PROJECT AQUATONE PROCUREMENT FOR AIR FORCE AND NAVY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62B00844R000200040015-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 20
• Document Creation Date: December 15, 2016
• Document Release Date: December 17, 2001
• Sequence Number: 15
• Publication Date: July 26, 1957
• Content Type: MF

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 Attorney-Client! fW Th ?Wilr1(jae CIA-RDP62B00844R000200040015-3
SAPC 17866a
Copy 4 of 4
JUL 1957
MEMORANDUM FOR: Special Assistant to the Director
for Planning and Coordination
SUBJECT: Project AQUATONE Procurement for
Air Force and Navy
1. This Agency has been acting as Procurement Agent for
the Air Force and the Navy for supplies, equipment, materiel,
and services developed under Project AQUATONE. Prior to
undertaking this role, we considered carefully the legal basis for
so doing and the legal problems involved in carrying out the
agencies. I discussed this at length with Mr. John A. Johnson,
General Counsel of the Air Forces, and with various Air Force
fiscal and procurement officials. It is my understanding we are
in agreement on the legal aspects and believe that the role of the
Agency as Procurement Agent under these circumstances and the
annex in which it carries out its role are consist ut with
applicable law.
2. First, as to the legal authority to act as Procurement
Agent for other departments or establishments, the following
comments should suffice:
a. Mr. Johnson and I believe that we are properly
proceeding under either of two authorities. Section 686
of Title 31 U. S. C. A. provides that any executive depart-
ment or indeependent establishment or bureau or office
may place orders with any other executive establishment
for materials, supplies, equipment, work, or services
which the requisitioned agency may be in a position to
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*questing agency has funds therefor
and the head of which determines it to be the
interest of the Government. The Army and Navy
are specifically authorized by this so,
orders for such materials, supplies. equipment.
work or services of any kind that the requisitioned
Federal agency may be in a position to supply,
render, or obtain by contract. There is so question
in xnlr mind. therefore that this section authorizes
the arrangement we have with the Diary, provided
that: an appropriate official of the Navy Department
has mad* the determination that this arrangement is
in the interest of the Government. I understand that
such as determination has been made. In my opinion
such a finding would be required not only by the
security aspects, but also because the Goverawen
interest in spending efficiently and economically is
also served. The AA Y force to act specifically named
authorizes furnishing the requisi-
contract, as the section was passed
rca became an independent estab-
en informs me, however, that
under their own authorities subsequently granted, the
ce is in a position to enter into similar arrang
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FOIAB5
3. We have also reviewed the manner to which the various
procurement contracts under these arrangements are. being negotiated
and administered. In my opinion we have not and will not exercise
any procurement authorities which are not available to the Air Force
and the Navy, and we are not, therefore, through these arrangements
circumventing any legal prohibitions on. those services. The one
area in which our arrangements depart from those normally authorized
for the services is in connection with methods of payment and audit.
We have, arranged channels and methods of payment required by
security which normal services' practices would be unable to follow.
Also the funds involved are certified to by the Director and are not
subject to General Accounting Office audit other than a review of
his final certification. However, it should be noted that the Bureau
of the Budget specifically approved our entering into the arrange- FOIAB
ments with the Air Force and the Navy an the basis of the security FOIAB
requirements, aced the lhnab involved, therefore,
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M t.ENCE R. HOUSTON
General Counsel
cc: DD/ S
X dCy troller
eneral Counsel
)GC:LRH:jeb
4
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"BET
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=
 Approved
Approve
i NOV 53 30_4 Previous editions may be used.
U. S. GOVERNMENT PRINTING OFFICE
UNCLXjSIFIED
For Release ;Mk1, L1j SIR,g M-,6 r#Mg0o 0004%%
CENTRAL INTELLIGENCE AGENCY
OFFICIAL ROUTING SLIP
TO
INITIALS
DATE
2
OGC - 221 East
3
4
5
FROM
INITIALS
DATE
Office of General Counsel
9/ 3
ZZI Fast
2
3
APPROVAL L -] INFORMATION C~ SIGNATURE
ACTION C ] DIRECT REPLY I l RETURN
F COMMENT I 1 PREPARATION OF REPLY DISPATCH
CONCURRENCE RECOMMENDATION L 1 FILE
Remarks :
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$APC-18402"
Copy / of 3
MEMORANDUM FOR: MR. DULLES 9 August 1957
SUBJECT : AQUA TONE Procurement for the Air Force and
the Navy
You have on occasion expressed some concern lest our procurement
undertaken for the Air Force and the Navy might be subject to criticism.
I have asked the General Counsel again to look into this matter. His brief
comments are attached hereto. If you want the longer paper referred to
in his memorandum, please advise me.
RICHARD M. BISSELL, J .
Attachment:
Copy I of SAPC 17866b
25X1A
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MEMORANDUM FOR: Special Assistant to the Director
for Planning and Coordination
SA.PC 17866bw'
Copy 1 of 4
SUBJECT: Project AQUATONE Procurement for
Air Force and. Navy
1. 1 understand the Director wanted to be informed
whether our acting as agent for the Navy and the Air Force
on procurement matters circumvented any legal restrictions
they might otherwise operate under. We had, of course, gone
into this before and I am satisfied with our position and have
prepared the accompanying memorandum on points of law
involved. You may wish to show this to the Director or brief
him on it.
2. There is, in my opinion, one point which may cause
difficulties and which we should keep in mind with the lessening
security problem.
3. From the audit point of view I have no particular
concern about a General Accounting Office review of the contracts
involved. Inasmuch as the security considerations are far less
restrictive than in the initial stages, and so far as procurement
is concerned will continue to reduce, we should give considera-
tion to permitting a General Accounting Office audit at some
future date. This could be done by either opening all contracts
to their inspection or else authorizing the Air Force and the
Navy to make available their portion of the procurement to GAO.
cc: DD/S
Appam tForlI elease 2002/11/19: C
U
LAWRENCE R. HOUSTON
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[TRNSMrrTAL SLIP DATE
14 ?gust 1957
`TO
ROOM NO,
REMARKS:
Before Mr. Dulles left he asked
Mr. Bissell for the attached informa-
tion. Will you please see that he
gets it upon his return. General
Cabell may be interested in this
also.
FROM:
ROOM NO.
BUILDING
EXTENSION
FOM
I FEB N505 241
REPLACES FORM 36-8
WHICH MAY BE USED.
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MEMORANDUM FOR: GENERAL COUNSEL
I would appreciate your comments on
the attached before I forward it to the
Director.
RICHARD M. BISSELL, JR.
25 October 1957
(DATE)
Attachment: SAPC-20671 (Cy 3)
FORM
AUGN 54 101 WHICH RELACES FORM 10-101
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SAPC -20671 /
Copy / of /D
MEMORANDUM FOR: Director of Central Intelligence
SUBJECT : AQUATONE Procurement for the Air Force
and the Navy
REFERENCE : Memorandum for DDCI from Acting General
Counsel, same subject, dated 9 September 1957
(SAPC-19052)
1. This memorandum is for information only.
2. The referenced document has been reviewed by the Deputy
Director of Central Intelligence who has concurred in the views expressed
therein. I understand you desire my comments also and these are set
forth below.
3. I am in general agreement with the views set forth in the
Acting General Counsel's memorandum of 9 September 1957. I am of
the opinion that our procurement and audit procedures offered the Govern-
ment all the protection possible under the extremely difficult conditions
imposed by security and time factors in the AQUATONE program. FOIAB5
The first step in
such an approach welt be a discussion w: omptrolter General
himself in which, without any allusion to AQUATONE, the main relevant
circumstances surrounding our procurement for the Navy and the Air Force
could be explained. These are: that the Agency caused to be developed
and has procured limited quantities of certain specialized hardware of
use in intelligence collection; that this development and procurement along
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SAPC-20671
Page Two
with the actual employment of the hardware in an important intelligence
collection project had been surrounded with the tightest security; that
after the development was substantially completed and the equipment in
operational use by the Agency, the Air Force and later the Navy deter-
mined that they had requirements of their own for additional quantities of
this equipment; and that, primarily to preserve security but also to secure
the advantages of single Service procurement from already established
sources, the Agency undertook the procurement in question on behalf of
the other two Services. It could be explained to the Comptroller General
that, even in the absence of overriding security requirements, there could
have been no question of opening the Air Force and the Navy procurement
to competitive bids, since the quantities required by these two Services
were small and could undoubtedly be furnished under more advantageous
terms and more speedily by the Agency's contractors who were already
producing the items in question. Finally, the main features of the con-
tracts could be outlined to the Comptroller General to make clear that
they were prudently drawn in such a manner as to give full protection to
the Government.
5. As a further measure of protection, it would seem to me
quite feasible, after such an informal discussion with the Comptroller
General, to set forth the above circumstances in writing in a letter to
the Comptroller General. As an annex to such a letter, reasonably
detailed information could be furnished on an unclassified basis, or under
Low classification, as to the terms of our contracts. I have in mind such
information as the character of the contract (whether Cost-Ptus-Fixed-
Fee or Redetermination Fixed Price), benefit rates allowed, provisions
for audit, and provisions for redetermination. Such a letter could be
so drafted as to conceal not only the nature of the equipments procured
but also the names of the companies, the dollar amounts of contracts,
and delivery dates. Even without revealing this classified information,
the Comptroller General would have full information as to the manner in
which the interest of the Government as a buyer had been protected.
25X1A 6. 1 must repeat that the above suggestions are not intended as FOIAB5
FOIAB5 a recommendation, since I have already stated my concurrence with
Iviews.
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Page Three
7. I trust that the above opinions will be helpful to you. Should
you desire that I contact the GAO in your behalf to explore this problem,
please advise me.
RICHARD M. BISSELL, JR.
Special Assistant to the Director
for Planning
RMB:gjg
Distribution:
,,X"opy 1-DCI
2-DDCI
3-General Counsel
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SAPC 20933/
V 119-7
MEMORANDUM FOR: Special Assistant to the Director
for Planning
SUBJECT: AQUATONE Procurement for the Air Force
and the Navy
1. The main point of my original suggestion has been
amply considered. I had no fixed views on whether or not we
should open the Air Force and Navy portion of the AQUATONE
procurement through General Accounting Office. I merely
wished the question to be seriously studied and a determination
made. I am quite satisfied with the reasons for recommending
that these contracts not be opened to General Accounting Office
audit and will join in the recommendation. 1 believe that such
a determination would serve to answer queries from General
Accounting Office or the Comptroller General. This being the
case I believe we should not approach the Comptroller General
unless we have some indication that he is aware of and bothered
by the problem.
2. If the Comptroller General's office raises the question
et certainly come to me through Lyle Fisher, the CG
eral Counsel, with whom we have had a long and highly
satisfactory likais.on. Further, if for any reason we decided to approach
Comptroller General's office, I would feel very strongly that
our approach should be made through Mr. Fisher. He has a keen
understanding of our legal problems but also of our operational
and security problems and has demonstrated time and again that
he is as little legalistic as his position permits and will support
a sound practical determination.
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3. Mr. Fisher would be somewhat unhappy as a matter
of principle that Army and Navy contracts will not receive General
Accounting Office audit due to utilization of our Agency as
procurement agent, as he has raised the point before. But
since in this case we had the approval of the Bureau of the
Budget for the arrangements we have entered into. I am
confident that he will accept that we had valid legal authority
to enter into these arrangements. I would have no hesitation
in describing such arrangements to Mr. Fisher and the contracts
which have been entered into, as I agree with you that they have
been soundly conceived and well-administered.
4. If you agree with the foregoing, might your approach
to the Director be merely that we are unanimous In recommending
against opening the contracts for audit and that if any problem
arises in connection with General Accounting Office or the
Comptroller General you and I will handle it preferably in the
first instance with Mr. Fisher or if necessary with the Comptroller
General him self.
LAWRENCE R. HOUSTON
General Counsel
Att- - CC of SAPC 20671
Copy 3 of 10. same
subject, dtd 25 Oct 57
Distribution
Orig & icc-Addressee
icc-General Counsel
OGC: LR H: j eb
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