WASHINGTON — Even before President Trump's nominee to lead the Army abruptly withdrew his name from consideration late Friday over business entanglements, it would have taken months before the Pentagon's top jobs would be filled.
If history is a guide, the exit of Vincent Viola, founder of digital stock trading firm Virtu Financial and owner of the National Hockey League's Florida Panthers, set back a process that would have already extended into April or beyond, insiders told Defense News.
Of the roughly 50 Pentagon jobs to be appointed by the president and confirmed by the Senate, President Trump now has one confirmed — Defense Secretary Jim Mattis — and two identified in the pipeline: Air Force secretary nominee Heather Wilson, a former Republican congresswoman from New Mexico, and Navy secretary nominee Philip Bilden, a private equity manager with dealings in Hong Kong. Both were named in late January.
As evidenced by Viola, complex financial holdings can slow and strain the process. Candidates must comply with rules meant to unravel business conflicts before a nominee gets Senate confirmation hearings. Ethics rules meant to safeguard against self-dealing are particularly relevant at the Defense Department, which stewards billions of taxpayer dollars.
"We've certainly seen, historically, cases with several months tried up in the financial disclosure process," said David Eagles, director of the Center for Presidential Transition at the Partnership for Public Service, who spoke with Defense News before Viola's exit.
"These things are very complicated, particularly for large assets like that … This just takes a lot of time, and a lot of experts, a lot of coordination with the Office of Government Ethics."
Typically, the transition team selects a nominee and then pre-vets them, sometimes working with the OGE, in a process that takes five to six weeks. Once they are cleared by the OGE, they are formally announced. The time from nomination to consideration by subcommittee would, for DoD nominees today, be up to Senate Armed Services Chairman John McCain, R-Ariz., and he has said he'll move as quickly as possible.
But that's when a presidential administration pre-vets a candidate before announcing them, and according to sources close to the process, there was little to no pre-vetting for Trump's service secretary picks.
Its been widely reported the Trump team — in the wake of a transition team shake-up — initially sought to rush Cabinet nominees to Senate confirmation, but Senate Republicans bowed to pressure to let federal authorities fully vet them. The initial hearing schedule had overwhelmed the OGE.
The Defense Department and Senate Armed Services Committee have strict rules that bar presidential appointees from owning stocks and bonds in companies that have Defense Department contracts. The Trump administration is not attempting to bypass those rules.
More than 40 days after Trump announced Viola on Dec. 17, the West Point grad concluded that he would not be able to navigate the confirmation. Sources close to the process said Viola had been looking for ways to divest as required — without hurting his employees.
The New York Times reported he had been trying to swap his majority interest in Eastern Air Lines for a smaller stake in Swift Air, a charter company with millions of dollars in hard-to-track government subcontracts.
Bilden's finance background is, broadly speaking, similar to Viola's. A former Army reservist, Bilden spent the last 25 years as a co-founding member and senior adviser at HarbourVest Partners, a global private equity investment management firm. He moved to the port city Hong Kong to run its Asia branch in 1996, opened its Tokyo and Beijing offices before leaving the firm recently.
Lawmakers and ethics monitors will want to know whether Bilden has any entanglements with China, particularly amid tensions with Beijing over its militarization of the the South China Sea.
Retired Adm. James Stavridis, a former NATO supreme commander, told Reuters Bilden, "is deeply knowledgeable about China, but I would not say he is close to China. Many times he has spoken to me about the need to take a firm line in the South China Sea."
Wilson, an Air Force Academy graduate who served in Congress from 1998-2009, is the president of South Dakota School of Mines and Technology, where her starting salary was $321,360 in 2013. The Center for Responsive Politics placed her net worth at $3.3 million in 2008 — a mix of real estate and investments.
Wilson faced ethics scrutiny in the past. In 2013, the Energy Department inspector general found a company she ran collected half-million dollars from four of the department's facilities with no evidence of the work. Wilson refuted the charges, and the government was reportedly repaid $442,877 of the $464,203.
On Tuesday, McCain told reporters he wants the administration to nominate senior Pentagon nominees "as soon as possible" so his committee can consider them. Specifically, McCain wants to fill the job of the Pentagon's No. 2 civilian, its chief weapons buyer and the three armed services secretaries.
"I would certainly like to see the deputy secretary of defense, although I would like to see [Obama administration holdover Bob] Work stay for a while. That's a key job. [The undersecretary for acquisition, technology and logistics] is a key job. And the service secretaries, I'd love to see them as soon as possible."
As soon as the administration formally nominates Trump's picks, "we'll start the process," McCain said, adding: We've heard of names, but we haven't received them."
According to McCain, the Trump administration did not ask to waive SASC rules for any of its nominees. "We have to adhere to procedures, but we can move quickly. Just like we did for [Defense Secretary Jim] Mattis," he said.
Mattis agreed to divest his stock in General Dynamics and resign from several boards prior to his confirmation.
Arnold Punaro, former Senate Armed Services Committee staff director and Marine Corps major general, told Defense News before Viola's exit that he had seen administrations skip thorough pre-nomination vetting only to lengthen the process later. As SASC staff director, that's what he advised the Clinton administration.
"As with every administration they're always in a big hurry to get in their nominations, and we said, 'Look, you better get all the conflict of interest stuff cleared up, because if you don't and the person is nominated, and we've got it for action and something pops, it will slow it down seven or eight months," Punaro said. "If you take an additional six weeks up front, it will save you five months."
Punaro lauded Viola, then still a nominee, for proceeding deliberately through the vetting process.
Until permanent leaders are in place, temporary leaders will be running things.
"It's not like the Department of Defense is missing a beat right now," Punaro said. "You have Jim Mattis at the top and everything is subject to his direct and total control."
Assistant Secretary of the Army for Financial Management and Comptroller Robert Speer is serving as the acting Army secretary; Air Force Undersecretary Lisa Disbrow is the acting Air Force secretary, and Assistant Navy Secretary for Research, Development & Acquisition Sean Stackley is the acting Navy secretary.
Email: jgould@defensenews.com
Twitter: @reporterjoe
Joe Gould was the senior Pentagon reporter for Defense News, covering the intersection of national security policy, politics and the defense industry. He had previously served as Congress reporter.
