WASHINGTON – If Boeing executive Patrick Shanahan is confirmed as deputy secretary of defense, he will be forced to hit the ground running, inheriting a number of internal projects from an experienced manager of the U.S. defense bureaucracy.
Shanahan, who on March 16 was announced as the intended nominee for the number two spot at the Pentagon, has yet to be formally nominated by President Donald Trump. Given the number of congressional priorities, the process for him getting into place will likely take weeks, if not longer.
Whenever he does step into the office, he will have big shoes to fill in replacing Bob Work, who has served as deputy since April 2014. Already tied into a number of modernization initiatives, the lack of top political appointees at the Pentagon has led Work, possibly the highest-profile Obama holdover in the Trump administration, to take on additional roles to support Secretary of Defense Jim Mattis.
According to a defense official, Work is managing 11 separate major reviews that are now underway inside the building, including major looks at current readiness, the question of creating a chief management officer, reforming the military health system, whether U.S. Cyber Command should be elevated to a full combatant command, the establishment of cross-functional teams to enhance mission effectiveness and efficiencies, and how best to manage the split of the undersecretary for acquisition, technology and logistics (AT&L).
In addition, Work is herding specific reviews requested by president Trump, including a review of ballistic missile defense, a new Nuclear Posture Review, a plan to defeat the Islamic State group, and looks at getting costs down for both the F-35 joint strike fighter and the replacement for Air Force One.
While the majority of these reviews may be completed by the time Shanahan takes office, the list provides a good look at how the deputy role under Mattis has required an internal operator who understands the Pentagon bureaucracy and can navigate it. And that is where Shanahan will have to quickly get up to speed.
But while corporate experience can certainly be valuable at the Pentagon, will Shanahan’s lack of experience inside the building be an issue? Experts have mixed views.
Arnold Punaro, a retired Marine general and former staff director on the Senate Armed Services Committee, said he does not anticipate major problems for Shanahan, comparing him to Don Atwood, a General Motors executive who served as deputy from 1989 to 1993 under president George H. W. Bush.
"He comes from an industry that is well-versed and used to key reviews to make better decisions and frankly is used to operating on a timeline much more succinct and effective than government," Punaro said. "He also was key on the V-22 which in the early years was having difficulties. Government could learn a lot from his approach."
Robert Rangel, a former chief of staff for Secretary of Defense Bob Gates who is now a senior vice president for Lockheed Martin, agrees that defense industry experience is a "net-positive" for someone coming into the Pentagon. But he warns that there is still a "steep learning curve" facing Shanahan.
Rangel’s concerns center on whether someone coming in from the outside can quickly learn the "very complex confluence of organizational challenges, government behavior, politics, [and] the complexity of how the Department of Defense is financed and operated," he said in a March interview with Defense News.
"The challenge for anybody is making that transition and understanding that business experiences are tremendously valuable, but you need to adapt them to this fundamentally different environment," Rangel said. "There are examples of folks who have made that transition successfully, but there are also examples of those that haven’t. In my experience, those that have had less success are the ones that don’t appreciate the necessity to marry both experiences. I’m hopeful that’s what we’re going to see here and I think certainly the department needs it, and I think it would be a good complement to Secretary Mattis."
Those concerns are shared by Sen. John McCain, R-Ariz., the head of the Senate Armed Services Committee. Asked by Defense News if he had any concerns about Shanahan’s lack of DoD experience, McCain said, "Yes. And we'll be asking about it. That's why we have hearings."
McCain also stated that Shanahan will have to take great pains to not just divest himself of corporate interests, but to "recuse himself from anything to do with Boeing."
The SASC head noted that there have been several industry executives who have taken DoD jobs without issue, saying, "as long as they're cut loose and we enforce that, if doesn't bother me that much."
Shanahan is currently senior vice president of supply chain operations for Boeing, Shanahan has also served as vice president for both Boeing Missile Defense Systems and the company’s rotorcraft division, giving him oversight on programs like the CH-47 Chinook and the AH-64D Apache.
Boeing is up for a number of major competitions and contracts in 2017, including a decision on the U.S. Air Force’s new T-X trainer aircraft and the ICBM replacement program.
Punaro notes Shanahan would have 90 days after confirmation to meet the requirements set by the Office of Government Ethics and the Senate.
"He will not start to unwind his financials until he gets a ‘certificate of divestiture,’ which helps a small bit to ameliorate the major financial hits he will take," Punaro explained. "He will likely have ‘deferred’ income and likely has stock options and restricted stock which are typical for executives at his level. There are various ways to unwind these, but again this will be worked with OGE, the Pentagon ethics lawyers, and the SASC counsels."
Punaro, who has advocated for loosening the requirements placed on government appointees in order to bring in better talent, also noted the current rules were put in place in the 1970s, when compensation was "totally different from today and the kinds of people we need to recruit very different. So for me the issues is the overall need to adjust the rules to the modern world and also to allow ‘recusals’ which are common in the judicial system for both lawyers and judges, but in defense they have not been permitted by the SASC."
"I can tell you without a doubt he will be making a huge financial sacrifice both in terms of his current income as well as his net worth to serve and he should be applauded for his willingness to do this as many others over the years have said ‘no,’" Punaro added.
Joe Gould in Washington contributed to this report.