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REORGANIZATION PLANS OF 1949

THURSDAY, JUNE 30, 1949

UNITED STATES SENATE,
COMMITTEE ON EXPENDITURES IN THE

EXECUTIVE DEPARTMENTS,

Washington, D. C. The committee met, pursuant to call, at 10 a. m., in room 318, Senate Office Building, Senator John L. McClellan (chairman) presiding.

Present: Senators McClellan (chairman), O'Conor, Long, Humphrey, McCarthy, Ives, Mundt, Margaret Chase Smith, Schoeppel, and Vandenberg. · Also present: Senators Anderson and Hendrickson; Walter L. Reynolds, chief clerk.

The CHAIRMAN. The committee will come to order.

The President of the United States has submitted to Congress seven reorganization plans under the authority and direction of the Reorganization Act of 19491 just recently enacted.

I wish to place in the record at this point the letter of transmittal from the President of the United States, together with seven reorganization plans as submitted by the President; and following that, I wish to have printed in the record the subcommittees appointed to handle each plan. (The reorganization plans are as follows:)

[H. Dọc. No, 221, 81st Cong., 1st sess.] MESSAGE FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING RECOM

MENDATIONS ON AN INITIAL PROGRAM OF REORGANIZATION OF THE EXECUTIVE

BRANCH OF THE GOVERNMENT To the Congress of the United States:

I have today signed the Reorganization Act of 1949. The provisions of this act depart from my recommendation and that of the Commission on Organization of the Executive Branch in that they permit the rejection or reorganization plans by action of either House of Congress, acting alone. Nevertheless, I am glad to proceed, under this measure, in cooperation with the Congress, on the important task of improving the organization of the executive branch.

I am today transmitting to the Congress seven reorganization plans, each with a related message setting forth its purpose and effects. I shall also transmit an additional message recommending legislation to place the management and financing of the Post Office Department on a more business-like basis. These reorganization measures will contribute significantly to the more responsible and efficient administration of Federal programs. They are important steps in putting into effect several major recommendations of the Commission on Organization of the Executive Branch of the Government.

During this session of the Congress I have made.a number of recommendations for improvement in the organization and management of the executive branch. They are closely related to the proposals submitted today.

The recommendations presented to the Congress at this session, in response to the specific opportunity presented by the reports of the Commission on

1 See p. 38.

Organization and the passage of the Reorganization Act, are of two types: First are those dealing with the general management of the Government and affecting all or a large number of the agencies; second are those dealing with the organization of individual major departments or agencies.

With respect to general management:

Reorganization Plan No. 4 of 1949 rounds out the organization of the Executive Office of the President by transferring to it the National Security Council and the National Security Resources Board, two important over-all staff agencies of the executive branch.

Reorganization Plan No. 5 of 1949 improves the organization of the Civil Service Commission by making the chairman responsible for the operation of civil-service programs within regulations made by the Commission. This will free the Commission as a body to concentrate upon matters of basic policy and on the determination of appeals.

I have previously recommended legislation for carrying out the proposals of the Commission on Organization of the Executive Branch of the Government that salaries of top officials be raised. This is essential if the Government is to retain and acquire men with the vigor, imagination, and experience necessary to make these reorganization measures truly effective.

I have previously recommended enactment of the Federal property and administrative services legislation which has passed the House of Representatives and is pending in the Senate. This legislation will create the General Services Administration and make fundamental improvements in the Government's system of procurement and property management,

Reorganization Plan No. 7 of 1949, which transfers the Public Roads Administration to the Department of Commerce, will facilitate the organization of the General Services Administration by enabling the new agency to focus its attention on perfecting central services and increasing the efficiency of the housekeeping activities of the Government. Furthermore, it will place the Public Roads Administration in its most appropriate location in the Government.

The Director of the Budget has been instructed to work with the departments and agencies in preparing budget estimates on a performance basis, as proposed by the Commission on Organization of the Executive Branch of the Government. This should provide a more understandable statement of Federal activities and of their financial requirements in the annual budget.

Other important steps for improving fiscal administration are included in the pending legislative revisions of the National Security Act and the legislation I shall propose for the Post Office Department. In addition, the executive agencies are cooperating with the General Accounting Office in improving their accounting systems.

Each of these actions is in general accord with the recommendations of the Commission on Organization of the Executive Branch of the Government. They do not complete the task of reorganizing the general management of the executive branch, but they represent a very significant beginning.

With respect to particular departments and agencies:

I have recommended, and the Congress has enacted, legislation to permit the reorganization of the Department of State along lines approved by the Commission on Organization. The internal reorganization of that Department is proceeding.

I have recommended, and the Senate has acted upon, a bill to amend the National Security Act and improve the organization and administration of our defense activities. It is essential that action be completed on this measure in order to provide responsible leadership for our Defense Establishment. This legislation will not only strengthen the administration of our armed forces in the interest of national security, it will also make possible major economies in the execution of activities common to the several armed forces.

Reorganization Plan No. 3 of 1949 and the legislation I shall recommend both deal with improvements in the operation and management of the Post Office. The plan and legislation would strengthen the top management of the Post Office and afford that Department greater financial and operating flexibility.

Reorganization Plan No. 1 of 1949 will create a Department of Welfare to administer most of the programs now within the Federal Security Agency. The creation of this Department will meet a long standing need of the executive branch and recognize the importance of our social security, education, and related programs.

Reorganization Plan No. 2 of 1949 strengthens the Department of Labor by transferring to it the employment service and unemployment compensation activites. This conforms to the recommendations of the Commission on Organization of the Executive Branch and reverses undesirable developments of recent years which have scattered various labor programs throughout the executive branch.

Reorganization Plan No. 6 of 1949 provides for the more effective administration of the operating activities of the United States Maritime Commission by vesting executive authority in the Chairman.

These are important moves affecting major areas of the Federal Government. Additional actions will be required to deal with other problems of departmental organization and administration. I intend to submit other reorganization plans and legislative recommendations to the Congress from time to time.

It is important that the Congress and the people appreciate the significance of these legislative proposals and reorganization plans. The common objective is a Government establishment which performs its authorized functions with effectiveness and economy. We are seeking to obtain this through improvements in organization and administrative arrangements.

The approval of a reorganization plan or the enactment of a statute dealing with organizational and administrative arrangements does not automatically produce efficiency and economy or reduce expenditures. Only the curtailment or abolition of Government programs can be expected to result in substantial immediate savings. The significance of reorganization plans or legislation is that they make it possible to work out improvements in administration which will increase efficiency and reduce expenditures over a period of time. Thus, they provide a necessary basis for increased economy and efficiency.

I intend to see that full advantage is taken of the opportunity for securing better operations which the reorganization plans afford. This will require a steady and sustained effort to achieve improved management. Without such an effort a major purpose of the reorganization actions will not be realized.

Taken together, the actions listed in this message place before the Congress an initial program of reorganization covering certain areas which the Commission on Organization of the Executive Branch has stated hold great promise of increasing economy and efficiency. The Commission did not state the amount of savings which could be anticipated, nor is it possible for me to indicate their ultimate dollar effect. By enlarging the opportunity for effective management within the Government, however, they will lead to more efficient performance of services by the Government and lower costs. In addition to the potential economies, these actions will invigorate and promote better management within the Government. They deserve the support of the Congress and the people.

HARRY S. TRUMAN. The White HOUSE, June 20, 1949.

[H. Doe. No. 222, 81st Cong., 1st sess.] MESSAGE FROM THE PRESIDENT OF THE UNITED STATES TRANSMITTING REOR

GANIZATION PLAN No. 1 OF 1949, PROVIDING FOR A DEPARTMENT OF WELFARE To the Congress of the United States:

I transmit herewith Reorganization Plan No. 1 of 1949, prepared in accordance with the provisions of the Reorganization Act of 1949. This plan will provide for a Department of Welfare to take its place among the principal executive departments of the Government. This new Department will perform the functions and conduct the programs now administered by the Federal Security Agency. Responsibility and authority for the administration of these programs will be vested in the Secretary of Welfare.

The creation of a Department of Welfare is long overdue. President Harding first recommended to the Congress the establishment of such a department in 1923. In 1937 President Roosevelt's Committee on Administrative Management likewise recommended the establishment of a Department of Social Welfare, More recently, the Commission on Organization of the Executive Branch of the Government has recommended the creation of a department to administer the social security and education functions of the Federal Government.

The foundation for the Department of Welfare was laid in 1939 with the establishment of the Federal Security Agency. With respect to this action the Senate Committee on Expenditures in the Executive Departments stated in its report on the Reorganization Act of 1949 that “the Federal Security Agency should have been designated an executive department" at the time of its creation; but the Reorganization Act then in effect did not permit such action. A second step was taken by Reorganization Plan No. 2 of 1946, which transferred additional related activities to the Federal Security Agency and strengthened its internal organization. Again, the Reorganization Act then in effect did not authorize the designation of the Agency as an executive department. However, I stated in my message accompanying that plan:

“* * * but, while this step is important in itself, I believe that a third step should soon be taken. The time is at hand when that agency should be converted into an executive departmept."

Since then I have several times proposed that the Federal Security Agency be made an executive department.

The central purpose of the Federal Security Agency is the conservation and development of the human resources of the Nation. Plainly, as I stated in my message transmitting Reorganization Plan No. 2 of 1946:

“The size and scope of the Federal Security Agency and the importance of its functions call for departmental status and a permanent place in the President's Cabinet."

In number of personnel and volume of expenditures it now exceeds several of the existing executive departments. The range of its programs and the significance of their impact upon national development obviously entitle it to a place in the highest rank of Federal organizations.

On May 9 of this year, when it appeared probable that the reorganization legislation would not permit the establishment of a new department, I urged the Congress to enact a measure creating a Department of Welfare. Since that restriction was later eliminated from the bill and the Reorganization Act of 1949 authorizes the establishment of an executive department, I have concluded that the reorganization-plan procedure affords the simplest and most expeditious method of creating a Department of Welfare.

In order to improve the administration of the Department, the plan consolidates in the Secretary of Welfare the functions now vested in the various officers and units of the Federal Security Agency, and authorizes him to delegate their performance to appropriate officers and units of the Department. Thus, it carries out two of the cardinal recommendations of the Commission on Organization of the Executive Branch of the Government, namely, that the department heads should control and have full responsibility for the conduct of their departments and that they should have authority to organize their departments. Such authority will enable the Secretary to work out the most effective distribution of the work of the Department and will contribute both to efficiency and economy in administration and to the convenience of State agencies and the public in dealing with the Department.

After investigation I have found and hereby declare that each reorganization included in this plan is necessary to accomplish one or more of the purposes set forth in section 2 (a) of the Reorganization Act of 1949. I also have found and declare that by reason of these reorganizations it is necessary to include in the plan provisions for the appointment and compensation of a Secretary of Welfare to head the Department of Welfare and of an Under Secretary and three Assistant Secretaries to assist him in the proper performance of the heavy duties involved in the direction of the Department.

In submitting this reorganization plan, I am fully aware of the recommendations of the Commission on Organization of the Executive Branch of the Government with respect to the various units of the Federal Security Agency. Among these are proposals for certain transfers to or from other agencies. In Reorganization Plan No. 2 of 1949, which I am transmitting today, I am providing for one of the most important of these transfers. The other proposals are currently under study, but final conclusions have not yet been reached with respect to them. The establishment of the Department of Welfare will effectuate the one recommendation of the Commission on Organization of the Executive Branch of the Government for the creation of a new executive department. It will not in any wise interfere with the presentation of additional reorganization plans with respect to other recommendations of the Commission in this field or with the ability of the Congress to deal with any of them by statute.

The reorganizations included in this plan will provide for greater flexibility of internal organization, clearer responsibility, and more effective administration of the functions of the new Department. The benefits in improved service and lower costs will flow from the administrative actions made possible by the plan rather than immediately from the plan itself. Over a period it is probable that substantial reductions in expenditures will result in comparison with those which otherwise will be necessary, but it is not practicable at this time to itemize such reductions.

The creation of a Department of Welfare represents a sound and much-needed step in the improvement of Federal organization. It provides appropriate recognition for the related and highly important functions which the Government carries on to advance the welfare of its people. I urge that the Congress allow this reorganization plan to become effective.

HARRY S. TRUMAN. THE WHITE HOUSE, June 20, 1949.

REORGANIZATION PLAN NO. 1 OF 1949

Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, June 20, 1949, pursuant to the provisions of the Reorganization Act of 1949, approved June 20, 1949

Department of Welfare

SECTION 1. Department of Welfare.—The name of the Federal Security Agency is hereby changed to “Department of Welfare" and such Department is hereby constituted an executive department.

SEC. 2. Secretary of Welfare.--(a) There shall be at the head of the Department of Welfare a Secretary of Welfare, who shall be appointed by the President by and with the advice and consent of the Senate and receive compensation at the rate of $15,000 per annum or such other compensation as shall after the date of transmittal of this reorganization plan to the Congress be provided by law for the secretaries of executive departments.

(b) All of the functions of the Department of Welfare and of all officers and constituent units thereof, including all the functions of the Federal Security Administrator, are hereby consolidated in the Secretary of Welfare.

(c) The Secretary of Welfare is authorized to delegate to any officer or employee or to any bureau or other organizational unit of the Department designated by him such of his functions as he deems appropriate, except that the function of promulgating or approving regulations may be delegated only to the Under Secretary or an Assistant Secretary.

(d) Pending the initial appointment hereunder of the Secretary of Welfare, but not for a period exceeding sixty days, the Federal Security Administrator in office immediately prior to the taking of effect of the provisions of this reorganization plan shall be Acting Secretary of Welfare. He shall, while serving as Acting Secretary, receive the compensation of Secretary of Welfare.

SEC. 3. Under Secretary and Assistant Secretaries of Welfare.—There shall be in the Department of Welfare an Under Secretary of Welfare and three Assistant Secretaries of Welfare who shall be appointed by the President by and with the advice and consent of the Senate and each of whom shall perform such duties as the Secretary shall direct. The Under Secretary (or, during the absence or disability of the Under Secretary or in the event of a vacancy in his office, an Assistant Secretary designated by the Secretary) shall act as Secretary during the absence or disability of the Secretary or in the event of a vacancy in the office of Secretary. The Under Secretary and the Assistant Secretaries shall each receive compensation at the rate of $10,330 per annum or such compensation as shall after the date of transmittal of this reorganization plan to the Congress be provided by law for the Under Secretaries and Assistant Secretaries, respectively, of executive departments.

SEC. 4. Abolition of offices.-(a) The office of Federal Security Administrator is hereby abolished.

(b) The office of Assistant Federal Security Administrator is abolished as of the time that the first Under Secretary of Welfare is appointed, or sixty days after the taking effect of this reorganization plan, whichever shall first occur.

(c) The two offices of assistant heads of the Federal Security Agency (provided for in section 5 of Reorganization Plan No. 2 of 1946 (60 Stat. 1095)) are abolished as of the time that an Assistant Secretary of Welfare is first appointed, or sixty days after the taking effect of this reorganization plan, whichever shall first occur.

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