Foreign Relations of the United States, 1952–1954, General: Economic and Political Matters, Volume I, Part 1

MSA–FOA Director’s files, FRC 56 A 632, box 8, “State Department 1953”

The Director of Mutual Security (Stassen) to the Secretary of State¹

Washington, undated.

My Dear Mr. Secretary: Reference is made to the letter from the Director of the Bureau of the Budget to the heads of all executive departments and agencies, dated February 3, 1953,² and outlining the policies which are to be followed with respect to levels of personnel and rates of obligation during the balance of fiscal year 1953 and in re-examining the fiscal year 1954 budget. This letter concerns the application to the Mutual Security Program of that portion of the foregoing letter which relates to personnel and new obligations for personnel and other administrative purposes during FY 1953.

While the Director of the Bureau of the Budget is looking to the Director for Mutual Security to exercise general supervision over the implementation of these policies insofar as they affect the entire Mutual Security Program, primary responsibility for the actual execution of these policies must rest with the heads of the participating departments and agencies. Moreover, such execution must be consistent with, and directly related to, the application of these same policies to other personnel of such departments and agencies who are not engaged in the Mutual Security Program.

I. Personnel Reductions

A. General

The provisions of the Bureau of the Budget letter with respect to the policy of reducing personnel will, insofar as they are applicable, be scrupulously adhered to in the execution of the Mutual Security Program. These provisions, which apply to both Americans and foreign nationals, are the following:

“With respect to personnel: It is the policy to reduce the number of Government employees. Each department or agency head shall immediately restrict the hiring of additional personnel. No vacancies shall be filled until the department or agency head shall have determined to his satisfaction that:

a. The positions represented by vacancies cannot be eliminated.

b. Existing employees cannot be shifted to cover the vacancies.

c. Increased efficiency, better utilization of personnel, or changes in standards and policies of department or agency operation will not make possible the attainment of a and b above.

It is the policy to achieve a progressive reduction of personnel for the remainder of the fiscal year 1953 and for the 1954 budget. Variations from this policy, as applied to individual departments and agencies, will be granted by the President in his review of the 1954 budget only upon specific request and adequate justification by the department or agency head.”

In applying this policy to the Mutual Security Program it is necessary to distinguish sharply between personnel who are paid from administrative funds (hereafter referred to as “administrative personnel”) and personnel who are paid from program funds (hereafter referred to as “program personnel”). The following sections describe the manner in which, as to each of these two classes of personnel, the Bureau of the Budget’s policy will be applied to the conduct of the Mutual Security Program by all participating agencies. Since this policy must be applied to such a variety of personnel and operations throughout the Government, unforeseen contingencies are likely to arise. As they do, or when difficulties are encountered in applying the following interpretations in individual cases, the participating agencies should consult this office for further guidance.

B. Program Personnel

1. The approach to be taken to any reduction in the number of MSP program personnel must be substantially different from the approach which is taken to a reduction in MSP administrative personnel. A reduction, or even the non-expansion, of current levels of program personnel may constitute a reduction in approved substantive programs. For example, a reduction in the number of personnel who are directly engaged in technical assistance projects would, in itself, represent the curtailment of going programs which the U.S., in the case of many countries, has committed itself to carry out under various international agreements. Similarly, a reduction in the personnel who are employed in the packing, handling, crating and shipment of military end-items could seriously interfere with MDAP deliveries. Consequently, any freeze on program employment, or the imposition of any fixed employment ceiling on program personnel, should follow—and not precede—the thorough re-examination, now in process, of currently approved 1953 programs. After this review has been completed, and a determination is made as to whether, and if so, how, to reduce or eliminate any programs, such a determination may, in fact, be a determination to reduce program personnel. The decision to do so, however, is a program decision.

2. Even though, for the foregoing reasons, no employment ceiling, or freeze, on program personnel is being imposed at this time, each participating agency must nevertheless carefully scrutinize all program vacancies and, in doing so, apply the three Bureau of the Budget criteria quoted above. In other words, the necessity for reexamining current programs before making major decisions affecting the number of program personnel must not be taken as a reason for not effecting, or in any wise delay, reductions in program personnel where, without in any way modifying the level of program execution, such reductions can be accomplished through increased efficiency, better utilization of personnel or improved methods of operation.

3. The provisions of B.–1. above do not apply to those personnel who are paid from program funds but who are engaged in carrying out overhead activities. Such personnel will be subject to the policy outlined for administrative personnel in C.–1. below.

C. Administrative Personnel

1. Since all MSP agencies are now operating under a Ribicoff Amendment ceiling, and since it was the clear intent of the Bureau of the Budget order that the agencies have flexibility in achieving a progressive reduction, DMS intends to establish no new ceiling for administrative personnel at this time. Nonetheless, in pursuance of the policy set forth in the foregoing letter, there should be a progressive reduction in MSP personnel in this category between now and June 30. Similarly, no new reports will be required. The personnel data, as of January 31, 1953, which has already been requested (DMS letter of January 27, 1953)² will be used for future comparisons of personnel data.

2. As in the case of program personnel, each participating agency is expected and required carefully to scrutinize MSP administrative vacancies and, in doing so, to consider the three Bureau of the Budget criteria set forth above.

D. Management Improvement

In complying with the third criteria specified by the Bureau of the Budget, MSP agencies may find it difficult to use an individual vacancy as a basis upon which to review efficiency and better personnel utilization in a whole process or function. It is assumed, therefore, that in addition to reviewing vacancies in the light of the specific Bureau of the Budget criteria, each agency will intensify its efforts to improve management and to secure greater efficiency in its several processes and functions, and thereby to reduce the personnel and funds which are required. Some of the agencies have recently conducted management reviews of this character in connection with the Ribicoff Amendment, and thorough management reviews will undoubtedly be made in any event in developing the fiscal year 1954 budget.

Since the Director for Mutual Security will wish to report to the Director of the Bureau of the Budget on Mutual Security Program compliance with the policies embodied in the foregoing letter, it is requested that this Office be advised of any management audits of this type which are undertaken by a participating agency, and of personnel savings effected thereby.

II. Rate of Appropriation Obligations for Personnel and other Administrative Purposes

A. Program Funds

As in the case of program personnel, a determination as to the rate of obligation of funds for program personnel between now and June 30 must await a review of MSP programs.

B. Administrative Funds

The obligation of administrative funds in any subsequent month shall not exceed the total of obligations incurred in January 1953. “Administrative funds” is here defined to mean the aggregate of United States dollars and local currency employed for administrative purposes.

It is requested that each agency advise this office as soon as possible as to its total obligation of administrative funds during the month of January. Where, because of special considerations, the application of this policy in any month in any agency will have undesirable consequences, this office should be advised as far in advance as possible so that the advisability of specific modifications in, or exceptions from, the policy may be considered jointly by the agency or agencies involved and this office.

III. Reporting

In addition to the information requested under I.–D. above, it will be appreciated if each agency will furnish this office with a copy of any instructions which it issues to implement the Bureau of the Budget policy and this letter insofar as MSP personnel are concerned.

Harold E. Stassen

1. Drafted by Sheppard and Ohly on Feb. 16. The source text indicates that identical letters were sent to Secretary of Defense Wilson and to Dennis A. FitzGerald, the Acting Deputy Director of the Mutual Security Agency. A covering memorandum from Stassen to Secretary Dulles, dated Feb. 17, 1953, reads in part: “Enclosed herewith find the formal letter prepared by my staff after conferences with the Bureau of the Budget, which relates the letter of February 3, 1953, from the Director of the Bureau of the Budget to the distinct problems of the Mutual Security Program. It is forwarded to you with reference to those portions of the Mutual Security Program which are carried on within your Department by means of Mutual Security Program funds.”
2. Supra.
2. Not printed.