1 00:00:00,840 --> 00:00:03,980 Thank you madam Chair . Um This of 2 00:00:03,980 --> 00:00:06,400 course is an important topic . I do 3 00:00:06,400 --> 00:00:08,456 find it odd that the same people who 4 00:00:08,456 --> 00:00:10,678 have advocated for truants and wasteful 5 00:00:10,678 --> 00:00:12,456 spending over the last year are 6 00:00:12,456 --> 00:00:14,622 suddenly fiscal hawks when it comes to 7 00:00:14,622 --> 00:00:16,622 this . This is an important topic , 8 00:00:16,622 --> 00:00:18,733 especially of course as we are facing 9 00:00:18,733 --> 00:00:20,733 new challenges , we need to realize 10 00:00:20,733 --> 00:00:22,956 that efficiency has to be a competitive 11 00:00:22,956 --> 00:00:22,870 edge for our D . O . D . And a 12 00:00:22,870 --> 00:00:24,981 patriotic duty for the companies that 13 00:00:24,981 --> 00:00:27,148 were contracting with . Of course , My 14 00:00:27,148 --> 00:00:29,203 only question in this hearing is why 15 00:00:29,203 --> 00:00:31,314 we're only looking at one company and 16 00:00:31,314 --> 00:00:33,426 why we're only talking about 15 to 20 17 00:00:33,426 --> 00:00:35,481 million when we have trillion dollar 18 00:00:35,481 --> 00:00:37,314 contracts that remain Backlogs , 19 00:00:37,314 --> 00:00:39,850 wasting billions of dollars . We we saw 20 00:00:39,860 --> 00:00:43,030 by it and leave 85 billion in military 21 00:00:43,030 --> 00:00:46,110 hardware uh to a terrorist organization . 22 00:00:46,120 --> 00:00:48,287 And today we're talking about 15 to 20 23 00:00:48,287 --> 00:00:50,790 million , which is important , But I 24 00:00:50,790 --> 00:00:53,410 think it's more of a systemic larger 25 00:00:53,410 --> 00:00:55,577 issue when we should be looking at all 26 00:00:55,577 --> 00:00:57,632 the issues when it comes to military 27 00:00:57,632 --> 00:00:59,466 contracting . Well that's really 28 00:00:59,466 --> 00:01:01,580 wasting billions , not millions . But 29 00:01:01,580 --> 00:01:03,913 today we're talking about 15-20 million . 30 00:01:03,913 --> 00:01:07,880 So Mr Chinaglia , can you talk 31 00:01:07,890 --> 00:01:11,570 about just in time inventory 32 00:01:11,570 --> 00:01:15,000 soldiers , soldiers contracting . They 33 00:01:15,000 --> 00:01:17,167 place the body in a position of paying 34 00:01:17,167 --> 00:01:19,167 more for spare parts and decreasing 35 00:01:19,167 --> 00:01:21,400 readiness . These are longstanding 36 00:01:21,400 --> 00:01:23,678 issues have never been fully addressed . 37 00:01:23,678 --> 00:01:25,733 What can you do you do to reform the 38 00:01:25,733 --> 00:01:28,680 acquisition process ? Thank you 39 00:01:28,680 --> 00:01:31,830 congressman . So as I mentioned earlier , 40 00:01:31,840 --> 00:01:34,780 part of the calculus in deciding how 41 00:01:34,780 --> 00:01:36,891 many of these parts we can buy at any 42 00:01:36,891 --> 00:01:39,113 one time is the carrying cost inventory 43 00:01:39,113 --> 00:01:41,730 cost for D . L . A . To to hold that . 44 00:01:41,740 --> 00:01:45,020 Uh There's the fiscal pressure to 45 00:01:45,030 --> 00:01:47,170 uh to purchase the items that are 46 00:01:47,170 --> 00:01:50,490 needed uh instantaneously . And the war 47 00:01:50,490 --> 00:01:53,390 fighter expects delay to respond uh and 48 00:01:53,390 --> 00:01:56,420 having those on stock . And so uh that 49 00:01:56,420 --> 00:01:58,830 has driven the need to purchase in in 50 00:01:58,830 --> 00:02:00,830 some of the smaller quantities that 51 00:02:00,830 --> 00:02:02,997 we've talked about for the sole source 52 00:02:02,997 --> 00:02:06,040 uh scenario . I wanted to come back to 53 00:02:06,050 --> 00:02:09,010 Mr Stein's description of the of the 54 00:02:09,010 --> 00:02:12,630 two parts . And certainly I agree where 55 00:02:12,630 --> 00:02:15,110 the where the part is exactly the same 56 00:02:15,340 --> 00:02:17,229 as that is sold in the commercial 57 00:02:17,229 --> 00:02:19,610 marketplace , then we have confidence 58 00:02:19,610 --> 00:02:21,666 that the fairness of the price . But 59 00:02:21,666 --> 00:02:23,666 let's say the airline paid for that 60 00:02:23,666 --> 00:02:25,888 exact same part would be a fair price . 61 00:02:25,888 --> 00:02:28,054 Where we run into difficulties is when 62 00:02:28,054 --> 00:02:30,277 we look at these items that are not the 63 00:02:30,277 --> 00:02:32,388 same . Uh They're somewhat comparable 64 00:02:32,388 --> 00:02:34,720 but they're more what we call of a type 65 00:02:34,730 --> 00:02:37,920 of a commercial of a type meaning uh 66 00:02:37,930 --> 00:02:39,930 you can't go out and see that exact 67 00:02:39,930 --> 00:02:42,280 same product . Uh And and understand 68 00:02:42,280 --> 00:02:44,570 what the price of it is when it's 69 00:02:44,570 --> 00:02:46,848 subjected to competitive market forces . 70 00:02:49,140 --> 00:02:50,862 How do we know this has been a 71 00:02:50,862 --> 00:02:53,084 longstanding question . How do we build 72 00:02:53,084 --> 00:02:55,650 in incentive within the D . O . D . For 73 00:02:56,040 --> 00:02:58,670 for bargaining ? Uh You know when 74 00:02:58,670 --> 00:03:00,392 you're a contractor and you're 75 00:03:00,392 --> 00:03:02,503 negotiating these deals , it seems to 76 00:03:02,503 --> 00:03:04,614 me like there's not much incentive to 77 00:03:04,614 --> 00:03:06,614 to push for the lower price for the 78 00:03:06,614 --> 00:03:08,392 american people . Uh you know , 79 00:03:08,392 --> 00:03:10,448 businesses or trying to operate in a 80 00:03:10,448 --> 00:03:12,448 competitive environment . We'd like 81 00:03:12,448 --> 00:03:14,670 them each of course to keep in mind the 82 00:03:14,670 --> 00:03:16,726 overall patriotic goal of what we're 83 00:03:16,726 --> 00:03:18,726 trying to produce efficiently . But 84 00:03:18,726 --> 00:03:20,781 they're also competing against other 85 00:03:20,781 --> 00:03:22,837 commercial companies in that space . 86 00:03:22,837 --> 00:03:24,837 And it seems like we how how can we 87 00:03:24,837 --> 00:03:26,781 better incentivize the D . O . D . 88 00:03:26,781 --> 00:03:29,730 Contractors to to uh negotiate better 89 00:03:29,740 --> 00:03:31,907 in this ? I I'd like us to expand this 90 00:03:31,907 --> 00:03:33,796 conversation into two contracting 91 00:03:33,796 --> 00:03:36,018 because it seems like we constantly put 92 00:03:36,018 --> 00:03:38,129 in contracts that never get fulfilled 93 00:03:38,129 --> 00:03:40,240 on time or on budget , we continue to 94 00:03:40,240 --> 00:03:42,184 pay them anyway , that's where the 95 00:03:42,184 --> 00:03:44,407 billions are being wasted as opposed to 96 00:03:44,407 --> 00:03:46,629 what we're talking about today . But if 97 00:03:46,629 --> 00:03:48,573 you could address that alright , I 98 00:03:48,573 --> 00:03:50,629 think competition is is the key . We 99 00:03:50,629 --> 00:03:52,629 have our men and women who wear the 100 00:03:52,629 --> 00:03:54,684 uniform of this country uh enjoy the 101 00:03:54,684 --> 00:03:56,907 weapons systems uh and that they really 102 00:03:56,907 --> 00:03:59,690 need to have the decisive advantage in 103 00:03:59,690 --> 00:04:02,790 any uh any adversary 104 00:04:02,800 --> 00:04:06,330 conflict . And so I'm proud of the fact 105 00:04:06,330 --> 00:04:08,790 that our defense acquisition workforce 106 00:04:08,800 --> 00:04:11,350 um brings and deliver those 107 00:04:11,350 --> 00:04:14,060 capabilities to the warfighter . So 108 00:04:14,060 --> 00:04:17,940 there there's a lot of uh cause to 109 00:04:17,950 --> 00:04:20,140 to look at the positive side of that . 110 00:04:20,140 --> 00:04:22,362 If you look at the weapons systems that 111 00:04:22,362 --> 00:04:25,660 have been deployed for this nation , 112 00:04:26,040 --> 00:04:27,873 many of those originated through 113 00:04:27,873 --> 00:04:29,984 competition . And I think coming back 114 00:04:29,984 --> 00:04:31,984 to that . Uh so the extent to which 115 00:04:31,984 --> 00:04:34,460 were effective and competing . Uh these 116 00:04:34,460 --> 00:04:36,682 requirements will be better off for the 117 00:04:36,682 --> 00:04:40,470 taxpayers . Thank you . Chairman . 118 00:04:40,480 --> 00:04:44,220 I yield back heels back the gentleman 119 00:04:44,220 --> 00:04:46,130 from California . Mr Ro Khanna is 120 00:04:46,130 --> 00:04:47,963 recognized for five minutes . Mr 121 00:04:47,963 --> 00:04:50,220 O'Connor . Thank you , madam . Chair . 122 00:04:50,220 --> 00:04:53,590 Thank you for your leadership . I'll 123 00:04:53,590 --> 00:04:56,280 remind this committee that we had a 124 00:04:56,280 --> 00:05:00,000 bipartisan hearing in 2019 and calls on 125 00:05:00,000 --> 00:05:02,222 both the democratic and republican side 126 00:05:02,222 --> 00:05:04,720 to have trans time reimburse the 127 00:05:04,730 --> 00:05:07,150 federal government . $16.1 million . 128 00:05:07,150 --> 00:05:09,372 They did the right thing then they must 129 00:05:09,440 --> 00:05:11,384 reimbursed the government at least 130 00:05:11,384 --> 00:05:14,960 $20.8 million . The 131 00:05:14,970 --> 00:05:18,120 excess profit funding . Let me start 132 00:05:18,130 --> 00:05:21,290 with Miss Hall . Do you agree that 133 00:05:21,290 --> 00:05:23,540 that's the least trans time can do in 134 00:05:23,540 --> 00:05:25,651 reimbursing the government for that . 135 00:05:27,040 --> 00:05:29,318 Thank you . Thank you for the question . 136 00:05:29,318 --> 00:05:31,650 I stand by our report that the 20.8 137 00:05:31,650 --> 00:05:33,820 million um that trans dime earned uh 138 00:05:33,830 --> 00:05:36,750 excess profits on 105 spare parts um 139 00:05:36,750 --> 00:05:38,917 should be refunded to the government . 140 00:05:39,640 --> 00:05:41,862 I mean it would be unconscionable in my 141 00:05:41,862 --> 00:05:44,084 view for them not to do that given that 142 00:05:44,084 --> 00:05:46,307 they admitted their error . Last time . 143 00:05:46,307 --> 00:05:48,196 I hope they will let me ask you a 144 00:05:48,196 --> 00:05:50,840 general election and fine said when he 145 00:05:50,840 --> 00:05:53,320 was before us in 2019 we ought to look 146 00:05:53,320 --> 00:05:55,800 to the legislative structure to require 147 00:05:55,800 --> 00:05:57,960 companies to provide cost information 148 00:05:58,340 --> 00:06:00,480 but when asking when asked by 149 00:06:00,480 --> 00:06:02,813 contracting officers basically if the D . 150 00:06:02,813 --> 00:06:04,758 O . D . Wants to buy something and 151 00:06:04,758 --> 00:06:06,758 asked the company for the cost they 152 00:06:06,758 --> 00:06:08,813 should be required to do so . Do you 153 00:06:08,813 --> 00:06:11,550 agree miss how that companies like 154 00:06:11,550 --> 00:06:13,439 trance time should be required to 155 00:06:13,439 --> 00:06:15,870 provide uncertified cost data when the 156 00:06:15,870 --> 00:06:18,260 contracting officer deems it necessary . 157 00:06:19,540 --> 00:06:21,540 Yes I agree that when a contracting 158 00:06:21,540 --> 00:06:23,651 officer is unable to determine a fair 159 00:06:23,651 --> 00:06:25,540 and reasonable price and asks the 160 00:06:25,540 --> 00:06:27,429 contractor , especially in a sole 161 00:06:27,429 --> 00:06:29,540 source environment , they should they 162 00:06:29,540 --> 00:06:31,373 should obtain the data that they 163 00:06:31,373 --> 00:06:33,710 request Mr Tartaglia . If contracting 164 00:06:33,710 --> 00:06:35,932 officers could require contractors like 165 00:06:35,932 --> 00:06:38,120 trans dime to provide uncertified cost 166 00:06:38,120 --> 00:06:40,970 data , will that empower our government 167 00:06:40,980 --> 00:06:44,440 our pentagon to make better buying 168 00:06:44,440 --> 00:06:47,380 decisions ? Yes I believe it would and 169 00:06:47,380 --> 00:06:50,040 uh central to that is the judgment that 170 00:06:50,040 --> 00:06:52,096 are contracting officers exercise in 171 00:06:52,096 --> 00:06:54,040 getting to the point where they've 172 00:06:54,040 --> 00:06:55,929 decided that that is necessary to 173 00:06:55,929 --> 00:06:57,873 establish for unreasonable pricing 174 00:06:57,873 --> 00:07:00,000 using the hierarchy of other means . 175 00:07:00,000 --> 00:07:02,150 Have established that that price . 176 00:07:03,840 --> 00:07:05,729 Thank you , madam . Chair Ice for 177 00:07:05,729 --> 00:07:07,618 unanimous consent to place in the 178 00:07:07,618 --> 00:07:09,784 record of written testimony from mandy 179 00:07:09,784 --> 00:07:12,560 smith Berger director of the project of 180 00:07:12,560 --> 00:07:15,200 government oversight . She wrote quote 181 00:07:15,270 --> 00:07:18,710 it's time for Congress . It is time for 182 00:07:18,710 --> 00:07:20,800 Congress to stop enabling contractor 183 00:07:20,800 --> 00:07:23,530 overpricing the problems identified by 184 00:07:23,540 --> 00:07:25,373 this Washington report and other 185 00:07:25,373 --> 00:07:27,596 reports are only the tip of the iceberg 186 00:07:27,596 --> 00:07:29,651 but the solutions are clear they can 187 00:07:29,651 --> 00:07:31,873 only be fixed . If Congress get serious 188 00:07:31,873 --> 00:07:34,250 and takes action Madam Chair you have 189 00:07:34,250 --> 00:07:36,390 gotten serious you're taking action 190 00:07:36,400 --> 00:07:38,510 with the bill the fair pricing with 191 00:07:38,510 --> 00:07:40,454 cost transparency act . That would 192 00:07:40,454 --> 00:07:42,177 require contractors to provide 193 00:07:42,177 --> 00:07:44,860 uncertified cost information . I'm 194 00:07:44,870 --> 00:07:47,092 joining you in supporting that . I hope 195 00:07:47,092 --> 00:07:49,203 everyone on the committee ? Well . Mr 196 00:07:49,203 --> 00:07:51,203 Chinaglia this bill is based on the 197 00:07:51,203 --> 00:07:53,537 legislative proposal from the D . O . D . 198 00:07:53,537 --> 00:07:55,703 So I assume you would support changing 199 00:07:55,703 --> 00:07:57,814 the law for D . O . D . Contractors . 200 00:07:57,814 --> 00:07:59,981 Is that right ? Yes congressman I look 201 00:07:59,981 --> 00:08:02,148 forward to working with your committee 202 00:08:02,148 --> 00:08:05,380 and understanding how that legislation 203 00:08:05,380 --> 00:08:09,050 would would help us . Mr Howley . Last 204 00:08:09,050 --> 00:08:11,800 time you came before the committee you 205 00:08:11,800 --> 00:08:14,170 denied you obfuscated etc . I said 206 00:08:14,170 --> 00:08:16,200 you're gonna end up paying the 16.1 207 00:08:16,200 --> 00:08:18,440 million . You disagreed . You went back 208 00:08:18,450 --> 00:08:20,617 people told you pay the 16.1 million . 209 00:08:20,617 --> 00:08:22,728 You want to skip those steps and just 210 00:08:22,728 --> 00:08:24,894 tell us today that you're going to pay 211 00:08:24,894 --> 00:08:24,660 the 20.8 million , 212 00:08:32,130 --> 00:08:34,463 apologize apologize . I have to commute . 213 00:08:34,463 --> 00:08:37,250 I am . I I think I'm on music now . Ah 214 00:08:38,040 --> 00:08:40,630 Let me start by saying we are primarily 215 00:08:40,630 --> 00:08:44,200 a commercial company . The Department 216 00:08:44,200 --> 00:08:47,470 of Defense though is a is a not our 217 00:08:47,470 --> 00:08:50,230 largest customer by by by by a fair 218 00:08:50,230 --> 00:08:52,008 amount but they're an important 219 00:08:52,008 --> 00:08:54,800 customer . Mr . Holly . I last I don't 220 00:08:54,800 --> 00:08:56,689 want to be disrespectful . It's a 221 00:08:56,689 --> 00:08:58,856 simple question . Are you going to pay 222 00:08:58,856 --> 00:09:01,022 it or you're not going to pay it ? And 223 00:09:01,022 --> 00:09:03,244 all the you know , it's a simple yes or 224 00:09:03,244 --> 00:09:05,467 no . You answered the question and I'll 225 00:09:05,467 --> 00:09:07,578 attempt to answer it . The last thing 226 00:09:07,578 --> 00:09:09,578 we want . We do not like an unhappy 227 00:09:09,578 --> 00:09:12,630 antagonized customer . What we wanna do 228 00:09:12,630 --> 00:09:14,797 is we want to get to the bottom of the 229 00:09:14,797 --> 00:09:17,130 facts so that everyone understands the 230 00:09:17,130 --> 00:09:20,270 facts clearly at which point we can see 231 00:09:20,270 --> 00:09:22,270 what kind of resolution we can have 232 00:09:22,270 --> 00:09:25,300 here . We cannot go forward with a 233 00:09:25,440 --> 00:09:29,050 certain you'll 234 00:09:29,050 --> 00:09:31,450 take you've been taking classes , You 235 00:09:31,450 --> 00:09:33,990 can take that incorrectly as a yes , we 236 00:09:33,990 --> 00:09:36,360 cannot go forward without the facts 237 00:09:36,360 --> 00:09:38,570 being clearly stated and clearly 238 00:09:38,570 --> 00:09:41,390 understood , Madam Chairman . It's 239 00:09:41,390 --> 00:09:43,557 unfortunate . I thought you were going 240 00:09:43,557 --> 00:09:45,612 to do it . I my my prediction is you 241 00:09:45,612 --> 00:09:47,723 will do it would be better for you to 242 00:09:47,723 --> 00:09:47,260 just say here . You're going to do it , 243 00:09:47,940 --> 00:09:51,770 madam . Chairman , Parliamentary 244 00:09:51,770 --> 00:09:54,670 Inquiry . Gentleman's time has expired . 245 00:09:54,670 --> 00:09:56,780 And what is your your point ? Mr 246 00:09:56,780 --> 00:09:59,760 Sessions . My point would be is this a 247 00:09:59,760 --> 00:10:01,720 negotiation with the company or a 248 00:10:01,720 --> 00:10:04,500 hearing ? That's not a problem . That 249 00:10:04,500 --> 00:10:06,810 is not a parliamentarian inquiry . I 250 00:10:06,810 --> 00:10:09,550 now recognize from Ohio Mr Gibbs , you 251 00:10:09,550 --> 00:10:12,350 are now recognized . Thank thank thank 252 00:10:12,350 --> 00:10:15,110 you madam . Chair to miss Hall . Um 253 00:10:15,120 --> 00:10:17,120 Just to be clear that you found the 254 00:10:17,120 --> 00:10:19,231 Trans Time did not violate any law or 255 00:10:19,231 --> 00:10:21,398 policy in your audit correct ? Say yes 256 00:10:21,398 --> 00:10:25,230 or no yes I did not did not did 257 00:10:25,230 --> 00:10:27,660 anything . And and that the the 258 00:10:27,660 --> 00:10:29,827 government you know , found that these 259 00:10:29,827 --> 00:10:32,049 prices were fair and reasonable and yet 260 00:10:32,049 --> 00:10:34,049 they entered into the contracts . I 261 00:10:34,049 --> 00:10:36,160 guess my my thought here is these are 262 00:10:36,160 --> 00:10:38,500 firm fixed price contracts . It sounds 263 00:10:38,500 --> 00:10:41,360 like we're negotiating the contract 264 00:10:41,370 --> 00:10:44,030 after the contract's been filled . What 265 00:10:44,030 --> 00:10:46,260 kind of negotiation happens before the 266 00:10:46,260 --> 00:10:48,482 contract is signed on both parties . So 267 00:10:48,482 --> 00:10:50,593 I guess the best first question go to 268 00:10:50,593 --> 00:10:53,840 Dr stein . Uh has anybody has trans 269 00:10:53,840 --> 00:10:56,160 dinosaur walked away from a negotiation 270 00:10:56,160 --> 00:10:58,382 of contracts or or is the Department of 271 00:10:58,382 --> 00:11:00,620 Defense walked away . You know what's 272 00:11:00,620 --> 00:11:02,676 happened here because it sounds like 273 00:11:02,676 --> 00:11:04,810 we're negotiating after the fact I'm 274 00:11:04,810 --> 00:11:06,670 not aware of any , anything that 275 00:11:06,670 --> 00:11:08,930 anyone's walked away on . What I will 276 00:11:08,930 --> 00:11:12,360 say is that since the last audit 277 00:11:12,740 --> 00:11:16,400 um we have in the last hearing we have 278 00:11:16,400 --> 00:11:19,370 implemented quite a bit of changes 279 00:11:19,370 --> 00:11:21,630 ourselves and how we interact with the 280 00:11:21,630 --> 00:11:24,770 D . O . D . We now offer volume 281 00:11:24,770 --> 00:11:28,550 discounts on all spare parts pricing . 282 00:11:29,140 --> 00:11:31,840 Um to try and get around this , we have 283 00:11:31,850 --> 00:11:35,730 voluntarily provided cost data . We 284 00:11:35,730 --> 00:11:38,110 are providing more information than we 285 00:11:38,120 --> 00:11:41,260 ever have before . Uh none of that was 286 00:11:41,260 --> 00:11:43,316 captured in this audit because again 287 00:11:43,316 --> 00:11:45,482 this audit , it's like double jeopardy 288 00:11:45,482 --> 00:11:47,482 their auditing the same timeframe . 289 00:11:47,482 --> 00:11:49,704 Again , what we know is that we offered 290 00:11:49,704 --> 00:11:52,590 a discount to commercial uh and we do 291 00:11:52,590 --> 00:11:55,970 not agree with the the prophet 292 00:11:55,970 --> 00:11:59,950 artificial arbitrary profit limits I 293 00:11:59,950 --> 00:12:02,172 think to a doctor so you can respond to 294 00:12:02,172 --> 00:12:03,870 this seems to me if I was a 295 00:12:03,870 --> 00:12:06,960 manufacturer and of course 94% of my 296 00:12:06,960 --> 00:12:09,016 business was the commercial market , 297 00:12:09,016 --> 00:12:11,540 only 6% of the D . O . D . And I've got 298 00:12:11,540 --> 00:12:14,430 my manufacturing lines going and all of 299 00:12:14,430 --> 00:12:16,840 a sudden they want a contract for a 300 00:12:16,840 --> 00:12:19,550 specialty single source item or a 301 00:12:19,550 --> 00:12:22,260 special item . That's you know , that's 302 00:12:22,260 --> 00:12:25,470 a specific item and then you have to 303 00:12:25,470 --> 00:12:27,820 shut down some of your operation to to 304 00:12:27,820 --> 00:12:30,120 make that , you know , it's it's 305 00:12:30,120 --> 00:12:32,176 difficult to figure the cost because 306 00:12:32,176 --> 00:12:33,898 you got lost revenues from the 307 00:12:33,898 --> 00:12:33,740 production where you shut down . Is 308 00:12:33,740 --> 00:12:36,310 that correct ? That is correct . Um 309 00:12:36,320 --> 00:12:39,280 Often what happens is that we see 310 00:12:39,290 --> 00:12:41,460 orders and then a couple of days later 311 00:12:41,460 --> 00:12:43,690 even you might get another order with 312 00:12:43,690 --> 00:12:46,610 no forecast , no notification of what's 313 00:12:46,610 --> 00:12:48,750 happening . You could clearly have 314 00:12:48,750 --> 00:12:50,910 manufactured differently if you could 315 00:12:50,910 --> 00:12:53,960 buy if the D . O . D was buying in some 316 00:12:53,960 --> 00:12:56,550 reasonable lot quantity many of the 317 00:12:56,550 --> 00:12:59,810 parts including in this audit They had 318 00:12:59,810 --> 00:13:02,690 61 of the 107 spare parts of value . It 319 00:13:02,690 --> 00:13:05,200 did not have enough procurement history 320 00:13:05,200 --> 00:13:08,440 data to even perform an analysis . 321 00:13:08,450 --> 00:13:10,970 So if you're not buying something , but 322 00:13:10,970 --> 00:13:14,300 once every 5 , 10 years can you imagine 323 00:13:14,300 --> 00:13:16,300 what you have to go through from an 324 00:13:16,300 --> 00:13:18,522 engineering point of view to figure out 325 00:13:18,522 --> 00:13:20,689 how to make that part again so that it 326 00:13:20,689 --> 00:13:22,522 passes all the criteria that the 327 00:13:22,522 --> 00:13:25,360 warfighter deserves to keep them alive . 328 00:13:25,370 --> 00:13:28,760 And this is uh , it's nonsense almost . 329 00:13:28,770 --> 00:13:31,780 Well if these , if these were cost plus 330 00:13:31,780 --> 00:13:34,620 contracts , I can understand having 331 00:13:34,620 --> 00:13:36,842 negotiations over what your costs are . 332 00:13:36,842 --> 00:13:39,009 But the sense or not , it's a , it's a 333 00:13:39,009 --> 00:13:41,176 contract that you agreed on before you 334 00:13:41,176 --> 00:13:43,009 can start making the product and 335 00:13:43,009 --> 00:13:45,176 everybody you got on both sides of the 336 00:13:45,176 --> 00:13:47,398 on their contract , which you did . And 337 00:13:47,398 --> 00:13:49,620 so now they come back after the fact it 338 00:13:49,620 --> 00:13:51,842 seems to be a a problem . I don't quite 339 00:13:51,842 --> 00:13:54,009 understand how that works . And then I 340 00:13:54,009 --> 00:13:56,009 think it's very difficult to put in 341 00:13:56,009 --> 00:13:58,120 what your true cost might be when you 342 00:13:58,120 --> 00:14:00,064 had . That's true and often we see 343 00:14:00,064 --> 00:14:02,231 inflationary pressures that are out of 344 00:14:02,231 --> 00:14:04,287 control for a product we make in our 345 00:14:04,287 --> 00:14:06,500 south Carolina facility a gen engine 346 00:14:06,500 --> 00:14:09,620 igniter A critical raw material over a 347 00:14:09,620 --> 00:14:13,060 three month period went up over 300% . 348 00:14:13,440 --> 00:14:16,560 If we had agreed to that contract 349 00:14:16,570 --> 00:14:19,800 beforehand we have no ability to get 350 00:14:19,800 --> 00:14:21,967 more money back out of the D . O . D . 351 00:14:21,967 --> 00:14:24,560 Because of that . We take it on risk . 352 00:14:25,140 --> 00:14:28,790 So on this um 15% to figure 353 00:14:28,790 --> 00:14:32,300 that the I . G . Put in for profit 354 00:14:32,300 --> 00:14:35,230 margin is that applied to all similar 355 00:14:35,230 --> 00:14:37,174 companies for these types of fixed 356 00:14:37,174 --> 00:14:39,890 price contracts . Not that we're aware 357 00:14:39,890 --> 00:14:42,340 of . No we believe we're the only 358 00:14:42,340 --> 00:14:44,396 company being targeted in this way . 359 00:14:44,940 --> 00:14:47,930 Okay so it um yeah I just think there's 360 00:14:47,930 --> 00:14:50,440 there's there's huge issues here how 361 00:14:50,440 --> 00:14:52,662 you calculate your costs and and if you 362 00:14:52,662 --> 00:14:55,150 both agree on it uh that's an issue you 363 00:14:55,150 --> 00:14:57,350 just move on forward and and you could 364 00:14:57,350 --> 00:14:59,350 walk away from this business if you 365 00:14:59,350 --> 00:15:01,461 wanted to write and then and they had 366 00:15:01,461 --> 00:15:03,517 to you know I could find the product 367 00:15:03,517 --> 00:15:05,628 somewhere else and that's why we talk 368 00:15:05,628 --> 00:15:07,739 about single source . It's kind of it 369 00:15:07,739 --> 00:15:09,990 is strange in this because if if 370 00:15:10,000 --> 00:15:12,270 transmission disappeared the planes 371 00:15:12,270 --> 00:15:14,159 would keep flying they would find 372 00:15:14,159 --> 00:15:16,270 another source . Okay well my time is 373 00:15:16,270 --> 00:15:18,660 up but thank you for what you do for 374 00:15:18,670 --> 00:15:21,820 for making this country safe . Thank 375 00:15:21,820 --> 00:15:24,310 you . The general woman from florida MS . 376 00:15:24,310 --> 00:15:26,460 Wasserman Schultz is now recognized . 377 00:15:29,440 --> 00:15:31,840 Thank you madam . Chair Madam Chair I 378 00:15:31,840 --> 00:15:33,562 serve as chair of the military 379 00:15:33,562 --> 00:15:35,562 construction , veterans affairs and 380 00:15:35,562 --> 00:15:37,340 related agencies appropriations 381 00:15:37,340 --> 00:15:39,451 subcommittee and and our committee is 382 00:15:39,451 --> 00:15:41,451 committed to protecting our service 383 00:15:41,451 --> 00:15:41,110 members and improving their quality of 384 00:15:41,110 --> 00:15:43,380 life . We've we've pushed to improve 385 00:15:43,380 --> 00:15:45,380 atrocious housing standards , build 386 00:15:45,380 --> 00:15:47,269 childcare development centers and 387 00:15:47,269 --> 00:15:49,380 address preface contamination . While 388 00:15:49,380 --> 00:15:51,713 we've made great strides in these areas , 389 00:15:51,713 --> 00:15:53,936 there is much more that must be done to 390 00:15:53,936 --> 00:15:55,991 meet our obligations to care for not 391 00:15:55,991 --> 00:15:57,991 only those who wear the uniform but 392 00:15:57,991 --> 00:15:59,658 also for their families . The 393 00:15:59,658 --> 00:16:01,880 challenges our troops face already make 394 00:16:01,880 --> 00:16:03,824 it all the more reprehensible that 395 00:16:03,824 --> 00:16:05,936 trans time would choose to fleece the 396 00:16:05,936 --> 00:16:07,991 american taxpayer and overcharge the 397 00:16:07,991 --> 00:16:07,350 Department of Defense for critical 398 00:16:07,350 --> 00:16:09,900 products . Trans dime supplies , D . O . 399 00:16:09,900 --> 00:16:11,900 D . With spare parts for Black hawk 400 00:16:11,900 --> 00:16:13,844 helicopters , F sixteen's and F 30 401 00:16:13,844 --> 00:16:15,900 five's . Our military is using those 402 00:16:15,900 --> 00:16:18,011 planes and helicopters and operations 403 00:16:18,011 --> 00:16:19,956 all over the world . And the spare 404 00:16:19,956 --> 00:16:21,900 parts that trans dime supplies are 405 00:16:21,900 --> 00:16:23,956 critical to keeping those planes and 406 00:16:23,956 --> 00:16:26,178 helicopters flying safely . In an email 407 00:16:26,178 --> 00:16:28,011 that I have here obtained by the 408 00:16:28,011 --> 00:16:29,956 committee a sales director of aero 409 00:16:29,956 --> 00:16:32,340 Control X . A Trans dime subsidiary 410 00:16:32,340 --> 00:16:34,451 emphasized several talking points for 411 00:16:34,451 --> 00:16:36,673 employees to use when responding to D . 412 00:16:36,673 --> 00:16:38,673 O . D . Requests for cost and price 413 00:16:38,673 --> 00:16:40,451 data . The email says that when 414 00:16:40,451 --> 00:16:42,784 communicating with contracting officers , 415 00:16:42,784 --> 00:16:44,729 employees should be clear that the 416 00:16:44,729 --> 00:16:46,729 company is quote offering this as a 417 00:16:46,729 --> 00:16:48,951 solution to support the war fighter and 418 00:16:48,951 --> 00:16:50,451 that you quote welcome all 419 00:16:50,451 --> 00:16:52,673 opportunities to support the government 420 00:16:52,673 --> 00:16:54,507 to economically procure goods to 421 00:16:54,507 --> 00:16:56,840 support the troops ? Mr stein the I . G . 422 00:16:56,840 --> 00:16:58,951 Found that Trans Times excess profits 423 00:16:58,951 --> 00:17:01,810 were more than 500% for dozens of spare 424 00:17:01,810 --> 00:17:03,770 parts sold to D . O . D . Do you 425 00:17:03,770 --> 00:17:05,937 actually consider charging D . O . D . 426 00:17:05,937 --> 00:17:08,159 Prices that give trans dime a profit of 427 00:17:08,159 --> 00:17:10,381 more than 500% to be economical for the 428 00:17:10,381 --> 00:17:14,180 government ? Um You know when we look 429 00:17:14,180 --> 00:17:17,050 at these contracts we lost money on 430 00:17:17,050 --> 00:17:19,670 nine of the contracts audited by the I . 431 00:17:19,670 --> 00:17:22,630 G . You are cherry picking a single 432 00:17:22,630 --> 00:17:25,470 part here or there . Um That has 433 00:17:25,470 --> 00:17:28,880 extremely low volume on it . No no no 434 00:17:28,880 --> 00:17:31,440 no no reclaiming my time . I'm sorry 435 00:17:31,450 --> 00:17:34,750 I'm sorry reclaiming my madam chair , 436 00:17:34,750 --> 00:17:37,700 reclaiming my time . There is no 437 00:17:37,700 --> 00:17:39,922 reasonable benchmark that would justify 438 00:17:39,922 --> 00:17:42,033 the profits trans dime obtained . You 439 00:17:42,033 --> 00:17:44,910 don't you don't get to charge 500% more 440 00:17:44,920 --> 00:17:47,450 for parts on on one part of the 441 00:17:47,450 --> 00:17:50,120 contract because you lost money on on 442 00:17:50,120 --> 00:17:52,231 another part . There were more than a 443 00:17:52,231 --> 00:17:54,530 dozen instances where your profits were 444 00:17:54,530 --> 00:17:56,670 more than 500% . 445 00:17:58,540 --> 00:18:01,450 That's just outrageous and project to 446 00:18:01,450 --> 00:18:04,900 the calculation of 500% profit . It is 447 00:18:04,900 --> 00:18:08,430 um SCC calculation that's reclaiming my 448 00:18:08,430 --> 00:18:10,430 time reclaiming my time . It's very 449 00:18:10,430 --> 00:18:13,810 clear the the I . G . Was correct that 450 00:18:13,810 --> 00:18:16,490 that was the percentage of profit and 451 00:18:16,490 --> 00:18:18,657 that is an outrage . Miss Hull The I . 452 00:18:18,657 --> 00:18:20,768 G . S . review was limited to a small 453 00:18:20,768 --> 00:18:22,920 sample of approximately 3% of trans 454 00:18:22,920 --> 00:18:25,310 times contracts . Yet still identified 455 00:18:25,310 --> 00:18:28,050 $20.8 million dollars in excess profits . 456 00:18:28,440 --> 00:18:30,607 Would you agree that in all likelihood 457 00:18:30,607 --> 00:18:32,773 the total amount of ss profit could be 458 00:18:32,773 --> 00:18:35,800 tens of millions more . Okay Thank you 459 00:18:35,800 --> 00:18:38,022 for the question . And we looked at the 460 00:18:38,022 --> 00:18:40,244 specific dollar value thresholds in the 461 00:18:40,244 --> 00:18:42,356 time period that was requested by the 462 00:18:42,356 --> 00:18:44,467 committee and we found again that the 463 00:18:44,467 --> 00:18:46,578 trans dime earned excess profit of at 464 00:18:46,578 --> 00:18:48,522 least 20.8 million . Um there were 465 00:18:48,522 --> 00:18:50,744 other contracts that we did not include 466 00:18:50,744 --> 00:18:52,967 in this review . So it is possible that 467 00:18:52,967 --> 00:18:52,530 that number could be greater than 468 00:18:52,530 --> 00:18:56,520 20-20.8 million . Okay thank you . 469 00:18:56,570 --> 00:18:58,570 Now let me close madam Chair with a 470 00:18:58,570 --> 00:19:00,792 statement from a former director of the 471 00:19:00,792 --> 00:19:02,903 Trans Time subsidiary . They told the 472 00:19:02,903 --> 00:19:05,126 committee that when Trans dime acquired 473 00:19:05,126 --> 00:19:06,737 their company quote . It was 474 00:19:06,737 --> 00:19:08,848 disheartening since I had tried to do 475 00:19:08,848 --> 00:19:08,660 the right thing for the war fighter my 476 00:19:08,660 --> 00:19:11,180 whole career . Mr Stein and mr Howley . 477 00:19:11,180 --> 00:19:13,860 I I believe it is morally wrong for 478 00:19:13,860 --> 00:19:15,860 Trans time to take advantage of our 479 00:19:15,860 --> 00:19:18,360 military in a time of need or any time 480 00:19:18,840 --> 00:19:20,890 And I expect you to repay the $20.8 481 00:19:20,890 --> 00:19:23,001 million dollars to me . You should be 482 00:19:23,001 --> 00:19:25,112 barred from future contracts for this 483 00:19:25,112 --> 00:19:27,334 greed and deception . And if you really 484 00:19:27,334 --> 00:19:27,190 cared about the troops you would 485 00:19:27,190 --> 00:19:29,370 provide full cost data to the military 486 00:19:29,370 --> 00:19:31,910 when requested not talking points to 487 00:19:31,910 --> 00:19:35,430 try to obfuscate what your true cost 488 00:19:35,430 --> 00:19:38,360 is ? It's imperative that they know 489 00:19:38,440 --> 00:19:40,496 when you're trying to rip them off . 490 00:19:40,496 --> 00:19:42,607 Thank you Madam Chair , ideal back to 491 00:19:42,607 --> 00:19:45,100 balance at nighttime . I thank the lady 492 00:19:45,100 --> 00:19:47,080 for questioning and I just like to 493 00:19:47,080 --> 00:19:49,390 clarify with Mr stein building on her 494 00:19:49,390 --> 00:19:51,500 question . The Inspector General 495 00:19:51,500 --> 00:19:54,800 selected contracts awarded from 2017 496 00:19:55,010 --> 00:19:57,710 through 2019 within a certain dollar 497 00:19:57,710 --> 00:20:01,340 amount . And I would be very happy to 498 00:20:01,340 --> 00:20:04,160 request a review of all of Trans Times 499 00:20:04,170 --> 00:20:07,020 uh contracts is if that is what you are 500 00:20:07,020 --> 00:20:09,242 requesting . So I'm gonna ask you , are 501 00:20:09,242 --> 00:20:11,464 you are you requesting that ? Would you 502 00:20:11,464 --> 00:20:13,687 like all of Trans Times contracts to be 503 00:20:13,687 --> 00:20:15,742 reviewed for excess profits with the 504 00:20:15,742 --> 00:20:18,640 government ? Yes or no , of course not . 505 00:20:18,650 --> 00:20:22,430 We have made incredible time reclaiming 506 00:20:22,430 --> 00:20:25,020 my time . Reclaiming my time . The 507 00:20:25,020 --> 00:20:27,600 gentlewoman from south Carolina . The 508 00:20:27,600 --> 00:20:29,544 gentleman from south Carolina . Mr 509 00:20:29,544 --> 00:20:31,767 norman is recognized for five minutes . 510 00:20:32,540 --> 00:20:35,060 Thank you . Thank you . MS maloney . Um 511 00:20:35,940 --> 00:20:38,162 I appreciate you holding this hearing . 512 00:20:38,350 --> 00:20:41,160 I still find this astounding that were 513 00:20:41,640 --> 00:20:44,540 going after a company that 514 00:20:44,550 --> 00:20:48,330 has a is employed americans . It's a 515 00:20:48,340 --> 00:20:51,380 pays american taxes . Uh we're taking 516 00:20:51,380 --> 00:20:55,060 time that uh we could be devoting too . 517 00:20:55,070 --> 00:20:57,280 I think as Mr high said trillions of 518 00:20:57,280 --> 00:20:59,391 dollars that have been wasted by this 519 00:20:59,391 --> 00:21:01,502 administration . Where is the hearing 520 00:21:01,502 --> 00:21:03,447 on the 80 billion that was left in 521 00:21:03,447 --> 00:21:06,900 Afghanistan . Where is the hearing On 522 00:21:06,900 --> 00:21:09,680 the 420,000 per illegal that was 523 00:21:09,680 --> 00:21:13,480 proposed . Where is the hearing ? Um on 524 00:21:13,480 --> 00:21:15,870 those get having those officials 525 00:21:15,870 --> 00:21:18,940 testified that uh looted and destroyed 526 00:21:18,940 --> 00:21:22,450 over 500 of our nice cities . 527 00:21:22,460 --> 00:21:25,930 Where is the where is the 528 00:21:25,940 --> 00:21:28,950 hearing on the Medicaid and and 529 00:21:28,950 --> 00:21:30,980 Medicare fraud and abuse . It's not 530 00:21:30,980 --> 00:21:32,813 here . We're picking an american 531 00:21:32,813 --> 00:21:35,830 company uh that again employs americans , 532 00:21:35,830 --> 00:21:39,270 pays american taxes . And let me let me 533 00:21:39,270 --> 00:21:41,850 try to understand miss whole um 534 00:21:42,540 --> 00:21:46,120 what that your decision to exclude 535 00:21:46,120 --> 00:21:49,430 taxes and interest uh from your cost 536 00:21:49,430 --> 00:21:51,770 calculations . Can you explain why that 537 00:21:51,770 --> 00:21:55,250 was made When we received the cost data 538 00:21:55,250 --> 00:21:57,980 from trans dime of far 31 principles 539 00:21:57,980 --> 00:22:00,490 applied and within that specific 540 00:22:00,490 --> 00:22:02,212 section of the far it talks to 541 00:22:02,212 --> 00:22:05,050 excluding interest and taxes when cost 542 00:22:05,050 --> 00:22:07,360 information is being used . So that is 543 00:22:07,360 --> 00:22:09,480 why we removed those costs from our 544 00:22:09,480 --> 00:22:11,670 calculations . Was this made for 545 00:22:11,670 --> 00:22:14,960 similar companies providing materials 546 00:22:14,960 --> 00:22:18,050 that you're that you went over and got 547 00:22:18,050 --> 00:22:21,240 information from ? Well , well for this 548 00:22:21,240 --> 00:22:23,296 particular situation , we're talking 549 00:22:23,296 --> 00:22:25,407 about trans dime but we do have other 550 00:22:25,407 --> 00:22:27,518 reports in which we've looked at cost 551 00:22:27,518 --> 00:22:29,629 information and had to make a similar 552 00:22:29,629 --> 00:22:31,796 similar decisions based on information 553 00:22:31,796 --> 00:22:34,980 provided . Okay , so uh and you're 554 00:22:34,980 --> 00:22:37,147 aware that trans time does not have to 555 00:22:37,147 --> 00:22:39,202 provide this . It's only 6% of their 556 00:22:39,202 --> 00:22:42,900 income . Uh and it's just 557 00:22:42,910 --> 00:22:44,960 do you blame them for being a sole 558 00:22:44,970 --> 00:22:48,680 provider in our report , We 559 00:22:48,680 --> 00:22:50,530 highlight the the risk to the 560 00:22:50,530 --> 00:22:52,752 government when they negotiate and sole 561 00:22:52,752 --> 00:22:54,697 source environments . So Trans I'm 562 00:22:54,697 --> 00:22:56,808 being a sole source company and there 563 00:22:56,808 --> 00:22:58,863 being no other competitive forces at 564 00:22:58,863 --> 00:23:01,030 play are really the issue here for why 565 00:23:01,030 --> 00:23:03,197 the Department of Defense is unable to 566 00:23:03,197 --> 00:23:05,419 get better pricing and when when a when 567 00:23:05,419 --> 00:23:07,510 a the environment is completely sole 568 00:23:07,510 --> 00:23:09,788 source for the parts that we looked at , 569 00:23:09,788 --> 00:23:12,010 there really isn't a lot of options for 570 00:23:12,010 --> 00:23:13,843 the government . So yes , you're 571 00:23:13,843 --> 00:23:15,954 correct that Trans Am did not have to 572 00:23:15,954 --> 00:23:17,954 provide us the cost information and 573 00:23:17,954 --> 00:23:20,177 they willingly provided it to the audit 574 00:23:20,177 --> 00:23:22,399 team to be able to calculate a fair and 575 00:23:22,399 --> 00:23:25,900 reasonable price . Mr uh 10 10 a 576 00:23:25,900 --> 00:23:29,510 godly . Um can you explain to me 577 00:23:29,510 --> 00:23:33,010 the again about the sole source , have 578 00:23:33,010 --> 00:23:35,230 you made any efforts to try and 579 00:23:35,230 --> 00:23:37,930 increase competition or ? Uh that's 580 00:23:37,930 --> 00:23:40,152 certainly not Trans dimes issue is it ? 581 00:23:42,040 --> 00:23:44,240 Uh No congressman . I don't think 582 00:23:44,240 --> 00:23:47,180 that's necessarily uh an issue for 583 00:23:47,180 --> 00:23:50,800 Trans time to take up . There are a 584 00:23:50,800 --> 00:23:53,022 significant amount of transactions that 585 00:23:53,022 --> 00:23:55,440 we execute with trans dime that are 586 00:23:55,510 --> 00:23:57,910 that have been coded as commercial and 587 00:23:57,910 --> 00:24:01,330 competitive . We do have initiatives 588 00:24:01,330 --> 00:24:04,190 underway to increase uh the extent to 589 00:24:04,190 --> 00:24:06,079 which we're able to compete these 590 00:24:06,079 --> 00:24:08,079 things . We've talked about some of 591 00:24:08,079 --> 00:24:10,134 those activities such as the reverse 592 00:24:10,134 --> 00:24:12,079 engineering that that gives us the 593 00:24:12,079 --> 00:24:14,301 ability to compete the manufacturing of 594 00:24:14,301 --> 00:24:16,523 those parts um where we have situations 595 00:24:16,523 --> 00:24:18,490 such as these so that's the 596 00:24:18,490 --> 00:24:20,720 government's responsibility . If you 597 00:24:20,720 --> 00:24:22,831 want to go after another company that 598 00:24:22,831 --> 00:24:25,053 makes something that is now made by one 599 00:24:25,053 --> 00:24:27,220 company , that's your responsibility . 600 00:24:27,220 --> 00:24:28,887 But here you are , you know , 601 00:24:28,887 --> 00:24:31,590 investigating one company and making a 602 00:24:31,600 --> 00:24:34,270 again , it still amazes me , You're 603 00:24:34,280 --> 00:24:36,770 excluding taxes and interest . When 604 00:24:37,140 --> 00:24:39,084 Anybody that's been in the private 605 00:24:39,084 --> 00:24:42,070 sector , you have to put that in before 606 00:24:42,070 --> 00:24:44,280 you price a anything , whether it's a 607 00:24:44,280 --> 00:24:46,710 house , whether it's a car or whatever . 608 00:24:46,720 --> 00:24:49,940 If you want to set the 15% again is 609 00:24:49,940 --> 00:24:52,460 staggering to me as to why that's 610 00:24:52,460 --> 00:24:55,260 that's there . Mr Howell and Mr stein , 611 00:24:55,260 --> 00:24:57,920 how much would you say that much of 612 00:24:57,920 --> 00:25:00,142 your business with the government is in 613 00:25:00,142 --> 00:25:02,820 the aftermarket sustainment space . Uh 614 00:25:02,830 --> 00:25:04,830 this piece that we're talking about 615 00:25:04,830 --> 00:25:06,830 right now , that's 6% of our direct 616 00:25:06,830 --> 00:25:09,450 sales is direct and is the spare parts . 617 00:25:12,440 --> 00:25:14,551 Well , let me just let me just say in 618 00:25:14,551 --> 00:25:17,060 closing um that you know , I find it 619 00:25:17,070 --> 00:25:19,380 here we are again , wait , you know , 620 00:25:19,380 --> 00:25:21,580 going after , we were majoring in the 621 00:25:21,580 --> 00:25:24,050 minor when it takes an american company 622 00:25:24,540 --> 00:25:27,900 uh and ignoring everything else is that 623 00:25:27,900 --> 00:25:29,900 this administration is doing that's 624 00:25:29,900 --> 00:25:32,760 costing the taxpayers so much more than 625 00:25:32,760 --> 00:25:34,649 this . You're a private company . 626 00:25:34,649 --> 00:25:37,450 That's uh that again , is employing 627 00:25:37,450 --> 00:25:40,160 americans uh and for their livelihood . 628 00:25:40,160 --> 00:25:42,216 You're paying taxes that support our 629 00:25:42,216 --> 00:25:45,650 law enforcement and police and uh to 630 00:25:45,660 --> 00:25:48,350 to listen to me like that . You've 631 00:25:48,360 --> 00:25:50,304 you've done everything you've been 632 00:25:50,304 --> 00:25:53,950 asked to do so madam chair . 633 00:25:53,950 --> 00:25:57,720 I yield back gentlemen , yields 634 00:25:57,720 --> 00:25:59,887 back the gentle lady from California . 635 00:25:59,887 --> 00:26:03,780 MS porter is now recognized . Hello , 636 00:26:03,780 --> 00:26:07,190 Thank you . Mr Howley has trans dime 637 00:26:07,200 --> 00:26:10,970 ever trained staff to provide , quote 638 00:26:10,980 --> 00:26:14,120 the minimum amount of information to 639 00:26:14,120 --> 00:26:17,180 the government . Trans dime 640 00:26:17,190 --> 00:26:20,400 regularly trains the staff and brings 641 00:26:20,400 --> 00:26:22,344 in outside consultants and lawyers 642 00:26:22,344 --> 00:26:24,067 reclaiming my time . Mr Howley 643 00:26:24,067 --> 00:26:26,610 reclaiming my time Sir . I'm sure you 644 00:26:26,620 --> 00:26:28,842 do all kinds of training . I'm asking a 645 00:26:28,842 --> 00:26:30,787 specific question and I'm going to 646 00:26:30,787 --> 00:26:33,880 repeat it has trans dime ever trained 647 00:26:33,880 --> 00:26:37,270 staff to provide quote 648 00:26:38,240 --> 00:26:41,760 the minimum amount of information to 649 00:26:41,760 --> 00:26:44,430 the government . I don't know the 650 00:26:44,430 --> 00:26:46,880 answer to that . What I know is we 651 00:26:46,880 --> 00:26:49,560 regularly train people in all the 652 00:26:49,560 --> 00:26:51,950 regulations required to deal with the 653 00:26:51,950 --> 00:26:54,006 government and we insist they comply 654 00:26:54,006 --> 00:26:57,350 with them . Okay um 655 00:26:58,140 --> 00:27:01,920 The the transit time actually has 656 00:27:01,930 --> 00:27:05,720 told people that it is wrong um to 657 00:27:05,720 --> 00:27:07,609 provide the minimum you have told 658 00:27:07,609 --> 00:27:09,831 people to provide the minimum amount of 659 00:27:09,831 --> 00:27:12,190 information . Have you ever told staff 660 00:27:12,200 --> 00:27:15,740 that it is wrong to charge ? 661 00:27:15,750 --> 00:27:19,630 Taxpayers lower per price units . 662 00:27:19,770 --> 00:27:22,280 Your lower per unit prices on higher 663 00:27:22,280 --> 00:27:24,450 volume orders . In other words when we 664 00:27:24,450 --> 00:27:26,617 all know when we buy in bulk on amazon 665 00:27:26,617 --> 00:27:29,730 it's cheaper per unit has trans Time 666 00:27:29,740 --> 00:27:32,060 ever told its employees that it is 667 00:27:32,060 --> 00:27:34,720 wrong to charge taxpayers lower per 668 00:27:34,720 --> 00:27:36,900 unit prices on higher volume orders . 669 00:27:37,100 --> 00:27:39,322 Not that I have knowledge of a recall . 670 00:27:40,540 --> 00:27:44,290 Okay . Um Mr Howie I'm introducing here 671 00:27:44,290 --> 00:27:46,760 is an exhibit . Um This this chord doc 672 00:27:46,760 --> 00:27:47,480 T . V . G 673 00:27:47,480 --> 00:27:51,260 00034189 . It's 674 00:27:51,260 --> 00:27:53,427 displayed on the screen so you can see 675 00:27:53,427 --> 00:27:57,270 it more volume equals lower price . 676 00:27:57,940 --> 00:28:00,560 What does it stay in big purple All 677 00:28:00,560 --> 00:28:02,671 count letters . Can you read that for 678 00:28:02,671 --> 00:28:06,360 me ? The words wrong . Wrong . 679 00:28:06,840 --> 00:28:09,190 So would you like to modify your answer ? 680 00:28:09,190 --> 00:28:11,870 Has trance kind ever told staff in 681 00:28:11,870 --> 00:28:13,814 light of seeing this exhibit . Has 682 00:28:13,814 --> 00:28:15,926 transient ever told its staff that it 683 00:28:15,926 --> 00:28:18,330 is wrong to charge taxpayers lower 684 00:28:18,330 --> 00:28:20,560 price per unit prices on higher volume 685 00:28:20,560 --> 00:28:23,010 workers . I don't know what that is . I 686 00:28:23,010 --> 00:28:24,843 suspect it's it's out of context 687 00:28:24,843 --> 00:28:27,010 somewhere and I suspect it's something 688 00:28:27,010 --> 00:28:29,400 done . Mr mr operating businesses at 689 00:28:29,400 --> 00:28:31,770 one time . I just I simply don't know 690 00:28:32,340 --> 00:28:35,480 Well mr Holly for $68 million dollars a 691 00:28:35,480 --> 00:28:37,850 year . You you need to know what's 692 00:28:37,850 --> 00:28:40,380 going on in your company . That's your 693 00:28:40,390 --> 00:28:43,770 annual salary in your retirement 694 00:28:44,940 --> 00:28:48,000 in your retirement . Has trans dime or 695 00:28:48,000 --> 00:28:50,090 its subsidiaries ever refused to 696 00:28:50,090 --> 00:28:53,150 provide price data to the military when 697 00:28:53,150 --> 00:28:57,140 it's requested it . I don't know 698 00:28:57,140 --> 00:28:59,196 the answer to that whether they ever 699 00:28:59,196 --> 00:29:01,700 have . I do know I do know that we 700 00:29:01,710 --> 00:29:03,960 regularly provide price data and in 701 00:29:03,960 --> 00:29:06,790 fact provide commercial price data for 702 00:29:06,790 --> 00:29:08,850 I believe every part in this audit . 703 00:29:09,240 --> 00:29:12,340 Yeah . Mr Howley . I just want to 704 00:29:12,340 --> 00:29:14,950 remind you that you're under oath as 705 00:29:14,950 --> 00:29:18,860 you're giving this testimony . Um Do 706 00:29:18,860 --> 00:29:22,110 you recognize these words quote ? We 707 00:29:22,110 --> 00:29:25,140 didn't have to give up a dime . I'm 708 00:29:25,140 --> 00:29:28,530 just full of B . S . And they took the 709 00:29:28,530 --> 00:29:32,180 bait . I don't I 710 00:29:32,180 --> 00:29:34,270 don't have knowledge or recall it . 711 00:29:35,440 --> 00:29:38,200 Okay that is from a trans dime exhibit . 712 00:29:38,210 --> 00:29:40,377 You don't need to see it . But that is 713 00:29:40,377 --> 00:29:42,266 from a trans diet that is from an 714 00:29:42,266 --> 00:29:44,377 exhibit in this investigation That is 715 00:29:44,377 --> 00:29:47,330 your salespeople Talking about a deal 716 00:29:47,330 --> 00:29:49,441 that they just made with the military 717 00:29:49,441 --> 00:29:51,960 for jet engine parts in 2018 . 718 00:29:54,140 --> 00:29:56,700 We don't have to give up a . You were a 719 00:29:56,700 --> 00:30:00,130 salesperson said I'm just full of B . S . 720 00:30:00,170 --> 00:30:03,080 And they being the D . O . D . And 721 00:30:03,080 --> 00:30:06,980 taxpayers took the bait . Mr Howie Does 722 00:30:06,980 --> 00:30:09,090 trans time have a code of business 723 00:30:09,200 --> 00:30:13,200 ethics and conduct ? Oh as as any 724 00:30:13,200 --> 00:30:15,311 company does . Of course we do . It's 725 00:30:15,311 --> 00:30:17,367 on our website . Okay . Um Does that 726 00:30:17,367 --> 00:30:20,960 code require fair dealing ? Yes 727 00:30:21,340 --> 00:30:23,229 and it says what it says . But of 728 00:30:23,229 --> 00:30:25,451 course it requires a fair deal . Do you 729 00:30:25,451 --> 00:30:27,970 think it's a fair dealing to be full of 730 00:30:27,970 --> 00:30:30,430 bullsh it and get the taxpayers to take 731 00:30:30,430 --> 00:30:33,080 the bait ? I don't have to comment on 732 00:30:33,080 --> 00:30:34,913 that . I'm not familiar with the 733 00:30:34,913 --> 00:30:37,136 situation . I don't know what it is . I 734 00:30:37,136 --> 00:30:39,302 don't know who the person is . I don't 735 00:30:39,302 --> 00:30:41,580 know that . I just can't comment on it . 736 00:30:41,580 --> 00:30:43,636 Mr Hollywood . You find out who that 737 00:30:43,636 --> 00:30:46,470 person is . I presume you have it . You 738 00:30:46,470 --> 00:30:48,581 have an email I presume you have . It 739 00:30:48,581 --> 00:30:50,692 is . I don't know who it is . I don't 740 00:30:50,692 --> 00:30:53,050 know . As executive chair of the board 741 00:30:53,150 --> 00:30:56,700 being paid $68 million . When a typical 742 00:30:56,710 --> 00:31:00,370 board member Of a Fortune 100 company 743 00:31:00,380 --> 00:31:00,910 receives 744 00:31:00,920 --> 00:31:04,410 $319,000 . 745 00:31:04,480 --> 00:31:07,600 Here is the typical board member of the 746 00:31:07,600 --> 00:31:09,900 Fortune 100 companies . See this flat 747 00:31:09,900 --> 00:31:12,670 line . You can't even see it here's you 748 00:31:13,540 --> 00:31:17,110 For $68 million . You need to 749 00:31:17,110 --> 00:31:20,190 enforce your company's code of business 750 00:31:20,200 --> 00:31:23,120 ethics later time has expired . Miss 751 00:31:23,120 --> 00:31:25,398 Porter , your time has expired expired . 752 00:31:25,398 --> 00:31:27,453 The gentleman from texas mr sessions 753 00:31:27,453 --> 00:31:29,690 you are now recognized madam chairman . 754 00:31:29,690 --> 00:31:32,630 Thank you very much . Uh The questions 755 00:31:32,630 --> 00:31:34,710 that I would like to go down really 756 00:31:34,710 --> 00:31:38,290 involved this conversation that the 757 00:31:38,290 --> 00:31:42,170 I . G . Is engaged in about 758 00:31:42,170 --> 00:31:45,990 this percentage Of of over 759 00:31:45,990 --> 00:31:49,550 earning the $20.8 million dollars that 760 00:31:49,550 --> 00:31:51,772 is being there . Being berated today to 761 00:31:51,772 --> 00:31:54,670 pay back . I thought this was a hearing 762 00:31:54,810 --> 00:31:58,160 not a negotiation and I'm 763 00:31:58,160 --> 00:32:00,382 disappointed that we're going down that 764 00:32:00,382 --> 00:32:04,160 track . So uh Mr Talia 765 00:32:04,640 --> 00:32:06,584 you know I'm sorry john how do you 766 00:32:06,584 --> 00:32:08,860 pronounce your last name ? Chinaglia , 767 00:32:09,340 --> 00:32:12,760 Mr Tartaglia . The number that is used 768 00:32:13,640 --> 00:32:17,560 and that the I . G . Used The 20.8 does 769 00:32:17,560 --> 00:32:21,050 that take into account Annette 770 00:32:21,060 --> 00:32:23,410 working against taxes they would have 771 00:32:23,410 --> 00:32:27,020 paid or is that just the total amount 772 00:32:27,020 --> 00:32:31,000 of money that you see ? So 773 00:32:31,000 --> 00:32:34,580 the the the I . G . Is used to the 15% 774 00:32:34,700 --> 00:32:38,150 really isn't after the fact way of 775 00:32:38,150 --> 00:32:40,920 looking at how things played out the 776 00:32:40,920 --> 00:32:43,630 way we normally negotiate contracts on 777 00:32:43,630 --> 00:32:45,908 the front end . We prospectively price . 778 00:32:46,240 --> 00:32:48,150 Let's say we were it was a non 779 00:32:48,150 --> 00:32:51,740 commercial part and we had the use of 780 00:32:51,740 --> 00:32:54,350 the record of weighted guidelines that 781 00:32:54,360 --> 00:32:56,360 that gives our contracting officers 782 00:32:56,360 --> 00:32:59,190 some structured approach to arrive at 783 00:32:59,200 --> 00:33:01,560 objective profit amount . It's all 784 00:33:01,560 --> 00:33:03,910 subject to negotiation . I don't 785 00:33:03,910 --> 00:33:06,243 disagree with the methodology the I . G . 786 00:33:06,243 --> 00:33:08,299 Used here . Yes or so in other words 787 00:33:08,299 --> 00:33:12,050 they What forget two The 788 00:33:12,050 --> 00:33:14,370 amount . So they just went and applied 789 00:33:14,370 --> 00:33:16,510 their own perspective that's not 790 00:33:16,510 --> 00:33:18,740 related to the law . As she says 791 00:33:18,740 --> 00:33:22,020 anywhere from 8-24% . She just 792 00:33:22,020 --> 00:33:25,140 applied 15% to the 793 00:33:25,140 --> 00:33:27,050 entire profit . 794 00:33:29,640 --> 00:33:33,050 So that I think that was the trying to 795 00:33:33,050 --> 00:33:36,210 portray the markup beyond the amount of 796 00:33:36,210 --> 00:33:38,432 costs that were incurred to produce the 797 00:33:38,432 --> 00:33:41,500 item . Okay let's go back and talk for 798 00:33:41,500 --> 00:33:43,940 a second about what's available in the 799 00:33:43,940 --> 00:33:46,750 marketplace . There's been discussion 800 00:33:46,750 --> 00:33:50,560 about the market value the marketplace 801 00:33:51,340 --> 00:33:53,620 And then the 2% discount that was 802 00:33:53,620 --> 00:33:56,950 applied . Were there others 803 00:33:56,960 --> 00:33:59,600 available that they someone could have 804 00:33:59,600 --> 00:34:03,230 gone to to get the same piece parts 805 00:34:03,230 --> 00:34:06,890 that they wanted . So I'd have to look 806 00:34:06,890 --> 00:34:09,001 at each one of those parts . But as I 807 00:34:09,001 --> 00:34:11,570 was describing earlier in those 808 00:34:11,570 --> 00:34:14,780 instances where we have a manufacturer 809 00:34:14,780 --> 00:34:18,180 or seller contractor presenting us 810 00:34:18,180 --> 00:34:21,430 apart that is sold in the marketplace 811 00:34:21,430 --> 00:34:23,597 that exact same part . Then we will we 812 00:34:23,597 --> 00:34:25,850 our policy and our training is to 813 00:34:25,850 --> 00:34:28,070 respect the fact that the going price 814 00:34:28,080 --> 00:34:31,020 uh that that that another commercial 815 00:34:31,030 --> 00:34:33,040 customer paid for that is what the 816 00:34:33,040 --> 00:34:35,262 market would bear . What's different in 817 00:34:35,262 --> 00:34:37,720 most of these circumstances is that 818 00:34:37,720 --> 00:34:40,380 same part is not necessarily sold to 819 00:34:40,380 --> 00:34:42,602 other commercial customers . They're of 820 00:34:42,602 --> 00:34:44,370 a type , meaning there is some 821 00:34:44,380 --> 00:34:47,750 variation of that same part . Um And 822 00:34:47,750 --> 00:34:49,750 and then it becomes the analysis of 823 00:34:49,750 --> 00:34:51,694 what what is the difference in the 824 00:34:51,694 --> 00:34:53,806 functionality of that part versus the 825 00:34:53,806 --> 00:34:55,917 part that's sold in the marketplace . 826 00:34:55,917 --> 00:34:58,083 Okay , so there's a generally accepted 827 00:34:58,083 --> 00:35:02,000 value and you asked for the parts and 828 00:35:02,000 --> 00:35:04,620 they gave you a discount , Why would 829 00:35:04,620 --> 00:35:07,230 someone assume that they're gouging 830 00:35:07,230 --> 00:35:09,870 someone as the majority is attempting 831 00:35:09,870 --> 00:35:12,740 to claim today ? If you go and buy 832 00:35:12,740 --> 00:35:16,540 gasoline At the marketplace 833 00:35:16,550 --> 00:35:19,780 and you know , it's 268 and you know , 834 00:35:19,780 --> 00:35:22,760 it's 262 and you buy it to 835 00:35:22,760 --> 00:35:26,310 65 somewhere in that marketplace , why 836 00:35:26,310 --> 00:35:28,860 would you even have an investigation 837 00:35:29,340 --> 00:35:31,680 about what , how much money you make 838 00:35:31,710 --> 00:35:33,660 when that's the marketplace ? 839 00:35:36,640 --> 00:35:38,529 Uh , Sir , I think for , for that 840 00:35:38,529 --> 00:35:41,220 analogy for gasoline , it's essentially 841 00:35:41,220 --> 00:35:43,387 the same gasoline that all consumers , 842 00:35:43,540 --> 00:35:45,540 uh , that are , that are purchasing 843 00:35:45,540 --> 00:35:47,540 that in this case , where these are 844 00:35:47,540 --> 00:35:50,710 specialized parts that may be of a type . 845 00:35:50,720 --> 00:35:52,970 They are . But my point is , is that 846 00:35:52,970 --> 00:35:56,790 they were well within the norm of 847 00:35:56,790 --> 00:35:59,520 what would be paid for and they still 848 00:35:59,520 --> 00:36:03,160 gave a discount . Is that disingenuous 849 00:36:03,430 --> 00:36:05,610 to give a discount off that to get the 850 00:36:05,610 --> 00:36:09,090 business . If the going price is 851 00:36:09,100 --> 00:36:12,940 X and you make an X -2% , why do you 852 00:36:12,940 --> 00:36:15,730 set yourself up for being accused of 853 00:36:15,730 --> 00:36:18,740 gouging the government . This makes no 854 00:36:18,740 --> 00:36:19,660 sense to me . 855 00:36:25,130 --> 00:36:27,352 Sorry , I would just say that the , the 856 00:36:27,352 --> 00:36:29,463 starting point for the analysis for a 857 00:36:29,463 --> 00:36:31,574 contracting officer is to take a look 858 00:36:31,574 --> 00:36:33,480 at whatever the contractor is 859 00:36:33,490 --> 00:36:35,630 identified as what they're selling in 860 00:36:35,630 --> 00:36:37,852 the commercial marketplace . If they're 861 00:36:37,852 --> 00:36:39,852 selling us the exact same product , 862 00:36:39,852 --> 00:36:42,074 then that contracting officer will look 863 00:36:42,074 --> 00:36:43,963 at the sales price that that that 864 00:36:43,963 --> 00:36:45,852 company has got in the commercial 865 00:36:45,852 --> 00:36:47,630 marketplace . If it's something 866 00:36:47,630 --> 00:36:47,190 different , there's a different 867 00:36:47,190 --> 00:36:49,246 analysis that needs to be undertaken 868 00:36:49,246 --> 00:36:52,550 and then fired 869 00:36:53,230 --> 00:36:55,174 the gentlewoman from Illinois . MS 870 00:36:55,174 --> 00:36:58,490 kelly is now recognized . Thank you , 871 00:36:58,490 --> 00:37:00,650 madam Chair Miss Miss Howell . Thank 872 00:37:00,650 --> 00:37:03,030 you for your reports on Trans Dines 873 00:37:03,040 --> 00:37:05,150 price . Gouging your recent report 874 00:37:05,150 --> 00:37:07,570 identifies astounding levels of excess 875 00:37:07,570 --> 00:37:10,010 profits . For example , Trans Dine 876 00:37:10,010 --> 00:37:12,380 sells a part called the plane and close 877 00:37:12,380 --> 00:37:15,590 seal That is used on the V 22 Osprey 878 00:37:15,600 --> 00:37:18,060 aircraft . You should see a picture of 879 00:37:18,060 --> 00:37:20,770 it in the room . According to Trans 880 00:37:20,770 --> 00:37:24,670 Dine Zone data . It costs $125 to make 881 00:37:24,670 --> 00:37:27,330 the seal but they charge D . O . D . 882 00:37:27,330 --> 00:37:30,320 More than $1600 which translates to an 883 00:37:30,320 --> 00:37:33,840 excess profit of more than 1000% . I'd 884 00:37:33,840 --> 00:37:36,062 like to show a picture of this part and 885 00:37:36,062 --> 00:37:38,340 a chart of trans dines excess profits . 886 00:37:38,830 --> 00:37:41,230 So you should be able to see that Miss 887 00:37:41,230 --> 00:37:43,563 Holt . Would you characterize D . O . D . 888 00:37:43,563 --> 00:37:45,980 Paying a contractor over 1000% profit 889 00:37:45,990 --> 00:37:47,460 as government waste . 890 00:37:50,730 --> 00:37:51,350 MS Hole 891 00:38:02,220 --> 00:38:02,840 MS Hall . 892 00:38:06,420 --> 00:38:09,990 I'll just move on . Mr Chinaglia 893 00:38:09,990 --> 00:38:12,150 analysis and analysis released last 894 00:38:12,150 --> 00:38:14,039 week by the project on government 895 00:38:14,039 --> 00:38:16,980 oversight said quote nearly 21 million 896 00:38:16,980 --> 00:38:19,740 in excess company profits may not sound 897 00:38:19,740 --> 00:38:22,690 like a lot in the context of 768 898 00:38:22,690 --> 00:38:25,110 billion defense budget . But those over 899 00:38:25,110 --> 00:38:27,166 charges add up to a lot of waste and 900 00:38:27,166 --> 00:38:29,340 undermine the readiness about force 901 00:38:30,910 --> 00:38:32,700 some weapons systems becoming 902 00:38:32,700 --> 00:38:35,040 increasingly costly . Do you agree with 903 00:38:35,040 --> 00:38:38,750 that analysis ? Well , I certainly 904 00:38:38,760 --> 00:38:40,930 agree with the point that the , you 905 00:38:40,930 --> 00:38:43,610 know , the more we pay unnecessarily , 906 00:38:43,700 --> 00:38:45,756 the less capability we can deliver . 907 00:38:45,756 --> 00:38:47,960 And so it's the responsibility of our 908 00:38:47,960 --> 00:38:50,530 contracting officers to negotiate the 909 00:38:50,530 --> 00:38:52,697 best price they can . The price that's 910 00:38:52,697 --> 00:38:54,808 fair to industry and it's fair to the 911 00:38:54,808 --> 00:38:57,680 taxpayers and the department and Trans 912 00:38:57,680 --> 00:38:59,902 Diamonds , a sole source contractor for 913 00:38:59,902 --> 00:39:03,890 the B 22 Osprey plane in case seal , 914 00:39:03,900 --> 00:39:05,880 Which means that the Department of 915 00:39:05,880 --> 00:39:08,210 Defense had to buy this part from you 916 00:39:08,220 --> 00:39:10,553 or go without . It . Isn't that correct ? 917 00:39:11,620 --> 00:39:13,564 That is my understanding . And and 918 00:39:13,564 --> 00:39:15,676 perhaps this is one of the parts that 919 00:39:15,676 --> 00:39:17,787 would be a good candidate for reverse 920 00:39:17,787 --> 00:39:21,760 engineering . Mr Howley 921 00:39:21,760 --> 00:39:23,982 do you think it's fair for taxpayers to 922 00:39:23,982 --> 00:39:26,800 pay over $1600 for a part that costs 923 00:39:26,800 --> 00:39:30,340 trans dime $125 to make ? 924 00:39:32,520 --> 00:39:34,576 I think there's a set of regulations 925 00:39:34,576 --> 00:39:36,520 that defines how you determine the 926 00:39:36,520 --> 00:39:39,090 pricing and the and the preferred way 927 00:39:39,090 --> 00:39:41,180 to do it is to compare it to the 928 00:39:41,180 --> 00:39:43,280 commercial , comparable commercial 929 00:39:43,280 --> 00:39:46,670 price . Uh And I believe this price is 930 00:39:46,670 --> 00:39:49,820 discounted to that . I also believe 931 00:39:49,830 --> 00:39:52,640 that when the contract was placed , the 932 00:39:52,640 --> 00:39:54,751 government has the right to declare a 933 00:39:54,751 --> 00:39:57,220 price fair and reasonable or not . Fair 934 00:39:57,220 --> 00:39:59,276 and reasonable . That has some other 935 00:39:59,276 --> 00:40:01,053 name . I don't recall all these 936 00:40:01,053 --> 00:40:02,887 contracts were declared fair and 937 00:40:02,887 --> 00:40:05,109 reasonable at the time of placement and 938 00:40:05,109 --> 00:40:07,220 they all have commercially comparable 939 00:40:07,220 --> 00:40:11,180 pricing . Well that's 940 00:40:11,180 --> 00:40:13,402 why we're having this hearing and in my 941 00:40:13,402 --> 00:40:15,569 opinion taxpayers should not be paying 942 00:40:15,569 --> 00:40:17,736 significantly over paying for parts of 943 00:40:17,736 --> 00:40:19,736 military needs to keep to keep your 944 00:40:19,736 --> 00:40:21,736 planes flying miss whole your audit 945 00:40:21,736 --> 00:40:23,624 addressed how the D . O . D . Can 946 00:40:23,624 --> 00:40:25,736 implement administrative reforms such 947 00:40:25,736 --> 00:40:27,791 as reducing the agency's reliance on 948 00:40:27,791 --> 00:40:29,791 soul search manufacturers . Can you 949 00:40:29,791 --> 00:40:33,340 elaborate on this ? Um Thank you . 950 00:40:33,340 --> 00:40:36,280 The department proposed several 951 00:40:36,280 --> 00:40:38,280 legislation a couple of legislative 952 00:40:38,280 --> 00:40:40,169 reforms in the last cycle . Um My 953 00:40:40,169 --> 00:40:42,391 understanding and hearing today is that 954 00:40:42,391 --> 00:40:44,558 they have some plans for additional um 955 00:40:44,558 --> 00:40:46,780 legislative cycles or proposals for the 956 00:40:46,780 --> 00:40:48,836 current legislative cycle now from a 957 00:40:48,836 --> 00:40:50,947 sole source environment . Um the only 958 00:40:50,947 --> 00:40:53,058 other options that the department has 959 00:40:53,058 --> 00:40:55,002 is to pursue some of those that mr 960 00:40:55,002 --> 00:40:57,113 Chinaglia outlined to include reverse 961 00:40:57,113 --> 00:40:59,169 engineering . Um There's a strategic 962 00:40:59,169 --> 00:41:01,280 supplier alliance in which De Ella is 963 00:41:01,280 --> 00:41:02,947 looking to original equipment 964 00:41:02,947 --> 00:41:04,947 manufacturers to potentially cancel 965 00:41:04,947 --> 00:41:06,891 their licenses with trans dime and 966 00:41:06,891 --> 00:41:08,836 produce the parts directly for the 967 00:41:08,836 --> 00:41:11,058 government . So while there are options 968 00:41:11,058 --> 00:41:13,280 there um currently in play , um uh more 969 00:41:13,290 --> 00:41:16,190 legislative and regulatory reform would 970 00:41:16,190 --> 00:41:18,640 be needed to address the systemic issue . 971 00:41:35,910 --> 00:41:38,930 Right , okay . 972 00:41:40,010 --> 00:41:43,960 The gentle lady um The gentleman 973 00:41:43,960 --> 00:41:45,950 from Pennsylvania Pennsylvania Mr 974 00:41:45,950 --> 00:41:47,839 Keller is now recognized for five 975 00:41:47,839 --> 00:41:51,820 minutes . Thank you Chairwoman 976 00:41:51,820 --> 00:41:54,098 maloney and thank you to our witnesses . 977 00:41:54,098 --> 00:41:56,320 Taking time to be with us today . 978 00:41:56,710 --> 00:41:59,470 Americans in pennsylvania and across 979 00:41:59,470 --> 00:42:01,930 our country are contending with huge 980 00:42:01,930 --> 00:42:03,950 increases in the price of daily 981 00:42:03,950 --> 00:42:07,090 necessities including fuel , gasoline 982 00:42:07,090 --> 00:42:09,230 and groceries . While the record 983 00:42:09,230 --> 00:42:11,452 inflation we've seen over the past year 984 00:42:11,452 --> 00:42:13,770 plays a large role . Broken supply 985 00:42:13,770 --> 00:42:16,360 chains only exacerbate transportation 986 00:42:16,360 --> 00:42:19,230 issues and lead to higher and costs . 987 00:42:19,800 --> 00:42:21,967 It's time to take a closer look at how 988 00:42:21,967 --> 00:42:24,078 the Department of Defense handles its 989 00:42:24,078 --> 00:42:28,060 contracts and taxpayer funds . Uh So my 990 00:42:28,060 --> 00:42:30,760 question is for Miss Hall , can you 991 00:42:30,760 --> 00:42:34,390 explain the just in time or 992 00:42:34,390 --> 00:42:36,620 jet inventory management system ? 993 00:42:38,500 --> 00:42:40,870 Uh Mr Tina ugly or or the department 994 00:42:40,870 --> 00:42:42,759 may be able to speak to this more 995 00:42:42,759 --> 00:42:44,870 robustly because it wasn't as part of 996 00:42:44,870 --> 00:42:47,210 our audit but um just in time inventory 997 00:42:47,210 --> 00:42:49,570 essentially is being able to get the 998 00:42:49,570 --> 00:42:51,660 part just when you need it . And 999 00:42:51,660 --> 00:42:54,390 forecasting models are also considered 1000 00:42:54,430 --> 00:42:57,030 in order for that particular uh concept 1001 00:42:57,030 --> 00:43:01,030 to work ? And I'm just you know want to 1002 00:43:01,030 --> 00:43:03,086 make sure that it's it's the same as 1003 00:43:03,086 --> 00:43:04,919 what I've experienced in private 1004 00:43:04,919 --> 00:43:06,808 industry but if the Department of 1005 00:43:06,808 --> 00:43:09,320 Defense uh huh miscalculates the parts 1006 00:43:09,320 --> 00:43:11,640 required for a particular program , how 1007 00:43:11,640 --> 00:43:13,862 does the D . O . D . Go about acquiring 1008 00:43:13,862 --> 00:43:15,751 additional or replacement parts ? 1009 00:43:18,700 --> 00:43:21,033 Again that was not a focus of our audit . 1010 00:43:21,033 --> 00:43:23,340 However we did highlight opportunities , 1011 00:43:23,350 --> 00:43:25,461 potential opportunity for D . O . D . 1012 00:43:25,461 --> 00:43:27,683 To consider coordinating the quantities 1013 00:43:27,683 --> 00:43:29,850 that they wish to purchase in order to 1014 00:43:29,850 --> 00:43:31,970 potentially get a discount on pricing 1015 00:43:31,970 --> 00:43:35,190 from trans time . So so what would 1016 00:43:35,190 --> 00:43:39,030 happen to the price of a replacement 1017 00:43:39,040 --> 00:43:42,250 item when it needs to be bought via a 1018 00:43:42,250 --> 00:43:44,320 rapid order fulfillment . 1019 00:43:47,900 --> 00:43:50,270 Again that was not a focus of our audit . 1020 00:43:50,270 --> 00:43:52,326 However the department would have to 1021 00:43:52,326 --> 00:43:54,910 look into whether they could forecast 1022 00:43:54,910 --> 00:43:56,854 their demand in time to be able to 1023 00:43:56,854 --> 00:43:59,077 benefit from that and pricing of course 1024 00:43:59,077 --> 00:44:01,280 would be impacted in some way . Okay , 1025 00:44:01,430 --> 00:44:04,540 sole source contracting is a long 1026 00:44:04,540 --> 00:44:06,810 standing issue within the pentagon . 1027 00:44:07,590 --> 00:44:09,701 How can congress better work with the 1028 00:44:09,701 --> 00:44:12,240 department to remove barriers to entry 1029 00:44:12,250 --> 00:44:14,610 and alleviate the many problems that 1030 00:44:14,610 --> 00:44:17,010 come with lack of competition for these 1031 00:44:17,010 --> 00:44:20,980 contracts ? The department is 1032 00:44:20,980 --> 00:44:23,350 pursuing reverse engineering . That is 1033 00:44:23,350 --> 00:44:25,440 an option . Um Also , again , the 1034 00:44:25,440 --> 00:44:27,540 strategic supplier alliance were an 1035 00:44:27,540 --> 00:44:29,651 original equipment manufacturer would 1036 00:44:29,651 --> 00:44:31,640 potentially cancel their licensing 1037 00:44:31,650 --> 00:44:33,761 agreement with trans dime and produce 1038 00:44:33,761 --> 00:44:35,983 those products parts for the department 1039 00:44:35,983 --> 00:44:38,090 directly . But again , sole source 1040 00:44:38,090 --> 00:44:39,868 parts by their nature . Without 1041 00:44:39,868 --> 00:44:41,800 competitive market forces are the 1042 00:44:41,800 --> 00:44:44,360 systemic issue that that our report 1043 00:44:44,360 --> 00:44:47,400 highlights and without reform without 1044 00:44:47,400 --> 00:44:49,550 some legislation where a contracting 1045 00:44:49,550 --> 00:44:51,830 officer can receive the information 1046 00:44:51,830 --> 00:44:53,830 that they need to be able to make a 1047 00:44:53,830 --> 00:44:55,663 well informed negotiation with a 1048 00:44:55,663 --> 00:44:57,774 contractor . You're going to continue 1049 00:44:57,774 --> 00:44:59,740 to see these results time and time 1050 00:44:59,740 --> 00:45:02,940 again . Yeah . And that's really what 1051 00:45:02,940 --> 00:45:04,996 we need to address with a variety of 1052 00:45:04,996 --> 00:45:07,130 accounting methods available and a 1053 00:45:07,130 --> 00:45:09,220 large number of domestic contractors 1054 00:45:09,220 --> 00:45:12,230 available to meet defense needs . I 1055 00:45:12,230 --> 00:45:14,452 would urge the Department of Defense to 1056 00:45:14,452 --> 00:45:16,508 analyze its current system to better 1057 00:45:16,508 --> 00:45:19,010 assist both the warfighter and taxpayer 1058 00:45:19,390 --> 00:45:21,612 and with that I thank you and your back 1059 00:45:22,790 --> 00:45:25,012 gentleman yields back . The gentle lady 1060 00:45:25,012 --> 00:45:27,290 from michigan Miss Talib is recognized . 1061 00:45:28,490 --> 00:45:30,657 Thank you so much . Chairwoman , thank 1062 00:45:30,657 --> 00:45:32,712 you for having this really important 1063 00:45:32,712 --> 00:45:34,823 hearing about transparency and really 1064 00:45:34,823 --> 00:45:36,934 accountability ? uh Mr Holley in 2020 1065 00:45:36,934 --> 00:45:39,780 performance recap . Trans dime had 1066 00:45:39,780 --> 00:45:41,980 reported that the company fired more 1067 00:45:41,980 --> 00:45:44,420 than 30% of its workforce in response 1068 00:45:44,420 --> 00:45:46,253 to the reduced demand during the 1069 00:45:46,253 --> 00:45:49,080 pandemic . As trans dime rehired all of 1070 00:45:49,080 --> 00:45:51,302 the people that they laid off in 2020 . 1071 00:45:51,302 --> 00:45:52,302 Yes or no . 1072 00:45:57,090 --> 00:45:59,312 Excuse me . I was muted . The answer is 1073 00:45:59,312 --> 00:46:01,423 no . Yeah . Just keep it on muted for 1074 00:46:01,423 --> 00:46:03,590 awhile . Okay . Trans dime also stated 1075 00:46:03,590 --> 00:46:05,800 that it was quote implementing unpaid 1076 00:46:05,800 --> 00:46:08,430 furloughs and salary reductions across 1077 00:46:08,430 --> 00:46:10,870 the organization . So Mr Holy as we sit 1078 00:46:10,870 --> 00:46:13,270 here today has trans dime restored the 1079 00:46:13,270 --> 00:46:16,000 employees who refer load or had their 1080 00:46:16,000 --> 00:46:19,150 salaries cut in 2020 yes or no . I 1081 00:46:19,150 --> 00:46:21,317 don't know the answer to that . In all 1082 00:46:21,317 --> 00:46:24,590 cases . The answer later to the 1083 00:46:24,590 --> 00:46:26,646 committee . The commercial airline . 1084 00:46:27,670 --> 00:46:30,130 Yeah but it's totally okay . I'm trying 1085 00:46:30,130 --> 00:46:32,297 to get to a point . You can explain it 1086 00:46:32,297 --> 00:46:34,560 in your response . Mr Holley in 2021 to 1087 00:46:34,560 --> 00:46:36,740 the pandemic , you gave up about 2% of 1088 00:46:36,740 --> 00:46:39,970 your total compensation correct ? I 1089 00:46:39,970 --> 00:46:42,026 gave up something . I don't remember 1090 00:46:42,026 --> 00:46:44,192 the percent . Okay it's 2% at the same 1091 00:46:44,192 --> 00:46:46,303 time . Trans dime reported to the sec 1092 00:46:46,303 --> 00:46:48,359 that your total compensation in 2020 1093 00:46:48,359 --> 00:46:50,359 was just over $68 million including 1094 00:46:50,359 --> 00:46:52,710 dividends and option awards . So while 1095 00:46:52,710 --> 00:46:54,932 trans dime was laying off employees and 1096 00:46:54,932 --> 00:46:57,099 cutting salaries who's paying you more 1097 00:46:57,099 --> 00:46:59,210 than $68 million even when accounting 1098 00:46:59,210 --> 00:47:01,432 for a measly 2% of your salary that you 1099 00:47:01,432 --> 00:47:03,488 gave up . So Mr Holy , are you aware 1100 00:47:03,488 --> 00:47:05,043 that you received more than 1101 00:47:05,043 --> 00:47:07,210 compensation than the C . E . O . S of 1102 00:47:07,210 --> 00:47:09,210 Raytheon Boeing and Lockheed martin 1103 00:47:09,210 --> 00:47:12,670 combined combined . Yes or no . I don't 1104 00:47:12,670 --> 00:47:14,559 know what's there . My colleagues 1105 00:47:14,559 --> 00:47:17,030 showed you a chart . I don't know what 1106 00:47:17,030 --> 00:47:19,370 their compensation is . Can you trying 1107 00:47:19,370 --> 00:47:21,481 to find , I'm trying to find where we 1108 00:47:21,481 --> 00:47:23,426 can get the money that you owe the 1109 00:47:23,426 --> 00:47:25,648 american people So I'm trying to get to 1110 00:47:25,648 --> 00:47:27,426 repeat the question to me about 1111 00:47:27,426 --> 00:47:29,481 compensation just so I can answer it 1112 00:47:29,481 --> 00:47:31,592 carefully about the basically are you 1113 00:47:31,592 --> 00:47:31,400 do you know that you receive more 1114 00:47:31,410 --> 00:47:33,940 compensation then ? The C . E . O . S 1115 00:47:34,080 --> 00:47:36,250 Combined of Raytheon Boeing and 1116 00:47:36,250 --> 00:47:39,060 Lockheed Martin ? I'm not I don't know 1117 00:47:39,060 --> 00:47:41,060 their compensation . That's right . 1118 00:47:41,060 --> 00:47:43,060 Your compensation was so high . The 1119 00:47:43,060 --> 00:47:44,893 transit time felt that it had to 1120 00:47:44,893 --> 00:47:46,893 include a note and the shareholders 1121 00:47:46,893 --> 00:47:48,838 report that acknowledged the quote 1122 00:47:48,838 --> 00:47:50,620 magnitude of Mr Holies reported 1123 00:47:50,620 --> 00:47:52,731 compensation particularly in light of 1124 00:47:52,731 --> 00:47:56,130 the COVID-19 pandemic . So Mr Stein , 1125 00:47:56,140 --> 00:47:59,050 you know before we go on your woman , 1126 00:47:59,050 --> 00:48:00,828 can I submit for the record the 1127 00:48:00,828 --> 00:48:03,630 compensation charts please ? Without 1128 00:48:03,630 --> 00:48:06,450 objection ? Mr Stein to you . Dr . 1129 00:48:06,450 --> 00:48:08,920 Stein to you . You received about 22 1130 00:48:08,920 --> 00:48:11,190 million in total compensation in 2020 1131 00:48:11,190 --> 00:48:13,350 after forfeiting about 25% of your 1132 00:48:13,350 --> 00:48:15,780 salary , correct ? I believe . That's 1133 00:48:15,780 --> 00:48:18,113 correct . Oh thank you for your honesty . 1134 00:48:18,270 --> 00:48:20,103 So to recap at the time when the 1135 00:48:20,103 --> 00:48:22,159 american families were and still are 1136 00:48:22,159 --> 00:48:24,381 struggling with the financial burden of 1137 00:48:24,381 --> 00:48:26,159 the pandemic trans dime paid to 1138 00:48:26,159 --> 00:48:27,992 executives here today around $90 1139 00:48:27,992 --> 00:48:30,340 million while at the same time laying 1140 00:48:30,340 --> 00:48:32,507 off furloughing , cutting the salaries 1141 00:48:32,507 --> 00:48:34,673 of its other employees $90 million . I 1142 00:48:34,673 --> 00:48:36,507 might add that trans dime got by 1143 00:48:36,507 --> 00:48:39,050 screwing over the american people sadly 1144 00:48:39,060 --> 00:48:41,282 since time is not unique , you just got 1145 00:48:41,282 --> 00:48:43,393 caught . You know , I know that we're 1146 00:48:43,393 --> 00:48:45,616 talking about one company but know that 1147 00:48:45,616 --> 00:48:47,671 this is for me , this is the perfect 1148 00:48:47,671 --> 00:48:49,893 you all are the perfect poster child of 1149 00:48:49,893 --> 00:48:52,004 an out of control defense budget that 1150 00:48:52,004 --> 00:48:54,060 puts the interests of wealthy , well 1151 00:48:54,060 --> 00:48:56,227 connected people like yourselves ahead 1152 00:48:56,227 --> 00:48:58,338 of the best interests of the american 1153 00:48:58,338 --> 00:49:00,504 people . You are for my residents what 1154 00:49:00,504 --> 00:49:02,616 corporate greed looks like in America 1155 00:49:02,616 --> 00:49:04,616 you two and trans dime must be held 1156 00:49:04,616 --> 00:49:06,650 accountable . It must pay the $20.8 1157 00:49:06,650 --> 00:49:08,872 million in access profits identified by 1158 00:49:08,872 --> 00:49:11,094 I g I would recommend that it comes out 1159 00:49:11,094 --> 00:49:13,340 of your salaries as your last act 1160 00:49:13,350 --> 00:49:15,680 before you both resigned in disgrace . 1161 00:49:15,690 --> 00:49:18,580 I would also add on and call on the 1162 00:49:18,580 --> 00:49:21,630 Department of Defense as a whole to 1163 00:49:21,630 --> 00:49:23,500 ensure that not a single cent of 1164 00:49:23,500 --> 00:49:25,667 taxpayer money ever goes to a business 1165 00:49:25,667 --> 00:49:28,290 run by either of these folks . Again , 1166 00:49:28,770 --> 00:49:30,659 it is so critically important and 1167 00:49:30,659 --> 00:49:32,510 chairwoman , we need to continue 1168 00:49:32,510 --> 00:49:34,732 holding these folks accountable because 1169 00:49:34,732 --> 00:49:36,343 when we are not holding them 1170 00:49:36,343 --> 00:49:38,232 accountable , then we have to cut 1171 00:49:38,232 --> 00:49:40,454 programs and those things that actually 1172 00:49:40,454 --> 00:49:42,621 attack this virus protect the families 1173 00:49:42,621 --> 00:49:44,343 at the forefront for all of my 1174 00:49:44,343 --> 00:49:46,399 colleagues they may be wearing suits 1175 00:49:46,440 --> 00:49:50,410 and may but they can still be 1176 00:49:50,410 --> 00:49:52,860 scammers of our country . It can still 1177 00:49:52,860 --> 00:49:55,027 be scamming are folks I wish you would 1178 00:49:55,027 --> 00:49:57,138 all treat them the same way you would 1179 00:49:57,138 --> 00:49:59,304 if somebody was on food assistance and 1180 00:49:59,304 --> 00:50:01,416 they didn't maybe qualify whatever it 1181 00:50:01,416 --> 00:50:03,582 is . The fact of the matter is we need 1182 00:50:03,582 --> 00:50:05,804 to hold them accountable equally as the 1183 00:50:05,804 --> 00:50:07,860 same as we would hold anybody coming 1184 00:50:07,860 --> 00:50:10,380 before our committee again that used um 1185 00:50:10,560 --> 00:50:12,393 you know there are resources and 1186 00:50:12,393 --> 00:50:14,800 undermining and also you know scamming 1187 00:50:14,810 --> 00:50:16,810 the system to basically make output 1188 00:50:16,810 --> 00:50:18,866 profit off of all of us . So I thank 1189 00:50:18,866 --> 00:50:20,950 you and I yield lady yields back . 1190 00:50:20,960 --> 00:50:23,600 Gentlemen from Kansas . Mr Laturnow is 1191 00:50:23,600 --> 00:50:25,489 now recognized the gentleman from 1192 00:50:25,489 --> 00:50:27,980 Kansas . Thank you madam Chairwoman . 1193 00:50:28,560 --> 00:50:32,180 Uh My first question is for Miss Hall . 1194 00:50:32,960 --> 00:50:35,127 In the absence of market driven driven 1195 00:50:35,127 --> 00:50:37,349 pricing , the federal government may be 1196 00:50:37,349 --> 00:50:39,571 left with a take it or leave it pricing 1197 00:50:39,571 --> 00:50:41,793 approached by sole source manufacturers 1198 00:50:41,793 --> 00:50:43,627 rather than capping profits with 1199 00:50:43,627 --> 00:50:45,238 arbitrary profit ceilings or 1200 00:50:45,238 --> 00:50:46,849 potentially bogging down the 1201 00:50:46,849 --> 00:50:48,960 procurement process with pricing data 1202 00:50:48,960 --> 00:50:51,182 requests . Is there a way to drive down 1203 00:50:51,182 --> 00:50:52,960 prices organically by improving 1204 00:50:52,960 --> 00:50:55,182 competition from smaller nontraditional 1205 00:50:55,182 --> 00:50:58,610 defense contractors . There are 1206 00:50:58,610 --> 00:51:00,777 certainly ways that the department can 1207 00:51:00,777 --> 00:51:03,220 um potentially begin to do that through 1208 00:51:03,220 --> 00:51:05,331 some of the methods we discussed like 1209 00:51:05,331 --> 00:51:07,220 reverse engineering or the supply 1210 00:51:07,220 --> 00:51:10,040 strategic supplier alliance but like 1211 00:51:10,040 --> 00:51:12,262 the case that we are discussing today , 1212 00:51:12,550 --> 00:51:14,830 the majority of the parts are sole 1213 00:51:14,830 --> 00:51:17,070 source . So there there isn't another 1214 00:51:17,070 --> 00:51:19,181 option for the department currently . 1215 00:51:20,960 --> 00:51:24,080 No I appreciate that . Mr Tartaglia 1216 00:51:24,860 --> 00:51:28,430 this committee a few years ago spend a 1217 00:51:28,430 --> 00:51:30,097 lot of time unpacking defense 1218 00:51:30,097 --> 00:51:32,319 contractors role in contributing to the 1219 00:51:32,319 --> 00:51:34,470 high prices of spare parts but 1220 00:51:34,480 --> 00:51:36,702 applicable laws and regulations seem to 1221 00:51:36,702 --> 00:51:38,813 invite practices that drive up prices 1222 00:51:38,813 --> 00:51:40,980 for the federal government and for the 1223 00:51:40,980 --> 00:51:43,036 american taxpayer by extension . Can 1224 00:51:43,036 --> 00:51:45,091 you explain the rationale behind the 1225 00:51:45,091 --> 00:51:47,202 Department of Defense is just in time 1226 00:51:47,202 --> 00:51:49,500 inventory management practices ? Well 1227 00:51:49,500 --> 00:51:52,060 congressman I think I'm not sure I 1228 00:51:52,060 --> 00:51:55,710 describe our acquisition of all these 1229 00:51:55,710 --> 00:51:58,210 parts using just in time . Certainly we 1230 00:51:58,210 --> 00:52:00,980 can provide some additional information 1231 00:52:01,350 --> 00:52:03,572 from the Defense logistics agency about 1232 00:52:03,572 --> 00:52:06,020 how they manage inventory but we're 1233 00:52:06,020 --> 00:52:09,760 talking about as the 1234 00:52:09,770 --> 00:52:12,690 number of transactions in the sample 1235 00:52:12,820 --> 00:52:15,042 happened to be the smaller transactions 1236 00:52:15,042 --> 00:52:17,820 by design . That was what you asked the 1237 00:52:17,830 --> 00:52:20,000 I . G . To look at and I think 1238 00:52:20,000 --> 00:52:22,111 inherently that that's going to drive 1239 00:52:22,111 --> 00:52:24,389 some of the smaller quantity purchases . 1240 00:52:24,590 --> 00:52:26,479 If we were to look at some of the 1241 00:52:26,479 --> 00:52:28,810 larger value transactions I would 1242 00:52:28,810 --> 00:52:31,550 expect on the other side of the truth 1243 00:52:31,550 --> 00:52:33,720 of negotiations act threshold I would 1244 00:52:33,720 --> 00:52:36,190 expect the exception commercial item 1245 00:52:36,190 --> 00:52:38,301 exception would most likely come into 1246 00:52:38,301 --> 00:52:40,134 play and we would not be getting 1247 00:52:40,134 --> 00:52:42,357 certified cost and pricing data but you 1248 00:52:42,357 --> 00:52:44,357 would have larger transactions with 1249 00:52:44,357 --> 00:52:46,110 perhaps larger quantities . I 1250 00:52:46,110 --> 00:52:48,110 appreciate that . Are you concerned 1251 00:52:48,110 --> 00:52:50,110 that legislative changes that force 1252 00:52:50,110 --> 00:52:52,166 companies to disclose cost data will 1253 00:52:52,166 --> 00:52:54,332 hamstring the D . O . D . S ability to 1254 00:52:54,332 --> 00:52:56,554 move quickly when procuring spare parts 1255 00:52:56,554 --> 00:52:58,277 particularly with just in time 1256 00:52:58,277 --> 00:53:02,070 purchasing . So I I don't want 1257 00:53:02,080 --> 00:53:03,913 to leave the impression that our 1258 00:53:03,913 --> 00:53:06,024 contracting officers are always going 1259 00:53:06,024 --> 00:53:08,950 to need to look at cost data . We have 1260 00:53:08,960 --> 00:53:11,790 in the law a preference that that puts 1261 00:53:11,790 --> 00:53:15,220 that as the last resort . Um leave it 1262 00:53:15,220 --> 00:53:17,070 to the Congress if they want to 1263 00:53:17,080 --> 00:53:19,270 maintain that . But you can see what 1264 00:53:19,280 --> 00:53:22,410 how that preference plays out . But the 1265 00:53:22,420 --> 00:53:24,587 the current law that we have that that 1266 00:53:24,587 --> 00:53:27,520 asks us to look at analogous pricing . 1267 00:53:27,530 --> 00:53:29,710 Uh Starting with sales data . I come 1268 00:53:29,710 --> 00:53:31,821 back to my at that point I was making 1269 00:53:31,821 --> 00:53:34,070 earlier . The starting point is really 1270 00:53:34,070 --> 00:53:36,014 analyzing the particular part that 1271 00:53:36,014 --> 00:53:38,126 you're buying and asking yourself and 1272 00:53:38,126 --> 00:53:40,348 the market doing the market research to 1273 00:53:40,348 --> 00:53:42,459 demonstrate whether that same product 1274 00:53:42,459 --> 00:53:44,681 is sold in the commercial marketplace . 1275 00:53:44,681 --> 00:53:47,350 If it is uh then we will look at what 1276 00:53:47,350 --> 00:53:49,350 other consumers are paying for that 1277 00:53:49,350 --> 00:53:51,572 product . But uh it's it's almost never 1278 00:53:51,572 --> 00:53:53,794 quite that straightforward because it's 1279 00:53:53,794 --> 00:53:56,270 usually uh of a type commercial product . 1280 00:53:56,650 --> 00:54:00,420 And then we need to make some do some 1281 00:54:00,420 --> 00:54:02,642 analysis on the differences between the 1282 00:54:02,642 --> 00:54:04,753 product that's sold in the commercial 1283 00:54:04,753 --> 00:54:06,920 marketplace and the product that we're 1284 00:54:06,920 --> 00:54:09,031 buying . Thank you . I appreciate you 1285 00:54:09,031 --> 00:54:11,031 being here today as well as the the 1286 00:54:11,031 --> 00:54:12,976 other countries Madam Chairman . I 1287 00:54:12,976 --> 00:54:15,460 yield back Woman yields back little 1288 00:54:15,460 --> 00:54:17,349 lady from Missouri MS Bush is now 1289 00:54:17,349 --> 00:54:19,016 recognized for five minutes . 1290 00:54:24,640 --> 00:54:28,470 We lost her a mute . 1291 00:54:28,480 --> 00:54:32,300 Corey butch , thank 1292 00:54:32,300 --> 00:54:35,560 you . Um And thank you uh 1293 00:54:36,440 --> 00:54:38,440 Madam Chair for convening convening 1294 00:54:38,440 --> 00:54:42,330 this hearing ST 1295 00:54:42,330 --> 00:54:46,100 louis and I are very troubled to 1296 00:54:46,100 --> 00:54:49,860 hear about yet more military waste from 1297 00:54:49,860 --> 00:54:52,760 the I . G . Audit . Trans dime sells a 1298 00:54:52,760 --> 00:54:55,330 linear actuated cap which is used in 1299 00:54:55,330 --> 00:54:57,680 both the eagle F . 15 and strata 1300 00:54:57,680 --> 00:55:00,060 lifters . C . 1 35 airplanes . 1301 00:55:00,540 --> 00:55:02,762 According to the I . G . Report . Trans 1302 00:55:02,762 --> 00:55:05,780 dime sold this part two D . O . D . For 1303 00:55:05,780 --> 00:55:09,690 $7495 1304 00:55:09,690 --> 00:55:12,150 per spare part . Despite it only 1305 00:55:12,150 --> 00:55:16,030 costing trans dime $189 to make the 1306 00:55:16,030 --> 00:55:19,870 part . The price has increased by 400% 1307 00:55:19,870 --> 00:55:21,814 in just the last three decades and 1308 00:55:21,814 --> 00:55:24,170 doubled in just a three year period . 1309 00:55:24,840 --> 00:55:27,740 Mr tartaglia , why would D . O . D . 1310 00:55:27,740 --> 00:55:29,796 Pay double what it paid for the same 1311 00:55:29,796 --> 00:55:31,907 spare part ? Just three years prior . 1312 00:55:34,340 --> 00:55:36,900 Thank you congresswoman . Part of our 1313 00:55:36,900 --> 00:55:39,440 analysis is looking at what we've 1314 00:55:39,440 --> 00:55:42,270 previously previously paid ideally 1315 00:55:42,270 --> 00:55:44,100 we're looking at what other uh 1316 00:55:44,110 --> 00:55:46,600 competitive consumers are paying in the 1317 00:55:46,600 --> 00:55:48,880 marketplace for this particular item . 1318 00:55:48,880 --> 00:55:50,991 And I don't I don't know if the exact 1319 00:55:50,991 --> 00:55:52,991 same item is sold in the commercial 1320 00:55:52,991 --> 00:55:55,102 marketplace is suspected is not . And 1321 00:55:55,102 --> 00:55:57,213 then the reality becomes whether this 1322 00:55:57,213 --> 00:55:59,430 is a flight safety item . Uh The 1323 00:55:59,440 --> 00:56:01,496 leverage that we have . We need , we 1324 00:56:01,496 --> 00:56:04,130 need the part uh as a sole source 1325 00:56:04,140 --> 00:56:06,990 supplier . If there's no other uh 1326 00:56:07,000 --> 00:56:09,111 source to buy that part , we're gonna 1327 00:56:09,111 --> 00:56:11,620 need to make the purchase to keep our 1328 00:56:11,620 --> 00:56:15,340 aircraft flying . Yes and so 1329 00:56:15,350 --> 00:56:19,310 um $108 $189 to 1330 00:56:19,310 --> 00:56:23,230 make . But $7400 is what is being 1331 00:56:23,230 --> 00:56:27,050 paid for this . Um The I . G . 1332 00:56:27,050 --> 00:56:29,240 Audit to determine that trans dimes 1333 00:56:29,250 --> 00:56:31,440 excess profit for this part was over 1334 00:56:31,440 --> 00:56:34,650 3800% . Just to be clear that it's not 1335 00:56:34,650 --> 00:56:37,890 the prophet trans dime earned mr stein . 1336 00:56:37,890 --> 00:56:40,620 How can trans dime justify though ? How 1337 00:56:40,620 --> 00:56:43,620 can you justify charging $14,000 for a 1338 00:56:43,620 --> 00:56:46,950 part that just costs $189 ? I'm glad 1339 00:56:46,950 --> 00:56:49,117 you asked that question . It's a great 1340 00:56:49,117 --> 00:56:50,894 question . There's a commercial 1341 00:56:50,894 --> 00:56:52,810 equivalent for that part . The 1342 00:56:52,810 --> 00:56:54,366 commercial equivalent costs 1343 00:56:54,366 --> 00:56:58,220 $8,182 . We gave 1344 00:56:58,220 --> 00:57:01,990 the d . o . d . a 10% discount on that 1345 00:57:01,990 --> 00:57:05,970 part and over five years the D . 1346 00:57:05,970 --> 00:57:09,550 O . D . Ordered less than 40 pieces 1347 00:57:10,330 --> 00:57:13,960 Over five years . 40 parts it's 1348 00:57:13,960 --> 00:57:17,800 so small and irregular And we gave a 1349 00:57:17,800 --> 00:57:21,360 discount of 10% to commercial . It's 1350 00:57:21,360 --> 00:57:23,460 simple to explain . I don't I don't 1351 00:57:23,460 --> 00:57:26,310 understand why we're here even we're 1352 00:57:26,310 --> 00:57:29,850 giving a discount to commercial prices , 1353 00:57:30,430 --> 00:57:32,541 you're giving a discount on something 1354 00:57:32,541 --> 00:57:35,830 that costs $189 to make . Mr Stein . 1355 00:57:35,830 --> 00:57:37,890 Will you commit to paying back the 1356 00:57:37,890 --> 00:57:40,150 excess profit Trans dime received in 1357 00:57:40,150 --> 00:57:42,610 this example as well as the other 105 1358 00:57:42,610 --> 00:57:44,730 parts identified by the I . G . S 1359 00:57:44,730 --> 00:57:47,550 returning excess profit . Yes or no . 1360 00:57:48,330 --> 00:57:50,750 Uh It's not a yes or no answer 1361 00:57:52,930 --> 00:57:54,763 yes yes or no because what we're 1362 00:57:54,763 --> 00:57:56,930 talking about here is something that's 1363 00:57:56,930 --> 00:57:58,930 $189 to make , not necessarily what 1364 00:57:58,930 --> 00:58:01,152 somebody else is charging for it . It's 1365 00:58:01,152 --> 00:58:04,860 $189 . So reclaiming , reclaiming my 1366 00:58:04,870 --> 00:58:07,880 time . Um It's essential that trans 1367 00:58:07,880 --> 00:58:11,540 dime pay back the $20.8 million in 1368 00:58:11,540 --> 00:58:13,750 May in X profits as a result of this 1369 00:58:13,750 --> 00:58:16,310 price gouging as lawmakers . We will 1370 00:58:16,320 --> 00:58:19,640 also work to ensure that this abuse and 1371 00:58:20,020 --> 00:58:22,131 recouping those excess profits is the 1372 00:58:22,131 --> 00:58:24,187 difference between having housing or 1373 00:58:24,187 --> 00:58:26,390 not mapping environment environmental 1374 00:58:26,390 --> 00:58:29,230 racism or not having clean drinking 1375 00:58:29,230 --> 00:58:32,420 water or not . $20.8 million dollars to 1376 00:58:32,420 --> 00:58:34,531 fund housing for tens of thousands of 1377 00:58:34,531 --> 00:58:36,753 our veterans , many of whom are far too 1378 00:58:36,753 --> 00:58:38,976 often living on the street . And I know 1379 00:58:38,976 --> 00:58:41,309 because I'm out there working with them . 1380 00:58:41,309 --> 00:58:43,364 It could map environmental racism in 1381 00:58:43,364 --> 00:58:45,476 hundreds of communities like ST louis 1382 00:58:45,476 --> 00:58:47,531 that are suffering from polluted air 1383 00:58:47,531 --> 00:58:49,642 and climate change . It could provide 1384 00:58:49,642 --> 00:58:51,753 millions of gallons of clean drinking 1385 00:58:51,753 --> 00:58:51,650 water for Children and Children and 1386 00:58:51,650 --> 00:58:53,761 families , especially black and brown 1387 00:58:53,761 --> 00:58:55,706 families all across this country . 1388 00:58:55,706 --> 00:58:57,600 Instead , more than 50% of the 1389 00:58:57,600 --> 00:59:00,980 exorbitant $778 billion defense budget 1390 00:59:00,990 --> 00:59:03,720 is given to military contractors . Miss 1391 00:59:03,720 --> 00:59:05,553 Ho would you say that the linear 1392 00:59:05,553 --> 00:59:07,553 actuated cap represents an isolated 1393 00:59:07,553 --> 00:59:09,220 case of D . O . D . Waste and 1394 00:59:09,220 --> 00:59:12,520 mismanagement of money . Uh the part 1395 00:59:12,520 --> 00:59:14,464 that you mentioned was the highest 1396 00:59:14,464 --> 00:59:16,660 excess profit percentage that we found 1397 00:59:16,670 --> 00:59:19,080 uh for during the audit . Um but the 1398 00:59:19,080 --> 00:59:21,550 profit percentages ranged anywhere from 1399 00:59:21,560 --> 00:59:25,150 2.8% to 3,850.6 1400 00:59:26,220 --> 00:59:28,442 come here despite receiving hundreds of 1401 00:59:28,442 --> 00:59:30,720 billions of dollars every year , the D . 1402 00:59:30,720 --> 00:59:32,831 O . D . Has never detailed its assets 1403 00:59:32,831 --> 00:59:34,942 or undergone a complete clean audit , 1404 00:59:34,942 --> 00:59:36,998 likely leading to the kinds of abuse 1405 00:59:36,998 --> 00:59:39,220 and waste . We're discussing in today's 1406 00:59:39,220 --> 00:59:38,940 hearing , I'm encouraged by the steps 1407 00:59:38,940 --> 00:59:40,940 this committee is taking to address 1408 00:59:40,940 --> 00:59:42,996 this pressing pressing issue . Thank 1409 00:59:42,996 --> 00:59:44,940 you . And I yield back gentle lady 1410 00:59:44,940 --> 00:59:47,000 yields the gentleman from texas . Mr 1411 00:59:47,000 --> 00:59:49,950 Fallon . You're now recognized . Mhm . 1412 00:59:50,520 --> 00:59:52,687 Thank you , madam . Chair , appreciate 1413 00:59:52,687 --> 00:59:55,090 it . I have a mister obviously there's 1414 00:59:55,090 --> 00:59:57,312 gotta be a balance between the needs of 1415 00:59:57,312 --> 00:59:59,423 our war fighters and the needs of our 1416 00:59:59,620 --> 01:00:01,898 taxpayers and no longer that R . And D . 1417 01:00:01,898 --> 01:00:04,210 Takes and the longer acquisition takes , 1418 01:00:04,210 --> 01:00:06,432 it's , you know , it's worse for both . 1419 01:00:06,432 --> 01:00:08,321 You know , there's money and time 1420 01:00:08,321 --> 01:00:10,266 that's wasted in in a hot war . It 1421 01:00:10,266 --> 01:00:12,432 could be even more , in your opinion . 1422 01:00:12,432 --> 01:00:14,543 Is it acceptable that the D . O . D . 1423 01:00:14,543 --> 01:00:16,766 Is consistently over paying contracts ? 1424 01:00:18,210 --> 01:00:20,321 Well , it's never acceptable if we're 1425 01:00:20,321 --> 01:00:22,450 paying excessive prices . And in this 1426 01:00:22,450 --> 01:00:25,450 case , we're talking about whether or 1427 01:00:25,450 --> 01:00:27,450 not our contracting officers should 1428 01:00:27,450 --> 01:00:29,561 have full access to the information , 1429 01:00:29,610 --> 01:00:32,090 the part we just described or any of 1430 01:00:32,090 --> 01:00:34,260 the other parts for that matter . 1431 01:00:34,270 --> 01:00:37,270 Whether we know all the facts that 1432 01:00:37,270 --> 01:00:39,492 really would go into that if if we were 1433 01:00:39,492 --> 01:00:41,770 in the world , uh non commercial items . 1434 01:00:41,770 --> 01:00:43,940 Uh And and again most of these items 1435 01:00:43,940 --> 01:00:46,218 are probably commercial , I don't know , 1436 01:00:46,218 --> 01:00:47,996 you'd have to do a part by part 1437 01:00:47,996 --> 01:00:49,940 analysis . But in the world of non 1438 01:00:49,940 --> 01:00:51,829 commercial items , the way we put 1439 01:00:51,829 --> 01:00:53,718 ourselves on level footing is the 1440 01:00:53,718 --> 01:00:55,829 legislation that the Congress enacted 1441 01:00:55,829 --> 01:00:57,551 many years ago . The Truth and 1442 01:00:57,551 --> 01:01:00,050 Negotiation Act , which gives us access 1443 01:01:00,050 --> 01:01:02,106 to the information and furthermore , 1444 01:01:02,106 --> 01:01:04,550 requires companies to certify that all 1445 01:01:04,550 --> 01:01:06,717 the facts that they're revealing to us 1446 01:01:06,717 --> 01:01:08,772 for the purpose of negotiation , our 1447 01:01:08,772 --> 01:01:11,050 current , accurate and complete . That . 1448 01:01:11,050 --> 01:01:13,106 That doesn't come into play here for 1449 01:01:13,106 --> 01:01:15,217 two reasons . One because we're below 1450 01:01:15,217 --> 01:01:16,939 the dollar threshold for these 1451 01:01:16,939 --> 01:01:18,883 transactions and two because their 1452 01:01:18,883 --> 01:01:21,106 commercial . But what we really need is 1453 01:01:21,106 --> 01:01:23,328 a policy that will give our contracting 1454 01:01:23,328 --> 01:01:25,494 officers a means to establish fair and 1455 01:01:25,494 --> 01:01:27,717 reasonable pricing when the , when some 1456 01:01:27,717 --> 01:01:27,740 of the tinA exceptions are in play .