Shanahan Cleared of Wrongdoing by Pentagon IG, Setting Stage for Nomination

Acting Defense Secretary Patrick Shanahan delivers remarks at the 35th Space Symposium in Colorado Springs, Colo., on April 9, 2019. DoD photo by Lisa Ferdinando.

The Defense Department Inspector General on Thursday cleared Acting Defense Secretary Patrick Shanahan of allegations that he violated an ethics agreement and promoted his former employer, paving the way for a possible nomination to take the job permanently.

The IG opened the investigation in early March after reports that he criticized Lockheed Martin over the performance of the F-35 program. Watchdog organizations and anonymous individuals claimed this was a violation of an ethics agreement he has in the Defense Department that forces him to recuse himself from Boeing-related matters. Shanahan has said he welcomed the investigation.

“We did not substantiate any of the allegations,” the IG states. “We determined that Mr. Shanahan fully complied with his ethics agreements and his ethical obligations regarding Boeing and its competitors.”

Shanahan spent more than 30 years at Boeing, including as a senior vice president overseeing programs such as the 757, rotorcraft, missile defense, and the 787 Dreamliner. When Shanahan became deputy secretary of defense in 2017 he signed an ethics agreement, which for him does not expire, to recuse himself from any program decisions related to Boeing. Shanahan became acting Defense Secretary after former Secretary Jim Mattis was abruptly fired in December after tendering his resignation.

The IG said the complaints against Shanahan also included pressure on Air Force Chief of Staff Gen. David Goldfein to buy the Boeing F-15EX, and to Marine Corps Commandant Gen. Robert Neller to buy more Boeing F/A-18s. A Senate Armed Services Committee attorney and member of the staff of Sen. Elizabeth Warren (D-Mass.) forwarded allegations, along with a complaint from the Citizens for Responsibility and Ethics in Washington.

As part of the query, the IG interviewed 33 witnesses and Shanahan himself, most senior officials in the Defense Department, and those who work on decisions to purchase Boeing or Lockheed Martin systems. It also reviewed more than 5,600 pages of unclassified documents and about 1,700 classified documents.

The IG determined that Shanahan did not make alleged comments supporting Boeing in meetings. While he referred to prior industry experience, his intent was to improve management of programs instead of promoting Boeing products.

Additionally, there “was no evidence that he made any comments pressuring General Neller, General Goldfein, or anyone else, about purchasing F-15 or F/A-18 aircraft as alleged,” states the report. The investigation found that Shanahan was not involved in discussions or decisions regarding the acceptance of the KC-46 tanker.

The investigation focused on the decision to buy the F-15EX, which originated from the DOD’s. Cost Assessment and Program Evaluation office. During these discussions, CAPE spoke only in general mission capabilities with Shanahan and not specifically about individual aircraft. Mattis made the ultimate decision, and “Shanahan did not participate in these discussions or decisions, and he did not provide any guidance or direction on this subject.”

Goldfein told the IG that in his experience with Shanahan, “he’s been very disciplined about adhering to the recusal.”

The IG also focused on a December 2018 meeting between Shanahan and SpaceX CEO Elon Musk. In advance of the meeting, Air Force Secretary Heather Wilson told the DOD Standards of Conduct Office that Shanahan should recuse himself from the meeting because Boeing and SpaceX were competitors for an Air Force launch contract. SOCO said there was no “ethics objection” to the meeting as long as they didn’t discuss procurement. Wilson met separately with Musk, where they talked about the launch service contract, which Boeing won.

During Shanahan’s meeting with Musk, the SpaceX CEO did bring up the competition with Boeing, saying that the company’s proposal “missed the mark,” though Shanahan did not comment. The IG determined this meeting did not violate the ethics agreement because SOCO approved it, both in advance and in the summary after.

Wilson told investigators that Shanahan wouldn’t tout Boeing. While he would make references to his experience in programs like the Dreamliner, she never took it as an ethical problem. Wilson said that while Shanahan may have said, “We would never have done it this way, or we wouldn’t do it this way. … It was more comparing his experience and criticizing a contract that felt he wasn’t getting the supply chain right.”

However, Wilson said elsewhere in the report that at times, specifically related to the meeting with Musk, meetings on the KC-46, and in a separate classified matter that “at least on one occasion, I felt uncomfortable.”

This was the only concern brought up in the interviews, according to the report. Other witnesses spoke highly of Shanahan, with Mattis saying he was “my ethical standard bearer the way he carried out his duties on a whole host of issues.”

With the investigation over, Shanahan has cleared a major hurdle to being nominated to be the Defense Secretary permanently, a step he said he wants.