It is important that this receivee is able to briefings and other communications. To oversightard responsibilities. Have you adhered to the applicable interest . Boeing executive Patrick Shanahan is the nominee to be Deputy Defense secretary. At his Senate Confirmation hearing he promised to divest requested by a duly requested committee or to consult with the Committee Regarding providing such documents . Yes. In the interest of time, i will submit my Opening Statement for the record. I know that will come as a terrible blow to the other members of the committee. I can see how upset they are in missing that and maybe with a little luck, senator reid will do the same. It is your lucky day, mr. Chairman. I just want to welcome mr. Shanahan and senator cantwell. Thank you. If i may also, senator shane wanted to be here, but she is delayed in this terrible weather. With that, i ask permission to submit the statement. I would ask the committee to consider a list of 195 pending military nominations. All of these dominations have been before the committee the required length of time. Is there a motion in favor of the report for these 995 military nominations to the senate . Yes. Is there a second . All in favor, say aye. The motion carries. Welcome, mr. Shanahan. You are deprived of the Opening Statements of senator reid and myself. Pardon me . Oh, before we allow you to speak, senator cantwell is here and i apologize. Senator cantwell, for not recognizing you to take time from your very busy schedule to introduce mr. Shanahan. Senator cantwell, welcome. Thank you, chairman mccain, Ranking Member reid, and distinguished members, i am glad to introduce Patrick Shanahan to serve as the deputy secretary. I too want to welcome his family. They are here and im sure he will make that appropriate introduction. Mr. Shanahan has a unique experience leading major reforms of large, highly complex programs at the boeing company, such as the 737 max and the 787 dreamliner. These aircrafts have cuttingedge technology, keeping them ahead of the global competition. His entire career has been about solving problems nobody else can solve and these skills would be invaluable at the d. O. D. He drives change by building teams to think outside the box and then convince others to think in doing things new ways. Mr. Shanahan has driven reforms in management, affordability, technology and supply chains. He has had an impressive 31 career at the boeing company, serving as Senior Vice President of supply chain operations. His hands on leadership inspires those around him to strive to achieve results on time and on budget. Mr. Shanahan, managing the boeing companys highly complex operations in washington and south carolina, he has served as the head of the commercial airplane program. His attention to detail while operating some of the largest operating manufacturers in the world will prove invaluable. He is fearless. He understands what our country is up against when it comes to the russians and the chinese and the North Koreans and it will not faze him. He focuses on big Game Changing innovation and science and technology and will not be deterred by the bureaucracy of d. O. D. Mr. Shanahan also knows the department of defense operates and has served as Vice President general manager of the boeing Missile Defense system and was responsible for the u. S. Army aviation programs and fight activities in philadelphia and in mesa, arizona. So, he has been able to achieve positive results throughout his career. He understands the need for fiscal responsibility and for innovation of the department. D. O. D. Is the largest employer in the world with almost 300 Million People and he has the management skills from the private sector to guide d. O. D. Successfully into the future. I am confident he will be an effective leader in this position for our country. Thank you, mr. Chairman and i will excuse myself, but again, i would thank the committee for this opportunity to introduce mr. Shanahan. Chairman we thank you, senator cantwell. We fully understand, you have other duties in the senate and thank you for taking the time to introduce mr. Shanahan. Mr. Shanahan. Mr. Shanahan thank you, senator cantwell for your kind words and thoughtful introduction. Before i begin, my thoughts and prayers go out to the family of the seven sailors killed in a tragic incident on the uss fitzgerald. Chairman mccain, Ranking Member reid, and members of this committee, i appreciate the time you have afforded me this morning. Im grateful to the president and secretary matthis for nominating to be the position of secretary of defense, deputy secretary of defense. I would like to knowledge my three children, who accompanied me, kayla, will, and jack, seated behind me. I want to take a moment to recognize and honor my parents, joanne and Michael Shanahan. Im the oldest of three boys. My father Michael Shanahan and my brothers and i, from as early as i can remember, practiced service before self. My father was an army veteran who served in vietnam. He taught his boys to love their country and value its freedoms. My father served in Law Enforcement for over 25 years. He taught us to treat people fairly, respect law and order, and the importance of protecting the community. My father cofounded a food bank in 1982 that is ongoing. Today it has distributed over 200 Million Pounds of food to the needy. He showed us that with initiative and outreach, good ideas can scale to make a big difference. At age 52, my father was afflicted with parkinsons. He battled that savage disease for 17 years before passing. And i never once heard him complain. My father modeled for us what it means to have grit. That is, the ability to maintain an indomitable spirit and persevere no matter what the challenge. I wish you were here today, and i know exactly what he would say to me. Hed say, patrick, dont screw this up. My mother joanne could not be here. She is here in spirit. My mother always supported me unconditionally. She taught my brothers and i to support others unconditionally. What i appreciate most about her though, and i would like to share, is she taught me to truly believe in myself. She taught my brothers and i it is not the size of your muscles that matter, but the size of your heart. She taught me to be a better parent. That is a gift i can never repay. Her words for me today were, youll do fine. Im here to earn your support. I aspire to join a strong and capable d. O. D. Team. I aspire to help them dominate and win. I aspire to help usher in a new age of innovation and effectiveness in the department. I believe i am prepared myself to contribute as deputy secretary of defense. I bring over three decades of leadership honed in americas largest manufacturing exporter. I have led large, geographically dispersed organizations focused on developing complex products. I have experienced converting technological innovation into operational capability. Innovation into operational capability. I bring with me a formula for leadership that has a record of delivering a formidable highperforming Business System and operations under adverse conditions. Leadership casts a long shadow. Strong leadership can create teams that achieve ambitious change of scale. I believe that my skill set strongly complements that of secretary matthis. He is a master strategist. As to the secretary of defense and secretary matthis chief operating officer, i bring strong execution skills with a background in Technology Development and business management. Areas this committee in particular has been in the fight for reforms. If confirmed, i will work tirelessly with congress and the department to deliver on our commitments to our men and women in uniform and their families, to defend the nation, and to be relentless stewards of the taxpayers money. I appreciate the time you have afforded me today to answer questions. Chairman thank you, mr. Shanahan. There was questions about providing the ukrainians lethal weapons with which to defend responded byd you saying you would have to look at the issue. That is not satisfactory. Would you wish to amend your statement concerning that . I support equipment for the ukrainians. You support providing lethal defensive weaponry to the ukraine . Yes. I am glad to hear that, but i have to tell you that our job is advise and consent and your response to the question was very disappointing to me and you have been associated for the last however many years as one of the five corporations that provided it is still disturbing to me after all of these years that you would say that you would have to look at the issue. Have you not been aware of the issue or of the Senate Armed Services committee . Have you not been aware of the People Killed by Vladimir Putin . Did you miss all of that . This is a duty of a major Defense Corporation in this country. I am aware of its, chairman. Well, i have to tell you that it is very disturbing and i am disturbed that we have an executive from one of the five major corporations that has 90 of the Defense Budgets and, on a major issue that this committee has had hearings and markups about, we want to find out more information. Not a good beginning. Not a good beginning. Do not do that again or i will not take your name up for a vote before this committee. My perfectly clear . Very clear. Thank you. Genericallyssues is termed the third offset and who you are following has done a remarkable job in this effort and this is trying to counter andadversaries ariel asymmetric capabilities and leap ahead with new technologies. Ae congress reestablished position for engineering and you are going to play a critical and in the new or revised secretary. Can you give us a sense of how this is going to work with the third offset . Yes. Confirmed, i will spend time with the group that has done that work and, while i have not received the briefing on the undertake anwould effort to make sure there is a clear path for the capabilities and, when i look at the strategy exercise that will be done, it is critical that we have the assessment of how much funding needs to be done against this offset. I believe we will have a more informed recommendation. Presume that you arty have that ares of companies not currently involved, but are major with the technology companies. That is correct. And we need tont develop other capabilities and companies. One of the things that we a secretary of acquisitions and, in many respects, you are the chief management officer. Ideas with any respect to that issue . Officer,ief management as i see it, has a responsibility for streamlining the operations for the department and this is how i see my responsibility. I will work with the chief management officer and i intend to experience how we capture efficiency and the opportunities by standardizing many of the services, if you will, across the departments. There is a complicated area andnformational operations it is ironic that the country that created madison avenue is trying to catch up with influencing people through media. Is that iuestion would think the secretary of defense would be. Much involved in this. Playu see a role you would and coordinating these aspects and reaching out to other agencies . The think the deputy and chief operating officer needs to make sure we have the right structure to interface with the proper architectures so that we evolve asde them and technology changes. Thank you. I think you are bringing significant experience. By appreciate your comment about nuclear deterrence. Is routinelyt that overlooked and we have submarines that are on alert. Said that thisr is the bedrock of our national security. You agree . I do. Do you support the modernization of of our Nuclear Weapons and the associated infrastructure . I do. The jointe chair of chiefs of staff has testified that our Nuclear Deterrent is based on a fact of squeezing all the life ive we can all of the life that we can out of the systems. Do you agree with his assessment and the level of urgency that this requires . I have not had a review of takeriorities and i will advice from general solvent to make sure he gets the proper support. In my office,re andalked about technology innovation, but we did not talk about risk tolerance. Innovation is risky. The current environment does not seem to tolerate risk. Do you believe there needs to be risk and howe of do you plan on navigating that and tolerating the amount of risk that is required to have innovation take place . My view is that we have to manage risk. Any risk. Ant when it comes to innovation, the mindset i have in the commercial world is that innovation is messy and you try something and it fails. And iuld not be afraid can be a proponent of failing fast and learning quickly. The faster you do that, the more we end up training people. It is about people developing technology. To theour response advanced policy questions with the violation of the imf treaty, the responses as part of this issue and i will be interested in making sure the skit translated into action. Do you believe the response is necessary . I do. Personalve any thoughts on what options would be available as a response . I do not. Thisu have noted that could lead to doubt in the stability of current and future initiatives. Could you elaborate on this statement . Sometimes the deals collapse and suppress theetimes file edition. I dont think you agree with that view. The russians are adversarial deal with the disruption tothe that ierests and i think will spend a significant amount of time dealing with russia. Would you support developing options besides diplomatic . I would support it. Happy. Are not making me we are expecting straight answers and you just duct every question that senator fischer asked you. I am telling you that i believe in the constitution of the United States and it says that the Congress Shall provide advice and consent. Im not going to sit here and let you dock every question. It is not going to go smoothly. Welcome. You have limited institutional experience in the military or the pentagon. The secretary working close with congressional allies and i heard you say that you would work closely with russia. Confirmed with the inner workings of the pentagon and the agency structures, how will you overcome the lack of institutional experience to operate in this environment. Very disparate i believe thatnd my technical and management background prepared me to be able to quickly assimilate the knowledge and expertise. What would you do to hit the ground running, if confirmed. It is a restructuring of the thatization and i think this will be a good way to begin to understand the inner workings of dod. They are participating in a this willview and allow different structures. A differents entity, in order of complexity and all you are working with. , youd you be confirmed will the completely apprised of your responsibilities in running dod. Uts and bolts of the havee cost overruns plagued the department of defense for many decades. This committee has tried to improve the acquisition system. Experiencesnificant with our defense contractors. Based on the perspectives, what would you recommend with contracting processes . Toolsre are a number of that are important. Effective forare contractor performance. Confirmed, we will work the we will understand the the cost baseline and we need to renegotiate. Inthe experience you have dealing with the acquisitions, key element of the overruns that occur on a regular basis, much to our consternation. I will look to you. Turning to the asianpacific strategy, i have some time. Thoughts some of the on the asianpacific pewter. I think that the chinese have been modernizing significantly in recent years and this threatens our ability for freedom of movement and it is important that we find ways to maintain the Security Architecture of the rim and support our allies and our partners there. I would like to see a continuing focus in this area. But as the rest of the world isomes more unstable, there north korea and china as major through things like acquisition reform and other things you bring to the table, i hope that releases more resources. Thank you. You on your nomination. Thee have discussed, secretary plays a major role in managing the department and you have a long and distinguished career at boeing and your reputation for turning around programs is something a lot of military programs could use. There are some questions that we should address up front. How do you plan on carrying on your duties while avoiding conflicts of interest based on your time at boeing . I will divest all ties with boeing with the exception of my executive retirement, which is permitted under the ethics agreement for the duration if im confirmed, i will not deal with any Matters Regarding boeing unless cleared by the office of ethics. We will put in mechanisms so that my calendar, the meetings that ill participate in, that we can screen to make sure there are no matters related to boeing that i will be exposed to. Thank you for that. That raises name specific programs. Will the ethics agreement call out specific programs . Its all matters boeing. So, it would include all programs. I think chairman mccain was driving the next question that i want to raise related to those precautions. Which is a good prudent. Boeing is one of our major defense contractors. They have many programs, some of which have troubles of their own. Osprey. , the v22 do you think recusing yourself from these boeing related issues could negatively impact the departments Decision Making process . I dont believe so. In my view, i believe i can provide general guidance in terms of Program Execution and techniques to drive better performance without getting into the specifics of a particular program. Thank you for that. In terms of your financial divestiture, you are or will soon be