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Rep. Denny Smith (R., Ore.) does not like the looks of the Navy`s investigation into its downing of an Iranian airliner. He won`t go so far as to say a whitewash is in the offing, but he predicted ”a very subjective report on what happened.”

Smith, who has feuded with the Navy for years over testing of the Aegis radar system, said in an interview last week: ”They`ve got to defend this thing. It represents the 600-ship Navy. It`s everything they know and love and want.”

Smith may have a point. The investigating team now in the Persian Gulf is made up entirely of active-duty officers from Central Command, the next higher headquarters in the so-called ”chain of command” that extends from the gulf all the way back to the Pentagon.

The senior investigating officer, Rear Adm. William Fogarty, is the director of plans and policy on the Central Command staff, and he was involved in developing the rules of engagement under which Capt. Will Rogers of the USS Vincennes was operating July 3 when the cruiser shot down an Iran Air Airbus carrying 290 people in the belief it was an attacking fighter.

Fogarty must now render judgment on those same rules of engagement.

”They`re filling out their own report card,” said a retired military officer.

In this respect, this investigation stands in sharp contrast to previous ones. After the disastrous 1980 attempt to rescue Americans held hostage in the U.S. Embassy in Tehran, an independent Special Operations Review Group was formed.

The investigating team then was headed by retired Adm. James Holloway and was composed of active and retired officers from all four armed services, none of whom was involved in planning or conducting the failed ”Desert One”

effort.

The team`s report was critical of nearly every aspect of the rescue operation, especially of its ”ad hoc organization and planning.”

Similarly, after 241 U.S. servicemen died in a terrorist bombing of their barracks in Beirut in October, 1983, an independent investigation was convened under the direction of retired Adm. Robert Long.

That commission also was made up of active and retired officers from the four services. Not one of them was in the direct chain of command.

The report that Long`s team produced was a sharp indictment of the entire ”presence” mission in Beirut.

Indeed, the report openly criticized the failure of the higher headquarters, Commander-In-Chief Europe, to ”monitor and supervise effectively the security procedures” employed in Beirut.

It is doubtful such a conclusion would have been published by an investigating team made up of staff officers from that higher headquarters. Yet an equivalent body of officers from Central Command is investigating the Airbus shootdown in the Persian Gulf.

Last year`s investigation into the Iraqi attack on the frigate Stark was not an independent inquiry, either. It was conducted by the senior officer in the chain of command, Rear Adm. Grant Sharp, commander of Cruiser-Destroyer Group 2.

Though there is only a single half-page deletion in the Long Commission`s report on Beirut, the public report on the Sharp Commission`s much briefer investigation into the Stark incident is riddled with more than 150 major deletions. Some pages are nearly blank.

Moreover, the deletions to the Navy`s in-house Stark report reveal a consistent pattern: Nearly every mention of equipment functioning was censored.

The central question was left unanswered: What did the Stark`s equipment

”know,” and when did it know it?

Now the same burning question cries for an answer: What were all those computer consoles on the Vincennes telling Capt. Rogers, and when were they flashing their messages?

The technology question suggests a motive for why the Navy might not want to conduct a tough, independent investigation.

The fate of at least three big-ticket defense procurement programs hangs in the balance. The Navy has only 11 of its 27 planned Aegis cruisers. It also intends to build between 50 and 60 new Arleigh Burke-class destroyers with a scaled-down version of the Aegis system.

Together, the two programs amount to shipbuilding contracts worth more than $80 billion.

The Aegis system also is being considered to track incoming enemy ballistic missiles as part of Phase 1 of the ”Star Wars” missile defense. If Aegis is a bust, all these grandiose plans are thrown into chaos.

But if Aegis doesn`t work, how did it get out into the fleet in the first place?

In the April, 1984, operational tests that preceded Aegis deployment, the system on the cruiser Ticonderoga hit 10 of 11 targets. According to informed sources, however, that score does not reveal that the ship was positioned in a corner of the test range, so it only had to engage from one quadrant. The targets were launched from high-flying aircraft, which also tipped off the time and direction of attack.

”It was like being on a skeet-shooting range,” said Rep. Smith, ”where you say `pull` and you know where the clay pigeon is coming from. They weren`t very taxing tests.”

It was on the basis of these tests that Congress voted billions of dollars to build Aegis ships.

If the Persian Gulf investigation were to end up damning the Aegis technology, the legislators who voted the money while turning a blind eye to the nature of the tests stand to be very embarrassed.