Lawmakers and military contractors fight over price gouging allegations

Republicans condemned the use of committee funds to single out a law-abiding corporation during a Jan. 19 congressional hearing intended at holding a military contractor accountable for price gouging.

Following a Defense Department (DOD) Inspector General audit, which revealed that aerospace manufacturing firm TransDigm Group generated "massive profits" from its business with the army, the House Committee on Investigations and Reform held hearings on price gouging in military contracts.

TransDigm gained approximately $21 million in extra profit on 105 spare components is supplied to the DOD between January 2017 and June 2019 according to the DOD audit—between 2.8 and 3,850 % on every part. "Increased profit," according to the auditor general, is defined as a profit margin of more than 15% above price.

“TransDigm also practices what it calls ‘market-based pricing’ … a strategy in which the company sets prices of items that it sells, based on what commercial or government entities are willing to pay, as opposed to basing prices on the cost to make spare parts,” DOD Deputy Inspector General Theresa Hull said at the Jan. 19 hearing.

20 Jan 2022