March 11, 2025

Warren Calls on Navy Secretary Nominee to Divest from Defense Contractors

“As Secretary of the Navy, you could make programmatic decisions that would increase DoD’s reliance on companies in which you are invested. To mitigate that conflict, you should divest your holdings in defense contractors.” 

Text of Letter (PDF)

Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), a member of the Senate Armed Services Committee, wrote to Mr. John Phelan, nominee to be Secretary of the Navy, with concerns regarding his “serious conflicts of interest,” given his financial investments in defense contractors. To address her concerns, Senator Warren asked Mr. Phelan to make a number of commitments related to his conflicts of interest ahead of the committee vote on his nomination. 

As Secretary of the Navy, Mr. Phelan could make programmatic decisions that would increase the Department of Defense’s (DoD) reliance on companies in which he is invested or with which he has close relationships. These ties to various defense contractors, including Dell Technologies, Palantir, and Red Call Partners, raise serious concerns about his potential biases in making programmatic decisions for the military. 

Mr. Phelan has investments worth over $50 million in Dell Technologies, which has a $2.5 billion contract to provide software services to the U.S. Navy, alongside other lucrative DoD contracts. Since January 2024 alone, he has earned over $5 million in capital gains and dividends from that investment. Mr. Phelan also has investments in other defense contractors, like National Resilience, a biomanufacturing company that has a $410 million DoD contract, and Woolpert, which provides school construction services for DoD.

The nominee also founded MSD Acquisition Corp., which has promoted Phelan’s “extensive and deep relationships” with Palantir and other companies in which he has invested. From his Palantir stock alone, Mr. Phelan recently earned over $5 million in capital gains. 

“Even if you have sold your Palantir investments, your relationship with the company could still bias your decision-making toward assisting Palantir in its current push for more DoD contracts,” said Senator Warren. 

Mr. Phelan also holds a multi-million-dollar stake in Red Cell Partners, a venture capital firm that is heavily invested in defense technology, has contracts with DoD, and has a history of hiring former senior defense officials, including former Defense Secretary Mark Esper. Red Cell aims to increase DoD’s reliance on artificial intelligence (AI), and Phelan’s Red Cell assets include investments in multiple defense-tech AI companies. 

Senator Warren urged the nominee to divest any remaining defense contractor investments before taking office and not repurchase stock in these contractors while serving as the Secretary of the Navy. She also asked him to recuse himself from particular matters involving his former clients and employers for four years after serving in the Navy role, as many Biden appointees did. Lastly, Senator Warren asked Mr. Phelan to commit not to lobby DoD or work for companies that do business with DoD for four years after leaving office. 

“The rampant revolving door of former government leaders lobbying the agencies they once led, while their government relationships remain fresh, erodes Americans’ faith in the federal government…By making these commitments, you would increase Americans’ trust in your ability to serve the public interest during your time at DoD — rather than the special interests of political allies and private sector companies,” concluded Senator Warren. 

Senator Warren has sought to protect servicemembers and national security by pushing defense nominees to resolve their conflicts of interest: 

  • In March 2025, Senator Elizabeth Warren wrote to Deputy Defense Secretary Nominee Stephen Feinberg, urging him to recuse himself from all matters related to Ligado Networks, which has a pending $39 billion lawsuit against the Department of Defense (DoD) over highly sought-after telecommunications spectrum space that the military has said is “essential for its various satellite communications, radars and navigation systems” usage. 
  • In March 2025, Senator Elizabeth Warren wrote to Mr. Emil Michael, nominee for Under Secretary of Defense for Research and Engineering, with concern over his history of inappropriate behavior at work, his attacks on journalists and public accountability, and his ties to technology companies that may seek contracts with the Department of Defense. 
  • In February 2025, Senator Elizabeth Warren wrote to Mr. Stephen Feinberg, nominee for Deputy Secretary of the Department of Defense, ahead of his confirmation hearing before the Senate Armed Services Committee, pressing him to explain his “serious conflicts of interest” and his track record of mismanagement.
  • In January 2025, Senator Elizabeth Warren wrote to Mr. Michael Duffey, nominee for Under Secretary of Defense for Acquisition and Sustainment of the Department of Defense, ahead of his confirmation hearing, with serious concerns about his record, which include violating the law, disregarding congressional authority, and his involvement in Project 2025. 
  • In January 2025, Senator Elizabeth Warren wrote to Mr. Pete Hegseth, nominee for Secretary of the Department of Defense, regarding his ethics conflicts ahead of the Senate’s consideration of his nomination. Mr. Hegseth’s household’s ownership of stock in several defense contractors and his unwillingness to commit to post-employment restrictions he previously advocated for at his confirmation hearing were particularly troubling for the role of Secretary of Defense.
  • In March 2024, Senator Elizabeth Warren secured ethics commitments from Douglas Schmidt, ahead of his confirmation to be the Director of Operational Test and Evaluation (DOT&E) for the Department of Defense.
  • In June 2023, Senator Elizabeth Warren and representative Andy Kim reintroduced the Department of Defense Ethics and Anti-Corruption Act, to limit the influence of contractors on the military, constrain foreign influence on retired senior military officers, and assert greater transparency over contractors and their interaction with DoD.
  • In July 2021, Senator Elizabeth Warren secured agreements to four-year recusals from former clients’ and employers’ party matters from then-Secretary of the Air Force Frank Kendall and then-USD(R&E) Heidi Shyu.
  • In January 2021, Senator Elizabeth Warren secured a commitment from General Lloyd Austin III, then-nominee for Secretary of Defense, to extend his recusal from Raytheon Technologies for four years and to not seek a position on the board of a defense contractor or become a lobbyist after his government service.

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