The issue actually runs far deeper than that. It was a brilliant scheme by them quite honestly. I could write a post that could take up a hundred pages, or we could grab a beer sometime.
If you had a gun to my head to give you a TL:DR though, I would just put it like this: Transdigm is a mother ship company that purchases manufacturers of very low dollar, but high volume parts. The DoD can’t get a full cost breakout for any sole source acquisitions that are under $2 million (TINA threshold). When we do big productions for aircraft or whatever, we focus on a lot of our efforts on the high dollar material and subcontracts. Transdigm went out and purchased the companies that sold us $500 worth of material and then started charging $5,000 for it, after changing part numbers and descriptions. They also don’t do business directly with the government, but with our contractors (Lockheed, Boeing, Raytheon, etc). Or, they are a second tier supplier (sell to the suppliers or our contractors). So then they make the $500 to $5,000 move that shows up for a part number that has changed on a bill of material that is thousands of lines long that flies under the radar (no pun intended).
Before the IG report, when they were first questioned, they would drag their feet and/or refuse to answer questions, using the TINA statute as their shield. Their leverage on that front is that they knew the DoD wasn’t going to postpone supplying the warfighter over $5,000 worth of material. The prime contractors didn’t care much either because it was a low material cost to them which would be reimbursed as part of the prime contract execution. The problem is TD has over 50 subsidiaries across the board now who all do this in high volume. Finally, somebody blew the whistle.
The other problem too, is that if you listen to what the GOP reps say during that hearing, you’ll notice they actually defend Transdigm with the whole “This is an American company creating American jobs and why are we trying to punish them?” Schtick.
Sorry to hijack the thread. That was my TL:DR believe it or not.
