The decision took 10 years to make. It cost hundreds of thousands of dollars in consulting fees alone. It was approved unanimously, twice.

But when members of Congress tried to understand at a hearing last week how the Smithsonian Institution selected Dulles International Airport as the site of its coveted Air and Space Museum annex, they came away baffled by the process and uncomfortable with the results. The General Accounting Office concluded that the Smithsonian had been neither businesslike nor demonstrably objective.

In choosing Dulles over at least two other sites, the GAO reported, the Smithsonian's Board of Regents did not invite competition, did not adequately establish or explain its site-selection criteria and did not give sufficient consideration to cost.

The Smithsonian has no rules requiring it to do any of that.

The congressional hearing did not touch on the role of David Acheson, the chairman of the Smithsonian's three-member executive committee, in the choice of the Dulles site. Acheson has long-standing business ties to the Dulles area, co-owns a parcel of land there, serves on the board of directors of a company that hopes to build a light-rail line to Dulles, and owns stock options in that company.

Acheson did not withhold any of that information from the Smithsonian. Though not required to do so, he disclosed his interests, in writing, to the full Board of Regents before they voted on the executive committee's recommendation that Dulles be chosen. The regents -- who operate under conflict-of-interest rules as vague as the rules that governed the site-selection process -- didn't discuss the information.

The story behind the choice of the Dulles site is a story about the Smithsonian itself, a revered organization of hybrid parentage that relies on public money but is not bound by some of the regulations that govern public agencies.

Washington's Air and Space Museum is the most visited museum in the world. The planned $360 million annex, which would house attractions such as the space shuttle Enterprise and the Enola Gay -- the plane that dropped an atomic bomb on Hiroshima -- is expected to bring millions of visitors a year to its host region.

The annex was not always such a grand conception. In 1983, it wasn't going to be much more than an overflow warehouse -- four hangars costing an estimated $12 million each. The facility had to be near a usable runway to accommodate transportation of large aircraft.

Relying on their general knowledge and expressions of interest from localities, Smithsonian staff members informally assessed nine sites, including Dulles and Baltimore-Washington International Airport, Andrews Air Force Base and Washington National Airport, as well as airports as far afield as Martinsburg, W. Va., and New York. Early on, the institution settled on a preference for remaining within an hour's drive of Washington so that Washington-based staff could work at the extension.

But gradually, the plan for the annex became more elaborate. After Martin Harwit became director of Air and Space in 1987, the extension evolved into a full-blown museum, complete with theater, restaurant and shop.

The Smithsonian never sought any bids for the project, but as the plans grew, some outside interest developed.

By happenstance, Rep. Benjamin L. Cardin (D-Md.) learned of the annex because he was a member of the Public Works and Transportation Committee, which authorizes Smithsonian construction. He wanted the project at BWI; Maryland officials had calculated that tourist traffic would generate $10 million a year in tax revenue alone.

The power to select a site rested with the Smithsonian's Board of Regents, a 17-member panel that includes U.S. Chief Justice William H. Rehnquist, three senators, three House members and a group of citizens. The regents had been leaning toward Dulles as early as 1983, and had signed an option to lease land there in 1986, but in light of the new bid, delegated to its three-member executive committee the power to recommend the final site.

In 1989, the regents commissioned a comparative study by Hellmuth, Obata and Kassabaum, an architectural firm that worked on the existing Air and Space Museum. The study used 11 criteria developed by the Smithsonian with the consultants. The GAO later criticized the study on the grounds that those criteria were not ranked and the cost analyses were not thorough.

The study, which cost $396,400, did not make any recommendation. "There was no question that either site could be developed," said project director Mary Ann Lasch, formerly with the architectural firm. "Dulles was a little bigger . . . BWI had a little better potential for public transportation."

Air and Space Director Harwit also had no preference. "We agonized about the {offers} . . . If I had seen a very big difference I would not have hesitated to come out with a recommendation," he said.

Shortly before the executive committee was to consider the offers in December 1989, Denver came forward with what it said was a money-saving offer to locate the annex at Stapleton International Airport. Again, this new bid was not solicited; it came about only because Rep. David Skaggs (D-Colo.) read a newspaper account about the annex and requested that the Smithsonian consider this offer too. Denver officials had calculated that the annex could generate an economic impact of up to $100 million in the region.

When the executive committee convened in a conference call, it had three offers -- and no recommendations -- before it.

Minutes from a January 1990 regents meeting show that the three committee members concluded that the Denver proposal was "viewed as too late to be comprehensively considered." The "claimed savings of $100 million seemed unrealistic," the committee said, adding that "a major concentration of the . . . collection at such a distance would require an essentially autonomous museum with its own, somewhat duplicative staff." Turning to the competing offers from Baltimore and Dulles, the committee concluded that "neither proposal for infrastructure and financing is clearly superior." It recommended Dulles, saying the airport's value was partially symbolic because it is on federal land and "is viewed as the prime gateway to the nation's capital." The Dulles site, the committee said, also is larger and would allow "a more conveniently clustered configuration of museum buildings to be planned."

According to the GAO report, these reasons were inconsistent with the criteria applied in the comparative study. The site's symbolic value was not mentioned as a site-evaluation criterion, the GAO said, and the size and configuration of the land was never ranked as an essential attribute. "In fact, Smithsonian officials said the BWI site, although smaller, still met their need," the GAO reported. Acheson's Ties to the Dulles Area

Acheson, the chairman of the Smithsonian's executive committee, is a Washington lawyer who has been a regent since 1980 and an executive committee member since 1982. He had business associations in the Dulles area that date back several years.

In the mid-1980s, he served as counsel to prominent Northern Virginia developer Bahman Batmanghelidj. In 1986, Acheson notified the regents in writing that he was representing Batmanghelidj in an effort to donate land to the Smithsonian as a site for the annex. The plan was to set up a "space camp" -- a kind of theme park with educational facilities -- on Batmanghelidj's land near Dulles in conjunction with the Smithsonian and Walt Disney Co. Acheson set up a meeting between Batmanghelidj and a Smithsonian official and tried unsuccessfully to enlist Disney.

In his letter, Acheson offered to recuse himself if Batmanghelidj's offer came before the regents. But the developer's concept was rejected by Smithsonian staff as "too commercial" and never came before the board.

Batmanghelidj still hopes to build the space camp, but Acheson said in a recent interview that he has nothing further to do with that effort.

Still, his association with Batmanghelidj continues. With the developer, Acheson sits on the board of Dartrail, a private for-profit corporation that was co-founded by Batmanghelidj with the hope of building a light-rail system along the Dulles Toll Road.

When the Smithsonian executive committee weighed the offers from Dulles and BWI in December 1989, the regents' minutes show that public access to Dulles was a concern. Partly because BWI is served by public transportation and Dulles is not, the comparative study predicted attendance at BWI would be 20 percent higher than if the annex were at Dulles. But the executive committee concluded that "it can be taken for granted that rail access to Dulles Airport will have been introduced" by the time the annex opened.

Because Dartrail has no assets yet, Acheson has been paid in stock options for attending board meetings, and estimates he currently owns options for 200 to 300 shares of stock. The options will have no value unless Dartrail is built, he said, and even then, the project would have to be exceedingly successful for any profits to accrue.

Acheson said his work with Dartrail is unlikely to produce a profit in the foreseeable future, even if the museum annex is located at Dulles. "If my grandchild is lucky he might see something out of the stock," he said.

He described his work for Dartrail as a "hobby" and a "public service."

"All of us do this because we like to work with each other," he said of himself and the other members of the Dartrail board. "We think it's fun."

Acheson also owns with Dartrail Chairman Najeeb Halaby a one-acre parcel less than a mile from the airport. He and Halaby bought it as an investment for $45,000 in 1985; in 1990, its assessed value was $71,960. The land is too far from the annex site to benefit from it, Acheson said.

The Washington Post contacted several real estate agents familiar with properties in the Dulles area; they agreed that the Halaby-Acheson parcel was unlikely to increase in value if the annex is built, but predicted that it would benefit substantially from a light-rail system.

According to Terry Holzheimer, Loudoun County's director of economic development, the chances that light rail will be built are enhanced if the annex is placed at Dulles. "What financially supports the light-rail system is demand and {the annex} would be an enormous generator of demand," he said.

Dartrail and Fairfax County are the only two entities that have come forward with proposals for a transportation system to the airport. Virginia Secretary of Transportation John G. Milliken has said that Dartrail should be allowed to participate in the development and implementation of the transit plans to the airport.

Acheson said his objectivity was unaffected by his business ties to the Dulles area. The selection of Dulles was a consensus decision made without "any dissent," he said. Smithsonian bylaws, Acheson said, did not even require him to inform the regents of his interests in the Dulles area.

Acheson said he filed a disclosure letter only to be completely aboveboard "in case some nit-picker raised a question."

"It really was a petty and indeed silly concern, but I wanted to be sure that there wasn't any reason or anything that anybody could possibly dig up to criticize," he said.

Earlier in the deliberations, Acheson said, he opposed a move by another regent to reject Maryland's bid out of hand. Only through his intervention was the bid considered.

"If the suggestion is that I conned the board of regents into going along with a siting action motivated by personal interest," he said, "if someone is looking for a dubious scheme on my part, I'd say that all I had to do was sit down and keep my mouth shut and maybe the Maryland proposal would have gone away. In this story, I'd have to ask, where's the beef?"

Two experts in ethics and law contacted by The Post agreed that Acheson did not violate Smithsonian rules, which require regents to disclose in writing to the executive committee only "any financial transaction or business dealing with the Institution in which such member has a direct involvement." But they said they believe those rules are too weak. Both said they would have counseled Acheson to recuse himself, to avoid an appearance of impropriety.

Attorney Daniel L. Kurtz, author of a legal guide for directors of nonprofit organizations, said Acheson could legally participate in the site-selection decision. "Ought he do it? I'd say no," he said.

"If you happen to own property or to be involved in light rail, you want more activity at Dulles," Kurtz said.

Yale law professor and ethics expert Geoffrey Hazard said regents have a public trust and should apply a judicial standard when determining whether to recuse themselves from certain matters. Regents should not participate in matters in which their "impartiality might reasonably be questioned," he said.

James Hobbins, executive assistant to the secretary of the Smithsonian, said that the institution's bylaws were deliberately "written very generally" so that the regents could interpret and apply them on a case-by-case basis.

Acheson said: "I am not going to be governed by the standard applicable to judges." Congress Grumbles, Others Hope

Congress now appears unlikely to appropriate funds toward construction of the annex without more exploration of the site-selection process. At the appropriations subcommittee hearing last week, questions were raised as to whether the annex should even be built in light of current budget constraints. Another broad policy question has been raised: Should the Smithsonian keep its collection close to Washington or expand to other areas around the nation?

In theory only, the Smithsonian can make autonomous decisions. The institution occupies a unique status in the federal establishment; it is a trust instrumentality that is not covered by laws that apply to purely federal agencies. But the institution gets 86 percent of its net budget from federal appropriations and, in the words of spokeswoman Madeleine Jacobs, "We simply cannot ignore the will of Congress."

With Congress grumbling, other regions are nursing renewed hopes that they will host the annex even though the regents reaffirmed their preference of Dulles as recently as last Monday. Representatives of those regions want the Smithsonian to heed the GAO's advice -- and they want to know more about Acheson's role.

Walt Koelbel, chairman of the nonprofit Air and Space West, which wants the annex in Denver, was surprised to learn of Acheson's background. "Obviously, I would like to investigate further," he said. "We never had an inkling of this."

Rep. Cardin said in an interview that he was unaware of and dismayed by Acheson's connections to the Dulles corridor. "When you have a three-member executive committee and the chairman has that type of interest, I don't think that's a fair process," he said.

Staff writer Steve Bates and researcher Julie Bresnick contributed to this report.

The Smithsonian Institution selected Dulles International Airport as the site of a proposed $360 million annex to its National Air and Space Museum, the most-visited museum in the world, below. However, Congress has raised questions about the selection process -- and about whether, in a recessionary economy, the annex should be built. Under the proposal, the annex would be a full-fledged museum with a theater, restaurant and shop, and would feature such attractions as the space shuttle Enterprise and the Enola Gay, the plane that dropped the atomic bomb on Hiroshima.