The decision came less than two months after Metro Newspapers, a group of alternative weekly papers in northern California, detailed the number of defense contracts awarded to Perini Corp. and URS Corp., both of which her husband, Richard C. Blum, has ownership, according to the newspapers.

The investigation was partially funded by the Investigative Fund of The Nation Institute, a non-profit organization affiliated with the liberal magazine The Nation.

Fitton said this is something Judicial Watch wanted to further investigate, possibly by seeking public documents on the matter and by asking the Senate Ethics Committee to look into the matter for a possible conflict of interest on Feinstein's part.

"On the face of it, it seems she at least had influence on how contracts were awarded," Fitton said. "There should be an investigation."

The California weeklies detailed examples that included a subcommittee hearing in which Feinstein asked Pentagon officials about increasing anti-terrorism protection for Army bases.

The next year, in March 2003, Feinstein asked why the funds for anti-terror protection had not been spent. Just over a month later, URS announced a $600 million contract to provide services for U.S. Army bases that included anti-terrorism force protection.

In another instance, Feinstein asked another military official when money would be spent on a maintenance facility for the C-17 Hickam Air Base in Hawaii. URS later announced a $42 million contract to build it.

Also, Feinstein's subcommittee in mid-2005 approved funds to reinforce roofs at military stations in Iraq, and in October of that year, Perini got a $185 million federal contract for that purpose, the papers reported.

The matter should be probed further, said Kenneth Boehm, chairman of the National Legal and Policy Center, a conservative government watchdog group. However, he isn't that confident in the Senate's ability to police itself.

"The real problem is there is too little objectivity," Boehm told Cybercast News Service. "Congress needs an independent watchdog. The ethics committees are partisan. They have an equal number of Republicans and Democrats, but the reality is that things don't get looked at that should get looked at."

Senator Dianne Feinstein, the California Democrat who will oversee any proposal as the incoming chairwoman of the Rules Committee, for example, said she was opposed to an independent Congressional ethics watchdog. “If the law is clear and precise, members will follow it,” she said in an interview. “As to whether we need to create a new federal bureaucracy to enforce the rules, I would hope not.”

Meanwhile, Melanie Sloan, executive director of the liberal watchdog group Citizens for Responsible Ethics in Washington, reportedly said the Feinstein matter could eclipse other congressional scandals.

"There are a number of members of Congress with conflicts of interest," Sloan told Metro Newspapers. "But because of the amount of money involved, Feinstein's conflict of interest is an order of magnitude greater than those conflicts."