Shanahan also said the Pentagon has failed its first-ever completed audit — a result he described as expected.
“There is a considerable number of areas where we had a pass,” he said. “Then there are some other ones where they went through and they said, ‘We went into your inventory system and we didn’t find these things, so therefore that’s a finding, and you don’t have a clean assessment.’ In a lot of these audits, it’s the type of finding that matters.”
The fact that an audit was completed at all is “substantial,” Shanahan said. He added that more information would be made public in due course by the Pentagon’s inspector general and comptroller.
He said the Pentagon has been coming up with “corrective actions” in response to the audit’s preliminary findings. Some of the compliance issues in particular irritated him, he said, such as inventory inaccuracies where the Navy had buildings on the books that actually weren’t there.
While Shanahan seeks to introduce better compliance and business practices at the Pentagon, the former Boeing executive is also dedicating much of his time to the creation of the Space Force, a hallmark project for the president. The Pentagon is working on a proposal to submit to Congress for the creation of the separate military branch.
“What we’re really targeting is to submit the legislative proposal so that Oct. 1 of next year we can say, ‘Here’s the birthday of the Space Force,’ ” Shanahan said.
Outside the legislative proposal, the Pentagon is already creating a unified Combatant Command for space — similar to Transportation Command or Strategic Command — and a space development agency. Shanahan said he would like to see the leader of the space development agency chosen by the end of the year and the first head of Combatant Command confirmed at the beginning of 2019.
The undertaking comes as the White House asks the Pentagon to shrink its budget for next year in response to a federal deficit that shot up since last year’s tax cut.
Democrats have expressed skepticism over the need for an entirely new military bureaucracy to step up American power in space.
Rep. Adam Smith (Wash.), the top Democrat on the House Armed Services Committee, who is poised to take over as chairman, has agreed that the United States must expand its military capability in space to counter Russia and China but has said the creation of an entirely new bureaucracy for the task is costly and unnecessary at a time when budget concerns should be in the forefront.
Shanahan said Thursday he can work with Smith on the issue. “On the Space Force itself, across the board everyone has said, ‘Accelerate your ability to deliver capabilities,’ ” Shanahan said. “That’s been universal. I think with Chairman Smith in place, what he has said is he wants to focus on cost and efficiency.”
Shanahan vowed that the Pentagon’s proposal to Congress for the Space Force would withstand cost scrutiny. “The proposal that we are going to carry forward makes sense,” he said.
The White House has ordered the Pentagon to come up with a budget some 5 percent less than the military had planned for next year. Shanahan said his office is working on a $700 billion budget in accordance with that order, about $33 billion less than the Pentagon had planned, and expects to get input from the branches of the military early next week. This year’s budget was $716 billion.
“What I want the president to understand going forward are what are those trade-offs so he has an informed position,” Shanahan said. “He needs to have an awareness of what that number really translates to in terms of performance here in the department.”
Despite the rollback, the coming budget proposal will still be a “masterpiece” that shows how the Pentagon is reshaping the military for an era of great-power competition with Russia and China, Shanahan said. It will retain priority areas for the strategy, such as the development of greater cyber capabilities and the pursuit of hypersonic missiles, he noted.
The White House’s demand for a pared-back Pentagon budget came as Trump dispatched thousands of active-duty troops to the border with Mexico ahead of the midterm elections to help U.S. Customs and Border Protection prepare for the arrival of a caravan of Central American migrants. Critics described the deployment as a wasteful political stunt, a criticism that Defense Secretary Jim Mattis dismissed during a visit to deployed troops in Texas this week.
At the Pentagon, Shanahan confirmed that the number of active-duty troops supporting the Department of Homeland Security at the border had peaked at 5,900, far fewer than the 10,000 to 15,000 troops Trump said he planned to send to the border before the midterms. In addition to the active-duty troops, 2,000 National Guard personnel have been deployed to the border since April.
Ask about the discrepancy between the numbers the president cited and a peak deployment of 5,900 forces, Shanahan declined to offer an explanation.
“I don’t know how to reconcile the two,” he. He referred questions on the troop figures to U.S. Northern Command, which is in charge of the mission.
“We’ve pretty much peaked in terms of the number of people who are down there,” Shanahan said.
The deputy defense secretary also dismissed speculation that he could leave the Pentagon and possibly join the White House office of Management and Budget.
“I will absolutely be here,” Shanahan said. “I am 100 percent confident in that. I am going to run through the tape.”