Secret Agency Reportedly Salted Away $1-Billion Fund : Finances: The National Reconnaissance Office did nothing illegal, but CIA director orders a restructuring.

The agency that manages the nation’s spy satellite program has accumulated unspent funds totaling more than $1 billion without informing its supervisors at the Pentagon and CIA or its overseers in Congress, according to Capitol Hill sources.

The ability of the National Reconnaissance Office to salt away so much money from its classified, multibillion-dollar budget reaffirms longstanding concerns in Congress that intelligence agencies sometimes use their secret status to avoid accountability.

After complaints from the House and Senate in June about the NRO’s finances, CIA Director John M. Deutch launched an inquiry. Based on its findings, he recently ordered a restructuring of the NRO’s financial management and a complete review of its spending.

The 35-year-old agency, whose operations were so cloaked in secrecy that even its name was classified until three years ago, supervises design, development, procurement and launching of satellites, and it maneuvers them, at the direction of program managers at the Central Intelligence Agency and the Pentagon, to cover designated targets.

The unspent funds, dubbed a “pot of gold” by one Senate aide, were discovered after the Senate Intelligence Committee raised questions a little more than a year ago about a luxurious $300-million headquarters complex the NRO was building in Fairfax County, Va., where officials had been told the building was for Rockwell International Corp. The committee learned that the four-building complex, which congressional staffers believe was financed in part by the unspent funds, contained 30% more office space than the NRO needed and that the agency was paying for construction out of base operating funds it already had, without seeking a specific appropriation for building.

The pool of unspent money accumulated as a result of the NRO’s practice of having Congress pay in advance for multiyear, billion-dollar-plus satellite programs, Deutch said in an interview. Agency managers allowed incoming funds to pile up when the NRO’s spending on contracts took place at a slower-than-planned pace.

Although the CIA inquiry found nothing illegal about how the NRO handled the money, Deutch said, he put a new chief financial officer in the agency. He also ordered a “separate budget scrub,” or thorough look at funding for all its programs, before presentation of next year’s spending plan.

Maj. Pat Wilkerson, a spokesman for the NRO, said agency officials could not comment on the fund because “both the programmatic and dollar content of the NRO budget are still considered classified.”

The satellite agency’s funding is part of the Pentagon budget, but many of the agency’s intelligence programs are under CIA supervision. Senate investigators, sent by angry members of the Senate Intelligence and Appropriations committees, have begun for the first time to take a close look at the NRO’s previously accepted accounting practices.

One congressional aide put the total of unspent funds as high as $1.7 billion, and another source familiar with the issue made a similar estimate. Some other sources, however, said the total may turn out to be less than $1 billion. Deutch, in the interview, declined to put a figure on the unspent money.

House Intelligence Committee Chairman Larry Combest (R-Tex.) said Friday he has demanded a complete accounting of the funds, “what money is in what account . . . how it got there and how the money will be dispensed in the future.”

Describing the situation as “disturbing,” Combest criticized NRO managers and said they had “fallen quite short about being open about this.”