Pentagon's No. 2 Watches The Money — And The Future

May 2, 2018
Originally published on May 2, 2018 3:29 pm

Patrick Shanahan is sitting in his sparse Pentagon office. The only picture is a framed portrait of his father, a Vietnam War veteran who was awarded a Bronze Star. Now it's up to his son — the No. 2 defense official — to juggle both current and future wars.

And that means he works six or seven days a week. Both Shanahan and his boss, Defense Secretary Jim Mattis, come from Washington state and have a good-natured rivalry about who gets to work the earliest, often before the sun rises.

As the deputy to Mattis, Shanahan is charged with making the military more "lethal," keeping an eye on emerging threats and assuring the money is spent wisely.

Shanahan is essentially the chief operating officer for the Pentagon. He handles everything from supplies for American troops in Syria, to fixing problems with the Navy's new aircraft carrier to keeping pace with the Chinese military.

He discussed his role in a wide-ranging interview with Morning Edition host Steve Inskeep.

Shanahan says 1,000 Pentagon contracts are signed each day. The defense budget is more than $700 billion, much of which is spent with an eye toward the future.

"The investment in weapons systems is long term," says the former Boeing executive who helped spearhead development of the company's 787 Dreamliner aircraft. "So when we watch whether it's the Chinese or the Russians or what extreme terrorist organizations are doing we have to put an eye towards what are those capabilities where we want to extend our advantage."

An advantage that Shanahan, an engineer who holds two advanced degrees from MIT, and defense analysts say is eroding. New technologies are being created every day and are sweeping the world, he says, and that will shape the future course of war.

"Technology flows everywhere in the world freely," Shanahan says. "So we shouldn't be surprised that other smart people are using technology and making investments in military capability."

New military frontiers

For example, Shanahan says the U.S. is able to use its cyber prowess to shut down the Islamic State's propaganda efforts on the Internet.

"We've been very disruptive with ISIS and we've been able to track the way they distribute information," he says. "We've been able to attack the way they distribute propaganda."

What about U.S. cyber attacks against nation states? He won't say. But he looks to where all this could lead.

"I think you're going to have cyber systems battling cyber systems, you know, trying to offset vulnerabilities," Shanahan says. "It wouldn't be surprising to see drones trying to stop each other. A drone is just an unmanned airplane. It's not any different than today when you have two manned airplanes meet. Drones are just the low-cost version."

Inskeep asked Shanahan if he viewed China as a far greater threat than Russia.

"If you look at their GDP and their ability to invest in capability I think you're right," Shanahan said, adding that it's not just China building up its number of missiles or buying an aircraft carrier.

"We think about China not just militarily," he says.

"We use the term 'great power competition.' We see their growth in the military, their pursuit of predatory economics, their theft of intellectual property. We see all of those things as disruptive and threatening to the American way."

China is also investing in cyber as well as weapons that can destroy satellites, a great concern for U.S. communications and war-fighting ability.

"Space was always a sanctuary," Shanahan says. "It was a place where you didn't have to protect your assets, it was a place that you could operate freely. That's not the case anymore. And since so much of our commerce and way of life is affected by our use of [global positioning satellites], sharing of communications, sharing of data, that we need to make sure we're protected and that we have resilience so we can continue day-to-day the operation of our businesses and defensive systems."

Shanahan points out that there have been no space attacks, no killer satellites taking out a U.S. satellite. At least not yet.

"So do we assume that it will continue just as it has in the past or should we safeguard this important infrastructure?"

For Shanahan, that's one more thing to think about.

"We have time to solve a lot of these problems," he says. "We have time to invest in security."

Meaning, asked Inskeep, we're not in a major war now?

"Right. Exactly," Shanahan says. "Prepare for a cold winter. When you look at the people in this department, the skill and the experience, the fact that we have this time and — for a short period, who knows how long the budget will last — make the most out of it. You know, developing these weapons systems and thinking about the future... this isn't the freshman econ class, this is the Ph.D. physics class."

Vast projects, vast spending

But with the increased budget for the Pentagon, there are questions of where the money is going. Is it being wasted? Are the weapons systems working?

Take the F-35 Joint Strike Fighter aircraft, the most expensive program in Pentagon history. It's been plagued with problems and cost overruns.

Or the Ford-class aircraft carrier, which had troubles with the elevators which move fighters from the hanger deck to the flight deck, with the catapults which launch the planes and with the arresting gear which captures aircraft as they land.

"You always find problems when you're doing development," Shanahan says. "The fact that you wouldn't find problems means you didn't take enough risk."

"I've been on many development programs whether it's a missile system or a helicopter, an airplane. Every one of them definitely had problems. And the whole idea is to bring those problems out in time so you can deliver something that works."

And of course spending billions and billions of more dollars on defense means someone has to pay for it. Does Shanahan agree with former Joint Chiefs Chairman Adm. Mike Mullen, who said the national debt is a national security issue?

"I think so," Shanahan says. "I think about, you know, my kids having to write a check later on to pay for the money I'm spending now, in the form of debt service."

But the whole point is to make sure the money is spent wisely, and the Pentagon is in the best position to innovate, on everything from how it does business to how it builds new weapons.

"Innovation is messy," Shanahan says.

A cautionary tale

One of the examples Shanahan uses at the Pentagon — on the failure to innovate — is the Kodak Company, which ruled the photography world for a hundred years and had 70 percent of the market. Even though Kodak invented the digital camera, the company ultimately went bankrupt. Executives brushed aside the new camera, thought the battery was too small, the picture wasn't good enough and the memory was too expensive.

"And so you know the key is just because something is working doesn't mean you should try to stick with it forever. But understand how to make that transition."

So does Shanahan think that he might have his own Kodak moment? That the expensive Joint Fighter Aircraft, for example, might at a future time be vulnerable to the new technology of an adversary, who will be able to shoot it down, make it irrelevant?

"Oh they won't. I mean, I know they won't. I mean, what they'll do is they'll find ways to counter its effectiveness," Shanahan says. So in return, the Pentagon will have to integrate other systems or weapons, perhaps in space or on the ground, to retain that fighting edge.

The "fun part," he says, is the cat and mouse game.

Morning Edition's Miranda Kennedy and Jacob Pinter produced and edited the audio interview.

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We've been talking with a man whose job is to help spend $700 billion. That is the approximate size of the military budget after a massive increase. We arranged to meet him inside one of the world's most massive office buildings. Pentagon spokesman Jeff Davis led us toward his office down one of the long, long corridors at the Pentagon.

JEFF DAVIS: Six-and-a-half million square feet of office space, and there are about 26,000 people who work here.

INSKEEP: It's the headquarters of a worldwide operation, and the job of overseeing it all falls to Jim Mattis, the secretary of defense. His No. 2 was the man we were walking to meet.

PATRICK SHANAHAN: Steve. Pat Shanahan. Nice to meet you.

INSKEEP: Patrick Shanahan is a former executive at Boeing. He built airplanes. Now he oversees an agency that buys thousands of airplanes and other hardware and employs more than 2 million people. It is the nation's largest employer. Decades ago, one of those employees was his father, whose picture is in Shanahan's office.

SHANAHAN: I remember I only saw my dad cry once in his whole life, - he's a real tough guy - and it was right before he went to Vietnam, he left his family.

INSKEEP: Decades later, the younger Shanahan seized on the chance to work for the military as a civilian. He has what he views as an exceedingly rare opportunity. At President Trump's request, Congress added some $60 billion to the military budget. Almost never does the budget rise that much when there's not a major war going on. Shanahan wants to plan for the next few decades, and he is conscious that some of the money will seem to be wasted. In the last big buildup, in the 1980s, there were famous stories of the Pentagon paying hundreds of dollars for a hammer.

SHANAHAN: Guess what? There's probably going to be a $600 hammer because somebody, you know, was trying to do something quickly, and they make a mistake.

INSKEEP: Shanahan says that in the end he just wants to know that spending is effective as the Pentagon executes thousands and thousands of military contracts.

SHANAHAN: I think the math on this is a little over $300 billion a year. So, you know, about a billion dollars a day. And I'll bet you we could find a mistake, but just think of the volume.

INSKEEP: We can find some.


INSKEEP: There's no doubt. I was reading recently about an aircraft carrier, the Ford...


INSKEEP: ...Which has been examined and investigated. I'm sure you know this. And it was found that there were problems with a lot of critical systems. The catapults that launched the airplanes off the deck, for example. This is a multibillion-dollar aircraft carrier that seems to be having problems launching airplanes, catching airplanes, firing weapons, almost every critical system. What do you think, about as a manager, when you discover something like that?

SHANAHAN: Well, it's funny. As you're describing it, I'm like, well, that's normal. You always find problems when you're doing development. The fact that you wouldn't find problems, it means you didn't take enough risk.

INSKEEP: Patrick Shanahan's ultimate goal in managing the world's largest military budget is to focus on future potential threats.

As everybody knows, China has been building up its military forces. And there's a degree of tension in that relationship. How does that affect your thinking here?

SHANAHAN: We think of China, as we see their growth in the military, their theft of intellectual property, we see all of those things as disruptive and, you know, threatening to the American way.

INSKEEP: Which I guess you had to deal with at Boeing long before this job.

SHANAHAN: Well, they were one of our biggest customers, as well. So here it's a lot easier in that regard. But their investment in military capability is different than where we've invested in the past so it certainly changes our calculus.

INSKEEP: I was thinking about the fact that the Chinese have aircraft carriers. The United States hasn't had to worry about another nation with a serious aircraft carrier fleet in a long time. Suddenly, they have aircraft carriers. You're thinking beyond that. You're thinking about what they do in space. What is your concern about what China does in space?

SHANAHAN: Space was always a sanctuary. It was a place where you didn't have to protect your assets. It was a place that you could operate freely. That's not the case anymore. And since so much of our commerce and way of life is affected by our use of GPS, sharing of communications, sharing of data that we need to make sure we're protected and that we have resilience so that we can continue day-to-day operation of our businesses and defensive systems.

INSKEEP: And so really the fact that we haven't had some significant space-based attack may solely be because we haven't had one yet.

SHANAHAN: Because we haven't had one. So do we assume that it will continue just as it has in the past, or should we safeguard this important infrastructure?

INSKEEP: What are you doing about that?

SHANAHAN: So you can imagine that we're not going to get a big ladder and go up there and take what's up and there bring it back...

INSKEEP: (Laughter).

SHANAHAN: ...Swap it out. That's a one-way trip. So, you know, the things that we've - you know, have on orbit are the things that we have on orbit. But when you think about our future systems and the new satellites that we'll put on orbit, they'll be capable of withstanding, you know, jamming and all sorts of other effects that malicious actors may try to deploy to disrupt our way of life.

INSKEEP: What are other future threats on your mind?

SHANAHAN: Well, the threat spectrum ranges from how do you motivate and make sure that we take advantage of what we do have right now that's so precious? We have time to solve a lot of these problems. We have time to invest in security.

INSKEEP: What do you mean by that? Meaning we're not at major war now?

SHANAHAN: Right. Exactly. Prepare for a cold winter, for a short period. Who knows how long the budget will last? Make the most out of it. You know, developing these weapons systems and thinking about the future, this isn't the, you know, freshman econ class. This is the Ph.D. physics class. And having the time and involving the leadership that's seen the world for 30 or 40 years, they know how the world works, and they really do have a sense for risk and technology. Taking advantage of what we have right now to lay the foundation is the most important work we can do.

INSKEEP: Patrick Shanahan, the deputy secretary of defense, spoke earlier this week at the Pentagon. Now the windfall his agency received is not without controversy. It is part of the reason the budget deficit is expanding. Shanahan just wants to be able to say afterward that the military spent the money well. Transcript provided by NPR, Copyright NPR.