(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP60-00213A000100020001-2
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 296
• Document Creation Date: November 17, 2016
• Document Release Date: August 1, 2000
• Sequence Number: 1
• Content Type: LIST

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4#4,' Nir
INDEX
TAB A General Management of the Executive Branch
Hoover Commission Report dated February 1949
TAB B Concluding Report of theEXecutive Branch
Hoover Commission Report dated May 1949
TAB C Policy letter of the President dated 1 July 1949
"Reorganization of Certain Agencies of the Government."
TAB D Executive Order 10072 of the President
dated 29 July 1949
TAB E Management draft dated 22 August 1949
"Management Improvement Program"
TAB F Management draft dated 29 August 1949
"Management Program of CIA"
TAP G CIA Management Improvement Activities
Fiscal Years 1950 and 1951 dated 9 September 1949
TAB H Memo from the President dated 1 August 1949
"Policy on Hoover Commission Recommendations"
TAB I Article from Business Management by General
Brehon Somervell - A "Management Department"
to Aid Organizational Control.
TAB J Management Improvement Activities
(Budget Section Fiscal Year 1951)
TAB K Management Improvement Activities
(Budget Section Fiscal Year 1952)
TAB L HR Report, 2457, Part IV, dated 5 January 1951
"Investigation of Employee Utilization in
the Executive Departments and Agencies."
TAB M
TAB N
TAB 0
HR Report 2457, Part V
HR Report 2457, Part VI
Senate Report dated 3 March 1951
"Organization of Federal Executive Departments
and Agencies"
TAB P Senate Report dated 19 December 1950
"Report of the Committee on Expenditures in
the Executive Departments"
(Note' See letter by DCI dated 24 November 1950)
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-2
kr Virtue ,of he authority vested in me by Setition-.205(a) of",
Act entitled *Ai to 8144311ft the proourwsent
pcsat .ofIkoirernisent property, to reorganise certtinatOn
CovernMent,Hanal :tier other purpotes,14 *approved tune 301,',1
Proporty,,end 'Administrative Servitan Act of 2.94.9).'tt li
thatt.' ? '
ration with ether Interested agenties the :,Administrator
,
es
shall institute studies mid ourtaysto dotezine
Lch misting policies, protedurew-'.?nd directives
d and remaining in force under eectJ.on $01 of thu Act,
'or revoked in the interest of p.reater
. in accotplishIng the purposes of thia
be Ad7).einitGitr4?aterilition ntnato bO'the'at degree.centralization
005 O od
vedo. When those studies andm vers have been,
cosseting with the Intereeted: .egaucac; the
prescribe suCh'.regulations asx*Cesnry to
tntions' eaulting.from such'
,
naultation wtth the, Pgreau vt,,
e and also with the enra1 Accounting'Officel
aljtero .05 nS7 be ,
&ppropiiat,, d
etiofle under zits ? 20(14
et possible date, .the Ac1ttnietathr at General .
uch standards, Pok13,0Fi,tilek, such
,
proOckelvsee'e0 reer:,
e s,,in ascertaining, Whether their t ors. in the
snd retards management ars_ effiedent end
.tent with established 0OvernUent panties.*
?.,--
3 n scoardance with directives' to be issued by.te /4d2041,
_
f General Serviaesoach, tatecutive agency shall pronet3. insti&te,
surveys to determine exam, personal property and that portion44 "Cells
reel, property, including unimproved property, under their cobtroi each
might be suitable for office, storage, and related fatilifies, Red shall
promptly report to the Administrator as soon as each eirvoy is completed.
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crnreu1iy Plan and anhadnia its
nt* ateri&1a andal),,other P ?.ersonal
stocks mAY
haninz eve
tainad isirdruum
e het* Roo
and proce
strator shall prov
to which Execative
leissuance of such
e authority except per-
provisions of* $ttites in force
eat oZ thie Act,
$02(d) of the ct provides
ed onby. various Esseu
provis4on8 of the A
ailed specifics
* insofar as p
anesiwith the
dgr in order tly.i
eThctd. Theses
tor of General oe
y management prec
inventory iv3? DrQVidd in section
d,
0 Officer
facer
t Officer
unsol
ite, 'Wry Truman
JUL 6 M9
of
utilize
et
verall
alev
n.,-; of
establish-
(2) of the
ruorred to in ararah 1 of the above ae tror the
Pra4int e mere]. Services Administr ludas
provisions but requires to the ?*Eton possible
Lcns of the Act.
It
Vakr COIPM
of the Director that vo cooperate in
ths.special problems and security,
DIECTC1R OF CENTPAL INThUIGtEj
C
Captain, USN
gs,ceelittft
Pos
b3z
25X1A9a
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AFT
MANAGEMENT IMPROVEMENT ,PROGRAM
Aug. 22, 1949 25X1A9a
The CIA Management Lnprovement Program is conducted under the general
supervision of the Bxecutive. The execution of the program is dole.
gated to the Management Office and the Policy, Coordination and Con-
trol Staff. Each operating off be of the Agency is responsible for
effecting those management improvements failing within its sphere of
activity. (with the asSistance of the Management Office ar as a result of
Managementis findings)
II. The Policy Coordination andDontrol Staff consisting of representatives
from the Departments of State, Army Navy and Air Force is assigned the
following responsibilities:
a. Coordinate inter-departmental intelligence planning for acooma.
plishment of the national intelligence mission.
b. Prepares for the Director with the assistance of CIA offices,
the overall plans and policies for inter-agency intelligence coordina-
tion,
o. Furnishes counsel and advice to CIA offioes on problems origi-
nating within CIA, but whioh may affect IAC agencies.
III. The Management Office VAS conceived and in maintained on the baSis of
a small efficient staff whose funotions and responsibilities are to
assist the Agency to function at maximum efficiency in accomplishing
its mietidaii it order to perform the mission of improving the effii.
?tem', effectiveness and economy ape,*
has been assigned responsibilities
arfEcii
diligl-01ArI111112
v 441.
a. Establishment and review of o aittigotee entit fun.
and its subdivisions DECIMEILILsi
tions of each office of C/A.
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b. Asoertainment of: Nanp r rsuiremente of orrlkni Inits.
o, Formulation of tables of orsoiation.
d. Development of plans for adminigtrative support activitiee
based an planaed prorram operations*
0. Supervision of allooation of ersonnol,
f. Establishment of personnel oeilin-s for optrating offioes mnd
staff aotivities.
Providing overall a-
ing.
cy operations analysis and uniform roport
h. Publications control.
1. Conducting to uncover operational and almin
istrative problems and leficienoies*
I* Provide aesitanoe to ci. rthin offices in developing and
stalling simplified and improved work :low procedures and enhancInv
employee utilization*
k. Coordinates with Budget Offioer in the development and preterit.*
tion of agency budget estimates.
Operates the employee stion program.
Controls the purchase and utilization of office machines and
equipment.
n* Controls the allooation of office reproduction equipment.
Keeps abreast of new developments and improVements in machine
and administrative methods anC teohniquee
methods and techniquesNfor possible adaptation to CIA activities,
IT. Top priority problem
a. Major reorganization of CIA activities to provide central ed
control or operational activities.
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Provision of a oentralited unit for .review, coordination &A
consolidation of recuiremonts for intelligent:le material.
c. Utilization of business ma hines to maximum degree possible
in maintenance of administrative mate els and of ar: index to refer nee
and other intelligence material.
V Actions under way or proposed to solve knawn optrating problemei
CA project list indexted to the material below is attaohed indicating
brief title of project, initiation and completion dates and the ?Mani
zational units to which the projects- have been assigned.)
a. Agenoywida proble et
1. The prosent method for preparing quiiments for Intel-
ligenoe material has not proven entirely satisfactory from an
overall agency standpoint. At present there in a Lai* of oom*.
plate coordination which has resulted in duplioatel or incomplete
requests. it is proposed to establish a oommittee composed of repro..
sentatives of M7, OCD, 081, 00, and 11C0 to review, coordinate
and consoiHate all intellifetoe req,Arements originating in CIA
or recetved from IAC agencies 2rior to collection action.
2. An extensive bus nose machine program has beet establiehed
as well Al
in CIA to assist in production of intelligence abed efficient adminr.
istration of housekeepinG details* Those applications of most Iwo
mediate value have been in tailed, however, it has been impossible
to develop all possibilities due to the relatively short time sinoe
the organi7ation of the ageney. It is ',lamed to continue to
explore all activities of the &eni to debermthe where machine
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5* A recent evaluation of dissemination of CIA-produced intal-
licenoe material indicate? that in some inetan00$ recipients re-
oeive material not required in the performance of their activities,
while in other oases sufficient distribution is not made to alias
for efficient operations. In both caves, this mal.distribution has
resulted in increased work for all concerned. A study is being
made to determine nore accurately the distribution needs of reoeivi.
ing ar:encies.
4. Prior to the present time, the management of agency records
has not constituted a major problem. However with the ever increas-
ing accumulation of rocord materiel definite plans for an adequtte
records management program must be established. A oomplete agenorwide
records managenent program is being organized to include an Inventory
of currently maintained records, evaluation of record material, estab-
lishment of disposal schedules, expansion of mierofilm usages,
standardisation of file systems and equipment and establishment of
an inactive records repository.
5. The rapid expansion of OIL has precluded the possibility of
annual budget preparation on the basis of periodic review durilk;
the entire year prior to submission. This has resulted in inevitable
workload distribution for all concerned with preparation of the
budget. A program has been ettablished and is being expanded to pro-
vide the detail of a budget analyst to each activity to assist In
planning, periodic review and coordination of all Phases of budrzet
preparation on a program basis* Each program budget will be analyzed
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25X1 C4a
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the Manacemont andnudget Officers prior to submisoion
to the Director of Central Intelligence.
6. The importance to the nation of the mission of CIA i dicatee
the necosstkyfbr a sound acenoy employee career management progmmi
It is planned to develop a personnel career management program C-lich
will make provision for themaximum development of employee interest,
inherent abilities and aptitttdes as well as for the beet utilization
of their Required skills and aocumulated knowled4e. The program will
include the sending of employees to school at government expense to
acquire training in subjects necessary for the fUlfilleent of
epeoialized activities of the agency.,
oonps
7. The seouritetif
yAc le agency during the years of early develop-
ment wore such that employees were not provided with information of
CIA activities other than that to which assigned. A review of the
security concepts indicates that a broader employee orientation
program is feasible and desireablet Efficiency, smonamy and effoetive-
noes of operations will be improved through the currently planned
employee orientation program.
8. Presently personnel are detailed to periods of duty froM
theIMMMMMM The method of selection for
detail has not always produced the most beneficial results to the
Departments and CIA. A plan to pro7ide for selootion of personnel
based on qualifications and assimment, including rotation is in the
process of development.
9 A lack of standardised off Io equipment and supplies has
resulted from many faotors inoluding .2tmitemis
or2elt
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unavailability of standard itcms .n the desires of offices for
non-standard items. A fraidardiza,.on prora has been develeped
and is being implemented as rapidly as eircumstanceswill per it.
The prozram is designed to inorease productivity, 3WVO funds,
reduoe warehouse and prooLrement effort1 and /mprove apace ut liga-
tion of all CIA offices.
10. The system of Internal e:?orational and administrative re-
portini; does not provide oomplate ()overage for comprehensive
analytical purposes. It is plan.ol to expand the roportIn 6ystem
to provide the coverage necessary to allow detailed analysisof
strong and weak points, personnel utilization, workload, types and
quantity of in%olli,ence nforation being oollected, etc., and
to eliminate deplicate reportin-
11, Internal reorAnizations and expansion of the CIA has
created a problem with regard to allocation and utilization of
available vac*. Constant surveys are made to bale paw allooa-
tione to aotivity functions.
12. The int(.1l1gence pliblicaUons of the ageneyare 0 such
volume and :mportanee tint eonstant study is reglired or the many
problems involved* These problels include format ;uality, quantity,
elimination of duplication, reproduotion methods, equipmem., sup.
plies, coordination with PUblic Printer, oto. Special studios are
made whenever new developments related to publications art n:tiated.
1r). ORE researchers are faced with an Inoreasing inforlation
reports evaluation workload* There is need to determine cr'teria for
odentifyinl% inforlation rvorts for which evaluation is nectessary.
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Inter., and intro.. agenoy discussions under ohatrmansht of PCCS is
planned.
b. Managoment improvement activity required within OCD and the
action under way to implement the improvement follows,
1. Define procurement responsibilities within OCD. Determine,
through management survey and analysis, those segments of OCD who oar'
most effectively procure the different kinds of intellience data
needed for CIA.
2. Specify the groups of materials which need not be processed,
which backlogs should be processed, and the ne6d for exploiting addi-
tional sources of Intelligence materials. Adjustment of needs of
users with workload potential of OCD branches.
3. Identify the scope of service for which DCD should 'carry
responsibility balancing needs of users with manpower and machine
potential of OCD branches.
4, Specify OCD responsibilities and procsiures for providiir
adequate and simplified register service on scientific materials.
Assertelning OI needs and OCD defieienoiee on present service to
OSI; then reallooatinT positions and personnel to s atisfy the needs
or cm.
6. Consolidate the maohine operations of OCD Registers Manage.
ment survey and analysis to determine organisation, staffing and
procedures.
6 Develop standardised criteria . and procedures for repro-
duction of materials held and disseminated by OCD ? analysis of
past reproduction aotivity in conjunction with eftaumerts needs
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and agency resources*
7. Establish polio3.os, standards and procedures for presenta-
tion of information concerning holdings and facsimile of wach hold-
ings from OCD Registers and Library ? Survey of pastactivity
analysed in conjunotion with needs of consumers and OCD resource*.
o. 0 of Reports and Estimates
;?. Presently no system is established to obtain an Objective
appraisal of the worth or Intelligenee produced by ORE. It is
proposed that the Policy Coordination and Control Staff periodioally
obtain evaluations of ORE intelligence from the Presidenti(thro4gh
the Director and tlw 7ationa1 Security Council and other reapients).
It is also proposed that a monthly oomparieon be graphioally de-
picted in the Director's Handbook of major foreign policy decisions
and ORE intelligence relating thereto.
2* Agency graphic services are orzanizationally located in ORE.
Presently, indications point to poor production. A Management sur-
vey is proposed to determine and correct causes for *lowdown in
this operation.
3 A considerable elitorial staff is new required in each
There
or the organisational units of ORE. his too mueh emphasio giver
to this activity. A Management surrey is proposed to examine
this activity and to present a eumnary of findings to the PCCS
the
for determination of need for presentstaff
4. A large.scale foreign map procurement program is now in
operaticn in the Map Dranoh. No tine limitations have been imposed on
tlispre I;irc 1
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produot,of this program in conjunction with map holdInge to deter-
mine need for oontinuing nperations ettheAyresent level.
5. ORE information oontrol activity at the: ?Moe level duji-
Gates OCD activity at the agency level. A Management survey will
be oonducted for the purpose of conoolidation of ORE and OCA
tn-
fnaiion control activities.
d. Office of Scientifio Intelligence.
1. At present no system is estatAished to 'obtain an objective
appraisal of the worth of intelligence produced by OSI. It is prom
posed that the PCCS periodical" ataie evaluations from the
President and the National Seourity Couecil (and interested eon.
cies).
2. On was recently established as a separate production of..
floe. This presents problems of providing methods to insure 000rdi-
nation of OH and ORE activity ? A working liaison ie being ()stab?
lished between all like omponf-nbs ro: the two officee.
3. The compiratively now enphasis on soientifio intelligonoe
presents the a;enoy with a small nucleus of scientists to ?op*
with a largo production job. All possIble administrative support
s needed to build up the raper of this activity and to other-
wise assist in aohieving soientifio intelligenou production. Large-.
scale reoruitmant is underway and all staffs of the Executive are
supplying all possible assistance.
4. OSI operational liaison with other government agenoies
has not been clearly defined. Discussions are underway b etween
OCD and OSI with ,IArAgement office participation to resolve this
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problem.
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t. Office of Operations
1. The field collection ani 000rational activities of CIA
have been under the euporviel on and. control of separate ?Moe*.
In order to provide centralized control which will result in bet-.
ter administration and improve security of operations a reorganization
is under way to consolidate field collection and operation aothi.?
ties into one office.
2. As the cost of field oolleotion and operational aotivities
is vory high, an evaluation of value received compared with the Oast
of operations is essential. At present a comparison is made bettreon
the number of reports received from an individual field station
and the number of regarts fro:a such station that are o maidered of
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velue to disseminate. The Cffiee of Reports and fletimates evaLiates
reports from the qualitative standpoint. By the above evaluat!.ots
efficiency and effeotiveness of each field station is judced.
An analysis of present evaluation Tetaods will be conducted to de?
termine the best oriteria to use in evaluation of field station
productivity.
3. Public Law 110 re7.11:-es that employees upon completion of
two years oentinuous service abroad '..)e recalled for leave purposes'
The recruitment of overseas personnel has not yet reached a stag()
where new persons hired are for roplacerent or rotation purposes.
It is propeeed that a short-term and lengwrange rotation schedulo
for overseas employees be developed so that emplo:oes nnyreturn to
this country for leave and advaneed traininc after a tour of duty
without havinc effectiveneas or field operations.
V7. Activities to identify other operatims pob1m brev12211EAuthe offi-
()tenor and effectiveness of eiicratione. The Policy, Coeidinatins and Contra
Staff and the Manaz:ement Office by the examination of the aboveprograms and ln
con,Ttant liaison with the other offices of CA and the LAC agent, es will be
able to fitd operational problems now ezisting but unknown and those whieh
may develop.
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RO
"TST
Assigned Tot
Istimated
Completion
Date
Estimated
Initiation
Date
Aganey Tide
1. Review of Intelligenoe Requirements.
suet 1949
January 1950
Management, ORE, 081, OCD, 00.
2. Expansion of Deohine Methods.
1947
**attuning
Management, OCD. and all Agency
aattvities.
3. Dissemination of Intelligens. Material. J&1y 1949
January 2950
OCD, FCCS, Ibnagement.
4. Records Menagemeut Program.
August 1949
oontinnieg
Management, OCD, Services, 00.
5. Budget Preparation.
Mk, 1949
oontinuing
Budget, Management. all Agency
activities.
6. Career Management Prograa.
January 1950
July 2951
Menagement, Personnel.
7. Employee Orientation Program.
Deeember 1949
March 1950
Management, Personnel, 00.
0-6-383netiverct-ISV-PieUnnel.
_Qataber 1949
Donambar 1949
Ezioutturo-lissaverata Pesne
TOGer?
9. Standardization of Offioe Equipment
and Supplies.
July 1948
June 2951
Management, Services.
10. Internal Reporting System.
JWauary 1947
ocntirming
Management.
11. Spa= Allocation and Utilization.
August 1946
oontinuing
Serviess, Management.
12. Publioations
August 1946
oaatinuing
Services, Management, 00, ORE.
13. Evaluation of Information Reports.
September 1949
December 1949
PCCS, ORE, 00, OCD, 081.
Officio of Collection and Dissemination
Infammaian Procurement.
July 1949
January 1950
OCD, PCCS.
2. Intelligence Data Processing.
jilIy 1949
January 1950
OCD, PCCS, Management.
Informatiaa Services.
September 1949
oontinuing
OCD, PCCS.
Selentifie Information Service.
Angnat 1949
Jenuary 1950
OCD, OSI, Managenent.
5. Organizational Consolidation.
SepteMber 1949
February 1950
OCD, Management.
6. Criteria for Reproduotion Requests.
August 1949
Movember 1949
OCD, Management, Services.
7. Standards for Information Presenta-
tion.
Septeiber 191e9
continuing
OCD, Management, PCCS.
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2-
PROJECT LIST
Pro ectIt_
Date
Assigned Tot
Witte of Reports and Estimates
1. Evaluation of ORE Intelligenos.
2.Grapicalua Serviees.
Editorial Aotivity.
Nap Procurement.
Information Control.
5.
Off i.. of Soientifie Intelligonoo
1. Evaluation of OBI Intolligonee.
2. Production Coordination with ORE.
3. Development of OBI.
Operational Liaison.
1. Evaluation of Covers .
2. Reproduction of Reports.
Offieo of Operations
October 1949
Doostbor 1949
January 1950
January 1950
October 1949
Oster at9
August 1
January 1949
August 1949
continuing
January 1950
July 1950
Juno 1950
Deeenber 1949
continuing
eoatinuing
continuing
Dovember 1949
September 1949 oontinuing
June 1149 Nerveraber 1949
ORE. POW.
ORE.lianagement.
ORE. Management, PCCS.
ORE, PCCS.
ORE, Managenent OCD.
OSI. PCCS.
OSI, ORE, PCCS.
OBI, Pereennol.
OSI, CCD, Menagenent.
ORE, PCCS.
Managements Services.
2
Consolidation of Field Collection
and Operational Activities.
August 1949 D.oember 1949
00, Management, Personne
2.
tvaluation of Field Station Pro-
ductivity.
Septetber 1949 nary 1950
00. PCCS, ORS.
October 1949 March 1950
3
Rotation Program.
00, Personnel.
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25X1A9a DRAF 116 29 August 1949
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25X1A9a
To: Executive
From: Management Officer
Subject: Management Program of CIA.
1. CIA has begun to assume the complexion of 41.-4-aTre-AtTe-evtaai-
aatIoNa. There has been a good mank;ement program in effect for over al-
years, but it would seem the time is very much in evidence when a more
planned program is essential, mainly because the problems already known
exceed the capabilities of the individuals who bear the responsibility
of solving them.
2. We are left no alternative but to list to top management those
shortcomings, weaknesses and dercdts and establish the priorities with which
they are to be dissolved.
3. Basically, Management is interested in the following projects:
a. Career management
b. Wider use of business machines.
c. Current and impending reorganization plans to effect OPC,
OSO, ORE, OCD, and the old office of Operation.,
4. CIA traininsy(Standardization of, Document No. 3
NO CHANGE in Class.
a. Equipment 0 DECLASSIFIED
C
b. Administrative methods 4??ii"1."
LYDA Memo, 4 Apr 77
c. Fiscal equipment Auth: DDA EITG- 77/1763
Date: AP:- 3-11 By: elf'
d. Improved space planning and allocation.
e. Reproduction
and several others.
tt
e
a. The philosopher, Dewey,
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-96*.dve4d "We do not beging to think until we are confronted with a problem.
jt), !dr-o. ,
It must be a real one, then we begin to grope for a solution". A If this
Agency is to be a success and is to be better than other agencies, we
aa4troc.?
must solve our problems before they effect our efficiency> ""#?
orivatinecet v)44,04-441.0 demi*" #4/4-ejle.-446,4 7-74,
?
elavkile4490
6. CIA Management has a 0ob1em - it is Agency-wide. However, as
the problems are many they are all related and all are important. There-
fore program planning must enter top Management's picture at this point.
We are just beginning to enter a phase where effective check points
and control points can be established which will provide the Agency with
a successful control program. Control in the sense that we will find
weaknesses, shortcomings and errors before or as they occur. With
ICAPS entering the picture from the operational point of view, the
cicle can be completed and an effective program actually placed into
operation.
7. I believe ane concept is essential, mainly as an operating
standard for ICAPS - namely, Management must find internal flaws, present-
ing problems to ICAPS for external examination. In reverse the related
errors found by ICAPS externally will be reported to Management for
further internal examination. While this does not preclude ICAPS from
physically joining Management before or during any survey, it does not
necessarily mean that ICAPS will be engaged in detailed organization
and method examinations. However, it does preclude Management,and properly
so, from engaging in oLtside or external ramlifioationn.
8. In paragraph 2 above, Mana;-;ement has indicated the problems
in the priority of importance as they appear to us. It is requested
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that top mane ement indicate any change in that priority necessary to
assure that the most important items are examined first.
9. At this point, it should be well to mention that with the above
program in operation, CIA should have a rounded administaative-operational
examination program which will provide continued and greater success in
the accomplishment of the stated CIA mission.
10. However, there is still one piece missing if the picture is
to be complete. - For the Agency has a whole, we still lack the planning
9
echelon. The nucleus has been formed. The people are at work, and the /
material necessary to planning is available. If this conception is to be
carried out a suggested examination should be made at budget finalization
time. The Management Office is logically the arm of top management to
determine functional balance of any given program as it relates to CIA
as a whole. Services, Personnel and Budget, etc., in determining the
internal balance. Therefore, it would seem that a committee composed
of the following officers should examine every budget in its final form
before presentation to the Directors
The Executive; his deputy; the Management Officer; Chief, ICAP3;
Personnel Officer; Budget Officer; Services Officer.
Procedure-wise, each Assistant Director with his assigned budget analyst
and any assistants he desires to ?a iii* accompany him will present
their program bi-annually to the above committee.
11. As this Agency grows in stature and strength, many of the programs
;we..
will become more and more important. Our ability to meet our problems be-
come more and more pertinent. It is felt, therefore, that now is the
time to consider these problems and to effect the machine as simple in
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PROPOSED AGENCY CONTROL PLAN
1. Management will endeavor to find overall administrative
and operational problems and willt
a. Take positive steps by existing methods and channels
to correct, simplify and perfect all administrative functions.
,t
b. 1111 report;recommendations to the Operational Evalua-
tion Staff such problems concerning the collection, production
and dissemination of information and intelligence which require
external examination and coordination, and internal evaluation
to assure fulfillment of the CIL mission.
2. Attached is a list of questions which could be asked at
this time. As of this date, the great majority of these questions
could not be referred to any one particular point or for satisfactory
answer. Consequently, the need for a plan similar to the above.
3. The attached list was made against time, and it is felt it
could probably be doubled or tripled on further examination.
4. The simple flaw chart attached is fundamental and designed
merely-to show the proposed flow control.
25X1A9a
2 Attach.
1. List of questions.
2. Flaw chart.
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f7ow Chare' of I4 c).g ell
Manage fir;o/op
dna' ,
Zonilide73'tz,bkm
zoc-AvrioN'
Evcikahon >11elemol, a
64' ab.5-iantiiie 7?-c .644.4 ,
-/RE'cron_
00100020001-2
0
0.
0.
A
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1. Manaconent will endeavor to tzd
and operational problems ad wills
as Take positive stei7a by dotin thod. and ohannel*
to oorreot, amplify-and rfect all intratvO 4i10t10111*
b. Trill report r000menlattons to the Cerstional fivalua-
tion 3tart suet problem* concerninc thy colleotion, protkaotion
and dissemination of inforT.atIo4aC ioiljnCI which requiro
external emanation and coordtin and trrernal ?valuation
to amyl, fUlfillnont of the CIA mission.
2. AttaChed is a. list or quelionsrshieh mad be a
this tine. As or this dato. the Greet majority or these cu
could not bo referred to any one partioular pant or saPis-
answers Coneequently. Lho nood 'or a plan similar to the 'bore.
Z. The attached list was mado actimst tine, and It ,as felt it
could probably be doUblod or tripled on further oxeminationi.
4. Tho simple flow chart attached is fundanental and ii
.srely to dhow ill? proposed flow control.
25X1A9a
2 Attach.
1. List of queotions.
2. Flow chart.
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Approved For Release 2000/08/22 : CIA-RDP60-00213A000100029001-2
QUESTIONS REL&UNG TO CIA
o Should all OCD registers procure intelligence information from other go rn-
meat agencies?
2. Should OCD registers initiate outsiderequests for information to supplement
register files?
ao Should the register determine the gaps? or
bo Should efforts be made to fill the gaps at the time need arises?
3. Can categories be established for ineoming intelligenoe information, which
categories oan become priority sehedules for processing materials?
L. Can OCD perform a selective reading job for ORE and OS/ branohes1 thus
redwing the volume of information flowing to each researcher?
5. Should OCD provides
a. only indexing service?
b. indexing and extracting?
co indexing, extracting and compilations?
6. Should steps be taken to protect the researcher from (mistiming duties
which are not directly related to tt;-eYintelligence effort? e.g.. (1)
evaluation of information reports; (2) abstracting and coding of mooning
doeument, (3) preparation of requirement for 00 ouroos.
Can OCD properly write requirements for all CI & ?Moss, or even consolidate
them?
3. Who evaluates the worth of ORE finished intelligence?
9. Should OSI prepare and issue a separate series of reports, or should they
fall into en agenoy series together with 01-2 reports?
154 Why does 081 issue Blich1ir:ht of liadirftiese Daily Broacloest Ipidemiolagimal
Bulletin when the information is an unevaluated word for word transcrittian
from intake?
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FOIAb3b1
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11. What are ORE. OCD, OSI responsibilities to determine gape in O011eGtiO2l
eoverage and to remedy the same?
12. What is agency policy on employment of 00/t to collect information already
submitted to other agencies of the Federal government?
13. Who has authority to purchase information now contained in other goverment
agencies. e.g.. Census'.
14, Who evaluates the dissem.nation requirements emanating from CIA offioes to
determine if the requirements are germane to the office's operation?
15. Who has the authority to refuse collection directives the collecting
offioe. e.g.. 00/t? OCD?
16. What steps should be taken to provide a reservoir of *give-away" materials
to be used in exchange for service and materials requested from non-tie
agencies and non-governmental servioes?
17. What action is needed to coordinate collection L'aoilities, wortri
mentos exohange of information, and intra-eommunioation between chapter
contributors for NIS program?
18. Can CIA holding be oorrelated to insure easy fulfillment of request51
19. What are CIA responsibilities in reproduction of materials reoeived ia
single copy?
20* Should CIA publish only one tteoessions list?
21* What should be dons to tailor CIL intelli genet, oI&ssiftoationsystem tel
a. needs of CIA components? e.g., 38I
b, systems of 14 agencies?
c. all aspects of CIA operations?
22. To what extent should 0.1.1:-0SI researcher files duplicate information avail-
able in OCD?
To what extent should 0113-OSI researohers evaluate tutor i reports of
23.
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wit? oso Air? State?
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QUESTIONS1
.24!* Do wo need to tighten requirements not for ad...hoc only but also standisig
priorities typo
Os Should more long range baokground studios be made
za. Why must collootion offices (00/b OSO) evaluate and 4oeu9nt information
(turn out finished reports)?
4. Should we periodicalIi survey eaoh regular publication distribution to elimi
notes
a. Those reoipients not actually using the publication.
b Those publioations with very limited use.
(IOWA CIA type instead of print reports where use is small?
216. Would less roport and more bibliography serve users better?
5a. How authoritative do users ?onside: CIA pdblioations?
gleo Should reports be written taaard a lower olassification thus assuring tidos
distribution?
39, Mat or who now determines whioh reports are written? their distribution?
theirelassifioation? their format?
sa Are overall IAC requirements fully considorod? By whom?
Se. Who determines operational needs to establish dietribution?
56C; What control is ezereised over initiation of new estivities and tho transfer
of aotivitioa from 14 to CIL? ?Irtfre COD is new negotiating for transfer of
State telecommunioation files to Industrial Register. OCD.
What action is now being taken to insure mamma utilisation of tho faoilities
of the LAC and other ::evernment agenoies thus reduoing duplicate action
within CIA?
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NOTES FOR CONSIDERATION
Who is authorised to make coomitzsents regarding tarnishing of intelligence
on oopies of produoed intelligenae?
AR Is ? oommitment once made subject to review? By whom?
AA, What facilities are available for determining whether the material we prow
duce is satisfaotory to recipients both qualitatively and qmanhitativoly?
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EXECUTIVE TRAINING PROGRAM
I. 2h2-2X2D121
A. The fact that executive and supervisory personnel must be
replaced is inescapable. The problem is to have trained replacenemts
available.
11 Sourco
A. The government has many sources of available replacements,
but, only two sources will provide sound and qualified replacements:
(1), from within, (2), from private enterprise.
III Examination of the Sources
A. Private business is suffering from an acute shortage of
younger executive ani supervisory personnel. Some years ago, the
general trend was that younger men were taking over top industrial
jobs, the trend now is in reverse A recent .tndy discloses that
the average age of such persons has increased from 5 to 10 years.
This is causing some alarm among big business because present execu-
tives are too frequently in the middle 60's to early 701s. While
long history ha8 proven that only the rare exception is effective
at that age, further as time goes on the is
Probably the most pressing used is for youth and vigor coupled
with ability and expression in 'middle...management*. Examination
of some prime causes of the shortage are as follows:
1. During the depression years, all small and middle
sised business (even some big business) would not pay to train
replacement personnel. Those lost years cannot now be regained.
2. With the of business conditions, the War
robbed business of the and type of personnel who
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B. Other outside sources to top quality personnel islimited.
As general rule we will only be able to secure that 'ditch top
businees is willing to release far in their present position they
will pay to keep the "cream of the crop".
IV. To Solve :the Prpblem
A. The answer there, is to inaugurate a program to develop
our own material and new material selected from organized souroes
suet as collages and training institutions.
V.
The Proirram Qsal and Problem
A. The program should
1 ?On the job and in.-grade training of selected personnel.
2. A more 'valuable tool to the above is our action Career
Management Program.
S. The problem all of which gia be solved through difficult.
Some of thee are discussed in the following:
1. Even the most intelligenlit of senior officials are
reluotent to admit they will be replaoed, or will retire or
die. Unless an individual can realise personnel vein he
in not likely.
2. The timing factor it probably most difficult. Men
do you start training Mr. A to replace Mr. 13", plus a correct
evaluation of "'when is Mr. A ready to take over a top position,
or can that evaluation be made until Mr. A actually assumes
the responsibility of Mr. tr. Next, many exechtive and top
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VI.
officials feel insecure in their positions, and are most
reluctant to discuss measurements, standards, and replacement
training for fear delegations of authority may cost them loss
of power, and even create an unfavorable view of their .
The Procedure -k9 Aftivt%p. Prigtea
A. The need recognised the problems found, perhaps the following
outline could be a starting point to establish a positive program.
I. The program should be conducted under the Matervidiog
of the Personnel Director.
2. tech Assistant Director and Staff Chief will be required
to submit a realistic evaluation report on every employee under
his supervision (or as submitted to his by his Division and
Branch Chiefs and evaluated by him, twice yearly,) who Is out
standing in ability, leadership, personality, etc.
3. This must be an enforced requirement, but all executives
will have to be educated.
VII, JO-commendations
A. The Personnel Director be directed to study the subject
and develop a tangible program which can be placed in effect in the
immediate future.
25X1A9a
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Approved FPRelease 2 IA-RDP -00213A000100
# /-
9 Sept 49
CIA MANAGMENT IMP VSMSNT ACTIVITIES
FISCAL YEARS 3.950 AND 1951
noes, a. Meurandum from the Preeident to Heads of Agencies
dated 1 August 1949.
enorandum from the Director ofthe Burer4 or the
Budget to Heads or Agenc4es, in connect.tnileft
Reference *an dated 1. August 294,1*
Bulletin no* 50-20 Bureau ot the Budget, dated
1 August 19494
Section 870 Budget Bureau Circular no. A-11.
?settion in CIA for Management Improvement Activities.
*tap official" designated in accordance with References "a"
upervise the management tapmvement prograa in CIA is
f\l/4
'Sall, permanent management staff comprised of fiftee ().5)
ngaged in constant studies and surveys within the Agent*
tepmine. and recommend possible improvements ,and ,economies?
:04Skstanr times its cost each year. Better 'Steins for is
cVective4
'Mont Operations arui Policy Staff has
partnental V3la onshipe andauboton
at'
or eliminated,
It* effectiveness of the collection effort and the substance
'ction shall be continually improved*
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-i and Staff Chiefs receive in trination in the prtnoipa
of, and the necessity- and personal responsioility for, strong executive
action toward management improvement activities within their apecific
activities, both administratively and substantive progrimpowiss.
5. Budg't controls are exercised with strong, ?antral supervision
to insure flexibility of operations -without waste and to the utmost
possible extent without non-productive obli3ation.
III. Special Problass.
1. A primary problem not easily ruaoepti
improvement activity is the intordepartlental
of CIA, This responsibility may xnrcii o
to Acency management
rdinating responsibililir
atoorianne with ,
directives of the National C,ecuriv wci1, ind in actual practice more
or less under circumstances roga.Lria: prior concurrence of members of
the Intelligence Advisory Oomoitteei The realm/ability for mordise.
tion has not carried with it the a ity for directimg action.
2. Another problem is the covert U30131010/ and oper
real menage-
nsibility which, by its very nature,
sent control concepts.
3, A fUrther complicating factor in the impossibi
Me
cal work standard to the Iroduotion of intellce
f applying
esti-
subetantitv protraea supportiagsuch prediction.
1. Lanas
the current and
a. Heor
art
for subetantive matters for
t activities in aocardanoe with
instructions from the National Security -ounci14,
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of an Integratod tt1U.gerc production p
tal in scope, Including*
dt3fini-3on of the term ofttionst
(2) Establishment c priorities in areas end subjects.
6.6teik44)ati
AlIocattyn of responsibilities between CIA and IAC
agIncies to propilat annecossary duplication in oithr researth
or droduction.
Determtn,7tion of deficioclas or gaps in available
intelligence inforastion and tne preparation of adequate
quireliente ak?co..12.004-idca to such deficiencies.
y - (5) improveizelt of rod increase in guidanco for collection
effort to avoid hoh,prouctive or misdirected efforts inherent
generally in purely opportunistic collection action.
c. Further improvmht 3-f collection action byr
(1) Determinin3 an( continuing nnneces1 dnplicatbn of
collection responsloilittes in the field
those found.
(2) Strengthening liaison control procedures.
aced *4 '141 (
(3), ai'nt .3., thg ,i, (ito pe 3 f collection facilities to inlet
? j),,,
.mod-Ameremweld collection reqairtmenta?
(4) Further increuine the speed of collection to meet
production priorities.
(5) Improving coordinction oi field of art, peril arlY
in overt foreign posts.
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Approved For Release 204111.91k-RDP60-00213A000100020001-2
(6) Farther development of machine methode and techniqUes
for recordings reproduction and dissemination of intelligence
information and intelligenoe.
(7) Development of improved methods br asseseinc the
value and effectiveness of collection facilities,
d. Constant rs-ivalnation of itimissinatiOn actiont
(1) To insure that all vino need to lato-e,d only thous
receive Ubratutrinfernation and intelligence.
Giok
To determine the feasibility and eapebili
. 411 7
clisseminntion responsibility.7
(3) Increase thn speed of dissemination.
Continuing stugy of possibilitien for /nova:wing central-
ised intelligenoe services in CIA, and elimination of similar
functions in the IAC agencies.
2. Mentgement Implwrement sc')4edule in overall support of sub-
stantive matters for the curmat 441-td Lie(4et ytare
a. Continuing survly of reprQ6actl.ozi needs and facilities to:
(1) Establish priorities
(2) Detorming and ostablich 1),tter anii morn economical
means and orthedes includini; supp1;$ techniques and ,aseldries?
(3) Eliminate unneeeeeery pzejects and multiple duplication
in several agencies of the same materiel.
(4) Reduce numbers of cog** no a of/liens to meet actual
current needs.
1,40 Reesereh into and impleuentation of iaproveeiente in Budget
developments reviews presentaticn and controls.
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c. )ev3lopeent and impleeetation of improved machine method,
for handling records and reporting in connection with*
(1) Personnel matters.
(2) ftpply accounts.
(3) Payrolls.
d, Progrea for the
mint and other supply- items
*. Continuing the farms control program.
f. Identification and reduction of eeekloge in both substantive
and support activities.
g. Improvement of the records management program.
h. Development and implementation of a career managmeant pro.
gram for CIA personnel.
j.Continuin6 survx,- of th3 dintribution system to increase
the speed of delivery of both administrative and inteLligenoe material
and reduce delays incident to improper routing.
j. Continuing survw of oronisatioa, functions, personnel
requismments, methods and procedures to increase efficiency and
effect possible ecwomies.
of this nate the :reactions of wict are
based on interdepartmezdal relationship and mutual suppert primes,
with chancing missions and responsibilities, und with the peculiar and
uniqee function of covert activities abroad, it is not yet prasticable
to schedule management irproveuent activities on a eat tins schedule
basis.
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2. ach of the problems 1iatd in eation IV above requires current
and continuing- attention in our present eituetion. Most of the probInme
are dependent to some extent on a factor or factors wttich we cannot
directly controls and are subject to delays and interdepartmental
cussions and agreements which Trill take varying periode to complete.
Seen the apparently purely administrative problems are affected hr th.t
situation.
3. a. The Management S s in carl7tng
ie s for developing and rocomasndin the or
a
tures assignment of functions, and per&annel stating of the Agency,
with the attendant -rohlems of adminietrative procedures and eupport
is engaged in daily constant surveyw of some portion or portions
of the Agency. ''''roblems invo Ting lack of adequa!' policy oxidate*
or program determinations aro tetected at their source it these
eurveys and placed in prope., channels for solution.
b. The Coordination Opertiona ane olicy Staffs is oarryint
out its responsibilities for intordepartm-ntal coordination in
conjUnction with tIle /A
the National Security
diees biaa-vierise4r-otiver-1.11.-040at: and
/144/
4. gam, of diffi-
culties and problems arising in this fie
r.) 4 ",4
responsibility for6pIA action to solve such probless in the most
efficient and econcnieal aanneripossible to obtadin, policy and
program inadequacies detected in Kanagesent Staff surveys are also
referred to the Coordinations Operations and ?olicy taff for
action and proper resolution.
charged with
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two stele mentioned abovl, together C.
Budget Officer, will he mordinated closely by the gxecative in
the overall eanagenent improvement opnram to assist the Director
in carrying- out the denims ot the Bureau ot the Aid t and the
?residont
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Gmwrimmo.
Chief, Management Staff
Asst. Management Officer, np/A Area
Program for Fiscal Tear 1955.
2 receMber 1554
I. The ()Toren Program. On an area-wide basis it is planned to undertake
a series of manageetent surveys of each of the major elements (Offices)
of the DD/1. Area. These management surveys 16111 consist of (a) an or-
ganisational study of each element having as its objective the establish-
ment of a sound organisational pattern sad a reasonable span of control;
(b) a study of the workload for the purpose of determining the staffing
pattern representing the manpower required to accomplinh the mission of
the element; (c) the establishment of a table of organisation and per-
sonnel ceiling based on the workload; and (d) a study of the over-all
procedures of the element.
Following the completion of these management warms it is planned to
initiate a series of detailed procedures surveys of the elements.
Each of these surveys will consist' of (a) a detailed study of procedures
presently in effect; (b) analysis, siMplification? mechanisation and
other ieprovement of procedures; (c) installation of inpreved procedures;
and (d) preparation of a procedures manual for each DD/A element either
in narrative or chart form or a combination of these methods.
2. The Program for Fiscakattlall.
a. Management Surveys for each of the following efficest
(1) Office of the Auditor-in-Chief
(2) Office of the Comptroller
Document No. I
(3) Office of Training NO HANCE infVD Class. rl
LJ
ECLASCIFIED
(4) Security Office Class. CHA"C?D TO: TS S
DDA rmo, 4 tor 77
(5) Medical Office Auth: DDP 77e/171-1
(6) Office of Personnel Date: A -3 Ifgq
b. A Procedures Survey in one major s4A element, either Logistics
Office or Security Office.
c. A work measurement system for the Finance Division, Office of the
Comptroller.
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aimmomm:gb
This
done
oover
am is booed on a ataff of six examiners. The of work
to (12-2-54), and the schedule for additional surveys, is
the following paragraphs.
3. Projects comleted as of 12-2-54:
a. Office of the Auditor-in-Ohief. Management survey. (Report com-
iWepor-TWartin Office of Personnel concurrence
as to grades.)
b. Office of the . Trffy_litS22_etrolier. ore measurement system fo the
) 8 on.
It. Pxojeots under way as of 12- (Date,' ehmm ars for oompletion of
zepor't5)
a. office of T aiati. Management survey, estimated oompletion date
T=15-M
b.ITirity Office.ement survey, estimated completion date
1- -55.
C. Medics' Offioe. Managenent survey, estimated completion date 12-31-54
d. Office of the OomItroller. Management survey involving, in addition
to a review of the organisation and staffing, a somewhat detailed
study of basic procedures. istimated completion date 6-30-55.
e. Other Projects. Study of disposition of classified waste. bat/mated
completion alit* 1-15-55.
5. Projects propmed to be started this fisoal year:
a. M went Survt Office ot Peronns1. It is est. ated that thie
cou
6-30-55.
) and possibly completed by
b. Procedures Survey. At present it is expected that this will be
eiiher the Logistics Office or tecurity cIffice. The probabls date
for undertaking this survey it% 3-1-55.
25X1A9a
MS/WRM:ee (2 December 1954)
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TOW
/02
1 1
xvit-- -C."'
/
,./'
25X1A9a
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Approved Fit Release 2000/08/2
THE WHITE HOUSE
Washington
TO THE HEADS OF AGENCIES:
Pit/RD
25X1 9a
August 1,
Lost Friday I discussed with the Cabinet Executive Order No. 10072,
which directs department and agency heads to give Special emphasis to
their repponsibility for appraising and improving Oterefficiency of
their operations. I am writing to you and to the heads of other agen-
cies to express deep interest and concern for improving administra-
tion of the Government's affairs.
In support of Hoover Commission recommendations I have submitted
proposed legislation and reorganization plans to the Congress. Addi-
tional proposals are under study. These actions are aimed to being
together in each agency programs with common purposes, and to give each
agency head the althority and discretion he needs to manage his agency
effectively.
These steps to make better administration possible must be
complemented by vigorous action to achieve potential improvements in
operations. Agency heads are primarily responsible for such action.
The Executive Order does not impose new responsibilities on
agency heads. It does provide the means to assure a systematic and
continuous management improvement effort on a Government-wide basis,
and to keep me informed of progress and accomplishments.
I hope you will designate one of your top officials to be re-
sponsible for seeing that an aggressive program to improve the
effectiveness and economy of operations is carried out on an agency-
wide basis.
25X1A9a
?
Very truly yours,
/s/ Harry S. Truman
Approved For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
EXECUTIVE OFFICE OF THE PRESIDENT
Bureau of the Budget
Washington 25, D. C.
August 1, 1949
TO THE HEADS OF AGENCIES
In the Cabinet meeting on Friday, I undstand that
the President discussed his Executive Order calling for
continued efforts to improve the operations of the Execu-
tive Branch. In this connection I am enclosing a copy
of the Bureau of the Budget Bulletin No. 50-2, which is
issued in accordance with Executive Order 10072. This
Bulletin describes the kind of information to be sub-
mitted by agencies with their budget estimates for
review by the Bureau of the Budget on behalf of the
President. As the success of the President's program
depends primarily upon the responsible heads of depart-
ments and agencies and their subordinate operating
officials, I would suggest that you designate one of
your top operating officials to give special attention
to this program.
If my staff can give you and assistance in
developing your plans for action under this program,
I hope you will not hesitate to call upon me.
Enclosure
Sincerely yours,
/s/ Frank Pace, Jr.
Director
4,4 15
Girt( 404- Wizq f 6?- 741
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rieZKIA---44--'1
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Approved For Release 2000/08/22 : CIA-RDP60-00243A000100020001-2
INSTRUCTIONS FOR THE
PREPARATION AND SUBMISSION of
ANNUAL BUDGET ESTIMATES
Section 87. ft Plans for management improvement.
Each agency will submit a statement of the activities
contemplated during the current year and budget year which
are aimed at appraising and improving the effectiveness,
efficiency, and economy of operations. This statment will
include the activities to be carried out, whether by line
officials or management staff, to evaluate and improve op-
erations. (This management program will be considered in
evaluating and examining financial requirements or agency
operations.) 0
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EXECUTIVE OFTICE OF THE PRESIDENT
Bureau of the Budget
Washington 25, D. C.
BULLETIN NO. 50-2 August 1, 1949
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Programming of agency management improvement activities
In his Budget Message and in his messages to the Congress dealing
with action to improve the organization of the Executive Branch, the
President has emphasized his interest in continued efforts to improve
the effectiveness of Government administration. Recommendations Which
he has made and proposes to make are aimed at giving responsible offi-
cials greater freedom and flexibility to organize and direct the activ-
ities under their jurisdiction. Along with this increased althority,
he is looking to department and agency heads to take vigorous leadership
in bringing about maximum effectiveness and economy in the operation of
Government programs.
Executive Order No. 10072 directs department and agency heads
systematically to appraise and improve their operations. Responsible
officials in each department and agency should make certain they can
assure themselves and the President that their olicies and rograms
are carried out effectively and eaonoinipAi]y, that possibi ities or
iii-C17aTe7weiri-c"reerarrieCifiWrreid.entified;-alid-that-idiqUITempro-
Zgra."5-1 arbeeriallae-Tor continuousi7 ev uating andov? er-
formAnce4
Section 87 of Budget Bureau Circular No. A-11 requests each agency
to submit with its budaet_estimates for the fiscal year 1951 a_ddgalat
of c7rr-Z-Can-a?FO-Tied aciiaiIii144ed at appraising and ilproviN the
e ec iveness, e fia;W; and economy of operations. nce a statement
-15FIZanaterentinaFOVement actratierrrie1Tirreire'ned for the first
time, this Bulletin explains in further detail the type of information
desired.
In this programming of action to improve operating effectiveness,
th22021,111rLa_atualz concerned with improving the substantive
9PerV4-1_14-j1E041ZLp "Hous eep les e Tria;a, of
F5111757-5.4t-the bejlaged 9n prcgram actiyities.
The following examples illustrate the 'type of operating problems
in substantive operations at which the program is directed: failure
of activities to accomplish program objectives; inadequate coordination
among related programs; overlapping or contradictory services to the
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- 2 -
public; continuation of activities no longer essential; lack of program
and -work standards for evaluating accomplishments; high unit costs of
-work completed; increasing backlog; excessive staff turnover, etc.
A management improvement program includes two types of activities;
(1) activities directed at salving known operating problems; and (2)
activities directed at evaluating operations in order to identify ways
of improving service and cutting costs. The latter type of activities
include such things as periodic, recurring operations audits or inspec-
tions in specified offices; a comprehensive review of9jectives, pro-
grams and activities in a segment of the agency; installation or improve-
ment of reporting programs; special surveys of organization and pro-
cedure.
In setting out its management _i....21:ovepsnt program each agency
should 1:1121:225aTII:p7112:12:211121T. Each agency should then
110, ja...awaggmext improvement' cateppytes: actions
under w or sro 0;-a-I-o---6671F6-kian operating problems; and activities
to ident t-TigefficjAn.cy, Arid
ectiveness of ipairp.:?Ciiirent aCrivitles -a-sivelf as those pro-
poS-eia-Y6F-T1iCIT 195T should be included, but clearly distinguished.
9Sac.ijaz_211...at_gassa_urlirespong,j,jae_tar action shou341,2_104-
cd.. Approximate manpower assigned and estimated raMTion and com-
pletion dates, should be shown where applicable. Separate statements
should be included for the office of the Secretary or Administrator and
for each Bureau or major constituent unit.
Members of our staff will be discussing this matter further w ith
appropriate representatives of your agency. Any time we can be of
assistance in clarifying the purpose and nature of the information to
be submitted, please do not hesitate to call on us.
FRANK PACT, JR.
Director
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eusiness Mgrkagemens
. . - ?
s n ecirrfgr le M.
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A "Management Department"
To Aid Organizational Control
Excerpts from an address given before the American Management
Association by
GENERAL BREHON SOMERVELL
President, Koppers Company, Inc., Pittsburgh, U.S.A.
IT IS generally accepted, I believe,
that the means of control avail-
able to the executive, in addition
to organization, include both long
range and day to day planning, the
establishment of policies and pro-
cedures to cover the operations of the
company and its sub-divisions, and
the submission of periodic and special
reports, including statistics, on opera-
tions.
The executive can exert a strong
control over his organization in the
allocation of funds for the activities
assigned to the various subdivisions.
Control likewise can be exercized
through assignment or allocation of
personnel to various activities. With
such controls over finances and per-
sonnel, the activities can be enlarged,
restricted, or directed in broad chan-
nels.
Once the personnel has been as-
signed and funds made available, the
executive through careful training
and orientation of his personnel can
guide their actions along the lines
contemplated by objectives and pro-
grams. Both he and his staff can
secure further control over operations
through inspections of work in prog-
ress and conferences with those
charged with the execution of the
work. Lastly, the executive by reserv-
ing to himself personal approval
of specific action in certain fields and
under certain conditions, can control
effectively the course of his subordi-
nates.
A Test
The extent to which this last
means of control is used is indicative,
to my mind at least, of the excellence
of the other controls established for
the organization. If most matters
must be referred to higher authority
for action, delegation has been poor
and the progress of the organization
will be limited largely to the capacity
of one man to make all the decisions
?and to assimilate the details necessary
to make them. A good organization
proceeds on an entirely opposite
course.
The agents used by the chief ex-
ecutive for the operation of the con-
trols which have been described must,
in any large organization, be the
heads of the various staff depart-
ments which supplement the chief ex-
ecutive in the discharge of his duties.
Some of the controls are exercised by
the President himself, but most of
them must be a specific concern of
various staff departments. For ex-
ample, the Finance Department,
whatever it may be called, must be
responsible for the compilation of the
budget no matter how it may be es-
tablished, and likewise -this depart-
ment must exercise the control to
see that the budgets are effective.
Likewise, in connection with its spe-
cialized function; each staff depart-
ment must assume a share of the re-
sponsibility for control.
Because of the different types of
organization in effect to carry out
the many different activities of vari-
ous industrial organizations, it would
be impossible to go into much detail
as to which staff department should
be used for the exercise of the differ-
ent controls which are necessary. I
should like, however, to take a few
minutes to discuss a concept of which
I believe I am the author. That is
the use of a special Control Section
or Department as a major tool of the
chief executive of any organization.
It is quite possible that a similar
concept may have come to others but
what I have to say today is a de-
velopment of my own experience.
Prior to its development and use I
had not found its prototype in other
organizations though obviously the
actual controls which are assigned to
this department will be found in a
number of staff departments in many
organizations. Perhaps the name
"Control" for this department is a
bad one. People instinctively resent
controls of any nature and a more
fortunate selection in name might be
"Management Section" or "Manage-
ment Department."
"Methods" Observation
In short, the Control Section is de-
signed to control not what the COM-
executive of the company or an op-
erating. division with respect to every-
thing that has to do with the way
in which the work of the company
is performed. Many men who were
members of the Control Division of
the Army Service Forces are now
doing similar work in industrial or-
ganizations or in companies designed
to give expert advice on management
problems to companies without the
benefit of such a -unit within their
own organization. I must say that in
my own company the idea was re-
ceived with a great deal of skepticism
and perhaps with a certain amount
of resentment. This feeling has dis-
appeared, as is proven by the
cordiality with which the members of
the Control Section are now re-
ceived everywhere throughout the or-
ganization, the fact that their advice
and counsel is sought, and that the
head of the Control Section is highly
regarded by the heads of all Operat-
ing Divisions and Staff Departments.
Four Divisions
The work of the Control Section
is divided into four main subdivisions:
Planning and Policies, Organization,
Reports and Statistics, and Pro-
cedures. It assists in guiding and co-
ordinating performance throughout
the company, in appraising results,
and in correcting unsatisfactory con-
ditions. It reviews with Staff Depart-
ments and Operating Divisions, the
objectives and program of the com-
pany. It is continuously engaged in
guiding and coordinating perform-
ance through bettering our organiza-
tion, through the formulation of
policies, through the development of
inter-unit procedures, through prog-
ress reports, and through audits. It
assists in correcting unsatisfactory
conditions through careful analysis
of problems, discussion of their
phases with the units involved, and
works with them in the development
of remedies to be applied.
In All Divisions
Control Sections are also present
in all of our operating divisions,
which perform the same functions for
the Vice Presidents and General
Managers in charge of these divisions
as does the central Control Section
for lop management. Control insofar
as Staff Departments are concerned,
is furnished exclusively by the top
management Control Section. Units
of the organization use the Control
Section facilities for assistance jn or-
ganization, planning, policy develop-
ment, procedure design, program de-
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t August, 1949
Approved For
velopment, clearance of information;
preparation of special reports. media-
tion, coordination, training, and de-
sign of reports.
Auth( ity rests in the president of
the organization insofar as the top
management Control Section is con-
cerned, and in the General Managers
insofar as the divisional Control Sec-
tions are concerned. If a control sec-
tion ever sought to become a super
central staff, its usefulness soon
would disappear.
Instead of being a welcome visitor
in the divisions and other staff de-
partments, it immediately would as-
sume the guise of an inspector and
critic, which would promptly mini-
mize if not destroy its effect.
As long as organization and con-
trols are used to bring out the best
in executives, to permit them to work
most effectively as a team and vet
lease 2000/08/22 : CIA-RDP60
not destroV their initiative. they are fu
of maximum usefulness. Once: they
begin to serve as a damper on the
spirits and enthusiasm of the person-
nel they become a liability rather
than an asset.
All of this sounds very simple, and
it is. However, because of the many
perplexities in business, the applica-
tion of the principles in the system
which I have just discussed is not
always easy. I have been asked to
apply these principles to the solution
of some practical. everyday prob-
lems. and to that end I have been
furnished with a numbet of questions.
I. The first of these questions con-
cerns the B am d of Directom s. and
asks what functions should be re-
tained by the Board and what func-
tions delegated to operating manage-
ment.
General practice reserves certain
What is
an Industrial Statesman?
An industrial statesman is a supervisor, foreman, executive admini-
strator, who:
I. Manages his organization w ith skill and at a profit while main-
taining a high decgree of morale and satisfying those served.
2. Delegates responsibility and authority to lower echelons of
management so as to develop executive calibre and stature.
3. Works in a w a) that Creates understanding and cooperation
rather than friction.
4. Understands our economic and social system, its motivations.
its vitality, its historical development, its comparative benefits
over other systems.
5. Carries a deep conviction that ours is the system that affirms
the individual, that capitalizes on incentiv e, that thri% es on
individual character and productiveness.
6. Knows wh) and how our system can and must give the greatest
job-satisfaction, be an outlet for the great human desire to create
something?to be useful.
7. By a definite program of action, works ceaselessly to get eyer)-
one within his realm of influence to understand and belies e the
same truths.
8. Provides for individual attention to the problems and develop-
ment of people on his payroll.
9. Recognizes responsibility for the effect of his decisions and
practices upon individuals and the communit).
Approved For Release 2000/08/22:
LAWRENCE A. APPLEY,
President, American Management
213A0001000200(11-2 !I,
(ions to the Board ot vitectors; -
such as Approval of capital expendi-
tures, purchase or sale of capital
assets, and approval of the basic ob-
jectives and programs of the com-
pany and appro? al of major policies
or important proposed transactions.
If it retained other functions it would
be performing part of the manage-
ment job, not directly related to its
principal assignment?trusteeship.
2. A question on controls and in-
centives asks whether administrative
controls and measurement of re-
sults should he imposed on sub-
ordinates without a provision for fi-
nancial rewards or penalties.
There seems to have been de-
veloped a feeling that the adoption
of administrative controls such as
programs, progress reports, etc., must
be accompanied by financial_ incen-
tives or awards a a means cl sugar
coating this bitter pill. It %%rid be
well to remember that norn r ' 1 effi-
ciency and attention to the Oh still
'
are to he expected i f
n returd or a .
fait has, salary. Incentives and le-
wards are intended to conipensatc ,
for perf-n-mance beyond nortnal ex-
p.( tan( . and in turn. to produce
such performance. My answeri there- :
fore, is that controls and measure-
ments may be adopted fairly with- .
out a system of rewards aruf penal-
ties.
3. Another part of this question is
concerned s% ith ss hether or not incen-
tives can or should be set up for staff -
or service units whose contribution
to profit cannot be readily de-
termined.
In my opinion, incentives 1or staff
and service units are quite ip order.
First, we create and mainta n these
units because we know that their
ww k is necessar), although sl 1 Ca liZC .
that we will be unable to measure its
exact value. Next, we revfrw the '
progress and results of th( 0\ trail
company and find it to be beyond
expectations and deserving* of re- '
wards. Arc we now to deny tflpt these
staff units made a contribution to
these n sults 7 If so. we shourd immiie-
diatelv dispense with them for we
have in effect decided that the re-
sults is ould be the same Ns ith011t
them. No reasonable man could de-
fend such logic. He would 11 sr staff
unit rewards on the overali results
they helped to produce.
4. Job security is certainIY some-
thing to be desired and milks high
among, the factors affecting the
worker's . attitude and satisfaction
CIA-RDP6044000/000qq"
A ss,,cation stilled in in staff groups so they, will not
i.
loi al . (Continued on Page 21)
24
Approved For
CANADA'S FINESI
GENERAL PURPOSE
PENCILS
Ite"46440108100""641PRW
"A Management
Department"
theire Pressure -Proof
se ed*
teod is octuoliy bonded to
4 a.
0
lead is Colloidal*
*Exclusive veeus pow
VENUS PENCIL CO. LTD., TORONTO, ONT.
(Continued br-it Page r 3)
feel that they may- be indiscriminately
cul off in times Of crisis.
The installati, iii oi .1 sitirit oi job
security among staff per SMITICI niav
he accomplished througlr forwar d
planning. Eye] y company should
study its "break even point" and lay
del irate plans for its lyrrations at
this and intermediate les its of
tis ity. Such plans N.1ill n'VCill t Iii
nature and amount of kith stall and
operating personnel (:quirrd under
these conditions and ss ill do much to
create some ineasurt of job setiii its.
While neither staff nor operating
units can hope to avoid some reduc-
tions in times of retrenchment, both
may be satisfied that their reductions
are fairly proportioned and not in-
discriminate.
5. Next, it is asked, what cOntrols
can be established to insure proper
redelegation by subordinates and
avoid overdclegation, to the point of
having idle executives and over-
worked subordinates.
This ins olves a control over or-
ganization. In in? opinion a Conlin!
Section, responsible to the chief ex-
ecutive and delegated the responsi-
bility for organization work, can hi.
of great assistance in assuring hint
that the delegation of responsibilit
by his subordinates is proper and
effective. Such a group should be em-
ployed to make organization studies
within the staff and operating units,
and to prepare reports of findings
and recommendations. In this man-
ner insufficient delegation. excessive
delegation and lip sirs ice to organ-
ization plans, can be detected and
corrected.
Ihnine ;thy
2-1-WQ040,0020001,20d
or,iiiiti tutu plan, b,u Li ii h? a yu(A.1
manual witicit is complete and cur-
FelltIV 1Wd. ('M) almost
any cause mi liii 6011 bCOACCII
in prftk tiMSC generated
tin ough persorral ii Iii es. ( )l course,
there is a certain amount of plam
cussediat ss ii some individuals which
c.in I slitriircited. if at ill, ott I 1,\
a priest or p?veliHtrist.
7. Ne st. the question: '11 hat sig-
nificant trends has c you obsen ed in
top management organization of in-
dust rial concerns?"
Indusln, is undoubtedly bet, tniin,,2
ons( ion; IC( 1 ?
Lik111!2, 1.1 in, IP lit. 1)1(1-
( Cd111.1' ,111d I il,ittinrii, 55011, OS it hill
t Itgat,d i csponsihilit rather
than :is thins to he done if.' as and
when arid b\ anyone N1110find5 time
for them. They ,ire }win, ruditgnized
as the duty and obligation ? if every
executive and the idea of a k;ontrol
Section as an aT?ncy for filth' per-
formata e is being adopted by more
and mo-e ctutipa Mrs. This i' leading
not only to better thoughts about
organization but also to the actual
use i_!:anization.
6. Can the responsibility and au-
thority of subordinates be defined
clearly enough as to scone and de-
gree to avoid friction and misunder-
standing.
Part 01 the allti CI to this hes in
the qualit,.. of the oi ganization plan
itsch. In fact it mat be said that un-
less the organization plan ;old the
duties and scope titular
jobs can be m educed to a cleat w ritten
description. the plan probably is
inie". Mid (Irldimiytt?dk. will lil-
t 1,(11 1,11.11CI ihitn at\ 1,1dIto tion.
The other tart of the answ ci lies
v arid iii ms ss uil th,
eases 2000/08/22iv'CIAIRDP60
portant duty of a Control Section
is the development and maintenam
Roxhirrough Electric
\ow in 1ew Building
TORONTO. R i\lti! ough Eke-
itit. Limited ha\ c autumn( tiE the it''
robs al ot th, ir of to their n,
build tic at 7 I his .'nqn it Road, '1 'o-
'(into, The ti lephone numb, e i ri,tw.
KIngschile 21
TAYLOR
PROTECTION
OVER 90 YEARS OF
DEPENDABILITY
Taylor Safes Always Reliable
J 6C....1.TAYLOR LIMITED
TORONTO SAFE WORKS
-00213A000100020001-2
Branches Montrral, Winnipeg, Vancouver
?
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?
CENTRAL INTELLIGENCE AGENCY
STATEMENT OF MANAGEMENT IMPROVEMENT ACTIVITIES
FOR THE CURRENT AND BUDGET FISCAL-YEARS
I. Special or Priority Problems
1. A primary problem not easily susceptible to Agency management improvement activity
is the interdepartmental coordinating responsibility of CIA. This responsibility may be
exercised only in accordance with directives of the National Security Councils, and in actual
practice is normally conducted under circumstances requiring prior concurrence of members of the
Intelligence Advisory Committee. The responsibility for coordination has been most difficult
because it has not carried with it the authority for directing action.
2. Another problem is the covert intelligence and operations responsibility whichs by its
very natures, does not lend itself to normal management control concepts.
3. A further complicating factor is the difficulty in applying mechanical work standards
to the production of intelligence estimates and the substantive programs supporting such
production. .
II. Management Improveme# Activities
1. Management improvement schedule for substantive matters for the current and budget
year:
a. Reorganization of covert activities in accordance with instructions from
the National Security Council.
'b. Development of an integrated intelligence production programs, interdepartmental
in scopes including:
\41
(1) Establishment of priorities in areas and subjects.
(2) More adequate allocation of responsibilities between CIA and IAC
agencies to prevent unnecessary duplication in either research or production.
(3) Determination of deficiencies or gaps in available intelligence
information and the preparation of adequate requirements to correct such
deficiftiallMed For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
40,
Ui
GE in Class.
C
Approved For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
miamowfimMot
(4) Improvement of and increase in guidance for collection effort
to avoid non-productive or miadirected efforts inherent generally in purely
opportunistic ealleetier action,
c.
Further improvement of collection action by:
(1) Determining any continuing unnecessary duplication of collection
responsibilities in the field, and taking steps to eliminate those found.
(2) Strengthening liaison control proceduree.
(3) Readjusting the scope of eolleetion facilities to provide more
effectiveness in meeting collection requirements,
(4) Increasing the speed of solleetioe to meet production prioritite.
(5) Improving coordination of field effoet, partitularly in overt
foreign posts.
(6) Developing machine methods and techniques for recording,
reproduction and dissemination cf unevaleated information and intelligenee,
(7) Developing improved methcde fen? aseeveing the value and effeetivenene
of eollection facilitiea.
d. Constant re-evaluation of diesemination action to
(1) Insure that all who need to know, and only thooe, reeetve
unevaluated information and intelligence.
,(2) Determine the feaeibility and eapability of inereasing the ecope
and effectiveneus of dissemination.
(3) Increase the speed of dissemination.
e. Continuing study of possibilities for increasing centralisation of intelligence
services in CIA, and elimination of similar functions in the IAC agencies.
2. Management improvement sehedule in overall support of substantive matt for the current
and budget years
a. Continuing survy of reproduction needs and facilities to
(1) Establish priorities.
(2) Determine and establish better and more economical means and methods,
including supply, techniques and machines.
(3) Rlieieate unnecessary projects and multiple duplication in several agencies
of the same material._
(4) Reduce numimrs of copies to a minimum to meet actual current needs.
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Approved For Release 2Q09/Q8/22LCIA-RDP60-00213A000100020001-2
b. Research into and implementation of improvementa in
presentation and control.
c. Development and implementation of improved machines
and reporting in connection with
(1) Personnel matters
(2) Supply accounts
(3) Payrolls
Budget development, review,
methods for handling records
d. Program for the maximum standardization of equipment and other supply items.
e. Continuing the forms control program.
f. Identification and reduction of backlogs in both substantive and support activitiee?
g. Improvement of the records management program.
h. Development and implementation of a career management program for CIA personnel.
i. Continuing survey of the distribution system to increase the speed of delivery
of both adminietrative and intelligence material and reduce delays incident to improper
routing.
jC Continuing survey of the organi ation and review of functions, personnel require-
ments, methods and procedures to increase efficiency and effect possible economies.
III. Responelbilitefe_. Agtion
? 1. The "top official" designated to supervise the management improvement program in CIA
is the Agency Executive.
2. A Coordination Operations and Policy Staff has been established to supervise inter-
departmental relationships and substantive intelligence programs to the end thats
a. Intelligence -services af-common-concemerwiII beimmA.bemalymore centralized?
b. Overlaps and duplications In the collection, production and dissemination of intel-
ligence and unevaluated information will be reduced or eliminated?
c* Effectiveness of the Collection effort and the substance of production will be
contiviA4)
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oftlaMPIIIm?
3. A small, permanent management ataff comprised of fifteen (15) employees is engaged
in constant etudies and surveys within the Agency to determine and recommend possible
improvements and economies. Improved methods and programs at a minimum cost is it primary
objective.
4. Office and Staff Chiefs receive indoctrination in the principles of and the necessity
and personal responsibility fore strong executive action toward management improvement
activities within their sphere of operations; both administratively and substantively from a
program viewpoint.
5. Budget controls are exercised with strong central supervision to insure flexibility
of operations without waste, and to the utmost possible extent without non-productive work.
6. An inspection staff attached to the Office of Inspection and Security performs special
investigations of operating and administrative activities in response to directives from the
Director of CIA and the recommendations submitted are coordinated from a management viewpoint
to the end that deficiencies may be rectified and improvements achieved.
IV. Anticipated Progress of the Program of Management Improvement Activities
1. In a new agency of this nature, the functions of which are based on interdepartaental
relationehipe and mutual support programs; with changing missions and responsibilities2 and
with the peculiar and unique function of covert activities ibroad? it is not yet practicable
to schedule managenent improvement activities on a set time schedule basis.
V. General Statement
1. Each of the improvement program activities listed in Section II above requires current
and continuing attention. Most of the problems are dependent to some extent on a factor or
factors ehich cannot be directly controlled by the Agency and are aubject to delays and inter-
departmental discussiona and agreements which require varying periods of time for completion.
Even the apparently purely administrative problems are affected by this situation.
2. a. The Coordination, Operations and Policy Staff, in carrying out its responsibilities
for interdepartmental coordination in conjunction with the IAC agencies and the National
Security Council, must remain abreast of difficulties and problems arising in this field,
and is charged with responsibility for recommending CIA action to solve such problems in
the most efficient and economical manner possible to obtain. Policy and program in-
adequacies detected in Management Staff surveys are also referred to the Coordination,
Operations and Policy Staff for action and proper resolution.
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aghihiMiNlirpm
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nnosogr..
b. The Management Staff, in carrying out its broad responsibilities for
developing and recommending the organisational structure, assignment of functions, and
personnel staffing of the Agency, with the attendant problems of administrative procedures
and support, is engaged in daily constant surveys of some portion or portions of the
Agency. Problems involving lack of adequate policy guidance or programs determinations
are detected at their source in these surveys and placed in proper channels for solution.
e. The two staffs referred to above, together with the Agency Budget Officer and
the Inspection Staff of the Office of Inspection and Security, will be required to
coordinate closely to the extent that the Executive, in conducting the overall
Management Improvement Program, will be in a position to render the greatest possible
assistance to the Director in carrying out the desires of the Bureau of the Budget and
the President.
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e4R22:2=11..
,1,1111- -11r-
IfOilgeReIrf.k.?Tfrgiikr- .-..Rrogron presented with the
? , ?
the'tasiO plan for management improvement
are effected throUsti the coordinated effort of the Coordination, OperatiOni-
the Management Staff, vor
in close riat'.ousbP vith operating officials. Specific problems
are identified and action initiated in accordance vith Agency policies. Priorities vary with the
changing world situation.
`Ai previously exPlain,ad, many of the major problems inherent in the Agency 1 Management Improve-
ment Program are interdepartmental in character and require inte4departmental-agreeme4ta or
directive., action by the National Security Council. Where possible, ?intra-Agency action is taken.
? Interdepartmental agreements are sought for problems not cappkiii,,
agreements cannot be reasonably obtained, further action' is re
. _ _ - -
_
meht Program_ within
g it
oncluded?eeVeral*tardepartmeritial agreements 'Ohl.ch have Provided igciftiirm simplified procedures
,
certain phaSes of
Operations The Management Staff has been. effective in defining Agency
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end presentation of .recciimended -solutions. -
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II. Schedules of Manavement Improvement Action.
A. General Statement
1. Pleasing during Fa.
25X1A5a1
I& ava,
195C vas directed at the re&L ent of enc:0,
the objectives set forth below It is anticipated that during
these plane mill be implemented and that further organisational
out the program.
a. Prov.ision for the improved production of integrsted national Intelligence based on
information reported from all sources.
b. Reflection of intelligence effort in orgsuiistianand stsfti toward the most
critical problems of national security.
c. Improvement in coordination, both interdepartmen and intra-agency.
d. Integratin,$ like functlons in sincle operational m1te to obtain maximum effIciency and
economy.
2. Improvements baTe been =de Loth*
Fiscal Years 1931 and 1932
tments will be made to carry
ction of in 1 g
materials and the production of intelligeace. During the rise Year 1950, the applies ion of
"content analysis" to Intelligence interpretstion and estimation has been explored by CIA in
conjunction with the Spec
new means and methods for the
collection
and development projects to provide
tion have been initiated. Dun
Fiscal Yaws 1951 and 1952, it is anticipated that the techniques of "content analysis"
beapplied. in snecislisedfields, particular re ng Soviet intentions. Research into new
ApprO
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means and methods for inprovemant of collection activities will be continued.
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ve Matters
isation of covert activities in ace
Council.
instructions from the Nstioual Sec
Action Taken:
Covert support activities were reorganised to facilitate proposed action. Further
action has been indefinitely suspended by the National Security Council.
2. Development of an intesiated intelligence production program, interdepartmental in scope.
including:
Establishment of priorities in areas and subjects.
2. More adequate allocation of responsibility between CIA and IAC afeC1ee to prevent
unnecessary duplication in either research or production.
3, Determination of deficiencies or gape in evailable intelligence iuf'ortion and the
preparation of adequate requirements to correct such deficiencies.
a. Action Taken:
(1) A revision of Jst4onsj Security Counci
responsfbilities of the intelligence agenci
to the National Security Council. The proposed revision viii str.rgthen CIA's authority
for coordination and direction of intelligence activities.
(2) A study of production plonning concepts ems completed within ORS Mese planning
but
cmsfttfforarrdmielitichie - latird81110$156itbeffeetnf= certain
area and functi n 1 divisions of OBE. .421"1/11111%*
Approved For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
(3) Inteflhijence agencies have*gred to apprise CIA perla
telligence projects.
(4) An ' terdeparteeatal Scientific Intelligence Cittee
1
eub-committees, with chairsnaMp sllocated to CIA, were establiabed by the Director of
Central Intelligence to achieve coordinatioa in the production of ecientific intelligence.
(5) Permanent interdepartmental committee* have bees establiahed under CIA chairmanship
for progrsning and coordinating intelligence production in the fields of international
COMMIS*, economics, and poychological intelligence. In addition, ad hoc entherings of
intelligence specialists in various area and industrial fields bare been sponsored by
pertinent ORE components for purpose of pToErin, coordinating, and exchengine intelli-
Eence and appropriate information.
(6) In conjunction with the Department of State Externai Research Progr sud with the
Scientific Intelligence Committee, the facilities of telligence goverzeontal agencies
end non-governmeatal institutions were utilized for cooductinc research and production in
specific intelligence fields.
(7) Scientific intelligence tegrated with the Research
and Development Board nester plsn to provide maximum intelligence support to the R.D.B.
(8) Responsibility and authority for coordination of scientific intelligence by CIA use
further centralised by transfer of coordioation responsibilities for Chapter VII (Scientific)
ofkptiadthogia ketwant0/08/2/2 : Dilvtrit30001000200402"
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(9) Through tI Scientific Intelligence Comzittee
functional sUb-committoes, a
master file of ?cientlfic information requirements reflecting gaps and deficienciee in
available information la in process of development for critical scientific fields such
SW,
(10) To assist the Department of State in discharging its responsibilities for collection
of foreign scientific information essigned by NSCID No. 10 and to permit direction of the
Department's activity toward present deficiencies and gaps, the foreign information
requirements of the Defense agencies together eith the organization and processIng ep.oyed
in the information requireeent function are being studied by CIA.
(11) Improved comprehensive field reporting guides for all areas of the world were
developed by ORE regional and functional division to provide guidance for intelligence
collection.
(12) ORE and OSI Requirements Staffs have been physically placed adjacent to each other
and procedures adjusted to permitmaximum coordination of their work.
Action Anticipated, Fiscal Team, 1951-2:
(1) Existing National Security Council Intelligence Directives and Director of Central
Intelligence Directives will be reviewed and to the extent
quired for further improve
ment and progrees in the over-all intelligence field recommen a time will be made'0
(2) Continued action will be directed toward improved comprehensive intro- and inter-agency
OcotprbAAvdPITSPIWIease 2000/08/22 11`01'.(0I0111611P60-00213A000100020001-2
Approved For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
(3) Procedures will be adjusted to speed up the coordination and review phases of
intelligence production, thereby providing more timely estimates.
(4) Tme facilities of non-intelligence agencies of the Federal Oeveranent and non-
governmental institutions will be more fully utilised to support the intelligence effort.
(5) The collection requirement formulation processes will be further simplified and
coordinated to provide more effective and expeditious gulOanre for collection activities.
Further improvement of collection action by:
1. Deteraining any continuing unnecessary duplication of collection responsibIlities in the
field, and taking steps to eliminate those found.
2. Strenuthenine liaison control procedures.
3? Readjusting the scope of collection facilities to provide more effectivene?s in meetine
collection requirements.
4. Increasing the speed of collection to et productioa p ti .
1. Improving coordination of field stfart, particularly in overt foreign posts.
6. Developing machine methods and techniques for recording, reproduction and dissemination
of unevaluated information and intelligence.
2, Developing improved methods for assessins the value aM ertectiveneucollection
fac lities.
a. Action Taken:
WspaRtlEfliikkti6iff 2$011,212z! efAVi59grati2Mitoittbacati F211"ti'
information from defectors has been assigned to CIA by NSCIDs No. 13 and No. 14.
25X1A6a
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-tteirri
This action etrsngt
(2) Some increase
free Ube *intimation
(3)
by amid
ests4 1 mites duplications,
be flow of foreign entitle intelligence inforamtion has resulted
e
a CIA scientific intelligence team attithed tcyugh Commissioner aar4tri
k) Procedures have been estebliehed for
;Lnolosittgataa?taissfaa*ries which has Wall ence siEnificence,
pt by CIA of
SCA
tion "ma
(5) Through a amp exchange program mope of critical areas are beine collected frcm
foreign countries.
25X1A7b (6) Theillillienitering *overage by the previously established Bureaus vas reorgantsed
to nest caning information requirements and provide better service without incraisaed
staff or facilities. A, monitoring oper 25X1A6a ation covering
25X1A6a needed to fill a serious gap ln overt reporting was initiated. The file of
25X1A6a anitoreL material from was increased 300 per cent st no additional
cost to CIA through conclusion of a communications arrangement with another government.
(7) An "intellofax" system which provides rapid service on reference material' through
combined IBM and facsimile machine process* was installed.
(8) Experimentation has been initiated to determine if neviy-deve1oped mechanical and
electronic. eeuiepeet can be utilised to *prove the documentation and reference require-
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meets.
25X1A6a
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(1) Coo
information s
CO
n
Tears 195
defectors peripheral reporting, overt scientific
sitieoof 8ovietmmterials viii be further
implemented and procedures developed to ensure increased coverage without unnecessary
duplication of effort.
(2) Efforts to identify and to channel into CIA all information of intelligence
significance will continue, e.g., surveys of materials received from abroad and held in
non-.ntellikenes aceneies of the government will be coaducted.
(3) The activities of the Federal Goverment relating to the collection and utilisation
of foreign economic data will be surveyed and analysed in accordance with specifications
set forth in ESC assignment 262.
(4) The further utilisation of nachine-support in the collection and referencing of
intelligence materials will continue to be explored and applied if found feasible.
(5) Present efforts to follow-up on collection failures and weaknesses with appropriate
collection agencies will be intensified.
Constant re-evaluation of dissemination action
1. Ensure that all vho need to know, and only those, receive unevaluated information and
intelligence.
2. Determine the feasibility and capability of increasing the scope and effectiveness of
dissemination.
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3, Increase the speed of dissemination.
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miii#,EmmommEms
a. ticm Taken:
(1) Valuable intelligence materiels received in limited copies by one intelligence agency
have been made available to other interested agencies through CIA assistance in providing
extra copies through use of aicrafila or other media e.g. Air Force reports from
(2) Pumices bility for Agency dissemination policy has bees exclusively assigned to one
Afeacy official, thee enhancing objective, of full coverage for those who need to know and
elimination of duplicate or unnecessary dissemination of Agency materiels.
(3) CIA internsl procedures for dissemination and distribution have been studied nd a
procedure which will permit speedier dissemination will be initiated.
b. Action Anticipated, rilCal rears 1951-52:
(1) The plan for simplifying nternal dissemination procedures is bei inetsiled and
sill be constantly surveyed.
(2) A study will be initiated to de mine if more discrinsiNui
at the time
? 25X1 A6
materials are received into the Agency will reduce the time and effort expended by pro
duction analysts in reviewing marginal materials without impairment to their analysis
through absence of such materials.
3) Efforts will be continued to restrict materials entering the dissemination pipeline
to those needed for intelligence purposes, thereby somewhat reducing the volume of data
received daily which must be handled and controlled at all distribution and sub-distribution
points.
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11PIPIftmimmimmft.
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5. Continuing study of possibilities for increasing centralisation of intelligence services
CIA and elimination of similar functions in the IAC agencies.
a. Action Taken:
(1) Studies are in process to determine the need for National Security Council Intelli-
gence Directives defining the common comcern responsibilities of CIA for:
(a) Industrial reference service.
(b) Biographic reference service for iaformation on non-scientific personal
(c) Basic economic intellivence service on Soviet Orbit economy.
(d) Central translation service.
(2) A file of non-governmental contacts maintained by the Office of Naval Intelligence
vas transferred to the Contact Divisiee, Office of Operations, thereby eliminating
duplication of similar files maintained by CIA for "common concern" purposes.
(3) Internal organisational and procedural improvements have been effected to provide
better service on activities maintained for common concern" purposes. CIA activities so
effected are the Office of Special Operations, the Office of Operations, the Register and
Library Divisions of the Office of Collection and Dissemination, and the Map Division of
the Office of Reports and Estimates. The adequate servicing of requests by these components
of CIA has resulted in elimination of duplicate activities in other intelligence agencies.
b. Action Anticipated, Fiscal Years 191-,2:
(1) Renewed efforts viii be made to eliminate the maintenance of Industrial Card Files in
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the other intelligence agencies which duplicate files maintained as a "common " service. INCA
Approved For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
?.144061:1401iii.
;L.
Continued study viii be given: (a) to increasIng cen in CIA when it
can best be performed centrally; end, (b) to negotiating vith the agencies represented
on the IAC for discontinuance by them of services being performed centrally in the Centre.
Intelligence Agency.
nt*tratve Matters
Survey of reproduction needs
a. action Taken:
(1) Arrangements mere mide with GPO to print NIS
to CIA needs.
(2) The GPO vas provided with spsc. for installation ofsddit
expeditious processing of work.
(3) The paper stock and collating process
tstimated savings of 07,500.00 per year.
(k) The number of copies of NIS furnished to a
cent,
on a priority schedule geared
(5) A private firm was st
a fast and inexpnai1 met
b. on Anticipated, Fiscal
Intelligence
for more
re changed.
by CIA to develop the Thermo-Pex machine vhich proyide5
Ingle page reproduction.
1,51-52:
(1) A study vill be mode of the media used for presentatien of intelligence
NASifffibseenrtiogRetbaita2ttewm12 arpeegfrefOblatillebilibt64-2
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2. Budget planning and execution.
a. Action Taken:
(1) Budeet and Mmmesemeat analyst*
preparation and execution of the .in
(2) A tabulating card system for position coctro3 c naa-yeer basis via inetsUed.
(3) An internal CIA budget hearings program ves miltabaliomod.
(4) Roviima forms for use in budget execution were adapted.
Astutia Anticipated, Fiscsl Years 1951-52:
(1) Refinement and improvement of p1aia end procedures currently utilised will, be a
conl.inuing objective.
Utilization of machine methods.
a. Action Tisk
(1) Personnel *accenting vas
b.
work with
tic offices in
machine procedures.
(2) Sthetentive program improvements are included in Section IIB of this report
b. Waal WasUdall, Limalaura1951-52.:
(1) Plans developed end in process of implementation for transfer of supply end payroll
accounting to tibulating machine procedures.
tanderdination of office equipment and supplies.
Continuing action on this prables is taken by all concerned
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"4.111111.11....1
7
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4c11,
(1) 145 Agency blank forms were re
=Ober of approved forms at the begl
approved feria at the close of the Fi.csl. Yew.
b. Action AnticiRated, Fiscal Years 1951-52:
(1) Review or the utilisation and format of a11
ear 1950. The
compared with 609
Y
forms viii be continuous.
(2) A combined Standard Form 57 and Personal Ristory Statement for Apency use v111 be
prepared.
Identification and reduction of
Attion Token:
(1) Revised tables of or on to iroide propex staffing were issued where
(2) Revilmiprocederes were clevel
b. MtIOD Anticipated, Fiscal
A continued review of opersti
a.
)
and exmmine proposed organization or
be crag ed.
be Dade to
ional changes
ing in specific instance.
(1) A comprehensive records asnagement program for the Agency was established.
y develop
will not
(2ApOrWife PettRtift4WINVI8/11*2r.!-tPAPIktIPtitiV61A3Aebff6150/15Mliti4. "eh d?c
b.
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aes
Mttcited1?ics Y
(1) Implementation of
and disposition tables w
records mansgement
be accoopliShed.
c1ting pUblication or retention
(2) Mans will be implemented for ensuring on a current
basis and sUbsequent utilisation in event of a catastrophe
8. legloyee Career Annammant Promos
a. Action Timken:
(1) Qualificatons of all employees re ip?zsd by puuch.d card
(2) Roster of key personnel iaa prepared
b. Action Anticipated, Fiscal leer. 1951-52:
(1) Development and implamsntntion of program will be
9. stribution of administrative end intelligence material.
a. Action Taken:
(1) Batch control procedure for
Anticipated, Fiscal
imination of certain information control
entation Programs
10. Rap
stribution of arterial ems estebU shed.
peed distribution vi
(1) A detailed orientation program for new employees grade GS-5 and below
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0.
ass* Aa
(1)
Agency le bi
LI. Tr.liung Promo
All
CL
Y covert
relac.aa
4..ste
"tatiOn
to include .1,
i.,
Prssiftr
- end rut
414C 1410 000b140d line 040
resultant Increase
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Approved Release 2000/08/22 : CIA-R -00213A000100020001-2
Approved For Re
Approved For Fkelease 2006/b8/22-:CIA-RDP86--002134000101420001-2
[COMMITTEE PRINT]
81ST CONGRESS 1_ HOUSE OF REPRESENTATIVES .5 REPT. 2457
2d Session j Part- I
INVESTIGATION OF EMPLOYEE UTILIZATION IN THE
EXECUTIVE DEPARTMENTS AND AGENCIES
DECEMBER 1950.?Submitted rto the Committee on Post Office and Civil
Service
PRELIMINARY REPORT
[Pursuant to H. Res. 114, 81stCong.]
PART IV
Pursuant to House Resolution 114, Eighty-first Congress, approved
May 2, 1949, the Committee on Post Office and Civil Service ap-
pointed a Subcommittee To Investigate Overstaffing in the Executive
Departments and Agencies. The subcommittee is conducting a
survey of several agencies, the purpose of which is?
(1) to explore and evaluate the utilization of personnel;
(2) to appraise the effectiveness of existing agency management
facilities in employee utilization;
(3) to ascertain and identify some of the causes and effects of
overstaffing; and
(4) to suggest remedial action necessary to correct overstaffing
in the executive departments and agencies.
Accordingly, the subcommittee submits the following interim report
relating to the Department of the Interior as part IV of its over-all
report on overstaffing in the executive departments and agencies.
THE DEPARTMENT OP THE INTERIOR 4'
The Department of -aid-Interior is responsible for the management,
conservation, and development of the Nation's natural resources. Its
jurisdiction extends over the continental United States to islands in
the Caribbean and the South Pacific and to lands in the Arctic Circle.
It includes the custody of 760,000,000 acres of land, the conservation
and development of mineral resources and the promotion of mine
safety, the protection of fish and wildlife, the administration of scenic
and historic areas, the reclamation of lands of the West through
irrigation, and the management of hydroelectric power systems. The
Department is also responsible for the welfare of more than 2,000,000
persons in the territories and island possessions and the guardianship
of approximately 400,000 Indians, and 30,000 natives of Alaska.
A more complete statement of the functions performed by the Depart-
ment of the Interior appears in the appendix as exhibit I.
76410-50--1
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Approved For Release 2000/08/22 : CIA-RDP60-00213A000100020001-2
1(16 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
The organization of the Department is divided into 24 parts for
w tich supervisory responsibilities have been assigned to principal
m3mbers of the Secretary's office, as follows 1 (see fig. I, Organization
of the Department of the Interior):
(a) Secretary and Under Secretary:
(1) Office of the Solicitor.
(2) Division of Information.
(b) Assistant Secretary for Mineral Resources:
(1) Division of Geography.
(2) Division of Oil and Gas.
(3) Bureau of Mines.
(4) Geological Survey.
(c) Assistant Secretary for Public Land Management:
(1) Division of Land Utilization.
(2) Bureau of Land Management..
(3) Fish and Wildlife Service.
(4) National Park Service.
(5) Bureau of Indian Affairs.
(6) Office of Territories.
(d) Assistant Secretary for Water and Power Development:
(1) Division of Water and Power.
(2) Bureau of Reclamation.
(3) Bonneville Power Administration.
(4) Southwestern Power Administration.
(5) Southeastern Power Administration.
(e) Administrative Assistant Secretary:
(1) Division of Administrative Services.
(2) Division of Budget and Finance.
(3) Division of Management Research.
(4) Division of Personnel Management.
(5) Division of Property Management.
Assistant to the Secretary:
(1) Program Staff.
(2) Special Assistant to the Secretary for International
Activities.
On June 30, 1950, the Department included 65,573 Federal em-
p-oyees, of which 6,037 were located in the headquarters offices in
Washington, D. C. and Denver, Colo., with the remaining 59,536
d stributed throughout the 1,044 field installations. Field installa-
ti ms of the Department's several bureaus and offices are maintained
at indicated in the following table:
T k?BLE 1?Field offices of constituent bureaus, Department of he Interior, as of
June 30, 1950
A
Name of bureau or office
Principal
offiees
Field
instJlations
Total
,partmerrLal Field Committees
6
0
6
Lreau of Indian Affairs
11
64
75
Lreau of Land Management
7
79
86
Lreau of Mines
9
74
83
Lreau of Reclamation
7
115
122
01 and Wildlife Servicc
6
301
310
,ological Survey
0
190
190
Menai Par, Service
4
157
161
oneville Power Administration
5
0
5
uthwestern Power Administration
2
0
aska Road Commission
4
0
4
Total
61
983
1,041
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Figure I
ORGANIZATION OF THE DEPARTMENT OF THE INTERIOR
AUGUST 1,1950
65,573'
SECRETARY OF THE INTERIOR
UNDER SECRETARY
OFF/OE Of T. SOLICITOR
55
DIVISION OF INFORMATION
ASSISTANT TO
THE SECRETARY
PROGRAM STAFF
32
INTERN?TIONAL
AGTIVITA
2
ASSISTANT SECRETARY
FOR
MINERAL RESOURCES
T=2.7
L 24?0"Z
89
54
BUREAU OF MINES
4,505
*Numerals indicate employment
GEOLOGICAL SURVEY
6,557
ASSISTANT SECRETARY
FOR PUBLIC
LAND MANAGEMENT
4
LiurglfoL?405
15
BUREAU OF
LAND MANAGEMENT
1,385
FISH AND
WILDLIFE SERVICE
3,546
NATIONAL PAR
SERVICE
5,837
BUREAU OF
INDIAN AFFAIRS
13,565
OFFICE OF
TERRITORIES
5,429
ASSISTANT SECRETARY
FOR WATER AND
POWER DEVELOPMENT
DIVISION OF
WATER ANO POWER
BUREAU OF
RECLAMATION
19,261
BONNEVILLE
POWER ADMINISTRATION
2,644
SOUTHWESTERN
POWER ADMINISTRATION
282
SOUTHEASTERN
POWER ADMINISTRATION
13
ADMINISTRATIVE
ASSISTANT
SECRETARY
4
as
01 IS.ON OF
BUDGET AND FINANCE
19
DIVISION OF
YANADITAIDIT AETAAACTI
4
DIVISION OF
PERSONNEL PAATANATOASYT
33
DIVISION OF
PROPERTY NANA. T
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1C S EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
Phe major purposes of the Department of the Unterior are reasonably
w(11 related. They provide an attractive opportunity for good depart-
mi ntal organization and administration. Except for the community
se] vices functions of the Bureau of Indian Affairs and the economic,
sof ial, and political activities in parts of the Office of- Territories, all
of the Department's functions are within the broad field of natural
ret ources. Circumstances are favorable to a well-defined, cohesive
gr c uping of activi ties.2
FINDINGS
The recent assignment of supervisory responsibilities to the
prl n.cipal members of the Secretary's office is a well-conceived improve-
m( nt. It should afford better control over the bureaus within the
D( partment for the new assignments are based upon the Depart-
mc nt's principal functions.
' Phis new approach alines the administration of the Department
ac ording to its four broad functions?mineral resources, land manage-
nu nt, water and power development, and, finally, departmental
ad ninistration. The Department has adopted a functional approach
in the' management of a score of bureaus and divisions which are not
conceived and organized in accordance with those functions. Actually,
se. -eral of these bureaus perform parts of the four basic functions.
Su reral of them carry on work in the field of mineral resources. The
siu ae condition applies to geology, engineering, conservation, etc. In
o
prctice, this dispersal and overlapping of program functions across
'anizational lines represents a major cause of overstaffing.
A. Delegation of authority and reduction of the headquarters staff
ha not been extended to the field in keeping with the recent decentral-
iza Lion of responsibilities.
The Department reports that for the past fl years it has made a
cco Lcertecl effort to decentralize its operations to the lield. In this
th( re has been an attempt to draw a distinction between line opera-
tio as to be carried, on in the field and staff work to be retained in the
shing.:on headquarters. In this decentralization the total employ-
m at in the field has increased from 34,752 in January 1944 to 50,769
on the same date in 1949. This represents an increase of 46 percent.
Di ring this same period the Washington headquarters staff decreased
from 4,490 to 3,614 employees a reduction of only 20 percent.
EN en this disproportionate decrease is substantially nullified when we
:e into account the 2,224 additional employees carrying on a part
of the headquarters functions in Denver, Colo.
The subcommittee does not contend that the two reductions must
be by exact ratio, but it does conclude that the reducticn in the head-
qu irters staff has not been in conformity with previously expressed
ph ns.
STAFF SERVICES
..n this part the subcommittee continued its examination of four
rej resentative staff services, following each one through the several
1a3 ers of administration in the Department of the Interior. Specific
fin lings in these areas are presented under the following headings:
2 "ask Force Report on Departmental Management, Commission on Organizal Eon of the Executive
Bra 'eh of the Government, p. 3, January 1949.
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THE'EMPLOYEE UTILIZATION IN TE, XECTJTIVE DEPAR
"Personnel management," "Fiscal management," "General services,"
and "Management improvement."
Personnel management
The Division of Personnel Management for the Department has
experienced difficulty in exercising control and supervision over con-
stituent bureau personnel programs.
There is no accepted pattern for the organization of personnel func-
tions in the bureaus. In 1943 the Division of Personnel Management
established a standard for bureau organizations. Currently there are
only three offices that conform to this pattern. The Department
directed that Bureau Personnel Offices be composed of six functional
units a Director of Personnel, an Employment Unit, a Classification
Unit, a Personnel Actions and Records Unit, a Training Unit, and
an Employee Relations Unit. There are many variations of this plan
in effect in the bureaus. This deviation indicates the independent
attitude of bureau personnel offices.
The Department permits the bureaus to delegate appointment au-
thority to the regional and field offices in a highly variable manner.
These delegations fluctuate from appointment at grade GS-4 in the
Geological Survey to GS-12 in the Bureau of Reclamation. Reluc-
tance to delegate authority in some bureaus has retarded improvement
in the personnel program. For example, in the headquarters of the
Geological Survey there is a Bureau Personnel Office and three Divi-
sion Personnel Offices. Regional and field actions above GS-4 are
first forwarded to one of the division offices before they are submitted
to the Bureau office for approval. They are then sent back to the
field offices through the same cumbersome channel.
Bureau personnel records are not current. During this survey it
was found that the Personnel Office of the National Park Service had
no up-to-date record of a group of 27 accountants serving in the
Audit Division. Similarly, the Personnel Office in the Bureau of the
Mines had no current data on its Statistical Services Branch num-
bering 38 employees.
Staffing?Ratios: The ratio of personnel workers to total employees
in the bureaus varies from 1 to 28 in the Southwestern Power Ad-
ministration to 1 to 231 in the Geological Survey. Table 2, "Ratio
of personnel employees to total employees in the Department of the
Interior," indicates the variation prevailing in the bureaus. The
divergence of these ratios indicates that little effort is being made in
the central office to enforce staffing standards prescribed for personnel
offices.
Table 3, "Comparison of total employees and ratio of personnel
employees to total employment as of January 1, 1940, and June 30,
1950," indicates that there were 346 personnel employees on January
1, 1940, or a ratio of 1 to 132 total employees. On June 30, 1950,
there were 551 personnel workers, showing a ratio of 1 to 110 em-
ployees. During this 10-year period, total employment increased 32
percent, whereas personnel employees increased 59 percent. Even
though this over-all ratio is within the allowable limits prescribed by
the Bureau of the Budget, each personnel worker is serving 17 percent
fewer employees than in 1940.
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L .IU EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
CABLE 2.?Ratio of personnel employees to total employees in bureaus, Department
of the Interior, as of June 30, 1950
Organizational unit
June 30, 1950
Total
employment
Personnel
employees
Ratio of per-
sonnel to total
employment
( ffice of the Secretary:
Staff services 1
33.0
Operations
560
4.0
1:140
I ins Arts Commission
2
I onneville Power Admihistration
2,644
24.0
1:110
S nithwestern Power Administration
282
10.2
1:28
I ureau of Land Management
1,385
14.7
1:94
I ureau of ndian Affairs
13, 565
75. 2
1:180
I ureau of lieclamation
19, 261
232. 5
1:83
eological Survey
8,557
37.0
1:231
I crews of Minns
4,505
42.0
1:107
ational Park Service 2
5, 837
46. 7
1:139
F sh and Wildlife Service
3,540
32.0
1:111
Total 3
60,148
551.3
1:110
Is responsible for the over-all development of policies and procedures, and the so pervision and coordina -
ti n of bureau and office personnel programs.
Personnd actions for 682 employees of the National Capital Parks are processed by the Personnel Divi-
si 11 of the National Park Service.
Does not include Office of Territories.
T knLE 3?Comparison of total employees and ratio of personnel employees to total
employment in tit? Department of the Interior as of Ian. 1, 1940, and June 30,
1950
Total em-
ployment
Personnel
employees
Ratio of per-
sonnel em-
ployees to
total em-
ployment
. 1, 1940 1
45, 690
346
1:132
Ju le 30, 1950 2
60, 144
551
1:110
Ch inge in number of personnel employees
Number Percent
+205 +59
3ee H. Rpt. 1593, 80t1 Cong., 2d sess., Study of Personnel Offices in the Exect tive Departments and
Ag ncies of te Government.
2 Does not include Office of Territories.
Cost data.?Average annual salaries of personnel workers range in
tib o bureaus front $3,293 in the Geological Survey to $4,536 in the
Bonneville Power Administration. Table 4, "Costs of personnel
se 'vices and average annual salary of personnel employees in the
D Tartment of the Interior for fiscal year 1950," illustrates the in-
co asistence of salaries of the organizational units. This difference
ty be partially attributed to the fact that the central office does not
re wire or use this type of cost information.
['able 5, "Comparative total and average salary of personnel
en ployees in the Department of the Interior as of January 1, 1940, and
Ju ae 30, 1950," shows that the total annual cost of personnel services
on January 1, 1940, was $634,337. On June 30, 1950, it was
$2 417,370. This represents an increase of $1,783,033, or 281 percent.
AN erage annual salaries for this same period advanced from $1,833 to
$4 017, an increase of $2,184, or 119.2 percent. Legislative pay
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raises accounted for $938 (51.2 percent) of the increase during this
period. However, an additional increase of 81,240 (68 percent) can
be attributed to reclassification of positions and other employee
promotions.
Employee turn-over.----Data submitted by the Department show that
the annual rate of employee turn-over has decreased from 30.4 percent
in 1947 to 15.8 in fiscal 1950.
Fiscal management
The present organization for fiscal management in the Department
is based on the principle of decentralized operation under central
guidance and control. In this, the bureaus have responsibility and
authority to develop, organize, and administer their own financial
programs with only general direction from the secretarial level.
Actually, the fiscal officer of the Department exercises control only
over budget preparation and the apportionment and allocation of
funds. He provides no control, and very little guidance, over account-
ing, auditing, and payrolling activities of the bureaus.
TABLE 4.?Costs of personal services and average annual salary of personnel employ-
ees in the Department of the Interior for fiscal year 1950
Organizational unit
Number of
employees
Fiscal year 1950
Annual salary
costs
Average an-
nual salary
Office of the Secretary
Bonneville Power Administration
37. 0
24.0
$194. 784
194,842
$5, 264
4, 536
Southwestern Power Administration
10. 2
35, 768
3, 507
Bureau of Land Management
14. 7
62, 289
4, 237
Bureau of Indian Affairs
75. 2
278, 641
3, 705
Bureau of Reclamation
232. 5
937, 026
4,030
Geological Survey
Bureau of Minos
37. 0
42. 0
121,843
15, 448
3, 293
3, 701
National Park Service
46.7
175,046
3, 748
Fish and Wildlife Service
32.0
126, 827
3, 963
Health Services
17. 8
71, 324
4, 007
Safety and Industrial Relations
32.6
149, 512
4, 586
Total
601. 7
2,417,370
4,017
TABLE 5.?Comparative total and average salary of personnel employees in the
Department of the Interior as of Jan. 1, 1940, and June 30, 1950
Jan. 1, 19401
June 36, 39942
Increase for period
Amount
Percent
Total salary
$634, 337
$2, 417, 370
81, 783, 033
281.0
Average salary
1,633
4,017
2,184
119.2
I See H. Rept. 1593, 80th Cong., 2d sess., Study of Personnel Offices in the Executive Departments and
Agencies of the Government.
3 Does not include Office of Territories.
The Division of Budget and Finance, on the staff of .the Secretary,
is organized and staffed to carry out the administration on the principle
of decentralized operations with a central control. The carrying out
of this principle has been retarded by weak and ambiguous depart-
mental orders which establish the responsibilities and authorities of
the Division. This is illustrated by the following quotation from the
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Approved ficr RA901,?P 321.9?{9.R,??N: THE EXECUTIVE
c rder establishing the Office of Administrative Management for the
I )epartmen t:
The Director of Budget and Finance * * * .shall be responsible to the
e.:ecutive officer for?
*
(4) general direction, through bureau and office heads Lnd their staffs, of
the development and operation of all financial programs for the Department,
and cooperation in this regard with the General Accounting Office, the
Bureau of the Budget, and the Treasury Department.
This is the only reference to departmental responsibilities for audit-
ing, accounting, and payrolling activities in the entire order. The
a ithorities for budgetary responsibilities are more clearly defined.
The responsibility of the Secretary for the fiscal-management activi-
ties of the Department is definitely reaffirmed by law in section 113
o the Accounting and Auditing Act of 1950, the opening paragraph
o which states:
The head of each executive agency shall establish and ma?ntain systems of
? 3ount in g and internal control designed to provide * * *.
This responsibility and authority has long been implied, yet the
E epartrnent has not crystallized its relations with the bureaus.
In the absen.c3 of clearly defined authority, the bureaus do not
fellow the advice or guidance which may be offered by the Office of
ti e Secretary. The Bureaus of Reclamation and Land Management
h:,ve proceeded to develop their own improved fiscal management.
0 her bureaus are doing very little toward this end.
Budget.?In past years the budget staffs of the bureaus have been
burdened with large numbers of appropriations. Beginning with
fiE cal year 1951 the total number of them has been greatly reduced.
T hs improvement suggests a simplification of both budget prepara-
tion and accounting with a corresponding reduction in personnel.
T rere is no evidence that present planning is directed toward this
re luction.
While the staff at the secretarial level has a great deal to say about
tli e policies and objectives of budget preparation and execution, it
de es not concern itself with the methods or personnel used in the
in lividual bureaus. Consequently, some bureaus use a large number
of people in detailed budget work while others use only a few top-grade
ex cutives and iyogram people in this activity. In both extremes,
th 3 utilization of personnel is poor.
Accounting .?The accounting in the Department lac.lcs uniformity.
TI Le van able nature of bureau program requirements leads to indi-
vidualization of accounting methods and procedures. This should
not affect accounting policy and objectives. Yet, accounting objec-
tiI es are widely dissimilar.
Phe Secretary's Division of Budget and Finance is responsible for
th coordination of accounting throughout the Department, but it is
no `, adeq uately staffed or clearly authorized to discharge this responsi-
bil ity. In reality, this is an example of poor personr el utilization.
Ac ditional personnel assigned at this key point would obviate the
ned for many employees at related points throughout the bureaus.
At present, impetus for improvements in the accounting system of the
bu7eau. s must come from the General Accounting Office or the Bureau
of the Budget. Fiscal officers of the bureaus look to these agencies
for assistance.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 113
All bureaus have attempted to decentralize accounting. In this,
some bureaus have gone to extremes while others have decentralized
very little. Both extremes are costly in the use of personnel. In the
first instance, there is a tendency toward "accounting for accounting's
sake" at the lowest level of the organization. In the other plan, the
practice is to maintain duplicating accounts at every level.
During the past 5 or 6 years the Bureau of Reclamation has made
progress toward the development of a workable accounting system.
It has now reached a point where a complete reappraisal should be
made to consolidate or eliminate some of its accounting activities.
Accounting operations of the Fish and Wildlife Service the Bureau
of Indian Affairs, the Bureau of Land Management, the Bureau of
Mines, the Geological Survey, and the National Park Service are
costly. Minor improvements in methods are being adopted, but
little or no thought is being given to a major overhauling of the system
which would enable a more efficient operation with fewer employees.
Auditing. One of the fundamental requirements of the General
Accounting Office for an on-site, business-type audit is a satisfactory
system of post audit in the agency involved. Only three bureaus of
the Department are meeting this qualification.
Internal pre-audit, or voucher examination, is handled differently
in all of the bureaus. The Bureau of Reclamation performs the most
complete yet least expensive. examination, while the Fish and Wild-
life Service carries on the most casual but expensive operation. In
general, there is too much time devoted to the examination, reexami-
nation and audit of vouchers throughout the Department. There is
no clear delineation of the aims of the voucher audit given to the
operating personnel. These conditions cause too many people to be
engaged in pre-audits. Again this practice stems from the decentral-
ization of responsibility without corresponding decentralization of
authority. This is particularly true in the Bureau of Mines, Geological
Survey, the National Park Service, Fish and Wildlife Service, and the
Bureau of Indian Affairs.
Payroll, leave, and rdirement.?As a result of efforts put forth by
the Bureau of the Budget, the operation and aicountability for pay-
rolling has recently been made the responsibility of fiscal management;
Like the other functions of fiscal management, there is no uniformity
of objectives or methods in the payroffing operations of the bureaus;
Payrolling in the Geological Survey is completely centralized at
Washington. In the Bureau of Reclamation this function is almost
completely decentralized. In all instances, only little consideration
has been given to the cost of this operation in spite of the fact that the
cost of preparing payrolls for each employee varies from a low of $9.14
per year in Geological Survey to $19.41 in the Bureau of Reclamation.
This variation again shows that extreme decentralization of house-
keeping functions is costly in both money and personnel.
Table 6 ,shows the number of personnel in each bureau or office
spending more than 50 percent of their time in fiscal activities. It
should be noted that while the Bonneville Power Administration has
a relatively high average salary rate, its system of commercial-type
fiscal management makes it possible for it to have the lowest unit
cost. On the other hand, the Fish and Wildlife Service has almost the
lowest average salary, yet its unit cost is next to the highest. Unit
costs for the Bureau of Land Management are also high in relation to
76410-50 2
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114 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
average salaries paid. The Bureau of Indian Affairs furnishes fiscal-
management services for trust, tribal, and private funds which are
not reflected in the cost figures in table 6. Therefore, their cost is
not directly comparable but it is still too high in comparison to the
relatively low .salaries paid.
A realistic approach to controlled decentralization and moderniza-
tion of the accounting systems in the bureaus will show that the
iccounting anc audit responsibilities could be executed with fewer
miployees.
FABLE 6.?Number of employees engaged in and cost of fiscal mTnagement functions
I ureau or office
Employees engaged in?
Budg-
et
Ac-
count-
ing
Payrolling
-
Vouch-
er ex-
amine-
tion
Total
To al costs
for per-
sonnel
Relative cost
Positim
Aver-
age
salary
Total
unit
cost 2
gime of Secretary
outhwestern Power_
teclamation
immovilli Power
>face of Territories_
And Management.
tureen of Mines
leologic Survey
ndlan Af'airs
l'ish and Wildlife Service
iational Park Service.
Total
2
71
8
4
4
4
4
13
8
9
16
10
537
48
2
49
52
55
210
45
35
4
2
109
10
1
9
18
27
50
19
29
2
1
80
12
1
7
20
15
51
15
17
30
15
797
78
8
CO
94
101
324
87
90
$i_30, 237
63, 168
3, 003, 617
386, 981
28, 896
239, 907
318, 656
336, 629
1,1>16, 891
181, 508
!85, 108
1
2
3
4
5
6
7
8
9
10
11
(3)
3
6
10
7
5
4
2
8
135
1,059
278
221
1, 693
6,1>26, 818
$3,560
1 1--higliest cost; 2?sccond highest cost, etc.
2 Cost p appropriated dollar for operations in continental 'United States.
Not comparable.
7eneral services
Procurement.--Procurement activities throrghout the headquarters
A the Department are wasteful and extravagant. The facilities for
mrchases, amounting to more than $53,000,000 in fiscal 1950, are badly
Aganized and poorly supervised. Table 7, "Average number of
flaployees and relative cost of purchasing operations during fiscal
rear 1049," shows that the average cost of processing each purchase
)rder is nearly $10 ($9.95). The 108 employees mgaged in this
ictivity throughout the headquarters produce orders at the rate of
)nly 1,4 per day per empLoyee. Daily average production rates vary
ietween. 0.7 per employee in the Southwestern Power Administration
,o 3.6 in the Bureau of Land Management. Only the Bureau of
leclamation is there any concern over this miserable -7ecord. In that
3ureau an effort is being made to reduce the number of small purchases
End to promote economy in this phase of the Bureau's operation. In
fuly 1050 the Director of Supply issued the following instructions to
Eli of the field offices in the Bureau of Reclamation:
All Bureau procurement offices are urged to study their procurement transac-
-ions with a view to reducing the number of procurement transactions involving
he purchase of small-dollar-value items. Wherever possihle such purchases
? .hould be consolidated and such small items procured for stock and issue on a
i-month basis. When it is considered that it cost about $6.3.5 for each procure-
nent action handled by the Bureau, the need for roducing the number of such
)rocurement actions involving small items is readily apparent.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 115
These instructions are timely, for this survey reveals that the aver-
age cost of issuing each Bureau of Reclamation purchase order is
$17.35 instead of the $6.35 esthn.ated by the Bureau.
Examination of purchase orders.?After reviewing the high unit costs
of issuing purchase orders shown in table 7, the subcommittee directed
its staff to make a detailed examination of each purchase order issued
during the month of August 1950 in the Bureau of Reclamation, the
Fish and Wildlife Service, and the National Park Service. This
inspection revealed that the Fish and Wildlife Service issued a purchase
order in the amount of 32 cents, even though it costs an average of
$13.78 to do so. The Bureau of Reclamation bought $2.45 worth of
paper drinking cups at an average administrative cost of $17.35 for
use in the transport airplane assigned to Bureau executives. The
National Park Service issued an order in the amount of 50 cents for a
copy of the August issue of Esquire magazine to be delivered to the
Office of the Director. Another order was issued for a copy of a
Rand-McNally atlas for which the sale price was 75 cents. Table 7
shows that the cost of issuing each one of these orders in. the National
Park Service was $13.39.
TABLE 7.?Average number of employees and relative cost of purchasing operations
during fiscal year 1949
Organization
Purchase orders
Employees engaged in issuing purchase
orders
Num-
ber
issued
Dollar
volume
Per-
cent
under
$20
Office of the Secretary
Bureau of Indian Affairs
Bureau of Land Management.. _ _
Bureau of Mines
Bureau of Reclamation
Fish and Wildlife Service
Geological Survey
National Park Service
Bonneville Power Administra-
tion
Southwestern Power Adminis-
tration
Division of Geography
Total
2,734
1, 121
1, 906
3,345
7, 071
1, 597
8, 789
1, 384
9, 531
1, 073
174
38, 725
$263, 812
833, 819
276, 862
569, 523
19, 172, 173
1, 731, 364
3, 526,654
1,041, 417
25, 741, 469
601, 034
6, 740
57
26
58
39
46
35
35
26
38
74
53, 770, 867
36
Num-
ber
of em-
ployees
Total
cost of
personal
services
Yearp
average
per ern-
ployec
Daily
average
per em-
ployee
Aver-
a4cost
4
$13, 075
683. 5
2.7
$4. 78
2. 5
11, 088
448. 0
1.8
9. 89
2. 1
8, 004
908. 0
3. 6
4.20
7
25, 375
478, 0
1.9
7. 59
31. 65
122, f163
223.0
. 9
17. 35
6.65
22, 007
240:0
1.0
13. 78
14. 65
49, 663
602. 0
2.4
5. 65
5
18, 535
277. 0
1. 1
13.39
28
97, 017
340.0
1. 3
10. 18
6
17, 000
179.0
.7
15.84
. 25
839
696,0
2.8
4.82
108
385,266
359.0
1.4
9. 95
Management improvement
Except in the Bureaus of Land Management and Reclamation,
management improvement activities in the Department are either in
the initial planning phase or nonexistent. In all, there are 37 em-
ployees working in this activity in the headquarters offices at a total
annual cost (including travel) of $247,897. (See table 8, "Personnel
engaged in management improvement in the Department of the
Interior, 1950".)
Approximately half of this total is expended in the Bureaus of
Reclamation and Land Management. The remaining half represents
hastily organized efforts to satisfy the provisions of Executive Order
10072 which established a management improvement program through-
out the executive branch of the Government. Table 8 shows that
six important organizations, with a total employment of 25,000
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116 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
e:nployoes, have made practically no effort to comply with this
I 'residential directive.
This circumstance is not easily understood, especially in view of
tie fact that existing improvement activities in Land Management
a ad Reclamation are so well developed and administered. In these
t wo Bureaus the management staffs are assigned to workaday problems
in cooperation with operating officials. They have made progress in
i:Istilling a philosophy of cost consciousness in the minds of many of
t le division and branch supervisors. They have gained the support
a ad confidence of the heads of their respective bureaus by showing
e vidence of real savings that have accrued from their efforts. The
)st of their program is fully justified and their record should be
e nulated by the other bureaus in the Department.
'1 ABLE S.?Personnel engaged in management improvement in !lie Department of
the Interior, 1950
Identity of organizational units
Number of persons
Reported on
man agement
improvement
questionnaire
by agency
Shown by
survey
0 nee of the Secretary
3
4
B ireau of Indian Affairs
3
3
B ireau of Land Management
4
4
B ireau of Mines
0
B ireau of Reclamation
8
15
oh and -Wildlife Service
4
5
B mneville Power Administration
6
6
S( uthwestem Power Administration
2
0
;ological Survey
2
N AiOnal Park Service
0 flee of Territories
1
Total
39
37
R Ltio to total personnel
1:1, 681
1:1,772
T dal number of central locations
10
6
C 1st for personal services
$248, 355
$247, 897
No management improvement personnel listed for the Alaska Railroad, Alaska Road Commission,
P Lotto Rico Reconstruction Administration, Virgin Islands Corporation, and tte Southeastern Power
A lministra
From all of this, the subcommittee can only conclude that the
ureau of Mines, the Geological Survey, the National Park Service,
the Southwestern Power Administration, and the office of Territories
a .e not inclined to improve their own administration.
AREAS OF UNSATISFACTORY ADMINISTRATI ON
lhe Office of Territories
There are several examples of unsatisfactory administration in the
epartment of the Interior. The Office of Territories numbers more
than 5,000 employees and receives a direct appropriation of funds
ii excess of $45,000,000, yet there is little or no information available
ii the Washington office on its field activities. Most of the employees
:e not within the competitive civil service. Similarly, the Office
is excused from the usual controls incident to the reporting require
ii ents of the Bureau of the Budget. There ace 71 employees on the
si aff in the Washington headquarters. They were unable to supply
fi ctual information about the administration of their program.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS I
The Geological Survey
The relationship of the Geological Survey with the Department is
-unique. It operates almost separate and apart from the Department,
and there is little knowledge concerning its operation at the secretarial
level. Its organization is made up of four highly professionalized
divisions, which are practically independent of each other.
The Geological Survey has paid little attention to the Department's
efforts to decentralize its activities closer to the scene of its operations.
It chooses to remain the most centralized activity within the Depart-
ment; yet each of the divisions maintains separate admMistrative
services, including budget, personnel, accounting, and procurement
services. Each division has its own supply room; and its scientific
equipment, although consisting of many of the same items, are kept
separately in the so-called central warehouse. Equipment and sup-
plies are procured at seven different points in the headquarters
organization.
An attitude of intolerance toward good administrative practices
pervades the organization. The following quotation, taken from a
report submitted to the subcommittee by the Survey, serves to
illustrate this attitude:
In a highly technical engineering and scientific organization, such as the Geologi-
cal Survey, recognition must, of necessity, be given to the difference between
operating problems (involving scientific skills) and administrative, or house-
keeping problems. Awareness of this distinction is of prime importance. For
example, in many agencies the organization and management staff can be used
interchangeably on either program or administrative problems, but not in the
Survey. In the Survey, however, the usual type of operations and management
analyst would be of 110 use if confronted with such a technical problem as bow best
to perfect the accurate measurement of flood flows through a survey of critical
data after the flood has occurred. Such problems must be left to the employees
who have competence in the 'away highly specialized fields of scientific endeavor
which touch upon the Survey's operational programs. Because of this need for
technical specialization, the Survey must assign the improvement of program
techniques to its technical divisions. This necessary and practical arrangement
precludes the segregation or formalizing of any segment of a program staff to
devote full time to personnel management improvement activities. No study has
ever been made of the portion of the total time that operating personnel spend
in management improvement. The very fact that the Survey, throughout its
expansion, has not only been able to keep its head above water, but has increased
its reputation for professional competence, is ample evidence of the exercise of
such considerable ingenuity that many a formalized staff in a static agency would
proudly claim it as savings attributable to management improvement. For
example, when the agency first undertook to test a sudden great increase in the
number of samples of ore for the presence of uranium, it took highly skilled em-
ployees 2 w3eki to make a single test. With the new techniques and equipment
which were then developed it is possible for subprofessional personnel to test a
sample in 2 minutes. The saving represented by the number of employees who
would hav.- been hired if the new technique had not been developed is significant.
Here again, management experts could not have devised the most efficient method.
The improvement was worked out by the technical staff.
Here is a fertile yet difficult field for management improvement.
RECOMMENDATIONS
In view of the conditions described in this report, the subcommittee
makes the following recommendations which it believes necessary to
improve the over-all management and utilization of personnel in the
Department of the Interior:
t1
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118 EMPLOYEE UTILIZATION IN THE EXEC-UTNE DEPARTMENTS
1. The authorities of the Secretary of the Department and the
n,embers of his staff should be firmly established in the subordinate
b ireaus.
2. Upon fulfillment of recommendation No. 1, the Secretary should
0 nduct a thorough examination of the functions in which the bureaus
a .e now engaged in order to eliminate all of the nonessential dupli-
c;ting and overlapping activities.
3. In this, the major objective should be a realinement of bureau
a,tivities in conformance with the four major functions of the Depart-
ent; i e., (1) mineral resources, (2) land management, (3) water
a] id power development, and (4) administration.
The Secretary of the Department should give consideration to the
knowing recommendations for the improvement of his four principal
staff services:
PERSONNEL
1. The central Division of Personnel at the seeretar[al level should
bi: giver more authority to control personnel policies and procedures
in the constituent bureaus of the Department.
2. The central Division of Personnel should aggressively examine
aid evaluate personnel management in the Bureau personnel offices.
iese offices should be made to adhere to departmental directives
ea llMg for?
(a) a standardized pattern of organization;
(b) greater uniformity in staffing requirements; elimination of
the wide variance in the number of employees required;
(c) the development of a realistic classificatior. standards to
insure equal pay for equal work; and
(d) uniform delegation of appointment authority to the field
Offices.
FISCAL MANAGEMENT
1. The Division of Budget and Finance should be activated as the
fo,;a1 point for all funds appropriated to and expended !in the Depart-
m4 mt.
2. There should be a more consuming relationship between the
vision of Budget and Finance and the directors of the several
bureaus.
3. The bureau directors should appraise the present fiscal activities
wi their respective bureaus in order to install a mere meaningful
fis ;al system to be used as a tool for better bureau management.
L The staff of the departmental fiscal officers should be increased.
Ac ditional qualified personnel should be assigned so that improve-
rth nts in the fiscal management of the bureaus can be accelerated
to' vard a reduction in total bureau employment.
GENERAL SERVICES
.. The Divisions of Property Management and Administrative
Se 'vices, in the Office of the Secretary, should prosecute a thorough
recrganization of the procurement activities in the headquarters
off ces. Methods, procedures, and controls should be promulgated
to insure a marked reduction in operating costs.
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MANAGEMENT IMPROVEMENT
1. An adequate management-improvement program should be
devised for the Department in conformance with the provisions of
Executive Order 10072.
2. Personnel from existing management-improvement groups .in the
Bureaus of Reclamation and Land Management should be temporarily
loaned to other bureaus to initiate badly needed management-
improvement programs.
Additional recommendations pertaining to the Department of the
Interior will ho included in. subsequent reports of the Subcommittee.
JOHN BELL WILLIAMS, Chairman.
JAMES C. DAVIS.
A. S. that.LoNG, Jr.
EDWARD H. BEES.
HAROLD C. HAGEN.
APPENDIX
EXHIBIT I
SUMMARY OF FUNCTIONS PERFORMED BY THE DEPARTMENT OF THE
INTERIOR
The Department of the Interior, created by the act of March 3, 1849,
is responsible for the management, conservation, and development of
the natural resources of the United States. These resources include
the public lands and the Federal range, water, and power resources,
oil and gas and other mineral resources, certain forest, resources, fish
and wildlife resources, and the national park system. In addition,
the Department of the Interior has specialized responsibilities to the
Indians and to the Territories and island possessions of the United
States.
The Department of the Interior consists of the following agencies:
(a) Office of the Secretary.
(b) Bureau of Indian Affairs.
(e) Bureau of Land Management.
(d) Bureau of Mines.
(e) Bureau of Reclamation.
(f) Fish and Wildlife Service
(g) Geological Survey.
(h) National Park, Service.
(i) Bonneville Power Administration.
(j) Southwestern Power Administration.
(k) Southeastern Power Administration.
(1) Office of Territories.
(m) The Alaska Railroad.
(n) Alaska Road Commission.
(o) Puerto Rico Reconstruction Administration.
(p) Virgin Islands. Corporation;
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E11,1 PLOTEE UTILIZATION IN T. HE EXECUTIVE DEPARTMENTS
SECRETARY OF THE INTERIOR
The Secretary of the Interior is the head of the Department and is
ci arged with the supervision and direction of the functions performed
ai d activities carried on by the offices and employees throughout the
D partment. All bureaus and offices of the Department are respon-
sible to the Secretary.
IR DER SECRETARY AND ASSISTANT SECRETAR1=ES OF THE INTERIOR
Under Secretary.?The Under Secretary advises and assists the Sec-
re ,ary in the determination and execution of departmental policy and
pr)grams. lie serves as the Secretary's principal adviser and as
ting Secretary of the Interior during the absence of the Secretary.
TI ie Under Secretary assists the Secretary in directin g the Depart-
ment's relationships with other Federal departments, the Congress,
an i the public. He has direct supervisory responsibility for the Office
of the Solicitor and the Division of Information.
The Assistant Secretary for Mineral Resources.?The Assistant See-
rd i ary for Mineral Resources performs all necessary du ties and funic-
tic ns to exercise the authority of the Secretary of the Interior with
riN pect to matters in the field of minerals and uels development and
ut lization and exercises secretarial direction and supervision over the
1-)i vision of Oil and Gas, the Division of Geography, the Bureau of
M nes, and the Geological Survey.
Me Division of Oil and Gas serves as the charnel of communication
be ween the Federal Government and the petroleum industry and as
th, Government liaison agency with State oil and gas bodies. The
Di vision assists the Assistant Secretary for Nifineral Resources in
co, wdinating and unifying oil and gas policy and administrative
ac ivities of Federal departments and agencies; reviewing and co-
on linating Federal policy with respect to technological developments
in 3etroleum and synthetic hydrocarbon fuels; obtaining and analyzing
jul armation on oil and gas matters in which the Federal Government
ha a proper interest, and serving as the central clearinghouse for
str tistics, technical data, and other information; coordinating all oil
an I gas policies and activities in the Department; and developing
proposals; looking to centralization of Federal oil and gas functions
an I activities.
The Division of Geography assists the Assistant Secretary for
M nerd Resources in performing the operational responsibilities of the
So retary of the Interior who, cojointly with thc Board on Geographic
Ni mes; has the duty of standardizing geographic names in the United
St: ,tes and throughout the world.
Che Assistant Secretary for Public Land Management. ?The Assist-
an , Secretary for Public Land Management performs all necessary
du ies and functions to exercise the authority of the Secretary of the
In .erior with respect to matters in the field of land utilization and
mi nagement and exercises secretarial direction and supervision over
tin Division of Land Utilization' the Bureau of Land Management,
flu Fish and Wildlife Service, the National Park Service, the Bureau of
In lian Affairs, and the Office of Territories.
' rhe Division of Land Utilization provides technical staff assistance
for the Assistant Secretary for Public Land Management on land use
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and community-service management and on the development and
coordination of programs in this area.
The Assistant Secretary for Water and Power Development.?The
Assistant Secretary for Water and Power Development performs all
necessary duties and functions to exercise the authority of the Secre-
tary of the Interior with respect to matters in the field of water and
power development and exercises secretarial direction and supervision
over the Division of Water and Power, the Bureau of Reclamation,
the Bonneville Power Administration, the Southwestern Power Ad-
ministration, and the Southeastern Power Administration.
The Division of Water and Power assists the Assistant Secretary
for Water and Power Development in the general super vision of all
the policies, programs of construction or acquisition, activities, reports,
recommendations, and contracts relating to the conservation, devel-
opment, utilization, or marketing of water or power, appertaining to
all agencies of the Department; and acts as the liaison office between
the Assistant Secretary for Water and Power Development and other
agencies of the Government on matters relating to the conservation,
development, and utilization of water and power resources.
Administrative Assistant Secretary.?The Administrative Assistant
Secretary performs all necessary duties and functions to exercise the
authority of the Secretary of the Interior with respect to matters in
the field of administrative management and exercises secretarial di-
rection and supervision over the Division of Administrative Services;
the Division of Budget and Finance, the Division of Management
Research, the Division of Personnel Management, and the Division
of Property Management.
BUREAU OF LAND MANAGEMENT
The Director of the Bureau of Land Management is charged with
the management, leasing, and disposal of the vacant public lands and
the timber and other resources therein; the execution'of all laws relat-
ing to the surveying, prospecting, locating, appropriating, entering,
reconveying, and patenting of all public lands within the public
domain, including national forests and other reservations; and the
conduct of scientific and professional work in the fields of land and
mineral economics. He administers the mining and mineral leasing
laws on lands in the public domain and purchased lands under the
jurisdiction of various Federal agencies. He supervises grazing on
Federal range in order to protect the lands, stabilize the livestock
industry dependent upon them, permit the highest use of the forage
and other resources, and at the same time retard soil erosion and
facilitate flood control.
BUREAU OF INDIAN AFFAIRS
The Commissioner of Indian Affairs is responsible for the manage-
ment of all Indian affairs and of matters arising out of Indian rela-
tions. This includes the economic development and relief of the
Indian, both tribally and as an individual; the organization of Indian
tribes, including credit organizations; Indian education in boarding
schools, day schools, and community centers operated by the Govern-
ment, and in public schools and other nongovernmental institutions;
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ti e health, medical, and sanitation activities; the land program,
ir volving land acquisition and adjustment, tribal enrollment, land
st les, and contracts; forestry, involving forest management, fire
p .otection, grazing; the furtherance of an agrtcultural. extension pro-
p am; irrigation, both construction and maintenance and operation;
ti .e construction and upkeep of buildings at field units; the construe-
ti and maintenance of roads and bridges on Indian lands; also
k ;filth, education, and other activities in behalf of the natives of
Alaska.
THE GEOLOGICAL SURVEY
The Director of the Geological Survey has respon sibility for the
d: rection of the Geological Survey, the classification of the public
la ads, and the examination of the geological structure and the mineral
sources and products of the national domain. In conformity with
it ; organic act and later legislation the Geological Survey is engaged
in the preparation and publication of reports upon the geology and
mineral resources of the United States and Alaska, in the investigation
ol strategic and deficient minerals in Latin America, and in the chem-
ic 1,1 and physical. research incident to the work; in the preparation,
iblication, and sale of topographic maps of the United States and its
ct:pendencies; in investigating and reporting upon water resources,
both surface and underground; in classifying the puldic lands as to
tl kir mineral and power value and in supervising the technical phases
ol mineral leasing on lands in which the title to the mineral resources -
rt mains in the United States.
BUREAU OF RECLAMATION
The Commissioner is in administrative charge of all the activities
oi the Bureau of Reclamation, including preliminary surveys, and
investigations of proposed projects, the preparation of plans, the con-
struction of irrigation works and multiple-purpose darns, power de-
Iopment, the administration of funds provided for reclamation, the
01 eration and maintenance of completed projects, the settlement and
:veloprnent of project areas, repayments from irrigation districts
SI Ed water users' associations of the cost of the construction works
al located to irrigation, and return of the investment in power facilities.
NATIONAL PARK SERVICE
The Director of the National Park Service administers the national
p:;rks, national monuments, and other areas of scen-.c and historic
);nificance.
The National Park Service formulates policies and directs protective
w n.k from the standpoint of preservation and of enjoyment by
visitors; directs public interpretive service in natural sciences, history,
ai Ed archeology; directs construction from engineering, architectural
ai id landscape viewpoints; provides for museum developments; issues
pliblications for the information of visitors and prospective visitors;
is responsible for the investigation of proposed national parks, monu-
Tr, ents, and historic sites, and other park projects; and furnishes
at [vice on national park establishment, policies, and management to
fc reign park officials, as requested.
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The National Park Service aids other Federal and State agencies
with planning for their park, parkway and recreational area programs.
Under cooperative agreements with the Bureau of Reclamation of
the Department of the Interior, the. Service assists that agency in
planning and managing recreational activities on and around reservoirs.
The National Park Service maintains the Executive Mansion and
grounds. The Director of the National Park Service is executive
officer of the National Capital Park and Planning Commission and a
member of the National Park Trust Fund Board, the District of
Columbia Zoning Commission, and various other commissions and
committees.
BUREAU OF MINES
It is the duty of the Bureau of Mines to conduct scientific and
technologic investigations on mining, and on the preparation, treat-
ment, and utilization of mineral substances, in order to increase
safety, efficiency, economic development, and conservation of mineral
resources; and to inquire into the economic conditions affecting the
mineral industries.
The Bureau of Mines investigates domestic mineral resources to
increase reserves of minerals essential to national defense or industry
and of which present or prospective supplies are inadequate.
The Bureau carries on extensive research and experimentation to
(1) determine the most economical methods of treating marginal ores
to produce metals and minerals that meet current industrial standards,
(2) develop alternative extractive methods for utilizing waste metals
and ores that do not respond to mechanical benefication, and (3)
develop substitutes and replacements for metals and minerals of which
this country lacks adequate deposits.
Fundamental information in the production, marketing, distribu-
tion, and consumption of all major mineral commodities are collected
and analyzed by the Bureau, and these data made known to industry
and Government, and the general public.
Assistance is given in rescue and recovery work after mine disasters
and the causes of accidents are investigated. The Bureau inspects
coal mines periodically and makes recommendations for correcting
hazardous conditions and practices observed. Its findings are made
available to the operators, the mine workers' organization, the appro-
priate State authorities, and the public, and through cooperative
efforts with management and workers in the coal-mining industry the
Bureau seeks to improve safety conditions and practices.
FISH AND WILDLIFE SERVICE
The Fish and Wildlife Service is concerned with the conservation of
the Nation's natural resources in the field of vertebrate wildlife, in-
cluding the land and water mammals and birds and the fishes, reptiles,
and amphibians, and also shellfishes and crustaceans.
The activities of this agency include such lines of work as (1)
business administration; (2) wildlife research; (3) fishery biology;
(4) Federal aid to States in wildlife restoration; (5) land acquisitions;
(6) wildlife refuge administration and management; (7) game manage-
ment and conservation law enforcement; (8) fishery industries;
(9) fish culture; (10) Alaska fisheries; (11) predator and rodent control;
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1 ?,4 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
( 2) foreign activities relating to international agreements concerning
fi th and wildlife, including the 'Whaling Treaty Act; (13) Philippine
fi ihery rehabilitation program; (14) Pacific Oceanic fishery investiga-
tions; (15) river basin studies; .and (16) public relations, in the dis-
si.mination of information developed through research and manage-
n ent and to facilitate law enforcement by acquainting the public with
tl ie nature and need of regulatory action.
The fishery functions of the Service involve the promotion of trade
a Id commerce in fishery products, as well as the conservation of
fithery resources. This includes the inquiry into the causes of fluctu-
a ions in abundance of food fishes in the lakes, rivers, and coastal
aters of the United States, the development of methods of husband-
ii
these resources, including improvements in methods of fish culture
a ad investigation of important fisheries of the Atlantic, Gulf, and
I acific coasts, with a view to determining the condition of these
r !sources; the propagation and distribution of food fishes; the rescuing
o " fishes from overflowed lands and the distribution of such fishes to
s mitabic. waters; the study of the methods of the fisheries and of the
p reservation, utilization, and merchandising of fishery products; the
c illection and compilation of statistics of the fisherie3; and the pro-
t iction and conservation of the salmon and other fisheries of Alaska.
The Service is responsible for the administration of the fur-seal herd
o the Pribilof Islands and the care of the natives of these islands.
'hrough the agency of the Alaska Game Commission it also regulates
unting and tranping in the Territory, for the protection. of big-game
a ad fur mammals and of game and other birds.
DIVISION OF TERRITORIES AND ISLAND POSSESSIONS
The Office of Territories centralizes the Department's responsibili-
t .es in connection with the civil government and certain other Federal
inctions and agencies in Alaska, Hawaii, Puerto Rico, the Virgin
I3lands, the Equatorial Islands, the island of Guam, American Samoa
a nd the Trust Territory of the Pacific. The respons1A.lities may be
roken down as follows:
t. Representation of Congress and the President in observing
and reporting the political, social, and economic progress of the
Territorial areas under the laws enacted for their government.
2. Origination and implementation of Federal policy in the
Territories through legislation, direct executive actions through
the governors, administrative action of other agencies through
their field organization, and public-relations contacts.
,3. Representation in Washington of the governors reporting
through the Division to the President and working through the
Division on congressional and departmental matters.
4. Participation in foreign-policy matters concerning or arising
from our Territorial interests including relations with such agen-
cies as the United Nations, Caribbean Commission, South Pacific
Commission, and intragovernmental activities such as tariff and
trade agreements affecting the Territories.
5. Operating responsibilities in the territories such as the
Alaska Road Commission, the Alaska Railroad, the Puerto Rico
Reconstruction Administration, and the Virgin Islands Cor-
poration.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 125
6. Participation in the drafting of legislation to be introduced
in the Territorial legislature or in Congress and representation
of the Territories in litigation on appeal in the Federal courts,
and in proceedings before Federal administrative agencies.
7. Participation in the preparation and presentation of annual
budget estimates to Congress for all offices under the administra-
tive jurisdiction of the Office of Territories.
BONNEVILLE POWER ADMINISTRATION
The Bonneville Power Administration is responsible for marketing
power generated at Bonneville Dam on the Columbia River in Oregon
and Washington, Grand Coulee Dam on the Columbia River in Wash-
ington, the Hungry Horse Dam on the South Fork of the Flathead
River in western Montana, the :VIcNary Dam project, the Snake
River navigation ard power projects, the Foster Creek Dam to he
constructed on the Columbia River and at Detroit Dam, and other
dams to be constructed in the Willamette River Basin. It is directed
by statute to encourage the widest possible use of electric energy gen-
erated at Federal projects and to provide market outlets therefor by
constructing, operating, maintaining, and improving such electric
transmission lines and substations as may be necessary.
SOUTHWESTERN POWER ADMINISTRATION
The Southwestern Power Administration is the agent for the oper-
ation of the _facilities of the Grand River Dam Authority and for
the sale and distribution of all electrical energy generated at the
Pensacola Denison, and Norfolk Dams in the States of Oklahoma,
Texas, and Arkansas, and the surplus electric energy produced by
the multipurpose dams constructed by the War Department in the
area including all of the States of Arkansas and Louisiana, all of
Texas and Oklahoma east of the ninety-ninth meridian and north of ?
the San Antonio River Basin, and all of Missouri and Kansas east of
the ninety-eighth meridian and south of the Missouri River Basin.
SOUTHEASTERN POWER ADMINISTRATION
The Southeastern Power Administration was established in 1950
as an agency of the Department, to carry out the functions assigned
to the Secretary of the Interior by section 5 of the Flood Control Act
of December 22, 1944 (16 U. S. C., 1946 ed., sec. 825s), with respect
to the transmission and disposition of electric power and energy
generated at reservoir projects which are or may be under the control
of the Department of the Army in the States of West Virginia,
Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama,
Mississippi, Tennessee, and Kentucky.
0
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2d Session t Part V
INVESTIGATION OF EMPLOYEE UTILIZATION IN
EXECUTIVE DEPARTMENTS AND AGENCIES
JANUARY 1, 1951.?Committed to the Committee of the Whole House on the tate
of the Union and ordered to be printed
Mr. WILLIAMS, from the Committee on Post Office and Civil Service,
submitted the following
PRELIMINARY REPORT
[Pursuant to H. Res. 114, 81st Cong.]
PART V
Pursuant to House Resolution 114, Eighty-first Congress, approved
May 2, 1949, the Committee on Post Office and Civil Service appointed
a subcommittee to investigate overstaffing in the executive depart-
ments and agencies. The subcommittee is conducting a survey of
several agencies, the purpose of which is- ?
(1) to explore and evaluate the utilization of personnel;
(2) to appraise the effectiveness of existing agency management
facilities in employee utilization;
(3) to ascertain and identify some of the causes and effects
of overstaffing; and
(4) to suggest remedial action necessary to correct overstaffing
in the executive departments and agencies.
Accordingly, the subcommittee submits the following interim report
relating to the General Services Administration as part V of its over-
all report on overstaffing in the executive departments and agencies.
THE GENERAL SERVICES ADMINISTRATION
After surveying a large Government agency and two long-estab-
lished executive departments,' the subcommittee turned its attention
to the General Services Administration. It is a comparatively new
organization, established in July 1949, only 18 months ago.
The framework of the General Services Administration was designed
in the provisions of Public Law 152, Eighty-first Congress,2 to provide
the Government with a better system for the procurement and supply
of personal property and nonpersonal property, the disposal of surplus
H. Rept. No. 2457, 81st Cong., 2d sass.?
Fart I: The Federal Security Agency;
Part II: Prices and Cost of Living Dlyiston, Bureau of Labor Statistics, Department of Labor;
Part The Department of the Treasury;
Part IV: The Department of the Interior.
2 Amended by Public Law 754, 81st Cong., 2d sass.
76904-50?pt. V 127
(;J\
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Z-1.000Z0001.000VelZ00-09daN-V10 : Z2/80/000Z eseeieN .10d peA0.1ddV
DtgU Fe I
ORGANIZATION CHART OF
GENERAL SERVICES ADMINISTRATION
26,136 EMPLOYEES (SEPTEMBER 30,1950)
Waif. [-I ADMINISTRATOR
I . I
EPUTY ADMINISTRATOR
eV,PEr, el
I
OFFICE OF
I GENERAL
I COUNSEL
CONTRACTS
DIVISIM1
Co I
SECURITIES
ADD FINANCE
DIVISION
1 1
CLAMS AND
LITIGATION
DIVISION
27 I
LEMMATA* AND
REGULATIONS
DIVISION
ADMINISTRATIVE
SER ICES
DIVISION
Ic I
OFFICE OF
PUBLIC INFORMA-
TION t REPORTS
OFFICE OF
COMPTROLLER
BUDGET
D V SION
OCOU NTS
AND REPORTS
Olv
IN R L
ADDIT
DIV. 0
MOAF.FAGICEEmOENSF
PROGRAm
PLANNiNG AND
SEARCH
ORGAN A
M ODS
DIVISION
pERsoNNEL
DiviSoN
s A s
AND RE.ORTS
DIVISION
CREDIT AND
FINANCE
DIVISION
LIQUIDATION
DIVISPN
0 GES
AND SuPPLy
DIVISION
PUBLIC BUILDINGSIC
EmEn6Ei4i,i
PROCUREMENT
SERVICE
FEDERAL SUPPLY
SERVICE
I .7
THE
NATIONAL
252 I
REGC.ROS
MANAGEMENT
DIVISION
EDERAL REGISTER
nonSION
RESEARCH AND
DEVELOPMENT
I 13 I
OFIRARy
PURCHASE
DIVISION
59 I
ISTORAGE AND
TRANSPo.vr...TATION
SUPPLY
MANAGEMENT
nons...oN
zo
STANDARDS
DIVISION
PURG
AND STORES
36Z
NUMERALS INDICATE EMPLOYEES
REGIONAL OFFICES
113,3991
UTILIZ TIO
DIVISPN
I SRI
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EMPLOYEE UTILIZATION IN EXECUTIVE, DEPARTMENTS
property, the utilization of available property, the management of
Federal records, and certain construction and service activities.'
Under the Office of the Administrator the organization consists of
the Public Buildings Service, the National Archives and Records
Service, the Federal Supply Service, and the Emergency Procurement
Service. The top staff of the Administration is divided into four
principal offices identified as the Office of (1) the Comptroller, (2)
the General Counsel, (3) Information and Reports, and (4) Manage-
ment.
On September 30, 1950, there were. 26,136 employees in the Ad-
ministration assigned in the manner illustrated in figure 1, Organiza-
tion Chart of the General Services Administration. The agency
maintains 10 regional offices situated in key cities throughout the
Nation.
ORGANIZATION
The basic organization of the Administration is sound. It is the
product of good planning in both the legislative and executive branches
of the Government, stimulated by widespread recognition of the need
for a central agency to direct as well as operate certain of the common
administrative functions of the Government. Its basic functions
make up a well-defined, cohesive grouping of activities. In general,
its organization and functions follow a pattern recommended by the
Commission on Organization of the Executive Branch of the Gov-
ernment."
In theory, the present leadership has continued this standard in
fixing the top structure of the agency organization. With one or two
exceptions, responsibilities and authorities are arranged in a manner
that should ultimately help to realize the objectives of efficiency and
economy for whch the organization was created.
GENERAL FINDINGS
The operation of the programs to be carried on by the General
Services Administration has not been stabilized to a point where a
conclusive survey of personnel utilization can be made. Total em-
ployment has fluctuated sharply as the result of internal reorganization.
Only one 3-month period, July to September 1950, can be accepted as a
fair sample of stable employment within the agency.
During the past year the Administration has attempted to prepare
itself to carry out a twofold responsibility. Under its present mandate
it is obligated to operate some common services for all of the Govern-
ment while simultaneously providing direction and control of related
services performed in other agencies. For example, the Federal
Supply Service operates a Nation-wide system of stores from which
common use items are supplied to all agencies both in Washington and
the field service. At the same time the service also governs the policies
and procedures for the operation of appendaged supply systems in the
civilian agencies. A similar relationship exists in the National
Archives and Records Service in the field of records management.
In this respect, the Administration is both an operating and control
A complete statement of the functions performed by the Administration appears in the appendix as
exhibit 1.
4 See report on Office of General Services--Supply Activities, and related task force reports. Commission
on Organization of the Executive Branch of the Government, February 1949.
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130 EMPLOYEE UTILIZATION IN EXECUTIVE DE PARTNIENTS
agency. The combined task that confronts GSA is so great that it has
had difficulty in determining the points at which emphasis is most
urgent.
INTERNAL RELATIONSIfIPS
Quite properly the first effort of the Gen3ral Services Administra-
tion has been 1-,0 "put its own house in order." This is not a simple
task, for the Public Buildings and Federal Supply Services, containing
94 percent of the total employees, are not new organizations. They
operai-,ed within the Federal Works Agency and the Treasury Depart-
ment, respectively, for a number of years prior to their transfer to
GSA. Due to the nature of their separate program functions they
had enjoyed a high degree of autonomy. In some respects they
were not favorably inclined toward the reorganizati an. Differences,
both personal and organizational, that accompanied the consolidation
characterized the early months of the new agency. 'Without attempt-
ing to appraise the conflicting points of view it is apparent that these
differences have retarded the progress of the Administration's pro-
gram.
INTEGRATION OF STAFF FUNCTIONS
One of the most significant steps in modeling the hew agency is the
manner in which the several staff functiors have been integrated.
Prior to the GSA each of its component services had independent
3taff cperations. Immediately after the consolidation the Adminis-
trator found that he had several groups dealing with personnel, fiscal,
Ind management functions in the Services. An early management
3tudy indicated the advisability of centralization arid integration of
these functions at the top of the Administration. All principal staff
3ervices have been brought together in the Administrator's Office
with the results reflected in the following Table 1, Reduction in Em-
ployment in Consolidated Administrative Functions from July I, 1949,
o November 11, 1950:
TABLE 1.?Reduction in employment in consolidated administr2tive functions from
July 1, 1949, to Nov. 11, 1950
Office and division
"fanploymen1
Net change
July 11,
1949
Nov. 11,
19b)
Increase
Decrease
Mee of Management:
Director's office
7
6
1
Planning and Resexch Division
4
9
5
Organization and Methods Division
24
31
7
Personnel Division
163
.103
60
Statistics and Reports Division
3
11
8
Service and Supply Division
341
273
ss
Net total, Office of Management
542
433
109
)ffice of t le Comptroller:
00.. I
Comptroller's office
5
1
LiquIlation Divisicn
177
118
Budget Division
44
2
Interr al Audit Div sion
35
8
Accounts Systems Division
7
15
Credit and Finance Division
7
2
Accounts and Reports Division
442
62
Net total, Office of Comptroller
717
1163
154
Net total
_
.1,259
096
263
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More important is the fact that this centralization and integration
of the top staff provides the Administrator with a closely knit team of
Administration-minded executives to carry out the over-all program
of the agency.
If the Administration does not ultimately succeed in its mission it
will not be for want of capable staff assistance. Task force teams
composed of well-qualified representatives of these staff offices have
conducted several studies of internal operations within the Adminis-
tration and its constituent services. While more than one study has
been devoted to the review of the organization and operations within
the Federal Supply and Records Services, too little attention has i?een
given to similar problems in the Public Buildings Service which con-
tains 86.3 percent of the total employment in the Administration.
STAFF SERVICES
In this part, the subcommittee continued its examination of four
representative staff services in the General Services Administration.
Comment on each one of them is presented under the following
headings: "Personnel management"; "Fiscal management"; "Pro-
curement"; and "Management improvement."
PERSONNEL MANAGEMENT
The personnel management program for employees of the GSA is
centralized in the Personnel Division, Office of Management. This
single office supersedes the separate personnel offices formerly main-
tained in the constituent services. As heretofore mentioned, this
consolidation has made it possible to reduce the number of personnel
workers in the headquarters. Table 2 shows that this office maintains
a ratio of one personnel worker for 128 of the 12,767 employees handled
in the central office. The ratio for the entire Administration is one
personnel worker for 151 total employees. Table 3 shows that there
are 176 personnel workers in the Administration with an average
annual salary of $4,381.
TABLE 2.?Ratio of personnel employees to total employees in the Washington, D. C.,
metropolitan area and regions, as of Nov. 11, 1950
Organizational unit
As of Nov. 11, 1950
Total
employ-
ment
Person-
nel em-
ployees
Ratio of
personnel
to total em-
ployment
Office of Management:
Personnel Division
12,767
100
1:128
Region I. Boston
754
4
1:188
II. New York
4,562
21
1:217
IV. Atlanta
908
8
1:113
V. Chicago
2,017
7
1:288
VI. Kansas City
1,047
6
1:174
VII. Dallas
1,255
7
1:179
VIII. Denver
707
4
1:177
IX. San Francisco
1,474
10
1:147
X. Seattle
645
6
1:107
Total
20,136
173
1:151
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: .32 EMPLOYEE UTILIZATION IN EXECUTIVE: DEPAETIVIENTS
'ABLE 3.?Estimated costs of personnel services and average annual sala,,y of
persoh.nel emplobees in the General Services AdminiEtration fol. fiscal year 1951
Organizational unit
Number
of em-
ployees
As of Nov. 11, 1950
Annual
salary
costs
Average
annual
salary
(face of Management:
Personnel Division.
Regional Offices
100
73
$446, 925
306, 405
$4, 469
4, 197
Health Services
1
4, 325
4,32o
Safety and Industrial Relations
2
13, 400
6, 700
Total
176
771, 055
4, 381
TABLE 4-.? Tabula4on of personnel activities in the Washington metropolitan area
during first quarter, fiscal year 1951
Number of?
Number of-
1S or corresponding
grade
Rate of
urn-over
GS or corresponding
graed
Rate of
tura-over
Separa-
tions
A m es-
sions
Separa-
tions
Acces-
sions
6
14.5
44
12
20.2
16
16
5
12.2
140
116
13.Q
20
12
4
14.2
248
96
5. 3
12
24
3
30.3
280
272
11.8
40
64
2_
16.5
472
180
177. 7
16
0
1
13.0
492
412
18.3
48
28
15. 3
1,900
1,300
8.2
8
o
Total or average 1.
1?9
64
68
Data submitted on a 3-month period are projected on a yearly basis.
Deeentralizatien.?In contrast to personnel programs surveyed in
c ther agencies, the GSA plan emphasizes the delegation of authority
t) regional offices rather than to component services. Accordingly,
r ersonr.el offices in the regions are authorized to make all personnel
a etions in the crafts, protective and custodial 8ervice (CPC schedule),
a ad up to grade GS -14 in the general classification scliedule.
Perscnnel rem-ds.--Data on employment were not r eadily available
d uring our survey in the ,central office due to the backlog of personnel
a etions attending the reassignment of personnel within the Adminis-
t 'ation. A major job of reclassification and reassignment of personnel
c mfronts the Personnel Division, the completion ol: which should
r Dint out worth-while savings in the reduction in total employment.
I ! this program can be made to parallel the consolidation and integra-
t on of functions throughout the operating elements of the Administra-
t on and its services, a considerable reduction can be effected.
Employee turn-over.?Table 4 indicates that the ann-ual rate of
t on-over in the GSA headquarters offices was 15.3 percent for the
p ariod of July-September 1950.
FISCAL MANAGEMENT
The control of the fiscal affairs of the General Services Administra-
t on is centralized in tho Office of the Comptroller. This office
o perates with clear and complete delegation of responsibilities and
a athori ties from the Administrator. Its organization is along func-
t onal lines, with subsequent delegation of authority by the Comp-
t 'oiler to his six division chiefs.
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EMPLOYEE UTILIZATION IN EXECUTIVE DEPARTMENTS r3'3'
The Division responsibilities consist of budget, accounting, audit,
and accounting systems, plus two additional ones, credit and liquida-
tion. These latter functions are more or less peculiar to this agency.
Responsibilities delegated to comptrollers in the regional offices are
limited to budget, accounting, and credit operations.
Authority has been delegated to the 10 regional comptrollers for the
independent management of the fiscal affairs in each region. Policy,
procedures, and methods are established, installed, and enforced by
the central office. The Washington office exercises only general
supervisory control over regional operations and keeps the general
leder accounts for the entire agency. Periodic reports from the
regions and an audit of their accounts serve to keep regional operations
in line with policies and limitations prescribed by the Administrator.
The process of bringing together the formerly independent fiscal
operations of the various services has not been completed. It will be
some time in 1951 before the actual operation and assignment of
personnel in fiscal management will conform to the over-all plan.
As a result, there is some confusion and uncertainty of responsibility
and authority at the lower levels of the organization.
Table 5, Employees engaged in fiscal management activities, indi-
cates a high proportion of fiscal management personnel in the agency.
This ratio should be improved when plans for consolidation are
accomplished.
The Office of the Comptroller has full authority to exercise an
effective control over all staffing requirements of the agency. This
authority has not been exercised to any great extent. It is contem-
plated that effective staffing and classification controls could be placed
in effect soon after January 1951.
TABLE 5.?Personnel engaged in fiscal management activities as of Nov. 11, 1950
Area
Number engaged in?
Total
Budget
Accounting
Voucher ex-
amination
Payroll
Washington Office
46
86
33
16
181
Field
12
333
76
132
553
Total
58
419
109
148
734
Ratio to total personnel
1:459
1:62
1:177
1:240
1:36
PROCUREMNT
In the belief that great savings can be realized, in both manpower
and dollars from improvement in procurement activities, the sub-
committee pursued its inquiry into this activity within the General
Services Administration. In contrast to the other agencies surveyed
it was found that this function is centralized in the Administration's
Office of Management. Although some items are procured separately
in the services, most of the purchase orders for items required by the
Administration are processed through the central Division of Services
and Supply.
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134 EMPLOY:VD UTILIZATION IN EXECUTIVE DEPARTMENTS
['ABLE 6.?General Services Administration procurement operations in Wushington
metropolitan area, July 1 through Sept. 30, 19601
Activity
Amount
. Procurement actions requisitions, and intra-agency work orders:
(a) Number issuod
3,474
(2) Number totaling less than $20
987
(c) Total dollars volume of all actions
$3,
569, 034
Employees engaged in procurement and requisitioning operations:
(a) Number of workers
31
(2) Total cost for personal services and related expenditures
$26,310
(c) Average cost per order
7.57
(d) Daily average workload
1.8
(e) Average annual salary
$3,395
I Excludes strategic and critical materials stockpile program and eperations charged to general supply
f Md.
Table 6 shows that, in the first 3 months of the current fiscal year,
8 percent of the 3,474 purchase orders issued were for amounts total-
1 3 than $20. The average cost of issuing each order was $7.57.
'he average workload for the 31 employees engaged in this wOrk was
c nly 1.8 orders per day. Their average annual salary is $3,395. It
s'Iould be noted that this cost data pertains only to the processing of
c rders to meet the internal needs of the Administration. It does not
"elude orders processed in the strategic and critical materials stockpile
rogram or orders processed for other agencies. The average cost of
t lese orders is even more costly.
. Government-wide procurement.?In view of the high cost of procure-
r,' tent activities revealed in previous parts of this report, the sub-
c immittee requested additional data on the cost of processing orders
o: other Government agencies through the facilities of the Federal
Supply Service.
Table 11 of part III (on p. 87) of this report revealed that the esti-
n ated average cost of buying $10 worth of lumber directly from the
"Y Lumber Co." was $25.38. GSA reports that the average cost of
supplying this item through the Federal Supply Sanice would be
$ L1.77. So if the $10 worth of lumber had been secured through the
ft cilities? of GSA the total Government cost would be $25.38 plus
$ :1.77, or $37.11i. The total cost of procuring $10 worth of lumber
ti Lrough Government-owned facilities would be more than 33 times its
o:iginal selling price.
The data showing the number, dollar volume, and costs of sales to
cu her Government agencies through the Federal Supply Service
d tring fiscal yea..! 1950 are presented in table 7 which follows:
TABLE 7
Number
Dollar
value
Fe leral Supply Service sales:
From stores
282,559
$25,
5413,
000
Direct delivery
36,425
47,
533,
407
Total
318, 984
73,
079,
407
Co ;1: 1
Performance cast of p archasing: Inspection, sampling and testing, storage,
and issue
$3,755,126
Average cost per sale
11.77
1 Does not include costs of $259,421 incurred for making Federal Supply Schedule 1. win contracts for Gov-
ern nent-wide use. Purchases by Federal agencies under these contrasts during fiscal year 1950 are esti-
ma ;ed at $101,000,009.
'1 he figures shown do not include activity supervision, Service admint;tration, or accounting costs.
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,Field purchase order-invoice.?The subcommittee instructed the
members of its staff to make full inquiry in the General Services
Administration to determine if they had developed a remedy for the
large number of people required to process purchase orders in the
agencies. It was found that officials of the Federal Supply Service
and later GSA had intermittently worked on a combination field
purchase order and vendor's invoice form since April 1949.
At that time officials of the Federal Supply Service had formed a
voluntary committee composed of representatives of interested
agencies to devise and seek the adoption of a short form by which
many small purchases could be consummated on the spot?in order
to cut the red tape and reduce the overhead costs of thousands of
small purchases. Although the plan appears to have developed to
the point where it could have been adopted many months ago, the
subcommittee found that it had reposed in one of the GSA staff
offices since April 1950.
The subcommittee does not infer that this inaction is typical of
the top staff of the GSA, but it does wish to emphasize that unless
responsibility for the prosecution and completion of projects of this
nature are fixed and enforced they will drag on indefinitely with the
costs of unforgivable waste mounting daily.
MANAGEMENT IMPROVEMENT
Management-improvement activities in the General Services
Administration appear to be above the average found in other agencies.
In the relatively short time since its inception the management-
improvement group has developed volumes of material, the adoption
of which would contribute substantially to the betterment of the
Administration's program. However, the services are slow to adopt
them and even slower in carrying out the improvements they suggest.
Table 8 shows the annual cost and number of employees working in
management improvement during the current fiscal year, 1951.
TABLE 8.?Estimated performance cost, fiscal year 1951
Depart-
ment
Field
Total
Man-years
7. 5
I 3
10.6
Personal services cost
$45, 750
$18, 317
$64, 067
Travel
3,600
864
4,464
Other objects
1, 533
753
2,286
Total cost
50, 883
19, 934
70,817
I Individuals devoting a portion of their time to management-improvement work.
RECOMMENDATIONS
In view of the circumstances described in this report, the subcom-
mittee makes the following recommendations which it believes neces-
sary to improve the over-all management and utilization of personnel
in the General Services Administration.
The Administrator of the General Services Administration should
give consideration to?
It
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116 EMPLOYEE UTILIZATION IN EXECUTIVE' DEPARTMENTS
1. Continued consolidation and integration of the activities of the
-
R ecords, Public Buildings, and Federal Supply Servic,3s, particularly
ai the operating levels.
2. Acceleration of improvement leading to greater efficiency and
onomy in the procurement and supply functions that affect related
ai tivities in the agencies of the executive branch of the Government.
3. Conduct a comprehensive management study of the Public
Buildings Service comparable to those recently made in the Federal
ipply and Records Services as a basis for furter improvement in the.
rE lated programs of all three services.
Additional recommendations pertaining to the General Services.
A Iministration will be included in subsequent reports of the subcom-
ittee.
JOHN BELL WILLIAMS, Chairman,
JAMES C. DAVIS.
A. S. HERLONG, JR.
EDWARD H. REES.
HAROLD C. HAGEN.
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APPENDIX
EXHIBIT I
SUMMARY OF FUNCTIONS PERFORMED BY THE GENERAL
SERVICES ADMINISTRATION
The General Services Administration was established by Public Law 152,
Eighty-first Congress, effective July 1, 1949, to provide for the Government an
economical and efficient system for (a) the procurement and supply of personal
property and nonpersonal services, including related functions such as contracting,
inspection, storage, issue, specifications, property identification and classification,
transportation and traffic management, management of public-utility services,
repairing and converting, establishment of inventory levels, establishment of
forms and procedures, and representation before Federal and State regulatory
bodies; (b) the utilization and management of available property; (c) the disposal
of surplus property; (d) records management; and (e) certain public works and
construction service activities.
This act transferred to the Administrator of General Services the functions of
the Federal Works Agency and all agencies thereof (including the Bureau of
Community Facilities), together with the functions of the Federal Works Adminis-
trator, of the Commissioner of Public Buildings, and of the Commissioner of
Public Roads. It abolished the Federal Works Agency, the Public Buildings
Administration, the Office of Federal Works Administrator, the Office of Com-
missioner of Public Buildings, and the Office of Assistant Federal Works Admin-
istrator. The act also transferred to the General Services Administration the
Public Roads Administration, which was thereafter transferred to the Department
of Commerce by Reorganization Plan No. 7 of 1949, effective August 20, 1949.
Public Law 152 transferred to the General Services Administration foi liquida-
tion the functions of the War Assets Administration and abolished the War Assets
Administration, the Office of the War Assets Administrator, and the Office of the
Associate War Assets Administrator.
The functions of the Bureau of Federal Supply, the Director of the Bureau, the
personnel of the Bureau, and of the Secretary of the Treasury relating to the
Bureau were also transferred to the Administrator of General Services by Public
Law 152, which abolished the Bureau of Federal Supply and the Office of the
Director of the Bureau.
Public Law 152 transferred to the Administrator of General Services the func-
tions of the Director of Contract Settlement and of the Office of Contract Settle-
ment, which had been transferred to the Secretary of the Treasury by Reorgani-
zation Plan No. 1 of 1947.
The act also transferred the National Archives Establishment and its functions
to the General Services Administration. It transferred to the Administrator the
functions of the Archivist of the United States, except for his service as member or
chairman of several boards, and it transferred the functions of the Director of the
Division of the Federal Register to the Administrator. It further provided that,
hereafter, the Administrator of General Services shall appoint the Archivist of the
United States, who shall continue to serve as chairman or member on the National
Archives Council, the National Historical Publications Commission, the National
Archives Trust Fund Board, the Board of Trustees of the Franklin D. Roosevelt
Library, and the Administrative Committee of the Federal Register.
An integrated organization pattern for the Central Office of the General Services
Administration was established in December 1949. Under this pattern all of the
program functions and operations except the residual functions of the former
War Assets Administration were assigned to four major services: the Public
Buildings Service, the Federal Supply Service, the National Archives and Records
Service, and the Community Facilities Service. All of the staff functions and
operations of the Administration were consolidated into four staff offices: the
137
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138 EMPLOYEE UTILIZATION IN EXECUTIVE DEPARTMENTS
0 Ece of General Counsel, Office of Comptroller, Oa e of Management, and the
0 Mee of Public Information and Reports. The Office of Contract Settlement
? ntinued as an independent organizational element reporting directly to the
A iministrator. A Liquidation Service was established on January 1, 1950, to
cc mplete the liquidation of the affairs of the former War Assets Administration.
T tis service was abolished on June 30, 1950, and all re:;idual real property disposal
ft nctions were assigned to the Public Buildings Service.
Reorganization Plans 15, 16, and 17 of 1950, effective May 24, 1950, trans-
fe ?red Community Facilities functions to the Department of Interior (Alaska and
V rgin Islands public works), to the Federal Security Agency (aid to public school
di3tricts and water-pollution control), and to the Housing and Home Finance
A ;ency (advance planning of public works). With th c transfer of these functions,
ti e Community Faeilities Service was abolished on June 30, 1950.
Reorganization Plan 18 of 1950, effective July 1, 1)50, transferred to the Ad-
in thistrator of General Services the functions of the various Federal agencies
w th respect to leasing and assigning general-purpose space in ouildings and the
01 eration, maintenance, and custody of office buildings. This transfer effects an
pansion of authorities (outside of the District of Columbia; already concen-
tr fted in the General Services Administration by Pub de Law if
Reorganization Plan 20 of 1950, effective May 24, 1950, transferred from the
D spartm,snt of State to the Administrator of General Services functions pertain-
in ; to the preservation and publication of laws, the preparation and publication
of the Statutes at Large, the certification and publication of constitutional amend-
m snts, tt e receipt and preservation of certificates of presidential electors and of
el !ctoral votes, and the compilation and publication of The Territorial Papers of
ti e United States.
On August 31, 1950, the organization of the Central Office was expanded by
ti e establishment of an Emergency Procurement Service to administer an expand-
in ; program relating to the procurement and stockpiLng of strategic and critical
m Iterials. These functions were formerly assigned to a division of the Federal
Si pply Service.
On September 5, 1950, the Congress considerably strengthened the authority
of the Administrator of General Services under Public Law 152 through amend-
m snt of that law, enacted as Public Law 754. The new law extended responsi-
bi ities with respect to real property management to permit additional control
? er the anaintenanze, security, repair and renovation of buildings, and provision
of utility services. Title V of the law, identified as the Federal Records Act of
if 50, established the authority of the Administrator of General Services on a
N Won-wide basis with respect to records managcment activities. He was
.er rpowered to bring about improvement of standards, procedures and techniques
w th respect to the creation of records, the maintenance of current records, and
tie disposal of records no longer needed for current operations. It specifically
ar thorized the Administrator to establish and operate records centers.
An important provision of the law affecting the management of personal prop-
er ;y was authorization for the elimination of the surcharge On sales to Federal
encies financed under the general supply fund. Thereafter a direct appropria-
ti should take ca-:.e of most of the expenses incurred in supplying the needs of
G wernment agencies. Another provision authorized the Administrator to charge
vi ndors' and producers' fees for testing their products. This will afford small busi-
m ss a better opportunity to have its products considered for purchase by the
.0 wernment.
Additional powers to assist in the expansion of the Nation's productive capacity
w ;re assigned to this agency in the Executive order delegating functions under
ti e Defense Production Act of 1950, Public Law 774, approved September 8, 1950.
U icier this order, the General Services Administration was given responsibility
w th respect to (1) installing additional equipment, processes or improvements in
in lustrial facilities owned by the United States, and installing Government-owned
,ec uipmert in privately owned industrial establishments; (2) purchasing metals,
m nerals, and other materials for Government use or fesale (this responsibility is
? er and above that for purchase of strategic and critical materials now being
Cm rried out under other authority; (3) guaranteeing loans to contractors, subcon-
tr tctors, and others when necessary to expedite production, deliveries, or services;
ar d (4) disposing of real or personal property acquired under the act when it is
tic termined that such property is no longer needed for defense.
A related responsibility, assigned to this Administration by the President in
Ji ly 1950, was that of reducing the total Government demand for supplies and
aterials in competition with those needed for national defense. In partial ful-
fil lment of this responsibility, a regulation was issued concerning the conservation
of critical, materials and limitation of stock inventories. Amonv, other things, the
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EMPLOYED UTILIZATION IN EXECUTIVE DEPARTMENTS 139'
regulation prescribes inventory standards for various classes of supplies and mate-
rials and replacement standards for selected classes of equipment using critical
materials.
Effective October 1, 1950, 10 regional offices of the General ServicesAdminis-
tration were activated and acting regional directors appointed. The organization
pattern established for each regional office provides for completely integrated
operations and parallels the pattern established for the central office. As rapidly
as possible, operating authorities and responsibilities are being decentralized to
these offices. In the future, all operations, with the exception of several special
activities, will be conducted by the field offices. When the decentralization is
completed, the central office will be the policy-making and coordinating office and
the regional offices, the operating offices of the Administration.
Following are statements concerning the functions and organizations of the
General Services Administration.
CONTRACT SETTLEMENT
Section 102 (b) of Public Law 152, Eighty-first Congress, transfers to the
Administrator of General Services, effective July 1, 1949, those functions of the
Director of Contract Settlement and the Office of Contract Settlement which
were transferred to the Secretary of the Treasury by Reorganization Plan No. 1
of 1947.
The functions of contract settlement were established by the Contract Settlement
Act of 1944 (58 Stat. 649; U. S. C., Supp. 101, et seq.), to provide for uniform and
efficient administration in the settlement of claims arising from terminated war
contracts.
The Contracts Settlement Act regulates the settlement of terminated contracts
with the Government. Among the subjects dealt with by the act are the principles
governing the determinations of fair compensation for the termination of contracts,
the prompt clearance from contractors' plants of property connected with ter-
minated contracts, the financing of contractors during the period between the
termination of their contracts and their final settlement, and defective, informal,
and quasi contracts.
PUBLIC BUILDINGS SERVICE
Section 103 (a) of Public Law 152, Eighty-first Congress, transferred to the
Administrator of General Services the functions of the Public Buildings Admin-
istration and the Commissioner of Public Buildings, effective July 1, 1949. These
functions have been organized as the Public Buildings Service of the General
Services Administration.
The Public Buildings Service was established as the Public Buildings Adminis-
tration in the Federal Works Agency by Reorganization Plan NQ. 1, section 303,
under the provisions of the Reorganization Act of 1939, approved April 3, 1939.
It is authorized to design and construct any type of Federal building, either by
direct appropriation or by reimbursement from appropriations made to other
agencies. It operates, maintains, and protects buildings under its jurisdiction
throughout the United States, and assigns or regulates assignment of office space
therein or in leased quarters; acquires sites for Federal buildings to be constructed
under its jurisdiction; promotes the maximum utilization of excess real property
by executive agencies; and disposes of real property surplus to the needs Of the
Government. It maintains in recoverable operative or in stand-by status a
reserve of industrial plants, equipment, and machine tools as designated by the
Secretary of Defense to form a nucleus of productive capacity to meet immediate
military needs in event of or anticipation of a national emergency, in accordance
with Public Law 883, Eightieth Congress.
Public Law 754, Eighty-first Congress, amending Public Law 152, extended
responsibilities assigned to the Public Buildings Service to permit additional
control over the maintenance, security, repair and renovation of buildings, and
provision of utility services.
Reorganization Plan 18 of 1950, effective July 1, 1950, had the effect of expand-
ing authorities of the Public Buildings Service (outside of the District of Columbia)
with respect to leasing and assigning general-purpose space in buildings and the
operation, maintenance, and custody of office buildings.
Public Law 774, Eighty-first Congress, as implemented by Executive Order
No. 10161, dated September 9, 1950, had the effect of assigning responsibility to
the Public Buildings Service for installing additional equipment, processes, or
improvements in industrial facilities owned by the United States, and installing
Government-owned equipment in privately owned industrial establishments, and
for disposing of real or personal property acquired under the act when it is deter-
mined that such property is no longer needed for defense.
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EMPLOYEE UTILIZATION IN EXEC JTIVE DEPARTMENTS
FEDERAL SUPPLY SERVICE
Secticn 102 (a) of Public Law 152, Eighty-first Congress, transferred to the
..dministrator of General Services the functions of the Bureau of Federal Supply
( f the Department of the Treasury, as well as the related functions of the Secre-
t ary of the Treasury, the Director of the Bureau of Federal Supply and Bureau
j ersonnel. These functions have been organized as the Fede:sl Supply Service
( f the General Services Administration.
The Federal Supply Service was created as the Procurement Division in the
Fepartment of the Treasury pursuant to Executive Order No, 6166, dated June
10, 1933, as authorized by section 16 of the act of March 3, 1933 (47 Stat. 1517).
I5s primary function related to supply management activities for the executive
gencies of the Government. For this purpose it is authorized to operate supply
c enters, purchase and issue supplies, utilize excess personal property by transfer
a aaong Federal agencies, and dispose of surplus personal property not required
L y the Government.
In performing tiese tasks, the Federal Supply Service is also authorized to
d evelop a uniform Federal Supply Catalog system, to stan&zdize descriptions
o supply items, and to develop standard contract and other Fuitable forms and
s andard purchase specifications. In transportation service matters, it is au-
torized to represent the executive agencies in negotiations with carriers. On
r( quest, it may provide service for legislative and judicial agencies of the Govern-
n ent and certain non-Federal agencies. It also controls the disposition of
p Tsonal property seized and forfeited or abandoned to the Government.
Public Law 754, Eighty-first Congress, amending Public Law 152, authorizes
tl.e elimination of the surcharge on sales to Federal agencies financed under the
neral supply fund. Thereafter, a direct approprTation should take care of
rr ost of the expenses incurred in supplying the needs of Government agencies.
'ae Federal Supply Service now has the authority to charge vendors and producers
le 38 for tasting their products.
EMERGENCY PROCUREMENT SERVICE:
Section 102 (a) of Public Law 152, Eighty-first Congress, transferred to the
A iministrator of General Services the functions of the Bureau of Federal Supply
oi the Department of the Treasury, as well as the related functions of the Secretary
of the Treasury, the Director of the Bureau of Federal Supply and Bureau per-
sc nnel. That portion of these functions, which were authorized by the Strategic
at d Critical Materials Stockpiling Act, approved July 23, 1946 (60 Stat. 596;
5( U. S. C. 98-98h), have been organized as the Emergency Procurement Ser vice
of the General Services Administration, effective September 1, 1.950.
The Emergency Procurement Service is authorized to plan, develop, and
az minister all programs of the General Services Administration relating to pur-
el ase, st)rage, transportation, and research and developmer t studies of the
St stegic and critical materials program, the ECA purchase program, and other
er lergency program items, and to direct these programs in all foreign offices of
the General Services Administration. It also maintains liaison with the Munitions
Board and other departments and agencies, representatives cr' foreign govern-
m ents, and industry, with respect to matters relating to the programs of this
se .vice.
Public Law 774, Eighty-first Congress, as implemented by Executive Order No.
10161, dated September 9, 1950, had the effect of assigning responsibility to the
Ei aergeney Procurement Service for purchasing metals, minerals, and other
m Aerials for Government use or resale. (This responsibility is over and above
th it for purchase of strategic and critical materials carried out under the Strategic
and Critical Materials Stockpiling Act.)
NATIONAL ARCHIVES AND RECORDS 3ERVICE
.ection 104 of Public Law 152, Eighty-first Congress, transferred the National
Ar chives Establisher ent to the General Services Administration, effective July 1,
1919. These functions have been organized as the National Archives and
R( cords Service of the General Services Administration.
Phe National Archives and Records Service was originally created as the
National Archives of the United States by act of Congress, approved June 19,
1914 (48 Stat. 1122-1124), whose duties and functions have beer.. redefined by the
Fe leral Records Act of 1950 (title V, Public Law 754, 81st Cong.). The Federal
gister Division of the National Archives and Records Service was created by
sej arate act of Congress, approved July 26, 1935 (49 Stat. 500-503).
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umpLoyEr&7JuzzATIoN, IN-/EXEC:MI/3R I'D EPAIITMENTS 141
- It isspomipb fqr ,0.0 efficielitssmanagenient of Government records; tht
preseYV41,*thidigeoifliatlently vallable'records; the clisposaLotrecorcIS'of temporary
usefulness; and the publication of the FederaL;Regiater,t,the God? of 'Federal
Regulations, and the United States Government Organization Manual.
Reorganization;Xlan 20 pf,1950,.tfreetixeilYhtY...g.4) 4950,thati1ed to the assign-
ment to the National Archives and Records Service of responsibilities formerly
belonging to tfielStatiilDepartment pertalifing to,th-eintegervation'afid publication
.of laws, the preparatibn and publicatioirof the Statutes at large, the certification
and publication of constitutionaliamOndments, the receiPtcsAld'preservation of
.certificates of presidential electOrSiandkoCelectoral votes, andothe Compilation and
publication of The Territorial Papers of the United States.--17cild JI . o; ..t.t
Public Law 754, Eighty-first Congress; amending Public Law 152, has led to
the establishment of the authority of the National 4rchivp and Records Service
over the managerneriVbf Tedeial records on a Natieg!* de basis. It is now
empowered to bring Nittligirovement of standards:, fiii Mures, and techniques
with respect to the 6 "ationnof records, the maintenancp?Wcurrent records, and
the disPosal of reco ) bi fopger needed for current oci6filtibtiS.: "It is also now
authorized to establ it apdate records centers. ' -1 ,aP.91- . :,`
The following bod deialSe liansferred, to the GenerQl,ervieis Administia=
tion by: Publie"L'avM52;'-Eightylfirst Congress, togethef with their respective
functions and AtielatiffdS as are deriVbd from Federal So'fffeeS:'
. . i MIS 911. ; . ,B--. f,' ' .; . ,L1 .r,?i0}f,D
94blinan.L RECORDS COUN&L
. ,
moll 01d The Federal ,RetordsoCouncil was established by section 504 of the Federal
Records Act of 1950 (title V, Public Law 754, 81st Cong.) which provided th2tt
the Administratothlofpfienural Services Shall establish a Federal RecordsiCouhcil,
'
and shall aliviSd,anthoonSult, with the Council with a view to obtaining it advice
and assistancelinulalTyling Out the purposes of title V. The CounCil. shall electa
chairman frontraneing)its own membership, and shall meet at least once laiperall!..
-)
o :al fIli iv' f,: -: r '
NATIONAL HISTORICAL PlillmcATIoNs COMMISSION
The National Historical Publications Commission was created by the National
Archives Act (48 Stat. 1122-1124) and its ditties and functions redefined by
section 503 of the Federal Records Act of 1050 (title V, Public Law 754, 81st
Cong.). The duties of the Commission are to "make plans, estimates, and
recommendations for such historical works and collections of sources as it deems
appropriate for printing or otherwise recording at the public expense. The Com-
mission shall also cooperate with and encourage appropriate Federal, State, and
local agencies and nongovernmental institutions, societies, and individuals in
collecting and preserving, and, when it deems such action to be desirable, in
editing and publishing the papers of outstanding citizens of the United States and
such other documents as may be important for an understanding and appreciation
of the history of the United States. The Chairman of the Commission shall
transmit to the Administrator from time to tune, and at least once annually, such
plans, estimates, and recommendations as have been approved by the Com-
mission."
NATIONAL ARCHIVES TRUST FUND BOARD
The National Archives Trust Fund Board was created by an act of July 9, 1941
(55 Stat. 581), which authorizes the Board "to accept, receive, hold, and administer
such gifts or bequests of money, securities, or other personal property, for the
benefit of or in connection with the National Archives, its collections, or its
services, as may be approved by the Board."
ADMINISTRATIVE COMMITTEE OF THE FEDERAL REGISTER
The permanent Administrative Committee of the Federal Register was estab-
lished by section 6 of the Federal Register Act, approved July 26, 1935 (49 Stat.
501), which provides in part that "the committee shall prescribe, with the Ap-
proval of the President, regulations for carrying out the provisions of this Act."
FRANKLIN D. ROOSEVELT LIBRARY
The Franklin D. Roosevelt Library was created by a joint resolution approved
July 18, 1949 (53 Stat. 1062-1066), to preserve and administer collections of
historical material donated to it by Franklin I). Roosevelt and such other material
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1912 EMPLGYZEt;VTITEIVINTIDWITN-"EXtttitIVE. DIPATITMENSS
lilateclAwandicontempiii?abr ivIth*ft-bisrmttfilial mitY 'ha alqiiireetVoni dther
-Tao MVO& ,Wrign;purehaAn:i.rorlloari.v ;,-ThePatirgaistratiOnvotragoliiik.arry4ignktested
Itathe'rAichbnatiathe,linited iSliateko n
itoit,!,imrof.) 1_1 : YofollIbubaria:arlitlent'?11.,
0.11I iTOURS'iNgatii lifiXLWARRitinV iid/iSiVEI;T:IthifitilifilF3m38100;f
Tr- lo 911V168 PlY100`)/1 {):11S IiojJ ot,t WWI
A ,Board ikaowujaeithergrutirters,rgfritheAVrauklin1D. rtoosevelt LibreiTy (*Fab
created by, the iointiresolution establishing .the Libraryrr-(53-rStati 1O6tr1066),,
which authorivq,t1,1011)0rcl to r"receives)giftarand bequests of persbnalrpro,pbrtry
and toihad adtnlmstarbtAke haraeraartt ust :funds- for the benefit of the iFratklin
D. Roosevelt LibraryXatat8 bed-inTf ,,,rt 10 al' ,er
r poerr ,sat wEj oildug 93'VDERAk kIltitge42'134?161- . ?. (WI
ra. 'U r vidn fla.1.3a..f, r
,,The Pederai glleu..-iya.s established boxwlixecTplyp urger O. .T097 ,of
,J*19,29, 193.6r aa34, Rai advisory group on the teptpm of Federal erriplvepe
propert3i. 'roil) 0., ,)gacecutive Order No. 81? ?of ;tulg 6, 1936?,placet oft
piLundeftliAdm ic,tion of the Federal Worh y. Public lea,Th 152,
tig ty-:first Congress, transferred the _flinctipac.oktt al WokslAgtaivy t9,
11,e,AcilgiinistrApr 9- 9pral Serific9?1, effect yeJfily.,1?4
,
The Couneil-48,au hcRzed to devl9p:silt , proc ure?.,-p.pd forrn?;-,und, on
reqUest, to conduct Awry 6 or suek:other4nvestigatio4 ay be,3aecosaary to
determine what measures should be taken to safeguard life and property from the
hazards of fire. The CounaiRs also authorized toanake such independent studies
of Federal buildings and property as it may deem desirable from the standpoint of
fire protection; to maintain a aiedord afire losses on GoverhamenCpropdrty; and to
review plans for tibw construction, , Oz,(q rdf ?
.Reports and _other informative, material are distributeditddhemerribership, to,
the head:s of bureaus and establishinents, and to ;Ahoy interested,Terieral;. State,
rand_ city. - Officials. - A manual covering the general subjectolcfireidosv prevention
.hPibeen issued together.with 'a :fire'reportand self-inspectioniforms,cthe latter for
use within departments and establishments in connection with inspections.
0
_hal fen
84?)
' 0111
vied
Liu; ,..v.?taarLte,a -1
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81ST CONGRESS HOUSE OF REPRESENTATIVES S REPT. 2457
Od Session j Part V
INVESTIGATION OF EMPLOYEE UTILIZATION IN THE
EXECUTIVE DEPARTMENTS AND AGENCIES
JANUARY 1, 1951.?Committed to the Committee of the Whole House on the State
of the Union and ordered to be printed
Mr. WILLIAMS, from the Committee on Post Office and Civil Service,
submitted the following
SUMMARY REPORT
[Pursuant to H. Res. 114, 81st Cong.]
PART VI
Pursuant to House Resolution 114, Eighty-first Congress, approved
May 2, 1949, the Committee on Post Office and Civil Service appointed
a subcommittee to investigate overstaffing in the executive depart-
ments and agencies. The subcommittee conducted a survey of several
agencies, the purpose of which was?
(1) To explore and evaluate the utilization of personnel;
(2) To appraise the effectiveness of existing agency manage-
ment facilities in employee utilization;
(3) To ascertain and identify some of the causes and effects of
overstaffing; and
(4) To suggest remedial action necessary to correct overstaffing
in the executive departments and agencies.
INTRODUCTION
The survey is based on investigations conducted in the Treasury,
Interior, and Labor Departments, the Federal Security Agency, and
the General Services Administration. Preliminary reports on each of
these agencies have been made separately.' In addition, it includes
data submitted by the following agencies: Department of Agriculture,
Department of Commerce, Department of Justice, Department of
State, and Veterans' Administration.
This report summarizes the findings and recommendations of the
previous preliminary reports. It covers the employment of 238,280
Federal workers for which the salary expenditure in fiscal year 1950
1 EL Rept. 2457, 81st Cong., 2c1. sess., Pt. I?Federal Security Agency; Pt. II?Prices and Cost of Living
Division, Department of Labor; Pt. DI?Treasury Department; Pt. IV?Interior Department; Pt. V?
General Services Administration.
143
76904-50?pt. VI 1
'`?,4>
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[44 EMPLOYEE: UTILIZATION: IN THE, EXECUTIVE; DEPARTMENTS
vas approximately 8770,478,891. On June 30, 1050, there were
L,966,444 civilian employees in the executive branch of the Govern-
nent for which the aggregate annual cost for salaries and wages was
1.7 billion dollars. This figure represents nearly 1(1 percent of the
,otal annual budget.
From the outset the Subcommittee on Ove_.staffing did not presume
hat every part of the executive organization was overstaffed. It
those to devote its attention and resources to achieve the above-stated
rbjectives of the survey. In this there has been no attempt to innovate
r magic formnla for the reduction of employment. Instead the
;ubcoramittee has made every effort to evaluate and appraise the
rtilization of existing personnel against principles of good business
mactice and accepted standards of departmental management.
idministrative policies and procedures were examined in the light
>f proven practices.
The most distinguishing aspect of the survey has been the fine
nanner in which it was received by the Federal workers. With only
ninor exceptions every employee encountered gave wholehearted
ooperation to the endeavor. In many instances this entailed the
;ubmission of self-damaging information in spite of the possibility
reprisal. The subcommittee wishes to acknowledge and express its
lincere appreciation for this assistance. It has not only increased
the accuracy of these reports but it has also enhanced the subcom-
nittee's belief that the vast majority of thoughtful Federal employees
me increasingly anxious to support any effort which holds promise
)f improvement.
For the most part the survey placed particular emphasis on the
Klmintstrative management in the nondefense agencies. This
mtivity is common to most of the agencies and comparable .data
)ertaining to it can usually be secured. Measurable standards
leveloped in the fields of personnel, fiscal, and property management
Tield indexes by which the quality of administration can be determined.
Further, the subcommittee believes that a direct relationship exists
retween the quality of administrative management and the more
;pecialized properties contained in the program t,ctivities of the
igencies. It therefore suggests that the findings and conclusions
rf this report reflect upon the over-all cenduct of the executive
lepartments and agencies.
In reviewing the data contained in the five previous parts of this
.eport the subcommittee is aware that many of the conclusions and
.ecommendations developed herein may appear to be trite and devoid
rf originality. That is an intended and purposeful characteristic of
he study?to test prevailing practices to determine the extent
)f conformance, to established principles. In that sense they bear
.epeating.
GENERAL FINDINGS
I. THE UTILIZATION OF PERSONNEL IN EXECUTIVE AGENCIES
The subcommittee finds that, in general, executive agencies could
lo a better job with fewer employees. In many respects they have
lot fully recovered from the ill effects of the World War II -period.
Elaborate staffing requirements still persist. Work habits are relaxed
'rom the all-out effort which formerly prevailed.
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EMPLOYER UTILIZATION IN THE EXECUTIVE DEPARTMENTS 145
Although some new nondefense activities have been added to the
normal prewar workload they are not sufficient to take up the slack.
Functional duties have not been altered in conformance with postwar
conditions. Improved methods and labor-saving techniques have not
been placed in general practice. Reorganization to eliminate duplicate
and overlapping activities has not been completed. Overhead
administrative costs have increased sharply. The retrenchment from
a peak period of wartime employment has not been fully carried out.
The cost consciousness which prevailed in the prewar period has not
been restored. The full capacity and myriad talents of the Federal
work force are not properly utilized.
II. THE ROLE OF MANAGEMENT IN EMPLOYEE UTILIZATION
It is universally agreed that agency management holds the key to
optimum employee ailization. Although the management of a large
Government enterprise presents many complex problems, most of
them center upon the expenditure of funds and/or the assignment of
people. The goal of management would appear to be the optimum
use of these resources?monetary and human?within fixed maximum
limits of dollars and employees.
With that in mind th'e subcommittee examined the management
facilities in each agency to determine their effectiveness in attaining
this goal. A search was made throughout the personnel and fiscal
activities to discover the point, or points, at which the use of personnel
and the expenditure of funds are controlled. The survey revealed
that little or no control is exercised from within to enforce economies.
In the administrative field, some effort has been made to develop
staffing standards from which reasonable personnel requirements
could be ascertained but they are not always enforced. In the pro-
gram activities of the agencies, where by far the greatest proportion
of funds is expended, workload standards are almost nonexistent.
The only notable exceptions to this condition were confined to those
agencies where program activities are readily adapted to machine
methods. Except in these mechanized operations, no one knows
how many people are required to carry on particular program respon-
sibilities. Present practices seem to represent the fulfillment of the
best unchallenged estimate. Additions can always be justified on
the basis of "new and enlarged duties and responsibilities."
In general, the personnel and fiscal management groups are numeri-
cally more than adequate to provide data with which top manage-
ment could obtain better use of employees. Within their present
sphere of operations they could provide the means for significant
economies for they almost invariably know where economies can be
made. Personnel officers are reluctant to assume this role in favor
of soniewhat loftier objectives. This, in spite of the fact that, in the
larger Eigen. cies staff personnel is retained to conduct "employee
utilization surveys" and "continuing classification studies looking
toward better employee utilization."
Budget offices are best equipped to function as a source of economy
in the expenditure of funds and the control of employment. They
could be the focal point for this kind of staff assistance. To the extent
that they are permitted, several of them are potentially equipped to
assist in the enforcement of minimum controls. Unofficially, some
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[46 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
if the key budget officers confide that they would welcome the oppor-
;unity to reduce the budget requirements within their own agencies.
.nstead, they are obliged to bolster the justification for increased
tppropriation requests. Unfortunately, this kind of frustration was
ibserved in all of the agencies surveyed.
The newly established management improvemen, activities hold
:resh promise for sonic effective control over expenditures and staffing.
They appear to be the one facility of top management that tends
,oward. self-criticism. In agencies where they have the full support
if the head of the agency they are making a sincere attempt to study,
.ivaluate, and appraise agency organizations, policies, and procedures
. n an objective manner. A well-constituted management improve-
: nent staff in each of the agencies can be made very effective in the
:iromotion of economy and efficiency in the handling of funds and
personnel. Ironically, the agencies that have the greatest need for
thprovement have not cooperated with this program.
The subcommittee does not agree with th3 oft-rep eated allegation
that the heads of departments and agencies need more staff assistance.
)n the contrary, the subcommittee believes that the facts contained in
1 his report repudiate that allegation. Existing staff assistance is
nore than adequate to provide the tools for good management.
:,h most cases, however, it is rendered impotent by lack of sustained
1,uthority from the head of the agency.
III. SOME CAUSES AND EFFECTS OF OVERSTAFFING
The subcommittee finds that although there are many circumstances
vhich contribute to overstaffing in the executive agencies, most of
hem can be traced to three basic prerequisites upon which proper
employee utilization depends. They are:
A. A good organization structure for the department;
B. A clear delineation of authority and province within the de-
iiartment ; and
C. A strong central control over the expenditure of funds by the
.lepartinent.
.1. Organization
As previously cited, this survey included three kinds of executive
organizations?(1) an agency, (2) an administration, and (3) two
.lepartments. From an over-all standpoint the quality- of administra-
ion among them varies little. With few exceptions they are "over-
. irganized." However Government officials are becoming increas-
ngly aware of the effects of obsolescent or faulty organization.
Pividence of this trend may be found in both the Department of the
nterior and the General Services Administration. The top structure
of these agencies has been reconstructed along functional lines.
?resent emphasis on the new performance-type budget will strengthen
his tendency. Continuing evaluation of existing organization
, tructures is a vital factor in good personnel utilization.
Bureau organizations should be given more attention for they are
leparated into almost endless divisions, branches, sections, units, etc.
rhe pattern for an increasing number of organizational elements
3roceeds down through the many layers of administration. Figure 1
)f part II on page 51 illustrates an organization chart af the Prices and
cost of Living Division, Department of Labor. This Division con-
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EMPLOYEE, UTILIZATION IN THE EXECUTIVE DEPARTMENTS 147
tains 5 branches composed of 10 sections. One of these, the Statis-
tical Services Section, is in turn broken down into 3 units, 6 subunits,
and 17 supervisory units. (See fig. 2, pt. II, p. 52.)
The General Services Administration reports that one of the divi-
sions in the Federal Supply Service had been divided into 4 branches,
17 sections, 27 units, 24 subunits, 13 groups, and 1 "inquiry office."
Some of these groups contained only one or two persons. These two
examples are not isolated instances. At the operating level confused
and unrealistic organization structures are the rule rAbcr than the
exception.
Doubtless this phenomenon is due to the prevailing desire to create
supervisory positions with accompanying titles of "chief," "assistant
to the chief," "assistant chief," etc. Very often this tendency takes
the form of informal organization plans developed to meet temporary
exigencies or to accomodate personalities within a branch or section.
In some cases this sort of arrangement is put in force without the
knowledge or consent of responsible officials. Under this kind of
arrangement the span of supervision is limited to a ridiculously small
area.
Generally the over-all job of an agency is broken down into such
minute segments that it is difficult to determine the precise division
of responsibility assigned to each part. When this condition continues
unchecked, duplication and overlapping increases. The positions in-
volved take on a high degree of specialization. Additional employees
are requested to replace and round out the assistance for the "super-
visors." As the size of a division increases, the director will soon find
that he has need for his own staff services. He will request and
attempt to justify the recruitment of a personnel officer, an administra-
tive or office services officer to look after the division files, mail, mimeo-
graphing, and sundry duties. If the division's responsibilities can be
made to assume the appearance and stature of a "program," the di-
vision director will ultimately obtain his own budpt and accounting
assistants. The addition of each of these staff services will bring addi-
tional working personnel into the division. In time, and under the
guise of internal reorganization, the division may be raised to bureau
or service status. At that time, it will be divided into several sub-
sidiary divisions and the same processes will begin again. It is a
vicious circle that breeds waste and inefficiency. It is a prime cause
of overstaffing.
The foregoing description is not intended as a criticism of Govern-
ment reorganization. On the contrary, the subcommittee believes
that much improvement has already accrued from the adoption of
recent reorganization plans, but the full benefit of reorganization plans
cannot be realized from the transfer of bureaus among departments.
The elimination of duplicating and overlapping activities, the appraisal
of nonessential functions, and the economies and efficiencies that
accrue from reorganization can only be gained by extending reorgani-
zation down through the operating elements of the agencies.
B. Delegation of authority.
Another significant contributor to overstaffing is the lack of clearly
defined authority for action within the agencies. The orderly manage-
ment of any large enterprise requires the delegation of authority to
keyindividuals. In Government agencies there is a noticeable
reluctance to delegate authority and an even greater hesitance to
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148 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
exercise it. In like manner, authority is diffused to such an extent
that it is often. difficult to discern the exact point at which responsi-
bility lies.
This is especially true in matters of pe.sonnel utilization. Few
Government officials welcome the responsibility or authority for
decisions that will result in the withholding of funds or the reduction
of personnel. As a result, internal action on the withholding of funds
or the reduction of personnel is practically nonexistent within the
agencies surveyed.
C. Centralized control
Except in specific instances cited in pnvious reports, the sub-
committee finds that the trend toward greater expenditures and in-
creased numbers of employees will continue unless it is checked by
axing responsibility in a strong central control over staffing require-
ments in each agency. This particular kind of authority should not
be redelegated.
STAFF SERVICES
In this survey the subcommittee has not challenged the merits of
the various program.s carried on by the agencies. Principal emphasis
aas been placed on the full utilization of employees assigned to the
tdministrative activities incident to those programs.
In order to obtain an index of the quality of personnel utilization in
?,ach of the agencies surveyed, the subcommittee revested that it be
lupplied with comparable data on four common staff services?
aersonnel management, fiscal management, procurement, and manage-
fent improvement. This section of the report represents a summary
)f that, data.
PERSONNEL MANAGEMENT
The subcommittee finds that, in spite of the recent development of
:tandards for the administration of personnel activities, they continue
n a costly and variable manner.
Table 1 shows that the average cost of providing personnel services
or each employee in four major agencies has increased 164 percent
lince 1940. Allowing for pay increments autheirized by legislative
hction (51.2 percent) the net increase amouns to more than 112 per-
ent. Per capita costs vary from an average of $29.5) in the General
tlervices Administration to $57.51 in the Federal Socurity Agency.
he et rrent average annual cost in the four agencies is $39.33 per
mplcy cc.
'ABLE 1.?Averav cost of personnel services per einloyee in selected agencies for
fiscal years 1940 and 1950.
Name of agency
1910 1
1950
Percent of
increase
1 ederal Seiurity Agene3 2
$11. 60
$57. 51
396
epartment of the Treasury 3
18.09
31118
190
I. apartment of the Interior 4
13. 88
40. 19
94
eneral Services Administration
29. 50
Average
15.92
39.33
164
See Study of PersonnA Offices in the Executive Departments and Agencies of the Goveri ment for basic
d ita. (H. Rept. No. 1593, 80th Cong., 2d scss.)
2 Does net include the Division of Commissioned Officers of the Public Health Service.
3 Does nct include military personnel in the U.S. Coast Guard.
e Does net include Offiee of Territories.
?A Not i xistence in M10
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EMPLOYEE! UTILIZATION IN THE EXECUTIVE DEPARTMENTS 149
Table 2 indicates that the ratio of personnel workers to total em-
ployment fluctuates from 1 in 68 in the Federal Security Agency to 1 in
151 in the General Services Administration. The four-agency
average is 1 personnel worker for 105 employees.
The average annual salaries of personnel workers assigned similar
duties in the four agencies are listed in table 12 on page 156. It should
be noted that these salaries vary from a low of 83,790 in the Treasury
Department to an average of $4,381 in the General Services Adminis-
tration?a difference of $591 per year.
TABLE 2.?Summary of ratio of personnel workers to total employees in selected
agencies for fiscal year 1950
Total
Agency
number of
employees
Number of
personnel
Employees
per person-
serviced
workers
eel worker
Federal Security Agency 1
31, 642
467
67.8
Department of the Treasury 2
89, 298
781
114. 3
Department of the Interior 2
60, 144
551
109. 2
General Services Administration 4
26, 136
173
151.1
Total or average
207, 220
1,972
105.1
1 Commissioned officers of the Public Health Service excluded,
2 Commissioned officers of the U. S. Coast Guard excluded.
3 Does not include Office of Territories,
Based on employment for fiscal year 1951.
Additional discrepancies in the operation of personnel offices are
revealed in tables 3 and 4 containing figures on the internal activities
of these offices. Table 3 shows that during fiscal year 1950 nearly
85,000 recruitment interviews were conducted in selecting applicants
for 12,595 jobs. A total of 84,326 man-hours of work was required
to file the applications for these positions. According to the table,
personnel in the Treasury Department interviewed an average of 10.7
applicants for each position filled. In the Federal Security Agency
this ratio was only 2.9. The over-all average for the four agencies
indicates that nearly seven applicants are interviewed for each
job opportunity.
TABLE 3.?Summary of number of employees, accessions, recruitment interviews, and
comparison of certain personnel functions in selected agencies during fiscal year
1950 1
Agency
Average
number of
employees
Number of?
Man-hours
required
to file
application
Accessions
Recruit-
ment
interviews
Interviews
Per
accession
Federal Security Agency
18, 667
3,828
11, 207
2.9
14,185
Treasury Department
41, 884
3,008
33, 177
10.7
21,225
Interior Department
20, 305
4,369
34, 337
8.0
41,407
General Services Administration 2
12, 400
1,300
6,000
4.11
7,609
Total
93,256
12.595
84,921
6. 7
84,326
Agency data are shown in exhibit 1 in appendix.
2 Based on first quarter of fiscal year 1951.
Table 4 shows the lack of uniformity in activities within the per-
sonnel offices. Here we find that an average of 52 percent of the time
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1 50 EMPLOYEE UTILIZATION IN THE EXECUTIVE UEFA RTMENT,S
o: the staff in the Treasury Department is devoted to "processing
r( cords and reports." This abnormally high averag: is due to the
e;:perierice in the Bureau of Internal Revenue wherein it is reported
ti Lat the personnel workers devote 73 percent of their time to this
unction. (See appendix exhibit 2, p. 160.)
T %.BLE 4 -Summary of distribution of staffing requirements for personnel services
in selected agencies for fiscal year 1950
Distribution of activity staff
Percent of staff
Federal
Securit
Agenc
Depart-
ment of
the
Treasury
Depart-
ment of
the
Interior
D rection and administration
28 oployment, placement, and separation
Cl issification, job evaluation, and wage administration
10 oployee relations
Ti alning
mmittees and boards of examiners
ocessing records and reports
U. distributed staff
Total.
15. 1
21.
16. 3
6. 2
6. 3
6.
29. 1
113
12. 2
10. 7
6. 3
7-7
1.5
52. 1
.2
12. 7
20. 7
13. 9
4.0
2.9
3. 9
33. 1
8. 8
100. 2 100. 0
100. 0
;OTE.-Ci. S. A. information not available for fiscal year 1950. Agency and bdreau data is shown in
ap ?endix exhibit 2.
There is lack of uniformity in the extent to which personnel opera-
ti Nis have been decentralized. Figure 1 shows the grade distribution
aid the number of workers for which personn31 actions are processed
in the headquarters offices. Table 5 indicates the percent of the total
p Tsons serviced in the central offices.
T U3LE 5.-Number of persons serviced by the headquarters personnel offices in the-
4 selected agencies, fiscal year 1950
111mployees
tiorviced by
Percent of
'Dotal em-
bead-
total em-
Agency
ployment 1
quarters
personnel
offices 1
ployees
serviced
deral Security Agency
34, 083
20, 832
61. 1
.partmeni. of tho Treasury
112, 488
42, 148
37. 5
partmeni; of the Interior
61, 573
20, 305
31.0
neral Services Adminit tration 2
26, 136
12, 400
47.4
Total
238, 280
95, 685
40. 2
Includes military personnel in U. S. Coast Guard and the Public 113 ealtb Service.
Based on first quarter fiscal year 1951.
lee exhibit 3 in appendix for supporting data.
I ersonnel loans, details, and assignments
In the beginning of this survey the subcommittee sent a letter 2 to
e tell independent executive agency to obtain informat ion on-
(a) The number of employees whose services laad been made
available to other agencies on a temporary loan, detail, or assign-
ment basis during the calendar year 1949, and
(b) The number of employees that each agency had similarly
borrowed during the same period.
See A Questionnaire en the Tempon ry Assignment of Personnel in Executive Departments and &gen-
ei is, appendix exhibit 4 on p. 162.
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-0
-0
CD
0-
-11
0
g
c'
Number of Employees
0 7
10,000
CD
9000
Is.)
o
o
o L
8000
03
7000
6000
0
5000
4000
-0
3000
6
2000
1000
(A)
0
FIGURE 1
THE NUMBER AND GS GRADE OF EMPLOYEES SERVICED BY HEADQUARTERS
PERSONNEL OFFICES IN THE FOUR SELECTED AGENCIES*
AS OF JUNE 30, 1950
Number of Employees
10,000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
15 ond 14
over
13 12
*41 percent of total employment in 4 selected agencies.
Supporting data shown in Table 5.
11 10 9 8 7
GS or Equivalent Grades
I Gornb.ned GS and CPC )
6
5
4
3
2
1
TOO t...hn, of C,Cre,v
Let,51011Ve ReferenCe Service
O,c,ofb,.8, 950
No 637
EMPLOYEE UTILIZATION IN TED EXECUTIVE DEPARTMENTS
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,52 EMPLOYEE UTILIZATION IN THE EXECTJIVE DEI ARTMENTS
Table 6 presents a summary of the agencies' replies. Comparison
d the data in contiguous columns 1-2 and 3-4 provides a good cross
( heck on. the accuracy of the agency personnel records on which the
eplies were based. For example, the Department of Justice reported
hat it had neither received nor extended the services of any employees
i a spite of the fact that other agencies reported the loan of 10 workers
o the Justice Department during the period.
'ABLE C .?Summary of accountability for loans of personnel between agencies daring
calendar year 1949
Agency
Personnel
by agency
loaned
Personnel received
by agency
Reported
by agency
as loaned
to others
Reported
by others
- . ,
AS received
from
agency
Reported
by agencyReported
- .
is received
from
others
by others
as loaned
to agency
I freau of the Budget
6
g, t. NJ C., 4.1 lND . 0 CO 0 C4 0 0 0 Ca 0 N., 0 0 0 lND C. I
2
2
18 ational Security Resources Board
0
0
3
C >mail of Economic Advisors
0
0
1
1? ar Claims Commission
1
0
0
E apartment of State
10
6
as
L apartment of the Treasury
0
1
3
L apartment of Defense
0
0
4
D apartment of the Army
10
7
37
D apartment of the Navy
4
4
10
11 apartment of Air Force
0
12
4
D apartment of Justice..
0
0
10
P st Office Department_
2
0
0
n partment of Interior
22
11
18
I) .partmen t of Agricultu T
68
7
5
D .partmen I Of Cornnierc
16
9
6
D ,partmen; of Labor_
5
6
6
C vil Service Comniission
3
4
2
E onomic Cooreration Administration
0
68
83
F. deral Deposit Insurance Corporation
0
1
2
F. chiral Security Agency
39
0
5
H using and Home Finance Agency
5
6
5
II using Expediter
3
0
0
N tional Labor Relations Board
3
3
1
TO construction Finance Corporation
28
0
0
Se iurities and Exchange Commission
1
0
0
Sc cativo Se'vice
0
0
1
T( nnessee Valley Authority
12
0
1
Vi terans' A lministration
4
2
2
At nnie Energy Commissmn
0
17
14
In erstatc Commerce Commission
3
0
0
M 6ritime Cnnmission
7
0
0
fil( aeral Sernces Administration
15
21
14
It should be noted that, except for negati-Te returos, the reports
rc vealed gross errors. It is doubtful that the agencies can give a
ompt and accurate accounting of the assignment of their employees
oi any given date or for any stated period. The on-the-spot surveys
in the agencies corroborate this finding.
D centralization
Previous parts of this report have presented information on the
di centralization of some of the agencies' administrative activities.
5 contains a summary of factual data on the extent of decen-
tr ilization of personnel activities within the agencies. On the aver-
e, 40.2 percent of all personnel actions are processed in the Washing-
to i headquarters. The agency average varies from 31 percent in the
.D Tartment of the Interior to 61 percent in the Federal Security
.ency.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE: DEPARTMENTS 153
FISCAL MANAGEMENT
Similar variations exist in staffing the fiscal management functions of
the agencies. Table 7 contains comparative data on the number of
workers assigned and the relative costs of budget, accounting, pay-
rolling, and voucher examination activities.
TABLE 7.?Employees engaged in fiscal management activities in selected agencies
during fiscal year 1950
Budget
Accounting
Voucher
examinations
Payroll
Total
Agency
Num-
ber of
Cost
.,.,?
Num-
ber of
Cost
' ,
Num-
ber of
Cost
??,.
Num-
ber of
Annual
cost
Num-
ber of
Ratio
to total
work-
'"'r
work-
kr
dorllar 1
work-
.''''
work-
per
work-
per-
ers
dollar
ers
ers
voucher
era
capita
ers
sonnel
Federal Security Agency2
202
$0. 005
459
$0. 010
149
$1.27
130
$11.12
910
1:36
Treasury Department.._
168
.002
1,013
.007
182
.96
476
12.44
1,839
1:61
Department of the In-
terior
135
. 001
1, 059
. 006
221
.99
278
14, 19
1, 693
1:36
General Services Ad-
ministration 4
58
.0003
419
.001
109
1.14
148
18.80
733
1:36
Total or average_ _
563
.0009
2,950
.005
661
1.05
1,032
13.41
5,205
1:45
1 Grants, loans, debt retirement, etc., not included.
2 Correction to table V, p. 11, pt. I.
Payrolls excluded.
Based on first quarter fiscal year 1951.
An average of 1 employee in 45 is assigned to internal fiscal manage-
ment in the agencies. In the four agencies the ratio varies from
1 : 36 to 1 : 61. A large proportion of fiscal employees is involved in
payrolling, the average annual cost of which amounts to $13.41 per
worker. Table 8 shows that this cost average deviates from $11.12
in the Federal Security Agency to $18.80 in the General Services
Administration.
TABLE 8.?Number of workers, employees per worker, and per capita cost of pay-
rolling activities in selected agencies, fiscal year 1950

Number of
Agencypayroll
Employees
Per capita
employees
per worker
annual cost
Federal Security Agency
130
262
811. 12
Department of the Treasury
476
236
12. 44
Department of the Interior
278
236
14. 19
General Services Administration
148
177
18. 80
Total or average
1,032
231
13. 41
Average salaries of persons assigned to fiscal management show a
difference of $700 per year in the four agencies. Table 12 on page 156
reveals that the highest annual rate ($3,860) is paid in the General
Services Administration with the lowest rate ($3,160) prevailing in
the Federal Security Agency.
PROCUREMENT
Table 9 summarizes the agencies' reports on the number of em-
ployees and relative costs of purchasing operations during fiscal year
1950.
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-1 54 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
T S.BLE 9.?Average number of employees and relative cost of purchasing operations
in selected agencies during fiscal year 1950
Purchase orders
Employees engaged in
issuing pure :lase
orde's
Average
A'
er
order
o
size of
order Average
order
Num -
ber
issued
Dollar
volurne
Per-
cent
under
$20
Ern-
lo
py-
ees
Cost
personal
services
-
pally
as 3rage
'demi Security Agency i
'easury Department
tenor Department
moral Services Admine tration 2_
Total
121, 014
44, 261
38, 725
13, 896
$25, 928, 639
46, 140, 878
53, 770, 867
14,276, 136
50
40
36
28
197
89
108
31
$605, 860
312,558
385, 266
105, 240
2.4
2.0
1.4
1.8
2. 0
$5.00
7.06
9.96
7. 57
0. 47
$214.26
1, 042. 47
1, 358. 53
1, 027.35
543.04
217, 896
140, 116, 520
48 125
1, 408, 924
Fiscal y iar 1949.
i Based o first 3 mont is of fiscal year 1951.
It will be noted that nearly half (48 percent) of the 217,896 orders
were for amounts totaling less than $20. The average cost of each
rder in the four agencies is $6.47.
The table shows that 425 workers are engaged in this function in the
1 eadquarters offices of the four agencies surveyed. Their average
c aily workload is only two orders per day. Prccuremei it workers in the
Federal. Security Agency receive an average annual ialary of $3,075
Thile workers performing similar duties in the Department of the
Interior are paid $3,567. (See table 12, p. 156.)
MANAGEMENT IMPROVEMENT
The circumstances regarding management improvement programs
n the agencies were a distinct disappointme it to the subcommittee.
presurvey analysis of this activity gave promise that this relatively
iew tool of management might be used as a means for attaining better
litilization of employees in the agencies. On-the-spot surveys pro-
need only infrequent evidence that this objective would be realized.
As previously pointed out, some effective management improve-
: nent is being carried on in the Bureaus of Reclamation and Land
.danagement of the Department of the interior and, in the Office of
. danagement of the General Services Administration. Elsewhere the
; tubcommittee believes that the program, suff -,,rs from (1) a misunder-
Aanding of the aims and objectives of Executive Order 10072,3 (2)
ack of support from the head of the agency or hurea-1, (3) disinterest
in.d lack of cooperation from responsible program officials, and (4)
?oorly qualified personnel.
Executive Order 10072, issued in July 1919, directed the head of
mch department or agency to give increased and regular attention to
le economy and effectiveness of the programs for which they are
7esponsible. It directed a systematic review of al.. activities on a
?ontinuing basis to determine the degree of effectiveness, efficiency
and economy in the agencies' operations. L ordered an appraisal of
Bach agency's organization, procedures and staffing at each level.
The content of the order seems unmistakably clear but thus far the
subcommittee finds that the agencies, generally, have exhibited a
great deal of misunderstanding and noncompliance with the mandate.
'See p.57, pt. 1, Federal Security Agency.
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EMPLOYEE UTILIZATION; IN THE EXECUTIVE DEPARTMENTS 155
GENERAL CONDITIONS AFFECTING OVERSTAFFING
FIELD ORGANIZATION
Field organizations of the agencies grow in an irregular manner. In
an attempt to bring program services closer to the people the 4 agen-
cies covered in this report maintain nearly 6,000 field offices through-
out the country. The subcommittee has not questioned the necessity
for so many offices but it does entertain serious doubt about the man-
ner in which they are established and administered. For the most
part, it has been found that there is not enough consideration given to
the necessity for their establishment and continuation. Usually each
bureau or office handles its own network of offices quite apart from the
offices of other bureaus within the same agency, and very often in the
same cities. There is little attempt to consolidate or integrate them
in local areas. This separate administration increases their cost in
both manpower and dollars.
LEAVE
A study of personnel utilization would be incomplete without some
consideration of the problem of employee attendance. The subcom-
mittee has not studied the prevailing leave system in this survey and
is not inclined to comment on present policies until the joint study
currently being made by the Bureau of the Budget and the Civil
Service Commission is completed.
Table 10 indicates that 47,996 headquarters employees in the 4
agencies surveyed were absent an average of 35.5 days 4 during the
calendar year 1949. This rate represents 14 percent of 252 working
days in that period.
TABLE 10.?Sumnzary of employee absenteeism in selected agencies1 during calendar
year 1949
Agency
Number of
employees
covered by
sample
Average number of working days leave 2
taken per employee
Federal Security Agency
Department of the Treasury
Department of the Interior
General Services Administration
Total or average
12, 099
18, 017
5, 130
12, 750
47,996
Annual
Sick
All other
Total
leave
22.4
9. 9
3.6
35.9
22. 5
11. 7
3.5
37.7
21. 0
8. 6
1.5
31.1
23. 1
11.1
2. 7
36.9
22. 4
10. 2
2. 9
35. 5
I Data for agencies shown in exhibit 5 in appendix.
2 Based on 252 total working days for year.
S Based on leave period Jan. 1 through Oct. 14, 1950.
EMPLOYEE TURN-OVER
Data submitted on employee turn-over provides an index to the
stability of employment in the agencies. Continuity of employment
in all positions is a factor in personnel utilization but it is particularly
important at the supervisory and executive levels.
GS grades 7, 9, and 11 are generally considered parts of the super-
4 Classified employees now receive credit for 26 days annual leave and 15 days sick leave per year.
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156 EMPLOYEE UTILIZATION IN 11-1E EXECUTIVE: DEPARTMENTS
v isory levels; yet, according to table 11, they show a high rate of
t on-over. The average rate of 13.5 percent at grade GS-11 should
b3 made the subject of further study within the agencies. Needless
) say, every effort should be made to lower the prevailing rates at
C Tery grade.
I ABLE 11.-Rate of employee turn-over by classification grade in stlected agencies
during fiscal year 1950
as or corresponding grade
Number of
employees
covered by
sample
ii and above
1,
ii
lr
11
9.
8
7.
6.
5
4
3.
2
1
Total
962
1, 412
3,183
5,713
5, 134
1,829
8, 119
4,725
5, 983
5, 991
8, 546
8, 585
8,364
11,816
9,894
93,256
Name of rgency
Ave 'lige
rate
Federal
Security
Agency
Treasury
Interior
General
Ser vices
Adminis-
tration 1
19. 1
3.7
14.2
10. 7
8. 5
5. 1
4. 5
20.2
6.4
10. 4
2.9
5. 2
13. 0
5.5
12.8
1.9
6. 2
5.3
5. 5
36. 8
1.0
7. 5
11.8
13.
9.0
1.9
18. 4
177.7
4.3
26. 9
2.2
11. 1
18.3
9. 2
6.2
1.6
10. 9
8.2
3,0
25, 2
2.3
8. 7
15.9
6.6
11.3
1.9
18.3
14. 5
5.7
21. 1
0. 1
20. 2
12. 2
15. 5
16.9
7.6
15. 2
14. 2
12.0
25. 2
15.0
25. 0
30.3
20.9
31. 8
20. 4
28. 8
16. 5
21.8
57. 1
29.5
39.6
13.0
27.6
26.3
8.3
15.8
15.3
13.6
Based ai first quarter fiscal year 1951.
PAY RATES
An important influence on the high rate of employee turn-over in
t le executive fgencies is undoubtedly the marked difference in
s daries offered among them. "Equal pay for equal wark" is a much-
discussed topic among Federal employees. The figures contained in
t ibles 12 and 13 refute this platitude.
Average salaries for similar staff work in the four agencies show
differences of $492 in procurement jobs to $1,688 in management-
ii positions. Certainly a condition of this kind stimulates
e nployee turn-over.
ABLE I2.-Average annual salary of employees engaged in personnel, procurement,
fiscal, and management-improvement activities in selected age3cies during fiscal
year 1950
Name of agency
Personnel
Procure-
ment
Fiscal
ment im-
provement
ManageII
tderal Security Agency
?easury Tepartment
tenor Department 2
neral Services Administration 4
Average
'$3, 897
'3, 790
4, 017
4, 381
$.3, 075
.3, 511
3, 567
.3, 395
$3, 160
3, 226
3, 560
3,860
M, 011
5, 654
6, 699
6, 102
3,931
3,315
3,396
5, 343
Does not include Division of Commissioned Officers at the Public Health Service.
'Does not include military personnel in the U. S. Coast Guard.
2 Does not include Office of Territories.
Based on fiscal year 1351.
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EMPLOYEE] UTILIZATION IN THE EXECUTIVE DEPARTMENTS 157
TABLE 13.?Average salaries for workers in selected agencies for fiscal year 1950
Agency
Total em-
ployment
Personal-
service costs
Average
salary
Federal Security Agency
34, 083
$126, 820, 265
$3, 721
Department of the Treasury
112,488
389, 001, 909
3,458
Department of the Interior 1
58, 843
166, 656, 717
2, 832
General Services Administration
26, 136
88,000, 000
3,367
Total or average
231, 550
770, 478, 891
3,327
1 Average salary based upon average annual total employment.
IIEARINGS
Extensive executive hearings were held by the subcommittee in
connection with the report on the Prices and Cost of Living Division,
Bureau of Labor Statistics (pt. II, pp. 49-57), but time did not permit
hearings on the other parts of the report. In lieu of this the sub-
committee asked the head of each agency concerned to submit written
comments on the preliminary reports. The subcommittee's letter of
request is reproduced below, and the agencies' replies are reproduced
in the appendix of this report. (See exhibits 6 to 10 on pp. 165 to
210.)
HOUSE OF REPRESENTATIVES,
COMMITTEE ON POST OFFICE AND CIVIL SERVICE,
Washington, D. C., December 5, 1950.
Hon. JOHN W. SNYDER,
Secretary, Department of the Treasury, Washington 25, D. C.
DEAR MR. SECRETARY: I am enclosing a copy of OUT preliminary report on
personnel utilization in the executive departments and agencies which deals with
the Department of the Treasury.
Inasmuch as the subcommittee intends to summarize its findings in a final
report for this session of Congress, we would like to know what action you have
taken, or propose to take, to carry out the recommendations contained in the
report. If you care to submit any additional comments on the report we shall be
glad to receive them.
We would like to have your reply on or before December 15, 1950. Your
cooperation in expediting this request will be appreciated.
Sincerely yours,
JOHN BELL WILLIAMS,
Chairman, Subcommittee on Overstaffing.
It should be noted that the data presented in tabular form in this
report were taken from communications received from, and signed
by, responsible officials of the respective agency involved.
CONCLUSIONS
The subcommittee wishes to emphasize that the need for vigilance
in the practice of economy and efficiency in government becomes
increasingly self-evident in periods of national emergency. Recent
events make it necessary that intense emphasis be placed upon the
optimum use of available manpower, especially in nondefense opera-
tions.
The subcommittee has presented evidence of overstaffing within
the agencies surveyed. It has identified numerous faults and mal-
practices that contribute to overstaffing. Specific remedial actions
have been recommended. Further, the subcommittee has recited
several principles of departmental management on which satisfactory
personnel utilization depends.
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L 8 EMPLOYEE! UTILIZATION: IN THE; EXECUTIVE DEPA RTMENTS
There is no escape from the fact that final responsibility for imple-
enting improvement rests with the agencies. They advise that
a( tion has already been taken to carry out some of the recommenda-
ti ins of the preliminary reports.5 Continued -Natchfulness by appro-
pi committees of Congress will be necessary to insure realization
01 the improvements which have not yet been put in force.
RECOMMENDATIONS
In keeping with the findings and conclusions contained in this
IT port, the subcommittee makes the following recommendations
w iich it believes necessary to the reduction and prevention of over-
st affing in the civil activities of the executive departments and
encies:
1. The head of each agency should make a thorough study of the
activities under his direction with principal :stress upon the fullest
possible use of the present personnel complement. Foremost con-
si should be given to?
(a) simplification of the agency's orgaLization structure. All
nonessential, duplicating, and overlappirg functions should be
eliminated. All functions not directly related 1-,(3 the defense
effort should be reappraised with a view toward reduction or
complete elimination;
(b) clarification of authority and responsibility within the
agency to prevent delay and indecision in operations;
(e) identification and correction of malpractic es of adminis-
tration;
(d) providing a strong central control over minimum staffing
requirements; and
(0 the transfer of excess personnel to activities which are a
par15, or directly in support, of the accele -ated de Cense program.
2. In addition, the head of each agency and/or bureau should devote
m we time to active supervision of the subordMate operations within
tt air respective assignments. Responsible officials should become
bater acquainted with the activities for wlich they- will be held
a( countable.
3. An appropriate committee of Congress E hould establish a con-
ti ming facility to follow up and extend to other agencies the applica-
ti in of the policies and recommendations, both specific and general,
se t ford. in this leport.
Respectfully submitted.
Bee exhibits 7, 8, 0, and 10 of the appendix.
JOHN BELL WILLIAMS, Chairman.
JAMES C. DA VIS
A. S. HERLO VG, Jr.
EDWARD H. 13,EES
HAROLD C. HAGEN.
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APPENDIX
EXHIBIT 1
Summary of number of employees, accessions, recruitment interviews, and comparison
of certain personnel functions in selected agencies during fiscal year 1950
Agency and bureau or service
Average.
number
of em-
ployees
Number of-
Man-
hours re-
quired
to file
applica,
tons
A cces-
sions
Recruit-
ment in-
terviews
Inter-
views per
accession
Federal Security Agency:
Office of Administrator
730
62
Office of Commissioner
2,287
1
22
91
Social Security Administration
1 108
42
Bureau of Federal Credit Unions
56
1
75
75
40
Children's Bureau
240
32
210
6
30
Bureau of Public Assistance
246
26
212
9
85
Bureau of Old Age and Survivors' Insurance_ .
1,911
683
4,318
6
6,865
Office of Education
373
86
718
8
1,032
Food and Drug Administration
439
66
196
3
833
Office of Vocational Rehabilitation
122
21
450
21
85
Public Health Service (civilian)
8, 256
2,421
1, 731
. 7
2, 414
Public Health Service commissioned officers
2, 165
389
850
2
2, 710
FSA total
38,667
----
3,828
11,207
2.9
14, 185
-
Department of the Treasury:
Office of the Secretary
898
74
3, 274
44
4, 296
Bureau of Accounts
1, 199
133
5, 794
44
4, 596
Bureau of the Public Debt
2,380
110
541
5
108
U. S. Savings Bonds Division
509
99
49
. 5
2, 388
Office of Treasurer of United States
1.403
98
1,117
15
1,008
Bureau of Customs
2, 098
32
270
8
236
Comptroller of the Currency
1, 106
127
72
. 6
156
Bureau of Internal Revenue
21, 065
505
16, 420
32
200
Bureau of Narcotics
282
32
200
6
30
Bureau of Engraving and Printing
6,014
1,300
2,770
2
6, 513
U. S. Secret Service
730
112
1, 250
11
920
Bureau of the Mint
1, 156
19
50
2
30
U. S. Coast Guard
2, 932
457
970
2
054
Treasury total
41,884
3,098
33, 177
10.7
21, 225
Department of the Interior:
OlTice of the Secretary
653
135
8, 791
6
8,908
Bonneville Power Administration
2, 644
1, 240
9, 000
7
9, 360
Bureau of Land Management
464
39
781
zo
520
Bureau of Indian Affairs
738
168
760
4
2, 142
Bureau of Reclamation
3,328
596
10, 610
18
10, 036
Geological Survey
4, 928
786
320
. 4
4, 525
Bureau of Mines
4, 058
990
500
. 5
1, 412
National Park Service
654
134
3, 000
22
4, 000
Fish and Wildlife Service
2, 838
281
775
3
504
Interior total
20, 305
4, 369
34, 537
8
41, 407
leneral Services Administration 'total
12, 400
1,300
6, 000
4. 6
7. 509
Total
93, 256
12, 595
84, 921
6. 7
84, 326
'Based on first quarter of fiscal year 1951.
159
76904-50- pt . VI 3
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Z-1.000Z0001.000VEI.Z00-09dCIN-V10 : Z2/80/000Z eseeieN iod peAwddv
CD
a.
Functional distribution of personnel staffs in agencies and bureaus during fiscal year 1950 cD 0
Percent of total personnel staff CD
Direction
and admi--
istration
Employ-
ment,
placcrarut,
and sepa-
ration
Classifica-
tion job
evaluation
and wage
adminis-
tration
Employee
relations
and
training
Tea in in g
Commit-
tees and
01/61,1,
examiners
Processing
records and
reports
oCD
tn
Undistri-
hstd staff

5 0
Federal Security Agency:
Bureau of Federal Credit Unions
Children's Bureau
Bureau of Public Assistance
Bureau of Old Age and Survivors Service
Office of Education
Food and Drug Administration
Public Health Service
Office of Vocational Rehabilitation
Freedmen's Hospital
St. Elizabeths Hospital
Average for FSA
Treasury Department:
Office of Administrative Services
Office of Technical Staff
Office of General Counsel
Bureau of Accounts
Bureau of the Public Debt
U. S. Savings Bonds Division
Office of Treasurer of the United States
Bureau of Customs
Bureau 01 Internal Revenue
Bureau of Narcotics
Bureau of Engraving and Printing
U. S. Secret Service
Bureau of the Mint
U. S. Coast Guard
Average for Treasury
30.0
9.4
6. 7
13.7
11.7
13. 4
16.7
11.0
6.8
20.0
21. 9
40. 0
27.9
33.3
17. 9
16.2
20.0
29.0
10.0
21.9
16. 7
9.0
21.0
20. 9
20.8
30.0
10.0
17.9
20. 0
3.3
8.3
5.0
3.0
5. 2
10.0
10.0
4.2
10.3
1.5
5. 8
10.0
5.0
3.0
6.0
4.9
45.0
10.0
14. 2
20.0
33. 3
27.8
2.5
37.3
30. 4
5.0
30.0
27.9
20
a
a
2 CO
"????-
--
1-3 "
?-?
15.4
21.1
10.8
6.0
6.3
5.0
29.4
>
23.4
C. 7
7.4
12.8
8.9
17. 1
10.2
9
8. 0
10.4
10. 0
16.0
15.9
28.7
21.9
16.0
16. 1
7.9
34.6
2..5
40.0
11.3
15. 0
12.0
18.9
6.4
13. 1
24.9
26.8
21.4
23.1
4.4
8.0
11. 9
as
23.3
13.9
8.5
is
6.5
12. 4
8.9
15.8
9.0
1
4.0
9.0
16. 7
6.0
0.6
2.2
6.3
1.8
1.4
13.6
16. 7
-9
-7
2.3
1.3
3. 9
33. 0
40.0
48.9
27.6
35-7
35.7
23.1
72. 8
40. 0
37.3
13.3
34.7
39.8
t>4
. 6 0
(3)
M
cb
a
Cd.)
6.7 4 >
9.3
12. 2
10.7
6.3
7-7
1.5
52. 1
.2
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Department of the Interior:
Office of the Secretary, Operations
Bonneville Power Administration
Southwestern Power Administration
Bureau of Land Management
Bureau ofsIndian Affairs
Bureau of Reclamation
Geological Survey
Bureau of Mines
National Park Service
Fish and Wildlife Service
Average for Interior
Average for 3 agencies I
11.1
12.0
10.9
13.4
11.2
11.7
5.8
10. 2
4.5
19. 5
16.6
56.0
16.4
29.3.
12.4
19. 6-
16. 8
12. 1
29.8
13.3
11. 1
8.0
34. 5
15.3
7.0
16. 5
14.4
17. 0
8. 1
18.7
7.4
16.4
2.5
8.5
5. 1
2. 9
3.8
.4
5.5
12. 0
3. 6
.8
4.4
.4
1.2
12.0
10.9
. 1
5. 3
2.9
4.5
3. 5
46.3
7.2
39.1
22.2
28.5
57.2
52.4
56.8
38.3
7.4
42.7
4.8
12. 7
20. 7
13.9
4.0
2.9
3. 9
33. 1
8.8
10.5
17.4
13.4
5.4
6.0
3.2
41.2
2.9
Data for General Services Administration not available for this period.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
EXHIBIT 3
G. or epivalent grades and number of employees serviced by headquarters personnel
offices in selected agencies during fiscal year 1951)
NUMBER OF EMPLOYEES SERVICED
Grade I
Federal
Security
Agency
Treasury
Depart-
ment
Interior
I )(mart-
ment 2
General
Services
Adminis-
tration
Total
15
464
301
127
73
1 :2, ,,i1,, ,E,
.4 c77.6 a; ,- -1 r06,6' r -7 c 6 cd ce7 t:
1
1
1
14
452
503
376
88
1 3
819
1,274
9111
164
12
1, 510
2, 353
1, 571
230
11
1,463
1.169
1,612
336
10
120
1,491
102
6
9_
1,640
3,682
2,201
265
8_
386
3,682
496
93
7_
1, 027
E., 194
2, 236
408
6_
392
4,039
965
292
6_
2, 288
1, 709
2, 833
1, 136
4_
1, 456
2, 640
2, 240
1, 730
3_
2,026
2,848
2,301
926
2_
2,723
2,710
1,346
2,740
1..
1,901
1,274
817
3,739
Total
18,667
34, 869
20,142
12,226
86, 904
PERCENT OF EMPLOYEES SERVICED
Grade I
Federal
Security
Agency
Treasury
Depart-
ment
Interior
Depart-
mrsat 2
GeneralServices
Admini,-
tration 3
Percent of
total
15
2.5
0.9
0.6
0.6
1.1
14
2.4
1.4
1.9
.7
1.7
13
4.4
3.6
4.6
1.3
3.7
12
8.1
6.7
7.8
1.9
6.6
11
8.0
3.3
8.0
2.7
5.3
10
.6
4.3
.5
.1
2.0
9_.
8.8
10.6
10.9
2.2
9.1
8_
2.0
10.6
2.5
.8
5.4
6. 5
14. 9
11. 1
3.3
10. 3
6_
2.1
11.6
4.8
2.4
6.6
5_
12. 2
4. 9
14. 1
9.3
9.3
4.. .
7. 8
7. 6
11. 1
14. 2
9. 4
10.8
8.2
11.4
7.6
9. 4
2_ .
14. 6
7.8
6. 7
22.3
11. 1
10. 2
3. 6
4. 0
30.6
9.0
Total
100.0
100.0
100.0
100.0
100.0
Consolidated GS and 3cluivalent CPC grades.
Does not include Office of Territories.
Based on period. Tan. I to Oct. 1, 1950.
EXHIBIT 4
A QUEST CONNAIRE ON THE TEMPORARY ASSIGNMENT OP PERSONNEL IN EXECUTIVE
DEPARTMENTS AND AGENCIES
I. Prepare a list of the employees in your agency whose services have been
n ade available to another agency on a temporary loan, detail, or assignment basis
ithin tl-e calendar year 1949. The list should include the folluwing information
fc r each ,3mp1oyee:
A. The name, grade, salary, and official class title of each employee.
B. The name and organizational unit of the agency to which the employee was
n ade available.
C. Th?, total duration of each loan period(s); indicate the number of time
e ;tensions granted.
D. The amount Pi* funds received from salary reimbursement.
Include military personnel working in civilian agencies.
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EIVIPLOYEE1 UTILIZATION IN TIM EXECUTIVE: DEPARTMENTS 163
E. The name, grade, salary, and official class title of the person or persons who
assumed the duties formerly assigned to the employee serving on loan.
F. Indicate any increase in grade or salary (other than in-grade promotions)
awarded to the employees listed in items A and E above, during the loan period.
G. Justification for the loan. (How was your agency able to do without the
services of this employee?)
H. The total number of employees made available to other agencies during
the calendar year of 1949.
I. The total funds received from salary reimbursements during the calendar
year 1949 (see item I-I) above).
II. Prepare a list of employees 1 of other agencies whose services have been
utilized in your agency on a temporary loan, detail or assignment basis within the
calendar year 1949. The following information should be included for each
employee:
A. The name, grade, salary, and official class title in your agency.
B. The name and organizational unit of the agency from which the employee
was acquired.
C. The total duration of the loan period(s); indicate the number of times
extensions required.
D. The amount of funds paid for salary reimbursement.
E. Justification for the loan. (Why was it necessary to borrow this particular
employee?)
F. The total number of employees borrowed from other agencies during the
calendar year 1949.
G. The total funds paid for salary reimbursements during the calendar year
1949 (see item II-D above).
EXHIBIT No. 5
Absenteeism for calendar year 1950 by salary grade of employees in selected agencies
Agency
Grade
Number of
enThl"e"
covered by
sample
average number of working days
of leave taken per employee
Annual
Sick
0Ath3elr
Total
Federal Security Agency_
, OD CO IA. CO c0 OD Ca Cn
70
18
6.1
24. 3
111
19.2
7.8
3
29.5
287
21.8
6.3
3
31.1
385
22
7.6
3
32.6
417
22
7.8
3.5
33.3
38
20.2
12.4
1
13.6
493
22.8
8.3
3.8
34.9
53
22.2
8.6
30.8
752
22
10. 1
5.3
37. 4
269
13
6
1.4
20.4
1,043
25. 3
10. 1
4.3
39. 7
1, 400
22. 3
10. 9
2. 5
35. 7
2, 001
22. 3
11. 1
3. 5
36.9
3, 164
24
10. 1
3.3
37.4
1, 616
20
10. 4
5.3
35. 7
Total
12,099
22.4
9.11
3.6
35.9
Department of the Treasury
15
Co Oo 01 OD CO co E., CT+ b., C. C.
N CO 01
0 co coal CO CO C, c.0
16. 1
3. 5
1.7
21.9
14
20. 4
7.6
2. 3
30.3
13
22.4
8.6
1.3
32.3
12
23.7
10
2.3
36
11
22. 4
12. :3
2. 5
37. 2
10
24.2
10.8
1
36
9
23.9
11. 1
1. 8
36. 8
8
24. 2
11. 3
1. 2
36.7
7
23.9
11. 8
1. 8
37. 5
6
23.9
12.3
1.8
38
5
22.4
11.6
1.1
35.3
4
22.7
12. 1
2.5
37.3
3
20.4
1L6
4
36
2
21.9
12.6
4.5
39
1
23. 9
11. 3
5. 3
40. 5
Total
18,017
22.5
11. 7
3. 5
37.7
1 Include military personnel working In civillian agencies.
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164 EMPLOYEE', UTILIZATION IN THE, EXECUTIVE' DEPARTMENTS,
EXHIBIT No. 5-Continued
Absenteeism for calendar year 1,950 by salary grade of employees in selected agencies-
Continued
Agency
Grade
Number of
employ 2,CS
c,overed by
sample
Average number of working days
of leave taken per employee
Annual Sick
ogir
Total
Department of the Interior
16
75
14.4
4
.2
18.6
14
182
19.2
5.4
.7
25.3
13
194
20.8
5. 5
1
27.3
12
1.05
21
7. 3
2. 2
30. 5
11
, 25
21.6
7
1.6
00.2
10
29
22 4. 7
26. 7
9
371
23.2 8.2
2
33.4
8
50
23 11.3
.3
34.6
7
121
23. 1 8. 7
? 9
32.7
6
253
22 9.2
1.8
33
5
882
18
7.7
1.6
27.3
4
702
23
11,7
1.7
36.4
3
153
20. 1
10.0
1. 5
32. 5
2
175
18.6
9.1
.0
28.6
1
33
19.5
10
1
30.5
Total
5, 130
21
8. 6
1. 5
31. 1
keneral Services Admiristration 1
15
13
15.9
6.6
22.5
14
38
36.7
7.8
.6
25.0
13
1.14
18.2
7.3
.5
26.0
12
230
19.7
7.1
1.0
27.8
11
336
20,7
9.9
1.5
32.1
10
6
1.2
.5
.2
1. 9
9
265
22.8
9.9
1.0
33.7
8
96
23.3
11.5
1.2
36.0
7
4,5
22.5
9.5
1.5
33,5
6
306
23.5
9.1
1.6
34.2
5
1,1(1
23.8
10.2
1.5
35.5
4
1,71.7
23.6
11.4
2.5
37.5
3
935
23.9
12. 0
3. 6
39.4
2
2, 8, 9
22. 8
10. 4
1. 9
35. 1
1
4,01.9
23.5
12.5
4.2
40.2
Total
12,7(0
23.1
11.1
2.7
36.9
Total average
47, 916
22.4
10. 2
2. 9
36.6
=Mary
15
322
16.1
5.1
.5
21.7
14
580
18. 9
7. 0
1. 6
27. 5
13
1,011
20.8
6.9
1.4
29.1
12
1,376
21.6
6.0
2.1
31.7
11
1,91)
21.7
9.2
2.3
33.2
10
316
16.9
7.1
.5
24.5
9
1,880
21.2
9.4
2.1
34.7
s
492
23.1
10.7
.7
34.6
7
2,435
22. 9
10.0
2.4
35.3
6
1,363
20. 6
9. 1
1. 7
31. 4
5
4,39:)
22.4
9.9
2. 2
34. 5
4
6,13)
22.9
11.5
2.3
36.7
3
6,05)
21.7
11.4
3.1
36.2
2
11.051
21. 8
10. 6
2. 6
35. 0
1
8, 603
21. 7
11. 0
4. 0
36. 7
Total or average_
47, 996
22.4
16.2
2.9
35.5
Based on leave period from Jan. 1 through Oct. 14, 1950.
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EMPLOYEE UTILIZATION, IN THE' EXECUTIVE: DEPA TM
COMMENTS ON THE REPORT ON INVESTIGATION OF EMPLOYEE
UTILIZATION IN THE EXECUTIVE DEPARTMENTS AND AGEN-
CIES
EXHIBIT 6
THE FEDERAL SECURITY AGENCY
FEDERAL SECURITY AGENCY,
Washington, December 15, 1950.
The Honorable JOHN BELL WILLIAMS,
Chairman, Subcommittee Investigating Overstaffing,
House of Representatives, Washington 25, D. C.
DEAR MR. CHAIRMAN: This is in response to your letter of November 30 in
which you ask for my comments regarding the preliminary report of your sub-
committee dated June 22, 1950. I appreciate very much having an opportunity
to comment on that report. Also you may be assured that I am always receptive
to suggestions that will improve the management of the Agency.
Under "General findings" there are two points to which I would like to refer.
One is the statement that there is no clear-cut line of responsibility or authority in
the Agency and the other that there are too many layers of administration. It
seems to me that through Agency orders, delegations, and organization charts,
copies of which were available to your investigators, there is a clear and definite
line of authority. I find it difficult to understand the statement that there are
too many layers of administration.
The Agency has about 35,000 employees and expends about $2,000,000,000 a
year. This cannot be done without a subdivision of responsibility. I have
recently abolished the Office of the Commissioner of Special Services and now
have the Director of the Office of Vocational Rehabilitation and the Commissioner
of the Food and Drug Administration reporting directly to me. This matter has
been under consideration for several months. We are constantly looking for
opportunities to improve our organizational structure.
Comments regarding personnel management are, in my opinion, not justified, in
that recognition was not given to the fact that we have a program for the de-
centralization of personnel activities which was and is in process. When con-
sideration is given to the fact that the Agency has hundreds of field stations, you
will agree that, when steps are taken to decentralize, caution must be exercised to
assure satisfactory operation at the points of decentralization before we completely
discontinue similar steps at headquarters. Ratios of those employed on personnel
to total employed have been improved as follows: Fiscal year 1950, 1 to 72; 1951, 1
to 78; 1952, 1 to 84. I also wish to point out that the Agency personnel manual
system is one which has been praised by the Civil Service Commission and other
departments and has been used as a model for other agencies because it reduces
and integrates all personnel instructions into one system.
-
The arrangement of the budget as to categories is a legislative matter and is not
for administrative decision. As to fiscal management, extensive consolidations
have taken place in the regional offices and more are under consideration. De-
partmental accounting has been studied and some consolidations made; others are
contemplated.
The Budget Officer is a staff position with unlimited authority to review
budgetary matters and make recommendations to me. The numb.or of personnel
engaged in accounting is incorrectly stated in the report. Five hundred forty-
three employees are reported for the Bureau of Old-Age and Survivors Insurance,
whereas only a small fraction of these are doing administrative accounting. The
balance are concerned with trust-fund accounts and the accounts of the bureaus
for 3,000,000 beneficiaries.
Reference to procurement mentioned the number of units procuring, storing,
and issuing supplies, and excessive costs. Prior to your survey, recommendations
had been made for the consolidation of these activities; and I am glad to advise
that the Agency has one supply section serving all the units in the two buildings
here in Washington. Formerly there were seven units serving the Washington
bureaus.
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166 EMPLOYE,T, UTILIZATION' IN' THE EXECUTIVE: DEPARTMENTS
Procurement casts will be reduced as simplified processes are released by the
General Services Administration, the Bureau of the Budgct, and the General
Accounting Office. You are familiar with the Hoover Commission reports
wherein it is clearly pointed out that the excessive costs of handling the procure-
ment of supplies in the Federal Government are due to a maze of laws and regula-
tions with emphasis on prevention of fraud rather than promotion of efficiency and
economy. I assure you that we are working closely with thc control agencies in
order to take advantage of new procedures.
Since the issuance of Executive Order 10072, tIe management-improvement
program of the Agency has been accelerated. The developments of the last few
months are bringing about new emphasis and new int crests in this field throughout
the Agency. The suggestion in the report that the executive assistant be author-
ized to assign all Agency personnel to survey teams concerned with management
:mprovcment is being implemented through leadership in this program and
coordination, rather than through direct assignment which would undercut ad-
ministrative responsibility. I feel that I should also call your attention to the
'act that it has not been possible to reconcile the figus-es in table VIII of the report
with the facts.
Another subject reported upon is "Areas of unsatisfactory staffing." Under
;his heading specific reference is made to the Office of Education, It is pointed
)ut that of the 35,E employees of this Office 155 are in positions above grade GS-11;
,hat there are 102 secretarial employees and that the Division of Central and
kuxiliary Services number 98. It is not quite clear what implication is intended
kere. The staff of the Office of Education, as you know, is necessarily highly
echnical. It could not perform its functions without a reasonable number of high-
evel employees who must be national experts in their respective fields.
Another area mentioned is "Field operations service," whue it is pointed out
that one of the most unique characteristics of the Federal Secirity Agency is the
:xistence of Federal Security Agency field offices attached to almost every part of
he organization. I know of no alternative under present laws. To illustrate, in
he Putlic Health Service, Congress has provided for categorical grants and for a
Lumber of other Epecific programs such as tuberculosis control, venereal-disease
ontrol, mental health, chronic diseases, dental health, operation of hospitals,
tc. All of these are highly specialized functions carried on -,inder specific laws.
' Therefore, it is necessary to have a central point for the issuance- of orders and
i astructions to those operating in the field and for the analysis of accomplishments
leportecl by the field.
The investigato7s did point out some weaknesses in our pnrchase and supply
unctior which had been discussed frankly with them.. As I I ave indicated, this
I as now been rectified. On the whole, however, I do feel that the time assigned
I o the task was not sufficient to permit a thorough understanding of the problems.
also think that it was unfortunate that the survey team did not have time to
) eview their preliminary findings with the Agency. Had the time been available
I or this, certain obvious errors which I have mentioned would have been eliminated.
3'lore important, I think, there could have been some clarification in the report on
I he general restrictive provisions which substantially impede the process of im-
I roving operations. Some of these restrictions are contained in law, in regula-
t ions, and decisions made by control agencies such as supply and procurement, to
dfich I have already referred. Due to actions already taker, by the Congress,
S orne improvement can be made in this field.
For several years the Agency's appropriation act contained a provision per-
r kitting the Administrator to make organizational a.djustmen ts. This was dis-
c ontinued in 1948. The action on the part of the Congress seems inconsistent
-ith the present trend to vest more authority and responsibility in the heads of
t le agencies.
I am glad to have had this opportunity to comment on the preliminary report
a ad to assure you that recommendations contained therein are under continuous
c Msideration.
Sincerely yours,
OSCAR R. EWING, Administrator.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 167
EXHIBIT 7
THE DEPARTMENT OF THE TREASURY
THE SECRETARY OF THE TREASURY,
Washington, December 11, 1950.
Hon. JOHN BELL WILLIAMS,
Chairman, Subcommittee on Oversta vng,
Committee on Post Office and Civil Service,
House of Representatives, Washington, D. C.
DEAR MR. CHAIRMAN: In your letter of December 5, 1950, accompanying the
report on the Treasury Department, released that day, you inquired as to the
action we have takers or propose to take to carry out the recommendations con-
tained in the report, and asked that this information with any additional com-
ments be submitted by December 15, 1950.
I have several general comments on the report. They are:
1. In my administration of the Treasury Department, I consistently have taken
the position that results are the test of management. Approximately $60,000,000
of identifiable savings have been achieved from the Department's management
improvement effort of the past 4 years, plus improvements in service and strength-
ening of management controls that are extremely valuable but not readily measur-
able in dollars. For the period from July 25, 1946, through October 31, 1949,
these savings are illustrated and itemized on pages 35 to 58 of the Annual Report
of the Secretary of the Treasury on the State of Finances, fiscal year ended June
30, 1949. Additional material will be included in the annual report for the
fiscal year ended June 30, 1950.
2. Were I to single out the most important factor contributing to the results
we have been able to achieve, it would be the utilization of all of the talent in
the Department in our approach to the solution of our problems. We have
striven, and with a growing degree of success, to enlist the aid of every employee
in effecting the improvement of operation. We are convinced, and have proved,
that tapping the practical know-how of realistic operating people produces a
better and more lasting result. The Treasury job is too large and too complex
to be approached with squads of so-called management experts forcing solutions
upon practical, experienced operating executives. This is my firm conviction,
and every consultant that I have brought in has agreed with it.
3. I believe that the report is a reflection of the method used in its development.
As you know, the data was gathered by three investigators working intermittently
for a few months and without previous experience in many of our complicated
operations. This type of sketchy study of the largest financial institution in
the world will not, in my opinion, produce a program on which an action pattern
can be based. Some of the Nation's best industrial engineers have devoted
tremendously more effort in arriving at recommendations on just one of our
bureaus.
4. In January of 1948 I received a report on the Bureau of Customs prepared
by McKinsey & Co., nationally known private industrial engineers. The first
sentence in their over-all appraisal of that Bureau was "Customs is as well operated
as the average industrial company." Another nationally recognized Arm,
Ebasco Services, Inc., came to a similar conclusion with respect to the operations
and management of the United States Coast Guard. I am satisfied that this
applies equally to the over-all management of the Treasury Department. While
I do not cite the above as standards of perfection, I believe that they represent a
level of achievement which belies the implications of the recent report.
The first two recommendations in the report touch on matters of particular
concern to me. They refer to our departmental-mindedness and the amount of
time devoted by our top officials on personal visits and surveys, the broadening
and cementing of informal relationship, etc. Above many other things, I have
emphasized these factors in managing the Treasury. I have devoted many days
and hours to these particular areas and have insisted that my key men do the
same. Most of Treasury's operation is outside of Washington. During the fiscal
year 1950 alone, 36 official representatives of my office, besides myself, made 150
inspectional field trips in which we covered 238 visits to 24 cities embracing ap-
proximately two-thirds of all Treasury field employment. One of several firm
convictions resulting from this extensive contact is that Treasury morale is at
an all-time high and that in no other organization of this size and complexity is
there greater "family" consciousness and esprit de corps. Another conviction,
based on these first-hand surveys, is that our field offices are ideally located from
a strategic standpoint.
76904-50--pt. VI 4
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1( 8 EMPLOYEE UTILIZATION, IN' TI1E EXECUTIVE DEPA RTMENTS
A.s to the specific charges leveled against our bureaus, I woull like to take the
or portunity of briefly commenting, as an example, on the following:
1. The report's allegation of overgrading, overstaffing, and other inefficiency
in the United States Coast Guard reveals a failure to consider all the facts. This
ai pears to be typical of many of the findings throughout the document. Based
or the most recent unclassified figures available, the proportion of Coast Guard
of leers tc enlisted men is less than that of the Air Force, Army, or Navy. More-
oi in addition to Deing a much smaller organization than any of the other armed
se7vices, -the Coast Guard's officer complement includes merchant-marine ins pee-
ti m officers with no enlisted counterpart for such officers. In the fields of account-
in 4 and supply, the Coast Guard is a pioneer leader introduction of improved
in athods and is serving as a model for similar activities in other Government
encies.
2. The report states that "our survey of the DepaAment faled to reveal any
idence to substantiate the saving of 'almost a million man-hours'." Since I
a; slimed office, the Treasury's manage-improvement program has produced
Si vings far in excess of the million man-hours quoted. For example, during the
ft cal year 1950, in the Bureau of Internal Revenue alone, 736,320 man-hours were
st ved in clerical posonnel and diverted to front-line enforcement. (See detailed
a tachment.)
3. The subcommittee recommends a reduction of 1,575 employees in the Fiscal
S ;rvice without furnishing any reconcilable information as to where the cut can be
a )piled. What appear to be definite statements in the report simply have no
b rsis in :Fact when assignments of responsibilities and functions are subjected to
o .deny analysis. For example, it is suggested that the Division of Disbursement
b 3 reduced by 821 employees. Although representatives of the subcommittee
Id no discussions with our officials on this subject, it appears that they based
t leir recommendation on the fact that a number of certified vouchers for non-
r ;curring obligations could be paid directly by the Federal Reserve banks. This,
t ie report states, "would eliminate at least half the work of the disbursing
o 5cers." If this e:-Aire function were removed from the Division of Disbursement,
aly a fraction of these 821 employees could be released. L would mean the
t ?ansfer of a function from one office to another with the establishment of another
s A of executive, supervisory, and service personnel, and other indirect expenses.
ri
he Federal Reserve banks would undoubtedly require reimbursement for this
a Pork. If the function were to be transferred to the various departments and
E gencies, the same situation would apply and it would be a reversion to a discarded
rrangement which had proved too expensive. Nowhere, in all of the foregoing,
(n I find evidence of a true saving to the Federal Government. Rather, it would
le more costly.
In the few days available since the release of the rep)rt, I have asked our bureaus
o furnish me with such comments as are feasible regarding the specific issues
aised ii; it. These comments are attached for your information. At the request
.f Congressman Gary, chairman of the Treasury-Post Office Subcommittee on
ippropriations, I am also furnishing him a copy of 1 he Department's comments.
am also sending to you with this letter a complete copy of a report that we just
Aepared for the Senate Committee on Expenditures in the Executive Depart-
nents. This report will furnish a comprehensive Fcture of the effective action
he Treasury is taking in the field of management improvement.
Contrary to the inferences in the report the departmental and bureau-
nanagement committees have full authority to act when action is in the true
nterest of the public and, equally important, these officials have the know-how
;o mako the action effective. These committees will review the report of the
;ubcommittee in the same manner as they review all other reports, and they will
nake full use of any recommendations that will improve the operations of the
Department.
Sincerely yours,
jOHN W. SNYDER,
Secretor y of the Treasury.
PART III?PRELIMINARY REPORT, DEPARTMENT OF THE TREASURY
OFFICE OF PERSONNEL
Reference is made to the section of the report containing ncommendations (p.
93) which states:
'The departmental Office of Personnel should?
"(a) Main3ain a more complete record of personnel data in order to accom-
plish better supervision of the personnel program."
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EMPLOYEE UTILIZATION IN THE; EXECUTIVE DEPARTMENTS 169
The House Appropriations Committee in 1947 sharply criticized the Office of
Personnel for the number of records maintained and the manpower devoted to
paper processing, and recommended that it should confine itself in the main to
policy matters.
Thereafter an intensive study was made of all of the records and reports of the
office. Records which duplicated those kept in the constituent bureaus were
eliminated and the reports regularly required of the bureaus were reduced to those
for which there was a continuing need. The bureaus maintain basic data from
which additional reports can be readily supplied on a spot basis as needed. Fur-
ther, members of the staff of this office are in frequent contact with bureau offices
and thereby the need for written reports is reduced. This change in operating
methods has resulted in a reduction of 46 positions in the Office of Personnel
since January 1947, and has also reduced the workload on the bureaus.
"(Jo) Devote more time to the over-all control of personnel costs and staffing
standards in the headquarters and field offices of the constituent bureaus."
It is believed that further improvement in staffing ratios can be obtained in
some areas and attention is being given to this matter. However due to the
diverse character of the several bureaus, and such factors as seasonal employ-
ment, number of skills required and geographical location, it is recognized that
there will be a justifiable variation of ratios between them. For example, the
Bureau of the Mint, which has six widely separated field establishments, cannot
attain the same ratio as the Bureau of Engraving and Printing whose employees
are all domiciled in two connected buildings.
A considerable amount of staff time is being devoted to simplifying the record
systems and to reducing the paper work involved in handling personnel matters.
Substantial progress has been made in this area and when this project is completed
a more consistent ratio between bureaus will result.
"2. Bureaus maintaining field offices should delegate additional authority to
them in order to expedite action and reduce workloads in the headquarters."
The announced policy of the Department is in accord with this recommendation
and delegation of authority and decentralization of operations to field offices is
progressing as rapidly as circumstances will permit.
OFFICE OF ADMINISTRATIVE SERVICES
Reference is made to the committee's comments on page 70 of the report
concerning general services, which conclude with the following statement: "The
Office of Administrative Services, within the Office of the Secretary, exercises
virtually no control over the constituent organizations. They operate in a
highly variable and dissimilar manner."
Other references to the control of general services, to the same effect, are found
on pages 71 and 72. There appears to be evident, from these comments, a lack
of information or misunderstanding on the part of the committee about what the
mission of the Office of Administrative Services is supposed to be.
The Office of Administrative Services was not created to become a control
point or central repository of all general services within the Department. It was
established to combine supervision of certain service and administrative opera-
tions already existing at the departmental level, only some of which have a
department-wide significance. In the main, its operating functions have been
confined to the service requirements of (1) the staff offices of the Secretary and
the departmental headquarters, and (2) certain of the smaller bureaus which
have made use of its physical facilities, such as its duplicating unit, rather than
establishing their own facilities. Other Treasury activities are served by some
of its facilities merely because of "building residence" (telephone switchboard,
for example) and maintain self-contained service facilities for themselves in other
respects.
The functions and responsibilities of the various Treasury bureaus, compara-
tively, are highly dissimilar. To best handle day-to-day operating problems, the
Department has been organized on the basis of decentralized operating authority
vested in the respective bureau chiefs, with policy control retained at the depart-
ment level. This basis has contemplated the employment by the respective
bureaus, of whatever self-contained operating services that contributed to the
operating requirements of the bureau functions. The direct result is to provide
the bureau head with working tools which are immediately available as needed.
Likewise, the expense of such services is made a part of the appropriation of the
using bureau, which is in accord with the principles of the performance-type
budget.
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1 70 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
The Office of Administrative Services is responsible for promulgation of De-
pnrtment orders and administrative regulations, and for coerdination, at the
L epartmental level, of matters pertaining to records administration, printing,
aid space occupied by Treasury offices. It participates in management programs
of the Department related to its general functions. t has direct liaison respon-
si Dility between the Department and the several activ ties of the General Services
A 'ministration. However, with regard to control of generul services in the
b. [reams, the Office of Administrative Services was never intended to become a
cc ntrol unit, and to place it in such a category would run cou titer to the policy
of decentralized operating authority which has been a major element in the
E apartment's organization pattern.
P ?ocurement
On page 71, the 'report cites the handling of purchase orders and the varying
( at of issuing purchase orders in various bureaus, as an example of what is termed
"T tnsatisfactory common services." It is believed that this example servos only
tc point cut that the purchasing requirements of various bureaus, and the internal
pi trchasing processes, arc quite different. The Burern of the Mint, the Bureau
of Engraving and Printing, and the -United States Co:aet Guard each have particu-
la commodity reqnirements not existing -elsewhere. Some Bureaus have :field
offices; while others are entirely local to the District of Columbia. Some bureaus
hi Are a centralized procurement process; while others make use of a decentralized
in ethod in field offices. It may be well to point out, in regar I to decentraliza-
ti cc, that such prDcedure may work faster and reduce supervisory expense;
yi t a centralized operation may be able, through consolidation, to reduce the
number of purchase orders. All of these factors have an effect on the cost of
purchase operations. Accordingly, to say that the varying cost of purchase
(Di ders is indicative of disordered and costly procurement activities appears
in warranted. More particularly, it would seem to ecrve only as an indication
of what the committee report earlier mentioned (p. 70), that tbe bureaus operate
in a "highly variable and dissimilar manner."
Previous reference has been made to the dissimilarity of function existing
b( tween the respective bureaus. In several instances, this dissimilarity exists also
b( tween the respective components of a single bureau, where a combination of
ac ministrative, technical, and enforcement functions is found. The general
sc :.vices function is a relatively minor aspect of the tottd cost of bureau operations,
am d its mission is to serve as a working tool of that bureau. Whether the methods
of performance of the general services function vary from bu.:?eau to bureau is
in important. The chief consideration is whether the performance of the general
se7vices function within a bureau serves that bureau effectively and economically.
T ie Treasury believes it does just that.
Specific disagreement is expressed with the statemeat found on page 71, under
,m A, that the trt.nsfer of the Bureau of Federal Supply from the Treasury has
le t a void of leadership in the procurement field. Th transfer Df Federal Supply
w fs accomplished by Public Law 152 (81st Cong., 1st sass.). The same enactment
ra [Bed from $100 to 8500 the general authority for Government agencies to purchase
in the open market without advertising. With the exception o the raised dollar
ai count, Treasury bureaus have the same authority oday as they had prior to
em actmert of such legislation, and the Federal Supply Service is performing
se bstantially the same type of purchasing for the Department as it did prier to
it; transfer from Treasury. There has been no change whatsoever with regard to
ti a Deprztment's position with respect to providing supply Leadership, where
in eded, to its constituent bureaus. It has only been round necessary, since such
tr ansfer, -to establish effective liaison with the General Services ;Ldministration for
pi rposes of the Federal Supply Service; in other words, to estalilsh the same type
of liaison as already existed with other control agencies.
G :neral services
On page 93 of the report, reference is made to a realinement ed all procurement
a( tivities and establishment of a central control. What is 0,ctua.ly intended is not
cl gar, but the general implication seems to suggest establishment of a central
pi ocurement office.
A great part of the supply needs of Treasury bureaus is met from recognized
-G Dvernment services, such as, for example, those sources controlled by the
:deral Supply Service. The volume of direct open-market transactions is
relatively small, aside from the technical and specialied supply requirements of
tl e Bureau of Engraving and Printing, and the Bureau of the Mint. To give
te example, as in the case of technical and specialized supply items in the Bureau
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of Engraving and Printing, the details of specifications preparation, procurement
through the bid and award procedure, and materials inspection necessitate close
association of the procurement unit and the operating units familiar with tech-
nical requirements. To establish a central activity at the department level
would merely create an additional layer of handling. In addition to the cate-
gories just mentioned, the United States Coast Guard presents still another.
situation, since it is a military activity and its supply needs must be determined
by military requirements. Accordingly, it is believed that control of the pro-
curement activity should remain with the using bureau, as a working tool gearect
to the bureau's own program and organization.
BUREAU' OF INTERNAL REVENUE
Part HI of the preliminary report of the Subcommittee to Investigate Over-
staffing in the Executive Departments and Agencies of the House Committee on
Post Office and Civil Service, dated December 5, 1950, contains several references
'to the Bureau of Internal Revenue that reflect serious misunderstanding or mis-
interpretation of actual conditions. We wish to indicate these references, and,
to submit comments thereon.
1. The following is an excerpt from page 63 of the report:
"The Department recently reported that 'The management-improvement pro-
gram was initially installed in the Bureau of Internal Revenue, the largest Bitrean
of the Department, where it has succeeded to such an extent that almost a million
man-hours have been released for other duties since the establishment of the:
program. For the most part, these man-hours have been diverted to increased:
enforcement personnel and to other direct front-line enforcement work.'
"Our survey of the Department failed to reveal any evidence to substantiate,
the saving of almost a million man-hours.' On the contrary, officials in the unit
directly concerned reported that the estimate was largely the result of one per-
son's imagination and that the statement was loosely cited up the administrative
line until it had reached the top. The same official reported that he would be
unable to validate even a fractional part of the allegatian."
As to the validity of the estimated savings, it is pointed out that the quoted
figure of a million man-hours is an exceedingly conservative estimate of the
savings attributable to the management-improvement program of the Bureau.
This may be seen by referring to the official record made during the latest fiscal
year, 1950. The average number of man-years has been computed by adding
the number of persons on the payroll at the end of each month and dividing by
12 to obtain the average for the entire fiscal year. A comparison of 1050 with.
1949, in terms of a significant twofold classification of personnel, is shown in the
following tabulation.
Front-line
Fiscal year
enforcement
personnel
All other
Total
1919
22, 780
29, 238
52, 024.
1950
25, 104
28, 884
53, 988
Difference
+2,318
?354
-1, 901
The figures in this tabulation are a matter of official record, and are available'
for audit by any duly authorized committee of Congress or members of its investi-
gative staff. The basic data were available to the Williams committee staff but.
were not inspected by them.
The volume of work performed by the "all other" personnel was no less in
1950 than in 1949; if anything, it was larger in 1950. Therefore, the reduction
of 354 in this personnel category is a direct and concrete result of the management-
improvement program. There are 2,080 hours to the work-year_ Mull iplying.
the 2,080 by 354, it is seen that the total number of man-hours saved and available
for transfer to enforcement work aggregates 736,320. Thus, it is evident that
the demonstrable savings for 1 year alone which were made availatIe for enforce-
ment work are not far from the cited savings figure of 1,000,000 man-hours
savings.
As a matter of fact, this 1950 figure falls far short of measuring the total savings
that were actually realized during the year. Some portion of the "all other"
personnel shown above represents the clerical workers assigned to complement
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ti e 2,318 additional front-line enforcement personnel. If there had been no addi-
ti mal enforcement personnel in 1950, between 500 to 600 of the "all other" per-
se oriel would not have been on the rolls. The basic correctness of this inference
is unassalable, even though the precise number of persons cannot be determined
fr )m available records. The aggregate savings in the Bureau during 1950 were
in the neighborhooe of 2,000,000 man-hours.
It is difficult to come to grips with the criticism implied in the reference to "one
pi rson's [magination" in the paragraph quoted above. The complete lack of
Is 3tual basis for the critical inference has been demonstrated in preceding para-
gf aphs.
2. A passage related to the above is found on page 72 of the report, as follows:
"The principal a,gency-wide effort in recent months took the form of a very
el ',borate work simplification program. It extended throughout the departmental
d field offices and was used supposedly as a device for self-analysis from which
si bsequent improvement might be launched. Instead, it has been allowed to
ag on indefinitely, far beyond its optimum period of usefulness, until it has de-
g( neratect into a monthly report on which operating officials are obligated to report
ft r the sake of repotting. Figure 2, Work Simplification Program, taken from the
1V ay (1950) issue of the Bureau of Internal Revenue Monthly Activity Report,
gt aphically indicates the present state of its ineffectiveness."
Comment.?One quoted figure of "almost a million man-hours" is derived from
n onthly progress reports on the work simplification program, submitted by depart-
tr ental Evad field offices of the Bureau for a period of Epproximately 3 years, end-
ir g in June 1950. The exact figure, as derived from these reports, is 943,477
it an-hours.
It is quite true, as indicated on page 72 of the subcommittee's report, that dur-
ir g the early months of the fiscal year 1950 the results being obtained from this
p ogram began to decline.
The decline in the effectiveness of this particular part of the Bureau's over-all
rr anagement improvement program was to be expected. Our experience in this
re spect parallels the experience of many other Government departments as well
w private industry. That is a characteristic of this type of work simplification
p ogram. It was and is only a part of the Bureau's management-improvement
irk. It is one systematic method by which supervisors at various work levels
n ay participate in the agency-wide program within the limits of their own par-
ti ular supervisory sphere. Its raw material is not in endless supply, because it
is made .ap only of the procedures with which the individual supervisor is con-
cirned daily, and its energizing influence derives to a great extent from the ea-
t] usiasm which this supervisor can bring to bear on it. Accordingly, while in a
b oad sense work simplification should be and is a matter of continuing admin-
is xative concern, for all practical purposes, its maintenance on any intensively
st stained': basis depends upon how fast this limited supply of raw material is
ci insumed and how constant is the supervisor's interest in seeing that it is proc-
sed through the simplification mill.
That the Bureau was aware of these characteristics of a work simplification
p .ogram is indicated by the adjusting action taken in certain segments of the
E ureau's organization. As soon as a down trend began to manifest itself in a
insistent and meaningful way, the Bureau took steps to cut down the program
it those offices where it appeared that maximum results lutd been achieved.
efore any wholesale discontinuance of a program that has had such beneficial
I.( sults o3curs, the Bureau makes abundantly sure that it has wrung from it all
ii wrovements possible and that the program has actually run its useful course.
It is as almost unbearably frustrating and morale-disrupting situation when a
I ureau which not ocio many years ago was criticized for lack of full management
c nasciousness---but which subsequently has been commended highly by the
E udget Bureau and Members of the Congress and other obje3tive investigators
f( r the management advances it has made since that time?is (tow publicly easti-
g fted for having eKercised administrative caution before completely discontinu-
ii a program that has contributed so importantly to such athances.
3. The following paragraph also appears on page 63 of the report:
"In the Accounts and Collections Unit, Bureau of Internal Revenue, one ad-
ndnistraoor reported that he had received verbal instructions ti assign 'confusing
names' to the various elements of his organization."
Commmt.?Estaalished organizational titles are so well known to taxpayers
merally it has been the policy to continue existing descriptive titles unless and
ntil they are cleaaly obsolete or misleading. This is done in order lo minimize
t le burden and confusion incident to revision of statutes, regulations, forms, and
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other official materials. Titles have been changed from time to time in the past
when such action was clearly in the public interest and will be changed in the
future for the same reason. This policy conforms with the suggestion contained
in the investigator's report which reads as follows: "There appears to be no valid
reason why these changes cannot be made progressively as the opportunities
arise."
As to the comment in respect to the assignment of "confusing names" to the
various elements of an organization, it can be stated that such a practice is not
the policy of the Bureau and no evidence of such a practice can be found.
4. The excerpt that follows is found on page 77 of the report:
"There is little or no control exercised in the central office over the number or
location of these offices. In some units of the Internal Revenue Bureau, this
determination is left to top personnel in the field."
Comment.?The implication of this paragraph?that the establishment and
location of field offices are not subject to review or control by appropriate depart-
mental officials of the Bureau of Internal Revenue?is incorrect._ In the interest
of taxpayer service and convenience, the policy of the Bureau is to decentral-
ize its operations and administrative responsibilities to the fullest extent prac-
ticable.
Field officers in charge, who are intimately acquainted with local conditions
and taxpayer needs, are encouraged to take the initiative in establishing or dis-
continuing branch offices of primary field offices. The recommendations of such
field officials are generally sound. It is to be emphasized, however, that every
such action or recommendation by a field officer is subject to review, and either
approval or disapproval, by the departmental official having direct administra-
tive supervision over such field office.
General comments.?The report does not charge the Bureau of Internal Revenue
with overstaffing. In fact its comments, other than purely descriptive material,
in respect to the internal revenue service are very limited. Moreover, it states
that no survey has been made of the field operations where over 90 percent of all
internal-revenue employees are located. For these reasons it is not believed that
anything approaching an adequate analysis of the Bureau's operations has been
made. Without such an analysis a completely objective view by the investigators
is not possible.
A few passing comments in respect to matters of management indicate an
interest in this phase of operations, but without a survey of the field operations
where practically the total job is located it is manifestly not possible for the report
to serve as any constructive critique of our management programs and their
effectiveness.
The Bureau's record in respect to these matters is open for inspection. Much
of the record is contained in the official hearings of the House Subcommittee on
Appropriations relating to the fiscal years 1950 and 1951.
In reply to the committee's statement regarding the use of management com-
mittees you are referred to page 151 of the 1951 appropriations hearing on in-
ternal revenue.
There follows a report on the management-improvement plan of the Bureau of
Internal Revenue.
REPORT ON OPERATION OF MANAGEMENT IMPROVEMENT PLAN OF THE BUREAU OF
INTERNAL REVENUE
The several broad, general areas encompassed by the Bureau's management
improvement plan (as distinguished from specific projects) are as follows:
(a) Development and implementation of new tax legislation: Attention
to the drafting of new legislation and associated administrative procedures,
in order to guard against unnecessary collection costs and administrative
complexities, is highly important from the management standpoint.
(b) Operating procedures.
(c) Budgeting and accounting.
(d) Program reporting and administrative information channels.
(e) Organization, and allocation of functions and jurisdictions.
(f) Housing and space utilization.
(g) Miscellaneous staff services and functions.
Accomplishments and further plans in respect to each of these 12 major program
operating problems are as follows:
1. Assignment of enforcement personnel. ?Field work under the 1948 tax year
audit control program was completed early in the calendar year 1950. The
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infirmation obtained therefrom has been summarized and analyzed in a series
of 7eports which have been distributed to the field officers charged with the
res ronsibility for selecting returns for investigation aid audit. A final report ?
of generarzed recommendations for returns selection, based on these analyses,
is I eing prepared and will be distributed by December 1950.
ield work on the 1949 tax year audit-control program is now under way. As
'cof waxed with the preceding year, this 1950 program has been reduced as to the
siz ; of the sample, but expanded to include corporation income and certain excise-
tar returns. Thus, it is calculated to test the feasibility of the "one shot" audit of
ret arns of two or more classes of tax filed by a given taxpayer (also see Problem
. 3).
I. Organization of enforcement personnel.--During the course of the year, the
sec pe of this problem was expanded and its content redefined to ewer all questions
of mganization, inclnding allocation of functions and jurisdictions.
k.cting pursuant to the authority vested in him by Reorganization Plan No. 26,
the- Secretary has conferred upon the Commissioner of Internal Revenue all the
po piers formerly exercised by the Secretary, the Under Secretary, or any Assistant
Se Tetary of the Treasury with respect to the approval of compromise cases in
wi ich the amount involved is less than $500. Also, the Secretary authorized the
Cc mmissiDoer to co afer such powers upon any officer or agent of the Bureau of
In iernal Revenue.
31-1 September 21, 1950, the Commissioner addressed a memorandum to the
he td.s of all operating units and divisions of the Bureau, calling attention to the
pt rpose and effect o7 Reorganization Plan No. 20, and inviting their recomm.enda-
tin as with respect to any areas in which it would be possible and appropriate to
delegate authority to a lower operating level. The responses of these operating
he sids are now being reviewed and coordinated. It is anticipated that additional
or lers for delegation of authority will be issued during the course of the year.
An important functional revision was accomplished by tho Commissioner's
or jar of November 14, 1949, delegating authority to the two Assistant Commis-
sicners. One Assistant Commissioner was authorized to exercise general super-
in ;endence over the technical functions of the Bureau of Internal Revenue, and
s other Assistant Commissioner was authorized to exercise general superin-
te adence over all operating activities of the Bureau.
In order to expedite the handling of tax-fraud cases, instructions have been
is tied to all 14 special agents in charge for the establishment of a conference
am d review section in each division headquarters. Previously -Cris procedure was
in effect only in several of the larger divisions. A careful review in this section
of tax-fraud cases results in a more expeditious handling of the cases, as only the
in ore flagrant cases in which there appears to be no doubt as to criminal intent
e forwarded for prosecution. Others are referred for irnmechate settlement of
ti e civil liability. 'rhis results in a more careful selection of cases for prosecution
and eliminates delay in settlement of fraud cases in which prosecution is not
gtituted.
Two other organizational changes effected during 1950 may be mentioned. The
uthority over compromise eases previously vested in the Office of the Special
L eputy Commissioner was transferred to the technical staff. Second, the with-
h riding tax ruling work was transferred from the Income Tax Unit to the Employ-
cot Tax Unit, taus placing all payroll tax ruling work under one Deputy
Commissioner.
3. Coordination of andit efforts.?This problem is closely related to problem
o. 1 and it has been found that the two can be handled most effectively if merged
aid considered as a single problem. As noted above, the practicabilr y of the
c msolidated audit ,procedure is now being tested on a limited seal r in connrction
v ith the field work under the 1950 audit-control program.
4. Impreved performance of nonenPrcement functions..?As initially defined,
t us problem covered so many lines of inquiry that it could scarcely be treated
c1r ctive..y as just one problem. Therefore, it has been divided, and hereaAer
ill be reated as two p7oblerns: (1) The mechanical-equipment problem and,
(2) the procedural improvements problem. Work is continued on a year-round
1 asis to adapt and app1,7 now, improved mechanical equipment to use in the
r erformance cf mass office operations. Developments duri-g the fiscal year
1050 included an addiional punch card and tabulating equiament install Won
ii the collector's office at Philadelphia; evnlorator-y work on the extension of
t abulating procedures in certain accounting and record-keeping operations;
I iStallations of eleetronic computers in several collec ors' offices for computation
ad verification purposes; and experimental installations of a wide variety of
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new types of nontabulating equipment, including electric typewriters with dual
platens and high-speed posting machines with direct subtraction and auxiliary
equipment.
Plans for 1951 call for three new installations of tabulating equipment; installa-
tions on an office-wide basis of major types of nontabulating equipment in two
additional collectors' offices; and two additional installations of electronic com-
puters. The 1952 estimates provide for installations of tabulating equipment in
five additional collectors' offices, and the equipment of five other collectors' offices
with full complements of nontabulating equipment.
Both Public Law No. 261 and Public Law No. 448 authorize the Commissioner
to use tax-stamp machines or other devices in lieu of stamps. Pursuant to this
authorization, active steps have been taken to develop a machine which would be
satisfactory for use in lieu of stamps for alcohol-tax purposes. Such a machine is
nearly ready for submission to the Bureau of Standards and, if acceptable, speci-
fications will be drawn and furnished manufacturers as the basis for bids to be
submitted by them. Considerable work has already been done toward the draft-
ing of regulations for the use of tax-stamp machines for paying the tax on
fermented malt liquors, rectified spirits, and distilled spirits.
The efforts to develop more effective and economic procedures proved highly
fruitful during 1950. The more important new procedural provisions may be
identified as follows (the numbers shown refer to specific items of Commissioner's
mimeographed instructions):
No. 6411, 6412, 6413, and 6431 provide uniform assessments lists procedure and
authorize the discontinuance of the preparation and submission to the Bureau in
Washington of duplicate assessment lists for all classes of internal-revenue taxes.
No. 6453 extends the authority from $1,000 to $10,000 to collectors to abate,
credit, and refund all internal revenue taxes in accordance with Public Law 271,
subject to subsequent instructions.
No. 6454 provides instructions for collectors to determine, assert, and abate for
reasonable cause delinquency penalties in amounts not exceeding $10,000 in all
internal-revenue taxes.
No. 6455 provides instructions for collectors to schedule and allow abatements,
credits and refunds resulting from the audit of agents' cases involving individual,
fiduciary, estate and gift tax returns in amounts not exceeding $10,000. (Pre-
viously, collectors were restricted to overassessments of $1,000 or less involving
individual income tax returns only.) By amendment No. 1, collector's juris-
diction was extended to corporation tax returns involving overassessments not
in excess of $10,000.
No. 6469 contains instructions that partnership returns should no longer be
forwarded to the Bureau for the purposes of obtaining statistics and selecting
returns for investigation. Agents now classify and select such returns in the
collectors' offices.
No. 6517 provided for the computation of interest by collectors on overassess-
ments scheduled by the Bureau and the allowance of such interest as a credit
against any tax due from the taxpayer. Under prior procedure the collector
applied only the overassessment of tax against outstanding tax and billed the
taxpayer for any balance due. The interest on the overpayment of tax was
later refunded to the taxpayer.
Pursuant to Public Law No. 261, the regulations governing the procedures
relating to fermented malt liquors were revised. The main purpose of the revision
in law and regulations was to change the point at which the tax on bottled or
canned beer would be collected. The effect of this change is that claims for the
refund of tax paid on unsalable beer at the brewer's bottling house and covering
beer lost in bottling have been eliminated.
Pursuant to Public Law No. 448, Eighty-first Congress, regulations covering
procedures relating to distilled spirits were rewritten. The new regulations
provide that spirits removed from internal revenue bonded warehouses may be
gaged in bulk gaging tanks. This should, in time, eliminate approximately 75
percent of all individual gaging. The law also eliminated the statutory schedule
of loss allowances and will, therefore, have the effect of eliminating many remis-
sion claims which have heretofore been filed under the previous requirements.
In providing for pipeline transfers of distilled spirits as well as for tank car and
tank truck removals, the methods of handling spirits have been greatly modernized
and will be of great benefit to both the industry and the Government.
An example of another type of procedural simplification is the revision of the
basic regulations covering the alcohol-tax field. Formerly these regulations were
contained in 30 volumes, and it was a serious problem to keep them current for
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17(1 EMPLOYEE. UTILIZATION IN THE EXECUTIVE! DEPARTMENTS.
reac y reference. After much study, it was concluded that the most economical
and satisfactory solution was to arrange with a private publishing company to
prir t these regulations in loose-leaf form and maintain them on a current basis.
Thr arrangement was made, and 2 loose-leaf volumes lave now replaced the 30
voh Ines ar d a multitude of Treasury decisions with much saving of time of
Bur mu o'heers and greater convenience to both officers and taxpayers.
;her important procedural changes for which orders and instructions are now
in t le process of preparation include the following:
Decentralization of authority to collectors to process ar d schedule for
allowance the bu k of all miscellaneous tax abatements, crediTs, and refunds.
Mora streamlined and expeditious procedures for processing offers in com-
promise and obtaining final action on such offers.
The selection for investigation of fiduciary and corporation tax returns by
revenue agents in field offices without references of these returns to Washing-
ton and their return to the field, and also a more uniform:, procedure for
selecting and investigating these types of returns.
A uniform system of acknowledging correspondence with taxpayers and
their rDpresentat; ves, with a view to improvement in taxpayer relations.
The introduction of four 30- and 90-day notices to advise taxpayers of the
results of audits, in lieu of 31 form letters now in use; 3 dc sing-agreement
forms to replace 8 now in use; and uniform instructions to taxpayers relative
to their appellate rights and protest procedures.
5. Inadequate hous',.:ng.?During 1950 several housing "sore spots" of long
star, ding were eliminated in the field by securing integrated and reasonably
adei .uate q aarters. A series of modern floor plans were prepared for use in the
desi m of future public buildings. Close liaison is maintained with the Public
Buil dings Service in order to obtain all possible benefits from periodic adjustments
in tie housing of Government offices throughout the country. Forward planning
wor on the housing problem is being done in full cooperation with Treasury
hot]: ing officers and the Public Buildings Service.
T us project has been redefined to include the broad aspects of the space-
utili ration problem. In Washington a space survey has been completed, and a
test rearrar gement is now underway in one division with a view to determining
the nest economical use of space. A report on space inventory arid its utilization
was made by each field office and submitted to the Bureau during June 1950.
The le reports have been summarized and are now being analyzed with a view to
determining the best methods and patterns of space utilization that can be de-
vise I. When completed, appropriate instructions will be prepared for trans-
mis to field offices.
6. Traim:ng of enfcrcement personnel.?Work-simplification "appreciation lec-
ture 3" are now being given, both in Washington and in the field, as a part of the
regr lar course of hmtruction for new revenue agents. Also, plans are in the
dev, lopmental stage for expanding the instructions in regard to taxpayer relations
in t' te training of all new enforcement personnel.
Iv ention may also De made of another type of training activity. At irregular
inte .vals, but frequently, the Bureau is visited by officials and students of tax-
atio i from foreign ccuntries who wish to learn as much as possible about our
met iods of tax administration. It is important that all coopera tion and aid be
exte tided to such visitors, but it makes heavy demands on the time of Bureau
officials to do so. In order to reduce this burden somewhat, and also to facilitate
the process of imparting information to visitors, an exhibit room has been estab-
lish, d and equipped in the Internal Revenue Building. Modern techniques of
vise al presentation have been utilized to develop the story of the Bureau's opera-
tion t with maximum clarity, forcefulness, and accuracy. This room is also
pro, Mg helpful in the process of indoctrinating new employees.
Destnction of obsolete documents.?The problem of planning the destruction
of o isolete returns and records has proven to be larger and more time consuming
that had Decn anticipated. The inventorying of all departmental and field
rece rds is nearing completion; the information thus obtained will be the basis for
formulating a complete program for the orderly and continuing disposal of
obsclete items. During 1950 some 68,000,000 individual income, fiduciary, and
part nership returns were destroyed, thereby bringing to a current basis the
Bur mu's program of destroying all returns of these types after a 6-year retention
peri id. Likewise, inactive and semiactive records are being moved in increasing
volt me from office space to less expensive storage or warehouse type of space.
The stepped-up microfilming program is progressing smoothly? During 1950
app ioximately 167,000,000 index cards and Forms SS-la and IN-1 were micro-
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filmed. Filing cabinets with an estimated value of $335,000, and floor space
with an annual rental value in excess of $67,000, have been released in conse-
quence. The microfilming program is being pushed ahead at an even greater
rate during 1951.
8. Decentralization of routine functions.--The major objectives of this program
have now been attained in large part. Pursuant to schedules now in effect, the
process of shifting work from Washington to field offices will continue during
1952. The necessary staff planning work should be completed during 195r,
however.
Pursuant to the policy of delegating authority to field personnel, the alcohol-
tax regulations were revised so that district supervisors are now authorized to
take final action on the qualification of industrial alcohol plants, industrial
alcohol bonded warehouses' industrial alcohol denaturing plants, registered dis-
tilleries, fruit distilleries, internal revenue bonded warehouses, tax-paid bottling
houses, and rectifying plants. They are also authorized to approve alternating
operations of industrial alcohol plants, fruit distilleries, and registered distilleries.
The procedure for alternating proprietorships of such establishments has been
simplified with the elimination of Forms 124, 125, 26, 1431, 2714 and 27-A and
the substitution of a simplified Form 1696.
Again, the audit review of a large number of alcohol tax reports previously
submitted to the Washington office has been eliminated. Submission of some
reports to the Deputy Commissioner's office has been discontinued, and in other
cases such reports were simplified. In the future, reviews of district supervisors'
reports will only be made as an incident to the examination of supervisors' offices
by field examiners.
Other examples of decentralization orders issued during 1950 have appeared
above under the heading of problem No. 4.
9. Budgetary record controls.?The content of this problem has been extended
to include improvements in the Bureau's accounting records and procedures. In
line with this expanded scope, and at the request of the Commissioner, a compre-
hensive survey was made of the Bureau's budgetary and accounting processes by
a representative of the Treasury Department's budget officer and a representative
of the Bureau of Accounts. Their report and recommendations were submitted
on January 25, 1950. A number of their secondary suggestions have now been
put in effect. Their primary recommendation was for a far-reaching revision of
the Bureau's organization of budgetary and accounting work and related proced-
ures; plans for implementing this proposal are now well advanced and should be in
effect by the end of this calendar year.
By the Commissioner's order of November 14, 1949, for delegation of authority,
responsibility for coordinating the estimates of fiscal needs was vested in the
Assistant Commissioner in Charge of Operations and the management staff.
Accordingly, the 1952 estimates of each operating unit were analyzed with the
heads of these units by the Assistant Commissioner and management staff mem-
bers, together with the Bureau's budget officers.
The list of five activities appearing in the 1951 budget estimates has been
revised and expanded to the eight-activity classification appearing herein. This
revised activity classification is facilitating greatly the task of analyzing and
evaluating the needs of the Bureau.
As a pilot operation, an office has been set up in Boston to handle disbursement
accounting functions on a centralized basis for the local internal revenue offices
in that city. If this proves successful, similar centralized fiscal_ offices will be set
up in other appropriate cities.
Every Bureau employee has been assigned to the proper budget activity, and
this assignment of personnel by activities is carried as a regular part of the payroll
accounting records. This complete integration of personnel costs with activity
records is an important forward step not only for budgetary purposes but also as
a source of valuable information for administrative management purposes.
Substantial progress has been made toward placing the reporting of incurred
obligations on an accrual basis. Further, every obligation item reported is now
being assigned directly to the proper activity category.
10. Review of the Revenue Code.?The concept of this problem has been enlarged
to include the development and implementation of new tax legislation. Effective
work in these areas is highly important for over-all management purposes. If
appropriate attention is given to administrative considerations when new tax
legislation is in the drafting stage, the revenue collection is made more certain,
and unnecessary or excessive costs of administration can be averted. Also, if
regulations, return forms, and taxpayer instructions are drafted as simply and
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17S EMPLOYEE, UTILIZATION IN THE EXECUTIVE: DEPAI1T1VIENTS
cle Lrly as possible, important gains result by way of higher volun-Ary compliance,
be ter taxilayer relations, and reduced administrative costs.
:)uring Dhe past year, representatives of the Bureau participated actively in the
dei elopment of Public Laws 814 and 734. Similar participation is now being
hau in the development of prospective excess-profits-tax legislation.
Ireview of the Revenue Code to develop recommendations fpr improvements in
adi ainistrative matters is a continuing activity. Lists of recommended changes
in he administrative provisions of the code are prepared and su omitted periodi-
cal y for consideration in the Treasury. Appropriate follow-up steps are taken
aft r Treasury review and approval.
( me recent development is significant. Six field offices have peen designated
as ocal pcints for channeling information to Washington in respect to desirable
legislative changes. Specifically, one reviewer in each of six i aternal revenue
age ats' divisions has been given responsibility for the selection of cases which
demonstrate the need for statutory modifications. These six men will meet
quE rterly in Washington with Treasury officials and members of the Commis-
sim er's management staff responsible for the development of tax legislation.
Th over-all objective is to reduce the obsolescence in the taxing statutes in rela-
tim to the actual current situation. This represents the first systematic attempt
to I acus the knowledge and talents of field officers on the problem of keeping the
tax rig stat rtes currer.t.
11. Deve!opment of procedure under Public Law 271.--With but one exception,
all iecessary steps for implementing the administrative provisions of Public Law
271 had been taken by the close of fiscal year 1950. This exception relates to the
pro visions of section 7 in respect to the collection of excise tio:es. No action
vs c irrently under way in this area, pending clarification of the over-all aspects
of t ie excise-tax situation. Therefore, and since only a minor part of the original
pro )1em is involved, this project is reported as completed in 1950.
1 !. Exploration of cooperative Federal-State audit possibilities.---Arrangements
wer ; made for active cooperation during 1950 between Bureau and State enforce-
met t officers with two States, Wisconsin and North Carolina. En both States,
the area of cooperation is the investigation of income-tax returns. The operation
and results of these initial attempts will be studied in order to identify possible
imp :?ovements in the pattern and methods of Bureau-State cooperative enforce-
mei t. It is planned to extend these cooperative efforts to addhional States as
rapi lly as may be determined to be feasible in the light of local circumstances.
UNITED STATES COAST GUARD
Ii aference: Pages 75-76 of committee report.
F )1lowing is the situation with respect to the inference that the ratio between
officer and enlisted personnel in the Coast Guard does not compare favorably
witl simila- ratios for other military services:
At of December 6, 1950, the on board military personnel strength of the Coast
Gus rd included 2,121 commissioned officers, 838 chief warrant and warrant officers,
and 22,478 enlisted men. The ratio of commissioned officers, therefore, is 1 to
10.6 in lieu of the 1 to 9.6 claimed in the report and 1 to 25.6 in lieu of 1 to 24 for
war ant officers.
T ye number of commissioned officers given above includes those engaged in
mer :hant marine functions. As these officers have no enlisted counterpart the
pore mtage of officers to enlisted personnel is of necessity higher than that prey-
alen ; in the Coast Guard before the war. Even including the merchant marine
insp wtion officers the ratio of the number of commissioned officers in the Coast
Gua xl to the numbe::. of enlisted personnel compares very favorably with the
situ: lion in the other services as is shown below:
Air Force (October 31, 1950)1 1 commissioned officer per 7.03 enlisted men.
Na v g (June 30, 1950),1 1 commissioned officer per 8.09 enlisted men.
Ara y (October 31, 1950),1 1 commissioned officer per 9.67 enlistd. men.
Con I Guard (December 6, 1950), 1 commissioned officer per 10.60 enlisted men.
T se Coast Guard does have a higher proportion of warram officers to en-
liste I men than do the other services but this situation is necessary due to the
man y small scattered command units in the service.
T le Coast Guard he,s carried out a general career plan for the rotation of officers
whh h provides officers the opportunity to obtain broad field exioerience before
assu ning alministrative responsibilities at headquarters. The 1.ack of a fixed
? --
1 L: test dates on which ur classified information is available.
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policy on the rotation of officer personnel is not only acknowledged but is believed
to be a definite asset in the efficient administration of the service. It is not be-
lieved that an inflexible rotation policy is the rule in any other well-run Govern-
ment agency or business enterprise.
The allegation of overgrading and overstaffing of military personnel at head-
quarters is not concurred in. It is believed that a full and careful analysis would
show that the responsibilities and actual workload required for the administration
of the far-flung and diversified activities of the Coast Guard would indicate
headquarters offices are generally undergraded and understaffed rather than the
reverse.
Table 9 of the report is used to show comparative costs between military and
civilian personnel in order to support a contention of "* * * a measure of the
extravagance which prevails in obscure places."
The spread between the military and the civilian salaries shown in table 9 is by
no means unreasonable as the work performed by individuals within the two groups
is not similar in any way. Military personnel in the Coast Guard, as in the other
military services, are generally employed in an executive or supervisory capacity.
Civilians on the other hand comprise the bulk of the stenographic, clerical, and
semiprofessional force working under supervision of the military.
Reference: Page 70.
Insufficient credit is given in the report to the progressive steps taken by the
Coast Guard to establish, develop, and make practical use of a modern cost
accounting system. This system is for use not only in the Coast Guard and
Treasury Department but also as a guide in the establishment of cost accounting
systems in all Government agencies as required by the Budget and Accounting
Procedures Act of 1950. This program is making rapid progress although a few
of the phases are still in the testing and development stage. Progress has not,
however, been limited to the strictly technical side of the program. The Com-
mandant has taken strong steps to indoctrinate all personnel in the service in the
practical aspects of the use of the cost accounting system to improve the economy
and efficiency of the public services required of the -Coast Guard.
The statement in the report that "one group suggests that a property inventory
upon which accounting control can be based be taken immediately; the other fac-
tion claims that a physical inventory will not be immediately necessary" is not
understood. The position of both supply and accounting personnel is that the
taking of immediate inventory would be ideal but that it was not necessary to
wait until complete physical inventory had been established to begin accounting
for receipts and issues from stores. A complete property inventory upon which
accounting control can be based has been in progress for some time; in the mean-
time, it was mutually agreed by accounting and supply that the accounting system
would provide for the recording of receipts and issues of stores at the date that the
districts were converted to the new accounting system, and that when the inven-
tory was finally determined an adjustment would be made to the balance sheet
account maintained for inventory which would establish complete accountability
at that date.
Reference: Page 74.
Development of a modern type of supply system has been in progress con-
currently with the development of the accounting program. The working rela-
tionship between the two programs is considered to be not only well defined but
has operated on a basis that provides the necessary coordination between these
two functions. The agreement existing is that the Supply Division will be re-
sponsible for the development and operation of systems and procedures relating to
the maintenance of stock record cards for each item of stock and dollar control
of these cards by class of commodity. The Accounting Division would be respon-
sible for the development and operation, as a part of the total accounting system,
of a single control account for inventory at each designated location and the
distribution of issues from inventory to the cost accounts receiving the benefit
of such issues. In order to coordinate these two operations and thereby provide
for reconciliation of the control accounts maintained by the Supply Division with
the single control account maintained by the Accounting Division, a system has
been in operation of reporting to the accounting office all receipts and issues of
stock by the supply activity. The system has been found to adequately provide
for the necessary coordination between these two functions.
In discussing the use of private management firms to make special studies the
report notes that there has been a time lag between the receipt of the report of a
survey and the implementation of recommendations therein. In regard to the
survey by Ebasco Services, Inc., the Coast Guard found that many of its recom-
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mei dations were very general and required extensive supplement al survey before
the specific details could be developed and final implemontation 7.ealized. Many
inv, dyed not only the practices of the Coast Guard but extended to other agencies
or i3quired congressicnal action with respect to appropriations or enabling legisla-
tior . The report alno states that the value of the recommendations made by
pri, ate management firms was impaired or entirely lost because of an elaborate
sys- em of processing. In this regard, attention is called to the 7act that within
2 y .ars af:er the Ebasco study had been completed, the status of the 193
reel mmenclations made was as follows:
A cc epted and completed_ 56
No accepted after careful study 25
AC c epted and instituted but requiring continued effort 48
In )rocess of implementation 46
Im Aementation contingent upon enabling legislation or appropriation
c! funds. 10
Lei islation pending_ 1
Un ler study, requiring lengthy investigation 7
Total 193
1 eferenee: Page 75.
r. 'he statement cited in the report regarding the disposition of Jersey City
Sui ply Depot fails to quote the entire recommendation made by Ebasco Services,
Inc ., and thus gives the impression that immediate action should have been taken
to lispose of this property. The Ebasco recommendation states that "these
prc perties should be sold after the district supply depots have been improved,
cot solidated, or expanded, as the logistical situations dictate."
r. 'he Commandant of the Coast Guard and the Secretary of the Treasury
cm sidered that the recommendations concerning the establish ment of district
cur ply depots and the elimination of the present supply depot at Jersey City,
N. 1., could not be properly evaluated until a detailed study of sources, distribution
fac ;ors, ar d requireraents was made for the many diverse groups of items used
by the Coast Guard as related to the geographical location of Coast Guard units.
As the result of these and other recommendations regarding the supply problems
of I he service a supply specialist (Capt. J. H. Skillman, USN, retired) was obtained
in Vlarch 1949 to act in a capacity similar to the accounting specialist recommend-.
ed oy the Committee on Appropriations of the House of Representatives.
ilter careful study Captain Skillman recommended to the Commandant by
let er dated June 16, 1949, that the Jersey City Supply Depot should not be
vaA ated until after the construction of a more suitable buildir g in a different
loc ation. As the construction of a new building will require the enactment of
leg station authorizing an expenditure of public funds in the amount necessary
for the purpose it is not known at this time a possible date on which the Jersey
Cii y Supply Depot can be disposed of. In the meantime the Coast Guard must
us( this available building even though it is ill adapted for its purpose. The
fa c Is concerning the Jersey City Supply Depot are well established in the hearings
bel ore the subcommittee of the Committee on Appropriations, House of Repre-
sec tatives. Eighty-first Congress, second session, January 1950.
' Che establishment of the district supply depot's has been progressing, through-
ou the past year and a half, in an orderly and realistic manner. At the present
tin e all supply depots have been commissioned and are in operation except two
(w licit will be in operation not later than April 1, 1951).
leference: Page 71.
Cable 7 of the report makes a comparison stated to be the relative cost of
pu ?chasing operations of each organization in the Treasury Department. It gives
an apparent picture of an extremely high average cost of issuing purchase orders
in the Coast Guard compared to the other organizations listed. A statement
be ow the table partially explains the reason for the higher unit cost in the Coast
GI ard, but fails to acknowledge the different types and numbers of procurement
itc las which may be required to carry out the various and different types of
op 3ration5 peculiar to each department. (For example there may be considerable
dil !erence between departments in the number of straight purchase orders versus
co 'tract procurement orders.) There is a wide difference in the time required to
iss le a straight purchase order for an item listed in a standard. catalog and the
tic le required to process an order on an individual contract bass. As there has
be In no attempt in the table to differentiate between the two types of purchases
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EMPLOYEE UTILIZATION IN 3.11E, EXECUTIVE D
for any department, it casts serious doubt on the value of the comparisons given
and on the conclusions reached. An assumption that the ratio between dollar
volume and personal services cost was a fair basis of comparison would probably
be just as valid as a comparison between departments on a cost per purchase order
'basis when two such widely differing types of purchases are arbitrarily added
-together.
The report briefly points out how the Coast Guard system of having head-
quarters perform a great deal of the details of procurement and other purchasing
operations for the field tends to increase the unit purchase cost. Had the fol-
lowing statistics (which were also furnished to the investigator). been used, the
;over-all picture of Coast Guard procurement, both at headquarters and in the
,field, would have shown:
Purchase orders
Number issued 131, 961
Dollar value .17, 177, 372. 51
Percent under 820 28
Employees engaged in issuing purchase orders
'Number of employees .149. 1
'Total cost of personal services ,... $570, 004. 17
.Yearly average per employee 885
Daily average per employee ,.._ 3. 49
.Average cost $4. 32
BUREAU OF CUSTOMS
'Management improvement program (references on pp. 61, 62, 72, 74, and 93)
The principal thread and theme of management improvement espoused by the
-committee report is that the approach should be of the "management expert"
type, in the Secretary's office, rather than by supplying of leadership and incen-
tive from the Secretary's office to intermediate and "grass roots" administrative
personnel who have been permeated with the desire to improve Management.
The committee's philosophy is contrary to that contained in title X, Public
Law 429, Eighty-first Congress, October 28,- 1949, concerning "Management
Improvement Plan and Awards." It also is significantly different from the
techniques used in making, evaluating, and implementing the Hoover Com-
-mission studies. The committee's report admits the management Lexpert approach
would require a full-time facility. One of the principal advantages of the Treas-
ury Department's approach to management is that, without a airect outlay for
-salaries, a larger number of employees who are detailedly familiar with the
-technical aspects of problems confronting them, and therefore, in an excellent
'position to sugsget remedies, can be used on a part-time basis.
Under the Treasury system, the number of minds that can be, brought to bear
,on a problem, the soundness of results, and, through the committee system, the
:sounding-board approach to screening results, have infinite advantages over the
-efficiency-expert system of management. Regardless of the caliber and the
-diversity of knowledge of an expert type staff, they are never able to spread
-themselves thin enough, nor to understand well enough the requirements of
-highly technical laws, regulations, and procedures dealing with a great com-
plexity of administrative problems to develop panaceas. For ,example, in the
Customs field, the visiting management expert, in order to make a sound recom-
mendation for improving laws, regulations, or procedures concerning counter-
vailing duties, would have to himself become detailedly familiar with the laws,
-regulations, histories of the laws and regulations, practical problems of operating
-under these laws and regulations, and many other matters which would reouire
intensive study, training, and deliberation. He would have to jump froin this
specialized field into the many procedures dealing with dumping duties, entry
of merchandise, classification of merchandise, valuation of mer'chandise, etc. In
order to make constructive recommendations concerning each of these fields, he
would have to become expert in each field. Short of this, he would have to rely
on his judgment of the intelligence, integrity, ambition, and thoroughness of
study made of these matters by experts in the field. This is precisely v hat is
done through the task force and steering committee procedure followed in the
Treasury Department,
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LipZ EMPLOYEE: UTILIZATION IN THE EXECUr:IVE DEPARTMENTS
On page 74 of the committee's report, the followirg paragraph appears:
"If for example, a management study is made of some phase of the work in the
T'.ustoins Bureau, that agency will be obligated to appoint committees to consider
he merit of the management report. Each committee will include a major
troportion of Customs personnel and they may accept, reject, modify, or make
ew recommendations at will. This second set of recommendations will be re-
ported to the Commissioner of Customs and to the Secretary of the Treasury
1 sually through the departmental management committee who also has the
eneral privilege of a third acceptance, rejection or modification. From this
oint, the subseqwnt action is entirely voluntary, aid in many cases no decisive
f etion is taken. In this system, in the example cited, the Customs Bureau is
I oth the accused and the jury. The prosecution, if any, is not very effective."
'he results achieved by this committee system will be discussed later. It suffices
t) say that results achieved were not delved into by the staff of the overstaffing
Committee and therefore the effectiveness should not have been commented upon.
The system used in evaluating the McKinsey & Co. management survey of
t le Bureau of Customs admittedly was a committee svstern. It utilized the same
t ichniques which were followed by the Hoover Commission in its study and analy-
s s of the Federal Government. The report rendered by McKinsey & Co.,
v thich consisted of nine chapters contained in eight volumes, was systematically
d ivided into related functional subject matter areas. These functional areas
v ere as follows:
. Entry or Merchandise.
2. Inspection of Merchandise.
3. Liquidation Activities.
4. Drawback Activities.
b. Marine Activities.
Customs-Immigration Activities.
7. Cl assi fi c ati on- Apprai se men t of Merchandise.
S. Statistical Controls and Material Handling.
f). Auditing and Accounting.
Investigation and Enforcement.
11. Port Patrol and Searching.
12. Air Activities.
13. Public Educational Material.
14. Reimbuisable Services.
. Organization of the Bureau of Customs.
The Secretary's office in all cases supplied the leadership for the securing of
c( ngressional authorization to make this study, for the selection of the manage-
rr ant firra making the study, for the determination of the fun Lttional areas -Mto
w iich the study should be channeled, and in the selection of task force and steering
C( mmittee personnel to evaluate the study. The task -force members, admittedly
SE cured largely from staff in the Bureau of Customs, were hand-picked because of
dr known qualities of familiarity with the specific subject to be studied, broad
vi don, initiative, and desire to improve the administration of the Customs Service.
The committee criticizes the necessity for making further studies and evaluation
of the recommendations of, for example, the McKinsey & Co. management firm.
cKinsey & Co. itself recognized the need for checking their recommendations in
th is highly technical and specialized field against field operating conditions and
p( inted this out in their report. Further, many of the most ,tignificant results
am hieved to date have been due to alternative plans and suggestions developed
di ring these studies. or during pilot installations set up to test the soundness of
th recommendations. These matters could not be inastermir ded from Wash-
in ;ton, nor were sufficient numbers of independent personnel available, nor are
th sy now or will ti ey in the future be available, to study the details of these
di terse recommendations. Further, many of the matters resulted in legislative
re tornmendations and it was determined to be necessa-y to thoroughly and care-
fii ly screm such recommendations before submitting them to the Congress so
th a this Department. can assure the Congress of their soundnestt.
Flie task forces made their reports on the definite recommendations assigned to
th m. These reports, available in writing to the steering committee, were further
pr sented orally to that committee. The committee was composed of top staff
of the Treasury Department; it variously included the Assistant Secretary, the
A( ministrative Assistant Secretary, the Treasury Budget Officer, Assistant
Crc neral Counsel, and the Commissioner of Customs. An opportunity was
afl orded this steering committee to ask questions concerning the procedure, the
re: ults which would be accomplished, the soundness of the recommendation, and
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possible alternatives which occurred to these "experts." In many cases, the
recommendations were returned to the task forces for further st,udy an i
d n an
attempt to develop a better way to solve the problem.
After the steering committee had determined on a course of action, its recom-
mendations were sent to the Secretary's office for approval. If approved by that
office, they were sent to the Bureau of Customs for implementation.
The overstaffing committee's report indicates in this system the Customs
Bureau was both the accused and the jury. It is further alleged that the "prose-
cution, if any, is not very effective." It will be seen from the *above that the
Bureau of Customs, which had employees familiar with the subject matter of each
recommendation, was given an opportunity to recommend definitively suggestions
to solve the problems. If the solutions suggested by its task forces, the members
of which had been appointed at the request of the Secretary, were not an effective
answer to the problem the Secretary's office had, and exercised, the opportunity
to detect and control t:he situation.
As a matter of fact, however, this system had been exceptionally effective. The
results achieved by the Customs management improvement program can be
shown two ways:
(1) From 1947 to July 1, 1950, Customs worklpad had increased more than 45
percent. During the same period the number of Customs employees had been
decreased by 5 percent.
(2) The following table gives in statistical form the over-all results achieved
under this constructive approach to the evaluation of the McKinsey & Co. report.
Summary status of recommendations through Dec. 1, 1950?Management improve-
ment program, Bureau of Customs
EVALUATION OF McKINSEY & CO. REPORT
Legislative
Admi nis-
trative
Total
Percentage
Total recommendations
36
141
. 177
100. 0
Evaluated:
1. Evaluated as acceptances
33
119
152
85. 9
2. Evaluated as rejections
3
22
25
14. 1
Total evaluated recommendations
36
141
177
100.0
Unevaluated
0
0
0
0
McKinsey & Co. realized that their recommendations would not prove to be
100 percent sound. Further, they estimated that the job of implementing their
report would require a 5-year period. We are ahead of this schedule in the Bureau
of Customs.
In summary, the Treasury Department uses the technique of expert leadership
from the Secretary's office and provides for effective review and control of the
management improvement program from that level. The system realizes the
futulity, however, of believing that constructive ideas and maximum effectiveness
can be achieved solely by the employment of a staff of experts in Washington.
Enlisting the assistance and cooperation of Bureau employees is the only effective
means of harnessing sufficient manpower with knowledge of the problems to
accomplish the maximum management problem identification and improvement.
Nomenclature (reference on p. 63 (2))
Several comments are made in the overstaffing report concerning ambiguous
nomenclature; and, in fact, an intent to be evasive and obscure is alleged. As far
as Customs is concerned we do conform reasonably to the nomenclature system
proposed by the Senate Expenditures Committee. To the extent that we do not
conform?names, titles, and organizational identification either have a long tradi-
tional history recognized by the public or otherwise find their genesis in something
other than an attempt to be ambiguous and to obscure.
Personnel management (reference on p. 64)
With respect to the criticism of personnel management in the Treasury Depart-
ment, Customs simply wishes to say that the quality, timeliness, and assistance
given by the Department would seem to leave little room for improvement.
Under the leadership of the Treasury Department, personnel operations have
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I;zi EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMEN'TS
13. :en decentralized and much "paper shuffling" has bean eliminated. The policy-
p anning assistance rendered by the departmental staff from day to day is believed
tc be a sound approach to personnel management.
F 'seal management (reference on p. 70)
The statement is made that "the only limitation exercised OVC:7 service functions
aid provarn operations takes the form of the question, 'Do we have the money?'
If so, the expenditure proceeds."
Customs wishes ;,o point out that requests for personal services- or for other
ol jects of expendit ire are carefully screened. It has, of course, been generally
tr le in recent years that many needs considered to be essential could not be
fl tanced from the funds available; and, therefore, the fund aspect was controlling.
nvever, the other test, "Is the proposed expenditure esseatial?" is always
al iplied by Customs.
G. neral services (reference on p. 70)
In an organization which is as large as Customs and which has as many field
of Ices as Customs, 't is believed to be more economical and more efficient for not.
oz Iv the Bureau to procure its own services but, as a matter of fact, for the field ta
plocure most of their own servites. 'The point of supply, the time element, the
m titre of the services contracted for by Customs, and the general spreading of the
w irkload indicate that the present system, with sonic modifications which are
cm rrently being made, is the best answer to the services problem.
1 he ire plication behind the Overstaffing Committee's report is that centralized
nt cessarily means more efficient and lets costly operations. Particularly in the
se 7ViCCS fold this is not alwa:N s true. For example, on a purchase order, the time
in volved to complete the order for a local purchase of supplies, which are not
ailable from the General Services Administration supply centers, would not be.
m rch greater than to prepare a requisition for forwarding to a central supply.
se Tice.
In addition, the central office would then have to make out the purchase order
am d, in many cases, procure the item from a local source of supply at the field-office.
location. On the other hand, items which can best be supplied by a central
Be; vice are handled that way by Customs.
Feld sendee
3n pares 76 and 77 of the Overstaffing Committee's report, Treasury is criti-
eh ed in gimeral terms apparently for the number of field offices . t has and for the
Im k of control exercised in the central office over the number or location of these
ofl ces.
Thstoms field offices have been and are established for one purpose: to serve
th needs or importing and traveling public. If business volume is not sufficiently
gr ;at to justicy the retention of an existing field office, this Bureau recommends-
ab >lition of the office. Very often there is a difference of opinion on this matter.
Pc litical and civic interests often believe that a field office must be retained even?
wi en Customs, from an administrative point of view, believes otherwise. The
no .essity for permi Aing the importing and traveling public to conduct their
bu iiness with Customs at a point along the border, and in some cases in the interior,
wl ere other requirements of shipping and commerce are met, has rarely been;
qu mstioned.
ks to the control exercised centrally over the number and location of these-
off ces, the amount cf service, the amount of revenue, the volume of transactions,
en orcement needs, and other matters are carefully considered in establishing or
ab )1ishing any Customs field offices. Each port of entry is approved by the
Cc mmissioner or Customs and Secretary of the Treasury before it is established.
EN 3n the establishment of a customs station is approved by the Commissioner of
?irithin the past 2 years we have, moreover, consolidated administrative service.
fuf etions where more than one branch of the Customs Service is located in the
sat m city. This program is continuing and it is expected to be completed by
Ju le 30, 195i. Customs has further consolidated its mail divisions under the
jur 'seliction or collectors of customs in 10 major customs ports, and this program
is Iso continuing.
FISCAL SERVICE
'The Fiscal Service was created in 1940 by Reorganization Plan III, under
au horitv of the Reorganization Act of 1939. This reorganization plan brought.
top ether a; a working, unit, the three fiscal bureaus of the Treasury dealing with
ao( aunts, deposits, disbursements, investments, public debt, and Treasury funds..
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EMPLOYEE UTILIZATION: IN THE EXECUTIVE DEPARTMENTS 185
The bureaus thus consolidated in the Fiscal Service are the Bureau of Accounts,
the Bureau of the Public Debt, and the Office of the Treasurer of the United
States. Supervision of their functions is exercised by the Secretary of the Treasury
through the Fiscal Assistant Secretary.
The creation of the Fiscal Service was the result of careful study of Treasury
activities by the Bureau of the Budget and the Treasury Department. Its
purpose was to bring about closer coordination of the interrelated functions of
these three bureaus engaged in carrying on the daily financial operations and their
relations with the banking system of the country. This purpose has been ac-
complished. It has been clearly demonstrated through the money savings that
have been effected.
At the present time the total number of employees in the three bureaus of the
Fiscal Service is 9,051, which is 381 less than the number on the rolls as of the
date the Committee's figure of 9,432 Was conipiled. Without allowing for this
reduction, the report suggests that there could be a saving of 1,575 employees if
the recommendations of the Committee should be placed into effect. The
difficulties in dealing with the fiscal management section of the Committee's
report are manifold:
First, the procedures and interrelationships of the many fiscal activities are of
a highly complex and technical character and arc governed by laws enacted by
the Congress over a period of more than 160 years.
Secondly, many statements in the report indicate a fundamental lack of knowl-
edge on the part of the authors of the report concerning these interrelationships.
Thirdly, there is manifested not only a lack of knowledge concerning personal
accountability of Government officials in the handling of Government funds and
securities, but also, in a larger sense, the accounting for stewardship to the Ameri-
can people who support the Government through the taxes which they pay.
Fourthly, the report does not set forth sufficient details on each recommenda-
tion nor correlate the estimated personnel savings with such recommendations as
to enable a constructive appraisal of the indicated overstaffing figures.
Fifthly, although briefly referred to, adequate recognition has not been given to
the work now being done jointly by the Treasury Department, the General
Accounting Office, and the Bureau of the Budget to improve procedures, under
authority of the Budget and Accounting Procedures Act of 1950.
The Committee recognized and expressed faith in the integrity of the Govern-
ment's fiscal accounts in the following words:
"The criticisms contained in this report should not be construed to reflect upon
the consummate record that the Department maintains as the fiscal center of our
Government. Its reputation in this endeavor is an enviable one, unmatched
throughout the history of governments."
Unfortunately, the Committee placed itself at considerable disadvantage when
it did not take the opportunity to receive testimony or explanations from the
Treasury Department on the matters reported to it by its investigators. Many
years ago one of our early Comptrollers said:
"Government business is not the work of a day, or even the lifetime of any
person. It is a continuing business; and prudence, as well as experience, dictates
such a persistency in records as will leave to future officers a record that will
enable them to ascertain what their predecessors have done, and the reasons for
their actions."
Changes in fiscal procedures and record keeping, therefore, must not be con-
sidered lightly or made inadvisedly, but carefully and discreetly, and only when
there is a full knowledge of the facts and implications. Inquiries as to the time
devoted by the investigators to a study of the fiscal and accounting procedures in
the Treasury have brought the amazing information that the total number of hours
spent with the responsible officers and employees of the Fiscal Service was approx-
imately 40 hours. Undoubtedly the Committee's investigators bad available a
great deal of source material such as organization charts, budget documents, and
hearings before the Appropriations Committee, but, as is well known, Government
activities are not static, and therefore it is not believed that the time spent with
Treasury officials was sufficient to give to the investigators all of the information
which they should have had before reaching their conclusions.
As an illustration of the misunderstanding of Treasury procedure the Com-
mittee states on page 81 that ?
" After an appropriation is passed by Congress, signed by the President, and
certified by the Secretary of State, the Bureau of Accounts issues ao appropriation
warrant which, when countersigned by the Comptroller General, directs the
Treasurer to set up on his ledger accounts a sum of money in the amount authorized
by the appropriation act."
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1 36 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
Actually, accounts of appropriations are not maintained in the Office of the
T7easure:7 of the United States except, of course, thaw. relating to the Treasurer's
? im expenses.
On page 82 the report states that checks paid at Federal Reserve banks are
T.( turned to the disbursing officers or to the Treasurer of the United States for
e: amination and account reconciliation. Actually, the large percentage of (by-
Cl checks are paid for the Treasurer at the Federal Reserve banks and when
p bid are sent by the Federal Reserve banks directly to the General Accounting
Tice.
On page 90 the Committee suggests that the appropriation warrant might be
d spensed with and that it would be "entirely realistic and practical" to post
a >propriation accounts directly from the law. This suggestion is neither "realis-
"Li 3 nor "practical, ' as is evidenced by the many decisions which the Comptroller
C eneral has rendered in the past on the question of whether a particular provision
o law does or does not make an appropriation. The approp:riation warrant is
ti .e legal accounting document through which the Secretary of the Treasury and
the Comptroller General indicate to the accounting offices of the various depart-
n ents their agreerrent with respect to the availability of public money, and the
w arrant is their authority to establish an appropriation account on their books
u ider t113 cited provision of law.
On page 84 the Committee states:
"Some money is deposited directly to the account of the disbursing officers and
p aced in their accounts by appropriation warrants."
Actually, no money is placed in disbursing officers' accounts by appropriation
arrants.
On page 90 of the report the Committee apparently questions the propriety
o our present statutory system under which "the Treasurer remains accountable
,r the funds (creel' ted to the disbursing officers' checking accounts) even though
I my may have been transferred to a disbursing officer under separate and a.ddi-
t onal accountability."
This indicates a ack of comprehension as to the separate am'. distinct responsi-
ilities of disbursing officers, as drawers of Government checks, and the Treasurer
o the United States as the drawee of the checks. Each officer, obviously, has a
s parate bonded responsibility.
On page 91 of the report tnere appears the following statement,:
"More thought should be given to the suggested rystom of certified vouchers
v hich could be paid directly by the Federal Reserve Bank System. This would
o iminate the use of the checks in the payment of nonrecurring obligations. The
r !finement and adoption of this plan would eliminate at least I talf of the work o
tie disbursing officers."
Since payments to Government creditors must be made in a form which they
o in either cash or deposit in commercial banks, the work of drowning the checks
'ould have to be d3ne either by the Federal Reserve banks or in the governmental
gencies Thus it would merely shift the expense to the Government of drawing
c aecks from one place to another. If the proposal contemplates the use of a
c 3mbined voucher-check form, the adoption of such a procedure involves such
amplications as tc require much more study than could possib:.y have been given
t ie subject by the investigators.
On page 88 the report states that "the Register keeps accounts on the issue and
3clemption of securities which are also kept in the Bureau of the Public Debt."
The Register does not keep any accounts on the issue of public-debt securities.
I fe does keep a numerical register against which are posted redeemed securities,
I ut this register in no sense is duplicated in any other activity of the Bureau of
tlie Public Debt.
On page 91 the report states that "The Division of Bookkeeping and Warrants
I ceps too many &tailed accounts. All of their accounts except those used for
entral control and general ledgers should be eliminated."
The detailed amounts referred to are undoubtedly the accounts of receipts by
f ources, States, districts, and ports of collection; and the expenditure accounts
Ire undoubtedly those of individual appropriations. These accounts must be
1:ept to comply W.th sections 255 and 264 of title 5 of the U cited States Code.
,'rom the beginning of the Government, Congress has required the Treasury to
iaaintain a separate account for each appropriation made by it. Here again it
muld seem that the elimination of such accounts should be given more considera-
1 ion than the investigators have given to the subject.
The purpose of pointing out the above-mentioned errors is not to discredit the
york of the Committee's investigators but rather to indicate to the Committee
he danger in reaching conclusions based upon insufficient or unreliable informa-
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 187
tion. Some of the suggestions in the report have been under consideration by
the Treasury Department and the General Accounting Office under authority
of the Budget and Accounting Procedures Act of 1950. While this act paves the
way for many procedural improvements, there should be expressed a note of
caution that the savings which such changes may make possible could not by the
widest stretch of the imagination reach ?,he proportions indicated in the report.
On the management side, from comments appearing in the report, the Com-
mittee apparently recognizes that the Fiscal Service of the Treasury Department
is a closely knit organization, responsive to top management by the Secretary
of the Treasury through the Fiscal Assistant Secretary. On the other hand, the
report does not appear to give adequate recognition to important managerial and
procedural improvements which have been instituted during the past several
years. Through the streamlining of procedures and the elimination of over-
lapping and duplication, where authorized by law and consistent with proper
security, approximately $16,000,000 has been saved during the past 4 years in
carrying on the fiscal operations of the Treasury. Notable among these savings
may be mentioned million dollars a year through improved procedures for
handling the redemption of savings bonds and interest coupons and 1 million
dollars a year through the adoption of a plan for the handling of withheld and
unemployment taxes. In addition to the combined savings of $16,000,000 for
the 4-year period mentioned above, the Treasury is also realising a saving of
$5,000,000 every year in payment of Government checks as a result of improved
procedures developed by the Fiscal Service.
Two whole units in the Treasurer's office involving approximately 150 employees
were virtually eliminated through the cooperation of the Office of the Treasurer
of the United States and the Bureau of the Public Debt. There is no aversion to
reducing personnel when that can be accomplished with due regard to the public
service and protection of the public funds. In fact, one of the underlying prin-
ciples of administration throughout the Fiscal Service is not to handle a piece of
paper twice when one handling will do the job. This policy of finding ways and
means to reduce personnel is further exemplified in tne collaboration between the
Fiscal Service of the Treasury Department and the United States Bureau of
Standards in developing the use of electronics in the handling of large-scale fiscal
and accounting operations. Arrangements for the installation of an electronic
machine for counting paper currency are already well advanced, and a study is
now underway to determine whether electronics can be applied to the recording
of the issue and redemption of United States Savings bonds.
In its endeavor to avoid overstaffing, the Fiscal Service has a program of train-
ing its supervisors in the direction that they will not only get the best production
from employees but will encourage them to make suggestions which will lead to
economies. Two recent illustrations might be of interest, one where an employee
suggested a method involving the conservation of carbon paper at a saving of
$127,000 a year, and another, where an employee developed a procedure for
punching a hole in checks through which enclosures could be picked up auto-
matically through the use of a suction cup thus avoiding a separate handling of
the enclosure. Standing alone, these examples of savings resulting from inventions
and ideas of individual employees in the lower grades may not seem impressive
or important, but to those who are interested in the advancement of public
administration, there is a deeper and greater meaning because these are mani-
festations of employee interest, high morale, and good leadership by supervisors
and top management.
The work simplification program of the Fiscal Service has resulted in numerous
improvements and substantial savings. Group leaders are brought together
periodically at luncheon meetings to make progress reports directly to the Fiscal
Assistant Secretary and to discuss ways and means for greater interest and stimu-
lation. The Fiscal Assistant Secretary is in daily touch with the Treasurer of
the United States, the Commissioner of the Public Debt, the Commissioner of
Accounts, and the Chief Disbursing Officer, and meets with them and their staff
members collectively every week at staff conferences. At other regular staff
conferences the Fiscal Assistant Secretary meets with the bureau heads and their
key personnel and with the budget and personnel officers of the Fiscal Service.
In this way the Secretary of the Treasury. through the Fiscal Assistant Secretary,
keeps in touch with the various activities of the Fiscal Service without unnecessary
encroachment on his time.
Since maximum utilization of the talents and services of employees is a key-
stone to avoid overstaffing the program of the Fiscal Service for employee develop-
ment should be mentioned. This is a three-point program, viz. (1) selection of
promising employees for rotating assignments in order that they may become
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18: EMPLOYEE "UrILIZNTION INF THE EXECUTIVE DEPAETMENTS
trai ned in all activities of the Fiscal Service, (2) biweekly a:7ter-hour group
disi ussions on various subjects relating to Treasury activities, and (3) biweekly
aft( r-hour general m.3etings in the General Services Administration Auditorium
wir oh are devoted to lectures by bureau and division chiefs on the work of the
Trc asury Department. All employees of the Fiscal Service are regularly invited
to ttend these meet: rigs and are given the opportunity of asking questions.
Bu; eau of Accounts
The Bureau of Accounts is the central accounting organization of the Govern-
me : it. It has three main operating functions, all statutory-
1. It issues the warrants on behalf of the Secretary of the Treasury
authorizing the Treasurer to place funds in checking accounts to the credit
of disbursing officers.
2. It keeps the central accounts relating to receipts, appropriations,
expenditures, and the public debt.
3. It compiles for the Secretary an annual report to the Congress showing
the re3eipts, by sources, States, districts, and ports of collection, and expendi-
tures according to the several appropriations made by the Congress.
lecause of the close relationship between this office and the Secretary of the
Tr( asury now exercised through the Fiscal Assistant Secretary ), the Bureau of
Accounts also handles the investment of trust funds, the designation of Govern-
me it depositaries, and the determination of the underwriting limitations of
Sin Ay companies which are authorized to do business with the United States.
It 3naintatas a small accounting systems staff which works closely with the General
Ac ;ountin; Office in the development of improved accounting procedures. Also,
itS )ointed out in the committee's report (p. 91) the Division of Disbursement is
pr sently a part of the organizational structure, but with clear lines of disbursing
au hority.
hider The Budget and Accounting Procedures Act of 19.50, undoubtedly
im )ortant changes will ultimately be made with respect to the Bureau of Accounts,
bu action with respect to these matters must await the conclusion of the studies
bei ng made by the Treasury, the General Accounting Office, and the Bureau of the
BE iget.
? Che subcommittee reports (p. 92) an overstaffing in the Bureau of Accounts of
81 ' emplcyees. This is a net figure since the subcommittee indcates that some
ac ivities of the Bureau are understaffed to the extent of 38 employees while a
sw?ings of 855 employees could be effected in other activities. The principal
im3rovements in the Bureau of Accounts are stated as resulting from changes in
th ) warrant system (p. 90), which apparently is also the basis for the major
pe ,sonnel savings. Other action to effect personnel savings is pointed out, such
as a review of the necessity for currently compiling financial reports and changes
in the disbursing procedures (p. 91). It does not appear that the suggestion of
or ;anization realinement would have any material effect upon the number of
en ployees required.
Me report recognizes that existing warrant procedure has been established to
co aform to provisions of law relating to the receipt and payment of moneys from
th ) Treasury (p. 90). It should also be pointed out that the Congress, by the
en ictment of legislation, has required the compilation of certain reports, including
re )orts to be submitted to it. For example, section 15 of the act of July 31, 1894
(5 U. S. 0. 264):
'It shall be the duty of the Secretary of the Treasury annually to lay before
Congress, on the first day of the regular session thereof, an accurate combined
st vtement of the receipts and expenditures during the last preceding fiscal year of
al public moneys, includinc, those of the Post Office Department, designating the
at lount of the receipts, whenever practicable, by ports, district, and States, and
tt e exper ditures, by each separate head of appropriation."
Likewise, the accounting for disbursements has been established to conform
tc provis-ons of law.
The Budget and Accounting Procedures Act of 1950, approved September 12,
1150, provides for a degree of flexibility not heretofore possible in the modification
of warrant procedures. Under section 115 of this act, in the interest of simplifica-
ti )n and economy, the Secretary of the Treasury and the Comptroller General
b ? joint regulation may now waive existing law regarding warrants issued "in
c( nnection with the receipt, retention, and disbursement of pnblic moneys and
ti oat funds" and funds requisitioned and advanced to disbursing officers. Revised
p ocedures under this authority for repayments to appropriations have already
b :en installed and other revisions are under study. The Bureau of Accounts
Ir tends to take full advantage of these studies to effect economies in operations.
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 189
The Bureau has long followed the practice of periodically reviewing financial
reports prepared by the Bureau to determine their usefulness, and consideration
is given currently to individual statements when their usefulness has decreased.
The Bureau takes prompt action to discontinue obsolete reports.
The basis for accomplishing the savings in personnel to the extent estimated by
the subcommittee is not clear. For example, it seems probable that a part of
the estimated reduction was based upon the premise that records on apportion-
ments for Government agencies are maintained in the accounts of the Bureau
(pp. 81 and 85) coupled with the recommendation that all accounts except those
used for central control and general ledgers be eliminated in the Division of
Bookkeeping and Warrants (p. 91). The Bureau of Accounts keeps no accounts
for apportionments other than those which relate to its own appropriations for
administrative expenses. Also, the suggestion (p. 90) that covering warrants be
discontinued, if adopted would have little, if any, effect upon personnel. The
covering process serves the purpose of classifying receipts by source and sum-
marizing for reporting purposes. This information is required by law, and if
this information was not obtained under the present procedure, it would be neces-
sary to produce summaries under some similar method. The statements produced
as a by-product also furnish a means of verifying the amounts deposited for the
account of the Treasurer of the United States.
A further example, which indicates that the recommendations may have been
made Nvithout full information, is given. The question is raised (p. 90) as to
whether the appropriation warrant which "notifies the Treasurer that the Congress
has authorized the expenditure of a certain amount of money for a particular
purpose" is needed. The purpose of this warrant is to advise the administrative
agency having control over the appropriation that funds are available on the
books of the Treasury. (The Treasurer of the United States does not receive a
copy of this warrant.) Many instances are on record where it has been necessary
for the Comptroller General to rule on the meaning of laws purporting to appro-
priate money. It is therefore, necessary that the laws be carefully considered
before the funds are established on the books of the Treasury and before adminis-
trative agency is permitted to withdraw funds for the payment of its obligations.
The estimate which causes considerable perplexity relates to the Division of
Disbursement. While the findings in the report contain no criticism of the
management of the Division, there is nevertheless shown in table 12 of their
report an indicated saving of 821 employees in the Division.
Representatives of the subcommittee had 1-10 discussion with officials concerning
the number of employees engaged on any function, operation, or task, in the
Division, nor did they discuss in any manner the composition of the savings
proposed in the report. It is therefore difficult to appraise their findings without
information as to how such savings were calculated.
Under the heading "Division of Disbursement" (p. 91), the report states:
"More thought should be given to the suggested system of certified vouchers
which could be paid directly by the Federal Reserve Bank System. This would
eliminate the use of the cheeks in the payment of nonrecurring obligations. The
refinement and adoption of this plan would eliminate at least half of the work of
the disbursing officers."
It is not explained how a creditor of the United States, who has furnished
supplies, could receive payment therefor without the use of a check, draft, or other
form of payment instrument.
While no itemization of the positions to be eliminated, or even a listing of the
operations and tasks to be discontinued, has been furnished, it appears that a
large error has been made in the calculations. If the entire function of making
payments on nonrecurring obligations were removed from the Division of Dis-
bursement, as suggested, only a fraction of these employees could be released.
This number includes not only all operative employees but also all related execu-
tive, supervisory, administrative, accounting, procurement, and service personnel.
It is doubtful that any saving would accrue to the Federal Government as a
whole. If Federal Reserve banks were to issue the check, warrant, draft, or some
form of instrument to authorize payment, the change would merely mean the
transfer of a function from one office to another, with another set of executive,
supervisory, and service personnel, and other indirect expenses. The Federal
Reserve banks would undoubtedly require reimbursement for its expenses in
handling such payments. In the end, a greater cost would have to be paid by the
Government. If the function was to be transferred to United States departments
or establishments, such action would be a reversion to a discarded arrangement
which had proved too expensive. The mechanical operation of writing the check,
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19(1 EMPLOYEE UTILIZATION IN TI-IE EXECUTIV E DEPARTMENTS
drat t, or warrant would in nowise be decreased, it being assumed that the dis-
chal ge of an obligati? involves the preparation of some instrumeet. Seemingly,.
any authorization to effect payment must have inscribed thereon the date, name.
of p lyee, amount to be paid, and the signature of the authorizing officer. These:
flat: are the minimum required, being virtually the same as new inscribed on
die( ks. The shifting of the manual or mechanical work from one large agency'
to many agencies woeld not result in a saving. Because of the loss of efficiency,.
sucl action would very likely increase the cost to the Government. The Division,
of I isbursement processes the nonrecurring types of payments usi rag principles of
mas I, production; it employs electrical equipment such as accounting machines,
pun ;h-card machines, check-writing machines tabulating machines, addressing
mac runes, signing machines, microfilming machines, and enclosing machines.
SIM; LI offices could not practically operate such equipment without excessive cost.
P Mr to the creation of the Division of Disbursement, the Federal departments.
had their own disbursing offices. In New York City alene there were more than
40 c ffices performing disbursing functions. By consolidating these activities, the
Div sion can process a very large volume of transactions on a production-line.
basi I with low operative, supervisory, and indirect costs. Year after year, through
spec Alization on jobs and with quantitative standards of performance, the
Divi-
sion has been able to reduce costs. During the past 6 years, the average unit cost
for 3naking payments and for depositing collections by the Division has not in-
crea led, despite the fact that salaries of employees and ether expenses have gone.
upi lore than 40 percent. This record of the Division for holding the line on
cost compares favorably with that of any other Federal agency, or f or that matter,.
any industrial organization in the country. In 1944 the average unit cost was
ovet 61 cents; in 1951 it was less than 61A cents. During this same period, the
num her of production units per employee rose from. 39,000 to 58,001 per year. As.
to px-sons employed in the fiscal year 1950, the Division had 3,388 employees and
ham led 198,000,000 checks, or 26,000,000 more than in 1947, when it had 3,735,
omp oyees. This indicates the continuous effective program ot improvement
goin ; on in the Bureau, of Accounts.
T le production control system established in the Division, under which units,
of o ttput are reported monthly for the various classes of activities has enabled
not mly control of production with savings in required manpower, but also the
mak aig of comparative studies, in which the output of one office is compared with
that in another and the output of the same office of one period with that for
mot her period. From the information so derived fair standards of performance
-
haw been promulgated to the various regional disbursing offices.
A further general conclusion appearing in the report (p. 68) without supporting
deta Is, relates to the internal security accounting prov.sions in the Division of'
Disk ursement, which are stated as too comprehensive. The provisions for safe-
guar ling securities such as currency, negotiable checks, enissued bond stock, and
emis: ued check stock in the Division of Disbursement are typical of those imposed
oth large and small financial institutions. The practice in the Division is,
'very similar to that in business. Collections, as received, are immediately re-
ceipt ed, recorded, and totaled to establish accountability. By this means con tn.'
is se- up for winch the corresponding accountability is established. The resulting
depe gt of the funds to appropriations, trust funds, or special accounts (as rc-
quin:d by law) must be in agreement. As to physical facilities utilized, the -
lora. ,ctive equipment and related service are no greater, and no less, than employed
by h rge banks. Huge sums of cash may be received, as fer example in Treasury
Ann cc 1, where the collections may exceed a million dollars in a dav, with $50,000
in ci rrenc3a: the receiving cashiers necessarily work in enclosed cages to which.
the )ublic does not have access. Each day they must account for the exact
amm tnt of funds received. At night the currency, checks, and negotiable papers
are j laced in locked safes or vaults, to which only designated individuals have
acne; a. In Washington the safes and vaults are inspected by Secret Service guards
in their periodic rounds. The practice is substantially the same ie each regional
offic(
If the report means that the accounting in the Division of Disbursement is too
comt.rehensive in that complete accounts are maintained or receipts and expendi-
lure: under specific appropriation, trust fund, and special account -sides, and that
only a single depositary disbursing account need be operated for each disbursing
offic( r, the recommendation has merit. In this connection, the syst erla of account- -
ing N as devised and operated to conform to existing law. In the past year, much
impr avement has been brought about in the appropriation and fund accounts in
adm nistrative agencies by the ;oint program of the Bureau of the Budget, the -
Gen( ral Accounting Office, and the Treasury Department. It is anticipated that,
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EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS 191
the technical improvements now being made in records of administrative agencies
will soon render unnecessary the detailed accounting in the Division so that steps
can be taken to modify the present law requiring that no payment can be made
by a disbursing officer unless he has sufficient unexpended balances in the respective
appropriation, trust fund, or special account to be charged with the expenditure.
It may, however, be possible to modify this procedure. With the passage of the
Budget and Accounting Procedures Act of 1950, the streamlining of the accounting
procedure may be possible by the joint action of the Comptroller General and the
Secretary of the Treasury. Such change, along with other related accounting
simplification in other records, is now under consideration in the Treasury
Department.
The report contains a proosal (p. 69) recommending the elimination of the
"administrative examination" of accounts. This proposal is one which the Gen-
eral Accounting Office and the Treasury sponsored in the Budget and Accounting
Procedures Act of 1950, previously referred to. It is too early to tell what effect
on personnel such a change would have, but the committee may be assured that
appropriate reductions will be made in the estimates of appropriations when
the changes are made effective.
As stated above, the subcommittee (p. 92) estimates that a net savings of 817
employees can be effected from a total of 3,450 employees on the rolls of the
Bureau of Accounts on June 30, 1950. Without correlating estimated savings
with the recommendations (which is not contained in the subcommittee's report),
a complete and satisfactory analysis cannot be made. There appears nothing
in the report which would support the conclusion that a redaction of 817 em-
ployees in the Bureau of Accounts could be made without impairing its operations.
Bureau of the Public Debt
The Bureau of the Public Debt exercises administrative supervision over public
debt operations. It maintains control over stocks of unissued securities, keeps
registered accounts, issues registered interest checks, and verifies the authenticity
and validity of every security redeemed by the Treasurer of the United States.
Because of the legal interrelationships public debt accounts are maintained in
each of the three bureaus of the fiscal service, namely, Bureau of A eco un ts , Bureau
of the Public Debt, and Office of the Treasurer of the United States. Each set of
accounts, however, is maintained for a different purpose in the discharge of
a different statutory or regulatory responsibility.
In the Bureau of Accounts, less than half time of 1 person is engaged on public
debt accounts; in the Office of the Treasurer, there are the equivalent of 13 full-
time employees; and in the Bureau of the Public Debt about 2.50. There is no
overlapping or duplication of functions performed by each organization.
Under section 10 of the act of July 31, 1894, the Bureau of Accounts maintains
central accounts relating to receipts, appropriations, and expenditures of all depart-
ments, bureaus, and offices of the Government, including the public debt. A
summary account for each outstanding public debt issue is required to be main-
tained by the Bureau, in order to properly account for all receipts and expendi-
tures of the Government. Without such information, the accounts would not,
of course, reflect the information which the afore-mentioned statute requires.
The Treasurer of the United States is the fiscal agent for the redemption of the
public debt. The accounts of the Treasurer are kept on the basis of cash receipts
and payments made by the Treasurer. These accounts differ from those of the
Bureau of Accounts in that they account for public debt receipts and payments
for each loan by Federal Reserve banks and branches, the principal issuing and
paying agencies for public debt transactions. These accounts not only serve to
record the Treasurer's accountability for receipts and payments, but are also the
basis for preparing the monthly statement of the outstanding public debt.
The Bureau of the Public Debt is the administrative organization for public
debt operations. The Division of Public Debt Accounts and Audit performs what
might be called administrative controllership functions. The main purpose of the
accounts maintained by this Division relating to public debt principal is to exer-
cise administrative control over public debt security stock, security issues, and se-
curity retirements. The blank stock of securities maintained with Federal Re-
serve banks and other agencies is also controlled by this Division. Another func-
tion of the Division is to see that the Treasurer's account is credited for the amount
of every public debt security sold. Its work is not duplicated in any other bureau
of the Treasury.
The statements on pages 88 and 89 of the report with respect to the role of the
Register are grossly inaccurate. The Register of the Treasury does not maintain
any accounts of the issue of public debt securities. One of the principal functions
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192 EMPLOYEE UTILIZATION, IN THE EXECUTIVE DEPARTMENTS
of tl e Register is to verify securities charged in the account of the Treasurer of the
Urn ed States as public debt redemptions and coupon interest payments, and te
mak e appropriate certification thereof to the Comptroller General of the United
Stat as. On the basis of the Register's certifications, ci edits are allowed by the
Cor iptroller General in the account of the Treasurer. These securities and cou-
poni, as well as those retired on other transactions, are visually examined in the
yeti 'cation process. Another function is to maintain custody of public debt
sect rities retired on a ay account, and interest coupons related theeto, and in due
cou se to deliver them for destruction.
'I he only accounts maintained by the Register are those showing the securities
recc wed foe examination, custody, and delivery for destruction. These accounts
ser e as controls over the securities and coupons with which the Register is
cha .ged. His records, and his records alone, reflect in detail the retirement of
the public debt by ser al numbers, denominations, and loans. Sit ailar records on
the issue side are maintained by the Division of Loans and Currency and the Fed-
eral Reserve banks. Thus the Bureau of the Public Dc lit has available to it the
nee !ssary details with respect to every public debt security issued and retired.
1 hese records in no wise conflict with or duplicate the administrative security
con rol accounts maintained by the Division of Public Debt Accounts and Audit,
win eh are general accounts supporting the public debt.
I ?cation of the Register's office in the Bureau of the Public Debt makes for
eco corny and efficiency in operations, since other units of the Bureau may readily
obt fin information relating to the redemption of securites, which is needed in the
per 'ormance of day-to-day functions. This office haa been functioning as an
int( gral part of this operation for many years, and, in the interest .3f good manage-
me it, it sh ould not be removed from the Bureau of the Public Debt.
'he United States Savings Bonds Division (p. 88) is a part of the Office of the
Sec retary of the Treasury, and not a unit of the Bureau of the Public Debt. This
or nizational status was accorded the Division in view of the character of its
sal, s promotional activities and the fact that it does not handle or service the
pin )lic debt. Funds for the Division, however, are properly included in the
api ,ropriation for administering the public debt. The service unit of the Division
wa required to move from Washington at the beginning of World War II, because
of he lack of space. For administrative control purposes, it was made a part of
tic( decentralized Public Debt organization, which was moved Loin Washington
to Dhicago at the sane time. There are no duplications of work and no economies
woild be effected through a change in the organizational set-up.
'['he allegations that the Bureau of the Public Debt (p. 89) is overorganized into
nu nerous divisions, sections, units, and subunits, with a system of security
ac i ounting, checks, and balances which is far beyond mirmal reqairements, might
be based on a cursory examination of detailed organization, functional, and work
fib v charts, but without further studied analysis. The Bureau is composed of
on y three major divisions.
.n order to operate effectively and efficiently, operating seAions have been
br )ken ino units specializing in related phases of the work. Numerous changes
in the status of operating units have been made in recent years, including consoli-
da :ions, all in the interest of providing a better framework in which to carry on
th functions of the Bureau. In practically every instance, the units and subunits
ar supervised by a working unit head, and very litte, if any, saving could be
re lized by further combining units or subunits under one administrative head.
The functions of he Bureau require security controls peculiar to the handling
ar d servicing of live securities and the highest degree of accoul tability over the
is: canoe and retirement of the millions of pieces of securities that have been issued
ar d retired.
The Division of Public Debt Accounts and Audit of the Bureau of the Public
D )bt (p. 89) has been responsible for many years for the maintenance of control
ac counts over blank distinctive paper and the audit of work in process at the
B treau of Engraving and Printing. Responsibility for these functions was
re terated in Treasury Order No. 121, dated July 31, 1150, which was promulgated
in connection with the transfer of certain functions with respect to the handling
oi distinctive paper from the Bureau of the Public Debt to the Bureau of En-
gi and Printing under Reorganization Plan No. 26 of 1950. The Division
oi Public Debt Accounts and Audit, of course, received necessary accounting
)cuments from va ions sources in connection with the maintenance of its distanc-
ti v-e paper control accounts and for the development of appropriate records upon
w hich to conduct a sound audit of work in process at the Bureau of Engraving
a id Printing. Neither the Division of Public Debt Accounts arid Audit nor any
o her off ce of the Bureau of the Public Debt, however, prescribed a "system of
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security accounting" to be followed by the Bureau of Engraving and Printing,
as shown by the chart facing page 89 of the report.
It is our well-considered opinion that the functions performed by the Division
of Loans and Currency with respect to the verification of redeemed currency and
mutilated paper represent the minimum consistent with good management.
principles, having in mind particularly the nature of the material processed.
The Redeemed Currency Unit of the Division of Loans and Currency verifies.
the lower halves of all United States currency retired from circulation. The
Mutilated Paper Unit of the Division verifies all work spoiled by the Bureau of.
Engraving and Printing at various stages of production. On the basis of the
work done by these two units, credit is allowed to Federal Reserve banks and
branches for unfit currency retired from circulation and to the Bureau of Engraving
and Printing for work spoiled in process. The functions must be performed in
some unit of the Treasury. In view of the security-mindedness of the Division
of Loans and Currency as a Whole it is believed that these functions are appro-
priately placed and may be more effectively performed from their present organi-
zational location. The operations conducted by the two units in question are not
duplicated by any other office of the Treasury.
The nature of the functions performed and accounts maintained by the Register.
of the Treasury are set forth in our answer to the comments relating to the Regis-
ter's office on page 88 of the report. It will be noted that the Register maintains
only such accounts as are necessary in the performance of his audit functions
and that they are not duplicated elsewhere in the Treasury. The work performed
by the Register's office is essential to proper security management. The Register'
is the final Treasury auditor of paid public debt securities and interest coupons,
and manifestly must have physical custody of the securities and coupons to
perform that function. If this work were transferred to other parts of the
Bureau of the Public Debt, as proposed, neither savings nor increased efficiency
would result, since, as stated before, functions of a similar character are not per-
formed elsewhere and new organization units would, therefore, have to be created
to do them.
The report (p. 92) suggests a reduction of 341 employees in the Bureau of the
Public Debt. As indicated in our comments on the specific suggestions of the
committee, we do not feel that the suggestions are well taken or that any econo-
mies would result from their adoption. It happens that there are now 85 fewer
employees in the Bureau than the 4,632 stated on page 92 of the report, and, of
course, we will continue to reduce our force if reductions in our workload and
further management improvements will permit.
Office of the Treasurer of the United States
The Treasurer of the United States is the official custodian of the public funds.
Contrary to statements in the report, it does not duplicate the work of other
activities. The Treasurer is bonded for the faithful performance of her duties
and this responsibility is not shared by any other officer.
On page 89, the report identifies specific areas within the Office of the Treasurer
where it is stated "organizational and procedural discrepancies entail unnecessary
and duplicating effort." On page 92, the report indicates the number of.
employees which could be released in each activity as a result of suggested correc-
tive action. In commenting on the committee's report, their findings will be
treated in the order in which they appear on page 89.
The report states that "The Stating and Claims Sections of the Accounting
Division need special consideration in view of the work being done by the Federal.
Reserve System."
The paying operation performed by the Federal Reserve banks on Government
checks pertains to checks which are payable through the Federal Reserve banks
only. The same operations are performed in the Accounting Division on other.
checks which are payable in Washington only. There is no duplication because
no one check goes through the paying operation twice. The paying operations
performed on Government checks are essentially the same as those performed in
a commercial bank and are deemed to be essential in the banking fraternity
before a drawee pays out cash on checks which are presented.
As to the work done in the Claims Section of the Accounting Division, the
only part taken in this operation by the Reserve banks is to report as to whether
-
a check payable through a Reserve bank which is involved in a claim has or has
not been paid. This is the only place this information can be obtained and is
absolutely necessary in settling a claim. The Claims Section picks up the case
at that point and consummates the case without duplicating ?any part of the
work done by the Reserve bank.
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II 4 EMPLOYEE; UTILIZATION IN THE EXECUTIVE DEPA:RTMENTS
rhe report states that, "The work carried on in the Card Check and Sorting
Se 'lions needs to be simplified in conformance with modern banking practices."
Die only operation performed in these sections which is not ger erally performed
in a commercial bank is that of arranging the paid checks in serial number
se( .uence. The commercial banks place this burden on their customers.
.n the ease of Government checks, the placing of this burden on someone else
uld restlt in transferring the operation to the General Accounting Office as a
pr requisite to reconciliation. This would result in no saving to the Government
in performing the operation and would result in extra costs in the Treasurer's
oil cc in determining the status of a check involved in a claim from a file of un-
an anged checks. Furthermore, it would delay settlement of the claim.
Phe reg ort (p. 89) states, "The size and cost of the activities of the Currency
Re demptim Division should be reviewed in the light of potential economies.
Ti ey overlap and dt plicate similar operations in the Bureau of the Public Debt."
['he Federal Reserve banks cut unfit United States currency in half and ship
thl lower halves to the Bureau of the Public Debt. Upon receipt of the lower
ha yes, the upper halves are shipped to the Currency Redemption Division.
Af rer verification by the Bureau of the Public Debt and adjmtment of errors,
tin currency is delivered to the Destruction Committee. Long experience has
tat glit that this procedure is essential for security and control purposes and to
pri vent fraudulent manipulation which might occur if both lowers and uppers
we -e available to the same office for final audit. The Treasurer d aes not duplicate
th( verification performed by the Bureau of the Public Debt en United States
cu rency.
'Phe same procedure is followed with respect to Federal Reserve currency except
thi t the lower halves of such currency are forwarded to the Currency Redemption
Di rision for complete verification, and the upper halves to the Federal Reserve
Iss le and Redemption Division of the Comptroller of the Currency. The entire
co: t of this operation is reimbursed by the Federal Reserve banks.
'
he report (p. 89) states, "The Federal Reserve Bank Section of the Division
of Securities and the United States Depositary Section of the Division of General
Ac :tounts are functioning in the same area with a duplication of effort." The
Fe leral Reserve Bark Section of the Division of Securities receives from Federal
Re serve banks all United States public debt obligations redeemed by the Reserve
ba tks, except savings bonds and Armed Forces Leave bonds. It examines the
igations for genuineness, for cancellation, amount paid and determines the
ac( ompansdng, schedules are accurate and properly prepared. The amounts are
rot orted to the Division of General Accounts for dete?-rnination that they agree
wii h the amounts charged in the Reserve banks' transcripts.
' le Depositary Section of the Division of General Accounts maintains the cash
ac( ounts carried with the Federal Reserve banks, general depositaries and foreign
iositaries. The media for posting these cash accomns are the daily transcripts
rer dered by the banks which show the opening balance, receipts, expenditures,
cot rections, and closing balance. These cash accounts are proved against control
figures and reports 7urnished by the Accounting Div:sion at the close of each
da: clearance.
''he areas covered by the two sections are entirely different, the functions
entirely different in nature and scope, and they bear no relation to each other.
' le report (p. 89) states, "The Coupon Section of the Divisio a of Securities is
ern aged in a partial duplication of the general activities of the Bureau of the
Pu )lic Debt."
''he duties of the Coupon Section with respect to the examination and audit
of mid coupons from United States obligations were transferred on November I,
19z. 9, to the Register of the Treasury; and the number of employees was sub-
se9 uently reduced from 38 to 8.
'able 12 (p. 92) cf the report suggests a possible reduction of approximately
30 percent in the employees of the Treasurer's office. In the absence of any
otter indication as to how these savings could be effected, it is presumed that
the y are based on the committee's suggestions of duplication and overlapping.
As indicated in our comments above, the suggestions are not well taken and their
ad( ption h; not feasible.
BUREAU OF ENGRAVING AND PRINTING
'rem the Committee's report, page 68:
Internal security accounting in the Bureau of Engraving and Printing * * *
is IDO comprehensive. The system in the Bureau of Engraving and Printing is
esp )cially cumbersome and involves many unnecessary intermediate steps."
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EMPLOYEE UTILIZATION IN THE' EXECUTIVE DEPARTMENTS 195
II
Security control accounting in a publicly owned security printing plant must
of necessity be comprehensive. It might appear to be cumbersome and involve
too many unnecessary intermediate steps. Security accounting controls are
desigr ed and modified as the needs arise adequately to protect the public, the
Government, as well as the officials and employees through whose hands pass
billions of units of monetary value during the course of a year.
Only through being actively associated with the manufacture of securities can
the need for a foolproof, detailed, and comprehensive control accounting system be
appreciated.
When it is recognized that employees of the Bureau are held accountable for the
face value of securities in their custody, even if only partially completed, every
device known to the accounting profession, which will afford fullest protection to
the employee, must be incorporated in the system. Without such a comprehensive
control, suspicion of irregularity could easily unjustly ruin the career of an
employee.
It should be noted that the control system in the Bureau reaches beyond the
confines of the Bureau in that it provides records which release the Bureau from
responsibility for custody of completed securities and, in the same accounting
operation, makes a substantial record available to the receiving agency.
The present control accounting has been in operation for 27 years. It has been
reviewed and examined by many expert accountants, and none have been able to
offer any suggestions which would either improve or simplify its basic principle.
From the committee's report, page 78:
"* * * A perfunctory inspection of this activity gives the impression of
unsatisfactory employee utilization, but further inquiry points to another obscure
cause of overstaffing. In this instance the inefficient and wasteful methods
employed stem largely from the physical lay-out of the plant in which the opera-
tions take place. * * * This has led to the continuance of poor morale and
too many employees."
At least 95 percent of the production workers of the Bureau of Engraving and
Printing work on a piece rate or on a task basis. The amount of work performed
by these workers has been established over a period of many years and is predi-
cated on a "fair day's work." The basis upon which this day's work has been
established is well recognized in industry where unions play a predominant role in
determining manpower output. Experience has shown that any effort on time'
part of Bureau management to prescribe work output in excess of that currently 1,
being performed would result in vigorous action on the part of the unions to resist
any increase. Since organized workers in the Federal Government are denied the)
right to strike, the right of petition is exercised in its stead. There are 26 unions
in this Bureau which avail themselves of this right.
The Congress has usually been sympathetic toward the petitions of organized
labor in the Federal Government, and for many years it limited the type and
number of printing presses that could be employed in the production of currency
in the Bureau. The Congress has also legislated the type of printing process that
must be employed in the production of United States securities. Even HO, the
amount of work performed by a vast segment of the Bureau's employees is measur-
able and compares well with work performed in private industry and with other
agencies of the Federal Government. Due, of necessity, to the complex require-
ments for printing and processing United States securities, all necessary precau-
tions must be employed to insure against irregularities in the handling of securities,
which has the result of reducing the productive output of the employees while
security measures are being carried out. Specifically, all stock in process must be
counted before being returned to the vaults at the close of the work period, and
during each movement of the stock in between processing operations. It is
obvious, therefore, that, during each counting operation preparatory to printing
and processing, nonproductive time on the printing and processing equipment
results. Each sheet or fragment of a sheet has to be specifically accounted for,
whether it be a 1-cent postage stamp or a thousand-dollar bill. The loss of a
sheet or a fragment of a sheet must be paid for by the employees, as there is ne
facility whereby such losses can be paid for out of Government funds. Under-
standably, therefore, employees must be given adequate time to insure proper
accountability of securities during each step of the many operations.
The reference to "This has led to continuance of poor morale and too many
employees" (p. 78) seems to be contrary to the facts. A comprehensive investi-
gation conducted by the Treasury Department disclosed that the employee morale
of the Bureau was excellent. So far as is known, nothing has occurred in the
interim to change this situation.
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193 EMPLOYEE UTILIZATION IN THE; EXECUTIVE DEPARTMENTS
4 hi June 17, 1950, representatives of the Williams Subcommittee on Overstaffing
in he Federal Government visited the Bureau and were conducted on a tour
wh eh extended over more than 20 acres of floor space. They spent slightly over
4 1 ours visiting the production divisions of the Bureau, and it is of interest to
noi e that in such a short space of time they could conclude that there were
"in afficient and wasteful methods employed," "unsatisfactory employee utiliza-
tio 1," "ur suitability of plant site and physical layout," "poor morale," "too
ma ny employees." There are approximately 6,200 employees in the Bureau,
am mg which are 32 skilled crafts represented by 26 labor unions. Many of the
Bu 'eau operations are highly technical and little under3tood by other than those
wh ) are directly associated with these operations. It would certa inly seem, there-.
for that before all the unfavorable conclusions quoted above co ild be reached a
gre it deal more time than 4 hours would have to be spent in view:.ng the Bureau's
.op e rations and then only by individuals skilled in the graphic arts.
n an attempt to improve the standard of quality of United States currency,
red uce production costs, improve working conditions, and eliminate hazardous
ope rations, a staff of qualified engineers is employed to conduct recurring studies
oil he Bureau's operations. These studies include machinery layouts and changes
in trocessing operations. From time to time, as improvod processes are developed
an . new equipment is obtained, increased production requirements become neces-
sar r, and changes in the plant layout are made. Flow of work is constamly
bei ig studied with tie view in mind of providing for maximum efficiency in the
Bu .eau's operations. Great progress has been made in the Bureau within the past
30 years. This is evidenced by the fact that the employees of the Bureau are
prc diming 126 percent more work today than was produced by a comparable
nui aber of employees 30 years ago. This has resulted in an accumulated saving
of core than $100,000,000. These savings are the direct result of more efficient
uti ization of manpower. The Bureau, it is believed, is unique in that it is the
onl i agency in the Federal Government where employees are sent home when
the -e is neither sufficient work for them to perform nor companion workers present
to )erform certain operations.
erious limitations are placed upon the extent to which changes in the process-
ing operations can be made or in the physical lay-out of the equipment because
-of I he necessity for maintaining security control over each step of all operations.
Th s results in the isolation of each operation in producing United States securi-
ties and, of necessity, results in the need for transporting work from one operation
to mother and, under certain circumstances, retracing these operations to provide
for another step in processing. It is agreed that, were it not or the need for
isol sting these operations, greater utilization of floor space and manpower could
be nade. Experience has shown, however, that there cannot be any compromise
in maintaining suitable and adequate accountability over every operation;
oth arwise, serious charges of negligence and misconduct cf the affairs of the Bureau
wo, tld inevitably result, as has occurred in the past.
From the Committee's report, page 70:
'Cost accounts are rarely maintained. If so, they are incomplete, unrealistic, or
not on an accrual basis."
'here has always been a cost-accounting system in the Bureau, made necessary
by ?eason of the fact that the Bureau makes an annual accounting to the Congress
of I he UM ted States as to how appropriated funds have been expended and how
neN appropriations are to be administered. Approximately 40 percent of all
wo] k perfcrmed is reimbursable, and accurate costs must be developed in order
that the agencies for whom the Bureau performs work on a reimbursable basis
wit not be required to carry a disproportionate share of the cost of operating.
Over a period of many years estimates have been submitted to the Congress,
bas ad upon unit cost rates developed during the prior year, making appropriate
adj istmenes for wage increases, changes in material prices, increases or decreases
in everhead costs due to a larger or smaller program, etc., for the current and
hue get years, demonstrating that a realistic cost accounting system has been in
opc ration. Since the Bureau has been on an obligation basis it was not possible
her tofore to include all items of cost on an accrual basis. For example, deprecia-
tioi of equipment has not been included as an item oE cost and it was for tais
am other reasons that the Bureau sponsored Public Law 656, Eighty-first Con-
gre s, in order that the accounting system could be on a 100 percent accrual
has 8. The account:; of the Bureau are audited by the Gen cral Accounting
Off cc and Bureau records fail to disclose any instances of irregularity which could
be attributed to a faulty cost accounting system, irregularities in the purchasing
,of m naterials, or in the auditing and payment of its accounts.
kit 1-1
m 1-2
0 op+in.,,A1
Apprgvea
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EMPLOYED UTILIZATION IN THE: EXECUTIVE: DEPARTMENTS 197
From the committee's report, page 89:
"* * * The Bureau (Bureau of the Public Debt) also prescribes a system
of security accounting for distinctive paper used in the Bureau of Engraving
and Printing. Figure 4, Security Accounting, Bureau of Engraving and Printing,
facing this page, graphically illustrates the extent and complexity of this system."
The security control accounting system in the Bureau was designed and
installed in 1923 by a special committee designated by Secretary Mellon, three
members of which were not employees of the Bureau. The Bureau of the Public
Debt did not, therefore, prescribe the system as is stated in the report. Since
the control ledgers of the Bureau system are maintained by a division of the
Bureau of the Public Debt, slight modifications to the forms and procedure neces-
sary to keep them current with requirements may have been suggested by that
Bureau.
During World War I, the Bureau was engaged in the mass production of Liberty
bonds.. Early in 1922, President Harding was informed by someone outside of
the Treasury that the administrative staff in the Bureau had engaged in duplicat-
ing Liberty bonds and thereby had stolen millions of dollars from the Govern-
ment. What was then considered a control system in the Bureau was so inade-
quate that the Director in office at that time was unable, with the meager records
at hand, to disprove the charge. As a result, the President issued an Executive
order on April 1, 1922, dismissing 28 operating heads of the Bureau. Two separ-
ate committees were assigned to investigate the charges and to inventory the
entire production of the Bureau during the war period by establishing as a base the
quantity of security paper produced at the paper mill, and following through
every operation to the completed bonds delivered to the issuing agency. During
the inventory the Bureau was closed. At the completion of the inventories, it
was disclosed that the charges were unfounded. Two years later all of the
officials who had been dismissed and who were still living were offered reinstate-
ment in the Bureau. During the 2-year period turmoil and confusion were
rampant in the Bureau. The cost resulting from low efficiency was enormous.
Had there been a security control accounting system comparable to the one now
in use, the charge of duplicating bonds could have been immediately proved
false and all of the difficulties and expense saved to the Government. It was
following this unfortunate affair that the Secretary established_the special com-
mittee for the purpose of installing an adequate, foolproof security control ac-
counting system. The present system has in ado it possible for the Bureau to
operate continuously since 1923 without ceasing operations for the purpose of
inventorying the work in process. It is safe to say, therefore, that the present
system, which to the layman appears to be complex, has saved the taxpayers
large sums of money, not to mention the fact that it has afforded adequate pro-
tection against irregularities for all concerned.
Security printing is costly, and adequate controls over it must be very compre-
hensive, and will continue to be for the simple reason that there can be no com-
promise with accuracy.
The representatives of the Williams committee were offered any assistance by
the staff of the Bureau which would permit a factual study of Bureau operations.
Reports showing progress that had been made in the past and proposed changes
for improvements were shown to a representative of the committee who gave
them only cursory inspection and seemed to have no interest in what had been
done or what was proposed to be done to place the Bureau on a more efficient
operating basis. In addition to the time spent by representatives of the Williams
committee on a sightseeing tour throughout the Bureau, only 60 minutes were
spent in conference with the Purchasing Officer, 45 minutes with the Chief
Accountant, and only 10 minutes in the Industrial Relations Division.
Since one of the responsibilities assigned to the committee was to "suggest
remedial action necessary to correct overstaffing in the executive departments
and agencies," it is noted that nowhere in this preliminary report is there any
indication of where overstaffing exists in the Bureau, nor is any suggestion made
of ways and means for correcting the alleged overstaffing. It would be of great
assistance to the Bureau, in eliminating the alleged overstaffing, if the report had
shown whether there are too many machinists, carpenters, plumbers, steam
fitters, plate printers, pressmen plate printers' assistants, clerical, or other such
workers. No doubt additional recommendations by the committee will show
specifically where overstaffing does exist in the Bureau. Assurances are given
that when this specific information is developed, attempts will be made by
the Bureau to apply remedial measures.
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S EiM:?LOYEE. "UTILIZATION IN THE EXECUTIVE' DEPARTMENTS
BUREAU OF THE MINT
'age 71 of the report under the section entitled "Procurement" contains the
fol owing statement, which is the only specific criticism of the Bureau of the Mint:
"Forty percent of the 44,261 purchase orders issued were for amounts totaling
les than $20. On this portion of the orders, the overhead costs amount to 35
pef cent of the money expended. The cost per order in the Bureau of the Mint
wa I almost $14. The average cost for the entire Department w $7.06."
Ve have checked into the facts on the $14 cost per purchase order in the Bureau
of the Mint and have determined that the employee who prepared the "pun-
ch t sing" form for the Williams subcommittee did not indicate thereon that the
pu- chasing officer for the Bureau of the Mint performs duties in addition to those
sin wn on the form, i. e., issuance of 371 purchase orders. The committee's
figi ,re of $14 was derived by dividing the purchasing officer's annual salary,
$5, L88.49, by the number of purchase orders issued in the Washin gton office-371.
Ho w-ever, the fact is that this employee supervises the purchasiog for the entire
mi: it service, by reviewing and passing upon purchase requests from the mints at
Ph Iadelphia, San Francisco, and Denver and the assay offices at New York and
Set ttle. Because of the special nature of its opera ions the mint service is
exc Tted from the usual requirement that the General Services Administration
ma re most of its purchases and, consequently, the mint writes i Is own specifica-
tin, is and makes its own arrangements for the purchaee of necessary specialized
eqr ipment and supplies. During the fiscal year 1950 the mint service purchased
mo 'e than $500,000 in specialized equipment and supplies, vaaying from such
itei as as specially designed crucibles for electric melting furnaces, to complex
am eating and cleaning equipment capable of daily handling many tons of coin
pla whets. This same employee is also responsible for issuing geeeral purchasing
ins ructions to the field offices and for coordinating the purchasing activities of
the mint service with the policies prescribed by the General Services Adminis-
tra ion. In addition to the supervision of the mint's purchasing this employee
is c ailed upon to perform other duties relating to the administration of the mint
ser ice, varying from making arrangements for disposal of surpins mint property
to erving on annual settlement committees at the mints and assay offices. Thus,
we feel that an erroneous picture was presented by forwarding a form to the
aommittee which showed the issuance of 371 purchase orden, against a total
anr ual salary cost of $5,188.49 without qualifying these facts by means of a
foo note or other ex olanation along the lines presented above. As a practical
ma ter, it is obvious that the Director's office in Washington with 50 employees
would not require the employment of a GS-9 purchasing officer to obtain its
offi ;e supplies.
Thile the foregoing represents the only specific criticism of the mint in the
rep nt, there are other general items contained therein which might be construed
as i adirectly affecting this Bureau. Comments relating to these items are included
in I he following paragraphs.
9 'here appears to be some confusion about the maintenance of "apportionment"
ace runts as referred to on page 81. We believe that the Bureau to which an
api ropriat Ion is made is the only point at which "apportionment" accounts are
ma ntained, although the report mentions that they are maintained in the Bureau
of he Budget, the Office of the Treasurer, the Division of Bookkeeping and
We rrants and the "agency." The report also shows some confusi on as to how the
"al otment" accounts operate; at least insofar as their comments might be con-
sick red as applying to this Bureau. The committee states that "a central set
of t hese accounts is kept on the basis of expenditure by objects. Operating units
anc field stations maintain similar accounts." This is not factual insofar as our
Bin eau is concerned; there is no duplication in allotment accounting. Our
fieli I offices maintain their own allotment accounts and render month-end reports
to is which can be taken from their allotment ledger in a matter of minutes.
Th, footnote on page 81, referring to allotment accounts, states that "Each one
of t aese major classifications has innumerable secondary break-downs." This
is n at true in the Bureau of the Mint; we have only 10 break-downs in our allot-
me; it accounts, which is the absolute minimum in consideration of budget data
for Congress.
( n page 63, it is stated under "2" that: "There appears to be an intentional
effcrt in the Department to disguise certain operations under ambiguous no-
me] clature."
1 he Bureau of the Mint uses standard nomenclature in identifying the various.
org.mizational levels. It follows the practice of identifying the organization by
the name cf the office or institution and within each office or institution by divi-
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sions, sections, and units. This practice was adopted in the mint years ago.
The names given to the working groups readily identify their functions, such as
Melting and Refining Division and Coining Division, etc. Also, no attempt is
made to conceal the duties of the employees by misleading titles.
The report, on page 65, contains the following statement:
"Staffing ratios in the personnel offices of constituent bureaus fluctuate from
1 to 44 in the Office of the General Counsel to 1 to 172 in the Bureau of Engraving
and Printing. It is concluded that only laxity of the part of responsible officials
permits these conditions to continue."
The Bureau of the Mint is shown in that tabulation with a ratio of 1 personnel
employee to 59 workers. The committee apparently fails to recognize compensat-
ing fa:tors which contribute to the variance in the ratio of personnel employees
to the number of employees served; which, however, have been recognized by the
Bureau of the Budget in the annual budget hearings. Problems such as turn-
over, geographical dispersion of offices, unusual personnel activities such as wage
board administration, and bonding of employees all have a direct bearing upon the
number of personnel employees who are necessary in a particular bureau.
At the top of page 70 in the section "Relationships" the following sentence is
included;
"The only limitation exercised over service functions and program operations
takes the form of the question?`Do we have the money?' If so, the expenditure
proceeds."
The above statement is not true in regard to management of the Bureau of the
Mint. For example, at the beginning of the fiscal year 1950, the mint voluntarily
curtailed its coinage program and formally reported to the Bureau of the Budget
that L would turn back $1,181,500 of funds which had already b_een appropriated
for operations during that year.
In other years, as the result of a desire to do the most efficient job at the lowest
possible cost, the mint has returned substantial amounts of appropriated funds
to the Treasury on a voluntary basis, and has furloughed large numbers of ern
ployees for the same reason.
Amounts which have been returned to the Treasury in the form of unused ap-
propriations include $63,000 at the end of the fiscal year 1949, $2,000,000 at the
end of the fiscal year 1948, and $1,500,000 at the end of the fiscal year 1947. In
these several years, if the only consideration had been "Do we have the money?",
mint managers conceivably could have found a way to spend a part or all of these
funds.
A few years ago the mint had approximately 4,000 employees; today the mint
has less than 1,000 employees, a reduction of more than 75 percent. These em-
ployees were dropped not only because of a decreased workload, but alse because of
more efficient operations.
Under the heading "Accounting Improvements," page 70, it is stated that:
"Cost accounts are rarely maintained. If so, they are incomplete, unrealistic,
or not on an accrual basis."
The Bureau of the Mint does maintain comprehensive cost accounts on the
accrual basis. They are sufficiently complete and realistic as to produce unit
costs of coinage (the major mint function) by denominations, seven manufacturing
stages, cost elements (direct labor, overhead, etc.), and by individual mint plants.
Furthermore, costs are controlled by the general accounts as Maintained on the
individual office level. Therefore, the above quoted statement, insofar as this
Bureau is concerned would appear to be inaccurate.
EXHIBIT 8
UNITED STATES DEPARTMENT OF LABOR,
OFFICE or THE RECRETARY,
Washington, December 21, 1950.
Hon. JOHN BELL WILLIAMS,
Chairman, Subcommittee on Overstaffing
in the Executive Departments and Agencies,
House Post Office and Civil Service Committee,
Washington, D. C.
DEAR MR. WILLIAMS: I have your letter of December 5 concerning the Report
of Your Subcommittee on the Division of Prices and Cost of Living of the Bureau
of Labor Statistics. I am pleased to have an opportunity to review this report
with you.
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:3efore discussing in detail your conclusions and recommendations, I would like
to make a general statement about the work of the Division of Prices and Cost
of :Jiving of the Bureau of Labor Statistics. This is the Divisioa which prepares
an I issues each month the official consumers' price index, on which so many
ma nagement-labor contracts are based, and also the official wholesale price index
of n.imary market prices, which also is widely used in business contracts. These
cm stitute the chief regular work of the permanent sAff of the Division. For
many years, including the years under the present management, this Division
hat turned out on time, week after week and month after month, some of the
cot ntry's most important and most carefully scrutinized statistics. This cannot
be done without competent supervision and good- management.
:a addition to this regular work, the Bureau of Labor Statistics is now engaged
on a 3-year program of revision of the consumers' price index, authorized by the
Co mgress in 1949. This is a vitally important project which is designed to improve
tin consumers' price index and thus to avoid some of time conflict and the contro-
ye] ay which developed during World War II. It was in connection with this new
pr c ject, as it was get;:ing under way, that the problems referred to in your investi-
gal ion apparently relate. This project had, for fiscal 1950, the appropriation
of 11,000,000 to which you refer, in concluding that "a substantial part of the
$1,100,000 initially appropriated for the revision of the consumers' price index
by this Division was dissipated through gross overstaffing, inferior planning,
urn rained supervision, and improvident administration."
find no evidence that any substantial part of these funds was dissipated.
Th re were some problems of personnel handling and of progra ming, but I can
ass ire you that they were not general. Let me describe the situation in more
del ail.
''his revision program was originally planned to begin in July 1949, at the
be inning of the fiscal year. However, the act appropriating the $1,000,000 for
thi work was not signed until early October. Meantime, the fie_ld work required
on the prcject had to be completed during the period November to March 1950
so s to avoid any interference with the population census beginning in April 1930.
Th .3- effect of these delays on the revision program was that the original plans had
to be changed, and the preparatory work originally scheduled for 5 months
(Jt ly to November 1949) had to be done in 2 months (Octoh ar to November
1949).
I personally had instructed the Bureau to schedule the completion of these field
sum veys in fiscal 1950 and the whole project in 3 years. Had this field work not
be n finished before the beginning of the census, the resulting delay would have
set back the project a year. It had always been my aim to get this work finished
as oon as possible, in view of the importance of having a sound fionsurners' price
ind ax. In the light of the Korean war and the crisis that now confronts us, it is
doi .bly fortunate that I did insist on this timetable and that the Bureau was able
to neet it.
''he Division, with great effort, managed to get back on schedule and by June
1910 had ?3ompleted nearly all the work originally scheduled for the fiscal year.
Th s included surveys of dwelling units in 50 cities, leading to the correction of
the rent index which has just been announced, exten-iive surveys of prices for
imm Toyed pricing and detailed preparation for the second year's 'work. I cannot
ovtremphasize the fact that no important part of that big program failed of
com mpletion on schedule, although it had to be compressed intc 9 months. At
the same time, a total of $150,000 out of the $1,000,000 appropriated was saved.
think in view o. the circumstances this is clear evidence of the over-all effi-
cie- icy and economy of the Division's work.
"our subcommittee makes five specific recommendations. My comments on
the 3e are as follows:
I. "The present ;:ystern of efficiency ratings should conform with over-all
civ 1-service regulations" (p. 55).
r_ 'he pra3tice of quarterly ratings is within the scope of civil-se-rvice regulations
ant is recognized by the Commission as a tool of good supervision. It permits
adi ministrative staff to take corrective action, as the work is being performed dur-
ing the year, rather than waiting until the end of the year. One objection
fre, iuently made by employees, at the time of the annual rating, is that they have
not been given during the year any indication that they were not doing all that
wa: required of them.
'.
his need for periodic review of performance was especially applicable to the
rev .sion project, on which the employees were both new and temporary. The
Di- ision management thought it desirable that every employee should learn
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early in his service what his supervisor thought of his work. The rating was an
administrative device to gage quality of supervision and employee work perform-
ance. It was not an official rating and was not made part of the employee's
file. This procedure did not work out as well as had been hoped. The problem
of service ratings is especially acute among temporary employees struggling to
obtain permanent status. So the quarterly ratings generated some friction and
some anxiety, as your subcommittee noted. Therefore, soon after your investiga-
tion, the Division eliminated these ratings and they are no longer being conducted.
2. "The present plan of the individual keeping his own time records should be
discontinued. Progress reports should be maintained by the grade GS-7 super-
visors responsible for assignment of work. Only one staff member in the' section
should be required to summarize all of the data contained in the supervisor's
reports" (p. 55).
Tins time report also was introduced by the Division as a device for better
management. The objective was to obtain a record of time spent on various
jobs and to regulate the flow of work. In the majority of cases the system worked
all right, but finally some complaints began coming to the Division (even before
they reached your committed).
Therefore, the Division made a thorough study of the problem. It was found
that the problem was basically one of misunderstanding on the part of some
employees and supervisors as to the use and purpose of the reports. Out of this
misunderstanding arose the allegation of some employees before your subcom-
mittee that the records were "falsified." After the most careful investigation
we have not been able to find direct evidence of deliberate falsification by anyone,
although some mistakes were made by some employees and by one supervisor.
However, the difficulties created by these reports outweighed the value that
might have been derived from them. As a result of the study, coupled with the
information disclosed during the subcommittee's investigation, these time reports
have been discontinued.
3. "The subcommittee recommends the elimination of 24 supervisory positions
at grade GS-3 and 5 with a corresponding reduction in over-all personnel; and,
the consolidation of all subunits into larger units under the best qualified and most
capable supervisors selected from the present group of employees serving at
grades GS-5 and 7" (p. 55).
With respect to this recommendation, I would like to point out that the staffing
needs for this special program has recently been carefully scrutinized by the
Department's Budget Officer and by the Bureau of the Budget. In addition the
progress of the program is carefully reviewed each month. The program estimates
for the next year (fiscal 1952) will envisage substantially less than was appro-
priated for 1951.
Some readjustment of work and staff has already been made by the Division.
The number of clerks assigned to each unit has been raised to 12 per GS -4, and
the supervisory responsibilities of the working supervisors or "leadmen" have
been reduced to a minimum. Further work will be done on this in connection
with recommendation 4 below.
I do want to emphasize as strongly as I can that the necessity for carrying
through this project on schedule, particularly in view of the importance of the
consumers' price index in the present emergency. It is going to be exceedingly
difficult, even at best, to maintain a staff of temporary employees under present
conditions. We shall continue to check carefully on the progress of this program
in order to make all possible economies consistent with maintaining the quality
of the work and insuring its completion on schedule.
4. "The management staff of the Bureau of Labor Statistics should make a
detailed survey of the Prices and Cost of Living Division with a view toward
(a) simplification of the organization pattern, (b) shortening the lines of adminis-
trative communication, and (r) a better accomplishment of the twofold mission
of the Division" (p. 56).
The Bureau has assigned its management staff to survey the operations of the
Division in order to determine whether any further management improvements
can be effected. As already indicated, I am also asking the management experts
of the Department to join in this review, particularly with the purpose of discover-
ing such improvements as may be applicable to other bureaus of the Department.
It is the Department's policy to achieve these objectives for all its programs.
5. "Top Division personnel should spend a greater portion of their time in
working units. In this, their objective should be (p. 56)?
`(a) To raise the quality of supervision;
"(b) To keep in closer contact with administrative problems;
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"(c) To insure better utilization of personnel; and
"(d) Most important, to instill an attitude of re:pect for he expenditure
of public funds."
S nce the subcommittee investigation, the top staff of the Division has spent
a c msidemble amount of its time in reviewing its operations and checking on
its .xlministration and procedures. Employee surveys have been made in every
uni of the Division, and actions are being taken on the basis of the results.
Fro n the Chief of the Division down, the supervisors have been working to
imr rove administrative communications and supervisory-employee relationships.
I al a making this the occasion of a thorough review of inanagnient practices, for
the purpose of making them as constructive and efficient as possible.
EMPLOYEE OPINION SURVEY
C ur knowledge of the investigation is confined primarily to the data contained
in he preliminary report. On page 57 there is printed an employee opinion
sur. -ey based on a survey conducted by the committee's staff where a random
sele .ttion of employees were asked eight questions.
'I he statements of witnesses, printed in the report, are not compatible with
the results of the committee's opinion survey. This would seem o indicate that
the complaints were local in character and not generally applicable to the Price
Division as a whole.
I i closing, I want to indicate my concern about the allegation of some em-
plo:ees before your subcommittee that they had been threatened with punitive
acti on by their supervisors if they complained about their grievances. The
con rnittee's own employee opinion survey indicates that 27 out of 29 persons
stat ed that they felt free to go to their immediate supervisors on personnel
que rtions. This certainly shows that any situation which existed must have
bee- t highly localized. In any case the estab.ished policy of the Department is
clear?there must never be any threats or reprisals of any kind toward any
emi loyee who has a suggestion to make or a grievance to air.
Very truly yours,
EXHIBIT 9
MAURICE J. TOBIN,
Secretary of Labor.
GENERAL SERVICES ADMINISTR ATION,
Washington 25, D. C., December 27, 1.950.
H03 JOHN BELL WILLIAMS,
Chairman Subcommittee on Utilization of Personnel,
House Post Office and Civil Service Committee,
Washington, D. C.
I EAR MR. WILLIAMS: Reference is made to your letter of December 20, 1950,
and the attached preliminary report regarding personnel utilization in the General
Ser 'ices Administration. I appreciate sincerely the consideratiot that has been
giv( n to the problems of this Administration in the report, and also the oppor-
tun ty afforded me to comment on the findings and recommendations.
I he following information pertaining to several of the findings eontained in the
rep( rt will, I believe, serve to clarify them:
(.) On page 130 the report states that differences of opinion with respect to the
orgl.nization of the GSA during its early months retarded the progress of the
Ach rinistration's program. When I became Administrator of General Services,
I fo med a number of committees comprised of key representatives, of the constitu-
ent agencies transferred to GSA by Public Law 152, and assigned to these com-
mit ,ees the responsibility for developing and recommending the appropriate
org: .nization, policies, and procedures to be adopted. While this process naturally
bro ight under consideration many varying points of view, I believe that this free
xci Lange of ideas in the early days of the Administration contributed materially
to he development of the sound organization and operating systems we now
pos, ess and made possible the development of a close-knit, well-f Inctioning GSA
teal a.
On page 131 the report states that too little attention has been devoted to
stu( ties of -?e organization and operations of the Public Buildings Service. In
this connection, a study of this Service, similar to that undertaken in the Federal
Sur ply Service, is programed as a part of the GSA internal management improve-
mei t activities for the first quarter of the calendar year 1951.
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(c) On page 133 the report states that responsibility for GSA's procurement
function (internal) has been centralizdd in the Office of Management. As a
matter of information, the Office of Management is responsible only for the
acquisition of GSA requirements for administrative supplies, equipment, and
services. Whenever such acquisition involves purchase, the purchase transaction
is handled by the Federal Supply Service.
(d) In the third paragraph on page 134, reference is made to an average cost of
$25.38 incurred by a Government agency in making a direct purchase of $10
worth of lumber. In the succeeding paragraph it is stated that had this lumber
been procured through the Federal Supply Service there would have been an
additional cost of $11.77 representing a total cost of $37.15 for the transaction.
In the develo7fment of this hypothetical case, certain costs incurred by the agency
in making a cirect purchase and costs involved in purchasing through the Federal
Supply Service were duplicated. While in the example given, the average cost of
$11.77 incurred by GSA appears excessive, it should be noted that this average is
equally applicable to requisitions involving purchases of $10,000 or more.
(c) On page 135 reference is made to the delay that has been incurred in the
handling of the combination purchase order-invoice-voucher form. The release of
this form, together with appropriate instructions regarding its use, has been
accomplished.
I am in accord with the recommendations of the subcommittee and will take
steps to assure their full accomplishment.
Sincerely yours,
HOD. JOHN BELL WILLIAMS,
Chairman, Subcommittee on Overstaffing,
Committee on Post Office and Civil Service,
House of Representatives, Washington 25, D. C.
MY DEAR MR. WILLIAMS: I have received your letter of December 20, 1950,
enclosing a copy of the preliminary report on personnel utilization in the executive
departments and agencies which deals with the Department of the Interior.
The Department of the Interior is sincerely interested in increasing the effective-
ness of employee utilization and in receiving constructive suggestions for the
improvement of over-all management. To the extent that it is found applicable,
therefore, the report will be used to further our progress toward good management.
I must report to you, however, that the value of your investigations is somewhat
impaired by certain misconceptions which are carried in this report.
You have asked for our comments and a statement as to the actions which we
plan to carry out the report's recommendations. The following comments are
submitted on the basis of a review of the report within the limitations of time
permitted by the reporting date of December 27, as stipulated in your letter. Pre-
liminary analysis indicates that certain of the findings and recommendations
either require further clarification or result from misunderstanding or misinterpre-
tation of facts.
I am pleased to note that your first finding endorses as a well-conceived improve-
ment the recent assignment of supervisory responsibilities to Assistant Secretaries
on a program functional basis. This affords secretarial direction to the bureaus
which are grouped according to four broad fields: mineral resources, land manage-
ment, water and power, and administration.
Your first recommendation, that the authorities of the Secretary and the
members of his staff should be firmly established in the subordinate bureaus," is
not readily understood. If the committee feels that my authority and that of my
staff is not fully recognized, I should be informed of the facts on which such a con-
clusion is based. I have felt that insofar as such a situation may have existed in
isolated instances in the past, Reorganization Plan No. 3 of 1950, recently ap-
proved by the Congress, effectively resolved the problem. However, if what is
meant is that those authorities have not always been fully exercised, the report is
more meaningful, since the recent reorganization of the Secretary's office was in
part for the purpose of insuring more adequate secretarial leadership in all phases
JESS LARSON, Administrator.
EXHIBIT 10
DEPARTMENT OF THE INTERIOR,
OFFICE OF THE SECRETARY,
Washington, December 28, 1950.
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2( 4 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPARTMENTS
of the Department's work. There are areas in which more effective work cart be
dc ne, and to these we will continue to devote our attention.
f cannot agree with your unsupported generalization, however, that because
th a bureaus are not organized entirely and exclusively on this same functional
be us, there results a major cause of overstaffing. The bureaus have been estab-
lis led to carry out saecific legislative authorizations and to accomplish reasonably
sp acific objectives, such as the development and niaintenan:te of parks, the
re tlamation of land, and the management of the public domain. With mos t of
th 3 Department's functions lying within the broad field of natural resources,
th 3 bureaus share a mutual interest in conservation, engineering, geology, and
m neral resources. For example, while the objectives of a water-using agency
di fer from the objectives of a water survey and reporting agency, both work neces-
sa ily with water, both employ engineers, and both are engaged in conservation,
? t each has a separate authorized service to perform.
We have felt that the need for integration of these bureau programs should be
pr avided for at the secretarial level, thus permitting the bureaus to be maintained
ge aerally as organized to carry out legislative objectives. The implied conclusion
th it overstaffing exists because all geologists are not located in one unit, all engi-
neers in another, and all conservationists in a third, is as unwarranted as would be
th a same conclusion if directed at other specialized personnel used to accomplish
a najor program objective, such as accountants and lawyers.
This does not mean that bureau structure should not be realined from time to
ti ae. We recognize that organizational needs change and we are -Aking continuing
action to identify and resolve problems of an organizational natare. Your second
re tomnaendation, that we "should conduct a thorough examination of the functions
in which he bureaus are now engaged in order to eliminate all of the nonessential
di plicating and overlapping activities," is in accord therefore with our going
? agram. I do regret, however, to find no recognition of the fact that, under the
at spices of the President's management improvement fund, I have just had
cc mpleted an objective study of the entire Department by an independent organi-
ze tion and all offices are currently engaged in determining specific actions to be
ta ien on the recommendations of that study.
Your third recommendation, that "the major objective should be a realinement
of bureau activities in conformance with the four major functions of the Depart-
m ant, i. e., (1) mineral resources, (2) land management, (3) water and power
cli velopment, and (4) administration," will of course be given further considera-
tis on. In the light of the foregoing discussion, however, it may be seen that any
pi oposal for a reorganization of bureaus so that they would be completely and
e), elusively dedicated to one of the major functions should be supported with a
st owing of advantages based on a comprehensive study of existing and proposed
ca ganization arrangements and legislation.
I am deeply disturbed by the finding in the report which concludes that "the
re luction in the headquarters staff has not been in conformity with previously
el pressed plans," referring to the decentralization of operations to the field. The
v( ry figures presented in the report, I feel, point to the conclusion that we have
re duced he headquarters staff in conformity with previously expressed plans.
T re Department's programs expanded from a war-connected curtailment in 1.944
tc a very high peacetime rate in 1949, with new responsibilities and with virtually
a tripling of total workload. Yet, while the field force was increasing 46 percent
te meet this load, the headquarters staff was reduced 20 percer t, by the report's
? in figures. I am surprised, therefore, that the Department was not lauded,
it stead of criticized, for its ability to carry this tremendous program with reduced
:adquarters staff. Incidentally, I see even less of a logical relationship than does
ti e committee between a percentage reduction in headquarters staff and a per-
c( ntage increase in field forces. Further, the report indicates that this reduction
is substantially nul ified by the "additional employees" in Denver. It should be
n rted first that this conclusion was apparently reached . by including consideration
ol Denver employment in 1949 and disregarding Denver employment in 1944.
A so, it should be noted that only a small portion of this employment performs
haadquarters funct.ons. Most of those employees are engaged in field activities
w dich because of their complexity from an engineering viewpoint were treated
ecially in carrying out the decentralization policy.
The findings and recommendations on personnel management criticize the
d !gree of supervisory control exercised by the Division of Personnel Management,
C ffice of the Secretary, over the bureau personnel programs and recommend that
tl.e Division be given more authority to control personnel policies and procedures
it the bureaus. The authority of the Secretary is already delegated to the Division
ti trough the Administrative Assistant Secretary for the direction of the personnel
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EMPLOYEE UTILIZATION IN THE 1 EXECUTIVE DEPARTMENTS 205
management program of the Department. The cited examples of lack of uni-
formity in the bureaus in respect to organization of the personnel function,
delegation of appointing authority, staffing ratios, and classification of personnel
positions are not conclusive that there is inadequate control. Personnel manage-
ment is an integral part of the managerial function exercised by all of those who
direct the work of other employees. The personnel offices supply specialized
competence to aid the administrators and supervisors in meeting this responsibil-
ity. Accordingly, there should be differences in applied personnel management
in the bureaus which differ in size, scope of operations, and organization. Personnel
programs are necessarily geared to the type of work, the assigned staff, and the
recruitment, employment, classification, and training needs of the bureau or
smaller organizational units concerned. For example, the extent of delegation
of appointing authority is influenced by the adequacy of the personnel staff at
a particular field station, which may vary from a large regional office to a small
project field unit; organizational pattern, similarly, has been varied to adapt to
a particular installation the performance of essential functions with appropriate
staffing.
I note that the current over-all ratio of personnel staff to total employment is
.stated in your report to be within the allowable limits prescribed by the Bureau
of the Budget. The decrease in this ratio from 1 :132 in 1940 to 1: 110 in 1950
reflects the earlier understaffing of the personnel offices, the development of
programs for training and personnel utilization, the adding of new requirements
by law and regulation to the responsibilities of the personnel staff, the delegation
by the Civil Service Commission of certain functions to this Department, and the
more complex administrative load created by the war and the readjustment
period, now succeeded by the problems of the present emergency.
Your recommendation that the Division of Personnel Management aggressively
examine and evaluate personal management in the bureaus is entirely acceptable,
of course, and is in line with current undertakings. The recommended standard-
ization of organization, of staffing, and of delegated appointing authority will be
considered for furtherance to the extent that uniformity is practicable and econom-
ical in its application to the differing needs of the various bureaus, as outlined
above. The recommended development of classification standards, which
apparently is based on the difference in average salary of personnel employees
in different bureaus rather than on the absence of classification standards as
applied, will be studied to assure that differences in work rather than in classifi-
cation standards account for the reported statistical range in the average salary.
Uniformity of classification standards and of application of the standards is a
continuing part of our personnel-management program.
The report contains various comments concerning fiscal matters within the
Department and recommends among other things that the staff of the depart-
mental fiscal officer be increased. Such comments and recommendations will
be fully examined and appropriate action will be taken where desirable or feasible
in connection with the fiscal operations of the Department. The Budget and
Accounting Procedures Act of 1950 provides for the Department to assume greater
responsibilities with respect to accounting and fiscal matters. To accomplish
the purposes of the act will require time and in many instances the cooperation
of the General Accounting Office, Treasury Department, the Bureau of the Budget,
and the Department in order to carry out the fiscal and accounting requirements.
The report states that the fiscal officer of the Department exercises control only
?over budget preparation and the apportionment and allocation of funds, and
provides no control, and very little guidance, over accounting, auditing, and
payrolling activities of the bureaus. The Division of Budget and Finance does
assume responsibilities over the budgeting, accounting, auditing, and payrolling
activities of the bureaus. This is accomplished through contacts with the appro-
priate officers of the bureaus, prescribing of procedures, and conducting surveys.
The Division has established, with the cooperation of the bureaus and offices,
chants of allotment accounts that integrate the accounts with the approved budget.
The Division has established a system of financial control that requires the
approval of all allotments or modifications thereto under each appropriation by
major activities or projects and for the reporting of obligations incurred under
approved apportionments broken down by appropriations, major activities, and
projects thereunder.
The report states that the Division of Budget and Finance, on the staff of the
Secretary, is organized and staffed to carry out the administration on the principle
of decentralized operations with a central control but that the carrying out of
this principle has been retarded by weak and ambiguous departmental orders
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w dch establish the responsibilities and authorities of the Division. The Depart-
m not denies that the responsibilities of the Division of Budget and Finance have
be an retarded by weak and ambiguous departmental orders. Since 1943, when
th 3 Division was established, the Department has isaued a series of orders, all
deggned to strengthen the budgetary and financial operations of the Department.
Fhe report states that the responsibility of the Secretary for fiscal management
is now established by law and has long been implied, yet the Department has not
or ,stallized its relations with the bureaus. The bureaus and offices are cooperat-
im ; and acting under the guidance of the Division of Budget and Finance with
ret poet to accounting and fiscal matters. The modification of the accounting
sy ;terns ct7 the Bureaus of Reclamation and Land Management have been carried
foi ward under the cooperative effort of the Department and the General Account-
inn Office. At present the accounting system of the Bureau of Indian Affairs is
un :ler examination, and the Department and the General Acconnting Office are
an isting the Bureau of Mines in connection with the decentralizat on and rnodifica-
tie n of the accounts of that Bureau.
he report states that the recent reduction in the number cf appropriations
sm;gests a simplification of both budget preparation aed accounting with a cor-
re: pending reduction in personnel, but that there is no evidence that present
ph nning is directed toward this reduction. The improvement in the appropria- -
tie a struceure will facilitate both budget preparation and accounting but not to
tht extent that reductions in personnel can be foreseen at this time and certainly
no reductions corre3ponding to the decrease in number of appropriation items.
Tlec Department is committed to present in practically as much detail as hereto-
for 3 data by activities and projects in support of appropriation requests and in
ref orts on expenditure programs. Furthermore, the House Cormnittee on Appro-
pri ttions in its reports on Interior Department appropriations for 1950 and 1951
hat directed the Delartment to develop more statistical and workload data in
col nection with the budget estimates. Thus it may be expected that there will
be no decrease in the volume of work of the budget and accounting functions.
In .his connection it should be noted that the budget staffs in some of our bureaus
are inadequate, a fact recognized by the committee rcport.
'he report states that the staff at the secretarial level does not concern itself
wit n the budget methods or personnel used in the individual bureaus. During the
pas t few years the Division of Budget and Finance ha:: been ins trumental in ()s-
tab fishing a pattern for the fiscal organizations in several of the bureaus and offices
am has been responsible for many improvements in the budget and accounting
me hods. This is reflected in the revision of the appropriation structure and the
int ,gratior of accounts with the budget. This work will go forward and it may be
ext acted that further efforts will effect a better utilization of personnel on budget
opc rations. Comple uniformity in budget and accounting functions will not be
pra3tical, however, in view of the diversification of activities, differences in organi-
zat onal structure, administrative requirements, and special accounting require-
me: its for certain operations.
'I he report states that the accounting in the Department lacks uniformity. For
the reason that the programs of the bureaus and offices of the :Department are
var ed and, diversified, the accounting must be patterned to lit management
nee is of such bureaus and offices. The objective is t) obtain accounting uni-
fort nity within the Department without conflicting with the pattern required to
me( t management needs.
he report states that the Secretary's Division of Budget and Finance is re-
spo isible for the coordination of accounting throughou the Department, but it
is r at, adequately staffed or clearly authorized to discharge this responsibility,
and that additional personnel assigned at this point would obviate the need for
ma) ,y employees at related points throughout the bureaus. The staff of the Divi-
situ of Budget and Finance has recently been augmented tn order to assume further
resT onsibilities in accounting and fiscal matters. The Division is participating.
in t te joint effort of the General Accounting Office, Bureau of the Budget, and the
Tre isury Department to improve accounting within the Department. The leader-
ship of the Department in the cooperative accounting iniprovement programs is
spot rheaded by the Division of Budget and Finance. Surveys have been made
witl respect to certain bureaus and offices of the Department and other surveys.
are Jlanned for the future. The objective is to obtain adequate accounting for-
eacl bureau and office of the Department and to eliminate duplieation of effort.
T ae report states that the Bureau of Reclamation has made progress toward
the development of a workable accounting system and that it has now reached
a p( int where a complete reappraisal should be made to consolidate or eliminate
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EMPLOYEE UTILIZATION IN THE, EXECUTIVE DEPARTMENTS 207
some of its accounting activities. During the past 2 years the Department and
the General Accounting Office have cooperated with the Bureau of Reclamation
for the purpose of improving the accounting and fiscal procedures of that Bureau.
Under date of October 6, 1950, in a letter to the Secretary, the Comptroller
General stated the following:
"There has been received a letter from your office of July 25, 1950, requesting
formal approval of the accounting systems of the Bureau of Reclamation, which
has been developed by representatives of your office, the Bureau of Reclamation
and this office. Subject to the qualifications noted in the letter from your office,
and with the understanding that the system will be revised from time to time
to meet changing requirements, the system as developed and submitted has the
approval of this office."
The report states that accounting operations of the Fish and Wildlife Service,
the Bureau of Indian Affairs, the Bureau of Land Management, the Bureau of
Mines, the Geological Survey, and the National Park Service are costly and that
little thought is being given to a major overhauling of the system which would
enable a more efficient operation with fewer employees. Surveys have been
made in certain of the bureaus indicated. Such surveys have developed that the
accounting systems were not adequate and that improvements were necessary.
Under such conditions it is essential at times to increase costs since better quali-
fied and additional personnel are required to operate adequate systenis. Of
course, it is desirable to obtain efficient operation with fewer employees when
it is practicable to accomplish such results.
The report states that one of the fundamental requirements of the General
Accounting Office for an on-site, business-type audit is a satisfactory system of
post audit in the agency involved, and that only three bureaus of the Department
are meeting this qualification. It further states that internal pre-audit, or voucher
examination, is handled differently in all of the bureaus. The Budget and
Accounting Procedures Act of 1950 provides in section 119:
"The head of each executive agency is authorized to designate the place or
places, at the seat of government or elsewhere, at which the administrative
examination of fiscal officers' accounts will be performed, and with the concurrence
of the Comptroller General to waive the administrative examination in whole or
in part: * * *"
Accordingly, steps have been taken to determine the field offices that will
perform this function as well as the auditing of vouchers. It is planned to discuss
this matter with the General Accounting Office and the Treasury Department at
an early date to determine the most favorable method for decentralizing these
functions. This arrangement will eliminate duplication in the central offices
of the bureaus and offices. With the cooperation of the General Accounting
Office, determination will be made that the voucher auditing is performed satis-
factorily and that the accounting records are adequate to permit on-site audits.
The report states that as a result of efforts put forth by the budget, the opera-
tion and accountability for payrolling has recently been made the responsibility
of fiscal management but that like the other functions of fiscal management, there
is no uniformity of objectives or methods in the payrolling operations of the
bureaus. The payroll operation, including leave, savings bonds, taxes, and
retirement accounting is the responsibility of fiscal management. This policy
was established by the Department's letter of instruction contained in Budget
and Administrative Management Letter No. 132, dated June 6, 1949. Owing
to the number of wage board, intermittent and other changing types of employ-
ment in the Department, it is necessary to operate different payroll systems, viz.:
(1) system prescribed by the Comptroller General in General Regulations No. 102,
as amended, (2) comprehensive payrolls as respecting wage board and temporary
employees, whose earnings change practically each pay period, and (3) a system
designed to combine (1) and (2) into a single operation, thereby reducing operating
costs as much as 50 percent in certain instances. Payroll operations must be per-
formed at the accounting offices in order that employees may receive the checks
on the day due as well as for the obligation of funds. Payroll operations are
under constant study and examination in an effort to reduce costs throughout
the Department.
The report recommends that the Division of Budget and Finance be activated
as the focal point for all funds appropriated to and expended in the Department;
that there be a more consuming relationship between the Division of Budget and
Finance and the directors of the several bureaus; that the bureau directors ap-
praise the present fiscal activities within their respective bureaus in order to install
amore meaningful fiscal system to be used as a tool for better bureau management;
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2C 8 EMPLOYEEi UTILIZATION IN THE EXECUTIVE DEPARTIVIENTS.
th: t the staff of the Departmental fiscal officers be increased; and that additional
qu dified personnel be assigned so that improvements in the fiscal management of
Uri bureaus can be accelerated toward a reduction in total bureau employment.
Ti e recommendations will receive the careful consideration of the Department
an I appropriate action will be taken wherein they are desirable or feasible at the
ea: liest practicable date.
rho report recommends that the Divisions of Property Management f6nd
Ac ministrative Servsces, Office of the Secretary, prosecute a thorough reorganiza-
tic a of the procurement activities in the bureaus' headquarters offices, and that
thods and contros be promulgated to insure a marked reduction in operating
co ts. I am pleased to point out that the Division of Property .:Vlanagement was
esl ablished early in the current year to promote economical and effective procure-
nos nt and property management, in recognition of the lieed for s7.rengthening and
im ?roving our administrative practices in these fields. In a relatively brief
pe iod, progress has been made and the small staff available for this function will
co itinue to appraise bureau practices in order that further tangible improvements
rat y be made.
. do not agree, however, that the statistics of your report fairly support the
ot erwise unsubstantiated finding that procurement activities throughout the
he dquarters of the Department are wasteful. The statistics show that the
av rrage cost was $9.95 for making each of 38,725 purchases having a total cost
of $53,770,867. The very same statistics also show that the average amount of
eal purchase was approximately $1,390 and that the average cost per purchase
of $9.95 was therefore only seven-tenths of 1 percent of the amount of the average
pt rchase. Further, in applying the so-called average cost per purchase order in
tin varioas bureaus to specific instances of very small purchases, the report
orates the erroneous impression that a cost of $13.78 was entailed to issue a
purchase order in the amount of 32 cents, and that it cost $13.39 to purchase a
50 -cent magazine. The small purchase of 50 cents did not, in fact, cost $13.39
ar the 32-cent order did not cost $13.78. Those average costs are statistically
applicable only to the average purchase. Those average costs are no more
va [idly applicable tc the small purchase than they are to a companion purchase of
gr at complexity arid involving many thousands of dollars. For example, a
rchase of equipment in one of the bureaus mentioned in the report involved an
or ler in the amount of $31,622 and required considerable work on a relatively
co nplex purchase. It should no more be represented that this large purchase
mr: s made at so low a cost as $13.39, the so-called average, than that the small
pt rchase was made at so high a cost.
It is rettognized to be true, of course, in Government as well is elsewhere, that
th e. cost of processing orders of small amount is disproportionately higher than
th at of larger orders. To minimize this, instructions have already been issued to
ct rtail small orders to the irreducible level practicable without incurring excessive
in ientories and unreasonably encumbering the day-to -day operations.
In further refere ace to the publicized purchase of the 50-cent magazine, it
sh ould be noted that the original purchase order of August 15 was canceled on
A 'gust 28, prior tc the inspection of these purchase orders by your investiga-
ti mai staff, and the order thereafter consolidated with 16 other small purchases
d: ting from July 3, 1950, to September 28, 1950. k single voucher was then
is ued in payment of the 17 small purchases in accordance with the procedure
pi escribed by General Regulation 103 of the Comptroller General. Thus, this
E apartment has been castigated by the press, as well as the report, on a matter
w rich is not only factually in error, but which represents MiSUSC by the report of
ti e statistics contained in it.
The concern expressed by the committee over the productic ri rate of 1.4 pur-
e} ase order per employee possibly is based on a failure to take into account that
ti e data on purchasing personnel included not only those issuing purchase orders,
a very minor procedural step, but also those otherwise engaged in the total pro-
m rement operation, including the writing of specifications, the analysis of bids,
ti e interpretation of regulations, and the awarding of contracts. My foregoing
C( mments on average costs applies here as well.
Your report recommends that an adequate management improvement program
b devised by the Department in accordance with 1 he provisions of Executive
rder 101)72. I call your attention to the reports which the Department and the
b treaus :;ubmitted to the Bureau of the Budget with the fiscal year 1952 budget
si bmission, copies of which were furnished the subcommittee. These not only
E5( t forth the management improvement accomplishments but also delineate our
trrently developed program in this field. I feel that we have developed an
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EMPLOYEE UTILIZATION IN THE, EXECUTIVE DEPARTMENTS 209
adequate management improvement program throughout the Department.
Some further action is necessary And will be taken to implement that program.
The findings, however, give no recognition to the work being done in this imple-
mentation. As an example of this work, the Department presently has under
consideration the conclusions of a study made by a private management engineer-
ing firm, recommending specifies on improvements in the Department's manage-
ment review and appraisal systems. These conclusions go to the heart of the
provisions of Executive Order 10072. Furthermore, that same management
engineering firm, under contract with the Department, has completed a detailed
review of the organization and management practices of the Bureau of Indian
Affairs. That Bureau is now taking specific action on the basis of these recom-
mendations. These studies were financed by the President's Management
Improvement Fund.
In view of the foregoing considerations, I am at a loss, without further informa-
tion, as to the effectuation of either your first recommendation on management
improvement, as discussed above, or your second recommendation on the subject.
The latter provides for the detail of Reclamation and Land Management personnel
to other bureaus to initiate management improvement programs.
The conclusion of the report that with few exceptions there is little concern in
the Department with improvement of management and administration seems to be
predicated on the lack of a formal organization and methods staff in every bureau.
The Department has insisted upon the maintenance of formalized organization and
methods staff only where the workload which such staff could _perform would
justify their maintenance. I must point out that, contrary to the implication of
the report, the President's directive and our own subsequent instructions on
management improvement were directed at the responsibilities of "management,"
1. e., the key officials at all levels of the Department. The Bureau of the Budget
and this Department have evaluated management improvement hot in terms of
formalized management staffs, but in terms of accomplishments of the total
organization involved. I call your attention to the reports referred to above on
the accomplishments of the bureaus and the Department in improving our man-
agement. I welcome criticisms and suggestions for improvement, but I do not
find the report particularly helpful in this regard.
The report states that the Office of Territories represents an area of unsatisfac-
tory administration in the Department. Only a few brief comments are
indicated as a basis for this conclusion and no recommendations are made; there-
fore, I cannot consider this portion of the report as being constructive criticism.
Aside from this, however, I am at a loss to determine the basis for the conclusion
indicated. So far as can be ascertained, apart from questionnaire information on
personnel and budget and finance activities, the only contact by members of the
investigational staff with the Office of Territories was one brief interview with the
administrative officer and a brief conversation with the personnel officer. The
report indicates that the 71 employees of the Washington staff were unable to
supply factual information about the administration of their programs. It
should be noted by your subcommittee that the printed hearings of the House and
Senate appropriations committees for 1950 contain at least 200 pages of detailed
factual information on these activities. In addition, detailed monthly reports on
field activities are available at all times in the Office of Territories. It is true,
however, that detailed information on personnel operations in the Territories is not
maintained in Washington.
It should also be noted that this fiscal year represents the first year in which
funds for the administration of Territories were provided for by one appropriation
administered by the Office of Territories. Until this year individual appropria-
tions for each of the Governors was made, which complicated the problems of
centralized administration and control. Further, in terms of interest in the
improvement of management in the Office of Territories, it should be noted that no
mention was made of the fact that under the auspices of the President's manage-
ment improvement fund studies were conducted by that Office this year of Guam,
American Samoa, and the trust territories; and that constructive action is being
taken in each of these areas based on the studies. In addition, representatives
of the Office of Territories worked with the Governor of the Virgin Islands in
improving the financial and personnel aspects of his administration.
It is difficult to see how a conclusion of unsatisfactory administration in the
Office of Territories can be predicated upon brief discussions and statistical reports
concerned almost entirely with personnel procedures and staffing information.
The report refers also to the Geological Survey as an area of unsatisfactory
administration but makes no direct recommendations for improvement. It is
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2 LO EMPLOYEE' "UTILIZATION IN THE EXECUTIVE DEPARTMENTS
tr le that the Geological Survey is organized into four functional divisions and
ti at their activities are of a scientific and professional character, but it is not
tr le, as is implied, that any division operates unilaterally to the detriment of the
bi at interests of the Survey as a whole.
The statement is made that the Geological Survey has paid little attention to
ti e Department's efforts to decentralize its activities closer to the scene of oper-
ations. The Survey maintains 400 field offices staffed by 67 percent of its total
fc rce. These field people, located in small water and conservation offices or the
frl.d parties making geologic and topographic maps at the sites to be mapped, are
cated at the scene of operation. The remaining 33 percent usually charged
a,;ainst the Washington headquarters includes 240 people con 3tituting the field
f( rce of die Atlantic States topographic region; an additional 124 employees to
o wrate the map printing plant which services all divisions of the Survey; and the
1 '6 employees of the Trimetrogon Section, financed by the Air Force, performing
p iotogrammetric work which must be carried on in close liaison with the Air
Drce hcadquartera. Thus, it is recognized that a ,-)ortion of the Survey staff
cated in Washington is here because Washington is its particular scene of oper-
a don, not as headquarters staff. Thorough analysis and coliside ration are required
b ;fore sound conclasions could he reached On an alternative functional plan for the
S irvey's operations which might provide for less concentratior. of the staff here.
The statement, "each of the divisions maintails separate administrative
s xvices (facilities), including budget, personnel, accounting and procurement"
i. aplies that there is overstaffing and inefficiency because of tais practice. The
r amber of employees so engaged in total falls far below any prescribed staffing
s andards or ratioE. and compares favorably with good practice outside Govern-
r Lent. There are no budget staffs as such in the division organizations. There
a no, however, operating personnel who are responsibl for bud;,,et matters.
The Survey has only such personnel staff at the division level as is required to
c msolidate personnel actions and problems as they flow in frosn a wide dispersal
f field offices. ASthough personnel records may be duplicated in part between
t ae bureau and the division level, the Survey is well aware of this problem and has,
f r some time, becn making progress toward its solution.
Any duplication in accounting staffs or operations is rapidly disappearing.
la comparison to the accounting problem involved, the Survey has an economical
nd efficient fiscal organization.
The statement with respect to procurement is unfounded. Day-to-day pro-
( uremert needs are provided by purchase in the fled on the job. Purchase of
pecialized equipment and all headquarters needs are cleared through one central
,urchasrng office. This has been the procedure since well befor?, the investigation.
With respect to storerooms and warehousing, the Survey now has one central
toreroom for all units located in downtown Washington, and under the newly
inaugurated system of property management and control, there is no segregation
equicment by any system of storing, accounting, or use.
I appreciate yoar courtesy in providing me tins opportunrty to comment on
- he preliminary report.
Sincerely yours,
OsoAn L. CHAPMAN,
Secretav of the Interior.
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BIBLIOGRAPHY
SELECTED REFERENCES ON OVERSTAFFING AND UTILIZATION OF PERSONNEL IN
THE FEDERAL GOVERNMENT
Atkinson, Kenneth B., "But is the Job Right?", Personnel Administration, May
1947, pp. 13-15, 31.
Some jobs as constituted are not "right" for anyone, resulting in poor
utilization of personnel.
Atkinson, Kenneth B., "Placement Programs in the Federal Government,"
Personnel Administration, March 1947, pp. 13-15, 21.
Placement officer's role in creating and maintaining effective manpower.
Byrd, Harry F., "Waste Goes On," American Magazine, January 1943, pp. 22-23,
136-138.
Gives examples to support thesis that there are tens of thousands of need-
less workers in Washington.
Commission on Organization of the Executive Branch of the Government. Report
on Office of General Services?Supply Activities, and related task force reports,
February 1949.
Commission on Organization of the Executive Branch of the Government. Task
Force Report on Departmental Management, January 1949, p. 3.
Demuling, Clara, "The Utilization Program in the Civil Service Commission,"
Personnel Administration, October 1945, pp. 14-21.
Describes and analyzes the Commission's program from 1942 to 1945.
Glaser, Comstock, "Administrative Procedure."
The House of Commons, Select Committee on Estimates 1946-47, "Organization
and Methods and Its Effect on the Staffing of Government Departments."
Kluttz, Jerry, "Public Relations in a Personnel Office," Personnel Administration,
January 1944, p. 20.
Belief that undetermined number of people could be eliminated from
Government is based in part on poor public relations.
Kluttz, Jerry, "Where Size Blunts Efficiency," Nation's Business, March 1943,
pp. 24-25, 72-73.
There are too many Federal employees. Work would be better done if
there were fewer. Discusses causes of idleness.
Kolz, Arnold, and Arthur Tiemann, "What is a Fair Day's Work?" Personnel
Administration, September 1949, pp. 34-38.
The use of staffing standards to determine size of staff.
Morris, Lt. T. D., "Personnel Utilization Audits in the Navy Department,"
Personnel Administration, June 1944, pp. 1-5, 20.
Describes scope, objectives, administration, and survey techniques of
Navy program for correct and economical use of personnel.
Morrow, Hugh, "Can We Reform Our Bureaucrats?" Saturday Evening Post,
May 10, 1947, pp. 21-22, 116-119.
Includes references to "empire building" and other questionable personnel
practices.
Nigro, Felix A., "Some Industry Misconceptions About Government," Personnel
Admin,istration, January 1948, pp. 15-18.
One misconception is that all government employees are inefficient and
extravagant.
Pollock, Ross, "Can an Aggressive Placement Program be Conducted Under the
Federal Civil Service System?", Personnel Administration, July 1948, pp. 9-12.
The development and operation of an employee utilization program.
Pollock, Ross, "Surveying Personnel Practices to Save Manpower," Personnel
Administration, February 1944, pp. 9-12.
The operation and merits of personnel utilization surveys.
Presidential Executive Order 10072.
Ramspeck, Robert, "Civil Service Wonderland," Collier's, May 15, 1943, pp. 26,
60.
Many Government workers have nothing to do. Efficiency is hindered by
some Civil Service regulations.
211
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2: 2 EMPLOYEE UTILIZATION IN THE EXECUTIVE DEPA RTMENTS
R( organization Plan No. 26 of 1950, Public Law 656, Eighty-first Congress, second
;ession, and Budget and Accounting Procedures Act of 1950, Public Law 784,
Eighty-first Congress, second session.
It( senberg, Herbert H., "Work Measurement in the Personnel Office," Personnel
4dministration, September 1947, pp. 17-24, 50.
Attempts to set up staffing standards to determine number of persons
required to perform personnel functions.
U. S. Civil Service Commission, Better Use of Personnel, Form 4462, February
.944, p. 14.
An outline and check list for evaluating agency utilization programs.
U. S. Civil Service Commission, Monthly Report of Employment, Executive Branch
if the Federal Government.
Statistical Report, by agency.
U. S. Congress. House. Committee on Expenditures in the Executive Depart-
nents. Subcommittee on Publicity and Propaganda. Final Report House
leport No. 2474, December 31, 1948.
This is the twenty-third intermediate report of the Subcommittee. Refers
to oNerstaffing of public-relations offices. Other Government officials are
involved in unwarranted propaganda activities.
U. S. Congress. House. Committee on Post Office and Civil Service. Study of
?ersonr el Offices in the Executive Departments and Agencies of the Govern-
nent, Eightieth Congress, Report No. 1593, March 22, 1948.
U. S. Congress. Joint Committee on Reduction of Nonessential Federal Expendi-
ures. Additional Report on Federal Personnel. Issued at irregular intervals as
en ate Documents as follows:
Seventy-eighth Congress:
Senate Document No. 66, June 18, 1943
Senate Document No. 131, November 22, 1943
Seventy-ninth Congress:
Senate Document No. 177, April 30, 1946
Senate Document No. 262, August 2, 1946
Eightieth Congress: Senate Document No. 57, May 29, 1917.
Since September 1943 the Committee has issued a monthly report on
Federal Employment. See Congressional Record indexes under heading
"Committee on Reduction * * *" for texts of reports.
U. S. Congress. Joint Committee on Reduction of Nonessential Federal Expendi-
ures. Hearings, Seventy-seventh and Seventy-eighth Gong] esses, 1941-43, 8
)arts, pp. 2510.
Ex;;ensive hearings on operations of Government public works and leading
agencies, as well as CCC, NYA, OCD, Office of Government Reports, ship-
yards, Bureau of the Budget, Department of Justice. Includes personnel
ref erc nces.
U. S. Congress. Joint Committee on Reduction of Nonessential Federal Expendi-
tures Report on Fistory and Trends of Federal Civilian Personnel, 1918-48,
7ongressional Record, vol. 94, part 7, June 19, 1948, pp. 9035-9043.
U. S. Congress. House. Treasury Department hearing before the subcommittee
,f the Committee; on Appropriations for 1951, Eighty-first ,:.-)ongress, second
ession, part 1, pp. 232-235.
U. S. Congress. Senate. Committee on Civil Service. Eightieth Congress,
irst session. Hearings on Officers and Employees of the Federal Government
S. Res. 41] 1947, 6 parts, pp. 1004.
Study of overstaffing in Departments of Interior, Jus,ice, Post Office,
Navy, Army, a ad at Naval Air Station, Patuxenb, Maryland, and Panama
Canal; Views of veterans and employees' organizations included.
U. S. Congress. Se-mate. Committee on Expenditures in the Executive Depart-
nents, Nomenclature in the Executive Branch, Eightieth Congress, first session,
leport No. 243.
U. S. Department of Agriculture, A Guide to Better ManagemeLt, May 1944, p.
.06.
Five basic steps to be observed in program for better utilization of per-
sonnel.
U. S. Department of the Interior. Official Organization Handbook.
U. S. War Department, Army Service Forces, Report on the Program for the More
Tffective Utilization of Personnel, 1943, p. 62.
Exoeriences c;f ASE in planning and executing program.
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INDEX
AREAS OF UNSATISFACTORY STAFFING
Page
Federal Security Agency , 20
Office of Education , 20
Bureau of Old-Age and Survivors Insurar 0 , 20
Field service offices 20
Department of the Interior 116
Office of Territories 116
Geological Survey 117
Department of the Treasury 75
United States Coast Guard 75
Field service 76
Bureau of Engraving and Printing 77
FISCAL MANAGEMENT
Federal Security Agency 10
Organization and staffing_ 10
Personnel engaged in fiscal management activities 11
Budget 11
Accounting 12
Audits 12
Pay and leave 12
Relationships 12
General conditions 12
Recommendations 22
Fiscal accounting in the executive departments and agencies_ 78-92
General Services Administration -, 132
Personnel engaged in fiscal management activities 133
Department of the Interior , 111
Budget , 112
Accounting 112
Auditing 113
Payroll, leave, and retirement 113
Number of employees engaged in and cost of fiscal management func-
tions ? 114
Recommendations ,, 118
Department of the Treasury 67
Organization and operations 68
Administrative accounting 68
Auditing , 69
Payroll, leave, and retirement , 69
Personnel engaged in fiscal management activities 69
Relationships , 70
ACCOlinting improvements 70
General conditions 70
Recommendations 93
Summary report 153
Employees engaged in fiscal management activities 153
Number of workers, employees per worker, and per capita cost of pay-
rollin g activities153
.. _
213
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2L4 INDEX
GENERAL ADMINISTRATIVE SER VICES
Page
Federal Security Agency 13
Procurement 14
Average number of employees and relative cost of purchasing opera-
tions 15
Supply rooms _ 15
Proc trement in the Public Health Service 16
Recommendations 22
G neral Services Administration 133
Procurement_ 133
Procurement operations in Washington metropolban area 134
Government-wide procurement 134
Field purchase order-invoice 135
Recommendations 136
D:partment of the Interior 114
Procurement_ 114
Examination of purchase orders 115
Average number of employees and relative cost cf purchasing opera-
tions 115
Reco mmendations 118
D partmcnt of the 'Treasury 70
Procurement 71
Average number of employees and relative cost of purchasing opera-
tio is 71
Recommendations 93
Su nmary report 153
Average number of employees and relative cost of purchasng opera-
tions 154
GEWERAL CONDITIONS AFFECTING OVERSTAFFIN 0
Su nmary report 155
Field organization 155
Leave 155
Employee absenteeism 155
Employee turn-over 155
Rate of turn-over by classification grade 156
Pay rates 156
Average annual salary employees engaged in personnel, procurement,
fiscal, and management-improvement activities 156
Average salaries for workers 157
GENERAL FINDINGS
Fe leral Sc curity Agency 2
Ge ieral Services Administration 129
Integration of staff functions 130
Internal relationships_ 130
De 3artmeat of the I aterior 108
De 3artment of Labor 50
De Dartment of the Treasury 62
Su; nmary report 144
The utilization of personnel in executive agencies_ 144
The role of management in employee utilization_ 145
Some causes and effects of overstaffing 146-148
AGENCY COMMENTS
Fec eral Security Agency 151, 165
Ge teral Services Administration 157, 202
De )artment of the Interior 157, 203
De iartment of Labor 55, 157, 199
De. )artment of the Treasury 157, 167
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INDEX 215
LABOR DEPARTMENT, PRICES AND COST-OF-LIVING DIVISION
Page
Efficiency ratings .. 53
Progress reports - 53
Employee-opinion survey 53
Hearings - 55
Conclusions 55
MANAGEMENT IMPROVEMENT
Federal Security Agency 16
Personnel engaged in management improvement 18
Recommendations 23
General Services Administration 135
Estimated performance cost - 135
Department of the Interior - 115
Personnel engaged in management improvement 116
Recommendations 119
Department of the Treasury - 72
Work simplification program 73
Work simplification summary 74
Recommendations a 93
Summary report 154
ORGANIZATION AND FUNCTIONS
Federal Security Agency .. 1
Organization chart a 3
Summary statement of functions 24
General Services Administration a 127
Organization chart _. 128
Summary statement of functions 137
Department of the Interior 105
Organization chart 107
Summary statement of functions 119
Department of Labor, Prices and Cost of Living Division 50
Line of common actions, Prices and Cost of Living Division 54
Organization chart, Prices and Cost of Living Division 51
Organization chart, Statistical Services Section 52
Summary statement of functions 57
Department of the Treasury 59
Organization chart 60
Summary statement of functions 95
PERSONNEL MANAGEMENT
Federal Security Agency _ ._ 4
Rate of turn-over 5
Tabulation of personnel activities 26
Ratio of personnel employees to total employees L 6
Comparison of total employees and ratio of personnel employees to
total employment 7
Cost data 8
Costs of personnel services and average annual salary 8
Comparative total and average salary of personnel employees 8
Manuals 9
Division of Commissioned Officers 9
Recommendations , ? 22
General Services Administration 131
Ratio of personnel employees to total employees 131
Costs of personnel services and average annual salary 132
Tabulation of personnel activities 132
Decentralization 132
Employee turn-over 132
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216 INDEX
Page
D( partment of the Interior_
109
Staffing ratios
109
Ratio of person lel employees to total employment
110
Comparison of total employees and ratio of personnel employees to
tot al employment
110
Cost data
110
Costs of personnel services and average annual salary_
111
Comparative total and average salary of personnel employees
111
Employee turn-over
111
Reco-nmendations_
118
Di partmcnt of the Treasury
64
Ratio of personnel employees to total employees
65
Comparison of total employees and ratio of personnel employees to
total employment_
66
Cost data
66
.Cost of personnel services and average annual salary
66
Comparative total and average salary of personnel employees_
67
Employee turn-over
67
Tabulation of personnel activities
67
Decentralizatio q
67
Recommendations
93
St mmary report
148
Average cost of personnel services per employee_
148
Ratio of personnel workers to total employees_
149
Number of employees, accessions, recruitment interviews, and com-
parison of certain personnel functions
149
Distribution of staffing requirements for personne, services_
150
Number of persons serviced by the headquarters' personnel offices_ __
150
Number and GS grade of employees serviced b3. headquarters' per-
sonnel offices
151
Accountability for loans of personnel between agencies
15.2
RECOMMENDATIONS
Fiscal management
Federal Security Agency
22
Department of the Interior
93
Treasury Department
118
G meral:
Federal Security Agency
21
General Services Administration
135
Department of the Interior
117
Department of Labor
55
Treasury Department
92
G neral Administrative Services:
Federal Security Agency_
22
Department of the Interior
118
Treasury Department
93
IV anagement improvement:
Federal Security Agency
23
Department of the Interior
119
Treasury Department
93
P rsonnel management:
Federal Security Agency
22
Department of the Interior
118
Treasury Department
93
S immary report_
158
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1
41 4 140
!t
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CONTENTS
.. Page
The Per Sceiirity Agency 1-48
'the e Gq0ersa1,Services Administration_
The DkePartment of Labor, the Prices and Cost of Living Divisiot
TIDeRartment of the Interior 124:15482
105-126
V)Ie XtepaArtmentof the Treasury t - 59-104
1,1mmArLrepprt 143? 210
211
iblioAraphy
4 . t
217
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82D CONGRESS SENATE { COMMITTEE
1st Session J REPT. No.11
Fite
?
ORGANIZATION OF FEDERAL EXECUTIVE DEPARTMENTS
AND AGENCIES
MARCH 3, 1951.?Ordered to be printed
Mr. MCCLELLAN, from the Committee on Expenditures in the Execu-
tive Departments, submitted the following
REPORT
The Committee on Expenditures in the Executive Departments
submits herewith a chart 1 outlining the organization of Federal
executive departments and agencies, with personnel assignments to
each operating unit down to the division level, as of January 1, 1951.
Similar charts have been prepared indicating organizational 'break-
down and employee assignments at the end of each Federal fiscal year
as of July 1, and at the end of each calendar year on January 1, be-
ginning January 1, 1947.
REORGANIZATIONS EFFECTUATED DURING 1949 AND 1950
The Commission on Organization. of the Executive Branch of the
Government, better known as the Hoover Commission, submitted, its
reports to the Congress, pursuant to Public Law 162 of the Eightieth
Congress, early in the first session of the Eighty-first Congress, in-
corporating approximately 300 Specific recommendations for re-
organizations in the executive branch. It was estimated that 114 of
these recommendations could be effectuated by administrative pro-
cesses and required no legislative action. With a view to implement-
ing the remaining recommendations, a total of approximately .350
separate bills and resolutions were introduced during the Eighty-first
Congress, of which 70 were enacted into law. The President sub-
mitted in addition thereto a total of 35 reorganization plans, under
provisions of the Reorganization Act of 1949, 27 becoming effective.
These actions have resulted in numerous reorganizations within a
majority of the departments and agencies of the executive branch of the
Government, and are estimated to have effectuated 50 percent of. the
recommendations of the Hoover Commission. All such reorganiza-
I For sale at Superintendent of Documents, Government Printing Office, Washington 25, D. C.?Prieo
20 cents.
79805 51 1.
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lion changes, including laws, reorganization plans, and administrative
Letions, are reflected on the chart insofar as they have been carried
into effect as of January 1, 1951. Other reorganiza Lions authorized
I T Congress are still in the study or formative stage, and further
Lotions taken for the implementation of the s arious acts and reorgan-
ization plans will be reflected in future charts as released by the
( ommietee.
NOMENCLATURE
? The chart reflects continued improvement it. nomenclature
tandards, in accordance with recommendatons made by this corn-
aittee in a special report to the Senate in the Eightieth Congress
S. Rept. No. 213) designed to establish uniform organizations in all
( perating branches of the Federal Government. The Hoover Commis-
ion endorsed these recommendations in its report on General Manage-
lent of the Executive Branch, and many of tho agencies have generally
conformed to the suggested program in effocting changes in their
rganiz ational structure.
During the Eighty-first Congress, reorganization plans or acts were
pproved vesting full reorganization authoriiT and functions in the
cads of certain agencies and in the Secretaries of all departments of
Cabinet rank, with the exception of the Department of Agriculture.
'? `he effect has been to eliminate statutory restrictions which have
I eretofore prevented the Secretaries from changing the structure of
I he various components within the respective departments, and pro-
1 ides adequate authority to permit of further conformity to the
omenclature formula proposed by this committee.
The general nomenclature pattern suggested was as follows: D epart-
I lents (agencies, commissions, administrations, or corporations);
services; bureaus; divisions; sections; and units. The latter two
omponents are not generally reflected in detail on the accompanying
(hart, the organization structure being limited in most instances to
aclude only those through the division level. Some agencies have
ound it desirab..e or necessary, however, to report organization struc-
tures below the divis'on level, in order to clearly indicate existing com-
l. onents and present operations. These are iisted in the chart sum-
aary as miscellaneous and functional operations. An additional top
dministrative control, usually designated as "Office," is generally
I ollowed throughout all agencies. This component is utilized in a
( epartment or agency or any of the lower echelons down to the divi-
s ion level, when reflecting an intraorganizational central control
common to lower components.
To illustrate the continuing need for further changes to reflect ac-
urately the relative status and importance of components, the Depart-
aent of the Treasury can be cited as an agency requiring revisions in
crganizational structure. Of a total of 118 components, 36 of them
re functional or outside the recommended nomenclature structure.
Under that Department, the Bureau of Accounts, the Bureau of
Customs, the Bureau of the Public Debt, and the Bureau of Engraving
t nd Printing follow generally the recommendations of the committee,
iThile the Bureau of Internal Revenue continues to use a unit designa-
tion for three of its components, covering approximately 50,000
( mploy ees. The Bureau includes an Accounts and Collections Unit
( mploying 33,910 persons, or more employees than are reported by
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the Departments of State, Justice, or Labor, and its Income Tax
and Alcohol Tax Units are larger and have more employees than the
Bureau of Accounts and the Bureau of the Public Debt., The first
two units are larger in personnel than the Bureau of Customs, the
Bureau of Engraving and Printing, and the Coast Guard, and far
larger in personnel assignments than the average division in other
departments. Conversely, the United States Savings Bonds Division,
and the Office of the Treasurer of the United States, are larger than
the Bureau of Narcotics, and the Office of the Treasurer has more
personnel than the Bureau of the Mint. Since these components are
of sufficient importance and their specialized responsibilities com-
parable to the normal bureau activity, uniform nomenclature would
seem to indicate that the Office of the Treasurer should carry the
normal bureau designation, with the units under the Bureau of
Internal Revenue designated as divisions, and the Savings Bond
Division absorbed into another bureau as a division thereof or elevated
to bureau status with its functional components consolidated into
divisions.
Some of the departments and agencies have been in consultation
with the staff of the committee whenever organizational changes
were to be effected, in order that general conformance to the nomen-
clature standards recommended by the committee and approved by
the Hoover Commission may be accelerated. Other committees of
the Congress have pointed out in their reports from time to time
areas in which there could be improvement in line with these recom-
mendations. In conformity with this policy, the committee will
continue to urge the departments and agencies to establish organiza-
tional structures in a manner calculated to eliminate functional
designations, and to promote uniformity of nomenclature for all
major and constituent components throughout the Federal Govern-
ment.
COMPONENTS
All departments and agencies reported a total of 1,875 operating
components to which personnel assignments were made on January 1,
1951. These figures include only the central office administrative
breakdown, with field installations counted as only one component,
regardless of the number of employees engaged in field work. The
number of field units is included in brackets after each such desig-
nation, where reported. The present total of 1,875 compares with
1,880 components included on July 1, 1950, and 1,816 incorporated
in the committee's report of September 1, 1948, on which the Hoover
Commission's studies were based.
Many of the establishments continue to adhere to functional desig-
nations rather than to uniform nomenclature, and a number of them
report components of minor importance, rather than conforming to
the committee's request to include only those components of a division
level and above.
Deviations from the prescribed formula are particularly noticeable
in the following departments: The Department of the Army lists 29
components of standard nomenclature and 40 miscellaneous and
functional designations. The Department of the Air Force lists only
19 conforming to standards prescribed, with 59 functional desig-
nations. The Navy has 80 of 143 conforming to the general formula,
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ORGANIZATION OF EXECUTIVE DEPARTMENTS AND AGENCIES
but one of its variations is a supply "department" in the Marine Corps.
The Department of the Treasury reported 36 miscellaneous and f tme-
tional components out of a total of 118, but, as pointed out above,
internal variations show a wider deviation than these statistics
indicate. On the other hand, the Department of State reported only
11 components out of a total of 103 outside the des::gnated category.
A breakdown of its structure, however, shows an abuse of the use of
"Office," which appears 62 times, and only 6 "Bureaus" arid 20
"Divisions." In a majority of instances one of these designations
would probably be more descriptive and preferable. The Depart-
ments of Justice, Labor, Commerce, Agriculture, Post Office, and
Interior have made some progress in eliminating miscellaneous and
functional designations outside the prescribed categories which re-
ported in the following ratios: Justice, 14 of 45 total; Labor, 4 of 90;
Commerce, 26 of 163; Agriculture, 18 of 117; Post Office, 14 of 56;
and Interior, 19 out of a total of 139 components.
The Veterans' Administration has resorted. to the use of "Services"
no less than 57 times, instead of the normal "Division" designation,
thus going counter to the Hoover Commission's specific.recommenda-
tion fiat "Services" should be used to group large related and co-
ordinated activities of bureaus or other high echelon groups. The
independent agencies as a whole, however, show a somewhat closer
3onformity with the proposed formula, with a total of 113 miscellane-
)us and functional groupings out of a total of 731 (15.5 percent), as
1,ompared to the executive departments, with 297 out of a total of
1,126 (26.4 percent) reported. Many of these designations are neces-
;ary, however, in both the departments and agencies, to clearly desig-
late certain activities, and the figures are cited merely for comparison
mrposes.
EMPLOYEES
The total number of employees in the executive branch of the Gov-
;rnment has increased by 219,494 during Cie past 6 months, from
1,945,868, the lowest postwar employment level on July 1, 1950, to
,165,162 on January 1, 1951. This compares with the postwar peak
)f 2,202,625 paid employees reported on January 1, 1947, and the
:;revions low of 1,969,899 on January 1, 1948.2 These figures do not
nclude employees serving without compensation, of which there were
:cported totals of 42,528 on July 1, 1950, and 86,132 on January 1,
.951. Excluded also are 38,871 uncompensated employees of the
;elective Service System, serving as local board members, advisers to
-egistrants, etc. The largest increase in paid personnel during the
)ci,st 6 months was reflected in the defense agencies. In addition a
tumbe r of new defense mobilization agencies and emergency depart-
mental componmts have been established during that period, which
- sill continue to show increased personnel assignments as the respec-
t ive programs advance.
The over-all increases during the latter half of 1950 are set forth
linder the varions departments and agencies as follows:
Department of Defense.?An increase of 235,894 employees was -
f eported in the Department during the period, from 751,716 to 987,610,
uch increases being allocated as follows: Office of the Secretary of
I For details as to personnel assignments for each period covered in his and prorious reports, by depart-
e Lents and agencies, see appendix A of this report.
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Defense, 231; Department of the Air Force, 31,904; Department of
the Army, 130,371; and the Department of the Navy, 73,388. These
increases are directly attributable to the enlarged responsibilities of
the departments in Korea and the present national emergency.
Department of Agriculture.?Total paid employees reported by the
Department decreased from 84,007 to 69,479 during the period July 1
through December 31, 1950. This shows a departmental net decline
of 14,528, of which 10,592 occurred in the Forest Service. Employ-
ment in that agency is highest during the summer because of the
seasonal manpower needs for pest control, fire control, and construc-
tion work on national forest lands. Other areas of recurring seasonal
decline occur in the white pine blister rust control work carried on by
the Bureau of Entomology and Plant Quarantine, and in the field
activities of the Soil Conservation Service. A reduction in Bureau of
Animal Industry personnel resulted from a change in the operations
of the foot-and-mouth disease program in Mexico due to the discon-
tinuance of a full-scale vaccination program. The total reported
herein compares with 70,986 for January 1, 1950, a decrease of 1,507
during the last calendar year.
Department of Commerce.?There was a decrease 61 3,528 employees
in the Department during the half-yearly period. The largest reduc-
tion came in the Bureau of the Census, now tapering off from the
high reached for the Seventeenth Decennial Census. There were
seasonal decreases in the Civil Aeronautics Administration, Coast and
Geodetic Survey, and Bureau of Public Roads, all of which engage in
substantial out-of-doors activity. The Bureau of Foreign and Do-
mestic Commerce, in spite of a substantial increase in its field service,
had an over-all reduction due to transfers to the National Production
Authority.
The total of 56,799 reported as of January 1, 1951, reflects an in-
crease of 10,593 over the corresponding period in 1950. Included in
the over-all increase are a total of 4,551 employees transferred from
the United States Maritime Commission to the Department under
Reorganization Plan No. 21 of 1950. The new National Production
Authority, created since the last chart was issued, reported a total of
789 new employees. The total included 5,808 part-time and inter-
mittent employees who worked a total of 1,267 man-months during
the month of December 1950, but does not include 9,105 employees
serving without compensation and who are not in the so-called expert
consultant category, 285 maritime seamen, and 9 employees of the
Government Patents Board, who were reported as being under the
jurisdiction of the Department for housekeeping purposes only.
Department of the Interior.?Personnel assignments in the Depart-
ment decreased by 6,379 from 65,573 (excluding 2,208 positions with-
out compensation) on July 1, 1950, to 59,194 (excluding 2,416 positions
without compensation) as of January 1, 1951. This compared with a
total of 54,383 in a pay status as of January 1, 1950, or an increase
of 4,811 during the last year.
These totals are influenced by two opposing employment trends:
decreases occurred in some agencies due to seasonal factors, and in-
creases occurred in others because of new defense responsibilities. In
the case of the former the decreases range from about 2,500 for the
National Park Service and about 1,800 in the case of the Bureau of
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I; OR GANIZATI ON OF EXECUTIVE DEPARTMENTS AND AGENCIES
Aeclantation down to a few hundred each for the Bureau of Land
jilanagement, the Geological Survey, and Territorial activities.
Opposing this trend are increases due to the setting up of-five new
( lefense agencies and moderate increases in the Bureau of Mines and
he Bonneville Power Administration. The latter shows the largest
i ncrease, amounting to less than 200 positions. The increases are due
10 the economic mobilization program responsibilities of these agencies.
] t is expected tint the defense administrations will show substantial
i aereases by the time the next report is due.
Post Office Department.?The Post Office Department reported a
otal of 495,278 employees, a decrease of 1,848 employees during the
list 6 months of 1950. This has resulted in a net over-all decrease in
I he Department during the past calendar year of 40,467, from the
IDstwar high of 535,745 on January 1, 1950, resulting primarily from a
eduction in the Bureau of Post Office Operations by 37,737, and in the
Bureau of Facilities by 4,041. Contributing to the decrease was the
ransfer of 4,178 employees to GSA under Reorganization Plan No. 18
f 195C, which was offset to some extent by slight increases in other
perations of the Department.
Department of State.?The total personnel assignments represent an
acrease of 653 persons in the period from July 1, 195), to January 1,
1951. These increases are chiefly attributable to expanded operations
i a the international information and education program, the adminis-
tration of the German and Austrian occupation, and the activities
i 'volved in the mutual defense assistance program..
Department of the Treasury.?The Department of the Treasury
sport indicates a decrease of 932 during tht-i, last 6 months, 456 of
rhich were in the Bureau of Internal Revenue. The present depart-
lento]. employment represents a net increase of 1,331 over January 1,
1950, the Bureau of Internal Revenue increasing its personnel over
that period by 2,027 employees, while the Bureau of the Public Debt
nd the Bureau of Engraving and Printing reported reductions of
( 98 and 433, respectively.
Department of Justice.?The Department reported; an increase of
1,066 employees durins,
g the 6-month period, of which 729 were as-
s ned to the Federal Bureau of Investigation, its field service expand-
i lg from 6,222 on July 1, 1950, to 6,999 on January 1, 1951. The
mmigration and Naturalization Service and the Bureau of Prisons
cis() increased total employees during the period by 251 and 168,
r.spectIvely.
Commission on Renovation of the Executive Mansion.--During the
ext 3 months a further small temporary increase in personnel of the
Commission will be required for a period estimated at from 6 to 8
ionths for the purpose of carrying out provisions of Public Law 377,
l;ighty-first Congress, in respect to the distribution of surplus material
f 7om the White House.
Economic Cooperation Administration.?The total employees of the
I:CA, including 2,209 foreign locals, or aliens, appointed overseas and
39 co:asultants employed on a part-time basis as advisers, is now
-,009, as compared to 4,482 as of July 1, 1950, an increase of 527 during
the past 6 months and approximately 1,000 over the total reported a
3 ear ago.
Federal Security Agency.?The FSA reported an over-all increase of
1,192 employees during the last 6 months, from 34,736 to 35,928, which
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ORGANIZATION OF EXECUTIVE DEPARTMENTS AND AGENCIES ./
represents a net increase of 565 over January 1, 1950, in addition to.
approximately 450 employees transferred to the Department of Labor
under Reorganization Plan No. 19, on May 24, 1950. The Bureau:
of Public Assistance anticipates an increase of 36 positions during the
current fiscal year, and the Bureau of Old-Age and Survivors Insurance'
an increase of 2,443 positions. These increases are due to the social
security amendments, Public Law 734, approved August 28, 1950.:
The Agency reports that it may also have to develop units to perform
its duties as a claimant agency of the National Production Authority
in the field of health, welfare, and education.
General Services Administration.?The GSA now reports a total of
26,875 employees as compared to 25,930 on July 1, 1950, and 22,806.
on January 1, 1950, or an increase, due to transfers and other accel-
erated activities, of 4,069 since its creation. This was due to the
transfer of 4,178 employees from the Post Office Department under
Reorganization Plan No. 18, of 1950 involving building and space
management functions. The net increase in the total GSA employ-
ment since July 1, 1950, was 945, resulting largely from the expanding
defense program workload. During the period dating from July 1,
1950, there was an increase of 11,107 employees in the regional offices,
principally due to the transfer of operating activities and personnel
from the central office to the 'Washington regional office.
Increased requirements for personnel may develop as a result of (1)
anticipated further expansion and acceleration of activities relating to
the procurement, storage transportation, and disposition of strategic
and critical materials; (2; new and additional responsibilities assigned
the Administration in connection with the Defense Production Act
of 1950 and Executive Orders 10161 and 10200, and National Produc-
tion Authority amendment to Rubber Order M-2 dated December 29,
1950; and (3) the possibility of expanded and accelerated activities
relating to equipping and managing industrial plants and facilities in
the national industrial reserve. The extent of the increased require-
ments for personnel will depend upon future developments in the na-
tional defense effort and the assignment of additional responsibilities
and workload to General Services Administration.
Housing and Home Finance Agency.?The Housing and Home Fi-
nance Agency reported a net increase of 634 employees, from 13,481
to 14,115, since the last report, and 2,104 over January 1, 1950. This
included 923 employees transferred from. RFC under Reorganization
Plans Nos. 22 and 23 of 1950, effective September 7, 1950. The re-
duction in the Home Loan Bank Board resulted primarily from con-
tinued success in selling and transferring the mortgages in the Home
Owners' Loan Corporation portfolio. Complete liquidation of the
Corporation's activities, except for minor clean-up problems, is sched-
uled in the next 6 months.
The Agency reported that some increase had occurred in Federal
Housing Administration field personnel as a result of the great volume
of home building and demand for mortgage insurance, especially dur-
ing the second half of the calendar year 1950 prior to the imposition
of credit controls. There was a decrease of 289 in the total number of
Public Housing Administration employees, chiefly occasioned by the
transfer of war housing projects under sales contracts included prior
to the outbreak in Korea; since the defense emergency, most disposi-
tion activity has been suspended pending determination as to the
possible defense needs for the properties involved.
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t ORGANIZATION OF EXECUTIVE DEPARTME NTS AND AGENCIES
Naticnal Advisory Committee for Aeronautics.?The NACA reported
7,139 employees, or 158 less than on July 1, 950. This represented
s ight decreases in each of the field installations.
Philippine War Damage Commission.--Th3 Commission reported
o aly 71 employees as of January 1, 1951, compared tc, 479 on July 1,
1 )50, and a peak of 1,042 on January 1, 1950. The Commission is
s theduled to expire on or before April 30, 1951.
Railroad Retirement Board.?The Board reported a decrease of 159
e nployees during the past 6 months. This reduction in personnel
a3signed to the various organization units of the Board since the last
r port occurred principally because of the more stable employment
s. tuation on the railroads, with a resultant substantial shrinkage in
t ie number of claims presented for unempoyment benefits. The
I oard also indicated that, because of this factor, a further gross
r duction is planned of approximately 177 in the personnel assigned
) the. regions who are engaged in the processing of claims with an
o Tsetting increase of 58 in the personnel in the various field offices,
t, le latter increaF.,e to take care of the anticipat3d work demands which
a ?e now commencing to develop and are expected to expand in con-
n3ction with the functions delegated to th3 Railroad Retirement
I oard of recruiting manpower for the railroads as a part of the
g meral manpower mobilization program. This net reduction of 119
ill the regions will be effected during the next 3 months. This reduc-
t on, however, will be partially offset by an increase in the Bureau of
Wage and Service Records of about 40 employees for a part of the
II 3xt 6 months because of the regularly recurring year-end processing
& the reports of service and compensation for the preceding calendar
y3ar.
Reconstruction Finance Corporation.?The RFC reported a change
ht personnel from 4,620 on July 1, 1950, to 3,452 on January 1, 1951,
a reduction of 1,168 employees. This was due to changes reflected
o a the accompanying chart, which involved the transfer of 923 em-
p loyees to the Housing and Home Finance Agency under Reorgani-
z Ltion Plans Nos. 22 and 23 on September 7, 1950, and an over-all
f trther reduction of 245 within the Corporation.
The Corporation also reported that the esimated personnel as of
July 1, 1951, is approximately 500 employees less than the number
rtflected in its budget request to the Congress, representing its most
r tcent estimate, and includes economies which were not anticipated
a t the time the original budget estimates were prepared. The Chair-
man of RFC pointed out that estimated employment at July 1, 1951,
does not provide for personnel to handle loans ma de pursuant to
a uthority provided in the Defense Production Act of 1950, and re-
p orted that the Corporation is just beginning to make these loans
a rid has not yet had sufficient experience to determine the number of
C np1oy3es which will be required to perform this additional work.
Selective Service System.?The agency reports a net increase of
9,045 employees, from 3,715 to 7,760, during the last 6 months, due
ta the expansion of its activities under the defense mobilization
rograra and raising paid seasonal personnel assignments. Included
i i the total are 294 commissioned officers of the United States Army,
3Tavy, Marines, and Air Force, on a reimbursable basis and 1 Air Force
c ffieer on nonreimbursable basis. Also inclucbd in the total are 1,409
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part-time employees. Not included are 38,871 uncompensated em-
ployees serving as local board members, appeal board members,
advisers to registrants, etc.
Tennessee Valley Authority.?The TVA reported a net increase of
1,238 employees during the last 6 months, from 13,923 on July 1, 1950,
to 15,161 on January 1, 1951., due to increases in steam plant, trans-
mission line, and substation construction. The over-all increase over
the total reporte,d on January 1, 1950, is 2,297.
Veterans' Administration.--The VA reported a total of 187,464
employees as of January 1, 1951 (excluding 27,862 WOC's), compared
to 188,392 (excluding 22,781 WOC's) in employment status on July
1, 1950, a reduction of 928 over the period. The field services were
reduced from 174,494 to 172,945, or a net of 1,549, but central office
activities increased by 621 employees. Central offices reflecting
reduced personnel included: Claims, 41; Construction, Supply, and
Real Estate, 481; and Finance, 65; while increases were reported in
the Offices of Administrative Services, 89; and Insurance, 261.
The following departments and agencies reported increases in excess
of 100 employees since the last report: Executive Office of the Presi-
dent, 178; Department of Labor, 267; American Battle Monuments
Commission, 164; Civil Service Commission, 180; and the Panama
Canal, 218. Agencies created during the last 6 months reported the
following personnel assignments on January 1, 1951: Economic Sta-
bilization Agency, 266; Federal Civil Defense Administration, 99;
Defense Transport Administration, 76; Subversive Activities Control
Board, 19; Veterans' Education Appeals Board, 12; and the Office of
Defense Mobilization, 5.
ORGANIZATION CHANGES SINCE JULY 1, 1950
During the past 6 months there have been numerous organizational
changes in the Federal structure, due largely to the national emergency
declared by the President on. December 16, 1950. Some of these
actions have been initiated and effectuated prior to that date under
basie legislative authority granted to the executive branch by the
Congress. The following is a composite list of the major emergency
organizations created under such legislation, when and how effectua-
ted, and the head and present location of such agencies.
79805-51-2
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Pmoolvt.i.mo n rkmnrt.11.i.re, bin.. a.
CREATED BETWEEN JULY 1, 1950, AND JAN. 1, 1951
Name
Organizational location Created by?
Current head
Address and phone
1. Economic Stabilization Agency
2. Defense Transport Administration
3. Subversive Activities Control Board
4. Office of Defense Manpower
5. National Production Authority
6. Defense Minerals Administration
7. Defense Power Administration
8. Defense Solid Fuels Administration
9. Defense Fisheries Administration
10. Petroleum Administration for De-
fense.
11. Office of Requirements and Alloca-
tions
12. Office of Materials and Facilities
13. Administrator's program staff
14. Price policy staff
16. Federal Civil Defense Administration
(see below also).2
Independent
do
do
Department of Labor
Department of Commerce
Department of the In-
terior.
do
do
do
do
}Department of Agricul-
ture, Production and
Marketing Administra-
tion
Cfacs thc
President.
do
Executive Order 10161, Sept. 9,
1910.
Notice;of ICC Commissioner, Oct.
4. 1950.
Public Law 831, 81st Cong., Sept.
22. 1950.
Executive Order 10161, Sept. 9,
1950.
Departmental Order 123, Sept. 28,
1955, amended
Department of the Interior Order
No. 2605, Dec. 4, 1950.
do
do
do
Department of Interior Order No.
2591, Oct. 3, 1950.
MA Instruction 101-4, Sept. 18,
1950.
PMA Instruction 101-5, Sept. 18,
1950.
PMA Instruction 101-6, Sept. 18,
1950.
PMA Instruction 101-7, Sept. 18,
1950.
E:zccutive Ords: 15103, Dc.c.
1950.
Executive Order 10186, Dec. 1,
1950.
Eric A. Johnston
James K. Knudson
Seth W. Richardson 1
Maurice I. Tobin
Manly Fleischmann
James Boyd
Clifford B. McManus
Charles W. Connor
Albert M. Day
Oscar L. Chapman
F. M. Rhodes
L. B. Taylor
H. I, Dunkelberger
J. M. Thompson
chaaLcs r..
Millard F. Caldwell, Jr_
Temporary Bldg. E, 4th St. and Adams
Drive SW. ST. 4200 (Code 135).
ICC Bldg., 12th and Constitution Ave.
NANW 74P41 Marie 766)
Lafayette Bldg., 811 Vermont Ave. NW.
EX. 3151 (Code 1253).
Department of Labor Bldg.. 14th and
Constitution Ave. NW. EX. 2420 (Code
177).
Commerce Department Bldg. ST. 9200
(Code 164).
New Interior Bldg. RE. 1820 (Code 181).
Do.
Do.
Do.
Do.
Department of Agriculture Bldg., 14th and
Independence Ave. SW. RE. 4142
(Code 161).
Exeeuti e Offl,,s Bldg. E .x. .530ifi (Gude
189).
Rochambeau Bldg., 815 Connecticut Ave.
NW. EX. 3300 (Code 189).
('.R.:F. .4 TPA-) A PT .V.R. .1 A N
Federal Civil Defense Administra- Independent
tion,2
Defense Production Administration do
Public Law 920, 81st Cong., Jan.
I 12, 1951.
Executive Order 10200, Jan 3, 1951
Millard F. Caldwell, Jr Cafritz Bldg., 1625 I St. NW. ST 0525 (Code
1251).
W. H. Harrison Commerce Department Bldg. ST 9200
(Code 164).
I Beard members out yet confirmed.
2 Originally created by Executive order within the Executive Office of the President; later established by legislation as independent agency.
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The following is a brief summation of internal reorganizations
effectuated during the past 6 months as reported by the indicated
agency:
Executive Office of the President.----The Office of Defense Mobilization
was created under authority of the Defense Production Act of 1950,
approved September 8, 1950, by Executive Order No. 10193, issued
by the President on December 16, 1950, and as of January 1, 1951,
only five persons were assigned to the Office. The Federal Civil
Defense Administration, originally created by Executive Order No.
10186 on December 1, 1950, within the Executive Office of the Presi-
dent, was established as an independent agency under authority of
Public Law 920, Eighty-first Congress, effective on January 12, 1951.
This agency reported a total of 99 employees as of January 1, 1951.
Department of Agriculture.?There have been no major reorganiza-
tions in the Department of Agriculture during the past year, except
in the Production and Marketing Administration as explained below,
although there has been a considerable defense program impact on
its operations. The Department has been assigned full responsibility
for the defense food program and other responsibilities relating to
lumber and the distribution of farm equipment and fertilizer. In
addition, many activities are being pursued at the request of, or in
cooperation with, the National ''Securities Resources Board, the
National Military Establishment, and other agencies. For example,
many of the Department's resources are devoted to research and
other activities in connection with biological warfare and atomic
attack. To meet these many defense needs, the entire Department
operates as an integrated and interrelated agency, incorporating
insofar as possible defense activities with related existing program
operations and organization. The Forest Service has established a
few coordinating positions in Washington and at its regional offices
but will call upon its regular employees to do the detail in carrying
out its responsibilities with respect to lumber; in the Agriculture
Research Administration, the resources of existing facilities and tech-
nical manpower have been reassigned and redirected where practicable
to defense projects within the respective research fields; and in the
Production and Marketing Administration, although two new offices?
the Office of Requirements and Allocations, and the Office of Materials
and Facilities?have been created for specific defense program pur-
poses, the commodity and other branches, the State and county
? offices, and other field facilities of the agency will play a major role
? in the discharge of its defense responsibilities. Other changes result-
ing from the defense program in Production and Marketing Adminis-
tration were the abolishment of the Price Support and Foreign Supply
Branch and the program management staff, with a reassignment of
their continuing functions. Also, the Assistant Administrator for
Management was given additional responsibilities for defense coordi-
nation and his title was changed to Assistant Administrator for
Program Coordination.
Department of Commerce.?The principal organizational develop-
ments in the Department of Commerce during the last 6 months of
calendar year 1950 have grown out of the increased defense effort.
The National Production Authority was established hi The Depart-
ment in September to carry out the responsibilities assigned to the
Secretary by Executive order under the Defense Production Act of
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1950. The commodity divisions of the Office of Industry and Com-
m rce of the Bureau of Foreign and Domestic Comme?ce were trans-
fe, 'red to the National Production Authority, and the export control
fu actions which had been located organizationaly with the comrnodity
di hsions were returned to the Office of Int ernational Trade. In
ac dition, the Office of Field Service of the :Bureau of Foreign and
D miestic Commerce was assigned the job of performing the field
pm ograms of the .National Production Authority. By January 1, the
O flee of Field Service had expanded its normal complement of 42
fit id offices to 59 offices toward a planned goal of a total of 98 offices.
The Maritime Administration also made mate,rial internal organiza-
tienal adjustments to meet its responsibilities in connection with the
defense effort. A new Office of Ship Construction was created and
cc veral other internal shifts were made. Mnor internal organiza-
ti mal changes also occurred in the Bureau of Standards where an
07dnance Development Division, Missile Developmern Division, and
S ipply Division were created.
Department of Defense (Office of the Secretary of Defense).?Since the
ti ne of the last presentation of similar information on organization
aid personnel, the position of Assistant Secretary (Administrative
a: id Public Affairs) has been abolished and the position of Assistant
S cretary (Manpower and Personnel) has been established. In
addition, two new offices have been set up: (1) Military Traffic
S u-vice, to provide under one authority efficient and economical
tiaffic management for all agencies or departments of the Department
o ' Defense; (2) Office of Guided Missiles, to provide competent
a lvice for the direction and coordination of activities connected with
r,,search, development, and production of guided missiles.
Subsequent to the date of this report the title of Assistant to the
S ecrettcy (Foreign Military Affairs and Military Assistance) has
been changed to ?Assistant to the Secretary for International Security
/Hairs and an Office of North Atlantic Treaty Affairs established
u nder its supervision. Also, the Office of Medical Services and the
rmed Forces Medical Advisory Committee have been abolished
a ad an Armed Forces Medical Policy Council established to perform
tie functions previously assigned to these two ,separate organizations.
The other three departments comprising the Department of Defense
ave reported the following changes in organizational structure:
Department of the Air Force.?Three new commands and a Financial
Division have been created since the last report was issued: (1) The
Northeast Air Command was established October 1, 1950; (2) the
'actical Air Command was established December 1, 1950; (3) the Air
l)efense Command was established January 1, 1951; (4) the Air Force
Finance Division was established January 1, 1951.
Department of the Army.?With the exception of some minor trans-
] ers of school and training activities from the armies to the appro-
Tiate technical or administrative services, there have been no organi-
ational changes in the Army Establishment since June 30, 1950.
Appreciable increases in employment have been effected since the
previous report principally in the technical services f or procurement,
:nanufacturing, storage, ,and overhaul and rebuild activities, and in
he continental armies for rehabilitation, and staffing of new and
: 'eactivated installations and training.
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Department of the Navy.?Four new components have been added
in the structure of the Department of the Navy during the past
6 months, as follows:
(1) Physical Disability Appeal Board: This Board was established
for the administration of title IV of the Career Compensation Act of
1949 (Public Law 351, 81st Cong.), to consider individual rebuttals
in cases where there is disagreement between the Physical Review
Council and Physical Evaluation Boards. (2) Physical Review
Council: This Council was also established in accordance with the
administration of title IV of the Career Compensation Act of 1949
(Public Law 351, 81st Cong.). (3) The Assistant Chief for Research
and Development, Bureau of Aeronautics': This office has absorbed
the functions and. personnel formerly assigned to the Assistant Chief
for Design and Engineering of the Bureau of Aeronautics, which latter
has been abolished. (4) Military Occupational Classification Project:
This is a joint service project formerly completely under the Personnel
Policy Board of the Office of the Secretary of Defense. It is now
partially conducted on a decentralized basis within each of the three
services.
Department of the Interior.--Since the last report the organization
structure of the Department was affected by two significant organ-
ization changes in the Office of the Secretary, by relatively minor
changes in the. Bonneville and Southeastern Power Administrations,
and by the creation of the defense administrations. Of major im-
portance is the creation of staff divisions for each of the three resource
Assistant Secretaries?Water and Power, Minerals, and Land Man-
agement and the abolition of the Division of Power and the Office
of Land Utilization which were program divisions reporting directly to
the Secretary. Under the new plan each resource Assistant Secretary
will have a division reporting to him to assist in program development
and in directing and supervising the bureaus and agencies which report
to the particular Assistant Secretary. Further, the Oil and Gas Divi-
sion which reports to the Assistant Secretary for Mineral Resources
was relieved of all functions except enforcement of .the so-called
Connally Hot Oil Act, its other functions being transferred to the
Petroleum Administration for Defense. This was done in recognition
of the need for placing the facilities of the Department concerning
oil at the disposal of the defense program.
The second important change in the Office of the Secretary is the
creation of a Defense Production Staff to assist the Secretary in dis-
charging his responsibilities arising out of the Defense Production
Act and related Executive orders and delegation orders. This staff
was made necessary by the need of the Secretary for advice and as-
sistance on general defense matters. To date, it has been staffed by
details of departmental personnel and the utilization of consultants.
The Bonneville Power Administration has realined responsibilities
for power operations and for administrative management, which is
expected to improve internal administration. The Southeastern
Power Administration, which was organized last year, has progressed
to the point where several divisions previously approved have been
activated. The Administration still is in an early stage of develop-
ment.
The new units created to administer the defense programs assigned
to the Secretary of the Interior are as follows: (1) Petroleum Adinmis-
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tr ttion for Defense; (2) Defense Solid Fuels Administration; (3)
D 3fense Power Administration; (4) Defense Minerals Administration;
(E) Defense Fisheries Administration. These agencies are in the early
St tges of organization, and personnel directly employed by them are
relatively few in number. In the case of the Defense Fisheries Ad-
m inistration, no specific personnel have as yet been added.
The Department reports that, in the formation of these administra-
tions, every effort is being made, in accordance with the President's
di sires, to utilize existing facilities of the Department to the maxi-
m am, and that in each area, personnel are and will be employed only
tc perform those functions which would not, on an expanded basis,
in rmally be a responsibility of an existing bureau or office.
Department of Justice.--While there are no pending changes in
oi gamzation of the Department of Justice, it is reported that some
in creases in personnel are anticipated, particularly in the Federal
B rreau of Investigation and the Immigration and Naturalization
rvice, in connection with national defense activities.
Department of Labor.?Since the last chart was issued, a Division of
E nployaes Compensation has been established. This authorization
w is contained in Reorganization Plan No. 19, which became effective
IV ay 24, 1950, under which the functions of the Bureau of Employees'
C wipensation and Employees' Compensation Appeals Board were
trmsferred from the Federal Security -Agency to the Department of
L tbor.
An Office of Rafense Manpower was also established in the Depart-
rr ent of Labor under Executive Order No. 10161, September 9, 1950,
al id implemented by General Order No. 48 issued by the Secretary of
L door on September 27, 1950.
Post Office Department.?Following the enactment of Public Law
7 2, the Post Office Department Financial Control Act of 1950, the
ft nctior.s previously performed by the General Accounting Office for
ti .e Post Office Department were transferred to this Department
elective November 15, 1950. At the same time 798 positions were
ti ansferred, of which 789 were placed in the Bureau of Accounts (Office
to the Postmaster General?Comptroller) in the newly formed Postal
A ceounts Division. The remaining nine positions were assigned. to
the Chief Clerk and Director of Personnel to handle the increased
p3rsonnel workload.
In order to secure maximum benefit from this change, the Depart-
ii reported that plans are being formulated to decentralize the
a ;counting activities to 12 regions in the field. This will be advan-
geous in that the accounting records will generally be retained at the
fi3ld accounting offices, which will greatly reduce the distance that
? Leh accounting papers must be transported before audit. While it
iE not anticipated that the acquiring of the accounting functions of
t. le General Accounting Office will in itself produce any tangible
ivings in money to the postal service, it should eventually reduce
o7er-all Government costs, and it is expected that through the use of
hatter accounting statistics the Department will be in a position to
b3tter administer the field service. Before full benefits can be realized
ii will be necessary to set up a new accounting system which will be
itegrated with the new budget and appropriation structures.
The organizational changes in the Bureau of Transportation and
t 3.0 Bureau of Facilities in process at the time of the Department's
last report on July 27, 1950, have been competed.
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Department of State.?No major organizational change has taken
...place in the Department of State since the last report. Internal
adjustments were reported as follows: The Interim Office of Technical
Cooperation and Development has beea succeeded by the Technical
Cooperation Administration; in the Bureau of Inter-American Affairs,
the Offices of East Coast Affairs and West Coast Affairs were abolished
and the Office of South American Affairs was established; in .the
-Bureau of Near Eastern, South Asian, and African Affairs, the Office
of African and Near Eastern Affairs was abolished and the Office of
Near Eastern Affairs and the Office of African Affairs were estab-
lished; the Office of Management and Budget became the Office of
Budget and Finance, and the former Division of Organization became
the Management Staff under the Deputy Under Secretary for
Administration.
Department of the Treasury.?The Department of .the Treasury
reported that certain functions incident to the procurement and
delivery of distinctive fiber paper were transferred from the Bureau
of the Public Debt to the Bureau of Engraving and Printing effective
August 1, 1950, and that, as a result, the organizational subdivisions,
Division of Paper Custody and Government Mill, formerly included
under the Bureau of the Public Debt, have been discontinued. The
functions and personnel of the Government Mill have been merged
with the Purchase, Storage, and Issue Division of the Bureau of
Engraving and Printing, whereas the Division of Paper Custody has
been entirely eliminated., resulting in savings of $72,000 annually.
Atomic Energy Commission.?A new field office was .established in
November as the Savannah River Operations Office and is included
in the accompanying chart. The recently established Ken Lucky Area
Office at Paducah is not listed since it is a suboffice of the Oak Ridge
Operations Office.
Civil Aeronautics Board.?The Board is now in process of a reor-
ganization to implement Reorganization Plan No. 13 of 1950 and the
recommendations made by a firm of management consultants previ-
ously retained by the Board. The position of Executive Director has
been established and the incumbent is serving as General Manager of
the Board's staff. In addition, the Board has announced that there
will be transferred to a new Bureau of Air Operations the activities of
the Bureau of Economic Regulation and certain functions of the
Bureau of Law. These changes have not yet been fully effected but
they, and probably others, will be reflected in the chart for July 1, 1951,
with detailed information concerning the reorganization.
Defense Transport Administration.?This Administration was created
under Executive Order No. 10161, September 9, 1950, and was effec-
tuated through notice of the ICC Commissioner October 4, 1950.
Economic Cooperation Administration.?The Administration re-
ported that the Assistant Administrator for Program now has. juris-
diction over all programing policy for the European and Far East
activities, while the operational aspects of the programs have been
concentrated under the Assistant Administrator for Operations.
The character and purpose of the ECA programs are also under-
going a basic change from economic recovery objectives to the formu-
lation and implementation of plans for economic assistance required
to support an adequate defense effort abroad. This change in objec-
tive has resulted in considerable redeployment of personnel which
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w 11 continue during the balance of fiscal year 1951, but it is reported
th at the level of :employment will remain about the same throughout
th s- current fiscal year.
Economic Stabilization Agency.?The Economic Stabilization Agency
w:s created as an independent agency under Executive Order No.
1C161, September 9, 1950, as a principal component of the national
de Cense program.
Federal Communications Commission.?The Chairman of the FCC
re rarted that a study is presently being conducted of the broadcast
ac bivities of the Federal Communications Commission with a view to
th 3 possible establishment of a Broadcast Bureau to handle these
fu rations, which will be covered in the next report, if approved.
Federal Power Commission.?The abolishment of the Division of
Pi ejects Costs in the Bureau of Power, including the reassignment of
it functions to other existing organizational units of the Commission,
has been completed. The transfer of executive and administrative
fu rations from the Commission to the Chairman is now in progress,
ur der Administrative Order No. 27, dated November 2, 1950.
Federal Security Agency.--The Office of Special Services has been
at ?fished. In the Office of Education, the Division of School As?
sis in Federally Affected Areas has been added to administer the
pr wisions of Public Law 815 of September 23, 1950, and Public Law
871 of September 20, 1950. In the Bureau of Public Assistance, the
Di vision of State Administrative and Fiscal Standards has been estab-
lis rad fo.7 the purpose of working with the States in improving adm M-
ist rative processes.
Federal Trade Commission.?The Commission has under study
eh anges in its organization which the Select Committee on Small
Bi ,siness of the House of Representatives recently recommended for
its consideration, and a further report on progress will be made on
July 1, 1951.
general Services Administration.?During the period July 1 through
Docember 31, 19130, organization changes were made as follows: On
Se tember 1, 1950, an Emergency Procurement Service was established
in the central office to plan, coordinate, and administer all programs
asiigned to this Administration relating to (a) the procurement,
sb rage, transportation, and disposition of stocks of strategic and
cr: tied materials essential to the military and industrial requirements
of the United States; and (b) the procurement of suppies, materials,
an I equipment and services in connection with foreign-aid assistance
pr )grams. The establishment of this Service resulted ;:rt the transfer
of certain functio.as and personnel previously assigned to the Federal
Sr pply Service.
October -1, 1950, the regional office organization of General
Se vices Administration was established providing for 10 regional
offices located in areas where there are concentrations of Federal
ac ivity and employment.
rile establishment of an Emergency (or Defense) Ficiilities Service
in the central office of this Administration is being considered. If
es ablished, this Service will be.responsible for planning, coordinating,
an d administering all programs assigned to this: Administration relat-
11)1; to the installation of additional equipment, facilities, processes, or
improvements in Government-owned plants, factories, and other
in lustrial facilities; the acquisition an.d installation of Government-
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owned equipment in plants, factories, and other industrial facilities
owned by private persons, in accordance with the Defense Production
Act of 1950. In addition, responsibility for the management, stand-by
preparation, maintenance, and protection of Government-owned
industrial plants, machine tools, and equipment in the national indus-
trial reserve in accordance with the National Industrial Reserve Act
of 1948 would be transferred to the contemplated service from the
Public Buildings Service (National Industrial Reserve Division).
Housing and Home Finance Agency.?During the 6-month period,
the principal change in personnel and organization of the HHFA
occurred in the Office of the Administrator. The greater part of the
increase shown for this office results from the transfer to the agency
of some 900 employees pursuant to Reorganization Plans Nos. 22 and
23 of 1950, effective September 7, 1950. Reorganization Plan No. 22
transferred the Federal National Mortgage Association, with the func-
tions of buying and selling insured and guaranteed mortgages, from
the Reconstruction Finance Corporation. Reorganization Plan No.
23 transferred from the same organization functions in connection
with loans to manufacturers of prefabricated housing or to builders
using large-scale site fabrication methods. Under both plans, there
were transferred persons employed and unexpended balances of funds,
as well as related assets and liabilities held in connection with trans-
ferred functions, as determined by the Director of the Bureau of the
Budget.
Operations in connection with the college housing program author-
ized by title IV of the Housing Act of 1950 were suspended due to the
developing defense crisis. As a result of this suspension the Division
of College Housing referred to in the previous report was eliminated.
Operations under this program have been authorized on a very limited
scale in connection with the submission of the budget for 1952, with
eligibility restricted to defense-connected projects. Due to the limited
scale of operations the Division of College Housing will not be reacti-
vated, and responsibility for conduct of this program has been dele-
gated to the Community Facilities Service of this office. While funds
will be necessary for administrative expenses of this program, it appears
that no over-all increase in personnel will be required, and that the
functions can be carried out by reassignment of present personnel
made available by declining activity in the program of advances for
planning non-Federal public works.
Office of the Housing Expediter.?Since July 1, 1950, three regional
offices of the Office of the Housing Expediter were consolidated into
one, with three branches--the headquarters located in Washington,
D. C. In addition, there was a reduction of 16 area rent offices through-
out the United States. Such reductions were the result of decontrol or
combination of offices. Under the present law there may be an increas-
mg number of areas decontrolled, unless legislative action is taken to
amend the law further. In the event of new legislation, recommenda-
tions for which are under consideration, expansion of the program will
result as areas are brought under control or recontrolled.
National Capital Park and Planning Commission.?Legislation
which would provide for the reorganization of the National Capital
Park and Planning Commission is now pending in the Congress and
if enacted would involve an increase in the staff of approximately
six employees.
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1E ORGWIZATIONT OF EXECUTIVE DEPARTMENTS AND AGENCIES
National Capital Sesquicentennial Commission.---During the calen-
dar year 1950 the Commission maintained aa average administra-
tive star: of 35 persons to publicize, operate, and manage a number
of programs and special events. The bulk of employment was
pvtinenr, to the Freedom Fair and a stage production, Faith of
Our Fathers. Following the determination by the Comptroller
GI neral that the Freedom Fair was impracticable, those employees
di: ectly connected with that portion of the program were terminated.
Al the conclusion of the season for Faith of Our Ft.thers, further
reductions have been made and at January 1, 1951, the adminis-
tn ,tive staff has been reduced to eight paid pe,-sonnel.
Ile present level of administrative employment is expected to
re:nain constant through 1951 except for seasonal increases neces-
sa to produce and service the summer program of Faith of Our
Fc, thers. The Commission's efforts will be confined to a single
pr iject, the historical pageant or symphonic drama Faith of Our
FE thers, and liquidation of obligations during 1951.
Vational Labor Relations Board.?Since the report of July 1, 1950,
two major changes have occurred in the organization of the NLRB.
TI e Division of Administration has been transferred from the Gen-
en I Counsel's offices to the Board member's' offices, and the Affidavit
Cc mpliance Section, formerly a part of the Division of Administra-
n, remained under the General Counsel's ()Ices as a section and
a part of the Division of Operations.
The Panama Canal.?There have been no significant revisions of the
CE nal-Railroad organization since the major reorganization of July 1,
1910. In accordance with the terms of recent legislation the Panama
Rtilroad Company will be renamed the Panama Canal Company
ani effective July 1, 1951, will include all non-Government activities
of the present Canal-Railroad organization. This revision will change
the names of the two existing entities, The Panama Canal and the
Pa nama Railroad Company, but will not change materially the sub-
dii of these groups. The July 1, 1950, organization was designed
to function under the new law which was then in prospect as well as
un ier the laws then in effect.
7econstruction Finance Corporation.--Pursuant to Leorganization
,ns Nos. 22 and 23 of 1950, transferring the Federal National
M &gage Association and prefabricated housing loans to the Housing
an I Home Finance Agency, 923 employees were transferred to that
Agency on September 8, 1950. In addition to this transfer, other
reductions in personnel have been made and more are contemplated
pr or to March 31, 1951. These reductions hnve resulted from pro-
cedural and organizational changes instituted by the Board of Dime-
toi s in an effort to effect economies without sacrifice of operating
eff ciency or lessening in any respect the available credit facilities of
the Corporation to borrowers and applicants. Certain of the organi-
za- ional changes were made to clarify the assignment of functional
res ponsibili ties.
some of the changes had been completed by January 1, 1951, and
others were in process at that date. The completed e hanges, which
an given effect on the outline of organization and personnel included
on the chart, are as follows: (1) Abolishment of the Agency Division
an I transfer of its functions to other offices in the Washington office;
(2: abolishment of the Office of War Activity Liquidation and transfer
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of its functions and personnel to the Office of Loans; (3) establishment
of the Office of Investigation by transfer of functions and personnel
from the Office of the General Counsel.
The changes which were in process at January 1, 1951, and which
are, therefore, not given effect on the accompanying chart, are as fol-
lows: (1) Centralization of all field fiscal and accounting functions
from 31 loan agencies to 10 area fiscal offices; (2) establishment of a
new loan agency at Columbia, S. C., to serve the needs of that State;
(3) establishment of the Office of Operations by transfer of functions
and personnel from the Office of Loans; (4) establishment of the Office
of the Review Committee by transfer of functions and personnel from
the Office of Loans.
Subversive Activities Control Board.?This Board was established in
accordance with provisions of Public Law 831, Eighty-first Congress,
September 22, 1950. It is still in process of organization, and as of
January 1, 1951, the Board reported a total of 19 employees, which
is expected to be increased to about 55 by June 30, 1951, and even-
tually to a total of approximately 100.
Veterans' Administration.?The Veterans' Tuition Appeals Board
existed on July 1, 1950, as a part of the organization of the Veterans'
Administration. However, under the provisions of section 2, Public
Law 610, effective July 13, 1950, the name was changed to the
Veterans' Education Appeals Board and was set up as an independent
agency. The law provides that the compensation and travel expenses
of the Board shall be paid by the Veterans' Administration and also
the Veterans' Administration shall provide the Board with such
stenographic, clerical, and other assistance and such facilities and
services as may be necessary for the discharge of the Board's functions.
The organizational title of "Auxiliary Service" in the Department
of Medicine and Surgery has been changed to "Outpatient Service,"
and the title of "Management and Planning Staff" in the Department
of Medicine and Surgery has been changed to "Program Analysis
Staff."
Since July 1, 1950, the Veterans' Administration has completed
and opened for the reception of patients nine hospitals at the following
locations: Minot, N. Dak.; Big Spring, Tex.; Saginaw' -Mich.; Grand
Island, Nebr.; Altoona, Pa.; Little Rock, Ark.; Marlin, Tex.; Spokane,
Wash.; Wilkes-Barre Pa.
Seven Veterans' Administration offices, which are small Veterans'
Administration installations under the various regional offices have
been closed during the period July 1 to December 31, 1950, and it is
planned to close several more within the near future.
Veterans' Education Appeals Board. Created as an independent
agency under Public Law 610, July 13, 1950, as outlined above.
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APPENDIX A
PERSONNEL SUMMARY
The following table includes all paid personnel (excluding WOC), assigned to each Federal establishment as reported to the committee
'uy the various departments and agencies, as us the dates indicated. The Genera,' Accounting Office, the Government Printing Office, the
Library of Congress, and the Architect of the Capitol (all within the legislative branch of the Government), and the judicial branch, are
excluded.
Organization of executive departments and agencies
Organization
1947
1948
1949
1950
1951
Ian. 1
July:
Jan. 1
July 1
Jan. 1
.
July 1
Jan. 1
July 1
Ian. 1
Executive Office of the President
1, 027
1, 076
929
892
1, 204
1, 138
1, 169
1,313
1,491
Executive departments
1,790, 266
1,655, 290
1, 581, 674
1,690, 238
1,698, 782
1, 730,403
1, 607, 340
1, 605, 212
1,815, 877
Department of State
22, 704
20, 696
20,797
21, 747
20, 126
21, 221
23, 735
24, 727
25, 380
Department of Defense: 1
Office of the Secretary of Defense
705
1,080
1, 263
1,873
1,915
1,970
2, 201
Department of the Army
629,104
803,213
377, 692
401,972
367, 334
368, 935
317,387
303, 599
433, 970
Department of the Navy
377, 284
355, 929
339, 236
346, 581
363, 415
344, 312
288, 065
291, 694
365,082
Department of the Air Force
111. 700
121, 103
157, 799
168.958
150, 743
154, 453
186, 357
Department of the Treasury
102,447
95, 294
85,909
90, 416
89, 677
87, 153
86,990
89, 253
88,321
Department of Justice
24, 280
24, 444
25, 070
26, 227
26, 136
25, 925
26,214
26, 402
27, 468
Post Office Department
458,988
471, 787
465, 272
498, 415
508, 321
517, 538
535, 745
497, 126
495, 278
Department of the Interior
49, 695
52, 813
46, 039
56. 193
49, 342
57, 801
54,383
65, 573
59, 194
Department of Agriculture
80, 325
87, 549
67, 851
82, 187
71,842
86, 247
70,986
54,007
69, 479
Department of Commerce
37, 600
38,545
37, 036
40,935
40,139
45,892
46,206
60,327
56. 799
DC1.161,1111:11L 4)1)140)01
hdependent agencies
7, 74;
5, 1;20
,, 433
5, 552
a, 586
5, 3.*5,
% WTI
6,081
15, 3,18
471, 332
427, 822
387, 296
372, 325
372, 685
361, 755
352, 520
339, 343
347, 994
American Battle Monuments Commission
87
97
101
121
135
158
372
475
639
Atomic Energy Commission 5
4, 105
4,757
5, 018
4,827
4,634
4,828
4,991
5,086
,-Ay,
, 1"
-.^,,,
itc.)
11,-,
AV:tOt.
an,
"1
Civil Service Commission5,440
3,408
3,686
4,043
4,071
4,039
5,604
3,487
3,667
Commission on Organization of the Executive Branch of the
Government 5
37
94
69
Commission on Renovation of the Executive Mansion 8
5
5
7
Defense Transport Administration'
76
Displaced Persons Commission'
116
253
255
256
327
Economic Cooperation Administration 7
620
8 1,757
5 2,126
4,070
8 2,619
5,009
Economic Stabilization Agency'
266
Export-Import Bank of F. ---hington
118
118
113
125
123
124
125
'no
AGO127
Federal Communications Commission
1,893
1,329
1,321
1,380
1,354
1,340
1,329
I 1.286
I 1.232
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Federal Deposit Insurance Corporation
Federal Mediation and Conciliation Service
Federal Power Commission
Federal Civil Defense Administration 11
F58
1, 181
(9790
1, 157
(9
777
1,158
396
786
1,097
373
822
1,091
377
838
1,090
364
794
1,087
341
755
1,069
330
737
1,077
332
738
(10)
Federal Security Agency
31,516
34,405
34,474
36,304
15,921
36,874
35,363
34,736
35,928
Federal Trade Commission
554
604
567
579
643
661
649
655
632
Federal Works Agency
24,420
24,547
22,785
22,401
22, 734
(11)
General Services Administration 12
29,484
22,806
25,930
20,875
Housing and Home Finance Agency a
11,887
11,574
11,517
11,235
12, 011
13,481
14,115
Indian Claims Commission 14
11
11
11
11
11
11
10
11
Interstate Commerce Commission
2,286
2, 281
2,257
2,301
2,265
2,152
2,139
2,089
2,067
Joint Chiefs of Staff
192
170
(15)
Maritime Commission
12,488
9,270
6,840
6,816
6,830
5,332
5,444
(19
Motor Carrier Claims Commission 12
27
27
17
National Advisory Committee for Aeronautics
5,650
5,926
6,061
6,264
6,868
6,938
7,278
7, 297
7,139
National Archives
396
384
328
344
380
(11)
National Capital Housing Authority
280
277
286
284
305
310
316
316
322
National Capital Park and Planning Commission
24
18
21
20
19
19
19
20
18
National Capital Sesquicentennial Commission I,
2
2
13
35
8
National Housing Agency
18,960
14,531
(19
National Labor Relations Board
788
692
827
1, 369
1, 458
5,399
1,401
1,297
1, 341
National Mediation Board
91
94
94
92
92
108
100
104
101
National Science Foundation "
(20)
Office of Defense Transportation 21
74
58
36
44
26
(21)
Office of the Housing Expediter 22
8, 494
4, 665
4, 568
4, 819
5, 226
4,183
2, 560
2,528
Office of Scientific Research and Development
Office of Temporary Controls
130
19, 156
26
(24)
(")
Panama Canal
27, 418
25, 556
24,365
23, 558
22,996
22, 149
21,014
19,026
19,244
Philippine Alien Property Administration
3
110
168
160
151
110
81
56
Philippine War Damage Commission
126
357
550
911
924
1,042
1, 042
479
Railroad Retirement Board
2, 559
2,645
2,783
2, 599
2, 388
2, 386
2,424
2, 276
2,117
Reconstruction Finance Corporation
9, 522
7, 718
6,270
5, 382
4, 623
4,601
4,455
4, 620
3, 452
Securities and Exchange Commission
1,209
1,159
1,181
1, 149
1,159
1, 125
1,043
998
1, 054
Selective Service System
7,906
1,067
713
815
5, 511
5, 105
3,648
3,715
7, 760
Smithsonian Institution
822
840
860
910
869
856
859
856
863
Subversive Activities Control Board 25
19
Tariff Commission
227
230
222
220
239
239
222
219
212
Tax Court of the United States
122
123
124
126
122
124
127
121
133
Tennessee Valley Authority
13, 431
14,258
14, 222
15, 223
13,982
13, 174
12,864
13,923
15, 161
Veterans' Administration
226,896
218,534
201,448
196, 858
203,404
198,488
195,535
188, 392
187,464
Veterans' Education Appeals Boarct 26
12
War Assets Administration
56, 575
41,899
30, 321
17, 129
7, 357
(11)
War Claims Commission 27
56
99
113
Total
2,
262, 625
2, 084, 188
1,969,899
. 2,
063,455
2,072, 671
2,
093, 296
1, 961, 029
1, 945, 868
2,165,362
See footnotes on p. 22.
t(7)
t-13
z-woozolksarli6Vei
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'National Military Establishment, created by act approved July 26, 1947. Established
as an executive department of the Government and designated Department of Defense by
CLLIAGLI,L11.11. IA 10'1U, appeuvelt Aug. iu,
2 Established by Atomic Energy Act, approved !Aug. II, 1946. Organized January 1,
1947. Formely Manhattan Engineer District, War Department. Transferred under
Executive Order No. 9816.
Established by Public Law 162, 80th Cong.. approved July 7, 1947. reoced to exist
on June 12, 1949, pursuant to act.
4 Established by Public Law 40, 81st Cong., approved Apr. 14, 1949.
s Established by Executive Order No. 10161, Sept. 9, 1950.
Established by Displaced Persons Act, Public Law 774, 80th Cong., approved June
25, 1948.
7 Established by Economic Cooperation Act, approved Apr. 3, 1948.
s Does not include alionc etorinvod "oder Foreign
Included in Department of Labor. Established as an independent agency under
Labor-Management Relations Act, approved June 23. 1947.
I, Established by Executive Order 10186, Dec. 1, 1950. Personnel included in Execu-
tive Office of the President. Became independent agency under Public Law 920, 81st
Cong., effective Jan. 12, 1951.
11 Transferred to General Services Administration, July 1, 1949.
12 Established by Federal Property and Administrative Services Act, Public Law 152,
81st Cong., July 1, 1949.
1' Established by Reorganization Plan No. 3 of 1947, July 27, 1947.
14 nreatod hv act of Sr,,, 15 1040
included under Department of Defense.
16 Transferred to Department of Commerce, Reorganization Plan No. 21, effective
May 24, 1950.
17 Established July 2, 1948, Public Law 880, 80th Cong.
16 gency diE2C:ived upon. creation af EILIF,L by Recicaul,,alloi., Flail No..3 a 1947,
effective July 27, 1947.
1" Established under Public Law 203, 80th Cong., approved July 18, 1947.
20 Established under Public Law 507, May 10, 1950. 21 commissioners appointed,
and confirmed by the Senate on Dec. 14, 1950. No personnel assignments as of Jan. 1,
1952L1 Terminated by Executive Order No. 10065, effective July 1, 1949.
22 -2,-/xeliv Ci20, eiimtive Jan. ii, 1Si, establisiaect as independent agency,
from National Housing Agency.
23 Terminated by Executive Order 9913, Dec. 26, 1947.
24 Terminated by Executive Order 9841, effective June 1, 1947.
2' Established Sept. 22, 1950, Public Law 831, 81st Cong.
se Established July 13, 1950, Public Law 610, 81st Cong.
27 Established by Public Law 896, approved July 3, 1948.
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A roved For Release 2000/08/22 ?
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,
81ST CONGRESSI.
SENATE t REPORT
c1
2 Session No. 2680 1
REORGANIZATIONS IN THE EXECUTIVE
BRANCH OF THE GOVERNMENT
REPOR
OF THE
COMMITTEE ON EXPENDITURES IN THE
EXECUTIVE DEPARTMENTS
DECEMBER 19 (legislative day, NOVEMBER 27), 1950.?Ordered
to be printed
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1050
tAtrtir
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:10111111TTEE ON EXPENDITURES IN THE EXICITTIVE DEPARTMENTS
JOHN L. McCLELLAN, Arkansas, hairman
FAMES 0. EASTLAND, Mississippi
:LYDE R. HOEY, North Carolina
IERBERT IL O'CONOR, Maryland
IUBERT H. HUMPHREY, Minnesota
gDWARD L. LEAHY, Rhode Island
VILLIAM BENTON, Connecticut
11
JOSEPH R. McCARTHY, Wisconsin
IRVING M. IVES, New York
KARL E. MUNDT, South Dakota
MARGARET CHASE SMITH, Maine
ANDREW P. SCHOEPPEL, Kansas
ARTHUR H. VANDENBERG, Michigan
WALTER, L. REYNOLDS, Chiaf Clcrk and ,Staff Direct)r
Professional Staff Members
HERMAN C. LOEFFLER
THOMAS A.SAPPINGTON
MILES SCULL, Jr.
CLENN K. Slimy-on
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CONTENTS
Page
Introduction
1
Reports from departments and agencies:
Department of Agriculture
5
Bureau of the Budget
7
Central Intelligence Agency
10
Civil Aeronautics Board
11
Civil Service Commission
12
Department of Commerce
15
Federal Power Commission
20
Federal Security Agency
20
Federal Trade Commission
22
General Accounting Office
29
General Services Administration
36
Housing and Home Finance Agency
45
Department of the Interior
48
Department of Justice
52
Department of Labor
53
National Advisory Committee for Aeronautics
55
National Security Resources Board
58
Panama Canal
61
Post Office Department
62
Reconstruction Finance Corporation
63
Securities and Exchange Commission
67
Selective Service System
65
Department of State
69
Department of the Treasury
74
Civil Aeronautics Administration
81
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81ST CONGRESS } SENATE
2d Session
REPORT
No. 2680
REORGANIZATIONS IN THE EXECUTIVE BRANCH
OF THE GOVERNMENT
DECEMBER 19 (legislative day, NOVEMBER 27), 1950.?Ordered to be printed
Mr. MCCLELLAN, from the Committee on Expenditures in the Execu-
tive Departments, submitted the following
REPORT
In accordance with the provisions of the Legislative Reorganization
Act of 1946 (Public Law 601, 79th Cong.) , the Committee on Expend-
itures in the Executive Departments is vested with authority over
legislation relating to "reorganizations in the executive branch," and
the duty of "evaluating the effects of laws enacted to reorganize the
legislative and executive branches of the Government." This report
is submitted to the Senate pursuant to the latter provision of the act.
The President transmitted 35 reorganization plans to the Eighty-
first Congress, all of which were referred to this committee. The
plans were carefully considered and analyzed by the committee and
reported to the Senate, with or without recommendations, whether or
not resolutions of disapproval were filed. Twenty-six of these plans
became effective. The committee also reported general reorganization
measures dealing with Federal procurement, property and records
management, and budgeting and accounting, which resulted in the
approval by the Congress Of the Federal Property and Administra-
tive Services Act of 1949 (Public Law 152), amendments thereto
(Public Law 754), and the Budget and Accounting Procedures Act
of 1950 (Public Law 784), designed to promote economy and efficiency
in the executive branch as recommended by the Hoover Commission.
In order to determine the success of these legislative efforts and in
conformance with duties vested in it, the committee initiated meas-
ures to ascertain the administrative actions thus far taken by the af-
fected agencies in implementation of reorganization and related legis-
lation emanating from this and other committees during the Eighty-
first Congress. Through this action the committee has obtained an ac-
counting from the executive branch of the Government and hereby
1
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2 REORGANIZATIONS IN THE EXECUTIVE BRANCH
discloses to the Senate the improvements which have been forthcoming
in terms of better management and more efficiency in operation, as re-
ported by the agencies.
Explicitly, the committee requested complete information from all of
the Federal departments and agencies directly affected by any of the
approved 26 reorganization plans, by specific reorganization legisla-
tion, and by general reorganization acts that became effective during
the Eighty-first Congress. Each agency was asked to advise the com-
mittee regarding (a) steps taken to carry or t each of the reorganiza-
tion p tans affecting designated agencies and in conformance, also, with
other basic legislation approved by Congress relating to their opera-
tions; (b) administrative deficiencies eliminated or improvements
effected in organization and management; and (c) estimates of sav-
ings that may Lave been realized, or that may be expected, as a result of
the implementation of programs authorized thereunder.
There follows a listing of the departments and agencies included in
this survey:
Department of Agriculture
Bureau of the Budget
Central Intelligence Agency
Civil Aeronautics Board
Civil Service Commission
Department of Commerce
Department of Defense
Federal Power Commission
Federal Security Agency
Federal Trade Commission
General Accounting Office
General Services Administration
Housing and Home Finance Agency
Department of the Interior
Department of Justice
Departnient of Labor
Nationa: Advisory Committee for Aeronautics
National Security Resources Board
Panama Canal
Post Office Department
Reconstruction Finance Corporation
Securities and Exchange Commission
Selective Service Commission
Department of State
Department of the Treasury
With a single exception, as shown hereir. after, tae agencies have
responded with reports setting forth in detail reorganational changes
brought about by specific actions taken by the Congress, and includ-
ing other improvements impending or proposed under authority
granted by the various reorganization plans or acts. The great pre-
ponderance of departments and agencies reporting have indicated
that many improvements and economies have been, or will be, realized
through better coordination and improvement in general management,
in procurement, warehousing, records, and buildings management, and
in the modernization of budgeting and accounting systems.
'While a number of the departments and agencies were unable to
report, direct savings effected pursuant, to reorganization legislation
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REORGANIZATIONS IN THE EXECUTIVE BRANCH 3
approved during the Eighty-first Congress, all of them predicted more
efficiency in operation and improvements in administration and serv-
ices to the public and stated that these factors, when fully imple-
mented, would necessarily bring about substantial savings.
There were a number of instances, however, where actual savings
can be identified as having already resulted. These were reported
by the General Accounting Office, the General Services Administra-
tion, the Housing and Home Finance Agency, the Civil Service Com-
mission, and the Departments of Commerce, State, and the Treasury,
as follows:
The General Accounting Office listed two particular areas where
savings have been or will be made: (1) Abolition of the Accounting
and Bookkeeping Division, through authority of the Budget and Ac-
counting Procedures Act of 1950, has resulted in a net reduction of
264 employees, with an annual salary savings of approximately $925,-
000 per year; and (2) through simplification and improvement of the
method of settling and adjusting accounts of deceased civilian em-
ployees of the Government, authorized by Public Law 636, approved
August 3, 1950, savings are estimated to aggregate $100,000 annually
for all agencies of the Government, of which $42,000 Will accrue in
the GAO.
The General Services Administration disclosed many instances
where savings have been realized as a result of operations carried on
under authority of Public, Laws 152 and 754 and Reorganization Plan
No. 20 of 1950. Segregated into three general categories, they are:
(1) Those that have been made internally by GSA, (2) those which
GSA directly has brought about on behall of other Government agen-
cies, and (3) those which have developed in other agencies' property
and records management affairs indirectly as a result of GSA activi-
ties. Identified savings under designated programs were reported as
follows: Personal-property management, $509,000, not including sav-
ings which are accruing to the Government as a result of efforts to
standardize commodities and specifications; freight-rate negotia-
tions, $1,711,709; utility management, $46,500 annually, with direct
savings on individual projects over which GSA assumed authority
reflecting additional net savings of $240,800; real-property manage-
ment, due to reductions in maintenance costs, $110,200; improvement
of telephone and teletypewriter systems, $1,000,000 for the fiscal year
1951; leased space, $372,000 in the first year and $582,000 annually
thereafter; records management, $300,000, with pilot records centers
now under operation in the New York area expected to bring about
further large savings when put into effect and applied to the various
agencies; printing, $,82,250 annually; and general savings in the form
or reduction in personnel and rental equipment, $101,500. All these
itemized savings, aggregating approximately $5,000,000, are only in
the nature of preliminary estimates, GSA. indicating that when these
programs are fully activated large additional savings will accrue on a
recurring annual basis.
The Housing and Home Finance Agency estimates that adminis-
trative expenses for the fiscal year 1951 under the Federal National
Mortgage Association mortgage purchase program, transferred from
RFC to EIHFA under Reorganization Plan No. 22 of 1950, "can be
held to approximately $1,0007000 less than at the time of transfer" and
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4 REORGANIZATIONS IN THE EXECTTHVE BRANCH
that "administrative expenses for fiscal year 1952 will be reduced
s- tbstantially below the 1951 amount" through the consolidation or
a )olition of field offices and reduction in personnel. The HHFA also
e timates savings in the amount of $60,000 annually through the inte-
g ration of common administrative services for the headquarters of
t. ie Community Facilities Service transferred from GSA to HHFA
u nder Reorganization Plan No. 17 of 1950.
The Civil Ser vice Commission reported savings of approximately
$50,000 in personal services and $149,000 through consolidation of
r igional loyalty board staffs under its management-improvement plan
ithorized under title X of the Classification Act of 1949. The De-
artment of State also reported estimated savings of approximately
$10,000 under this title, resulting directly from the efficiency awards
p rogram.
The Department of Commerce stated that, while it is difficult to
e timate monetary savings that resulted from improved management
a ad organizational practices within a large oiganization, it "is inter-
e ited both in effecting savings and in obtaining full 'value for every
d Dllar expended." The Department disclosed as actual savings already
a -,?complished (1), through the abolition of the Distribution Section,
Office of Technical Services, and transfer of its functions to the central
3 [ail Room and :Distribution Section, $32,500 annually; (2), by trans-
f !.r of printing and duplicating functions from Maritime, Patent Of-
Ce, National Bureau of Standards, and the Bureau of the Census to
tie central plant, $82,140; and (3) , through a pending recommenda-
t on on changes in style, format, and reproduction processes for print-
i ig and duplication in the Patent Office, approximately $200,000
anually.
The Treasury Department disclosed several areas where savings
ave already been realized, estimating that (1), based on the Hoover
Commission formula for the average cost of space and equipment,
Ltions taken under the Federal Property and Administrative Services
L.ct to coordinate the records program of the Treasury Department
have caused savings in space, equipment, and the sale of waste
aper aggregati rig approximately 11/2 million dollars and (2), under
Lc organization Plan No. 26 of 1950 estimated savings of $68?000
rn null] y have accrued through the simplification of procurement,
N'l rehousing, and distribution of distinctive paper of United States
Cu :rency and securities.
The reports describe especially compliance by the agencies with
eorganization legislation, to the extent thus far effectuated, but omit
tny inaction or deviation therefrom, although some are in early
rocess of implementation, and others have not yet became effective.
' le committee has, however, otherwise procured information indi-
cating that there are certain agencies, including some not reporting
I .erein, which are evading the requirements of general reorganization
egislation, particularly in the procurement, 'warehousing, and records
aanagement areas. This situation will be given careful attention by
t he committee in the Eighty-second Congress.
The single exception to the otherwise uniform cooperation displayed
y the various departments and agencies is the Department of Defense.
"he Assistant Secretary of Defense merely acknowledged the request
rom the commfttee, and submitted a copy of the semiannual report
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of the Secretary of Defense, consisting of 222 printed pages, along
with two unofficial bulletins published by the Citizens Committee for
the Hoover Report with reference to that committee's interpretation
of the accomplishments under the amended National Security Act of
1947. The inadequacy of this response has necessitated the omission
herein Of any report from that Department, notwithstanding the fact
that considerable legislation was enacted affecting it; for example,
Public Law -216, to amend the National Security Act amendments of
1949, Public Law581, to provide for the organization of the Depart-
ment of the Army, and Reorganization Plans No. 4 of 1949 and No. 25
of 1950, relating to operations of the National Security Resources
Board.
In order that it. may carry out its plain responsibility, the commit-
tee proposes to make further detailed inquiries into the operations
of the Department of Defense, particularly as related, to reports re-
ceived by the committee that, there continue to be duplicating and
overlapping services maintained in procurement, cataloging, and
warehousing activities, despite the fact that the Secretary is author-
ized and directed by the National Security Act and House Concurrent
Resolution 97 (to provide for a single catalog system), to eliminate
such flagrant. examples of mismanagement. These reports indicate,
also, that there is considerable inefficiency in the administration of
these services as now constituted, particularly in regard to duplicating
medical warehousing facilities operated by the I the
Army
of t;
Army and of the Navy in the same immediate vicinity. The com-
mittee has therefore again requested specific information from the
Department and, if the reported duplications are verified, hearings
will be held early in the Eighty-second Congress in an effort to bring
about conformance with existing legislation and eliminate waste and
extravagance in the defense procurement program.
The following reports were submitted by the indicated depart-
ments and agencies in conformity with the committee's request:
DEPARTMENT OF AGRICULTURE
DECEMBER 1, 1950.
Hon. JOHN L. McCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate.
DEAR SENATOR MCCIELT,AN : The following information is presented in response
:to your request of October 26, 1950, concerning the effect of certain recent:legis-
lative actions on this Department.
I. BUDGET AND ACCOUNTING PROCEDURES ACT OF 1959
A. Budget.?Part I of title I of the Budget and Accounting Procedures Act of
1950 contained several amendments to the Budget and Accounting Act of 1921.
These amendments generally serve to bring up to date and clarify various budget
statutes and provide much needed flexibility for the President in setting the
date for submission of departmental appropriation requests to the Bureau of the
Budget. The tunendments also encourage improvements in the budget format
and content, and clarify and strengthen the general approach of requiring the
submission to Congress of a comprehensive financial plan, with -full disclosure
of the relationship between expenditures arid proposed appropriations. The
most significant change from the standpoint of budgetary presentation, however,
was contained in the revision to section 201 of the 1921 act, :which required
the presentation of the budget on the basis of functions and activities or other
desirable classifications. The Department has for many years used a functional
or project breakdown in its budget schedules and believes that Government-
wide adoption of such a practice as is now required by law will result in a
S. Rept. 2680, 81-2-2
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nore meaningful budget document. No material change in OW7 budgetary admin-
stration was therefore required as a result of th4: legislation although it has
)een of definite value in confirming the validity of the direttion of our efforts
;o improve budgetary presentation in the Departmer t.
B. Accounting.--The Budget and Accounting Pro,Tdures Act of 1950 (Public
".,aw 784, 81st Cong.) has provided long-needed statutory authority for moderniz-
ng and simplifying accounting procedures in the Government. For many years
his Department, in cooperation with the General Accounting ()ffice, the Treasury
)epartment, and the Bureau of the Budget, has cc nsidered various means for
mproving such procedures. While some progress was made in this direction
mior to the enactment of this statute, there is no question but that the enactment
)f Public Law 784 has given added impetus to our efforts. A number of new
mocedures consistent with the provisions and objectives of Public Law 784 have
dready been placed into effect. The administrative examination and approval
fiscal officer's accounts have been decentralized to the agency level. Certain
Lccounting and fiscal functions formerly performed at the departmental level
mire been either discontinued or decentralized. The work related to the account-
: ng processes connected with depositing appropriation repayments has been re-
[med. Work has been undertaken toward the development of modern account-
ng systems for the agencies of the Department based on the principles enumer-
ted in the Accounting and Auditing Act of 1950 to the extent permitted by avail-
: .ble personnel. In connection with the development of a modcrn accounting sys-
1 em for one of these agencies, an internal audit program was recently adopted
? o improve the internal control over its resources. Steps have also been taken
10 strengthen the technical accounting staff at the departmental level, to develop
: .ccounting systems based on management needs in accordance with the pro-
' isions of Public Law 784. It must be recognized that, while certain improve-
) aents have already been made, the cumulative effects cannot be fully appraised
t t this time.
In the audit field., three agencies are now covered by the comprehensive audit
rograrr: of the General Accounting Office and retain on the site the original (locu-
m lents supporting their fiscal transactions. This procedure has made possible
I ae elimination of the preparation and handling of extra copies of many docu-
ments, not only in the agencies involved but also in the Treasury Department
ad the General Accounting Office. Plans are now being developed to extend
t
his audit program to a fourth agency on January 1. 1951.
C. Repeals.?As a result of the repeal of many obsolete laws and other laws
a ditch have outlived their original objectives, the agencies of the Department
1 ave been able to eliminate the work involved in preparing, maintaining, and
abmitting considerable detailed records and report.
II. THE FEDE1AL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949
A. Procurement and supply managentent.?While the Federal Property and
,dministrative Services Act of 1949 (Public Law 152, 81st Cong.) has on-
oubtedly affected almost every phase of procurement mad supply management
N 'ithin Cie Department, insofar as past practices, procedures, policies, and meth-
c ls are concerned, and while the act has been in effect almost 1fh years, it still
ppears to be too early to fully evaluate at this time what is, or forecast what
/ Lay be, its impact on specific programs of this Department.
Implementing provisions of the act relative to the exchange or sale of property
the purchase of similar items, the General Services Administrator has recently
i sued regulations winch, we believe, will prove of considerable advantage to
rogram operations. Comprehensive regulations covering the utilization of
e Ecess personal property and the disposal of surplus oersonal property have also
aen issued by the Administrator. Title III of the act, which provides that the
dministrator may delegate authority to executive agencies to purchase and
mtract for supplies and services under procedures particularly advocated by
t ie Commission on Organization of the Executive Branch of the Government as
b sing a much-needed forward step in governmental purchasing has not been
e /tended. to this Department, and we are consequently not in a position to report
o a the benefits which might accrue from the provisions of that title.
We should like to emphasize, however, our complete accord with the objectives
o the act as outlined by the Congress. For many years this Department has
d .rected concentrated effort in the field of procurement and supply management
t ,ward the development of improvements in policies, practices, and methods
r dated, whether directly or indirectly, to purchase and supply activities. The
e iactment of legislation which provides over-all direction for and gives impetus
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to such a program would Seem to offer inestimable possibilities in providing,
Government-wide, for an economical and efficient system for the procurement
and supply of personal property and nonpersonal services. It is believed that
much can be accomplished as a result of the enactment of Public Law 152.
B. Real property management.?To accelerate effective real-property manage-
ment operations under Public Law 152 and Public Law 754, a series of
meetings in both Washington and the field have been held between officials of the
General Services Administration and this Department. Also, the administrative
regulations of the Department have been modified and given wide dissemination
to conform with new General Services Administration regulations.
Insofar as records management aspects of these laws are concerned, the De-
partment has for years maintained an effective records-management program,
and, therefore, has not been required to take any unusual action in organizing
to implement the program required specifically by Public Law 754, except that,
at the request of the Administrator of General Services Administration, the
Secretary of Agriculture designated an official of the Department for membership
on the Federal Records Council, which establishment is required in section 504,
Public Law 754. However, we are in the process of transferring closed
personnel records to a General Services Administration depository.
In connection with Reorganization Plan No. 18, the Department has by agree-
ment with General Services Administration transferred on July 1, 1950, respon-
sibility for operation and maintenance of three buildings in accordance with
section 2 of that plan. Appropriate transfers of funds have been arranged by
the Budget Bureau. The Department will continue the operation and mainte-
nance of all of its other buildings.
With respect to section 1 of plan No. 18 and by agreement with the General
Services Administration, the Department has made all arrangements for the
transfer of certain leasing functions to the General Services Administration
in 128 cities on January 1, 1950. This transfer involves 270 leases, or about 5
percent of the approximately 6,000 non-Federal space and land occupancy of
the Department. Fifteen agencies of the Department are involved. Although
no transfer of funds will be made to the General Services Administration this
fiscal year, the Budget Bureau will make appropriate adjustments in the re-
spective budget estimates for the fiscal year 1052, except in the case of cor-
porate, trust, and section 392 funds (Agricultural Adjustment Act of 1938) which
will continue to be reimbursed.
It is believed that not enough time has elapsed to make an evaluation of the
effects of these acts on the Department in the area of real property manage-
ment. Our experience in this field should really begin on January 1, 1951.
Prior to that, there has been a period of unusual transition. In the field of
records management, our experience has also been too short as Public Law 754
was approved by the President less than 3 months ago.
III. OTHER BASIC ACTS
Other basic acts approved by the Eighty-first Congress, such as the General
Appropriation Act of 1951, the amendment to the Administrative Expenses Act
of 1946, the Classification Revision Act of 1949, the expanded coverage of the
Social Security Act, and so forth all will have a definite effect on administrative
policies and procedures within the Department. While no material effect on
the organization of the Department has resulted from these laws to date, it is
anticipated that such organization changes as may be accomplished in the future
will be minor in character.
If other or more detailed information is needed, please let us know and we
will attempt to supply it.
Sincerely yours,
K. T. HUTCHINSON,
Assistant Secretary.
BUREAU OF THE BUDGET
DECEMBER 15, 1950.
Hon. JOHN L. MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, Washington 25, D. C.
MY DEAR SENATOR MCCLELLAN : In response to your letter of October 25, 1950, I
am transmitting our comments on the progress to date on the following pieces of
reorganization legislation mentioned in your letter.
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REORGANIZATIONS IN THE EXECUTIVE BRINCH
I OW Law No. 2?Increase in salary of the President, Vee President, Speaker of
the House, and agency heads
Appropriations have been made under authorization of this law, thereby putting
? into effect.
ublic Law No. 359?Increase in eccecutivc salaries
The purpose of this law is to provide more adequate financial recognition to
p officials of the Federal service. The critical international situation has under-
Ii the importance of holding and attracting outstanding executives.
ablic Law No. 507?National Science Foundation Act of 1950
The 1951 Supplemental Appropriations Act, signed on September 27, 1950, con-
t dned an item of $225,000 for the Foundation for the remainder of fiscal year 1951.
After extensive consideration and careful selection, in compliance with the act,
U Le President announced the appointment of the 24-noan National Science Board
of November 2, 1950. The first meeting of the Board is seneduled for early
I ecember 1950. Following the selection of a Director, the Foundation will be
a de to carry out its responsibility for the promotion of basic research and
e iucation in the sciences.
I tcblic Law No. 636?Settlement of accounts of deceas.-id Federal employees
This law dealing with the settlement of accounts of ceceased Federal employees,
as approved on August 3, 1950. On October 23, 1950, the General Accounting
C Mee issued Supplement No. 1 to General Regulation No. 104 whicli sets forth
e methods to be followed and the forms to be used in setting amounts due
d !ceased civilian employees. Since the act became effective on December 1, 1950,
Lere has been no experience to date. However, this act will speed up the pay-
n ent of claims to the beneficiary and will eliminate unnecessary steps and
p tper work.
P Lblic Law No. 67,5?Authorizes President to delegate functions
Tentative drafts of Executive orders have been prepared which will delegate
a tproximately 75 finctions to the departments as audforized 1:y the act. These
d legations will relieve the President of numerous administrative details which
o ould be delegated to other officials of the executive blanch.
.F Alio Law No. 784?The Budget and Accounting Prccedures ,:,et of 1950
This act was approved on September 12, 1950. Part I of title I of the act
p7ovides a basis for presenting budget estimates on a performance basis by
f inctions and activities. Initial steps were taken last year towards the adoption
o ' the performance-type budget. Refinements in the budget presentations are
b ling made this year. Part II of title I of the act lays the foundation for
n ajor improvements and simplifications in fiscal operations.
Since the enactment of this legislation, several significant improvements have
b Tri made. On September 22, 1950, the Comptroller General :bid the Secremry
o the Treasury issued Joint Regulation No. 1 whit!' simplifies the handling of
c 11 ections representing repayments to appropriations. Internally the General
ccounting Office has made significant changes. It has abolished the Accounting
a id Bockkeeping Division. The accounting and bookkeepi ng work of this
I oivision was eliminated and other functions transferred elsewhere. Other
tternal changes will be dealt with in the Comptroller General's reply to your
r west. The Treasury Department is actively reviewing its internal operations
t I determine the changes which need to be made in order best to fulfill the
o ijectivcs of the new act. Agencies have been authorized to retain accounting
(1)cuments and supporting papers in those cases where the General Accounting
( ffice conducts its audit at the site of accounting operations. This eliminates
t ie need for shipping documents to the General Accounting Office. Work is also
g )ing forward on a broad scale in other areas under the joint accounting program
t) bring about accounting improvements.
Section 103 of the Budget and Accounting Procedui(os Act of 1950 supplements
a ad strengthens the authority previously lodged in the Bureau of the Budget,
nder tie Federal Reports Act of 1042, to coordinate and improve the Govern-
Lent's statistical t;ervices. The Bureau recommended enactment of this legis-
1 Ltion a:ad is now formulating proposals for implementation of the authority
granted under it.
Section 104 emphasizes the responsibility of the Bureau cf the Budget for
I nproving the orgtmization arid management of the executive branch in accord-
rice with the recommendations of the Commission on Organization of the
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REORGANIZATIONS IN THE EXECUTIVE BRANCH 9
Executive Branch. Under this section and under previously existing authority,
the Bureau of the Budget will continue its efforts directed toward improving
the organization and management of the executive branch.
The legal requirements controlling the number of employees through per-
sonnel ceilings were repealed by Public Law 784. On September 12, 1950, the
Bureau of the Budget rescinded its circular pertaining to the establishment of
personnel ceilings. This control will be accomplished by the Bureau of the
Budget through regular methods of budget control.
Public Law No. 830?Amends Administrative Expenses Act of 1946
This law, approved September 23, 1950, repealed provisions of law requiring
specific mention in each appropriation act of the authority to make expenditures
for printing and binding, personal services in the District of Columbia, health
service programs, and payment of tort claims. Such expenditures will now be
covered by the general terms of the appropriation language making funds
available for necessary expenses, thus permitting elimination from appropriation
acts of a large portion of the "jungle of detailed provisions" which the Hoover
Commission criticized.
Public Law No. 152?Federal Property and Administrative Services Act of 1949
Improvements in General Services.?The General Services Administration wag
created by Public Law 152, Eighty-first Congress (the Federal Property and
Administrative Services Act of 1949), to provide central leadership and man-
agement control over all executive agencies in the fields of real estate and per-
sonal property management, procurement, warehousing and supply operations,
and records management. This new agency now has the opportunity to provide
leadership for executive agencies in the field of property management, supply,
and other common services to complement the leadership provided in personnel
management by the Civil Service Commission and in budgetary management
by the Bureau of the Budget.
Progress has also been made in the corollary action to decentralize the com-
mon services so that agency heads may be equipped with authority under cen-
tral standards and controls to carry on the services needed in their operations.
Completing the process of decentralization and developing means for exercising
effective central controls is, however, a difficult and long-range undertaking
which will require several years of earnest, cooperative effort on the part both of
the central management agencies (Budget Bureau, General Services Adminis-
tration, and Civil Service Commission) and of the operating agencies.
One of the major steps taken by the General Services Administration to insure
continued cooperative effort with the operating agencies is the establishment
(with Presidential approval) of a General Services Advisory Council. This
Council comprises the Assistant Secretaries for Administration of the executive
departments and comparable executive officers of the major independent
agencies.
Much of the time and energy of General Services Administration staff for the
past year has been devoted to perfecting internal organization structure and de-
veloping plans, policies, and procedures to carry out General Services Adminis-
tration functions under Public Law 152 as amended.
Public Law 754, Eighty-first Congress, approved September 5, 1950, provides
for records management programs in each executive agency under central stand-
ards and controls to be developed by the National Archives and Records Serv-
vice in the General Services Administration.
? The task of building an integrated General Services Administration organiza-
tion plan was substantially completed when General Services Administration
regional directors were appointed, effective October 1, 1950.
During the fiscal year beginning July 1, 1951, there should begin to be realized
some of the major benefits in improved and more economical general service.
operations in the respective operating agencies for which General Services Ad-
ministration is now organized and staffed to provide central leadership and
control.
Coordination of civilian and military procurement .?When the President signed
Public Law 152, he directed that areas of understanding be develaped between
the General Services Administration and the Department of Defense with re-
spect to the application of the Federal Property and Administrative Services.
Act of 1949. Following through on the President's memorandum, a group rep-
resenting the Secretary of Defense, the Administrator of General Services, and
the Director of the Bureau of the Budget, has been developing such areas of:
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10 REORGANIZATIONS IN THE EXECUTIVE BRANCH
understanding. On January 17, 1950, the three agency heads signed a joint
policy statement which said in part: "All agency requirements in peace and
war should be coordinated so as to constitute a minimum impact upon the Na-
tion's economy. The military and nonmilitary supply systems must be coordi-
nated at both the policy and operation levels so that the 2onstituent agencies
will not compete against each other for their requirements thus creating arti-
ficial scarcities and inflationary prices * * *. Every effort will be made by
the undersigned to expedite the development of a eeas of understanding within
the framework oC the above policies."
Areas of understanding between the General Services Administration mad the
Defense Department have been, or are being, developed cove eing various aspects
,of supply management, such as: Uniform Federal commoCIty catalog system,
material inspection and testing, traffic management, utilities and communica-
tions, specificaticns and standard packaging, glossary of common definitions of
-terms related to supply activities, what commodities should be warehoused in-
stead of being purchased for direct delivery, standardized procurement regula-
tions, policy for giving small business its fair share of contracts, allocation of
office space in emergencies, etc.
If we can be of any further help in connection with your forthcoming report,
,we shall be glad to cooperate.
Sincerely yours,
F. J. LAWTON, Director.
CENTRAL INTELLIGENCE AGENCY
November 24, 1950.
Hon. JOHN L. MCCLELLAN,
Chairman, Committee on Expenditures in the Eweoutive Departments,
United States Senate, Washington 25, D. C.
DEAR M. CHAMMAN : Your letter of October 26, 1950, requests information
to be furnished you by December 1, 1950, to assist the committee in its respon-
sibility to evaluate the effects of laws enacted to reorganize the executive branch
of the Governmer t. Particular information is requested concerning the Central
Intelligence Agen2y Act of 1949 (Public Law 110, 81st Cong.), as well as certain
general legislative enactments.
The Central Intelligence Agency Act of 1949 pertains particularly to the
Agency's procurement authorities, travel, quarters allowances and related ex-
penses, the Agency's general administrative authorities, and the expenditure
of funds. The intent of the act was to improve the adin- nistration of CIA,
to protect the co ifidential aspects of the Agency's functions (set forth in sec.
102 of the National Security Act of 1947), and to develop a career service in the
field of intelligence. In your recent report No. 2581. Action on Hoover Com-
mission Reports, it is noted that the work of the Central Intelligence Agency
bas been improved as a result of legislative and administrative action. The
legislative action has greatly facilitated the administrative improvements, and
without it the proper functioning of the Agency would have been impossible.
Because of the nature of the Agency's activities, I am sure you will understand
that it is impossible to give a detailed public report of the type which you request
while still maintaining essential security. There are, however, certain things
which can be set forth which may be of some assistance to you.
Prior to the passage of the Central Intelligence Agency Act of 1949, CIA was
administered under laws and regulations of general application and without
specific authority for necessary expenditures. These authi Titles were made-
plate to serve the special needs of an intelligence agency. Consequently, admin-
istrative officials were required continually to resolve legal and other obstacles
by mat eshift arrangements in order to provide the necessaty services. Public
Law 110 provides specific administrative authorities for our special needs, and
includes basic authority for expenditure of funds, eliminating the requirement
for reenactment each year of language specifying expenditure authorities. It,
thus, provides the flexibility and security for operations necessary for an intelli-
gence crganization.
The Erect financial savings that have been realized cannot be ascertained
precisely in dollars and cents. The Central Intelligence Agency is a compara-
Avely new agency still in the process of development. But the act has enabled
simplification and increased efficiency of administration, which means that the
!ost of administration is far less than it would have been otherwise.
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. Action has been taken to carry out all the provisions of the law and to issue
appropriate regulations required by the act. Categories covered include (1)
procurement; (2) education and training; (3) travel, allowances, and related
expenses which, in an intelligence agency, cover many complex iproblems inci-
dental to foreign and domestic travel not common to most Government agencies;
(4) medical services program; (5) budgetary and accounting controls which are
particularly necessary because of the Agency's comparatively broad latitude in
the application of appropriated funds; (6) personnel; and (7) other general
>authorities usually set forth in appropriation language.
In addition, a continuing management survey and analysis is maintained in an
effort further to increase efficiency and to reduce administrative personnel and
costs to a minimum.
As pointed out in our letter to you of July 18, 1949, the Central Intelligence
Agency was exempted from the provisions of the Federal Property and Admin-
istrative Services Act of 1949, and we have also been exempted from its subse-
quent amendments. This exemption was granted to meet our special problems
in the field of procurement and services. Because of the nature of our work,
special procurement channels and methods must he followed to maintain security.
However, we utilize the services of the General Services Administration in all of
its fields, and have adopted their procedures wherever feasible. In view of the
very recent passage of the Budget and Accounting Procedures Act of 1950, we are
unable to state finally what effect it will have on this Agency. However, CIA
officials are studying the act and conferring with representatives of the General
Accounting Office, the Bureau of the Budget, and the Treasury Department
concerning the budgetary accounting and reporting procedures best suited for
the needs of this Agency. Our budget presentation has always been made on
the basis of a performance budget. While this Agency has also been exempted
from the provisions of the Classification Act of 1949, we have followed standard
Government classification procedures as well as grade structures throughout.
Sincerely yours,
WALTER B. SMITH, Director.
?MI AERONAUTICS BOARD
OCTOBER 30, 1950.
Hon. JOHN L. MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, Washington, D. C.
MY DEAR SENATOR MCCLELLAN This will refer to your letter of October 25,
1950, asking for a complete report of the steps taken by the Civil Aeronautics
Board to carry out Reorganization Plan 13, which became effective on May 24,
1950.
Mr. Joseph J. O'Connell resigned as Chairman and member of the Civil Aero-
nautics Board on July 8, 1950, and the Board functioned under its Vice Chairman,
Oswald Ryan, from that time to October 4, 1950, when I became Chairman of the
Board. On or about April 26, 1950, the Board retained the services of the man-
agement consultant firm of Booz, Allen & Hamilton for the purpose of making a
comprehensive survey of the operations of the Civil Aeronautics Board in the light
of the statutory mandates contained in the Civil Aeronautics Act of 1938. The
report of this firm has since been received by the Board, and we are in the process
of considerable reorganization designed to bring about a more effective and
smooth-functioning organization. The report was prepared after full account
was taken of the new responsibilities of the Chairman of the Board under Reor-
ganization Plan 13, and it is confidently expected that when the reorganization
contemplated by the Board has been completed we will have reports of substantial
improvements to make to your committee. It is contemplated that a period of
several months will be necessary to carry out the reorganization and produce
a streamlined and more efficient organization.
It therefore does not seem possible at this time to give the detailed information
sought in your letter. However, I should be very pleased to meet with you and
to explain orally the various matters that are in progress here at the Board. You
will readily understand that the Booz, Allen & Hamilton report has been kept
confidential within the offices of the members of the Board until such time as the
program can be implemented. However, at the same time, I am anxious for your
committee to be fully advised as to the action being taken and contemplated by
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ti is agency with respect to the effect of Reorganization Plan 18, and I should be
Lppy, at your cons enience, to give you any specific information yott may desire.
Sincerely yo-irs,
D. W. REN'IZEL, Chairniau,
UNITED STATES CIVIL SERVICE COM rlISSION
Novicminut 17, 1950.
B n. JOHN L. MCCLELLAN,
Chairman., Committee on Expenditures in. the
Executive Departments, United States Senatc,
Washington, D. C.
DEAR SENATOR MCCLELLAN : In your letter of October 24, you asked us to provide
? mplete information on several of the basic reorganization measures passed by
e Eighty-first Colgress. It is a pleasure for me to point out the favorable
? !ects they have had on our operations and on personnel management in the
P !dual service.
1. Reorganization Plan No. 5 of 19.49
Plan No. 5 created the office of chairman and vested in the Chairman full
tthority to direct the administrative operations of the Commission. Policy
? termination and the adjudication of appeals remain the responsibility of the
fill Commission. This has combined very successfully the benefits of unified
a !ministration with mature bipartisan consideration of poli,2y questions and
ii dividutd appeals.
Immediately after my designation as chairman, I appointed Mr. Lawson A.
oyer as executive director, the top career position in the Commission which
m as established by Plan No. 5. I inaugurated a four-point program to speed
o ir operations and improve our service to the public. It included shortening and
s mplifying our regulations, developing a Government-wide promotion policy,
aproving our correspondence, and strengthening our examining program. We
hive reg,,stered remarkable progress on each of these points. In less than a year,
fr,r exanple, we reduced by half the time which elapses between the closing of
o ir examinations and the establishment of eligible lists.
Under the reorganization we have been able to speed decisions on our day-to-day
a tivities. Quite iliderstandably, it requires considerably less time to clear
iministrative matters through one office than through three. Our staff can now
ii ok to one point for its administrative direction. Under our new administrative
f ?amework, we are in a better position to make quick and flexible adjustments
t ? changing requirements in our work. Shifts in funds or in personnel to accom-
.odate changed workloads or sudden emergencies, dke the defense expansion,
c in now be made directly and without delay.
Briefly, my colleagues and I believe that the reorganization has been an un-
q mlified success.
2 Travel Expense Act of 1949
The Travel Expense Act of 1949, is concerned exclusively with regulating sub-
s stence expenses and mileage allowances of civilian officers and employees of
t ie Govermnent. The Commission does not administer this legislation except
t.,s it affects its own employees.
The major provision of this legislation provides al increase in the maximum
er diem allowance from $(3 to $9 per day and an i acrease in mileage rate for
t ae use of privately owned vehicles from 5 cents to 7 cents per mile.
It had been recognized for several years that rates in effect prior to the enact-
r lent of this act were inadequate to cover the subAistence costs of employees
dine on travel status. Our employees were forced to pay sorte of their expenses
I ar food and lodging out of their pockets while traveling on official business.
'his injustice was recognized by Congress and led to passage of this legislation.
As we see it, the act was not designed as an economy measure since it does
ot have the effect of lessening the amount of traveling that employees must do
I a the discharge of their official duties. According to our fiscal records, the cost
er day to kevp at employee in travel status has increased from $12.92 to S16.58
: s a result of this legislation and increases in transportation costs. While this
s. true an the expense side, there are unmeasurable benefits derived from this
egislation in employee morale and a higher degree of job satisfaction on the
iart of those who must engage in travel in connection with their official duties.
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REORGANIZATIONS IN THE EXECUTIVE BRANCH 13
3. Increase in executive salaries
The Executive Pay Act was designed to increase rates of compensation of the
heads and assistant heads of the executive departments anti independent
agencies. The Civil Service Commission has no responsibility for the adminis-
tration of this act. The legislation did increase 1:he salaries of the three Com-
missioners and thus bring their remuneration more nearly in line with their
responsibility.
4. Classification Act of 1949
The Classification Act of 1949 comprehensively revised and superseded the
Classification Act of 1923 and its amendments. The basic functions covered by
the new act have been performed by the Civil Service Commission since 1932 at
which time they were transferred from the Personnel Classification Board. The
new act provides for the first time that in both the departmental and field services
the same authorities and operating procedures will govern the placing of posi-
tions in grades and classes for pay and other purposes. Hitherto, final classify-
ing authority of the Commission was limited to the departmental service having
only 20 percent of the positions subject to the Classification Act_ while similar
authority in the field service with 80 percent of the positions was vested in the
heads of agencies.
Under the new act the Commission prepares and publishes allocation standards.
Each agency allocates its positions without prior reference to the Commission in
individual cases, but iii so doing it must adhere to the published standards.
The Commission post-audits agency allocations to determine that standards are
being adhered to and requires the correction of errors. An exception to this
general procedure exists in the case of positions in the three highest grades of
the general schedule, 1. e., GS-16, 17, and 18. Prior action of the Commission
is required by law for the first two of these grades and in the highest grade recom-
mendation by the Commission and approval by the President are required.
To carry out the provisions of the new law it has been necessary to expand our
staff of classification experts, especially in our regional offices, and to train them
In the new features of the Classification Act of 1949. We are gradually de-
veloping, and expect to perfect with experience, methods of auditing classifica-
tion actions performed by the agencies so that Government-wide compliance with
our standards will be assured with a relatively low enforcement cost. Two sec-
tions in the central office formerly dealt respectively with field and departmental
classification. Since operating techniques will now be the same in Washington
and the field, these sections have been consolidated in order to improve the effec-
tiveness of operations.
It is too early to estimate savings resulting from passage of the Classification
Act of 1949 which has been in effect for barely a year. Actually, savirrts in this
work are difficult to assess since many of the collateral benefits such as. the
elimination of competitive bidding for personnel by the agencies, improved em-
ployee morale, and the more logical and efficient distribution of functions some-
times flowing from classification audits are not susceptible to monetary measure-
ment. Even when a position is reallocated downward the saving usually does
not fully develop until the incumbent vacates the job and it is fitted by an ap-
pointee at the pay scale of the lower grade. Position classification, however,
does avoid waste of Government funds by preventing the payment of excessive
salaries for simple work or too low a salary for more difficult and responsible
work which inevitably leads to the employment of the less competent personnel.
The bulk of the Classification Act of 1949 is enforced, Government-wide, by the
Civil Service Commission. Title X. Management improvement plan and awards,
is enforced by the Bureau of the Budget. We have brought our own management-
control system into line with the regulations- issued by the. Bureau of the Budget,
pursuant to the provisions of this title, and have issued instructions to our
division chiefs and regional directors on the installation and maintenance of
the Civil Service Commission management-improvement plans.
Our management-improvement plan has been very effective. During fiscal
year 1950 several improvements in procedures, organization, and management
have been accomplished. Two examples of the several improvements mode are
as follows : (1) The continuing expansion of the number of annuitants on the
monthly roll of the civil service retirement system raised serious question
whether the methods employed could continue to meet the monthly peak loads
in certifying the names of annuitants to the Treasury for nayMent. After a
thorough study of the problem the operation was greatly simplified, resulting
S. Rept. 2680, 3
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:4 REORGANIZATIONS IN THE EXECUTIVE BRANCH
i n estimated annual savings in personnel services alone of $00,000. (2) The
1 4 regional loyalty board staffs were consolidated into 4 a ran staffs thereby
3educing the clerical and technical personnel assigned to regional loyalty ad-
; udicatims and releasing $149,000 for other work. No loyalty boards were abet-
:shed. In addition to the savings in money realized, the consolidation of the
taff services into four area offices considerably increased the efficiency of these
ervi.ces.
All of the improvements resulted in either money savings, freeing manpower
7or other essential work, reducing the time required to perform certain functions
reducing the amount of space or equipment required.
The new efficiency awards authorized by title X were added to the Com-
1nission's existing internal program of cash awards for meritorious suggestions,
vithin-grade step increases for superior accomplishment and honor awards.
. in efficiency awards committee and 21 subordinate committees were established.
: )uring fiscal year 1950 there were 240 suggestions submitted, of which 65, or
:7 percent, were adopted. The estimated first-year savings -esulting from the
dopted suggestions is approximately $14,000.
The results fiat cate that the awards program is stimulating the thinking of
curtployees and bringing about improvements in operations.
Performance Rating Act of 1950
This act was signed quite recently on September 30 and does not go into
( ffect until December 29. The Commission has already issued instructions to
- he departments and agencies on the administration it this ac::. Without experi-
, mce in operating under the new act, we cannot yet discuss results. We agree,
: iowever, with the report of the House Committee on Post Office and Civil Service
vhich predicted that the new act would result not only in better performance
tppraisal .but also in savings through simplified administration.
Federal Property and Administrative Services Act of 194?9 and amendments
We are working closely with the General Services Administration in all
thases of proper :y management, procurement precedures, and records man-
[gement. Improvements made or under way include: Revisi mi of our property
9ontrol and acconntability system, establishment of inventory levels, develop-
tient of replacement standards for several types of equipment, and surveys of
.ecords. The Aeministrator of General Services provides opportunities for
is to review proposed regulations and invites our suggestions and comments
or improvements as they affect our functions before the regulations are pub-
ished. We have been requested to designate officials of the CDIMIliSSiOn to serve
is members of va-d.ons interdepartmental advisory committees engaged in activ-
ties such as Federal specifications writing, proem emennt procedures and poll-
des, and space control and utilization. We have found Otis legislation to be
)enefietal.
I. Budget and Accounting Procedures Act of 1950
The Commission is of the opinion that the objectives of the Budget and Account-
ng Procedures Act of 1950 are highly desirable and that the act will result in
nany improvements in budgetary and accounting work throughout the Govern-
nerd service. As you know, our organization is not a large one in comparison to
many of the other agencies and our accounting and budgetary systems therefore
ire not as complex and extensive as may be found elsewhere. Moreover, we
lave been operating a performance type of budget for nearly a decade. Accord-
Mgly, we do not anticipate any appreciable savings from a dollar standpoint as a
esult of this new act although we do expect some improvemen I and simplification
:n our internal budget and fiscal procedures and reports.
CONCLUSION
Our Commission's activities are vitally important to good management because
they closely affect every department arid agency in the Go-uernment. We are
concerned at all times with improving our services and gi ring the American
citizen the maximum return for his tax dollar. We welcome legislation winch
helps us to streamline our operations, to do our work more e fficiently, to attract
and hold in our great Federal agencies staffs of loyal, competent, efficient:, and
devotee public servants.
Sincerely yours,
Jimmy B. MITCHELL, Chairman-.
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DEPARTMENT OF COMMERCE
DECEMBER 7, 1950.
Hon. JOHN L. MCCLELLAN,
United States Senate, -Washington, D. C.
DEAR SENATOR MCCLELLAN : I am pleased to have this opportunity, provided by
your letter of October 24, 1950, to outline some of the accomplishments and plans
of the Department of Commerce under the recently enacted reorganization plans
and other pertinent legislation.
The reorganization plans which directly affect the Department of Commerce
are? ?
Plan No. C of 1949, strengthening the administration of the United States
Maritime Commission.
Plan No. 7 of 1949. transferring the Public Roads Administration from
the General Services Administration to Commerce.
Plan No. 5 of 1950, reorganizing the Department of Commerce.
Plan No. 21 of 1950, creating a Federal Maritime Board and establishing'
a Maritime Administration in the Department of Commerce.
I have given careful consideration to many organizational changes in the
Department of Commerce leading to the economical and efficient administration
of the Department's programs. We are continuing to study general organization
and management-improvement possibilities, and. feel that additional benefits can
be realized under the several recent reorganization plans.
The unsettled international situation and outbreak of the Korean War brought
about many changes to the Department. Prominent among these changes has
been the delegation to the Department of a major responsibility for placing into
effect the Defense Production Act of 1950. Temporarily, therefore, certain long--
range objectives within the scope of the reorganization plans can be given only
limited attention while the Department strives to organize and staff itself to
fulfill its role in the defense effort.
Notwithstanding the preoccupation of key officials with primarily defense prob-
lems, however, substantial progress has been made, and more is contemplated
toward the goal of improving organization and management.
Enclosed is a statement setting forth the more significant actions taken to
effectuate the reorganization plans which bear on Department of Commerce
activities. We have also attempted to show the benefits resulting .from the gen-
eral legislative actions of the Eighty-first Congress designed to promote economy
and efficiency in the executive branch.
If this Department can furnish any additional information or help, please do
not. hesitate to call on me.
Sincerely yours,
CHARLES SAWYER,
Secretary of Commerce.
SUMMARY REPORT ON RECENT REORGANIZATION PLANS AND OTHER GENERAL LEGIS-
LATION AFFECTING THE INTERNAL MANAGEMENT OF THE DEPARTMENT OF COM-
MERCE
I. REORGANIZATION PLAN NO. 5 OF 1950
A. General
Reorganization Plan No. 5 of 1950 placed in the Secretary, with a few minor
exceptions, all of the functions of the Department of Commerce previously vested
by law in other officers or agencies of the Department. It empowered the Secre-
tary to make such provisions as he deemed appropriate for the performance of
such functions. It authorized an Administrative Assistant Secretary of Com-
merce under the classified civil service to aid the Secretary. It also provided for
the transfer of records, property, personnel, and funds within the Department as
deemed necessary by the Secretary to carry out the plan.
B. Steps taken to carry out the plan
Among the important measures taken to implement Reorganization Plan No. 5
of 1950 were:
1. The issuance of temporary delegations of authority, effective as of the
effective date of the plan, to the primary organization units of the Department
of Commerce "to prevent disruption of the essential operations of the bureaus
and offices of the Department of Commerce and to permit the full consideration
of all factors involved in making permanent delegations of authority";
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2. The initiation of a study, at the direction of the ;4ecretary, to encompass the
ew functions and activities brought under direct secretarial control to the end
t tat this increased authority might be utilized to the fullest extent possible in
i:nproving the organization and management of the Departmen I. This study has,
riot yet been completed; however, a number of actions have a (ready been taken
a a result of this study as subsequently indicated in this report; and
3. Effective November 20, 1950, Clarence H. Osth igen was appointed to the
r asition of Administrative Assistant Secretary created by Reorganization Plan
.t3. 5 of 1950. Mr. Osthagen will serve as the princi a1 deputy to the Secretary
o Commerce on al administrative activities of the Departmen b.
C Administrative deficiencies eliminated or improvements made in organization
and management of the Department
Included among the actions already accomplished under the authority of
eorgarr zation Plan No. 5 of 1950 are--
1. The Bureau of Foreign and Domestic Commerce was reorganized as of
J me 1, 1950, aftei an exhaustive study of its major functions and objectives.
1 he reorganization brought together the several offices which had been 'trac-
t cally autonomous for several years and provided for a single individual as
irector of the Bureau. It also provided for a strengthening of the commodity
v ork of the Department, as recommended by the Hoover Commission, by con-
k llidation of the Foreign Trade and Domestic Trade t lommodit y Divisions. Also.
t ie export-control function was transferred from the Office of International
71 rade to the Office of Industry and Commerce im order to keep it organization-
lly alined with the commodity activities;
2. Before the reorganization of the Bureau of Foreign and Domestic Cora-
l- terce was fully implemented, the changing defense situatiou made necessary
tie assignment of the commodity units and the field office l to the National
1 roduction Authority, created within the Department as a result of the Defense
I reduction Act of 1950 and Executive Order 101(d. At the same time the
Kpert-control function was shifted back to the Office of Imernational Trade,
N there it could best be performed under emergency conditions. This is an ex:1m-
1 le of the organizational flexibility made possible by Reorganization Plan No. 5:
3. The Commodity Standards Division, National Bureau of Standards, has
1 een transferred to the Bureau of Foreign and Domestic Commerce in order
I) place the Division in an organizational location where it could better accom-
lish its assigned task;
4. Printing serv'ces for the primary units of the Department have been cen-
t ralized for a more economical and efficient operation as well as better control.
7'his aclon included the shifting of printing and 41.uplicating work previously
one by the Maritime Administration, Patent Office, Bureau of Census, and
Tational Bureau of Standards to the Department's ct ntral plant;
5. The Transportation and Communications Division of the Bureau of Foreign
md Domestic Commerce has been transferred to the Under Secretary's Transpor-
ation Mobilization Organization, Office of the Secretary (discussed more fully
mder Reorganization Plans No. 6 of 1949 and No. 21 of 1950)
6. The Secretary has delegated to the heads of primary units the authority to
lesignate officers and employees to administer the oath of office required by see-
ion 171,7, Revised Statutes, and any other oaths required by law in connection
vith employment in the Department; and
7. Areas of resoonsibility in connection with international affairs have been
darified by the establishment of the position of A'sistant Secretary for inter-
aational Affairs from one of the assistant secretaryships' authorized for the
Department.
In addition to the actions already accomplished under Reorganization Plan
isTo. 5, there are certain areas where action is under consideration at the present
time. These areas include:
1. Ccordination of aeronautical charting activities of the Civil Aeronautics
Administration and the Coast and Geodetic Survey;
2. Centralization of materials and equipment testing activities of the De-
partment ;
3. Coordination of the work of the Civil Aeronautics Administration and the
Bureau of Foreign and Domestic Commerce in the field of aircraft production;
4. Centralization of certain administrative activities in Washington and the
field;
5. Transfer of responsibility for road air strips from the Bureau of Public
Roads to the Civil Aeronautics Administration; and
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Cl. Transfer of foreign trade analysis functions in the Office of Government
Aids, Maritime Administration, to the Office of International Trade, Bureau of
Foreign and Domestic Commerce.
D. Estimated savings
- It is difficult in many instances to estimate monetary savings that accrue from
improved management and organizational practices within a large organization.
Many of the benefits resulting from management improvements are found in
improved services to the public, in having work performed at the proper organi-
zational level, allowing for optimum coordination with the other programs of the
agency, and in strengthening accountabilly of the constituent units of the Depart-
ment to the Secretary. Increased effectiveness is a joint objactive with increased
economy. The Department is interested both in effecting savings and in obtain-
ing full value for every dollar expended. Some of the savings effected to uate are:
1. The abolition of the Distribution Section, Office of Technical Services, and
transfer of its function to the central mall room and distribution section
resulting in an annual savings of $32,500;
2. Transfer of printing and duplicating functions from Maritime, Patent Office,
National Bureau of Standards, and the Bureau of Census to the central plant
resulted in an estimated savings of $82,140; and
3. A pending recommendation on changes in style, format, and reproduction
processes for printing and duplication in the Patent Office should save approxi-
mately $200,000 annually.
LI. REORGANIZATION PLAN NO. 7 OF 1949
Under Reorganization Plan No. 7 of 1949, the Bureau of Public Roads was
transferred to the Department of Commerce effective August 20, 1949. This
transfer pertained to all functions, including those of the Commissioner of
Public Roads and those of the Federal Works Administrator in relation to the
Bureau of Public Roads.
The transfer lees been fully implemented with respect to records, property,
personnel, and funds. In going beyond these fundamentals, the Bureau of
Public Roads was provided with sets of the administrative regulations of the
Department, and modifications have been made in terms of bureau needs as
they became apparent. To facilitate and furl her bureau-departmental integra-
tion, a complete personnel management survey was made, printing and other
necessary administrative services were arranged, and the relationship between
the Bureau and the Department was studied and established with respect to
budgetary matters.
To further coordination between the Bureau of Public Roads and other
comparable organizations within the Department, studies have been under-
taken on specific matters of interbureau interest. One example is a study of the
relationship between the Bureau of Public Roads and the National Bureau of
Standards with respect to testing and physical research in the laboratory.
Another example deals with the relationship between the Bureau of Public
Roads and the Civil Aeronautics Administration with respect to a number of
flight strips which had been constructed for defense purposes as road-connected
developments.
Considerable progress has also been made regarding legislative programs of
the Bureau of Public Roads and proposed legislation affecting the Bureau of
Public Roads. The Department was particularly active in reviewing and making
recommendations on the proposals for the Federal-Aid Highway Act of 195).
To implement the objective of coordinated transportation policies and pro-
grams, there has been established a Transportation Council, the chairman of
which is the Under Secretary of Commerce for Transportation. The Commis-
sioner of Public Roads is a member of the Transportation Council.
III. REORGANIZATION PLANS NO. C OF 1949 AND NO, 21. OF 1950
A. General
Reorganization Plan No. 21 of 1950, which became effective May 24, 1950, was
a second step toward accomplishment of the recommendations of the Hoover
Commission that all nonregulatory transportation activities of the Federal
Government be centered in the Department of Commerce. This plan abolished
the United States Maritime Commission and created within the Department of
Commerce the Federal Maritime Board and the Maritime Administration. To
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REORGANIZATIONS IN THE EXECUTIVE BRAN-CH
C c ordinate the trarsportation program within the Department, including those
w lich are the responsibility of the Civil Aeronautics Administration, Weather
B imam, Coast and Geodetic Survey as well as the Bureau of Public Roads, the
F Lderal Maritime Board, and the Maritime Adminisl ration, and to provide for
di velopment of over-all transportation policy within the executive branch, the
p3 an also established the new position of Under Secretary of Commerce for
T ?ansportation.
The plan provides for joint administration of the Federal Maritime Board
aid the Maritime Administration by a Chairman-Administrator. As Chairman,
tl is officer is assigned the functions of the Chairman of the former Maritime
C mamission with respect to the functions transferred to the Board. The Pane-
ti ms of the Chairman were those placed in him by Reorganization Plan No. 6
0: 1949, which made him the chief executive and administrative officer of the
C unmiss ion.
13 Steps taken to carry out the plan
The more important steps taken by the Department to effectuate the provisions
? Reorganization Plan No. 21 of 1950 include:
1. Issuance on the effective date of the plan of a temporary delegation of
ithority to the Maritime Administrator ,to perform all functions transferred
ti the Secretary of Commerce by the plan, with certain reservations. The pur-
p ise of this temporary delegation was "to assure continuity in the performance
o ' the functions transferred to the Secretary of Commerce and to permit full
c,insideration of all factors involved in making more lasting assignments";
2. Approval on June 28, 1950, a few days more than a month after the plan
v cut into effect, of an organization for the two agencies. With minor adjust-
n ents this original organization has continued in effect;
3. The appointment of Philip B. Fleming, former Chairman of the Maritime
Commission, as Under Secretary of Commerce for Transportation was effected
J aly 27, 1950. The Under Secretary for Transportation immediately assumed
r sponsibility in the Department for general supervision over all transportation
a .:?tivities in the Department; program consistency among the several transpor-
t Ltion agencies of the Department and development of a unified over-all trans-
r )rtation policy for their guidance; actions before the transportation regulatory
g-encies when appropriate to effectuate the over-all transportation policies of
t le Government; and studies and plans required for mobilization of the Nation's
t .ansportation resources in behalf of the defense effort; and
4. Issuance on November 20, 1950, of an order "providing for the administra-
t on of transportation activities in the Department of Commerce," including the
e itablislimneint of the Office of Transportation under the Un ler Secretary for
'i'ransportation. This order assigned to the Under Secretary for Transportation
dditional responsibilities: first, the provision of staff assistance to the trans-
/ ortatio:a subcommittee of the Advisory Committee en Priorities Administration
f the National Production Authority, and second, the development of traffic
stimatcs and proposals to secure optimum use of existing transportation facili-
ties or, if necessary, secure additional facilities. This order also established
Transportation Council composed of transportation bureau chiefs of the Depart-
] lent for the purpose of developing coordinated policies and programs in the
I aterest of successful mobilization and maintenance of transportation resources
.dequate to meet the needs of commerce and national security.
Adm4vistrative dedeiencies eliminated or improvements made in organization
and managemont
Among the actions already accomplished as an outgrowth of Reorganization
Plans Nos. 6 of 1949 and 21 of 1950 are those listed below. It is important to
ecognize that immediate and long-range constructive management measures
I Lad to compete ton attention against the military priority requirements of repair-
ng and outfitting approximately 130 ships, with practically ne advance warning.
1. In addition to organizational changes, the qualifications oL! the top staff have
lieon materially strengthened by new appointments to a large share of the high-
: evel positions in the Maritime Administration.
2. Aggressive steps are being taken to meet the problems of policy which existed
mder the former Maritime Commission, involving the following subjects: Com-
mtation ef construction-differential. subsidies and national defense allowances,
wovisions of construction contracts, computation of operatiag-differential sub-
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sidles, calculation of the capital necessarily employed in subsidized steamship
companies, existence of foreign competition on subsidized lines, trade-in allow-
ances provided for in the Merchant Ship Sales Act of 1946, adjustments in vessel
sales prices by reason of existence of desirable features or lack of standard
features on vessels sold, computation of profits made by charterers of vessels
under the Merchant Ship Sales Act of 1946, and revision of audit techniques for
subsidized and charter operations. In areas where outside assistance could be
utilized, such assistance has been sought?for example by appointment of a
committee to study the problem of computing construction-differential subsidies.
3. Each of the backlogs of work whieh had hindered the operations of the
former Commission has been isolated and plans laid for its most expeditious
clearance. As an illustration of progress in the reduction of backlogs, the esti-
mated 4 to 5 years backlog of claims is now reckoned as a backlog requiring only
2 years to complete, by reason of the elimination of unnecessary or duplicating
work and the simplification of procedures. More specifically, during the 5 months
-
period ended November 30, the new Division of Claims disposed of 489 new claims
and 1,227 backlog claims.
4. Concurrently with the establishment of the Office of Transportation in the
Office of the Secretary, specific administrative plans are rapidly crystallizing
toward the objective of providing realistically effective program coordination
among the transportation bureaus of the Department for both mobilization and
peacetime activities. Prior to the formal establishment of the Transportation
Council, coordinative efforts have been conducted through the Temporary Trans-
portation Program Committee. Beyond this the new Office will assist in the
determination of facts and other criteria that can serve as a basis. for reviewing
transportation material requirements as presented to the National Production
Authority. Also, the Office will determine the facts and criteria that can serve
as a basis for exercising priority and allocation authority over the use of air
transportation and in coastal, coastwise, and.overseas shipping facilities.
D. Estimated savings
The primary objective of Reorganization Plan No. 21 of 1950 was. not to develop
dollar savings as such but rather to achieve effective coordination of many of the
Government's transportation activities. As this program coordination is achieved,
the assurance will automatically be provided that wasteful efforts in terms of
duplication and conflict will be eliminated. The raising of the quality of top-
level personnel has already resulted in improved morale and efficiency. The
faster reduction of backlogs clearly will result in dollar savings. For the most
part the type of savings growing out of Reorganization Plan No. 21 are not the
type of savings that can be stated in dollar terms for the current fiscal year,
but rather in reduced future budgets for specific items and higher quality of
service.
Iv. OTHER PERTINENT LEOISLATION
While there are no significant accomplishments under the general legislation
passed for improvement of management in the Federal Government, it is felt
that much of this legislation is beneficial and will result in long-range betterment
and economy in our activities.
The Department has requested funds for a small records management staff
in the 1952 fiscal year budget as a result of the statutory directive set forth in
Public Law 754 (81st Cong.) as an amendment to the Federal Property and
Administrative Services Act. Improved records programs are only one of the
benefits we hope will accrue from this net and its amendments.
Under the Budget and Accounting Procedures Act of 1950, the Department's
budget and management staff has been reassigned to provide a Small group to
work with the General Accountling Office, Treasury Department, and Bureau of
the Budget. representatives on improved budgetary and accounting policies and
practices. This group has completed a study of the fiscal practices of the Nation-
al Bureau of Standards and has installed a new fiscal system hi that bureau
which we believe materially increases the administrative effectiveness of the
agency. The group is now conducting a similar study in the Civil Aeronautics
Administration and will continue its work until the entire financial structure
of the Department has been thoroughly reviewed and modernized.
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13N THE EXECuTIVE t000100020001-2
FEDERAL Powrit Commissrox
DECEMBER 1, 1950.
JOIL JOHN L. MCCLELLAN,
Chairman, Senate Committee on Expenditures in the Executive Departments,
United &ates Senate, -Washington, D. U.
DEAR SENATOR MCCLELLAN : In response to your letter of October 25, 1950, re-
westing information as to economies or increased efficiency resulting from Pres-
dential Reorgarniation Plan No. 9 and other actions of the El r,hty-first Congress,
here is attached a copy of Administrative Order No. 27 which was adopted by
he Federal Power Commission on November 2, 1950, to implem mt Reorganization
-Ian No. a You will note that this order transfers certain executive and ad-
- ninistrative functions from. the Commission to the Chairman and defines genet.-
.11y the respective functions of the Commission and the Chairman under Plan 9.
The policies and procedures prescribed by the above-menti med Order No. 27
utve net as yet been in operation a sufficient length of time to appraise their
? vorth in terms of administrative deficiencies elimindted or improvements made
n the organization and management of the Commission. Likewise, it is too early
lo estimate any savings which have been realized thereby. It is probable that the
odividu al Commissioners will be relieved from seine administrative routine,
fut, of course, added burdens will be shifted, necessarily, to the office of the
(Mairman.
With respect to the Federal Property and Administrative Services Act of 1949,
s amended, this Commission has experienced no substantial in crease in efficiency
r economy. In tact, the nature of its activities precludes theft. realization. It is
.ot a "procuring" agency, and stores only minimum quantities of common items of
ffice supplies for day-to-day use, and certain technical publications for sale to the
ublic. Its procurement and property management staff is ex-:remely small..
It may be said that some economy has resulted, and some inerease in efficiency
las been noted, due to one provision of the act, namely, that Witich increased the
1 .mitation on unadvertised purchases from 4;100 to $!%00.
The Budget and Accounting Procedures Act of 1950, while in large measure
c )nfirmng certain methods and procedures theretofo-e in effect, and facilitating
ad improving Government accounting and auditing in many respects, did include
c ?,rtain specific provisions which have resulted and v-ill result in economies and
hereased efficiency. Among these are the elimination of personnel ceilings
e3t-bliEltment and ohservance, provision of flexibility in the time of submission
f budgets by the departments rather than complying with a 11:Ked date as before,
r emissive modification of the system of warrants and requisitioning of funds,
e Ktension of General Accounting Office site audits, aid permissive elimination of
I may accounts formerly maintained by the General Accounting Office.
The precise degree of economy realized through sach measures is, of course,
r lost difficult to assess. In an agency as small as this, the result is an increase
i i the efficiency with which its limited accounting and auditing staff can perform
t le more importanc duties with which it is concerned.
The act of September 23, 1950 (Public Law 830), included a provision Which
r pealed the former requirement that proprietors or publishers of newspapers
r rovide sworn statements as to rates charged or to be charged for Government
a ivertising. The elimination of that requirement considerably simplifies and
e cpedites the placbg? and processing of advertising orders and effecting payment
t ierefor. It also eliminates the heretofore prevalent confusicn and chagrin on
t le part of publishers with whom orders were placed and makes them less rolue-
t. Int to accept Government orders.
The Commission will be pleased to cooperate with your committee by tor-
y arding such additional Information as may be required at any time.
Respectfully yours,
MON C. WALLGREN, Chairman.
(Enclosure No. 146177, Administrative Order No. 27, November 2, 1950, has been
.corporated in the committee's files.)
FEDERAL SEcusrry AGENOY
I OIL JOE N L. MCCLELLAN,
Chairman, Committee on Expenditures in the
Executive Departments, United States Senate,
Washington 25, D. O.
DEAR SENATOR MCCLELLAN In your letter dated Ootober 25, 1950, you request
ii formation regarding the steps taken by this Agency o carry oat Reorganization
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REORGANIZATIONS IN THE EXECUTIVE BRANCH 21
Plan No. 2 of 1949, and Reorganization Plans Nos. 16 and 19 of 1950. You
also request information regarding administrative deficiencies eliminated or
improvements which have been made in the Agency and an estimate of savings
that may have been realized as a result of actions taken relative to these plans.
The following indicates what has taken place in connection with each of these
plans.
Plan No. 2 of 1949.?Under this plan the Bureau of Employment Security was
transferred from the Federal Security Agency to the Department of Labor. At
the time of the transfer the Bureau of the Budget made a careful study of all
operations of the Agency concerned with the supervision and direction of the
Bureau of Employment Security. All funds used by the Agency in the adminis-
tration of this Bureau were transferred to the Department of Labor. The trans-
fers on an annual basis consisted of?
Salaries, Office of Administrator
$215,
427
Salaries and expenses, Division of Service Operations
117,
669
Salaries, Office of General Counsel
72,
432
Salaries and expenses, Office of Commissioner, Social Security Admin-
istration
16,
825
Total
422,
353
As the operations of the Bureau of Employment Security had direct relation-
ships with a number of other bureaus in the Federal Security Agency it has been
necessary to develop methods for coordination. These have been worked out
On a basis satisfactory to the Department of Labor and to this Agency.
Plan No. 16 of 1950.?Under this plan the functions of the General Services Ad-
ministration relating to assistance to local school districts and with water
pollution control projects were transferred to the Administrator.
The functions relating to assistance to local school districts were delegated
to the Commissioner of Education and the funds transferred for the adminis-
tration of these functions were made available to the Office of Education. The
amounts transferred consisted of $25,000 for salaries and expenses and $50,000
for the payment of terminal leave to employees. The program, as you know, was
to be liquidated by September 30, 1950. Of the funds transferred for salaries and
expenses, it is estimated that approximately $13,998.75 will be returned to the
Treasury. Of the $50,000 made available for terminal leave, $92.30 was expanded,
leaving a balance of $49,907.70 for return to the Treasury. This saving was
made possible because of the transfer of most of the employees concerned to
other agencies and to the new programs authorized by Public Law 815 relating
to the construction of school facilities in areas affected by Federal activities and
for other purposes; and Public Law 874 to provide financial assistance for local
educational agencies in areas affected by Federal activities and for other
purposes.
The functions transferred from General Services Administration that related
to water-pollution control were assigned to the Surgeon General of the Public
Health Service and placed in the Division of Water Pollution Control to be
consolidated with functions relating to water-pollution control already being
carried on by that Division. Transfers for salaries and expenses amounted
to $3,629.12, practically all of which has been obligated. It is believed, however,
that the consolidation of these activities will simplify operations as it will no
longer be necessary to coordinate the functions relating to water-pollution con
trol in the Federal Security Agency with those which were formerly performed
in the General Services Administration.
Plan No. 19 of 1950.?Under this plan the Bureau of Employees Compensation
and the Employees Compensation Appeals Board were transferred to the De-
partment of Labor. On the basis of studies made by the Bureau of the Budget
there was transferred to the Department of Labor all funds concerned with the
administration of these functions. Transfers on an annual basis were as
follows:
Salaries, Office of the Administrator $18, 300
Salaries and expenses, Division of Service Operations 17, 400
Salaries, General Counsel 104, 560
Total 140, 260
Because of this Bureau's relationships with a number of other bureaus of
the Agency it has been necessary to make arrangements for proper coordination.
S. Rept, 2680, 81-2-----4
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2 2 REORGANIZATIONS IN THE EXECUTIVE BRANCH
In the first paragraph on page 2 of your letter you refer to other legislative
a!tions pertaining to the Commission's reports and request information as to
h )w these and other basic reorganization acts approved by Congress have at-
fl cted this Agency. The approval of these acts, particularly those relating to
pmeral management, have been of assistance in enabiing the Agency to take the
f( Bowing actions.
The nomenclature throughout the Agency is now substantially in accord with
commendation 21 of the report on general management. The few variations are
is rgely doe to titles established by law.
With regard to field offices, the Agency has long recognized that certain
[vantages and eccnomies would result in centralized regional operations. Ac-
e( rdingly and prior to the Commission's study, the Agency regional offices had
ben established. Previous to this action there were seven or more bureau
r )gional offices located in one city. We now have one centrally housed regional
o lice in SLO cities with a director who reports to the Administrator.
In the field of general services we are cooperating with the General Services
A Iministration in improving our supply and records activities.
During the past year we have established a central unit for the purchase,
st Drage, and issue of administrative supplies and equipment. Prior to this
?nsolidution there were six supply rooms operated by central office units of the
A ;ency in Washington and live procurement sections purchasing administrative
Si pplies and equipment. At the present time GenerAL Services Administration
I: making a comprehensive survey of all records management activities of the
A gency. This survey was undertaken at my request.
In cooperation with the Civil Service Commission the Agency's Director of
ersonnel and his staff are working vigorously to develop and carry out a
n imber of the improved procedures recommended by the Hower Commission.
For a number of years the Agency has been developing budgets substantially
ir conformance with the performance budget recommended by the Commission.
Tic necessary refinements in this system are being worked out in cooperation
ith the Bureau of the Budget. The Agency is also cooperating with the General
A 2counting Office, Bureau of the Budget, and Treasury Department in estab-
li thing accounting systems which meet the requirements of the various programs
tI e Agency administers.
In the fields of foreign affairs and Federal-State relations, the Agency had
e tablished stair ofices in the latter part of the calendar year 1946. The Com-
o ission's reports on these activities suggest the need for establishing such offices
a td for strengthening offices already in existence. We have gradually broad-
e red and extended the duties and responsibilities ai these offices so that they
a e now functioning substantially in accord with recommendations and sugges-
ti ons made in the Commission's reports.
In all matters that relate to general services, budget, titian( e, and personnel,
ii presentatives of the Agency maintain constant contact with control agencies
. order to take advantage of every opportunity to increase our effectiveness in
t [ese fields.
Sincerely yours,
jOHN L. THURSTON,
Acting Administrator.
PED1CRAL TRADE COMMISSION
Nov-OMBER 22, 1950.
IT on. JOHN L. MCCLELLAN,
Chairman., Committee on Empenditures in the Exrxutive Departments,
United States Senate, Washington, D. C.
MY DEAR MR. CHAIRMAN: 1111.S letter is in reply to your communication of
C ctober 25, 1950, which I acknowledged under date a October 27, 1950.
I am glad to advise the Senate Committee on Expenditures in the Executive
I epartments that the Federal Trade Commission has made substantial progress
complying with applicable recommendations of th.) Commission on Orgardza-
t on of the Executive Branch of the Government and general legislative actions
c1 the Eighty-first Congress to promote efficiency am) economy in the operations
c f the Government.
ORGANIZATION
After intensive study of its organization problem, the Commission reached
ntain conclusion; and on May 15, 1950, announced the reorganization of its
ureaus and divisions and its appointment of supervisory officials to become
e fective June 1, 1050. This reorganization organized the work of the Commis-
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sion as nearly as possible by major purposes. It integrated related functions
in each line of Commission activity. It provided over-all direction of programs
in each line of activity and directing staff officers to whom more authority could
be delegated. It was designed to accomplish the following purposes :
1. To relate the investigation of complaints with the trial work which may
develop therefrom so as to eliminate waste of effort and cost in litigated
matters.
2. To associate the economic investigations with the preparation and trial
of cases so that these investigations will give guidance and direction to the
antimonopoly program of the Commission and conditions which encourage
monopolistic developments and practices will be treated in their incipiency.
3. To eliminate delay in tile handling of cases.
4. To promote the development of the Commission's cooperative work
with industry.
One of the principal changes effected by the reorganization was to coordinate
the investigation and trial of formal cases. Formerly the Commission was
organized by administrative process Or procedure, and investigation of all types
of cases was the function of the Bureau of Legal Investigation, and similarly
the trial of all types of cases was the function of the Bureau of Litigation.
Finding that investigations to develop facts upon which charges were brought
have been too much separated from the trial of cases, the Commission reorganized
its internal structure and its investigative and trial staffs so as to integrate the
two functions. Accordingly, both the investigation and trial of ali antimonopoly
cases were brought together in the Bureau of Antimonopoly, and the investiga-
tion and trial of all cases involving antideceptive practices were brought together
in the Bureau of Antideceptive Practices.
The reorganization also provided for relating more intimately the work of
the Bureau of Industrial Economics with the work of the Bureau of Anti-
monopoly. "If free enterprise is to be preserved," the Commission said in
announcing the reorganization, "the determination of economic facts is a prime
requisite in this work."
In calling for greater development of cooperative work with industry, the
Commission consolidated the former Bureau of Trade Practice Conferences
and the Bureau of Stipulations into a Bureau of Industry Cooperation. It
also created the position of assistant general counsel in charge of industry
cooperation.
In the reorganization effective June 1, 1950, the Commission followed the rules
of standard nomenclature with respect to the major organization units of the
Commission. As speedily as consistent with good administration, it is now
applying these rules where the need exists within the major organization units
of the Commission.
For your information, I am enclosing herewith a chart of the Commission as
reorganized June 1, 1950.
In another move to speed up the disposition of formal cases the Commission,
under the reorganization effective June 1, 1950, authorized the trial examiners to
make initial decisions in contested cases they hear. Under this new procedure
decisions of the trial examiners automatically become decisions of the Commis-
sion 30 days after they are served upon respondents, unless respondents or Com-
mission attorneys supporting a complaint appeal from the decision to the Com-
mission within said 30-day period or the. Commission, on its own initiative, orders
the case placed on its docket for review or stays the effective date of the order
within said 30-day period.
The former practice was for the trial examiners to make "recommended deci-
sions" and for the Commission to make the decisions.
Simplification of the trial procedure in formal eases and making of initial
decisions by the trial examiners has eliminated much duplication of work and
thus speeded action in contested cases.
The reorganization has effectuated in the Federal Trade Commission, by admin-
istrative action, recommendations of the Hoover Commission as follows:
Recommendation No. 13, part 3, Hoover Commission Report on General Man-
agement of the Executive Branch, for grouping subsidiary bureaus within depart-
ments as nearly as possible according to major purposes.
Recommendation No. 21, part 3, Hoover Commission Report on General Man-
agement of the Executive Branch, that the internal operating organization of
each department follow a standard nomenclature as follows: Service, bureau,
division, branch, section, unit.
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
Recoramendatima No. 7 of the Report of the Hoover Commission on the Regu-
atory Agencies for improvement in procedures and reduction in the cost of
tisposing of business before administrative agencies.
The change in procedure authorizing the trial examiners to make initial deci-
; ions has also further effectuated in the Commission provisio as of the Adminis-
rative Procedure Act (Public Law 404, 79th Cong.) with respect to the trial
4t cases.
REORGANIZATION PLAN NO. 3
Reorganization Plan No. 8 for the Federal Trade Commission became effective
May 24, 1950. While it vests administrative management of the agency in
he Chairman, the Commissioners are responsible for the policies of the Commis-
ion and pass on management matters of primary significance, such as the
:.ppointinent of heads of major organization units, the revision of budget esti-
) aates, and the distribution of appropriated funds according to major programs
; nd purposes.
Upon my designation by the President as Chairman of the Commission on the
4 ffectivc date of the plan (May 24, 1950), I assumed the duties and responsibili-
lies of the chairmanship as provided under the said plan.
11643ga/ton of authority
As Chairman, I have delegated to the directors of bureaus responsibility and
; uthority commensurate with their duties as directors of work programs adopted
1 y the Commission and to the secretary and executive director authority coin-
] rensurc.te with his responsibility to assist me in improving and coordinating
ae operations of the Commission.
itanagement improvement plan
On June 1, 1950, the Commission adopted a management improvement plan
far the Commission, but at my direction it was not put into effect in the Com-
] rission until August 1, 1950. The reorganization of the Commission had been
rade effective as of June 1, necessiating the divisit a of the staffs and records
1 the antimonopoly and anti-deceptive-practices work. To prevent further
infusion and get the plan off to a proper start. I directed that the operation
E said plan in the Commission be delayed until sufficient time had elapsed for the
eorganization to become an accomplished fact.
The management improvement plan outlines the methods to be followed by
ae Commission and its organization units in (1) accomplishing systematic
eviews to determine the degree of efficiency and economy of operations, (2)
lentifying opportunities for improvement and scheduling action to achieve
Such improvements, (3) identifying organization units that are outstanding
nd supervisors and employees who make outstanding contributions to ef-
f ciency and economy, and (4) reporting progress under the plan.
Supplementing and implementing the management improvement plan, the
( ommission adopted and put into operation on Sept(mber 25, 1950, an incentive
wards program. This program provides additional incentives for employees
t) participate in management improvement.
While the management improvement plan and incentive awards program
I ave not been in effect for a sufficient period of time to fully evaluate their
?orth, the Commission does have tangible evidence that the provisions for
S vstemaric review of operations are producing beneficial results. For instance,
rocedures are being analyzed and steps in procedures sharply defined so that
is possible to better evaluate and report on the workload of the bureaus.
For your information, I am enclosing herewith copies of the management
I nproveinent plan and incentive awards program of the Commission.
This plan and program have effectuated in the Commission applicable pro-
isions of Public Law 429, Eighty-first Congress, and Public Law 600, Seventy-
inth Congress.
/ rogram and policy planning
Under my respmasibility as Chairman, I submitted to the Conunission a pro-
1 ?sal for reorganizing and reactivating the central planning council to advise
and assist the Commission in performing its statutory duties. On September
11, 1950, the Commission adopted said proposal for reorganization and reactiva-
t _on of the central planning council. I then appeinted the members of the
nuicil, subject to the approval of the Commission, which was given.
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The membership of the council is representative of the Commission's work,
and the -reorganized council is functioning more effectively in advising and
assisting the Commission in programing and guiding its activities, with the
view of achieving the Commission objective?the most, fruitful utilization in the
public interest of the powers and funds granted by statute and appropriation to
keep the channels of interstate commerce free of restraints on competition and.
other unfair practices.
The planning council also advises and assists the Commission in better
coordinating its program with the national program, with the view of promoting
accomplishment of the national objectives.
In its Report on the Regulatory Commissions, the Hoover Commission found
that the chief criticism that could be made of these commissions was that they
become too engrossed in case-by-case activities and thus fail to plan their roles
and to promote the enterprises entrusted to their care. The Hoover Commission
also recognized that adequate planning cannot be decreed. The reorganization
and reactivation of the Planning Council in the Commission recognizes that pro-
gram planning is of first importance in achieving fulfillment of the Commission's
objetive and meets, from the standpoint of organization, the general criticisms
of the Hoover Commission with respect to planning.
Field offices
Since I assumed the chairmanship I have inspected the six field offices of
the Commission. Our field offices located in Seattle, San Francisca and Chicago
serve the West and Middle West. Our offices in New York City and Washing-
ton, I). C., serve the East and Middle East, and our New Orleans office serves the
deep South.
The field offices of the Commission are located at points from which we can
most efficiently and economically administer our statutory duties.
The Commission has taken the necessary steps to decentralize to its fiAd offices
more responsibility for the investigation and preparation of final, reports in in-
formal cases. Definite instructions dOveloping criteria and procedures to be
used in tile assignment of such cases for investigation at the field-Office level, fix-
ing responsibility for immediate direction of the investigations and for the
preparation of reports thereon, have been issued to the field offices. The system
developed has promoted thoroughness in investigating the cases and eliminated
the necessity for much of the review previously made in the bureaus of the Com-
mission, as well as the preparation or lengthy review memoranda in the bureaus_
It is possible now for the heads of divisions and bureaus to concur in a large per-
centage of the reports in informal cases by the attachment of endorsements
approving the reports or by approving the reports with a limited exception or
addition.
This system is standardizing procedures and strengthening investigations and
reports of the field offices. It effectuates in the Commission Recommendation
No. 24, part 3 of the Hoover Commission Report on General Management of the
Executive Branch, for the strengthening of reporting and inspection practices
in the Federal field services.
As Chairman, I am continuing and expanding the program providing for Organ-
ization, methods, and procedures sit:ryes of the various organization units of the
Commission. These surveys are being made with the view of improving the
internal structure and management within the major organization units of the
Commission.
The following actions with respect to the fiscal personnel, records manage-
ment, and supply operations of the Commission have been taken: ?
Budgeting and accounting action
The Commission has a budget officer who is chief of the Division of Budget and
Planning and Assistant Secretary of the Commission.
The Finance Section of the Division of Budget and Planning has better sys-
tematized its cost accounting records. Administrative actions, promoting, and
developing our accounting procedures in line with the reorganization of the
Commission and the Budget and Accounting Procedures Act of 1950, have been
taken by the Division. As a result, the Commission and bureaus now receive
more accurate and factual reports on expenditures by bureaus and programs..
Accounting support for budget estimates has also been strengthened by these
revisions.
The staffing guides issued by the Bureau of the Budget for fiscal services have
been studied and improvements in staffing requirements have been effected where
possible.
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Personnel action
Reorganization Plan No. 8 transferred to the Chairman, subject to specific
imitations, the executive and administrative functions formerly exercised by
be Commission as a whole, including the appointment and supervision of per-
sonnel, the distribution of business among personnel and among administrative
nuts, and the use and expenditure of funds.
Subject to his approval, the Chairman has delegated to the executive director
be authority to tr2t in all personnel matters.
The duly appointed Director of Personnel, with primary responsibility for
)ersonnel matters, works closely with the executive Erector on all such matters.
n addition to his responsibility for action in all personnel matters, the Director
)f Personnel advises the executive director on all rMes and regulations affecting
)ersonnel promulgated by the Civil Service Commission, the Bureau of the
ludget, and the Comptroller General. He also advises the Management Improve-
. nent Committee concerning matters for considerntion and recommendations
t said Committee, and recommends procedures for effectuating in the Commission
- egislation concerning personnel as set forth in general form by the Civil Service
lommission.
The Personnel Division has made the necessary adjustments in salary, titles,
ervices, code, series and grade of records covering each position in the Federal
!7rade Commission in compliance with the Classification Act of 1945.
The Personnel Division, pursuant to the Classification Act of 1949, has been
asponsible for the classification of all positions in the Federal Trade Com-
mission other than positions at grades 16, 17 and 18, in compliance with
s recifications promulgated by the Civil Service Commission.
As a result of the reorganization of the Federal Trade Commission, effective
une 1, 1950, the Personnel Division prepared necessary organizational charts,
j )I) descriptions for all positions affected by the reorganization, reclassified
positions, and processed actions on all positions according to the functions of
e ich new organizational unit. .
In compliance with the policy announced by the President through his
^ lministrative assistant in charge of personnel emphasis has been placed on
t le responsibility of supervisors in handling personnel matters and upon the
?sponsibility of the Director of Personnel to advise supervisors concerning
ii srsonnel matters; also the Director of Personnel is available at all times to any-
o le on personnel matters. Responsibility has been lodged with supervisors for
titiating personnel actions.
The performance rating plan superseding the old efficiency rating system was
msidered of sufficient significance aa a means of management improvement
t at the Chairman of the Commission discussed the orovisions of the plan with
t Le Director of Personnel and scheduled a series of meetings with employees in
t: Le various organizational units of the Federal Trade Commission, at which he
Thscussed provisions of the plan and the performance which he expected of
e nployees of the Commission. He also discussed the performance rating plan
^ ith all rating officials of the Commission, charging. them with responsibility
fr admMistering the plan in such manner that the most capable and 'com-
p ?tent employees ma be singled out for added responsbilities and their attendant
r wards. A performance rating plan for the Federal Trade Commission is
P ing prepared for approval of the Civil Service Commission.
The atector of Personnel serves as secretary to the Board of Special Exam-
ii iii examining and setting up registers for all attorney applicants. This
D?sponsibility requires advising the members of the Board of Special Legal
Kaminers on the regulations and procedures governing such examinations,
n aintaining all files and records pursuant to the establishment of registers, and
ti e preparation and maintenance of registers resulting from he examinations.
teident to this responsibility is the interviewing and counseling of all attorney
mlicants, together with much correspondence with applicants, sponsors, and
N. embers of Congress in connection with these applicants. A similar function
h performed by the Director of Personnel in conneetion with establishing the
'gister for economist 08-13. In addition, periodically, as requested by the
C vii Service Commission, the Personnel Division furnishes assistance in con-
d meting and monitoring civil-service examinations for positions Colinlion to,
a I agencies.
The general personnel policy of the Federal Traci( Commission is at present
ii ing revised for printing and issuance in the Employees' Handbook, a loose-
1? mf compilation issued to all employees at the time w! the orientation interview,
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
which contains statements of regulations and policy governing employment
Ill the Federal Trade Commission.
The promotion policy of the Federal Trade Commission is likewise being
revised for inclusion in the Employees' Handbook. Because of the nature of
the mission of the Commission, which in turn determines the citifies and sub-
sequently the jobs necessary to perform the mission, the majority of positions
in the Federal Trade Conunission are legal, with a relatively small number of
economists and accountants, and of course the necessary administrative em-
ployees. The over-all promotion policy of the Federal Trade Commission is to
obtain the best qualified personnel available for tile job. This is done through
the system of examinations by Boards of Special Examiners. Insofar as is
consistent with the general principle of obtaining the best qualified person
available for the job, the Commission's policy is to promote employees who
have demonstrated qualifications for performing more difficult work. There is
a gap between the lower grade positions supporting the professional positions
and professional positions in the Federal Trade Commission which it is im-
possible to bridge by promotion as a result of learning from experience on the
job only. Additional formal education is necessary to meet qualification
requirements.
All personnel actions since September 2 have been made in compliance with
the procedures promulgated by the Civil Service Commission for administering
the Whitten amendment to the Deficiency Appropriation Act of 1951.
Records management action
The Federal Trade Commission has established a records management pro-
gram which is believed to be adequate. On April 2, 1950, it appointed a records
management officer, with full administrative responsibility?
"For a continuing and comprehensive program of records management
for the Federal Trade Commission and to be the actual responsible cus-
todian and manager of its records;
"To plan and administer a program for current records maangement
throughout the Commission, coordinating and if necessary reorganizing
existing records offices and records systems; coordinating, improving, and
revising the organization of records materials and classification systems
therefor, including training personnel engaged in these fields of work;
"To plan, initiate, and supervise the regular transfer of , valuable non-
current records to the National Archives, and the appraisal, selection,
segregation, and elimination of valueless records; and to clear all sched-
ules to the National Archives for disposition of records;
"To advise the Commission, the Secretary, and the staff in matters of
records production and administration."
The present program broadly contemplates?
( a) Reorganization of functions and assignments of duties in the four
branches of the Division of Legal Records;
(b) Creation of manuals of procedures and system for guidance of su-
pervisors and clerks;
(e) Establishing a more regular and automatic disposal of appropriate
material under the jurisdiction of the Division of Legal Records, to con-
serve space and equipment and to reduce the amount of material per-
manently lodged in the National Archives;
(d) Survey of the organization and methods of the Division of Admin-
istrative and Economic Records, with probable reorganization and estab-
lishing a more regular and automatic disposal of material;
(e) Survey of records work in operating bureaus, divisions, etc., to
achieve maximum coordination, efficiency, and economy.
The organization and procedures of the operational phases of the Commis-
sion's work are the basis of the system of records management by the Division
of Legal Records. The system of records management has been the subject of
a thorough and detailed examination by a committee of the Bureadof the Budget.
A full report by an outstanding authority in the field of records management the
records officer of the Bureau of the Budget, was strong in its commendation; and
disclosed no deficiencies in theory of management or in current operation other
than some slowing down of production in one branch due to understaffing.
More recently the records management officer of the Federal Trade Com-
mission has conferred with an inspecting representative of the Records Manage-
ment Division of the National Archives. The contemplated program was fully
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28 REORGANIZATIONS IN THE EXECUTIVE BRANCH
e tplainel as to scope and probable timetable. This received the oral approval
o ' the investigator.
- The program is in its first stage and there has been considerable constructive
a t'complishment. Changes have been made in the functions of two major
b ranches, in the assignment of some personnel and in the assignment of duties
o individual positions; similar but lesser changes have been made in a third
b7anch. These have produced smoother operation, better service, and better
u llizatien of personnel.
The general program has been considerably retarded and mut progress slowly
b ,cause of an almost disastrous personnel situation caused Iv retirements and
e [tended illnesses of long experienced and key personnel and by some promo-
tons of lower-grade employees to more attractive positions elsewhere in the
(3mmission. Rebuilding is made difficult by inability to attract or hold well-
q utlifi :c1 personnel in positions with the grades and salaries which present classi-
li mtions rigidly prescribe for records work.
Payroll cost as of January 1, 1950, was $44,424.77; as of November 1, 1950, it
w as $30,763.89. There is therefore a gross saving of 13,660.S8 from which must
b deducted $9,350 for the filling of three now vacant but necessary positions
kesist m Chief of Division, Assistant Chief of Brench, and one clerk, GS-3)
: a total cost of $9,350. There has been effected, therefore, a net saving of
$ ,310.88, with considerably increased efficiency. (.11 October 30, 1050, there
w as also completed a substantial disposal of obsolete i taterial which had accumu-
It ted because of shortage of personnel during the war and postwar period.
The Commission has little or no inactive records. in past years a consider-
a )le amount of material has been transferred to the National Archives and the
n aterial retained is in constant use although, obviously, there is less use of older
r( cords. However, records dating back to the early days of the Commission are
canstantly in use. Close watch is maintained to pi event the accumulation of
n aterial and there is no waste of filing space or furniture. The least expensive
n etal trans'Zer cases are utilized as much as possible. Fifty-fie percent of filed
n aterial is contained in these as against forty-five percent of current and con-
s- antly active material stored in more easily opera Led wooden furniture pur-
el.ased many years ago.
No material presently in use by the Commission could be transferred to any
!cords center and it is expected that no problem of filing space or furniture
vt Ill be presented for at least 3 or 4 years. Before that time it is probable Unit
ntemplated recommendations of policy will, if adopted, enable the disposal of a
ct nsid..mble amount of material which has been held as permenently necessary.
I: this is achieved, the space and furniture presently in use should be sufficient
r a very long time; annual disposals of material will continually provide space
r current material. Tins is of course based upon a continuation of the present
to of accumulation. It would be modified to the extent that the work of the
C mmission might increase.
tpply operations action,
The Commission has a services and supply officer with administrative respon-
si bility for the efficient and economical handling of its supply operations.
A. majority of Commission purchases of supplies are covered by purchase orders
p aced with the General Services Administration. TLe benefits received through
e ficient supply activities of the General Services Administration would be hard
t( determine so far as the Commission is concerned. Our orders are being filled
n ore completely with fewer back orders than has been our experience in the
p st. Quick delivery of our orders by the General Services Administration en-
a des us to develop satisfactory requisitioning schedules.
The inventory level in our stockroom has been reduced to an absolute minimum
a id very careful consideration is being given to snail-dollar-value orders to
iminate needless expensive paper work as much as oossible.
We are called upon, from time to time, to make reaorts and recommendations
t( the General Services Administration and have cooperated to the fullest extent.
We have been consulted On traffic management problems and activities by the
G eneral Services Administration but the volume of cur shipping activities is so
sj aall that no appreciable savings can be accomplished.
We are endeavoling to keep our property management conteol records at the
v try mirimum in order to avoid the necessity of a larger staff of personnel to
hi andle such records. We are constantly planning for maximum utilizatiori of
p .operty. The General Services Administration has improved upon the method
o ' disposal of surplus and while this has not been a serious problem for the Federal
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REORGANIZATIONS IN THE EXECUTIVE BR
Trade Commission, we do occasionally prepare a declaration of surplus property
for items for which we no longer have any ne,d.
The above actions and contemplated actions of the Commission with respect to
budgeting and accounting, personnel, records management and supply operations
implement and effectuate in the Commission applicable provisions of Public Law
No. 784, the Budget and Accounting Procedures Act of 1950, the Classification
Act of 1949, personnel policies announced by the President and rules and regula-
tions issued by the Civil Service Commission, Bureau of the Budget, and Comp-
troller General regarding personnel matters, Public Law No. 152, Federal Property
and Administrative Services Act of 1949, and Public Law No. 754, approved
September 5, 1950, amending said act.
It is respectfully submitted that many improvements in the Commission can-
not be evaluated in dollars and cents. Improvements in procedures, fully pre-
serving "due process," make it possible for the Commission to increase its produc-
tion and render administrative justice in the growing mass of matters coming
under its jurisdiction with the limited staff provided.
However, numerous improvements by administrative action effecting econo-
mies in the operation of the Commission have been made, and others are con-
templated. For instance, revision of the Rules of Practice of the Commission
to conform to the reorganization and a change in the form of publication of said
rules, together with institution of a new policy whereby a respondent is fur-
nished Copy of the individual act under which he is charged, are resulting in.
substantial monetary savings to the Commission. Prior to the reorganization, the.
Commisison published in one paper-bound book of 220 pages its Rules, Policy,,
Organization and Acts. The last printing of this publication was made in
May 1949, when 2,500 copies were printed at a cost of $2,500. The Rules of
Practice of the Commission are now a pamphlet of 20 pages, and it is estimated
that the Commission has been able to reduce the cost of this item to approxi-
mately $350 per annum.
The centering in the Chairman of administrative responsibility for the func-
tioning of the Commission has promoted orderly dispatch of the Commission's
business.
The purposes of Reorganization Plan No. 8 are being effectuated in the
Commission.
The Commission appreciates the interest of the Senate Committee On Ex-
penditures in the Executive Departments in its operations. We recognize the
grave responsibilities of management. It is our purpose to continue our efforts
to promote efficient and economical administration of our activities and fulfill-
ment of the constructive objectives of the laws administered by the
Commission.
Yours sincerely,
JAS. M. MEAD, Chairman.
(The organization chart and other documents relating to Management im-
provement of the FTC referred to by Commissioner Mead have been made .a part
of the committee's files.)
GENERAL ACCOUNTING OFFICE
Hon, Jon N L. MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate.
MY DEAR MR, CHAIRMAN : Further reference is made to your letter of October
31, 1950, requesting complete information as to (a) steps taken to carry out
the provisions of certain legislation enacted by the Eighty-first Congress which
apply specifically to the General Accounting Office, (b) administrative de-
ficiencies eliminated or improvements in organization and management resulting
from the enactments, and (e) estimates of savings realized or expected from
implementation of the programs authorized by the measures, with emphasis
on over-all progress under general legislation such as the Budget and Accounting
Procedures Act of 1950 (64 Stat. 832) and the Federal Property and Adminis-
trative Services Act of 1949 (63 Stat. 377), as amended. Comment also is in-
vited on report of your committee, printed as Senate Report No. 2581, Eighty-
first Congress.
In accordance with your request, I am forwarding herewith, as enclosures
1 to 8, comments of the General Accounting Office with respect to each of the
DECEMBER 8, 1950.
S. Rept. 2680, 81-2 5
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3() REORGANIZATIONS IN THE EXECUT NE BRANCH
la vs mentioned in your letter, including the administrative action taken by the
neral Accounting Office to implement the laws, and statements as to esti-
ited savings.
wish to point out to your committee that for toe most part each of the
la- vs commented on is either directly or indirectly related to the work being
de 'ie under the joint accounting program of the Secretary of t he Treasury, the
Director, Bureau of the Budget, and myself, to improve accounting, auditing,
and financial reporting in the Government.
Ile laws enacted during the Eighty-first Congress will be a tremendous step
to yard accomplishing the objectives of the program which was initiated with
th cooperation of your committee. You, as chairman, and the members of
yo ir committee, as well as the committee staff, have made contributions of
inestimable vale to the program, and are deserving of great credit for -the
dil igent a:ld vigorous manner of handling the enactment of these laws, a number
of which are highly 'echnical and complex.
pith reference to Senate Report No. 2581 a review has been made of the
co: aments in the report, particularly those concerning accounttag and auditing,
an I I have no suggestions to make at this time, other than that your corn-
ml ;tee may wish to include certain of the information which is furnished with
thi 9 letter.
Sincerely yours,
LINDSAY C. WARREN,
Comptroller General of the United 'States.
?UMW LAW 784, APPROVED SEPTEMBER 12, 1950, BUDGET AN D ACCOUNTING
PROCEDURES Act OF 1950
'ublic Law 784 deals with both budgeting and accounting. &rice the primary
int ?rest of the General Accounting Office is in the accounting field, the corn-
meats with respect to Public Law 784 are limited to the provisions of part II of
tit e I, which compt.ses a complete Accounting and Auditing Act of 1950. This
leg :slation embodies the principles and objectives of the joint accounting program
to mprove the Government's accounting, financial reporting, and auditing. The
pr c visions of part II will also facilitate the attainment of the budgetary improve-
me ats provided for elsewhere in Public Law 784. Part II spells out the clear-cut
responsibilities and duties of the Comptroller General, the Secretary of the Treas-
ur:., and Cm head of each executive agency, while at the same time providing for
tin exercise of these duties and responsibilities in proper relationship and
coc peration.
)uring the course of the hearings before your committee, when the legislation
wh ch resulted in the enactment of Public Law 784 was under consideration,
a c omplete report was furnished of the progress which was being made under
the joint accounting program. (See pp. 185-192 of the Hearings Before the Sen-
ate Committee on Expenditures on S. 2054, February 27, 28, March 2, 3, 6, and
7, ..950.) The work is being vigorously carried forward and Cle enactment of
the provisl ons of Public Law 784 will allow the attainment of certain objectives,
wh ch were heretofore not legally possible.
pecificrIly, since the enactment of Public Law 784, the following action has
bee a taken:
1. UndeL. date of September 22, 1950, there was issued Treasury Department-
Ge: ieral Accounting Office Joint Regulation No. 1. Th1s joint regulation elimin-
ate ; the necessity for the issuance of covering warrants, the requisitioning of
fur ds, and the use of accountable warrants, in connection with repayments to ap-
pre priations. ( See attachment No. 1.)
`x- . By Office Order No. 93, dated October 26, 1950 (attachment No. 2), the Comp-
tro ler General abolished the Accounting and Bookkeeping Division of the Gen-
era I Accounting Office, effective at the close of business December 31, 1950. To
ace )mpany Office Order No. 93, there was issued a memorandum dated October
26, 1950 (attachment No. 3), setting forth the disposition of functions which were
for nerly performed by the Accounting and Bookkeeping Division. The most signi-
fict nt items covered by the memorandum insofar as elimination of work is con-
cer red are:
(a) The discontinuance of the function of Luring accounts and pro-
cedures letters by the General Accounting Office. Symbols and titles for
appropriation, limitation, receipt, and trust accouats will be designated by
the Treasury Department and other agencies in accordance with regulations.
(b) The discontinuance of maintaining fiscal officers' accountability ledg-
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ers, appropriation, special and trust fund receipt, and public debt ledgers,
expenditure and limitation ledgers, special deposit ledgers? general tenger
and general fund receipts ledger; prescribing symbols and titles; and de-
veloping related files pertaining to appropriations, expenditures, receipt and
application of public, quasi public or trust fund matters.
3. Under date of October 5, 1950, the Comptroller General issued Accounting
Systems Memorandum No. 10, which amplifies Joint Regulation No. 1 of Septem-
ber 22, 1950, and sets forth the procedures to be used in handling repayment
transactions, including both reimbursements and refunds. (Attachment No. 4.)
4. Under date of November 20, 1950, the Comptroller General issued General
Regulations No. 84, Second Revision, which-,?
( a) sets forth the responsibilities of the Treasury Department, the General
Accounting Office and the various agencies for assigning account symbols
and titles, and
(b) establishes the principles under which the symbols and titles will be
assigned. (Attachment No. 4 (a) . )
5. Under date of November 24, 1950, the Comptroller General issued Account-
ing Systems Memorandum No. 11, which places upon the departments and agen-
cies the responsibility for the accounting and control of funds under limitations,
including subsidiary accounts under working fund accounts established pursuant
to section 601 of the Economy Act. ' (Attachrnent No. 5.)
6. At present a cooperative survey by representatives of the General Account-
ing Office and the Treasury Department is being made of certain fiscal operations
of the Treasury Department for the purpose of developing an improved account-
ing system and all possible simplifications. This work is being carried forward
under principles and objectives of the joint accounting program, and pursuant to
the policies enunciated by the Congress in Public Law 784. See letter . dated
October 11, 1950, from the Secretary of the Treasury to the Comptroller General
(Attachment No. 6) and reply of the Comptroller General dated October 23, 1950.
(Attachment No. 7).
7. There have also been issued Office Order No. 67, Supplement 20, and Office
Order No. 94, both dated November 22, 1950, and Office Order No. 30, Supplement
No. 1, Office Order No. 78, .Supplement No. 1, and Office Order No, 83, Supplement
No. 1, all dated November 29, 1950, which supplement Office Order No. 93 men-
tioned above. (See attachments No. 8 and No. 9.)
With reference to the savings under part II of title I of Public Law 784, it is
not possible at this time to accurately report, or to make an estimate of the
over-all dollar savings that will be realized. As a result of the work done under
the joint accounting program and by virtue of the provisions of Public Law 784,
it has been possible to abolish the Accounting and Bookkeeping Division of the
General Accounting Office. This action will result in no loss Of :control of public
funds. In fact, the revised procedures which are being placed in effect should
enable the General Accounting Office and the Government generally to do a more
competent job. The Accounting and Bookkeeping Division employed 325 people
as of October 26, 1950. Certain of the functions formerly performed by that
Division are being transferred to other divisions of the Office; however, it will
be possible to carry out the transferred functions with 61 people, making a reduc-
tion in personnel of 264 people, with an annual salary -savings of approximately
$925,000 per year.
Full implementation of the act will take considerable time, and many of the
benefits that will accrue are not susceptible to specific identification as dollars
saved. There is no doubt, however, that improvement of the Government's
accounting, financial reporting, and auditing; the elimination of duplicating and
overlapping functions; and a more adequate control of funds, will result in sub-
stantial savings and benefits far in excess of that apparent at this time.
PUBLIC LAW 830, APPROVED SEPTEMBER 23, 1950, AMENDMENT TO THE
ADMINISTRATIVE EXPEN SE ACT OF AUGUST 2, 1946, 60 STAT. 806
Subsections 1 (b) and 1 (c) and sections 2 and 3 of Public Law 830 primarily
deal with authorization for allowance of travel and transportation expenses of
employees and new appointees to and from posts of duty outside the continen-
tal limits of the United States and evacuation of employees' families and house-
hold goods from danger zones under certain conditions. Section 1 (a) and sec-
tions 4 through 10 simplify certain administrative procedures by repealing re-
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3 REORGANIZATIONS IN THE EXECUTIVE BRANCH
st rictions which from time to time have been placed in general appropriation
a, 'counts. Sections 1(a) and 4 through 10 simplify the requireinents for payment
w vouchers covering charges for newspaper advertising, repeal provisions of law
? quiring specific mention in appropriation acts of authority make expendi-
tt res for printing and binding, personal services in the Distt?htt of Columbia..
talth service programs and payment of tort claims. Some of the items covered
ic sectior 1 (a) and sections 4 through 10 were included in a report of the Comp-
tr Ater General entitled "A Study of Restrictions on Expenditures of Appropria-
te 3 Funds" which was submitted to the Congress on January 4, 1949, pursuant
te section 205 of the Legislative Reorganization Act of 194d (GO Stat. 837).
The provisions of Public Law 830 are for the most part self activating. Pur-
51 ant to the authority of Public Law 830, the Comptroller General has issued
G !neva] Regulations No. (12, Supplement 2, dated November 15, 1950, which cOrn-
Ia the requirement that a copy of Bureau of the Budget Standard Form Ola be
fu nvarded to the General Accounting Office. (Attachment No. 1.)
It is not possible to furnish an estimate of the savings that will be accom-
pl _shed as a result of the enactment of Public Law 830.
PUBLIC LAW 92, APPROVED JUNE 9, 1949, TnAvEL EXPENSE ACT OF 1949
?ublic Law 92 relates to the subsistence expenses and mileage allowances of
cie than officers and employees of the Government. The principal effect of the
let islation is to increase the rate of per diem in lieu of subsistence expenses
pa aible to Government employees traveling on official business from a maximum
of $6 to a maximum of $9 per day, and to increase mileage allowance for the use
of privately owned -automobile by employees traveling on official business from
a -maximum of 5 cents to a maximum of 7 cents per mile. A significant feattare
of the legislation is its comprehensiveness. The embodiment in one law of the
pr tvisions covering subsistence, mileage for use of privately owned automobile,
an traveling expenses generally of Government officers and employees, together
with the related factors of advance of funds and regulatory powers, constitutes
a i more realistic approach to the problems of official travel. The legislation serves
to reduce the possibility of inequities and simplifies the administration and audit
of travel accounts.
'L'o effectuate Public Law 92, the General Accounting Office has issued General
Regulations No. 88, Second Revision, dated November 7, 1950, which prescribes
sh 'paned voucher forms and procedures (Attachment No. 1) and the Bureau
of the Budget has issued an amendment to the Standardized Government Travel
Re gulations dated October 1, 1950 (Attachment No. 2).
)ue to the principal purpose of this legislation it, of course, does not result
in any savings. To the contrary, at the time the legislation 71/BS considered by
tin Congress, the Bureau of the Budget estimated that the cost would approxi-
mm te $52,770,000 a year in excess of the cost under then existing. law. However,
du t to the simplification in the administration of payments for travel expenses,
an-I elimination of the duplicate accounting for travel advances, there should be
soi le savings in this field.
Pu ILIC LAW 152, APPROVED JUNE 30, 1949, FEDERAL PROPERTY AND ADMINISTRATIVE
ERVICES ACT OF 1949, AS AMENDED BY PUBLIC LAW 754, APPLOVED SEPTEMBER
, 1950
'he General Accounting Office is particularly concerned with section 109 (e)
rel iting to audit of the general supply fund, that part of section 201 (a) relating
to the centralization of transportation and traffic management activities of the
Go 76trnmetat section 205 lb ) which requires the Comptroller General to prescribe
pri rciples and standards of accounting for property, and to cooperate with the
Ge: teral Services Adthinistration and the executive agencies in developing prop-
ert 7 accounting systems, etc., and section 206 (c) which requires the General.
Ac, ounting Office to audit all types of property accounts and transactions.
lrnder section 109 (e), the Comptroller General is required to make an annual
am it of the general supply fund and to report to Congress the results of the
am it, together with such recommendations as he may have regarding the status
am. operations of the fund. The audit for the year ended June 30, 1950, is pres-
ent .y under way and a report of the audit will be made to the Congress when
cor tpleted.
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Section 201 (a) anthorizts the Administrator of General Services to regulate
the policies and methods of executive agencies with respect to the procurement
and supply of personal property and nonpersonal services, including related
functions such as contracting, inspection, storage, issue, property identification
and classification, transportation and traffic management, management tif public
utility services, and repairing and converting. It authorizes the Administrator
to procure such personal property and nonpersonal services and too perform such
related functions, to consolidate and operate or arrange for the operation of
suitable warehouses, repair shops, and similar facilities, and to represent the
executive agencies in negotiations with carriers and other public utilities. The
General Accounting Office is directly concerned under this section in connection
with transportation and traffic management activities. Under section 322 of the
Transportation Act of 1940, practically the entire responsibility for the audit of
payments made by the Government for transportation is placed on the General
Accounting Office, that is, there is no requirement that the administrative agencies
make any audit prior to payment, other than for the mathematical correctness
or obvious errors. Consequently, action taken by the General Services Adminis-
tration in the transportation field is of utmost importance in connection with the
audit which must be performed by the General Accounting Office. The General
Accounting Office is cooperating closely with the General Services, Administration
through correspondence and conferences to devise ways and means of securing
the records necessary to the examination and audit of transportation vouchers
and to the consideration of claims arising from the transportation activities of
the Government, and to improve procurement practices with respect to trans-
portation.
Section 205 (b) requires the Comptroller General, after considering the needs
and requirements of executive agencies, to prescribe principles and standards
of accounting for property; to cooperate with the Administrator, General, Serv-
ices Administration, and with the executive agencies in developing property ac-
counting systems; to approve satisfactory systems; to examine Systems of agen-
cies from time to time to determine the extent of compliance with principles,
standards, and approved systems; and to report to the Congress failure to com-
ply therewith or adequately to account for property.
Under the joint accounting program, which was initiated in the fall of 1947,
and since the enactment of Public Law 152, the General Accounting Office, in
cooperation with the Bureau of the Budget, the Treasury Department, the Gen-
eral Services Administration, and the executive agencies, has been actively
engaged in developing principles and standards of accounting for property of the
Government. On June 27, 1949, there Was issued to the heads of all departments
and agencies a report entitled "A Federal Inventory Control System," prepared
by the joint property accounting staff. That staff included representatives of
the Treasury Department, the Bureau of the Budget, and the General Account-
ing Office (attachment No. 1). On January 17, 1950, a memorandum regarding
the working relationship between the General Accounting Office and the General
Services Administration, which outlines the general approach to be made with
respect to the exercise of responsibilities of the two offices under Public Law 152
was entered into by the Comptroller General and the Administrator, General
Services Administration. (See attachment No. 2.) While this memorandum
is limited to setting forth the manner in which the General Accounting Office
and the General Services Administration will discharge their respective inter-
related responsibilities under Public Law 152, it lays the foundation for the work
to be performed in the property accounting field. The principles and standards
of accounting for property to be followed by all executive agencies have not, to
date, been issued. However, much of the preliminary work has been done, and
it is anticipated that such principles and standards will be available at an
early date. In addition work on property accounting systems has been done in
many individual agencies.
With reference to the examination of property accounting systems, it is im-
portant to note that this work has always been done in connection with the
audit of Government corporations by the General Accounting Office under the
provisions of the Government Corporations Control Act. Comments with respect
thereto appear in the audit reports of the corporations which are submitted to
the Congress.
Section 206 (c) requires the General Accounting Office to audit all types of
property accounts and transactions. It provides that the audit shall include
an evaluation of the effectiveness of internal controls and audits, and a general
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
a Wit of the discharge of accountability for Government-owned or controlled
p aiperty based upon generally accepted principles of auditing.
The General Ac c minting Office, as stated above, has examined the property
a !counts of Government corporations in connection with the audits made under
ii e Government Corporation Control Act. Also, the audits performed of the
a,;encies which have been assigned for comprehensive audit will include audits
o: prope]ty as req aired by section 206 (e). To date, 17 agencies or parts of
a;encies have been assigned for comprehensive audit. With respect to the
b: lance of the agencies of the Government, a joint program for surveying this
p .oblem is being arranged with the General Services Administration and the
w irk in connection therewith will be commenced shortly.
In adctAion to the above, approximately 1.000 inspections of field sites through-
01 Lt -the country (especially in the three Defense Dpartments, Veterans Admin-
is:ration, and the Department of the Interior), have included as a part of the
ii spectio:a coverage, examination of the adequacies ot property records and ro-
cc local control of property, etc. A great many questions have been
th veloped and referred to the Departments for attention, among the most nu-
m emus of which are:
Records found to be inadequate and/or improperly maintained.
Differences ( shortages or overages) in property inventories, warehouse
stocks, etc.
Equipment, supplies, etc., in excess of local needs.
Insufficient care, control and/or safeguarding of property.
Government property diverted to personal use or other unauthorized
purposes.
It is not possible, at this time, to make an estimate of the savings that will
rf suit from the enactment of the particular sections of the Federal Property
A t, as amended, that are listed above. However, there is no doubt that they
w .11 result in more efficient operations of the Government generally and a far
13( tter utilization of the property of the Government.
Pi rsLic LAW 216 (TITLE IV), APPROVED AUGUST 10, 1949--NATIONAL SECURITY
ACT AMENDMENTS OF 1949
Title IV of Public Law 216 provides for better financial management of the
Il!partment of Defense by requiring a performance-type budget, allowing a
gr 2ater fixibility ir the control and use of funds, and establishing a comptroller
in the Department .if Defense and in each of the military departments.
in implementing title IV representatives of the General Accounting Office have
w, Tked with the Off.ce of the Secretary of Defense and the three military depart-
m tats on a consultng and assisting basis in developing preliminary principles
ar d working out procedures and regulations for industrial funds, management
fu ads, and stock funds, for the development of cross disbursing and cross serv-
icf ng accounting methods, cost accounting procedures, improvements in property
ac .7ounting, and improved and simplified appropriation and fund accounting.
72hanges in control and audit practices of the General Accounting Office which
hr ye been made poksible by the National Security amendments of 1949 and
ot ler current accounting legislation have been made on a day-to-day basis as
in ernal 1)efense Department procedures have been developed in line therewith.
Plans are being developed in conjunction with the defense departments to
pr wide sound over-all accounting structures which coincide with the assignment
of command and onerating responsibilities and provide for the maintenance of
ac !ounting records at the source of operations to the full extent desirable, and
to develop comprehensive type internal audit programs by adapting commercial
ac !minting principles to the Government's requirements and coordinating neces-
sa 7y compliance features of the audit required under existing legislation.
The General Accounting Office is not in a position to estimate the savings that
hr re been or will be accomplished as a result of the enactment of title IV.
RLIC LAW 636, APPROVED AUGUST 3, 1950, SETTL,EMEN r OF ACCOUNTS OF CERTAIN
DECEASED C:VILIAN OFFICERS AND EMPLOYEES OF THE GOVF:RNMENT
public Law 636 simplifies and improves the method of settling and adjusting
th accounts of deceased civilian employees of the Government. Sections 3 (a),
3 (b), and 5 of the act require the issuance of rules and regulations by the
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Comptroller General setting forth the procedures to be followed in carrying out
the act. Under date of October 23, 1950, the Comptroller General issued General
Regulations 104, supplement 1, wherein the procedures and standard forms are
prescribed for the use of the agencies covered by the act. (See attachment
No 1.)
As a result of the enactment of Public Law 636, there will not only be a more
expeditious payment of amounts due deceased civilian employees, but there will
also be a considerable savings in administrative expenses. It is estimated that
under the provisions of Public Law 636, approximately 80 percent of the claims
for amounts due deceased civilian employees, which prior to December 1, 1950,
were settled by the General Accounting Office, will be adjudicated by the
administrative offices. This will result in a savings to the General Accounting
Office of approximately $42,000 per year. While savings to other agencies of
the Government in administrative costs cannot be accurately measured by the
General Accounting Office, it is believed that some savings will be made, and
it is possible that Public Law 636 will result in an aggregate savings to the
Government of $100,000 annually.
PUBLIC LAW 656, APPROVED AUGUST 4, 1950, FINANCING OPERATIONS OF THE
TREASURY DEPARTMENT, BUREAU OF ENGRAVING AND PRINTING
Public Law 656 provides for financing the operations of the Bureau of En-
graving and -Printing of the Treasury Department on a businesslike basis by
providing for a working capital fund, without fiscal year limitation, and for a
commercial-type audit of the Bureau by the General Accounting Office.
The act does not become effective until July I., 1951. However, the General
Accounting Office has been working closely with the Treasury Department in the
development of principles and standards to be followed by the Bureau of En-
graving and Printing in its new accounting system. In addition, the General
Accounting Office has recently commenced the survey portion of the audit for
the fiscal year ended June 30, 1951.
There is enclosed a copy of memorandum dated November 1, 1050, which sets
forth the progress made in the installation of an accrual accounting system for
the Bureau of Engraving and Printing. (Attachment No. 1.)
It is not possible at this time to estimate the savings that will result from
the enactment of Public Law 656. It will make possible a more efficient opera-
tion of the Bureau of Engraving and Printing and a full disclosure of costs. This
can only result in economies to the Government.
PUBLIC LAW 712, APPROVED AUGUST 17, 1950, POST OFFICE DEPARTMENT FINANCIAL
CONTROL ACT OF 1950
Public Law 712 provides the framework for the constructive .and cooperative
development for the Post Office Department of a system of accounting, financial
reporting, and audit, with full recognition of the Department's special status,
as a revenue producing public service organization.
The following steps have been taken to carry out the provisions of the act:
1. Letter dated September 22, 1950, from the Postmaster General to the
Comptroller General and reply of the Comptroller General dated September 25,
1950, expressing agreement to the proposal that certain functions of the General
Accounting Office be transferred to the Post Office Department effective November
15, 1950. (See attachment No. 1.) The transfers proposed by the exchange of
correspondence were effected on November 15, 1950.
2. By Office Order No. 92, revised, dated November 1, 1950, the Comptroller
General abolished the Postal Accounts Division of the General Accounting Office
and established the Postal Audit Division. The Chief of the Postal Audit Di-
vision is made responsible for (a) the audit of the financial transactions of
the Post Office Department as provided in section 5 of Public Law 712, and for
the discharge of any other auditing responsibilities imposed by law upon the
General Accounting Office, insofar as they may relate to the Post Office Depart-
ment; (5) the development of a comprehensive audit program of the Post
Office Department and for the auditing and accounting. methods and procedures
incident thereto; (c) cooperating in establishing an accounting system for the
Post Office Department, as required by section 2 of Public Law 712. (See attach-
ment No. 2.)
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3. Un( er date of November 2, 1950, an agreement was entered into by the
omptroller General, the Postmaster General, and the Director, Bureau of the
IF udget, relative to the transfer of records, property, personnel and appropria-
t ons frem the General Accounting Office to the Post Office Department. (See
a tachment No. 3.)
Full implementation of Public Law 712 will take considerable time and there
e many problems yet to be solved. However, representatives of the General
A ccounting Office and the Post Office Department are cooperating closely in
w )rking out all details.
With reference to the financial effect of Public Law 712, it is not believed that
St immediate savings can be accomplished. However, full implementation of
ti e act will improve control over revenues and expenditures aid make for more
el icient ;Ind economical use of funds. It is believed that this will result in
Ultimate savings, as well as a more effective operation of the postal system.
(All aAachmenti, and enclosures referred to in the Comptroller General's
re port have been made a part of the committee files.)
GENERAL SERVICES ADMINISTRATION
DECEMBER 12, 1950.
JOHN L. McCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, Washington 25, D. C.
DEAR SENATOR MiDCLELLAN: As requested in your letter of October 25, 1950,
th we is submitted herewith a report of the steps taken to effectuate a number
of reorganization plans and legislative acts which affect the General Services
Ae ministration, together with a brief summary thereof.
rhe report also includes information on administrative deficiencies eliminated
or improvements made in organization and management, and estimated savings
re..lized or expected, as the result of these reorganization plans and legislative
ac s.
Sincerely yours,
JESS LARSON, .4(1411i/liStrat07'.
St MMARY OF REPORT TO TIIE SENATE COMMITTEE ON EXPENDITURES IN TIIE EXECIT-
' `IVE DEPARTMENTS ON TIIE EFFECT OF VARIOUS REORGANIZATION PLANS AND
: ...EGISLATIVE ACTS To REORGANIZE AND PROMOTE ECONOMY AND EFFICIENCY IN
"HE EXECUTIVE BRANCH
1. XORGANIZATION PLAN NO. 7 OF 1949 TRANSFERRING THE PUBLIC RC ADS ADMINISTRA-
TION TO THE DEPARTMENT OF COMMERCE
a. Steps taken to effectuate
n accordance with the provisions of Reorganization Plan Ni:. 7 of 1949, and
del ermine lions and dispositions made by the Director of the Bureau of the Budget
pa ?suant to section 3 of the plan, the functions, records, prorerty, personnel,
an I funds of the Public Roads Administration have been transferred to the
De mrtment of Commerce. These transfers were made as of the effective date of
the plan, I. e., August 20, 1949.
b. idministrative deleiencies eliminated or improvements made in the organim-
lion and managiment of GSA
,eorganization Plan No. 7 of 1949 has resulted in the elimination of adminis-
tra :lye deficiencies and improvements in the organization and management of the
Ge]Leral Services Administration to the extent that the plan has resulted in the
ren oval ficim the Ac ministration of programs which might possibly complicate,
hal mer, or detract from the performance of its intended purpose. Some of the
ach antages made available to GSA by the elimination of unrelated functions, as
provided by Reorganization Plan No. 7 of 1949, are as follows: (1) Greater
con 2entration of the efforts of top administrative and staff officers toward the
ace miplishment of tYe primary mission of the General Services Administration;
(2) .simpliication of the problem of getting employees o understand and accept
the objectives of the General Services Administration; and (3) more effective
coo .dination of programs.
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c. Estimates of savings realized or expected
The Public Roads Administration appears to be the primary beneficiary of such
tangible savings as have been or will be realized. The General Services Adminis-
tration has no tangible savings to report.
2. REORGANIZATION PLAN NO. 15 OF 1950, TRANSFERRING ALASKA AND VIRGIN ISLANDS
PUBLIC WORKS FUNCTIONS TO SECRETARY OF INTERIOR
a. Steps taken, to effectuate
In accordance with the provisions of Reorganization Plan No. 15 of 1950 and
determinations and dispositions made by the Director of the Bureau of the
Budget pursuant to section 3 of the plan, the functions, records, property, per-
sonnel, and funds relating to Alaska and Virgin Islands public works, were trans-
ferred to the Department of the Interior. These transfers were made as of the
effective date of the plan, i. e., May 24, 1950.
b. Administrative deficiencies eliminated or improvements made in the organiza-
tion and management of GSA
The internal operations of the General Services Administration have been im-
proved by Reorganization Plan No. 15 of 1950, to the extent that it has resulted
in the removal from the Administration of programs not directly related to the
primary mission of the organization. The nature and extent of the benefits
derived from the removal of unrelated programs has already been discussed in
this report. The Department of tile Interior appears to be the primary beneficiary
of any improvements resulting from the closer integration, simplification of re-
lationships, and more economical administration, of public works programs in
the Virgin Islands and Alaska.
c. Estimates of savings realized or expected
It appears that such savings as may have been realized will have been to the
benefit of the Department of the Interior. The General Services Administration
has no tangible savings to report.
3. REORGANIZATION PLAN NO. 16 OF 1950, TRANSFERRING GSA ASSISTANCE TO SCHOOL
DISTRICTS, AND FOR WATER-POLLUTION CONTROL TO FEDERAL SECURITY AGENCY
a. Steps taken to effectuate
In accordance with the provisions of Reorganization Plan No. 16 of 1950, and
determinations and dispositions made by the Director of the Bureau of the Budget
pursuant to section 3 of the plan, the functions, records, property, personnel, and
funds of the General Services Administration relating to assistance to local
school districts and grants and loans for water-pollution-control projects, have
been transferred to the Federal Security Agency. These transfers were made
as of the effective date of the plan, i. e., May 24, 1950.
b. Administrative deficiencies eliminated or improvements made in the organi-
zation., and management of GSA
The internal operations of the General Services Administration have been im-
proved by Reorganizatimt Plan No. 16 to the extent that it has resulted in the
removal from the Administration of programs not directly related to the principal
objectives of the organization. The nature and extent of the benefits derived
from the removal of unrelated programs has previously been discussed in this
report. The Federal Security Agency appears to be the primary beneficiary
of any improvements resulting from better integration, elimination of overlap-
ping functions, simplification of relationships, and more economical administra-
tion of the programs for assistance to school districts and water-pollution
control.
c. Estimates of savings realized or expected
The Federal Security Agency appears to be the primary beneficiary of any
savings which have or may be expected to accrue. The General Services Admin-
istration has no tangible savings to report.
4. REORGANIZATION PLAN NO. 17 OF 1950, TRANSFERRING ADVANCE PLANNING AND
MANAGEMENT OF WAR PUBLIC WORKS TO HOUSING AND HOME FINANCE AGENCY
a. Steps taken to effectuate
In accordance with the provisions of Reorganization Plan No. 17 of 1050 and
determinations and dispositions made by the Director of the Bureau of the
S. Rept. 2680, 81-2 6
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Pth lget pursuant to section 4 of the plan, the functions, records, property, per-
son lel, ant. funds of the General Services Administration relating to the advance
pia ming of non-Federal public works and the management and disposal of war
pul lie worm were transferred to the Housing and Home Finance Agency. These
tra isfers were made as of the effective date of the plan, 1. e., May 24, 1950.
b. _dministrative deficiencies eliminated or improvements made in the, organi-
gation and management of GSA
I he internal operations of the General Services Administration have been
imr roved by Reorganization Plan No. 17 to the extent that it has resulted in the
ren oval from the Administration of programs not directly related to the principal
objf ctives of the organization. The nature and extent of the beneLts derived from
the removal of unrelated programs has previously been discussed in this report.
The Housing and Home Finance Agency appears to be the primary beneficiary of
any improvements resulting from better integration and coordination, avoidance
of e uplicaton of staff, and more economical administration of the programs con-
cert ed with the planning and development of communities and the disposal of
proi ,erties built or acquired under the Lanham Act of 1940.
c. I stimates of savings realized or expected
Tie Housing and Home Finance Agency appears to be the prin:ary beneficiary
of any savings which have or ma.y be expected to accrue. The General Services
Ada tinistration has no tangible savings to report.
5. REORGANIZATION PLAN NO. IS OF 1950 TRANSFERRING BUILDING AND SPACE-
MANAGEMENT FUNCTIONS TO THE GENERAL SERVICE:: ADMINIW.'RATION
a. 8 eps taPen, to effectuate
A; a result of a study to determine how the plan should be effectuated, all
Fed !mai agencies were delegated authority to continue to exercise temporarily
thei ? functons of leasing general-purpose space and the assignment and reas-
sign ment of space. The authority to continue leasing and assignment functions
was rescinded effective December 1, 1950, for the Department ef Defense and
will be rescinded January 1, 1951, for all other agencies, except in cases where
the kdministrator dererinines this is not desirable for efficient and economical
adm inistrat ion.
II connection with the transfer of office building management. functions, 112
buildings have been taken over and studies are being conducted to determine
the desirability of taking over others. The 112 buildings takes over involve
approximately 17,000,000 square feet of space and approximately 4,500 employees.
b. A iministrative deficiencies eliminated or improvements made organization
ae d management of GSA.
13:? centralizing responsibility for leasing, space utilization, and buildings man-
ager rent, in a single agency with an organization structure design ed to facilitate
the requisition of general-purpose space by lease, its assignment and reassign-
men and the management of office buildings, Reorganization Plan 18 has made
poss ble improvements in the organization and management of the Government's
adin nistrative services activities in the following ways: (1) by permitting the
leas ng of entire buil( ings and large blocks of space instead of numerous small
unit ; ; (2) by eliminating competition among Federal agencies for leased space,
vvIM h tends to drive up rental rates; (3) by concentrating leasing in the hands
d si ecialists who know the local real-estate market and are experienced in nego-
I lati ag leases ? (4) by permitting the establishment of definite standards of space
atili ;ation a,nd requir ng agencies to justify their space requests before persons
who are qualified to judge the reasonableness of the requests; (5) by preventing
'ger cies from entering into leases at high costs when suitable space is, or is
drat t to become, available in Government-owner buildings or in lower-cost leased
miii ings ; and (6) by permitting the use of 57year leases inst fad of annual
;easi s where the condition of the rental market warrants.
K timate,; of savings realized or expected
iTi til the plan has been in effect a greater length of time, it is not possible to
;tab what 'reduction in expenditures or savings may be realized cr effected as a
-esu t of plan 18. Hewever, the centralization of responsibility and operations
.tone. ?riled aaith the leasing and assignment of space outside the District of Colum-
-An, now scattered among a large number of agencies, should produce savings
,of a offistantial amount.
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6. REORGANIZATION PLAN NO. 20 OF 1950, 'IRAN SFERRING STATE DEPARTMENT
FUNCTIONS REGARDING STATUTES AT LARGE AND OTHER MATTERS TO OSA
a. Steps taken to carry out Reorganization Plan 20 and Public Law 821
Responsibility for the performance of the functions listed in the reorganiza-
tion plan has been delegated to the National Archives and Records Service. The
records, property, personnel, and funds of the State Department employed in
connection with all of these functions were transferred to the National Archives
and Records Service on May 24, 1950, the effective date of the reorganization
plan.
The treaties and other international agreements entered into beginning as of
January 1, 1950, will be published by the State Department in a separate series
as required by Public Law 821. Public Law 821 confers no duties on the General
Services Administration other than those already assigned under Reorganization
Plan No. 20.
b. Administrative deficiencies eliminated or improvements in organization and
management of GSA
At the time of the transfer of functions, there existed a very acute need for
reducing the time required to publish slip laws and the Statutes at Large. A re-
view of the methods used in connection with the publication of slip laws and
Statutes at Large revealed the possibility of developing improved publication
practices by taking advantage of methods already used in connection with the
Federal Register, provided approval of certain changes could be obtained from
the Government Printing Office and the Joint Committee on Printing. This
approval was obtained and should result in overnight printing of all but the
longest slip laws. It should also result in the publication of future volumes of
the Statutes at Large within 2 months of the end of a session.
c. Estimate of savings expected
Official estimates furnished by the Government Printing Office indicate that
the offset printing of the slip laws and Statutes at Large will result in imme-
diate savings in printing costs of approximately 37 percent. This would have
amounted to $41,848.95 if the relatively few laws enacted in 1948 had been printed
by the new method.
7. PUBLIC LAWS NOS. 152 AND 754, FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES
ACT OF 1949, AND AMEN DMEN TS THERETO
a. Steps taken to effectuate
(1) Organizing to meet the provisions of the acts.?The agencies transferred
to General Services Administration continued under a temporary operating plan
until December 11, 1949, when a new organization for the central office of the
Administration was put into effect. On April 24, 1950, geographic areas were
defined for 10 regional offices to be located in key cities throughout the country.
On September 25, 1950, the regional office organization was established, pro-
viding for the assignment of functions and responsibilities of an operating nature
to units that are a counterpart of the planning and control units of the central
office, and authority was delegated to various officers and employees of the Admin-
istration to carry out the assigned responsibilities. The appointments of regional
directors were announced September 26, 1950.
(2) Personal property management.?The Administration's personal property
management program is directed toward accomplishment of the following broad
objectives: (a) to develop Government-wide control of inventories and assure
maximum utilization of excess property before it is disposed of as surplus or new
purchases are made; (b) to assure that purchases are made by economical and
efficient methods, in the quantities required, and with a fair proportion going to
small business; (c) to assure economical storage and issue; and (d) to assure
economical freight traffic practices in the shipment of Government property, and
efficient management and procurement of other public utility services. The
activities authorized by Public Law 152 and carried on in connection with these
broad objectives are described in the following paragraphs.
(a) Establishment of a uniform property identification or catalog system and
standard purchase specifications.--On July 19, 1950, the Administrator of Gene,ral
Services delegated to the Secretary of Defense full authority to develop the
system. The Secretary of Defense has redelegated this authority to the Chairman
of the Munitions Board. An advisory group, composed of representatives from
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REORGANIZATIONS IN THE EXECUTIVE BRA NCH
ch of the three military departments and the General Services Administra-
a at, and a system for appeals from decisions were also set up.
By August 15, 19,50, one-third of the estimated total of military supply items
h: d been described under the new uniform Federal catalog system. The General
S( rvices Administration, as representative of civil agencies, has participated
in policy and procedural studies with the Munitions Board Cataoging Agency.
Federal specifications do not now cover all of the important items of common
um e required by Federal agencies. The Administration's program has been
de signed s'o that the- objective of making Federal specifications available is being
ac !omplished more quickly. During fiscal year 1950, 191 revisions, amendments,
or new Federal specifications were promulgated, and 26 GSA stecifications were
lam ued.
(b) Contracting.--The basic objectives of this activity are (1) the acquisition
of needed. commodities, in the proper quantities, at the -proper times, and at
ad vantageous prices, and (2) the full utilization of all available sources of supply,
including small business establishments. Action being taken to achieve these
ob jectives includes: ? (1) expansion of consolidated purchasing of common-use
items by the Administration and other -designated agencies: (2) reexaminatien
an 1-adjustment of purchasing policies, methods, and techniques in the light of
ch tnging requirements and economic conditions; (3) development of procure-
m( nt regilations designed to promote uniformity, simplicity, and speed in
pu chasing; and (9,) the survey of contracting and purchasing facilities of
ex, cutive agencies.
:c) Transportation, traffic, and other public utility services management.?
A omprebensive program Of freight traffic management has been developed which
is timed at eliminating excessive Charges for movement of public property and
at making available to Federal agencies a reliable source of relevant information.
freight classification guide covering some 3,000 stock catalog items, describ-
im all such items in shipping terminology, has been issued and revised and its
us( made mandatory in all supply centers of the Administration.
Administration activities in the field of public utility service management
include the following: (1) Supervision of contracting for majer utility service
co] tracts to insure that service is obtained at minimum rates ; (2) continuing
re iew of existing power contracts to insure that these are at the lowest rates;
(3 survey and reduction of Government telephone and telegraph installations
to the minimum siza consistent with efficiency; (4) participation in the more
im (ortant utility rate negotiations and formal rate cases before regulatory
cm 'missions; and (5) negotiation of long-term contracts, whenever these will
pr( vide for lower rates than otherwise available.
d) Inspection.?The General Services Administration is currently engaged in
est tblishing economical and efficient systems for inspection and testing through-
out the Federal Government. Substantial progress has been made in formulat-
ing inspeclon and testing arrangements with the military serv ces in an effort
to ming about an eventual interchange of inspection and testing services on a
rd i nbursable basis.
e) Storage and issue.?The program for achieving lie desired results in this
fiel I involves the following major phases: (1) Continued operation and improve-
me it of the Administration's storage-and-issue warehouses, with greater cover-
ag( of common-use items: (2) extension of the stores system to include all items
cm (monis used by executive agencies; (3) study of storage-and-issue facilities
of executive agencies to determine which should be consolidated, merged, or
ott erwise modified; (4) assignment of storage and issue functions with respect
to specific commodities to other agencies when it is determined that a given
ag( ncy is best qualified to perform such functions for all agencies; (5) develop-
ing and prescribing r ?Hey and methods of storage and issue of personal property
by executive agencies; (6) study of inventories held by executive agencies arid,
thr nigh cooperation with them, the establishment of reasonable inventory levels;
an( (7) development of a means of providing informal ion to measure the effec-
tiv ness of this program and to point out the areas in need of corrective action.
(f) Property utili-mtion and disposal.?The program covering the utilization
an( disposal of excess and surplus personal property was developed as a result
of ? (road studies carried on during fiscal year 195(). These studies also provided
the basis a regulation, setting forth the basic policy of the Administrator.
De -- ails of the field organization and operating procedures needed by General
Set vices Administration to carry out operations under the regulation have been
de sloped. The regidation, field organization, and procedures are to be placed
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REORGANIZATIONS IN THE EXECTJTIVE BRANCH 41
in operation this fiscal year and should materially facilitate better utilization of
personal property.
(3) Real property management.?Responsibility for the new and transferred
functions relating to real property management are carried out in the General
Services Administration by its Public Buildings Service, comprised primarily of
former Public Buildings Administration personnel. The consolidation into one
service of all real-property functions afforded new opportunities for improving
.efficiency in the acquisition, utilization, and disposal of real property.
During the fiscal year 1950, plans were developed for the improvement of
services previously performed by :constituent agencies and for the execution of
new and expanded responsibilities. Standards were developed for utilization of
real property owned and leased for the use of the Government, and regulations
were prepared setting forth the more important factors to be considered in
bringing about more effective and efficient space utilization. Surveys Of Gov-
,ernment property and property-management practices were initiated to ascertain
the extent to which space is economically and efficiently utilized and to provide
the basis for transfers and reassignments of space.
Procedures were developed for the reporting and transfer of property which is
?excess to the needs of individual agencies and for the disposal of realty which
is determined to be surplus. Federal agencies now report to this Administration
real property no longer required for the discharge of their responsibilities and
-make known their needs for additional property. This matching of needs with
available property assures an efficient program of space and property use. No
property is disposed of without careful screening for defense needs.
The following are the major activities carried on in connection with the real
property management functions of the Administration: (a) real property acquisi-
tion and utilization; ( b) design, construction, repair, and improvement of Federal
buildings; (c) operation, maintenance, and protection of public buildings; (d)
management of the national industrial reserve property; and (c) management
and disposal of surplus real property.
(4) National Archives and records management.?in the field_ of records man-
agement, Public Law 152 transferred to the Administrator of General Services
the functions previously assigned to the National Archives Establishment.
Public Law 152 also assigned additional functions to the Administrator of
General Services. He was authorized to make surveys of Gov_ernment records
and records management and disposal practices and to obtain_ reports thereon
from Federal agencies. The Administrator was further authorized to promote
improvements in records management, including central storage and disposition
of records, and to report to Congress and to the Director of the Bureau: of the
Budget the results of such activities.
On September 5, 1950, Public Law 152 was amended by the enactment of Pub-
lic Law 754 (Federal Records Act of 1950) which established .the authority of
the Administrator of General Services on a Nation-wide basis_ with respect to
records management activities. He was empowered to bring about improvements
. of standards, procedures, and techniques with respect to the creation of records,
the maintenance of current records, and the disposal of records no longer needed
for current operations. It specifically authorized the Administrator to establish
and operate records .centers. Provision was also made for deposit in the Na-
tional Archives, under certain conditions, of the personal papers and other per-
sonal historical documentary material of the Presidents, the heads of executive
,departments, and certain other officials.
Responsibility for the records management program in the General Services
Administration is assigned to the National Archives and Records Service, which
is comprised of the personnel of the former National Archives Establishment.
(a) Records management.?
(i) Development of organization for records management?A Records
Management Division was created in the National Archives and Records
Service by order of the Administrator effective December 11, 1949.
(ii) Records management surveys.?During the fiscal year 1950 four sur-
veys were undertaken, one of which had been completed by the end of the
year.
(iii) Records inventorying and schednling.?To determine the exact ex-
tent to which Federal records have been scheduled, a careful review was
undertaken of all records retirement schedules approved by Congress. Per-
missive general disposal schedules were issued covering records in common
use throughout Government agencies, snch as personnel records and fiscal
and accounting records. General schedule No. 7, covering the records of
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4 ? REORGANIZATIONS IN THE EXECUTIVE BRANCH
health units in Government agencies, was compiled and promulgated in May
1950. New regulations establishing the standards for the reproduction of
records by microphotographic processes were promulgated by the National
Archives Council on July 29 and approved by the President on August 22.
A single standard Government form was introduced for use in obtaining
authorization to dispose of records, replacing six different forms previously
necessary. In December 1949 a new manual on the Dispcsition of Federal
Records was issued.
(iv) Records centers.--To test the economy and efficiency of records cen-
ters, it was decided to establish a pilot General Services Administration
records center in the New York City area, which has the largest concentra-
tion of FeclerW records outside Washington. By June 30, 1950, the center
had received 45,000 cubic feet of records and thereby ha released 57,000
square feet of space.
(b) The National Archives--
(F,, Appraisals and accessioning of records.--As a result of new pro-
cedues established during the year and described in the manual, the Dis-
position of Federal Records, disposal work was considerably streamlined.
(ii) Analysis and description of records.?The major accomplishment
of the analysis and description program was the completion during the year
of a guide, or handbook, describing the functions and records of Federal
agencies of World War II. Also, the popular booklet, Your Government's
Records in the National Archives, which was first published in 1946, was
revised to include descriptions of records received up to April 1, 1950; the
284-rage Preliminary Inventory of the Records of the United States Senate
was published; substantial progress was made in inventorying the records
of the House of Representatives in the National Archives; and descriptions
of the records of the First through the Sixty-sixth Congress were completed.
In addition, a valuable inventory of the land-entry papers of the General
Land Office was published.
(c) Phe Federal Register and other publications?
(i) Code of Federal Regulations.?Major attention of the Federal Reg-
ister Division was centered during the fiscal year 1950 or the compilation
and publication of the 1949 edition of the Code of Federal Regulations.
( ii) Federal Register.?During the fiscal year 1950, 11,175 documents.were
reviewed and filed, and 8,550 pages were proofed and released for press.
(iP) United States Government Organkation 114 anual.?The United States
Government Organizational Manual was revised in 1949 to bring it into
harmony with the Code and the Federal Register so that the three consti-
tute a useful, related set of publications.
(iv) Indexes and aveillaries.?Monthly, quarterly, and annual indexes are
published covering all documents published in the Federal Register. Each
book of the 1949 Code of Federal Regulations contains a short, separate
index; and a general index volume, in process on June 30, 1950, are sched-
uled for delivery within a few months after the close of the fiscal year 1950.
(d) The Franklin, D. Roosevelt Library.?On March 17, 1950, about 85 percent
of the total volume of the Roosevelt papers, 1910-45, were opened for research
rposes.
b. AdminIstrative deficiencies eliminated or improvements made in the organiza-
tion and management of GSA
kt the time of the establishment of the General Services Administration under
Pi blic Law 152, identical or similar staff and administrative service functions
Iv( re being performed independently in the agencies brought under the jurisdic-
th n of GSA. These included the development of policies, procedures, methods,
mu d orgarization structure, and the furnishing of internally required administra-
ti, e services such as ma il, file, and messenger servnp ; procurement; travel;
te ephone ; printing and duplicating; etc. Much prog 7ess has been made in the
co isoliclarlon of these functions. The integration of personnel offices, and budget
ai d accounting activities, are examples of improvements made in the staff or
ad ministrative service areas.
aegional offices were established and operating vaithority decentralized in
or ler to (a) provide better service to the field offices of execulve departments
ar agencies; ( b) decrease costs and operational delays inherent in referring
.tters for central office approval; (c) increase local participation in Govern-
mi purchasing; ( d) provide top-level representation throughout the United
St ttes for liaison with business firms, business councils, and other agencies on
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Government property and records management activities; and (e) assist small
business through increased local procurement.
To speed up management improvement studies within the Administration,
an allocation was obtained from the President's fund for management improve-
ment to finance the following projects: (a) The study of legislation pertaining
to the procurement, utilization, and disposal of Government property to determine
revisions needed as the result of Public Law 152; (b) review and improvement
of operations relating to standard purchase specifications and commodity stan-
dardization; (c) analysis of cataloging programs of civil establishments; (d)
development of standards for establishing inventory levels and requirements;
(e) review of purchase and storage activities of the Federal Government; (f)
development of a plan for coordinating Government-wide inspection and testing
activities; (g) collection of facts and devehipment of plans for Government-wide
property utilization and disposal; (h) development of plans to reduce transpor-
tation costs; (i) conduct of pilot operations for records centers (j) planning
and promotion of improved methods for record making, record keeping, and
record disposition; (k) survey and development of plans for space assignment
and control, leasing, management of real property, and maintenance of real
property inventory; (1) development of plans for centralizing control of office
furniture, furnishings, and equipment; and (m) development of standards of
efficiency in the management of public buildings. More detailed information on
the improvements accomplished as the result of these special projects and other
activities is contained in the report covered by this summary.
c. Estimates of savings realized or expected
? There follow examples of some of the instances in which savings have been
realized as the result of operations carried on by the General Services Adminis-
tration under the authorities contained in Public Law 152. Since these examples
are summaries in many cases, reference must be made to the over-all report to
obtain an accurate understanding of what they involve.
(1) Personal property management?(a) Method of procurement for furni-
ture.?At the request of the Quartermaster General, Department of the Army,
furniture was procured at a cost of $1,105,000, as compared with an estimated
$1,400,000 if procured by routine methods.
(b) Standardization of purchase specifteations and commodities-
- - (i) Nine new GSA specifications for executive-type wood furniture con-
tributed to price reductions estimated to save $114,000 annually.
(ii) Use of a new GSA specification for wood desks is expected to con-
tribute to an estimated saving of $55,000 in fiscal year 1951, based on pur-
chasing volume in previous years.
(iii) Implementation of a standardization project to replace milled toilet
soap with ideating toilet soap wherever possible is expected to result in a
savings of approximately $45,000 annually.
(c) Freight-rate negotiations.?Negotiations with carriers for adjustment of
freight rates produced estimated savings of $1,711,709.
.(d) UtiUties management---
(1) Consolidation of telephone switchboard facilities has resulted in sav-
ings of personnel and equipment estimated at $39,000 annually.
(ii) More faverable rates obtained for electricity and gas consumption
- resulted in savings estimated at $7,500 annually,
(ill) Successful defense in the Court of Claims of a claim by the city
of Los Angeles for additional payment for electric service at a Japanese
relocation camp saved $54,000.
(iv) Refund obtained for prior year's overcharges for gas service
amounted to $11,800.
(v) Estimated savings on an electrical installation in New York through.
the revision of equipment specifications: $20,000.
(e) Procurement of fuel oil for 'Washington area.?By taking advantage of
new storage facilities, it is estimated that there will be an annual saving of
approximately $88,000.
(f) Furniture repairs.?An agreement with the Federal Prison Industries to
service old furniture and to refurnish and rebuild surplus furniture resulted in
estimated savings for fiscal years 1950 and 1951 of $07,000.
(2) Real property management?(a) Building improvements.?Federal build-
ings in Virginia were connected to the Virginia Heating and Refrigeration
Plant for greater utilization of plant capacity. Estimated savings, three projects,
$77,500.
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(b) Protection and maintenance of NM plants.?Changing from contract op-
e ?ation 170 force account; operation and vice versa when advantageous for six
1\ IR plants in the Pennsylvania, Ohio, and Indiana area resulted in savings
o approximately $32,700 annually.
(c) Communications?Teletypewriter service.?Telephone transmittal plus ma-
c tine confirmation copy by mail or messenger of messages to non-Government.
o Rees resulted in an estimated saving of approximately $23,1)00 annually.
The operations of the teletypewriter system for the fiscal year 1950 effected
fi r the entire Government a potential saving of approximately $777,000. On
tie basis of first-quarter experience in 1951 it is estimated that the potential
s; .vings to the Government will approximate $1,000,000 for the fiscal year 1951..
(d) Space conversion.?Dormitory and residence space at West Potomac Park,
e: :cess to the needs of the Government for housing purposes, was converted to
u 'gently needed office space with an estimated net annual savings, after the
ft at year, of $582,000 over cost of equivalent leased space.
(e) Space allocation.?
(i1 Consolidation of GAO activities in the Old Post Office Building re-
leased space to Geological Survey equivalent in value to $8,900 of leased
space.
(ii) Activities of SEC and EILBB at 101 and 131 Indiana Avenue were con-
solidated to provide space for two Senate commiltees, resulting in a saving
of about $14,500 annually, less $4,820 for tenant change and moving costs.
(3) Nctional Archives and records management--(a) Beards management
ST rveys.--
(i) The Nat:onal Capital Housing Authority requested a survey of the
Authority's records system which resulted in recommendations for the re-
lease of space and equipment equivalent to $11,250.
(ii) Another survey, of the General Services Administration itself, indi-
cates a potential gross savings in space and equipment equivalent to
$300,000.
(b) Records consolidation,.?
(i) To test the economy and efficiency of records centers, a pilot GSA
records center was established in the New York City area, with net savings
estimated at $57,000.
(ii) Termination of leases of HOLC and assumption of records respon-
sibility by GSA records center in Brooklyn resulted in savings of. $35,150
for 1951.
(c) Federal Register roprints.-Agencies have been requested to order reprints
of Federal Register documents from standing type rather than have new type
se . by GPO. Estimated annual savings: $40,400.
(d) Changes in printing processes for Federal laws.?Annual savings based.
on Eighty-first Congress, first session, workload are estimated at $41,850.
4) Consolidating and relining functions and procedures.?(a) The previously
ex sting payroll sections for FSS, PBS, NARS, Liquidation Service, and Office
of Administrator, 33'WA, integrated into one payroll section in Washington
ar Savings by release of 23 employees, gross salary $82,000 annually.
b) Punched-card tabulating sections of PBS?Building Management; PBS?
Pe raolmel; PBS-Cost and Reports and Liquidation Service were. integrated
in o one group. This resulted in a personnel savings of 14 employeesIvith annual
sa ary of $49,000, and rental of equipment savings of $29,500 annually.
8. BUDGET AND ACCOUNTING PROCEDURES 1 CT OF 1960
rhe General Services Administration is in full accord with the provisions of
tit! Budget and Accounting Procedures Act of 1950. The Administration be-
lie yes that this act is the most important and progressive piece of budget and
!ounting legislation passed by the Congress since the Budget and Accounting-
Act of 1921.
'assage of this act has had no direct effect on the General Services Admin-
ist ration, however, because the Administration organized itself initially in con-
te] inlation of its enactment.
The complete report of the General Services Administrator is on file with the
co] amittec.)
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HOUSING AND HOME FINANCE AGENCY
DECEMBER 5, 1950.
. Hon. JOHN L. MCCLELLAN,
Chairman, Senate Committee on Expenditures in the Executive Departments,
United States Senate, Washington, D. C.
DEAR SENATOR MCCLELLAN : We are pleased to furnish the information re-
quested in your letter of October 24, 1950, concerning the action that has been
taken by this Agency pursuant to Reorganization Plans Nos. 17, 22, and 23 of
1950, as well as the effects on this Agency of other general legislative actions
taken by the Eighty-first Congress.
Of the three reorganization plans transferring functions to the Housing
Agency, one was effective in May, and two, in September 1950. I am sure you
recognize that, because of the relatively brief period of time during which
these activities have been under the jurisdiction of this Agency, we must neces-
sarily address ourselves in large part to improvements and economies which
we can now anticipate as a result of the transfers rather than limiting our dis-
cussion to those which have already taken place. Nevertheless, we are pleased
to be able to say that substantial progress has been made in carrying out the
obje:tives of the plans.
The primary significance of these plans at this point, both as to economy
and effectiveness of operations, lies in the fact that they permit the progressive
integration of these programs and functions with related activities, with results
which will have cumulative effects in terms of improved service to the public
and more economical administration.
REORGANIZATION PLAN NO. 17 OF 1950
This plan transferred to the Housing and Home Finance Agency the pro-
grams of the General Services Administration relating to the advance planning
et non-Federal public works and the management and disposal of certain war
public works. Orders were issued on May 24, 1950, effecting the transfer to
I:EWA of the functions and personnel of the Community Facilities Service, the
organization in GSA which had been responsible for the administration of these
programs.
Improvements resulting from the transfer
This plan established for the first time a single point in the Federal Gov-
ernment equipped to deal with the problems of local communities on matters
affecting housing and related community facilities. The opportunities thus pro-
vided for a coordinated approach to localities on problems involving over-all
community development are more and more being realized.
The advantages which accrue from the integration of these programs in a
single Federal agency have been forcefully illustrated in recent months. A
single Federal agency has been in a position to deal with other agencies on
defense planning problems involving housing, community development, and local
public works. The Housing and Home Finance Agency has been designated
by the Secretary of Commerce as the claimant agency for requirements with
respect to all housing as well as for most community facilities. There can be
little doubt that this coordinated representation during the defense period on all
these related matters will be of great benefit both to localities a,nd to the_effec-
tiveness of administration by the Federal Government.
In addition to insuring coordination at the policy level of the broad objectives
of these related programs, their placement in one agency has, of course, .estab-
lished a closer working relationship at the operating level. It has stimulated
discussion of working policies a ad problems between the Division of Slum Clear-
ance and Urban Redevelopment and the Community Facilities Service with
respect to applications and plans for specific projects, with the result that
advances for public works are increasingly considered in the light of plans for
urban redevelopment generally. Both programs thus contribute more effectively
to the common objective of sound development of the community as a whole.
In addition, frequent Cmmtacts on related problems involving local relationships
will contribute to the clarification and coordination of Federal-local relationships
on closely related activities.
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46 REORGANIZATIONS IN THE EXECUTIVE BR ,iNCH
I stimaie of savings
The Community Facilities Service was transferred intact as an operating divi-
s .on within the Office of the Administrator of the HI1FA on the effective date of
eorganization Plan No. 17. The integration of common administrative services
f ir the headquarters of Community Facilities Service with those for other Office
o2 the Administrator programs has permitted fairly substantial savings. It is
r A easy to isolate the total savings involved because some of the administrative
)sitions retained are absorbing work load for other expanding programs in. the
( ffice of the Administrator. However, it has been possible to identify a reduc-
t on in rersonahservice costs of $60,000 per year resulting from_ this integration.
I ; is anticipated that additional cost reductions will be possible as further con-
s. didation and reorganization of activities is completed.
REORGANIZATION PLAN NO. 22 OF 11)51)
Reorganization Plan No. 22 transferred the Federal National Mortgage Asso-
c ation from the Reconstruction Finance Corporation to the Housing and Home
Mance Administrator. On September 7, the effective date of the plan, action
Ns as completed to transfer the association to the IIHFA.
Taproventents resulting Irony the transfer
The primary objective of this reorganization plan, recogniz.A by the Hoover
C umnission in recommending the transfer and by the Congress in its approval,
In as the closer integration of the Government's secondary mortgage market activi-
ties with other Federal housing programs. Under the plan, 03 FNMA board of
d rectors, under the chairmanship of the Administrator, conK sts of officials of
ti e Office of the Administrator of the HHFA, the Chairman of the Home Loan
B ink Board, and the Federal Housing Administration Commissioner. This
Tangement has assured that FNMA operating policies are constantly reviewed
iT terms of related housing policies and problems.
The oreration of the FNMA as an integral part of the housing agency made
)ssible an immediate policy redirection of the program to permit the institu-
ti m of aa intensified sales program, consistent with the desira bility of reducing
rr ortgage credit funds in the defense period.
The anticipated increase in mortgage sales resulting from this sales activity,
? upled with the decline in mortgage purchases due in large measure to legi.sla-
ti ie changes recommended by this agency and enacted by the Congress, will permit
a substantial reduclon in the impact of this program on the Federal budget.
E aimates of savings
The decrease in mortgage purchases and the anticipated increase in mortgage
st les explained above are expected to permit repayment of about $400,000,000
ir Treasury borrowings by the end of fiscal year 1952.
Prior to the transfer of FNMA, operations were conducted at 31 agency offices,
w tich were responsible for handling other RFC transactions as well as FNMA
ft nctions. The distribution of workload following the transfer permitted the
? nsolidation of some of the smaller field offices with other operations. Nine
01 ices were abolished immediately after the transfer. Since that time three
m ditional offices have been consolidated with other offices. It is expected that
ft rther consolidations will result in a further reduction to a total of six offices.
T 'ere has been a reduction in staff of 70 employees since the effective date of
tr. a transfer.
As a result of the redirection of the program and the consolidation of offices
it is expected that administrative expenses for fiscal year 191 can be held to
ai proximately $1,00,000 less than the rate of administrative expenditures at the
ti ne of the transfer; and that administrative expenses for fiscal year 1952 will be
rc duced substantially below the 1951 amount.
REORGANIZATION PI.AN NO.
This plan transferred from the RFC to the Housing and Home Finance Agency
tie lending functions of the Government with respect to the production and
di 3tribution of prefabricated houses and components, consistent with the recom-
m indation of the Hoover Commission that "all housing activities be placed in one
ai ency under a single Administrator." The transfer was effected on September 7,
11.50, with the establishment of this function as an operating program in the
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
Office of the Administrator, HIIFA. Approximately $13,000,000 of uncommitted
authorizations were transferred along with the outstanding loans.
Improvements resulting from the transfer
The change in housing policy which has occurred since this plan was conceived
has necessarily affected the benefits that might flow from it. It was anticipated
that the plan would permit the prefabrication technique to be utilized in con-
junction with other housing programs to expand the housing supply. The impact
of the mobilization effort has, of course, required a reversal of that objective.
It is important, however, that the application of the techniques of prefabrication
and site fabrication to military and defense needs be fully explored. To the
extent that study indicates that they are especially well adapted to meeting
special defense problems, their adaption to this purpose will be facilitated by
the fact that they are handled in the agency dealing with both housing and
community facilities problems in defense and military areas.
We are presently studying the relationship of this program to FHA programs
for insuring loans and mortgages for prefabricated housing under sections 609
and 611 of the National Housing Act. When conclusions are drawn from that
study it will be possible to take immediate action to install any desirable
improvements.
An important benefit gained from the placement of this program in the housing
agency is the availability for this program of the market analysis, financing and
distribution, and other skills available in the Division of Housing Research. The
use of such skills and experience is putting us in a better position to protect the
Government's interest in outstanding loans, as well as to increase the effectiveness
of the prefabricated housing industry in the defense effort.
Estimate of savings
The administrative expenses required for this program are comparatively
small. Present indications are that it will not be possible to achieve any econo-
mies in administrative costs in the foreseeable future.
OTHER LEGISLATIVE ACTIONS
Federal Property and Administrative Services Act
The stimulation and emphasis given by this act to the functions of records
management, procurement policies, property controls, etc., should result in im-
proved administration of these activities throughout the Federal Government.
Regulations issued to date by the General Services Administrator are essentially
sound in concept and application to the Government's housekeeping business.
To date, we have not been able to identify any savings resulting from operations
under the act; however, it should be recognized that this agency's operations
constitute a very minor part of the total activity affected by the act.
Budget and Accounting Procedures Act
Several provisions of this act have definitely contributed to improvements in
the mechanics of administering the programs of this Agency. Among these is
the waiving of warrants, authorized in section 115 (a) (1), whereunder transfers
of appropriations and funds authorized by law may now be accomplished directly
in the accounts of the disbursing facilities; reimbursements and 'refunds (under
the same authority) may now be credited directly into the accounts of such
facilities; and the repeal of section 607 of the Federal Employee's Pay Act of
1945, as amended, having to do with personnel ceilings.
The first two examples, resulting from waiving the "warrants" requirements,
operate to speed up considerably the availability for disbursement of funds
legally available for the purposes intended, by obviating the need for their
deposit into "Treasury cash," and the issue in the Treasury of covering, transfer,
and pay warrants, each of which had to be individually countersigned by or
for the Comptroller General. The repeal of the personnel ceilings provision has
made available for normal administrative functions much time on the part of
administrative personnel hitherto devoted to the quarterly examination of
personnel requirements and the general administration of the "ceiling" concept.
Other sections of the act, when activated, should further contribute to an
improvement in administrative processes.
Sincerely yours,
RAYMOND M. FOLEY, Administrator.
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9 8 R:EORGANIZATIONS IN THE EXECTIAVE BRANCH
DEPARTMENT OF THE INTERIOR
R.:CEMBER 4, 1950.
I [OH. JOHN L. MCCLELLAN,
Uniied States Senate, -Washington 25, D. C.
MY DEAR SENATOR MCCLELLAN : I subndt the attached rewt for the Depart-
r rent of the Interior requested in your letter of October 24, 1950, concerning
ministrative action taken in connection with reorganization plans. You will
r ote that this report deals not only with action under specific reorganization
tans directly affecting the Department of the Interioi7, it also includes, in accord-
a nce with your request, administrative action taken under general reorganization
I( .gislation.
In summary, I wish to affirm my intention to do all things possible to take
a ivantrge of the impetus to improvement of the conduct of the Department's
b isiness resulting from the Hoover Commission reports, work of your commit-
t e, and congressional action. I believe we have made substantial progress in
t :is direction. However, implementation of many recemmeniations, and exer-
c se of new authorities obtained by reorganization plans require a great deal
o ! detailed study and planning before action can be taken. Further, many of
t e benedts from these efforts are intangible and are not measurable in monetary
f 'rms. Consequently, accomplishments are often difirmIt to appraise and report
o 1. Nevertheless, very real benefits have been and are being achieved.
Sincerely yours,
VERNON D. NORTHROP,
Assistant Secretary of the Interior.
EPORT CN IIEORGATTIZATION ACTION IN THE DEPARTMENT OF THE INTERIOR FOR THE
SENATE COMMITTEE ON EXPENDITURES IN THE EI:ECTJTIVE DEPARTMENTS
1 Actio, under sveide reorganization plans
(a) Reorganization Plan No. 3.?Reorganization Plan No. 3 of 1950 made pos-
s hie the reorganization of the Secretary's office along major purpose lines so as
to permit. more effective integration of the management of the Department, and
b relieve the Secretary of an overwhelming supervisory load. Among other
ti iIngs, the plan raised from two to three the number of Assistant Secretaries and
ithorized an Adm' nistrative Assistant Secretary. Thaler this authority the See-
r tary, in July 1950, designated three program Assistant Secreta ries. The natural
ri source management task of the Department was considered to be divisible into
tl Tee major purposes. Therefore, the Secretary designated an Assistant Secre-
t: ry for l'ublic Land Management, an Assistant Secretary for 'Water and Power,
a id an Assistant Secretary for Mineral Resources. The bureau and offices pri-
arily engaged in these activities were assigned to these Assedant Secretaries
r supervision and management. The program Assistant Secretaries were given
tthority by the Secretary to supervise and direct the activities in their respec-
ti ve areas.
In keenin.g with this eoncept proper staff faeilities were provided in each of
ti ese program arees to make it possible for the Assistant Seeretaries to fulfill
ti eir resitonsibilitics. These staff facilities consist oii7 a Water and Power Divi-
si )n, a Mineral Resources Division, and a Land Utilization Division, each re-
SI to the appropriate Assistant Secretary and encompassing all of the
aff facilities requiired by that: Assistant Secretary te permit him to insure ade-
quate program development, establishment of policies, and supervision of pro-
m am execution for his area. At the same time, the previously existing staff
ft cilities were incorporated in these new divisions so as to permit a balanced
al proach.
Under Reorganization Plan No. 3 an Administrative Assistant Secretary was
ai pointed. The purpose of this move was to permit integrated direction of the
a( ministrative management activities of the Department and to strengthen and
b: lance the staff facilities in this area. The result has been the establishment
of five divisions within the administrative management area at the secretarial
le rel under the Administrative Assistant Secretary. These live divisions are
B idget and Finance, Property Management, Personnel Management, Management
R search, and Administrative Services. This last Division incorporates operating
ministrative functions for the Secretary's office- permitting the remaining four
di visions to operate, as staff areas in their respective fields, and thus assure
pi oper secretarial attention in this area throughout the Department.
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REORGANIZATIONS IN THE EXECUTIVE BRANCH 49
The Secretary needs to assure himself of the development and integration of
a total natural resource program. This responsibility was assigned to the pro-
gram staff with the assistance of the field committees. As a result of these ac-
tions the program development and management load of the Department falls
largely on the three program Assistant Secretaries and the Administrative As-
sistant Secretary. The Secretary is thus left free for Major policies and over-all
guidance. Additionally, through the facility of the field committees and the
program staff working with the Assistant Secretaries, he is able to assure inter-
area coordination on program development and the establishment of depart-
mental objectives and goals. Thus, there exists a relatively small key staff to
advise the Secretary on major policy problems. At the same time, it is this
same staff which is responsible for execution and management of the decisions
made by the Secretary.
A further result made possible by Reorganization Plan No. 3 relates to the
authority of the Secretary. Certain statutes enacted in early years conferred
authority for exercising certain functions on the heads of . some of the bureaus
of the Department, subject to general supervision by the Secretary. Reorgani-
zation Plan No. 3 transferred all authority thus conferred to the Secretary of
the Interior. At the time plan No. 3 became law the Secretary issued order
No. 2563 delegating all authority thus transferred, until further notice, to
officials of the Department having such authority before plan No. 3 became law.
The effect of this provision of the plan is important, however, in terms of clearly
centralizing in the Secretary all authority for the direction and management
of the activities of the Department, with some minor exceptions. Thus, the
means are provided for more effective integration and secretarial control than
had been previously. Furthermore, the plan permits the Secretary to delegate
any authority to any official so that the Secretary now has the tools needed to
insure effective management.
None of these actions resulted in specific monetary savings, but they have
already contributed measurably to increased effectiveness in. operation and
management of an integrated Department.
(b) Reorganization Plan No. 15.?Reorganization Plan No. 15 of 1950 pro-
vides for the transfer of two public works programs from the General Services
Administration to the Department of the Interior. One of these programs
provides for the construction of public works in the municipalities of St. Thomas
and St. John and St. Croix, Virgin Islands. The other provides for the construc-
tion of public works in the Territory of Alaska. In view of the location of the
programs, jurisdiction over them was placed by the Secretary in the Office .of the
Territories of the Department of the Interior. The employees of the General
Services Administration in Washington were transferred to the Department of
the Interior, and have been provided with offices in the Department of the In-
terior Office Building. They have been set up as a unit of the Office of Territories,
working under the administrative supervision of the Assistant Director of that
Office. In the administration of the program they work closely with those em-
ployees of the Office of Territories who handle the general affairs of Alaska and
the Virgin Islands.
The employees of the offices of the district engineers in the Virgin Islands
and Alaska were also transferred to the Department of the. Interior under
Reorganization Plan No. 15. Except for a change in the lines Of responsibility
from the district offices to the Interior Department there has .been very little
change in the set-up or personnel in these offices.
There has not as yet been substantial change in the operation of the public-
works programs. Extensive studies of operation have been Made and plans
are under way for considerable readjustment in the Alaska office. The program
in the Virgin Islands has been under way for 5 years and should be completed
within the next year or two if appropriations are made for the remainder of
the authorized work. In view of this fact, and because that program has been
operating satisfactorily, it is not considered necessary to make any change in
the program or operations.
The fact that these programs have been transferred to the Department of
the Interior will not result in any appreciable monetary savings. It was not
anticipated that there would be visible savings merely through this act. Rather
the objective was to effect a more logical organizational arrangement through
placing responsibility for the programs in the Department primarily concerned
with the areas involved. As a result, more effective integration of the total
program for these areas has been achieved.
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51) REORGANIZATIONS IN THE EXECUTIVE BRA NCH
(c) Advance plavning of public works.?Prior to the effective date of Reorgani-
Z? tion Plan No. 15 ,:he Alaska district office of the General Services Administra-
ti m was charged with the operation of both the advance planning program
? d the Alaska public works program. After the transfer, the General Services
A [ministration had no Alaska office. Obviously it would have been uneconomical
fc r General Services Administration to set up a new office. The Department of
ti e Interior was, therefore, requested to handle the advance planning program
ir Alaska for the General Services Administration, and this is being done on a
rs imbursable basis. The fact that the two programs are being handled in the
same office permits :he advance planning of desirable projects filr which it would
ix impracticable to allot construction funds from the public works program
b( cause of the lack of preliminary data or because they could not be scheduled
fc r construction during the current fiscal year. This union if the two offices
hi s been very satisfactory from the point of view of both programs. The fore-
? ing is the only activity of the Department directly affected by Public Law 352,
rn vance planning ol non-Federal works.
2. Action under general reorganization legislation
? (a) Employee incentives program.?A secretarial order has ben prepared and
w 11 be issued shortly providing for comprehensive organization and procedures
fw enlisting employee participation in management improvement through a
sy stem incentive awards. These awards are made possible through title X
of the Classification Act of 1949 and earlier legislation. It is anticipated that
m ire effective actioa to improve the management will result from this program.
(b) Budget and accounting.?The Budget and Accounting Act of 1950, Public
w 784, Eighty-first Congress, directed substantial changes to improve Federal
nt actice in this field. The act is under study currently by the Department. The
pc licy of the Congress, as defined in the act, under title I, is to establish a long-
ra age program for improving budgeting, accounting .and financial reporting in
th a Government anti since the act was approved but a short time ago (September
12 1950), sufficient time has not elapsed for a progress report to be made with
re meet tc accomplishments thereunder. The Department will give full consider-
at on to the various provisions of the act in conjunction with the continuous
gram of the Comptroller General of the United Slates, the Secretary of the
Ti easury, and the Director of the Bureau of the Budget.
It can be stated, however, that prior to the enactment of the Budget and
Ai counting Procedures Act of 1950, the following had been accemmlished by the
Di partment ; such accomplishments being in conformance with certain of the
pr wisions of the act- :
I. The appropriation structure for the fiscal year 1950 was completely revised.
A definite pattern of appropriations under specific categories a:ad activities was
es ablished resulting in the reduction in the number of appropriation items from
it 1 to 42, and the elimination of much superfluous appropriation text.
!. Allotment accounts were established for the bureaus and oflices to insure an
in egraticn of the 1951 approprialton structure with the accounts.
I. A financial reporting system has been devised to establish departmental
co itrol over allocations, apportionments, and obligations below the level of appro-
pi to insure that funds are used according to the purposes for which they
w,!re authorized by the Congress.
Aence, the act NVI 11 have less effect on. the Department than i.n other agencies
w dch hail not taken these steps in advance of the legislation.
(c) Property management (Federal Property anct Administrative Services
AA t of 19f,9).?Issuance of Secretarial Order 2516 and aniendments 1, 2, and 3,
th u.eto, provided for the establishment of the Division of Property Management,
el ftrged with respcnsibility for the development of an effective program for
pi operty management and procurement throaghout the Department including all
as cessary related activities, and development and administration of an effective
re !ords-management program throughout the Department, including all related
activities. With this facility it has been possible to effect the specifics and
in :ent of the Federal Property and Administrative Se'vices Act in the following
w:.ys
1. All circulars and regulations issued by the General Services Administration
hi ye been promulgated throughout the bureaus and offices of the Department
in !hiding in such promulgation the establishment of standards, policies, and
? 3grams designed to assure more efficient and economical procurement and
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
management of supplies, equipment and other property required in the execution
of the operational progress of the Department.
2. Special delegations of authority have been obtained from the Administrator
of General Services in order to enable the bureaus and offices of the Department
to carry out more effectively their program activities. The methods and pro-
cedures are being brought gradually into a standard pattern of operation
throughout the bureaus and offices of the Department. Tbe delegations of
authority received from the General Services Administrator have enabled faster
and more efficient handling in the disposal of properties found to be excess to
the needs of the Department iii accordance with existing screening requirements.
An examination of lists of surplus property made available through the facilities
of the General Services Administration have enabled greater over-all property
utilization in that items of property excess to the needs of other Government
departments have been obtained for use in this Department rather than pur-
chasing new items.
3. Inventory controls have been established in those bureaus and offices that
heretofore had not carried on such an activity in connection with their operations.
An active program has been initiated and is producing results to reduce the
number of small purchases. The inventory controls established permit better
utilization of space and equipment in that less stock on hand is. necessary and
provides for closer control and analysis of items carried in stock.
4. In regard to the records management program an instruction has been
issued requesting the various bureaus and offices of the Department to review
their files for the purpose of segregating those inactive files that may be trans-
ferred out of the Department of the Interior Building to the Federal IteCords
Center in Alexandria, Va. Also an order has been prepared and early issuance
is anticipated initiating standards and policies to be followed in :setting up rec-
ords management programs in each of the bureaus and offices of the Department.
Implementing the provisions of the directive and secretarial order regarding
records management and this action will result not only in the release of both
filing equipment and floor space but will free necessary items which are in great
demand in view of the emergency situation.
5. Supplies previously requisitioned in Washington and then transported to
field stations are now and have been since July 1, 1950, requisitioned from the
respective General Services Administration regional office in whose territory the
field activity of this Department is located. One bureau of the bepartment has
turned practically all ordering and purchasing activities over to the General
Services Administration in order to obtain better prices of the commodities being
purchased.
6. Substantial economies are also expected to accrue on a continuing basis
through?
(a) Establishment of controls on the creation of records through forms,
reports and correspondence management techniques designed io insure among
other things, that only needed forms, reports and correspondence are pre-
pared and, in addition, placing limitations under the number of copies pre-
pared and/or filed.
(b) Improvement of filing systems, where applicable, designed to render
expedited reference service without the encumbrance of additional manpower.
(c) Improvement of mail-room procedures, where applicable, designed to
expedite processing of mail.
(d) Economical usage of microfilming, where applicable, designed to effect
floor space and tiling equipment savings.
(e) Establishment of controls to insure systematic and continuous dis-
posal of inactive records.
3. General comments
Many other actions are contemplated to improve management within the
Department as a result of reorganization plans and general organization legisla-
tion. As these actions are taken they will be reported in future submissions.
Additionally, within the past year many improvement actions have been taken
which did not require organization plans or general legislation to effectuate.
These actions are not included in this report since the data requested related only
to action under reorganization plans or legislation. The Department is making
every effort to improve its organization and its practices and to assure effective
administration of its natural resources program.
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52 REORGANIZATIONS IN THE EXECUTIVE BRANCH
DEPARTMENT OF JUSTICE
DKICEMBER 11, 1950.
Ion. JOHN L. MettEti.AN,
Chcirman, Committee on Expenditures in. the Executive D opartments,
United States Senate, Washington, D. C.
MY DEAR SENATOR: This is in response to your request for a report from the
])epartment of Juf-tice on the extent to which Reorganization Plan No. 2 has been
ut into effect and the results thereof.
Reorganization Plan No. 2 of 1950, which became effective May 23, 1950, trans-
f erred to the Attorney General, with certain exceptions, the functions of all
( fficers, agencies, and employees of the Department of Justice. The functions
KeepteC from the over-all transfer consisted of the functions of the Federal
'ri.son Industries, Inc., of the Board of Directors of the Federal Prison Industries,
I ac., of the Board of Parole, and of the hearing examiners employed by the De-
r artment of Justice under the Administrative Procedure Act. The plan effects
e rtain other changes hereinafter discussed.
The following is- submitted in connected with the specific topics concerning
v hich you requested complete information.
(a) Seps which have been taken to carry out the plan.?To implement the
^an, the Attorney General authorized the performance of th.:2 functions trans-
f rrecl to him by the delegation to appropriate officers of the Department of
istice. This delegation was accomplished by supplements 12 and 44 to De-
p trtmental Order No. 3732, dated respectively May 21 and ;Buie 6, 1950. In ac-
e, rdance with the provisions of the plan, which in addition to the above-described
c[anges, (1) changed the title of the Assistant to the Attorney General to Deputy
Attorney General ; (2) nrovided an additional Assistant Attorney General to
snpplant the Assistant Solicitor General, which office was abolished, and (3)
eJ eater' in Administrative Assistant Attorney General, the departmental orders
elf reefed appropriate delegations. Further changes will undoubtedly be made
w thin the Department on assignments of personnel and duties as occasion
n quires.
(b) Ariministrative deficiencies eliminated or improvements which have been
in ide in the organization and management of the Department.?The plan has had
the desired effect of clarifying the authority of the Attorney General with respect
to a limited number of departmental functions for which authority was placed
el ewhere in the statutes. This was tine particularly of statutes which placed
re monsibilities in the Commission of Immigration and Naturallzation (see e. g.,
8 J. S. C. 727 ff.). Similarly, the Assistant Attorney General in charge of ens-
to ns matters was charged by name with the performance of certain statutory
di. ties (5 U. S. C. 206).
(e) Esamates of savings that may have been realizt d or that may he expected
as a result of suck actions relative to this plan.--Plan No. 2 was not intended as
an economy measure and no substantial immediate steps were contemplated as
a esult of changes which it authorized. It is likely, however, that improved
op nations resulting from the effect of sections 1 through 5 of the plan and from
t,h t incidental transfers which the Attorney Genert1 is authorized to effect
m time to time by section 0 of the plan, will Io the means by which Depart-
mm economies will eventually be effected. It is too early to comment in
de all on. those aspects of the plan.
' The Budget and Accountiwz Procedures Act of 1050 and certain of the other
ac-- s provide substantive law for practices that had been growing up as a result
of experience or as may have been suggested by and adopted from the Hoover
Co omission reports and recommendations. The performance budget principles
ha 'e been used in establishing the budget for the fiscal year 1951 under which we
an now operating.
' The Department has not as yet had sufficient experience to evaluate the results
of the a.mendments made by the Federal Property and Administrative Services
Ac The changes in practices and procedures by the latter act as well as others
em cted during the second session of the Eighty-first Congr2ss are evolved
gri dually and it is extremely difficult to make a comparison of the work today
wit h that of yesterday. For this reason it is not possible to state specifically the
pn rise results flowing from the changes and what savings have been accom-
ph; bed. The process is one of growth and development as experience dictates.
Yours sincerely,
PErrox r+ q11),
Dcputy Attcrney General.
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DEPART :GENT OF LABOR
DECEMBER iT, 1950..
Hon. jOHN L. MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, Washington 25, 1). C.
DEAR SENATOR MoCLELLAN : This is in reply to your letter of October 24, 1050;.
in which you request certain information with respect to the actions taken to,
effectuate reorganization plans affacting the Department of Labor. Your letter
also requests information as to how the Federal Property and Adniinistrative
Services Act of 1949 and the Budget and Accounting Procedures Act of 1950 have
affreted this Department.
As was stated in my testimony before your emanate? regarding the various:
reorganization plans affecting the D:Tartment of Labor, it was not the purpose
of these plans to effect monetary sa.vings which could be immediately identifiable.
Rather, it was the purpose of these plans to centralize within the Department
of Labor fmictions pertaining to labor which previously had been scattered
throughout the executive branch and by such centralization to achieve increased'
efficiency in the performance of these functions. All of the agencies. transferred
by these plans have now been assimilated into the departmental organization
and their general management services, such as personnel, space control, legal
services, etc., have been integrated with these services in the Department. The
-
centralization in the Department of Labor of the functions transferred by these.
plaits has, in my opinion, achieved the purpose of more efficient performance..
In accordance with your request, the following information is submitted.
I. REORGANIZATION PLAN NO. 2 OF 1949, TRANSFERRING THE BUREAU OF EMPLOYMENT
SECURITY TO THE DEPARTM ENT OF LABOR
The duties and functions transferred to the Secretary of Labor under plan No. 2.
of 1940 were, in large part, delegated to the Director of the Bureau of Employ-
ment Security by Department of Labor General Order No. 44, of October 19, 1949,.
a copy of which is enclosed.
The transfer of the Bureau of Employment Security to the Department of
Labor has made it possible to set up close, direct, working relationships with
the other bureaus of the Department which have a vital concern in various
aspects of the manpower program. These relationships are of particular adva.n-
tage in meeting the defense manpower requirements created by the present
international situation.
Reorganization Plan No. 2 abolished the Veterans' Placement Service Board,
which had consisted of the Director of the Selective Service System, the Admin-
istrator of Veterans' Affairs, and the Administrator of the Federal Security
Agency, and transferred the policy determination and administrative functions
of that Board to the Secretary of Labor. This change has resulted in greater
administrative efficiency through the ability to obtain quicker consideration of
Veterans' Employment Service problems than was possible with the Board, whose?
members were relatively unavailable because of the heavy pressure of their other
duties. A further advantage accrues through the fact that the Secretary of
Labor is also administratively responsible for the whole emplOyment security
program, and has a direct operating interest in the field of employment.
II. PLAN NO. 6 OF 1950, REORGANIZATION OF THE DEPARTMENT_ OF LABOR
The principal effect of this plan was to vest in the Secretary certain functions.
under the Fair Labor Standards Act, as amended, which hitherto has been by
statute vested in the Wage and Hour Administrator. The plan also clarified the.
authority of the Secretary with respect to certain functions performed by the
Bureau of Labor Statistics and the Women's Bureau. Provision was made for.
the performance of the functions vested in the Secretary by plan No. 6 by
Departmental General Order No. 45 A, in the case of the Fair Labor Standards
Act, by General Order No. 45 B, in the case of functions hitherto vested in the
Commissioner or Bureau of Labor Statistics, and by General Order No. 45 C, in
the case of functions hitherto vested in the Women's Bureau. Copies of these
generalorders are enclosed.
The administrative deficiencies which have been eliminated and the improve-
ments which have been made are those which were urged as reasons for approval
of the plan, namely, that good and effective organization of an executive depart--
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REORGANIZATIONS IN THE EXECUT VE BRANCH
rn alt required that the head of the department be in complete control of all of the
tivities of the department, and that officials and employees Of the department
sh ould not exercise power outside of the general direction and control of the head
of the department.
IE. PLAN NO. 14 OF 1950, COORDINATING THE ADMINISTRATION OP LABOR STANDARDS
Pursuant to this plan, the Department has drafted la gulations setting forth the
st tndards and procedures to be observed by the various agencies in the enforce-
!nt of the labor standards provisions of the laws dsted in the plan. These
re ;illations, which are at present in tentative form, have been ,2ircu1ated among
th various agencies for their review and comment and confeences have been
he id with a number of these agencies for the purpose of discussing the regulations
al d their comments. All comments and suggestions made by the various agencies
ha ve been carefully considered and some changes have been ma de in the regula-
th ns upon the basis of them. A final draft of tilt se regulations is now in
pr Taration.
The Department, since the effective date of this plan, has conducted inVestiga-
th ns of 150 construction projects to determine the steps which are being taken
by the Federal agencies to obtain compliance with labor standards. On a large
.jority of these prpjects violations, ranging from minor to flagrant, were found.
IV. PLAN NO. 19 OF 1950, TRANSFERRING EMPLOYEES' COUPENSATION FUNCTIONS TO
TILE DEPARTMENT OF LABOR
The functions transferred to the Secretary of Labor by this plan were, for the
mcst part, delegated to the Director of the Bureau of Employees' Compensation
an I the Employees' Compensation Appeals Board by General Order No. 46, a
co. )37 of which is enclosed.
)ne of The major advantages advanced in support of the plan was the Integra-
tic n of the accident prevention programs authorized by the Federal workmen's
co apensation laws with other safety programs under the Department of Labor.
Sr 2h integration was necessary in the interest of good adminstra don since it
m: kes possible maximum utilization of the facilities oi the Department of Labor
de ding with the problem of accident prevention on a Nation-wide scale. This
ha3 been accomplished.
?ursuant to General Order 46, amendment No. 1, dated Sept ember 6, 1950, a
co w of which is enclosed, safety promotional activities formerly carried on
by the Bureau of Employees' Compensation have been transferred to the Bureau
of Labor Standards of the Department. The latter for some years has been
en ;aged in carrying out the Department's program in developing and promoting
sar'ety standards for industry. It is expected that this change will result in
gD.ater promotional activity to prevent injuries and to eliminate industrial work
ha lards in the Federal service and in the other employments covered by the
Fe leral compensation laws. This in turn should result in a greater conservation
of iceded manpower and ultimate savings to the Government. As a part of the
nil nagement improvement program, further studies are in progress for improving
ad ninistrative efficiency and service in administration of the compensation laws.
V..'FFECT UPON DEPARTMENT OF LABOR OF THE FEDERAf. PROPERTY AND ADMINIS-
TRATIVE SERVICE'S ACT OF 1919, AS AMENDED, AND TBE BUDGET AND ACCOUNTING
PROCEDURES ACT OF 1950
' lhese two acts are measures for better internal administrative procedures.
To a large extent these procedures had been adopted by this Department prior
to :he enactment of these laws. The two acts, therefore, have had little or no
eff ,ct upon the Depa-tment of Labor.
trust that the above information will be helpful to you in th a preparation of
yen x report to the Senate.
Yours very truly,
1114warep, J. TOBIN,
Seorerary of Labor..
Enclosures referred to in Secretary Tobin's letter have been made a part of
the committee's files.)
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS,
November 28, 19410.
Senator jOHN L. MCCLELLAN,
Chairman; Committee on Expenditures in the Executive Departments,
United States Senate, Washington, D. C.
DEAR SENATOR MCCLELLAN : In the absence of Dr. Hunsaker, I am pleased to
submit the attached report concerning basic legislation enacted during the
Eighty-first Congress affecting the National Advisory Committee for Aeronautics
as requested in your letter of October 26, 1950.
Very truly yours,
NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS,
J. F. VICTORY, Executive Secreary.
REPORT ON BASIC LEGISLATION ENACTED DURING THE EIGHTY-FIRST CONGRESS
AFFECTING TIIE NACA
PUBLIC LAW NO. 167. TO AMEND THE ACT OF AUGUST 1, 1947, AS AMENDED, TO AUTHOR-
PM THE CREATION OF 10 PROFESSIONAL AND SCIENTIFIC POSITIONS IN THE HEAD-
QUARTERS AND RESEARCH STATIONS OF TUE NATIONAL ADVISORY COMMITTEE FOR
AERONAUTICS
A. Steps which have been taken to carry out Public Law 167
At the end of calendar year 1949, 5 positions of the 10 authorized had been
established. .These were reported to the Senate and the House of Representatives
on December 21, 1949, in accordance with the provisions of the act. During
calendar year 1950, the remainder of the 10 have been established and filled.
B. Administrative deficiencies eliminated or improvements which have been made
in the organization and management of NACA
This act has enabled the NACA to improve its organization and managerial
activities by establishing a top-pay structure more in balance with existing com-
pensation in industry and other governmental agencies. The enactment of this
legislation has somewhat diminished competition with the Department of De-
fense, which previously had authority for 45 such positions when the NACA had
none. The authorization by Congress of 10 such positions for the NACA, al-
though inadequate, has caused a marked increase in morale of our professional
staff at all levels. It has also improved recruiting relationships with educational
institutions because graduates may aspire to higher pay levels More in keeping
with industrial rates.
0. Estimates of savings that may have been. realized or that may be expected as
a result of Public Law 167
The savings that are being realized are indirect and immeasurable in terms of
dollars, but are reflected in improved efficienc
3,, teamwork, and morale.
PUBLIC LAW NO. 472. TO PROMOTE THE NATIONAL DEFENSE AND TO CONTRIBUTE TO
MORE EFFECTIVE AERONAUTICAL RESEARCH BY AUTHORIZING PROFESSIONAL PER-
SONNEL OF THE NATIONAL ADVISORY COMMITTEE FOR AERONAUTICS TO ATTEND
ACCREDITED GRADUATE SCHOOLS FOR RESEARCH AND STUDY
A. Steps which have been taken to carry out Public Law 472
The NACA on June 27, 1950, began granting graduate study leave to employees
with emphasis on study for those entering new areas of research. Individual
young scientists are being sent to take special course work and to perform
research at the graduate level in such areas as new instrumentation work, solid
states physics, specialized advanced mathematical fields, and other new areas of
research and knowledge. This law has enabled the NACA to give advanced
selected training to our research scientists and has provided our scientists oppor-
tunities to perform research for short periods under leading scientists in univer-
sities who are specialists in advanced science fields. Ry carefully controlling
the graduate course work and research, the NACA is assured of the direct
applicability of the course of study to the research field in which the employee
works at the NACA.
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53 REORGANIZATIONS IN THE EXECU1 1VE BRANCH
B Adm&istrative deficiencies eliminated or improrements which have been made
in the organization and management of NACA
This law will greatly increase the effectiveness of our scientife personnel. Not
(1 dy is it possible t.nder this law to provide training which the NACA could not
gi ve internally, but it enables NACA research personnel to work and study with
.tside scientists who are leaders in their fields. Th( law has a beneficial effect
oi the recruitment and retention of scientific personnel, as the individuals with
ti e best scientific minds are desirous of the opportunity for such advanced
tr lining and are attracted to an organization where such opportunity exists.
C. Estimates of savings that may have been -realize(' or that may be expected
as a i.esult of Public Law 472
This law enables the NACA to provide for training and research at universi-
tics which would Le very costly, if not impossible, to provide within the or-
gn The employee pays his own tuition, li ing expenses, and travel,
at d it costs the NACA only the employee's salary. The equiv dent in training.
W thin the NACA, it were possible, would cost the man's salary, and the time
am d expense of high-level scientists used to conduct this advanced training.
Phere can be no doubt that this advanced training will increise the effective-
no ss of our scientists in performing research at the frontiers of knowledge in the.
ae7onautical sciences, and in turn enhance and make more Froduttive the parallel
in 'estmer ts in scientific equipment.
P C13LIC LAW NO. 574. TO PROMOTE THE NATIONAL DEFENSE RY A UORIZI N G SPECIFI-
, !ALLY CERTAIN FUNCTIONS OF THE NATIONAL ADVISORY COM VITTEE FOR AKRO?
: IAUTICE NECESSARY TO THE EFFECTIVE PROSECUTION OF AFRO NAI 1 TICAL RESEARCH,.
-ND FOR OTHER PURPOSES
'ublic Law 672 CO writes into substantive law certain functions heretofore
ex, rcised by the National Advisory Committee for Ae-;.onantic.Ct under authority
of language contained in various appropriation acts ; (2) establishes a proce?
du 'e requiring in the future legislative authorization for new construction;
aal (3) specifically authorizes a current appropriation of $16,500,000 for con-?
str action at existing laboratories and research stations of the NACA.
A. Steps which have been taken to carry out Public Law 672
(1) Appropriation language has been simplified because certain functions,
an now authorized by substantive law.
( 2) Legislative authorization will be requested fwt all future construction
pl.( grams.
( 3) The Committee is proceeding with the construction of pew facilities at
exi ding laboratories in the amount of $11,500,600, as provided in the General
An mopriation Act, 1951, pursuant to the authorization contained in Public-
La, v 672.
13. Administrative deficiencies eliminated or improvements waich have been
made ix the organization and management of NACA
1 his legislation makes NACA estimates for new construction subject to the ?
cus omary procedure in the Congress, requiring legislative authorization in ad-
vat cc of appropriations.
C. .7%stimates of savings that may have
as a result of Punlie Law 672
o savings of either time or money
legi dation, but opportunity for review
mit .ees concerned is assured, in keeping
Con Kress.
been realized or that /I ay be expected
are accomplished, or intended by this
and consideration by legislative coin-
with long-established procedures in the ?
'ITBLIC LAWS NOS. 152 AND 7154, THE FEDERAL PROPERTY AND ADMINISTRATIVE
SERVICES ACT OF 1949, AND AMENDMENTS THERETO
T se Federal Property and Administrative Services Act of 1919 (Public Law
152, approved June 30, 1949, as amended by Public Law 754, approved Septem?
ber 5, 195(,) provides the legislative framework for I he establishment of an
effic cut and economical system for property and records management in the
FetUral Government. Central responsibility for leadership in this area is.
vest ?d by the act in tie Administrator, General Services Administration. Since -
the ?assage of the act, policy statements and regulations have been issued by
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the Administrator to executive agencies in the fields of procurement, property
utilization, and disposal of surpluses. The regulations issued thus far have
been comprehensive and satisfactory for the needs of the NACA. The standards
and policies established and promulgated by the Administrator have proVided
a guide for the NACA in ascertaining whether its operations in the field of
property and records management are efficient and economical as well as con-
sistent with established Government policies.
In general, the act has provided the central direction and policy control of
property and records management long needed in the executive. branch, and it
is believed that substantial economics and greater efficiency in operations will
result.
The following are some of the current efforts being made by the NACA in
hnplementing the policies and regulations prescribed by the Administrator,
General Services Administration:
Procurement and property management
1. Planned requisitioning on (ISA supply centers.?In accordance with GSA
Federal Supply Service Circular No. 1, the procurement offices of the NACA
are constantly endeavoring to improve their ordering practices by consolidating
requirements for items obtainable from Federal supply centers in order to reduce
the number of small orders. Periodic requisitioning dates have been established
for certain commodities at one of the major installations of the NACA (Lewis
Laboratory) as part of the program to plan and schedule requirements for
supplies. NACA efforts in this area on an agency-wide basis are continuing
through liaison between the methods and procedure officers and the procurement
officers at both headunarters and field levels.
2. Inventory control and property aceountability.?A new stock-control system
has been established at NACA headquarters. During the 6 months that it has
been in operation, overstocking of certain items has been revealed, and steps
have been taken to utilize these excesses by transfers to other NACA installations
and by declaration to Federal Supply Service for transfer to other Government
agencies. The inventory-control systems iii use at. the NACA laboratories are now
being continuously examined to determine whether inadequacies exist and to
correct these deficiencies. The general standards for inventory levels promul-
gated by the general service management regulation No. 2 have been made known
to all NACA activities with a view toward progressively reducing present inven-
tories to conform to these objective levels.
3. Equipment replacement xtandards.---Replacement standards for equipment
such as typewriters, filing equipment, and motor vehicles are being complied with.
Proposed purchases of new equipment in these categories are being carefully
screened at central management level to curtail purchases to the absolute
minimum.
4. Property utilization and disposal.--Procedures implementing GSA personal
property regulation No. 3 dealing with personal property utilization and disposal
have been issued to all NACA activities. Instructions have been issued
requiring (1) the continuous survey of property under NACA control to determine
which is excess to. the needs of the agency, (2) to report promptly such property
to General Services Administration for transfer to other agencies, and (3) to
obtain excess property from other Federal agencies to fill NACA material require-
ments wherever possible.
PUBLIC LAW NO, 784, THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950
The Budget and Accounting Procedures Act of 1950 provides the framework
within which it will be possible to develop a budget and accounting program
responsive to the needs of the NACA. The spirit and intent of the act appear
to be that budget and accounting procedures should be developed within the
agency, and primarily to serve the needs of the agency. It is felt that this repre-
sents a marked change in the philosophy which has heretofore prevailed
and that it will result in a considerable streamlining of the present unwieldy
budget and accounting procedures. The act became law September 12, 1950.
11 is felt that considerable work must be done both within the agencies and
by the Bureau of the Budget, time Treasury, and the General Accounting Office
before the benefits of the act are fully developed. The NAPA bps already begun
work on the internal audit programs required by the act and is making a com-
prehensive review and reevaluation of its present accounting procedures. The
NAOA-recogniZes the desirability -of the commercial-type audit called for by the
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a -A and is considedng the needs of General Accounting Office auditors in con-
n action with such an audit in making changes in its present fiscal procedures..
1: appears that the joint action of the Bureau of the Budget, -:he Treasury, and
t ie General ACCOIHting Office, as expressed through Accounting 'Systems Division
n .emorandums and Treasury Department-General Accounting- Office joint regu-
tions, gives evidence of the understanding of those agencies of the need for.
d ?tailed and pract:cal assistance to governmental agencies in carrying out the.
p irposes of the act. It is felt that the memorandums and regulations issued so
r have made a real contribution toward simplifying and streamlining agency
Ii ;cal procedures.
NATIONAL SECURITY RESOURCES BOARD
NO14-1MBER 21, 1.950.
on. JOHN L. MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
!jutted States Senate, Washington, D. C.
DEAR SENATOR McCLELLAN : This is in further reply to your letter of October
requesting that the Resources Board submit to the Committee on Expenditures
it the Executive Departments a report as to the actions that have been taken to,
irtplemeLt Reorganization Plans No. 4 of 1949 and No. 25 of 1050.
The attached report is submitted in accordance with your request. If we can
lx of further service in this matter, please feel free to call upon us.
Sincerely,
W. STUART SYMINGTON.
TORT 01? THE NATIONAL SECURITY RESOURCES BOARD Co' THE SENATE COMMITTEE:
ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS AS To THE ACTIONS TAKEN
ro IMPLEMENT REORGANIZATION PLANS No. 4 Or 1949 AND No. 25 Or 1950
I. Stepg which havc been taken to carry out Reorganization Picots No. 4 of 1949
and No. 25 of 1950
1. Plan No. 4 of 1949, which transferred the Resources Board to the Executive,
01 ice of the President, required no implementing steps in addition to the legis-
la Ion.
!. Plan No. 25 of 1[950, which transferred the functions of the Resources Board
to the Chairman of the Board and provided for a vice chairman, required only
th ? appointment and confirmation of a vice chairman as an inpletnenting step.
TI e nomination of Mr. Robert J. Smith as vice chairman was made by the
Ii esident on July 2), 1.950. Mr. Smith was confirmed by the Senate on August
4 nd took the oath ,ff office on August 14, 1950.
II The administrative deficiencies eliminated or improvements which- have been
made in the organization and management of the Resources Board
.. Reorganization Plan No. 4 of 1949 has strengthened the staff facilities of
tir Executive Office of the President by giving legal status to the close working.
re ationships which must exist: between the Resources Board, .Bureau of the
Bt dget, Council of Economic Advisers, National Security (louncil, and the White
Hi use staff. Since approval of Reorganization Plan No. 4 of .1945, Several ad-
nil fistrative steps have been taken to improve these relations hips. The most
im mrtant of these steps are as follows:
1) The use of Executive Office committees on matters of common interest;
2) The strengthening of the Resources Board's staff responsible for working
on National Security Council matters;
3) The participt.tion of Resources Board staff members as observers at
Bureau of the Budget hearings on the appropriation estimates for major security
pr( grams:
4) The participation of the Bureau of the Budget and the Council of Economic
Ad Tisers in meetings of the Interagency Controls Coordinating Committee ( a corn-
mi .tee composed of those agencies with control authority under .the Defense
Pr, duction Act of 1050).
!. Reorganization Plan No. 25 has overcome many of the difficulties of boards
tyl e operation by clearly placing responsibility for advising Cm President on
Mo dlization plans and readiness measures in one official, the Chairman. This
pla a has, at the same tithe, preserved the Board as a useful arrangement for
obt mining the necessary participation of the departments in the coordination Of
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mobilization policies and programs. Thus the plan preserves the intent of the
National Security Act of 1947.
The authorization of a Vice Chairman has provided for a depth of top leader-
ship that is necessary to carry out the heavy responsibilities and ,ensuing work-
load that falls on the Chairman. Authorization of a Vice Chairman has also
provided an additional means of achieving a better coordination of the efforts
of the staff with those of other agencies on a day-to-day basis.
3. The implementation of other recommendations of the Hoover Commission
not directly related to Reorganization Plans No. 4 and No. 25 are covered in
exhibit A, Summary of Actions Taken by the Resources Board Within the Scope
of Hoover Commission Recommendations. This report was. prepared at the re-
quest of the Citizens Committee for the Hoover Report.
Estimates of savings that have been realized or that may be eopected as a
result of actions relative to Reorganization Plans No. 4 of 1949 and No. 25
of 1950
1. Due to the nature of the reorganization plans affecting the Resources Board
and the limited size of the Board's staff, it is not possible to estimate the savings
that have been realized or that may be expected from Reorganization Plans No.
4 and No. 25. This was pointed out by the President in his messages to the
Congress on these reorganization plans.
In spite of the difficulty of identifying savings, the importance of Reorganiza-
tion Plans No. 4 and No. 25 should not be minimized. These plans have so
strengthened the Resources Board that it has been able to assume heavy additional
responsibilities under the Defense Production Act of 1950 With only -small
increases in staff.
/V. How other legislative actions have increased efficiency or affected the work
of the Board
1. Federal Property and Administrative Services Act of 1949 and amendments-
thcreto.?(1) Actual or potential benefits of this act include?
(a) Strengthening of records administration. This is of assistance to the
Resources Board in its mobilization planning work.
( b) Some reduction of paper work in procurement activity due to lifting the
open-market purchase limitation from $100 to $500.
2. Budget and Accounting Procedures Act of 1950.?(1) Since this act is.
primarily directed to the fiscal management agencies (Bureau- of the Budget,
Treasury, General Accounting Office) it has had little direct effect on the Re-
sources Board. The one direct change that has occurred in the operations of
the Resources Board as a result of the act is the elimination of quarterly per-
sonnel ceiling requests to the Bureau of the Budget. Due to the Small size of the
Board's staff, elimination of this activity in terms of savings has been negligible.
3. Impact of other reorganization. plans.--(1) The clarification and simpli-
fication of the structure of the executive branch achieved by other reorganization
plans has been of aid to the Resources Board in carrying out the Board's respon-
sibility for the coordination of mobilization planning and of the current defense
effort.
EXHIBIT A. SUMMARY OF ACTIONS TAKEN BY THE RESOURCES BOARD WITHIN THE.
SCOPE OF HOOVER COMMISSION RECOMMENDATIONS
I. HOOVER COMMISSION BECOM MENDATION
More adequate and effective relations be developed at the working level be-
tween the Resources Board and other Government departments and agencies.
Action taken
In consultation with the departments and agencies which have a role in
mobilization planning, the following actions have been taken:
1. Development of an interdepartmental staff group. This group, composed
of the key program officers in each agency with mobilization planning responsi-
bilities, serves as a focal point for the development of interagency staff work.
2. Appointment of a key executive in each agency to be responsible for leader--
ship of the mobilization planning work within the agency.
3. Establishment of an interagency controls coordinating comindttee to develop
consistent economic control programs under the Defense Production Act of 1950.
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6u REORGANIZATIONS IN THE EXECUTIVE BRANCH
4. Development of a written statement of working relationships between
the Resources Beard and the other departments and agencies. This statement
gives particular attention to the Board's relationships with the Department of
Defense and other agencies of the Executive Office of the President.
5. Development of a system of Resources Board observers to serve on inter-
agency committers and industry advisory committees of other departments and
agencies.
II. HOOVER COMMISSION RECOMMENDATION
That the jurisdiction and activities of the Resources Board be further defined
Ind clarified.
action taken
1. A complete survey of the functions and activides of the Resources Board
vas undertaken with the cooperation of the Bureau of the Budget. This survey
lad the following results.:
(1) The organization structure of the Board's staff was modified to strengthen
;he program elements of the staff and to clarify the rule and functions of the
:planning offices.
(2) New statements of functions were developed for each office.
(3) Adjustment of staff was undertaken in accordance with the requirements
rf the new functional statements.
(4) An over-all statement of the Board's jurisdiction and activities was de-
-eloped in cooperation with the staffs of the departments represented on the
tesources Board.
2. Under the Defense Production Act, the jurisdiction and activities of the
Resources Board have been further clarified. Executive Order 10161 places
esponsibility for coordination of the current defense effort in the Chairman of
t
ac Resources Board.
III. HOOVER COMMISSION RECOMMENDATION
Development of policies on various matters within the purview of the Resources
I (:ptir(1, such as civil defense and stockpiling.
etion taken
1. The Resources Board has undertaken extensive work in the field of civil
.d dense. Progress in this area is high-lighted by the recent submission to the
I resident of the report entitled "United States Civil Defense."
2. Responsibilities for stockpiling policy and execution have been clarified
b 7 NSRB Document 99, Organization of Responsibilities in the Executive Branch
fir Stockpiling, which was developed by the Bureau of the Budget and approved
b 7 the President or January 5, 1949.
IV. HOOVER COMMISSION RECOMMENDATION
That tie emergency plans for civilian and industrial mobilization be completed
p .omptly and contiauously revised.
A :lion. token
This recommendation has been implemented through a Government-wide mo-
lizatior-planning program. The program covers the development of pl.ans
ir the following areas: (1) legislation; (2) testing the feasibility of require-
ix ants; (3) economic controls; (4) transportation; (5) energy and utilities;
(G) materials and stockpiling; (7) manpower; (8) foreign economic controls
al programs; (9) housing and community facilities; and (A) civil defense,
V. HOOVER COMMISSION RECOMMENDATION
That the use of civilian advisory boards should be continued.
A lion, taken
Implementation of this recommendation has been high lighted by the appoint-
m !nt of a 12-member civilian advisory committee on mobilization policy. This
-committee is composed of representatives from industry, agriculture, labor, and
th ?. public.
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REORGANIZATIONS IN THE EXECUTIVE BRANCri
THE PANAMA CANAL
NOVEMBER 29, 1950.
Hon. JOHN MCCLELLAN,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, 'Washington, I). C.
DEAR SENATOR MCCLELLAN have your request of October 26, 1950, for in-
formation regarding action taken in connection with Public Law 841, Eighty-
first Congress, maintenance and operation of the Panama Canal, and aIko re-
garding the effect of several other general legislative actions taken by the Eighty-
first Congress. This matter has been taken up with Governor Newcomer who
has asked me to advise you substantially as follows:
Public Law 841 was approved September 26, 1950. It will not become generally
effeetive, however, until the Panama Canal, together with the facilities and
appurtenances related thereto, is transferred by Executive order to :the corpora-
tion, now known as the Pa.nanot Railroad Company, by the same law renamed
the Panama Canal Company. The President of the United States has Stated
his intention to make the transfer on July 1, 1951.
Since approval of the law on September 26, 1.950, steps have been taken to re-
vise the 1952 budget presentation of the Panama Canal and Panama Railroad
Company so as to conform, to the organizations which will be in effect at the be-
ginning of that fiscal year?namely, the Canal Zone government and the Panama
Canal Company. The 1952 budget estimates must be complete in time for the
President to present them to the Congress in January 195f. Because of the time
facter, therefore, the only action to date as a result of Public Law 841 is that
which is being taken to revise the budget estimates.
Until the complete detail of the entire operating organization under the new
organization is worked out, it is not possible to say that any administrative
deficiencies have been eliminated or that savings will be accomplished. The
purpose of the legislation was not primarily one of eliminating administrative
deficiencies or of effecting financial. savings. Its main purpose WBS to permit the
operation of the Canal and related activities as a corporation instead of as a non-
corporate Government agency. This change is desired to permit management of
the Canal and its appurtenances along commercial lines with a more equitable
division of the cost of operation among the users of the Canal and its related
facilities.
The Federal Property and Administrative Services Act of 1949, as amended
(Public Laws No. 152 and 754), has only limited application to the Canal
Railroad on the Isthmus, and has not resulted in any reorganization actions.
The records management provisions are under continuing study and application
with a view to achieving the objectives of the legislation, although no basic
changes have been required, because the records management system of the Canal
Railroad is already in substantial compliance with the legislation.
The Classification Act of 1949 applies to the Panama Canal, and a compre-
hensive plan for management improvement and efficiency awards to employees
has been developed under title X of that act and Bureau of the Budget regula-
tions thereunder. The Performance Rating Act of 1950 applies to the Canal
Railroad but does not become effective until 90 days after September 30, 1950.
The development of a performance rating system conforming to the requirements
of that act is, of course, in progress.
Immediate benefits from the Budget and Accounting Procedures Act of 1950
will be obtained through the adoption of principles, standards, procedures, and
systems which have been and are continuing to be developed by the joint account-
ing program. The Panama Canal is now engaged on a program to reappraise and
revise the existing accounting, fiscal, internal control, budgeting, and reporting
systems for the reorganization which will be effected July 1, 1951, for the Panama
Canal Company and Canal Zone Government entities. It is anticipated that the
provisions of Public Law 784 will be of material benefit in the development of our
systems, through the cooperation of the General Accounting Office, Treasury
Department, and Bureau of the Budget, and will result in improved financial
and cost-accounting reports for management purposes.
Sincerely yours,
B. F. Bounfox, Chief of Office.
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?, REORGANIZATIONS IN THE EXECUTIVE BRANCH
POST OFFICE DEPARTMENT
NOVEMBER 29, 1950.
in. JOB N L. MCCLELLAN,
Chairman, Committee on Expenditures in the Exer utive Departments,
l'inited States Senate, Washington, 1). C.
DEAR SENATOR : This will acknowledge receipt of your letter dated October 24,
if 50, requesting information with respect to the operation of certain reorganiza-
ti in plans and public laws affecting the postal service. The information that you
re quest follows:
Reorganization Plan No. 3 provided for the transfe of all functions formerly
el raged to subordinate officers and agencies of the Post Office Department to
th 3 Postmaster General, with authority for delegatior of functions as he deems
ai propriate. The plan also created the offices of Deputy Postmaster General,
al d four Assistant Postmasters General in lieu of four numerically designated
sistant Postmasters General. All of these provisions have been carried out.
T] .e plan provided for an Advisory Board, the members of which now have been
co ?Armed by the Senate. it is expected that the Board will meet-shortly after
th ? first of the year.
is indicated by the nature of the plan, it was designed fitc! the purpose of
de 7eloping a closer control and coordination of the varied activities of the postal
se vice. The plan did not contemplate that there would be any immediate
elimination or curtailment of activities conducted by he central office in Wash-
iff ;ton, for which reason there has been no tangible dollar savings that can be
at ributed directly ta the reorganization of the Department. There are approxi-
mutely 1,800 employees in the Department in WaslUngton, fui compared with
ne trly 500,000 employees in the field service. It is anticipated that the eventual
sa 'lags to be realized through a more comprehensive and effect Ne headquarters
:anization will be made in the postal field service.
: teorganization Plan No. 18: In accordance with the requirements of this plan,
the Post Office Department, on July 1., 1950, transferred 93 Federal buildings
to the General Services Administration. It is estimated that nearly $14,500,000
wi 1 be transferred before the close of the year to cover the operating and main-
tel ance costs of these buildings, together with per:4)11nel re)resenting 3,900
mi n-years, of employment. The effect. of this transfer will be to reduce the
po, tal deficit by the amount of the transfer, but it will conversely increase the
ere iendittes of the General Services Administration by the amount it will
re( uire to operate the buildings transferred.
ifter cencluding the transfer the Department still his 3,169 Federal buildings
to )perate, including personnel approximating 15,100 man-years of employment.
I 'ublic Law 231: This law provides for a research and development program
in the Post Office Department. Under the authority of this act a Division of
Re earch has been organized in the Office of the Administrative Assistant to
the Postmaster General. The Department is now in the process of recruiting
pm sonnet for these assignments, which course must of necessity be slow in view
of the great care to be exercised in selecting the most qualified persons for
the work to he undertaken. Many important resefuTh proje2ts are now in
pre gress. Other projects are in various stages of planning for the purpose of
det ?rminirg the practicality of the proposed changes in equipment and in fina.n-
cia , accounting, and mail-handling procedures.
,5onie of the major research projects may take several years to complete.
Oti ers may be competed in shorter periods of time wdh respect to the investi-
gat .on and determination of their usefulness, hut additional time will be required
to dace the changes in effect in post offices or other operating units in order
tha the full benefits may be obtained. Because of this, the major savings
ma r not be realized immediately.
? I or the fiscal year ended June 30, 1950, the sum of $750;000 Iv as appropriated
for the use of the Post Office Department in purchasing ,nodern and experimental
equipment. From tie best figures available, the indication is lhat the annual
ben ?fits resulting from the installation of this equipment exceeds $1,500,000.
TM se benefits will cf course accrue each year hereafter, and will increase to
the extent that the experimental equipment may be extended to other post offices
win re its use is practicable.
ablie Law 712, Post Office Department Financial Control Act of 1950: In
accerdance with the provisions of this law, the functions performed by the
Ger eral Accounting Office for the Post Office Department were transferred to
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REORGANIZATIONS IN THE EXECITTI
this Department effective November 15, 1950. The General Accounting Office
-transferred about 800 employees at Asheville, N. C., and the sum of $1,755,000
to the Post Office Department for the purpose of carrying out these functions
from November 15, 1950, to June 30, 1951. The budget estimates for the postal
service were increased by $2,813,000 for the purpose of providing funds for
this new activity for the entire fiscal year 1952. The effect of the transfer will
be to increase the annual expenses of the Post Office Department and the postal
deficit to that extent.
Ill order to. secure maximum benefit from this change, plans are being formu-
lated to decentralize the accounting activities to 12 regions in the field. This
will be an obvious advantage in that the accounting records will generally be
retained at the field accounting offices, which will greatly reduce the distance
that such accounting papers must now travel before reaching their ultimate
destination. While it is not anticipated that the acquiring of the accounting
functions of the General Accounting Office will in itself produce any tangible
savings in money to the postal service, it should eventually reduce over-all
Government costs, and it is expected that through the use of better accounting
statistics the Department will be in a position to better administer the field
service. Before full benefits can be realized it will be necessary to set up a new
accounting system which will be integrated with the new budget and appropria-
tion structures. Probably it will be about 2 years before the effect of Public
Law 712, the decentralization of the audit functions, and the hew accounting
structure call be evaluated.
Public Laws 152 and 754 to date have had comparatively little effect on the
administration and operation of the postal service due to the very nature of
postal service functions of procurement, warehousing, property utilization, dis-
posal of surplus property and the like.
Public Law 784 to date has had very little effect on the administration and
operation of this Department except to repeal "personnel ceiling requirements"
and other laws affecting the postal service that were obsolete or DO longer neces-
sary. Public Law 712, rather than Public Law 784, is considered the "Budget
and Accounting Act" for this Department.
Sincerely yours,
J. M. DON ALDsoN ,
Postmaster General.
RECONSTRUCTION FINANCE CORPORATION
NOVEMBER 24, 1950.
Hon. JoaN L. McCilatari,
Chairman, Committee on Expenditures in the Executive Departments,
United States Senate, Washington 25, D. C.
DEAR SENATOR MCCLELLAN : This will supplement my letter dated November 1,
1950, in reply to your letter dated October 26, 1950, requesting complete informa-
tion as to (a) steps which have been taken to carry out any reorganization laws
or plans affecting RFC; (b) administrative deficiencies eliminated or improve-
ments which- have been made in organization and management of RFC; and
(c) estimates of savings that may have been realized or that may be expected
as a result of such reorganizations.
Pursuant to Reorganization Plans No. 22 and No. 23, the funds, personnel,
records, documents, property, and equipment involved were transferred to Hous-
ing and Home Finance Agency- effective September 7, 1950.
At the request of the Federal National Mortgage Association, the RFC, under
a temporary arrangement, is supplying personnel on a reimbursable basis to
supervise the activities of the Association in two field offices, which are presently
shared by RFC -and FNMA., pending a determination as to the ultimate disposi-
tion of such activities. It is the announced plan of FNMA to integrate the
remaining two reimbursable offices into the FNMA program by January 1, 1951.
By agreement with Housing and Home Finance Agency, the RFC is continu-?
lug to service ona reimbursable basis nine loans transferred pursuant to Reor-
ganization Plan No. 23.
Since the programs covered by these reorganization plans are no longer op-
erated by RFC, we are, of course, not in position to speak with reference to any
improvements in organization or management, or any savings in administra-
tive costs Of these programs. The total expenditures made by this Corporation
have, of cOurse, been reduced by the amount of funds and authorizations trans-
ferred pursuant to these plans, but insofar as present RFC operations are con-
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?4 REORGANIZATIONS IN THE EXECUTIVE BRANCH
c !rned, -they were not affected by reorganization plans and consequently the
-
r !organization plans have not resulted in any improvements in organization or
-
n ianagement, or any savings in administrative costs of RFC operation.
The Corporation has conformed to the requiremeiits of the Budget and Ac-
c nutting Procedures Act of 1950 (Public Law No. 780 insofar as its provisions
-
a !e apphcable to the budgetary, accounting, and auditing pro ctices required of'
C overnment agencies coming within the provisions of the Government Corpora-
ons Control Act of 1945. The improved procedures for reporting from ac-
counting, auditing, and budgetary standpoints have vitally assisted management
ii determining Corporation policy. It is not possible to deter:nine- at this time
hether there will be any monetary benefits.
The General Services Administration has issued regulation; pursuant to the-
deral Property and Administrative Services Act of 1949, as amended (Pub-
ii Nos. 152 and 754), advising Government agencies with respect to their
ii sponsibiliites under the act. The RFC is complying with these regulations
it sofar as they apply to the activities of the Corporation. Procedures have
bi en installed for the reporting of surplus property by the loan agencies and
ti e Washington office and for the disposal of such property. In addition, various
r( ports, such as the report on contracts for supplies and services, are being
Ii rnishcaa General Services Administration periodically. It should be men--
ti )ned that preparation of these reports results in administrative expense which
pi eviously was not involved in RFC operations.
With reference to your inquiry concerning the Lush on transaction, that trans-
ac tion has not been transferred from RFC to HHIPA because both of the agencies
cc [teemed have administratively determined that Reorganization Plan No. 23 of
It 50 did not operrue to effect such a transfer. In this connection, I am en-
cl )sing a copy of a letter dated August 31, 1950, which, you will note, formal-
iz- is this determination and bears the signature of Mr. Rise on behalf of RFC
in d the concurrence of Mr. Foley on behalf of HIRFA. Attention is particularly
in dted to the following paragraphs of that letter:
'Since the loans to the Lustron Corp. have progressed far .leyond being re-
di cod to judgment ?the mortgaged property having been sold jralicially and the-
sa es having been confirmed by the court) they have become a liquidation mat-
te and, hence, in our opinion, remain unaffected by Reorganization Plan No. 23
of1950 which, as its language indicates, was intended to transfer active func-
tir ns as distinguished from liquidating functions. Constituting, as they do,
on aggregate indebtedness consisting of an original loan which at later dates
-
wt s supplemented by additional loans to accomplish the purposes of the original
lot n, and the authwity under which the first loan was made having expired in
1917, it would seem that a liquidating function, the remnant of expired statu--
to; y authority, could hardly have been intended to be transferred to another
ag !ney?and especially so where such late stages of liquidation have been
ret.ched as are here involved.
' Certainly, if the consideration motivating lteorganiza tion Plan No. 23, of
19; 0 (namely the transfer to Housing and Home Finance Agency of housing-
Tm ctions being performed by this Corporation) is to serve also as a guide in in-
ter ?reting the plan, it must be concluded that the so-called Lustron loans are not
tra nsferred by the plan. It will be recalled that the motivating consideration.
sta ted in the President's message submitting the plan was that the functions in
qui stion are more closely related to the housing functions of arising and Home
Fu ance Agency than to the financing functions of this Corporation. What
rer tains to be done -vvith respect to the so-called Lustron loans consists of con-
ch' ling pending litigation, completing the liquidation through realization on the
ass ats purchased at he foreclosure sale, and taking such other :steps as may be
ap ropriate to satisfy the judgment recovered by this Corporation. Manifestly,
the se remaining functions are inherently liquidation rather than housing in
elm meter."
his letter was submitted for publication in the Federal Register but we
we: e advised that its publication in the Federal Register would not be in keeping-
will applicable regulations. Upon advice that the lettsr could riot be published
in Ihe Federal Register, it was released to the pross.
I am also enclosing a copy of our general counsel's opinion dated August 11,
195), which discusses the question in greater detail and concludes that Reorgani-
zat, on Plan No. 23 of 1950 did not effect a transfer of the Lustron transaction.
It nay perhaps be of interest that an inquiry into the status of the Lustron
transaction was made by the subcommittee on RFC of the Senate Banking
and Currency Committee on September 19, 1950. This was an executive session
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held for the purpose of determining whether there should be open hearings on
the matter. Representatives of H1IFA and of this Corporation gave testimony,
and so far as we know, no open hearings are scheduled.
We are glad to cooperate with your committee in any way that we can and
if we can be of further assistance, please let me know.
Sincerely yours,
W. E. Hiam-Zo, Chairman.
(The enclosures referred to in Chairman Harber's letter have been
incorporated in. the committee's files.)
SELECTIVE SERVICE SYSTEM
DECEMBER 4, 1950.
Hon. JOHN L. McCit:r,LAN,
United States Senate.
DEAR SENATOR MCCLELLAN : Pursuant to your request of October 26, 1950, made
under Senate Rule XXV (Public Law 601, 79th Cong.), the Selective Service
System submits the following information:
For the implementation of Public Law 779, Eighty-first Congress, amending
the Selective Service Act of 1948, part 1650 of the Selective Service ligulations
was written, approved, and put into effect. This part of the regulations supple-
ments the general regulations written for the implementation_ of the Selective
Service Act of 1948 and provides for special registration of members of the
medical, dental, and veterinary professions and allied specialists. The first
registration under these regulations was held on October 16, 1950. Provision has
been made also for the classification by local boards of these special registrants
and special procedure established for their physical examination at Armed
Forces joint examining and induction stations. Provision ha a also twee made
for special selection, delivery, and induction, unless these special registrants
apply for and accept commissions in their respective corps of the Armed Forces.
To supplement these regulations in the implementation of _Public Law 779,
Operations Bulletins Nos. 8 and 10, dated October 11 and 26, respectively, and
State Director Advice (No. 191), dated October 13, 1950, have been issued. These
publications indicate the formation of the National Advisory Committee as
provided in Public Law 779 with its constituent voluntary advisory committees
within the States and indicate the desirability of having all of the echelons of
the Selective Service System cooperate fully with these committees. No savings
have resulted to the Selective Service System from the enactment of Public Law
779, Eighty-first Congress. Quite the contrary has taken place. The Selective
Service System was the agency ordered by the President to defray the necessary
expenses of this medical advisory organization. Representatives of the National
Advisory Cormnittee have informed the Selective Service System that their
expenses for the balance of the fiscal year will be approximately $442,828. Other
expenses incident to the registration, classification, physical examination, and
induction of this special group will approximate $67,172.
The Budget and Accounting Procedures Act of 1950 (Public Law 784, 81st
Cong.) as of this date has not affected the Selective Service System to such an
extent that specific statements can be made regarding any economies that may
result or additional expenses that may be involved.
Title V of the Federal Property and Administrative Services Act of 1949,
and amendments thereto (Public Laws 152 and 754), affected the records man-
agement program of the Selective Service System. This title, known as the
Federal records law, sets forth the duties and responsibilities of the Archivist of
the United States and of the heads of Federal agencies with respect to the
creation, maintenance, and disposal of records. Inasmuch as the Selective Serv-
ice System had, in accordance with previously issued Executive Order 9784,
dated November 26, 1945, and the various records disposal acts administered
by the National Archives, created a well-coordinated records-disposal program,
which included many objectives found in the legislation referred to above, it
may be stated that this agency had, beginning on May 3, 1943, with the estab-
lishment of the Archives Division at national headquarters, anticipated, and,
in many ways, exceeded the recommendations of. the Hoover Commission on
Organization of the Executive Branch of the Government, insofar as this phase
of operations is concerned. This records-disposal program was carried into
the administration of the Office of Selective Service Records and enlarged upon
to include records management and record depot operation.
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3peration of the Selective Training and Service Act of 1140, as amended,
re miter! in the accumulation of approximately 700,000 linear feet of records.
Al the time the Office of Selective Service Records was established on March
31 1947, approximately 233,000 linear feet of such records had been disposed of
by destruction, transfer to other agencies, or transfer to the Archivist of the
Iii ited States. The remaining 467,000 linear feet el! records were housed in
54 record depots in the several States and Territories where they were serviced
in accordance with the intent and provisions Of Public Law 21, Eightieth Con-
gr ss, at the maximum of efficiency and at a minimum of cos7. to the Federal
Ge vernment. This service has been continued under the Selective Service Act
of 1948. Since March 31, 1947, over a million requests for information have
be n made upon the records of the Selective Training and Service Act of 1940, as
an ended.
The Office of Selective Service Records was in existence for approximately
15 months, during which an additional 50,000 linear feet of records were disposed
of, a total of 283,000 out of an estimated 700,000, or 10 percent of the original
ho-. dings. These records are now arranged in well-coordinated groups, described
in the attached Administrative Bulletin, which will permit, at a minimum of
ex} iease, (1) identif cation of individual records through proper finding media,
(2 fixed retention periods for records of permanent value, (3) fixed destruction
dat es for records which can be destroyed within the foreseeable future, and
(4 fixed dates for transfer of records of permanent value to the Archivist of
the United States.
In addition to the 417,000 linear feet of records acquired from the Office of
Se] ective Service Records, there have been obtained under the Selective Service
Act of 1948, as amended, approximately 100,000 linear feet of records, to which
an accretion of approximately 10,000 linear feet per year may .je expected. It
is tanned that this accretion will be offset by comparable disposals of noncurrent
ree mds of the Selective Service Act of 1948 and overage records of the Selective
Tr: ining and Service Act of 1940, as amended. The Selective Service System has
pla med for the periodic retirement of certain noncurrent records to record depots
pre Jiously established at each State headquarters and at national headquarters,
ant for the destruction, after a fixed period of retention, of duplicate record
cop es of documents prepared in multiple numbers. All records of the Selective
Ser vice Act of 1948 have been placed on approved disposal 'ENO and schedules
sub nitted to the Arcaivist of the United States and the Joint Cemmittee on the
De truction of Executive Papers, in accordance with the Federal records law.
TM se plans are flexible enough so as to permit a change without further refer-
one to the Archivist or to the Congress, except as to the procurement of funds.
As provided in the Federal records law, plans have been formulated and are
rea ly to be placed in operation for the orderly periodic retirement of certain
cur 'ent records of the Selective Service System of 1948 to records centers. This
ret] ernent of records program should result in reducing the purchase of filing
elm pment to an absolute minimum, since the retirement of records to record de-
pot will be accompanied by a disposal program on the records of the Selective
Tra .fling and Service Act of 1940, as amended, as described below.
Tie Selective Service System has ready for publicatio a instructions which will
rest It in the destruction of approximately 6,000,000 of the 35,000,100 cover sheets
obb ined under the Selective Training and Service Act of 1940, as amended.
Bee Luse of the confidential nature of such records, it is required that they be
mac crated, shredded, or burned. While these requirements contribute to the
cost of operation of record depots, they are necessary t ecause of. the provisions
of I ublic Law 26, Eightieth Congress, which require that the confidentiality of
all 'ecords obtained under the Selective Training and Service Act of 1940, as
ante aded, be preserved. Funds were requested for this purpose in the budget
for the fiscal years 1049 and 1950, which were approved by the Bureau of the
Bud ;et, but in both years were eliminated by the Congress. Funds have again
beet requested in the pending deficiency appropriation, and it is hoped that this
prot. ram ea nbe accomplished before the end of the present fiscal year.
1) [ring each succeeding fiscal year, it is planned to destroy several hundred
thou sand cover sheets of registrants who have reached the ago of 45 years, and
to ti ansfer to record depots from local boards approximately the same number
n cords cf registrants who will have reached the age after wWch they are no
long r liable for military service, and veterans who are exempt from induction;
Sincerely yours,
LEWIS R. HULSE-TEM Director.
(fi dministrative Bulletin No. 7.20, as amended September 6, 1950, referred to
G neral Hershey's letter has been made apart of the committee's files.)
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REORGANIZATIONS IN 'THE EXECUT V
SECURITIES ANT/ EXCHANGE. 11.0MMISSION
DECEMBER 11, 1550.
HOB. JOHN L. McCLELLAN,
United States Senate, Washington, D. C .
1/EAR SENATOR MCCLELLAN Your letter of October 25, 1950, requests complete
information on the effect of Reorganization Plan No. 10 of 1950 as well as other
general legislative action by the Eighty-first Congress affecting the organization
and operations of this Commission.
A. STEPS WHICH HAVE BEEN TAKEN TO CARRY OUT REORGANIZATION PLAN NO. 10
OF 1950
Reorganization Plan No. 10, transferring certain executive functions of the
Commission to its Chairman, became effective on May 24, 1950. On that date,
pursuant to section 3 of the plan, the President designated as Chairman Mr.
Harry A. McDonald, a member of the Commission who had been serving as
Chairman since the previous November.
The Chairman has assumed responsibility for the following activities previously
vested in the Commission:
1. General personnel supervision, including the appointment, promotion, and
separation of personnel (other than beads of major administrative divisions) ;
2. General budget and fiscal matters, including the periodic review and approval
of expenditures and obligations, administrative regulations covering official
travel of employees, establislin lent of fiscal accounting procedures, and prepara-
tion of budget requests and justifications for consideration by the Commission.
3. All management functions designed to secure more efficient use of personnel
and to improve the quality of service rendered to the public ; and
4. All housekeeping functions, including records service and management;
the acquisition, storage and issue, of supplies and equipment ; duplicating and-
printing; library services; and similar administrative duties.
The Chairman has delegated to the budget and fiscal officer, the Director of
Personnel, and the Director of Administrative Services authority to perform
certain of those functions, including respectively the certification of vouchers?
the appointment and promotion of employees up to and including GS-8, and the-
execution of contracts.
13. ADMINISTRATIVE DEFICIENCIES ELIMINATED AND IMPROVEMENTS WHICH H AVE 3EEN
MADE IN THE ORGANIZATION AND MANAGEMENT OF THE COMMISSION
It is believed that the assumption by the Chairman of responsibility for the
foregoing activities, and the resulting delegations of authority lie has made, has
facilitated the dispatch of routine matters. llie Chairman has also assumed a
greater participation in the Commission's management program established fol-
lowing the Hoover Commission study. Under this program a systematic review
is being made of the functions and efficiency of the various operating units in the
Commission, and progress is being made toward the development of work stand-
ards arid the simplification of procedures.
The Chairman is aLso concerned with planning for major problems which the
Commission may anticipate in the future. An example of this is the adjustment
which will have to be made in the staff assigned to the administration of the
Public Utility Holding Company Act of 1935 as the major burden of work under
section 11 of that statute diminishes. Action is being taken to absorb personnel
thus released into vacant positions elsewhere in the Commission for which they
are qualified or can be trained through an in-service training program.
C. ESTIMATES OF SAVINGS THAT HAVE BEEN REALIZED OR MAY BE EXPECTED AS A RESULT
OF PLAN 10
We can point to no actual money savings as a result of Reorganization Plan
10, nor is it possible to estimate any savings which may be realized in the future.
An indication of the type of economies which have been achieved can he seen in
the following action of the Chairman For many years this Commission gathered
and published data on the financial characteristics of corporations having listed
securities. In 1948 this work was stopped for budgetary reasons. Nevertheless,.
there has been a continuing demand for this type of information from commit-
tees of Congress and other agencies of the Government as well as from business
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3 REORGANIZATIONS IN 'THE EXECUTIVE BRANCH
01 ganizations and other persons. It was estimated that 10 full-time employees
w mld be needed in the statistical section to maintain this information on a cur-
at basis. However, after study, the Chairman's office evolved a method for
gi thering the necessary figures in the course of the routine examination of the
lb ancial statements made by the operating divisions. This new system will not
!ect the workload of the examiners to any material degree, so that the informa-
ti in will :aow be available without any increase in personnel.
D. EFFECTS OF GENERAL LEGISLATIVE ACTIONS
1. The Budget and Accounting Procedures Act of 1.950
Dais already has resulted in the simplification of some of the Commission's
ad Mnistrative accounting procedures in that (a) it is no longer necessary to
oh am n the approval of the Director of the Budget for quarterly personnel cell-
in s; and (b) the regulations of the Treasury Dep trtment and the General
Ac!ounting Office with respect to administrative accounting nod reporting re-
qu rements are being modified from time to time to eliminate unnecessary reports
an 1 to simplify accounting procedures. While savings to date have been modest,
it s apparent that this law will result in simplified and more useful fiscal ac-
cm nting records.
he Commission welcomes the official recognition given by this law to the
"p( rformance budget." As we have informed the committee previously, our
hu get estimates for the past several years generally have been based on the
colt of performing our major functions under the several statutes which we
ath ainister. We feel that this permits a better understanding of our needs
by the Appropriations Conunittees of Congress and by the Bureau of the Budget.
2. "he Classification Act of 1.949
1 'Maier this law the departments and agencies are granted authority to evaluate
pos itions in accordance with prescribed standards. This method of job classi-
fica tion represents a considerable improvement over the procedures required
um er the Classification Act of 1923, as amended.
I.a additMn, title X of the Classification Act of 1949 gives legislative substance
to ystematic review of agency operations looking toward improvement in man-
agement, and provides for awards to supervisors and employees whose efforts
lew to efficiency and economy of operations. The efficiency-award plan provided
for in this law serves to round out the Government's incentive-a wards program.
3. !'he Federal Property and Administrative Services Act of 1149, and amend-
ments thereto (Public Laws 152 and 754)
(7) Records management.?Public Law 754 combi led into one law many
sea tered statutes, executive directives, and administrative precedents relating
to 'ecords management. It is not possible as yet to assess the value of the
eha ages in procedures which this law has mantle. In our letter of June 10, 1949,
to our committee, vl,e reported the disposal of 10,950 eubie feet of records, the
equ valent of 1,200 filing cabinets. Since that date we have eliminated an ad(li-
Um al 1,15) cubic feet of unnecessary material. More than $0,000 has been
rea ized to the Government during the past 4 years in (he sale of these obsolete
me( rds as waste paper. In addition, we have freed for ether use a large amount
of torage space and filing equipment.
( )) Acquisition and disposal of property.?Public Law 152, the Federal Prop-
erty and Administrative Services Net of 1949, has had very litre effect on the
ope ations of this Commission. Being a relatively small agency, our purchasing,
stem age, issue, and transportation activities are minor in scope, Prior to the
past age of this act, our purchasing was done from the Pureau of Federal Supply
of tie Treasury Department, the General Schedule of Supplies, or upon the open
mat ket. No substantial change in this procedure has occurred.
R)eently, regulations have been issued by the General Services Administration
coni erring upon the individual agencies authority for the utilization of excess
pro] erty and for the disposal of surplus property. These activities formerly
were handled by the War Asets Administration and the Bureau of Federal
Sup dy. The Commission feels that this decentralizatien may ultimately result
in a msiderable savings to the Government. So far as the Commission is con-
cern ed, however, we can point to no savings attributable to this act. -
(t) Office space.?Iteorganization Plan No. 18 had the effect of centralizing
in tl e General Services Administration the authority for the leasing of all office
pact This work wt.s formerly performed by the Division of Administrative
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REORGANIZATIONS IN THE EXECUTIVE BRANCH
Services of this Commission. Again, since this Commission is a relatively small
agency, negotiations with lessors and acquisition of office space was a minor
function. Since this work originally required only a nomin.al amount of time,
we do not anticipate any administrative savings as a result of plan No. 18. It is
our belief, however, that the centralization of this function in one agency may
result in considerable savings to the Government as a whole, particularly as a
consequence of volume leasing.
I trust this letter will furnish you the information you seek. If you should
desire any further details, I would be happy to comply with your request.
Sincerely yours,
DONALD C. COOK, Vice Chairman.
DEPARTMENT OF STATE
DEGEMBER 11, 1950.
The Honorable JOIIN L. MCCLELLAN,
Chairman, Committee on _Expenditures in the Executive Departments,
United States Senate.
MY DEA.R SENATOR MoCLELf &Dr ? Further reference is made to your letter of
October 25, 1950, to the Secretary of State requesting information concerning
action taken by the Department of State to implement Reorganization Plan 20 of
1950, Public Law 73, Public Law 821, and certain general legislative enactments
of the Eighty-first Congress designed to improve economy and efficiency in the
executive branch. ?
I am pleased to submit the attached report which, I believe, provides the infor-
mation you need. If I can furnish any additional information, I shall be most
happy to do so.
Sincerely yours,
CARLISLE H. HUMELSINE,
Deputy Under Secretary.
REPORT TO COMMITTEE ON EXPENDITURES IN THE EXECUTIVE DEPARTMENTS, UNITED
STATES SENATE
The following statements describe the implementation and administration of
Reorganization Plan 20 and certain legislative enactments of the Eighty-first
Congress:
REORGANIZATION PLAN 20 OF 1950
Reorganization Plan No. 20, approved June 20, 1949, transferred the following
functions from the Department of State to the Administrator of General Services:
1. The receipt and preservation of the original copies of bills, orders, resolu-
tions, and votes;
2. The publication of acts and joint resolutions in slip form and the compilation,
editing, indexing, and publication of the United States Statutes at Large, except
such functions with respect to treaties and other international agreements;
3. The certification and publication of amendments to the Constitution of the
United States and the preservation of such amendments; ?
4. Certificates of appointment of the electors of the President _and Vice Presi-
dent and certificates of the votes of such electors for President and Vice President;
and
5. The collection, copying, arranging, editing, copy reading, and indexing of the
official papers of the Territories.
This reorganization was designed to remove from the State Department func-
tions which had no direct relationship to the conduct of foreign affairs. To
carry out the provisions of the plan the following positions, funds, and property
located in the Department of State for the purpose of administering the functions
enumerated above were transferred to the General Services Administration:
1. Nine positions carrying annual salaries totaling $52,400 together with un-
expended balances to cover such salaries for the period May 24, 1950, to June
30, 1950, amounting to $2,338.50;
2. All other unexpended funds designed for these activities along with all
unliquidated obligations for fiscal years 1948, 1949, and 1950, and total funds to
be appropriated for fiscal year 11)51; and
3. Miscellaneous property items including files and other records furniture,
etc.
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) R:EORGANIZATIONS IN THE EXECUTIVE BRANCH
The effect of this plan was to remove from the Department of State functions
e, traneous to its normal responsibilities being, therefotv, one of a series of actions
th signed toward a more orderly grouping of functions within the Government.
hile functions transferred under this plan were relatively minor, the transfer
ht s helped to improve the organization of the Department of State. Any econ-
ot lies which may result in the future cannot be estimated at this time.
PUBLIC LAW 821?PUBLICATION OF STATUTES AT LARGE, TREATIES, ETC.
This law authorizes the publication of treaties and other int nmational agree-
iii mts, formerly published in the Statutes at Large, in a new compilation entitled
"l`nited States Treaties and Other International Agreements." The effect of
th a law was to permit the transfer to the General Services Aeministration the
re Tonsibility for pablishing the Statutes at Large but at the same time main-
ta .ning within the Department of State responsibility for publication of treaties
at d other international agreements. The first volume of United. States Treaties
ar d Other International Agreements will be published dun i ag . 1951 for the
ca tendar year 1950.
Phis legislation, together with Reorganization Plan 20, lies assisted in divesting
fr an the Department of State functions not related to its normal responsibilities.
TI .e Deptirtment does not expect that there will be any appreciable savings in
rn fletary terms as a result of this legislation although an improvement in service
to the users of the publications is expected.
PUBLIC LAW 73?REO11GANIZATION OF THE DEPARTMENT OF STATE
Complete information concerning the basic steps taken to carry out this law and
to put the recommendations of the Hoover Commission into effact was reported
to you by this Department in letters dated July 12, 1949, August 1, 1949, and Janu-
ar v 31, 1950. Senate Report 2581 contains this information in digest form.
ci nsequeatly, these remarks will be limited to an evaluation of the reorganiza-
tit n and a summary of additional steps taken by the Department of State to
st engthen its organization since the submission to you of the January 31 report.
Dyer the past several months the benefits of the reorganization have been
re dized. In general, the Department has been provided with a simpler and more
m.ponsive organization and an improved mechanism for discharging its responsi-
bi. ities. The principal improvements that have been made in the Department as
a : esult of the reorganization are as follows:
L. The overwhehring workload on the Secretary and Under Secretary, which
had been noted by both Secretary Marshall and Secretary Acheson, has been
ill! :de manageable through the strengthening of their offices by the utilization of
Secretaries of State as Deputy Under Secretaries and by delega-
ti( ns of responsibility to the eight Assistant Secretaries. Under Secretary Webb
ha m publicly stated his view that the work of the Office of the SetTetary has been
lig htened by GO percent as an end product of the total reorganhation effort.
!. The Department's structure is now much simplified and the responsibilities
an 1 functions of its various parts are better defined and clarified. In January
19 ,9 the Department consisted of a total of 393 major organizational units?
off ces, divisions, branches, and so forth. This number was reduced through con-
so idations and reorganization to a total of 213. This reduction in number in
its ?if is not necessarily noteworthy but it means that the tasks of direction, co-
on ination, and management control have become less burdensome for the senior
oil cers of the Department.
. The establishment of four new geographic bureaus under the new Assistant
Set rotaries of State provided by Public Law 73 has facilitated the fixing of
res ponsibiliity by the Secretary for action with respect to the geographic regions
an I particular countries of the world. These new bureaus have been given
poi itical, economic, public affairs, and diplomatic and consular :)ost administra-
tioi responsibility for the areas of the world which they handle. Accordingly,
y have been adequately staffed in order that they may apply general foreign
poi icy within their regions and contribute substantially to the development of
glo )til policies.
The ever-all economic activities and the public-affairs activities of the De-
na] tment have continued under the direction of the Assistant Secretaries for
tic, 'comic and Public Affairs, respectively. 130th hay reoriented their activi-
tie; in the light of new divisions of responsibilities between them and the regional
bin earls. In line with the reorganization pin n the public affairs area was reor-
gar ized internally in order to free the Assistant Secretary for Public Affairs from
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REORGANIZATIONS IN THE EXECT.TTIVE BRANCH 71
the heavy operational responsibilities involved in the direction of the interna-
tional information and educational exchange program. A general manager was
appointed to direct the operation of both these programs under the policy _direc-
tives of the Assistant Secretary to whom he reports.
5. The former Office of United Nations Affairs was reestablished as the Bu-
reau of United Nations Affairs under the direction of a new Assistant Secretary.
Internal rearrangements have been made in this Bureau which have resulted in
a strengthening of our machinery for administrative backstopping of United
States participation in international activities. As part of the reorganization
plan, a careful division of responsibility was evolved in order to assure that
the special knowledge and interests of the regional bureaus would be brought
to bear in the establishment of United States positions in the United Nations, and
and other international organizations.
6. The entire organization for administrative management of the Department
was also extensively revised. In addition to an extensive decentralization of
administration to the operating bureaus and offices, the central administrative
offices responsible for personnel, organization, general service, and consular
affairs were reorganized to eliminate the separate organizations for departmental
and Foreign Service administration. Each of the new offices now has clear-cut
responsibility for its functions both in the United States and overseas. This
change in organization has greatly facilitated our taking prompt and coordinated
action on administrative matters and has improved the administrative support
for the Department's overseas activities.
There follows a summary of additional steps taken by the Department to
strengthen its organization in the light of new responsibilities in the foreign-
affairs field:
? 1. A Bureau of German Affairs, patterned after the regional bureaus, was
established to support the work of the United States High Commissioner in
Germany. While this is a separate bureau, established to meet the extraordinary
problems arising from the German occupation, it is expected that eventually its
activities will be absorbed by the Bureau of European Affairs.
2. On October 25, 1949, the position of Director of Mutual Defense Assistance
was established in the Office of the Secretary and assigned the general respon-
sibility for carrying out the provisions of the Mutual Defense Assistance Act of
1949, as amended. The Director was assigned a small staff to assist him in
administering the program. In addition, the regional bureau S and functional
offices of the Department have been developing and administering certain aspects
of the program subject to over-all advice, review, and coordination of the Director.
Because of the tremendous step-up in our foreign and domestic programs for
increasing our own national security and that of other free nations, the Depart-
ment of State has recently been devoting considerable efforts toward the develop-
ment of organizational machinery which will integrate the many programs of
military and economic assistance both within the Department of State and among
the various agencies of the Government. Recent international developments
require a vigorous and unified direction. of United States policy and programs in
the international security field.
This Department in conjunction with the Department of Defense, the Treas-
ury Department, and the Economic Cooperation Administration has devised
machinery to accomplish this purpose. Arrangements are being made for the
appointment of a Director of International Security and Assistance Affairs in
the Department of State who will be responsible for coordinating all activities
within the Department relating to the North Atlantic Treaty, other similar inter-
national Programs, and military and economic assistance for mutual defense
and in addition will be responsible for providing leadership in the interdepart-
mental coordination of these programs. The Director for International Security
Affairs will assume the duties now performed by the Director for Mutual Defense
Assistance and will be given additional responsibilities and authorty commen-
surate with the role outlined above.
3. On October 27, 1950, the Technical Cooperation Administration was estab-
lished in the Department of State. It is the function of this Office to plan, im-
plement, and manage the techniCal cooperation (point 4) progrems authorized
by the Act for Internatonal Development (title IV of Public TAW 535, 81st Cong.).
The Technical Cooperation Administration operates as an integral (otaponent
of the Department of State, utilizing the Department's staff services and facili-
ties.
4. Executive Order No. 10171 of October 12, 1950, vested in the Department of
State the responsibilities and obligations of the United States la connection with
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tie occupation of Anstria. A United States civilian High Commissioner for Aus-
tr .a was appointed and furnished as organization to carry mit these responsi-
bi ities it. Austria, Departmental support for the High Commussioner has been
pi ovided in the Bureau of European Affairs.
PI BLIC LAW 110-10 IMPROVE ADMINISTRATION OF T RE CENTRAL INTELLIGENCE
AGENCY
Since this law is entirely concerned with the internal opera tions of another
agency of the Government, the Department of State does not feel competent to
co nment upon its effectiveness.
BLIC LAW 152 AND PUBLIC LAW 754?FEDERAL PROPERTY AND ADMINISTRATIVE
SERVICES ACT OF 1950
ft is too soon for the Department of State to have realized any administrative
im ?rovements or economies from the passage of this legislation. However, we
ex )ect that after the General Services Administration has had time to place its
pr Trams into full operation there will be some improvements to report.
PUT LIC LAW 784?BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950
lace early in 1950 the Department of State has been engaged in a series
of projects to improve its budget, accounting, and financial reporting processes.
Ti me projects have proceeded as follows:
:.. During March and April 1950 a financial report survey completed a study
of summary financial reports prepared in the Department and, discussed with
str ff and operating efficials the types of summary financial data needed through-
ou the Department for fiscal management. This study necesFarily broadened
jut) a review of our budgeting and accounting procedm7es.
. As an outgrowth of the work performed by the financial reperts survey team,
we requested the assistance of the Accounting Systems Division of the General
Ac minting Office, tle Bureau of the Budget, and the Treasury Department in
del eloping a fiscal system which will provide the Department with fiscal informa-
tio i needed for executive control and facilitate the preparation of a performance
but Tet. It is contemplated that the joint team will thoroughly review cur
pl.( sent fiscal operations and assist the Department in implemcnting necessary
inn n.ovements.
On October 9, 1950, an intra-State Department committee was established
to recommend solutions to certain specific problems of fiscal and budgetary
ach nnistrntion. TM terms of reference of this committee are as follows:
a) Develop a cost-activity classification and a program to implement cost-
act vity and performance budgeting.
b) Make recommendations relative to fund control and budget execution.
(c) Develop and recommend a system of summary financial reports.
(d) Recommend solutions to certain existing accounting and budgeting policy
prc TieMS.
12 addition to providing a general basis for a modern accounting system for
the Department of State, Public Law 784 will permit the simplification of fiscal
pro !edures previously influenced by the provisions of certain laws. Examples
are the warrant procedure for making appropriated funds available to spending
age acies and the State account of advances through which funds are made
available to our disbursing officers both lathe United States and overseas. These
rev sea prccedures are being developed primarily through the cocperative efforts
of the General Accounting Office and the Treasury Department.
PUBLIC LAW 359?EXECUTIVE PAY RAISE ACT
his act has enabled the Department of State to achieve a greater salary
equ ty for its high-level personnel and will undoubtedly assis:: materially in
obt: thing and retaining the services of top executives.
T de Executive Pay Raise Act initially increased the cost of! operating the
Der artment in that t: raised salaries of top executives. Savings to be achieved
uncl or this bill must result from either, or both, the following factors:
1. The ability of tie Department to obtain the services of higher caliber per-
son) Lel for these positions, thereby increasing productivity.
2. The possibility of retaining the services of high-caliber personnel already
in t le Department, many of whom in the past have resigned to go into private
em r toyment due to the low Federal salary scale for such positions.
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PUBLIC LAW 429-CLASSIFICATION ACT OF 1949 (GENERAL)
A significant provision of this act was that which removed the requirement of
pre-audit of agency allocations by the Civil Service Commission and allowed
.agencies to complete personnel actions on the basis of agency allocations subject
to post-audit by the Commission. Procedures to effectuate this provision have
been installed and have resulted in the elimination of the delay necessitated by
the submission of all positions to the Commission for review and approval. This
has brought about a reduction of from 2 to 4 weeks in the time required to obtain
final allocations of a position. A further saving in time has been made through
the elimination of the numerous discussions and negotiations with the Commis-
son on individual cases. While this saving is partially offset by the necessity
for a more comprehensive review in appeal cases, nevertheless the change has
resulted in a net increase in efficiency to the Department. There has also been
a decrease in the length of time for allocations of positions in the Department
which has resulted in a net speeding up of the personnel processes.
The significance of the addition of the top three grades provided in the Classi-
fication Act has been discussed under the executive pay bill. It is our opinion,
however, that the limitations on the number of positions allowed in these three
grades was placed in the act without realistic determination of the number of
positions having the duties and responsibilities which meet the requirements for
those grades throughout the Government.
PUBLIC LAW 429-CLASSIFICATION ACT OF 1949 ( MANAGEMENT IMPROVEMENT AND
EFFICIENCY AWARDS)
Under the provisions of section 1001 of title X of the Classification Act of 1949
and Bureau of the Budget Circular A-8, January 31, 1950, the Department of
State has submitted to the Bureau of the Budget a comprehensive report on its
management-improvement activities designed to accomplish the objectives of
systematic reviews of operations. In brief, the Department's plan is built around
the decentralization of responsibility for the review of operations to the oper-
ating units themselves, and the provision of necessary management staff assist-
ance to the line executives to aid them in the critical examination of their own
functions and the installation of improved methods.
Such staff assistance is located in the office of the executive director of each
regional bureau and the functional and policy advisory areas of the Department.
Each of the offices in the administrative area, namely the Office of Personnel,
Office of Operating Facilities, Office of Budget and Finance, and Office of Con-
sular Affairs is charged with the continuous appraisal of the administrative
support and control functions which they conduct on a Department-wide basis
as well as within their own organizations. In the Office of the Deputy Under
Secretary for Administration, a management staff provides assistance to all
areas of the Department in solving management problems which cross bureau
and office lines, are common to several major organization units, or otherwise
cannot be solved at the operating levels.
Each organization unit is required to maintain a comprehensive listing of the
management problems involved in its operation and a schedule for attacking
these problems, including, as nearly as can be determined in advance, the man-
power and timing of the efforts to be applied. The schedules also include sys-
tematic review projects intended to identify problems not already recognized and
to disclose organization units, supervisors, and employees who have produced
outstanding results in terms of efficiency and economy.
The organization of the Efficiency Awards Committee and the specific pro-
cedures necessary for the efficiency awards program established by section 1002
of title X of the Classification Act have not yet been fully implemented in the
Department of State. However, the problem has been given thorough study and
instructions have been prepared to place the efficiency awards program into
operation. These instructions are now in clearance and will he issued in the
near future. They provide, in brief, criteria for the granting of awards, define
eligibility to receive awards and provide the procedure and organization for the
program administration.
The program is to be closely integrated with the already existing employee
suggestion and honor awards programs of the Department. To this end, the
functions of efficiency awards committees under title X will be assigned to the
Department's Employee Suggestion Board. Efficiency awards will be granted
only to employees whose suggestions or performance result in savings. The
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tritiloyee Suggestion Board is charged with establishing standards to be used in
evaluating recommendations for awards and in determining the nature and
a Mount of awards; providing guides to supervisors n the inftlation of nomina-
t ons for efficiency awards; and stimulating participation in the efficiency awards
r rogram.
The Department has had highly satisfactory results over the past 2 years with
s 'exist ng employee suggestion program. During fiscal year l.950, for example,
a total of $2,692 was paid to employees for suggestions that have resulted in an
e thmated savings of $42,871 to the Department for that year.
PUBLIC LAW 873?PERFORMANCE RATING ACT OF 1950
The Department is at present developing its plan for implementation of this
2t. The plan is directed at achieving a system whi,th will require that all em-
p _oyees are made aware of their individual work requirements and of their Frog-
r !ss toward fulfilling those requirements. We are currently studying ways and
n .eans of developir.g and applying performance staneards, the forms to be used,
r !quirements for "outstanding" and "unsatisfactory" ratings, appeals system,
t ansition problems, etc.
AMALGAMATION OF FOREIGN SERVICE AND DEPARTMENTAL PERSONNEL
Recommendation No. 20 of the Hoover Commission proposed an amalgamation
o the now separate personnel systems of departmental and Foreign Service
p Tsonnel. As you know, the Department requested i hat implementation of this
r ,commendation be deferred pending further study because of t lie complex nature
a the problem.
A preliminary study of the problem was made by a research committee in the
11 epartment during: the summer and fall of 1949. During January of 1950 an
a lvisory committee to the Secretary was appointed to advise hi in whether :funda-
ental changes are required in the personnel systems and re,-ationships of the
E apartment and the Foreign Service. The membership of the committee included
r. James Rowe, who was a member of the Hoover Commission, as chairman;
r. William E. DeCourcy, Ambassador to Haiti; and Mr. Lobert Ramspeck,
rmer chairman of the House Civil Service Committee.
The committee has made its report to the Secretary. The Department is now
ri viewing the report and the improvements require e in our personnel systems
Ii r the more effective conduct of foreign affairs.
DEPARTMENT OF THE TREASURY
MY DEAR MR. CHAIRMAN: In compliance with your request in your letter of
!tober 24, 1950, there is attached a statement on the activities of the Treasury
D ipartment related to the Reorganization Act of 1949, Reorganization Plan No.
2( of 1950, the Budget and Accounting Procedures Act of 1950, and other items
01 similar legislative intent.
Sincerely yours,
II in. JOEIN L. MCCLELLAN,
Chairman, Committee on Expenditures in the Exceutive Departments,
United States Senate, Washington, D. C.
T. :EASURY DEPARTMT.NT ACTIVITIES RELATED TO THE RI ORGANIZATION ACT OF 1949,
THE BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950, AND OTHER MANAIIE-
MENT BVIPROVEMENT LEGISLATION
The Treasury Department, in respect to the legislation under consideration,
In S taken the position that these acts call for the broadest possible constructive
ai proach.. The repeated specific statements of congressional intent, embracing
vi tually every area of management efficiency, are accepted rs maximum em-
p1 asis on the objectives of more effective government. Such an interpretation
in plies intense action to effectuate the laws in their basic spirit as well as in
detail, and that is the program of the Treasury.
The President has laid out and stated his management objectives with
comparable emphasis and vigor. The Secretary of the Treasury since taking
of ice in 1946, has underscored these same objectives in repeated policy state-
ni,!nts and has made them an integral part of Treasury operation.
JOHN W. SNYDER.,
Seoretary of the Treasury.
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Treasury aetion on the subject legislation is intertwined with and a reflection
of all of the forces mentioned above. Though some items can be traced directly,
it is difficult to differentiate in comprehensive detail among the various possible
origins of action and results. The important thing, in the view of the Department,
is that positive action and results, reflecting both the broad and specific objectives
of the subject legislation, be attained.
That Treasury is taking the necessary aggressive action and obtaining the
results is evidenced by approximately $60,009,000 of identifiable savings from
the Department's management improvement effort of the past 4 years, plus
strengthening of management controls and improvements in service not readily
measurable in dollars. There is no question but that the Reorganization Act of
1949, the Budget and Accounting Procedures Act of 1950, and the other laws
considered here are playing a direct role in the cumulative maintenance of these
results and additions thereto.
REORGANIZATION ACT OF 1949 AND REORGANIZATION PLAN NO, 20 OF 1950
Action taken
As indicated above, action to carry out the objectives of the Reorganization
Act and plan 26 predates the passage of tho act and the effective date of the
plan July 31, 1950. In order to avoid an unwieldy and voluminous report, some
arbitrary cut-offs have been made, and the presentation here is limited to basic
illustrative material bearing directly on the point.
Pursuing his general management objectives, the Secretary of the Treasury
on March 16, 1948, established the Treasury Department Management Committee
to formulate plans and recommendations pertaining to the over-all management
and administration of the Department, including the development of immediate
and long-range steps leading to economical and efficient administration of the
Treasury in all aspects of its work. The assignment to the committee included
responsibility for?
t Selecting the management problem areas which require action by the
various bureaus and offices of the Department.
2. Reviewing and effecting the implementation of various reports which
have been or will be directed toward the improvement of administration and
management of the Treasury Department.
3. Directing, where necessary, the implementation of any recommendations
contained in any of these reports, provided that the committee, after investi-
gation or review, believes they are sound.
4. Keeping the Secretary informed of progress.
5. Drawing, when necessary, on qualified personnel throughout the Depart-
ment in order to conduct surveys, critical reviews, and investigations deemed
necessary in the interest of efficiency and economy.
Added impetus was furnished to the Committee's efforts when the President
issued Executive Order No. 10072 of July 29, 1949. This order laid out a broad
program for department heads requiring continuing action to improve manage-
ment. The Secretary designated Ids administrative assistant, serving also as
Chairman of the Treasury Department Management Committee, as the official
to direct and coordinate effectuation of Executive Order 10072. Then, working
in intimate cooperation with the management of each of the Treasury bureaus,
the Secretary's top assistants and the Committee carried forward aggressive
prosecution of the management program.
The Department prepared, in 1949, a comprehensive analysis of the status
of its management program, its operating problems, and corrective action. The
way that this tied in to the objectives ultimately expressed by the legislation
under discussion is clearly indicated in a summary attached hereto as exhibit A.
Early this year the Department and its bureaus again took a careful inventory
of its plans and progress hi carrying out the objectives of reorganization legis-
lation and other management programs. This was also used as an occasion
for spelling out in detail how all of the various activities underway are used
to obtain a better result. A summary of this Treasury Department manage-
men improvement plan is attached hereto as exhibit B,
Within the past 60 days another check-up on plans and action has been com-
pleted. A summary of these findings is included herewith as exhibit C.
Development of specific action under Reorgtrnization Plan No. 26 originally
started in connection with anticipated congressional acceptance of Reorganiza-
tion Plan No. 1. The pace of this work was somewhat decelerated following
disapproval of plan 1 in May 1950 lest overemphasis result in waste of staff
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work on projects that could not be brought to practical conclusions. However,
when the President submitted Reorganization Plan No. 26 on May 31, 1950,
?reliminary staff work was again stepped up so that the Department was in a
?osition to proceed aggressively immediately after the effective date, July 31.
rhus, it was possible to begin official action immediately. The following points
Ilustrate some of the more significant actions taken:
1. Since plan 26 transferred virtually all authority to the Secretary, the orderly
:ransaction of Department business required an interim redelegation of these
tuthorities. This was accomplished by Treasury Department Order No. 120 of
fuly 31, 1950, which pointed out that these interim redelegations remained in
!ffect only until changed by the appropriate authority.
2. Functions with respect to distinctive papers used in vinting money and
;ecurities were immediately transferred from the Bureau of the Public Debt to
he Bureau of Engraving and Printing by Treasury Department Order No. 121
)f July 31, 1950.
3. The position of Administrative Assistant Secretary created by the plan was
illed and vested with broad responsibility and authority for departmental man-
tgement and admlnistration.
4. The Secretary reiterated his intense interest in making sure that the Depart-
nent obtains max:.mum constructive benefits from Rmrganization Plan 26 which
ie described as "an excellent new tool whereby managemen t progress may be
tepped up, particularly through the elimination of obsolete legal barriers." In
etters to each btreau head he directed the reexploration of every possibility
vhereby this new flexibility might contribute to incruased operating effectiveness.
le assigned responsibility for leadership in this work to the Administrative
. ssistant Secretary, directed the use of all of the Department's operating facilities
o pursue the program and emphasized that budget requests and other operating
eports must reflect aggressive attention to these mailers.
5. The Commissioner of Internal Revenue, by Treasury Department Order No.
24 of August 22, 1950, was given delegated authority for the approval of tax
!omprornises in any case involving less than $500.
G. To expedite United States Coast Guard administrative action under defense
aobilization conditions, the Secretary acted on August 22, 1050, to delegate to
he Commandant of the Coast Guard the powers vested in the Secretary by
iitle 14, United S:ates Code, section 41, as they apply to the establishment of
tatings for enlisted personnel and also authorized him to establish the pay grade
lor each rating on a basis coordinated with Navy policy.
7. On August 3, 1950, the Administrative Assistant Secrel:ary simplified de-
partmer tal travel procedures winch were required theretofore because of dele-
ation limitations removed by plan 26.
8. The need for a number of pro forma approvals and excess paper work was
emoved. on September 18 when, under plan 26, Department Order No. 125 was
I isued delegating authority to bureau heads to designate those officers authorized
a administer oaths under various statutes.
Concurrently with the above immediate action program, eac:a of the individual
!7reasury bureaus is continuing with its own specialized analysis of possible
lan 26 applications, not only for broad departmental application but also as
ffecting techncal points within each operation. Tile thoroughness with which
ibis work is being attacked by the bureaus is exerrmlified by the Commissioner
( f Internal Revenue's instructions to his top men, attached hereto as exhibit D.
The bureaus' work in this field has resulted in literally hundreds of proposals
I or various adminlstrative improvements pertinent to plan 26. These, of course,
must be analyzed in detail before final action can be taken. However, even
though the reorganization plan has been in effect for less than 4 months, a :num-
er of the proposals are in the final action stage. Examples of these varied bu-
i eau projects are presented in attached exhibit E.
.chievements
Estimated savings of $68,000 annually are now accruing from the simrified
rocurement, warehousing, and distribution of distinctive paper for United States
urrency and securities, just one of the actions under plan 26 cited above. The
elegaUm to the Commissioner of Internal Revenue of authority to take final
ction on offers in compromise under $500 is already saving many days of delay
I ir taxpayers and many hours of staff time for the Bureau of Internal Revenue
nd the Department. But, the direct tracing of dollur savings: to plan 26 at this
(
any stage, less nan 4 months after the effective date, poses many problems.
Savings and accomplishments bearing directly on the broader objectives set
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forth in the Reorganization Act of 1949 are more readily identifiable. For the
period from June 25, 1946, through October 31, 1949, these savings are illustrated
and itemized on pages 35 to 58 of the Annual Report of the Secretary of the
Treasury on the State of the Finances, fiscal year ended June 30, 1949. A copy
of this is submitted herewith as exhibit F. Similar material will be included in
the annual report for the fiscal year ended June 30, 1950. Although this latter
report is not yet published, an advance draft of material covering management
achievements is submitted herewith as exhibit G.
BUDGET AND ACCOUNTING PROCEDURES ACT OF 1950
Action taken
The general position of the Treasury Department in respect to this legislation
is Well illustrated in the opening paragraph of a comprehensive policy statement
issued by the Secretary of the Treasury on September 28, 1950, The Secretary
said:
"In signing the Budget and Accounting Procedures Act of 1950 on Septem-
ber 12, the President stated that this is the most important piece of legislation
in the budget and accounting field since the original budget and accounting
law was passed almost 30 years ago. I had a deep personal interest in the
drafting and consideration of the act when it was before the Congress and I
want to emphasize now that I have an equal interest in its effective adminis-
tration in order that the Government may obtain maximum benefits under it.'
The remainder of that policy statement by the Secretary and memorandum for
the guidance of Treasury officials released with it presents a vivid picture of the
Treasury's approach to the problem. A copy is attached as exhibit H.
In improving governmental accounting, the Treasury Department collaborates
actively with the Comptroller General and the Bureau of the Budget. The high
level of coordination and cooperation thus achieved is evidenced by corre-
spondence exchanged by these officials and released on October 30, 1950, to
Treasury bureau heads for their guidance. A copy of this release, Treasury
Accounting Bulletin No. 13, is attached herewith as exhibit I.
The accounting, reporting, and auditing provisions, which constitute part II
of title I designated as the Accounting and Auditing Act of 1950, emphasize the
use of financial information as important tools of management operation and
control. Consistently, the Treasury Department has been moving in this direction
on several fronts.
Culminating 2 years of developmental work, the Department has launched an
action program to establish, extend, and refine practical reporting of operating
performance throughout the organization. Visual aid material is being used to
explain the performance budgeting and reporting idea to all executives of the
Department. A reproduction of this material with appropriate explanation is
attached herewith as exhibit J.
Similarly, an action program in the more technical aspects of accounting has
been under way in the Department for some time. This is underscored and
summarized by the Secretary's general letter of December 5, 1949, a copy of.
which is attached hereto as exhibit K.
Achievements
Under section 115a of the act, the Secretary of the Treasury and the Comp-
troller General arrived at a joint determination that, in the interest of sim-
plification and improvement, warrants for repayments and refunds could be
discontinued. Accordingly, Joint Regulation No. 1 was issued on September
22, 1950, effective November 1, 1950, which provides for the direct deposit of
repayments and refunds to appropriations. This procedure will expedite the
crediting of appropriations and the availability of such funds for obligation and
disbursement.
The Treasury is also coordinating its procedures with those of the General
Accounting Office to carry out the order of the Comptroller General discontinuing
some of the activities of the Accounting and Bookkeeping Division of the General
Accounting Office authorized by section 116 of the act.
Responding to the various action programs spelled out in the documents
cited above, each Treasury bureau is improving its accounting practices in ac-
cordance with the act. Outstanding among bureau achievements were the
accomplishments of the United States Coast Guard.
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78 RE Olt GAN1ZATIONS IN THE EXECUTIVE BB ANCH
Coast Guard, fer almost 2 years preceding the passage of the act, had been
tonducting an accounting improvement program in close cooperation with the
oint program sponsored by the Secretary of the Treasury, the Comptroller
leneral, and the Bureau of the Budget. This program has included (1) The
f,evelopment of a system of accounting and internal control of the type required
ly section 113 of the act; (2) comprehensive site auditing by the General
?ccounting Office as provided by section 117; and (:i) performance-type budget-
for which provision is made in part I, title I of the act.
The new accounting system has been installed in all district offices except the
iurteenth, Honolulu, for which the installation is scheduled for January 1, 1951.
A commercial-type accounting system was installed on July 1, 1950, at the
Coast Grard yard, the Coast Guard's large industrial-type activity, This system
ii designed to cha.7ge work orders performed at the yard with direct costs and
t heir proportionate share of overhead. Monthly financial reports are prepared
lthich snow the fi hancial conditions and results of industriaj operation of the
oast Gnard yard, including the extent to which the overhead expense of each
E hop and other indirect activity has or has not been absorbed through charges
t) work orders. Although the method of cost determination and cost reporting
f ni the Coast Guard yard can and will undoubtedly so refined as a result of an
i tclustrial survey which is now being made, the method of accounting and financial
r fporting which was recently installed furnishes financial data that can be 'used
a 3 an effective tool of management, and the system is sufficiently flexible to pro-
v Ae for such refinements as may later be developed with a minimum of change
ii existing procedures.
As a final means of internal control there is presently being developed an
ihternal audit program for the Coast Guard. This program with respect to
)th staffing and audit procedures is being developed in close cooperation with
t te Corporation Audits Division of the General Accounting Office which is
r,sponsible for the external audit of the Coast Guard. This cooperative rela-
t onship will assure that the programs for internal and external audit will be
d iveloped in such a manner that they will supplement ratli.ir than duplicate
.ch other.
Bureau accounting improvements under the act embrace every phase of
T ?easury operations and are not limited to large-scale protects such as the
C iast Guard program outlined above. Typical of the manner in which the
oi,jectives of the act carry down to the smaller organizations ire the following
af.complishments in the Office of Administrative klervices. This Office has
a, hieved :
1. Simplificaidon of records in accounting for reimbursements for services
performed for other organizations.
2. Simplification of clerical work in such items as auditing of telegraphic
expense vouchers, purchase orders, and duplicating jobs.
3. Transfer to the Treasury Department Bureau of Accounts of the func-
tion of accounting for collection of receipts from telephone pay stations in
Government buildings in Washington.
4. Preparaticn of monthly financial reports of the Office reflecting obliga-
tions and balances and used for management purposes,
in the broad Government-wide sense, achievements under he provisions of
th s. act may be considered almost synonymous with achievements under the
Jo .nt accounting program of the Treasury, Comptroltfr General and Bureau of
th Budget. Earlicr this year, a summarization of orogress made under that
pr igram was jointly prepared by the three agencies. Since tha.- summary spells
or t in detail numerous achievements under the act, it is attached herewith as
ex hibit L.
PT CLIC LAW 656, 'TO PROVIDE FOR FINANCING THE OPER1TIONS OF THE BUREAU OF
:NGRAVING AND PRINTING, TREASURY DEPARTMENT, AND FOR O'ICHER PURPOSES
Ac Non taken
it.ction to effectuai-ie Public Law 656 considerably predates the approval of the
ac. on August 4, 1950, and this early action is closely associated with original
co tgressional consideration of the act. A joint survey participated in by the
Br reau ot Engraving and Printing, the General Accounting Office, Treasury De-
pa tment, and Bureau of the Budget, begun in April 1949, laid out the initial
ph n for converting engraving and printing operations to business-type accounting
an I budgeting procedures and a reimbursable basis.
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Following approval of the act, final development and actual installation of the
revised accounting procedures and budgeting methods was begun immediately
with the assistance of the joint accounting staff. This work is still under way
and is proceeding in accordance with a schedule that will permit satisfactory
operation when the plan takes effect on July 1, 1951.
Achievements
The basic achievements under this act may be expected after the Bureau of
Engraving and Printing begins business-type reimbursable operation July 1, 1951.
However, certain benefits are already being realized.
? Approximately 70 agencies of the Federal Government have already been
furnished unit costs for the items they will be ordering from the Bureau for
fiscal year 1952. These costs were computed by the Bureau in accordance with
the principles enunciated in the act and according to modern accounting practice.
On this basis, the Bureau was also able to submit its own budget estimate for
fiscal year 1952. The Bureau was able to set up its balance sheet accounts as of
July 1, 1950, as well as portions of the required subsidiary records. Thus, the
Bureau is already getting part of the management benefits anticipated in the act
and is also accumulating practical operating experience with the accounting
system prior to the official July 1, 1951, date.
FEDERAL PROPERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 ANP AMENDMENTS
Action taken
Particularly in (but not limited to) the area of supply, the Treasury Depart-
ment has been an active advocate of the program laid down by this legislation.
In its August 2, 1949, report to the Senate Committee on Expenditures in the
Executive Departments, the Treasury Department stated its position as follows:
"In the light of the statute which recently established the General Services
Administration to cope with the problems outlined by this Hoover Commis-
sion report, it does not seem that any extensive comment from the Treasury
is necessary. The new General Services Administration will receive the
cooperation of the Treasury in its efforts to solve the problems which this
report discusses. Treasury supported the proposal to transfer the Bureau
of Federal Supply to this new administration."
On February 24, 1959, the Secretary of the Treasury, in order to reemphasize
the importance of achievements under the act, arranged for a fresh reexamination
of the space, records, and supply situation in the Department. Special teams
were formed to check into the following matters:
I. Space program.?
(1) Effective and economic utilization.
(2) Procurement of Federal rent-free space.
(3) Standardization of functional requirements by activity.
(4) Long-range major objectives; such as consolidation of field offices in
headquarters cities in the same buildings or contiguous groups of buildings.
(5) Establishment of central services, where practical, to avoid costly dupli-
cation of personnel and equipment.
(6) Effective cooperation and coordination with the Post Office Department
and the General Services Administration regarding allocation of space in head-
quarters cities, including plans for construction of new Federal. buildings.
II. Records program.?
) Full utilization of existing disposal authorities.
(2) Inventory of basic forms and records, and related subsidiary documents.
(3) Development of statutory and regulatory changes essential. to more orderly
and expeditious disposals.
(4) Familiarization of operating personnel with the instructions and pro-
cedures outlined in the Treasury Department Records Manual.
(5) Microfilm needs, including recommendation of list of documents which,
for security or other reasons, should be microfilmed.
(6) Transfer of semiactive and dead records not ready for disposal, from
valuable office to Federal rent-free or inexpensive commercial storage centers.
(7) Control of forms or other standard records at time of initiation, to provide
for ultimate orderly disposal.
III. Supply program?
(1) Resurvey the supply practices in the Department in the light of recent
legislation regarding this phase of management.
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8) REORGANIZATIONS IN THE EXECUTIVE BRANCH
(2) Establishment of a departmental advisory council which can voice the
Dppartment's needs to the Federal Supply Service through the Department's
11:ison with that organization's advisory council.
(3) Identify the current technical or peculiar supply requirements, such as
ti ose in Coast Guard, Engraving and Printing, and Mint, and recommend any
rn cessary amendments to current policies and practices.
(4) Stock cataloging and uniform supply nomenclature.
(5) Analyze and recommend methods to achieve maximum decentralization of
st pply to lowest operating levels, particularly in field offices.
On July 21, 1950, the President directed that all programs be thoroughly re-
e) amined for the purpose of modifying them to lessen demand for services, com-
m Aities, raw materials, manpower, and facilities in competition with those
ne eded for national defense. This tied in directly with the above-mentioned
m tion and the Department was able to respond on August 14, 1950, with a sum-
m try of its progress. This summary is attached hereto as exhibit M.
Operating under the act, the General Services Administration has issued a
m mber of regulations and guidance memoranda. The Treasury Department has
? apted each of tlese to its own peculiar situations and provided for their
efi ectuation.
Action by Treasury bureaus under the Federal Property and Administrative
? rvices Act embra2es virtually every area covered by the various titles under
the law. One of the most generally useful provisions has been that one per-
m tting open-market purchases in amounts not to exceed $500. This has proved
to be a decided advantage in emergency purchase tituations. Other specific
by reau action is more readily seen in considering achievements under the leg-
is: ation.
A( hiev gnt s
rhe coordinated records program of the Treasury Department, worked out
in cooperation with all of the bureaus and offices, reflect savings in space, equip-
ment, anC sales of waste paper. Based on the IDover Commission formula for
th average cost for space and equipment, estimated gains during the calendar
ye tr 1949 aggregate approximately $1,500,000 and for the first 0 months of the
ea endar year 1950 may approximate $700,000.
Effective October 15, 1950, the operation and maintenance of t kvo buildings, the
Li )erty Loan and tha Auditors (and annexes thereto) in the District of Columbia
W( re transferred to the General Services Administration. This transfer resulted
in a reduction in salary appropriations available to the Departinent of approxi-
m; tely $125,000, involving 47 positions and the sum w $20,525 formerly used to
de !ray the cost of supplies, materials, and utility services in these buildings..
Gi ard personnel assigned to these buildings were also transferri el to the General
Se vices Administration. Fifteen positions were Livolved. An amount of
$2 1,759 was transferred from the appropriation "Salaries and expenses, guard
fa .ce, Treasury Department buildings, 1951" to cover these salary obligations.
Su fficient uniforms, equipment:, weapons, and ammunition were included in
ad lition thereto. The guard force budget estimates for fiscal year 1952 were-
re by $41,270 as a result of this change.
Effective July 1, 1951, it is probable that the Bureay of Internal Revenue will
trl nsfer to the Public Buildings Service of the General Services Administration.
ap ?roximately 258 real-estate leases with a value of mare than $5,000,000. This
wi I be the initial s:ep in placing responsibility for the housing of all Internal
Re venue field offices in the General Services Administration. While the reduction.
in the Bureau's appropriation may not be considered a savings as such, it is
be. loved that the combining of all leases under one agency should result,
in better space management and eventually greater economy.
lignificant achievements have been made in the Coast Guard supply program
cot amenced in March 1949. These accomplishments include to date?
A. Ten supply depots and supply centers, in different geegraphic sections
of the United States and its possessions, are already in commission. Two.
additional depots will be in commission before the end of fiscal year 1951.
B. District supply sections located in each district office have been uni-
formly organized and staffed according to the estaMished work factor.
C. Knventories have been commenced at each large base or depot whereby
all material presently on hand will be recorded.
D. Centralized inventory control is now established at heaCquarters.
E. Approximately 90 percent of all material peculiar to the Coast Guard
has been cataloged and the information disseminated.
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F. Logistic support arrangements with the Navy have been consummated
and are now in force in all districts.
Upon completion of the entire supply improvement program installation in the
Coast Guard, it is estimated that in excess of 98 percent of Coast Guard's stores
and property will have been inventoried, priced, and put on record; a system of
efficient logistic support to Coast Guard units, both afloat and ashore, will be
functioning and economy in procurement will be realized through proper distri-
bution of the necessary stores and elimination of overstockage.
Though not as extensive as the Coast Guard, comparable gains have been
made in other Treasury bureaus. A standard stock control system for application
throughout the Internal Revenue service has been devised with the advice and
cooperation of the General Services Administration. The system is undergoing
tests in one collector's office and it is anticipated that it will be installed in all
Offices of the Bureau during the next fiscal year
The President's letter which accompanied Reorganization Plan No. 26 when it
was transmitted to the Congress said:
"The taking effect of the reorganizations included in this plan may not in
itself result in substantial immediate savings. However, many benefits in
improved operations are probable during the next years which will result
in a reduction in expenditures as compared with those that would be other-
wise necessary. An itemization of these reductions in advance of actual
experience under this plan is not practicable."
It is believed that this statement of the President characterizes the general
situation in regard to all of the subject legislation at the present time. In
short, it is felt that until the Department has had a longer period in which to
accommodate itself to the many changes which have been, and will continue
to be, effected under these new laws, it will be most difficult to itemize with any
degree of particularity the savings that will have been effected. This is especially
true at the present time when, because of the emphasis which the Department
and its bureaus have been placing on better management, independent of the
stimulus afforded by legislation, it is difficult to sort out from the many improve-
ments that have been effected those which are fully and partially attributable
to legislative action.
(The exhibits accompanying the report of the Department of the Treasury
are available for reference in the committee's files.)
CIVIL AimoNnuncs ADTAINISTICATION
DECEMBER 13, 1950.
The Honorable JOHN L. McCLELLAN,
Chairman, Committee on Expenditures, in the Executive Departments,
United States Senate., -Washington, D. C.
DEAR SENATOR MCCLELLAN : This is in reply to your letter of October 26, 1950,
in which you request information necessary to evaluate the effJct of Public Law
858 and certain other laws enacted by tbe Eighty-first Congress for the purpose of
promoting more economy and efficiency in the executive branch.
Public Law 858 authorized the delegation of certain functions pertaining to
aviation safety certification activities to properly qualified private persons.
In effect, this law granted specific legislative authority for a practice that has
been followed under more general authority since the enactment of the Civil
Aeronautics Act of 1938. At present, under this system we have 14 categories
of "designated representatives," with an approximate total of 7,000 "designees"
performing inspection and certification functions relating to the safety and pro-
ficiency of aircraft and airmen. The attached exhibits A and B give a brief
description of the duties and numbers of these designees.
In accordance with the principles of Reorganization Plan V of 1950, certain
powers authorized by Public Law 858 were vested in the Secretary of Commerce.
Action has been initiated to secure the formal delegation of these powers to the
Civil Aeronautics Administration. Since adequate instructions and organiza-
tional arrangements already exist for the operation of this designee system, the
CAA will not be required to take any further implementing action once this for-
mal delegation is received.
An analysis of reports of activities of persons designated to act for the CAA
indicates that upward of 350,900 man-hours of work per year are being per-
formed which otherwise would have to be performed by CAA personnel. When
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fa 2tors such as travel, space, clerical help, and other costs are taken into con-
sideration, it is estimated that the performanee of these dudes by the CAA
w mid cost in excess of $2,000,000 per year. While tiese savings do not result
di ectly from the provisions of Public Law 858, this law does provide specific
le. ;islative authority for the continuance of the system we have been using.
It is our intention to continue to exercise the authority granted in this legis-
la ion whenever it reasonably can be done in order to redue a the amount of
deral Government activity required in carrying out the safety provisions of the
Ci zil Aeronautics Act, and thereby eliminate the need for in:Teasing Federal
ex penditures in the administration of the functions inNolved.
With respect to your inquiry as to how other basic reorganization plans or
le lslation have affected the CAA, I wish to comment as follows on Public Laws
151, 754, 184, and Reorganization Plan 14 of 1950.
It is not believed that we have felt the full impact of Public Law 152, the
deral Property and Administrative Services Act. However, I Lave been advised
by my staff of the steps we have taken and some of the problems we may antici-
pa be as a result of this law.
Jnder authority granted by this law the General Services Administration has
pr )mulgated regulations covering the procurement and management of Federal
pr )perty. Their regulation No. 2 prescribes uniform methods for the estab-
lis ament and maintenance of permanent-type inventories by all agencies. Prior
to this regulation, the CAA had established a simplified warehousing system
wl ich met our special requirements with the minimum of manpower, records,
an sl reports. Pending further consideration, the General Services Administra-
ti( n has granted us certain temporary exceptions to the report ng requirements
of this regulation. In the event these exceptions are not made permanent, con-
ye !sion o our syst3m, to the uniform method will require the; addition of at
le st 40 extra employees at an estimated annual cost of $125,000.
Ve also understand that a uniform property-accounting system is being de-
ye oped ter use by all agencies. While it is recognized that some agency variation
wi I be permitted, certain basic requirements will be mandatory on all agencies.
To meet these requirements for CAA property items will, it is c stimated, cost at
les st an additional $250,000 annually.
Chose comments are not intended to imply that oar relations with General
Sc vices Administration have been strained. On the contrary, they have been
m( st cordial, and employees of the General Services Administration have coop-
ert ted fully in an effort to understand our particular problems in this respect.
?ublic Law 754, which amended the Federal Pro lefty and Administrative
Se vices Act, primarily required Government agencies to establish a continuing
pr( gram for the efficient and economical management of agency records. Prior
to the passage of this law the CAA had already established a records-management
pr igrain. This program is consistent with the objectives of tffs law and is al-
re: .dy producing satisfactory results. Decentralization of ow record-keeping
work to oar primary operating units has eliminated eight posi-dons and accom-
pli shed an annual savings of $21,500. In addition, Nye have transferred 2,500
cu )ic feet of records from active storage space and destroyed another 300 cubic
fee t. Plaas under way call for the further elimination of another 1,000 cubic
fee t in the near future.
'Ire following steps have been taken with respect to Public Law 784, the Budg-
eti ig and Accounting Procedures Act of 1950. Requirements and control pro-
em .ures connected with personnel ceilings have been rescinded. Also, the re-
sci ssion of requirements concerning summary annual base-rate controls will be
ins de as soon as formal departmental instructions on the subject are released.
Ti a rescission of both of these controls will enable us to release approximately
5 man-years of clerical effort for more productive work. We plan to devote this
sa 'ing to more effective budgetary reporting and analyses.
n addition to the above, we made a review of our systems of accounting and
int ?rnal controls established for fiscal year 1951. This review satisfied us that
ou. ? systems fully complied with the requirements of section 113 (n) (4) and there-
to) e could be continued in effect.
' Che broader authority given to us with respect to budgeting, accounting, and
an Ruing processes should result in more effective presentation of facts and
cc: ksequently improved management control. When the detailed procedures
un ler this authority have been formulated we may even find more savings in
pm sonnet requirements. The removal of the budget submission deadline pre-
vie usly fixed by law should make it possible for us to develop a workable, all-
ele at work schedule. permitting improved quality of ;submissioas, while at the
SU] re time reducing the overtime required for previous 'submissions.
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Section 104 of Public Law '74- &Is? authorizes and directs the President,
through tfie DirecferThr the Murat -of the Budget, to evaluate and develop im-
proved plans for the organization, etiordination, and management of the execu-
tive branch With a view to efficient and economical service. This provision has
added to and enipliasized the statutory Minority for the management improve-
-n:1%1 projects We 'na.-fe-been afrying ml-antler -11xecutive Order 10071 and other
exeditive directivff. in this connection, I am pleased to attach a copy (exhibit
C) of the annual:7%116ft of the management improvement plan of the Civil Aero-
nautics Administration. This report covers progress made on projects initiated
in fiscal year 1050 and indicates the nature and scope of projects to be accom-
plished in fiscal year The stimulus afforded by a positive program of this
sort to. itentify opportunities for management improvement and initiate appro-
priate 6eTictn to correct deficiencies IS, in my opinion,A major forward step toward
promoting economs1' and efficiency in the executive branch.
? Reorganrzation Plan 14 authorized the Secretary of Labor to prescribe regu-
lations, starfadlg, and procedures with respect to the labor standard provisions
of numerousiliTs 'administered by various Federal agencies. These regulations
were to aa'surt`doordinated administration and consistency of enforcement by
the various agenles of labor standards governing matters such as wages and
hours of workers- employed on federally financed or assisted projects. The
CAA, by reason of certain wage-rate provisions in the Federal Airport Act, would
be affected by Such regulations. In order to meet the requirements of certain .
regulations proposed bylheDepartment of Labor under this reorganization plan,
the CAA would have to hire a considerable number of additional employeead
incur other experfsA (Tur experience with wage-rate disputes brought to the
attention of the CAA under the Federal Airport Act indicates that they are So
insignificant as not to warrant the major expenditure of funds and time required
to meet these requirements. We have brought this matter to the attention of
the Department of Labor and mention it here only so you'may have complete
information as to how reorganization plans and legislation affect us.
In accordance with the requests dontained in youLlitter I have tried to furnish
somewhat complete information on.'each pertinent legislative item. I trust that
is will meet your requirements. However, should you require further data,
ball be pleased to do what I can to obtain it for you.
' Sincerely yours,
DONALD W. NYROP,
Administrator of Civil Aeronautics.
ttachments referred to have been incorporated in the committee's file's.)
?
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