By the middle of President Reagan's first term, the shortage of potential conservative appointees became severe. Demand had not abated, but there was a problem on the supply side. Most of the think tanks that manufactured most of the conservative new class were out of inventory.

Virtually all who had wanted to serve in the New Beginning's beginning were already in government. And some -- for example, Richard V. Allen, the national security affairs adviser, and Martin Anderson, the domestic policy chief -- were already out. Those left behind at the Hoover Institution and the American Enterprise Institute, the largest and most prestigious conservative think tanks, had chosen to remain aloof.

"The Hoover people drifted away," said a former conservative administration official. "And they have no cadre recruitment." Moreover, those at Hoover and AEI considered themselves candidates only for senior appointments. The need, however, was for a large supply of midlevel and junior appointees.

To meet the manpower crunch, the Heritage Foundation retooled. "We can point the White House to the infantry officers to fire the guns," Edwin J. Feulner Jr., the foundation's president, said in an interview.

"Heritage," contended a former administration official, "moves people more than ideas."

As Heritage adapted its productive plant to capture a larger share of the political job market, the presidential personnel office itself was undergoing changes.

In mid-1982, E. Pendleton James left his post as White House personnel chief to become a corporate recruiter in New York. His successor was Helene von Damm, who had been Reagan's private secretary since his days as governor of California. Her appointment was greeted with elation by conservatives. But she was more a personal Reagan loyalist than a movement conservative; she believed that labor in a Reagan campaign carried greater weight than anything, including membership in a conservative group. Despite gains in procuring jobs during Von Damm's tenure, the conservatives did not get all they wanted. Once again, there was dark muttering.

"She's more Hollywood than conservative," complained a conservative administration official. (She left personnel to become ambassador to Austria, where she married a hotel heir and submitted a letter of resignation announcing her intention to resign by year's end.)

In mid-1983, John S. Herrington became the new personnel director. He had been a deputy district attorney in Ventura County, Calif., and an advance man in every Reagan campaign since 1966. When Reagan was elected president, Herrington's ambition was to be named an assistant secretary of the Navy. His main sponsor was Lyn Nofziger, Reagan's longtime operative and first White House political director, who set Herrington up as his "executive assistant."

"He did some volunteer work for me," Nofziger said in an interview. "He returned phone calls, anything I asked him to do."

Finally, through Nofziger's influence, the Navy drafted Herrington. "We fought and fought to get him that position," Nofziger said. Subsequently Herrington moved up to head presidential personnel. In Reagan's second term he moved up again to become secretary of energy. His wife, Lois, is an assistant attorney general.

From the point of view of conservatives, "Herrington understood," as a conservative administration official put it. What he "understood" was the necessity of hiring conservatives, something he apparently understood so well that he hired as his deputy in the personnel office a staunch movement activist, Becky Norton Dunlop.

"We've known her for years," said a Heritage Foundation official. Dunlop's political life had been devoted to the conservative movement; she was once an officer of the American Conservative Union and was a close political ally of ACU Director Donald J. Devine, who became director of the Office of Personnel Management. Her job under Herrington in the personnel office made her the natural target for names and resumes from her old friends and allies -- like those at Heritage.

Heritage, meanwhile, was refining its patronage techniques with the help of two men who had gone to work at the foundation after losing jobs in government.

This was partly made possible by two conservative disasters. In March 1983, Environmental Protection Agency Administrator Anne M. Burford resigned under pressure. And in October 1983, Interior Secretary James G. Watt quit. The government's loss was Heritage's gain: The foundation gained former aides to Burford and Watt who could run a new kind of patronage operation.

One was Louis Cordia, who had worked for Burford in the EPA until he was asked to leave with her. As a member of the Reagan transition team, Cordia had compiled a "hit list" of EPA officials who were "unacceptable to this administration." In his EPA office, 24 of 47 career professionals departed after he arrived. In 1984, Cordia became Heritage's director of executive-branch liaison.

The second new Heritage official was Gordon S. Jones, who had been a senior aide to Burford and Watt. Jones became Heritage's vice president for government and academic relations -- a position devoted to job hunting for conservatives. Thousands of Resumes

During Reagan's first term, Heritage collected thousands of resumes that were regularly carted over to the administration's personnel office. Not all of the job-seekers who mailed their curriculum vitae to Heritage were ideologically desirable. "A lot of them were like Republican operatives . . . . They weren't interesting; we didn't know them," a Heritage official said. "They simply worked on the campaign. Heritage was in no position to recommend them. They weren't in the circle."

Jones introduced greater efficiencies by instituting more informality. Although the foundation's leaders meet every two weeks to discuss the conservative advances in getting administration jobs, they no longer stockpile resumes. Instead, Heritage helps place applicants solely on the strength of personal contacts within the administration. "Occasionally," a Heritage official said, "a staff aide to a Cabinet secretary will call and say, 'We have got 20 positions to fill. Do you have any resumes?' I'll say, 'Tell me what you want. Give me a list. We'll see what we can do.' "

"Conservatives don't come to Washington looking for jobs," said Herb Berkowitz, Heritage's public relations director. "It requires an effort by someone on the inside to staff the administration with true believers. Where do we find true believers?"

The names do not fall from the sky. Often they come from Robert Huberty, who helped former president Richard M. Nixon research his memoirs and directs Heritage's Resource Academic Bank, a talent-scout operation. He is always updating his list of the more than 400 groups and 1,000 academics appearing in Heritage's Annual Guide to Public Policy Experts, which he edits. When he discovers a conservative eager to serve the administration in Washington, Heritage may begin to circulate his name in hiring circles.

In the meantime, Cordia may uncover job openings as he daily perfects his computerized record of everyone in the executive branch who receives Heritage reports.

There is a hierarchy of recommendation: A letter signed by Gordon Jones, noting that the applicant has been suggested by "a good conservative," is common but perfunctory. A telephone call from Jones is better than his letter. A letter signed by Feulner, the Heritage president, giving his personal imprimatur, is much better. But the best of all possible recommendations is a letter and a phone call from Feulner. "The people we'll go all out for," says a Heritage official, "are those who've worked for many years in the conservative movement."

"We like to regard ourselves as a farm club," said Burton Yale Pines, a Heritage vice president. "Marshall Breger is the paradigm of how things work well."

Before Reagan was president, Breger was an anonymous law professor at New York Law School, writing law review articles about the Legal Services Corporation, on whose board he had once unhappily served. As a result of his writing, he became visible on the conservative radar screen. Pines arranged for the Olin Foundation to fund a position for Breger at Heritage as a policy analyst.

When the job of White House liaison to the Jewish community opened up, Heritage had a ready candidate. (Conservatives within the administration also lobbied for Breger, especially Michael Horowitz, the neoconservative general counsel at the Office of Management and Budget, who had also urged the philanthropists at Olin to subsidize Breger at Heritage.)

Breger's White House days, however, were few. Several months after Reagan laid a wreath at Bitburg cemetery in West Germany where some SS Nazi soldiers are buried -- a public relations disaster with Jews -- Breger was promoted to chairman of the Administrative Conference of the United States, which recommends improvements in federal regulatory and benefit programs. His old job, from which he had presided over the alienation of much of the Jewish community, was liquidated.

Another conservative for whom Heritage has gone "all out" is Danny Boggs, the deputy secretary of energy. "We suggested Boggs for any number of positions," a Heritage official said. "He clearly fits the pattern. He's a conservative activist promoted by a conservative organization."

Boggs has been a ubiquitous second-level conservative appointee in the Reagan administration. He was present at the start, as a member of Martin Anderson's original domestic policy staff. His rise through the bureaucracy has been assisted at every point by his carefully cultivated conservative connections.

Boggs is a new kind of political figure, adept at both conservative ideology and practical politics. He was a vice president of Young Republican chapters at Harvard and the University of Chicago Law School. He was also associated with the Philadelphia Society, a small group of intellectual conservatives who meet regularly to discuss grand philosophy, and the Intercollegiate Studies Institute.

"It's like going to Harvard," Boggs said of the political value of his conservative ties. At the University of Chicago he befriended conservative economist Milton Friedman, then taught for a year at the law school. He left to work as a political operative for the conservative Kentucky governor Louis Nunn. When Nixon appointed Robert H. Bork solicitor general, Bork named Boggs as his assistant. They had known each other through conservative legal circles, according to Boggs.

After an unsuccessful campaign for the Kentucky state legislature, Boggs used Friedman and "the Hoover connection," he said, to be named in 1980 to Reagan's campaign advisory committee. When Heritage recruited policy-thinkers to write its program for the new administration, Mandate for Change, Boggs was tapped. Martin Anderson, who moved from the Hoover Institution to the White House as the person responsible for domestic policy, brought Boggs on to his staff. And then Heritage promoted him for bigger jobs. By October 1983, he attained his deputy secretaryship. He is now being considered for nomination to the federal court of appeals for the 6th Circuit. Some Plans Went Awry

Heritage's incessant demands do not always result in instant gratification. "You can never be satisfied by White House personnel," said a Heritage official. "They can never accommodate just one institution." And even when its efforts have succeeded, the ending has not always been happy. The ill-fated appointment of Leslie Lenkowsky as deputy director of the U.S. Information Agency, rejected by the Senate Foreign Relations Committee, is a case in point.

USIA is the agency over which Feulner has his greatest direct influence; he has been chairman of its Advisory Commission on Public Diplomacy. "I personally cleared every appointment I made with Feulner," said a former top USIA official.

Lenkowsky was to be the operational complement to USIA's mercurial director, Charles Z. Wick, the president's close friend. But Lenkowsky was not just another bureaucratic manager; nor was he just another member of the conservative cadre. "He was their paymaster, running the neoconservative elite," a former conservative administration official said.

As director of the neoconservative Smith-Richardson Foundation, disbursing about $3 million a year, Lenkowsky's most notable achievement was his underwriting of the supply-side economics movement. The grants he gave supported the writing of the supply-side's sacred texts: Jude Wanniski's "The Way the World Works," George Gilder's "Wealth and Poverty" and Michael Novak's "The Spirit of Democratic Capitalism." Now Lenkowsky wanted to fight the "war of ideas" on an international scale.

He called in his considerable chits in his campaign to secure the USIA post. According to a former senior agency official, many of the neoconservative elite lobbied Wick, including Commentary editor Norman Podhoretz; his wife, author Midge Decter, not so incidentally a board member of Heritage, and the godfather of the neoconservatives, Irving Kristol.

"I learned how not to get a job from the Lenkowsky affair," a former administration official said. Lenkowsky assumed his post under an interim appointment before he was confirmed. Then, in response to a newspaper article, Lenkowsky claimed that he had stopped the blacklisting of liberals in the agency's overseas speakers' program, which he blamed on "mindless gnomes" within the agency.

Several senior USIA officials at the time, however, insisted that the exclusion of liberals on a systematic basis did not begin until Lenkowsky's arrival. One official in particular, Associate Director W. Scott Thompson, a conservative, went public with the charge.

Feulner met with Wick and Thompson at the Metropolitan Club. Wick confessed that he couldn't persuade Lenkowsky to meet with Thompson to settle the dispute. "I'll get them together within an hour," Feulner announced, and he did. At a private meeting in his sumptuous office at the Heritage Foundation, he urged the two to patch over their differences. "They had the same world views," Feulner said. But Lenkowsky refused to budge. "We wanted to help him," Thompson said. "He was the only one at that meeting who didn't know that he was in deep trouble."

"Lenkowsky was very vain, and he constantly refused advice, despite the fact that he had no previous experience in government or Washington," said another former USIA official who attempted to counsel him.

At Lenkowsky's Senate confirmation hearings, he and Thompson presented opposing testimony. And many senators were led to disbelieve Lenkowsky because of his apparently contradictory statements, especially after he declared: "I am prepared to stand by what I meant to say." On May 15, 1984, his nomination was rejected.

Lenkowsky retreated to the American Enterprise Institute, where he raised funds from conservative sources to support his new staff position. Conservatives sorrowfully describe his short career in government as an individual misfortune best forgotten.

The Lenkowsky affair was a particular blow to the new generation of conservatives of which he had been a leader. Through his foundation, for example, he helped fund The American Spectator, the chief organ of the young right-wing intellectuals. It was a bitter paradox to them that Lenkowsky should fall just as the new generation was systematically being brought into the administration, to be groomed as the future governing elite.