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December 9, 2016
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July 25, 2000
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January 1, 1961
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Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 TAB Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 . ? , , : ' Approved For Release 2001/09/04 : CIA-RDP80-01240A00010014011273 g ' rtr1401 C,IC !uo t The data contained herein is classified as CONFIDENTIAL and is for the use of the Comptroller General, the General Counsel, and the Director, Civil Accounting and Auditing Division. It cannot be maintained in the General Accounting Office building, but Must be returned to the site audit staff. OudNIVetti lie. Review of this document by CIA has &termined Mat H 9d tEls no obfertIon to dielasS r,,.f," it con;ainb information at CIA ihai MOO remain afOct at TS S APnOViiIrl HR 10.2 1 tromaini nothing of CIA interest 3".r 5(../ Reviewer /11) 5AL; RA ? Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 C91 ?t1 t:At MOAT Riinv SAX= THE CONPISOLLIN MIMAL D S Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 Approved For Release 2CCONMENAtP80-01240A000100140112-3 )3+133200 COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON 25 Honorable Paul J. Kildey, Chairman Special Subcommittee, Central Intelligent:* Agency Committee on Armed Services House of Representatives Dear Hr. Chairman: Herewith is our report on rcviv or selected activities of the Central Intelligence Agency, January 1961. The review vae made for the purpose of determining vbether the scope of the audit of the General Aacounting Office could be expanded sufficiently to make reseoeably comprehensive evaluative& of CIA's activities that would be helpful to the Congress. This review, vas made pursuant to the interest indicated by the Special Subcommittee at an executive hearing in Mow 1959. Following several neetings between representatives of the General Aceounting Office and the CIA, the Director of Central Intelligens* end the Comptroller General in October 1959 had an exchange of correspondence concerning the audit and concerning restrictions on reviews in the area of sensitive security operations. Various steps were taken by CIA to place the General Accounting Office in apositlin to maks a comprehensive audit of the overt activities of CIA. Based en our review, however, vs believe that under the existimg security restric- tions on the General Accounting Office audit of CIA activities, we do not hive sufficient access to make comprehensive review on a con- tinuing basis that vould be pxoducrtive of evaluations helpful to the Congress. Our review of selected overt activities in the Intelligence Com- ponent disclosed certain mattert Which have been broudht to the atten- tion of the Agency, and which are discussed in detail in iippendix IV to this report. These matters relate to (1) the Mancini by CIA of certain Department of State activities which do net seem to be the primary responsibility of CIA, sal sash flawing mey have the effect of supplemeating the appropriations of the Department of State and (2) the financing by CIA of certain Library of Congrese aetivitiee Which substantially transcend CIA's interest and responsibility. CIA officials advised us that corrective action is being taken. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 Approved For Release 1 1JkDP80-01240A000100140112-3 B-133200 Inasmuch as is cannot, ih our opirion, eff accomplish worthwhile audit objectives at CIA on a continuing basis, is plan econtinue our audit of CIA activities. We are prepared to discuss these setters with sire. A copy of this report iv b Central Intelligence, a you so day to the Director of Sincerely yours, Caeptraller General of the United Ststes Approved For Release 2001/09/04 Cl4k-RDP80-01240A000100140112-3 Approved For Release =IAL COM= A # P80-01240A000100140112-3 1 D ten tl ORGANIZATION AND MANAGEMENT ?reanimation of Centre/ Intelliene Agency Director of Central Intelligence Plans Component Support Component Intelligence Compoment Financing of Central IuteUiice Auncy activities BY TEE GENERAL ACC .rzi* OF1CL Legal limitations on the audit of Cartintl Intellimpince Agency activitiec Audits of Federal departmentc ow:4 tsOsile.iet6 Agreement for extension of audits of Centrwl Intelligence ALvnicl- activities FINDINGS AND CONCLUSIONS Plans Component activities Support Component activitieo Office of the Copptroller Budget Division Finance sndFiscel Livisious Finance Division Fiscal Division Industrial Contract Audit Division Vouchered lUnds expenditures...Charged to confidential Ands allot/Eats Office of Logistics Procurement DivioL:L Supply Division Transportation Divisim Printing Services DiviLioL ternal revirumechanisim Support Component Audit Ste= Osnagement Staff Inspector General Intelligence Component az;tivities STATSPEC Foreign Documents LlivitioL Office of Central Refereuae Liaison and Callao Lion Division Documents Division Machine Division CIA Library Biographic Register Office of Basic Intelligence 1 4 1.5 9 lo 13 14 14 14 15 17 is 19 23 24 26 29 30 31 31 32 32 32 34 34 35 37 37 38 39 39 39 40 40 41 41 Approved For Release 2001/09!04*CIA-RDP80-01240A000100140112-3 I? 4 .:?]" Approved For Releas " 1. 2, M4-RDP80-01240A000100140112-3 AIMS= Letter dated 19591 to the C1mirn of the Special ubctet, CeatL Intelligence Agency, Committee Armod Services, House of Represeatativea Letter dated October 16, 1959, to the Comp- troller General of the United States Letter dated October 21, 1959, o tbe iirectJ Central Intelligence Agency Review of selected activ1tiec of C4fice of Central Reference and Office of Baal /ntelligence Approved For Release 2 r tTo, &mai IV li&P80-01 46 4,0 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 or RiLACTSTIACTIVITilp OF TRE CARTRAL /1111LLISINCZ gAmA%2 sal** CC?1a2c$ The General Accounting Office has mnee a review of selected activities of the Central Intelligenco Agency (CIA) for the purpose of detervdning whether the scope o4 the Genera'. AccounUsg Office audit of CIA can be expended sufficiently to make it productive of evaluations that wad, be helpful to the Congress. Our review included an eanmination of the basic lams leve CIA activities, CIA regulations, nnstruotimas and other policy document* made available to us. We revieved t interlal controls over tie utilization of Amds, personnel, and. property pr 1.ctive basis to the extent peraitted. under the audit limitations irpoeed, by the Director of Central Intelligence in a letter dated October 16, 19594 Bemuse of the liadtatimu4 which are summarized on pave 11 and 12 of this report, substantial Segments of the review vere limited to disouesions with CIA officials responsible for the direction of the activities selected for review, and there ,vas complete denial of access for discussion in the arra of covert. intelligence operations of the Plane Component. Comments on the epecific activities included in our review are contained on page 13 of this report. This review vas made pursuant to the interest iidicatt4 by the Special Subcommittee on the Central Intelligente Agency of the Committee on Armed Services, Nouse of Representatives, at an executive hearint in Nay 1959, width MirnaliTtiktrefee /11.59M51054?: cfnelgiedITROSPreei4R12Pirect0r of CI AppmvedFore Releas _401/01 jilDP80-01240A000100140112-3 to and the Compixolle h correspondence is inc1w1t in the appendices to t'AilL report ne review vas started in January 1960 and vas completed in January 1961. Based on our review, ve believe that the security restrictions placed on the General Accounting Office uudit of CIA activitieo will not permit review of C/A activities sufficiently comprehensive to b6: productive of evaluations helpful to the Congrets Detailed comment ox the effect of the escurity restrictions on our audit aa-- oontained in the 3Zidths and Con- clusions section of this report. (k 13 .) Approved For Release 2001/00/0,4 -RDP80-01240A000100140112-3 ; A I, Approved For Release 2001/09/ 240A000100140112-3 The Central lntsUigence Agangy vas established wider suthority con- todned in the Mations:1 Security Act of 1941, for the purpooe of coordinating the intelligence activities of tho Oovernment departments end:agencies in the interest of national oecurity. Ao sot ?orth in this act, CIA is under the direction of the National Security Counail, =4 it 1- the tuty of CIA to advise on, and to make recommeniatiore for the coordiestioc of, intelligence activities relating to the nationsl t&-car:.ty; t ooroeiaLe, 000luate, and disseminate intelligence relatily; to tha oaoioaal seourityl to perform ser- vices of a common concern to the Intelligence agenclos; ant. to perfOrm such other functions as may be directed. The authoTity necessary to ore edministration to2 CIA ties is pro- vided in the Central Intelligenoo Ammo hat uf 1949. MOO e.ct provides CIA 'with the authority considered to e ess;J.u.3. to the adinir4tration of the covert operations and intellioence Tunctiono of t'oe OMGANIZATION OF CENTFAL ISTEUIJKlia The activities of the Contrite Io. ? carried out by three major organizational convmente -.Plane, Into rt-- under the direction of the Director of .JeTtral InteiLigent. rnach of these three major aomponents is headed by a Depoty Bilectoo obc is rensibie to the Director. Director of Central IntelligmE:i. The Director of Central latelli elsoe i the ea.L a Lim Can 'Once Agency and ie responsible roo tee proper perfevmanco of the Agency functions. The Deputy Director of Ceatoal Intelligence asOists the Director in the performance of his duties and sets so bireotor in tte ohoence of the Director. Approved For Release 2001/09/04'; CIA-RDP80-Q1240A000100140112-3 Approved For Release 20 P80-01240A000100140112-3 The Director' and the Deputy Director of Central Intelligence are ap- pointed by the President by and vith the advice and comma; of the Senate. either of these two positions Jew be held by commiesioned officers of the armed services, but the two p3sir..icin,; ray mot be oceupied nimultaneoualy by commisnioned officers. The staff of the Director of Central Intelligeace includes an inspector General who Is responsible to the Director for condacting inspections and investigations throughout the Agorcy, inc:%uaing the survey and evaluation of the assignment and perfornn3e f tha missions and functions for all CIA components, and. the inveotigetion of irauml mitten of fends, conflicts of interest and other mntters. Piens Component The nanc Component, or Clnndeetine Cervices sational aecher4 by which the Agency's csidoneas, counterespionage, and other covert operations are carried out. It is we the direction of the Deputy Director (Plans). Support Co5onen. The Support Comment, under the &t rection of the Depty Director (Support), in responsible for providing the overall itnistrstive and other support necessary to the Agency's intelligence, operational, and related activities. Support resoonsibiMttes include legal., fineuulial, communications, transportation, equipment supply, personnel tzeining, seearity, sanegement, and internal audit services and sctiv/ties. IntellUence Conponen The intelligence Component carries out the y's responsibilities for the overt collection, systematic organization, production sad dirnatnation of substantiosintelligence It is under the direction of the Deputy Director Cintel4pliftWal.For Release 2001/09/04 ; CIA-RDP80-01240A000100140112-3 Approved For Release 20 80-01240A000100140112-3 The fwctiona of the Intelligence Cemponent now be greaped in three general categorises the overt collection of intelligence, the collation Of intelligence, and the on and diesemination of ittelligence reports. ES r411-1?. 7*uds for the p.rfornce 1,1 CIA of Its sctivtes ar provided in the appropriations by the Congress 'o other Government departments and agencies, =dare transferred to CIA in accordance with the authority from the appro- priation committees and the Approval of the Bureau of the tudget. The funds so transferred are available to CIA. without regard to any ltatione on the appropriations from which transferred. CIA officials have advised us that the Amdamode available to finance CIA activities are sUbject to annual review b special subcommittees of the comadttees on samlopristions of the House of Representatives and the Senate. We vire advised that the congressional reviews are JOAO in closed hearings and are based on cartaintmdget data sUbeitted to the suteommittees and testimony of appropriate CIA officials. We understand that the detersdna- tions of the congressional abcaianittees are not subject to farther review or approval by the Congress. In addition to the funds providedannually to fleet the ;damned (budgeted) needs of CIA, CIA has contingency reserve funds available to it. CIA offi- cials have advised us that bemuse of the nature of their activities, it is not possible in the advance planning of the normal budget cycle to provide for all of the intelligence operating requirements in an ever changing world situation. tor this reason, contingency reserve funds are available to C/A to meet its emerIF my mmeds. These contingency reserve folds are, in effect, supplemental appropriations which are mmia in advance of the need therefor. Approved For Release 200ftripZIMIAI80-01240A000100140112-3 MIL Approved For Release 20 1E80-01240A000100140112-3 d in use it has been de CIA' a supple.= ppropriation needs cannot be included in rnMlrnnwta1 appro- priations to other Government deportment:a and agencies tBout leading to the disclosure of the *mounts included therein for CIA t vities. understand that the budget estimates for each year are Itted to the Bureau of the Budget for reviers4 and. CIA Ands, including contingency reser,. hinds, are subject to Bureau -f tbe Budget apportienment. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 Approved For Release 2 MOR1411e.1 4P80-01240A000100140112-3 4?4111!)1,4,s.f +,1 of methods which dc not always c law and. regmlatio is omen- tial to a secure and effective intelligence service to withhold fiscal and other information revealing the spacifir... ratare, scope, and methods of telligence operatdcms, or the identity of persons so enmged floc= unauthor- ized disclosure. 2he authority l'or CIA tc withhold such information is pro- vided in the national Security Act of 1947, end the Central Intelligence Agency Act of 1949. Section 8 (b) of the Central Intelligence Agency Act provides the authority for CIA to expend funds vithmxt regerd to Jew ant regulations, and when made for objects of a confidential, extraordinary, or emergency nature, such expenditures, when so certified to by the Director of Central Intelli- gence, are not subject to review by the General Accounting CIffice. Section 8 (b) of the act is quoted below. "The sums made svailable to the Agency way be expendet without regard to the provisions of law an4 regulations relating to the expenditure of Government funds; and for objects of a confidential, extraordinary, or emergency nature, such expenditures to be secounted for solely on the certificate of the Directer and every ouch certificate shall be deemed a sufficient voucher for the amount therein certified." Under this authority, CIA classifies the funds available to it as or unvouchered (confidential) funds. The vouchered funds are those funds that can be expended in accordance with the provisions of the CIA Act of 1949 or the provisions of law and regUletions normally applicable to the expendi- ture of Government funds, and, in the Director opinion, the vouchers and related documents can generally be made available for audit by the General Approved For Release 200 A.- PitallAT8"1240A000100140112-3 Approved For Release 2001/ -01240A000100140112-3 Accounting Office. Confidestal funds are those fw1s vied for necessary official purposes of such a con:adsntial, extraordisem7, otemergency nature that they should not be accounted for il mail outmode CIA. These confi- dential Ands are obligated and expenMi under authaelties and regulations prescribed by the Director. Detail accountings of such co.fidential funds expenditures are not made cmtaide of tho Agency, out, fur the most part, are accounted for outside CIA solely ea the certification of tis Mrector that they expended for confidential., extremmlinary, or emergency purposes. Section 102 (d)(3) of the National Security Act of 19/1-7, Provides in pertinent part: That the rnrector of Central Intel,ligence spormible for protecting intelligeaco sources and method. frcaUnauthorised disclosure." this authority, CIA withholds iron our review carte.% activities, de, and documeats, which, me have been advised, might reveal intelli methods or operational locatiors retpardless of vouchimmd or oonl'i- al classifications. this authority, CIA also zevietm all visit rial, including this report, that is prepared in the course of our Rudit #>rk for dissemina- tion to other than CIA officials. Thepurpose of such a review is to deter- mine the proper security classittcetion of the information contained therein, and to determine whether the person cr persons to -which thC material is directed. *re properly cleared to receive and maintain such classified informa- tion. Where, in the Director's opinion, any of the vilirtmetmaterial mi&t disclose intelligence sources or intelligence methods; the Director has the authority to require that all or part, cl the material will, not be disseminatedy Approved For Release 2001/ Dl4180-01240A000100140112-3 Approved For Release 2001/69*#444 frv0-01240A000100140112-3 egerdless of the security clearauceE of the person or perpons to which thematerial is directed. Prior to the agreement for the extenalon of the General Aceaunting Office audits at Central nts1lince Agency to include reViews of its activities (see page 10 )0 we examined certain CIA expemditures at the site. This arrangement was made vita officials of the National Ihtelligence Author- ity in August 1946, and has been continued with the succee0ing intelligence agencies. This site audit of certain CIA expenditures was essentially 14m4ted to a review of fiscal olTieerat accounts, includi4 an eaWAnation of certain related vouchers and other documents eviemecingthe expenditure of appropriated funds to determine whether the expenditureo Imre made in accordence with the provisions of the CIA Act of 19431? or with the laws and regulations generally applicablo to Government expenditure0. In addition, the site-audit staff performed liaison functions between CIA and the General Accounting Office as requested by CIA officials. QuestionOle expenditures were sUhmitted to our site-audit sta.= by CIA officials for review prior to payment. Reports were not isuuld to anyone outside CIA, aild formal exceptions to the expenditures made were no tam, but any expenditures that were questioned in the audit were telem up informally with CIA Officials, The site-audit activities were limitee to expenditures of CIA referred to as vouchered funds. AUW Cir UMW. FRARTIOW113A4D CJ In 1946 when the sitegpaudit of central intelligence e4endituree was first initiated, the General Accounting Office audit activities encompassed generally the audit of expenditure rott4 related documents centrally and the Approved For Release 2001/09104 CIA-RDP80-01240A000100140112-3 Approved For Release 2C0 P80-01240A000100140112-3 sett3nt of sccounta of fiscal icers, the sedit of fSrazisl trans- actions of Government corporations, ant the investigation of matters re- lating to the receipt, dist:urn/mit upplication of foLds. Mince the enactment of the Central TartelLigence Agency Act of l99, however, the General Accounting lffIce bee broadened the etope of the audit of the activities of most Gaverzetzt, uncles. Under our prompt audit approach the basic purpose o telt: mat to review mad, evaluate the manner in ehich the agency or act.iviJ under audit carriea out its financial responsibilities and to reporv. o4r '..i.ndinds, opinions and recommendations to the Congress, or agency officials, an appropriate. Finencial responsibilities are construed to irclude the er,,e Ate of funds amid the utilieation of pro. party and personnel only in the conduct authorised programs or activities in an effective, efflient, and ,econouleaL We ',mane, also, agency practices and proceduresfoil1 i carr4ng outthe &gamy policien and mahe selective eeaminations actus._ sut.vities and tranenctions an a means of appraising the application of asincy pactices and, procedures on the a to the Chairman, al oned.ttee Commdttee on Arse:d. Services, Mouse of spreeentativea, the CotroUer Ceneryl concluded that a broader type of our ?remit audit approach at other Federal depart- ments and agencies, is appropriate and clearable for our audit of CIA and that the limited audit then being eohdhattd be disecutinueC? The belief vas stated that the broader comprehensive audit is more litely to be pro- ductive of evaluations of the adudnistr4tive functions, et4ch evaluations audit MOre Approved For Release 200Ritipkhi 0-01240A000100140112-3 Approved For Release 2001,10wrn ? :CfroriVP80-01240A000100140112-3 would be helpful to the Congress and the Director of Central Intelligence. It was concluded, also, that any broadening of our audit attivities should not include an evaluation. of CIA intelligence activities. It vas proposed that our audit work be expended to inaude em exesdna tion of vouchered expenditures ad, at the outset, the controls and procedures used in processing confidential expetdittreo. It 'wig PropPsed, also, to make a limited examination of 't wepport for confidential expenditures in accordance with such agreement 43 tO acoeus aa can be res4eKivith CIA. A copy of this letter is includedav Append:Ie I to this repoi.t. In a letter dated October 15, 1959, 74 the Came-troll* General, the Director of Central Intelligence vet forth his Position aUany possible ex- pansion of the General, AccountiaG Office audit of CIA activities. This posi- tion is summarized in the next exceedieg paragraph. A copy of this letter is included as Appendix II to tith, report. The Generel Accounting Offic comprehensive type audit of CIA activities will have to remain outside the area 04 sensitive aeurity activitiee regard, less of whether the Director hal ilymi?xcl his special authcalty under Sec- tion. 8 (b) of the Central Luta:Lit:awe Agency Act to make t final accounting therefor. Although all funds aepropriated to the Agency ate technically on an unvouchered (confidential) baxte, the exercise of the Mirector's authority to make a final accounting thereor Lz been limited to those actieties which in the national interest should have the vradasue security ixotectiou. CIA expenditures are aide Where p,-)seillc usila7.' the genexel aullioritles of the act without invoking the special auti.orj,kr, as a resIdtp certain,non- sensitive activities support V coLfIdeuUal operations are funded under Approved For Release 2001/09/04-t-CIA-RDP80-01240A000100140112-3 Approved For Release 20PORI4 wpm) 01240A000100140112-3 ,11 1 the general authorities of the ac,:, Or the a*thoriLee avaiiible to Government agencies by various 31ututog. In such instaneen, the cre- hensiaudit of the General AccovntLue; a!Tice would have o in .0 side the area of sensitive security Avt.ties. In a letter dated October 2' 1959, the CoiztrGller athised the Director of Central Intelligence 14m1; the Director's posi*on on the General Accounting Office audit of CIA v!tiv;ifts presents problimel on sufficient breadth of coverage and review of dedl Gr the purpose 4r reaching mound evaluations, but that the General Account1ng Office is 1Lirg to broaden its activities at CIA -within the principles eagressed in the Da:vetoes letter dated October 16, 1959. The Compt:miler General advised, however, in the event it appears after u trial period that the reviveare limited tc such an extent that we cannot effectively and construetive4accomplith any worthwhile audit objectives, we will have to consider whether the audit should be continued. A copy of this letter is ineldied aeAppendix III to this report. The following report sections corktain our conts ozi the effect the vithholding of fiscal and other irtorTeAon has in l?uitio. the General Accounting Office audit at CIA. Approved For Release 200V09 : CIA-RDP80-01240A000100140112-3 Approved For Release 2001/ '6-1A"-Rt) 80-01240A000100140112-3 tIO Our reviev of CIA activities ha e teal limited to selmeted activities of the Support Component and ii Inee-elleersce Ccapostani. of CIA. The limita- tions on our review are suomerlext oyk paipleu endiR of 44e report. We have had no scams whatsoever to the eetteities of the Pleem Component of CIA. In the Support Coot, revieTeed Helmeted activities of the Office of the Comptroller, the Office of Loeietice, and the Audit Staff. In the Intelligence Component ye revieeei. etleeted activitieu oi the Office oi Operations, the Office of Centre:, Seferenee, fere the mice oe Basic Intelligence. Thie report contaens brief commente (el the ectivities of the Inspector General, but ve have hid no &mese ehateeever to the work of the Inspector General or his staff:. Based on our review, we believe that under the Ximitatione placed on the General AcconnUng Office aerie oi CIA octivitiee lee the Director letter dated October 16, 1959, it. is nit -possible to perfors comprehensive review of CIA nctivitles that eculd. be productive of evaltAtions helpful to the Cmagrese. It is not possible, i4 our opinion, fee' the leneral Account ing Office to moke comprehensive reviee% acid *valuations of the activities carried eue by the Piens CoUpt0401K wee the Support Componeme of CIA. It is possible to make reasonably conelrelmneiee eeviews oX 4he eperi, activitiee of the Intelligence Component, but mirth review, on a ccatinutee basis, in our Opinion, would not be prodnntVre3 Erra-LustionS belptil to Congress. COMMentS on our reviews are at.ntftiLed la the following sections of eeis report. Approved For Release 20 80-01240A000100140112-3 13 Approved For Release 2001/ =WIVE The Plans Component, or Claude mechenism by which CIA's espionage, operations are carried out. The General Accounting Offiou TIT-L1 -01240A000100140112-3 rvice, is the organisational spiceage, and. other covert Plans Component or its activities, because aeons to condi opera- tions is denied to us. We would be permitted to make a v er..tijpe audit of certain vouchered :funds transactions* -drincipal4 payroll* processed for the Plans Component in the Fiscal Division of the Office o:,7 the Comptroller. SUPPORT COMPOMINT ACEVITISB Office of khe Comptroller The Office of the Coztro1Jjs. is charged with the responsibility for budgetary and financial operationc of the Agency, tacluding both overt and covert (confidential) operations. This responsibility is carried out under the direction of the Conptroller by five operating divisions and certain staff units. The five operating divisione are the Budget, Finance* Fiscal, Industrial Contract Audit, and the Machine Records Divisions. BOICIMO the operating divisions of the Office of the Comptroller have both overt and confidential operations and access to confidential operations is denied to us, the General Accounting Office cannot effectively review and evaluate the integrated activities carriet, out in the Offiee of the Comptroller. The General Accounting Office could sake a vsucher-type site audit of trans- actions processed in the Fiscal tivision, but such aUditsia our opinion, would not be productive of any satisfactory conclusions or of results commen- surate with the efforts involved. Approved For Release 2001/Q9 t04 : C1A-RDP80-01240A000100140112-3 3 L. wt.MOM NIP If X* Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 IA1 is repsibie for tration of This responsibility is carr Division, by /tire branches, 6Pvil1.OPsitot and admixd a- ties* and prosrems for the entire Agency. out under the direction of the Chief Budget An Asol7mis Branch is responnible for the developmet and administration of budget plan. and program of east of the three major CIA components. A 13pecial Projects Branch operates entirely in the area of clandestine activities and is responsible for carrying out the budgetary responsibilities az they apply to CIA Proprietary and subsidy pro- jects, including the review and analysis of corporate finencial statements of the business entities awned or subsidized. by CIA, it order to evaluate the fund requirements of each project. A Support Branch reinteins the budgetary records, assembles the segments ot the budget estimates and justifications presaredly the anslysie branches, and provides clerical avdtYPiog services. The Genera Accounting ()Mott cannot review and evalnhte the activities of the %diet Division and the budgetary controls the division over CIA activities for the reasons stated in the following paregrephs. All branches of the Budget Division are invelved in confidential funds activities, and the General Accounting Office will be permitted only limited access to any of the branches. We were advised by the Chief Budget Division, that it would be necessary to remove records and documents concerning confi dential funds activities fron the tiles before we scold be permitted to review the activities of a branch. The Chief, Budget Division, advised us that budget estLtes are pz'epere by the Agency for submission to and review by the end the Bureau of the Budget, and that these estimates disclose data nortally submitted by Approved For Release 20,09,9/94 : CIA-RDP80-01240A000100140112-3 Approved For Release 20CCIN 80-01240A000100140112-3 Govx'nt agencies to the Conreas un1 1 the Burem& o Budget. Th estimates are prepared on an afl, wtdi basis idth sepemtion of vouchel and confidential funds activittea MO n1srstand that cloarmipersonnel oi the Bureau of the Budget review the detailed rseplrements throughout the Agency on a continuing basis, and that the subcommittees e..,! the committees on appropriations of the House of Representatives and. the Senate are fur- shed full information about the Agancy'3 activities in any amount of detail The Chief, Budget Levied aevised us that tle estimatee could be made available for our review only on a selective basis with the selection to be aede by the Agency. Two overall summary schedules which include all funds of tho throe CIA efeeponents were nude available to us and, in addition, the narrative justilleatioee sad organizationsa end functional statements supporting the ttdeet estimates of anhatantially all of the activities of the Intellijenco Cor onent were made nvallable to us. /be budget material on the activitieb cr the Photographic nitelligence Center of the Intelligence Component was withtald, however. The documents to which we were given access were on an mll 47unds basis and do not disclose the details of either contleentia:. yr vouchered fund activitien. As previously mentianed, fa necesaary to meet CIA opera ments are not appropriated direatly to CIA, tut are included in priatdons made to certain other Govermmem departments and ege'eies and are sebsequently transferred to CIA. The Chairmen of the Apprvpriations Com- ttees of the Senate and the House of Representatives CIA and the Bureau of the Budget by letter a: the aeounts appropriated for CIA activities, and the appropriations in which the funds are included. The Chief, Budget uire- Approved For Release IhRDP80-01240A000100140112-3 11? Approved For Release 2* *P80-01240A000100140112-3 sed us that such lettere setting forth CIA be made available to the General Accounting ?flies for re. because these letters disclose the sources o- C/A funds and would lead to the daclosure of the methods by%thich the funds are made available to CIA. Mdliscal Divillome The division of financial responsibilities in the Office of the Comptroller is generaly based on whether the activity is me a sensitive security nature, vhich in order to protect intelligence methods, procedures, or sources should not be accounted for outside the Agency, or whether the activity is one usually found in other Goverment operations and the related expenditures could be made in accordance vith the provisions of lav and regulation usually applicable to Go:manumit transactions and, in the opinion of the Director of Central Intelligence, can be audited by the General Accounting Office. CIA funds alloted for einsitivn security activities are designated as unvouchered ecofidential) rUeds and the res ponsibility for the financial administration of theMe confidential funds is assigned to the Finance Division. CIA funds slated to nceumositive activi- ties are designated as vouchered fun& and the responsibility for the fin- ancial sumgment of these fuada is assigned to the Fiscal Division. CIA expenditures are pail '4y Goverment check dravn it the Treasury Department Branch No. 2, of the Macula Division, or they are paid through the covert disbursing systen of the Finance Division. Where the transaction is of a nature that CIA or the Governmeat may be ideutifie4 vith a trans- action, the payment will be made by Govertment check 'which will be drawn in the Fiscal Division regardless te: the vauchered or confidestial funds classi- fication. Substantially all vouchered funds transactions ire paid by Approved For Releas RDP80-01240A000100140112-3 Approved For Release 200 0-01240A000100140112-3 Goverament check. Where the tressactimm is of such a nature that it shomld not be identified with the kvernment, the payment is made through the covert disbursing system. of the Finance Divieion. Finance Xviedron Finance Division responsibil ties include the preparation and e of the financial records and accounts, amd the periodic financial reports on confidential funds ilesertil activities; the adeinistrative audit and certification for payment of elaims which are chs.reable to con. fidential funds allotments; the operation of a -overt disbersing system; t.:he preparation of covert payrolln; end related activities. Officials of the Office of the Comptroller advised us that the Gener Accounting Office would have no audit access whatmoever te the Finance Division and. the activities perforse(1 Li that Divisibn. position is based on the fact that all of the sctivfties of that Divisicn are confi- dential activities and are therefore precluded fromreviee inder Section a (b) of the Central Intelligence Agency Aot or 1949. The Finance Division is respoasible tor the in fCIA financial property accounting records, regeriless of whether the property was acquired with vouchered or confidential-Ands. 'item accounting records and controls are not subject to review, because we axe not pereittodaudit access to Flame? Division activities. Ail inventory, eacept edvdnitnrative supplies, are conoiderved by CIA to be o sconfidential nature. AdUlnistrative supplies are also conaidered to be of u confidential nature in soma: Instances, for example, where such supplies are far overseas use. Approved For Release,2001/ 904 C!A-RDP80-01240A000100140112-3 Approved For Release 200/WM ItUt ibe80-01240A000100140112-3 nacal. Division Fiscal Division responsib ltiet incLude the preparation saimmintAmmnce of the financial records and ant and the periodic repOrts on vouchered financial activities; the admeistretive audit and dertifiCation for payment of claims ibith are chargeable to voucherod funds allotment:A; the operation of a Treasury Department Disbursement Eranehi the peevaratton of vouchered funds payrolls; and related activities. In addition, all funds appropriated to CIA =dell CIA disbursing funds are initially recorded on the records of the Fiscal Division, and the Divieion is responsible for maintaining the applicable overall allotment =I expendithre control recorMs. /n the case of confidential funds, this overall control is maintained thrOugh a series of reciprocal accounts on the reeorlr of both the Fleet' DiviSion and the Finance Division, The detail control records for vouchered funds are main- tained in the Fiscal Division. The General Accoenting Office is permitted only liattOd audit access to the records, accounts reports, doctrients? and filet prepeted and iaintained in the Fiscal Division. This restriction has the effect of curtailing the audit by the General AccountingOffice to a limited voucher-type audit of transactions processed in the Fiscal Division. Our comments on these audit limitations follet. The central accounting records z&indned in the FiecUl Division include a general ledger of vouchered funds accounts mbich ledger Mo supported by certain detailed subsidiary acceunts and by four books of original entry. The books Of original entry include registers for Cash Receipts, Cash Disburse- ments Dille Rendered, and General Journal, and fora the 'Wide for monthly Approved For Release 2 4WP80-01240A000100140112-3 Approved For Release 20CCONFMa 80-01240A000100140112-3 summary po tings to the general ledger accomits . In addition, an allotment ledger to control the obligation and expenditure of vouchered funds allot- ments is maintained in the Division. CIA officials will perai. audit acoeia to the not rmit audit access to ti, o of the books of original be permitted to review the Register or Casks Receipts, or but will . We will not General Journal. Officials of the Office of the Comptroller advised us that the Register of Cosh Receipts would disclose the sources cf funds vbich are made available to CIA, and perhaps, the devious methods by vhich these fliads are made avail. able to CIA. They advised us also that the General Journal night include sufficient detail concerning the reserve for continipmcies, 'which detail might be coupled vith intonation available elsewhere and eight lead to con- clusions concerning the direction al sensitive security operations of CIA. The officials stated that these limitations vere imposed 14 order to protect intelligence sources and methods from unauthorized discloser.. Vouchered funds expenditure* are sot certified to by the xector of Central Intelligence under Section 6 (b) of the Central Intelligence Agency Act as being expenditures of a confideneiel, extraordinary, or emergency nature vbich cannot be accounted f3r outside CIA. ROvever, the vouchere and other documents supporting certain vouchered funds eupenditures processed in the Pigtail Division are not available for comprehensive audit by the General Accounting Office. CIA veuchered funds eenditures fall into two general ca riea: (1) vouchered funds expenditures tiie are chargeable: to vouchared funds allotments, and (2) voucbered fueds expenditures which are obargeable to confidential funds allotments. Approved For eleast /139, CIA-RDP80-01240A000100140112-3 Approved For Release 2130 WRINERRACP80-01240A000100140112-3 QtZiciaia f the Office of the CctOUera and te supporting vouenem :AuJids espendiUir able to vow-bored funds allotmeato Basy initLate the name? of a project or activity which oennat, Lc 4/k:c1osed Outai4a location, Oe officials stated that if such tramsaction4 sere selected ' sit, the vouchers and supporting documents coulLibit be wade available to our audit staff, We made a limited revive of oeleemed vouchered runes empenditurer chargeable to vouchered funds allotments, and found that 4Prme of the trans actions selected vere vithheld fro* our rovies. Officia:3 of the Support Component subsegeently advised as tz oat, up: kik*, traaet.,:Limas chargeable to membered funds allotments vW oe vitakeld fz.ot . our roviev on the con- dition that the sensitive information, l* tiLthl in our atifit and is not recorded in our audit larking papers Officials of the Support Comment advised us that t* other dog:marts sipporting wad:mitred 1\411413 expendi to confidential funds allotments coulu be made available Zr audit by the General Accounting Office, Imrt since these trussactio involve activities that are of a confidential, crordinsz7, or emergency natmre, rs under the limitations set forth iuta r s lt ter (*.WI October 1959, they are 'withheld frommegalkensivu audit nyt1 euerelAceounting Office. PUrther comments on them: e nt.turee are j1ted on paces 24 through 28 of this report, Officials of the Support Conponent advieed us that ttel general Accounting Office meld be permitted audit &get* to tile records MIA aud documents maintained in the Payroll Branca of the Plecal Division, but would be per- mitted, only Limited access to the perm 1 files of indivtdmels included. Approved For Rele um T. aCartikeiVIA-RDP80-01240A000100140112-3 Approved For Release 2 ERIktP80-01240A000100140112-3 on the voushered personnel files of would not be permitted to hew 40A*4 OD the pereonnel file of employees engaged in clandestine otiVitj or direst osppott t ldeetine activitlee. it is our understszadiag t this arrangemen-xnadpermit the 11. Wa vould be permitted access to the Alti.0404, purely overt astlyi4es but we Oenerat Accounting uffiae to asiis..; of the employees of the In' 11411E0 I;ouponent, xt would review of such files of all an?loyaea tae Plans COMpamaM cally all of the employees of be Stro?,xut Component. Based upon the doilaP volume of louchsred funds trimasmrtions charged vouchered funds allotments tkva major .11Al4ty of the Fi .aL Division is payroll activity. Thenem/ Divitils personnel rervice uligations against fiscal year 1959 vouclered fuads 114$ about 8( per aant of the total vouchered funds obligations ohargel t) vouzhered funs allotments. The personal services obli tions ott telligence Component however, repre seated sly about 20 percent s-Z -1 7IA fiscal year 1 59 personal services obligations or about 3.surcaat o the Pieced 1:1144ik:A4 fiscal year 1959 personal services obligs;IYan. The Chief, 1iscal Div/sic:14 aIr1344 U3 that prnevt the vouchered funds payroll or. nes4 ired electrenic Rovembe:: 1960. He further advised U4 %-.Lat the related .x.6404414 and proetbirea necessary to the proposed chande baTe it jet been finalised.' tically ude tne and of practi. Fiscal Division, changeover had not yet been that at May 3, 1951 this proposed a. Approved For Release COM DP80-01240A000100140112-3 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 It may be possible to pertorn a payroll audit of the woudhered funds payroll activity under present audit limitations, but the ability to audit payroll activity after October 1960, cannot be determined until the new payroll system is installed. We de not believe, hovever? that the audit of payroll activity would be productive of evaluations that mould be helpful to the Congress. Industrial Contract Aufit Division The Industrial Contract Audit Division (ICAD) is chergtd with the respon- sibility for the review of financial and cost data submitted in contract pro posals for determining throug4 Id surveys the extent to 'dila the Agency can rely upon a contractor's coat determinations and the fisancial ability of a contractor to perform under contract; the administrative-pre-audit of all vouchers under confidential binds contracts, and of all vo*Chers under vouchered funds contracts, which will require a cost or price redetermination audit; the field audit of all CIL cost and price relletenthisble contracts; and the reconciliation of certain hank belanses of the covert disbursing system of the Finance Division. The Chief, ICAD, advised us that the contract audit work is performed entirely by ICA)) eapioyees, nest of Whom are stationed at CIA Readvarters, and that without major exception the oontract audit work follow the applicable provisions of the Armed Forces ProcUrement Regulations and Contract Audit Manual of the Department of Defense. Because substantially all of the ICAD activities pertaUl to confidential funds activities, and access thereto would be denied, it would not be pos- sible, in our opinion, for the General Accounting Office to review and evaluate the activities of ICAD. Review' by the Genital Aconunting Office of the audit activity of ICAD pertaining to vouChered fends cootracts would be Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 Approved For Release 200 ted. but it is only a re tobla tan percent of 180-01240A000100140112-3 segment of ICAD activity. representing dollar volume of cost and, price redstar- t. 0102 penditures vill or Act of 19 t be accountel (a) o ? of its ex - audit by. the General Accounting Office. On this basis, CIA elassifies the fends available to it as either voucherel funds or confidential tondo. Vanchered funds are these Pends that can be expended *a accordance with pro'irisicng of the CIA Act of 194$ 4r -)t' law and regulation izemally applicable to the expenditure of Government fonds nay in the c4nion,of the Director of Central Lutellisence? the vouchers /Lai related documents geeerelly can be made available for audit by the General Aelounting Office. Cont.dential funds are those Awds used for necessary official Femmes of such a. oonfitlentiel extra- ordinary, or emergency nature that thee eamnat or should ret be accounted for in detal. I outside CIA Confidential funds trunsaations t 4.14 are diaburnta that are aceounted for on the certificate reator of Central InteUigene Sec 8 (b) of Pd.. 33. 3, alch 3rovides: "(b) 2be sums made available to the Agency may be evended vith- out regard to provisions of Invited regulations relatipg to the expenditure of Govenment feed's; art ret, ?Weeds of a confidential, extraardthary, or egssreatey untureo such expenditures t-o be accounted for solely on the certificate 02 bbe lireCtOr aad such certificate shall be deemed. a sufficient levechet :or the amount 4,0 certified.." Voucherect funds trensactione are :Tt nitrattrted for os the at, cato of the Director. erk.411111..A.1 Approved For Release 206/11/NOWMSA-MP80-01240A000100140112-3 Approved For Release 204 P80-01240A000100140112-3 Included in these vouchored and confidential fends tromactions are certain transactions which are 'aid from. 'leuchered funds but are charged to confidential funds allotnents. Offieials of the Office of the Cow- troller, CIA, advised us that vorachereo. brads disbursementu Charged to confidential funds allotments represent transactions that are not sensitive until associated with CIA, that they are not accounted for on the certificate of the Director, and that they are disbursements by Government check for services, equipment and supplies obtained from or through other Government agencies and commercial vendors. These officials initial* advised us that these pgyeents were not being nade available for audit by the General Account- ing Office staff assigned to the audit of CIA, but whore these transactions were payments to other Government agenclea? the related disbursements by the receiving saincy were subject t3 audit by any General Accounting Office staffs that might be assigned to the audit of ouch agencies. Disbursements by the receiving agencies of such CIA f.ind.smy be sub- ject to our audit, but in any such audit we 'would be preclUded from know ledge that the disbursements involved. C/A, or were to meet C/A requirements. In our audits of other Government agencleo there heve beeu instances, however, where CIA officials have requested that the General Accounting Office cease certain audit activities. The Maputo' Comptroller advised us that the instances eters the Gemeral Accounting Office has been requested to cease audit activities 25X1C 25X1C Such contracts, we were ad- vised, do not involve fund transfers t*ian CIA and other Goverment agencies. Approved ForReleaseaMIRDP80-01240A000100140112-3 UONtilkill11111. 25X1A 25X1C Approved For Release 200 80-01240A000100140112-3 tlun that these ens be about 15 psi' Cent of CIA'e total expenditures. TM toiz1 of these vou- ts charged to conlidential funds allotments are inei*t in various reports issued by the Ccieptroller as veuchered funds transactions. The activity during the tvo immediately prior fiscal years may be suemarised as set forth below. sed us September 19, 1960, that if agenciesher Go1mz1rt vere certified by the Dir- t - uould be exempted rrc* audit by the General Accounting Office. The disthunsisnts to other fere, are not certified to by Director under Section 8 (h) of P1L. 81-110 in order to permit audit by tte General Account- ing Office of the asburseaserts by the receiving agency. The pertinent parts of the Ocartroller's letter are net forth below. by the memi Approved For Release 200 J,00 CLA-kET80-01240A000100140112-3 25X1C 25X1C 25X1A Approved For Release te 1 inALDP80-01240A000100140112-3 wade to other totems la matt es* so- isthiseetwitr *et vies wool en *Wit is tied are free sety by the t tie dibmsente tc fiemML years 1959 and 1960) ?-t o a ount-Log Office, because the t cticnre euittv, . these ?Magic advisedus, hamever, fiscal year 1961 tends the audit comp tion 8 (b) of P.ii. 81.410 eill be 'Wiled ani thc expenditures NAIL JO Apated for =dor %lie certificatior of the Director. DePut7 that there d supporting t) funds allotments avallabla far-mnettme.typs anti Approved For Release 2CONF DP80-01240A000100140112-3 d. 3, 1961 other 7 Approved For Release 200 DE4A180-01240A000100140112-3 Accounting Jftice. T4'iii ou1 t' perZorni the sane voucher- ype aleit or ,glese 'Gran prior to the Ultima= of thir ce to op possible The Office of Lag!.tt1cs, v,itr the rectjon of the *rector tics, is responsible for the :21111117UL; and 1e"rtstton c4 CIA I support. This responsibility inoludos the iftWaviduil11 COMItadait' and disposition of 44E41 elpipment, ouppliee and re the transportation of persor=1? eguipami, ai4 trApplies; and. Ute Of printing, sail, and courier :services. Mese rosimasibilitios chtreed through :MVO oporatin4, jj ic..ort.ain sta.ti` units. operating divisions are Printintt Benelc-= structluno %play, and Traneirrattior. The General Accounting *Mee, in .fita' opinioa, kxta vale and evaluations of the centralised at tib*ities of the Printing ision. Booed On our reviews and discus:done with ofU.cini4 oi Lo.atiee during fiscal year 1960, the lotaral Accomiting (fries cannot review and evalunte the ektiv:ities ce the trocurenent, d Transportation itivirt.ons. Imo:fors Carttlill CLI14160 in the policies, practices, and procedures affi,v;ing the ac V.vities a -Ghost divisions are presently being inpleer_nted attd. ere el.peeied to incrImse the General Account- in Office access to these activitieL Effective littlyr 1.0 1960, CIA setob pexit the use of vouebored funde 431otara. curet tent vith CIA watrity recothoommts. peratte d funds to be usod for 4.,ifertpr:ie rcial vendors in thenom of CIA vbero thedo.--urentb atupcvting the transaction do Approved For Release 210?10x13.1 : CIA-RDP80-01240A000100140112-3 GUICR to Reel getate cal Sc. of poliatec and rocedures to property Pro ff?finetrallY 28 rtv-tE%-nrAmIt Approved For Release 20097/1104VCIAlilf,DE80-01240A000100140112-3 ti or voudhered funds procurement development onntracts and to vas housekeeping and Janitorial make additional newly actions and by the General Accounting Office, into the utilisation of sua gOnce Component. t of ma ting orricc 'iu ix X,eraitted to at* access for review tic.e, and procedural applicable to nencov.rt CIA pro- but any veriiicationc thereof mould bi limited to t actions, lisadonixters vouchafteltmds jrocure- dted certain research and derelopont contracts and rocureuent of 0,014 strative, bousekfivina and Janitorial t in fiscal. year 196(). All other fiseal yvar 1960 pro- fund transactions, or vtuabered fund ntial allotments. of prcur*nt activity during the 6canuth period ended tte General Accounting Office would to de see to evaluate tbeaeprocuremant activities. We found that 330 contracts authorising the expenditure of about $5.8 nillion of CIA funds re entered into during tbis periot vith nowlgovarmient contractors. Teenty of those contracts obligating about $1.4 million or ranclummal funda ilere gagage4siss jpoigcall: ceargoitgiggrom 1101143 tpe k Approved For Release 20 CCM P80-01240A000100140112-3 obligating about $164 million mem contracts paid, from oonridential funds or trait vow:hared funds but charged to confidential allotments. This review did not include standard purchase order agreements entered into vitk, non.governmental souroes, or any cOnialactbmi. agreements with other Govern ant AISOncies. SMOLX 14Vitsion The Supply ivision, under -tie dtrecl4oii of the Chief, Supply is responsible for planning and implementution of the CIA 049179=gram. inc1zdiz the accountability for, and the receiving, inspocticc4 storage, maintenumm issue and final disposition of CIA material. Officials of the Supply Division adWIsed us that the femoral Accounting Office woul4 have no access Vhateosvea' to the physical assets of CIA that are under the control of the Supply Division. We would be permitted to make *sleeted reviews of the unit accountability records maintatned in the Supply Division, with the selection to be made /7 CIA. We liccildlot be permitted to make any overall review of these records. The General Accounting Office would be permitted to review the policies, practices and procedures under wtich the supp4 program is carried Gut, but any verifications thereof would be limited to the documents and records OVidanCiAglitouchertd funds ections. Headquarters vouchered, fends supply actions during fiscal year 1960 re nutted to administrative, bouseskeeping end janitorial seeplies, Berrie and equipmmatimed,the blanket order acquleition of are parts and petroleum products. All other Headoarters supply actions in fiscal year 1960 were confidential funds transactions. Approved For Relea IRMA-RDP80-01240A000100140112-3 Approved For Release 2rtr RTAP80-01240A000100140112-3 In tradition) of tints atfiess of the Comptroller advised us reeirdless of etherthe pervert, um acclaim. frau voulthered eonftmtjii3. fonds the General Ameounties office could not have any access to the financial property ecostualdng merits. MONIESS.USSAWISS The enorteti fls1aa,under the di of tile Chief Wane tion Division) is resocassiliky fur the tmennortation of CIA peroccue3., equ1rut, and mplies, and. the operation of CIA motor vehicles end a tor pool Officials of the Traespartatical 111414011 advised me that the fpist bulk of CIA tivaaportation shipmate are cleadisartiza arweeents vide under the mover of other Qoyerrreint swam 1320 dreatiments evidencing these ship- are not euts4stet to review the amoral Acovaiting (Mae as CIA treateactions. The documents evidencing elsipments aide under the cover of other loverrieent species sus $ubject) Iracever) to maistralised, audit by the Transpnriatien Divisica of the Citmeral Accouating Seim. This centrilized audit relates Mbolly to the ilocumats submitted to ids General Actomulting Offices which cersot be identified idth CIA, and ewer as movements of the Goverment agency used. for stover imposes? Such as audit eammot be wed as a beads for the evaluation of CIA transportation aetivities? hapjanagals Tiro Printing Services) Divisiato ander the directicie of Servioes Division) is responsible for the dirsatide of including the operation and usiutenenee of stoutish facilities at liegelyetrters. and the furaisiming of technical on specialprinting and ruproduetion fticihties LA other ileadvartai wriPlanational units. Approved For Release 2001(19/04I : ClA-WP80-01240A000100140112-3 \ 0 Approved For Release 2001,a, id bave 0-01240A000100140112-3 te operated by the Division. Be &blow alsu that we could practices, and procedures under Nellola thee plants are opera we wad have access to the records And docussnts upon ehiuh the cets of these facilities are estimated and charged to the various users of the service within CIA and the other Com-meat agencies. Boviover, the distri- bution of the cost of the printinc services to users vithiu CIA are to confidential funds cost records Bud w would be prolluded from verifyinz the distribution of such charms to the related cost recoras. INTORNSh MVO! AMPA4MME ClAmasegement controls include three internal review aocba the Support Component, an Audit StafT is responsible for conduc audits of CIA financial and.pwacert, activities, and a Naollammon responsible for conducting; mems4pmem revs. An Inspectur General Staff of the Director is responsible for conducting inspections end,investi tions of C/A activities. or Cot Audit Staf! The Chief of the Audi Director (Support) for an md p enta receipt and d bient, and a ication of CIA. This responsibilit7 includet the c territion as to In rl 13 "P is re &matte a the to and property of an activity audited are uned in an econceital, efficient, and. proper manner, and. vbether calls use in in furtherance et an, activity Approved For ReleaseLIikr 21141/99404.? DP80-01240A000100140112-3 ' Approved For Relean kr-RDP80-01240A000100140112-3 authorized internal audit may be 1itei ?z ord cover, and to adequately pro+ In carrying out its responsibf..lil give: **count ittlities enstodar., and of other rebated adod.n.istratt Deports on the results of tbe of au mad security atipiss of auditiwis titelernes of aeoeteralmg feeds and ptopert$ teres end respetua relation to the reipts and. other assets; ind cos." performed $16re directed to the ornization audited, the Deputy Directo' (SuPport), and., Where appropriates to the Director of Central Intelilenco. TheDeputy tgrector (Support) seviet. Of the Audit Staff hen been in 121.4o area or claudeettne Sc advised that internal audits upport activities lavolvitg both oonfldea- tisi. and vouebered activities &14 not septirete the cionfidettial frole the voumbered activities. Officiale of the Audit staff.adviseC us that about 90 percent of their audit effort IA in Ube area of alandostios activities. In our reviews o, the nreal Division and the frocurenent Eivieion, we wre gill= access to pertinent aunt reports because the ruports did not disclose any semeitive inforsatim. W Notre reiluiedaccesps however, to the dir1ijing working per on i-;h3 u*dtt Gf the Procurement becaune the confidential es4vouohered ooted not be sapeauted. In our review of an activity of the intellidesee (Jjc4nent,we vere giosn access to the audit reports the related verldne papers svplicelat to vmehered funds ire e' fort itataer Approved For Release 2ofirq9 - P80-01240A000100140112-3 33 Approved For Release 20 11A1P80-01240A000100140112-3 Without complete access to U13 autIt program, the General Accounting tf Me a (=unapt, in ow effective evaluation of the CIA Internal suit activity 0#01,4Wa. $4.t.t Pr The Clief, lemegement fits to impreve management art offi other tango reviews of the orginitetica, tis eyat, methods zation of personnel o tho various CIA organies onal units. performed at the cequent oi the officials 41 the various CIA ts. Based on rue* reviews the Wadimmet Staff submits tions resuittto. t..7oe. such revives ts the interested eral4ou and rd $X7 action. f activities of the /ate:Inmate Compoem d. recommendalsas regattas from such WInagement reviev. 041COS8 to repor of the In Ingector Gen,rstl The Inspector Component is responsible for investigations on. 'behalf of the D4ree:b4:-:' of CeWaal - the Agency, including the survvaldeinAluatton t1s ae;at arid. per formence of the missions and furxtt.orkF4 all cowmen the investigation of fraud, *tense of funds, conflicts of laterest, and other matters. 144 were advteed by the Deptliy : tug Office welad have no access ghltsoever te the reports $nd **icLn papers of the Inspector General. Approved For ReleaZ 4tA-RDP80-01240A000100140112-3 Approved For Release 2 DR80-01240A000100140112-3 CCWOMIST ACTiV;MIS The activities of the intelligeace Component may be grouped in three general categories: the overt colieceon of itel.U.gance infcawmtlon, the indexing and collation of such infernation, and the produation and dissemi- nation of intelligence reports baled au this intonation. In addition, certain covert (confidential) actvities are performed in this Component The activities of the Component are oarrielout under the direction of the Deputy Director (intelligence) by a aenioc Research Statfoil International Communion, a Photographic Intelligence *sitars and the seven operating officen referred to as Offices of Operations, Central Reference, Basic Intelligence, Research and Roport4; lietimal Estimates, Current Intelltgence, and Scientific Intelligence. The activities of the notaipisphic inimaligence Center are confidential and ve have had no audit access thereto but sabetantially all of the activi. ties of the seven operating offices are overt. The Office of Operations has primary responsibility for the overt collection of intelligence information and the Office of Central Reference has primery responsibility for indexing end collating intelligence inaermation? The five remaining operating offices are primarily responsible for the production and dieseedration of intelligence reports. The Office of Basics intelligence for example, responsible for oordinating the production and maintenance of the Notional Intelligence Survey, a comprebenaive digest of 'mate intelligence on feesign areas. Our reviews of the overt activities or the IntelliemeatCWmponeet were mde in the Offices of Operations, Centnal Zeferebeep and Susie Intelligence to termlne on a selective basis ubwlher these activities ure effectively and economically carried out aadare acoordance with hastc authorizing Approved For Relea /09/04:CIA-RDP80-01240A000100140112-3 Approved For Release 2001102QA.:..ql&Bpp.80-01240A000100140112-3 Utittlin I la legtalation. National Security Council Intelligence Directives sad other regmlatiens, end whether adequate atininistrative procedures aro used to guide and control the activities of these ciliate. Booed en our reviews me believe that there is to is rwvievi of overt operatioss of the intalligenos COsponeat. In our opinion, however, sudb reviews vill net be, productive of eigpdammut evalu. *tie* priacipally because Ve aannot feaeibly evaluate the extent to Which needed overt inlOrmation is available bur collection ordetermine ths need for the intelligence information selected for collation and use la the pro- duction of intelligence reports. Bemuse of the great guilnktty of infbr- MUM* available, out 90 percent of %he annual expanditeras of the Intelli- gens* Cempommat relates to pmyroll end other contractual payments fOr personal services rendered in selecting or the bowls of pareonal jpigement under broad guidelines established by the intelligence community US* Stossitis lafersstiss to be colleatedo colleted* and uesd in the production of intentional, reports. Our reviews in the /ntellignace Component disclosed certain natters raIntlng to: (1) the finsmcing by CIA of certain Dsperineet of State activities which do not seem to be the primary respossibiaty of CIA and such tineneingney here the effect of supplementing the ansual apprearlatioss of the Department of State sad (2) the fineralag by CIA of certain Library of Csadrsas sotivitle* Allah substantially transcoad CIA's isterest and respon- sibility. ear osamats sad findings on mice-of selected activities of the Office of Central MeSarmaso and the Office of Mae Intelligence together 'with CIA's cements, are included as Appendix 1V to this report. ? i ? Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 3 Approved For Release 2001/0g 01240A000100140112-3 A:Wowing are our comments respect to the activities of the selected offices reviewed. 0;fievi of 9perationq The Office of Operations (41)) ib I xumible for admivietering; as a service of moon camera the selective exploitation and rOporting of intelligence information obtain:4)1e from domestic nongovurnment sources, foreign radio and television brunt:nests, foreign language publications, and analyses of material objects originating vithin the Soviet Bloc. Respon- sibility for emploitbag and reporting saloated information from these TATSPEC STATSPEC sources recto respectively, via, thE C-mtact Foreign Documents Divisions end the **net Materials STATSPEC Staff. STATSPEC V. reviewed acttvitjeg and the Yozeiga I awrta Zdvislon. Approved For ReleascON I -R0 1' 80-01240A000100140112-3 25X1A Approved For Release 20014 STATSPEC reporting on a silsetive several, lumdred thousand journals, books, and mono A10-01240A000100140112-3 roquiremnts conc0 ob needed intelligence are clevelopei in at interdepartmental t' tee on gsploitation of Foreign language Pubtliemt..oas (C1012) of diic1i tha Chief FDD, is the chailman. The catmil,tee ie emtiosed of repziesontatives from other agencies of the intell1tjaa3e cxxourr.t, carry Otti, its responsib FDD bea a staff of about 275 distributed',-...brc)-44.slat its War,hington head- quarter various unit service?. tbe and In additioei t h1. staff, 25X1A s and 25X1A guidance 4f 711D sppt 1,100 cpen-ond th indiviluate 'she have eared]. to Perona taiumalating? editing, typg, and printizig sad orti*ct per pze in accordance 4th the broad retpireliterr develaded 5,500,000 pager annual -1,y, fad select, from this coterie/ the informatior t uisI?erperwl by P1F Intelaigiance inform- ticei selected from this NIfiterIal dare-..nk; flseal year 960 moulted in the production or some 200,000 pa ass of Itricli3b-language repciL ,s. Approved For ReleaseeiimillitRDP80-01240A000100140112-3 ij nrinri ILO Approved For Release 2001 the The Orrice of Central M0-01240A000100140112-3 (OCE) is responsible fir idthm direction and administ. tivxl support required t itstn as a service of common concern CIA's oentralised reference service. it- tivities are carried out under Was direction of an Assistent Btrector by three operating divisions, faLo regisArs, a library, and a number of !Maris. We reviewed activities of the Liaison and.Colleetion %du. Machins ths Litriri? and tto Blogpaphic Register. ItIMMABiatiatigtelAta2B The Liaison and Collection Atrial ) is priirily responsible for conducting and controlling inter.egency si intra-aseory operational liaison 'with respect to servicing reqpasta frcAu CIA and other Cknennnommt agenclee for intelligenoe support, providing for the coordination of inte31igence tiOn reinstrements, collecting int1:11..geree information rm.:nether Government agencies ant. their officials, aid prod4cing intelligence inenroation reports. With a staff of about 25 LCD serfLced itr.L.13 fiscal year 1360 approximately 5,700 requests for intelligene evpoil4 700 nev requireomer; directives, 500 briefing and debriefings, and paliUshol about 550 intelligence informs tion reports. IAlmosot3Wielete The fteueentsDivieiot (It) lo primar14 responsible f* providing a central Amingy service for the ric4a cn4 dissemination of intelligence ts and non.CIA cables, with the requiraments of athorise recipients; develccing and z- tainingacodimgandindezing systea for the retrieval of inte:;.:1.igertce documents frae the: central respository, Approved For Releaseet VIIIAIRDP80-01240A000100140112-3 3 9 Approved For Release 2CCONFIBENALP80-01240A000100140112-3 to $e in nteLligence doctainta the appropriate retrieval code and inx. With it staff or about 110, DD received, coded., and distributed &zrtng fiscal yeur 1960 approximately 513,00) documents and. cables. phehime_Dpi on The Machine Division (MO in primarily responsible fot providing accounting machine (IDM) indexes of documentary and graphic intelligence terisi.s held by OCR, maldng microfilm photographs of such intelligence and, preparing such photographic reproductions as are required for reference purposes. Using a staff of about 80, MD added. during fiscal year 1960 approximately 2,400,000 IBM index cards and 1,00C,000 photographs to the files of OCR. Male* reproduced frosindcrorilm *bent 500,000 pages of intelligence information for referenoe purposes. CIA 14brocx7 The CIA Library is p ble for providin4 central Agency repository and reference faciliii.s ror foreign intelligente informetion held by CIA. With a staff of alxmt 140, the Library provi,ed during fiscal year 1960 some 747,000 references to 337,000 information ritiPasto. The Library also has assumed under ar, arrangement vitt, the Library of Congress certain responsibilities with respect to the fin'facing of Library of Congress activities concerning the publication of a Monthly Index of Russian Accessions and an last ifuropeanAneession Index. the.. publica- tions are primarily distributed to public and, private research organiza- tions and libraries in the United States and many foreign nations, including some in the U.S.S.R. and its satellites, end the projects, in our opinion, substantially transcend CIA's responsibiliby for previdingl a central reference facility as a service of comman concern for the intelligence Approved For ReleastoOkagitt-RDP80-01240A000100140112-3 Approved For Release 200 t 1494904?, AA978040240A000100140112-3 Unfi Immunity. Our connects concerniag this activity ere included in Apvemdix IV to this report 11161F104e 11.0;ban The Elierephic Register ) is assagoiMprinery resfonslbiL nelataining and providing biographic information on selected ecim ty for fie and technical personalities of foreign countries, end soloomic personalities from countries inside the Sino-Coviet Moe. BR also hes *Assumed under an agreement with the Deportment of State certain responsibilities with res- peat to the financing of biogrephic coverage on selected political and SOCIO 10001sl personalities of foreign countries and economic personalities from countries outside the Sino-Soviet Blot, which seen to be the responsi- bilities of the Deportment. Our oomments concerning this activity are included in Appendix IV to this report. A ceibined staff of about 10, including 27 at BD financed activity of the Department of State, provided during fiscal year MO bislang/Die reference service to about 6,000 biographic requests, Prepared 6,200 written reports, and banished 1,169,000 name references and documents. Office of Desio I1te111404eg The Office of Basic Intelligence (OtI) is primeriiy sesponaible fbr the meintenance ant production of the Mitionel Intelligence Survey (310; for making such requests of other Government divestments and as are necessary for the development and maintenance of the EIS; end for the review, publication, and dissemination of the XIS. Primary responsibility for selecting and producing the political, sociological, end most economic intelligence included In the NIS seems to rest with the Depart- nest of State. Primary responsibility ter the product:Loma military intelli once rests 'with the Department of Defense. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 41 Approved For Release 2001N /04 : CIA-RDP80-01240A000100140112-3 1#Id Pit The NIS is a comprehensive digeet of selected bade intelligence cu foreign areas. The digost is deeigned to serve fully the strategic and operational requirements of the Department of Defense, the foreign policy requirmsents of the Department of State, and the lower planning aad opera- tient' requirements of all other Government agencies. Broad policies and operating requirements concerting the intelligence infOrmation to be in- cluded in the IS are developed under the direction of the National Security Council and an interdepartmental National Intelligence Survey Committee of Which the Assistant Director, OBI, is the cbeirman. The komittee is composed of representativee from the Departments of State end Defense. OBI 's regponsibility for coordinating., reviewing, publishing, and dis- seminating the 444 IS section.% produced during fiscal year 1960 diseharged by a staff of about 80. OBI also has assumed under an arraegement with the responsibility with respect to the financing of of State activities concerning the production of political sociological, and econceic intelligence contributions to the XIS. These activities seem to be thereepoesibilitr of the Depertment of State. About t40 Department of State employees were assigned to this activity during negel year 1960. OBI's fiammtUag of en activity which seems to be the primery responsi- bility of the Department of state may hare the effect of eapplementing the annual appropriation of the Deportment of State. Our eomments concerning this activity are included in APPetdix /V to this report. of State Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 142 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 CONFIDENTIAL A P P 11 Approved For Release ettRDP80-01240A000100140112-3 4 Approved For Release 200 COMPUIDLLIM B?133200 DP80-01240A000100140 wenvancet 25 SUM 3959 Mr ? A. T. of our Civil Meounti and A attended u;,.ejtL aeetiog of dicuui a,w au4Ut revansitilitios 44 aemelusion of Uzi* meatinfip for the l'Utwt; =Lit wtLviti.. at ti A?y. Approved For Release 2 1 80-01240A000100140112-3 CONF 1141 Approved For Release 2001/0 CIA-RDP80-01240A0001001 ai.ncerely ycnir (1311;m1) Joseph $110Pbe emaptitt-43ar Geewital c4:* tate Suited Staten Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 CONFlifirint or ppnj ii Approved For Release 2001/09/047M-RDP80-01240A000100140 112-3 V. Os me had the piaaeweof Samuelson Qf this ispreved? X believe that the t audit eetivilits im 4 comei in thie tIreetiou I level t dementai. svpoets? Intelligeoco Agency Act of 1949, the (*ogress? recognizing problems invoXrecl in The eenduct lot inttlligenee activities ties *Tim 1*. elpeDiLiturs of awl eecsozting for Atosnecy A %cum a et that-, $am (formerfiy Section 10) Provides or ebitecte of * coundiatiela extwoordisery, or *Mergency ted ter volely on the cert=cate Of the Mrector te Mal/ be iesteti. a suftistsot vo*aber for the This wording toes Apt contemplate the review of tor certified mare made I.Or oolirldisitiel, extra- 'es. 16 ocular 1959 teC Agency are I tttc1U3r am. ei "avouch. IBS $01107 Gad %hat of my. prOacomilme to 1J.idt the ty to those octivitits vbitl In eesurityprotoctien? To 1,10 e Imo ot4armrialcus-of the Cemtnal latent Xbr thee* expendittres ago available to the poliTi hem been emetcleed such a degree themselves senaitive but ccodueted solely in time, ere tuastet moor gamma amtborttleE tc nate fin144040enitzsg theral'or. A cotwooteci, by, the Ciiment. Aecatating Office eow3eLled voualaored e4JewiLtiare6., weld ovulations *Joh thily support end.libleh der Section a of ti* Act. Ir these sualt seuldbase to be limited so as or 4ecurity oper4tiono? Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 COP APPENDIX II Approved For Release 2001/09/0-47t1A-RDP80-01240A00010014n= batikaounel, trust Vat you viU agree with ? atlisVe any guestion Wad bo s1iited u yolts. oaintevience t we sax, in kg-element so Leutaset Vat your restresbatatives continue iv laic the sco,a of 14ie Cienere.1 Account- Iniraidetnedo ceueistdett with the Approved For Releast 371-14Cill2X11,jr, (Bigeori) Allan V. Dialat$ Palen U. DuLles Diroator 41?;,,pjA-RDP80-01240A000100140112-3 ?:1111 Approved For Release 2001/09/04: A -RDP80-01240A0001001 CONFllJEll1AL CONVISIOLLIP CIIIISPAL OF UP WARIMMICS 25 you over the (1) allnliain activities in tooted by vac *otiosity tO the extent expreatares oositititml or enoripaay *bum *Eh expendituree are rot isanturttan hir us vithout yaw conourreneo. Oar leadar* the oroateation structure, asennv sad proosibtrioar tositilm WC satoetive west a mine at ampesintai the agelleattort of %Peel( *seat ot aiseviationa *Ail Your Man' it WM. to evipaadl Ms audit at the datisiola pert of the Aganees activities) the aria of ainsitivo saratrity opera? as a result of tho MUM ve could evaluations of t substantial part CONFTENTIAL Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 ) C111 .MUZSIX M Approved For Release 2001/097a4reTA-RDP80-01240A000100140112-3 COIIRD 'MAL appears after a trial period that our relieve are liadted to such an extent that we cannot effectively and coestructivel,y accomplish any worthwhile objectives, ve 1,111 have to consider whether the suitLt shou1d be continued. On ths basis of the above, ve are willing to have further discussions with your Staff in order that the audit ear proceed. Approved For Release Sincerely yours,. (Siwietl) Joseph Campbell ecimptztalar Osneral of the Vatted States 0, 0? ciLfiliDP80-01240A000100140112-3 111111. t!, Approved For Release 2001neiel 0-01240A000100140112-3 kfur l REVIEW MU:CM ACTITZepli 01...TIC.AZIVELM_CENCE ii ?'z =MIL IEVIELIGEMICE ACENCY review' ar the Comicral Imbelligemse has reviewed aeleated avert activities (M) end the ?Mee of Basic latelligance Banat Cle our reviimr, me believe that certain latalligaeme Component ghouls:Ito chan(ed. C/A is of Ccograss activities *Mb substantially responsibilitly, and (2) certain Departamat of was U. be CIA's primacy rtependbilitr, easd of supplsasutleg releerni appropriations ,Te bora advised that corrective action is at by CIA. 25X1A Thee bviloot for fiscal at the Wawa 40` Cowries I Ilse Dicabli4Index o end the East European ACCOSIdtele I' :ENAI) Mall Wad aud Zitdi Pluiaate stAaturtad by OCR molt In northir publics- tie= by the Libraa of Caegresa. Thee* publications reoard and index them itessiaa sad East Ihropesa aeompiatts and periodicals evsmtly obtained by the Massy of Canova.* mad a group of ccaperating libreries. We moderstand tbe isihrieetion caatained in these publicetiOns is in the files of. the Library The pabileatdoes produced are primal? iistributad to public and private MOW* emposimmelomm mod libraries in the United Motes sad smery faraign =time, imolutsing these of tbe U.3.V.R. and Its laetallttss. These projects, laeareginien4 subetaatiali7 transcend CIA's resposelbtlity tar providtpd central ratereme facility sesserviee et mamma aceseerin for intolligance eemeaaihy. Va. bare been advised that based on a riviev of the needs of the InE31 Approved For Release 2001/09/Lounmp&4 4240A000100140112-3 50 Approved For Release 200C AMR180-01240A000100140112-3 011 AM= IV intelligence oneunity, it hms teen dotemdiesit C3A a looser can justify major support of the tvo indents bemuse of chanapd intelligeoze needs. =A min continue to support the Library, forth* pre- panties of certain Sino-Soviet Bloc biogrePhie mode- cards have grove in leportence frosalqNimoduct to the most valusbie part of the project. dor detailed commute on this eubjeet are presented below. With the financial support of the ambefal:Wer/hemdetion? the Library began publishieg in April 1948 aMonthly Dist of Mission Accessions, nov knave es the MIRA project. The project vas supported VI the Myles?. during the period from J41y 1949 through *web 1950. CIA -support for the project vas requested by-the Library for the period free April through Awe 1950, but the request vas dieggroved by the CIA Projeets Review Committee bemuse the project vas considered at that time to be of general public interest only end thereibre at directly an intelligens function. The Library supported the project during the period free/April 1930 through Deenher 19521 and again regested CIA sumpert fOr the project in October 1951. This revised mutant, itch 'vs eVereved 1 CIA, Projects Review Committee in avember 1951, Srgporied that the intelligence velue of the publication mould be strengthened t1r includine translation Olin tables of menet of current periodicals, end a subject index. CIA provided about 25X1A the Library for the support of the project during the remainder of fiscal year 1952, end has been the principal seem of funds for this publieetion since that time. The OCR buApetwomides far the ampsediturs of ebout $hommo for the support of this project in flacel Year 1961. Under the confidential sponorship of the Plane Compeaent, the Library began publishing labs in 1951 =Seat amen Acesseleas,Iiist_-nov kaolin 25X1A as the ZRAI project. The Plans Component- provi4oloGemt11110111te eesPort this project in fiscal year 195P, and coetinksed to support the operration through its budget until fiscal year 1960. a uniersteedtbat OCR assumed fixonetro sapport of the project In fiscal yew 1960 bonne Plass Coven- mot ewer fer the project vas no onessary. The 003 budiet provides fertile expenditureofabout for the support of this project in fiscal year 1961. 25X1A (Aar maw of the ICIRA and HMI distribution lists fer December 1.960 disclosed that ressereh oresaisetione end libraries in the United States sag erel foreign nations, inluding several in the U.S.S.R. and its satellites, are the principal recipients of the ti o publintions. Of the appoodUmemi1y2,400 copies of M1RA end Sal distributed during that month, about 2,003 vere made available to public and private ressearch organisa- tions and libraries, 200 Imre sent to other Government agencies, end 203 more retained by the Library. We understood that the 200 copies retained by the Library are distributed among the compoments of the Library and U he eeencles of the intelligence eamemet4y. Only 600 of the 2,140 copies distributed are issued on a subscription beds, the cost or *hi* ranges from $10 to $16 *year. The remainlog amiss are distributed mahout charge. CONF101/11 Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 51 Approved For Release 20(11490/ Lejil .?CjA7F,T80-01240A000100140112-3 EiTSPETX TV The Assistant Director, Office of Central Reference AD/OCR) stated that beceamoof an annually expending work*lead and operntimg Met, it below necessary for OCR to *ask additional finenciel port for the projects In fiscal years 1.960 and 1961. SO pointed out thet the Library refUsed inMy 1959 to oom000 amy of the fimencing for thane two publicom 5X1A time on the basis that their continued publication ass not important to the Library because the infementioa they contain is in the Library's file'. Aeditionsl fends totalingMMwere mode available to the Library in nasal year 1960 by the National Selene* Fauedetion (MP), Ilatiomal Aare. amities and Seece-Agancy (SBA), end the Atonic Resew Commission (AEC). We umierstanWkthat a similar amouet will be made available from the budgets cellos* three agencies for fieeel year 1961. Only the AM, however, is essifically designated by the intellieenee directives of the Retiomal Becerity Council to be a. neeber of the iniallivemmkonserity. The AD/OCR else advised us that the SS, prepoees to undertake in flecel year 1961 a survey to determine how MIR/ is used by recipients, end that he has suip. Malted the survey be expended to eeplore the prospects for Obtaining funds fer the production of both publieetions from appropriate learned soeieties and feundetices. Re stated, however, that the contract for the proposed survey ems to bis knowledge in Decemher 1960 still in the process of nego- tiation, end that he vas not mere of the precise soepeof the nentract. We do not question CIA's mod for bibliorrephic notarial in the dis- charge lefts responsibility for providiag the intelligenee community alth a central reference thelliey, we believe the publiestion at these biblio- erephic materials, boinver, p42eer1.1y serves- the needs of public and private reinerth organisations and libraries and therefere, is a function of the Library. It is our opinion tberstbre? that it would be more appropriate to flumes the related costs through the appropriations of the Library rather than of C/A. We sndeested that CIA take reappraisethe specific needs of the intelligence community for this bib1ipqkjc natasial, and based an this reeppradsal, make necessary arrangements to obtain or import only those biblinexsphic activities necessary to the production of material to neat the specifie need. of the intelligemce community. CIA umdertook reappraisal action Ukiah disclosed that intellionce need* for the two indexes Wive shawl and that (1) demand for the con- Uneaten of MAI wins iigs, (2) the MP sponsored survey buttressed thadr original decision not to support MAI and caused thee to reconsider support *flan, and (3) Mk should be adapted to meet obeneing require- ments since, for crimple, the biographic cards have groan is Importance from a by-product to the most valuable pert of the project. Based on these findings, =advised the United Stales Intelligence Dowd Oemmittee on Doeumantation (COMB) that CIA plans to (1) phase out the MAI as rapidly as it is reasonable for the Libraey to do Ivo, (2) maintain sort of MIRA for Stoma year 1962 in, order to amble MS, to define the reepiremeata of the American scientific community for such bibliographic services, and to permit the Library to adjust to a poesible Cheese in the preeent publica. tion and (3) eontinue support to the Library ter the preparetion of bieggraPidApcpcgrailrovedF aesielterd064319eFh-RDP80-01240A000100140112-3 52 Approved For Release 2001/AN0 iitik-gpq?.0-01240A000100140112-3 GUA APPENDIX IV We were advised on aine 16, 1961, that the CIA finding* and plan concerning the curtailment of CIA support to the Library fer =AI and 25X1A MIRA have been reviewed by C(I)I3 and the United States Intelligence Board, and that CIA is going be1 with the planned curtailment. CIA mey achieve a saving of about aneually under this plan. otiose 25X1A of about 1960 and 4061 of OCR and OBI e or an r the purpose o otbor GOvarummt 11010mcies. About thiP725X1A activities that seem to be the the Department of State, not of OCR and OBI, ehich may have supplementing the annual appropriations of the Deportment. some of the CIA financed effort of the Department of State is diverted to other activities usually financed from the salary and expense eppropristione of the Department. OCR is responsible for providing the overall direction and adminia- trative support rewired to maintain CIA's matralleed reference service, and OBI is responsible for 41seharging the responsibilities of the Director of Central intelligence for the administration of the Rational intelligence Survey (BIS) program. In the discharge of these responsibilities, both OCR and OBI sponsor through their manual operating budgets a =mew of COW. tinning lprojects at other Government agencies. Advances or reimbursements to finance these projects are made bv OCR and OBI uader the authority of section 601 of the coRnoey Act of 3$33, and /action 5(a) or the Central intelligence Away Act of 1949. Order these acts, CIA is -authorized to make advances or reimbursememta for the procurement of goods and services to carry out its responsibilities. CIA finances under the cited acts the intelligmnce ;reduction activities of the Biographic information (BI) and entiomal intelligenee Survey (BIS) projects of the Mepartment of State. /hese projects preduee intelligence in areas that seem to be the primary responsibility of the Department, however, and some of the CIA financed MIS effort of the Department is diverted to activities usually financed frau the salary amd expense eppropriations of the Department. CIA'. financial support of there prejects maw supplement the appropriations of the Department. The Congress has been advised that the CIA finaneed liS activity of the Department is net a reimbursable pro- ject. it is not iscarent, however, that Congress bas been advised of the diversion of effort from the Department's CIA financed MIS activity. Our detailed comments on this abject are presented 'below. The intelligence directives of the latiomel Security Onuncil assign to the Department primary responsibility for producing political and socio- logical intelligence on all countries, and *commie intellionee on countries cartel& the Sino-Soviet Bloc, as a service of Gammon concern to the intelligence oommunity. Under arrmagmments mode betveaa CIA and the Deportment, the BI and NIS projects furnieh CIA with biographie and basic intelligence in these same fields of interest. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 7 53 25X1A 25X1A 25X1A Approved For Release 2001Mn 12-3 &a j, xv CIA' a Maiming of the tepartment'a B1 pro eadertsiken as the result of a CIA staff study completed it SepteMber 1952 This study dis- closed that biogrephic intelligence on eammiscientific personalities was then being processed and serviced by both the Deportment end CIA, and pro- posed thet this duplication of effort be eliminated by aerhiag out satis- factory arreneements with the Department for the merviciag of CIA requests for blogrePhic intelligeace on these personelities. This proposal au approved br the Deputy Director (latelligsmee) am* am agreement under which the Departamet assumed full responsibility fer serviciag au requirements by net later than illay 1, 3953, was negctiated in November 1952. Moder the terms of this agreement, thiCh we were &Advised is still la effect, the Departmemt provides complete biographic service to CIA ft tereign political, socielogical, and cultural perseselities. CIA provides the seceesery funds eopputed on the basis of the eeditional mat incurred by the Department in reedering this service to CIA. We understand thet the Degextment also services CIA requests for biographic intelligence on economic persomelities from countries outside the Sim-Soviet Bloc although the terms of the November 1952 agreement ao not provide for this service. The annual cost to CIA far the support of this project increased from about $130,000 in fiscal ser 1954 to *proposed for fiscal year 1961. 25X1A The NIS project produces a comprehemeive digmst of basic intelligence on foreign areas. The digest is designed to serve fully the strategic and operstiomal requirements of the Department of Defense, the foreign policy requirements of the Depertmeat of State, and the lover goal% and opera- tial requirements of all other Goverment agencies haviag missions or responsibilities in florets* areas. The MIS project formal', boon with the Issuance in January 1948 ofintional Security Council Intelligence Directive No. 3. This directive provides that the Director of Central Intelligence shall be responsible for coordinatiag production and msletensace of the NIS; for their review, publication, and diseeadastion; mad for askiig such requests of the departments and agencies as are aecessary for their proper develop- meat amimaietemance. Chador au arraagmeent worked out is 1948, the Depart- meet assumed responsibility far producing or coordinetimg all political, sacialalacal, and other that Sino-Soviet Bloc economic intelligence contri- butions* the N10 project, and CIA assumed responsibility for financing 25X1A the of/tort of the Department. The annual cost to CIA of sappertiag the NIS set of the Department increased from aboutMMLa fiscal year 1949 to2111:11111111 1 fiscal year 3959. The annual cost to CIA declined to about in fiscal year 19600 homever, and is budgeted by CIA at annually for fiscal years 1,961 rad 1962. All DI and NIS contributions of am, naval, and air intelligence are financed through the budgets of the Amp, Navy, and Air levee in, accordance with their assigned responsibilities, and nithout the fisaacial support of CIA. We understand that since 1952 the Deportment has diverted the effort of its employees from the CIA finaaeed NIS project to activities financed by the amnual salary amd expense appropriation of the Department. Such diversion accounted for *bout 34 man years or 12 percent of the 278 man yearn charged CIA for the MN project in fiscal year 1959, and about 36 as Approved For Release 2001/09/04: 91A-IPP?0-01240A000100140112-3 4 L -AIAL !JtJ A . 54 Approved For Release 2 lAinDP80-01240A000100140112-3 of the 240 ant yearn t fern]. ahcut 12 pereen r the respective fiscal years c prodUctlon under the MIS project, idered in arriving at the reduced ject in fiscal rare 1960 through OUe 0 al year 196o. t of its FL, 196C). The understard, vas CIA expenditure 162. or of financing tbs EIS emation of the Department tImnsi,1 a discussed in its Department of State fiscal year 1960 held before the Unbcommittee of the Committee on Coittee to ami Of Represeatrtifen. The Department **guested this budgetiac for the Department's DIE operation as a r ita salary and expeeee appropriatiqu The Cam- the request 1rtIi the expectation ther-, the operatiov d financed au in the poet several yenre. This concurred in by the Senate Cammdttee an Appropriations. One of the factors De considered in r thinenching in eonclusion vas tint regnest of t1N- 13 more positions Tor the WS activity in Meal year 1960 able in fiscal yeir. 195). Me reperteent's irc&L year 196A appropriation rewest fel, other than the NIS activity, provide for an increased number of positiote although 36 men years mare diverted from the CIA fitanced MIS project to the other massy and expense activities of the Department years 1959 and 19E0, respectively. The Merida* do not die- the committees tyre advised of the 34 men years diverted by from its CIA financed NIS project in flecal year 1959. ou of diversioa 02' effort from the CIA finame4A NIS project diecussedvdth the Assistant Director, Office of Basic Intelligence OBI)0 sad the Chief, Budget Division, Office of the Comraoller. The stated that diversion under lse CIA financed NIB project during the first 6-months of fiscal year 1961 vas reduced to about 11 mnn years, or a projected total of 22 eau years for the entire fiscal year, nnd be advised US that both OBI and the Department are striving for an annual diversion of about 5 percent of the nut years budgeted for the project. Be stated that diversion at this rate is 4000601117, in his opinion, if the Depart- ment is to asiatain sufficient flexibility to carry out Its intelligence functions, and pointed out that CIA suffers no lose because of such diversion since the diversion of effort increases the overall intellieenct available to the int4lligence community. BO stated aLso that be is firmly opposed to reducing CIA support to the NIS project of the Department by an sactmt oval to the cost of the sae years diverted, because this procedure Ionia. in his osdnion? reduce substantially the flexibility flooded by the Department in directing its intelligence effort. The AD/OBI Also pointed out that all agencies chargedtvith raspounibilitlea for makin4 contribu time to the NIS project, except the Department, have in the :cast opposed proposals for centralised CIA budgeting for the MIS project 1200UUSO of their need to keep intelligence anito fanctiyaing for eperatibnal purposes. Approved For Release 2001/09104': CIA-RDP80-01240A000100140112-3 Approved For Release 200 F,11710-01240A000100140112-3 Mai Budget Division stated that CIA policy iith respect to diversioa under the CIA financed KO project of the Depart- currently miter study. Se stated also that to his koyaladce, a problem of diversioa doss not eclat lender the CIA financed 111 project of the Department, or wader any other CIA rimmed puojeet It other Goverment ageacies. Trimaran of cu funds for the purpose of aupporting activities that arethe prinew respoasibility of the Deportment mid not the primary responsibility of CIA, la our Wales, are sot authorised by emetics 601 at talc?, __IevallsW Act of Emetic* (a) of the Central lestelligmes Agency Act of 10149. The BI and NIS activities seem to be the prissy respossibility of the Deportees& of State, sot Of OCR sae COI. The eireseige soma' diversion, of about 35 ma ruin fres the CIA fineaced projaet to activities fimeacesit by the salary sad espease appropriation of the Depart 25X1A next for fiscal years 19,9 lad ISO clizeumventa the iatest at Caesarea* by the salary and expesee appropriation of the Department by ennua1 ly. supplementing the sanual spanepriatiens of the Depertaset of suggested that CIA disomitime swift the Depanaimet tor man yearn the CIA rimmed Itril projoet. Vs seagasatect also, that the Central Intelligence townie? the assiipmenet of responsibilities? mad the Departneen of State is relatioe to thee fuels available to species, ants if nocessari, obtain additional autphoritf from tor the transfer of Mode to *any out the SE aid315 reepon- of the Department of State. The Deputy Director (Support) advised us by lot dieted Aral. 13, 1961, that the Department of Stabil eml CIA have bean considering the possible transfer of the Departmeett's BI end NIS setivities to CIA. Vy letter dated April 29. 1961, CIA advised State that CIA agreed la PrinoiPla with th? proposed transfer to CIA of thole portico* of the HI end NIS activities *Joh have bezietofore bola performed by State. Use Gemmel Counsel, CIA, advised us by latter dated JULy 28, 1961, that the procuration and dissenciaatios of intellicsace relating to the astional secturity is tateleally a respaneildlity of CIA. Ix his opiacion, thereforre, it may be the responsibility of CIA La certain tastiness to relaburee all or a poetics of the costs incurred by other illiptaatas have beak ccioperteame in the field of a partial14r seatributiaa, but mist go to additional 4:90214110 in making their emtributioas responsive to XIS needs. Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3 56 Approve. or -e ease IS i? SA : .7-4.7NT 11. The data contained herein is classified as COEFIDEBTIAL and is for the use of the Comptroller General, the General Counsel, and the Director, Civil Accounting and Auditing Division. It cannot be maintained in the General Accounting Office building, but must be returned to the site audit staff. FL211,11, Approved For Release 2001/09/04: CIA-RDP80-01240A000100140112-3