Pentagon Contractor’s 9,400% Profit on a Half-Inch Metal Pin

The Pentagon could end up paying about 9,400% in excess profit to TransDigm Group Inc. for a half-inch metal pin.

The Defense Logistics Agency could end up paying the manufacturer, TransDigm, $4,361 for the “drive pin” in a July contract that should cost $46, according to a Pentagon review.

The review found excess profits for 98 of 100 parts sampled. The Pentagon could pay TransDigm nearly $100 million more in coming years for parts valued at a fraction of the cost, with excess profit per part of 95% to the 9,380%, the Defense Department’s inspector general said in an audit obtained by Bloomberg News.

The release of this information comes as the Pentagon weighs whether to recommend legislation to require more disclosure by contractors.

According to the audit, from 2013 through 2015, the contractor increased the price of one part that changes the pressure of fuel moving through an engine to $9,801 from $543. In those years, TransDigm charged $1,443 for each “non-vehicular clutch disk” that cost just $32 to make.

 

 

Image adapted from: “EAT WHAT YOU KILL” by CHRISTOPHER DOMBRES is in the Public Domain

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