CONVERSATION WITH MR. FOCKE, BUREAU OF THE BUDGET

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP62-00631R000400020004-3
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: December 20, 2016
• Document Release Date: October 24, 2006
• Sequence Number: 4
• Publication Date: August 12, 1959
• Content Type: MFR

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12 August1959
MEMORANDUM FOR THE RECORD
TATINTL
SUBJECT: Conversation with Mr. Focke, Bureau of the Budget
1. Mr. Focke, Bureau of the Budget, telephoned in connection
with our reply on the proposed Department of Defense executive order
concerning the Industrial Security Program. He noted that our view
was that so long as it was a DOD order we were not concerned although
a general order might cause problems. He indicated that there was a
possibility a general order would be forthcoming and asked for our
views on an informal basis of the difficulties this might cause us.
was notified and he will have ontact STATIN
me to develop an appropriate response.
deletion of the Agency from the previous order.
2. Mr. Focke also raised the question of the executive order
proposed by the Atomic Energy Commission and Department of Defense
in which we had requested an amendment to include authority to
transmit Restricted Data. Mr. Focke was concerned with the Director's
letter which said any deletion or change involving the Agency should
be brought to our attention. He indicated that the part dealing with
CIA was being deleted, and the matter had been forwarded to Justice
for final approval. I assured him that this did not cause us any
concern since we had been working with AEC and DOD looking toward
submission of a separate executive order and concurring in the
DOD review(s) completed.
cc: OGC Subject - Security
Leg. Counsel Subject - RD
Chrono.
N S. WARNER
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SECFLEI
RE: Applicability of Proposed Executive Order to CIA
1. Proposed E.O. as now prepared pertains only to Defense. To
extend it to apply to all agencies would add whom besides CIA? Who
else has classified contracts except AEC who act under their own
statute? Cannot think of any others.
2. The E.O. would make it impossible to continue our program
of procurement of clandestine devices in that, if an appeal is
instituted, CIA would have to furnish a detailed statement of reasons
of ineligibility. This would have to be unclassified and would publicly
identify CIA as the one contracting for the article being produced under
the contract. This would render the item valueless for future use and
could very possibly endanger the lives of those using them currently in
foreign areas.
3. CIA standards for clearances to classified information would
become public knowledge as a result of the hearings during the appeals.
These standards are higher than those of other agencies and the
question would probably be raised as to why a clearance from another
governmental organization would not satisfy CIA.
4. In the event derogating information had been received fran
SI sources regarding an individual, it would be impossible to in any
way describe the nature of such information in the "detailed statement"
or elsewhere. Similar blocks would result when information was
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RE: Applicability of Proposed Executive Order to CIA
received from normal foreign intelligence sources,
5. Unlike components of the Department of Defence, CIA has
no units dispersed throughout the country. Hence, it would be most
expensive and difficult to conduct appeal hearings in the vicinity
of the residence of the person appealing.
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14 JUL 1959
Mr: Arthur B. ?" ce
General Counsel
Bureau of the Budget
Washington 25, D. j"
Dear Mr. Fock.e
Your letter of My a, 19590 requested as a apressioo, Of our
views with respect to the Executive Order
reset of 1)0(0400 entitled "lftdVGtrIQ% proposed by thepsart-
{~ .
Security Program.
The problems of two Agency in regard to industrial securit
are different from those of the Department of Defeat. both in r
nature and *cc". Therefore, an Executive Order of the t
posed by the Dep$,tmsnt of Def nst w rPs Ar+e-
purpasees. Inasmuch as it a oM1d not be sn~lltbtle for o+nr
and thlatianal Atroe-as~titr pis only is the T~vpsrt~raeat of 1)sf+ens,e
and the
to the x Spac? Administratitnee, there is no OCtiou and we do not feel a spat ~ ~~>Enrrnt on the ~ 1~-st of this A jeen?Y.
in+vaived. "Weal Problems
If there is any quest on of $pplyie-g such an Order to this
Agency or a rder of
informed so that t g~eeaeet~al application, we should be
Carr assure the Continuance of our present
procedures.
Sparely,
STATINTL cc:. office of Securit~
STATINTL Office of Logistics via
OGC chrono-no circ
;r ubject-Security
F
tatwre ,e R. Houston
n.ral counsel
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EXECUTIVE OFFICE OF THE PRESTPENT
BUREAU OF THE BUDGET
Washington 259 D. C.
July 8, 1959
My dear Mr. Director:
The Department of Defense, by letter of July 7, 1959,
has submitted to the Director of the Bureau of the Budget,
in accordance with Executive Order No. 30006 of October 9,
l948,, a proposed Executive order entitled "Industrial
Security Program." Copies of the letter and the proposed
Executive order transmitted therewith are enclosed.
The Director of the Bureau of the Budget would appre-
ciate receiving an expression of your views with respect to.
this matter.
Because of the urgency of this matter, a reply is
requested.at the earliest practicable date.
Sincerely yours,
General Counsel
Honorable Allen W. Dulles
Director
Central Intelligence Agency
Washington 25, D. C.
Enclosures
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GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE
Washington 25, D. C.
July 7, 1959
On June 29, 1959 the Supreme Court handed down a decision in
Greene v. McElroy to the effect that the present Industrial Security
Program operated by the Department of Defense lacks "explicit authori-
zation from either the President or Congress" as it relates to the denial
or revocation of clearance of individuals in private industry. The
majority opinion ruled that neither Congress nor Presidential authori-
zation could be inferred for a procedure which did not afford the safe-
guards of confrontation and cross-examination.
In the light of this decision, continued operation of this aspect
of the Industrial Security Program of the Department of Defense is
impossible without an authorizing executive order or law. Without such
an order it is necessary either to suspend further operations of this
aspect of the Industrial Security Program or require full disclosure
of our investigative sources regardless of the impact on the national
security. It is believed essential that an executive order be issued
immediately.
In view of the above, the Department of Defense recommends for
your consideration the promulgation of the enclosed executive order.
The executive order would apply to employees in private industry who
are required to have access to classified information in connection
with contracts with the Department of Defense or the National Aero-
nautics and Space Administration. The order would further prescribe
certain minimum procedures for determining their eligibility for
clearance, but at the same time would preserve the right to withhold
information or witnesses where in the opinion of the Secretary of
Defense the production of such information or witnesses would be
prejudicial to the national security.
It is assumed that this executive order would be disseminated to
other agencies of the Government directly concerned with industrial
security matters. It is requested that the Department of Defense be
afforded a further opportunity to comment on the final draft before
promulgation.
Si~cerely yours,
It ) _ ( 1
ROBERT DECHERT
Honorable Maurice H. Stans
Director, Bureau of the Budget
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INDUSTRIAL SECURITY PROGRAM
7/7/59
WHEREAS the interests of national defense require the preservation
of the ability of the United States to protect and defend itself against
all hostile or destructive actions by covert or overt means, including
espionage and subversion, as well as military action; and
WHEREAS it is essential that certain information affecting the
national defense be protected against unauthorized disclosure; and
WHEREAS, ti,hile fully recognizing the necessity of preserving and
maintaining the traditional rights and privileges of the individual,
it is, nevertheless, necessary and warranted in determining what con-
stitutes fair, impartial, and equitable procedure for determining
eligibility for clearance for access to classified information that
paramount consideration be given to the interests of national security:
NOW, THEREFORE, by virtue of the authority vested in me by the
Constitution and the statutes of the United States, and as President of
the United States, and deeming such action necessary and warranted in
the best interests of the Nation, it is hereby ordered as follows:
Section 1. The Secretary of Defense in-connection with the bidding,
negotiation, award., performance or termination of contracts with the
Department of Defense or the National Aeronautics and Space Administra-
tion involving classified information or in connection with other re-
leases to United States industry of classified information for which the
Department of Defense has safeguarding responsibility, shall, consistent
with this Order, for maintaining and continuing the Industrial Security
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ogranr prescribe such regulations, requirements, restrictionsgand
safeguards as he deems necessary to safeguard classified information.
SEC. 2. Access to classified information shall be permitted only
after appropriate security determinations have been made under regula-
tions prescribed by the "Secretary of Defense. Decisions shall be
based-upon determinations that the'granti gof such access would be
clearly consistent withthe interests of-national security.
SEC. 3. Under regulations prescribed by the Secretary of Defense
an individual whose . eligibility for security clearance has been ques-
tioned shall be furnished (a) a ,detailed statement of the reasons why
his eligibility for clearance has beel questioned which shall be stated
as specifically as the Secretary of Defense or his designee determines
that the interests of national security permit; (b) an opportunity,
after he has filed a reply to such statement, to appear personally for
the purpose of determining his eligibility for suck clearance and to
present evidence on his behalf; (c) a reasonable time to prepare for
such appearance; and (d) an opportunity to be represented, at his own
expense, by counsel.
SEC. 4. The Department of Defense shall make available at such
appearances, to the extent permitted, by law and except as herein-
after provided, all witnesses relied upon by the Government to support
controverted issue-, who shall testify under oath or affirmation and
shall be subject to cross-examination by or on behalf of the individual
concerned. No information or testimony shall be used, over the objec-
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Lion of the individual ;Those eligibility is i ssueto deny or
revoke any such clearance unless such in.f'ori} `on or testimony is
so produced and opportunity for cross-examination is so provided,
except as set forth in. section 5.
SEC. 5. Information not so produced or testimony of witnesses
not available for cross-examination may be used. only under one of the
following:
(1) As to information or witnesses who are employees or regular
informants of an official investigative agency, such information
or testimony may be used if the Secretary of Defense or his desig-
nee determines, after advice from the head of the investigative
agency involved, that to produce such information or witness would
under the circumstances be prejudicial to the national security; or
(2) As to other information or witnesses, when the head of the
investigative agency involved advises that the information or
witness in question cannot be produced for reasons specified in
such advice and that in his judgment the information is believed
to be reliable, the Secretary of Defense, the Deputy Secretary of F
Defense or, if so designated by the Secretary of Defense, the
Director of the Department of Defense Industrial Personnel Security
Review Program may determine that the information in question may
be used if he finds that (1) it is in his judgment both reliable
and pertinent and. (2) to make a decision without the benefit of
such information would, in view of the category of clearance
sought and all circumstances involved, be prejudicial to the
national security.
3
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Re~i_stered-Return Rece gt Requested
Attention:
Subject : Contract Security Authorizations
Gentlemen:
You are advised that the following personnel of your organization
are authorized to have access to classified information and/or material
relative to our classified contracts and proposal requests, through the
security classification indicated below:
This information should not be disseminated to the employee or
furnished anyone outside your immediate office, except that where
operationally required key administrative and supervisory personnel
may be informed on a "need-to-know" basis, provided that such adminis-
trative and supervisory personnel have been authorized by this office
to have access to classified information.
It is requested that this office be advised immediately in the
event of termination of employment of the above listed employees, or
the transfer, for cause, of these employees from work on our classified
contracts, with a statement of the reason for such termination or transfer.
Very truly yours,
NOTICE
This material contains information affecting the National Defense of the
United States within the meaning of the espionage laws, Title 18, USC,
Secs. 793 and 794, the transmission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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3 1 MAR 1959
Honorable Emanuel Collor
Chairman
Committee on the Judiciary
House of Representatives
Washington 25, D. C.
Dear Mr. Gorier:
I have followed with much interest 5. 555, a bill to amend d
United States Code to prohibit the misuse of names, emblems and
insignia by various private orgsulkaations to indicate Federal agency.
This bill was passed by the Senate with as dments and referred to
your Committee for action.
This A gency is not protected from the misuse est its same or
initials by private organisations as are the FBI -ud certain other
departments. An at least one occasion a private organization has
used the initials "C. I.A." in such a manner that a false impression
of Federal relationship could be gained. We have considered
requesting specific prohibitions in the United Stages Code similar to
those of the FBI and others. fiver. it appears that with miner
adjustments S. 353 would serve our purposes.
As amended by the Senate Judiciary Committee. S. 355
sufficiently identifies the types of organisations most likely to
misuse this Agnesy's name or initials. However, it does net
specifically prohibit the ass of initials in such a =sassier as would
convey a false impression of Federal agency. I suggest for your
consideration a further amendment a1 S. 355 so that lines 4 and S
of page 2 of the bill as passed by the Senate would read as follows:
-; ' national'. 'Federal', or 'United States'. the initials
'U.S.', or any other initials, or any emblem. insignia, or
name, for the purpose of conveying . . . .
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-aat
The Auxo,tc at the *us4 t
00 s b 4.s1 i at we r o t.
ft
ss John S. Warner
4 cc: Bureau of the Budget
istribut or.
O P? ? .. _ ddressee
Bureau of thf: ]3udg t
,. - '-;Pnerai "ounsel
I - Ccm trotter
Office o ' ecurity
C/GL.C1~'7 Mar
I - LegCoumFel (Subj.)
1 - LegCounsel ((',brono)
Nnta; Sig-net! by JSW on Friday, 27 March 195Q
Clear==-?1 by ' OB an Man ay, 30 March 1 59
Sent out and date stamp,-,d on 31 March 10,59
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