Committee Held Hearing on Defense Contractor’s Excess Profits

May 15, 2019
Press Release

Washington, D.C. (May 15, 2019)—On Wednesday, the Committee on Oversight and Reform held a hearing on “DOD Inspector General Report on Excess Profits by TransDigm Group, Inc.” 

 

TAKEAWAYS

 

  • The memo prepared by Committee staff released during today’s hearing summarizes new documents obtained by the Committee regarding TransDigm’s extreme profit margins, as well as information from whistleblowers and former company officials about efforts to conceal data about the company’s costs for manufacturing these parts.

 

  • TransDigm refused to commit to paying the Department of Defense (DOD) a refund of the $16.1 million in excess profits it received through its price gouging.  Democratic and Republican members of the Committee urged TransDigm to immediately reimburse the DOD and end its unethical business practices.

 

  • TransDigm’s Chief Executive Officer Kevin Stein admitted that the company’s employees withheld cost data from contracting officers for 15 parts manufactured by the company despite requests from contracting officers.  Stein claimed that TransDigm can legally withhold cost data for commercial items, but none of the 15 parts had been deemed commercial items, according to testimony from the DOD.

 

  • Assistant Secretary of Defense for Acquisition Kevin Fahey testified, “we look forward to working with Congress to find ways to prevent companies like TransDigm from gouging the taxpayers with their sickening business practices.” 

 

  • As a result of TransDigm’s price gouging, Mr. Fahey explained that the DOD overpaid for mission-critical parts, diverting resources that could have been used for additional military needs.  Mr. Fahey testified, “Every time you’re paying a cost that is outrageous, you could be spending that money somewhere else. For example, if we got our $16 million back, we could be buying other spare parts to increase readiness.”

 

WITNESSES

 

The Honorable Kevin Fahey 
Assistant Secretary of Defense for Acquisition, Department of Defense

 

The Honorable Glenn Fine 
Acting Inspector General, Department of Defense

 

Nicholas Howley
Executive Chairman and Founder, TransDigm

 

Theresa Hull

Assistant Inspector General for Acquisition, Office of Inspector General, Department of Defense

 

Kevin Stein 
Chief Executive Officer, TransDigm

 

 

VIDEOS

Watch Rep. Khanna’s opening statement.

Watch Rep. Ocasio-Cortez’s question line.

Watch Rep. Connolly’s question line.

Watch Rep. Wasserman-Schultz’s question line.

Watch Rep. Holmes Norton’s question line.

 

116th Congress