48)-NATIONAL RECONNAISSANCE OFFICE

WASHINGTON. D.C.

THE NRO STAFF 19 May 1976

MEMORANDUM FOR GENERAL SHIELDS

M DV

SUBJECT: Authority for the Establishment of the National

Reconnaissance Program

with Mr. Hill on 14 May 1976,

f the Intelligence Oversight Board,

he document at attachment 1. The

subject of the meeting wa ationale of NRP

financing and accounting. nterest stemmed

from an assertion by Mr. ormerly the CIA

General Counsel now retired) that the NRP appropriations

should conform to the same accounting procedures as other

organizations (i.e., formal segregation into 3600, 3020,

3080 appropriations). Mr. Hill's explanation of.the evolution and rationale of NRP financing was excellent, and I

feel, fully countered Mr. Warner's assertion.

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For security storage reasons,

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s arranged

to have this document retained fo FIAB.

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Please sign the transmittal memo on the right.

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-(5)-NATIONAL RECONNAISSANCE OFFICE

WASHINGTON. 0 C.

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1C1.1

THE NRO STAFF 19 May 1976

MEMORANDUM FOR MR. LEO CHERNE, CHAIRMAN, PFIAB

SUBJECT: Authority for the Establishment of the National:

Reconnaissance Program

Mr.

has reques

on his behalf for retonti

not forwarded directly to

not have an approved stor

nature.

the Intelligence Oversight Board,

shed material be forwarded to you

AB. This material was

his organization does

for material of this

Thank you for your assistance in this matter.

eno

Director

1 Attachment

Authority for the Establishment

of the NRP .

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1. Authority for the establishment of the National

Reconnaissance Program:

By Memorandum to the Secretary of Defense, dated

1 September 1960, the National Security Council, in the

name of the President, directed that certain components of

the Air Force satellite reconnaissance program be assembled

into a program of high priority.

Between September 1960 and August•1965 a number of

Department of Defense Directives and Agreements between

the Secretary of Defense and the Director of Central

Intelligence governed the establishment and operation of

the National Reconnaissance Program (NRP).

On 11 August 1965 the current agreement between

the Secretary of Defense and the Director of Central

Intelligence was signed. This agreement established the

Secretary of Defense as the Executive Agent for the NRP

and the National Reconnaissance Office (NRO), and provided

for the establishment of the NRO as a separate agency of

the Department of Defense, with the Director, National

Reconnaissance Office (DNRO), selected by the Secretary

of Defense. The agreement also established a National

Reconnaissance Program Executive Committee (ExCom), consisting of the Deputy Secretary of Defense, the Director

of Central Intelligence, and the Special Assistant to the

President for Science and Technology to guide and participate in formulation of the NRP, through the DNRO, to meet

the national intelligence needs as established by the U.S.

Intelligence Board.

2. Mission: The NRP is a single program, national in

nature, to meet the intelligence needs of the Government

_sander a strong national leadership. The_program is responsible for the development, management, control and operation,4

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-TOP-SECRETof all projects, both current and long range for the

collection of denied area intelligence through satellite

overflights. The potentialities of U.S. technology and

all operational resources and facilities are exploited

to develop and operate systems for the collection of

intelligence. These systems are fully responsive to the

Government's intelligence needs and objectives.

3. Management of the NRP:

- The DNRO is responsible for management of the NRP

activities and operation and receives guidance from:

The Secretary of•Defense for the management,

operation, and resource utilization of the NRP.

- The Director of Central Intelligence for

collection priorities, requirements, and overall security

policy guidance.

The NRP ExCom for the allocation of resources

and authorization for system development and acquisition.

4.. Relationship to the Central Intelligence Agency (CIA):

One of the three NRP Program Offices responsible to the

DNRO has been established within the CIA for the development, acquisition, and operation of selected NRP efforts as

approved by the ExCom. In accordance with the DOD/CIA

agreement, NRP efforts assigned to the CIA program office

are the specific direction and control of the DNRO.

Fiscal controls, accounting, and reporting procedures have

been established to ensure all funds expended in support

of the assigned NRP effort are fully accounted for and

appropriately utilized. Prior to the start of each Fiscal

Year, based on ExCom approval of program objectives and

resource allocation, the DNRO provides the CIA Program

Office specific program approvals, initial funding levels,

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and obligation authority for each assigned task for the

Program Year. Monthly, based on detailed program status

and obligation reports, the initial funding levels are

adjusted as required and funds are transferred to the CIA.

All IRP funds managed, obligated, and expended by the CIA,

as an agent of the NRO, are for the procurement of goods

and services external to CIA. Most of these funds--for

development, acquisition, and operation of assigned satellite program tasks--are applied to industrial contracts

which are independently audited by the Defense Contract

Audit Agency.

5. NRP Funding:

- NRP Budget: A recommended NRP budget is proposed

by the DNRO, within overall fiscal guidelines provided by

the Secretary of Defense, for submission to the NRP ExCom.

After review and approval by the ExCom, the NRP budget

recommendation is included in the Air Force budget and

submitted to the Secretary of Defense i DOD a royal.

Within DOD. NRP funds are in a

The

t nomenclatures to prevent ready

identification of the total NRP by unauthorized personnel.

r•cutement a ropriations are identified

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However. Congressional revs

program level displayed by appropriation. The frequency,

level of detail, and committee member participation of NRP

budget reviews are determined by the Chairmen of the

Congressional Armed Services and Appropriation Committees.

- Appropriation Integrity: As required by the DOD/

CIA agreement, all NRP budgets identify those funds to be

applied to research and exploratory design development,

system development, procurement, and operational activities

to the extent feasible. The integrity of this identification is maintained through Congressional appropriations and

application.

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Exceptions to traditional procedures:

The NRP receives no Operation and Maintenance

funding. Prior to FY 197 nd support

costs were charged to th propriations. In the FY 1970 C e Chairman

of t ns Committee requested that the

NRP equest be decreased in subsequent

yea 11 operations and support

cost to th ppropriations.

A total system development, acquisition, and

operation concept is applied on most NRP satellite programs.

In implementing this approach the system life cycle effort

is included on a single contract and holds the contractor

responsible for the end performance of the effort. Contractors are required to maintain normal auditable cost

accounting records at the total contract level. However,

they are not required to maintain cost accountability at

the appropriation level. Formal management reporting

systems are established and are used to identify appropriation chargeability.

Incremental Funding is applied to all NRP major

system acquisition contracts. This is a departure from

normal standards which require full funding for obligations

under the Procurement Appropriations. This procedure has

been applied since the inception of the NRP.

The above departures from traditional standards are

periodically reviewed and discussed within the ExCom, DOD,

OMB, and the Congress. •

6. Audits: Operationally, the NRP has been audited by a

specifically designated detachment of the Defense Contract

Audit Agency (DCAA). This group has been assigned to the

NRO contractor areas and regularly reports to the program

managers and the Director of the Audit Agency on the state

of contract management audit activities. To supplement the .i .

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Defense audit activity, the Air Force Auditor General and

the CIA Inspector General are tasked from time to time to

accpmplish audits of specific activities. In addition,

there has been a sustained contact with the General

Accounting Office (GAO) and a periodic review of specified

activities. Presently, the Auditor General, the General

Counsel, and the Director of the Procurement and Systems

Acquisition Division of GAO are cleared on the programs.

Recently, we have held an extensive discussion with the

latter and have welcomed the interest of the GAO in our

activities if it was felt necessary. To date there has

not been a routine or special overall audit of our program

by the GAO; however, the DCAA Detachment Chief maintains

frequent contact with that office. From time to time we

have been requested to work with the GAO to respond to

specific inquiries from the Congress with relation to our

procurement or acquisition activities. These requests

have been completed to the satisfaction of the GAO.

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