Small Wars Journal

Defense Firm’s ‘Excess Profits’ Land in Congress’s Crosshairs

Thu, 05/16/2019 - 1:28am

Defense Firm’s ‘Excess Profits’ Land in Congress’s Crosshairs by Joe Gould – Defense News

Call it the gold-plated clutch disk.

The Pentagon paid contractor TransDigm $1,443 for a for a three-inch ring called a “non-vehicular clutch disk” which is used in the C-135 transport aircraft, though it cost the company just $32 to produce, giving it 4,436 percent in excess profit, according to a House Oversight and Government Reform memo released Wednesday.

The committee set to probe what it called TransDigm’s “extreme profit margins" at a hearing Wednesday, echoing a famous Pentagon crackdown in 1984 on “gold-plated” weapons and other items that are built to much higher standards than common sense would dictate. Lawmakers are expected to use the hearing to explore the potential need for greater transparency and stronger regulations on defense industry profits…

The concern is bipartisan. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, sent a letter to acting Defense Secretary Patrick Shanahan, President Donald Trump’s nominee to lead the department, seeking more information about how the Pentagon is protecting itself from contractors who overcharge…

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