CENTRAL INTELLIGENCE AGENCY ACT AMENDMENTS OF 1963 EXPLANATION AND JUSTIFICATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-03721A000200010051-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 14
• Document Creation Date: December 12, 2016
• Document Release Date: February 20, 2002
• Sequence Number: 51
• Publication Date: January 1, 1963
• Content Type: OUTLINE

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CENTRAL INTELLIGENCE AGENCY ACT AMENDMENTS OF 1963
EXPLANATION AND JUSTIFICATION
PART A. PURPOSE OF PROPOSED BILL
1. Improved Retirement System
The proposed bill permits the Agency to im-
prove its retirement program by authorizing the
establishment of a retirement system corresponding
to that of the Foreign Service. The Central Intel-
ligence Agency needs to attract and retain a force
of highly motivated careerists who are intensively
trained in unique skills. However, the Agency is
unable in fact to provide full-term careers for
many individual officers. In order to minimize
the adverse effects of necessary programs of man-
aged attrition and to preserve its ability to
recruit and retain the high-caliber personnel it
needs, the Agency must make reasonable provision
for the futures of those individuals who must be
separated before completing a full-term career of
thirty or so years. Therefore, the proposed bill
adds a new Title II to the Central Intelligence
Agency Act of 1949, as amended, which establishes
for a limited number of Agency employees a retire-
ment and disability system corresponding to that
established for persons serving in the Foreign
Service of the Department of State.
Section 4 of the Central Intelligence Agency
Act was originally drafted to extend to Agency
employees serving abroad travel expenses and over-
seas allowances similar to those extended to Foreign
Service personnel. Section 2 of the proposed bill
makes appropriate modifications in Section 4 of the
Central Intelligence Agency Act to bring it up to
date in this regard. Also included are certain
other amendments which have been determined to be
necessary.
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PART B. PROPOSED RETIREMENT SYSTEM
1. Need for a Separate Retirement System for
Certain Employees
a. Summary
All regular employees of the Central Intel-
ligence Agency are at present covered by the provi-
sions of the Civil Service Retirement Act. Such cov-
erage is appropriate for those whose conditions,
obligations, and terms of service are comparable to
those of federal employees generally. However, the
Agency has a serious problem in its need to make more
adequate provision for certain of its employees who
should be retired at an earlier age and with a more
equitable annuity than can be provided under the
Civil Service Retirement Act. This need stems from
the fact that the Agency cannot provide to or ex-
pect from many individuals in its service a full-
term working career of thirty or so years.
b. Background
(1) The nature of the Agency's mission re-
quires people who are highly motivated and who de-
velop unique and specialized abilities through
their continuing training and service over the years.
A substantial proportion of Agency personnel accept,
as do members of the military service, the obliga-
tion to serve anywhere in the world at the Agency's
direction--not at their own will--and to be avail-
able for duty on a 24-hour-a-day basis. Further,
the stresses and strains of uneven and uncertain
hours of work, of duty in unhealthful locations,
and of arduous assignments require people who have
a high degree of vigor, vitality, endurance, re-
silience, and adaptability.
(2) Despite the saying that "no man can
serve two masters," this is the very essence of
clandestine operations. An Agency operator has
two jobs: his cover job and his Agency job. Not
only does he have two jobs, he leads two lives;
and the physical strain of dual employment is com-
Jpounded by the emotional tension of living a lie
day in and day out. He lives under the constant
hazard of exposure and must work convincingly at
,his cover job even while pulled in the opposite di-
rection by his Agency job. This problem is aggra-
.vated at times, for instance when a crisis in his area
increases the amount and urgency of his Agency
tasks, while his cover duties are in no way
diminished. Sometimes the cover job is not very
exacting, but sometimes it is a full-time job.
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develop the natural immunities which most for-
eigners develop. Consequently, Americans are
more susceptible than local inhabitants to the
diseases of an area.
(b) The wear and tear of repeated
illness saps an individual's strength and re-
silience and affects his longevity. Moreover,
ills which an employee encounters in one place
often attach themselves permanently as chronic
and sometimes disabling conditions. This con-
tributes to the need for the earlier retirement
provisions now proposed.
(c) Finally, there is "motivational
exhaustion." This term is used to describe a
gradual lessening of interest and enthusiasm
of an officer as a result of impingements on his
personal and family life. These stem from the
transient nature of his assignments, the com-
plications and restrictions of security re-
quirements, and intrusions on his family life,
occasioned by the requirement that he spend `,.
his-apparent "leisure time" in performing his
Agency duties after completing his cover work-
day.....
The dynamic nature of intelligence
work produces sudden and sometimes radical shifts
in the types of personnel required and in their
deployment. For example, the Agency's respon-
sibility for covert cold war functions requires
that much of its effort be directed to troubled
areas, wherever they may be. Civil troubles
often bring about a retrenchment of activity
on the part of other U.S. Government agencies,
but a reorientation and intensification of that
of the Agency. Completion of a mission of a
temporary nature or a shift in emphasis or di-
rection of operations may result in an excess of
officers who are skilled in a relatively narrow
field. Their primary qualifications thus become
obsolete or unneeded and they become "occupationally
surplus."
c. Manpower Control
The Agency finds it increasingly
ILLEGIB
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necessary to impose manpower controls to ensure
appropriate alignment as to age, qualifications,
and other characteristics of its employees en-
gaged in conducting or supporting foreign intel-
ligence operations. Insofar as possible, im-
balances should be and are corrected by the
reassignment of officers who cannot, or should
not, continue in such work to other fields of
work in the Agency. However, encouraged and
induced attrition will continue to be necessary
and a program of managed attrition is feasible
only if it is linked to a system of retire-
ment benefits pLoviding fair annuities to those
who have earned early retirement.
(2) The proposed bill would provide
these individuals with a more equitable annuity,
beginning immediately upon their separation. This
would place them in a better position to accept
less demanding and probably lower-paid employ-
ment. It is often difficult for an Agency em-
ployee to obtain other employment. The special
skills required for intelligence work, developed
over the years by training and experience with-
in the Agency, are not directly applicable to
other fields. This situation is aggravated by
security considerations which do not allow an
Agency employee to describe to a prospective
employer the substance of his Agency duties and
responsibilities. There is also a reluctance on
the part of other employers, both Governmental
and private, who are engaged in business over-
seas to hire a former intelligence officer. This
attitude reflects their concern that the attitude
of foreign officials toward their enterprises
might be adversely affected if they were known
to employ /former e ri t~ a l .; ,; f ?
(3) During the past year, the Agency has
separated some 125 individuals as surplus to its needs
because of the several factors described above.
These people had given years of competent and faith-
ful service to the Agency and to the Government.
The process of terminating their employment was
made the more painful because of the relatively
inadequate assistance which the Agency could offer
them in making occupational transfers or in re-
tiring prematurely.
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2. Proposed Retirement System
a. In order to minimize the adverse effects of
such programs on the Agency's ability to recruit and
retain the caliber of personnel needed, and partic-
ularly to minimize their effects on the dedicated
personnel already in the service of the Agency,
better provision must be made for the futures of
those individuals who are separated before completing
a full-term career. An important means for doing
so is to establish a retirement system permitting
earlier retirement with a more nearly adequate and
,equitable annuity than is possible under the CivU.1
Service retirement system.
b. Careful study has been devoted to this
matter. Recognizing the difficulties in developing
an entirely new retirement system, the Agency
examined existing systems. We have determined that
the Foreign Service system fulfills Agency require-
ments and is appropriate for those Agency employees
whose careers involve conditions of service comparable
to those of the Foreign Service personnel. - -t i- -
c. Appendix II compares the pertinent provi-
sions of the proposed Agency retirement system and
the Foreign Service and the Civil Service retirement
systems. In format, this chart is similar to one
appearing in the Report of the House Committee on
Foreign Affairs in the second session of the 86th
Congress. It was prepared at that time in con-
nection with proposed amendments to the Foreign
Service Act of 1946, as amended, relating to the
retirement system, which proposals were subsequently
enacted into law.
d. All of the Agency's employees do not serve
under conditions warranting other than the normal
retirement considerations. Consequently, the Agency
does not intend to place all of its personnel under
the proposed new system. Those who are to be desig-
nated for coverage will undergo a rigid selection
process, the essential criteria for coverage being
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within the Agency. It is estimated that by the end
of the first five years the administration of the
proposed program would cost approximately $85,000
per year including an increased staffing requirement
of approximately eight man-years. Internal admin-
istration of the program would include determinations
of eligibility and entitlements, payment of retire-
ment benefits, and all related administrative matters.
b. Program costs cannot be estimated with com-
",.parable precision. , a"lid
es timates have .been.-made` C tl"?t fie "'b"asis of actuarial
:pa4~~~c.?v.,of the Civil Service and t'h(:oreign
aergice systems.
(add to introductory paragraph of be on pg 8)
i*-more realistic estimate can be made of the increased payout in basic
annuity benefits under the proposed system over the civil service retire-
ment system for the next five fiscal years. The estimate assumes a
target rate of 67 retirements per year. 0)er assumptions, based upon
manpower studies and age and grade characteristics of the eligible groups
contemplate an average retirement age of 55 years with 25 years of
service and an average high-five salary ad at about the Second step of GS-13.
systems stated bel .)
(2) Similar aft hough not fully compa-
rable data pertaining ,to the Foreign Service
retirement system indicate that additional
contributions by the government of 10.69%
would be required. UsinJ4,the difference
(9.86%) between these two stimates as
reflecting the cost differe tials of the
differing benefits of the is programs and
applying this difference to tle estimated
annual payroll of the DAg,ncy employees 25X9A2
eligible for the proposed retir'.jnent system,
we compute that a maximum additiepal govern-
ment contribution of nnually 25X1A1A
would be required. However, it has-::not been
government practice for many years t'9 fully
fund its retirement programs. Further,, there
have been special charges against the Foreign
Service Retirement Fund which go beyond"-the
basic benefits of the proposed system.
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c. Increased payout costs for the next five
years can be estimated through comparison of the
basic annuity benefits under the prpposed system
over the Civil Service system. Qu1 estimate as-
sumes reduction in retirement ale of the eligible
group to 55 years-and attainnrent of the planned
rate of 67 retirements per year. It also, based
upon age and grade characteristics of the group,
assumes retirement with 25 years of service and
an average high-fiive salary at about the second
step of GS-13. `Lastly, in computing the increased
payout, the e'stimated high-five salary was adjusted
to reflect-'salary increases and the in eases in
civil service annuities authorized by th&"~Postal
Service and Federal Employees Salary Act of 1962.
ESTIMATE OF TOTAL INCREASED ANNUITY PAYMENTS
Increased
Annuitants Annuity Payments
Fiscal Year (Cumulative Total) (Annual Payout)
1964
(1/2 year)
$ 17,612
1965
57,142
1966
100,022
1967
148,932
1968
197,842
Total Increased Annuity Payments
$ 521,550
d. The chain of recruitment, reassignment, and
promotion actions created by this annual retirement
of officers would result in a considerable lapse in
salary expenses. Assuming an average lag of six
months in this process, the reduction of expend-
itures would approximate $2,516 per retirement
and would total approximately $452,880 over a five-
year period. This amount would almost offset the
estimated increase in annuity payments for the first
five years that the new system was in operation.
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PART C. OTHER PROVISIONS
1. General
The purpose of section 2 is to bring up to date
references to other statutes and to update certain of
the existing provisions of the Central Intelligence
Agency Act. Some of these are necessary to achieve
desired legal clarification and some are new authori-
ties. Section 3 merely inserts new headings in the
Agency Act for convenient reference and does not re-
quire explanation. The following explanations all
pertain to subsections of Section 2.
2. Procurement Authorities subsections (1) and (2)7
The Central Intelligence Agency Act of 1949
authorized the Agency to exercise certain specified
authorities contained in the Armed Services Procure-
ment Act of 1947. Since that time the Armed Services
Procurement Act has been codified and enacted into
positive law in Title 10 of the United States Code.
Consequently, the purpose of these subsections is to
provide corrected citations to the Armed Services
Procurement Act.
3. Allowances and Benefits /Subsection (3)7
Subsection (3) amends section 4 of the Central
Intelligence Agency Act of 1949 adding three new
paragraphs, /T1) (G), (1) (H), and (8)7. The pre-
ceding paragraphs of section 4 were originally pat-
terned after allowances and benefits available to
Foreign Service personnel. Our new paragraphs are
provisions which have been subsequently authorized
by the Congress for Foreign Service personnel and
they are:
a. Rest and Recuperation Travel
aragrap 1 permits -Me travel of employ-
ees and members of their family at government expense
from certain designated hardship posts to an area
where the employee and his family may relax and ob-
tain needed freedom from climatic and other condi-
tions which caused his post of assignment to be
designated as a hardship post. r example, an
emnl Q___-_vee tianed 'Wouid be 25X1A6A
permi:tted..to..travel once during a two-year tour or
twice during a three-year tour 25X1A6A
25X1A6A
b. Dependents Accompanying Employee on Temporary
Duty
Not infrequently, an Agency employee, upon
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assignment to a permanent post of duty is directed to
deviate to or stop at, another post en route in order
to receive orientation or training. Paragraph (1)(H)
would permit the dependents of the employee to travel
concurrently and remain with him at the temporary
duty post with appropriate travel expenses paid by the
Agency. Ar?-example of this type of travel would be
t,e transfer of an employee from Washington 25X1A6A
-25X1A6A but with a requirement that he,.-spend ten days
25X1A6A en route for operational briefings and famil-
..........
;a on with linked activities. This 25X1A6A
authority would avoid requiring tpe employee1to choose.
between sending his family on prior to his 25X1A6A
arrival or scheduling his departire from Washington 25X1A6A
early in order to be n time to meet his
family upon their arriva .
c. Orientation and Language Training for Dependents
Paragraph (8) will permit necessary orientation
or language training for members of the employee's
family where this is deemed necessary because of the
circumstances of the prospective post of assignment
or because of contemplated duties of the employee.
4. Eighteen-month Home Leave /Subsection (4)7
Existing authority to order employees to the
United States from a post abroad for home leave is
conditioned upon "completion of two years' continuous
service abroad or as soon as possible thereafter."
This proposal extends the two-year period to three
years and also permits the Director, when hardship
posts are involved, to order the employee on home
leave after completion of 18 months of continuous
service. At certain hardship posts it is highly
desirable to return the employee for home leave
after eighteen months; on the other hand, at posts
where living conditions are more favorable, a tour
of duty of three years is more appropriate than a
two-year tour. Therefore, this proposal will give
the Agency additional flexibility in managing the
assignments of employees on a world-wide basis.
5. Hospitalization and Travel for Medical Treatment
subsection (5)7
a. Travel for Medical Treatment
Existing legislation permits the Agency to pay
the travel expenses of employees who suffer illness or
injury abroad to the nearest locality where a suitable
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hospital exists. The proposed legislation removes the
requirement of hospitalization and replaces it with a
more realistic standard permitting travel at government
expense when travel is required to obtain adequate
medical care. In many places medical care available
locally is either nonexistent or is completely
inadequate by U.S. standards; consequently, while
the illness or injury may not require hospital-
ization, travel to a location where adequate med-
ical care is available becomes a necessity. In
addition, this provision includes the travel. of
dependents in the event of their illness or in-
jury on the same basis as for the employee.
b. Hospitalization or Similar Treatment
Existing authority permits the Agency to
pay the cost of hospitalization of an employee in
the event of illness or injury incurred abroad. The
proposed legislation would broaden this standard
slightly by authorizing reimbursement not only for
hospitalization but also for costs of medical treat-
ment where hospitalization is not required. In
many cases, although the illness or injury may not
require hospitalization, treatment which cannot be
obtained locally is required to prevent a more
serious illness or aggravation of the injury. This
proposed legislation would also permit similar
reimbursement for expenses of dependents located
abroad; however, for dependents there is a $35.00
deductible clause and a maximum limitation of 120
days of treatment for each illness or injury.
This maximum limitation will not apply in the
event it is determined that the illness or in-
jury clearly is caused by the fact of location
of the dependent in the foreign area.
6. Re-employment Rights and Claims Authority
/Subsectio" (6)7
a. Re-employment Rights
This is a new authority for the Agency which
would permit an individual to transfer from another
department or agency to CIA for a specified period
of time agreed upon by the two agencies and afford
the individual statutory protection in re-employment
upon completion of his Agency assignment. This
authority is already available in slightly dif-
fering forms to such agencies as State Department
and AID. It could be of material assistance in
fulfilling critical personnel requirements in times
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of emergencies by giving employees transferring to
CIA the assurance that they can return to their
parent agency upon completion of their assignment
to CIA.
b. Claims Authority
The Agency has found need for authority
to process justifiable claims arising at overseas
installations. The proposed legislation would
permit the Agency to settle such claims of non-
citizens in amounts not exceeding $10,000 for any
one claim. This authority would extend to loss
or damage to real or personal property or personal
injury or death. Claims would only be payable
where it was established that the loss arose abroad
out of the act or omission of an Agency employee
or a person acting on behalf of the Agency. Similar
authority in a somewhat more extensive form is avail-
able to the military departments, Department of
State and other agencies.
7. Tax Exemption of Disability Annuities subsection
(7)7
This authority is related to the establishment
of the new CIA retirement and disability system. It
would exempt from gross income for Federal income tax
purposes a disability annuity payable under the pro-
posed CIA retirement system. Similar provision has
been made for disability annuities under the Foreign
Service retirement system. Disability annuities
for military personnel are likewise tax-
free.
8. Authority to Accept Gifts subsection (8)7
This subsection would authorize the Director to
accept gifts and bequests to the Agency for the ben-
efit or welfare of employees of the Agency or their
dependents. It is anticipated that in future years
there will be gifts or bequests from donors who are
interested in the welfare of Agency employees and
their dependents. For example, it is hoped that
such funds may become available for scholarships
which could be granted to children of Agency em-
ployees in deserving cases. This type of authority
is available in varying forms to many agencies of
Government today.
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