ANNUAL REPORT FOR FY-1974

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80M01048A000800040004-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 13
• Document Creation Date: December 16, 2016
• Document Release Date: October 7, 2004
• Sequence Number: 4
• Publication Date: July 31, 1974
• Content Type: MF

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3 1 JUL i 4
MEMORANDUM FOR: Director of Central Intelligence
SUBJECT : Annual Report for Fri-1974
1. Forwarded herewith is the annual report of the Office of
the Inspector General for FY-1974.
2. It is noted that considerable detail was required to describe
the problems of the Inspection Staff, in which a small number of
persons. worked under a total load. beyond their capability to handle
adequately. This treatment is an accurate reflection of the sort of
management problem presented in such a situation.
3. The main conclusions of this report are found in the
recommendations, which are summarized below:
a. A separate EEO Staff should be established
under the Inspector General. It should have one secretary,
which would represent an addition to the present authorization
of the Office. In order to meet a priority requirement in the
development of the Agency's EEO programs, the AO/DCI has
concurred in the assignment of a black officer to this Office in
excess of its authorized strength until additional position
ceiling can be made available sometime in the future. This
move should be accompanied with a separate budget for the
EEO Staff.
b. An additional position for one inspector should be
approved for the Inspection Staff, which has proved to be
severely understaffed during the year since its reorganization.
Comptroller projections show such a position in FY-1976,
and we propose that this action be taken during FY-1975.
25X1
Donald F. Chamberlain
Inspector General
Attachment: a/s
25X1
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3 1 JUL194
MEMORANDUM FOR: Director of Central Intelligence
SUBJECT : Annual Report for FY-1974
1. Forwarded herewith is the annual report of the Office of
the Inspector General for FY-1974.
2. t is noted that considerable detail was required to describe
the proble s of the Inspection Staff, in which a small. number of
persons wor ed under a total load beyond their capability to handle
adequately. his treatment is an accurate reflection of the sort of
management p oblem presented in such a situation.
3. The ma 'n conclusions of this report are found in the
recommendations, which are summarized below:
a. A sep rate EEO Staff should be established
under the ~nspec or General. It should have one secretary,
which represents n addition to the present authorization
of the Office. AO/ CI has announced the additional assign-
ment of a black offic .r to the EEO Staff under the Develop-
ment Complement of t e DCI Area, which should establish
a strong staff for furthe development of the Agency's EEO
Program. This move sh uld be accompanied with a separate
budget for the EEO Staff.
b. An additional positio for one inspector should be
approved for the Inspection Staf which has proved to be
severely understaffed during the y ar since its reorganization.
Comptroller projections show such position in FY-1976,
and we propose that this action b ttak during FY-1975.
Attachment a/ s
25X1
JiLillalki X. e ain
Inspector General.
25X1
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ULWILT
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ANNUAL REPORT FOR FY-1974
Section A -- General
1. The Office of the Inspector General was reorganized at the
beginning of the Fiscal Year. The Inspection Staff was reduced to
a total of five inspectors, including the Chief of the Inspection Staff
who also serves as Deputy Inspector General. Two of these inspectors
were assigned to EEO work (one being the CIA. Director of Equal
Employment Opportunity--D/EEO--an.d one being the Federal Women's
Program Coordinator-- FWPC). The Audit Staff was also realigned to
more fully correspond with Directorate responsibilities.
Introduction To and Context for the Discussion
Inspection Staff.
2. The Inspection Staff program was planned with the under-
standing that the Staff would be responsible for activities in some
four areas: special management studies, which would constitute an
important part of its activities; the Equal Employment Opportunity
program; employee grievances; and, special assignments, such as
what has come to be known as "Watergate. "
3. At the time the Staff was reorganized it was felt that the
reduction of the staff by two-thirds would leave sufficient strength to
handle the mandatory work on grievances, to undertake a program of
special studies, and to handle other staff assignments on an ad hoc
basis. The possibility that this estimate might be incorrect was
recognized and the Inspector General reserved the right to review
the manpower requirements of the Inspection Staff at the end of a
year's experience in the new mode.
4. During the first half of FY-1974 a new program was formulated
and submitted to the DCI, which was approved on 9 January 1974; very
little of this has been accomplished. The EEO program was given new
stimulus with instructions to move from the relatively conservative
character that had typified past Agency policy to a new and aggressive
course of action.
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Audit Staff
5. The Audit Staff was reorganized at the beginning of Fiscal
Year 1974 with five operating Divisions being consolidated into
three and the special ADP audit personnel becoming a designated
Group within one of the Divisions. In addition, in response to
Federal Management Circular 73-2, the Audit Staff proposed
modification of its traditional program of auditing financial
compliance to include the broader management-type audit that is
being adopted in the government as a more modern management
technique. It was planned to enter the new field on a highly selective
basis, and it was felt that there would be only a few so-called
"program audits" each year, with the Agency's need for financial and
compliance audits continuing to be of primary importance because of
the absence of an audit by outside authorities such as the General
Accounting Office.
Operating and Management Strategy
6. The problem of operating with a new program approach in a
new organizational mode presented itself differently to the Audit and
Inspection Staffs. During FY-1974 the Audit Staff retained its basic
level of manpower, and was able to adjust assignments of personnel
to better meet its responsibilities. The Inspection Staff, however,
was limited in its management options. It dicl not- -nor does it now- -
have sufficient manpower to permit reassignment of personnel in
order to adjust to new tasks and programs; it was compelled to abandon
projects and delay some work in order to handle assignments of higher
priority. Instead of being free to take initiatives of its own, it has had
to be largely reactive to requirements and situations emanating from
outside its own staff.
7. As a cushion for the experimental year a retiring inspector
was employed on contract for one year--the last half of FY-1974 and
the first half of FY-1975, while real experience was gained in the
new situation. This officer was carried over ceiling for the first
half of FY-1974, until retirement. Additionally, it was anticipated
that the D/EEO and FWPC would be free to give half their time to
Inspection Staff duties, equalling the work of one full-time inspector.
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8. The EEO program proved to be a time-consuming activity,
as the Agency's more positive approach resulted in considerable
work in developing the program, dealing with the various components
of the Agency, monitoring progress, and then keeping the new
momentum going. Results of the past year show that the D/EEO has
only about 10% of his time to give to other Inspection Staff duties, and
the FWPC has about 1 /3 of her time for Inspection Staff duties. In
addition the contract inspector was not able to work full-time. With
one senior inspector assigned full-time to "Watergate", this left one
full-time inspector to carry most of the regular load. He was forced
to concentrate on grievance cases; in the last half of FY-1974 he handled
about half the case load.
9. Perhaps the single most influential factor, in terms of being able
to handle planned activity, has been the issue that has come to be known
as "Watergate. " The Inspection Staff was assigned the task in mid-May
1973 to investigate the questions of support given Howard Hunt in 1971
and the Ellsberg psychological profiles. While the importance of the
subject was understood, the later development of the various investi-
gations, court actions and impeachment proceedings was not anticipated.
The Inspection Staff, as part of its initial .nvolvement, established a
file and index system for documents relating to the problem, which
gave it a retrieval capability not established elsewhere for reference
purposes. As the investigations developed the Staff continued to be
involved centrally in the Agency's contribution to the external proceedings,
as well as conducting investigations as new questions arose. One senior
officer has been on this full-time throughout, and continues to be so
involved, with a secretary in almost full-time support. At this writing
a senior officer from the Directorate of Intelligence has been on loan for
six months on a full-time basis. It has also been necessary to borrow
secretarial assistance from time to time to reduce backlogs. Additionally,
the Inspector General and his Deputy have been involved on a recurring
basis, on occasion on a full-time basis for extended periods. The
continuing nature of the work is indicated by projections that the court
actions will continue for many months; at the end of FY-1974 action
was initiated to assemble a special indexing team to develop a more
thorough index and document retrieval system.
10. The Inspection Staff has also been involved in the program to
search Agency files for activities of questionable propriety, which
resulted in instructions issued by the DCI in August 1973; the addition
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to and maintenance of this file continues at a low level. The Staff
also is the focal point for an on-going review of assistance furnished
to other government organizations, which ccnstitutes a minor work
requirement on a continuing basis. Staff participation in either
Watergate-related investigations, or participation in preparation
of various papers (such as response to Congressional questions on
surveillance) occurs on an ad hoc basis.
11. While the EEO program has been included organizationally
in -the Inspection Staff, it is in fact an Agency program and the D/EEO
reports to the Director. The required reporting schedule of the Civil
Service Commission has led to a reporting pattern that has been brought
to the attention of the Director and the Management Committee, and the
details are not repeated here. Suffice it to say that it now appears that
the D/EEO and the FWPC will have practically no time to give to the
Inspection Staff's work by the end of FY-1975. In fact, in the eyes.of
those outsiders who judge the Agency's commitment to its EEO program,
the lack of full-time personnel in this program and their organizational
subordination in another staff, however generically related some of the
activities, is inappropriate. As the program grows--as it clearly will--
.the present two officers assigned to EEO work will.. be involved exclusively
in that work. In fact, there will be a need for an additional officer by the
end of FY-1975; to this end AO/DCI plans the assignment of a black officer
to the Inspector General for this work. It seems inevitable that these
officers will require additional secretarial support. A recommendation
on this point is made later in this report.
Change of Objectives
12. While a change in planned program objectives was not formally
recorded during the year, the balance in the work of the Inspection Staff
was different from that intended. Perhaps it emphasizes an unstated
objective of the Inspection Staff--that of its readiness to be responsive
to a variety of requirements. It is ill-equipped to do this at present.
The Audit Staff planned to commence its new "program audit", and
conducted the great majority of its planned compliance audits. One
problem faced it in this respect, and that was a delay in formal
approval of the "program audit" concept, which was held in abeyance
during the last half of the Fiscal Year.
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Section B--Performance AAainit FY-1974 Objectives
Objectives and Results
Audit Staff
13. Prior to the beginning of fiscal year 1974 the Audit Staff
submitted an audit program for the entire fiscal year. This program
detailed the audits which were expected to be performed or initiated
during fiscal year 1974. Attachment A lists audit reports released
during fiscal year 19714, jobs in process on 30 June 1974 and jobs
rescheduled into FY 1975. Overall, the Audit Staff released 206
audit reports of which 75 contained 265 audit recommendations. As
planned, we achieved our training goal of 5% of total man days of
Audit Staff personnel which emphasis on computer science and program
audit techniques.
Inspection Staff
14. Under the new organization and program, the Inspection
Staff proj ected a series of special studies of subjects approved by
the Director on 9 January 1974, set forth at Attachment B. It also
planned to receive and process the various appeals of employee
grievances, as well as handle such special staff assignments as it
might receive. The special studies actually undertaken and completed
are shown in the attachment. Approximately 100 grievance cases of
all types were handled during the fiscal year. Watergate and its by-
products have produced an endless chain of investigations, papers and
documents that are not recorded separately here.
15. A management objective was to develop sufficient experience
in the new mode to be able to recommend specific manpower strengths.
The distorted work pattern of the Staff, as distinguished from that
planned, has complicated the evaluation of work requirements in terms
of normal activities. It has demonstrated, however, the under-strength
status of the office. A scrambling technique has had to be employed
continuously to meet deadlines, to try and fit in mandatory tasks when
they can be handled, and to maintain some sense of order and of control
over the quality of the work produced.
On
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Component Evaluation
Audit Staff
16. We are pleased with the ef_fectivene::c of the Audit Staff's
reorganization and with the findings of the Accounting and Management
Consultants who made an independent survey of the staffing and operation
of the Audit Staff (See Section C). We are also pleased with the
completion of so many audits and the numerous audit recommendations
which were made during the year. We believe we have now convinced
management of the necessity for "Program Audits" and of the necessity
of performing these audits on a management team basis making maximum
use of the findings of other investigative components of the Agency there-
by reducing any duplication of effort.
In.s ection Staff
17. A major effort, in terms of manpower available, has been
devoted to a variety of activities related to the Agency's posture in
relation to external governmental support. l e believe that our
contribution has reduced the number of possible Agency errors in
providing such support. We judge this effort to have been essential
and in many respects outstanding. At the same time, there have been
frustrations in that large requirements matched with tight deadlines
and limited manpower has on occasion affected the ability of the Staff
to perform up to its own standards, and left undone things that were
planned.
18. We have been disappointed in the inability to undertake a larger
number of special studies, and to begin to develop the new pattern of
work that had been anticipated at the time of the reorganization at the
beginning of FY-1974. One strength of the Staff in the past has been
its continuing working contacts throughout the Agency, and the resulting
knowledge of and feel for the state of the Agency; the heavy concentration
on a smaller number of activities tends to hold Staff personnel back from
this sort of working familiarity with the Agency. The planned Headquarters
Interview Program to be accomplished this fall will hopefully revive this
aspect of the Staff's overall capability.
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Section C--Other FY 1974 Activities
Audit Staff
19. As stated in Section A the Audit Staff completed two audits
on an expanded "Program Audit" basis. This means that in addition
to examining and reporting upon the financial and legal compliance
aspects of the operations of a component, we also gave attention to
the efficiency and economy of the operation of the component as well
as the results of its operations. One of these components was in the
DDS&T and the other was in DDM&S. This was our first formal
endeavor in this field and we feel that the results justify continuing
and expanding this type of audit in the years ahead as required by
Federal Government Audit Policy.
20. We noted during the audit of the DDS&T Special Activity
that those other special activities administered by the Department
of Defense not under the Director's certification authority apparently
are not subject to program review by either DoD auditors or the GAO.
It would appear that this matter should be explored in view of the
Director's overall intelligence community responsibilities.
21. We initiated a review of the Defense Contract Audit Agency's
(DCAA) Detachment A, which provides contract audit services to
certain special activities of the Directorate for. Science and Technology.
This review was performed jointly by a representative of our staff and
DCAA personnel. The review of Detachment A resulted from our desire
for assurance that proper contract audits were being made of expendi-
tures which the Director must certify.
22. An unexpected event of fiscal year 1974 was a complete survey
of Audit Staff activities by the public accounting and management consulting
firm of Touche Ross & Co. Their report gave the Audit Staff high marks
on all its activities and recommended that we perform financial audits more
selectively at more infrequent dates and expand our "Program Audit"
activities. In the meantime we have presented the case for "Program.
Audits" to the Agency Management Committee and have also established
priorities for all of our audits carrying frequencies of one, two and three
years instead of attempting to visit each component every year.
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23. We also established liaison with the Deputy Assistant
Secretary of Defense (Audit) who is responsible for audit policy
within the Department of Defense and audits the National Security
Agency and the Defense Intelligence Agency. We found that this
audit group provides extensive management review of intelligence
operations within the Department of Defense. We believe that, in
recognition of the Director of CIA's overall responsibility for the
intelligence community, this liaison should be encouraged and the
eventual possibility of joint audit efforts be considered.
Inspection Staff
24. The Inspection Staff has no "Other Activities" not discussed
elsewhere in this report. Its ability to engage in collateral or such
other activities relates directly to its staff strength and assignments.
FY-1974 has been severely limiting in this respect.
Section D--Recon-in-aendations
Audit Staff
(1) The Agency Regulation which will implement the
current federal audit policy regarding "Program Auditing"
be issued at the earliest possible date in order that all
components of the Agency will recognize the task which is
assigned to the Audit Staff. This will enhance the cooperation
with the components being audited and will allow us to better
schedule our activities for future years.
(2) The matter of program audits of DoD Special
Activities not under audit cognizance of either DoD or GAO
auditors be pursued.
(3) Liaison with DoD auditors on intelligence activities
of national interest to the Director be continued and further
explored.
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Inspection Staff
We recommend that:
(1) The authorized Table of O _-ganization of the
Inspection Staff be reviewed with the following objectives:
a. The authorized strength be increased
by one Inspector, Grade GS-15.
b. The EEO Program be constituted in a
separate organizational component under the
Inspector General, as the EEO Staff, with the D/EEO,
FWPC, and one new secretarial position, Grade GS-7.
The planned assignment of an additional EEO officer
on the Development Complement of the DCI area
should be finalized.
(2) The new formulation of Inspector General
responsibilities, as posed in the draft regulation submitted
months ago, be approved along with the new statement of
the Audit Staff responsibility.
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