Congressman seeks investigation into TransDigm

By Marjorie Censer / March 22, 2017 at 12:51 PM

Rep. Ro Khanna (D-CA) is asking the Pentagon inspector general to pursue an investigation into TransDigm Group “for potential waste, fraud, and abuse in the defense industrial base,” according to a letter sent this week.

In the letter, sent to Glenn Fine, acting inspector general at DOD, Khanna says he has been monitoring reports that suggest TransDigm “has been operating as a hidden monopolist by (i) engaging in a series of unreasonable price increases of products for which it is the only supplier, (ii) disguising its cost structure and identity from Pentagon procurement officers, and (iii) unreasonably hiking prices to benefit shareholders and executives.”

TransDigm Group has made a series of acquisitions in recent years. The company earlier this year acquired Takata's aerospace business for about $90 million. Last year, TransDigm picked up Young & Franklin, Data Device Corp. and Breeze-Eastern Corp.

In his letter, Khanna, a member of the House Armed Services Committee, argues TransDigm is a holding company that acquires the makers of “rarely noticed 'proprietary' aerospace parts.” Once a supplier is acquired, TransDigm then raises the price of its product, the letter alleges.

He writes that TransDigm is avoiding regulations meant to protect against sole-source contractors, contending the company's subsidiaries are not identifying TransDigm as their corporate parent. Khanna outlines a list of six questions about the company, including the total cost to the government of its price increases.

Khanna also sent copies of the letter to Defense Secretary Jim Mattis and to the leaders of the House Armed Services Committee and the House Armed Services oversight and investigations subcommittee.

TransDigm did not immediately respond to a request for comment.