REPORT ON AGENCY PROCUREMENT FOR FISCAL YEAR 1976

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79-00498A000200070002-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 15, 2016
• Document Release Date: September 16, 2002
• Sequence Number: 2
• Publication Date: November 12, 1976
• Content Type: MF

OGC HAS REVIEWED.
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12 NOV 1978
MEMORANDUM FOR: Deputy Director for Administration
FROM James H. McDonald
Director of Logistics
SUBJECT Report on Agency Procurement for Fiscal
Year 1976
'7l - .0-7-x/
1. This memorandum is for your information only. It
constitutes the Office of Logistics' annual report on Agency
procurement for Fiscal Year 1976. It has been delayed to
include significant developments from the Transitional Quarter
(TQ).
2. Tab A discusses events which had a significant impact
on the procurement process during the past fiscal year and the
TQ. Tabs B through I provide statistical data in similar for-
mat and coverage to that provided in previous reports, including
a listing of the ten contractors who received the largest dollar
volume of contracts with the Agency.
3. Statistical data for the TQ were forwarded with the
Contract Activity Report for September.
25X1A
ame McDonald
Director of Logistics
Atts
Tabs A - I
cc: DCI, w/atts
DDCI, w/atts
ER, Watts
This memorandum may be
downgraded upon removal
of the attachments.
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Table of Contents
,A. Report on Agency Procurement for Fiscal Year 1976
B. Agency Contract Actions by Month--FY 1976
C. Agency Contract Dollar Volume by Month--FY 1976
D. Agency Contract Dollar Volume by Month--FY 1974,
FY 19 75 , and FY 1976
E. Agency Contract Actions by Month--FY 1974, FY 1975,
and FY 1976
F. Distribution of Total Agency Contracting Activity
by Directorate and Type of Business--FY 1976 and
FY 1975
G. Total Agency Contracting Activity According to Type
of Business and Responsible Contracting Element-
FY 1976 and FY 1975
H. Recapitulation of All Agency Procurement--FY 1976
and FY 1975
I. Top Ten Contractors--FY 1976
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REPORT ON AGENCY PROCUREMENT FOR FISCAL YEAR 1976
I . Trends in Government
A. Office of Federal Procurement Policy (OFPP)
The establishment of the Office of Federal Procurement
Policy (PL 93-400) on 30 August 1974 is undoubtedly the most
significant event in the history of Federal Government pro-
curement. The Procurement Management Staff in the Office of
Logistics (OL) has been established as official liaison with
OFPP and has been asked to participate as a member of a work-
ing group on policies and regulations. This new office,
criticized initially by the Congress for inactivity, made
great progress during FY 1976 in execution of plans for imple-
menting the most significant of the 149 recommendations made
by the President's Commission on Government Procurement.
Some of these have included the following:
1. Major Systems Acquisition
A Government-wide policy for the acquisition of
major systems was promulgated on 5 April 1976 by OMB
Circular A-109. This document, among other things,
required identification of major systems with major
Agency objectives, high-level approvals for various
types of decisions, designation of a Major Systems
Acquisition Executive, and prescribed handling of major
systems as part of the budget presentation. The Cir-
cular also schedules requirements for reporting and
implementation. Because of the interdirectorate
implications, responsibility for implementation was
transferred to the Office of the Comptroller.
2. OFPP Regulations Nos. 1 and 2
These first two regulations from OFPP leave the
Armed Services Procurement Regulation (ASPR), issued
by the Department of Defense (DOD), and the Federal
Procurement Regulations (FPR), issued by General Services
Administration (GSA), intact, but make both sets of
regulations subsidiary to and a part of the new Federal
Procurement Regulatory System (FPRS) issued by OFPP.
Regulations Nos. 1 and 2 call for close coordination
between GSA, DOD, and OFPP on future regulatory issuances,
with the goal being one uniform federal procurement
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regulation. The first regulation stated that DOD and
the National Aeronautical and Space Administration
(NASA) would conduct their procurement in accordance
with the ASPR, while all other agencies would follow
the FPR. After substantive discussions with Mr. Witt,
the Administrator for OFPP, and correspondence between
the DD/A and OFPP, agreement has been reached on CIA's
continuing to operate its system "to the maximum
practicable extent" in accordance with the ASPR.
3. Procurement Law
Proposed legislation to update and consolidate the
two basic procurement statutes, the Armed Services Pro-
curement Act and Title III, Federal Property and Admin-
istrative Services Act of 1949, was submitted to the
Congress. It was introduced as S. 2309 by Senator
Charles H. Percy on 9 September 1975. A subsequent bill,
S. 3005, to achieve the same goal was presented by
Senator Lawton Chiles on 19 February 1976. Our Office
of Legislative Counsel is following these bills.
4. Federal Procurement Institute
The Administrator for OFPP, by memorandum dated 14
July 1976, established the Federal Procurement Institute.
The Institute will serve as the focal point for coordina-
ting the Government-wide planning, development, imple-
mentation, and evaluation of programs in procurement
research, education and training, and career development.
DOD will serve as the Executive Agency for the Institute.
E. Executive Order 11905
Issuance of this Executive Order on United States Foreign
Intelligence Activities was a major step forward for Agency
procurement in that authority for R&D contracting was provided.
Also provided was additional enabling authority for handling
both classified and unclassified procurement activities in the
U.S. and abroad.
C. Accommodation Procurement
This activity, which was the subject of an OL study in 1974,
continued to be a matter of concern for the Office of Logistics.
I t had been expected that involvement in this area would diminish
as a result of senior management concern in early 1975 it now
appears that our involvement is greater than ever. u continues
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with two full-time procurement officers dedicated to that
program, I and although has been reduced significantly,
Project has been a e While procurement activity on
is for the most part advisory, there is a
continuing drain on procurement manpower assets; and we feel
these programs have high "flap" potential.
D. Equal Employment Opportunity
Increasing emphasis throughout Government and from the
Director of Central Intelligence's panel has been evident
during FY 1976. The Director and Deputy Director of Logistics
along with Chief, Procurement Management Staff, met with the
Director's Equal Employment Opportunity panel late in 1975
to explain to them actions being taken to insure that Agency
contractors are in compliance with applicable laws and regula-
tions. Revised instructions to contracting officers have
been issued (Procurement Note 75), and mechanisms have been
established with cognizance agencies to verify compliance or
to request action.
E. Congressional Investigations
Substantial effort was expended on responses to the
various investigating committees, principally the House Select
Committee. Primary areas of interest for procurement were
contracts with educational institutions and with certain con-
25X1A tractors such as Procurement procedures, forms, and
boiler plate also came under scrutiny. Perhaps the most time
consuming was the Committee's investigation of covert pro-
curement practices.
F. Transitional Quarter (TQ)
The Federal Government's fiscal year after operation on
a basis of 1 July to 30 June since 1842, was changed during
the reporting period to 1 October through 30 September. The
change required establishment of a mini fiscal year which
was identified as the Transitional Quarter (TQ). Guidance
was issued to requirements units to avoid to the maximum
extent possible initiation of major, time-consuming pro-
curement actions during this period. The budget for the
contract actions totalling I which was equivalent 25X1
to 44% of the contract volume handled for the entire FY 1976.
Notwithstanding the high level of activity, the transition
period is considered to have gone very smoothly.
transition period proved to be very tive, withi1funded 25X9
TQ was established at 25% of the FY 1976 budget. The
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I I . Private Sector
handled on a case-by-case basis as they are identified
because there is no "cookbook" formula for dealing with them.
The problem is also critical for DOD and will be followed
closely.
B. Contractor Relations
In 1972, the then Director of Logistics, Mr. John F.
Blake, and the Chief of the Procurement Management Staff
visited several long-time suppliers of services and supplies
to interview senior contractor officials and to evaluate 25X1A
industry's perception of CIA procurement practices. A similar
survey was made in February 19 76 .
I Iwere included in the
survey. It was found that the contractors visited continue
to be strongly supportive of the Agency, even after the in-
vestigations and the resultant negative press. They feel
that Agency procurement practices are excellent and in the
best interest of the Government. However, those contractors
with significant international sales or capital investments
abroad expressed sensitivity to publicizing any extensive
involvement with CIA.
III. Agency Procurement Organizations
A. Assignments and Acquisitions
Consistent with the OL policy of rotating its procurement
officers -every three years, 26 officers were selected for re-
assignment during the year. Utilization of procurement person-
nel was complicated by an emergency request from the Deputy
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survey of-Procurement--Other Agencies
Increased oversight, coupled with the possibility of
General Accounting Office review, raises a question as to the
level of manpower resources which would have to be allocated
by our Agency to operate our procurement system in a manner
similar to that of other agencies. A survey of the procure-
ment process at the Environmental Protection Agency was made
and revealed that they employ slightly over two times as
many professional procurement officers as we do for about
the same number of contract actions, but their dollar volume
is substantially less when the National Programs are taken
into consideration. A similar survey at NASA is planned.
IV. Management Developments
A. Agency Contract Review Board
The Agency Contract Review Board reviewed 45 agenda
items in FY 1976 compared to 44 in FY 1975 and 42 in 19 74 .
Cases reviewed included 32 requests for approval to negotiate
new contracts or amendments to existing contracts and 16
requests for the approval of overruns in existing contracts.
The number of overruns qualifying for review by the Board was
10 greater than in FY 1975. The average overrun reviewed by
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system. is figure represents a percent overrun of the
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ment was also brought in for discussions with senior command
officers and contracting personnel to advise them of the
Agency's concern.
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25X1A The Board met at II on 21 June 1976 to review its
charter. Items of specia concern were the types of contracts
that should be reviewed and the dollar threshold at which
such cases should be reviewed. (At present, the Board
reviews R&D contracts but does not review services or
production actions.) The Board is also seeking new guidance
from the Director of Logistics as to what he desires in the
way of Board action. Final decisions on this matter had not
been made by the end of the reporting period.
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B. Procurement Policy Panel
This panel, chaired by Chief, Procurement Management
Staff, includes as members the Chiefs of the various contracting
teams, plus the Chief, Procurement Management Staff, DD/SET,
and the Chief, Procurement Division. Reactivated in 1974,
the panel is an important mechanism for communication with
and among the various decentralized proc
two-day seminar-type meeting was held at 25X1A
in February; and for the first time, an outside speaker,
was invited to speak to the group. His
comments were excellent, and the practice of bringing in out-
side speakers will be continued. The principal items dis-
cussed by the panel were the use of award-fee contracts and
the charter of the Contract Review Board.
The CONIF system has undergone a difficult period in its
evolution, which is not yet complete. The evolution has
involved the transition from a batch update system (CONIF IIA)
to a random access, on-line update system (CONIF III). The
CONIF IIA system was frozen as of 1 October 1975, with dual
coding for CONIF IIA and CONIF III taking place after that
date. Further complicating the problem is the interface of
the General Accounting System with CONIF III. This upheaval
in our data base has been particularly painful because it
occurred when the various investigations and an influx of
Freedom of Information Act requests were creating a peak
requirement period. The forecast now is that we will be
able to rely fully on CONIF III effective 1 December 1976.
V. Problems
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mass storage system to be installed in Agency facilities as
part of Project0 In late 1974, cost and performance
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problems occurred. In the Spring of 1975, contractual relief
was granted in the form of additional funds of 25X1A
and approximately one additional year for completion. In
the Spring of 1976, it became obvious thati performance 25X1A
was such that completion of the contract in accor ance with
its terms was in jeopardy; and the two contracts were ter-
minated for default. The contractor appealed the default
action in due time, and action has been taken to prepare
the Agency's case for hearing before the Armed Services
Board of Contract Appeals. As of this date (29 Oct. 1976),
II has proposed an out-of-court settlement, which is
under consideration.
B. Contract Obligations
On 8 June 1976, our office of Finance issued Office of
Finance Notice 14-76, "Documentation Requirements for
Obligations." This notice reiterated the le al requirements
for recording obligations included in and in the 25X1A
Appropriations Act of 1955. The essence of this requirement
is that we have (1) a bid in writing, (2) acceptance of the
bid communicated to the bidder in the same manner as the bid
is made, (3) incorporation in the contract of the terms and
conditions of the bid without qualification, and (4) signatures
of both contracting parties. The Office of General Counsel
has held that the Agency's procedure of recording obligations
on the basis of contracts being signed by authorized Agency
contracting officers and mailed prior to the end of the
fiscal year does not meet legal requirements of the Appropria-
tions Act of 1955. In order to have bilaterally signed
contracts in hand by the end of the fiscal year, earlier cut-
off dates for accepting requisitions from requesting com-
ponents will be required. Procedures will be developed during
FY 1977 to comply with this requirement.
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