CONTRACTUAL AND INDUSTRIAL SECURITY OVERSIGHT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00156R000200090010-6
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 17
• Document Creation Date: December 19, 2016
• Document Release Date: October 31, 2006
• Sequence Number: 10
• Publication Date: April 30, 1979
• Content Type: MF

Approved For Wease 2006/10/31: CIA-RDP83-0015000200090010-6
P 7.
a 4 APR 1971
MEMORANDUM FOR: Deputy Director for Administration
FROM: James H. McDonald
Director of Logistics
SUBJECT: Contractual and Industrial Security Oversight
1. During the last quarter of 1977, the Acting DDCI,
Jack Blake, directed the formation of a task force to perform
an in-depth review of industrial contractin
security in CIA. That group 25x1
I
25x1
Office of Medical Services. , ocure-
ment Management Staff, Office o ogistlcs OL), was our DDA
representative to the task force. The group finished its work
in early 1978, with subsequent review and approval of resulting
recommendations taking place at Executive Advisory Group (EAG)
meetings in April and May of that same year. There is attached
a current report which lists recommendations by the task force,
approvals and dates of said approvals, offices to which action
was assigned, and current status. You will note that the
largest number of recommendations involve either OL or the
Office of Security (OS). You will also note that of 51 approved
recommendations and/or directions, 39 have now been completed.
Two of the recommendations, #8 in the Industrial Security
Interim Report, and #15 in the Final Report require that the
Inspector General (IG) conduct periodic functional audits and
inspections of the industrial contracting and industrial security
process. These recommendations became the 25x1
current IG investigation bei a conducted byr ~ OL
was tasked by the Acting DDA to act as 25x1
coordinator for implementation o approved recommendations and
also to provide periodic reports to your office. These reports
were biweekly initially but have been aperiodic during the last
few months because of the fact that only a few recommendations
remained to be completed, most long term.
Downgrade to AIUO
when separate from
attachment
SEC ET
A0R,'1/CDF Pages 1-16
 Approved For Wease 2006/10/31: CIA-RDP83-0015W00200090010-6
S
SUBJECT: Contractual and Industrial Security Oversight
2. I would be happy to meet with you at your convenience
to discuss any or all of the recommendations as well as action
I uo date to implement said recommendations. Mr. Charles 25x1
in OS has asked that he also be included in any briefing
on task force recommendations and subsequent implementa-
tion action.
na
,~/ james n.
CET
 0
RECOMMENDATION OR DIRECTION
Industrial Security Interim Report
SECIET.
CONTRACTUAL AND INDUSTRIAL SECURITY OVERSIGHT
2 5 APR i;lt;;
ACTION NECESSARY FOR
APPROVAL STATUS ASSIGNED TO IMPLEMENTATION
able in contract law be used as the primary DDCI 6/2/78
means of enforcing contractor compliance
with industrial security standards.
Recommendation #2: That the Agency EAG 4/18/78 OGC/OLC
explore legislation which would empower DDCI 6/2/78
the DCI to impose sanctions on industrial
security contractors who fail to conform
to security performance standards.
Recommendation #3: That Director-of
Security responsibilities for the
Agency industrial security effort be
clearly defined in the Office of
Security series of Agency regulations.
Recommendation #4: That Agency regula-
tions be revised to clearly charge the
Director of Communications with responsi-
bility for and enforcement of communica-
tions security at Agency-sponsored
contractor facilities, including those
of National Programs.
WAnii NG NOTICE
INTELLUBENCE SfURC S
AND MIETFIODS INVOLVED
On 11 Jan 79, Brian Walsh, staff
member for the Subcommittee on
Federal Spending Practices and Open.
Government,, stated unequivocally
that any legislative punitive sanc-
tions against contractors violating
industrial contract security provi-
sions would not be considered
further. No punitive provisions
will be included in acquisition
EAG
4/18/78
D/Sec
DDCI
6/2/78
EAG
4/18/78
D/CO
r
"f
t
DDCI
6/2/78
0
TARGET COM- COMMENT/
PLETION DATE STATUS RECOMMENDATION
5X11
 RECOMMENDATION OR OTgrr.TTON*
Industrial Security Interim Report
Recommendation 1/5: That Agency regula-
tions be strengthened to give the Director
of Security clear responsibility for the
overall coordination of the entire indus-
trial security effort of the Agency and
for ensuring that classified procurement
security support is well organized and
effective. These regulations should
include provision for:
--Security audits of procurement
security management practices within
Agency components as well as security
audits of contractor facilities;
--Technical supervision of all
industrial security officers includ-
ing establishment of comprehensive
reporting requirements; and
ACTION
NECESSARY FOR
TARGET COM-
COMMENT/
APPROVAL
STATUS
ASSIGNED TO
IMPLEMENTATION
PLETION DATE
STATUS
RECOMMENDATION
EAG
4/18/78
D/Sec
DDCI
6/2/78
--Implementation of an Industrial
Counterintelligence Program, includ-
ing the scheduling of audio
countermeasures inspections of con-
tractor facilities and the estab-
lishment of a close working liaison
with the FBI with respect to
industrial security.
Recommendation #6:" That the Director EAG 4/18/78 D/Sec
of Security be required to prepare a DDCI 6/2/78
written review of the fitness reports of
all industrial security officers as to
their performance in carrying out his
security policy.
 0
RECOMMENDATION OR DIRECTION
Industrial Security Interim Report
Recommendation #7: That the Director
of Security develop a centralized index
of the industrial security status of
contractor personnel and facilities to
improve security oversight.
Recommendation #8: That the Inspector
General perform functional reviews of
the Agency Industrial Security Program.
W
SECRET
9
ACTION NECESSARY FOR TARGET COM- COMMENT/
APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
EAG 4/18/78 D/SEC
DDCI 6/2/78
EAG 4/18/78 IG
DDCI 6/2/78 , .
EAG 4/18/78 D/CO
DDCI 6/2/78
-3-
Fall 1979 Conversion of the industrial
security approvals of contractor
personnel into an automated system
(SECOND Program) has commenced.
It is estimated that this effort
will be complete by Fall 1979 25X1
 0
RECOMMENDATION OR DIRECTION
Industrial Security Interim Report
Recommendation #10: That the Director
of Security be responsible for monitoring
the security, responsibilities of the
contractor. The enforcement of contract
terms, including those covering security
performance, remain the responsibility
of the contracting officer.
Recommendation #11: That procedures be
revised to provide for a single industrial
security officer to be responsible for
inspection and policy guidance at each
contractor facility wherever cover and
operational security permit.
Recommendation #12: That the necessary
staff realignment and augmentation be
approved and that added contractor costs
be absorbed by the sponsoring office.
Recommendation #13: That a uniform
industrial security manual (currently
in preparation) be completed at the
earliest possible date and that the
performance standards contained therein
with appropriate annexes be incorporated
in the provisions of. classified Agency
contracts. Community-wide coordination
and acceptance of. the uniform manual.
should be encouraged.
..
I
SEC ET
APPROVAL
STATUS
ACTION ' NECESSARY FOR TARGET COM-
ASSIGNED TO IMPLEMENTATION PLETION DATE
STATUS
EAG
4/18/78
D/SEC
DDCI
6/2/78.
D/L
EAG
4/18/78
D/SEC
DDCI
6/2/78
EAG
4/18/78
D/SEC
DDCI
6/2/78
EAG
4/18/78
D/SEC
DDCI
6/2/78
COMMENT/
RECOMMENDATION
Manual in process
of being printed.
Should be ready for
distribution late
April/early May.
 W
RECOMMENDATION OR DIRECTION
Industrial Security Interim Report
Recommendation #14: That the Director
of Security periodically review variances
and waivers recommended by industrial
security officers to ensure compliance
with Agency security policy.
Recommendation #15: That "requests for
proposals" which anticipate classified
contracts describe security requirements
and require that the contractor include
in his proposal his plan for satisfying
those requirements.
Recommendation #16: That contractor
performance in the security area be
considered as a critical element for
consideration in the contracting
officer's determination of responsibility
prior to awarding contracts.
Recommendation #17: That incentive/
award fee type contracts include
security performance along with other
performance requirements as a basis for
fee determination.
Recommendation #18: That classified
contracts shall incorporate specific
security performance standards as well
as language that stresses the impor-
tance of complying with all security
requirements.
3. 6i AE T
APPROVAL
STATUS
ACTION
ASSIGNED TO
NECESSARY FOR
IMPLEMENTATION
TARGET COM-
PLETION DATE
STATUS
EAG
4/18/78
Complete
DDCI
6/2/78
EAG
4/18/78
DDCI
6/2/78
EAG
4/18/78
D/L
I
Complete
DDCI
6/2/78
EAG
4/18/78
D/L
Complete
DDCI
6/2/78
EAG
4/18/78
D/SEC
DDCI
6/2/78
OGC
SECRET
COMMENT/
RECOMMENDATION
Conflicts resulting
from such variances
will be referred to
the Director of Security
(Attn: DD/PTOS) for
resolution.
 0 .91 SEG ET
ACTION NECESSARY FOR TARGET COM- COMMENT/
RECOMMENDATION OR DIRECTION APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
Industrial Security Final Report
Recommendation #1: That there be one Disapproved
delegation of contracting authority EAG 5/23/78
from the DCI to the D/Log with redelega- DDCI 6/2/78
tion of that authority to the contracting
officers for National and CIA Programs.
Recommendation #2: That decentralized No determination.
contracting procedures be continued as Recommendation requested
the most cost effective method of by DDCI.
carrying out industrial R&D contracting.
Recommendation #3 (ISIR #4): That EAG 4/18/78 None
Agency regulations be revised to charge DDCI 6/2/78
the D/Sec with specific responsibility
for the physical security protection
of communications centers located at
Agency-sponsored contractor facilities,
including those of National Programs,
and also be revised to charge the D/CO
with specific responsibility for emanations,
transmission and cryptographic security
protection at these facilities.
Recommendation #4 (ISIR #6): That the EAG 4/18/78 None
D/Sec participate jointly with Agency DDCI 6/2/78
procurement components in preparing
Letters of Instruction (LOIs) for each
ISO and to prepare, as part of the
fitness report cycle, a written evalua-
tion of his or her performance in
carrying out security policy. The
D/Sec's evaluation will be shown to
the office of Personnel (OP) for inclu-
sion in the officer's official personnel
file.
(L !j
N/A Disapproved. No
action necessary.
 RECOMMENDATION OR DIRECTION
Industrial Security Final Report
Recommendation #5 (ISIR #5): That
Agency regulations include provision
for the D/Sec to exercise functional
supervision over all ISOs and to set
up comprehensive reporting require-
ments which will include a direct
channel of communication between
each ISO and the OS.
ACTION
NECESSARY FOR
TARGET COM-
CONVENT/
APPROVAL
STATUS
ASSIGNED TO
IMPLEMENTATION
PLETION DATE
STATUS
RECOMMENDATION
EAG
4/18/78
None
DDCI
6/2/78
Recommendation #6: That the D/Sec EAG 4/18/78 None
examine the ISO support structure in DDCI 6/2/78
order to recommend to the contracting
components effective functional
realignment and reporting responsi-
bilities. Emphasis should be placed
on a more efficient structuring of
the in(hint-rial ecurity staffing on
Recommendation #7: That the Office No determination.
of Legislative Counsel in coordination Recommendation requested
with the Office of General Counsel by DDCI.
advise the DCI of legislative proposals
which could severely impact on the
procurement authorities of Section 8
of the CIA Act.
 ?.
SECRET
ACTION NECESSARY FOR TARGET COM- COMMENT/
RECOMMENDATION OR DIRECTION APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
Industrial Security Final Report
Recommendation #8: That CIA continue No determination
to utilize the ASPR to the-maximum prac-'
tical extent except in those areas in
which the FPR is mandatory for all
Federal agencies.
Recommendation #9: That the D/Log No determination
continue to issue notices on procure-
ment policy and procedures which
complement the ASPR and FPR and permit
sufficient flexibility for procurement
responsiveness to mission requirements.
Recommendation 010: That the Agency No determination.
continue to implement interagency Recommendation requested
agreements for the development of by DDCI.
national collection programs.
Recommendation #11: That the D/L No determination
issue procurement policy and procedural
guidance for both Agency and National
Programs and oversee their implementa-
tion.
officer's Manual be updated and issued.
as a Headquarters handbook to provide
guidance for technical representatives
involyed in..theindustrial contracting
process. Particular attention should
be given to guidance on industrial
security matters.
August 1979 Adopted as an MBO for Logistics
in 1979. The primary manual will
go into typing during the week of
28 May. Several addenda are still
in writing stage.
 0
RECOMMENDATION OR DIRECTION
Industrial Security Final Report
Recommendation #13: That the Project
Officer in the Contract Cycle course be
continued with emphasis on the specific
role of the contracting officer, the
auditor, the security officer, and the
technical representative with respect
to industrial security.
Recommendation #14: That the D/Log,
in coordination with the Deputy Director
for Science and Technology (DDS&T), estab-
lish contract review procedures which
will ensure adherence to Agency procure-
ment policy consistent with National
Programs requirements.
Recommendation #15: That the Inspector
General conduct periodic functional
audits and inspections of the indus-
trial contracting process.
Recommendation #16: That the Director
of Finance and the Chief, Det A, jointly
conduct periodic reviews of the policies
and procedures followed by each of their
components for the purpose of assuring
appropriate application of contract
audit policy and procedures.
SEC, ET
ACTION NECESSARY FOR TARGET COM- COMMENT/
APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
No determination.
Recommendation requested
by DDCI.
No determination.
Recommendation requested
by DDCI.
No determination.
Recommendation requested
by DDCI.
~wtJi;LI
 0
RECOMMENDATION OR DIRECTION
Industrial Security Final Report
LCIRIT
ACTION NECESSARY FOR TARGET COM- COMMENT/
APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
Recommendation #17: That the Inspector No determination.
General arrange with representatives,of Recommendation requested
the DCAA to conduct a joint survey to by DDCI.
determine what action is required to
improve audit services provided to
Agency-managed National Programs.
Recommendation #18: That the General No determination.
Counsel and the D/Log determine what Recommendation requested.
further manpower may be necessary to
enable the division to provide the
desired legal support to the industrial
contracting process while fulfilling its
other assigned responsibilities.
Recommendation #19: That the D/Log No determination.
consider the establishment of a Deputy Recommendation requested by DDCI.
Director for Industrial Contracting.
Recommendation #20: The the D/Log. No determination.
review the Procurement Management Recommendation requested by DDCI.
Staff to assure that it is staffed to
carry its responsibilities.
-----nanrinn 691.
reduc
activities By redirecting compet t ve
industrial R&D contracting responsi-
bilities to the component contracting'
teams.
No determination.,
Recommendation requested by DDCI.
Recommendation #22: That the No determination.
Inspector General determine if the Recommendation requested by DDCI.
functional review of industrial
contracting requires additional
personnel.
Complete No addition?: -n- '
power requir'
Complete One additional GS-15
position will be added
to OL/PMS.
2 April 79 Procurement Note to b115 X 1
issued week of 23 May.
 0-
RECOMMENDATION OR DIRECTION
Industrial Security Final Report
SECRET
ACTION NECESSARY FOR TARGET COM- COMMENT/
APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
Recommendation #23: That the DDA No determination.
establish a working group to develop Recommendation requested
procedures for implementing ISIR by DDCI.
Recommendations #15, 16, 17, and 18,
and report to the DDA within 60 days.
Recommendation #24: That the D/Log No determination.'
(for contracting officers) and D/Fin Recommendation requested
(for auditors) participate jointly by DDCI.
with Agency procurement components
in preparing Letters of Instruction.
The D/L and the D/Fin shall also
prepare written evaluations of their
personnel assigned to Industrial
Contracting Teams to ensure assess-
ment of their technical performance.
These evaluations shall be shown to
the individuals concerned, attached
to their fitness reports, and
included in their official personnel
files.
Recommendation 1125: That a compart-
mented contract management system be
developed which will include the
requirements of the users of CONIF,
STEPS and SPA, and that the D/Log
establish procedures for utilizing
this system to monitor the performance
of Agency contracting elements.
Complete Disapproval recommended.
15, 16, 17, and 18
approved and moving
toward implementation.
Action complete for COs.
except for receipt of LOIs
Conditional approval
See discussion on last
EAG
5/23/78
item of this report.
DDCI
6/2/78
C E T
 SECrET
0
RECOMMENDATION OR DIRECTION
APPROVAL
STATUS
ACTION
ASSIGNED TO
NECESSARY FOR
IMPLEMENTATION
TARGET COM-
PLETION DATE
STATUS
Industrial Security Final Report
Recommendation #26: That the DDS&T
Approved
Complete
seek guidance from the Director, NRO
EAG
5/23/78
regarding accountability for property
DDCI
6/2/78
acquired with National Programs funds.
Recommendation #27: That the DDA, No determination:
in coordination with the DDS&T, estab- Recommendation requested by DDCI.
lish a computer-supported system to aid
in control of classified document
exchanges throughout the Agency's
industrial contracting program.
a. The Agency will maintain the
dual delegation of contracting
authority to the Director of Logistics
and to the Chief
,
Contracts Staff
,
OD&E
,
as the National Programs Contracting
Officer, DDS&T, for Agency and National
Programs respectively.
COMMENT/
RECOMMENDATION
Agreement reached with
NRO on procedure
Because of wide scope,
best directed by DDA
and DDS&T.
Approved
Complete
No action necessary..
EAG
5/23/78
Continuation of exist-
DDCI
6/2/78
ing arrangement.
 0
RECOMMENDATION OR DIRECTION
STATUS
b. The DDS&T shall establish a National
Programs Contract Review Board to review
Approved
EAG
5/23/78
system procurements and associated source
DDCI
6/2/78
selection procedures. The Board shall be
chaired by the Associate Deputy Director for
Science and Technology and have the follow-
ing membership: The Director of Logistics
or in his absenge a representative appointed
by him; a Senior Program Manager appointed
by the DDS&T; a Legal Advisor appointed by
the General Counsel; the Comptroller, DDS&T,
as a representative of Director of Finance;
and a Security Advisor appointed by the
Director of Security. The Chief, Procurement
Management Staff, DDS&T, and a representative
of Detachment A DCAA will act as advisors to
the Board. The Board at its initial meeting
shall recommend to the DDS&T its procedures,
types of procurements, and criteria for
procurements that will be subject to its
review and approval. A copy of these procedures
will be submitted for my approval.
c. The DDS&T shall revise and update. the
current delegations of contracting authority
for National Programs from the DCI to the
Chief, Contract Staff, OD&E, to include the
following provisions:
Approved
EAG 5/23/78
DDCI 6/2/78
(1) The National Programs Contracting
Officer has direct-access to the Director of
Logistics for coordinating substantive matters
and shall bring to his attention any problem
that could result in embarrassment or legal
difficulty for the Agency.
0
ACTION NECESSARY FOR TARGET COM-
ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS
13 SECRET
Annrnvarl Fnr RaI ca 7flfP/1 fl/'I1 ? ('IA-RfPR`I-ffl1.~;f;R(1(1(17(1(1(1Q(1(11fl-Fi
0
COMMENT/
RECOMMENDATION
Charter established.
Documentation re-
quirements set and
projection of case
loading determined.
 RECOTDSENDATION OR DIRECTION
(2) The National Programs Contracting
which will ensure adherence to Agency
procurement policy consistent with
differences, which cannot be reconciled,
e. The DDS&T shall provide that the
Director of Logistics or his designee,
Chief, Procurement Management Staff, OL
is the reviewing official on fitness
ment Staff, DDS&T, and for the Chief,
Contracts Staff, OD&E. ..
ensure that essential contract informa-
tion is readily available for responding
to questions on Agency contracting
APPROVAL STATUS ASSIGNED TO IMPLEMENTATION PLETION DATE STATUS RECOMMENDATION
Approved
D/L
Include National
Complete
EAG
5/23/78
Teams on inspec-
DDCI
6/2/78
tion schedule.
Agreement has been
reached and teams are
progressively being
scheduled for inspec-
tions.
D/L or designee will
execute.
Approved
DDA-DDS&T
EAG
5/23/78
Agreement has been
DDCI
6/2/78
reached between
_Logistics and DDS&T
on monitoring data
from SPA. Necessary
program changes are
. t
 Approved For Release 2006/10/31 : CIA-RDP83-00156R000200090010-6
Approved For Release 2006/10/31 : CIA-RDP83-00156R000200090010-6