- Part 1 - TransDigm pays back $16 million in overcharges
- Part 2 - How overcharging was allowed to occur
- Part 3 - OIG recommendations to prevent future overcharges
Last Friday, the Defense Department told its contracting officers that it can no longer buy products from TransDigm (or its 150 or so subsidiaries) unless it receives uncertified cost or pricing data to support prices proposed by TransDigm. DoD now understands the problem and its significance to fair and reasonable pricing:
FAR ... provides that adequate price competition exists if two or more responsible offerors, competing independently, submit priced offers that satisfy the Government's expressed requirement. Even where there is only one manufacturer of an item, an acquisition complies with this definition as long as offerors each establish their proposed price independently. However, the definition of adequate price competition does not address the fact that a sole manufacturer (such as TransDigm) participating in a competition can effectively control the competition by its ability to establish the material pricing for all other offerors. In these situations, the Department does not consider such rigged competitions to be adequate price competition, based on independently submitted offers.
Therefore ... contracting officers are directed to require the submission of uncertified cost or pricing data to support prices proposed by TransDigm and its subsidiaries.Contracting officers have requested cost or pricing data in that past but TransDigm has refused. Given the critical nature of the parts being bought, TransDigm just might have the upper hand.
The DoD directive with its listing of 150 TransDigm subsidiaries can be found here.
RELATED: Article appearing in Forbes Magazine: Congress is Accepting Price Gouging by Defense Contractors. Alleges that the Transdigm case is only the tip of the iceberg.
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