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 contractto 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 inother defense contractors, like National Resilience, a biomanufacturing company that hasa $410 million DoD contract, and Woolpert, whichprovides school constructionservices for DoD.
The nominee alsofoundedMSD 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. Phelanrecently earnedover $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 ahistoryof hiring former senior defense officials, includingformer Defense SecretaryMark Esper. Red Cellaims to increaseDoD’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, asmany Biden appointeesdid. 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:
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