Pentagon’s No. 2 Sets Up Alert System on His Ex-Employer Boeing

  • Patrick Shanahan outlines plan to avert conflicts of interest
  • Ethics waivers to be made public on request, Pentagon says

Patrick Shanahan, the Pentagon’s No. 2 civilian, has set up an alert system to insulate himself from decisions affecting Boeing Co., where he rose to senior vice president during a 30-year career.

The new deputy defense secretary has signed a "screening arrangement" that will notify Defense Secretary James Mattis and Shanahan’s staff to issues involving Boeing -- the No. 2 U.S. defense contractor -- and “instructs them to refer certain matters to another official” for decisions, Navy Commander Sarah Higgins, a Pentagon spokeswoman, said in a statement.

Patrick Shanahan

Photographer: Tom Williams/CQ-Roll Call,Inc.

Many Boeing programs face major decisions or periodic review over the next year. Among them is a review instigated by President Donald Trump on whether to buy more of Boeing’s Super Hornet fighters instead of the Navy version of Lockheed Martin Corp.’s F-35, whether to request increased funding for ground-based missile defense, future Army programs on rotary aircraft and certifying new multiyear purchases of the V-22 Osprey that Boeing co-produces with Textron Inc.

Shanahan’s steps to avoid conflicts of interest touching on Boeing have drawn attention from members of Congress and watchdog groups because of the length and scope of his career at the aerospace giant. Over a career that culminated in a role on Boeing’s executive council, he oversaw major commercial aircraft, such as the 787 Dreamliner as well as military projects such as the V-22, Army helicopters and a ground-based missile defense program.

Working with Pentagon ethics attorneys, Shanahan designated a screener and an alternate in his office, Higgins said. The deputy secretary would play a role in a Boeing-related issue only if he received explicit waivers from administration lawyers. Shanahan will make public “upon requests” any waivers he receives, according to Higgins, who said none have been issued so far.

‘Nice to See’

“This is a more formal arrangement than some agencies do, which is nice to see,” Walter Shaub, the former director of the U.S. Office of Government Ethics, said in an interview. Shaub resigned in July and has been highly critical of the Trump administration’s approach to government ethics.

It makes sense for someone in Shanahan’s office, who’s familiar with major issues, to serve as screener, according to Shaub, who’s now senior director with the Campaign Legal Center, a Washington group that advocates for stronger campaign-finance disclosure laws.

But Mandy Smithberger, a director at the Project on Government Oversight, said that someone on Shanahan’s own staff “could fear retaliation for raising concerns.”

“This is one of the concerns about the revolving door, especially for such a major contractor -- these types of recusals are too thin to protect the public interest,” she said.

Other Potential Conflicts

Other potential conflicts for Shanahan could involve Boeing’s competition with Northrop Grumman Corp. to replace the nation’s ground-based intercontinental ballistic missiles. The Air Force announced on Monday that the two companies were receiving early technical risk-reduction contracts for what the Pentagon’s independent cost office last year estimated will be a potential $85 billion program.

The Pentagon also will oversee the Air Force’s management of Boeing’s program to develop a new version of Air Force One, the presidential plane.

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