Unfiled

CONSARC, Rancocas, New Jersey

Date: October 4, 1985

Subject: USSR Contract with Machinoimport

Ref: Contract #50-0166/34881

Dear Jim:

The above contract apparently covered equipment for pitch impregnation, carbonization, and graphitization of materials and parts using induction furnaces and a heated isopress.

Whereas, I do not think any of us understand the full significance of this contract, we have to be sensitive to the concerns that the Department of Trade and Industry has shown and that our government has shown in this area. They have embargoed some of the equipment and broadened their restriction with regard to the start-up of this equipment. Although certain of the furnaces may have been sold and designed for temperature applications that are well below the restricted areas, it becomes impossible for us to assure that the furnaces cannot be used or modified to be used in areas where our governments would like to restrict. Apparently no one in the American Government or the British Government has the authority, power, or inclination to order us to not send personnel to complete the contract or to start up the equipment. On the other hand, they seem very anxious that these activities not go forward.

In view of all this confusion, it would appear that we have to make the decision.

No Consarc Personnel or agents or agents of Consarc are to do any further work on the above contract either in Scotland or the USSR, and nothing is to be done that will contribute toward the operation or the start-up of this equipment. Is short, please stop all work on the above contract.

Very truly yours,

HM Rowan

Chairman