ALLEGATIONS (Sanitized) CONCERNING ADMINISTRATIVE PRACTICES IN THE CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP77-00512R000100030221-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 17
• Document Creation Date: December 12, 2016
• Document Release Date: April 22, 2002
• Sequence Number: 221
• Publication Date: August 28, 1975
• Content Type: MF

Approved Fors
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5. I wish to address myself to two matters concerning
allegations and the reply by the Director of
Personnel. I would urge you to very carefully consider any
change in our overtime policy as it pertains, in certain
selected cases, to the voluntary contribution of the first
eight hours of overtime performed by professional employees.
This policy has been in existence since 1962, and is univer-
sally accepted as a management device of this Agency. Withdrawal
from this policy would cost well in excess of one million
dollars per year, and would present management with many
complex issues, not the least of which would be innumerable
requests to authorize premium pay. The Office of General
Counsel opinion states we are in a legally defensive position
and, I believe, our advice on this matter must be taken from
the Agency's attorneys and not its Personnel Officers.
6. I do not wish to examine motivations 25X1A
in submitting his memorandum of 15 July. Two events that
were known to him on that date, however, may have been an
influencing factor. Prior to that date, the Director of
Personnel informed he was being reassigned to
other duties within the Office h
evoked very strong protest from 25X1A
secondly, was aware on 15 July t at' a directed t e Office
of Personnel to undertake a review of the position classifica-
tion policies and procedures of this Agency in an endeavor to
ascertain if experiences exist in both the governmental and
private sectors unknown to us and which, if studied, could
assist us in this admittedly complex and difficult field.
7. I would recommend to you the following course of
action:
a. Sign the attached piece of corre-
spondence which I have prepared for your
signature addressed t and which
acknowledges receipt o s memoran um to you
and gives him indication of action taken to
date. (This correspondence is at Attachment #4.)
b. You submit the papers addressed to you
by and Janney and my memorandum
to the Inspector General and ask him to provide
you with his advice and reconimendatiOn . as well
as a final communication from you to
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woui4 ask of yoo that, if there should be a
*f opinion stwoe n the Insp actor C. rai and
personnel, r to ;tired the opportun.ity to discuss
e!crs you adopt your final positi .
. Pt I &,r---e
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DD/A Chrono w/o Atts (DO NOT
1 - JFB Chrono
DD/A:JFBlake:der (25 August 1975)
Retyped: (27 August 1975)
LATE)
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 Executive Registry
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?1 :i JUL
0221-0
MEMORANDUM FOR: William E. Colby, Director of Central Intelligence
SUBJECT : Administrative Practices in the CIA
1. There are administrative practices in the CIA which I believe
are in violation of Federal laws or regulations, or are unconscionable.
I have attempted to secure corrections of these practices through ad-
ministrative channels without success.
2. I have, therefore, written this report.
3. I am the Chief of the Position Management and Compensation
Division, a position I have held for approximately eight years. I have
worked in this division and predecessor organizations for over twenty
years. I am familiar with position grading actions that have taken place
over this time which have resulted in improper escalation of the grade
and pay structure. Many of the upgrading actions were ordered by ad-
ministrative officials with full knowledge of the facts and over objections
of the Position Management organization. I believe there is a serious
question as to the validity of these levels.
4. There is present interest in decentralization-of position
classification functions, which would permit a still greater escalation
of the grade and pay structure. I believe that action should be taken
to prevent such decentralization and to correct present errors.
5. The overtime regulations of this Agency, established in 1962,
are, I believe, in violation of Federal law. I attempted to correct
these regulations by a report I submitted through administrative channels
on June 6, 1974. Nothing has been done.
6. The independent contracting system in the Agency, I believe, is
a further violation of law. The practice this Agency follows is incon-
sistent with that followed in other agencies and inconsistent with the
duties of many such independent contractors.
7. I have not taken this course of writing you directly without
long and careful thqught. I have become convinced, over many year, that
no improvement and no correction of errors will ever take place without
direction from the top.
11,1 ei
Position Management & Compensation Division
STAT
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ADMINISTRATIVE PRACTICES IN THE CENTRAL INTELLIGENCE AGENCY
Problem
1. The grade structure of the Central Intelligence Agency is
excessively high in comparison to levels existing elsewhere in the
government for comparable work. This is contrary to the principle
of equal pay for substantially equal work included in the U.S. Code
Title 5, Section 5101.
2. The overtime and premium pay regulations and practices of the
Agency are contrary to the requirements of Title 5 of the U.S. Code,
Section 5541 to 5545.
3. Individuals designated as Independent Contractors in the Agency
appear in many cases to be employees under the requirements of Social
Security and Internal Revenue legislation requiring the deduction of
Social Security taxes.
Background Data
A. Position and Grade Structure
1. The position classification system of the Central Intelligence
Agency is based on the general government system applied in other agencies.
Before the Classification Act of 1949 the Agency was under the review and
control of the Civil Service Commission. Upon the enactment of this law,
which exempted the Agency, the Agency agreed to follow the government
system voluntarily without external control.
2. Initially the grade structure established was comparable to those
in other Agencies of equivalent functional responsibility and for a num-
ber of years, Classifitcation Personnel frequently made comparisons with
other agencies to insure comparable levels. In succeeding years, pressures
from senior officials resulted in a gradual elevation of the structure.
The primary emphasis of the Office of Personnel was to provide service to
operating components. Efforts to hold grades to reasonable levels were
challenged ,on the ground that service was not being provided. Since no
external controls were imposed on the Agency, Classification Personnel
were subject to pressures both from'operating officials an&from officials
within the administrative structure. As a result, it was 'hot possible for
the Position Pfar.ageEent Organization to control the escalation.
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B. Overtime and Premium Pay
The present overtime and premium pay regulations of the Agency
were established about 1962 and have remained substantially unchanged.
The basic principle of these regulations is to require most employees
to work eight hours of overtime without compensation before being com-
pensated for any additional overtime, to ignore the requirement that
all hours over eight in one day are overtime, and that all hours over
forty in one week are overtime. These requirements are not consistent
with the provisions of the U.S. Code.
C. Independent Contractors
Independent Contractors can be defined as individuals who re-
ceive a specified contract sum for providing certain services. In many
cases in the Agency, Independent Contractors perform the same duties
as Staff employees and are determined to be Independent Contractors from
a statement in the contract. The purpose of the contract appears to be
to avoid requirements for deducting taxes and Social Security and pro-
viding employee benefits. It appears that such employment may be contrary
to Internal. Revenue or Social Security laws.
Analysis of the Problem
A. Position Grade Structure
1. The grade structure of the Agency has resulted in part from
the establishment of positions necessary to recognize the level of func-
tional responsibility. It has resulted in part, also, from the wish to
accommodate individuals who have been promoted without regard to the
levels of their performance by the Career Service System. This System
is composed of boards in the various offices whose functions include the
assignment and promotion of employees by so-called competitive evaluation,
in many cases without consideration of the levels of the positions they
occupy or the levels of work they perform. In cases where they are assigned
to positions below their grade level, there is often pressure to upgrade
the positions to accommodate their grades and avoid personal rank assign-
ment. The views of "supervisors have frequently not been considered in
promotion of employees.
2. As a result of-the continuing pressure for upgrading of positions,
grades of positions have changed with little change in position respon-
sibility, as follows: .
GS-11 and GS-12 positions have advanced to GS-1Y
and GS-14.
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GS-12 and GS-13 positions have advanced to GS-14,
GS-15, and GS-16.
GS-16's have become GS-17's or GS-18's.
3. The classification of higher grades has in some cases produced
an inverse pyramid with more higher grades than lower grades or as it
is sometimes called--more Chiefs than Indians. Efforts by the Position
Management Organization to hold down grades or reduce them to reasonable
levels have been ignored or overruled.
4. The results show, I believe, that Agency positions in many ca.es
are overgraded one or two grades above elsewhere.
5. Agency officials are not satisfied with this grade difference over
other Agencies. They continue to want more. They will not accept deter--
minations that Agency grades are higher than elsewhere. In some cases they
become angry when their grades are not raised; they threaten Position
Management Personnel with being responsible for hamstringing their opera-
tions by forcing employees to resign to accept higher pay in industry. I
believe this is partly the result of the inbred nature of the Agency--
the emphasis on the belief that Agency employees are smarter than other
people, more creative, more dynamic. Strange as this may seem, such beliefs
have been pronounced by personnel officers.
6. Partly, I think, it is the result of lack of control, unwilling-
ness on the part of senior officials to rock the boat. Office heads should
be told to live with the grades they have and count themselves lucky. But
they are not. There is interest at present in abolishing grade controls
and giving office heads authority to set their own levels with only a
budgetary control.
7. Deputy Undersecretary Crockett of the State Department made such
a delegation of classification authority to major organizations of the
Department of State in 1962. As a result, from 1962 to February 1971,
there was a general escalation of levels in the Department of State which
was completely inconsistent with levels of responsibility. An investiga-
tion was conducted and in 1971 position classification was again recen -
tralized and efforts began to correct the mistakes.
8. Surveys were conducted which resulted in reductions of class levels
at FSOl and FS02 by 23% and FS03 by 6%. These are the higher pay levels
of the Department of State, equivalent to the supergrade and GS-15 levels.
The reductions were modest, intended to reduce personnel impact. The CIA
has made much progress in the same direction. Apart from the fact that
money is being wasted on such profligacy, the government and the general
public deserve more honest treatment.
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B. Overtime Practice
1. The overtime regulations were designed to discourage the use
of overtime in the Agency. This was done about 1962 and was accomplished
n
by arbitrarily changing the provisions of law to providelthat wertaine
types of overtime did not qualify for overtime pay.
first eight hours of overtime performed by professional employees, all
hours over eight in one day, and all hours over forty in one week if
the two week pay period included no more than eighty hours of duty.
These regulations are contrary to Title 5 of the U.S. Code.
2. The same result could have been accomplished by requiring
supervisors to avoid authorized or directed overtime, without a viola-
tion of law.
OGC 3. At the time the present regulations were established they were
25X1 objected to by PMCD n the around that they were inconsi n with the
4. I submitted a report on the overtime practice in a Agency
with a recommendation for changing overtime regulations to conform to
general Federal regulations on June 6, 1974. The recommendation has
never been approved (copy attached).
C. Independent Contractors
Under Federal law, Independent Contractors are individuals who
undertake to provide certain service for a stipulated sum of money.
In this Agency, however, Independent Contractors who are retired
annuitants may be hired at a daily rate of pay which is equal to the
rate of pay they received as employees and they may work in the Agency
performing duties comparable to those performed as employees. A
limitation of $36,000 per year is placed on what these individuals may
receive. This limitation appears to indicate doubts on the part of
Agency officials as to whether they are actually employees as the
$36,000 limitation of Title 5 of-the U.S. Code applies only to em-
ployees. It does riot !apply to an Independent Contractor who contracts
to perform a certain' service and is not an employee. It is as though
the Agency follows the Alice in Wonderland system of defining Independent
Contractors i.e., an Independent Contractor is just what we say it is,
no more, no less.
PMCD Position
1. I believe that these errors should be corrected. This can be
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done by issuing regulations to correct the overtime and independent
contracting practices and by giving the Position Pianagement and
Compensation Division the authority to make a complete review of
positions and take corrective action, possibly spaced over a period
of time to avoid downgrading actions.
2. Promotions should be based on performance in positions
legitimately graded, not on speculative potential as determined by a
Career Service Board. Promotions should be-under the control of
supervisors who are the only individuals qualified to judge work
performance and employees' grades should be limited to the grades
of their positions.
Recommendations
1. That a regulation be issued to make overtime rules consistent
with the Federal law and to correct the present practices relatinc, to
Independent Contractors.
2. That an investigation be directed of the grade structure of
this Agency in comparison with other Agencies and that corrective action
be taken.
3. That except for unusual cases, promotions to and lecithin upper-
grade and supergrade levels be frozen until the validity of those levels
has been established.
STAT
Chief
Position Management and Compensation Division
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6 JU:; i /4
MEMOflANDUM FOR: Deputy Director for 14anagenent and
Services
SUBJECT : Cvertine and Prer;tiun Pay Policy
1. Action Requested: Change in overtime and prenium
pay policy-a--n&-regulations to conform to the requirements
of Federal Law.
2. Basic Data:
Federal Laws
Title 5 U.S. Code, Subchapter V establishes the
basic requirements for overtime for general schedule employ-
ees. These are as follows:
Section 5542: Overtire rates; coMputation
(a) For full-time, part-time and i.nterriit-
tent tours of duty, :sours of work officially ordered or
approved in excess of 40 hours in an administrative torkweek,
or (with the exception of an employee engaged in professional
or technical engineering or scientific activities for whom
the first 40 hours of duty in an administrative workweek is
the b;sic -workveek and an employee whose basic pay exceeds
the vnznimum rate for GS-10 for whom the first 40 hours of
duty in an administrative workweek is the basic o orkweek) in
excess of 8 hours in a day, performed by an employee are
overtime work. (NOTE: The provision designating -work in
excess of 8,}lours in a ,day as overtime was originally
Included in`Fddcral Law in.Public Law S9-504, 18 July 19G5.)
Section 5543: Co :pensa toryttir2e_off
(a) The head of an agency may
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(1) on request of an employee, grant
the employee compensatory time off from his scheduled tour
of duty instead of payment for an equal anoulit of time spent
in irregular or occasional overtired work; and
(2) provide that an employee whose rate
of basic pay is in excess of the maximum rate of basic pay
for GS-10 shall be granted compensatory time off from his
scheduled tour of duty equal to the amount of time spent in
irregular or occasional overtime.-work instead of being paid
for that work.
Section 5545: Annual premium paY
(c) the head of an agency, with the approval
of the Civil Service' Commission, may provide that
(2) an employee in a position in which
the hours of duty cannot be controlled administratively, and
which requires substantial amounts of irregular, unscheduled;
overtime duty with the employee generally being responsible
for recognizing, without supervision, circumstances which
require hire to remain on duty, shall receive premium pay for
this duty on an annual basis instead of premium pay provided
by other provisions of this subchapter, except for regular
scheduled overtime, night, and Sunday duty, and for holiday
duty. Premium pay under this paragraph is determined as an
appropriate percentage, not loss than ten per century nor more
than 25 per centun, of such part of the rate of basic pay
for the position as does not exceed the minimua rate of basic
pay for GS-10, by taking into consideration the frequency and
duration of irregular, unscheduled overtime duty required in
the position.
(The Civil Service Commission has established
the following rules for determining the amount of annual
premium pay:
1. An average of at least three but
not more than five hours per week of irregular or occasional
overtime work - lot.
2. An average of over five but not
more than seven hours per week of irregular or occasional
overtime work - 15o.
3. An average of over -seven but not
more than nine hours per week of irregular or occasional
overtime work - 20%.
4. An average of over nine hours per
week of irregular or occasional overtime work - 2S$.)
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Fair Labor Standards Act Amendments of 1974
Effective May 1, 1974, except for certain employees
in executive, administrative, and professional positions, and
those in foreign areas, all Federal employees are entitled
to overtime pay for all work which the employer "suffers or
permits" to be done. The Civil Service Commission will issue
a tentative list of the exempt employees by April 26. Most
employees at GS-11 and below will be covered under this law.
The Civil Service Commission, as the enforcement
agency, will be responsible for post audit of overtime pay
administration to determine violations and order corrective
action.
A enc Regulations
A. overtime
The Agency ,regulations on overtime and annual
premium pay follow the Federal Law in some respects. However,
points of substantial difference are;
1. Employees, GS-12 through GS-14, .iay
receive overtime payments or compensatory tiro in lieu thereof
for directed overtime work in excess of 48 hours in a given
work week.
2. No overtime payment. or compensatory time
will be granted for hours of duty between 40 and 48 in a
given work week unless such hours represent directed work on,
a. a position which requires substantial
amounts of over tine work on a continuing basis, the produc-
tivity of which is predominantly measurable in units of pro-
duction or hours of duty performed;
b. -on any day during a work period of
seven or T oic conoecutive days, or,
c. a second job, the duties of which are
subs ta`ntially unrelated to the primary assignment.
(The' requirement that 8 hours of work be contributed without
pay 'is inconsistent with tho Federal Law anc, with goad manage-
nent principles.)
The Agency regulation also provides for the
substitution. of compensatory time in place of regular overtzr,e
either on the request of employees at GS-11 and below or by
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direction of the supervisor for employees in higher grades
even though the Federal Law provides for such substitution
only in the case of irregular or occasional overtime work.
The Agency regulation has never provided
that overtime pay is required for all work in excess of
eight hours in a day. There are a number of nonstandard
work schedules in the Agency now utilizing 12 hour work
days for which under Federal Law four hours of overtime pay
are required for each 12 hour day. Other agencies which
have tried similar schedules have been required to pay over-
time. Compensatory time was not permitted.
The Agency overtime regulation has been in
substantially the same fo:m since March 1962. During this
period the Agency regulation has required the normal sacri-
fice of eight hours of overtime compensation for employees
at GS-12 through GS-14.
B. Annual Premium Pay
The provision of the Agency regulation
covering annual premium pay is substantially the same as
that established by the Federal Latw.
Application of :'lgency Corxpensation Policy
Agency professional employees at GS-12 and
above have been expected and encouraged to work overtime
whenever they determined that such work was necessary or
when directed, in nearly all cases without any form of com-
pensation. Agency duty officers have worked in Headquarters
offices on Saturday regularly for a dozen years or more with-
out any form of compensation. The expressed view of many
high officials has been that Agency professionals should be
glad to perform such "discretionary" overtime without addi-
tional pay, since they are well compensated by their regular
salaries. This view is in disregard of,the fact that their
regular salaries are based on a 40-hour week.
Agency officials having authority to approve
such overtime have been aware that it was being performed
and approved of it.
Failure to formally authorize or approve
overtime where approving-officials were aware of and agreed
to performance has been held by the Court of Claims to
require payment.
The Court of Claims in Anderson v. United
States 136 Ct. Cl 36S (1956) makes the point t at "The
Cor_, z~ ssioner of Customs, as the authorized deputy of the
Secretary of the Treasury,-had authority under the statute
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to order or approve overtime. ,:hilt he did not order the
work to be performed, he certainly knew and approved of its
being done. . . . In withholding orders for the approval
of overtime, the Commissioner intended to withhold compen-
sation for services performed. . ." The Court directed pay-
ment to the employee,
The Court of Claims in Rapp v. United States,
340 F. 2d 635, 167 Ct. Cl 852 (1964) deck eft fher "l1 ire
plaintiffs were not only induced to perform duty officer tours
but were given reasonable and understandable grounds for
fearing they might jeopardize their positions if they did not
do so" they were entitled to compensation.
any CIA professionals have performed Saturday
duty tours without question and without, overtime pay for many
years for this reason. It seems clear that the fear of
reprisal is a strong deterrent to employee claims for over-
time.
With regard to. annual premium pay, while the
Agency regulation is substantially in agreement with the
Federal Personnel Manual, we have deviated from the estab-
lished percentage requirements for pay. In certain cases it
was decided, for administrative reasons, to pay a lesser per-
centage rate than established. The legality of these actions
is questionable.
Applicability of I=edersl Late to the CIA
The question as to whether the Federal
Premium Pay law applies to the CIA has apparently never beea
ruled on by the Comptroller General or the Courts. The U. S.
Code Title 5, Subchapter V on Premium Pay, however, provides
for no exclusion of the Agency. While this may not be con-
clusive, it should be noted that Chapter 51, Title 5, on
Classification of Positions, does provide for exclusion of
the Agency. The absence of a specific exclusion for appli-
cation of ' Prcr:tjunt Pay provisions to the Agency is evidence
of intent that the Agency should be covered.
3. Staff Position
The provision of the Agency regulation liWiting
compensation for the first eight hours of overtime to emplo_yee~s
at GS-12 through GS-14 pre-dorminantly in production jobs is
prejudicial to the rights of employees in jdbs not of a pro-
duction nature who may be equally industrious and conscientious
,further, it is inconsistent with the annual premium pay pro-
vision 'fthich dots not provide for ignoring the first eight
hours of overtime.
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OGC
25X1
The primary reason for the Agency regulation nay
have been to discourage the use of excessive overtime but
the result was to avoid payment for overtime while benefiting
from the extra work performed. This result is not defensible
in principle. regulation T;nv.,#--Vpr- at the time the Azenc-y was
established 1
security grounds.
more concerned with employee s rig is t ian it x zany years
ago. Employee organizations are more vociferous. Further,
it is difficult to explain to employees why in the CIA one
gives eight hours of free overtime to the Government which he
is not required to do elsewhere. This cannot be justified on
From the tone of decisions of the Court of Claims
on the right of Federal employees to overtime compensation,
it seems probable that any claim by an Agency employee sup-
ported by evidence of overtime work with tacit approval of
officials would be decided in favor of the employee. Such a-
decision might require the Agency to compensate other employee:
so deprived of overtime compensation.
Therefore, consideration should be given to bring-
ing all forms of Agency premium:. pay into line with the
general Federal Law. Consideration should also be given to
reviewing the extent to which employees who have not been com-
pensated for overtime should be paid.
ReFc~sracndatian:
4.
a. That a comnittee be established in the Office
of Personnel to review the overtime pay policies and regu-
lations and revise to bring into agreement with the Federal
Last. ,
b. That the corraaittee determine,practieable lirmi-
tations to set on the authorization of overtime.
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c. That the committoc consider and make recom-
mendations as to the extent to which employees who have worked
overtime without compensation under the present regulations
should be compensated.
F. 11. M. Janney
Director of Personnel
APPROVED15'
l3arold L. Brour_man
1I JUN 1974
~~. -Date- _
DISAPPROVED
Distribution:
Orig - Adse (Ret to D/Pcrs)
2 - DD/M&S
1. - D/Pers
1 - OP/PMCD
(22 Apr 74)
28 May 74)
Date
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rID/A 75-4::33
rtcti t of your l Jk
sdinistratI c practices
action I have t*ken to
re request
rat Cae
raised i y x
those relies.
Ins for Genera
review 'Istudy a,
t ,
late, positions from bet
Director of P net on s.t t x ;
tio. I an now is rtcii t.
its h i.s
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Si cereI.
W. !. C*lby
=1 rector
ORICIATFt
,ii `need'4i YJ ohn P.. Blake.
Deputy Director
for
2 8 AUG 1975
Att. to /A 75-4014 Original - Ms*
JID/A Subject
DD/A Chruao DO NOT CIRCULATE
DD/A (JFS Chrouo)
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1 - DX
3 ER
1 - General Counsel
Approved For Release 2002/07/02: CIA-RDP77-005t12R0P< TO0030221-0