With Shanahan As Defense Secretary, Boeing's Influence Over Pentagon Likely To Grow

MARY LOUISE KELLY, HOST:

Starting next week, the acting head of the Pentagon will be a man who spent most of his career in the private sector, an unusual background for a defense secretary. Patrick Shanahan spent the last two years as deputy defense secretary. President Trump praised Shanahan during a visit to Iraq yesterday.

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PRESIDENT DONALD TRUMP: Shanahan was at Boeing and did a great job at Boeing. He was there for a long time, did a - Boeing's a hell of a company. He did a great job.

ARI SHAPIRO, HOST:

In Foreign Policy magazine, reporter Lara Seligman writes about what she describes as Boeing's Pentagon takeover. She told me in the last six months, the Pentagon has awarded the company three major new contracts.

LARA SELIGMAN: The first carrier-based drone for the Navy. There was the Air Force trainer program. There is an Air Force helicopter program that - all were multibillion-dollar contracts, and they all went to Boeing over such competitors like Lockheed Martin, like General Atomics.

SHAPIRO: So over the last couple of years, Boeing has won a few contracts worth billions of dollars. And one of the most puzzling deals is for a new version of an existing fighter jet called the F-15X. The Air Force says it does not want this aircraft, but as you and others have reported, senior leaders at the Pentagon are effectively forcing the Air Force to buy it. This could be worth more than a billion dollars a year to Boeing. What's going on here?

SELIGMAN: Right. So the proposal to buy the F-15X or some version of the F-15 Eagle that Boeing has been building since the '70s has actually been on the table for a couple of years. But the Air Force has never wanted it. It never really gained traction because the Air Force has been buying the F-35, and there is limited money in the Pentagon's coffers right now for the F-35 and much less for a new version, even a shiny new version of a fourth-generation or a legacy fighter. So recently it seems a little strange that it's gaining traction, and it very much seems like the Pentagon leadership is forcing the Air Force to buy this plane even over the objections of their own people.

SHAPIRO: Does this just look like cronyism or favoritism, or is there actual evidence of something unsavory going on here?

SELIGMAN: It's important to note that there is no smoking gun here. There is no evidence that Deputy Secretary of Defense Shanahan is engaging in any unfair practices, that Boeing has any unfair advantages. Boeing has actually decided to bid very aggressively and allowed - their proposals have allowed the department to tout significant cost savings, such as on Air Force One, such as on several of the competitions that they've won recently. So there could be another explanation for Boeing getting these wins lately, but it certainly looks - it's starting to look a little bit strange.

SHAPIRO: Boeing declined to comment for your story. We also reached out to them, and they declined to comment to us. But can you describe their perspective on this?

SELIGMAN: They - as I said, they were - at the end of the Obama administration, they were looking at potentially getting out of the military fighter jet market. Now they see this as an opportunity to get back in the business, get back in the business of their bread and butter, which is military fighter jets. The relationship - the personal relationship between Muilenburg and President Trump - they're seizing that opportunity.

They're seizing the opportunity of their commercial market doing quite well, and they're able to use the gains in the commercial market to take more risk, to bid more competitively as they have done on several programs recently. So this - from their perspective, it's them seizing the advantage right now. There might not necessarily be anything corrupt or unfair going on.

SHAPIRO: Now that Patrick Shanahan, who spent years as a Boeing executive, is becoming acting defense secretary, what do you expect to happen next?

SELIGMAN: I expect that Shanahan will be more focused on modernization of the force. We just heard yesterday that Trump is going to ask for more money for the Pentagon, so I expect Secretary Shanahan will be focused more on the defense budget, more administrative tasks. That's where his experience lies.

SHAPIRO: Which could mean more money for Boeing.

SELIGMAN: Right, that is very true.

SHAPIRO: That's Lara Seligman of Foreign Policy magazine speaking with us from the Pentagon. Thanks so much.

SELIGMAN: Thank you.

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