'FALLOUT MONEY' BEING FUNNELED THROUGH CIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00806R000201150015-6
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: September 1, 2010
• Sequence Number: 15
• Publication Date: April 21, 1984
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/09/01 : CIA-RDP90-00806R000201150015-6
AR,? APP:APT~'
PAGE ___ __I WASHINGTON POST
'Fallou t Money'
Being Funneled
Through CIA
By Fred Hiatt
Wa 1r .ton Post Sat: K'rner
The Air Force intelligence staff
has funneled money through the
CIA and the State Department to
bypass regulations intended to con-
trol year-end spending and promote
competition in contracting, accord.
ing to Air Force officials and internal
memos.
The memos indicate that Air
Force intelligence officials again this
year hope to award outside research
contracts by channeling unbudgeted
funds near the end of the fiscal
year-"fallout money," in Pentagon
terms-through the CIA.
"Apparently, -new' regulations de-
signed to encourage competitive con-
tract negotiation do not apply to
CIA," the deputy. director of esti-
mates for Air Force intelligence said
in a Feb. 8 memo. "This makes CIA
the logical agency to place U
fallout monies we might obtain."
Some of the funds would be awarded without competition to Air
Force weapons manufacturers such
as Boeing and Lockheed, which -
would be hired to study weapons
production in the Soviet Union, ac?
cording to the memos. _
Other funds might be awarded on
a non-competitive basis to univer-
sities or "think tanks" whose leaders -
in some cases have connections with Air Force officials. The memos were
given to the Project on Military Pro-
curement, a non-profit organization
that is frequently critical of Defense
Department spending, which made
them available to The Washington
Post.
Air Force officials said yesterday-
that similar memos could be found
in almost any agency and that they -
do not reflect any improper activity.
They said that Air Force intelligence
spent about 5750,000 in each of the
past two fiscal years, mostly through
the CA and some through the State
21 April 1984
Department, when it obtained funds
too late in the fiscal year to go
through the normal Air Force con-
tractinz process.
"The actions of the Ai.- Force in
obligating money for research were
entirely legal and appropriate," said
Air Force spokesman Maj. Ron
Rand.
Air Force officials noted that the
CIA, the Defense Intelligence Agen-
cy and individual military service
intelligence agencies share an inter-
est in following and analyzing world
events.
They said that the results of out-
side research projects commissioned
by one agency are often shared in
the intelligence community and that
federal law encourages agencies with
shared interests to enter into joint
contracts.
Officials also said that while ev.
eryone tries not to return unspent
funds to the U.S. Treasury each
year, no money is spent on useless
projects.- They noted that the Air
Force in some cases cannot obligate
funds after July, while the CIA can
sign contracts through Sept. 30 when
the fiscal year ends.
"We're confronted by a cumber.
some *system that because of its size
is less responsive and so makes it
difficult to use the full 12 months of
the year to obligate funds that we
have coming to us," one official said. -
"There are other methods available
to us that may on their face look
devious but have stood the test of
time and stood the test of law."
Officials at the University of
Pittsburgh, which is in line to get a
major contract without having to go
through competitive bidding, said
the issue of CIA funding never came
up in discussions with the Air Force.
"The issue of CIA funding we
knew nothing about, we are very
negatively_ surprised about," said _
Burkart Holzner, director of the uni-
versity's Center for International
Studies. "The whole purpose of the
project is to enlighten public debate
on international issues, and the pur-
pose of that would be undermined if
it had anything to do with undercov.
er or classified work, and the CJA
suggests" that."
d said yesterday that the Air
Force hopes to award Pittsburgh a
contract on a non-competitive basis
but has no plans to do so through
the CIA. The university's foreign
affairs experts . would be cornrnis-
sioned to write 15- to 20-page papers
on topics such as "Philippines After
Marcos" or "Israel Under a Labor
Government" for about $36,000 per
study, according to a very prelimi.
nary budget estimate.
The chancellor of the Uni ity
vers
of Pittsburgh, Wesley W. Posvar, is
a retired Air Force colonel. Its senior
research associate, Harold Hitchens,
also is a retired Air Force colonel
who the Air Force said is a friend of
Maj. Gen. James C. Pfautz, the head
of Air Force intelligence.
Both the university and the Air..
Force said yesterday that the ass&
ciations were not a factor in the Air
Force choosing the university.
Such suggestions are 'patently
false," Rand said. He said the uni-
versity "best met our needs" in ex-
pertise, organization and data base
after discussions with other univer-
sities including Stanford, Duke and
the University of Texas.
Holzner also said he believes
Pittsburgh was selected for its expe-
rience. "In the-field-of international
issues, we are not a minor universi-
ty," he said:
Pfautz recommended--in a Febru-
ary memo that a small think tank in
--Alexandria, Abbott Associates Inc.,
be awarded a contract to study "Syr-
ian Vulnerabilities and Strengths."
The Air Force said yesterday that
Pfautz has a "long-term professional
relationship and personal friendship
with Paul Jureidini," the Abbott vice
president who submitted the unso-
licited Syrian proposal.
The Air Force also said, however,'
that Pfautz's recommendation was
based on Abbott's `unique expertise'
and not on his friendship with Ju
reidini. Jureidini said Abbott sub-
.witted its proposal "across the gov-
ernment" because of its expertise in
Middle East affairs. He said he has
not received a reply.
Sanitized Copy Approved for Release 2010/09/01 : CIA-RDP90-00806R000201150015-6