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Acting Defense Secretary Shanahan Is Cleared in Ethics Inquiry Acting Defense Secretary Patrick Shanahan Is Cleared in Ethics Inquiry
(about 11 hours later)
WASHINGTON — The Pentagon’s inspector general has removed a big hurdle to Acting Defense Secretary Patrick M. Shanahan’s path to make his job permanent, clearing him of allegations that he promoted his former employer, Boeing, and disparaged its competitors for military contracts. WASHINGTON — Acting Defense Secretary Patrick Shanahan overcame a major hurdle to obtaining the top Pentagon job on Thursday when an internal ethics investigation cleared him of allegations that he promoted his former employer, Boeing, and disparaged its competitors in official discussions about military contractors.
An investigation that examined complaints by a watchdog group, Citizens for Responsibility and Ethics in Washington, was released Thursday morning after being sent to Congress. It did not find that Mr. Shanahan acted inappropriately on behalf of Boeing while he has been in a senior leadership role at the Defense Department. But while the Defense Department’s inspector general found no evidence to support complaints that Mr. Shanahan “repeatedly dumped” on Boeing’s competitors, it did cite a number of times that he praised the Boeing 787 Dreamliner that he famously rescued as a senior executive at the aircraft maker before joining the government.
“The evidence showed that Acting Secretary Shanahan fully complied with his ethical obligations and ethical agreements with regard to Boeing and its competitors,” Glenn A. Fine, the principal deputy inspector general, said in a statement on Thursday. Mr. Shanahan took over the top job at the Pentagon in an acting capacity in December, but President Trump has not nominated him to the Senate for approval.
But Mr. Shanahan may not be out of the woods just yet. The deadly crash of a Boeing 737 Max jet in Ethiopia last month — the second for the jet in just months — brought into public view longstanding complaints about Boeing’s close relationships with federal officials. “The evidence showed that Acting Secretary Shanahan fully complied with his ethical obligations and ethical agreements with regard to Boeing and its competitors,” Glenn A. Fine, the acting inspector general, said in a statement on Thursday.
Mr. Shanahan was not known for working on the 737 Max, which President Trump grounded last month after days of mounting pressure. But he did play a key role in rescuing another Boeing plane — the 787 Dreamliner — when delays and cost overruns threatened the future of that project. Two months ago, Defense Department officials were preparing talking points for Mr. Shanahan’s expected nomination. But those plans were shelved after the ethics investigation was announced, and after the crash of a Boeing 737 Max 8 in Ethiopia in March, killing all 157 people aboard.
On Saturday, The New York Times reported that the Boeing plant near Charleston, S.C., which produces the Dreamliner, was plagued by employee complaints of safety issues on the plane stemming from the rapid pace pushed by management to meet quotas after the Dreamliner faced production delays. Mr. Shanahan had managed to dodge being directly tied to the fallout after that crash and that of another 737 Max off the Indonesian coast in October, and no Dreamliners have failed like those two jets. But the inspector general’s report cited numerous meetings at the Pentagon during which Defense Department officials said Mr. Shanahan had promoted his experiences solving production problems on the Dreamliner as techniques that should be copied by the government.
While no Dreamliners have failed like the two 737 Max airplanes, the recent rash of negative press around Boeing continues to complicate what is already an uphill battle for Mr. Shanahan in his effort to become the next permanent defense secretary. Whether the investigation’s clearing of Mr. Shanahan carries water with the senators who must confirm him to the post vacated by Jim Mattis, who was beloved on Capitol Hill, is still up in the air. The praise could come back to bite him: Boeing’s plant in North Charleston, S.C., where the Dreamliner is built, has been plagued by employee complaints about safety issues on the plane stemming from the rapid pace that was pushed by management to meet quotas after the jet faced production delays.
Mr. Shanahan is well known for playing a key role in rescuing the Dreamliner during his three-decade career at Boeing when delays and cost overruns threatened the future of that project.
Mr. Trump, who had previously expressed a willingness to consider Mr. Shanahan for the top Pentagon job, has not said much on his prospects since. Kellyanne Conway, a counselor to the president, told reporters on Wednesday that Mr. Trump was “very pleased with his defense team” and that the lack of a Senate-approved defense secretary had not impeded the Pentagon’s work.
Mr. Shanahan has skeptics in the Senate, where his predecessor, the retired Marine Gen. Jim Mattis, was uniformly respected.
“The senior leadership of D.O.D. oversees hundreds of billions of taxpayer dollars, and to do that job well they must be above reproach and focused only on the country’s interests,” Senator Jack Reed of Rhode Island, the top Democrat on the Armed Services Committee, said in a statement after the inspector general’s report was released on Thursday.
He said the investigation “shows the wide swath of national security matters that Acting Secretary Shanahan is barred from, which strikes me as something the Senate needs to consider.”
Senator James M. Inhofe, Republican of Oklahoma and the chairman of the committee, and Senator Lindsey Graham, Republican of South Carolina, have also appeared skeptical of Mr. Shanahan.
The inspector general’s office interviewed more than 30 witnesses, including senior officials and Mr. Shanahan himself, according to Dwrena Allen, a spokeswoman for the office. Mr. Mattis was also interviewed.
The investigation examined formal complaints filed by the watchdog group Citizens for Responsibility and Ethics in Washington. Some Pentagon staff members had also complained about Mr. Shanahan, a Defense Department official said on Thursday, describing an unusual level of hostility within the military headquarters that could make it difficult for him to run the department if he is nominated and confirmed.
The investigation did not find that Mr. Shanahan had acted inappropriately on behalf of Boeing while in a senior leadership role at the Pentagon, going back to the start of the Trump administration, when he was confirmed as the deputy defense secretary. Nor did it find that he had “boosted” Boeing in Pentagon meetings, or “repeatedly dumped” on competitor Lockheed Martin’s F-35 aircraft.
The report did include one unusual passage in which Mr. Shanahan sought to explain that his disparaging remarks about the F-35, an expensive stealth jet that has been plagued by cost overruns and stolen technology, were actually about the program — not the warplane itself.
“Mr. Shanahan told us that he did not say that the F-35 aircraft was ‘f—ed up,’” the report said. “He told us that the F-35 aircraft is ‘awesome.’ Mr. Shanahan told us that he said the F-35 program was ‘f—ed up.’”
The investigation also did not find that Mr. Shanahan pressured Gen. Robert B. Neller, the Marine Corps commandant, to buy Boeing F/A-18 fighter jets. Nor did he threaten to cut other Air Force programs unless the Air Force chief of staff, Gen. David L. Goldfein, supported buying Boeing F-15Xs. All were allegations that were investigated by the inspector general’s office.
The 47-page report cited numerous senior Defense Department officials who said Mr. Shanahan had, in their eyes, acted properly. At one point, the report quoted an Air Force general who said he had approached Mr. Shanahan in September 2017 to brief him on a Boeing program, and was stopped.
“Stop. That’s a Boeing program. I can’t talk about it,” Mr. Shanahan said, as relayed by Gen. John E. Hyten, the commander of United States Strategic Command, to investigators.
“Not even conceptually about future capabilities?” General Hyten said he asked. He said Mr. Shanahan replied, “No, I can’t talk about that at all.”
But what Mr. Shanahan did talk about — repeatedly — was the Dreamliner.
Heather A. Wilson, the retiring Air Force secretary, told investigators that “in almost every meeting, there were references to the Dreamliner.” William Roper, an assistant Air Force secretary, told investigators “that Mr. Shanahan would often discuss his experiences in solving issues on the Boeing commercial Dreamliner as program techniques that should be used.”
None of the officials said they felt pressured on the Dreamliner, a commercial aircraft.
But in one instance, Ms. Wilson told investigators, Mr. Shanahan or his staff may have “created the appearance of favoritism” by ordering that a meeting on delivery of a Boeing refueling tanker, the KC-46, be led by a Pentagon official who was believed to favor the aerospace contractor’s terms.
As a former Boeing executive, Mr. Shanahan was not supposed to have anything to do with decisions on the KC-46. Ms. Wilson told investigators that she felt she had to make sure that the KC-46 procurement process “was protected from undue influence.”
Mr. Shanahan denied to investigators that he pressured the Air Force to accept the KC-46 delivery. The inspector general report concluded that Mr. Shanahan had no involvement in the Air Force’s acceptance of the tanker delivery, and that he was appropriately “screened” from decision-making on the issue by his staff.
While Mr. Mattis resigned in protest of Mr. Trump’s policies — including the surprise announcement that American troops would withdraw from Syria — Mr. Shanahan has held the line for the president.While Mr. Mattis resigned in protest of Mr. Trump’s policies — including the surprise announcement that American troops would withdraw from Syria — Mr. Shanahan has held the line for the president.
As the deputy defense secretary, Mr. Shanahan made clear that “we are not the Department of No,” as he told officials after the administration announced plans to create a stand-alone Space Force at the Pentagon. (It has since been moved to the oversight of the Air Force.)As the deputy defense secretary, Mr. Shanahan made clear that “we are not the Department of No,” as he told officials after the administration announced plans to create a stand-alone Space Force at the Pentagon. (It has since been moved to the oversight of the Air Force.)
Since becoming acting defense secretary, Mr. Shanahan has drawn the ire of some lawmakers. Earlier this year, Senator James M. Inhofe, Republican of Oklahoma and the chairman of the Armed Services Committee, said he did not believe Mr. Shanahan shared the humility of Mr. Mattis, but did not elaborate. Senator Lindsey Graham, Republican of South Carolina, also clashed with Mr. Shanahan in February over the planned troop withdrawal from Syria.
The inspector general’s office interviewed more than 30 witnesses, including senior officials and Mr. Shanahan himself, according to Dwrena Allen, a spokeswoman for the office. A Defense Department official said that Mr. Mattis was also interviewed.