Good morning. Were going to use this morning to consider the nomination of Patrick Shanahan to be deputy defen defense secretary of the United States. We thank you for your willingness to 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. Its important that this committee and other appropriate committees of the congress be able to receive testimony, briefings, and other communications of information. So it is a standard for this committee they ask certain questions in order to exercise the legislative and oversight responsibilities. I have. Will you ensure that your staff complies with deadlines established for requested communications including questions for the record and hearings . I will. Will you cooperate in providing witnesses in briefers in response so congressional request . I will. Will those witnesses be protected from reprisals for their testimony or briefing . Yes. Do you agree if confirmed to appear and testify before this committee . Yes. Do you agree to provide documents including copies and electronic forms of communications in a timely manner when requested by a constituted committee or consult with a Committee Regarding a basis for any denial in providing such documents . Yes. Have you assumed any duties or undertaken any action which would appear to presume the outcome of the confirmation process . 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. Its your lucky day, mr. Chairman. I just want to welcome mr. Shanahan. Have every confidence of his abilities. Thank you. And she might not make it here today in the terrible weather. Since a quorum is now present, i ask the committee to consider the list of 995 pending nomination. These all have been before the committee. Is there a motion in favor to report these 995 military nominations to the senate . So moved. Is there a second . All in favor say aye. Aye. Motion carries. Welcome, mr. Shanahan. You are deprived of the important Opening Statements of senator reid and myself. Oh. But before we allow you to speak, senator cantwell is here and i apologize, senator cantwell for not recognizing you to take the time from your busy schedule to introduce mr. Shanahan. Senator cantwell, welcome. Thank you, mr. Chairman. Chairman mccain, Ranking Member reid, and distinguished members of this committee, im privileged to introduce a qualified candidate Patrick Shanahan to serve as secretary of the depth of defense. I, too, want to welcome his family. They are here and im sure hell make the appropriate introduction. Mr. Shanahan has experience leading the reform of highly large complex programs at the boeing company. Such as the 737 max and the 787 dreamliner. These aircraft have 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 having teams build outside the box and then convince others to think in doing things new ways. Mr. Shanahan has driven reforms in talent management, affordability, technology, and supply chain. And hes had an impressive 31year career at the boeing company last serving as Senior Vice President of supply chain operations. His handson leadership inspires those around him to aspire to achieve results on time and on budget. And mr. Chan hshanahan managing complex operations, he has served as the head of the commercial airplane program. His attention to detail while operating some of the largest manufacturing operations to the world will prove invaluable at dod. 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 it wont faze him. He focuses on big gamechanging innovation and science and technology and wont be deterred by the bureaucracy of dod. 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 flight activities in philadelphia and in mesa, arizona, as Vice President general manager for rotocraft systems. 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 and the Largest Military budget in the world. And he has the management skills from the private sector to guide dod successfully into the future. I am confident that he will be an effective leader in this position for our country. Thank you, mr. Chairman, and im going to excuse myself. Again, thank the committee for this opportunity to introduce mr. Shanahan. Thank you, senator cantwell. We fully understand you have other duties in the senate. Thank you for taking the time to introduce mr. Shanahan. Mr. Shanahan . Thank you, senator cantwell, for your very kind words, thoughtful introduction, and enduring support. Before i begin , my thoughts an prayers go out to the families of the seven sailors killed in the tragic accident on the uss fitzgerald. Chairman mccain, Ranking Member reid, and members of this committee, i greatly appreciate the welcome and time you have afforded me this morning. Im grateful to the president and secretary mattis for nominating me to the position of secretary deputy secretary of defense. Id like to acknowledge my three children who have accompanied me here today. Kayla, will, and jack who are seated behind me. I also 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 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 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 is 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. To persevere no matter what the challenge. I so wish he were here today. I know what exactly what hed 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 more about her that id like to share is she taught me to truly believe in myself and i could do anything i set my mind to. She taught my brothers and i that its not the size of your muscles that matters, its the size of your heart. She taught me to be a better parent, thats 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 dod team. I aspire to help them dominate and win. I aspire to usher in effectiveness in the department. I believe i have prepared myself to contribute as deputy secretary of defense. Ive led large geographically dispersed organizations on engineered products. Ive experience converting innovation into capability. I bring with me a record of leadership for systems under adverse conditions. Leadership casts a long shadow. Strong leadership can create teams that achieve ambitious scale. I believe my skill set strongly compliments that of secretary mattis. Hes a master strategist with Foreign Policy experience. As secretary mattis chief operating officer, i bring strong execution skills with a background in technology, development, and business management. Areas this committee has identified for reform. If confirmed, i will work tirelessly with congress and the department to deliver for our men and women in uniform and their families. And to be relentless stewards of the taxpayers money. I appreciate the time you 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 u crakrainians with Lethal Weapon weaponry inexplicably you responded saying youd have to look at the issue. Its not satisfactory, mr. Shanahan, would you wish to abridge or amend your statement concerning i would. Go ahead. I support equipping the ukrainians. You support . Yes. Providing lethal defensive weaponry to ukraine . Yes. All right. Good. Im glad to hear that. But i have to tell you, mr. Shanahan, our job is advise and consent. We are equal branches of government. Your response to that question was, frankly, very disappointing to me. You have been associated for the last i dont know how many years with one of the five corporations that provide 90 of the defensive weaponry to defend this nation. And your answer was, well, id 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. Its still disturbing to me after all these years that you would say that you would have to look at the issue. Have you not been aware of the issue . Have you not been aware of the actions of the Senate Armed Services committee . Have you not been aware of the thousands of people that have been killed by Vladimir Putin . Have you missed all that in your duties at one of the major defense corporations in this country . No, chairman. Im aware of that. Well, ive got to tell you its very disturbing. One, im disturbed that were now having 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, has had markups about, has had reported out our bill, and you want to find out more information. Not a good beginning. Not a good beginning. Do not do that again, mr. Shanahan, or i will not take your name up for a vote before this committee. Am i perfectly clear . Very clear. Senator reid . Thank you very much, mr. Chairman. Mr. Shanahan, one of the issues youre going to face is generically termed the third offset. Bob work, who you are succeeding has done a remarkable job, i think, and hes been the leader for this effort. Its essentially trying to counter technologically and otherwise our adversaries, their capabilities and leap ahead with new technologies. In trying to deal with that, the congress reestablished a position under secretary of as he was for research and engineering. But as deputy secretary, youre going to play a Critical Role in supporting the new or revised under secretary. But also reaching out to the whole community, the intelligence community, the industrial community, technological community. Senator reid, i if confirmed, i will spend time with the group that has done the third offset work. And i have not received the classified briefings on the work that they have done. The effort i would undertake is to make sure we have a clear path to being able to operationalize the capability. When i look at the strategy exercise that well be conducting to put together the fy19 budget, it will be critical that well have an assessment of how much funding needs to be applied against the third offset. I believe the restructuring of r and e will give us the concentrated skill set so we can have a more informed recommendation. Thank you very much. I presume also because of your significant experience in private industry, you already have some ideas of companies that are not currently involved but could be major contributors to this effort, some of this software and technology companies. Is that accurate . That is correct. I think to chairman mccains point, we need to broaden our Industrial Base. Its important that we develop other capabilities and companies as well. Thank you. One of the other changes that we made in last years ndaa was creating an under secretary for acquisition and also a chief management officer. In many respects youre really the chief management officer. How will you work with the chief management officer . Do you have any ideas with respect to that issue . I do. The chief management officer, as i see it, has responsibility for helping to streamline business operations. So as the deputy, its all of operations for the department. Thats how i see my responsibility. A subset of that is the business operations. But ill work hand in glove with the chief management officer. The real intent and i have experience in this area is how do we quickly capture efficiency and the opportunities by standardizing and sharing many of these services, if you will, across the department. Very good. One of the areas that is complicated, troubling daily we seem to be falling behind is the whole concept of information operations. Its ironic that the country that created madison avenue is now sort of trying to catch up with in terms in influencing individuals through media. The department of defense has a role in this. First question is at a consumption level i would think the secretary of defense is going to be very much involved in this, but do you see a role that you will play in terms of trying to coordinate all the different aspects just within dod and then again reaching out to other agencies . Sir, i do. I think the deputy and the chief operating officer role really needs to ensure that we have the right structure so that were effective in interfacing with these other organizations and that we have the proper architecture so that the systems are cost effective, the proper architectures so we can upgrade them easily and evolve as technology changes. Very good. Again, thank you, mr. Shanahan. I think youre bringing significant experience to a very challenging job. Thank you very much. Thank you, mr. Chairman. Thank you, mr. Chairman. Mr. Shanahan, i appreciated your comments in our meetings about the Nuclear Deterrent. Being a weapons system that we use every single day, this fact is often over looked but every day we have missilers in Launch Control centers and we have submarines that are on alert. Do you agree with that statement . I do. I know the forthcoming ndr will lay out particulars, but in general, do you support the modernization of our nuclear weapons, the associated delivery vehicles, command and control arc checkture and the supporting infrastructure . I do. General salva, the vice chair of the joint chiefs of staff has testified that the joint staff puts our Nuclear Deterrent as the number one priority for modernization and recapitalization and that is based on the fact, in his words, that we have squeezed about all the life we can out of the systems we currently possess. Do you agree with his assessment and the level of urgency and priority this requires . Senator, if confirmed, i will i have not had a review of the priorities of the department. I understand the importance of the Nuclear Deterrent. I will take advice from general sullivan and make sure he gets the proper support. Thank you. When you were in my office, we talked a little bit about technology and innovation. One thing we didnt touch on is the question of risk tolerance. Innovation is inherently risky and not all good ideas pan out, but the current environment seems to be very intolerant of risk. Do you believe the department and the services need to be more tolerant of risk . And how do you think the department can better navigate that tension between effectively using scarce resources and tolerating the amount of risk thats required if were going to have any innovation take place . In my view on risk is that you have to manage risk. So out at the pointy end of the spear we dont want really any risk. I think when it comes to innovation and this is the mindset ive developed working in the commercial world. Innovation is messy. And if you try something and it fails, i think thats we shouldnt be afraid. Organizations that pride themselves on execution tend to be afraid of failure. So im a proponent of failing, failing fast, learning quickly. I think the faster you do that, the more we end up training people. Its not about the technology. Its about our people 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, you state, i understand that 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 a response is necessary beyond simply expressing concern through diplomatic channels, which has already been done . I do. Do you have any personal thoughts right now on what options would be available to be some of those responses . I do not. You also noted that russias action in violation of the inf treaty, if its unchecked, would lead to doubt in the stability of current and future arms control agreements and initiatives. Could you elaborate on that statement . Sometimes theres a view thats expressed that holding violators accountable for their behavior risks, deals collapse and that we should therefore suppress any suggestion that a violation has happened. I dont believe you agree with that view, do you . Senator, i think the russians are adversarial. I think through the whole of government we need to deal with their whether we call it aggression or their disruption to our interests, i at this point dont have any specific recommendations. If confirmed, i will spend a significant amount of time deal