COMPETITION IN CIA CONTRACTING

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP81-00142R000200010004-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 16
• Document Creation Date: December 15, 2016
• Document Release Date: August 28, 2003
• Sequence Number: 4
• Publication Date: May 19, 1978
• Content Type: MF

Approved Mr Release P3/q 9, rqt E P!81-0d'Tt2R00020
S 378
MEMORANDUM FOR: Deputy Director for Administration
FROM: James H'. McDonald
Director of Logistics
SUBJECT: Competition in CIA Contracting
ing:
1. We have been aware of Senator Hart's concern regard-
a. A possible lack of competition for intelligence
community contracts, and
b. Inclusion of only a relatively small number of
contractors in the base of contractors competing for
community contracts.
Early action in response to these concerns was taken in April
1977 when a directive (Attachment 1) was issued by Mr. Knoche
STATINTL to all of the deputy directors which committed the Agency to
the principle of competition. Also in April 1977
was revised to require that any contract planned on a sole
source basis and expected to uglify for review by the Agency
STATINTL Contract Review Board or greater) must be presented
to the Board for sole source approval at the earliest possible
time and prior to any contact with the contractor. Also in
1977 Admiral Turner tasked the Intelligence Community Staff to
develop a procurement policy for dissemination to the community
which would stress the importance of competition and of broaden-
ing the base of contractors serving the intelligence community.
Such a policy was developed, tabled and approved by the NFIB
(Attachment 2).
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SUBJECT: Competition in CIA Contracting
2. For comparison purposes I have collected figures on
Agency-funded, National Programs, Department of Defense and
civilian agencies for FY 1976. They are included as Attach-
ment 3 to this memorandum. Analysis of these statistics must
be with a jaundiced eye, bearing in mind that the formula or
ingredients that go into the numbers for various Government
components may vary. Our figure for Agency-funded does not
include competition in the general purchase order area or
dollars spent for items bought from Federal Supply Schedules.
As you know, the DCI has, in NFIB-Q levied a require- STATINTL
ment for reporting statistics on competitive versus sole
source procurements in FY 1978. It is our intention to get
together with other members of the intelligence community
prior to filing that report to make sure that our formula for
reporting is consistent with theirs.
3. If the statistics shown on Attachment 3 were computed,
using formulae which were identical, we must conclude that our
National Programs contracting has been handled in exemplary
fashion insofar as competition is concerned. We are unable to
comment on the number of new contractors invited to compete for
contracts in the National arena, either during a specific period
or generally. We note, however, that in a recent action being
handled in the National area the Director of Logistics and the
Chief, Procurement Management Staff, OL, participated in the
review process. This particular action was considered to be
so sensitive that approval was granted to hold the data outside
of our automated data system and, yet, the contract was handled
competitively with four contractors included in the competition.
We understand Senator Hart's concern regarding the number of
contractors competing for intelligence community contracts but
we must be mindful that even the Armed Services Procurement
Regulation (ASPR 3-101(b)) states: "When supplies or services
are to be procured by negotiation, offers shall be solicited
from the maximum number of qualified sources consistent with
the nature and requirements of the supplies or services to be
procured." In the intelligence community and, certainly in the
National Programs, the nature and requirements of the supplies
or services being procured is unique. The number of firms in
America capable of handling major system contracts in the very
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SUBJECT: Competition in CIA Contracting
specialized areas of technology of concern to National Programs
is few. The National importance and priority of the programs
mitigates against taking chances with awards to contractors
without established track records, and further contributes to
reducing the contractor field. Even with these constraints the
National Programs have active contracts currently with approxi-
mately 80 different contractors.
4. When we look at the stable of contractors handling
Agency-funded contracts, I believe the number of contractors
and the spread of CIA procurement dollars among its contractors
demonstrates an effort to include new contractors and also that
there are no favorites. Our automated contract information
system indicates that since 1. July 1967 we have had contractual
relationships with approximately. 2,963 contractors and that, at
this time, there are active contracts with 827 contractors.
These figures do not include small purchases or procurements
through General Services Administration, Defense Logistics
Agency, or from Federal Supply Schedules. One final factor on
the number of contractors and the spread of dollars among those
contractors is that no single contractor in FY 1976 received
more than two percent of our CIA procurement dollars.
I IAt your direction and stemming from discussion of the
case with Mr. Carlucci, I have asked Procurement Manage-
ment Staff, OL (OL/PMS) to prepare a directive for Mr. Carlucci's
signature which will advise Agency management of Admiral Turner's
and Mr. Carlucci's commitment to maximum competition. The NFIB
policy statement prepared at Admiral Turner's direction will be
made a part of the directive. As a second order of business,
OL/PMS will reexamine Agency procurement practices to ascertain
whether there is abuse of sole source prerogatives.
7
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 Approved For Release 2003/12/19: CIA-RDP81-002R000
MEMORANDUM FOR: Deputy Director for Administration
Deputy Director for Intelligence
Deputy Director for Operations
Deputy Director for Science and Technology
E. H. Knoche
Deputy Director of Central Intelligence
SUBJECT Competition in CIA Procurement
1. Procurement of supplies and services required for
authorized Central Intelligence Agency programs is vital
to the Agency's mission. Applicable Federal Government
procurement laws and regulations require that all procure-
ments utilizing appropriated funds,. whether by formal
advertising or by negotiation, be made on a competitive
basis to -the maximum practicable extent. The requirement
is applicable to all procurements, whether for research and
development, production hardware, external analysis, ser-
vices or major system acquisition. Our fullest compliance
with this requirement will serve to optimize our procure-
ment efforts as well as further the doctrine of fairness
for Agency contractors.
2. I ask that each of you, during the various phases
of program planning and execution, be mindful of the re-
quirement for handling procurement on a competitive basis
to the maximum practicable extent. I ask also that you
convey to personnel-within your Directorates_my personal
commitment to the principle of competition.
7s7 i. Ff. Knoclia
E. Fl. Knoche
Distribution:
Orig - DD/A
1 - Each Other Adse
I - DDCI
1 - ER
I - CL Official
OL 7 1323
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 *? mbcr 1977
ovd 1rVr Release 2003/12/19 : CIA-RDP81 -00-2I4%00200010004-8
NFIP Procurement Policy
1. Purpose. The purpose of this Directive is to establish
policy and reporting procedures for the procurement of
goods and services by NFIP.entities. . I
2. Responsibilities
a. The DCI is responsible for controlling the budget
preparation and resource allocation for the NFIP.
b. The Code of Federal Regulations in Titles 41 and 32
establishes Federal and Armed Services procurement'
policy pursuant to the Armed Services Procurement.
Act of 1949, as amended, and the Federal Property
and Administrative Services At of 1949, as amended.
3. Applicability. This Directive shall apply to all purchases
and contracts made by NFIP components, units and activities,
within-or outside the U.S., for the procurement, or
z.cquisiti on, from non-Federal sources of personal property
and non-personal services (including ADP&E and construction)
by such means as purchasing, renting, leasing (including
real property), contracting cr bartering. It includes all
functions that pertain to the obtaining of supplies and
.services, including description (but not determination)
of requirements, selection and solicitation of sources,
and preparation and award of contracts for supplies or
services which obligate appropriated funds.
4. Policy. The following Policy and Guidance for the procure-
ment of NFIP goods and services reaffirms and extends the.
general and permanent rules for procurement published in
the Federal Register and codified under Titles 32 and 41
of the Code of Federal Regulations.
a. All procurement, whether by formal advertising, or
by negotiation, within the li:;iitations of statuata'ry
responsibilities to protect sensitive intelligence
sources and methods, sha:_1 be made on a competitive
basis to the maximum practical extent.
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 STATINTL'
a. Within the framework of applicable Armed Services and
Federal Procurement itcgul.ations, and consistent with
statuatory responsibility to protect sensitive intelli-
gence sources and methods Agency Heads, Program
`..% -l rl in. 1
rtr"r? '
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.,atiC)n supplies Or
-'? ' nerot' *.on, off r ~,hall be sol' cit d from the
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the nature, and requirements of the supplies, or
services, to be procured.
C. Negotiated procurements shall be on a cocpetitiv
ILLEGIB
basis to the maximum practical extent. When a proposed
procurement appears to be necessarily non-competitive,
contracting officials are responsible not only for
assuring that competitive procurement is not feasible,
but also for acting whenever possible to avoid the
need for subsequent non--competitive procurements.
This action should include both examination of the
reasons for the procurement being non-competitive
and steps to foster competitive conditions for
subsequent procurements, including possible break-out
of components for competitive procurement. Except
for procurement of utilities, and utility services,
and educational services from nonprofit institutions,
contracts in excess of'0 shall not be negotiated
on a non-competitive basis without prior review ata
.level higher than the initiating contract officer
to assure compliance.
d. Procurements, whether by formal advertising or by
negotiation, generally shall be made by soliciting-
bids, proposals, or requests for quotations from
the, maximum number of qualified: sources consistent
with the nature and requirements of the supplies or
services to be procured.
C. "Bidders" lists for procurement or other similar devices
shall be established, maintained, and utilized to insure
access to, and use of, the broadest possible b4se of
U.S. industrial firms.
f. Purchases shall be made from, and contracts shall be
awarded to, responsible prospective contractors only.
Responsible prospective contractors shall meet the
criteria set forth in Federal and Armed'Services
Procurement Regulations.
5. Action Recuired
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 and the heads of elements of departments
an d'agei- es within the Intolligen. Community
4vg~leffiP, 2'Ip2/'19n: