Price Gouging in Military Contracts: New Inspector General Report Exposes Excess Profit Obtained by TransDigm Group

Chairwoman Carolyn B. Maloney's Opening Statement

Washington D.C. (January 13, 2022)— On Wednesday, January 19, 2022, at 10:00 a.m., Rep. Carolyn B. Maloney, the Chairwoman of the Committee on Oversight and Reform, will hold a remote hearing to examine the results of an audit by the Department of Defense Office of Inspector General (DOD OIG), which found that a defense contractor, TransDigm Group Inc., has received nearly $21 million in excess profits on numerous contracts by acquiring companies with sole-source contracts for spare parts needed by the military and then raising prices dramatically. 

On May 15, 2019, the Committee held a bipartisan hearing examining a DOD OIG report that found TransDigm received $16.1 million in excess profits on 46 of the 47 parts reviewed.   After Committee Members called on the company to refund the money during the hearing, TransDigm repaid the full $16.1 million to DOD.

On December 13, 2021, the DOD OIG released a new report requested by the Committee revealing that TransDigm received an additional nearly $21 million in excess profits on 105 of 106 types of spare parts purchased by the Pentagon.  The DOD OIG also confirmed that TransDigm’s business model is to acquire companies with sole-source contacts, and then hike up prices on the spare parts those companies manufacture.

The hearing will examine the new report as well as potential legislative and administrative reforms to increase transparency and accountability in government contracts.