REVIEW OF THE NRO FY 64-AND FY 65 BUDGET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP72R00410R000200040001-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 11
• Document Creation Date: December 16, 2016
• Document Release Date: March 30, 2004
• Sequence Number: 1
• Publication Date: October 31, 1963
• Content Type: MFR

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MEMORANDUM FOR THE RECORD
31 October 1963
SUBJECT: Review of the NRO FY 64 and FY 65 Budget
1. The meeting was held in the Headquarters building
on 22 October 1963 to consider the NRO budget for FY 64 and
FY 65. Those present included Mr. McCone, Mr. Gilpatric,
General Carter, Drs. Fubini, Wheelon and McMillan, and
25X1 Messrs. Kiefer, Bross and NRO.
2. Dr. McMillan opened the meeting by circulating
a memorandum outlining the major categories of expenditures
in FY 64 and FY 65. Reference was made to an item of
25X1 I uin the FY 64 column in the line marked
(see annexed memorandum, Attachment A). This was identified
as representing a portion of the regular CIA budget for FY 64.
Mr. Gilpatric professed ignorance as to what it meant and wh y
it was there. General Carter pointed out that
requested by CIA in its FY 64 appropriations should have been
included if the item were appropriately shown in a presentation
of the NRO budget at all. It was generally agreed that this item
should be eliminated from the context of the NRO budget.
3. There followed a general discussion of the total
proposed budget for NRO for FY 64. It was agreed that the figure
shown on the annexed memorandum was inaccurate; that the total
figure would be generally in the vicinity of
have been approved
by the Secretary of Defense. (An additional
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had been requested by Dr. Fubini but for a purpose not finally
approved by the Secretary of Defense.) The comparable figure
for FY 65 is The increase for
FY 65 over 64 is largely accounted for by the R-12 program.
4. Dr. McMillan then initiated a discussion of the
satellite programs including the proposed scheduling of CORONA
launches in FY 64. This was followed by some
It was decided to cancel the LANYAR launch scheduled for early
November. The FY 64 LANYARD program involves three launches
and the purchase of eight additional LANYARD payloads. All
launches will be cancelled but negotiations will be initiated
with ITEK for the procurement of some LANYARD payloads to
be kept in storage. The necessity of renegotiating commitments
with ITEK was a factor to be kept in mind, as well as the objective
of keeping ITEK going as a national resource.
discussion of which led in turn to further discussion
of the reliability of In this connection the
need for LANYARD Iwas discussed.
6. Dr. Fubini identified the five outstanding require-
ments for develo ment as inc ing: (1) a better CORONA, (2) a
25X1 (3) a qu' reaction system, (4) a read-out system,
and a truly cover ystem. Dr. Wheelon qualified this statement
by restating it e effect that the development program involved
examinati of a number of basic functions. First, there is the
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requireme for general searc (presently filled by CORONA).
Secondly, there is a require ent in the technical intelligence
field for . resolution This requirement is -66&&4 4
justify.&LANYARD, the U-2, OXCART, etc. Next, there is the
field of geodesy which justifies the present ARGON. Finally,
there is what is called the indications problem, which involves
the R-7 and would perhaps justify the covert satellite. Dr. McMillan
concurred in Dr. Wheelon's analysis. Dr. Fubini commented
that really does not fit any of these categories.
7. The DCI then addressed himself to the recom-
mendations of the Purcell Panel with particular reference to
their findin s concerning the necessity of improving CORONA
25X1 After some discussion of various related or
competing requirements, including requirements for all weather
reconnaissance, quick reaction etc. , Dr. McMillan described
25X1 the Iwhick involves some
25X1 I uin expenditures in FY 64. It was on inall initiated
with a direction towards a system
25X1 but was later reoriented to a "spying system. " The contractors
developed studies and undertook development work designed to
improve sensors and film transport mechanisms which will
minimize film vibrations, etc. T-exe_is e Eastman Company t~
confiden'*l in their ability to improve eyond the
25X1 objective of In FY 65
has been allocated against the new system.
8. Dr. McMillan then addressed himself to the
problem of an improved CORONA. A committee (including Agency
representation) was set up to examine with the contractors a
number of proposed technical improvements. The committee
concluded that none of the proposals promised enough improvement
to be worth implementing, although there was some interest in
certain proposals relating to exposure a control . In the meantime,
CIA has had a group examining the actual records of CORONA
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photography aa9el had concluded that atmospheric effects were
the cause o our imperfections in the CORONA system.
have been allocated in the FY 64 budget for
the improvement of the CORONA system. Nothing has been
specifically allocated for CORONA improvement in FY 65.
9. There followed some discussion as to the precise
amount of money available for research programs generally in
FY 64 and FY 65. There was general agreement that there
should be further analysis of CORONA photography and that a
group should be established to conduct these investigations.
Dr. Wheelon pointed out that the group appointed on the West
Coast to review the findings of the Purcell Panel did not in fact
include representation from the Agency but the fact that two
separate groups worked independently on this problem turned out
to be a fortunate thing.
10. It was decided that a research group would be
reconstituted under Dr. Wheelon's direction and Dr. Wheelon
undertook to advise Dr. McMillan and otherrconcerned of the
proposed ?ca~ti~.a#e~a of this group at the earliest possible date.
11. The DCI then discussed the general situation
in the NRO and indicated his very strong belief that the NRO
must be so constituted, directed, managed and staffed as to
continue to be an instrument responsive to intelligence require-
ments. He stated that he wanted more CIA people assigned to
the NRO 'in a truly joint organization.
12. It was further agreed that the officials repre-
sented at the meeting or officials similarly constituted in the
hierarchy of the Agency and Defense Department should meet
regularly as a Board of Directors to provide policy and management
guidance to the NRO.
JOHN A. BROSS
D/DCI/NIPE
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UNCLASSIFIED CONFIDENTIAL XX SECRET
CENTRAL INTELLIGENCE AGENCY
OFFICIAL ROUTING SLIP
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NAME AND ADDRESS
DATE
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DIRECT REPLY
PREPARE REPLY
APPROVAL
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RECOMMENDATION
COMMENT
FILE
RETURN
CONCURRENCE
INFORMATION
SIGNATURE
Remarks :
Attached is a very rough draft of a
memorandum for the record of the budget
meeting on NRO. You will probably be far
better able than I was to either make out or
remember what was actually said at the meeting.
In any event, you may want to reconstruct
what ought to have been said.
The proposed attachment A was the
memorandum giving a list of budget items, of
which I do not have a copy.
FOLD HERE TO RETURN TO SENDER
FROM: NAME. ADDRESS AND PHONE NO.
DATE
2
UNC A
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FORM NO. 237 Use previous editions (40)
y_61 C !! d U.S. GOVERNMENT PRINTING OFFICE : 1961 0-587282
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TOP SFORET
DEPARTMENT OF THE AIR FORCE
WASHINGTON
December 20, 1963,
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MEMORANDUM FOR DR. WHEELON, DDS&T, CIA
As we discussed yesterday, I would like you to take
a personal hand to guide, in my behalf, the studies
proposed by Director, NRO Program B, of a possible mobile-
launched satellite. As you know, his budget contains about
for studies of new satellite systems. I would
like to be sure that this money is spent in the most pro-
ductive way. I suggest the following general guidelines.
I feel that studies of specific hardware, or design
studies, are not appropriate until the operational and
intelligence objectives that are being sought are clarified.
I look to you for help first in bringing about this clarifi-
cation. I believe that we need a statement of mission, or
a list, but at most a limited list, of specific missions, in
order first of all to define why it is that we are studying
a new development. Second, such a statement or list would
serve as a basis for determining the features to be emphasized
in hardware and systems studies, and for setting the priorities
in trade-off studies that may ensue. Among the features that
must be related to each other and fitted into a mission con-
cept are covertness, vulnerability, reaction time, resolution,
coverage, and flexibility of targeting and recovery.
More specifically, it is my impression that for later
use several combinations of boosters and launch aircraft have
already been well studied, and indeed to the point that one
can generalize from these studies to conclusions about the
limitations of systems based on available hardware. I feel
that no new studies of this kind should be started until the
results of all past studies have been summarized and analyzed.
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John Bross' memo. to Exec. Dir. states the problem is one of deciding
how funds are to be shown in the budget; that the DCI has already said that
funds will be in the CIA budget. After discussion of pertinent matters,
he submits two (2) procedures for implementing budget arrangements. No. 1
Alternative anticipates funds appropriated. to CIA - No. 2 anticipates CIA
receiving funds on a reimbursable basis. He recommends alternative No. 2
and defers to the DD /_A and the latter's ultimate views. Mr. Bross says
that either alternative conforms with the DCI's instruction and the meaning
and spirit of the NRD Agreement.
I believe that Mr. Bross'approach to this problem is not an altogether
desirable one because it presumes that our past experience, evidencing an
inability to work cooperatively and agreeably with NFO precludes any satis-
factory working arrangement in the future unless we agree to receive our
funds on a reimbursable basis. Perhaps, whereas money matters have been
an integral part of the problem, a greater problem is one of "responsibility
without corresponding authority" and, removing the presumed aggravation
will not obviate the need to find and resolve the other contributing causes.
Although the alternate procedures are of immediate consideration and
should be reviewed and commented upon, a few observations on the memorandum
are submitted:
In Para 2, re - "token portion of the total" - - this would seen to
be an aside from the immediate prob4Jm because in a dynamic program of
building sophisticated machines, systems, etc., new and better (and
more costly) innovations are found during the process which, if not
incorporated at the time (in consideration of the additional expense)
could possibly result in the ultimate delivery of an inferior, already
obsolete product. Unanticipated requirements for program acceleration
with attending higher costs are also responsible for additional funding
requirements. For NM to have all funds in their appropriation would
not preclude a recurrence in the future of any of these situations
developing and requiring more money than budgeted.
Regarding Para 6a, it is suggested that as an advantage from direct
appropriation would be the assurance that contracts, alr:ady undertaken,
might be administered more efficiently and timely since funds would be
immediately available and forced slow-downs or shut-downs could be
avoided. This recalls the situation in early '63 when CIA was in the
25X1 red by some because the Bureau of the Budget would not
release CIA appropriated funds and some talk was heard of shutting
down the contractors unless and until we received our funds.
In Para 6b(l) the "exercise of centralized control - - " - will
not be nearly so likely if funds are appropriated than if funds were
obtained by reimbursement. Ergo, this hardly seems as a disadvantage
but might seem to be an assumption based upon what happened (illegally)
before.
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In para 6b(2) - This was the result of apparent collusion between
NRO/DOD and the Bureau of the Budget and was successfully accomplished
because CI.A was unable to find the means of enforcing "our legal
position", as affirmed by CIA General Counsel.
In Para 6b(3) - Neither CIA nor NRO can predict overruns. Going
back for additional funds, after PIIO concurrence in the overruns,
is no reflection on CIA management.
In para 6b(4) - Even with the strong emphasis on holding the line,
a factual and realistic budget can be defended regardless of the size,
if the activities contemplated are a proper part of the Agency's missions.
When a budget is pared, everyone knows that some part of a justified
program must be sacrificed. Furthermore, assuming the funds were not
appropriated'-directly to CIA, funds for an approved program would then
appear in the DOD budget, therefore it would seem that the same balance
pervades, regardless.
In para 7 - There can be no argument against centralized budgeting.
However, it is a fact that in this case this is not a wholly centrallized
program. The answer to whether this is or is not desirable might be
found in the listed advantages and disadvantages of appropriated funds
versus reimbursed funds.
Comments on Alternative Nol 1 Procedure
Believe para. 2 should be preceded by a paragraph on how the figure in-
cluded in the CIA budget is arrived at, i.e., what joint action is taken
which precedes the decision on the budget figures to be submitted.
Believe, for purposes of clarification, definition of "assigned tasks"
must be included in the procedure. For purposes of the procedure, assigned
tasks are programs assigned to the Agency for - Contract Administration -
For Financial Administration and For Program Direction.
Regarding the assignment of a "senior Comptroller representative to the
staff of the DNRO" - this might serve some useful purpose. However, it would
not actually ensure very much unless the individual is given authorities as
well as responsibil'ties which situation is hardly likely to happen. Dosn't
the assignment of such a person assume that our problems have always been
attributable to financial disagreements? I suggest that a senior CIA
N Programs Officer might serve a more useful purpose since the NRO Comptroller
A Programs Officer might be
Z5X1 better qualified to understand the technical problems of contracting and
production and could better coordinate these matters between CIA and NRO.
There might be a conflict in that para 2c says the DD/R "will be responsible
- - and - - ensure the proper application of funds to these tasks", whereas
para 2d says the Comptroller's representative would "ensure adherence to the
requirements - - -". I think it goes without saying that the DD/R would,
stemming from an inherent responsibility, ensure the proper use of the funds.
Also, the Comptroller's representative must be subordinate to the DD/R as
the Deputy DNRO and, in such a position, could hardly ensure anything. He
could, however, "assist both the CIA and the Deputy DNRO on the one hand
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and the Comptroller NRO on the other hand, in coordinating financial and
budgetary matters of common concern." With regard to liaison responsibility
between NRO and CIA, what elements of CIA h&s this reference to? Would it
presume that technical discussions between persons in CIA and NRO be pre-
cluded except via this person, i.e. between Ledford, Parangosky,
et al on the one hand and and AF technical people on the
o er, Suggest that liaison, in this concept, be between the Comptroller,
NRO and the elements of the Comptroller, CIA. Finally, whether funds were
appropriated directly to CIA or reimbursed, it might be just as appropriate,
or inappropriate, to have a Comptroller's representative in the ITRO(the
No. 2 alternative does not provide for one).
Believe it desirable to add a paragraph to both No. 1 and No. 2 alternatives
which would intend to cover those items which are funded by NRO in the
form of Advances. Such a paragraph might read - -
" In addition to the assigned tasks referred to in para
for security and cover reasons, the CIA will perform Contract
and Administration only for certain N programs which are not
assigned to CIA for program direction. Funds for these programs
will be made available to CIA by means of advances from NRO.
CTA_ will account separately for these funds."
The above because in para 2e a reference to funds "which may be advanced"
presumes that this form of funding is an approved technique whereas while
it has been practiced, no formal arrangements have ever been made. And,
with the new Agreement, I think we cannot simply refer to an arrangement
which has been in practice before the date of the Agreement, but must
regularize it to avoid misunderstanding.
Not mentioned in either alternative procedure is any reference Myabe
to the OSA/CIA program, for which funds are provided in the CIA budget.
I would assume that we would insist on budgeting for these items if only
to guarantee the integrity of our employees as CIA personnel, not subject
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