Congressional Democrats heat up fight against contractors price gouging the military

November 30, 2023

Two Congressional lawmakers—Sen. Elizabeth Warren (D-MA) and Rep. John Garamendi (D-CA)—have stepped up their campaign against price gouging in military contracts, CQ Roll Call reported Thursday.

The lawmakers, each a member of their respective chamber’s Armed Services Committee, pressed their case in letters obtained by Roll Call that was sent to Defense Secretary Lloyd Austin and Kevin Stein, president and CEO of Cleveland-based TransDigm Group Inc., a company that provides military parts and has been at the center of the pricing controversy for more than a decade. 

A CBS News “60 Minutes” report back in March found that nearly half of the United States’ $842 billion defense budget went to military contractors.

In their letter, Warren and Garamendi accused contractors of exploiting loopholes so their companies can refuse to submit to the Department of Defense legally required data documenting that their prices are fair and reasonable on contracts awarded without competition.

“Contractors who consistently refuse to turn over cost and pricing data continue to rake in DoD contracts,” Warren and Garamendi wrote to Austin.

In their letter to Stein, the lawmakers wrote that the TransDigm Group’s “ongoing refusal to provide DoD with pricing data is unacceptable given the company’s record of ripping off the government and taxpayer.”

In February 2019, the Pentagon’s inspector general revealed that the TransDigm Group overcharged the military by at least $16 million, with margins up to 4,451%, for various aircraft parts over a two-year period. 

A second investigation, in December 2021, found that the same company overpriced items by an additional $21 million, or 3,850% over the average cost for those same materials. 

In June of this year Warren and Garamendi introduced legislation to leverage Congress’s oversight powers and rein in the loopholes that allow for such price gouging.

However, The Stop Price Gouging the Military Act has so far not gotten past introduction on either the House or Senate floor.

This week in their letters, Warren and Garamendi posed a number of detailed questions to Austin and Stein aimed at gathering more information about price gouging and how to shape potential Congressional responses.

“It remains unclear…if DoD is otherwise using its full authority to ensure the government isn’t being ripped off,” they wrote to Defense Secretary Austin.

Read more exclusive news from Political IQ.

 

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