Commercial and military aircraft component designer and supplier TransDigm Group [TDG] earned $20.8 million in excess profits in a sample of contracts awarded by the Defense Logistics Agency between 2017 and 2019, the Department of Defense Office of Inspector General (IG) says in a new report.
The report says that the excess profits were earned on 105 spare parts on 150 contracts where the company wasn’t required to provide certified cost data because the award values fell below the threshold mandated in the Truth in Negotiations Act (TINA). Between January 2017 and June 2019, the IG report says that more than 95 percent of the contracts valued at $268.2 million in total to TransDigm were below the threshold.
“The DoD will continue to pay higher prices if the DoD is not enabled to use cost analysis to determine price reasonableness for sole-source spare parts procured using market-based pricing on contracts valued under the TINA threshold,” the report says.
The Dec. 13 IG report follows one from the agency in February 2019 charging that TransDigm overpaid the DLA and the Army by $16.1 million on 112 contracts between January 2015 and January 2017.
“Today’s DoD IG report confirms that TransDigm is back at it again, holding the federal government hostage by manipulating sole-source contracts to hike prices on taxpayers,” Rep. Carolyn Maloney (D-N.Y.), chairwoman of the House Oversight and Reform Committee, said in a statement. “The Inspector General found that TransDigm has engaged in rampant price gouging on mission-critical aircraft parts. TransDigm must immediately return the $20.8 million it overcharged American taxpayers. If it fails to do so, the committee will take further action.”
TransDigm fired back in a statement that DoD paid lower than commercial prices for similar parts, adding that “the report did not conduct a price analysis and instead implies that the DoD negotiated prices that were too high.”
“Since 2019, TransDigm has invested considerable resources to better support the DoD and provide more information about the value of its products,” the company said. “For this audit, TransDigm provided full access and cooperation to the IG to help promote a complete and accurate assessment of the company and the value the company provides to the DoD through its businesses.”