Laurel to the editorial staff of Stars and Stripes for uncovering a murky financial relationship between its paper and the Pentagon’s public-relations machine, and a Dart to the publishing staff for signing off on the arrangement.

First, some background. Stars and Stripes is an odd animal. Despite serving a military audience and receiving about half of its budget from the Pentagon, the paper’s civilian editorial staff bristles at suggestions that it’s anything less than editorially independent. They take pains to distinguish between “command information”—say, content on the Department of Defense Web site or the Armed Forces Radio and Television Service—and the journalism in Stripes.

So when reporter Jeff Schogol discovered a contract showing a $499,000 deal between the paper and an outside PR firm, it raised newsroom eyebrows—especially since the contract was for a controversial Pentagon program known as “America Supports You” that has been criticized as propaganda.

The digging started after David Cloud of The New York Times reported in May 2007 that the Defense Department’s inspector general had begun an inquiry into whether funds for “America Supports You” were shifted from other Pentagon programs improperly, in a way that could have avoided budget scrutiny. Stars & Stripes first reported the paper’s own involvement last October.

“My biggest concern was not, ‘Will we run this or not,’” says Executive Editor Robb Grindstaff. “It was, ‘We’ve got to get this story, get it first, and break it.’”

“America Supports You” has been dogged by controversy since its launch in the fall of 2004. The initiative is perhaps best known for its sponsorship of “Freedom Walks” across the country, which urge Americans to “support the troops” in Afghanistan and Iraq and take place each year on the Sunday closest to September 11. The program is the brainchild of Allison Barber, the deputy assistant secretary of defense for public affairs. Her office oversees the DoD’s PR machinery. It also is the conduit for government funding to Stars and Stripes.

Stripes’s editorial staff knew that the paper had some level of partnership with “America Supports You.” The paper sells ASY memorabilia—lapel pins, bracelets, and the like—on its Web site, and has co-sponsored the “Freedom Walks.” But members of Stripes’s senior editorial staff insist they had no idea that the paper was processing hundreds of thousands of dollars on behalf of the program.

There’s not a lot of information on why “America Supports You,” Barber, or the business-side folks at Stars and Stripes conceived of or agreed to the plan. Tom Kelch, who retired as the paper’s publisher in September, says he authorized the arrangement “years” ago to help Barber circumvent burdensome federal and Pentagon budget procedures.

On October 25, Schogol reported that an unnamed Stripes official said the funds handled by the paper on behalf of ASY were originally appropriated by Congress for other Pentagon programs. Although those involved deny that the arrangement bends or breaks spending rules, this would seem to run afoul of plain language in Pentagon regulations prohibiting the usage of Stripes money on other public-affairs projects.

One thing is clear: Stripes’s involvement has made it harder to track exactly how much money has been spent on “America Supports You.” So far, the paper has only obtained and published documents showing $810,650 worth of contracts. One, with Susan Davis International, a major PR firm, includes assistance with bringing entertainment to overseas troops, alongside domestic PR initiatives like public-service ads. The other is to build a Web site for ASY.

Kelch told CJR that he agreed to help ASY with entertainment, but that he had delegated most decisions on the matter to Max Lederer, now the acting publisher, and was unaware that contracts had been issued for Web design or public relations. “I guess I wasn’t on the ball enough,” he said. “I know that won’t look good in print.”

The largest known contract covered just four months of work in late 2006. Lederer has acknowledged that the paper’s contracts on behalf of ASY are ongoing, and could continue through May 2008. That suggests that millions of dollars could have been, and will continue to be, funneled through the paper.

Lederer has declined to answer key questions posed by his own staff on the affair, and would not speak to CJR. He’s also refused to turn over key documents to his own reporters. (According to one editor, Lederer’s refusals have created other problems. Since the scandal broke, this editor says, Stripes reporters requesting unrelated documents from other sources have been rebuffed by people who say, “Why should I give you this stuff if your own paper won’t?”)

Clint Hendler is the managing editor of Mother Jones, and a former deputy editor of CJR.