Congressional shaming prompts notorious Pentagon price-gouger to refund $16.1m

Transdigm is a notorious military supplier/hedge fund that used acquisitions to attain a monopoly over many spare parts so they could charge exorbitant markups -- as high as 4,451%! -- on materials procured with tax dollars.

Many attempts have been made to rein in Transdigm (who, despite their massive profits, clearly can't afford to buy a vowel, perhaps they could ask their retired $61m/year CEO, Nicholas Howley, to buy them one), but they have all failed. Transdigm's price-gouging is repugnant, but not illegal.

Rep Ro Khanna [D-CA] got on Transdigm case as a freshman Congressman two years ago, and after two years of work, he dragged them in front of the House Oversight Committee, where they were made to answer for a scorching DoD Inspector General report.

During the years he fought for his hearing, Khanna was subjected to a dirty-tricks campaign to discredit his work, including the false claim that he was motivated by having taken a short position on Transdigm's stock. But he stuck with it and recruited the aid of the likes of Elizabeth Warren, prompting the Inspector General to audit the company's transactions with the US military.

That report was so damning that even the Republicans on the committee condemned Transdigm and called on them to return the $16.1m in "excess profits" that the Inspector General had identified.

Less than a week later, the company refunded the $16.1m. As committee chair Elijah Cummings [D-MD] said, "We saved more money today for the American people than our Committee’s entire budget for the year."

This crooked dealing happened on the watch of multiple Congresses and administrations that concerned themselves with the most meanspirited cuts to education, food assistance, and subsidies for housing -- whereas merely auditing the Beltway Bandits who were gouging the taxpayers for hundreds of millions in aggregate would have saved much more for the taxpayer. The difference? Poor people don't have any money left over from their Section 8 vouchers and SNAP cards to make campaign contributions, while the military-industrial complex can handily afford to roll a few million out of the hundreds they've ripped us off for into campaign finance.

Cummings, the House Oversight chair, wanted hearings on TransDigm, and Khanna also happened to be a member of that committee. Investigators for the committee spoke with former TransDigm employees, who gave more information about TransDigm’s deliberate deceptions. One former sales director said, “We were coached not to provide cost data,” and that working with the Defense Department was like “taking candy from a baby.”

This came to a head on May 15 at the Oversight Committee hearing, where former TransDigm CEO Howley (who remains the company’s executive chair) and current CEO Kevin Stein testified. Another witness, assistant secretary of defense for acquisition Kevin Fahey, condemned TransDigm’s “disgraceful business model, designed to exploit current statutes.” He also called TransDigm’s business practices “outrageous” and “sickening.”

How Rep. Ro Khanna Got a Price–Gouging Defense Contractor to Return $16.1 Million to the Pentagon [David Dayen/The Intercept]