Acting Defense Secretary Patrick Shanahan’s private remarks during his 18 months at the Pentagon have spurred accusations that he is boosting his former employer Boeing, people who have witnessed the exchanges told POLITICO — fueling questions about whether he harbors an unfair bias against other big military contractors.
Shanahan, who spent 31 years at Boeing before joining the Pentagon in mid-2017, has signed an ethics agreement recusing him from weighing in on matters involving the mammoth defense contractor. But that hasn’t stopped him from praising Boeing and trashing competitors such as Lockheed Martin during internal meetings, two former government officials who have heard him make the accusations told POLITICO.
The remarks raise questions among ethics experts about whether Shanahan, intentionally or not, is putting his finger on the scale when it comes to Pentagon priorities. They also call new attention to a recent decision by the Pentagon to request new Boeing fighters that the Air Force has said it does not want — a request that Bloomberg has reported came after “prodding” from Shanahan.
Concerns about Shanahan’s ties to his former employer first surfaced during his confirmation hearing to be deputy secretary, but they have re-emerged since President Donald Trump said last month he may be running the Pentagon “for a long time.”
In high-level Pentagon meetings, Shanahan has heavily criticized Lockheed Martin’s handling of the production of the F-35 fighter jet, which is expected to cost more than $1 trillion over the life of the program, according to one of the two sources, a former senior Defense Department official who was present.
Shanahan, this official said, called the plane “f—ed up” and argued that Lockheed — which edged out Boeing to win the competition to build the plane in October 2001 — “doesn’t know how to run a program.”
“If it had gone to Boeing, it would be done much better,” Shanahan said, according to the former official.
As the Pentagon’s No. 2, Shanahan repeatedly “dumped” on the F-35 in meetings, calling the program “unsustainable,” and slammed Lockheed Martin’s CEO, Marillyn Hewson, according to the second source, a former Trump administration official. “‘The cost, the out-years, it’s just too expensive, we’re not gonna be able to sustain it,'” this person said, quoting Shanahan.
The former Trump official said Shanahan “kind of went off” about the F-35 at a retreat for Republican lawmakers last year at the Greenbrier resort in West Virginia. This angered several members of the delegation who had home-district interests in the F-35 program, the former official said.
“He would complain about Lockheed’s timing and their inability to deliver, and from a Boeing point of view, say things like, ‘We would never do that,'” this former official said.
Shanahan is the first Pentagon chief to come purely from the private sector since the 1950s and has virtually no government or policy experience. He became the acting Defense secretary Jan. 1, following former Secretary Jim Mattis’ resignation over Trump’s abrupt decision to pull U.S. troops from Syria and begin drawing down from Afghanistan. He has signed an ethics agreement barring him from weighing in on any matters involving his former employer, the Pentagon’s fifth-largest contractor in 2017.
Shanahan’s experience at Boeing is “his only reference point,” the former Trump administration official said. “He doesn’t have a lot of other experiences to draw on. He owns it in a powerful way because he doesn’t have the military experience, he doesn’t have the experience in government. So when he talks about those things, he’s very forceful.”
His remarks about the F-35 stand in stark contrast to those of the president, who regularly praises the stealth fighter despite initially slamming its high costs.
The F-35 program, while experiencing a number of setbacks, technical delays and groundings throughout the years, is generally considered to be on the mend. The Air Force and Marine Corps variants have been declared ready to deploy, and the Navy version is expected to reach that point as early as next month. And unit costs have come down for all three variants as the plane matures.
Trump has praised Shanahan’s ability to cut costs, calling him a “great buyer.” He is now among the candidates the president is considering as a permanent replacement for Mattis.
Asked for comment, Shanahan’s office released a statement saying he is committed to his agreement to stay out of matters involving Boeing.
“Under his ethics agreement, Mr. Shanahan has recused himself for the duration of his service in the Department of Defense from participating personally and substantially in matters in which the Boeing Company is a party,” his office said.
Shanahan’s critics are misreading his comments, according to two currently serving officials, who requested anonymity to speak about internal discussions. While Shanahan regularly recounts his experience working on major programs at Boeing, they say, he has not said the company should have won the F-35 contract.
“He’s not talking about Boeing right now; he’s really speaking more to his experience, his leadership. His insight is, ‘I’ve seen this, I’ve done it,’” one Defense Department official said.
A second source, a senior government official who has been in the bulk of the meetings involving the F-35, says Shanahan is no Boeing booster.
“I don’t believe that’s the case at all. I think he’s agnostic toward Boeing at best. I think he’s extremely confident about his capability relative to sourcing and working with contractors,” this official said. “There might be overconfidence there in terms of how his commercial experience translates to defense programs. But I don’t think there’s any intent to have Boeing favored in the building.”
But as Pentagon chiefs go, Shanahan is an outlier. For the past 60 years, Defense secretaries have come to the job with a mixture of military, public service, engineering and business experience.
Two of former President Dwight D. Eisenhower’s Defense secretaries had only business experience when they were sworn in. Charles Wilson was president of General Motors when he was nominated, and Neil McElroy was president of Procter & Gamble, although he did serve for a brief time as chairman of the White House Conference on Education.
The late Senate Armed Services Chairman John McCain (R-Ariz.) was among those expressing qualms about Shanahan’s ties to Boeing during his confirmation hearing to be deputy secretary in June 2017. “I am concerned that 90 percent of defense spending is in the hands of five corporations, of which you represent one,” McCain told Shanahan. “I have to have confidence that the fox is not gonna to be put back into the hen house.”
Mandy Smithberger, director of the military reform program at the Project on Government Oversight’s Center for Defense Information, said Shanahan’s comments could raise questions about his ability to give an unbiased view of programs.
“It’s reasonable that people would question whether he is making these comments based on actual policies and performance versus biases and conflicts that he might have from his former employer,” she said.
Asked whether a deputy Defense secretary could feasibly recuse himself from Boeing-related matters, Smithberger said it would be “pretty close to impossible.”
Though Shanahan has a subordinate who screens matters that come to him in order to prevent him from considering Boeing-related matters, government officials frequently interpret the law narrowly, Smithberger said. “They’ll ask, ‘Is Boeing an entity competing for a program?’ rather than, ‘This policy decision, could it be profitable to Boeing or benefit them in another way?’ That’s why, when people have this deep of a conflict, we wonder if they can really occupy this kind of a position.”
Shanahan’s ties to Boeing came under renewed scrutiny in December, when Bloomberg reported that Shanahan had urged the Air Force to add $1.2 billion to its fiscal 2020 budget to purchase 12 Boeing F-15X fighters.
Military experts seemed baffled by the F-15X decision, arguing that the jet, because it lacks the F-35’s stealth capability, is ineffective against enemies like Russia and China, which have sophisticated air defense technologies.
“They simply lack the survivability to fly into harm’s way and make it home against the military equipment that’s built by China and Russia — identified as the two pre-eminent threats in our national security strategy,” retired Lt. Gen. Dave Deptula, the dean of the Mitchell Institute for Aerospace Studies, told POLITICO.
Air Force leaders have said publicly they are not interested in purchasing more F-15s, raising questions about the Pentagon’s request to purchase the planes now.
In September, Air Force Secretary Heather Wilson told Defense News that the service needs to spend its money on stealthy, fifth-generation F-35s — and that buying even an advanced fourth-generation fighter such as the F-15X, which isn’t as stealthy, was not in the cards.
“This is a real head-scratcher for me,” retired Air Force Col. J.V. Venable, a senior research fellow with The Heritage Foundation, told POLITICO. “I don’t like the decision, I don’t think we should invest any more in fourth-generation platforms.”
Lockheed did not respond to a request for comment. In a statement, Boeing said it “adheres to and respects Secretary Shanahan’s decision to recuse himself from Company matters. We have not spoken to Sec. Shanahan regarding Boeing programs during his entire Pentagon tenure.”
A Boeing official said the company views having one of its former senior executives at the top of the Pentagon as a complicating factor, not as an advantage. “We couldn’t talk to the DepSec and now we can’t talk to the acting secretary about our programs,” the official said. “That’s a disadvantage to Boeing that other companies don’t have to deal with.”
At Boeing, Shanahan was involved with the 700-series jetliners, some of the world’s most popular commercial aircraft, and played a key role in getting the troubled 787 Dreamliner program back on track.
He oversaw military programs as well, and was vice president and general manager of Boeing Missile Defense Systems and Boeing Rotorcraft Systems. There, he was involved with ballistic-missile defense and laser systems, and the Apache, Chinook and Osprey military helicopter programs.
Dan Grazier, a military expert with the Project on Government Oversight, said that even if Shanahan isn’t violating his ethics agreement, he risks coloring the decisions of underlings if he draws too heavily on specific Boeing experience.
“You get into a gray area if he’s saying these things in front of what can only now be subordinates talking about these types of matters,” Grazier said. “There can be some undue influence issues with that.”
Grazier, a critic of the revolving door between industry and government agencies, said he’s reserving judgment on Shanahan until he sees him in action as secretary.
He said people with industry experience have a checkered past when they take on senior Defense Department positions.
He said his concern is less with senior government officials enriching themselves in their current jobs and more with decisions that could make them rich later.
“In general, the concern with revolving-door issues is not so much what they could potentially do, or what they could get right now,” Grazier said. “It’s how they could be compensated later on. He won’t be in this position at the Pentagon forever.”
Article originally published on POLITICO Magazine
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