PENTAGON'S TOP SECRET 'BLACK' BUDGET HAS SKYROCKETED DURING REAGAN YEARS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504560001-4
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: January 3, 2012
• Sequence Number: 1
• Publication Date: March 1, 1986
• Content Type: OPEN SOURCE

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ARTICLE NATIONAL JOURNAL
ON PAGE 1 March 1986
Pentagon's Top Secret `Black' BudgetHas Skyrocketed During Reagan Years
A National Journal review of Defense Department budget reports shows an
indisputable surge-to more than $22 billion in fiscal 1987-in secret spending.
T he United States, most observers
would agree, maintains one of the
most open defense establishments in the
world, even if only by comparison with its
major foreign counterparts.
Just one manifestation-and guaran-
tor--of this remarkable degree of mili-
tary disclosure is the small army of Penta-
gon officials who parade each year before
the 19 congressional subcommittees with
direct oversight responsibility for defense
matters to explain and justify, often in
nitpicking detail, their weapons programs
and operating plans.
The 40-odd volumes of printed testi-
mony these hearings produce each bud-
get season, even though carefully sani-
tized to remove what the services regard
as sensitive data, divulge a wealth of
information about current U.S. military
affairs to anyone dogged enough to plow
through thousands of pages of fine print.
The Defense Department itself consumes
uncounted reams of paper every year
churning out reports on its budgets and
activities.
Members of Congress, outside analysts
and a small handful of Pentagon insiders
complain, however, that this generally
observed tradition of military openness is
being undermined by an unsettling new
budgetary trend.
Since the Reagan Administration ar-
rived in Washington five years ago, a
steadily growing proportion of the Penta-
gon's budget has been funneled into
highly classified programs-the so-called
black budget. Defense policy analysts
may disagree on the exact size and rate of
increase of the "black" defense budget,
but few dispute that it has grown signifi-
cantly over the past half-decade.
A review of Defense Department bud-
get reports by National Journal confirms
the surge in secret defense spending-to
more than $22 billion in the fiscal 1987
budget request-a 300 per cent increase
over the $5.5 billion in 1981.
The amount of classified funds ear-
marked for research and development
(R&D) and procurement projects that
the Pentagon declines to enumerate in
specific budgetary line items has jumped
from $891.9 million in fiscal 1981 to $8,6
billion in the fiscal 1987 request, a ten-
fold increase. (See box, pp. 494-95.)
That $8.6 billion-a lot of money by
most yardsticks, but only 3 per cent of the
Defense Department's $311.6 billion re-
quest for fiscal 1987-nevertheless con-
stitutes only one piece of the Pentagon's
classified budget puzzle.
The 1987 defense budget also contains
almost S14 billion worth of another kind
of black money: programs for which the
department enumerates the budget re-
quest in specific line items-generally
Armed Services chairman Les Aspin
worth billions of dollars each and bearing
either code-word nicknames or vague,
nondescriptive titles-and for which it
does not publicly reveal the purpose.
The dollar value of five such large line
items in the Air Force procurement bud-
get has jumped from $3.8 billion in fiscal
1981 to $11.5 billion in the request for
1987; that's an increase of more than 200
per cent, or double the percentage in-
crease in the Pentagon's total procure-
ment budget over the same period.
Additional pockets of black dollars are
reportedly tucked away in the operations
and maintenance and military personnel
budgets, although the amounts of those
funds are difficult to gauge.
The Defense Department, not surpris-
ingly, maintains an official stance of
strict silence on the growth in black bud-
geting and the reasons for its growth.
"Nobody here ever discusses that aspect
of the budget," said a Pentagon spokes-
man. "That's an area we cannot talk
about."
Other players in the Washington bud-
get game, however, are more vocal in
commenting on the black hole that is
rapidly widening in the Pentagon budget.
"You are talking about 20 per cent of
the [defense R&D] budget being hidden
and, of that 20 per cent, I would say most
of it is on the basis of national security,
but a lot of it doesn't belong there,"
Anthony R. Battista, the staff director of
the House Armed Services Research and
Development Subcommittee, warned
members in a briefing last March. "That
is the kind of stuff you got to pay close
attention to this year, because the num-
ber and scope of the black programs is
growing at a phenomenal rate."
Defense reporter Richard C. Barnard
has written on several occasions about the
Pentagon's black budget, first for De-
fense Week and more recently as editor of
a new weekly, Defense News.
Cf t ntl
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Rep. John D. Dingell (left) says "black" programs lack sufficient scrutiny; Sen. Barry Goldwater disagrees.
"The problem was first pointed out to activities to include such big-ticket strate-
me in 1982 by a deputy assistant secre- gic nuclear weapons as the radar-evading
tary of Defense," Barnard said. "We Advanced Technology Bomber (ATB),
were discussing other matters and he also called stealth, and even tactical
said, 'By the way, if you want to see a cruise missiles.
problem we have around here, you should "I would prefer to see more of it [black
take a look at the black programs.' His money] moved into the public domain,"
main objection was that at least a third of Les Aspin, D-Wis., chairman of the
this stuff was black to make it easy [to House Armed Services Committee, said
manage] or to cover somebody's ass." in an interview. "They have programs in
One concern of critics is that through there that it's time they were moved out
black budgeting, the Pentagon and its into the open."
contractors might be attempting to end-
run normal procurement procedures. HIDING THE FUNDS
Others, however, maintain that the de- Black budgeting is by no means a new
fense acquisition process is so hopelessly phenomenon. Some Pentagon projects
screwed up that shielding programs from have a ways n nance secret an
the multilayered oversight bureaucracy in c ose to e- ocked
that typically manages or micromanages doors. The U.S. photoreconnaissance sat-
weapons production actually yields sig- a tte program, or one, while generally
nificant cost and performance benefits. known tote outside world, was not o -
Precisely because classified weapons ciall~ acknowledged from 1962, when a
programs are scrutinized by fewer agen- special secrecy directive was signed by
cies and individuals, however, there is Defense Secretary Robert S. McNa-
worry in some quarters that black budget- mara, until ,wen est ent Carter
ing might permit misguided programs to alluded to the two decades-old program
flourish while facilitating the kind of pro- in a speec designed to bolster support or
curement abuse that has generated so the verifiability of the pending second
much juicy fodder for headline writers Strategic Arms Limitation Treaty.
and Pentagon-bashers in recent years. The National Reconnaissance Office,
"In part," said Gordon Adams, direc- which manages satellite and aircraft re-
tor of the Defense Budget Project, a connaissance for a variety of user agen-
Washington-based research organization, cies, has yet to be acknowledged even
"this whole problem of enormous growth though its existence has been known ever
of black programs has to do with a larger since its name was inadvertently men-
issue, which is the extent to which [the tioned in a 1973 congressional report. The
Defense Department] does not trust Con- office reportedly has an annual budget of
gress and the public. There's a tremen- $3 billion-$4 billion.
dous paranoia these days about what Almost as secretive is the National
Congress will do with your program and Security Agency. Charged with oversee-
what the public will think about it." ing all U.S. signals intelligence-gathering
These concerns become especially activities, the agency functions as a sort
acute as the roster of secret projects ex- of global electronic vacuum cleaner, in-
pands beyond spy satellites and other tercepting a wide range of communica-
traditionally black intelligence-gathering tions, radar and weapons test telemetry
signals. Estimates of its annual budget
range from $5 billion-$10 billion.
Funds for the agency and for the recon-
naissance office, as well as for the CIA,
are reportedly tucked away somewhere in
the Defense Department's black coffers.
The budgetary pockets many analysts be-
lieve are likely repositories for these intel-
ligence-related dollars are four big Air
Force procurement line items labeled spe-
cial programs, special update programs,
selected activities and special update pro-
gram-and another line item in that ser-
vice's R&D budget called special activi-
ties. All told, those five items account for
$9.6 billion in the fiscal 1987 Air Force
budget request.
John E. Pike, a defense analyst for the
Federation of American Scientists who
spends much of his time studying obscure
Defense Department documents, con-
tends that the $4.1 billion selected activi-
ties line item holds operating funds for
the intelligence agencies.
"The Air Force Cost and Planning
Factors Manual gives you outlay rates
for the various procurement categories,
and they break it down by chocolate
[classified] and vanilla [unclassified],"
Pike said. "The outlay rate for 'classified
Air Force other procurement' is like 85
per cent in the first year. An outlay rate
like that screams 'agency operating bud-
get.' "
The average outlay rate-the pace at
which new defense appropriations are
spent-for the first year of an actual
procurement program is 13 per cent.
Funds for personnel and operations are
spent much more quickly, lending sup-
port to Pike's thesis that the Air Force's
selected activities include a lot more than
miscellaneous procurement.
Most experts interviewed believe that
intelligence and reconnaissance programs
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were quite properly conducted under the
cloak of secrecy, although some felt the
extreme degree of secrecy-the National
Reconnaissance Office classifying its let-
terhead, for instance-often bordered on
the absurd. Those same sources, however,
were generally less tolerant of the thick
veil of secrecy that has been drawn over
the budgetary details of the stealth
fighter, bomber and cruise missile pro-
grams. (See NJ. 1/11/86, p. 66.)
"The way we piss away money, how do
the budget numbers mean anything?"
asked Paul Hoven, a research associate at
the Project on Military Procurement, a
Washington public-interest group. "If we
buy a $7,000 coffee pot, how can anyone
tell anything just by looking at the bud-
get?"
Combing defense budget documents
looking for telltale traces of stealth
money has become a popular sport in
Washington and on Wall Street. The
heavy betting this year on where advance
procurement money for the stealthy ATB
might be cached rides on a line item in
the Air Force's aircraft procurement cat-
egory, entitled other production charges.
The $3.7 billion request for that line item
is a $1.5 billion increase over this year's
allocation and a $2.9 billion jump over
fiscal 1981 funds-a good sign that it is a
catchall for black money.
Research funds for the ATB have long
been rumored to reside in a classified Air
Force R&D line item called advanced
concepts. But the program element num-
ber-the six-character alphanumeric
code appended to all R&D programs-
indicates that advanced concepts involves
some sort of black missile program. A
more likely candidate for ATB funds is a
line item called special improvement
projects.
Both of those unhelpfully titled pro-
grams are found in the Air Force's strate-
gic R&D budget listings, which contain
eight black line items worth a total of
$2.6 billion for fiscal 1987. Among them
are two, called Bernie and Leo, the un-
known purpose of which has been driving
Finding the Pentagon's Black Numbers
Deriving the numbers that chart the dramatic tenfold in-
crease in the dollar value of classified "off line-item" defense
programs from fiscal 1981-87 calls for little more than a
reliable pocket calculator and a high tedium threshold. Add
up the more than 2,600 individual line items listed in the
Defense Department's research and development and pro-
curement budget books--called the R-1 and the P-1-
subtract the various subtotals from those published by the
Pentagon and any resulting discrepancy is part of the
"black" budget.
The bureaucrats who assemble the military construction
budget document-called the C-1-simplify the task by
listing funds destined for work at "classified locations" as a
separate line item.
The funds shown in the table are those earmarked for
specific programs for which the Defense Department lists a
line item but will not say how much is being spent. Not
included are funds for code-named projects for which the
Pentagon discloses the budget, but not the purpose. More
than $500 million is alloted to 15 such projects in the Navy's
fiscal 1987 R&D budget alone, and more than $13 billion is
contained in six big Air Force line items with such
nondescriptive titles as "selected activities."
Further black defense dollars are reportedly contained in
the Pentagon's operations and maintenance and personnel
budgets-for which $163.2 billion is requested for fiscal
1987-but which are not as amenable to "reverse engineer-
ing" as the other defense budget components. Thus, the
Defense Department's actual black budget could be more
than three times as large as the numbers below suggest.
In the table, the defense agencies listed as receiving black
money are the Defense Intelligence Agency and the Na-
tional Security Agency, with the latter getting the lion's
share (in millions of dollars, by fiscal year).
1981
1983
% growth
1985
% growth
R&D
Actual
Actual
1981-83
Actual
1983-85
Army
$3.7
$58.3
1,476%
$230.4
295%
Navy
24.2
156.6
547
270.9
73
Air Force
181.1
325.0
79
1,993.5
513
Defense agencies
417.3
755.7
81
1,040.0
38
Black R & D
$626.3
$1,295.6
107%
$3,534.8
173%
Total defense R & D
$16,633.5
$22,824.8
$30,869.5
Black percentage
3.8%
5.7%
11.5%
Procurement
Army
$0.0
$0.0
-
$0.0
-
Navy
0.0
0.0
-
0.0
-
Air Force
0.0
0.0
-
38.9
-
Defense agencies
261.0
706.8
171%
713.8
0.9%
Black procurement
$261.0
$706.8
171%
$752.7
6.0%
Total procurement
$47,767.5
$79,659.6
$93,423.1
Black percentage
0.5%
0.8%
0.8%
Construction
Black construction
$4.6
$44.0
$58.6
Total construction
$5,467.8
$7,230.7
$8,424.2
Black percentage
0.08%
0.6%
0.7%
Total black budget
$891.9
$2,046.4
Cantnued
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outside analysts mad with curiosity. Cute
code names are nothing new; in the mid-
1970s, Air Force stealth aircraft research
was called Harvey, after the invisible
rabbit in the play of that title.
The procurement line item for the se-
cret Advanced Cruise Missile is clearly
labeled, although the Air Force declines
to say how much it plans to spend in fiscal
1987. Since there are only two black
projects in that budget category-the
other, called tactical drones, is generally
thought to be the Pave Tiger, a small,
unpiloted attack aircraft-it is easy to
subtract out the black funds, $841.6 mil-
lion, most of which can be assumed to be
for the stealthy new cruise missile.
1987
% growth
Request
1985-87
$926.1
302%
548.8
103
3,868.7
94
1,275.8
23
$6,619.4
87%
$41,929.9
15.8%
$351.0
-
0.0
841.6
2,063%
742.4
4.0
$1,935.0
157%
$95,776.8
2.0%
$57.5
$10,157.2
0.6%
Also stashed away somewhere in the
defense budget is research and produc-
tion money for the secret F-I9 stealth
fighter and the Army-Air Force Joint
Tactical Cruise Missile, designed to at-
tack Soviet targets far behind the lines in
a European war. (See NJ, 1/4/86, p. 22.)
Along with $548.8 million for black
intelligence and communications
projects, the Navy R&D budget contains
another half-billion dollars for 15 re-
search projects with such code names as
Chalk Banyan, Link Hazel and Retract
Maple, all thought to involve secret sub-
marine silencing and detection efforts.
The Army procurement budget con-
tains $251 million for such black elec-
tronics programs as Trojan, which 1984
congressional testimony identified as a
signals intelligence collection effort. An-
other $100 million worth of M-1 tank
cannon shells and 155-millimeter howit-
zer nerve gas shells have, for some reason,
been blacked out.
Zeroing in on black funds concealed in
the $86.4 billion operations and mainte-
nance budget for 1987 is a more difficult
undertaking. But a congressional report-
ing document, Justification of Estimates
for Operations and Maintenance, reveals
at least one black item: $158.7 million
this year for something eliptically termed
the Special Tactical Unit Detachment.
Those millions, apparently, finance op-
erations at "Dreamland," a restricted site
on the enormous expanse of Nellis Air
Force Base near Las Vegas, Nev., where
the Air Force tests secret aircraft. Lt.
Gen. Robert M. Bond, vice commander
of the Air Force Systems Command, died
two years ago in a mysterious, highly
publicized crash at Dreamland.
Finding the black in the proposed
$10.2 billion military construction budget
is much less arduous because the Penta-
gon sets out the $57.5 million for secret
construction in identifiable line items.
Among the black projects are $2.9 mil-
lion for housing at "Base Thirty," a TR-1
spy plane base at a classified overseas
location, and $5.5 million for a satellite
control facility at "Base Forty-Three," a
secret site in the United States.
It is difficult to discern how much
black money is in t e Pentagon s person-
nel budget. $76.8 billion in the fis
1987 request. "The number of people
who work for the [National Security
Agencyl is classified, and the same thine
goes for the CIA." said Jeffrey T.
Richelson. a professor of government at
the American University and author of
e IntILUence Community
(Ballinger, 1985). "So I would su ose
that there probably are black activities
included in the personnel budget."
There is a great deal, obviously, that
outsiders can never hope to learn about
the Pentagon's black budget by decipher-
ing open documents. "If they don't want
you to find it, it's hard to find; these
people are not fools," cautioned Joseph F.
Campbell, an aerospace analyst for Paine
Webber Group Inc. in New York.
"They screw around with those num-
bers," said David J. Smith, a senior ana-
lyst with Sanford C. Bernstein & Co., a
New York-based broker. "Now that peo-
ple are chasing it [black financing],
they're putting things in there to throw
them off the track."
ACCOUNTABILITY
Sources, even those with inside knowl-
edge, disagree on the extent to which
black programs are subjected to ade-
quate oversight.
"In my experience, some of the black
programs have a much more attentive
level of oversight than some of the regular
programs," said William J. Perry, a for-
mer Defense undersecretary for research
and engineering.
"There are three reasons to have black
programs," asserted Thomas S. Amlie,
who works with gadfly A. Ernest Fitzger-
ald in the office of the Air Force assistant
secretary for financial management.
"One, it deserves to be black. There may
be five of those, and Stealth isn't one of
them. Two, you're doing something so
dumb you don't want anyone to know
about it. Or, three, you want to rip open
the money bag at both ends and get out a
big scoop shovel, because there's no
accountability whatsoever."
On several recent occasions, officials
have publicly aired the possibility that
some black programs are established pre-
cisely to elude oversight. Such a note of
caution found its way into the report
issued last November by the Commission
to Review Department of Defense Secu-
rity Policies and Practices, chartered in
the wake of the Walker family Navy spy
scandal.
"The possibility exists that such pro-
grams could be established for other than
security reasons," suggested the Stillwell
Commission, so named after its chair-
man, retired Army Gen. Richard G.
Stillwell; "in other words, to avoid com-
petitive procurement processes, normal
inspections and oversight or to expedite
procurement actions."
Battista of the House Armed Services
Committee staff lent flesh to the commis-
sion's suggestion in his briefing last
spring, describing "a jamming system
one year that was funded in the black
world, not because of national security
[because] it was developed as a white
world program. It turns out they funded
the losing contractor in a competition
[and made the program black] so Con-
gress wouldn't be aware of that."
COndnued
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Rat's Maze or Tool of Efficienc
Last September, Defense News editor Richard C. Barnard
published a commentary decrying the growth of highly
classified "black" programs. "It is a matter of time before
the public gets a peak inside the rats' maze and is repelled
by what is there," he wrote. "A huge systems failure?
Another crash of a black plane? A billion dollars squan-
dered? Where is the $650 hammer of the black system? It
is there. And it will be put to the same purpose as was the
scandal over spare parts pricing: to damage public faith in
the Pentagon and in the defense industry."
The editorial drew a generally approving response, in-
cluding letters from several Members of Congress. But,
Barnard said, "a lot of people called me from industry and
said: 'You're dead wrong, it's not a problem. I can build
[black] aircraft for 60 per cent of the cost because I don't
have all of these agencies coming down on me every time I
draw a breath.' "
The argument that black programming fosters efficiency
because it is burdened with fewer bureaucratic gatekeepers
is often bolstered by references to Lockheed-California's
secret "Skunk Works." Under the guidance of the legend-
s designer ClarenceL.(KeDy o nson, the Skunk
or cheaply and a ciently turned out the remarkable
U-2 and SK-7 spy planes, the former covertly nan in
the Mid-1950S rom the CIA 's contingency account.
"I think there's va t tty tote view that the procurement
process for black programs is better than for the white,"
said House Armed Services Committee chairman Les
Aspin, D-Wis. "Because you keep a lot of people out, you
don't have everyone wanting to be briefed. You can also
avoid big design bureaus."
The question has received some attention from the
President's Blue Ribbon Commission on Defense Manage-
ment, whose interim report was scheduled for release on
Feb. 28. William J. Perry, a former Defense undersecretary
for research and engineering who heads the procurement
reform panel, said it examined such successful commercial
aerospace programs as the Boeing 737. "We discovered,"
he said, "that they had certain management characteris-
tics: short lines of communication, clear responsibility and
accelerated schedules." The commission found similarities
between the management of model commercial programs
and some high-priority classified programs.
"We think it is quite possible to apply those techniques"
to the range of defense acquisition programs, Perry said.
"But we don't believe that requires eliminating the over-
sight function. What it does require is eliminating many of
the [bureaucratic] layers in between."
Laurence B. White of Rockwell International Corp.'s
Autonetics Marine Systems Division in Anaheim, Calif.,
agreed that black programs might be better because "you
don't have as many staffs of people scrutinizing every-
thing." But "there's a downside to that, too. Without the
scrutiny, you can have programs getting away from you."
Another downside is the fiscal levy imposed by the
intense security measures surrounding such projec While
some programs may have been put in the black expressly
because the contracts were not competitively bid, the
process also works the other way around. For security
reasons, requests for contractor bids on black projects are
not publicly issued. The resulting lack of competition limits
the government's chance of getting the best possible price.
Moreover, once a corporation receives a black contract,
tight compartmentalization of information reduces the
likelihood of creative brainstorming on engineering prob-
lems by technicians and managers, who are generally given
only a discrete piece of the puzzle to work on.
Black work is also conducted in specially constructed
secure facilities, using techniques borrowed from the strin-
gent safeguards that have long been used in secret intelli-
gence-related programs. These secure construction mea-
sures include thicker walls, nonresonant window glass and
electronic shielding-all designed to prevent data leakage
and eavesdropping. The additional costs, said the Penta-
gon's director for information security, L. Britt Snider,
"could be significant if you're talking about vaulted areas
and equipment that's specially shielded."
A further financial penalty is imposed by the deep
background investigations and polygraph examinations re-
quired before workers can be issued clearances to partici-
pate in black projects. In testimony to the Senate Armed
Services Committee last June, Snider said that 145,000
people were cleared for access to one type or another of
black program and that a further 8,000 must be cleared
every year. Deep background investigations of the past 15
years of a potential employee's life cost an average of
$1,500-$2,000 each.
The General Accounting Office told the Senate Govern-
mental Affairs Committee last May that an investigations
backlog is costing the Pentagon about $1 billion a year in
lost productivity for workers awaiting security clearances.
Some black programs entail extraordinary security pre-
cautions. In 1982, the Air Force initiated Seven Screens, a
counterintelligence polygraph operation aimed at all per-
sons going to work on a particular black program. The
operation entails video-taped polygraphs of at least 2,500
individuals annually. Because the exams are performed at
Palmdale, Calif., and Las Vegas, Nev., they are generally
assumed to involve the stealth bomber program.
The House Post Office and Civil Service Subcommittee
on Civil Service has taken a recent interest in Seven
Screens because the Air Force has sought to exclude the
program from the current quota limit imposed on Pentagon
polygraphing. The office of the Defense undersecretary for
policy "talked to us about Seven Screens," said sub-
committee chief counsel Andrew A. Feinstein. "They
couldn't find any reason to classify it. But the program
people in the Air Force are furious, they don't want anyone
at all to know the existence of this. The fact that we know
anything at all about it freaks them out."
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A March 1983 General Accounting
Office (GAO) report also uncovered
cases of inappropriate program classifica-
tion. The report was a review of Pentagon
oversight of "carve-out" contracts written
for classified programs that are suppos-
edly of such great sensitivity that the
Defense Investigative Service is relieved
of its usual security inspection respon-
sibility, which devolves instead to the
Pentagon office managing the program.
The information restrictions on such
programs are sweeping. According to a
1984 Pentagon memorandum, "mere
knowledge of the existence of a [carve-
out] contract or of its affiliation with the
[black] Special Access Program is classi-
fied information." L. Brit Snider, direc-
tor for information security in the office
of the deputy Defense undersecretary for
policy, said most black programs involve
carve-out contracts.
The GAO told of a service carving out
a contract only to "preclude someone
from identifying the military service in-
volved and the amount of money
being spent." Several contractors
and Pentagon officials, the GAO
said, "told us that they thought
that carve-out contracts were being
used to expedite procurements and
facilitate sole-source [noncompet-
itive contract] awards."
Hoven of the Project on Military
Procurement, which acts as a con-
duit to the news media for Penta-
gon whistle blowers, maintained
that "black almost tends to be
synonymous with a major boner.
There must be some programs that
are really crest-of-the-wave kind of
technology that you don't want the
Russians to read about in The
Washington Post. But from the
[Pentagon] underground, we keep
getting word that more and more
problems get shifted into the black
programs."
In response to concerns ex-
pressed by members of the House
Appropriations Subcommittee on
Defense last spring, Defense Secre-
tary Caspar W. Weinberger as-
sured the panel that the Air Force
"has always maintained both strin-
gent management controls and in-
dependent audits of these (black]
programs."
tions Subcommittee, who is conducting a
long-running investigation into defense
contractor ethics, also has grave concerns
about accountability for black projects.
On Jan. 16, Dingell wrote to Weinber-
ger that "the subcommittee is aware of an
increasing number of abuses by the con-
tractors involved in these 'black' pro-
grams. We have documented evidence
that abuses are occurring. Secrecy is be-
ing used by the contractors as a device to
cloak mischarging, overcharging and, in
some cases, engaging in outright illegal
activities."
The most glaring example Dingell
cited was the Brousseau case. Ronald E.
Brousseau Sr., a purchasing agent for
Northrop Corp.'s stealth bomber pro-
gram, pled guilty to fraud and bribery in
1984 after being snared in an FBI sting
operation while hustling subcontractors
for kickbacks. Transcripts of conversa-
tions taped by a wired informant and
quoted in the U.S. Attorney's sentencing
memorandum suggest that Brousseau, at
Air Force is-house critic Thomas S. Amlie
least, was not impressed by the oversight
of black programs.
"We don't have any heads, we don't
have any supervisory people," Brousseau
bragged during a May 1984 meeting.
"Nobody questions dollars or anything
like that as long as I can show compe-
tition, whether it's true competition or
courtesy [fraudulent] competition or
bullshit competition."
A Northrop spokesman, queried about
Amlie, however, after reciting a litany
of contracting abuses prevalent in
"white" programs, stated that "the black
programs are worse, much worse, be-
cause nobody's looking over their shoul-
der. The few that I know something about
are abominably run." (See box, p. 496.)
John D. Dingell, D-Mich., chairman of
the House Energy and Commerce Com-
mittee and its Oversight and Investiga-
Brousseau, said, "We turned him in; that
was our controls that got him." But the
U.S. Attorney's memorandum states that
Brousseau was fingered by an executive
from RH Manufacturing, one of the
southern California subcontractors to
whom he had offered kickbacks.
Dingell said in an interview that he has
been getting "generally good cooperation
from Northrop folks" in his subcommit-
tee investigation. His biggest problem, he
said, lay in judging the adequacy of the
disclosure filings that Northrop and other
contractors working on black projects
made to the Securities and Exchange
Commission. In his letter to Weinberger,
therefore, Dingell requested a list of all
black Air Force programs worth more
than $10 million and information on the
auditing procedures for such contracts.
Dingell's request triggered a heated
Jan. 29 letter to Weinberger from Senate
Armed Services Committee chairman
Barry Goldwater, R-Ariz. "The increas-
ing number of claims that the so-called
'black' programs are growing out
of control and are subjected to too
little oversight is a matter that I
take strong exception to," Goldwa-
ter wrote. His committee, he as-
serted, "has subjected these pro-
grams to far more scrutiny and
review than 'white' programs with
comparable budgets."
Citing the success of black pro-
gram procedures in "keeping in-
formation of unprecedented mili-
tary value from the pages of our
newspapers and the halls of the
various rumor mills in town,"
Goldwater told Weinberger, "I
think you ought to resist any
stretching of jurisdictional bound-
aries that expands access to these
critically sensitive national secu-
rity programs."
Peter D. H. Stockton, an investi-
gator for Dingell's subcommittee,
took exception to the Senator's ar-
gument. "Goldwater mischaracter-
izes the hell out of what Dingell is
after," said Stockton. "No one's
raised any question about our juris-
diction to look into how defense
contractors do their business.
When he says we're asking for
broad access to these programs,
you can see from our letter that it's really
quite limited."
Concerning security, Stockton pointed
to a recent lapse committed by Goldwa-
ter, who last June, after viewing the
stealth prototype, disclosed to reporters
that the ATB has a flying-wing configura-
tion similar to Northrop's experimental
YB-49 aircraft of the late 1940s. Further,
a Senate Armed Services Committee
press release last April let slip the fiscal
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1986 Pershing II missile production run,
which, for reasons best known to the
Army, remains a classified number. (See
NJ. 1/4/86, p. 55.)
"We've been dealing very responsibly
with the most sensitive information in the
government-vulnerabilities in nuclear
weapons production plants-and no in-
formation on that has leaked out of here,"
Stockton asserted. "So it's bullshit that
we can't handle that stuff."
Gerry Smith, a Goldwater defense
aide, declined to address recent commit-
tee security lapses but reasserted the Sen-
ator's position. "There's already too many
people with their fingers in the pie,"
Smith said, "and it just doesn't do any
good to increase that."
As to the adequacy of congressional
oversight of black procurement, Arnold
L. Punaro, staff director for Senate
Armed Services Committee Democrats,
agreed with Goldwater that black pro-
grams receive as much oversight as their
unclassified counterparts. "Some peo-
ple's definition of doing proper oversight
is that if they don't agree with what was
done, then there is no oversight," he com-
plained.
Black programs largely fall outside of
the many reporting requirements that
Congress has imposed on the Pentagon.
Every quarter, for example, Congress re-
ceives Selected Acquisition Reports de-
tailing the cost growth of about 100 ma-
jor weapon programs. The Defense
Department, however, informed the
House Appropriations Subcommittee on
Defense two years ago that "the Secre-
tary of Defense has determined that cer-
tain programs, because of their highly
sensitive classification, are exempt from
[the reporting] procedures."
In the House Armed Services Commit-
tee, according to chairman Aspin, black
procurement is scrutinized by the Pro-
curement and Military Nuclear Systems
Subcommittee and black R&D by the
Research and Development Subcommit-
tee. Later in the authorization process, a
panel that includes members of those
subcommittees and members of the Per-
manent Select Committee on Intelligence
looks at all of the black programs. The
Pentagon, Aspin said, "is pretty forth-
coming. There's always a concern about
whether you're getting the full story, but
that's true about any program."
One Member who has found the Penta
gon less than forthcoming is Rep. Mike
Synar, D-Okla. He was instrumental in
attaching to the fiscal 1986 defense au-
thorization bill an amendment requiring
a Defense Department report detailing
costs for the Advanced Technology
Bomber.
Synar was displeased with the Air
Force report that arrived on Feb. 1. "Al-
though the report is top secret and I can't
discuss its contents," he said in a press
release, "I can tell you that the essence of
the report is only three sentences long.
This is an obvious affront to Congress."
The ATB cost estimate, a Synar aide
said, was expressed in unadjusted fiscal
1981 dollars and was not supported by
requested reliability assessment.
Synar has asked the GAO to conduct
an independent audit of the bomber's
costs. "I think this is typical of the atti-
Defense expert William J. Perry
tude of the Pentagon," he charged in an
interview, "and has triggered some new
[congressional] interest in looking deeper
into these black programs."
The Synar case and the Dingell-Gold-
water tussle highlight the jurisdictional
problems that can arise when Members
who lack formal defense oversight
responsibility seek wider access to in-
formation about projects on the Penta-
gon's lengthening list of black projects.
"There isn't any general rule, and
that's awkward," said Russell Murray,
special counselor to the House Armed
Services Committee. "All Members have
to vote on appropriations, and so they
have a right to know what they're voting
about. But at the same time, you have
very properly classified development pro-
grams that you don't want bruited about
by 535 Members."
Punaro of the Senate Armed Services
Committee said that any Senators who
want information on black programs can
get it, the only issue being whether or not
they have the time and interest to pursue
the matter. "The same situation exists on
bills that come out of other committees,"
he said.
Aspin said it is more difficult for
House Members to get fuller disclosure
on black programs. "If a Member wants
to know about it because he votes on it, he
should be allowed to do so," Aspin said.
"We're in a tug-of-war with the Pentagon
over Mike Synar on that right now."
TWO-EDGED SWORD
Whatever the merits of black program-
ming in promoting procurement effi-
ciency or outfoxing the Soviets, the Pen-
tagon may find, as programs hidden in its
black box continue to burgeon in size and
number, that secrecy, like the truth, can
be a two-edged sword.
Hiding budget projections does stifle
unwanted debate. But, as is happening
now with the ATB program, the very fact
that the numbers are hidden becomes, in
itself, an unwanted controversy. In the
process, the rumored costs conceivably
become vastly more inflated than the
actual costs. The Pentagon, its lips firmly
zipped, is powerless to decisively dispel
rising speculation about a stealthy flying
pork barrel.
Withholding even the most general
technical information can also defuse
some of the contentious wrangling about
military requirements that has beset such
weapons as the MX missile and the BI-B
bomber while allowing officials to make
almost mystical claims for performance.
In his fiscal 1987 report to Congress,
for instance, Weinberger dangled the tan-
talizing prospect of stealth aircraft en-
abling the United States "to reach into
the Soviet Union and destroy selectively
highly valued targets." While the specif-
ics of stealth technology are "appropri-
ately classified," he continued, "publicly
available evidence should suggest that
these possibilities are not fanciful."
But persistent rumors percolating in
both the liberal and conservative wings of
the defense analysis community hold that
the ATB might well prove an under-
powered and overfinanced turkey. The
Pentagon is now confronted by what
promises to become a heated bomber
debate with little meaningful that it can
say publicly in its own defense.
In a gloomy assessment last September
of the Air Force's budgetary and hard-
ware prospects for the rest of the century,
Armed Forces Journal International edi-
tor Benjamin F. Schemmer took that ser-
vice to task for its "self-defeating se-
crecy."
Noting that one out of every five pro-
curement dollars in the Air Force budget,
and two out of every five of its R&D
dollars, were slated for black programs,
Schemmer worried that "so much se-
crecy doesn't bode well for future Air
Force budgets.... It's hard to win public
support-and thus congressional votes-
for programs [the Air Force] can't even
name, much less brag about." ^
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