Top 2 Officials at Agency for Spy Satellites Ousted

The top two managers at the super-secret agency that operates spy satellites were ousted Monday amid a growing furor over what congressional leaders charge was rampant financial mismanagement and gold-plated spending practices.

Jeffrey K. Harris, director of the National Reconnaissance Office, and deputy Jimmy D. Hill were removed from their posts by CIA Director John M. Deutch and Defense Secretary William J. Perry.

In a joint statement, Deutch and Perry said that the shake-up was prompted by “our belief that NRO’s management practices must be improved and the credibility of this excellent organization must be restored. . . . We are convinced it is time to make these changes and move forward.”

The move came just days after Senate Select Intelligence Committee Chairman Arlen Specter (R-Pa.) publicly asked Deutch whether any NRO managers would be fired for their role in allowing billions of dollars in excess funds to build up in the agency’s accounts. Deutch said no.

But intelligence community sources said that, in fact, he already had decided to fire the managers, although he had not yet had time to inform Harris and Hill. The sources added that the decision to fire the two was made by Deutch and that Perry agreed with the action.

Harris and Hill will be assigned to new, unspecified positions in the intelligence community and Deutch and Perry announced that Keith Hall, an expert on intelligence budgets, will serve as deputy director and acting NRO director.

Hall is currently the executive director of the intelligence community management staff and seems likely to be selected as permanent director. But the NRO director also serves as assistant secretary of the Air Force for space affairs, a position that requires a presidential nomination and Senate confirmation.

The NRO, an agency created in 1960 to manage America’s fleet of spy satellites, was so secret that the government did not even acknowledge its existence until 1992. Yet in its brief public life, it has suffered a series of humiliating disclosures about its expensive habits, raising new questions about whether the intelligence community has taken advantage of secrecy to hide bloated spending and bureaucratic featherbedding.

In 1994, the Senate Intelligence Committee disclosed that the NRO had spent more than $300 million on new headquarters in Virginia, which was being built under a cover story that it was a facility for a defense contractor. After the Senate panel disclosed the project, a task force found that the agency had built an excessively large facility.

Yet far more damaging to the NRO were more recent disclosures that the agency had built up about $2 billion in excess funds without turning them back to Congress. The agency continued to accept far more money from Congress for spy satellite launches than it needed and allowed the funds to sit unspent until outside auditors discovered the excess funds.

The NRO’s budget is classified but the agency reportedly receives $5 billion to $6 billion annually.

Congressional and administration officials stressed that no NRO officials were benefiting personally from the excess funds.