CENTRAL INTELLIGENCE AGENCY INTRODUCTORY STATEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-01034R000200140006-9
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 24
• Document Creation Date: December 19, 2016
• Document Release Date: October 13, 2005
• Sequence Number: 6
• Publication Date: September 1, 1950
• Content Type: REPORT

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CENTRAL INTELLIGENCE AGENCY
This budget presentation is based upon a carefully considered concept of the responsibilities
charged to the Central Intelligence Agency in relation to the f arsighted and vigorous steps which the
United States Government must take because of a threatening world situation in which this country is
in open hostilities with a force which gives promise of further aggression. In this connection Section
102 subsection (2) of the National Security Act of 1947 (Public Law 253, 80th Congress) presents the
basic functions and activities of the Central Intelligence Agency as follows-.
"For the purpose of coordinating the intelligence activities of the several
Government departments and agencies in the interest of national security, it shall
be the duty of the Agency, under the direction of the National Security Council -
"(1) to advise the National Security Council in matters concerning such
intelligence activities of the Government departments and agencies as relate to
national security;
rr(2) to make recor.3mendations to the National Security Council for the
coordination of such intelligence activities of the departments and agencies of the
Government as relate to the national security;
"(3) to correlate and evaluate intelligence relating to the national security,
and provide for the appropriate dissemination of such intelligence within the
Government using where appropriate existing agencies and facilities; provided,. that
the Agency shall have no police, subpena, law-enforcement powers, or internal-security
functions; provided further, that the departments and other agencies, of the Government
shall continue to collect, evaluate, correlate, and disseminate departmental intelligence:
And provided further, that the Director of Central Intelligence shall be responsible for
protecting intelligence sources and methods from unauthorized disclosure;
"(4) to perform, for the benefit of the existing intelligence agencies, such
additional services of common concern as the National Security Council determines can
be more efficiently accomplished centrally,
"(5) to perform such other functions and duties related to intelligence affecting
the national security as the National Security Council may from time to time direct,"
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S E C R E T
On 20 June 1949 the enactment of Public Law 110 (81st Congress) provided the Central Intelligence
Agency budgetary and financial stability as well as certain unusual powers for the prosecution of its most
urgent mission, This legislation prescribed for the Agency special authorities and limitations with regard
to procurement; education and training of employees, travel, allowance, and related expenses; handling of
funds; and certain other purposes. Necessary legal and fiscal coverage for obligations and expenditures
applicable to both overt and covert activities was included in the language of Section 10 of the Act, which
is now being used by the Agency~s budget and finance officers as a basis for establishing valid obligations
and certifying payment documents. Section 10 reads a. follows.-
"(a) Notwithstanding any other provisions of law, sums made available to the Agency by
appropriation or otherwise may be expended for purposes necessary to carry out its
functions, including
"(1) nersonal services, including personal services without regard to
limitations on types of persons to be employed, and rent at the seat of
government and elsewhere; health-service program as authorized by law
(5 U.S.C. 150); rental of news=reporting services; purchase or rental and
operation of photographic, reproductions cryptographic, duplication and
printing machines, equipment and devices, and radio-receiving and radio-
sending equipment and devices, including telegraph and teletype equipment,
purchase, maintenance, operation, repair, and hire of passenger motor
vehicles, and aircraft, and vessels of all kinds; subject to policies
established by the Director, transportation of officers and employees of
the Agency in Government=owned automotive equipment between their domiciles
and places of employments where such personnel are engaged in work which
makes such transportation necessary, and transportation in such equipment,
to and from school of children of Agency personnel who have quarters for
themselves and their families at isolated stations outside the continental
United States where adequate public or private transportation is not
available; printing and binding; purchase, maintenance and cleaning of
firearms, including purchase, storage, and maintenance of ammunition=,
subject to policies established by the Director, expenses of travel in
connection with, and expenses incident to attendance at meetings of pro-
fessional, technical, scientific, and other similar organizations when
such attendance would be a benefit in the conduct of the work of the
Agency; association and library dues; payment of premiums or costs of
surety bonds for officers or employees without regard to the provisions of
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61 Stat. 646# 6 U.S.C. 14g payment of claims pursuant to 28 U.S.C. acqui-
sition of necessary land and the clearing of such landl construction of
buildings and facilities without regard to 36 Stat. 699; 40 U.S.C. 259, 267
repair, rental., operation, and maintenance of buildings, utilities, facilities,
and appurtenances ~ and
"(2) supplies, equipment, and personnel and contractual services otherwise
authorized by law and regulations, when approved by the Director.
"(b) The sums made available to the Agency may be expended without regard to the pro-7isions
of law and regulations relating to the expenditure of Government funds;. and for objects of
a confidential, extraordinary, or emergency nature, such expenditures to be accounted for
solely on the certificate of the Director and every such certificate shall be deemed a
sufficient voucher for the amount therein certified."
The National Security Act of 1947 as well as subsequent National Security Council Directives
have reflected the intention that the Central Intelligence Agency, rather than replacing all existing
governmental intelligence activities and research f acil,ities, should serve as a strong coordinating
force for the most effective and efficient operation of the government's intelligence machinery. To
maintain the relationship essential for coordination between the Central Intelligence Agency and the
intelligence organizations of other departments and agencies, the National Security Council early
established an Intelligence Advisory Committee composed of chiers from the Departments of State,
Army, Navy and Air Force, and representation from the Joint Chiefs of Staff, The Intelligence Advisory
Committee meets regularly to consider matters of conmwn concern and to advise the Director of Central
Intelli:sence. In the interest of a coordinated and valid product, the National Security Council has
required that intelligence prepared for dissemination by CIA be coordinated with IAC agencies for
their concurrence or comment before release, Liaison within the intelligence family is further strengthened
by the "detail" of certain :intelligence specialists of the IAC agencies to the Central Intelligence Agency
for actual participation within selected intelligence producing activities. It is also essential for
coordination purposes that various of the intelligence producing components within CIA work directly with
their counterparts in the IAC agencies, and arrangements have been made to accomplish this end. In order
that government intelligence facilities may be consistent in essential objectives, the IAC agency bes?
equipped to provide directional planning in.a given field has been assigned such responsibility by the
National Security Council. Such delegations may result in an IAC agency other than CIA having an
immediate and continuing directional effect upon the operations of a CIA organizational segment. The
Office of Policy Coordination, for example, receives direct policy guidance from the Departments of State
ency is a reflection of
the A
b
b
g
y
orne
and Defense. Part of the financial responsibility which must be
certain types of joint operations carried out in close collaboration with IAC agencies.
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The substantial revisions in program and financial planning which is reflected in this document
are a result of the most careful study and development by the National Security Council, the various
IAC agencies, and responsible key officials within the Central Intelligence Agency. In this connection,
it is desired to outline some of the more important considerations affecting the present national emergency
Which has necessitated intensified budgetary planning,
The recent outbreak of hostilities in Korea has made it necessary for the agency to -intensify
its estimates of Soviet intentions around the entire periphery of the Soviet orbit, in addition to
the normal surveillance of indications of Soviet preparations for its own military effort, each and every
situation in the Far East as well as Eastern and Western Europe, must now be examined continuously and
analyzed systematically with a view toward detecting the capabilities, preparations and intentions of
Soviet Satellites to engage in operations similar to the North Korean aggression An increasing effort
must be applied to specific indications of Soviet intentions either to employ their own military forces
or to incur increasing risks of direct military action against United Nations-forces by manipulation of
other dominated peoples. In addition to intensifying its survei.llanco of the Soviet orbit, the Agency
must concomitantly address itself with equal attention to the non=Soviet political, economic, psychological,
and military pressures. The Agency must estimate the potential of such countries to support the United
States in achieving its objectives in the continuing cold war with the USSR and the contingency of the cold
war developing into open warfare. Further, the Agency must provide continuous intelligence appraisals of
U. S. objectives, commitments and risks in support of the established policies of the United States toward
the non-Soviet countries with regard to military aid, economic assistance, the Point Four Program and other
measures designed to strengthen the capabilities of such countries against Soviet aggression. in accomp-
lishing the foregoing, the Agency must intensify its collect-ion, source exploitation and intelligence
production activities. It will also be necessary for the Agency to accept the responsibility for strength-
ening the entire governmental intelligence structure with a view toward achieving a fully integrated United
States intelligence effort in objective support of policy planning, strategic planning, and operational
decisions which are of such critical importance at this time. To this end CIA must ensure that its own
intelligence production effort and that of the departmental intelligence agencies are continuously oriented
toward current and long-range requirements of the national security interests and objectives.- the intelli-
gence collection and source exploitation of all U. S. intelligence agencies effectively meets the require-
ments and priorities of the intelligence production effort; all categories of intelligence requirements
bearing on the national security are specifically identified and defined; responsibilities for collection
and production action are appropriately allocated throughout the governmental intelligence structure; ands
finally,.-that the relationship between the governmental intelligence effort and the policy planning and
operational levels of the government are strengthened in order that the intelligence process is effectively
and continuously brought to bear at such levels,
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The primary commission of the Agency in view of the present emergency must be to enlarge and
extend those of its several activities which rest perfectly complement action which the United States
Government is taking in the interest: of national defense. The gravest threat to the security of the
United States withirt the foreseeable future stems from the hostile designs and formidable power of the
USSR and from the nature of the Soviet system. The Agency is inevitably a participant, and particularly
so with regard to its overseas a tivities, of various measures which must be taken to disrupt Soviet
Satellite relationship and bring about the gradual reduction and elimination of preponderant Soviet
power and influence from Eastern Europe. In this conLnection, the invasion of South Korea and subsequent
events have created a situation which is critical to the extent of emphasizing the need for substantially
implementing certain types of covert activities in key foreign areas. Specifically, there must be a
greater intensification of effort along the periphery of the Soviet Empire with principal focus in the
Far East. These situations have imposed unexpected additional obligations upon the Agency, particularly
so with regard to the financial responsibility which must be borne by CIA in connection with certain types
of joint operations. From experience gained since the last war and particularly in view of the current
situation in Korea, it is obvious that the USSR neither intends nor desires to cooperate in establishing
harmonious world conditions. Faced by this situation, this country must answer the aggressor with the
fullest means at the disposal of a balanced -intelligence effort, and is forced to adopt, effect, and
maintain such machinery as will be necessary to assure strength in all departments of its mission through-
out this critical period. The basic assumptions upon which the 1951 budget . requirement A were predicated,
accordingly, have changed considerably since submission. The need for placing greater emphasis upon
certain programs and areas has become apparent, as well as to telescope into a relatively short period
carefully prepared plans affecting various parts of the world which were intended to extend over a much
longer period. At the time the 1951 budget was submitted, it was not considereoy necessary to activate
certain projects and activities until subsequent fiscal years. Accordingly, there is now an immediate
need for greatly expanded requirements in personnel, services, and materials to some extent affecting
departmental activities, but mainly for such foreign activities as will be essential to properly implement
TISC directives and various joint operations as requested by the Departments of State and Defense. These v
considerations have had such a Profound effect upon. the present operating budget and planning s;iatay of
the Agency as to result in the necessity for additional funds for fiscal year 195`,. Accordingly, the
Director, in his communication dated 25 August, presented a request to the Bureau of the Budget for certain
supplemental requirements for the current fiscal year. The supplemental request is explained and justified
on the basis of plans which must be immediately implemented affecting areas of the world of present strategic
importance to the United States. In the preparation of the supplemental estimate consideration was given
to the strengthening of machinery at home for personnel recruitment, logistic support, and for certain
support operating elementsr de-veloping, despite considerable cost, new and highly complex processes for
broader and more effective digestion of certain types of valuable source material improving training
facilities for personnel which cannot be recruited directlyv implementing certain security measures of
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S E C R E T
substantial implication to the revised program; establishing, stockpiling, and operating on an expanded
basis overseas operational supply bases and co: rcunications facilities for the necessary support of foreign
covert operations- and enlarging the complex requirements of the various covert operations at home and
abroad for which there exists the greatest urgency for prompt and substantial expansion. These consider-
ations are reflected in the adjustments set forth in the 1-951 fiscal year supplemental request as being
most essential to sustain the increased needs for intelligence efforts. Economies are shown wherever
such action can be taken without prejudice to present objectives,
The budgetary preparation which follows presents scheduling of funds for fiscal. year 1951 with-
in the overall amount which was originally submitted to the Congress last year, If funds contained in the
submitted supplemental appropriation request are not made available,, the Agency will be unable to properly
comply with NSC directives and recanm.endations of the 1AC agencies and the intelligence component of the
government will not be geared to the overall requirements of the defense effort. Progr=am activities and
financial requirements contained in this document for fiscal year 1952 are ba>sed on the assumption that the
pending supplemental action will be approved.
Comparisons made between the two fiscal years are based upon the deviation of fiscal year 1952
estimates from the 1951 supplemental amoun,tz. If none of the supplemental request is approved the Agency
will allocate the funds made available in accordance with, the plan of dist;ribution as set for?tIt in Exhibit
"Revised Estimated Budget Requirements Based on the Amount Approved by Congress."
The most careful thought has been applied to preparation of the budget year estimates in order
that they may be sound and reasonable; despite the existence of a number of vac v,ables which affect our?rent
requirements and others of the mediate future. it is desired to point out some of the mcsc pertinent=
factors of a special nature affecting the operation of the Agency which must enter into ecconsiderations of
any presented work plarne The majority of such factors are so highly individual to this Agency as to
invalidate comparisons in any respect with those of other government agencies. The broad functions assigned
to CIA by the National Security Act of 1947 are under the general supervision of the National Security
Council which may at its discretion direct the Agency to perform "such additional service of common concern
as can be more efficiently accomplished centrally" and "perform suih other functions and duties related to
intelligence affecting the national security as the National Security Council may from time to time direct."
CIA's future may be influenced by further directives covering programs or projects to be exclusively per-
formed by it. The assignment of new functions normally spring from changes in worldconditions which have
a direct bearing upon world security.- Since these budget requirements are being prepared during a situ-
ation of world crisis in which the security of this countro ? is directly involved- the possibility of
unanticipated further requirements upon the Agency of inn: ac.t. but potentially great cost, cannot be dis-
counted. However, there has been presented in this submission requirements for basic realizable factors
so that the Agency will be in readiness with leadership and support elements if new tasks are suddenly
placed upon it. r%
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A particularly difficult problem which will affect present and future estimates has to do with
personnel. The various intelligence functions constitute coverage of a significant body of knowledge
requiring specialized techniques and philosophy, and substantial number of personnel. There have been
and may continue to be serious manpower limitations because of difficulty of inducing physically,
intellectually, and psychologically qualified American personnel to abandon their present activities and
enlist in this work,. The location of eligibles for required specialist tasks requires a great deal of
searching over broad areas. Security consideration constitute another barrier to convenient and economical
recruitment of all categories of personnel. Not only must some personnel be recruited under a degree of
cover, but after acceptance there must ensue awaiting period for security investigation before employment
can be effected which may not only serve to handicap an operation, but in many cases individuals othernvise
eligible, cannot for various reasons, wait for final acceptance. Whenever possible, after a preliminary
security check, operations personnel in specific cases are given tempora.r=y appos..ntnents and placed in
training, However, because of the sensitive. nature of the work there can be no compromise with the expensive
and time-consuming security processes required prior to permanent employment. A:cordengly, this Agency's
expense for personnel functions and for related security clearances will continue to remain heavy until
the Agency is fully staffed. Provisions are also included for an expanded training program for operations
personnel. Since it is undesirable to accept certain required personnel with valid background in some
? specific areas, or who have family connections in certain countries, and in other cases because of re-
cruiting difficulties for highly specialized tasks, an effort must be made to train otherwise acce'ptab'
personnel. Another characteristic of the present status of Agency progress affects the necessity for
major logistic provisions. It is necessary to establish and maintain overseas operating and supply bases
involving vast water borders and national areas. The future operating strength of such bases must be
protected by stockpiling of various equipment and supply items.
Estimates for personal services are based on existing tables of organization together with anti`i
pated needs for fiscal year 1952. Personnel strength requirements reflected in tables of organ -ation ar:
established through surveys in which relative importance of a given operation to the Agency mission, work
volume, operational efficiency, space allocations and other r'?elated factors are carefully evaluated. Gen-
erally., the computation of average employment and funds required is based on the assumption that all, positions
within the current table of organization will be filled by the end of fiscal year 1951, and the problem for
fiscal year 1952 will be one of recruiting occasioned by personnel turnover and additional positions requested
in budget estimates for- that year. Gross requirements are originally contemplated upon rates of pay under
positions in the current table of organization and proposed revisions at actual salary including the appro-
priate within-grade step for those now employed at grades shown on the T/0, at the base of the TbO grade for
those employed at a grade below the T/0 grades and at the T/0 grade base for vacancies. Included in the
gross amounts are the annual increments of within-grade salary advancements which will fall due during the
fiscal year and will be effective for more than six months. Because of Agency policy to employ new personnel
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at grades lower than those which properly apply to the positions filled, the current status of position
occupancy of such assignments has been used. In these cases gross amounts have been developed on the
basis that "adjustments to actual grade of position" wall bL effected some time during fiscal year 1951.
In the computation of net 01 requirements, lapses were applied for turnover in filled positions,
delays in the filling of vacant positions, lag in effecting "adjustments to actual grade of position";
noneffective period of within=grade salary advancements, and terminal leave payments. Adjustments also
were made for savings in within-grade salary advancements resulting from turnover. A lapse of 4.2% was
used for turnover in filled positions. This factor was developed from experience of the past year during
which separations amounted to 19.2% and the time required to fill vacated positions averaged 80 days or
21.9%. The multiplication of these two factors produces the lapse of 4.2%, Vacant, positions were
separated into three groups representing the different phases of filling vacancies9 and a separate lapse
was applied for each group. The normal lapse of 4.2%u' was applied to the "pending:EOD" group. In con-
nection with the group of positions, for which prospective employees are awaiting security clearance, a
lapse of 10.9%owas taken which represents an average of 40 days clearance time among a group which are
in varying stages of the clearance. A 50% lapse was applied for vacancies which are in neither of the
two phases referred to above. Lag in raising the grade of an employee to the grade of the position is
estimated to be 50% during 1951. Since the estimates are based on the expectation that these grade adjust-
ments will be completed by the end of fiscal year 1951, only the normal lapse of 4,2 Q was applied to
increased grade costs for fiscal year 1952. Gross amounts for within.graae salary advancements were
lapsed down to the net requirement as determined by the method specified in instructions issued by the
Bureau of the Budget.
Lapses in employment and in money are not in direct relationship in all cases owing to the in-
elusion in the money lapse of such factors as lag in effecting "adjustments to actual grade or position,"
and turnover savings for within-grade salary advancements which.in no way are reflected in employment
lapse. It will be noted in certain cases that increased fund requirements for personal services are
disproportionate to increases in average employment. This results primarily from the requirement that
adjustments to actual grade of position which were lapsed 50% in fiscal year 1951, be paid for the full
year in 1952 and increased cost due to within-grade advancements. Estimates for overtime have been based
upon experience records over the last few pay periods of fiscal year 1950.
lY t
NSC directives in many cases spring from changes in world conditions. Some of these requirements
are of such nature that their financial needs cannot be exactly calculated. Accordingly, for these oper-
ations known factors are exactly computed, whereas for the more difficult segments of the operations, re-
quirements are predicated upon carefully evaluated alternatives in the light of the realities of our present
situation.
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The sections located under. the tabs describe the programs undertaken in each of the major
segments of the Agency, The nature of the work. is such that it cannot always be ?eduoed?to units of
work measurement or objective criteria, but an effort is made to thoroughly discuss, indicate. recent
performance, and future objectives for all Agency components,
LEGISLATIVE PROGRAM
Since enactment of Public Law 110 on 20 June 1949, operating experience of the Agency has
proved the Act to be generally sufficient for administrative'requirements, An amendment to section .9
of the Act was accomplished by-.Public Law 697, 81st Congress,- approved 16 August 1950, which-.established
the Director-1.6 authority for fixing the compensation of three positions in the scientific. field within a
differential ranging. from $13,X00 to.$15,000per year,..-Whereas the previous differential authority
was $10,000 to $15,000-per, year, In a few particulars, for the most part minor in character, the . Act
may,: justify revision to clarify: some provisions and support certain requirements-which were not
originally anticipated. For this reasons.. the Act is presently under study .and it. is. possible that somie
amendatory .legislation willb.e proposed during the first session of,:the 82nd Congress.
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SECRET
CE'ZRAL INTELLIGENCE AGENCY
STATEL NT OF I .NAGEMEi\TT IM ROv'E