INSPECTOR GENERAL SURVEY OF THE OFFICE OF LOGISTICS, AUGUST 1969

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84-00780R003400080027-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 26
• Document Creation Date: December 14, 2016
• Document Release Date: April 1, 2003
• Sequence Number: 27
• Publication Date: January 1, 1969
• Content Type: MF

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MEMORANDUM FOR:
Executive Director-Comptroller
SUBJECT \ Inspector General Survey of the Office pf Logistics,
August 1969
1. This mem6 and um contains a recommendation for Executive Director-
Comptroller approval ; sch recommendation is conta ed in paragraph 5.
2. Attached is the ly of the Director Logistics to the report of the
Inspector General as a result the recent sure y of that Office. We were pleased
to note in paragraph 6 of the Int duction of th/report that the Inspector General
feels "the Office of Logistics is wl organiz d and well managed" as well as "the
Agency components served by the Office to/be virtually unanimous in their appre-
ciation of its efforts. "
3. The report contains, fro ' a s stantive point of view, two areas of
criticality, i.e., personnel managOent an procurement organization, and also
raises certain management quest)bns within e Supply Division. In replying to the
report, we have chosen to offer, first, comme taries on these three areas, fol-
lowing which positions are to n in a sequential der on the 24 recommendations.
We have chosen in the com entary to address our Ives first to the matter of
procurement because that object received the majo interest of the Inspector
General. It also contai certain observations on man ement of procurement
personnel and, theref fe, logically leads to the second c mentary on personnel
management. Ther astly follows observations on the Ins ctor General's posi-
tion on certain or ' ational matters within the Supply Division.
4. We ave given serious consideration to the positions \aken by the In-
spector Gene al and the resultant recommendations, but we cannon all cases
agree eithe with the facts as stated or with certain of the recomme dations. We
believe w will obtain maximum benefit from this matter by your app val of the
positio we have taken on all of the recommendations.
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SUBJECT: Inspector General Survey of the Office of Logistics,
August 1969
5. It is recommended that the Executive Director-Comptroller approve
the stated positions of the Director of Logistics on those recommendations pre-
sented by the Inspector General.
R. L. Bannerman
Deputy Director
for Support
The recommendation contained in paragraph 5 is approved.
L. K. White Date
Executive Director-Comptroller
Distribution:
Orig - Adse (return to D/L via DD/S)
1 - ER
1 - IG
2 - DD/S
1 - OL/Official
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RESPONSE OF DIRECTOR OF LOGISTICS
TO
INSPECTOR GENERAL'S SURVEY OF THE OFFICE OF LOGISTICS
AUGUST 1969
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1. The principal substantive focus of the Inspector General (IG) report clearly
centers on the function of procurement. This conclusion is enhanced by statistical evidence.
The report consists of 134 pages, of which 59 are devoted to procurement, and it contains 24
recommendations, of which 14 bear on procurement. We will, of course, address ourselves
to the IG recommendations, but believe some general commentary and analysis will be
helpful to an understanding of our position on certain of the recommendations.
2. The interest and concern on procurement by the IG is, almost exclusively, cen-
tered on the current management structure that directs the program and does not appear to
interest itself particularly in the operations of the program. Yet we believe it reasonable to
maintain that, if the operations are successfully conducted, the management structure in-
volved at least has met the pragmatic test. There are aspects of Agency procurement which~5X1
if not properly conducted, can lead to considerable embarrassment and highly adverse pub-
licity affecting this Agency. Several examples are in order. Some 15 years ago this Agency
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Office of Logistics has played a significant and leading role both in developing and imple-
menting Agency policy concerning contractual relations with academic institutions, and has
kept Agency visibility in this area to the absolute minimum. We mention these matters be-
cause we believe it is of equal importance for someone to record the successful and secure
conduct of procurement for intelligence as it is to note and discuss management concepts
that guide a procurement program.
3. We would like to offer one other observation on both the current management
structure and the workings of the current Agency decentralized procurement program be-
fore addressing ourselves directly to the IG recommendations. One historic criterion in
this Agency, by which a support mechanism is judged, is its acceptance by senior Opera-
ting Officials of the Agency. In this connection, we should like to quote from a memoran-
dum to the Executive Director-Comptroller of 10 June 1969, signed by Mr. Carl E. Duckett,
Deputy Director for Science and Technology:
"2. In February 1968, working cooperatively with the Deputy Director
for Support and the Director of Logistics, I established a contracting team in
Headquarters Building to support S&T Offices: OEL, OSI, FMSAC, and OCS.
That team proved so successful that in March of this year, again in coopera-
tion with the DDS and D/Log, I extended the concept by establishing a second
contracting team to support the contract requirements of the Office of Research
and Development in the Ames Building.
"3. Our experience to date with the concept has been excellent, and I
believe that the contracting team, fully integrated in the technical office, pro-
vides a contracting system which is unqualifiedly superior to others. "
4. As mentioned previously, the focus of the Inspector General's considerations on
procurement impact, with few exceptions, on the management structure that guides the pro-
gram and to that focus we now address ourselves. There is a clear philosophical difference
between that management structure the IG would have us have and that structure which, to
date, appears to have successfully brought into existence and now guides our decentralized
system. The essential elements of the management structure espoused by the Inspector
General are found in four of the 14 recommendations and, in order of significance, they are
numbers 24, 12, 11, and 16. If these four recommendations were approved and implemented,
a management structure for procurement would be created which would see an "Agency Con-
tract Policy Review Board" established in the Office of the Deputy Director for Support; the
establishment of a position of "Assistant Deputy Director of Logistics for Contracting" with
command prerogative overseeing the entire procurement system; contracting officers, re-
gardless of where they were assigned, either being rated or reviewed on their fitness
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reports by Office of Logistics personnel; and all NRO contracting) becoming intermingled
with Agency-appropriated fund contracting and coming under the supervision of this mech-
anism. In essence, a tightly controlled and authoritative management structure would be
created. We do not believe the time has yet arrived to adopt this recommendation and,
further, we possess some reservations on the basic premises involved. Additionally, we
feel the recommendation that Agency contracting for NRO programs, i.e., Recommenda-
tion No. 11, be done under the authority of the Director of Logistics should receive specific
comment and to that we first address ourselves.
5. The Inspector General, under the heading of "The Delegation of Contracting
Authority" (pages 70 through 75 of the IG report), discusses the manner in which authority
to contract, for NRO programs awarded to this Agency, is delegated to the senior Con-
tracting Officers of the Offices of Special Activities and Special Projects. He questions
the propriety of the Office of Special Projects having its authority by lateral delegation
from the Office of Special Activities. His point is beyond the responsibility of the Director
of Logistics and we take no position on it. He notes that the delegation of authority to the
Contracting Officer of the Office of Special Activities includes authority for the obligation
of Agency-funded activities under the Office of Special Activities management. We merely
note here that, at the time of the original delegation of authority to the Office of Special
Activities, the NRO did not exist and all funds obligated were appropriated to the Agency.
We would also note that it has been historic practice for the Directorate of Science and
Technology to develop with Agency-appropriated funds certain sensor systems which were
included in vehicles funded by NRO. Because these sensor systems came under the "single
manager concept, " were subject to the same security ramifications as the development of
the vehicles, the undertakings were, for all practical purposes, contractually inseparable.
Such undertakings have been accepted historically as a proper exercise of contracting
authority by the Offices of Special Activities and Special Projects. After these and other
observations are made by the Inspector General, it is then concluded that "the procedures
for delegating contracting authority in the Agency now can be regularized without adversely
affecting the Agency-contracting relationships so successfully pioneered by the Office of
Special Activities and its predecessor organizations. " Recommendation No. 11 then gives
the Inspector General's view as to how to effect this matter. We do not agree with the
Inspector General's findings for a variety of reasons. Many of the factors of security and
compartmentation that have guided Agency and Agency-NRO reconnaissance activities re-
main valid and viable. Secondly, the matter is not singly one of the execution of contracts
but becomes deeply involved with different security standards, procedures and
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classifications. These security matters are different from and do not parallel Agency
security standards. There are elements of interdepartmental liaison and coordination
involved in NRO contracting which are unique to those undertakings. It is interesting to
observe that only recently the Director has given a direct contractual delegation to a new
compartmented undertaking in the Directorate of Science and Technology. The Director
of Logistics was requested to furnish a senior contracting officer to do special work, but
he is unaware of its purpose. Lastly, we find no evidence in the Inspector General's re-
port that leads us to believe there are any significant differences in contracting policy
being followed by the Contracting Officers in the Offices of Special Activities and Special
Projects than in those policies followed by other Agency contracting officers. In the last
analysis, governmental contracting is guided by the Armed Services Procurement Regu-
lations and this, of itself, generally insures commonality of policy.
6. Viewed within the theoretical concepts of organizational management, we under-
stand the rationale of the Inspector General's recommendations. We have difficulty, how-
ever, in matching the theoretical concept both to the practical views of the matter plus the
accomplishments made to date. The IG report makes frequent reference to the "22-month"
history of decentralization and, accordingly, leaves the inference that the totality of the
system has existed for that period of time. The fact of the matter is that the system came
into being incrementally over a period of 18 months, and only since March of 1969 has the
total basic structure we were directed to accomplish come into being. If one then chooses
to make a judgment on the totality, one is limited to a timespan of some eight months. The
Inspector General, himself, notes in the Introduction of his report the complexities and
sensitivities of the undertaking, and we thoroughly subscribe to his observations. Our
actions have endorsed our feelings and the temptation has been resisted to force a more
junior officer to assume responsibility to create and initially guide the new system. We
believe, as the Inspector General observes, that on a matter of this significance authority
should be exercised where responsibility resides. It is axiomatic that it is much more
difficult and challenging to bring into being new organizational concepts and insure their
successful operation during the initial period of development than it is at a later date to
monitor and direct their continuing existence. What the Office of Logistics had done here
is only symptomatic of what has happened throughout the history of the Agency when major
organizational developments take place. We feel that to retreat from this posture of
senior command interest and direction at this time would serve to prejudice and not en-
hance the remaining work needed to be done to further develop the concept and insure the
necessary degree of coordination so that control of the dispersed procurement mechanism
is neither lost nor diminished to the prejudice of the Agency. It is our proposal, accord-
ingly, to maintain and retain the current structure controlling, guiding, and further develop-
ing the decentralized procurement system for an additional year. We would then, toward
the end of calendar year 1970, undertake a further review of accomplishments made to that
date and assess our capability both from the point of available, qualified personnel, plus
ceiling positions, to create the command structure that the IG now recommends.
7. Our earlier expressed reservations on the concept espoused by the IG for
managing the decentralized procurement system are based on the following observations.
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The adoption of this concept could, in effect, tend to bring about an even more centralized
management structure than that which existed prior to 1 September 1967 and which we were
directed to change. We are also unsure that the managerial principles or style of this
Agency encourages, or indeed perhaps tolerates, the type of centralized control of person-
nel innate in the IG concept nor are we convinced that this concept is compatible with the
Agency manner of conducting its affairs.
8. Throughout the text supporting the four significant IG recommendations, i.e.,
24, 12, 11, and 16, are found various statements with which we must take some exception.
It would probably be neither constructive nor productive to list all observations concerning
which we have disagreement or reservations, and we have, accordingly, selected only
those which appear to us to have unique significance. We note, for example, in paragraph
19 of the procurement section, a comment concerning the lack of staff assistance to the
Deputy Director of Logistics to accomplish his role as the overseer of the new procurement
system. For the past two years, we have continually requested, and have continually been
denied, increased personnel ceiling for the new two positions created in September 1967 to
conduct the work of the Contract Review Board, i.e., the Chairman and his Secretary. It
would make little sense to go forward with a request for other new staff support with a pre-
dictable denial being forthcoming. This fact, then, logically leads to our disagreement with
the IG position that the Chairman of the Contract Review Board should perform no staff work
for the Director of Logistics and concern himself solely and exclusively with Contract Re-
view Board matters. The IG report also infers there is an inferential "conflict of interest"
in one individual being both Chairman of the Board and also a staff assistant to the Director
of Logistics on procurement matters. We find no more "conflict of interest" here than we
find in the Deputy Director for Science and Technology also being the Director's senior re-
search and development coordinator throughout the entire Agency.
9. We note the Inspector General recommends that both the rating and/or reviewing
of the fitness reports on contracting officers assigned to the decentralized teams (and here
we assume that also includes the Offices of Special Activities and Special Projects) be exe-
cuted by command officers assigned to the Office of Logistics. A management principle
bearing on this specific matter was espoused by the then Deputy Director for Support (now
Executive Director-Comptroller) in 1952 and accepted by Agency command and has remained
inviolate for 17 years. That principle is that officers of the Support Services assigned to
Operating Components come under the command jurisdiction of that Component, to include
the Component's right and responsibility to both rate and review Support personnel. If this
principle were ever tested and still found valid, it was done so at that time when Office of
Finance personnel, with delegations of authority to act as certifying officers, were assigned
to Operating Components and came under the rating and reviewing authority of those Com-
ponents. Command responsibility cannot be divided and there is no fact sufficiently unique
to the responsibilities of a contracting officer that justifies deviation from one of the soundest
management principles ever adopted by CIA. The exercise of a delegation of authority by
these officers is periodically reviewed by representatives of the Director of Logistics and
this fact establishes the needed system of "checks and balances. " In connection with this
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later observation, we also note that paragraph 65 says, in effect, that the three principal
sources of information available to a "senior contracting officer" (presumably the
Director of Logistics) to manage a system are the Contract Review Board, Procurement
Officers' Meetings, and the two existing automated contract information systems. We
suggest that one of the principal sources of information, surveys of the procurement teams
conducted by the Special Assistant to the Director of Logistics, is one of the prime sources
of information and yet it is not noted. The monthly statistical reports, organized in vari-
ous formats to include work done by teams, by type of contracting, by organizational units,
and by purpose of contract, is a continuing workload and managerial input. We would fur-
ther observe that the personal and continuing involvement of senior officers responsible for
overseeing and operating the system represents a continuing source of information and con-
trol which, in the last analysis, is probably more efficacious than any formal system that
could be devised.
10. Serious words are spoken in the IG report concerning the career responsibility
for contracting officers held by the command structure of the Office of Logistics and the
language inferentially creates an impression that this responsibility is perhaps not being
well met in this day of a decentralized procurement system. The particular language to
which we make reference appears on pages 96 and 97 and reads as follows:
. . With the creation of the independent contracting teams, their
physical isolation, and the reduction in size, scope and responsibility of the
Procurement Division, some of the aspects of a viable career service have
disappeared.
"39. We feel it is important to the future of the decentralized con-
tracting process in this Agency and to the officers that participate in it that
the features of a Procurement Officers' career service be preserved. One
senior officer should be responsible for the selection of qualified candidates,
their training, their assignment, and their evaluation as procurement offi-
cers. We feel that this activity cannot be effectively performed for long
personally by the Directoror. Deputy Director of Logistics. "
We believe the facts from the period 1 September 1967 to 26 September 1969 bearing on the
discharge of responsibility to career officers very adequately speak to this point. There
are today 73 officers performing a procurement or purchase function under the career cog-
nizance of the Director of Logistics. These individuals are found in seven different
organizational entities. In the last two years, 27 of these officers have received a grade
promotion; 14 of these officers have received a Quality Step Increase; and the Office of
Logistics has either sponsored or concurred in 78 external training opportunities. Addi-
tionally, we have sponsored or concurred in 63 internal training opportunities. We have
introduced 15 new people into the procurement function and have rotated 33 officers. The
rotation has included overseas assignments, transfers from Procurement Division to
Operating Components, transfers from one Operating Component to another, and transfers
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within the Office of Logistics itself, i. e
Procurement Division Headquarters,
11. Having opened the subject of career management, this is perhaps the appro-
priate place to comment generally on the Inspector General's remarks as they pertain to
the Personnel and Training Staff. We will respond later in this paper to the specific
recommendations. The Inspector General's report states ". . the Office of Logistics does
not have a career service board that functions as such. The Office used a career service
board system until late 1964. It was ignored thereafter as unproductive both by the pre-
vious and by the present Director of Logistics. " One gets the impression from these state-
ments that decisions affecting the careers of Logistics personnel are made by the Director
of Logistics without due consideration of the opinions of his division chiefs. This is a mis-
conception which hopefully the following remarks will clarify. On 15 October 1964, the
Logistics Career Board was made an advisory body in developing career service policy and
ceased to function as a voting group on competitive promotions or personnel assignments.
Each division chief is regularly asked to make recommendations for competitive promotions
or personnel reassignments. This is really no different than the way the Board operated in
the past because the Board made recommendations to the Head of the Career Service, and
he approved or disapproved those recommendations. The only significant difference is that
members do not meet in a body to decide issues on the basis of majority rule.
12. On the subject of personnel policies, the Inspector General's report indicated
that practically every employee expressed a total lack of knowledge on the subject of
career management and career development. For example, one female employee was
specific in her complaint that while she could not get a promotion no one would tell her why.
It is difficult to answer this kind of complaint without knowing the particular circumstances
the employee is confronted with. In general, we discuss with every overseas returnee his
career potential and, of course, we discuss with numerous individuals his career develop-
ment whether for training purposes or for overseas assignments. A followup interview is
held with each individual assigned to the Office of Logistics; the first is held with pro-
fessional employees 30 days after entrance on duty and again after six months on duty.
Clerical individuals are interviewed between six to eight months after entrance on duty.
13. The Inspector General focused on problems caused by rotational assignments.
Most problems apparently centered on a lack of information about the next assignment or a
lack of a next assignment (indefinite tour), leave record problems, timely information on
training requests, and the general feeling that Logistics Careerists assigned to area divi-
sions were forgotten and their careers suffered as a consequence. Specific IG statements
and our comments are as follows:
a. Inspector General Statement: "Logistics personnel in the Far East,
almost without exception, complained they could not get timely information on their
next assignment when rotation was imminent. "
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Comment: It is true that personnel departing the Far East area in the sum-
mer of 1969 were not advised until early May about their next assignment. We know
of only one individual who made a specific request before 1 May to obtain his assign-
ment and this information was furnished separately on 28 April 1969. It is realized
that this information is of great interest and importance to the employees, but, with
many ramifications in personnel processing (medical, security, BALPA, OPRED,
etc.), it is not always possible to give timely notice. We plan to advise the 50 or so
employees departing overseas stations next summer of their new assignments by
January 1970.
b. Inspector General Statement: "Several employees could not get their
leave records straightened out upon return to headquarters. One case was nearly a
year old. (This is more the fault of the area division and the Office of Finance, but
indicates that Logistics didn't follow through)."
c. Inspector General Statement: "Several overseas employees had asked
for special arrangements on training, which required headquarters approval, and they
could not get a timely answer. "
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Comment: There were two individuals who asked for approval for educational
leave after completion of their tour in the summer of 1969. One individual made the
request in mid-November 1968, and the dispatch was inadvertently destroyed. In May
1969 the individual was notified of the approval but in late May 1969 he reported that
he did not gain admittance in the university of his choice and would report for duty.
The other request was not received until 16 May 1969, which was after the Inspector
General's tour overseas.
d. Inspector General Statement: "Most Logistics careerists assigned to
area divisions expressed the view that once so assigned they were forgotten and that
their careers suffered as a consequence."
Comment: No individual assigned to an area division has made this state-
ment to any member of my Staff. We cannot agree ". . that their careers suffered
as a consequence" since only 15 of the 52 promotions in FY 1970 went to careerists
in Office of Logistics positions. The remaining 37 went to careerists in positions
outside the Office of Logistics. Of these 37 promotions, 16 went to Logistics Career-
ists in the Clandestine Service. Of the 41 individuals now assigned to the Clandestine
Service, 60 percent have been there less than three years; 29 percent have been there
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from three to eight years; 10 percent have been assigned there over eight years.
Most of those who have been there the longest period of time have expressed a pref-
erence to remain in their assignment.
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e. Inspector General Statement: "The concept of indefinite tours was
brought up by several employees. One employee had asked for mid-
career training. He was told, however, that only employees on headquarters assign-
ments could be considered for the Mid-Career Course. He then asked when he would
be rotated to headquarters and was told that his tour was indefinite. 25X1
While this situation eventually was rectified and the employee was to receive his
transfer and his appointment, this type of paradox is not conducive to good morale.
As a matter of fact, it must be difficult for any employee to make intelligent plans for
I I education of children, or career development when assigned on the
basis of an indefinite tour. "
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14. The remaining statements by the Inspector General on the Personnel and Train-
ing Staff have to do with overall ceiling, replacements, availability of the Staff for individual
problems, honor and merit awards, and problems presented by retirements at the
a. Inspector General Statement: "The Office has an approved ceiling of
staff . . . as of 1 July, there were employees on duty. "
Comment: Statistics on the present ceiling and on-duty strength are more
significant when contrasted to the situation six years ago (31 October 1963) when the
Office ceiling was F-1 Il and there were Iemployees on duty.
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b. Inspector General Statement: "The Chief of the Motor Pool Branch
knows he is losing six or seven employees, but has no information on replacements."
Comment: At the time of the Inspector General Survey and on 1 November
1969 the Motor Pool personnel situation was as follows:
Authorized
On Duty
In Process
Time of IG Survey
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Three chauffeurs retired as of 31 October 1969. The next known vacancy is in
March 1970 and the next one after that is in April 1970. Therefore, the Motor
Pool is two understrength as of November 1969 and will remain so until additional
chauffeurs are recruited and put in process. The Office of Personnel is aware of
our requirement.
c. Inspector General Statement: "Several supervisors in various ele-
ments of Logistics made the comment that anytime they or an employee had a per-
sonnel problem they were always told to report to the Personnel Staff in the Ames
Building and that personnel people never came to see them. "
Comment: Members of the Personnel and Training Staff have visited the
Printing Services Division and Headquarters Building on numerous
occasions. Instructions to members of that Staff are to be available to any of the
Operating Components at any time.
awards have been given in 13 years by an Office that controls approximately
Logistics careerists. "
d. Inspector General Statement: "Available records reveal that only
27 honor or merit awards have been granted to Logistics employees since 1956.
Of the 27, 12 were given to employees who were retiring or who were military de-
tailees returning to their parent organization. In other words, approximately 15
Comment: The Office of Logistics has energetically sought to find ways to
award individuals in addition to the Honor and Merit Awards Program. For example,
in FY 1968, 32 Logistics Careerists were awarded Quality Step Increases and in
FY 1969, 55 were granted Quality Step Increases. Further, the Incentive Awards
Program at resulted in four individuals being honored in FY 1968 and
14 in FY 1969. Also, there is an awards program for the Mail and Courier Branch,
Logistics Services Division. In FY 1968, three individuals were awarded $25 each
and in FY 1969 two individuals were awarded $25 each and one individual received
$100. Also, we have a Safe Driver's Award for chauffeurs and other drivers in the
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 f. Inspector General Statement: (Pertaining to I "Turn- 25X1
over of personnel is not high but retirement is posing a problem as talent is not
available for training and succession. "
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Motor Pool Branch. In FY 1968, 72 individuals received lapel buttons and safe driv-
er's cards for the year and 14 other individuals received additional special awards.
In FY 1969, 70 individuals were given lapel buttons and safe driver's cards for the
year and seven drivers were given other special awards. In addition, during FY 1969
Logistics employees received $11,175 under the Agency Suggestion Awards Program.
e. Inspector General Statement: "The team found a number of cases of
misslotting and double slotting. While number was not unusually large, several of
these cases had been misslotted for up to two years. "
Comment: The principal reason for the misslotting was because a request
had been made to establish a new position in the Procurement Division for use in an
automatic data processing function. Although this position was classified by the
Office of Personnel, this Office had not received a ceiling increase to cover the
position; consequently, it had not been established on the books. However, the
function has been performed and numerous physical reassignments were made of
individuals to bring this about. During the course of the Inspector General's Survey,
when this was informally brought to our attention, the misslotting was corrected.
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Comment: For the next three years, that is through 1972, ten individuals
are scheduled for retirement four GS-05 to GS-14 and six Wage 25X1
Board employees. If they all retired s month, nine of the ten could be replaced
with current personnel on board. The one that could not be replaced from current
assets is a secretary-stenographer, GS-05. Therefore, retirements do not pose
a problem.
15. Turning now to the Supply Division, we feel it is appropriate to answer some
of the general comments before addressing ourselves to the specific recommendations.
a. Inspector General Statement: "Of considerable interest to the survey
team was the method used by this Unit to ac uire materiel and 25X
account for funds. It differs from the system employed by the 25X
of the Procurement Division. It is our understanding that items procured by
the are not processed through the financial property accounting
system. This obviously is a faster and simpler way to handle a procurement action
and to process the paperwork. If this method is acceptable for the 25X
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we wondered why it could not be adopted for general procurement.
Comment: The two situations are not comparable. The fact that
Fctions are not processed through the financial property accounting
25X
11
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X1
system has no bearing on the method and s eed of action taken. The categories of
materiel specified for requisition through annels can be likened 25X1
to those which the overseas stations would procure locally if available. They consist
of items generally available on the commercial market, not carried in the Logistics
System, not requiring review by technical components, required in small quantities,
and of relatively low dollar value. The request is forwarded directly to the 125X1
rom the overseas station. The procurement 25X1
agents, on an individual basis, arrange for, pick up, package, and ship those require-
ments (except when 0 methods cannot be used). Additional comments on this mat-
ter are also contained in comments referring to Recommendation Nos. 8 and 15.
b. Inspector General Statement: "The staff employee occupying the stock
control position did not seem fully occupied and is doing work previously done by a
I" 25X1
Comment: The "staff employee" concerned was a marginal employee and
has since resigned.
25X1
25X1
X1
X1
X1
d. Inspector General Statement: "We question the location o4I 25X1
ceives more than 90 percent of its work direction from the Central Control and Dis-
tribution Branch, discussed below, and from a standpoint of workload, perhaps it
would make sense to place it under that branch. "
der the Stock Management Branch. The Section re-
Comment: The is not a stock manage-
ment function; it is a supply management function in a broad sense. It serves the
other elements of its Branch in its procurement of materiel for stock and providing
information on availability of excess materiel, etc. That the
1"receives 90 percent of its work direction from the Central Control
anDistribution Branch" can be misleading. Central Control and Distribution Branch
has no directive authority over other units; it is a clearing house with respect to the
point at issue.
25X1
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:l~Ii11L, i
16. Our specific positions on the Inspector General's report recommendations
now follow. Four recommendations, i.e., 11, 12, 16, and 24, have been addressed
previously in this reply and represent our positions on the totality of those recommendations.
a . Recommendation No. 1
"That the Director of Logistics
"a. Broaden the base of participation by division chiefs in the decision-
making process on personnel assignments, reassignments, and promotions."
Position: Each division chief today, as in the past, makes his recommenda-
tion to the Director of Logistics about personnel assignments, reassignments, train-
ing and promotion for the people under his jurisdiction. The division chiefs are not
brought together in a body to debate or vote on specific individual personnel actions
covering employees not under their specific jurisdiction.
"b. Establish and enforce a program which will ensure that branch and
section chiefs participate with their division chiefs in the processes of personnel
management and career planning for employees under their jurisdictions, perhaps to
include at least annual employee counseling. "
Position: Annual employee counseling is now being performed when the fit-
ness report is prepared and more often if appropriate. Each division chief now dis-
cusses proposed assignments with his appropriate branch chief before an employee
is reassigned. Branch chiefs initiate recommendations for promotions and Quality
Step Increases. Each division chief will be encouraged to bring about a greater de-
gree of participation by their section and branch chiefs in personnel management and
career planning. Consideration is also being given to organizing panels of the Logis-
tics Career Service Board to give advice and recommendations on reassignment of
personnel between and among Headquarter land overseas field assignments.
25X1
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b. Recommendation No. 2
"That the Director of Logistics negotiate with the Director of Security
an agreement that all industrial security officers serving with the Office of Logistics
be assigned to the Office of Logistics Security Staff for training and for subsequent
reassignment to the independent contracting teams and staff components. "
Position: We agree with the intent of this recommendation but its imple-
mentation depends on the availability of security officers who can be assigned to the
Office of Logistics for the sole purpose of training. In the event security officers
cannot be made available for such use, we will propose that industrial security
officers serve a tour of duty, possibly of shorter duration than normal, in the Office
of Logistics, Security Staff, before being eligible for assignment to the independent
contracting teams and staff components.
c. Recommendation No. 3
"That the Director of Logistics, in consultation with the Director of
Security and, as necessary, with appropriate Deputy Directors, establish the policy
that the Chief, Security Staff, Office of Logistics, shall be the reviewing official on
fitness reports of Office of Security personnel assigned to the independent contracting
teams. "
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Position: We disagree with this recommendation. As outlined in the fore-
going general commentary, it is a basic management principle that officers of the
Support Services assigned to Operating Components come under the command juris-
diction of that Component to include the Component's right and responsibility to both
rate and review Support personnel. We will, however, propose to the appropriate
authorities that the Chief, Security Staff, be allowed to examine and comment on
Fitness Reports of Office of Security personnel assigned to independent contracting
teams.
d. Recommendation No. 4
"That the Director of Logistics explore with the Deputy Director for
Science and Technology the feasibility and the desirability of subordinating to the
(under the general supervision of the Logistics
Security Staff) the two industrial security officers Iwho now report 25X1
to the DDS&T Security Management Staff. "
Position: This recommendation has focused on a problem area which we
feel should be further explored. Discussions on this subject between the Chief,
Security Staff, Office of Logistics, and the Security Management Staff, Directorate
of Science and Technology, have already occurred. If investigations reveal that it
is feasible and desirable to subordinate the two industrial security officers on the
mfuaion to tne iieputy Director tor Science anTechnology.
e. Recommendation No. 5
"That the Deputy Director for Support consider transferring responsi-
bility for the Agency Safety Program, along with slots, from the Office of Security
to the Office of Logistics. "
Position: The Directors of Security and Logistics disagree with this recom-
mendation for the following reasons. Even though the Office of Logistics has a num-
ber of activities that pose a variety of security hazards (materiel handling equipment,
ordinance handling and storage, etc.), the Office of Security is in a better position to
conduct effective independent inspections to ensure safety policies and procedures are
being effectively carried out. There would, therefore, not be a danger of sacrificing
safety for performance. Safety and security matters are closely aligned in the pro-
tection of physical facilities, both domestic and overseas. This can be illustrated by
recent trends in our society (rioting, firebombings, etc.) which closely ally safety
with security in the protection of Agency buildings, people, and other assets.
f. Recommendation No. 6
"That the Director of Logistics take action to redesign and renovate
the office space at
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Position: Agree. At such time as funds are available, we will take action
to improve the office space at 25X1
Recommendation No. 7
Recommendation No. 8
"That the Director of Logistics initiate with the Director of Finance a
study to examine the present procedures used in the financial property accounting
system to achieve still further simplification of those procedures and liberalize
property and financial property account requirements in the Type II and Type III
accounts."
Position: We agree in principle. However, we wish to point out that, upon
implementation of the modern electronic data processing system now under develop-
ment, the concept of Types I. II, and III accounting systems as now employed would
vanish. Inasmuch as we anticipate the automatic data processing system being
operational in a FY 1971 time frame, the extensive work involved to implement this
recommendation and the short period of gain before the advent of the automatic sys-
tem would appear to be counterproductive.
16.
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i. Recommendation No. 9
"That the Director of Logistics revise present practice so as to provide
that administration of procurement actions assigned to Procurement Division is con-
ducted by the unit and officer undertaking the procurement action. "
Position: The administration (followup) of Procurement Division actions di-
rectly to the vendor by the Central Control and Distribution Branch is limited to those
actions initiated by the General Procurement Branch ( or Con- 25X1
tract Branch procurement). Prior to the establishment of the Central Control and
Distribution Branch, the followup of these same actions in the Procurement Division
was by an element not a part of the General Procurement Branch. The existence of
the Central Control and Distribution Branch is a direct assistance to requisitioners,
inasmuch as it represents a single control point which a requisitioner can contact to
trace action on the majority of his requisitions. We would be doing the customer a
disservice by decentralizing this followup facility.
Recommendation No. 10
"That the Director of Logistics and Chief, Supply Division, consider
the consolidation of the Central Control and Distribution Branch and 25X1
I I or take steps to reduce duplication and to revise the pruccuares em
-
ployed by the units. "
Position: We have given considerable thought to both the consolidation of
these two units as well as to reducing the minor duplication of documents now created
by both units. Current limitations of space prevent the consolidation of the units.
Our studies indicate to us that the alternative solution to the problem again will be
found in the electronic data processing system now under development. Inasmuch
as the procedures of both units are well established, our judgment is that it is wise
to allow them to continue to operate under those procedures with realization that in
the FY 1971 time frame the minor duplication that does exist will be eliminated by
the new automated procedures.
k. Recommendation No. 13
"That the Director of Logistics extend an invitation to the contracting
officers of the Offices of Special Activities and of Special Projects to attend and
participate in the Procurement Officers' Monthly Meetings. "
Position: We agree with the spirit of the recommendation and have extended
an open invitation to the Heads of the Offices of Special Activities and Special Projects
contracting units to attend the monthly Procurement Officers' Meetings.
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1. Recommendation No. 14
"That the Deputy Director for Support
"a. Create a Directorate for Support contracting team consisting of
personnel drawn from the I land the research and develop-
ment contracting activities of the Procurement Division and augmented by appropri-
ate security and audit advisors. "
Position: See below
"b. Consider attaching the Directorate for Support contracting team
to the Office of Communications. "
Position: See below
M. Recommendation No. 15
"That the Director of Logistics
"a. Abolish the Procurement Division of the Office of Logistics. "
Position: See below
"b. Establish in its stead a Purchasing Division composed of the Gen-
eral Procurement Section, the Registry and Document Control Branch, the
I of Supply Division. "
Positions: There is merit to these ideas insofar as uniformity and consist-
ency of organizational format is concerned. We are persuaded, however, that a
greater and more substantive interest is served by maintaining the current structure
and responsibilities of the Procurement Division. As an Operating Component that
reflects all facets of purchasing and procurement, it continues to afford us an
excellent professional entry point to expose newly hired procurement personnel to the
totality of the Agency procurement specturm. Its formal type of organization allows
a young officer to spend a period of time in the three identifiable functions of procure-
ment, i.e., negotiation, administration, and settlement. By having these unilateral
exposures the officer is then much better equipped, when rotated to a decentralized
team, to act in the "womb to tomb" mode where he is responsible for all three
functions. While there is only a minor amount of research and development contract-
ing done within this Division, and the vast majority of it is development and not
research, again an opportunity is afforded for on-the-job training to better equip an
individual for eventual assignment to the decentralized teams. It is the current
Procurement Division that serves the research and development needs of the Office
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u>
of Communications, the body of principal interest in the Support Services. The
Director of Communications has expressed his satisfaction with the current
arrangement.
"That the Director of Logistics assign to the Assistant Deputy Director
of Logistics for Contracting responsibility for the analysis of outstanding contracts
in settlement with a view toward identifying instances of undue delay and finding ways
to hasten settlement. "
Position: The Office of Logistics is well aware of the Executive Director-
Comptroller's, and other senior management officers, interest in expediting the rate
of settlement of contracts. We will continue to diligently pursue this goal.
X1
"That the Director of Logistics
"a. As a service of common concern to th 25X1
Office and the decentralized contracting teams, assume responsibility for the cen-
tralized dispatch and receipt of all internal Agency correspondence between head-
Recommendation No. 19
"That the Deputy Director for Support explore with the Deputy Director
for Science and Technology the feasibility of merging the CONIF and ACORN data
bases into a single, Agency-wide contract information system. "
Position: The Office of Logistics takes no position on the merits of Recom-
mendation No. 19, which would see merged the current ACORN (DD/S&T) and CONIF
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(OL) contract information systems. This matter was thoroughly investigated by
Support Information Processing System (SIPS) personnel some six months ago and,
acting in its chartered and authoritative role, the SIPS Task Force determined to
continue in existence both systems.
We do offer several comments, however, on the IG's report. We
agree with the Inspector General that each system has its unique and valuable
characteristics. Paragraph 67 identifies the ACORN uniqueness and paragraph
69 states ". . . in contrast to the ACORN system, the CONIF data base does con-
tain substantial information on the state of contract settlement. " While we are the
first to admit, incidentally, that the CONIF system is susceptible to much more
refinement and development, we are not prepared to grant the statement, also in
paragraph 69, that ". . Programs for access to the data base are grossly inade-
quate." In this connection, paragraph 70 of the report states as follows:
"Our inquiries revealed that the Office of Computer
Services could provide programs within two or three weeks
which would markedly improve access and, consequently,
the utility and value of the system. We passed this infor-
mation to the Office of Logistics and were advised that the
decision had been made to deter upgrading the existing
CONIF in view of the improvements anticipated from the
Support Information Processing System (SIPS)."
We offer two observations on the above-quoted language. Upon fur-
ther study, we have decided to proceed with upgrading, including both content and
programming, the existing CONIF system. There does seem to be some confusion,
however, on the matter of the Office of Computer Services (OCS) having a capa-
bility to markedly improve access within two or three weeks. According to the OCS
representative, to whom the inspector put the question, his answer was not correctly
understood. The OCS representative stated that an "on-line" capability could be
furnished within three weeks. This has nothing to do with reprogramming, per se,
but merely means the installation of a remote control console in the Ames Center
Building and then reformating the file. Reformating includes transposing information
now on magnetic tape to computer memory discs. The basic program remains the
same. To reprogram is a very basic undertaking, and we have asked OCS to under-
take it. Not only can it not be done in "two or three weeks, " but several months
have already transpired while OCS is studying how to do it and what new program to
use. This whole area is a rather complex one, and we feel we should take our
guidance from the SIPS Task Force, which is technically trained and competent in
this field. Therefore, we take no position on the recommendation.
q. Recommendation No. 20
"That the Deputy Director for Support direct
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"a. That the Contract Review Board concentrate its efforts on the
monitoring of the overall effectiveness of Agency-wide procurement policies,
procedures, and practices. "
Position: We agree that the Board should continue to interest itself more
in substantive policy matters and less in a contract-by-contract review mode. We
went to great lengths to explain to the IG representatives that this indeed was our
plan, and they indeed reflect that knowledge in paragraph 79. It must be remem-
bered that Board members were not picked for their extensive knowledge and back-
ground in the field of procurement but because of the general overall seniority and
expertise. The Board itself, initially, as the IG report reflects, had considerable
reservation about its capability to become deeply involved in a role of policy re-
view and formulation. With the passage of time, however, the Board has developed
much more interest in the examination and development of policy. One cannot
hasten the accumulation of experience and, as the Board continues to play its role,
it simultaneously contributes to its own background to become more intimately in-
volved in policy matters. We feel that this evolutionary approach, in the long run,
will insure the Board's playing a more substantive role in continually having
greater impact on matters pertaining to procurement policy.
"b. That the results of these efforts be reflected in an annual re-
port to the Director of Central Intelligence, with recommendations for the reso-
lution of problems and the correction of deficiencies. "
Position: We are in agreement that the Contract Review Board should
prepare an annual report. The Board, however, is an advisory board to the Di-
rector of Logistics, and the Deputy Director for Support holds the Director of
Logistics responsible for keeping him aware concerning the efficacy of the Agency
contract program. Accordingly, we believe the annual report of the Contract Re-
view Board should be made to the Director of Logistics, who will then take action
to keep senior management officers informed.
"c. That the annual report address all facets of the Agency's
organization, philosophy, and methods of contracting, to include availability and
capabilities of personnel, management techniques and tools, and strengths and
deficiencies by category and by case. "
Position: While we note that subparagraph c. of Recommendation No.
20 delineates the content of the report, we believe it most appropriate to request
the Contract Review Board to devise its own format and select its own content.
r. Recommendation No. 21
"That the Deputy Director for Support establish with the Chairman,
Contract Review Board, an understanding that the Board's authorities extend to
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include review of external analytical and production contracts and so inform all
Agency components engaged in these categories of contracting activities."
Position: The Director of Logistics is at liberty to refer external analyti-
cal and production contracts to the Board for their recommendation. As a matter
of policy, we will, henceforth, regularly submit to the Contract Review Board ex-
ternal analytical contracts. The Board, however, has shown little interest in re-
viewing production contracts, and we support their collective position that their
major interest is in reviewing research and developmental undertakings. The Di-
rector of Logistics will, as a matter of practice, refer a production contract to the
Board when its uniqueness or its complexity might be worthy of the Board's
deliberations. The usual production contract allows much less latitude in format
than does a research and development contract, and it is not envisioned that many
referrals to the Board will be in order.
s. Recommendation No. 22
"That the Deputy Director for Support seek revision of or its 25X1
successor issuance, to provide for automatic consideration by the Contract Review
Board of contracts valued in excess of $250 thousand. "
Position: The $150,000 limitation was originally selected because it coin-
cides with the maximum monetary approval authority for research and development
undertakings that can be exercised by a deputy director. Its selection was arbitrary
and at such time as the monetary level of research and development approvals to
the Deputy Director for Support changes, we will adjust so that Board actions con-
tinue to reflect that level of approval.
Recommendation No. 23
"That the Deputy Director for Support seek authorization, either by
consultation with the other Deputy Directors or, if necessary, by referral to the
Director of Central Intelligence, for the Contract Review Board to have access to
any and all information (except as specifically exempted by competent authority),
or to the advice of any Agency personnel, that may be required for its determina-
tion of the desirability and validity of contracts referred to the Board for
consideration. "
Position: The principles of "need to know" have not been an inhibiting
factor to the conduct of the Contract Review Board business. The Inspector Gen-
eral's observations are based on only one case, i.e., -]which is a
most sensitive one differing only in degree but not in principle with those develop-
ments and operations conducted under a0 classification. Its magnitude is 25X1
such it represents the largest dollar volume contract currently financed by Agency-
appropriated funds, and its sensitivity is such that a specific briefing on it was
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given by the Deputy Director for Science and Technology to Senator Richard B.
Russell (D-Ga) on 26 September 1969. We do not believe the Board needs any
additional authorization to seek information, and the Board, further, has
access to appropriate technical as well as contracting officers to respond to
any questions which are germane to an understanding of the proposed contractual
relationship.
U. Recommendation No. 24
"That the Deputy Director for Support make the Agency Contract
Review Board advisory to him rather than to the Director of Logistics; and
that he change the name to the Agency Contracting Policy Review Board. "
Position: The Deputy Director for Support holds the Director of Logis-
tics responsible for the conduct of the Agency's procurement program. It is,
therefore, appropriate that the Contract Review Board maintain its current
relationship to the Director of Logistics.
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