"Don't shoot me, I'm only the Raytheon lobbyist;" a defense lobbyist told the truth about the Pentagon budget, now he's out of a job.

• Author: Crowley, Lyle
• Position: Lawrence J. Korb

On a February afternoon in 1986, the day before President Reagan made a nationally televised speech to promote his defense budget, the Committee for National Security, a Washington policy group, held a press conference on Capitol Hill. On the dais was Lawrence J. Korb, who just the year before had been serving in the Reagan Defense Department as assistant secretary for manpower and military preparedness. Like many military men before him Korb had left the public service to become a lobbyist. He was head of the Washington office of Raytheon.

In his remarks, Korb echoed what had become a rather familiar and accepted notion by the middle of the president's second term: with a vast deficit and an unwillingness to reduce spending on domestic programs, Congress was sure to cut the defense budget. Given this fiscal climate, Korb explained, he had signed on to the committee's alternative budget, a proposal to keep military spending at pace with inflation (rather than outstrip it, as the administration desired). He added that it was the best one could hope for from Congress.

"What we have to do is avoid the temptation for the easy cuts," said Korb.

The next morning, across the Potomac, the temperature rose inside the office of John Lehman, the secretary of the Navy. Reading The Washington Post, Lehman was stunned by the headline. "Pentagon ExDefender Turns Critic." Lehman later told investigators that he "especially was upset" by the Post's report that Korb had urged cuts in his 600-ship, 15-carrier-group Navy. (While Lehman had argued for 15 carrier battle groups, Korb supports 13.) At the press conference, Korb had not directly criticized the navy buildup, but he had spoken in general terms about maintaining a strong defense in the face of deficit pressures. The secretary, though, had seen enough.

When Korb arrived at his office the following day he was surprised by a call from a senior vice president of Raytheon, R. Gene Shelley. Shelley was based at Raytheon's headquarters in Lexington, Massachusetts and had never called Korb before. It was the start of a long morning. Shelley and another Raytheon executive had already been contacted by Melvyn R. Paisley, assistant secretary of the Navy for reserves, systems, and engineering, and Everett Pyatt, assistant secretary for shipbuilding and logistics. A third call came from Carl Smith, who served on the Republican staff of the Senate Armed Services Committee. Together the three men helped shape the nation's military budget and exercised enormous influence over billions of dollars in government contracts. They were not calling to congratulate Korb on his fine talk.

Before he had time to recover, the phone rang again. This time it was Korb's immediate boss, Philip Phalon. He told Korb to get upstairs quickly and said, "All hell's breaking loose up here." Korb headed up to the office, where he recalls Phalon saying, "You're in a lot of trouble. [Raytheon President D. Brainerd] Holmes says if you criticized Lehman's 600-ship Navy you should be fired." Korb defended himself and promised to call Pyatt and Paisley to straighten things out.

The next Wednesday, Korb went to Lexington to attend a staff meeting at Raytheon headquarters, uncertain of where he stood. It did not take long for him to find"When I walked into the room people looked at me like I had AIDS," he recalls. Korb describes a private and disturbing conversation he said he had with Phalon after the meeting. In court briefs, Phalon denies the meeting ever took place, and Raytheon officials have refused to discuss the case.

"The Navy has said they never want to see you," Korb recalls Phalon saying. "You're going to have to go." Phalon said that Assistant Secretary Pyatt had warned the chief of Raytheon's missile division that he would "stop assisting Raytheon with certain defense contracts" so long as Korb continued to criticize the defense budget. As for Carl Smith, the Republican committee aide, Phalon said that Smith did not want to see anyone from Raytheon's Washington office as long as Korb was there. Two former staff members of the Senate Armed Services Committee say that Smith was unusually close to senior navy officials.

Korb was asked to resign from his $150,000-a-year job on March 12. In an effort to salvage his past, he contacted John Warner, then the second-ranking Republican on the Senate Armed Services Committee and a former secretary of the Navy, who called Raytheon on Korb's behalf. Melvin Laird, the former...