Good morning. We need to consider the nomination of Patrick Shanahan. Mr. Shanahan, we thank you for joining us today and for your willingness to save country and serve our nation at an important time. We welcome your family and friends. As is our tradition, we invite you to introduce them at the beginning of your testimony. It is important that this committee and other appropriate committees of congress be able to receive testimony, briefings and other indications of information. So as it standard for this committee to ask certain questions to exercise its legislative and oversight responsibilities, have you adhere to applicable laws and regulations governing conflicts of interest. I have. Will you ensure your staff complies with deadlines including questions for the record and hearings. I will. We cooperate in providing witnesses. I will. Will those witnesses be protected from reprisals for their testimony or briefing. Yes. Do you agree, if confirmed to testify on th request was for this committee. Yes. You agree to provide copies in a timely manner or to consult with the Committee Regarding the basis of any good faith denial in providing such document. Yes. Have you assumed any duties or undertaken any action which would appear to presume the outcome of the confirmation. No. In the interest of time, i will submit my Opening Statement for the record. I know that will come as a terrible blow to 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. Im confident in his abilities. If i may also, senator shaheen is delayed in this weather. Since the corn is present, asked the committee to consider a list of 995 pending military nominations. All of these nominations have been before the committee. Is there motion to report these 995 military nominations to the senate to move. All in favor say i. Welcome mr. Shanahan. You are deprived of the important Opening Statement of senator reid and myself. Before we allow you to speak, senator cantwell is here and i apologize for not recognizing you to take time from your busy schedule. Thank you. Chairman mccain and distinguish members, and proud to introduce an extremely qualified candidate, Patrick Shanahan to serve as the deputy secretary of the department of defense. I want to welcome his family. They are here and im sure he will make that appropriate introduction. Mr. Shanahan has a unique experience leading reforms of highly complex programs at the boeing company. These aircraft has cutting edge technology, keeping them ahead of the global competition. His entire career has been about solving problems no one else can solve, and these skills would be invaluable at dod. He drives change by building teams that think outside the box and then convince others to think in doing things new ways. Mr. Shanahan has driven reform in management, affordability, technology and supply chain. He has had an impressive career last serving as Senior Vice President of supply chain operations. His handson leadership inspires those around him to just strive to achieve results on time and on budget. Managing the highly complex operations in washington and charleston south carolina, he has served as the head of the commercial airplane program. His attention to detail, while operating some of the largest operations in the world. He is also fearless. He understands what our country is up against when it comes to the russians and the chinese and the north koreans and wont faze him. He focuses on big Game Changing innovation and science and technology and will be deterred at the bureaucracy of dod. He 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 Program in philadelphia and mesa arizona as Vice President for rotorcraft systems. He has been able to achieve positive results throughout his career. He understands the need for fiscal responsibility and for innovation of the department. Dod is the largest employer in the world with almost 3 Million People in the Largest Military budget in the world. He has the management skills from the private sector to guide dod successfully into the future. I am confident he will be an effective leader for our country. Thank you, mr. Chairman. I will excuse myself, but i think the committee for this opportunity to introduce mr. Shanahan. Thank you senator. We fully understand you have other duties in the senate and thank you for taking the time to introduce mr. Shanahan. Thank you senator cantwell. Thank you for your kind words, thoughtful introduction and endearing support. Before i begin, my thoughts and prayers go out to the families of the seven sailors killed in a tragic accident on the uss fitzgerald. Chairman mccain, Ranking Member reed, members of this committee, i greatly appreciate the welcoming time youve afforded me this morning. Im grateful to the president and secretary mattis nominating me to the position of secretary of defense, deputy secretary of defense. Id like to acknowledge my three children who have accompanied me here today. Kayla, will and jack were seated behind me. I also want to take a moment to recognize and honor my parents, joann and Michael Shanahan. I am the oldest of three boys. My father Michael Shanahan instilled in my brothers and i, from as early as i can remember, service before self. My father was an army veteran who served in vietnam. He taught his boys to love his country and value its freedoms. My father served in Law Enforcement for over 25 years. He taught us to treat people fairly, respect lawn order and the importance of protecting the community. My father cofounded a food bank in 1982 thats ongoing. To date 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 the disease for 17 years before passing. I never once heard him complain. My father modeled for us what it means to have great, that is the ability to maintain a spirit and persevere the matter what the challenge. I so wish he was here today. I know exactly what he would say to me. He was a patrick, dont screw this up. My mother, joann, could not be here. She is here in spirit. I mother always supported me unconditionally. She taught my brothers and i to support others unconditionally. What i appreciate most about her and she taught me to truly believe in myself and that i could do anything i set my mind too. She taught my brothers and i that its not the size of your muscles that matter, its the size of your heart. She taught me to be a better parent and thats a gift i can never repay. Her words for me today were, you will do fine. Im here to earn your support. I inspired to join a strong and capable dod team. I aspire to help them dominate and win. I aspire to help usher in the new age of innovation and effectiveness in the department. I believe i have prepared myself to contribute as dick and jen deputy secretary of defense. I bring over three decades of leadership. I have led large geographically dispersed. I have experience converting technological innovation to operational capability. I bring with me a formula for leadership that has a record of delivering affordable highperforming Business Systems and operations under adverse conditions. Leadership casts a long shadow and strong leadership can create teams that achieve ambitious change. I believe my skill set strongly complements that of secretary mattis. He is a master strategist with the military and Foreign Policy experience. As deputy sector of defense, i bring strong execution skills with a background in technology, development and business management. Its areas this committee has identified for reform. 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 youve afforded me today to answer questions. Thank you mr. Shanahan. In your questions that were submitted to you, one of the questions was about providing the ukrainians with lethal weaponry to defend themselves. In explicitly you responded by saying you have to look at the issue. Its not satisfactory. Do you wish to abridge or amend your statement concerning. I support equipping their ukrainians. You supported. Yes. Providing lethal weaponry to ukraine. Yes. Okay, good, im glad to hear that, but i have to tell you mr. Shanahan, our job is advise and consent were equal branches of government. Your response to that question was very disappointing to me. You have been associated, for the past how many years with one of the five corporations that provide 90 of the defensive weaponry to defend this nation, and your answer was i would have to look at the issue. Thats not good enough mr. Shanahan. Im glad to hear you have changed your opinion from what was submitted, but its still disturbing to me after all these years that you would say you have to look at the issue. Have you not been aware of the issue and the actions of the Senate Armed Services committee . Have you not been aware . Have you missed all of that in your duties at one of the major defense corporations in this country. No chairman, i am aware of them. Ive got to tell you, its very disturbing. Im disturbed that we now have an executive from one of the five major corporations that has corralled 90 of our Defense Budgets and on one of the major issues that this committee has had hearings about, and markups about and you want to find out more information . Not a good beginning. Do not do that again or i will not take your name up for a vote before this committee. In my perfectly clear. Very clear. Senator reid. Thank you very much. One of the issues you will face is termed the third offset. Bob has done a remarkable job and has been the leader for this effort. It is trying to counter technologically otherwise our. [inaudible] we need to leap ahead with new technologies. In trying to deal with that, the congress reestablished a position under the secretary of defense for research and engineering. As deputy secretary you will play a Critical Role supporting the new or revised. But also reaching out to the whole community, the industrial community, technological community. Can you give us a sense of how you will continue his efforts with respect to the third offset. If confirmed, i will spend time with the group. I have not received classified briefings on the work that they have done. The effort i would undertake is to make sure we have a clear path to capability. When i look at the strategy exercise will be conducting to put together the fy 19 budget will be critical we have assessment of how much funding can be applied against the third offset. I believe in the restructuring will give us the concentrated skill set have a more informed recommendations. Thank you very much. I presume also because of your experience in private industry , you have some ideas of companies that are not currently involved but could be major contributors to this effort. Is that accurate. That is correct. We need to broaden our Industrial Base and its important we develop other capabilities and companies. Thank you. One of the other changes we made last year was creating and also achieves management officer. In many respects how will you work with the chief management officer . Do you have any ideas with respect to that . The chief management officer will help streamline Business Operation to as the deputy all the operations, a subset of that is the Business Operations. I will work hand in glove with the chief management officer. I have experience in this area on how to we quickly capture efficiency and the opportunities by standardizing and sharing many of these services across the department. One of the areas thats complicated and troubling daily is that we seem to be falling behind in information operations. Its ironic that the country that created madison avenue is now trying to catch up in terms of influencing individuals through media. I believe the secretary of defense will be very much involved in this. Do you see a role you will play in terms of trying to coordinate with food dod and then reaching out to other agencies. We need to have the right structure so we are effective in interfacing with these other organizations and the systems must be cost effective. The proper architecture so we can upgrade them and evolve as technology changes. Thank you very much. Thank you, mr. Chairman. Mr. Shanahan, i appreciated your comments in the meeting about the Nuclear Deterrent and being a Weapon System that we use the recycled day. The fact is often overlooked but often we have those who are in Launch Control systems and submarines on alert. Secretary carter characterized our Nuclear Deterrent as the bedrock of our National Security. Do you agree with that. I do. And of the forthcoming ncr will lay out the particulars but you support the modern nation and the supporting infrastructure. I do. The vice chair of the joint chiefs of staff has testified that they put our Nuclear Deterrent as the number one priority for modernization. Thats based on the fact that weve squeezed all the life we can out of the current system. You agree with his assessment. If confirmed, i have not had a review of the priorities of the department. I understand the importance of the Nuclear Deterrent and i will take advice and make sure he gets the proper support. Thank you. When you were in my office, we talked about technology and innovation but one thing we didnt touch on is the question of risk tolerance. Its inherently risky and not all good ideas pan out but the current environment seems to be very intolerant of risk. You believe the department and the services need to be more tolerant of risk and how do you think they can better navigate that tension by effectively using scarce resources and tolerating the amount of risk thats required if we are going to have innovation take place. You have to manage risks when you take risks. I think when it comes to innovation, innovation is messy. I think thats your point around risk, we shouldnt be afraid. Organizations that pride themselves on execution tend to be afraid of failure. I am a proponent of failing fast and learning quickly. I think the faster you do that the more we end up treating people. Its about learning how to develop the technology because they know how the users can apply it. In your response to the committee advance policy questions regarding russias violation of the inf treaty, i understand the administration is reviewing a number of potential responses as part of its ongoing review of this issue, and i will be keenly interested in making sure these are translated into action. So, to be clear, for the record, do you believe your response is necessary beyond expressing concern through diplomatic channels which has already been done . Do you have any personal thoughts on what options would be available on some of those options. I do not. You also noted that russias action in violation of the inf treaty, if unchecked could lead to doubt in the stability of current and future arms control agreements and initiatives. Could you elaborate on that statement . Sometimes there is a view thats expressed that holds violators accountable for their Behavior Risk and deals collapse. I think the russians are adversarial. I think, through the whole of government, we need to deal with whether we call it aggression for thi or disruption to our interests. At this point i dont have any specific recommendations. If confirmed, i will spend a significant amount of time dealing with russia. Would you be supportive of developing options to present the president besides diplomatic or just made making statements. I would be supportive. Thank you. Mr. Shanahan, youre not making me happy. We expect straightforward answers and you just ducked a sickly every question that senator fisher has to. Im telling you, i believe in the constitution of the United States which says that the congress of the United States shall provide advice and consent. Not what you said here and watch you duck every question and expect that everything is going to go smoothly. Its not. Thank you, mr. Chairman. Welcome mr. Shanahan. Mr. Shanahan, you have limited institutional experience in the military dod or the pentagon. In my experience ive seen that deputy secretary heavily involved with running the bureaucracy will the secretary works closely with the presiden president , nsc, congress and allies, although i just heard you say you would work closely regarding russia. So, if confirmed, if you are tasked with the inner workings of the pentagon and its interagency structures, how will you overcome your lack of institutional experience to effectively operate in this environment . Senator, i have worked in environments where we have very disparate organizations. They may not be dod, but in the commercial world, with many different suppliers and agency like organizations, i believe my technical and management background will prepare me to be able to quickly assimilate the knowledge and the expertise to properly interface. What would be one of the first things you would do to get yourself to position where you can hit the ground running should you be confirmed . I think the first place that i was going to hit the ground running was on the restructuring of our and he, the ans organization, and then working the chief management officer initiative. I think that will be a