HomeBusinessDemocrats press defense contractor over alleged price gouging

Democrats press defense contractor over alleged price gouging

Democrats on the House Oversight and Reform Committee wish to claw again $21 million in extra earnings from a spare elements producer who they are saying has repeatedly fleeced the Pentagon.

TransDigm Group Inc. already ponied up $16.1 million to the Defense Department after a 2019 inspector normal report discovered that the corporate obtained extra earnings on 46 of 47 spare elements reviewed as a part of an audit.

Last month, the Pentagon launched a follow-up that discovered that the corporate had extra earnings on a further 105 elements.

“Pay back the money,” House Oversight Committee Chairwoman Carolyn B. Maloney, New York Democrat, demanded Wednesday. “Overcharging taxpayers, even if you get away with it under the law, is just plain wrong.”

TransDigm executives had been hauled earlier than Congress in 2019 after the Defense Department’s preliminary report was launched, and appeared for a second grilling by lawmakers Wednesday in response to the Pentagon’s newest findings.

The Pentagon’s follow-up audit was in response to the committee’s request following the listening to in 2019.

The Pentagon says TransDigm, the father or mother firm of a number of subsidiaries that manufacture spare elements for navy and civilian plane, has continued to gouge the federal government on a number of sole-source spare elements contracts because the 2019 report was launched.

The auditors say the corporate’s enterprise mannequin is to purchase up smaller firms with present sole-source Pentagon contracts and instantly hike costs on these elements — in some circumstances tacking on ten-fold margins.

The auditors additionally say the corporate withholds value information wanted to find out honest price estimates and capitalizes on smaller contracts that fall beneath whole value thresholds requiring extra detailed value evaluation by the Pentagon.

Both studies suggest modifications within the contract bid negotiations course of, together with legislative modifications that may enable the Defense Department to acquire “necessary cost or pricing data to negotiate fair and reasonable prices.”

TransDigm says the auditors used “arbitrary standards” that resulted in “flawed” and “misleading” findings. They additionally say the auditors ignored “real costs incurred by the business” and introduced the corporate’s margins “in a misleading and provocative manner.”

TransDigm President and CEO Kevin Stein stated that because the listening to in 2019, the corporate has “instituted many initiatives” to enhance transparency with the Defense Department and that particular contracts audited within the Pentagon’s newest probe are from the identical timeframe because the earlier audit and predate the 2019 listening to.

“After over two years of review and thousands of documents produced, the recently released audit came to the same conclusion as the previous two: that TransDigm businesses followed all applicable laws and policies in their fixed-price contracts with the DoD,” Mr. Stein stated earlier than the committee Wednesday.

The high Republican on the committee, Rep. James Comer of Kentucky, defended the corporate, which he stated adopted the regulation.

“I agree the government needs to be a good steward of taxpayer dollars,” Mr. Comer stated. “And I agree DOD should not be forced to pay exorbitant prices. I don’t agree with attacking one company that, frankly, followed the law.”

He accused committee Democrats of recycling a spectacle from three years in the past to distract from urgent points spurred by Democrats’ failed insurance policies.

“Instead of focusing on any of these crises, we are here today to conduct a hearing that already happened,” Mr. Comer stated. “We had this exact same hearing in 2019. Not a similar hearing, the exact same one, with almost the exact same witnesses.”

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