FUNDING PROPERTY PROCUREMENT IN FY 1961

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-05246A000100030019-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 4
• Document Creation Date: December 12, 2016
• Document Release Date: May 3, 2002
• Sequence Number: 19
• Publication Date: February 25, 1960
• Content Type: MF

2 5 FEB 1960
MEMORANDUM FOR: Comptroller Policy Planning Group
SUBJECT : Funding Property Procurement in FY 1961
1. PROBLEM:
To improve Agency Property procurement
2. ASSUMPTIONS:
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a. The Agency must have better control over the planning, funding and
management of property resources before cost based budgeting is 25X1
practicable.
b. The four technically-cognizant offices, Commo, TSS, Medical and
Logistics, will have greater responsibilities for property under
cost based budgeting and therefore will require better working tools.
c. Under a cost based budget system the Agency must assume responsibility
for budgeting for funds at the Agency level since offices will
budget for the cost of property used. Under the present system and
during the transition period we should similarly consider budgeted 08
and 09 funds an Agency asset and control them, as such, at the Agency
level.
d. The new object classification code will classify property by tech-
nically cognizant office.
3. FACTS REARING ON THE PROBLEM:
a. The present property procurement funding system has corrected some
of our past difficulties in funding property procurement. It has,
however, the following shortcomings:
(1)
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Offices tend to retain some 08 and 09 funds as "reserves" thus
making procurement planning difficult because of the lack of
definite knowledge regarding total. planned procurement. Also,
the Comptroller is placed in the position of "asking" for the
return of funds for procurement.
(2) Under the present system it is difficult for any office to
estimate in advance the amount of property cost authority which
is required since only part of the property requirements is
subject to property cost authority.
(3) Reports and analyses of property funding and cost data are
difficult to present, complicated to analyze or explain, and
confusing to reviewers. This is primarily due to the-fact that
property funds are divided between eight stock accounts and
numerous operating office accounts. It is also due to the fact
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(3) and part is not, nor are these distinctions clear-cut concerning
individual items.
b. The obligations and costs pertaining to activities at smaller field
stations are, for all practical purposes, identical. Control of
costs would effectively control obligations at this level.
c. The smaller field stations are, in effect, agents of headquarters,
receiving detailed instructions and authorizations for all signifi-
cant activities. Headquarters is therefore a logical allotment
and cost control point for such stations,
d. There appears to be a growing feeling that we should distinguish
between fund requirements for stock and for special inventory build-up
or stock pile operations. This presents no problem since all procure-
ment actions are approved individually at present and could easily be
separated. Recent planning requirements indicate an increasing need
also for separating long-lead time procurement needs.
l.. DISCUSSION:
a. If we are to move in the direction of a cost based budget, we should
make the maximum use of cost data rather than merely paying lip-
service to the requirement by performing a cost collection function
only. It follows that we will use cost, rather than obligations, as
our principal management tool at the operating level. Under this
concept we can raise the level of our allotment and obligation con-
trols and depend upon cost data for details. If this concept is
not "bought" we should not be moving in the direction of a cost based
budget.
b. The difficulties experienced by the offices and the Budget Division
in estimating the requirement for property cost authority and property
funding under the present system, where FPA property (overseas) is
subject to property cost authority and non-FPA property is not, has
convinced most offices that all property should be an indirect cost,
subject to cost authority*
co It appears feasible to simplify our property funding controls by
taking advantage of machine or computer "automatic" compilation.
This can readily be accomplished through the use of "single" stock
and special procurement control symbols, Agency wide but identified
by office; for example, an allotment to NE for local procurement
overseas would consist of a common basic number followed by the office
indicator. Machine reports would consolidate all property obligations
including local procurement and thereby supply fund control information.
Cost reports would properly reflect cost to the appropriate projects
or accounts, thereby supplying data for management purposes.
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d. It is true that action in the direction described above will force
more reliance upon cost information and cost controls. Present cost
reports must be made as timely as past obligation reports. Perhaps
the problem of up-dating field cost data can be met through the
accrual studies now in processo
e. The details of our property budget estimates, having had little basis
in fact., have been poor in the past and are likely to improve very
slowly under the present system. The nature of our business is such
that line item forecasts may always be unreliable, but given actual
cost data by cognizant group our property estimates over-all would
be more readily explainable. We would also be able to justify, with
equal facility, our property obligations and our property issues.
Our difficulties in this area are common knowledgeo
f. As we consider ;procurement of all Agency stocks from commonly ident-
ifiable allotments we must consider the machanics of obligation and
cost control. At present, in theory at least, no obligation occurs
without being recorded against a field or headquarters allotment.
It has been proposed that we might rely upon cost controls for
property and to simplify field operations, particularly at small
stations., consider the use of open-end allotments. In view of the
nature of local procurement., the amounts involved and the fact that
costs and obligations are practicaly identical at small stations,
the use of such allotments appears entirely feasible. Area division
headquarters now estimate field station obligations; they can as
readily estimate property costs, encumbering their own cost authority
and establish procedural controls for the unpredictable or unusually
large amounts. Our allotment controls would remain, for all practical
purposes., completely effective.
5, CONCLUSIONS s
a. We are committed to cost based budgeting., therefore, it is essential
that we begin to budget in that direction. We must decide immediately
that each office will budget for property use or cost requirements
and identify special and lead-time needs that should be considered in
making procurement plans-,
b. We should simplify ourrprocedure by considering all property an
indirect cost, subject to cost authority (and not necessarily only
that subject to FPA).
c. We should create "single" Agency procurement account numbers for stock- 'ell
and for special or lead-time procurement and add office or location "18
indicators to this basic symbol when issuing allotments or authority
for all property procurement. Thus, we will have the effect of all ~,,
is consolidated by machine methods-we can readily comprehend the total sit
property obligation picture, not just bits and pieces of it.
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5. (Continued)
d. Subjecting the issue of all property to the cost authority of appro-
priate projects or accounts will provide data on use. By applying
a sub-object classification identifying the technically cognizant
office to both obligation and cost data we will have a factual basis
for planning and justifying 08 and 09 obligations and costs.
e. The use of an open allotment, administered centrally and controlled
at operating office level, is feasible although the mechanics of
implementation will require careful.. study.
6. ACTION RECOMMENDED:
a. If. the above conclusions are valid, it follows that Agency 08 and 09
funds must be centrally administered although allotment and cost
controls could be decentralized so far as is practicable, to the
point where the encumbrance takes place. It is recommended that:
(1) The Comptroller Policy Planning Group review this proposal as
early as practicable in order that budget instructions may be
issued on a timely basis.
(2) The necessary Agency concurrences within the DD/S, DD/I, and
DD/P area be secured.
(3) A worki.ng group or groups be established to study and progressively
implement various phases of this change, to discuss them with
other Agency components and to develop necessary procedures,
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