INSPECTOR GENERAL SURVEY OF THE OFFICE OF LOGISTICS, AUGUST 1969

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84-00780R003400080028-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 49
• Document Creation Date: December 14, 2016
• Document Release Date: April 2, 2003
• Sequence Number: 28
• Publication Date: January 1, 1960
• Content Type: MF

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MEMORANDUM FOR: Executive Director-Comptroller
SUBJECT Inspector General Survey of the Office of Logistics,
August 1969
1. This memorandum contains a recommendation for Executive Director-
Comptroller approval; such recommendation is contained in paragraph 5.
2. Attached is the reply of the Director of Logistics to the report of the
Inspector General as a result of the recent survey of that Office. We were pleased
to note in paragraph 6 of the Introduction of the report that the Inspector General
feels "the Office of Logistics is well organized 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, from a substantive point of view, two areas of criti-
cality, i.e., personnel management and procurement organization, and also raises
certain management questions within the Supply Division. In replying to the report,
we have chosen to offer, first, commentaries on these three areas, following which
positions are taken in a sequential order on the 24 recommendations. We have chosen
in the commentary to address ourselves first to the matter of procurement because
that subject received the major interest of the Inspector General. It also contains
certain observations on management of procurement personnel and, therefore,
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logically leads to the second commentary on personnel management. There lastly
follows observations on the Inspector General's position on certain organizational
matters within the Supply Division.
4. We have given serious consideration to the positions taken by the Inspector
General and the resultant recommendations, but we cannot in all cases agree either
with the facts as stated or with certain of the recommendations. We believe we will
obtain maximum benefit from this matter by your approval of the positions we have
taken on all of the recommendations.
5. It is recommended that the Executive Director-Comptroller approve the
stated po .ans of the Director of Logistics on those recommendations presented
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
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1.. The principal substantive focus of the Inspector General (IG) Report clearly cen-
:ers on the function of procurement. This conclusion is enhanced by statistical evidence. The
. eport consists of 134 pages, of which 59 are devoted to procurement, and it contains 24 recom-
nendations, of which 14 bear on procurement. We will, of course, address ourselves to the
;G recommendations, but believe some general commentary and analysis will be helpful to an
inderstanding of our position on certain of the recommendations.
2. The interest'and concern on procurement by the IG is, almost exclusively, cen-
:ered on the current management structure that directs the program and does not appear to
.nterest itself particularly in the operations of the program.' Yet, we believe it reasonable to
naintain that, if the operations are successfully conducted, the management structure in-
solved at least has met the pragmatic test. There are aspects of Agency procurement which,
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f not properly conducted, can lead to considerable embarrassment and highly adverse pub-
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brought this matter to the attention of the Chief, Technical Services Division, obtained his
agreement to gradually cease its utilization, and eventually sever from it entirely. That pro-
gram has now been successfully accomplished and, where necessary, we are using several
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It should also be noted that the Office of Logistics has played a significant and leading
role both in developing and implementing Agency policy concerning contractual relations with
academic institutions, and has kept Agency visibility in this area to the absolute minimum.
We mention these matters because 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 before
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 Operating
Officials of the Agency. In this connection, we should like to quote from a memorandum to
the Executive Director-Comptroller of 10. June 1969, signed by Mr. Carl E. ]Duckett, Deputy
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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 Head-
quarters Building to support S&T Offices: OEL, OSI, FMSAC, and OCS. That
team proved so successful that in March of this year, again in cooperation 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 Develop-
ment in the Ames Building.
"3. Our experience to date with the concept has been excellent.; and I be-
lieve that the contracting team, fully integrated in the technical office, provides
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?gui,des 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, regard-
less of where they were assigned, either being rated or reviewed on their fitness reports by
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Office of Logistics personnel; and all NRO contracting' becoming intermingled with Agency-
appropriated fund contracting and coming under the supervision of this mechanism. 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.
5. Viewed within the theoretical concepts of organizational management, we under-
stand the rationale of the Inspector General's recommendations. We have difficulty, however,
in matching the theoretical concept both to the practical views of the matter plus the accom-
plishments 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 theAbasic 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, him-
self, notes in the Forward 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 th-at authority should be exercised where responsibility
resides. It is axiomatic that it is much more difficult and challenging to bring into being new
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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 bereisQn1y symptomatic of what has happened throughout
the history of the Agency when major organizational developments take place. Senior officers
assume the personal responsibility for the implementation of the change and do not turn to the
traditional military theory of distributive responsibility where numbers of assistants and staff
officers are involved with an inevitable diffusion of responsibility and dilution of command
directive. We feel that to retreat from this posture of senior command interest and direction
at this time would serve to prejudice and not enhance 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, accordingly, to maintain and retain the current structure controlling,
guiding, and further developing the decentralized procurement system for an additional year.
We would then, toward the end of calendar year 1970, undertake a further review of accom-
plishments 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.
6. Our earlier expressed reservations on the concept espoused by the IG for managing
the Decentralized Procurement System are based on the following observations. 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 personnel innate-in the IG
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concept nor are we convinced that this concept is compatible with the Agency manner of con-
ducting its affairs.
7. 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. We agree
with the fact as stated but would have been appreciative if the point had been more thoroughly
pursued by the IG representative. The cold fact is that one cannot have that which one cannot
afford. For the past two years, we have continually requested, and have continually been
denied, increased personnel ceili ng 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.. This
Office has had to "eat" out of its T/O, such T/O having been reduced by n five
years, those two jobs. With this fact clearly on the record, it would make little sense to go
forward with a request for other new staff support with a predictable 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 con-
cern himself solely and exclusively with Contract Review 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 Director of Central Intelligence being
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both the Senior Intelligence Advisor to the President of the United States and the Executive
Head of Central Intelligence; nor do we find it any different that the Deputy Director for
Science and Technology also being the Director's Senior Research and Development
Coordinator throughout the entire Agency.
8. 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
executed 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 Components.
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
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
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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 various 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 further observe that, the personal and
continuing involvement of senior officers responsible for overseeing and operating the system
represents a continuing source of information and control which, in the last analysis, is prob-
ably more efficacious than any formal system that could be devised.
9. 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.,
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 assign-
ment, and their evaluation as procurement officers. We feel that this activity can-
not be effectively performed for long personally by the Director or Deputy Director
of Logistics. "
"39. We feel it is important to the future of the decentralized contracting
We believe the facts from the period 1 September 1967 to 26 September 1969 bearing on the dis-
charge of responsibility to career officers very adequately speak to this point. There are
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today 73 officers performing a procurement or purchase function under the career cognizance
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. Additionally, 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 assign-
ments, transfers from Procurement Division to Operating Components, transfers from one
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Operating Component to another, and transfers within the Office of Logistics itself, i.e.,
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I and the Contract Review Board. We would be happy to have this record of interest
in careering a group of functional specialists matched against any other group of functional
specialists within the Agency.
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10. Having opened the subject of career management, this is perhaps the
appropriate place to comment generally on the Inspector General's remarks as
they pertain to the Personnel and Training Staff, OL. We will respond later in
this paper to the specific recommendations. The Inspector General report states
"... The Office of Logistics does not have a Career Service Board that functions
as such. The Office used a Career Board system until late 1964. It was ignored
thereafter as unproductive both by the previous and present Director of Logistics."
One gets the impression from these statements that decisions affecting the careers
of Logistics personnel are made by the Director of Logistics without due consider-
ation of the opinions of his Division Chiefs. This is a misconception which hope-
fully the following remarks' will clarify:
On 15 October 1964, the Logistics Career Board was made an advi-
sory 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 per-
sonnel 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
Services and he approved or disapproved those recommendations. The only sig-
nificant difference is that members do not meet in a body to decide issues on
the basis of majority rule.
11. On the subject of personnel policies, the Inspector General's report indi-
cated that practically every employee expressed a total lack of knowledge on the
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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_o __ 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 their career development whether for training pur-
poses or for overseas assignment.. A followup interview is held with each individual
assigned to the Office of Logistics --the first is held with professional employees
30 days after entry on duty and again after six months on duty. Clerical individuals
are interviewed between six to eight months after entry on duty.
12. The Inspector General focused on problems caused by rotational assign-
ments. 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 ca-
reerists assigned to area divisions were forgotten and their careers suffered as 'a
consequence. Specific Inspector General 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.
Comment: It is true that personnel departing the Far East area in the
summer 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
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assignment 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 the 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 assign-
ments by January 1970.
b. 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
did not follow through).
Comment: There is no record in our Personnel and Training Staff or
anyone requesting assistance about transfer of leave. As we see it, this could
only occur to someone who had been
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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.
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 re-
ported that he did not gain admittance in the University of his choice and would
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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 in an Area Division has made this statement
to any member of my Staff. We cannot agree "that their careers suffered as a con-
sequence" since only 15 of the 52 promotions in FY 70 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 careerists 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 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 preference
to remain in their assignment.
e. Inspector General Statement: eneral StatementThe 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
assignments could be considered for the Mid-Career Course. He then asked.when
he would be rotated to Headquarters and was told that his tour
to good morale. As a matter of fact, it must be extremely difficult for any
was indefinite. While this situation eventually was rectified and the employee was
to receive his transfer and his appointment, this type of paradox is not conducive
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employee to make intelligent plans foil
education of children, or
career development when assigned on the basis of an indefinite tour-
Headquarters, his request will be given appropriate consideration at any time.
13. The remaining statements by the Inspector General on the Personnel
and Training Staff have to do with overall ceiling, replacements, availability
of the Staff for individual problems, honor and merit awards and problems pre-
sented by retirements at the
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a. Inspector General Statement: "The Office has an approved ceiling
staff... As of 1 July 1969 there were ^ employees on duty."
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Comment: Statistt.r=, 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
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employees 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 replace-
ments.
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
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Time of Inspector General
Survey
1 November 1969
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 addi-
tional chauffeurs are recruited and put in process. The Office of Personnel is
aware of our requirement.
c. Inspector General Statement: Several supervisors in various elements
of Logistics made the comment that anytime they or an employee had a personnel
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,nu-
merous occasions. Instructions to members of that Staff are to be available
to any of the operating components at any time.
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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
detailees returning to their parent organization. In other words, approximately
15 awards have been given in 13 years, by an Office that controls approximately
Logistics Careerists.
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, Fiscal Year 1968, 32 Logistics Careerists were awarded Quality
Step Increases and in Fiscal Year 1969, 55 were granted Quality Step Increases.
Further, the Incentive Awards Program at
resulted in four indivi-
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duals being honored in Fiscal Year 1968 and 14 in Fiscal Year 1969. Also,
there is an Awards Program for the Mail and Courier Branch, Logistics Services
Division. In Fiscal Year 1968, three individuals were awarded $25 each, and in
Fiscal Year 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 Motor Pool. In Fiscal Year 1968, 72 individuals received lapel
buttons and safe driver's cards for the year and 14 other individuals received
additional special awards. In Fiscal Year 1969, 70 individuals were given lapel
buttons and safe driver's cards for the year and 7 drivers were given other special
awards.
e. Inspector General Statement: The team found a number of cases of ,
mis -slotting and double slotting. While number was not unusually large, several
of these cases had been mis-slotted for up to two years.
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Comment: The principal reason for the mis -slotting 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 sur-
vey, when this was informally brought to our attention, the mis -slotting was
corrected.
f. Inspector General Statement: (Pertaining to "Turn-
over of personnel is not high but retirement has proven a problem making people
available for training and succession. "
Comment: For the next three years, that is through 1972, ten individuals
are scheduled for retirement at four GS grades five to 14 and
six Wage Board employees. If they all retired this 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.
14. Turning now to the Supply Division we feel it is appropriate to answer
some of the general comments before addressing ourselves to the specific
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IG Statement, Paragraph 9, Page 29
"Of considerable interest to the survey team was the method used by
this Unit to acquire materiel and account for funds. It differs from the
system employed by thel
1 f 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 procure -
ment action and to process the paperwork. If this method is acceptable for.
I we wondered why it could not be adopted for
general procurement. "
Comment:
b
le. The fact that
The two situations are not compata
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actions are
not processed through the FPA System has no bearing on the method and
speed of action taken. The categories of materiel specified for requisition
through Q channels can be likened 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
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Irom the overseas
procurement agents, on individual bases, arrange for,
pick up, package, and ship those requirements (except when
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cannot be used). We suggest that the General Procurement Branch of the,
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Procurement Division is not the proper point of departure to revise the
FPA System. Additional comments on this matter are also contained in
comments referring to Recommendation Nos. 8 and 15.
IG Statement, Paragraph 15, Page 32
"The staff employee occupying the stock control position did not seem
fully occupied and is doing work previously done by a Government Services
Administration employee who is still at the I I"
Comment:
The "staff employee" concerned was a marginal employee and has
since resigned.
IG Statement, Paragraph 16, Page 32
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IG Statement, Paragraph 30, Page 41
"We question the location of nder the 25X1
Stock (sic) Management Branch. The Section receives more than 90
percent of its work direction from the Central Control and Distribution .
Branch, discussed below, and from a standpoint of workload, perhaps it
would make sense to place it under that Branch. "
Comment:
is not a stock management 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 "receives 90 percent of its work
distribution from CCDB" can be misleading. CCDB has no directive
authority over other units; it is a clearing house with respect to the point
at issue. We cannot agree with the IG suggestion.
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SE; t 1
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Our specific comments on the Inspector General's Report recommendations
now follow. Four recommendations, 11, 12, 16, and 24, have been addressed
previously in this reply and represent our comments on the totality of those
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 SEC eaET1
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Recommendation No. 1
a. Each Division Chief today, as in the past, makes his recommendation to
the Director of Logistics about personnel assignments, reassignments, training,
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. Annual employee counseling is now being performed when the Fitness
Report is prepared and more often if appropriate.
Each Division Chief now discusses proposed assignments with his appropri-
ate branch chief before an employee is reassigned. Branch chiefs initiate re-
commendations for promotions and quality step increases. Each Division Chief
will be encouraged to bring about a greater degree of participation by their section
and branch chiefs in personnel management and career planning.
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Recommendation No. 2
We agree with the intent of this recommendation but its implementation de-
pends 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.
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Recommendation No. 3
We disagree with this recommendation. As outlined in the foregoing general
commentary; it is a basic management principle that officers of the Support Serv-
ices 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. We will, however, propose to the appropriate author-
ities that the Chief, Security Staff, Office of Logistics be allowed to examine and
comment on fitness reports of Office of Security personnel assigned to independent
contracting teams.
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Recommendation No. 4
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 of the Directorate for Science
and Technology have already occurred. If investigations reveal that it is feasible
and desirable to subordinate the two industrial security officers
then we will make such a recommendation to
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the Deputy Director for Science and Technology.
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Recommendation No. 5
We requested Office of Security comments on this recommendation. The
Director of Security disagreed with the recommendation citing, inter alia,
that it is a basic principle of management that there be a separation of command
between the safety program and offices responsible for logistical support.
We propose to take no further action on this recommendation.
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Recommendation No. 6
"That the Director of Logistics take action to redesign and renovate
the office
space at the
Comment:
Agree. At such time as funds are available we will take action to
imnrove th
offi
---_-
e
ce
Recommendation No. 7
"That the Director of Logistics issue instructions that when workload
permits additional effort be made to purify stocks of
unneeded arms and ammunition.
Comment:
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. "
Comment:
We agree in principle. However we wish to point out that upon
implementation of the modern Electronic Data Processing System now
under development, the concept of Types I, II, and III accounting systems
as now employed would vanish. Gn- *as -s' /e do not believe that a major
review of those systems under these circumstances would be practicable.
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Recommendation No. 9
"That the Director of Logistics revise present practice so as to provide
that administration of procurement actions ass signed to Procurement Division
is conducted by the unit and officer undertaking the procurement action. "
The administration (followup) of procurement Division actions directly
to the vendor by CCDB is limited to those actions initiated by the General
Procurement Branch I I or Contract Branch procurement).
Prior to the establishment of CCDB the followup of these same actions in the
Procurement Division was by an element not a part of the General Procurement
Branch. We see nothing sacred about procurement officers doing the followup
on actions they initiate with vendors. We cannot agree with the recommendation.
Recommendation No. 10
"That the Director of Logistics and Chief, Supply Division, consider
the consolidation of the Central Control and Distribution Branch and
I Ir take steps to reduce duplication and to revise the
procedures employed by the units. "
a. The functions of CCDB and the
are enumerated below:
Central Control & Distribution Branch
1. Receive all requests for materiel.
2. Scan requisition for items carried
in system
3. Item not carried in system, reviewed
by cataloguers and assigned numbers
4. If request, prepare
requisition.
5. For items carried ins stem,
determine which I should
be given requirement.
Stock Control Branch
Stock Control Branch,
25X
25X
25)
1. Receives three types of requisitions:
a. Requisition (ditto mat) when all
items are to be issued from
stock at CD.
b. Requisition (ditto mat) split stock
and procurement, when stock items
only are to be issued from stock
at CD.
c. Requisition (ditto mat) when all
items are coded procurement, file
in the accountable voucher file.
2. Checks availability of stock items
at CD for issue:
a. If items are available for issue,
postsstock issues to stock status
report and indicates quantity on
requisition to be issued.
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X1
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Central Control and Distribution Branch
6. For items not carried in system,
determine procurement source,
i. e. , GP (PD), ICS (PD),
CPB (PD), WCPO (PD),
7. Schedule (review and assign RDD
Dates) actions for stock issues and
procurement. Establish priority
codes.
8. Forward to appropriate I
and/or procurement element s
for action. Establish followup
file for procurement actions.
9. On receipt of action "
documents establish followup
file.
10. Follow up with vendors, or
other action elements when scheduled
dates are not met.
11. Notify customer of delays or
rescheduling of requisitioned
materiel.
Stock Control Branch/
b. If sufficient quantity not available
for issue, places item on due-out
and annotates the stock status
report and requisition to this effect.
Marks, the requisition with the due-in
voucher number.
3. Assigns the transaction analysis code
on requisition (ditto mat).
4. Reproduces and distributes all required
copies of the requisition.
5. ACTION COPIES of the requisition are
forwarded to 25X
I . CD for processing. ; 25
6. One copy of requisition is utilized to
record the transaction for OCS.
7. One copy of requisition if forwarded
to CCDB for followup.
8. Reproduces (if required) and distributes
required copies of the receiving report.
One copy of R/R sent to CCDB for file
in official procurement folder.
9. Processes receiving reports:
a. If items are for stock:
(1) Posts receipt to stock status report
(2) Assigns transaction analysis code
(3) Records the transaction for OCS
(4) Release due-outs on requisition
(ditto mat)
b. If items are for direct shipment:
(1) Assigns transaction analysis code
(2) Records transaction for OCS
10. Deposits the posted receiving report in
the debit accountable voucher file.
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b. As pertains to Stock Control Branch/
three possibilities:
requisitions have 25X1
(1) All items in stock: In this case, requisition ditto mat is forwarded
intact to CD/SCB. All copies required are produced by CD/SCB.
(2) No~ items in stock: CCDB runs off and distributed all required
copies.
(3) Some items in stock, some to come from procurement:' CCDB
reproduces copies required for procurement action. Ditto mat is then
sent to CD/SCB where remaining copies required are reproduced and
distributed.
.(4) In other words, CCDB runs off copies required for procurement
action. CD/SCB runs off all others.
c. The records which CD/SCB sends to the archieves are the official
accountable property records for transactions involving These 25X1
records involve receipt, issue, shipment or disposal of property. The official
records maintained and retired to archieves by CCDB are procurement instruments.
There is not duplication of action between these branches. As pertains to
reproduction facilities, if these branches were physically adjacent there could
naturally be greater utilization of such facilities, as could be between any units
using such facilities. We cannot agree with the recommendation.
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We agree with the spirit of the recommendation but, inasmuch as we have no command
or technical supervisory responsibility for contracting matters handled under the direct dele-
gation of authority from the Director to the Offices of Special Activities and Special Projects
Contracting Officers, we have taken no positive action on the matter. The formalized Pro-
curement Officers' Meeting, as the IG Report acknowledges, is a relatively recent innovation.
We appreciate the favorable comments given by the IG on the management technique. The
substance and value of the meetings appear also to be recognized by others and, in August of
this year, the Senior Contracting Officer of OSP asked for the right of attendance. The re-
quest was granted and we suspect the Senior Contracting Officer of OSA will quite soon state
his own desire.
~ r.
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DD/S Contracting Team (Recommendation Number 14 and
Purchasing Division (Recommendation Number 15)
There is merit to this idea insofar as uniformity and consistency 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 OL/Procurement Divi-
sion. 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
r
personnel to the totality of the Agency procurement spectrum. 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 R&D contracting 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. we are also concerned,
in this day of decentralization, of too much fragmentation and believe that the current procure-
ment organization is just about appropriate to meet Agency needs and any further decentrali-
zation might tend to represent consistency only for consistency's sake
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Recommendation Number 17
We agree with the thrust of the recommendation but its manner of implementation will
be somewhat dependent on future command organizational changes in the Office of Logistics.
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Recommendation Number 18
We agree with the thrust of the recommendation and will undertake study to determine
workload factors involved prior to committing ourselves to its implementation.
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Contract Information Systems (Recommendation Number 19)
The Office of Logistics takes no position on the merits of recommendation number 19
which would see merged the current ACORN (DD/S&T) and CONIF (OL) contract information
systems. This matter was thoroughly. investigated by 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 contract to the ACORN system, the
CONIF data base does contain 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 inadequate." In this connection, para-
graph 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 information 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 further 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 OCS having
a capability 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
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 Approved For Release 2003/05/27 : CIA-RDP84-00780R003400080028-9
Recommendation Number 20
Without taking any position on the organizational location of the Contract Review Board,
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 para-
graph 79. It must be remembered that Board members were not picked for their-extensive
knowledge and background in the field of procurement but because of the general overall
ILLr GIB
seniority and expertise. The Board itself, as the IG Report reflects, had considerable reser-
vation about its capability to become deeply involved in a role of policy review and formulation.
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 involved 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 per-
taming to procurement policy. W e:,feel_ it_would be aahisfake?-o- "force-feed" in this connection.
We further agree that the Contract Review Board should prepare and submit to the
Director, through channels, its annual report to include recommendations where appropriate.
We note that recommendation number 20c lists the various items to which the IG would have
the report address itself. We-sus Ct hatj am.,of these elements are perhaps too precise and/or
Q
individual to be appropriate for a report to senior management, and we would propose to
suggest that the Contract Review Board devise its own format and select its own content.
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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 instal-
lation of.,~a remote control console in the Ames Center Building and then reformating the file.
Reforma~ing 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 undertake 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 and will continue to take advice from technically com-
petent people.
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~~ be a
Recommendation Number 21
We agree with the propriety of this recommendation and we understand the reasons for
the Inspector General bringing it forth. For several reasons, however, we do not agree with
the practicality of the entire recommendation and note that the IG's Report itself, in para-
graph 85, states that "technically" the classes of contracts in the recommendation should be
subject to Contract Review Board action. We also note that in recommendation number 20,
and the language supporting it, the Inspector General encourages the Board to "deemphasize
its review of individual contractual actions, reserving such reviews for those cases or
groups of cases which possess unique policy implications and which contribute to some ele-
ment of its annual report." It could be maintained,..therefore, that were we to implement
recommendation number 21 in its entirety we might inferentially be prejudicing the imple-
mentation of recommendation number 20. We explained to the IG representatives the staffing
history of the proposal on decentralized procurement and'the establishing of the Contract Re-
view Board, in papers given to and approved both by the Director and the Executive Director-
Comptroller. All through the fabric of the proposals ran the thesis that the Board would
exercise cognizance over research and development cases. This point was elaborated upon
in great detail by the previous Inspector General's Report, primarily based on the report of
which laid great stress on bringing closer, organizationally,
technical officers and contracting officers involved in research and development undertakings.
As evidence of this, we have attached (Attachments and ) reproductions of two briefing
sheets shown and explained to the Director on this matter. The prominence of research and
development speaks for itself (Attachment ) on the reproduction of the chart, and the
third entry under "DD/S Recommendations" again highlights research and development
SE11
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 Approved For Release 2C49 f 9jJ~ FIA-RDP84-0078OR003400080028-9
ontracts. We are frank to admit that in the paper signed by the Executive Director-.Comptroller
the words "research and development" were omitted when stating, in general
erms, what would, be the area of cognizance of the newly created Contract Review Board. This
rror was noted shortly before the paper was presented for signature but, on the assumption
hat the intent was so well understood and had been so thoroughly discussed with all senior
fficers involved, we felt the spirit. of the undertaking was beyond question. Accordingly, the
apex presented was not recalled, and was signed.. This oversight was called to the attention
f the initially appointed members of the Contract Review Board when they themselves partici-
ated in drafting their own charter. They agreed that the purpose of the Board was to assume
gnizance over research and development contracts and, accordingly, met the issue by de-
ng the language found in paragraph 2b o dated 8 April 1968, "CIA Contract Re-
ew Board "(Attachment ):
"Such review of individual contracts or classes of contracts may be waived
by the board with the concurrence of the Director of Logistics."
'his position was immediately made operative by the Board and they excluded from ,review
roduction contracts and contracts for "external analysis." External analysis contracts are,
n reality, vehicles by which intelligence reports are purchased from institutions in the
rivate sector. They do not represent research and they do not represent development. They
o, however, to again quote the language of the Report, represent "cases. . . which possess
nique policy implications" and for that reason would agree, therefore, that they come under
oard cognizance. We are not in agreement, however, that production contracts meet either
he criteria for Board consideration established by the Inspector General or would the sub-
'mission of such contracts to the Board be in the spirit of recommendation number 20.
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 Approved For Release 2003 E/ 17-RDP84-00780R003400080028-9
Recommendation Number 22
The $150, 000 limitation established as the base for Contract Review Board action was
deliberately chosen so as to reflect the same dollar limits as found in the Agency operational
approval regulation. While we do not disagree with the IG's recommendation to raise that
level, we are aware of action by O/PPB in staffing a proposed revision of the operational ap-
proval limitation from $150, 000 to $200, 000. We would prefer to continue our policy of
having the Board level reflect the operational approval level and would suggest before making
.any changes that we await the outcome of the current PPB activity.
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Recommendation Number 23
In this general area of Board and supporting activity, we note some adverse comment
concerning adherence to principles of "need to know." It strikes us strange that, in a day
of decentralization of procurement, when contracting officers sit organizationally side-by-
side with technical and operations officers and now know more than they ever did concerning
that for which they: are contracting, this observation is made. The Agency, as such, by
virtue of the existence of the Contract Review Board can be considered more knowing than
ever before of that for which it is contracting. The one particular case, upon which the Re-
port bases its finding, is a most sensitive one which differs only in degree and not in principle
with those developments and operations conducted under I classification. 'Its
magnitude is such it represents the largest dollar volume contract currently backed by Agency-
appropriated funds and its sensitivity is such that a specific briefing on it was given by the
Deputy Director for Science and Technology to Senator Richard Russell on 26 September 1969.
This Agency is an intelligence organization with all that that connotes. We believe we should
conduct our business under the historic principles of "need to know," judiciously applied,
when it appears to us necessary to do so to protect both intelligence sources and methods, as
well as clandestine undertakings.
Gti~~r+ t
zcfacca frori aul, a
d~t;:rz~ia and
_UC.ic ciiic;lca
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 Approved For Release 2003/05/Z7E@84=007$OR00340008002879
REAFFIRM THE DIRECTOR OF LOGISTICS AS THE AGENCY CONTRACTING
OFFICER FOR ACTIONS FUNDED FROM AGENCY APPROPIATIONS.
ESTABLISH A CONTRACT REVIEW BOARD TO ADVISE THE DIRECTOR
OF LOGISTICS ON CONTRACTING POLICY 9, TO REVIEW AND
RECOMMEND ACTION ON CONTRACTS OVER $200,000.
EXPAND ON CURRENT PRINCIPLE OF ASSIGNING CONTRACTING OFFICERS
TO OPERATING COMPONENTS BY ESTABLISHING WITHIN DD/I, Do
AND DD/SST "CO G TRW$',' I.e., CONTRACT, AUDIT, AND
SECURITY OFFICERS AUTHORIZED TO EXECUTE RESEARCH AND
DEVELOPMENT CONTRACTS TO A $200,000 LEVEL MAXIMUM.
EXPEDITE THE DEVELOPMENT OF AN AGENCY- WIDE PROCUREMENT
MANAGEMENT INFORMATION SYSTEM (ADP).
DIRECTOR OF LOGISTICS AUTHORIZED TO CONCLUDE IMPLEMENTING
ARRANGEMENTS WITH OPERATING DIRECTORATES AND UNDERTAKE
NECESSARY REGULATORY REVISIONS.
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Co V%ZSS
0S: AV:
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 S-E-C-R-E-T
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This Notice Lpires 1--February 1-969
MANAGEI NT / JPPti 7 u
8 Aprii.1968
CIA CONTRACT REVIEW BOARD
a. The CIA Contract Review Board shall function in an advisory and
recommendatory capacity to the Director of Logistics in support
.of his responsibilities as senior Agency official responsible
for Agency-funded procurement operations. The board shall review
proposed contract actions, as described below, and also
'operationally approved procurement requests which, by their
nature, are of contractual policy, procedural, or operational
significance. It shall monitor the overall effectiveness of.
Agency-wide procurement policies.
b. The board's responsibilities shall be discharged without
assumption of operational, technological, or contractual
responsibility--its responsibilities remaining advisory and*
recommendatory.
2. PRIOR REVIEW OF PROPOSED CONTRACT ACTIONS
a. The board shall review proposed contracts or additional scope
amendments individually in excess of $150,000 valuation, or
overrun-funding amendments if overrun funding exceeds $22,500
and also exceeds 15 percent of original cost estimate.
b. Such review of individual contracts or classes of contracts may
be waived by the board with the concurrence of the Director of
Logistics.
3. REVIEW OF OPERATIONALLY APPROVED PROCUF"KENT REQUESTS
Subsequent to operational and command program approval of procurement
requests estimated to exceed $150,000, copies of the requests shall be
forwarded to the board for its initial consideration. Any member,
believing that such requests present unique contracting policy or
substantive considerations, may request the board's approval to invite
representatives of the sponsoring directorate to brief the board on the
proposed undertaking.
GROU? 1
Excluded from 0utomatic
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