice-of selected activities of the Office
of Central MeSarmaso and the Office of Mae Intelligence together 'with
CIA's cements, are included as Appendix 1V to this report.
?
i ?
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3
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A:Wowing are our comments vd.th respect to the activities of the
selected offices reviewed.
0;fievi of 9perationq
The Office of Operations (41)) ib I xumible for admivietering; as a
service of moon camera the selective exploitation and rOporting of
intelligence information obtain:4)1e from domestic nongovurnment sources,
foreign radio and television brunt:nests, foreign language publications, and
analyses of material objects originating vithin the Soviet Bloc. Respon-
sibility for emploitbag and reporting saloated information from these
TATSPEC
STATSPEC sources recto respectively, via, thE C-mtact
Foreign Documents Divisions end the **net Materials
STATSPEC
Staff.
STATSPEC
V. reviewed acttvitjeg
and the Yozeiga I awrta Zdvislon.
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25X1A
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STATSPEC
reporting on a silsetive
several, lumdred thousand
journals, books, and mono
A10-01240A000100140112-3
roquiremnts conc0
ob
needed intelligence are clevelopei in at interdepartmental t' tee on
gsploitation of Foreign language Pubtliemt..oas (C1012) of diic1i tha Chief
FDD, is the chailman. The catmil,tee ie emtiosed of repziesontatives from
other agencies of the intell1tjaa3e cxxourr.t, carry Otti, its responsib
FDD bea a staff of about 275 distributed',-...brc)-44.slat its War,hington head-
quarter
various unit
service?.
tbe
and
In additioei t h1. staff,
25X1A
s and 25X1A
guidance 4f 711D sppt 1,100 cpen-ond
th indiviluate 'she have eared]. to Perona
taiumalating? editing, typg, and printizig
sad orti*ct per
pze in accordance 4th the broad retpireliterr develaded
5,500,000 foref.gs-...anossge pager annual -1,y, fad select, from
this coterie/ the informatior t uisI?erperwl by P1F Intelaigiance inform-
ticei selected from this NIfiterIal dare-..nk; flseal year 960 moulted in the
production or some 200,000 pa ass of Itricli3b-language repciL ,s.
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ij
nrinri ILO
Approved For Release 2001
the
The Orrice of Central
M0-01240A000100140112-3
(OCE) is responsible fir idthm
direction and administ. tivxl support required t itstn as
a service of common concern CIA's oentralised reference service. it-
tivities are carried out under Was direction of an Assistent Btrector by
three operating divisions, faLo regisArs, a library, and a number of !Maris.
We reviewed activities of the Liaison and.Colleetion %du.
Machins ths Litriri? and tto Blogpaphic Register.
ItIMMABiatiatigtelAta2B
The Liaison and Collection Atrial
) is priirily responsible for
conducting and controlling inter.egency si intra-aseory operational liaison
'with respect to servicing reqpasta frcAu CIA and other Cknennnommt agenclee for
intelligenoe support, providing for the coordination of inte31igence
tiOn reinstrements, collecting int1:11..geree information rm.:nether Government
agencies ant. their officials, aid prod4cing intelligence inenroation reports.
With a staff of about 25 LCD serfLced itr.L.13 fiscal year 1360 approximately
5,700 requests for intelligene evpoil4 700 nev requireomer; directives,
500 briefing and debriefings, and paliUshol about 550 intelligence informs
tion reports.
IAlmosot3Wielete
The fteueentsDivieiot (It) lo primar14 responsible f* providing a
central Amingy service for the ric4a cn4 dissemination of intelligence
ts and non.CIA cables, with the requiraments of
athorise recipients; develccing and z- tainingacodimgandindezing
systea for the retrieval of inte:;.:1.igertce documents frae the: central respository,
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3 9
Approved For Release 2CCONFIBENALP80-01240A000100140112-3
to $e
in
nteLligence doctainta the appropriate
retrieval code and inx. With it staff or about 110, DD received, coded.,
and distributed &zrtng fiscal yeur 1960 approximately 513,00) documents and.
cables.
phehime_Dpi on
The Machine Division (MO in primarily responsible fot providing
accounting machine (IDM) indexes of documentary and graphic intelligence
terisi.s held by OCR, maldng microfilm photographs of such intelligence
and, preparing such photographic reproductions as are required
for reference purposes. Using a staff of about 80, MD added. during fiscal
year 1960 approximately 2,400,000 IBM index cards and 1,00C,000 photographs
to the files of OCR. Male* reproduced frosindcrorilm *bent 500,000 pages
of intelligence information for referenoe purposes.
CIA 14brocx7
The CIA Library is p ble for providin4 central Agency
repository and reference faciliii.s ror foreign intelligente informetion
held by CIA. With a staff of alxmt 140, the Library provi,ed during fiscal
year 1960 some 747,000 references to 337,000 information ritiPasto.
The Library also has assumed under ar, arrangement vitt, the Library of
Congress certain responsibilities with respect to the fin'facing of Library
of Congress activities concerning the publication of a Monthly Index of
Russian Accessions and an last ifuropeanAneession Index. the.. publica-
tions are primarily distributed to public and, private research organiza-
tions and libraries in the United States and many foreign nations, including
some
in the U.S.S.R. and its satellites, end the projects, in our opinion,
substantially transcend CIA's responsibiliby for previdingl a central
reference facility as a service of comman concern for the intelligence
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Approved For Release 200 t
1494904?, AA978040240A000100140112-3
Unfi
Immunity. Our connects concerniag this activity ere included in
Apvemdix IV to this report
11161F104e 11.0;ban
The Elierephic Register ) is assagoiMprinery resfonslbiL
nelataining and providing biographic information on selected ecim
ty for
fie
and technical personalities of foreign countries, end soloomic personalities
from countries inside the Sino-Coviet Moe. BR also hes *Assumed under an
agreement with the Deportment of State certain responsibilities with res-
peat to the financing of biogrephic coverage on selected political and SOCIO
10001sl personalities of foreign countries and economic personalities from
countries outside the Sino-Soviet Blot, which seen to be the responsi-
bilities of the Deportment. Our oomments concerning this activity are
included in Appendix IV to this report.
A ceibined staff of about 10, including 27 at BD financed activity
of the Department of State, provided during fiscal year MO bislang/Die
reference service to about 6,000 biographic requests, Prepared 6,200 written
reports, and banished 1,169,000 name references and documents.
Office of Desio I1te111404eg
The Office of Basic Intelligence (OtI) is primeriiy sesponaible fbr
coordinsti.ag the meintenance ant production of the Mitionel Intelligence
Survey (310; for making such requests of other Government divestments and
as are necessary for the development and maintenance of the EIS;
end for the review, publication, and dissemination of the XIS. Primary
responsibility for selecting and producing the political, sociological, end
most economic intelligence included In the NIS seems to rest with the Depart-
nest of State. Primary responsibility ter the product:Loma military intelli
once rests 'with the Department of Defense.
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41
Approved For Release 2001N /04 : CIA-RDP80-01240A000100140112-3
1#Id
Pit
The NIS is a comprehensive digeet of selected bade intelligence cu
foreign areas. The digost is deeigned to serve fully the strategic and
operational requirements of the Department of Defense, the foreign policy
requirmsents of the Department of State, and the lower planning aad opera-
tient' requirements of all other Government agencies. Broad policies and
operating requirements concerting the intelligence infOrmation to be in-
cluded in the IS are developed under the direction of the National Security
Council and an interdepartmental National Intelligence Survey Committee of
Which the Assistant Director, OBI, is the cbeirman. The komittee is
composed of representativee from the Departments of State end Defense.
OBI 's regponsibility for coordinating., reviewing, publishing, and dis-
seminating the 444 IS section.% produced during fiscal year 1960
diseharged by a staff of about 80.
OBI also has assumed under an arraegement with the
responsibility with respect to the financing of of
State activities concerning the production of political sociological, and
econceic intelligence contributions to the XIS. These activities seem to
be thereepoesibilitr of the Depertment of State. About t40 Department of
State employees were assigned to this activity during negel year 1960.
OBI's fiammtUag of en activity which seems to be the primery responsi-
bility of the Department of state may hare the effect of eapplementing the
annual appropriation of the Deportment of State. Our eomments concerning
this activity are included in APPetdix /V to this report.
of State
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CONFIDENTIAL
A P P 11
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Approved For Release 200
COMPUIDLLIM
B?133200
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wenvancet 25
SUM
3959
Mr ? A. T. of our Civil Meounti
and A attended u;,.ejtL aeetiog of
dicuui a,w au4Ut revansitilitios 44
aemelusion of Uzi* meatinfip
for the l'Utwt; =Lit wtLviti..
at ti A?y.
Approved For Release 2
1 80-01240A000100140112-3
CONF 1141
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ai.ncerely ycnir
(1311;m1) Joseph $110Pbe
emaptitt-43ar Geewital
c4:* tate Suited Staten
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CONFlifirint
or ppnj ii
Approved For Release 2001/09/047M-RDP80-01240A000100140 112-3
V.
Os
me had the piaaeweof
Samuelson Qf this
ispreved? X believe that the
t audit eetivilits im 4 comei
in thie tIreetiou I level t
dementai. svpoets?
Intelligeoco Agency Act of 1949, the (*ogress? recognizing
problems invoXrecl in The eenduct lot inttlligenee activities
ties *Tim 1*. elpeDiLiturs of awl eecsozting for Atosnecy
A %cum a et that-, $am (formerfiy Section 10) Provides
or ebitecte of * coundiatiela extwoordisery, or *Mergency
ted ter volely on the cert=cate Of the Mrector
te Mal/ be iesteti. a suftistsot vo*aber for the
This wording toes Apt contemplate the review of
tor certified mare made I.Or oolirldisitiel, extra-
'es.
16 ocular 1959
teC Agency are I tttc1U3r am. ei "avouch.
IBS $01107 Gad %hat of my. prOacomilme to 1J.idt the
ty to those octivitits vbitl In
eesurityprotoctien? To 1,10 e
Imo ot4armrialcus-of the Cemtnal latent
Xbr thee* expendittres ago available to the
poliTi hem been emetcleed such a degree
themselves senaitive but ccodueted solely in
time, ere tuastet moor gamma amtborttleE
tc nate fin144040enitzsg theral'or. A
cotwooteci, by, the Ciiment. Aecatating Office
eow3eLled voualaored e4JewiLtiare6., weld
ovulations *Joh thily support end.libleh
der Section a of ti* Act. Ir these
sualt seuldbase to be limited so as
or 4ecurity oper4tiono?
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COP APPENDIX II
Approved For Release 2001/09/0-47t1A-RDP80-01240A00010014n=
batikaounel, trust Vat you viU agree with
? atlisVe any guestion Wad bo s1iited
u yolts. oaintevience t we sax, in kg-element
so Leutaset Vat your restresbatatives continue
iv laic the sco,a of 14ie Cienere.1 Account-
Iniraidetnedo ceueistdett with the
Approved For Releast
371-14Cill2X11,jr,
(Bigeori) Allan V. Dialat$
Palen U. DuLles
Diroator
41?;,,pjA-RDP80-01240A000100140112-3
?:1111
Approved For Release 2001/09/04: A -RDP80-01240A0001001
CONFllJEll1AL
CONVISIOLLIP CIIIISPAL OF UP
WARIMMICS 25
you over the
(1)
allnliain activities in
tooted by vac *otiosity
tO the extent expreatares oositititml
or enoripaay *bum *Eh expendituree are rot
isanturttan hir us vithout yaw conourreneo.
Oar
leadar* the oroateation structure, asennv
sad proosibtrioar tositilm WC satoetive west
a mine at ampesintai the agelleattort of %Peel(
*seat ot aiseviationa *Ail Your Man' it
WM. to evipaadl Ms audit at the
datisiola pert of the Aganees activities)
the aria of ainsitivo saratrity opera?
as a result of tho MUM ve could
evaluations of t substantial part
CONFTENTIAL
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)
C111 .MUZSIX M
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COIIRD 'MAL
appears after a trial period that our relieve are liadted to such an extent
that we cannot effectively and coestructivel,y accomplish any worthwhile
objectives, ve 1,111 have to consider whether the suitLt shou1d be continued.
On ths basis of the above, ve are willing to have further discussions
with your Staff in order that the audit ear proceed.
Approved For Release
Sincerely yours,.
(Siwietl) Joseph Campbell
ecimptztalar Osneral
of the Vatted States
0, 0? ciLfiliDP80-01240A000100140112-3
111111. t!,
Approved For Release 2001neiel 0-01240A000100140112-3
kfur l
REVIEW MU:CM ACTITZepli
01...TIC.AZIVELM_CENCE
ii ?'z
=MIL IEVIELIGEMICE ACENCY
review' ar the Comicral Imbelligemse
has reviewed aeleated avert activities
(M) end the ?Mee of Basic latelligance
Banat Cle our reviimr, me believe that certain
latalligaeme Component ghouls:Ito chan(ed. C/A is
of Ccograss activities *Mb substantially
responsibilitly, and (2) certain Departamat of
was U. be CIA's primacy rtependbilitr, easd
of supplsasutleg releerni appropriations
,Te bora advised that corrective action is
at
by CIA.
25X1A
Thee bviloot for fiscal
at the Wawa 40` Cowries I Ilse Dicabli4Index o
end the East European ACCOSIdtele I' :ENAI)
Mall Wad aud Zitdi Pluiaate stAaturtad by OCR molt In northir publics-
tie= by the Libraa of Caegresa. Thee* publications reoard and index them
itessiaa sad East Ihropesa aeompiatts and periodicals evsmtly obtained by the
Massy of Canova.* mad a group of ccaperating libreries. We moderstand tbe
isihrieetion caatained in these publicetiOns is in the files of. the Library
The pabileatdoes produced are primal? iistributad to public and private
MOW* emposimmelomm mod libraries in the United Motes sad smery faraign
=time, imolutsing these of tbe U.3.V.R. and Its laetallttss. These projects,
laeareginien4 subetaatiali7 transcend CIA's resposelbtlity tar providtpd
central ratereme facility sesserviee et mamma aceseerin for intolligance
eemeaaihy. Va. bare been advised that based on a riviev of the needs of the
InE31
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50
Approved For Release 200C
AMR180-01240A000100140112-3
011
AM= IV
intelligence oneunity, it hms teen dotemdiesit C3A a looser can
justify major support of the tvo indents bemuse of chanapd intelligeoze
needs. =A min continue to support the Library, forth* pre-
panties of certain Sino-Soviet Bloc biogrePhie mode- cards have
grove in leportence frosalqNimoduct to the most valusbie part of the
project. dor detailed commute on this eubjeet are presented below.
With the financial support of the ambefal:Wer/hemdetion? the Library
began publishieg in April 1948 aMonthly Dist of Mission Accessions, nov
knave es the MIRA project. The project vas supported VI the Myles?.
during the period from J41y 1949 through *web 1950. CIA -support for the
project vas requested by-the Library for the period free April through
Awe 1950, but the request vas dieggroved by the CIA Projeets Review
Committee bemuse the project vas considered at that time to be of general
public interest only end thereibre at directly an intelligens function.
The Library supported the project during the period free/April 1930 through
Deenher 19521 and again regested CIA sumpert fOr the project in October
1951. This revised mutant, itch 'vs eVereved 1 CIA, Projects Review
Committee in avember 1951, Srgporied that the intelligence velue of the
publication mould be strengthened t1r includine translation Olin tables
of menet of current periodicals, end a subject index. CIA provided about
25X1A 11111.111.to the Library for the support of the project during the remainder
of fiscal year 1952, end has been the principal seem of funds for this
publieetion since that time. The OCR buApetwomides far the ampsediturs
of ebout $hommo for the support of this project in flacel Year 1961.
Under the confidential sponorship of the Plane Compeaent, the Library
began publishing labs in 1951 =Seat amen Acesseleas,Iiist_-nov kaolin 25X1A
as the ZRAI project. The Plans Component- provi4oloGemt11110111te eesPort
this project in fiscal year 195P, and coetinksed to support the operration
through its budget until fiscal year 1960. a uniersteedtbat OCR assumed
fixonetro sapport of the project In fiscal yew 1960 bonne Plass Coven-
mot ewer fer the project vas no onessary. The 003 budiet provides
fertile expenditureofabout for the support of this project in
fiscal year 1961. 25X1A
(Aar maw of the ICIRA and HMI distribution lists fer December 1.960
disclosed that ressereh oresaisetione end libraries in the United States
sag erel foreign nations, inluding several in the U.S.S.R. and its
satellites, are the principal recipients of the ti o publintions. Of the
appoodUmemi1y2,400 copies of M1RA end Sal distributed during that month,
about 2,003 vere made available to public and private ressearch organisa-
tions and libraries, 200 Imre sent to other Government agencies, end 203
more retained by the Library. We understood that the 200 copies retained
by the Library are distributed among the compoments of the Library and
U he eeencles of the intelligence eamemet4y. Only 600 of the 2,140 copies
distributed are issued on a subscription beds, the cost or *hi* ranges
from $10 to $16 *year. The remainlog amiss are distributed mahout
charge.
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The Assistant Director, Office of Central Reference AD/OCR) stated
that beceamoof an annually expending work*lead and operntimg Met, it
below necessary for OCR to *ask additional finenciel port for the
projects In fiscal years 1.960 and 1961. SO pointed out thet the Library
refUsed inMy 1959 to oom000 amy of the fimencing for thane two publicom
5X1A
time on the basis that their continued publication ass not important to
the Library because the infementioa they contain is in the Library's file'.
Aeditionsl fends totalingMMwere mode available to the Library in
nasal year 1960 by the National Selene* Fauedetion (MP), Ilatiomal Aare.
amities and Seece-Agancy (SBA), end the Atonic Resew Commission (AEC).
We umierstanWkthat a similar amouet will be made available from the budgets
cellos* three agencies for fieeel year 1961. Only the AM, however, is
essifically designated by the intellieenee directives of the Retiomal
Becerity Council to be a. neeber of the iniallivemmkonserity. The AD/OCR
else advised us that the SS, prepoees to undertake in flecel year 1961 a
survey to determine how MIR/ is used by recipients, end that he has suip.
Malted the survey be expended to eeplore the prospects for Obtaining funds
fer the production of both publieetions from appropriate learned soeieties
and feundetices. Re stated, however, that the contract for the proposed
survey ems to bis knowledge in Decemher 1960 still in the process of nego-
tiation, end that he vas not mere of the precise soepeof the nentract.
We do not question CIA's mod for bibliorrephic notarial in the dis-
charge lefts responsibility for providiag the intelligenee community alth
a central reference thelliey, we believe the publiestion at these biblio-
erephic materials, boinver, p42eer1.1y serves- the needs of public and private
reinerth organisations and libraries and therefere, is a function of the
Library. It is our opinion tberstbre? that it would be more appropriate to
flumes the related costs through the appropriations of the Library rather
than of C/A.
We sndeested that CIA take reappraisethe specific needs of
the intelligence community for this bib1ipqkjc natasial, and based an
this reeppradsal, make necessary arrangements to obtain or import only
those biblinexsphic activities necessary to the production of material to
neat the specifie need. of the intelligemce community.
CIA umdertook reappraisal action Ukiah disclosed that intellionce
need* for the two indexes Wive shawl and that (1) demand for the con-
Uneaten of MAI wins iigs, (2) the MP sponsored survey buttressed
thadr original decision not to support MAI and caused thee to reconsider
support *flan, and (3) Mk should be adapted to meet obeneing require-
ments since, for crimple, the biographic cards have groan is Importance
from a by-product to the most valuable pert of the project. Based on these
findings, =advised the United Stales Intelligence Dowd Oemmittee on
Doeumantation (COMB) that CIA plans to (1) phase out the MAI as rapidly
as it is reasonable for the Libraey to do Ivo, (2) maintain sort of MIRA
for Stoma year 1962 in, order to amble MS, to define the reepiremeata of
the American scientific community for such bibliographic services, and to
permit the Library to adjust to a poesible Cheese in the preeent publica.
tion and (3) eontinue support to the Library ter the preparetion of
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APPENDIX IV
We were advised on aine 16, 1961, that the CIA finding* and plan
concerning the curtailment of CIA support to the Library fer =AI and
25X1A MIRA have been reviewed by C(I)I3 and the United States Intelligence
Board, and that CIA is going be1 with the planned curtailment. CIA
mey achieve a saving of about aneually under this plan.
otiose
25X1A
of about 1960 and 4061 of OCR and OBI e or an
r the purpose o
otbor GOvarummt 11010mcies. About thiP725X1A
activities that seem to be the
the Department of State, not of OCR and OBI, ehich may have
supplementing the annual appropriations of the Deportment.
some of the CIA financed effort of the Department of State
is diverted to other activities usually financed from the salary and
expense eppropristione of the Department.
OCR is responsible for providing the overall direction and adminia-
trative support rewired to maintain CIA's matralleed reference service,
and OBI is responsible for 41seharging the responsibilities of the Director
of Central intelligence for the administration of the Rational intelligence
Survey (BIS) program. In the discharge of these responsibilities, both OCR
and OBI sponsor through their manual operating budgets a =mew of COW.
tinning lprojects at other Government agencies. Advances or reimbursements
to finance these projects are made bv OCR and OBI uader the authority of
section 601 of the coRnoey Act of 3$33, and /action 5(a) or the Central
intelligence Away Act of 1949. Order these acts, CIA is -authorized to
make advances or reimbursememta for the procurement of goods and services
to carry out its responsibilities.
CIA finances under the cited acts the intelligmnce ;reduction activities
of the Biographic information (BI) and entiomal intelligenee Survey (BIS)
projects of the Mepartment of State. /hese projects preduee intelligence in
areas that seem to be the primary responsibility of the Department, however,
and some of the CIA financed MIS effort of the Department is diverted to
activities usually financed frau the salary amd expense eppropriations of
the Department. CIA'. financial support of there prejects maw supplement
the appropriations of the Department. The Congress has been advised that
the CIA finaneed liS activity of the Department is net a reimbursable pro-
ject. it is not iscarent, however, that Congress bas been advised of the
diversion of effort from the Department's CIA financed MIS activity. Our
detailed comments on this abject are presented 'below.
The intelligence directives of the latiomel Security Onuncil assign to
the Department primary responsibility for producing political and socio-
logical intelligence on all countries, and *commie intellionee on
countries cartel& the Sino-Soviet Bloc, as a service of Gammon concern to
the intelligence oommunity. Under arrmagmments mode betveaa CIA and the
Deportment, the BI and NIS projects furnieh CIA with biographie and basic
intelligence in these same fields of interest.
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25X1A
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CIA' a Maiming of the tepartment'a B1 pro eadertsiken as the
result of a CIA staff study completed it SepteMber 1952 This study dis-
closed that biogrephic intelligence on eammiscientific personalities was
then being processed and serviced by both the Deportment end CIA, and pro-
posed thet this duplication of effort be eliminated by aerhiag out satis-
factory arreneements with the Department for the merviciag of CIA requests
for blogrePhic intelligeace on these personelities. This proposal au
approved br the Deputy Director (latelligsmee) am* am agreement under which
the Departamet assumed full responsibility fer serviciag au requirements
by net later than illay 1, 3953, was negctiated in November 1952. Moder the
terms of this agreement, thiCh we were &Advised is still la effect, the
Departmemt provides complete biographic service to CIA ft tereign political,
socielogical, and cultural perseselities. CIA provides the seceesery funds
eopputed on the basis of the eeditional mat incurred by the Department in
reedering this service to CIA. We understand thet the Degextment also
services CIA requests for biographic intelligence on economic persomelities
from countries outside the Sim-Soviet Bloc although the terms of the
November 1952 agreement ao not provide for this service. The annual cost
to CIA far the support of this project increased from about $130,000 in
fiscal ser 1954 to *proposed for fiscal year 1961. 25X1A
The NIS project produces a comprehemeive digmst of basic intelligence
on foreign areas. The digest is designed to serve fully the strategic and
operstiomal requirements of the Department of Defense, the foreign policy
requirements of the Depertmeat of State, and the lover goal% and opera-
tial requirements of all other Goverment agencies haviag missions or
responsibilities in florets* areas. The MIS project formal', boon with the
Issuance in January 1948 ofintional Security Council Intelligence Directive
No. 3. This directive provides that the Director of Central Intelligence
shall be responsible for coordinatiag production and msletensace of the NIS;
for their review, publication, and diseeadastion; mad for askiig such requests
of the departments and agencies as are aecessary for their proper develop-
meat amimaietemance. Chador au arraagmeent worked out is 1948, the Depart-
meet assumed responsibility far producing or coordinetimg all political,
sacialalacal, and other that Sino-Soviet Bloc economic intelligence contri-
butions* the N10 project, and CIA assumed responsibility for financing 25X1A
the of/tort of the Department. The annual cost to CIA of sappertiag the NIS
set of the Department increased from aboutMMLa fiscal year 1949
to2111:11111111 1 fiscal year 3959. The annual cost to CIA declined to
about in fiscal year 19600 homever, and is budgeted by CIA at
annually for fiscal years 1,961 rad 1962.
All DI and NIS contributions of am, naval, and air intelligence are
financed through the budgets of the Amp, Navy, and Air levee in, accordance
with their assigned responsibilities, and nithout the fisaacial support of
CIA.
We understand that since 1952 the Deportment has diverted the effort
of its employees from the CIA finaaeed NIS project to activities financed
by the amnual salary amd expense appropriation of the Department. Such
diversion accounted for *bout 34 man years or 12 percent of the 278 man
yearn charged CIA for the MN project in fiscal year 1959, and about 36 as
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of the 240 ant yearn
t fern]. ahcut 12 pereen
r the respective fiscal years c
prodUctlon under the MIS project,
idered in arriving at the reduced
ject in fiscal rare 1960 through
OUe 0
al year 196o.
t of its FL,
196C). The
understard, vas
CIA expenditure
162.
or
of financing tbs EIS emation of the Department tImnsi,1
a discussed in its Department of State fiscal year 1960
held before the Unbcommittee of the Committee on
Coittee to ami Of Represeatrtifen. The Department **guested this
budgetiac for the Department's DIE operation as a
r ita salary and expeeee appropriatiqu The Cam-
the request 1rtIi the expectation ther-, the operatiov
d financed au in the poet several yenre. This
concurred in by the Senate Cammdttee an Appropriations. One
of the factors
De considered in r thinenching in eonclusion vas tint regnest of t1N-
13 more positions Tor the WS activity in Meal year 1960
able in fiscal yeir. 195). Me reperteent's irc&L year 196A
appropriation rewest fel, other than the NIS activity,
provide for an increased number of positiote although
36 men years mare diverted from the CIA fitanced MIS
project to the other massy and expense activities of the Department
years 1959 and 19E0, respectively. The Merida* do not die-
the committees tyre advised of the 34 men years diverted by
from its CIA financed NIS project in flecal year 1959.
ou of diversioa 02' effort from the CIA finame4A NIS project
diecussedvdth the Assistant Director, Office of Basic Intelligence
OBI)0 sad the Chief, Budget Division, Office of the Comraoller. The
stated that diversion under lse CIA financed NIB project during the
first 6-months of fiscal year 1961 vas reduced to about 11 mnn years, or a
projected total of 22 eau years for the entire fiscal year, nnd be advised
US that both OBI and the Department are striving for an annual diversion
of about 5 percent of the nut years budgeted for the project. Be stated
that diversion at this rate is 4000601117, in his opinion, if the Depart-
ment is to asiatain sufficient flexibility to carry out Its intelligence
functions, and pointed out that CIA suffers no lose because of such
diversion since the diversion of effort increases the overall intellieenct
available to the int4lligence community. BO stated aLso that be is firmly
opposed to reducing CIA support to the NIS project of the Department by an
sactmt oval to the cost of the sae years diverted, because this procedure
Ionia. in his osdnion? reduce substantially the flexibility flooded by the
Department in directing its intelligence effort. The AD/OBI Also pointed
out that all agencies chargedtvith raspounibilitlea for makin4 contribu
time to the NIS project, except the Department, have in the :cast opposed
proposals for centralised CIA budgeting for the MIS project 1200UUSO of
their need to keep intelligence anito fanctiyaing for eperatibnal purposes.
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Budget Division stated that CIA policy iith respect to
diversioa under the CIA financed KO project of the Depart-
currently miter study. Se stated also that to his koyaladce, a
problem of diversioa doss not eclat lender the CIA financed 111 project of
the Department, or wader any other CIA rimmed puojeet It other Goverment
ageacies.
Trimaran of cu funds for the purpose of aupporting activities that
arethe prinew respoasibility of the Deportment mid not the primary
responsibility of CIA, la our Wales, are sot authorised by emetics 601
at talc?, __IevallsW Act of Emetic* (a) of the Central lestelligmes Agency Act
of 10149. The BI and NIS activities seem to be the prissy respossibility
of the Deportees& of State, sot Of OCR sae COI. The eireseige soma'
diversion, of about 35 ma ruin fres the CIA fineaced projaet to
activities fimeacesit by the salary sad espease appropriation of the Depart
25X1A next for fiscal years 19,9 lad ISO clizeumventa the iatest at Caesarea* by
the salary and expesee appropriation of the Department by
ennua1 ly.
supplementing the sanual spanepriatiens of the Depertaset of
suggested that CIA disomitime swift the Depanaimet tor man yearn
the CIA rimmed Itril projoet. Vs seagasatect also, that the
Central Intelligence townie? the assiipmenet of responsibilities?
mad the Departneen of State is relatioe to thee fuels available to
species, ants if nocessari, obtain additional autphoritf from
tor the transfer of Mode to *any out the SE aid315 reepon-
of the Department of State.
The Deputy Director (Support) advised us by lot dieted Aral. 13, 1961,
that the Department of Stabil eml CIA have bean considering the possible
transfer of the Departmeett's BI end NIS setivities to CIA. Vy letter dated
April 29. 1961, CIA advised State that CIA agreed la PrinoiPla with th?
proposed transfer to CIA of thole portico* of the HI end NIS activities
*Joh have bezietofore bola performed by State.
Use Gemmel Counsel, CIA, advised us by latter dated JULy 28, 1961,
that the procuration and dissenciaatios of intellicsace relating to the
astional secturity is tateleally a respaneildlity of CIA. Ix his opiacion,
thereforre, it may be the responsibility of CIA La certain tastiness to
relaburee all or a poetics of the costs incurred by other illiptaatas have
beak ccioperteame in the field of a partial14r seatributiaa, but mist go to
additional 4:90214110 in making their emtributioas responsive to XIS needs.
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Approve. or -e ease IS i? SA :
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The data contained herein is classified as COEFIDEBTIAL and is
for the use of the Comptroller General, the General Counsel,
and the Director, Civil Accounting and Auditing Division.
It cannot be maintained in the General Accounting Office
building, but must be returned to the site audit staff.
FL211,11,
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