(Adds comments from Shanahan)
By Idrees Ali and Steve Holland
WASHINGTON, May 9 (Reuters) - President Donald Trump plans to nominate Patrick Shanahan, a former Boeing Co executive, as his defense secretary, the White House said on Thursday, breaking with tradition by choosing someone who made a career at a top defense company as Pentagon chief.
Shanahan had been under investigation by the Pentagon inspector general for allegedly seeking preferential treatment of Boeing while at the Defense Department but he was cleared of wrongdoing in April. He has been acting defense secretary since January, the longest in Pentagon history.
"Based upon his outstanding service to the country and his demonstrated ability to lead, President Trump intends to nominate Patrick M. Shanahan to be the secretary of defense," White House spokeswoman Sarah Sanders said in a statement.
Early tests for Shanahan will include handling growing tensions with Iran, renewed missile tests by North Korea and questions about how the United States should handle the political and economic crisis in Venezuela.
Shanahan said in a statement that he was committed to modernizing U.S. military forces and if confirmed would aggressively implement Trump's national defense strategy which prioritizes competition with China and Russia over the counterinsurgency wars that have consumed the Pentagon for much of the past two decades.
Shanahan, 56, was thrust into the role in an acting capacity in January, after Jim Mattis abruptly resigned over policy differences with Trump.
On his first day as acting Pentagon chief in January, Shanahan told civilian leaders of the U.S. military to focus on "China, China, China."
The Trump administration has announced its intention to withdraw most U.S. troops from Syria and diplomatic efforts are underway to bring an end to the 17-year-old war Afghanistan.
But the most pressing short-term issue is likely to be Iran. Earlier this week the Pentagon said it was sending a carrier strike group and bombers to the Middle East after U.S. intelligence signaled possible preparations by Tehran to stage attacks against U.S. forces or interests.
Shanahan is expected to be confirmed by senators, though he could face a tough confirmation process because of his tenure at Boeing.
Lawmakers have previously expressed concern about undue influence on the Pentagon from defense companies.
Ties between Boeing and the Trump administration run deep, with Trump using the company's products and sites as a backdrop for major announcements.
Boeing, the world's largest planemaker, is facing one of the biggest crises in its 103-year history following the disasters on Lion Air in Indonesia last year and another on Ethiopian Airlines in March, which together killed all 346 on board.
The Pentagon inspector general started the investigation of Shanahan in March for allegedly promoting Boeing in Pentagon meetings and disparaging competitors. But a report published on April 25 said none of the allegations were substantiated.
Defense secretaries have traditionally come from a political or policy background, serving as a counterweight to the military brass in decision making. Mattis, a retired Marine general, was one of the few former military leaders to become secretary.
Mattis implicitly criticized Trump in his resignation letter for failing to value allies who fight alongside the United States, including in places like Syria.
Shanahan is unlikely to be an effective counterweight to Trump's often impulsive decision making. He toured the U.S. border with Mexico in February in what was seen as a show of support for Trump's planned border wall.
Shanahan has been serving in an acting capacity since the start of the year, making him the longest acting defense secretary ever. He joined Boeing in 1986 and spent more than three decades there, working on the 737 and 787 Dreamliner commercial airplanes.
Shanahan was also the president and general manager of Boeing Missile Defense Systems and worked on the Apache, Chinook and Osprey military aircraft.
Trump himself has been a strong proponent of military products made by U.S. defense companies. In phone calls and public appearances with world leaders, Trump has gone further than any of his predecessors to act as a salesman for the U.S. defense industry.
A senior administration official, speaking on condition of anonymity, said Shanahan believed that he was answerable to Trump and it was his job to implement decisions made by the president.
In February, the chairman of the Senate Armed Services Committee, Senator James Inhofe, said he did not think Trump would nominate Shanahan. But since then, officials say Inhofe has privately told Shanahan he would back him.
"We need a confirmed leader at the Department and, after working with him closely over the last few months, I welcome his selection," Inhofe said in a statement on Thursday.
During Shanahan's Senate confirmation hearing to be deputy defense secretary in 2017, the committee's then-chairman, John McCain, voiced deep concern about giving the deputy job to an executive from one of the five corporations accounting for the lion’s share of U.S. defense spending.
"I have to have confidence that the fox is not going to be put back into the henhouse," said McCain, who died in August. (Reporting by Steve Holland and Idrees Ali; Writing by Idrees Ali and David Alexander; Editing by Eric Beech and Alistair Bell)