RECOMMENDATIONS OF THE PPA/PRA STUDY GROUP - SUPPLY DIVISION COMMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP93-00229R000100060015-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 7
• Document Creation Date: December 14, 2016
• Document Release Date: April 7, 2003
• Sequence Number: 15
• Publication Date: January 21, 1974
• Content Type: MF

t ~Y 7.nSF ?,waes reeq ~~
Approved Forg&ease 20DI/05r2iN'
-RDP93-002290100060015-3
MEMORANDUM FOR: ?Deputy Director of Logistics
SUBJECT
Recomeaclations of the PPA/PRA Study Group-
Supply' Division Comments
A. This paper discusses the Supply Division (OD) posi-
tion vis-a-vis the recommendations made by the PPA/PRA Study
Group and contains a reco anondation or your approval in the
concluding Paragraph. Any analysis of alternatives to o'cr
presort PPA/PR.A system demands that certain basic elements of
procedural guidance be accepted if. 'we are to maintain tb'
integrity of the system of accountability adopted. They are
defined as follows:
1. Stock:
a. Captive - Those items for which
budget. responsibility, materiel management,
technical cognizance, and authority for
drawdown are vested in one office.
b. Common - Those items which are
utilized by two or more requisitioning
activities (users) with materiel manage-
meat vested in a single component and
technical cognizance exercised by an ap-
propriately designated office. Budget
responsibility rests with the requisitioner
(user).
2. Materiel tia .a emont: Quantitative accountability
maintained through an adequate system of transaction and
inventory control either manually or semiautomatically
(GIM3 II/ICs).
ateriel management of specific
3, Single Manager: ., 1r/
items or classes of itemsL . am,~`xm an appropriately designated
manager. (This does not include budget respon.sit:ity or
technical cognizance, although these elements may be-as-
signed to a single manager.)
25X1
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3
 Approved Forease 20O3/dS128 : CIA RDP 3-002290100060015-3
4. Budget Responsibility: Monetary estimates
(budgets) prepared in response to authoritative Program
Calls by the user.
stock.
Inventory Budgeting: Pertains only to "captive"
6. Requisitioning Authority: That authority
vested in components allowing appropriately allotted
monies to be converted into personal property.
7. Direct Procurement : Requests for materiel not
maintained in the Agency's "stock system" for which pro-
curement action must be undertaken which results in a
direct fund charge to the requisitioner (user).
B. Stock Allocation: Stocks reserved for a
particular Agency component or project. (It does not
pertain to materiel management, technical cognizance,
or budget responsibility.)
B. After reviewing the recommendations made (in draft)
by the PPA/PRA Study Group, we feel that the disadvanta es of
our present system and the extensive system revision required
to accept a completely capitalized or revolving fund procedure
does, at least at present, eliminate thorn from further consid.-
oration. Thus, only the "Direct izunding" and. "Modified i'PA/P?dA"
proposals are considered responsive to the Study Group charter.
However, the "Revolving Fund" alternative and its interface with
current and proposed ADP procedures, as they pertain to the
property system, should be evaluated in depth with a view towards
future consideration for adoption.
Ii DISCUSSION
A. As stated earlier, the status quo is an acceptable
alternative; but, by the same token, not all of the deficiencies
of our present system automatically translate as advantages for
"Direct Funding." In the current atmosphere of "Resource" and
"Zero Base" budgeting, estimates of future monetary needs will
require looking more to the future with less credence put on
past action. Notwithstanding, there are very definite advan-
tages to "Direct Funding," albeit most of which will accrue to
the maintenance of financial accountability. Conversely, elim-
inating the recording of direct purchases in the Financial
Property Accounting (FPA) system will very definitely bring man-
power savings to SD in the area of transaction coding azd tape
punching of machine input data. This saving, of course, would
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3
 - ~~'ili~~-srn'n$~~w7-fry
Approved Forease 2003/05/28 CIA-RDP93-00229p0100060015-3
also apply if we removed the processing of direct purchases
through the PP.A system as envisioned in the "Mo 1ified PPA/ RA":
system. It is an accepted fact that any supply ma zisge. x nt
system must include effective property control and utilization
criteria. It is extremely doubtful that the "Direct Funding"
concept would enable an acceptable level of control and rate-
riel utilization to be established by reason of the fact that
neither initial issue nor reissue would cause an appropriation
charge. Any degree of control and utilization of materiel under
`$firect Funfding" would require clearly defined and practiced
-(enforceable) supply discipline measures. Lack of control on
initial issue would most assuredly result In indiscriminate
materiel drawdown. Further, reissue would, of course, be
dependent on the materiel being returned when no longer needed.
The only meaningful control on property is money in the hands
of the requisitioner. A system of price adjustment based on the
condition of an item would be far r#orc enticing from a user's
point of view.
R. Aside from the materiel management aspects, or lack
thereof, in the "Direct Funding" concept, there is an addition-
al burden that would be placed upon each budgeting component;
i.e., each office would, in the preparation of its bud get, be
required to "guess" at what it must fund and what would be
funded for it. Acceptance of inventory budgeting for "common"
stocks (a requirement for all elements if the "Direct Pundin7"
proposal is implemented) would not retain for us the measure
of control and utilization we now have, much less achieve any
anticipated improvement. SD cannot effectively dischar-c its
responsibility of maintaining a viable, responsive supply system
and at the same time permit indiscriminate drawdown. Tcday, we
look at "unfunded PIA"* and its effect on our materiel ,*na. e^aent
system with a jaundiced eye. Under the "Direct Ftr-)ding' conceit,
we feel we would be subscribing to such a system as a matter of
common practice.
C. The current budgeting process can accept inventory
budgeting where "captive" stocks are concerned. There are, as
you know, many elements which must be considered in the develop-
ment of a budget estimate. Briefly, they include, but are not
limited to:
1. Active projects in the expenditure,
budget, and out years.
2. Materiel usage during the expenditure,
budget, and out years.
3. Demands experience.
4. Procurement leadtimes to include
fabrication.
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3
 ua ?Juxu
Approved For!ease 2003/05/28 : CIA-RDP93-002290100060015-3
S. Anticipated funds limitation.
6. Future trends in the Intelligence Co:-
munity, including trends in national policy and
i,t provenents to the state of the art.
Naturally, materiel usage is of vital concern when dealing with
any specific period of tine covered by budget estimates with the
ultimate judgment impacting on "what to buy." At the saT~ie tiny,
continued investment in inventory fDr newly developed oquip, .ent
and significant increases in inventory levels are of concern.
III F CO -AMENDATIO t
It is feasible at the present time to accept inventory
budgeting for "captive" stock and to eliminate the processing
of all direct purchases through the PFA (IC`'I'A./PRA) system. There-
fore, it is recommendod that inventory budgeting for "captive"
stock be incorporated into the Study Croup's proposal titled
"Modified PFA/PIIAA'' and that this system be adopted.
25X1
Chief, Supp
Distribution:
Orig & 1 - Adse
I OL/SD (Official)
1 - OL/SD/OSB
OL/SD (21 Jan 74)
Division, OL
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3
 'f??71 )
Approved Forlease 2003/05/28 : CIA-RDP93-00229 p00100060015-3
SUBJECT: Memorandum for DD/L (Draft) Containing Recommendations
of PPA/PRA Study Group
1. While each alternative to the present system of
Financial Property Control deserves a complete analysis,
we are in no position to accept a complete change of systems
without considering beforehand the effects of such change
both direct and indirect. "Direct funding" may well be
determined to be the best course of action; however, we must
look at probable problem resolution prior to system adoption.
2. The objective of this memorandum is to present a
preliminary analysis of the "direct funding" recommendation
as it can affect the management of this Agency's materiel
assets. Initially, we are concerned with a differentiation
between what I shall refer to as "captive" and "open" stock.
a. Captive Stock: Those items for which
materiel management and technical cognizance
is vested in one office, and only a single
activity is authorized to approve stock draw-
down.
b.. Open Stock: Those items which are
utilized by two or more requisitioning ac-
tivities and for which materiel management
rests with the Office of Logistics, and
technical cognizance may be exercised by any
appropriate office so designated.
I believe it to be imperative that we accept the definitions
above if we expect any degree of success in inventory budget-
ing and the follow-on facets of "direct funding." Even so,
while materiel management and the requisitioning authority
would be clearly defined, there would be constraint to indis-
criminate stock drawdowns.
25X1
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3
 Approved Fo lease 2003/0128 CI 'RtP9 0022p00100060015-3
SUBJECT': Memorandum for DD/L (Draft) Containing Recommendations
of PPA/PRA Study Group
3. In addition to the "captive" and "open" stock concept,
materiel management would not relate to stock allocations.
Stock allocations would then only relate to the technical cog-
nizance assigned. This, in fact, represents the adoption of
the "Single Manager" concept. With the reorganization of the
Supply Division, one of the first orders of priority will be
to purify the materiel management process. This, of course,
will include restructuring the data base from an analytical
point.of view. By this, I mean stock allocations will only then
reserve stock quantities for particular Agency components while
management and technical cognizance will be indicated by the
appropriate code.
4. Currently, our Financial Property Accounting system
(FPA) is controlled by the Property Procurement Allotment (PPA)/
Property Requisitioning Authority (PRA) principle. It is well
recognized that in many instances it has outlived its usefulness.
On the other hand, without some form of control, FPA would become
a worthless set of debits and credits so far as materiel manage-
ment is concerned. It must be remembered that both financial
as well as quantity control of property is required under the
"Government Accounting Office Policy and Procedures Manual for
Guidance of Federal Agencies." Section 12.5 states in part,
"Accurate and reliable financial and quantitative information
on property. resources for use by internal management and for
preparing financial reports for the Congress and others can be
obtained only from a properly designed and operated system of
accounts and related procedures." While our relief from audit
by the General Accounting Office (GAO) under PL110 carries cer-
tain exemptions, we must live within the intent and maintain a
system of checks and balances of all resources, funds, and
property alike.
5. There are certain facts which dictate we embark on
an exhaustive analysis which will reflect "cause and effect"
of any new or modified system we recommend for financial and
property control of Agency resources. Additionally, we must
accept within any such system a definitive control on materiel
drawdown and the authorization for action. Without control
over issues, we will have no system of property control from
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3
 Approved FoIease 2003/05/28 : CIA-RDP93-002200100060015-3
SUBJECT: Memorandum for DD/L (Draft) Containing Recommendations
of PPA/PRA Study Group
a consumption point of view. Knowledge after the fact on re-
quirement levels will mean multiple adjustment prior to the
expenditure year and most assuredly re-allotment of funds
during the expenditure year.
6. We can employ inventory budgeting under our present
system. The elements of a budget determination will encompass
the expenditure year "use factor" (PRA) as well as "leadtime;'
"project status," "demand," and other consideration in develop-
ing procurement requirements. This practice has much precedent
in the Defense Deaprtment procurement bill which, of course,
amongst other things includes monies to underwrite consumer
funds outside the stock fund system.
7. In summation, I believe we can accept inventory
budgeting on "captive" stock now and commence a "hard look" at
our present system in determining our future course of action.
25X1
cc: Mr.
Mr.
Ms.
Mr.
Mr.
EO/OL
PMS/OL
:.&FB/OL
OSB/SD/OL
- P$PS/OL
Approved For Release 2003/05/28 : CIA-RDP93-00229R000100060015-3