Could Trump’s pick for Pentagon No. 2 accelerate the Pentagon’s hypersonic efforts?
The Pentagon’s next No. 2 may be a billionaire investor with deep ties to the defense industry that suggest potential conflicts of interest but also a familiarity with the military acquisition system.
Numerous media outlets reported on Tuesday that President-elect Trump has said he will nominate Stephen Feinberg, co-founder of Cerberus Capital Management, to be U.S. deputy defense secretary.
Feinberg has played a role in building a variety of technology companies that work with the Pentagon and other defense contractors, and observers and watchdogs have raised concerns that Feinberg’s current role presents a serious conflict of interest.
But his background may also make him well suited to challenge the notoriously slow and difficult Defense Department acquisition process.
At Cerberus, Feinberg directed the firm’s investments toward the defense sector across a range of areas, from armored vehicles to aviation services to undersea cables.
He has taken a particular interest in aerospace, through positions in companies like Vivace—a producer of specialty propulsion tanks—and investments in hypersonic missile testing businesses The company’s acquisition of CalSpan led to the creation of a business called North Wind, which aims to “drive the expansion and modernization of our nation’s valuable test infrastructure with a focus on hypersonics,” according to a company release from May.
The U.S. military services are also investing in advanced highly-maneuverable hypersonics, though many of those efforts have met with setbacks and delays. A GAO report from July noted, “DOD’s hypersonic weapon development efforts are not fully implementing leading practices for product development, which we have found enable leading commercial companies to deliver products quickly.”
The military also lacks testing ranges and facilities for the advanced weapons—another area in which Feinberg could have unique insight.
As a successful investor, he may be in a position to conquer bureaucratic and management-practice hurdles that have long slowed acquisition reform.
But his experience also includes possible conflicts of interest. In 2017, when Feinberg was nominated to serve on Donald Trump’s Presidential Advisory Board on Intelligence, the Project on Government Oversight noted that military logistics company DynCorp, which Cerberus acquired in 2010, posed a potential ethics problem.
“Mr. Feinberg owns a financial stake in a companies with national security-related contracts, notably DynCorp International, which could benefit from Mr. Feinberg’s recommendations and actions. Lobbying disclosures show that defense contracting is a federal legislative and policy priority for Cerberus and DynCorp. The White House can prevent foreseeable ethics scandals,” POGO noted in a letter.
Cerberus sold DynCorp off in 2020.
Additionally, a person familiar with the nomination told The Washington Post on Tuesday, “Steve’s obviously very aware of the Office of Government Ethics rules, and, of course, he went through the full assessment for his role with the intelligence advisory board. And so he knows exactly what he would need to do and will be prepared to be in full compliance with OGE rules and directions.”
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