Foreign Relations of the United States, 1950, National Security Affairs; Foreign Economic Policy, Volume I

A/MS Files, Lot 54D291, Drawer 48

Memorandum by the Chief of the Division of Organization ( Gordon ) to the Director of the Office of Management and Budget ( Howell )

[ Washington ,] May 31, 1950.

Subject: Management of the Point IV Program

Problems

Now that legislation has been enacted authorizing a Point IV program up to a level of $35,000,000 for 1951, and congressional appropriation hearings are about to be held, it is essential that organizational plans for the program be firmed up and that there be an agreed-upon State Department position with regard to the role of other U.S. agencies in the administration of the program.

Program planning and development has been underway for about a year in the Department (principally in E) with extensive participation by 8 or 9 other federal agencies through the ACTA.¹ For about the past nine months the principal participant[s] have assumed that the administrative pattern set forth in the so-called “Management Plan” (Tab A²) developed last summer would be adopted. Recently the IIAA (Glick)³ has come forward informally with an alternative plan which is regarded favorably by both NEA and ARA. The resulting confusion must be eliminated as promptly as possible.

Discussion

1. History and general provisions of the Point IV Management Plan.

About a year ago Mr. Thorp was assigned responsibility within the Department for Point IV program planning. At that time there was a great deal of interest in Point IV throughout the executive branch of the government. Many agencies had begun to think and plan in terms of providing technical assistance abroad in their specialized fields. For this reason and because it seemed foolish not to take advantage of the technical know-how of other agencies, Mr. Thorp thought of the program in terms of a government-wide effort guided by the State Department from the standpoint of its impact upon total foreign policy. He established an Interdepartmental Advisory Committee on Technical Assistance (ACTA) as a means of obtaining interdepartmental participation in program planning.

Last spring it looked as though there might be some possibility of going ahead with a program for fiscal year 1950. A State Department group prepared a paper summarizing a plan of administration. Based upon that paper a budget was prepared and hearings were held at the Budget Bureau in July. Following those hearings a group was established in the Department to prepare a management plan in more detail. Mr. Hanson⁴ was loaned to E to spearhead this group which included representatives from OMB, UNA, E and ARA. The resulting plan was sent to each Assistant Secretary and every suggestion made was either incorporated or a mutual satisfactory solution was arrived at. The plan was then discussed extensively in ACTA meetings and with some changes was approved by that committee.

Although this management plan never was submitted to the Secretary’s office for official Department approval, it has been used as a basis for legislative presentation by Mr. Thorp and Mr. Dort⁵ and as a basis for preparation of the 1951 budget. The seven other agencies (ECA, FSA, Treasury, Labor, Interior, Commerce and Agriculture) which have participated actively in ACTA have assumed with good reason it represents State Department’s position.

The approved management plan provides that a general manager within the State Department shall have authority to approve all projects and allocate funds for such projects. It provides that there shall be established a program board (successor to ACTA) which would be advisory to the general manager. Basic responsibility for program planning would be in the State Department and its field missions. However, ideas for projects might originate in other agencies. In all cases, however, program plans would be approved by the Regional Bureau concerned as well as by the general manager.

Once a project is approved the general manager will determine which agency (UNA,⁶ US, or private) is best suited to carry out the project. Funds would then be allocated to such agency which in turn would recruit the necessary technicians, send them to the State Department for training and then to the field. The management plan contemplates that the agency receiving the funds for a project would provide the technical assistance and backstop for its specialists but that in the field they would be under the administrative supervision of the State Department mission (see Tab B—Summary of the Management Plan which is contained in the budget statement⁷).

Periodic reports would be rendered on each project to the general manager through the regional bureau concerned. No changes could be made in a project without the concurrence of the regional bureau and the approval of the general manager.

2. The IIAA Proposal

Unquestionably, a straight line operation within the Department of State such as proposed by Mr. Glick is much to be preferred from a management standpoint and probably would result in a more effective program. However, it would not be feasible politically to make such a radical change at this late date—it is doubtful that such a move would have been feasible at any time in view of the developmental history. Glick’s paper (Tab C⁷) considerably exaggerates the defects of the management plan. First of all there will be not more than ten rather than 25 agencies actively participating. Secondly, the program board will be advisory only. It will not run the program. Thirdly, it is not correct to say that responsibility for the conduct of the program will be separate from responsibility for program planning. Other agencies will be responsible for technical backstop but this can be practiced in the narrow sense. Our field missions and the regional bureaus will participate actively in the conduct of the program. Fourth, I do not share the fears about field technicians being answerable to two bosses. The concept of one administrative boss and several technical bosses is as old as big organization. It can work effectively. Fifth, as long as the State Department retains the authority to approve projects and retains control over the purse strings, it should be able to assume responsibility for results.

3. Intradepartmental Organization

As you know there are still rather pointed differences of opinion within the Department concerning the relationships between the general manager’s office and regional bureaus. This first came to light in connection with our attempts to obtain clearance on a departmental announcement which established TCD. Previous to that the regional bureaus had in effect cleared the management plan which assumed a highly centralized operation.

OMB recommended the division of functions spelled out in Departmental Announcement #41, February 21, 1950. (Tab D⁸) I believe this same division of functions should continue as between the Point IV Administrator’s office and the regional bureaus. For many reasons a highly integrated operation would be desirable especially during the initial stages of the program. Once the complex interagency and interprogram relationships become established a considerable amount of decentralization can take place. Meantime, the regional bureaus will participate to a large extent both in program planning and in continuing supervision of operations. The budget estimates submitted to Congress provide for 24 positions in the regional bureaus as compared with 86 in the general manager’s office. It is not contemplated that the general manager will establish any regional groupings within his office. He will utilize regional bureaus to the maximum extent possible. It is likely that both the other agencies and Bureau of the Budget would strongly oppose a large measure of decentralization of authority over the program within the Department during its initial stages.

Conclusions

I think it would be extremely unwise to completely scrap the management plan at this time because we would be reneging on a great many expressed and implied commitments both to other agencies and to the Congress. However, the oral expressions of representatives of some of the other agencies at recent ACTA meetings indicate that they are now thinking in terms of much greater participation than they envisaged in the management plan. I believe there are certain things which we should do to ensure a maximum extent of control over the program.

a. Although we should basically stick to the management plan (allocate money to other agencies to carry out approved projects permitting them to send their own technicians to the field and furnish the technical back stop to make sure that they are under the control of the Chief of the Foreign Service Mission) wherever we find a situation similar to that now existing in Southeast Asia where the foreign political implications are extremely important, we should attempt to stick to a straight line operation. Moreover in all countries where there is to be substantial amount of Point IV activity there should be a chief of field to be employed by the State Department.

b. We should make sure that the Executive Order to be issued clearly gives to the Secretary of State all of the powers and authority vested in the President by the Act.⁹

c. With respect to AEA, consideration should be given to the plan of operation outlined in Mr. Halle’s memorandum of February 9, 1950 (Tab E¹⁰). This would make the IIAA (as an integral part of ARA) the operating agency for its region. However the IIAA would look to the other agencies of government for its technicians.¹¹

d. The relationship between the Point IV technicians and the field posts must be clearly spelled out. We should make sure that all communications between the agencies concerned and the technicians in the field flow through the State Department.

e. At an early date ACTA should be abolished and the advisory program board established.

1. Interdepartmental Advisory Committee on Technical Assistance.
2. Not printed.
3. Philip M. Glick, Acting President of the Institute of Inter-American Affairs.
4. Haldore Hanson, Executive Director, Secretariat, Interdepartmental Committee on Scientific and Cultural Cooperation (SCC).
5. Dallas W. Dort, Special Assistant to the Assistant Secretary for Economic Affairs.
6. Refers presumably to multilateral programs for technical assistance under the auspices of the United Nations, which would be a concern of the Department’s Bureau of United Nations Affairs (UNA).
7. Not printed.
7. Not printed.
8. Not, attached. This provided for the establishment of an Interim Office for Technical Cooperation and Development (TCD), under the direction of the Assistant Secretary for Economic Affairs. The office was to have “specific action responsibility” for the Point IV program: to develop overall policies, formulate general program plans, coordinate specific program plans developed by the regional bureaus; approving projects, determining action agencies, and allocating funds for U.S. bilateral programs; directing negotiations and relationships with intergovernmental agencies and other U.S. agencies. For text, see Department of State Bulletin, March 13, 1950, pp. 422 and 423.
9. Substantially, this was the effect of Executive Order 10159, September 8, 1950, 15 Federal Register 6103. The executive order also directed the Secretary of State to establish an Interdepartmental Advisory Council on Technical Cooperation, which was to be composed of the heads of participating; departments and agencies or their representatives.
10. This memorandum was not attached to this document but is found in the Department’s central indexed files (820.00–TA/2–950).
11. The documents immediately following are illustrative principally of the IIAA problem.