i found the answer for this one. Add this to your xml data file
<OrganizationRequests DN="dc=iplanet,dc=com">
<CreatePolicy
createDN="o=sunamhiddenrealmdelegationservicepermissions,ou=services,dc=iplanet ,dc=com">
<Policy name="DataStoreReadyPolicy" referralPolicy="false"
active="true">
<Rule name="delegation-rule">
<ServiceName name="sunAMDelegationService" />
<ResourceName
name="sms://*dc=myretsu,dc=com/sunIdentityRepositoryService/*/" />
<AttributeValuePair>
<Attribute name="READ" />
<Value>allow</Value>
</AttributeValuePair>
</Rule>
<Subjects name="ReadyOnlySubjects" description="">
<Subject name="delegation-subject"
type="AMIdentitySubject" includeType="inclusive">
<AttributeValuePair>
<Attribute name="Values" />
<Value>
id=employee,ou=role,dc=myretsu,dc=com,amsdkdn=cn=employee,dc=iplanet,dc=com
</Value>
<Value>
id=manager,ou=role,dc=myretsu,dc=com,amsdkdn=cn=manager,dc=iplanet,dc=com
</Value>
</AttributeValuePair>
</Subject>
</Subjects>
</Policy>
</CreatePolicy>
</OrganizationRequests>