Oversight Committee to Hold Hearing on Excess Profits by Defense Contractor

May 13, 2019
Press Release

Washington, D.C. (May 13, 2019)—On Wednesday, May 15, 2019, at 10:00 a.m., the Committee on Oversight and Reform will hold a hearing on the “DOD Inspector General Report on Excess Profits by TransDigm Group, Inc.

WHERE:  2154 Rayburn House Office Building

WHEN:  Wednesday, May 15, 2019

TIME:  10:00 a.m.

A livestream will broadcast here

 

PURPOSE

The hearing will examine a report issued by the Department of Defense Inspector General (IG) identifying excess profits by TransDigm, a contractor that provides spare parts for military aircraft, and whether current acquisition regulations adequately equip contracting officers to negotiate fair and reasonable prices on behalf of the American taxpayers.

 

BACKGROUND

TransDigm manufactures spare parts for aircraft used by the Air Force and Army, including the AH-64 Apache, C-17 Globemaster III, the FF-16 Fighting Falcon, and the CH-47 Chinook.  According to the IG, from April 2012 through January 2017, DOD issued 4,942 contracts valued at $471 million to TransDigm.

In response to a request from Representative Ro Khanna, the IG reviewed the prices for a sample of 47 parts purchased from TransDigm under contracts awarded by the Defense Logistics Agency (DLA) and the Army. 

The IG determined that “TransDigm earned $16.1 million in excess profit on 46 of the 47 parts it sold to the DLA and the Army for $26.2 million between January 2015 and January 2017,” with profit percentages ranging from 17 to 4,451% for the 46 parts. 

The IG identified 12 parts that previously had been sold to DOD by another contractor.  For each part, TransDigm’s prices were significantly higher than the price offered by the original manufacturer before it was acquired by TransDigm.

 

WITNESSES

The Honorable Glenn Fine

Acting Inspector General

U.S. Department of Defense

 

Theresa Hull

Assistant Inspector General for Acquisition

U.S. Department of Defense, Office of Inspector General

 

Kevin Stein

Chief Executive Officer

TransDigm

 

Nicholas Howley

Founder and Executive Chairman

TransDigm

 

Kevin Fahey

Assistant Secretary of Defense for Acquisition

U.S. Department of Defense

 

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116th Congress