Gov. Ed Rendell has terminated what he called a horribly misguided state contract with a Philadelphia firm that led to wrongful and improper reports being disseminated about environmental groups, tax protesters, people at gay and lesbian rallies and even supporters of more funding for education.

At a news conference Tuesday evening, Mr. Rendell said he hadn't known until Tuesday about a one-year, $125,000 contract between the state Office of Homeland Security and the Institute of Terrorism Research and Response.

"I am appalled that this contract was entered into without my knowledge," he said. "I am appalled that information was disseminated about groups that were exercising their constitutional right to free speech and to protest. They shouldn't be on any list [of possible security threats]. This is extraordinarily embarrassing."

The contract started last October and was due to expire next month. Its original purpose was to inform state police and homeland security officials about "credible threats to critical infrastructure" around the state, meaning potential attempts by terrorists to destroy roads, bridges, buildings, power facilities or other important facilities.