IG Report: Shanahan Called F-35 Program, Not Plane, 'F-----d Up'

Deputy Secretary of Defense Patrick M. Shanahan speaks with CNN's Pentagon correspondent Barbara Starr during the Reagan National Defense Forum at the Ronald Reagan Presidential Library in Simi Valley, Calif., Dec. 2, 2017. (DOD/U.S. Air Force Tech. Sgt. Brigitte N. Brantley)
Deputy Secretary of Defense Patrick M. Shanahan speaks with CNN's Pentagon correspondent Barbara Starr during the Reagan National Defense Forum at the Ronald Reagan Presidential Library in Simi Valley, Calif., Dec. 2, 2017. (DOD/U.S. Air Force Tech. Sgt. Brigitte N. Brantley)

Acting Defense Secretary Patrick Shanahan did not use his position to promote Boeing, his former employer, while disparaging its competitors, the Pentagon's top watchdog said Thursday.

Shanahan "fully complied with his ethics agreements and his ethical obligations regarding Boeing and its competitors," according to a 47-page report released by the Defense Department's Inspector General's office. The findings end a month-long probe into allegations of wrongdoing and could pave the way for President Donald Trump to nominate Shanahan to serve in the defense secretary role permanently.

Shanahan, who was on Boeing's executive council after working there for more than three decades, is the longest-serving acting defense secretary. He stepped into the role after Jim Mattis quit as defense secretary in protest of Trump's policies.

Army Lt. Col. Joe Buccino said the report "speaks for itself" and that Shanahan is focused on the National Defense Strategy.

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The investigation began last month over allegations that Shanahan "repeatedly dumped" on the F-35 Joint Strike Fighter, which is made by Lockheed Martin, Boeing's competitor. He was also accused of threatening to cut military leaders' funding for other programs if they didn't purchase aircraft built by his former employer.

But none of the allegations was substantiated. Investigators interviewed 33 of the most senior Pentagon officials -- witnesses who were involved in the review, consideration or decisions to purchase Boeing or Lockheed Martin systems, the report states.

"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."

Shanahan allegedly called the F-35 Lightning II program "f---ed up," according to the report. Witnesses said he was critical of how Lockheed Martin and the DoD Joint Program Office managed the F-35, but all but one said he didn't "repeatedly dump" on the aircraft.

The acting defense secretary told investigators the F-35 aircraft itself is "awesome," but that the program is "f---ed up." There are too many expensive retrofits, he said, and the planes are too often on the ground awaiting those fixes.

But that sentiment appears to be widespread among Pentagon leaders. Witnesses said his comments about the F-35 program are consistent with those made by other defense leaders, the report states.

"Many people criticized the F-35 program," Air Force Gen. John Hyten, head of U.S. Strategic Command, told investigators. "I've criticized the F-35 program in public."

Robert Daigle, director of the Defense Department's cost-assessment and program evaluation, said, "Most of the people in the [Pentagon]" have said critical things about the F-35 program.

Mattis tasked Shanahan with reviewing the F-35 program last spring. While Mattis said Shanahan did make comments about the program that some might have considered disparaging, the former defense secretary wanted him to be honest.

"He's doing his job, as far as I'm concerned," Mattis said. "I didn't pay him to be a shrinking violet when it came to saving the government money."

Shanahan, who served as vice president and general manager of Boeing's 787 commercial Dreamliner program, was also said to have made repeated references to that aircraft. But military and civilian officials said it wasn't because he was touting Boeing, but because he wanted to help defense leaders understand the supply chain better.

"In almost every meeting, there were references to the Dreamliner," Air Force Secretary Heather Wilson told investigators. "And I never really took those issues as being any kind of an ethical problem. ... It was more comparing his experience and criticizing a contractor that he felt wasn't getting the supply chain right."

Investigators did not substantiate claims that Shanahan had made disparaging remarks about Lockheed Martin's chief executive officer. None of the witnesses said they'd heard Shanahan speak negatively about Lockheed Martin as a company or its CEO, the report states.

When asked about those allegations, Shanahan said that, whenever he spoke about Lockheed, it was always in connection to the F-35 program.

"He said he was 'disappointed and frustrated' that Lockheed Martin was not supporting its customer, the DoD, properly, and was not taking the initiative to give the government a plan for improving its F-35 program," the report states.

Members of the Joint Chiefs of Staff said they faced no pressure from Shanahan to purchase Boeing aircraft despite allegations that they had.

When Marine Corps Commandant Gen. Robert Neller was asked whether Mattis was forced to intervene after Shanahan pushed the general to purchase Boeing F/A-18 Super Hornets, he said it never happened.

"Nobody gets [Secretary] Mattis to do anything," Neller said, after telling investigators he never felt pressured by Shanahan to buy products from certain companies.

Similar claims were made about the Air Force, with Chief of Staff Gen. David Goldfein facing alleged pressure to buy Boeing F-15Xs or risk facing cuts to other programs. Investigators found no evidence it had happened.

When the Air Force was working with Boeing to address several KC-46 aerial refueling tanker deficiencies, Shanahan was accused of "weighing on" the service to accept the aircraft despite the technical problems. Wilson said she was concerned that Shanahan or his staff "may have created the appearance of favoritism" by tasking Under Secretary of Defense for Acquisition and Sustainment Ellen Lord -- who supported accepting the KC-46 delivery -- to convene a meeting on the issue.

"However, Ms. Wilson added, 'It is entirely possible that [Mr.] Shanahan knew nothing about any of that swirling around him, and hence it was a staff problem in a huge swirling change from the departure of [Secretary] Mattis,'" the report states.

Ultimately, investigators found no evidence that Shanahan pressured Air Force leaders to accept the KC-46 delivery.

"We reviewed more than 5,600 pages of unclassified documents and approximately 1,700 pages of classified documents related to the allegations and the relevant major defense acquisition systems," the report states. "We did not substantiate any of the allegations."

-- Gina Harkins can be reached at gina.harkins@military.com. Follow her on Twitter @ginaaharkins.

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