New intel director may lead smaller agency

WASHINGTON -- President-elect Barack Obama's top pick to become national intelligence director won high marks for countering terrorism in southeast Asia after Sept. 11, but he will preside over an agency that may be downsized somewhat under the new administration.

As chief of the U.S. military's Pacific Command, Dennis Blair responded to the Sept. 11, 2001, terrorist attacks by devising an active anti-terror effort in southeast Asia. Blair worked closely with foreign partners to target the Abu Sayyif organization in the Philippines and Jemaat al Islamiyah in Indonesia, offensives that crippled both terror groups, according to intelligence and military officials familiar with his work.

Last month, Obama transition officials vacillated over whether to pick the retired admiral because of concerns that he was not a perfect fit in an agency expected to lose some influence. Obama wanted a national intelligence director willing to work in a streamlined office with a narrowed focus on giving strong direction to the country's 16 intelligence agencies, according to one current intelligence official.

A former senior CIA official with close ties to Obama said Monday that there has been criticism of the size and effectiveness of the national intelligence office so Blair will be expected to take stock of the office and adjust its size and mission as he deems necessary. But that doesn't mean Blair will be making changes on his first day, according to this former official who spoke on condition of anonymity because Obama had not yet announced Blair's selection.

The officials who commented about the 34-year Navy veteran spoke on condition of anonymity because the Obama transition team has insisted on confidentiality in its internal deliberations about personnel.

Congress followed the recommendation of the 9/11 Commission and created the national intelligence director's office in 2004 to knit together the missions, priorities, resources and analysis of the 16 intelligence agencies. The national intelligence office was envisioned to have a staff of 500 people, but that has grown to 1,500.

Blair would have control over CIA's planning and its role in overall intelligence strategy but not over the agency's budget. That disparity between the duties and powers of the national intelligence director's office has spawned conflicts between the two agencies.

Blair also might face an uncomfortable confirmation hearing before the Senate because the Pentagon inspector general found that he violated conflict-of-interest standards.

In 2006, Blair resigned from his top position at the Pentagon-funded, not-for-profit Institute for Defense Analyses after the Senate Armed Services Committee raised concerns about possible conflicts of interest because Blair, after leaving the Navy, became the institute's president while serving on the boards of two defense contractors that worked on the F-22 fighter jet.

At the institute, he participated in two reviews of the F-22, including one that endorsed an Air Force proposal to buy the F-22 on three-year contracts rather than one-year contracts. The longer-term contracts would financially benefit F-22 contractors and shareholders by guaranteeing a multibillion-dollar revenue stream for three years.

At the time, Blair served on the board of EDO which produced missile launch systems for the F-22, and Tyco International Limited, which produced small electronic components used by F-22 subcontractors.

A 2006 Pentagon inspector general's report found that Blair "violated IDA's conflict of interest standards because he failed to disqualify himself from all matters related to IDA's work concerning the F-22 program."

However, the November 2006 report found that Blair took no action to influence the outcome of either of the two studies.

Blair got rid of his interest in EDO in August 2006 by donating his common stock to a charity that benefits military families. In July 2006, after the Senate Armed Services Committee questioned his board memberships, he took himself out of any IDA studies that could create conflicts.

But rather than resign from the defense contractors' boards, he resigned as both president and trustee of IDA on Sept. 11, 2006.

Blair is also a China expert, and he was formerly an associate director for military support at the CIA.