A defense contractor accused of overcharging the Pentagon for mission-critical parts has agreed to repay the government $16 million after its executives were grilled by Congress last week.
TransDigm Group cut several checks to the Pentagon on Thursday as part of a repayment agreement after the company’s high profit margins selling aviation parts to the military became public. TransDigm executives faced bipartisan backlash for their business practices last week during a House Oversight and Government Reform Committee hearing.
“Today’s decision by TransDigm to refund millions of dollars in blatant overcharges would not have happened without the hearing in the Oversight Committee last week,” said committee chairman Elijah Cummings, D-Ga., in a statement Friday. “This is solid, bread-and-butter oversight that helps our troops and the American taxpayers. We saved more money today for the American people than our Committee’s entire budget for the year.”
A Pentagon inspector general review of some of the parts TransDigm sold to the government found the company was raking in excess profits ranging from 17% to 4,451%. Many of the parts were required for essential military aircraft, meaning Pentagon contracting officers had no choice but to purchase them, even though they knew the prices were exorbitant.
Assistant secretary of defense for acquisition Kevin Fahey told the committee that TransDigm was “gouging the taxpayers with their sickening business practices.” Rep. Ro Khanna, D-Calif., who helped lead the investigation into TransDigm, wondered why the company had not paid back the $16 million suggested by the inspector general.
“The company is worth $1.2 billion, why not just pay back $16 million?” Khanna asked TransDigm executives during the hearing.
“We’re still evaluating that,” said Nicholas Howley, the company’s executive chairman and founder. He expressed concern that paying back the money would imply TransDigm did something wrong or illegal. The Pentagon found that TransDigm’s actions were legal, though perhaps unethical.
Holding TransDigm to account was “a good first step,” Cummings said, but he added “we must do even more in the future to prevent unscrupulous contractors from holding us hostage through abusive monopoly contracts.”
