ACTION MEMORANDUM A-436, DATED 23 JANUARY 1965, SUBJECT: FY 1966 BUDGET DEVELOPMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80M01048A001500130024-8
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 27, 2016
• Document Release Date: December 28, 2012
• Sequence Number: 24
• Publication Date: February 3, 1965
• Content Type: MF

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3 February 1965
MEMORANDUM FOR: The Director of Central Intelligence
SUBJECT: Action Memorandum A-t36, dated 23 January 1965,
Subject: FY 1966 Budget Developments
1. The referent memorandum contains implications which, taken
together with a series of other action memoranda and proposed Regu-
lations, give us in the Clandestine Services reason for concern.
The CS Division Chiefs in a forum which I did not attend have
volunteered an identical opinion. It may well be that I am reading
more into this latest memorandum than it is intended to convey, but
I believe that it is in the best interests of the Agency and the
Clandestine Services for us to make sure that we have a clear
understanding of the direction in which the controls already im-
posed, and those hinted at in the referent memorandum, are forcing us.
2. The accumulative effect of these measures would appear to
signal the advent of bureaucratic controls which are inconsistent
with and inimical to the nature and mission of the Clandestine Ser-
vices. There is no evidence in the referent memorandum, nor has any
other information come to rmy attention, that an effective effort has
been made by the Agency to convince the Bureau of the Budget of this
fact. On the other hand, the Bureau is cited time and again as the
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 W,\.
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authority. I do not question the need for controls, but I do
question the nature of restraints which constitute barriers to per-
formance and which result in a centralization running counter to
our rationale of management, given the diversity of ends and means
of our Agency components. Surely the Bureau of the Budget, and if
necessary the President, can be convinced that it is undesirable to
impose controls which thwart the very purpose of our existence.
3. At one time, the Financial Policy and Budget Committee
functioned as a useful device for achieving communication and under-
standing both of the Agency's problems as these were imposed from
without by such agencies as the Bureau of the Budget, and of the
problems of the Agency's components in their efforts to adjust to
controls and requirements. It has ceased to be useful in this se:~nse.
It has become largely a one-way channel for communicating decisions
and directives to the component services of the Agency. At its most
recent meeting on 25 January 1965, for example, announcement was
made that referent Action Memorandum, content of which had not been
discussed with me nor with any of my colleagues previously, had
been signed and was on its way to the various components. Following
this announcement, there was a recitation in general form of the
content of the memorandum. Copies were not distributed at the meeting,
hence it was not feasible for my representative to raise questions
concerning it.
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4. Although I do not wish unduly to stress the failure to
achieve joint resolution of the problems facing us, I believe it
lies at the heart of an increasingly difficult personnel situation
for the Clandestine Services. As you may be aware, through a con-
scientious effort on the part of all components of the Clandestine
Services, and with no significant outside assistance, we are
achieving successfully the reduced ceiling for this fiscal year.
Through a parallel effort, we have identified a number of personnel
whom we consider marginal and whom we would like to separate from
the Clandestine Services. Courses of action proposed in previous
action remoranda have proved totally inadequate for our requirements
in this respect. Our recommendations for alternative courses of
action have been disapproved.
5. Control procedures now include a threatened reduction in
the numbers of our supergrade positions, the reduction in hiring
(largely to a reduced level, of clerical replacements and JOTS),
the slow-down of promotions through new review procedures at Agency
level for their "essential" nature, the inability of the Clandestine
Services to transfer their personnel to the other career services
while other career services recruit from the outside, and the im-
position of "average grade" and "average salary" requirements. Re-
gardless of the individual merits of these measures, they do in fact
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place us on the threshold of a situation which will result in an
absence of flexibility on my part to administer the personnel of
the Clandestine Services. As you well imow, people are our prin-
cipal true asset, and their effective management and employment
are my prime concern.
6. We are confronted with the important question of estab-
lishing effective machinery in our Agency structure to permit the
Deputy Directors to deal effectively with the determination and
administration of control measures relating to their budget, man-
power, and programming.
Richard e
Deputy Director for Plans
Attachment - A-436
cc: DDCI
Ex.Dir.
STAT
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J UNrr"LASSIFIED (_~'CC nuf;, I I COMDENTIAL " f n SECRET
ROUTING AND RECORD SHEET
SUBJECT: (Optional)
FROM:
EXTENSION
NO.
DD /P 3-C-34
DATE
2/3/65
TO: (Officer designation, room number, and
building)
DATE
OFFICER'S
COMMENTS (Number each comment to show from whom
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to whom. Draw a line across column after each comment.)
1.
DCI
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S.
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FORM 610 USE PREVIOUS INTERNAL
3-62 EDITIONS F-1 SECRET ^ CONFIDENTIAL F-] USE ONLY ^ UNCLASSIFIED
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(CLASSIFICATION)
OFFICE OF THE DIRECTOR
(Deputy Director (Plans)
Deputy Director (Intelligence)
TO : Deputy Director (Science and Technology)
Deputy Director (Support)
Inspector General
General Counsel
SUBJECT : FY 1966 Budget Developments
REFERENCE:
1. The Fiscal Year 1966 budget proposal of the Agency has been
reviewed by the Bureau of the Budget and, after adjustments, the President
has now approved the Agency's request for presentation to the Congress.
In addition to the usual limitations on total dollar level for new obligational
authority and on total number of positions, the Bureau has this year
applied two new restrictions:
a. A "maximum allowable" number of positions GS-14
through GS-18 and a specific limitation on the overall total
of supergrade and scientific pay schedule employees authorized.
b. A set level, which cannot be exceeded, for the average
salary paid on an Agency-wide basis.
2. Both of these new limitations have been established for all agencies
of the Government. The first one, restricting the number of grades 14
through 18 and setting the ceiling on supergrades, has been given wide
publicity in the press, is easily understood, and poses no great problem
for CIA. The second new control factor, the average salary stipulation,
is more complex and requires both elaboration and action ... the purpose
of this memorandum.
3. Obviously, the change in ground rules reflects the Presidential
determination to stop escalation in the size and in the dollar costs of
Government agencies. These measures have been taken against a backdrop
SUSPENSE DATE:
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of two recent pay raises for Federal employees and the abundantly clear
policies of this Administration with respect to increased productivity and
economy in Government operations. Each agency is charged with keeping
within the limits established and with taking steps now to assure that
controls are developed to meet these objectives.
4. The Bureau of the Budget contends that, even after allowances
have been made for pay raises and the usual periodic step increases, the
Agency average salary over the past year has shown a sharp rise. The
Bureau feels that our promotion rate may be unduly high, that there has
been too great a margin between position grade and the actual grade of the
incumbent, and that grade structure within organizational components may
be richer than actual responsibilities justify. The Bureau has also suggested
that Agency retirement rates, under both the new legislation and existing
Civil Service arrangements, should start to accelerate, with a concomitant
lowering of average salary needs.
5. Based on the foregoing considerations the Bureau of the Budget
has assigned an Agency average salary for FY 1966 which is exceedingly
austere. A careful examination of Agency experience in this area is being
made in preparation for further negotiations with the Bureau, but even if
some relief is obtained from the assigned figure, the problem of adhering
to a set average salary is a substantial task for Agency management.
6. There are mitigating factors, believed to be unique to CIA, which
have contributed to the trend toward higher average salaries. First is
the legitimate and anticipated result of the Agency's deliberate policy of
recruiting below the grade of the position and then promoting to the grade.
In other words, people brought aboard in the lower grades are now growing
into their full responsibilities and this is being recognized by promotion.
This policy of EODing substantially below grade differs from the practice
elsewhere in Government. Second, the Agency skills mix has also changed
materially over the past year with many lower grade personnel dropped
from Tables of Organization and their numbers reduced through attrition
(one of the manifestations of an organization coming down in over-all
personnel strength). Finally, new positions at higher grade levels have
been created to accommodate an increasing requirement in the scientific
and technical fields.
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7. The Bureau has taken note of these factors and recognizes that they
play a role in the upward trend of average salary. Accordingly, when FY 1966
funds are apportioned next July, the issue can be opened again. In the interim,
the Agency's Congressional budget request complies with the assigned level
and will be defended on that basis.
8. Admittedly, "average salary" in itself can be a very fluid control
device, responding to the mix of personnel at any given time and susceptible
to artificial rigging. Despite these possible shortcomings, Agency manage-
ment must propose to meet this new requirement. This task involves the
full scope of personnel management from job creation and position grading
through recruitment, pay, promotion and separation.
9. The Office of Budget, Program Analysis and Manpower and the Office
of Personnel are currently developing proposals which will assure appropriate
monetary and personnel controls while maintaining the integrity of the Agency
Career Service concept. The results of these efforts will be discussed at a
forthcoming meeting of the Financial Policy and Budget Committee.
10. Three steps are immediately obvious. First, as a temporary measure,
there will be no upgrading of positions until an appropriate monetary and grade
control system has been approved. Second, promotion actions must be held to
those which you feel are absolutely essential. Third, all Directorates must
institute an aggressive program to initiate retirement of those personnel who
qualify under the law at this time. This is vital to provide essential headroom
and flexibility for personnel management throughout the Agency. The Office
of Personnel will provide each Directorate with the names of personnel under
their jurisdiction who qualify for retirement over the next 18 months. Each
Directorate will report to me by March 1, 1965 the actions taken to effect
retirement of these personnel.
STAT
yman 13. it patric
Executive Director-Comptroller
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