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Defense Contractor Accused of Overcharging Will Repay $16 Million

TransDigm Acts following inspector general report and noisy hearing.

Two weeks after resisting the demands of scolding lawmakers, a major sole-source supplier of parts to the Pentagon has agreed to repay $16 million in overcharges, the Defense Department inspector general confirmed on Tuesday.

Cleveland-based TransDigm Group Inc., a maker of aircraft parts, was the subject of a lengthy IG investigation that concluded last February that the company had taken $16.1 million in excess profits in 46 of the 47 parts under contract reviewed by the watchdog

The auditors asserted that TransDigm took advantage of existing acquisition regulations that did not require it to provide cost data when requested by Defense Department contracting officers. The case was monitored by Pentagon waste-watchers as a symptom of a larger problem of corporate overcharging, and it prompted Sen. Chuck Grassley, R-Iowa, to send an unusual hand-written note to acting Defense Secretary Patrick Shanahan demanding “accountability from DoD leadership.”

At this month’s hearing of the House Oversight and Reform Committee, several members, joined by deputy inspector general Glenn Fine, called on the company’s top executives to repay the money. But at the time, the company representatives denied any wrongdoing and said the question was under review.

House Oversight and Reform Chairman Rep. Elijah Cummings, D-Md., commended his fellow committee members for prompting the refund. “This is solid, bread-and-butter oversight that helps our troops and the American taxpayers,” he said on Friday. “We saved more money today for the American people than our committee’s entire budget for the year.”

The IG’s office on Tuesday called the refund “a significant return on investment to the taxpayer and one that doesn't happen very often.” Glenn Fine, the principal deputy inspector general performing the duties of inspector general, said, “I am pleased TransDigm agreed with our recommendation to return these excess profits to the government… We look forward to working with the Department of Defense and Congress to consider legislative reforms to prevent TransDigm, or other companies, from overcharging the government when buying sole-source items."

TransDigm did not respond to requests for comment by publication time.