A former Washington defense consultant, whose criminal case led to a widespread investigation of defense contractors who trafficked in classified military budget reports, pleaded guilty yesterday to illegally conveying a secret Navy report to GTE Corp. in 1983.

Bernie E. Zettl, 67, could be fined up to $10,000 but will serve no prison time, according to a plea agreement filed in Alexandria. U.S. District Judge James C. Cacheris set sentencing for Oct. 26.

The case against Zettl, indicted five years ago, planted the seeds of Operation Uncover, a subsequent criminal investigation into a network of major contractors who freely obtained and traded sensitive Pentagon budget reports in their efforts to win lucrative weapons contracts in the late 1970s and early 1980s.

Boeing Co., Grumman Corp., Hughes Aircraft Co. of General Motors Corp., RCA Corp. and Raytheon Co. pleaded guilty and agreed to pay $14.9 million in fines and damages as a result of the recently completed case. Six corporate representatives were also prosecuted.

Several defendants had argued that they did not know that trading in the documents was a criminal offense until the government indicted Zettl in September 1985. But government officials said contractors were well aware of the Zettl investigation during its early stages.

"It was common knowledge in the industry by mid-1984 that an investigation {of Zettl and GTE} was underway," said Mathew Walinski, special agent from the Defense Criminal Investigative Service that conducted the Zettl investigation and later Operation Uncover.

Michael J. Costello, special agent in charge of the DCIS regional office, said industry representatives simply did not take the investigation seriously and "were dumb" for not stopping the flow of secret documents the moment they learned of the first Zettl subpoenas.

Richard A. Hibey, Zettl's attorney, said yesterday's plea "ends six years of hell for Mr. Zettl." Hibey noted his client was the first person prosecuted for passing classified military budget reports to an industry representative who had appropriate clearance.

Zettl, a former McLean resident and retired Air Force major, admitted in court papers that he obtained the secret Navy report from a retired Army colonel in 1983 even though his secret security clearance had expired. He also conceded that he had no government authority to share the document with a defense contractor, even though the contractor had adequate security clearance to review such documents.

The report detailed all the budget and operational information for the Navy's research programs in 1984.

An associate of Zettl's frequently distributed the documents to GTE employees on street corners in Arlington from the trunk of Zettl's car.