the administrative needs of the Secretary and the operating agencies. It will be a matter of first importance that the Department look to the most effective and economical allocation of its resources. All the new positions requested are to be used for the purpose of improving either personnel or organizational performance. The long-range benefits of improvements in productivity or efficiency should more than offset the minimal costs involved.

The Office of Administration and the Office of the Comptroller (as described under activity 4), will have significant roles to play in the President's cost reduction program. During the past year a comprehensive manpower utilization, cost reduction, and management improvement program was developed under the leadership of this office. The Office of Administration will have principal responsibility for several elements: position management, systems development, personnel management and management appraisal. It will also be involved together with the Office of the Comptroller in elements such as the cost reduction planning and reporting and program analysis and appraisal. The Assistant Secretary for Administration will assist the Department Management Committee in directing the program.

The following recent and current activities related directly to increased administrative effectiveness are illustrative of Office of Administration responsibilities:

A study of the administrative and organizational problems of implementing the Water Quality Act of 1965 and of creating a new Federal Water Pollution Control Administration;

Continuing assistance to the new Secretary in staffing and reorganization problems within the Office of the Secretary;

Developing a Department-wide system for securing administrative information on grants;

A review of the long-range organization and equipment needs for central data processing services;

Development of policy and procedure for strengthening personnel management evaluation in the Department;

A survey of the Department incentive awards program leading to current reorganization and strengthening of procedures;

Planning for a comprehensive career development program in administrative management positions.

Request for new positions

Seventeen new positions are requested in fiscal year 1967 to strengthen the career development and executive recruiting program, to make organizational and procedural studies and appraisals, to strengthen the staff functions in general administrative services, and to cope with increased operating workloads. Division of management planning (three new positions)

The progressive and accelerated expansion of the programs and staff of the Department together with the establishment by statute of new operating agencies within the Department have created the need for increased staff assistance to the Secretary in studying organizational and procedural matters and planning for Department-wide management improvements. The studies of organizational proposals made by the operating agencies can have a significant influence in determining the long-range structure and effectiveness of the Department. In terms of current operations, the Division needs to furnish leadership and guidance in use of progressive management techniques. Additional staff time is needed to identify and analyze the areas susceptible to administrative innovation. As a method in the identification process, the Division plans to expand its management appraisal activity which reviews the current effectiveness of operations and which promotes appraisal as a vital factor in planning and accomplishing program missions. The Division requires adequate analytical staff to assure the prompt effectuation of needed organizational changes but at the same time to prevent changes which may lead to fragmentation and duplication. Presently, only one analyst is assigned to organization studies. This assignment includes review of new organizational proposals, review of proposed delegations of authority, assistance to operating agencies in the conduct of internal organization studies, and staff assistance to public advisory groups which may be appointed by the Secretary to conduct studies of mission and organization. At the present, time is borrowed from other priority responsibilities of the Division-such as the coordination of management information systems.

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The positions requested will be used for broad-scale organizational studies and appraisals and will provide the nucleus for an internal management consultant staff to the Secretary.

Division of Personnel Management (seven new positions)

The Division proposes strengthening its career development and executive recruitment programs. The basic justification for this proposal is that the key to meeting the challenges of the Great Society insofar as HEW programs are concerned lies in the selection of quality executive personnel and the effective utilization of the work force.

In order to develop executive leadership and secure executive talent and to encourage employee growth, we must build and maintain a comprehensive and systematic career development program. In the past year the Division has made a sound start, but there is need for considerably more progress. Among the specific things we need to do are:

Planning for Department-wide manpower and career needs;

Forecasting long-range executive needs;

Coordinating and improving Department-wide recruitment efforts and techniques;

Guidance to operating agencies in developing career programs for agency specialists;

Development of career programs for Department-wide positions;

Coordinating the flexible use of personnel through interagency exchanges and special assignments;

Establishment of a career referral system including maintenance of a roster of executive talent;

Improving the Department promotion plan;

Encouraging full utilization of training opportunities;

Guidance in developing agency training programs;

Promoting the cross-utilization of agency training facilities and resources;
Guidance in development of career program information;

Strengthening the employee incentive awards program.

Division of Internal Security (2 new positions)

The request for two new clerical positions are directly connected with increased workload. The number of new employees in the Department has substantially increased as has the number of advisory committees and similar groups. The effects of this increased workload are felt principally in the following areas:

1. Sensitive positions.-There are now approximately 2,700 sensitive positions throughout the Department and the number is increasing, particularly in Public Health Services activities. Besides the problem of keeping current on clearances, inadequate staff hampers the efforts to keep investigation records up to date.

2. Security checks on applicants for the Commissioned Corps, Public Health Service.-The Public Health Service estimates that during fiscal year 1966 they will submit requests for security checks on approximately 4,900 applicants for the Commissioned Corps. This represents a 48-percent increase over the checks completed during fiscal year 1965. This increase can be expected to continue with expansion of Service programs.

3. Advisory groups.-The Department is committed to a policy of confidential preappointment checks for all proposed members of any advisory groups established within the Department. The numbers of such groups continue to increase. Division of General Services (5 new positions)

The need for new positions is based on increased workload and on the desirability of strengthening the staff components of the Division. The Division has a dual responsibility for achieving more efficient general services-in its staff leadership function and in its central services function.

The potential for securing better services at lower costs is illustrated by the plans for centralization of mail and messenger services to operating agencies. This step has been taken as a result of an internal study which recommended reorganization of the present mail and messenger service to provide a more efficient method of supplying the Department with required services. Periodic appraisals will be made of the service to determine its adequacy and to provide a base for being more responsive to agency needs. The Division will provide staff direction to the service activity and will directly operate the central mailroom.

The Division has been severely handicapped because the day-to-day operating workload demands have had such priority as to leave little time for staff leadership. The two outstanding examples of the need for greater emphasis on staff work are in printing management and communications. The Division plans to separate the line and staff functions, and for that purpose the budget provides $27,000 for funding, on a full-year basis, five positions in the Office of the Director which are now paid partially from salaries and expenses, Office of the Secretary, and partially from the working capital fund. These positions will devote their entire effort to carrying out supporting staff responsibilities for the Assistant Secretary.

The Division also proposes the establishment of a full-time position of Safety Coordinator to guide the Department's safety program. Again, the duties of this position are shared as part-time assignments by individuals also having operating responsibilities. The Coordinator will work principally to assure that the Department reduces accidents by 30 percent, the Federal goal set by the President in his Mission Safety 70 program.

The Division requests four positions which are directly workload related. Two positions are needed for space planning and acquisition. Present staff can no longer cope with the current workload even with large amounts of overtime. Workload factors include the general growth of the Department and resultant geographic dispersion, reorganizations brought about by new programs and new priorities, planning for needed headquarters space, and increasing needs for conference and meeting space. Day-to-day demands make impossible the orderly and systematic approach needed to insure adequate space planning.

The other two positions are in the Technical Services Section of the Department library. Demands for library services continue to increase not only because the clientele population has increased, but because of a wider range of program responsibilities. The library will absorb the major part of the workload impact, but in order to maintain currency in the essential activities (e.g. cataloging and processing acquisitions), two additional positions are needed.

The Office of the Comptroller serves as the Secretary's staff for the budgetary and financial management of the Department. The Comptroller is responsible for directing the work of the Divisions of Budget, Fiscal Policy and Procedure, Grants Administration Policy and Operations Analysis; the Data Management Center, and the Office of Audit. In the area of financial management, the Comptroller provides leadership in establishing basic Department policy in all areas of financial and fiscal management; conducting internal and external audits; developing and maintaining data collection and reporting systems; providing automated centralized payrolling services; conducting studies and appraisals of program needs and performance and evaluating their needs in relationship to budgeting and financial requirements. In addition the office provides fiscal, accounting, computer and data processing services for the Office of the Secretary and, upon arrangement for operating agencies.

Studies of programs and operations

The Division of Operations Analysis is engaged in or has completed a variety of major studies for the Office of the Secretary and/or the Cobmptroller, including:

Cooperative research and demonstration grants;

Study of the PHS general hospitals in Savannah and Detroit;

The narcotic problem and the PHS narcotic hospitals;

Federal grants for State and community health services;

Review of the policies affecting the care and management of laboratory animals used in programs of the Department;

The Construction grant and loan programs;

The efficiency of student loan collections;

A review of the distrubtion of research grants among large and small colleges and universities;

Assistance in developing and instituting a new budget system in the Department.

In addition, several new major projects have recently been initiated, including: Analysis of clinical training programs of the Department;

Programing of the comprehensive plan for the transfer of Freedmen's Hospital to Howard University.

Other studies scheduled for immediate attention include:

Vocational rehabilitation of public assistance recipients;

Comptrollership organization and functions throughout the Department.

Effort to improve financial effectiveness

A major organizational change has been made to assure continued emphasis on cost reduction. The Office of the Comptroller has been separated from the Office of Administration and now reports directly to the Secretary. As a part of this elevation of the organizational status of the Office, an Assistant Comptroller has been assigned direct responsibility for followup and coordination of cost reduction activities. The interest of the Secretary and the Under Secretary in the continued and intensive cost reduction effort reflected in this assignment will do much to emphasize the importance attached to this program at the higher level in the Department.

The Office of Administration, as described in the previous activity, will work closely with the Office of the Comptroller in carrying out the cost reduction program.

The Division of Fiscal Policy has undertaken a number of significant studies within the past year. The Division has implemented the use of a statistical sampling technique for auditing vouchers. It also has implemented a letter of credit system for grantees which will result in substantial savings to the Department. It has established a system of uniform accounting codes which is a prerequisite to the utilization of data processing systems and intelligent review procedures. The Division is currently setting up the policy and standard guidelines for administrative accounting systems throughout the Department. This system when completed will bring HEW within the General Accounting Office requirement that all accounting systems be set up on an accrual basis. Application of ADP equipment

The conversion of the Department to an automated, centralized payroll system is now complete. The new input system which was introduced last year has resulted in improved productivity of payroll clerks. In addition to the personnel report to the Civil Service Commission on paid employment which has been in production for over a year, the Office of the Secretary accounting system is being converted to computer use. Parallel runs are now being made and plans are to have the system completely automated by the end of fiscal year 1966. For this reason the service is being centralized and its operation placed under the working capital fund in fiscal year 1967. The centralized computer accounting services will be provided for all offices now served through the manual system; i.e., Office of the Secretary, Office of Commissioner of Welfare, Juvenile Delinquency and Youth Development program, and the Administration on Aging. The centralization of the service will make feasible adjustments in service which become necessary as a result of changing programs. It will also readily adapt to peak workloads so that posting backlogs will not develop. It is anticipated that this system will produce more meaningful data more promptly than has been possible under the present method.

The Office of the Comptroller, through its newly established Data Management Office, will provide management data services for the Office of the Secretary and for the operating agencies upon request.

Request for new positions

The Office of the Comptroller requests seven new positions for 1967 to aid in budgetary review and coordination, fiscal policy development, and program and grant appraisal.

Office of the Comptroller

This tightly knit office is the pivotal point for all financial management concerns of the Department. Its professional staffing now consists of the Comptroller and two Assistant Comptrollers (one for cost reduction and manpower control, and the other for management and career development). There are many special, short-term projects arising in the conduct of the office which could be carried out at the middle management staff level. The 1967 request provides for a man-year of employment of a financial management intern to assist in these projects. The proposal anticipates the assignment, on a 6-month rotating basis, of young people who are interested in the field of financial management. Such an assignment, in a Department of this size and complexity, should also contribute significantly to the development of future leaders in this field. Division of Budget (two new positions)

The many new program responsibilities placed on this Department by recently enacted legislation as well as the growth of ongoing programs have increased both the scope and the complexity of the Budget Division's activities. At the same time, the quantity and use of budget information has grown to such an extent that the pressures of the budget cycle are now felt during the entire year. The full time and attention of the staff is so heavily concentrated on meeting deadlines for budget information and submissions throughout the year that the time available for analysis and coordination is severely limited.

Two positions, both professional, are requested for the Budget Division. This additional staff would provide badly needed assistance in budget development, analysis, and coordination.

Division of fiscal policy and procedure (one new position)

The new and expanded programs of the Department have created, over the past year, additional demands on this Division for more assistance and guidance in the fiscal and accounting areas of financial management. Congressional and GAO pressures to establish as quickly as possible the accounting systems thorughout the Government on a current accrual basis have made necessary an extensive revision of the policies and guide procedures used by its operating agencies. The operating agencies also will need the assistance of this Division in developing their accounting systems to conform to these revised policies and guidelines and to obtain GAO approval of their revised systems. Professional staff was added to this Division over the past year to carry out these expanded responsibilities. Temporary stenographic assistance was provided to balance the increased staff. The addition of one stenographic position in this year provides for a continuing balanced relationship of clerical and stenographic positions to professional positions in a ratio of 1 clerical to 3 professionals.

Division of operations analysis (two new positions)

The Division was established to serve the Secretary in analysis of especially difficult management and program problems. During its relatively short period of operation, the Operations Analysis Division has highlighted for the Secretary many problems which were previously unknown. These problems facing the top management of this Department remain complex and numerous. New programs, new problems, and demands for further program and management progress continue. A further increase of two positions in this staff resource would make available to the Secretary additional staff to serve in study and analysis of at least some of the most urgent management and program problems. Although progress is being made, so much more remains to be done in resolving such problems that this additional investment is most urgently needed.

Grants administration policy (two new positions)

This small unit currently consisting of a professional staff member and a secretary, is a newly formed element which will assist the Comptroller in the