Question 3.-Of the total cleared facilities, how many have custody of less than five items of classified material? Reply. Of the total cleared facilities, 1357 have custody of less than five items of classified material. Question 4-How many inspections were conducted during the period July 1, 1973 to June 30, 1974 of: A. Facilities with Top Secret material? B. Facilities with Secret material but no Top Secret material? C. Facilities with Confidential material only? D. Facilities with less than five items of classified material? E. Facilities with no classified material? Reply. The following information, as requested, represents industrial security inspections which were conducted by this Agency during the period July 1, 1973 to June 30, 1974: 1 The total facilities identified in this column differs by 74 from the total facilities identified in item 1 due to the different dates on which the information was compiled. 2 Included in above figures. Question 5.-How many of the DSA personnel were engaged in the performance of industrial security inspections as of July 1, 1974? Reply. As of July 1, 1974, 211 DSA Industrial Security Representatives (IS Reps) were available to conduct industrial security inspections in addition to accomplishing other functions of the Office of Industrial Security. Question 6.-How many of the industrial security inspections conducted during the period July 1973-June 1974 resulted in a rating of Unsatisfactory, and how many facility security clearances were canceled during the period for non-compliance with security rules? Reply. During the period July 1973-June 1974, three industrial security inspections resulted in "Unsatisfactory" ratings which have since been rectified. No facility security clearances were revoked during the period for noncompliance with security regulations and procedures. Question 7.-Why cannot the frequency of inspections at contractor facilities with Top Secret or Secret material be made semiannually instead of each 4 months? Reply. The current inspection frequency is based upon policy promulgated in the Industrial Security Regulation (ISR). However, the DoD is currently considering changes to the ISR which will provide that TOP SECRET and SECRET possessing industrial facilities, graphic arts firms, and commercial carriers be inspected at 6-month intervals, and that all other industrial facilities be inspected at 12-month intervals. Question. 8.—In the course of your testimony, the point was made that DSA personnel making inspections at contractor facilities are not allowed to challenge questionable security classifications assigned to information in the custody of the contractor. In the light of evidence showing a high percentage of unjustifiable classifications on material held by contractors, including material several years old, the question arises as to why appropriate instructions cannot be developed for the inspecting official to inquire about the basis for maintaining classifications which seem unrealistic or unnecessary, and report the facts for possible corrective action? Reply. As a point of clarification, DSA IS Reps are instructed to review, and if necessary, challenge industrial security markings applied by industry, if the markings conflict with guidance furnished by the Government procuring activity. During the inspection process if the IS Rep notes that classified material in the possession of an industrial facility should have been downgraded or declassified in accordance with the schedule outlined in Executive Order 11652, but such action has not been accomplished, the deficiency is brought to the attention of facility management for corrective action. In addition, the IS Rep is to inform his Classification Management Staff Specialist of inconsistencies, obvious errors, and insufficient or lack of current guidance concerning classifications assigned by Government procuring activities which are detected during an inspection. In turn, the Classification Management Staff Specialist reports such information to the Government procuring activity for appropriate corrective action. In regard to the suggested expansion of responsibilities assigned to DSA IS Reps to inquire about the basis for maintaining classifications assigned by Government procuring activities which seem unrealistic or unnecessary, this additional responsibility extends beyond the technical capabilities which our IS Reps possess. The role of the DSA Office of Industrial Security is limited to the review of appropriate safeguards, i.e., marking, accountability, transmission, or storage, applied to classified material. In order to challenge unrealistic or unnecessary classifications, other than as outlined above, IS Reps would be required to gain advance technical expertise currently only possessed by Government procuring activities. Question 9. Under paragraph 5.0 of the Department of Defense Industrial Security Manual for Safeguarding Classified Information, a contractor is expected to obtain approval of the Department of Defense before making public dissemination of information pertaining to a contract which involves classified information. The following questions arise: A. Must a contractor obtain approval of DoD before giving non-classified testimony before a committee of Congress regarding the security classification procedures which apply to his contract? B. Would a contractor who testifies before a Congressional committee about the application of security classification procedures to his contract and resultant problems be subject to sanctions by the Department of Defense? Reply.-A. It is not necessary nor is it required that an industrial contractor obtain approval of DoD before giving unclassified testimony regarding security classification procedures before a Committee of Congress. B. An industrial contractor who testifies before a Congressional committee about the application of security classification procedures to his contract and resultant problems is not subject to sanctions by the DoD. HOUSE FOREIGN OPERATIONS AND GOVERNMENT INFORMATION SUBCOMMITTEE, Washington, D.C., September 6, 1974. Maj. Gen. J. J. CODY, DEAR GENERAL CODY: Your letter of August 26, 1974, providing additional information for our hearing record on H.R. 12004, regarding Defense Supply Agency operations involving the safeguarding of classified information in the hands of industry was most helpful to this subcommittee. Some of the data furnished, however, require clarification. Accordingly, would you please comment further on those matters stated below: 1. There were 1,293 TOP SECRET facility security clearances reported, but 1,198 of the facilities did not have custody of any TOP SECRET material. There were 9.688 SECRET facility security clearances reported, but 5,864 of the facilities did not have custody of any SECRET material. The Subcommittee is interested in the degree of effort that is made to assure the integrity of the TOP SECRET and SECRET classification categories, as defined in Executive Order 11652, and also in the degree of effort that is made to preclude unnecessary expenditure of money and manpower. Therefore, the question arises as to whether the Department of Defense intends to maintain costly TOP SECRET and SECRET facility security clearances at thousands of locations having no TOP SECRET or SECRET material, and if so, what is the justification, in specific detail, for retaining (a) the 1.198 TOP SECRET facility security clearances, and (b) the 5,864 SECRET facility clearances? 2. There were 2,996 inspections conducted in 12 months at facilities having custody of less than five items of classified material. Would national defense requirements be served adequately if custodial information regarding a single classified document, or a few more than one, was obtained by requiring holders to submit a report of possession, or by obtaining the information by some other means without the expenditure of money and manpower involved in DSA personnel making visits to the facilities? 3. There were 6,940 inspections conducted at facilities having custody of no classified material. If such inspections are to be made in the future, please state in specific detail (a) the need for them in terms of national defense requirements and (b) the standards that are used to determine whether the results of an inspection are satisfactory. 4. The restriction stated in the letter of August 26 against Industrial Security Representatives (IS Reps) initiating challenges of unrealistic or unnecessary security classifications during inspections at contractor facilities would seem to require reconsideration. It is noted that IS Reps made 14,014 inspections in one year at facilities having classified material. There probably is no one else in this country with a fraction of that much opportunity to observe and question seemingly unwarranted classifications on material in storage and on material in production. In the light of existing industrial security training resources and the information security management course on classification responsibilities, what could be done to prepare IS Reps for reporting questionable classifications for possible corrective action? With best regards, Sincerely, | Hon. WILLIAM S. MOORHEAD, WILLIAM S. MOORHEAD, Chairman. DEFENSE SUPPLY AGENCY Alexandria, Va., Sept. 30, 1974. Chairman, Subcommittee on Foreign Operations and Government Information, Committee on Government Operations, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: In response to your letter of 6 September 1974, there follows a clarification of information previously furnished in our letter of 26 August 1974: (1) Facility security clearances are maintained at facilities having no custody of classified materials because in every case the facility either requires access to classified information in the physical custody of a Government procuring activity or another cleared industrial facility, or exercises direct management control over the operations of one or more subordinate cleared facilities which require custody or access to classified materials/information, and thus is in a position to influence or control their performance in classified Government procurements. Examples in the latter category would be a corporate headquarters or a home office of a multiple facility organization. These facility clearances are initiated and maintained only in response to a request from a Government procuring activity indicating that the services of the facility are required in connection with current procurements or may be required on procurements in the foreseeable future. Procedures exist in the Industrial Security Regulation (DoD 5220.22-R, previously furnished) for administrative termination, without prejudice, when these conditions no longer apply. (2) A report certifying current possession from facilities having less than five items of classified material would not obviate the need for periodic visits to the facility to insure that the contractor maintains a viable security program. Accountability for classified material in custody is only one of many elements which must be examined to make this determination. During our inspections we also inquire into (a) foreign ownership, control or influence of the facility, (b) personnel security clearance procedures and records, (c) visitor procedures, (d) safeguards against unauthorized disclosure, (e) physical safeguarding of classified material, (f) reproduction and destruction of classified material, and (g) employee security education. These elements must be examined whether the facility has custody, access only, or is in a position of influence or control, or any combination of these conditions. From our previous correspondence, you are aware that facilities which have no classified material in their custody are inspected less frequently than those in possession, thereby minimizing the resource impact on both Government and industry. (3) We have outlined above those elements of the contractor's security program which must be examined even though he may not be in physical custody of classified material. The need for these inspections is predicated on the fact that information classified under the provisions of Executive Order 11652 relates directly to the national security, and that its loss or compromise would have some degree of impact on U.S. defense efforts and those of our allies. Government agencies maintain continuously active security programs; however, in industry security programs are less formally organized and are frequently a collateral or part-time function of management officials who have little or no experience in security matters. Therefore, the Defense Industrial Security Program inspection program is considered to be a necessary and sound management technique for insuring that classified information in the hands of industry is afforded protection comparable to that in the hands of Government. A contractor's security program is determined to be satisfactory when, based on the results of an inspection, it is found to be in compliance with the requirements of the Industrial Security Manual (DoD 5220.22-M, previously furnished). The Manual establishes the overall performance standards. While detailed procedures within facilities may vary, based on operational contingencies, the program is considered to be satisfactory when the basic intent of the Manual requirements has been met. (4) As stated in our previous correspondence, the Industrial Security Representative (IS Rep) does and will continue to challenge unrealistic and unnecessary security classifications when such are obvious or suspected. In our opinion it would not be feasible to train IS Reps to do more. Training courses currently available are limited to the principles and techniques of security classification program management and would not enhance the ability of an inspector to detect classification errors in complex subject matter. Proper security classification of information embodied in military procurements requires detailed knowledge of many complex scientific, technical and military operational disciplines. Within the Government agencies responsible, the security classification determination is reached only after consultation between subject matter experts in all disciplines involved in each procurement. In view of the extensive technical knowledge required, a detailed classification analysis during visits to a contractor's facility is considered to be beyond the capability of the IS Rep. Nevertheless, in this Agency's administration of the Defense Industrial Security Program we will continue to review all classification guidance furnished to the contractor by the Government and make constructive recommendations for change whenever possible. We will also continue to review, by sampling techniques, the contractor's application of such guidance and the marking requirements of Executive Order 11652 and implementing DoD Directives. We trust that the foregoing provides the classification you desire, and gives assurance that, within our authority and capability, we endeavor continuously to assist the Government and the contractor in resolving security classification problems. Sincerely, HENRY SIMON, Major General USAF, Deputy Director, Mr. COOKE. Thank you very much. We enjoyed appearing before you. MS. ABUZG. The subcommittee is now adjourned. [Whereupon, at 4:30 p.m., the subcommittee adjourned, to reconvene, subject to the call of the Chair.] SECURITY CLASSIFICATION REFORM THURSDAY, JULY 25, 1974 HOUSE OF REPRESENTATIVES, FOREIGN OPERATIONS AND GOVERNMENT INFORMATION SUBCOMMITTEE OF THE COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C. The subcommittee met, pursuant to notice, at 10:15 a.m., in room 2154, Rayburn House Office Building, Hon. John E. Moss presiding. Present: Representatives John E. Moss, Paul N. McCloskey, Jr., and Gilbert Gude. Also present: William G. Phillips, staff director; Norman G. Cornish, deputy staff director; L. James Kronfeld, counsel; and Stephen M. Daniels, minority professional staff, Committee on Government Operations. Mr. Moss. The subcommittee will be in order. This morning we begin the second of our scheduled 3 days of public hearings on H.R. 12004, a bill to amend the Freedom of Information Act to establish a statutory security classification system. Two weeks ago we heard testimony from our distinguished committee colleagues, Representatives Fascell and Steelman; and from Dr. James B. Rhoads, Archivist of the United States and Acting Chairman of the Interagency Classification Review Committee, who was accompanied by Mr. William L Brown, executive secretary of that committee. We also heard from Mr. David O. Cooke and Mr. J. J. Liebling, the responsible classification and security officials of the Defense Department, who were accompanied by Gen. J. J. Cody of the Defense Supply Agency. As was explained in the statement opening these hearings 2 weeks ago, the subcommittee is not only soliciting views on H.R. 12004 and the need, generally, for a law to govern the classification and declassification of Government documents, but we are also seeking information concerning the implementation and operation of Executive Order 11652 since it became effective on June 1, 1972. Today, we will lead off with two outside witnesses who have had many years of experience in observing the operation of the classification system, from inside Government and from the newsman's vantage point. I will ask both Mr. Morton H. Halperin and Mr. David Wise to come forward to the witness table and present their oral statements in tandem. Then we will direct questions to both of you gentlemen, and the informal interchange of comments resulting will, I am sure, be of great assistance to us. |