Pentagon watchdog clears acting Defense chief in ethics probe

The Pentagon’s watchdog has cleared acting Defense Secretary Patrick Shanahan of allegations he violated his ethics agreement by favoring his former employer Boeing while serving in government.

“We did not substantiate any of the allegations,” the inspector general wrote in the report released Thursday. “We determined that Mr. Shanahan fully complied with his ethics agreements and his ethical obligations regarding Boeing and its competitors.”

The inspector general’s finding clears the way for Shanahan to be nominated by President Trump to take the Defense secretary job permanently.

Asked for comment on the 43-page report, Shanahan’s spokesman reiterated that he has followed his ethics agreement “at all times.”

“Secretary Shanahan has at all times complied with his ethics agreement, which screens Boeing matters to another DoD official and ensures no potential for a conflict of interest with Boeing on any matter,” Lt. Col. Joe Buccino said in a statement. “Secretary Shanahan remains focused on retooling the military for great power competition, executing the National Defense Strategy, and providing the highest quality care for our service members and their families.”

In a separate statement, acting Inspector General Glenn Fine said Shanahan fully complied with his ethics agreement. 

“The evidence showed that acting Secretary Shanahan fully complied with his ethical obligations and ethical agreements with regard to Boeing and its competitors,” Fine said. 

The inspector general opened an investigation into Shanahan, who worked at Boeing for 30 years, in March roughly a week after receiving a complaint from outside watchdog group Citizens for Responsibility and Ethics in Washington (CREW).

CREW’s nine-page complaint largely centered on two issues. One was the Pentagon’s decision to buy eight Boeing-made F-15Xs for the first time since 2001, a decision Bloomberg reported was made with “some prodding” by Shanahan.

Air Force officials have said their original budget plans did not include the F-15X. The Pentagon has said it was former Defense Secretary James Mattis’s decision to purchase the planes.

The other main issue raised in CREW’s complaint was a Politico report that said Shanahan disparaged Boeing’s competitors in private conversations at the Pentagon.

In particular, according to Politico, Shanahan bashed Lockheed Martin’s handling the F-35 fighter jet program, saying the plane is “f—ed up” and that Lockheed “doesn’t know how to run a program.”

The $400 billion F-35 program, the most expensive weapons system in history, has been decried by leaders throughout Washington as a boondoggle. Most prominently, Trump himself called the costs “out of control” in 2016, though he has more recently praised the jet.

The inspector general’s report said the office was informed of multiple allegations in addition to CREW’s, including one forwarded by a Senate Armed Services Committee attorney in February that accused Shanahan of trying to force Marine Corps Commandant Gen. Robert Neller to buy Boeing-made F/A-18s and threatening to cut other Air Force programs if Air Force Chief of Staff Gen. David Goldfein did not buy F-15Xs.

In February, staff from Sen. Elizabeth Warren’s (D-Mass.) office also forwarded the inspector general three allegations that Shanahan pressured military services to buy Boeing aircraft.

Because the accusations did not identify specific people who heard Shanahan’s alleged comments, the inspector general’s office interviewed a “wide range” of 33 witnesses, including Mattis, other senior Pentagon officials and those who “regularly dealt with acquisition and budget issues,” the report said.

The inspector general, who also reviewed 5,600 pages of unclassified and 1,700 pages of classified documents related to the allegations, concluded in the report that Shanahan did not make the alleged comments.

“While Mr. Shanahan did routinely refer to his prior industry experience in meetings, witnesses interpreted it, and told us, that he was doing it to describe his experience and to improve government management of DoD programs, rather than to promote Boeing or its products,” the report said.

On the F-35, the report said, Shanahan did not “repeatedly dump” on the aircraft itself, but did comment on the overall program’s performance and problems in ways consistent with other top Pentagon officials’ comments, the report said.

For example, Mattis told the inspector general that any comments Shanahan made about Lockheed’s handling of the F-35 program were him “doing his job as far as I’m concerned.”

“I didn’t pay him to be a shrinking violet when it came to saving the government money,” Mattis said, according to the report.

Shanahan told the inspector general he didn’t say the F-35 aircraft was “f—ed up,” but acknowledged that he did say as much about the program, according to the report. Shanahan added that he thinks the plane is “awesome,” the report said.

But one witness, F-35 program director Vice Adm. Mat Winter, told the inspector general he heard Shanahan call the F-35 aircraft “f—ed up.” 

“Vice Admiral Winter told us this happened in the first few weeks of Mr. Shanahan’s tenure as Deputy Secretary of Defense, approximately in July 2017,” the report said. “Vice Admiral Winter told us, ‘This is a couple of occasions and the first couple of meetings [with him]. I push back in that my team’s working hard … and then he says, ‘Well, it’s not just you [the F-35 Joint Program Office]. It’s Lockheed [Martin].’ So, those were factual.”

Meanwhile, there was “no evidence” Shanahan pressured Neller or Goldfein, the report said.

The pressure to buy the F/A-18s and F-15Xs instead came from the Office of Cost Assessment and Program Evaluation, Neller and Goldfein told the inspector general.

“We also determined that Mr. Shanahan only participated in broad policy discussions and not in specific discussions about quantities and types of aircraft, including the mix of 4th and 5th generation aircraft,” the report said. “He did not participate in any discussions relating to the purchase of specific aircraft or Boeing products.”

The investigation also uncovered other potential issues not raised in allegations forwarded to the inspector general, including a meeting Shanahan took with SpaceX CEO Elon Musk in December 2018. 

Air Force Secretary Heather Wilson told the inspector general she was concerned about the appropriateness of the meeting because SpaceX had just lost out on a contract that Boeing won.

The inspector general, though, determined the meeting did not violate Shanahan’s ethics agreement because he sought the advice of the Standards of Conduct Office, which did not raise objections to the meeting. Shanahan also “did not discuss any particular matter involving Boeing” with Musk, according to notes taken by Shanahan’s staff.

Shanahan has served as acting Defense secretary since January following Mattis’s resignation in December. Shanahan is the longest acting Pentagon head in U.S. history.

Before the inspector general opened an investigation, Shanahan’s nomination as Defense secretary was widely expected to be imminent.

Prior to becoming acting chief, Shanahan had been deputy Defense secretary since mid-2017. Before that, he had worked for Boeing since 1986.

–Updated at 11:05 a.m.