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SPY AGENCY ADMITS GATHERING A RESERVE OF NEARLY $4 BILLION

A spy satellite agency already under scrutiny for financial problems now acknowledges it accumulated nearly $4 billion in unspent funds because of poor management, according to published report Wednesday.

The National Reconnaissance Office, a super-secret agency that buys, launches and manages a multibillion-dollar system of spy satellites, ran up the surplus due to a chaotic and poorly organized financial management system, the publication Defense Week said.The NRO's chief financial officer, John Nelson, told the defense publication that auditors found at least 15 different accounting systems used by the agency and its various components at the Pentagon, CIA and the military services.

"Everybody did it a little different, and it was a mess," Nelson said. "This was literally a house on fire in many ways. . . . No one has ever had any quarrel with mission performance, but we got to a point where we had a fundamental financial meltdown."

The NRO has been embroiled in a series of politically charged controversies in recent years. Perhaps the most damaging was the disclosure last year that the agency had lost track of more than $2 billion in classified money - more than the annual operating budget of the State Department.

According to the Defense Week report, NRO officials now believe the figure was nearly double that amount. Each time officials examined the problem, the surplus figure grew, Nelson said.

The roughly $3.8 billion in surplus funds represented unspent money due to delayed satellite launches and other bureaucratic and contractual snags. Despite heavy criticism from Congress, senior officials have never charged the NRO with diverting funds or deliberately squirreling money away.

By comparison, the NRO's entire annual budget has been reported at about $6 billion; the exact figure is classified.