WASHINGTON — Acting Secretary of Defense Patrick Shanahan has been cleared by the Pentagon’s Inspector General’s office, in a move that likely paves the way for nomination to the full secretary job.

In a 47-page report released Thursday, the IG wrote that no evidence was found that Shanahan used his position in the department to provide preferential treatment to the Boeing Co., where he worked for over three decades.

“We determined that Mr. Shanahan fully complied with his ethics agreements and his ethical obligations regarding Boeing and its competitors,” investigators concluded.

Aside from Shanahan himself, the IG interviewed top leadership from across the department. That including Marine Commandant Gen. Robert Neller, Air Force Chief of Staff Gen. David Goldfein, former Secretary of Defense James Mattis, Gen. Joe Dunford and Gen. Paul Selva, the Chairman and Vice Chairman of the Joint Chiefs of Staff. Unnamed military services chiefs, DoD undersecretaries and “other senior officials who regularly dealt with acquisition and budget issues; and other senior DoD civilian and military leaders" were interviewed as well.

The investigators also looked at more than 5,600 pages of unclassified documents and approximately 1,700 pages of classified documents.

News of Shanahan’s clearance was first reported Thursday morning by the Wall Street Journal.

It has been widely expected for months that Shanahan, who came in as the deputy secretary of defense in summer of 2017, will be the official successor to Mattis as the full secretary of defense. He appears to have a positive relationship with President Donald Trump, and few other names have arisen as a possibility since Mattis left at the end of last year.

However, the IG investigation reportedly caused the White House to press pause on any moves to nominate the former Boeing executive for the defense department’s top spot. In response, Shanahan launched something of a press tour, doing a one-on-one interview on Fox News, increasing his visibility with reporters and talking openly about why he feels he can do the job.

“I show up every day, put my shoulder to the wheel because I believe in what we’re doing,” he told Defense News during a recent trip to Florida. “I want to make a contribution to national defense. And I believe I can deliver on the National Defense Strategy.”

Notably, the IG says that the investigation was launched in part because of request from the office of Sen. Elizabeth Warren, D-Mass., a Senate Armed Services Committee member who is also running for the Democratic nomination for president. Should Shanahan receive the nomination, Warren may be a vocal opponent.

“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.," said Lt. Col. Joe Buccino, Shanahan’s spokesman. “The report speaks for itself.”

Detailed findings

The IG launched its investigation based on accusations of five ways Shanahan may have violated his ethics agreement:

  • That he “Boosted” or “praised” Boeing in meetings.
  • Made disparaging remarks about Boeing’s competitors, including Lockheed Martin CEO Marillyn Hewson.
  • “Repeatedly dumped” on the F-35 aircraft in meetings and called the F-35 aircraft “f---ed up”
  • Put “his finger on the scale when it comes to Pentagon priorities” for procuring Boeing aircraft that the Military Services did not want, including forcing Neller to buy Boeing F/A-18s, and threatening to cut other Air Force programs unless Goldfein supported buying Boeing F-15Xs.
  • "Involved himself” in the KC-46 program by “weighing on” the Air Force to accept the aircraft after technical problems delayed Boeing’s delivery.

Following a series of interviews, the IG also decided to look into whether Shanahan had inappropriate contact with Elon Musk, the CEO of SpaceX, suggested that a DoD official visit a Boeing simulation facility, and discussed a classified matter related to a Boeing product.

During the course of the investigation, Shanahan repeatedly expressed confidence he would be cleared.

“I appreciate the IG addressing these accusations,” he said during the same Florida trip. “What I would say is, look, I have over 30 years of experience doing large-scale engineering and manufacturing. I’ve brought that experience, management expertise to the Department of Defense. What I would tell people is I’m not at all biased towards Boeing. I’m biased toward performance for the Department of Defense, I’m biased toward performance for the taxpayer and most importantly I’m biased towards performance for the war fighter.”

He then seemed to point directly at one of the prime accusations in the CREW complaint — that he referred to the F-35 joint strike fighter as “f---ed up” — by saying “I would also add: I know substandard industry performance. And I am an equal opportunity critic of substandard-performing programs. And I will always criticize substandard performance.

“My history has always been to call things the way I see it because at the end of the day, that’s what our war fighters deserve and that’s why I joined the Department of Defense.”

The IG’s findings line up with Shanahan’s statements. Specific to the F-35 comments, the IG concluded that “Mr. Shanahan did not ‘repeatedly dump’ on the F-35 aircraft in meetings. Rather, we determined that Mr. Shanahan’s comments related to the F-35 program and its performance, and were consistent with other comments about problems in the F-35 program made by other senior DoD officials.”

On the specific F-35 comment, the IG noted a differentiating between the F-35 program at the Pentagon and contractor level, and the plane itself.

“Mr. Shanahan told us that he did not say that the F-35 aircraft was ‘f---ed up.’ He told us that the F-35 aircraft is ‘awesome.’ Mr. Shanahan told us that he said the F-35 program was ‘f---ed up,'" the IG wrote.

This story was updated 11:46 AM EST with details from the report.

Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.

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