Ruppelt noted that some of "ATIC's top intelligence specialists who had been so eager to work on Project Sign were no longer working on Project Grudge. Some of them had drastically and hurriedly changed their minds about UFOs when they learned the Pentagon was no longer sympathetic to the UFO cause." (Ruppelt, 60)
As Dr. Michael D. Swords writes, "Inside the military, [Maj. Aaron J.] Boggs in the Pentagon and [Col. Harold] Watson at AMC [Air Material Command] were openly giving the impression that the whole flying saucer business was ridiculous. Project Grudge became an exercise of derision and sloppy filing. Boggs was so enthusiastically antisaucer that General Cabell ordered General Moore to create a more proper atmosphere of skeptical respect for the reports and their observers." (Swords, 98)
Critics charged that, from its formation, Project Grudge was operating under a debunking directive: all UFO reports were judged to have prosaic explanations, though little research was conducted, and some of Grudge's "explanations" were strained or even logically untenable. In his 1956 book, Edward J. Ruppelt would describe Grudge as the "Dark Ages" of USAF UFO investigation. Grudge’s personnel were in fact conducting little or no investigation, while simultaneously relating that all UFO reports were being thoroughly reviewed. Ruppelt additionally reported that the word "Grudge" was chosen deliberately by the anti-saucer elements in the Air Force.
The first salvo in the PR campaign came via Sidney Shallet of the Saturday Evening Post, one of the more popular magazines of the era. Shallet's article appeared in two consecutive issues of the Post (April 30 and May 7, 1949) and generally echoed the Grudge line: Most UFO reports could be easily explained as mundane phenomena misidentified by an eyewitness, the subject was blown out of proportion by the mass media. Shallet suggested that hoaxes and crackpots played a prominent role in popularizing UFOs, and the opinions of many high-ranking military personnel were featured.
The article also included a few misrepresentations of the facts. Shallet asserted that the Air Force thought the subject was nonsense, and was more or less forced to investigate flying saucers due to public interest--this was manifestly false, as the Air Force took the UFO subject seriously nearly from the beginning. Shallet, of course, did not have access to some secret information, such as the 1947 memorandum by Gen. Nathan Twining that had declared flying saucers a "real and not visionary" phenomenon and had kickstarted Project Sign, and did not mention Sign's secret Estimate of the Situation that had argued in favor of an extraterrestrial origin for UFOs.
Shallett's article was perhaps the first detailed public discussion of UFOs, let alone with the endorsement of such prominent military men. Grudge had hoped the article would reduce public interest in flying saucers, but the effect was just the opposite: Shallet had mentioned in passing that a small minority of UFO reports seemed to defy analysis, and these statements were seized upon by the press and the curious. Ruppelt wrote that rather than squelching interest, Shallet had "planted the seed of doubt" in the general public.
Not long after this report was released, it was reported that Grudge would soon be dissolved. Despite this announcement, Grudge was not quite finished. A few personnel were still assigned to the project, and they aided the authors of a few more debunking mass media articles.
On September 10, 1951, there was a radar/visual UFO encounter near Fort Monmouth in New Jersey. Pilots and radar operators reported encounters with a number of fast-moving, highly maneuverable disc-shaped aircraft. High-ranking personnel ordered an investigation, and Cummings and Lt. Colonel N.R. Rosegarten spent most of 13 September interviewing witnesses and gathering documentation at Ft. Monmouth.
The duo were then ordered to relate the results of their investigation directly to Major General Charles P. Cabell, then the head of Air Force intelligence at the Pentagon. Cummings and Rosegarten arrived at a meeting already in progress, and found the atmosphere thick with tension. Cabell in particular was distressed by what he saw as the sloppy debunking and lackadaisical attitude Project Grudge brought to bear on a subject he thought deserved serious scrutiny. Cummings and Rosegarten related their conclusions of the Fort Monmouth incident: they agreed with Monmouth personnel who judged the fast moving objects sighted there as being "intelligently controlled." (Clark, 240)
When given permission to speak freely to Cabell and the others, Cummings (as Ruppelt wrote) "cut loose. He told how every UFO report [submitted to Grudge] was taken as a huge joke" and Grudge had become all but moribund. (Clark, 240)
When General Charles P. Cabell learned that Grudge had essentially ignored UFO reports, he became furious. The Fort Monmouth case had highlighted what critics saw as Air Material Command's sloppy debunking, and at a meeting, a frustrated Cabell was reported to have said, "I want an open mind; in fact, I order an open mind! Anyone who doesn't keep an open mind can get out now! ... Why do I have to stir up the action? Anyone can see that we do not have a satisfactory answer to the saucer question." (Swords, p. 103) At another meeting--this one of high-ranking military Colonels--Cabell said, "I've been lied to, and lied to, and lied to. I want it to stop. I want the answer to the saucers and I want a good answer." (Swords, p. 103) Cabell also characterized the 1949 Grudge report as "tripe".
Lt. Col. N.R. Rosegarten asked Ruppelt to take over as the new project’s leader in late 1951, partly because Ruppelt "had a reputation as a good organizer." (Jacobs, 65) While Cabell wanted Grudge reactivated, he did not want the general public to know that he and some others in the military took UFOs seriously, and ordered the project to keep a low profile. This, he hoped, would protect the military's reputation on both fronts: if the saucer phenomenon was groundless, they could not be accused of sensationalism, but if the phenomenon proved to have some basis in fact, the military could produce serious studies of the subject. Cabell especially did not want the military to be perceived as belittling civilians who had reported UFOs.
Grudge became Project Blue Book. Its first era--directed by Ruppelt--is generally seen as its most open-minded and productive era.