Air Force Chief Broke Ranks in Raising Boeing-Shanahan Concerns

Secretary warned Shanahan not to meet with SpaceX CEO Musk
Wilson reported KC-46 delivery decision to general counsel

Air Force Secretary Heather Wilson, diverging from other top Pentagon officials, raised concerns about acting Defense Secretary Patrick Shanahan’s dealings involving his former employer, Boeing Co., according to an inspector general’s report.

Wilson alerted investigators to a past meeting that Shanahan had with SpaceX CEO Elon Musk at a time when SpaceX was competing with a consortium that included Boeing for satellite launch work. She also raised concerns about whether Shanahan influenced a Boeing KC-46 tanker decision, the inspector general said.

The highly anticipated inspector general report released Thursday found an almost unanimous view among top military leaders that Shanahan never boosted Boeing or broke ethics guidelines. It exonerated the acting defense secretary of allegations forwarded by the Senate and reported by media that he pushed Boeing aircraft and disparaged competitors such as Lockheed Martin Corp.

“I always saw him as part of my solution when it came to ethical endurance,” former Defense SecretaryJim Mattis told investigators.

Wilson was a notable exception to this consensus, the report shows. The details are included deep in the report and some of her concerns weren’t part of the original allegations.

“Wilson told us that she thought that Mr. Shanahan should not have met with Mr. Musk because SpaceX and Boeing were competitors for an Air Force launch services contract,” the inspector general reported.

Wilson and Shanahan, who spent 30 years at Boeing, met separately with Musk in early December as he was competing with Boeing for military launch contracts. Wilson, who was discussed as a possible defense secretary candidate, will resign at the end of May for a job in academia.

Musk’s SpaceX and United Launch Alliance, the partnership between Boeing and Lockheed Martin Corp., split contracts for six military launches worth $739 million in February.

Warned About Musk Meeting

On the day of the meeting, Wilson said she warned Shanahan that he should probably recuse himself and not meet Musk. Pentagon staff who oversaw Shanahan’s ethics agreement had advised him beforehand that the meeting wouldn’t be a violation.

Shanahan said he was interested in talking with Musk about his views of future technology. But Wilson reported her concerns to Air Force General Counsel Thomas Ayres.

Pentagon staff took notes of the discussion for the official record, which the inspector general reviewed during the probe. Ayres told investigators that he obtained the notes and they allayed his concerns about the meeting.

The inspector general said the meeting didn’t violate Shanahan’s ethical obligations.

Tanker Aircraft

A section of the report also deals with Wilson’s concerns that the Pentagon handling of its decision to accept delivery of Boeing’s troubled KC-46 tanker aircraft could have appeared to favor the defense company.

The inspector general investigated allegations that Shanahan pressured Pentagon officials to accept delivery of the aircraft despite its deficiencies.

Wilson told investigators she worried that Shanahan or his staff may have directed Defense Undersecretary Ellen Lord, who supported accepting delivery of the tanker, to head up a meeting on the KC-46 decision in December.

“It is entirely possible that 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 Mattis,” Wilson told the inspector general.

But Wilson said she felt a responsibility to make sure that the aircraft procurement was “protected from undue influence.”

The inspector general found that Shanahan had no role in the KC-46 decision. Lord said her involvement was an example of other leadership handling Boeing business when Shanahan recused himself according to his ethics agreement.

To contact the reporter on this story: Travis J. Tritten at ttritten@bgov.com

To contact the editors responsible for this story: Paul Hendrie at phendrie@bgov.com; Robin Meszoly at rmeszoly@bgov.com