Shanahan, who stepped into the top Pentagon job in January after his predecessor, Jim Mattis, resigned over differences with Trump, denies the allegations and expects to be cleared.
White House officials said aides have warned the president that it would be difficult to win Senate confirmation while the investigation is ongoing.
The investigation has injected a new element of unpredictability into an already uncertain outlook at the Pentagon, where officials are scrambling to prepare for heightened competition with China and Russia while seeking to manage polarizing orders such as the use of military funds to build Trump’s border wall.
In some ways, Shanahan may be more aligned with Trump’s foreign policy impulses than Mattis, a retired Marine general who spent years immersed in the counterterrorism wars of the post-9/11 era. Shanahan appears less inclined to fight for robust counterinsurgent deployments and has taken a business-minded approach to the military that dovetails with the president’s.
Speaking in an interview this week with Fox News, Shanahan said he had a “good relationship” with the commander in chief.
“He’s engaged. He gives us the resources we need to do our job, and he supports us in what we need to defend America,” he said. “We have strong, strong leadership from the White House.”
Further delay in nominating a permanent secretary could pose problems for the Defense Department.
Brian McKeon, an acting senior Pentagon official during the Obama administration, said Shanahan’s acting status might not affect his ability to do his job because he is “vested with all the power of the secretary, and people in DoD — civilian and military — respond to the office and to people with authority.”
McKeon said Shanahan’s status might make him less inclined to challenge the White House or other agencies in internal policy discussions. “Every Cabinet secretary has to pick their battles with the White House,” he said. “I’d guess that Shanahan is picking fewer of them than a Senate-confirmed secretary would be.”
The Pentagon’s inspector general opened the probe after Citizens for Responsibility and Ethics in Washington (CREW), a government watchdog group, filed a complaint alleging that Shanahan, according to news reports, appeared to have “made numerous statements promoting his former employer Boeing and has disparaged the company’s competitors before subordinates at the agency.”
CREW cited a story by Politico that said that Shanahan had praised Boeing and criticized its competitor Lockheed Martin in private remarks during his time as deputy secretary.
The delay in nominating a defense secretary has frustrated some lawmakers, who have complained about the growing number of senior roles in the administration filled by officials who have not gone through the Senate confirmation process. The Department of Homeland Security and the Interior Department are among the agencies without a confirmed leader. Mick Mulvaney, the White House chief of staff, also is serving in an acting capacity.
Some worry that overseas leaders may perceive they are dealing with a Pentagon leader with reduced status because of the absence of the Senate’s imprimatur. The situation has threatened Shanahan’s stature in Congress, where he is trying to get a defense budget passed to recalibrate the military and establish the Space Force. It also could complicate his ability to fill jobs at the Pentagon and manage an extensive bureaucracy that often seeks to wait out or slow-roll political appointees.
At the same time, lawmakers would balk at the idea of confirming a defense secretary in the middle of an active inspector general investigation. The result is an unprecedented period of limbo at the Pentagon, with Shanahan the longest-serving acting defense secretary since the establishment of the department after World War II.
Trump has publicly acknowledged his preference for keeping Cabinet members in an acting role because, he said, it gives him more leverage.
In March, Sen. James M. Inhofe (R-Okla.), chairman of the Senate Armed Services Committee, expressed concern about the delay.
“We need to have a nominee for the Secretary of Defense, and I would like to see that nomination come from the White House soon,” Inhofe said in comments to Bloomberg News that were later circulated by his office. “Should the White House choose to nominate Acting Secretary of Defense Shanahan, I welcome the [inspector general’s] thorough, but expeditious examination of any outstanding issues. We have too many threats facing this nation to have so many key DOD officials serving in an ‘acting’ capacity.”
It is unclear how long the inspector general will take to complete its probe. A spokeswoman for the inspector general said she could not give a time frame because the office does not comment on active investigations.
A senior defense official, who spoke on the condition of anonymity to discuss the matter, said officials in Shanahan’s office had not been lobbying the White House but that “at some point, we expect a nomination.”
“We get up, we do the job, we get what we get. We’re not worried about this,” the official said.
In comments before the Senate Armed Services Committee last month, Shanahan said he welcomed the investigation. Lt. Col. Joseph Buccino, a spokesman for Shanahan, has said the acting secretary has abided by ethics agreements that he signed upon entering the Pentagon to avoid a conflict of interest with Boeing.