DOD IG to audit TransDigm's business model

July 9, 2019

By Marjorie Censer

The Pentagon inspector general announced it will start an audit this month to determine whether TransDigm Group's "business model affects the DOD's ability to pay fair and reasonable prices for spare parts."

In a July 8 memo sent to the under secretary of defense for acquisition and sustainment, the commander of U.S. Special Operations Command and others, Theresa Hull, the assistant inspector general for audit, writes that the audit is in response to a congressional request.

"We will perform the audit at the Defense Logistics Agency, Department of the Air Force, Department of the Army, Department of the Navy, and U.S. Special Operations Command," she adds. "We may identify additional locations during the audit."

The company did not immediately respond to a request for comment.

TransDigm has come under fire in recent months after the Defense Department inspector general found the company was reaping excessive profits.

Last month, the Pentagon issued a new memo singling out the company for "engaging in a pervasive strategy of negotiating excessive profits on contracts with the department for spare parts."

As a result, the document added, "for all procurement actions not yet awarded as of the date of this memorandum, unless the prices agreed upon are based on adequate price competition or are set by law or regulation, contracting officers are directed to require the submission of uncertified cost or pricing data to support prices proposed by TransDigm and its subsidiaries."