1 00:00:00,140 --> 00:00:03,180 back your time Fallon , are you 2 00:00:03,180 --> 00:00:06,510 finished ? Mr Fallon . We seem to have 3 00:00:06,510 --> 00:00:10,150 lost . Mr Fallon . Uh let's go on and 4 00:00:10,150 --> 00:00:13,920 we can come back to him . Mr 5 00:00:13,920 --> 00:00:17,820 Fallon . Let's 6 00:00:17,830 --> 00:00:20,180 go to Mr Clyde . Mr Clyde . You're now 7 00:00:20,190 --> 00:00:22,246 recognized we seem to have lost . Mr 8 00:00:22,246 --> 00:00:24,970 Fallon . Oh 9 00:00:25,840 --> 00:00:29,500 thank you , madam Chair uh and ranking 10 00:00:29,500 --> 00:00:31,611 member comer for holding this hearing 11 00:00:31,611 --> 00:00:34,310 today . Um Well I appreciate a closer 12 00:00:34,310 --> 00:00:36,254 examination of wasteful government 13 00:00:36,254 --> 00:00:38,254 spending . I cannot help but notice 14 00:00:38,254 --> 00:00:40,366 that we need to take a closer look at 15 00:00:40,366 --> 00:00:42,088 the flaws in the Department of 16 00:00:42,088 --> 00:00:44,088 Defense's acquisition process too , 17 00:00:44,088 --> 00:00:46,032 including what I call just in time 18 00:00:46,032 --> 00:00:49,090 inventory and and and put the what the 19 00:00:49,090 --> 00:00:51,257 industry calls that as well . Time and 20 00:00:51,257 --> 00:00:53,423 time again . The Department of Defense 21 00:00:53,423 --> 00:00:55,080 has had difficulty correctly 22 00:00:55,080 --> 00:00:56,913 forecasting much needed , highly 23 00:00:56,913 --> 00:00:59,390 sophisticated spare parts until it 24 00:00:59,400 --> 00:01:01,820 comes time for repairs . Thus leading 25 00:01:01,820 --> 00:01:03,987 in my opinion too costly , small batch 26 00:01:03,990 --> 00:01:06,230 ordering . This issue has gone on for 27 00:01:06,230 --> 00:01:09,840 years . In fact , in March of 1986 28 00:01:09,850 --> 00:01:12,870 the G A . O . Produced a report called 29 00:01:12,870 --> 00:01:15,240 D . O . D . Initiatives to improve the 30 00:01:15,240 --> 00:01:17,470 acquisition of spare parts . This 31 00:01:17,470 --> 00:01:19,637 report highlighted that the Department 32 00:01:19,637 --> 00:01:22,550 of Defense continuously purchased spare 33 00:01:22,550 --> 00:01:24,272 parts at high prices when less 34 00:01:24,272 --> 00:01:26,383 expensive alternatives were available 35 00:01:27,140 --> 00:01:29,307 to further highlight the Department of 36 00:01:29,307 --> 00:01:31,480 Defense's fought acquisition . In a 37 00:01:31,480 --> 00:01:33,870 2015 report , the inspector general of 38 00:01:33,870 --> 00:01:35,981 the Department of Defense stated that 39 00:01:35,981 --> 00:01:38,550 in 20 of 32 reports regarding spare 40 00:01:38,550 --> 00:01:41,860 part price issues Since 1998 , it was 41 00:01:41,860 --> 00:01:43,916 found that the Department of Defense 42 00:01:43,916 --> 00:01:46,230 did not perform adequate cost or price 43 00:01:46,230 --> 00:01:48,950 analysis when purchasing spare parts . 44 00:01:48,950 --> 00:01:51,860 That leads me to question , you know , 45 00:01:52,740 --> 00:01:55,130 as a Navy supply officer for over two 46 00:01:55,130 --> 00:01:57,120 decades I've had a fair bit of 47 00:01:57,120 --> 00:01:59,287 experience when it comes to Department 48 00:01:59,287 --> 00:02:03,230 of Defense procurement . Um So that 49 00:02:03,230 --> 00:02:05,452 leads me to question why are we holding 50 00:02:05,452 --> 00:02:08,230 these hearings on trans um dimes 51 00:02:08,230 --> 00:02:10,230 profits when we should be primarily 52 00:02:10,230 --> 00:02:11,897 focusing in my opinion on the 53 00:02:11,897 --> 00:02:13,897 Department of Defense's acquisition 54 00:02:13,897 --> 00:02:17,510 processes . So Mr Chinaglia a 55 00:02:17,510 --> 00:02:19,677 question for you , thank you for being 56 00:02:19,677 --> 00:02:22,350 here today . I appreciate that um 57 00:02:22,840 --> 00:02:25,030 regarding item procurement . What 58 00:02:25,030 --> 00:02:27,086 research has done to ensure that the 59 00:02:27,086 --> 00:02:29,141 Department of Defense is getting the 60 00:02:29,141 --> 00:02:32,810 best price available sir , for the 61 00:02:32,810 --> 00:02:35,143 items we're talking about in this I . G . 62 00:02:35,143 --> 00:02:37,230 Sample . For the most part it's a 63 00:02:37,230 --> 00:02:39,452 universe of parts that are known to the 64 00:02:39,452 --> 00:02:41,508 Defense Logistics Agency . There are 65 00:02:41,508 --> 00:02:43,674 there are parts that we've procured in 66 00:02:43,674 --> 00:02:45,619 the past . There there may be some 67 00:02:45,619 --> 00:02:47,674 market research to identify not only 68 00:02:47,674 --> 00:02:49,674 alternative sources but alternative 69 00:02:49,674 --> 00:02:51,490 parts but for most cases in the 70 00:02:51,490 --> 00:02:53,640 sustainment environment . I think the 71 00:02:53,640 --> 00:02:55,696 parts that we're talking about there 72 00:02:55,696 --> 00:02:57,870 aren't alternatives . And the question 73 00:02:57,870 --> 00:02:59,850 is can we what can we do to create 74 00:02:59,870 --> 00:03:02,430 alternative sourcing where we do have 75 00:03:02,440 --> 00:03:04,850 sole source suppliers such as Trans 76 00:03:04,850 --> 00:03:08,760 time . Right , okay . All right . 77 00:03:08,760 --> 00:03:10,982 So once you've determined what the best 78 00:03:10,982 --> 00:03:14,830 available prices um are the 79 00:03:14,830 --> 00:03:16,886 things that prevent you from placing 80 00:03:16,886 --> 00:03:19,560 larger batch orders that would give you 81 00:03:19,570 --> 00:03:22,830 um you know maybe a better price 82 00:03:22,830 --> 00:03:24,941 because of the increase in quantity . 83 00:03:26,140 --> 00:03:28,029 In my discussions with the senior 84 00:03:28,029 --> 00:03:30,251 officials at Defense Logistics Agency . 85 00:03:30,251 --> 00:03:32,418 They recognize that that is a factor . 86 00:03:32,540 --> 00:03:34,540 And they described a scenario where 87 00:03:34,540 --> 00:03:36,762 they were responding to a demand signal 88 00:03:36,762 --> 00:03:38,984 from the military departments that have 89 00:03:38,984 --> 00:03:41,730 needs for a particular part . Uh , 90 00:03:41,740 --> 00:03:44,420 perhaps the the department in general 91 00:03:44,420 --> 00:03:46,198 could have done a better job of 92 00:03:46,198 --> 00:03:48,364 predicting when they would need that . 93 00:03:48,364 --> 00:03:51,220 But all those factors that go into that , 94 00:03:51,230 --> 00:03:53,452 I think we owe you a more robust answer 95 00:03:53,452 --> 00:03:55,674 that goes into the inventory management 96 00:03:55,674 --> 00:03:57,786 and I'm not really the subject matter 97 00:03:57,786 --> 00:03:59,841 expert to address that . But that is 98 00:03:59,841 --> 00:04:02,380 certainly a a factor in the price we 99 00:04:02,380 --> 00:04:04,930 pay . The smaller the quantities by the , 100 00:04:04,940 --> 00:04:07,440 by virtue of this particular sample , 101 00:04:07,560 --> 00:04:09,671 the I . G . Was asked to only look at 102 00:04:09,671 --> 00:04:12,360 the smaller , smaller dollar purchases . 103 00:04:13,240 --> 00:04:15,407 So inherently you're going to have the 104 00:04:15,407 --> 00:04:17,629 smaller , uh , smaller batches . And so 105 00:04:17,629 --> 00:04:19,740 there's another universe of of larger 106 00:04:19,740 --> 00:04:21,470 procurements that with larger 107 00:04:21,480 --> 00:04:23,480 quantities that that really weren't 108 00:04:23,480 --> 00:04:25,910 examined for this particular audit ? Mm 109 00:04:25,910 --> 00:04:28,021 hmm . Okay . You know , I would think 110 00:04:28,021 --> 00:04:30,280 that for highly sophisticated equipment 111 00:04:30,290 --> 00:04:32,390 intended for national security use . 112 00:04:32,400 --> 00:04:34,567 You know , I would think that we would 113 00:04:34,567 --> 00:04:37,190 generally want a little more depth when 114 00:04:37,190 --> 00:04:40,010 it comes to our inventory positions um , 115 00:04:40,020 --> 00:04:42,580 you know , when things like aircraft or 116 00:04:42,580 --> 00:04:44,900 whatever . That was my my primary focus 117 00:04:44,900 --> 00:04:48,650 as an aviation supply officer . Um , 118 00:04:49,440 --> 00:04:51,960 so as a follow up based on your 119 00:04:51,960 --> 00:04:53,793 experience , what information or 120 00:04:53,793 --> 00:04:56,650 resources do you think D . O . D . Um 121 00:04:56,650 --> 00:04:59,000 could use to improve forecasting and 122 00:04:59,000 --> 00:05:01,800 inventory management Or are there are 123 00:05:01,800 --> 00:05:03,911 there any that come to mind right now 124 00:05:05,340 --> 00:05:07,562 congressman ? I actually prefer to take 125 00:05:07,562 --> 00:05:09,784 that one for the record . That's not my 126 00:05:09,784 --> 00:05:11,840 area of expertise but with with with 127 00:05:11,840 --> 00:05:14,020 with a fulsome answer . Okay . All 128 00:05:14,020 --> 00:05:16,131 right , well thank you . I appreciate 129 00:05:16,131 --> 00:05:18,020 that madam chair . I yield back . 130 00:05:18,020 --> 00:05:20,187 Gentleman yields back . We will now go 131 00:05:20,187 --> 00:05:22,131 to the gentleman from Georgia . Mr 132 00:05:22,131 --> 00:05:24,660 johnson , you're now recognized . Thank 133 00:05:24,660 --> 00:05:26,771 you madam Chair for holding this very 134 00:05:26,771 --> 00:05:29,840 important hearing and I have missed 135 00:05:30,030 --> 00:05:33,930 much of it uh having to attend a 136 00:05:33,940 --> 00:05:36,640 two other hearings but I'm happy to be 137 00:05:36,640 --> 00:05:39,220 here right now and I may ask a question 138 00:05:39,220 --> 00:05:41,790 that's been already asked and answered 139 00:05:41,800 --> 00:05:45,260 and I told you why that may 140 00:05:45,260 --> 00:05:47,970 happen . So I apologize for it . But Mr 141 00:05:47,970 --> 00:05:51,430 Stein , in your response to the O . I . 142 00:05:51,430 --> 00:05:54,790 G . Report , your company stated that 143 00:05:54,800 --> 00:05:56,522 after working with D . O . D . 144 00:05:56,522 --> 00:05:58,950 Officials , quote , there have been 145 00:05:58,950 --> 00:06:02,230 improvements in the to the procurement 146 00:06:02,230 --> 00:06:05,030 process . End , quote , what specific 147 00:06:05,030 --> 00:06:08,100 improvements were made . It's a great 148 00:06:08,100 --> 00:06:10,730 question . Thanks for asking . We have 149 00:06:10,740 --> 00:06:13,060 formed a working group with the D . O . 150 00:06:13,060 --> 00:06:16,910 D . D . L . A to look at the pricing 151 00:06:16,910 --> 00:06:19,810 and procurement issues that may exist 152 00:06:20,110 --> 00:06:23,430 in any of our business is uh this is 153 00:06:23,430 --> 00:06:25,670 something we've put in place . We have 154 00:06:25,670 --> 00:06:28,650 hired outside consultants experts . 155 00:06:28,840 --> 00:06:32,740 We've retrained our people . Um as we 156 00:06:32,740 --> 00:06:35,790 do constantly on this topic , we've 157 00:06:35,790 --> 00:06:39,740 also now gone the further step of 158 00:06:39,750 --> 00:06:42,880 one submitting commerciality packages 159 00:06:42,890 --> 00:06:45,620 upfront on every part that has a 160 00:06:45,620 --> 00:06:48,540 commercial equivalent . So we take that 161 00:06:48,550 --> 00:06:51,160 off the table and we now offer 162 00:06:51,160 --> 00:06:54,780 discounts for volume 163 00:06:54,780 --> 00:06:57,950 discounts if they buy more than what 164 00:06:57,950 --> 00:07:00,300 they're asking for unfortunately to 165 00:07:00,300 --> 00:07:02,650 date they've they . 166 00:07:04,390 --> 00:07:06,900 No , no , no , I'm sorry . Let me ask 167 00:07:06,900 --> 00:07:09,210 you this question . What has the 168 00:07:09,210 --> 00:07:11,900 company done specifically to ensure 169 00:07:11,900 --> 00:07:15,220 that it never overcharges the 170 00:07:15,220 --> 00:07:17,460 government by eight , 171 00:07:17,840 --> 00:07:22,060 3850.6 172 00:07:23,340 --> 00:07:26,060 profit margin on a particular product ? 173 00:07:27,140 --> 00:07:29,870 Well , as I've said earlier , we 174 00:07:29,870 --> 00:07:32,980 disagree with that . This calculation 175 00:07:32,980 --> 00:07:35,700 omits the taxes and interest we paid to 176 00:07:35,700 --> 00:07:37,867 the federal government . The taxes . I 177 00:07:37,867 --> 00:07:40,150 don't think that that percentage 178 00:07:40,160 --> 00:07:43,590 justification if you know how much 179 00:07:43,590 --> 00:07:46,740 taxes did the company pay , what the 180 00:07:46,740 --> 00:07:49,730 amount we were obligated to pay legally . 181 00:07:49,740 --> 00:07:51,740 I don't actually know the answer to 182 00:07:51,740 --> 00:07:55,640 that . Yeah . Well , But you're saying 183 00:07:55,640 --> 00:07:59,100 your tax burden would substantially cut 184 00:07:59,100 --> 00:08:01,630 into a well for these contracts . The 185 00:08:01,630 --> 00:08:04,260 taxes and interest were $10 million . 186 00:08:04,840 --> 00:08:08,350 So it's , half of the overcharge , Half 187 00:08:08,350 --> 00:08:12,100 of it that is being alleged is taxes 188 00:08:12,100 --> 00:08:14,490 and interest that the I . G . Somehow 189 00:08:14,490 --> 00:08:17,200 correlated as profit . This makes no 190 00:08:17,200 --> 00:08:20,680 sense . Well , it makes no sense that 191 00:08:20,690 --> 00:08:22,420 we would have a figure of 192 00:08:22,430 --> 00:08:25,360 3850 193 00:08:25,840 --> 00:08:29,100 uh , profit margin off of one product , 194 00:08:29,110 --> 00:08:32,170 which it's kind of like a business 195 00:08:32,170 --> 00:08:34,392 model that you have for your company to 196 00:08:34,392 --> 00:08:37,580 go in and , uh , purchase , uh , 197 00:08:37,590 --> 00:08:40,170 companies that manufacture parts and 198 00:08:40,170 --> 00:08:43,270 then getting a lock on the market so 199 00:08:43,270 --> 00:08:45,520 that there is no place other than your 200 00:08:45,520 --> 00:08:47,687 company for the government to purchase 201 00:08:47,687 --> 00:08:51,260 support and then you turn around and 202 00:08:51,840 --> 00:08:53,780 Charge the government whatever or 203 00:08:53,790 --> 00:08:56,300 charge the taxpayers actually whatever 204 00:08:56,300 --> 00:08:58,411 you feel like you want to charge them 205 00:08:58,411 --> 00:09:00,220 and it can be as high as 206 00:09:00,220 --> 00:09:04,060 3850% . I think that 207 00:09:04,060 --> 00:09:07,700 is uh that is despicable conduct . This 208 00:09:07,700 --> 00:09:10,160 is the second time that this committee 209 00:09:10,540 --> 00:09:12,990 has held a hearing to a trist to 210 00:09:12,990 --> 00:09:15,020 address your company's price price 211 00:09:15,020 --> 00:09:17,890 gouging on essential military parts . 212 00:09:18,340 --> 00:09:21,060 The last hearing that we held 213 00:09:21,440 --> 00:09:24,530 resulted in your company refunding 214 00:09:24,540 --> 00:09:27,910 $16.1 million requested by the 215 00:09:27,910 --> 00:09:31,890 Department of Defense . Do you see your 216 00:09:31,890 --> 00:09:35,890 company um paying back 217 00:09:35,890 --> 00:09:39,790 the $20 million that D . O . D . Has 218 00:09:39,800 --> 00:09:42,560 asked you to pay back as a result of 219 00:09:42,940 --> 00:09:45,960 overcharging the government . You know 220 00:09:45,960 --> 00:09:49,010 as I've said repeatedly , we see 221 00:09:49,010 --> 00:09:52,010 significant accounting and legal errors 222 00:09:52,020 --> 00:09:54,960 in this I . G . Report . Um We look 223 00:09:54,960 --> 00:09:57,071 forward to sitting down directly with 224 00:09:57,071 --> 00:09:59,300 the D . O . D . And I will tell you 225 00:09:59,300 --> 00:10:01,910 congressman that if we find the 226 00:10:01,910 --> 00:10:05,580 transition , I made a mistake in any of 227 00:10:05,580 --> 00:10:08,410 our contracting , we will gladly pay 228 00:10:08,410 --> 00:10:11,770 money back . Um but what we must do is 229 00:10:11,770 --> 00:10:15,400 agree to the facts . The facts are that 230 00:10:15,400 --> 00:10:18,000 we lost money on nine of the contracts . 231 00:10:18,010 --> 00:10:21,980 We only made 37% average on 232 00:10:21,980 --> 00:10:25,670 this entire I . G . audited uh 233 00:10:25,680 --> 00:10:29,560 parts . And we now know definitively 234 00:10:29,560 --> 00:10:31,590 that we gave the D . O . D . In the 235 00:10:31,590 --> 00:10:35,470 american war fighter a 25% discount to 236 00:10:35,470 --> 00:10:38,760 commercial prices . I don't understand 237 00:10:38,770 --> 00:10:42,370 why we would pay back of $21 238 00:10:42,370 --> 00:10:44,980 million . When as we've illustrated , 239 00:10:44,980 --> 00:10:46,924 there are so many , it's rife with 240 00:10:46,924 --> 00:10:50,220 errors . The gentleman's time has 241 00:10:50,220 --> 00:10:52,680 expired and we are now going to the 242 00:10:52,680 --> 00:10:54,736 gentleman from Kentucky . Mr Comer . 243 00:10:54,736 --> 00:10:57,970 You are now recognized . Thank you 244 00:10:57,970 --> 00:10:59,748 madam chair . I'm fascinated by 245 00:10:59,748 --> 00:11:02,690 listening to some of your socialist 246 00:11:02,700 --> 00:11:05,350 members talk about how the private 247 00:11:05,350 --> 00:11:07,239 sector should operate and what an 248 00:11:07,239 --> 00:11:10,160 appropriate profit level is and uh all 249 00:11:10,160 --> 00:11:12,930 of the points they've made but uh miss 250 00:11:12,930 --> 00:11:14,930 whole . I want to talk a little bit 251 00:11:14,930 --> 00:11:16,874 about the meth methodology In your 252 00:11:16,874 --> 00:11:19,340 report and just yes or no to these 253 00:11:19,350 --> 00:11:22,020 questions . Please first , the decision 254 00:11:22,020 --> 00:11:24,700 to make anything more than 15% profit 255 00:11:24,710 --> 00:11:26,930 excessive In your report , you state 256 00:11:26,930 --> 00:11:29,770 that a 15% cap did not apply by law or 257 00:11:29,770 --> 00:11:32,440 regulation to any of the contracts 258 00:11:32,440 --> 00:11:34,051 examined . Is that correct ? 259 00:11:36,340 --> 00:11:39,850 It is not defined as a specific 15% 260 00:11:39,850 --> 00:11:42,410 benchmark by law . No correct . Yes . 261 00:11:42,410 --> 00:11:45,060 So you also state that a 15% cap should 262 00:11:45,060 --> 00:11:47,720 not be the benchmark for negotiating 263 00:11:47,730 --> 00:11:49,786 firm fixed price contracts . Is that 264 00:11:49,786 --> 00:11:52,970 correct , Correent ? It is not a 265 00:11:52,970 --> 00:11:55,050 standard . Right finally , you state 266 00:11:55,050 --> 00:11:56,900 that a 15% cap is not the formal 267 00:11:56,900 --> 00:11:59,011 position of the inspector general and 268 00:11:59,011 --> 00:12:01,122 this report should not be interpreted 269 00:12:01,122 --> 00:12:04,250 to mean that is that correct , Correent . 270 00:12:04,260 --> 00:12:06,371 But if I could add , we were asked to 271 00:12:06,371 --> 00:12:08,260 determine the fair and reasonable 272 00:12:08,260 --> 00:12:10,482 prices for these parts requested by the 273 00:12:10,482 --> 00:12:12,538 committee and in order to do that we 274 00:12:12,538 --> 00:12:14,649 had to calculate a benchmark and that 275 00:12:14,649 --> 00:12:16,940 is where that 15% was applied next . 276 00:12:16,940 --> 00:12:18,829 The decision to exclude taxes and 277 00:12:18,829 --> 00:12:20,710 interest . As congressman norman 278 00:12:20,710 --> 00:12:22,766 pointed out in your report you state 279 00:12:22,766 --> 00:12:24,990 that you determined to not allow taxes 280 00:12:24,990 --> 00:12:27,268 and interest in your cost calculations . 281 00:12:27,268 --> 00:12:30,660 Is that correct ? That is correct . You 282 00:12:30,660 --> 00:12:33,300 also state that the exclusion of taxes 283 00:12:33,300 --> 00:12:35,300 and interest from your calculations 284 00:12:35,300 --> 00:12:37,467 should not be interpreted to mean that 285 00:12:37,467 --> 00:12:40,050 offers cannot include these costs of 286 00:12:40,050 --> 00:12:42,217 their negotiations . Is that correct ? 287 00:12:43,340 --> 00:12:45,396 Yes but if I could add again we were 288 00:12:45,396 --> 00:12:47,062 asked to determine a fair and 289 00:12:47,062 --> 00:12:48,840 reasonable price and because we 290 00:12:48,840 --> 00:12:51,062 received cost data far 31 allowed us to 291 00:12:51,062 --> 00:12:53,229 look at it from that perspective which 292 00:12:53,229 --> 00:12:55,400 is why we removed interest in taxes as 293 00:12:55,400 --> 00:12:59,100 allowable costs . So used to 294 00:12:59,100 --> 00:13:00,989 standards in this report that you 295 00:13:00,989 --> 00:13:03,420 yourself admit you would not advocate 296 00:13:03,420 --> 00:13:05,870 for Mr stein ? The I . G . Report 297 00:13:05,870 --> 00:13:07,481 highlights a few spare parts 298 00:13:07,481 --> 00:13:09,481 manufactured by trans dime that had 299 00:13:09,481 --> 00:13:11,703 multiple contracts in one calendar year 300 00:13:11,703 --> 00:13:13,926 for a very low dollar amount ? I have a 301 00:13:13,926 --> 00:13:16,148 few questions and again just just a yes 302 00:13:16,148 --> 00:13:18,314 or no because I've got two minutes and 303 00:13:18,314 --> 00:13:20,650 40 seconds left . Does the D . O . D . 304 00:13:20,650 --> 00:13:23,180 Investigate ? No I'm sorry does D . O . 305 00:13:23,180 --> 00:13:25,020 D . Instigate those negotiations 306 00:13:25,020 --> 00:13:27,860 meaning it is D . O . D . Who comes to 307 00:13:27,860 --> 00:13:30,580 you and says what they need to order 308 00:13:30,580 --> 00:13:32,980 correct ? That is correct . Does D . O . 309 00:13:32,980 --> 00:13:35,270 D determine how many of each part they 310 00:13:35,270 --> 00:13:38,670 need . Yes Does D . O . D determine 311 00:13:38,670 --> 00:13:41,740 when they request the parts . Does this 312 00:13:41,740 --> 00:13:43,851 haphazard kind of contracting put you 313 00:13:43,851 --> 00:13:45,573 in a more difficult position ? 314 00:13:45,573 --> 00:13:48,450 Absolutely it's not regular purchases 315 00:13:48,450 --> 00:13:51,090 or there's no forecast to it . What 316 00:13:51,090 --> 00:13:53,960 comes is what I need immediately today 317 00:13:54,740 --> 00:13:56,962 generally with purchasing more parts at 318 00:13:56,962 --> 00:13:58,907 once and in a more regular manor . 319 00:13:58,907 --> 00:14:01,610 Drive down costs . Yes it will drive 320 00:14:01,610 --> 00:14:03,790 down prices and it will drive down 321 00:14:03,790 --> 00:14:06,370 costs and we've offered these to the 322 00:14:06,370 --> 00:14:08,400 government to the D . O . D . And 323 00:14:08,400 --> 00:14:11,470 they've not taken us up on a single 324 00:14:11,480 --> 00:14:13,940 offer to lower the price to buy more 325 00:14:13,940 --> 00:14:16,930 parts . And I think that's what this 326 00:14:16,930 --> 00:14:19,180 hearing should be about . And and my 327 00:14:19,190 --> 00:14:21,246 colleagues on the republican side of 328 00:14:21,246 --> 00:14:23,301 the island have pointed that out . I 329 00:14:23,301 --> 00:14:25,523 just want to clarify a few other things 330 00:14:25,523 --> 00:14:27,430 in closing here how much of your 331 00:14:27,430 --> 00:14:30,050 business is direct to government ? 332 00:14:30,540 --> 00:14:32,290 6% is direct 333 00:14:33,340 --> 00:14:37,030 6% is all that you sell to the 334 00:14:37,030 --> 00:14:39,086 government . That's that's what your 335 00:14:39,086 --> 00:14:41,460 government sales are . Yes direct 336 00:14:41,460 --> 00:14:44,550 government sales 6% . What is the 337 00:14:44,550 --> 00:14:46,570 average price the government pays 338 00:14:46,570 --> 00:14:50,500 versus the commercial sector ? I don't 339 00:14:50,510 --> 00:14:54,330 on this basket of contracts 25% 340 00:14:54,330 --> 00:14:57,860 lower . 25% lower . Ah 341 00:14:58,440 --> 00:15:01,550 Mr Chinaglia based on those answers . 342 00:15:01,560 --> 00:15:03,727 It would appear the D . O . D . Has an 343 00:15:03,727 --> 00:15:05,949 issue with demand forecasting finally . 344 00:15:05,949 --> 00:15:08,600 Yes or no . Did D . O . D . Agree to 345 00:15:08,610 --> 00:15:11,270 agree to and sign all the contracts 346 00:15:11,270 --> 00:15:13,250 that were analyzed by the I . G . 347 00:15:14,940 --> 00:15:17,730 Yes it's my understanding they did . I 348 00:15:17,730 --> 00:15:20,910 believe we're passionate about waste 349 00:15:20,910 --> 00:15:24,060 fraud abuse in the Department of 350 00:15:24,060 --> 00:15:27,100 Defense but I believe we have to look 351 00:15:27,100 --> 00:15:29,810 at the Department of Defense for a lot 352 00:15:29,810 --> 00:15:31,532 of the problems that are being 353 00:15:31,532 --> 00:15:33,421 discussed in this hearing today . 354 00:15:33,421 --> 00:15:35,532 There's a better way to order parts . 355 00:15:35,532 --> 00:15:37,310 We've talked about that in this 356 00:15:37,310 --> 00:15:39,421 committee hearing over the five years 357 00:15:39,421 --> 00:15:41,643 that I've served on this committee . So 358 00:15:41,643 --> 00:15:43,990 hopefully that's something that the the 359 00:15:43,990 --> 00:15:46,860 D . O . D . Can focus on in the future 360 00:15:46,860 --> 00:15:50,010 to be more efficient and to be a better 361 00:15:50,020 --> 00:15:52,820 advocate of tax dollars . So madam 362 00:15:52,820 --> 00:15:55,760 chair , my time is expired and I yelled 363 00:15:55,760 --> 00:15:59,410 back millennials back and we will 364 00:15:59,410 --> 00:16:01,577 now hear from the gentle lady from new 365 00:16:01,577 --> 00:16:04,580 york . MS Ocasio Cortez and I 366 00:16:04,580 --> 00:16:06,680 understand Mr Fallon is back and we 367 00:16:06,680 --> 00:16:09,080 will go back to him . I now recognize 368 00:16:09,090 --> 00:16:12,380 MS Ocasio Cortez . Thank you Madam 369 00:16:12,380 --> 00:16:15,250 Chair chairwoman . Um I'd like to thank 370 00:16:15,250 --> 00:16:17,630 all of our witnesses who are here today 371 00:16:17,630 --> 00:16:20,420 and you know I'd like to just jump 372 00:16:20,420 --> 00:16:23,540 straight into it . Mr Howley thank you 373 00:16:23,540 --> 00:16:25,762 as well for being here . I just want to 374 00:16:25,762 --> 00:16:27,929 start off with a simple question . The 375 00:16:27,929 --> 00:16:30,480 spare parts that trans dime supply to 376 00:16:30,490 --> 00:16:32,379 the U . S . Military were used in 377 00:16:32,379 --> 00:16:33,712 Afghanistan , correct ? 378 00:16:38,740 --> 00:16:42,590 Excuse me I was muted . Uh I 379 00:16:42,590 --> 00:16:44,479 don't know the answer but I would 380 00:16:44,479 --> 00:16:47,210 presume probably well trance time has 381 00:16:47,210 --> 00:16:49,154 supplied the U . S . Military with 382 00:16:49,154 --> 00:16:51,210 spare parts for aircraft such as the 383 00:16:51,210 --> 00:16:53,460 age 64 Apache , the C 17 Globemaster 384 00:16:53,460 --> 00:16:56,120 three , the F 16 fighting falcon and 385 00:16:56,120 --> 00:16:59,720 the ch 47 chinook , correct I believe 386 00:16:59,720 --> 00:17:01,887 so I don't I don't know the whole list 387 00:17:01,887 --> 00:17:04,580 but well each of those aircraft were 388 00:17:04,580 --> 00:17:07,690 used in Afghanistan now trans dime is 389 00:17:07,690 --> 00:17:09,930 the sole supplier for many of the spare 390 00:17:09,930 --> 00:17:12,041 parts of the pentagon needs for these 391 00:17:12,041 --> 00:17:14,152 aircrafts . Um In other words , there 392 00:17:14,152 --> 00:17:16,760 is no question that the spare parts 393 00:17:16,760 --> 00:17:19,038 that transformed supplied to the U . S . 394 00:17:19,038 --> 00:17:21,540 Military were used in Afghanistan . So 395 00:17:21,550 --> 00:17:24,420 um Mr Howley . It does seem like the 396 00:17:24,420 --> 00:17:27,470 war in Afghanistan was a boon for trans 397 00:17:27,470 --> 00:17:30,700 dime , correct ? I don't know the 398 00:17:30,700 --> 00:17:33,840 answer to that . You don't know . Um 399 00:17:33,850 --> 00:17:35,961 Well I have some numbers here to give 400 00:17:35,961 --> 00:17:38,183 us an idea according to the Wall Street 401 00:17:38,183 --> 00:17:40,183 Journal since 2000 and one military 402 00:17:40,183 --> 00:17:42,130 outsourcing has pushed pentagon 403 00:17:42,130 --> 00:17:45,290 spending to about $14 trillion . That's 404 00:17:45,300 --> 00:17:48,590 12 zeros . And to give a comparison 405 00:17:48,600 --> 00:17:50,656 even after averaging out that number 406 00:17:50,656 --> 00:17:52,600 over 20 years , that's at least 12 407 00:17:52,600 --> 00:17:54,656 times the amount that we spend on an 408 00:17:54,656 --> 00:17:57,030 essential programs like snap . Um And 409 00:17:57,030 --> 00:18:01,030 in essence really the United States and 410 00:18:01,030 --> 00:18:03,030 the U . S . Government hid the real 411 00:18:03,030 --> 00:18:05,380 price tag of our war in Afghanistan in 412 00:18:05,380 --> 00:18:08,140 contracts with private companies like 413 00:18:08,140 --> 00:18:11,390 yours . According to MS Heidi Peltier 414 00:18:11,400 --> 00:18:13,650 at Brown University's costs of war 415 00:18:13,650 --> 00:18:15,900 program . The US military's reliance on 416 00:18:15,900 --> 00:18:18,950 contractors has led to the rise in a 417 00:18:18,950 --> 00:18:21,790 camo economy in which the US government 418 00:18:21,790 --> 00:18:24,050 camouflages . The costs of war that 419 00:18:24,050 --> 00:18:27,130 might reduce public support for it . So 420 00:18:27,130 --> 00:18:29,540 $14 trillion were handed over to 421 00:18:29,540 --> 00:18:31,651 private industry companies like trans 422 00:18:31,651 --> 00:18:33,818 dime but also Lockheed martin Raytheon 423 00:18:33,818 --> 00:18:37,420 and Boeing um without real transparency 424 00:18:37,420 --> 00:18:40,410 with the american public . So Mr Howley 425 00:18:40,420 --> 00:18:43,200 Was there a net negative to trans dimes 426 00:18:43,200 --> 00:18:46,220 bottom line um or has it been a net 427 00:18:46,220 --> 00:18:48,442 negative to transforms bottom line that 428 00:18:48,442 --> 00:18:50,387 the war in Afghanistan has ended ? 429 00:18:52,640 --> 00:18:54,751 I don't know the answer to that . I I 430 00:18:54,751 --> 00:18:56,696 just I don't know where this , the 431 00:18:56,696 --> 00:18:59,330 total defense spending has gone . I 432 00:18:59,330 --> 00:19:01,497 think it's probably still stayed about 433 00:19:01,497 --> 00:19:03,608 flat . I just don't know the answer . 434 00:19:03,608 --> 00:19:06,220 Okay , so as the executive chairman of 435 00:19:06,220 --> 00:19:09,260 trans dime , you're not sure about the 436 00:19:09,260 --> 00:19:13,160 financial impact of military 437 00:19:13,160 --> 00:19:16,380 contracting with respected Afghanistan 438 00:19:16,390 --> 00:19:18,612 with your company despite the fact that 439 00:19:18,612 --> 00:19:21,210 it was one of the sole suppliers of um 440 00:19:21,220 --> 00:19:24,720 many of the military supplies and uh 441 00:19:24,730 --> 00:19:27,063 and contracts that were they were using . 442 00:19:27,063 --> 00:19:29,130 No , what I said is I am not sure 443 00:19:29,140 --> 00:19:31,480 specifically what the impact of the 444 00:19:31,490 --> 00:19:33,101 cessation of the fighting in 445 00:19:33,101 --> 00:19:35,268 Afghanistan was on the total buys that 446 00:19:35,268 --> 00:19:37,268 we got from the government . I just 447 00:19:37,268 --> 00:19:39,434 don't know how to parse that out . And 448 00:19:39,434 --> 00:19:41,490 you don't have like a general idea , 449 00:19:41,490 --> 00:19:43,657 even if it's not a specific number . I 450 00:19:43,657 --> 00:19:45,657 think that our defense business has 451 00:19:45,657 --> 00:19:47,879 been roughly flat . I believe Eve , but 452 00:19:47,879 --> 00:19:50,080 I don't know the exact number . Okay . 453 00:19:50,090 --> 00:19:52,390 Mr Howley , what was your compensation 454 00:19:52,390 --> 00:19:55,240 in 2020 . That's a public number . So 455 00:19:55,240 --> 00:19:57,407 you probably have it . I'm not looking 456 00:19:57,407 --> 00:19:59,780 at it ? I think it was 16 8 million or 457 00:19:59,780 --> 00:20:02,440 thereabouts . Mr stein , what was your 458 00:20:02,440 --> 00:20:05,580 compensation in 2020 I think you have 459 00:20:05,580 --> 00:20:07,913 it . It was somewhere around 20 million . 460 00:20:07,913 --> 00:20:10,930 Okay . And um trans time it does seem 461 00:20:10,930 --> 00:20:13,152 that in 2020 trans dime did lay off its 462 00:20:13,152 --> 00:20:15,208 employees during this time as well . 463 00:20:15,208 --> 00:20:17,570 The company fired about 30% of its 464 00:20:17,570 --> 00:20:19,830 workforce in order to maintain a 465 00:20:19,830 --> 00:20:23,310 revenue stream . Is that correct ? Yes . 466 00:20:23,310 --> 00:20:25,477 I believe those numbers are accurate . 467 00:20:25,477 --> 00:20:27,590 And even while the government paid 468 00:20:27,590 --> 00:20:31,240 trans dime $1.5 billion in cash as part 469 00:20:31,240 --> 00:20:33,610 of a pandemic debt buyback program . To 470 00:20:33,610 --> 00:20:35,666 prevent precisely those layoffs from 471 00:20:35,666 --> 00:20:38,140 occurring , You took home a total of 472 00:20:38,140 --> 00:20:39,140 $90 million 473 00:20:39,140 --> 00:20:43,570 Martin , 474 00:20:43,570 --> 00:20:46,640 Boeing and Raytheon combined . So let's 475 00:20:46,640 --> 00:20:49,840 talk about what contributed exactly . 476 00:20:49,850 --> 00:20:52,480 Two such exorbitant compensation now 477 00:20:52,480 --> 00:20:54,760 Trans time sells a part called the 478 00:20:54,760 --> 00:20:57,650 linear actuated cap . It's used in the 479 00:20:57,650 --> 00:21:00,270 eagle F . 15 and the strait of lifter C . 480 00:21:00,270 --> 00:21:02,940 1 35 . It costs the company only 100 481 00:21:02,940 --> 00:21:05,620 and $35 to produce . Now . Mr stein , 482 00:21:05,620 --> 00:21:07,564 how much did trans dime charge the 483 00:21:07,564 --> 00:21:11,300 pentagon for the $135 . Part 10% 484 00:21:11,300 --> 00:21:12,990 less than what we charged the 485 00:21:12,990 --> 00:21:16,680 commercial world for this part . Do you 486 00:21:16,680 --> 00:21:19,160 know how much that was ? About 10% less . 487 00:21:19,160 --> 00:21:22,850 Yeah so about $7,495 . 488 00:21:22,860 --> 00:21:23,450 Yes . 489 00:21:24,620 --> 00:21:28,490 $8,182 . And that's a profit 490 00:21:28,490 --> 00:21:32,490 margin of about 3,850% . No that's not 491 00:21:32,490 --> 00:21:35,630 how the gentle lady's time has expired ? 492 00:21:35,640 --> 00:21:37,640 He he can respond in writing to our 493 00:21:37,640 --> 00:21:39,418 question . Mr Fallon you're now 494 00:21:39,418 --> 00:21:42,100 recognized for your two remaining 495 00:21:42,100 --> 00:21:44,690 minutes . That and we are we think 496 00:21:44,690 --> 00:21:46,746 we've lost you during this process . 497 00:21:47,040 --> 00:21:50,880 Welcome back . Thank you . Thank you . 498 00:21:50,890 --> 00:21:54,170 Thank you . Just appreciate it . 499 00:21:54,640 --> 00:21:58,620 Um Mr . Has the D . 500 00:21:58,620 --> 00:22:01,290 O . D . Acquired any I . P . From sole 501 00:22:01,290 --> 00:22:02,350 source contracts 502 00:22:05,940 --> 00:22:08,051 generally ? Uh That's that's not what 503 00:22:08,051 --> 00:22:11,490 we do . Uh What we try to do in some 504 00:22:11,490 --> 00:22:14,160 limited circumstances is produced 505 00:22:14,170 --> 00:22:16,230 intellectual property using our own 506 00:22:16,230 --> 00:22:19,240 engineers uh and sending out technical 507 00:22:19,240 --> 00:22:22,330 data packages for re procurement 508 00:22:22,340 --> 00:22:24,507 through reverse engineering . But it's 509 00:22:24,507 --> 00:22:27,080 not generally our practice to buy back 510 00:22:27,080 --> 00:22:29,080 the intellectual property from sole 511 00:22:29,080 --> 00:22:32,570 source providers . So do we uh how 512 00:22:32,570 --> 00:22:35,260 often do we do purchase any I . P . At 513 00:22:35,260 --> 00:22:38,970 all ? Well so 514 00:22:38,970 --> 00:22:41,450 that's for the items we're talking 515 00:22:41,450 --> 00:22:43,760 about in this spare part universe . 516 00:22:45,340 --> 00:22:47,750 All the decisions about intellectual 517 00:22:47,750 --> 00:22:51,180 property were made long ago . And so 518 00:22:51,190 --> 00:22:53,790 now we're living with with some of 519 00:22:53,790 --> 00:22:56,240 those decisions . In many cases it 520 00:22:56,240 --> 00:22:58,462 makes the most sense for the department 521 00:22:58,540 --> 00:23:00,950 uh to allow companies to retain their 522 00:23:00,950 --> 00:23:03,470 intellectual property . Um Sometimes 523 00:23:03,470 --> 00:23:06,440 that results in putting us in uh less 524 00:23:06,440 --> 00:23:10,320 than a uh the best 525 00:23:10,330 --> 00:23:12,497 position with respect to competition . 526 00:23:12,497 --> 00:23:15,100 But that's the tradeoff we make it 527 00:23:15,100 --> 00:23:16,878 would be very expensive for the 528 00:23:16,878 --> 00:23:18,489 department to buy up all the 529 00:23:18,489 --> 00:23:20,489 intellectual property . And I'm not 530 00:23:20,489 --> 00:23:22,322 sure industry would generally be 531 00:23:22,322 --> 00:23:24,267 interested in selling us all their 532 00:23:24,267 --> 00:23:26,433 intellectual property . Yeah , because 533 00:23:26,433 --> 00:23:28,433 I was gonna follow up with , do you 534 00:23:28,433 --> 00:23:30,711 think this is cost effective , do that ? 535 00:23:32,140 --> 00:23:34,196 Well , I think to the extent that we 536 00:23:34,196 --> 00:23:37,090 can do whatever we can to maintain 537 00:23:37,090 --> 00:23:40,720 competition for our weapons systems and 538 00:23:40,730 --> 00:23:42,840 spare parts that will put us in the 539 00:23:42,840 --> 00:23:44,951 best position to get the best price . 540 00:23:46,040 --> 00:23:48,262 Thank you . Thank you , madam Chair . I 541 00:23:48,262 --> 00:23:50,318 yield back the gentleman yields back 542 00:23:50,318 --> 00:23:52,373 the gentle lady from new Mexico Miss 543 00:23:52,373 --> 00:23:54,262 Harold is now recognized for five 544 00:23:54,262 --> 00:23:56,500 minutes . Thank you madam Chair , can 545 00:23:56,500 --> 00:23:59,790 you hear me ? Okay ? Okay . I had had 546 00:23:59,790 --> 00:24:02,310 some problems with my other computer um 547 00:24:02,320 --> 00:24:04,440 just kind of following along just the 548 00:24:04,440 --> 00:24:06,700 discussion in terms of procurement . Um 549 00:24:06,710 --> 00:24:08,970 I'm directing this question to MS hole 550 00:24:08,980 --> 00:24:10,758 in october members of the house 551 00:24:10,758 --> 00:24:12,813 appropriations can be requested that 552 00:24:12,890 --> 00:24:15,001 this committee conduct an independent 553 00:24:15,001 --> 00:24:17,168 review of the evidence used to support 554 00:24:17,168 --> 00:24:19,168 the Department of Defense Inspector 555 00:24:19,168 --> 00:24:21,112 General's april 2020 report on the 556 00:24:21,112 --> 00:24:23,550 Joint Enterprise Defense Infrastructure , 557 00:24:23,570 --> 00:24:26,700 Jedi cloud procurement . Since then I 558 00:24:26,700 --> 00:24:28,756 have received extensive briefings on 559 00:24:28,756 --> 00:24:31,250 this matter . New evidence obtained 560 00:24:31,250 --> 00:24:34,000 through the foyer raises serious 561 00:24:34,000 --> 00:24:36,190 questions about criminal violations in 562 00:24:36,190 --> 00:24:38,357 connection with the Jedi procurement . 563 00:24:38,540 --> 00:24:40,910 Thus , I have talked , I have asked to 564 00:24:40,910 --> 00:24:43,188 meet with the acting Inspector General , 565 00:24:43,188 --> 00:24:46,390 Sean O'donnell over the oversight 566 00:24:46,400 --> 00:24:48,122 investigation and the evidence 567 00:24:48,122 --> 00:24:50,750 collected to support the april 2020 568 00:24:50,760 --> 00:24:53,110 Jedi report . I hope this meeting can 569 00:24:53,110 --> 00:24:56,520 be arranged with the I g soon as 570 00:24:56,520 --> 00:24:58,409 members of Congress it is without 571 00:24:58,409 --> 00:25:00,131 question , our right to review 572 00:25:00,131 --> 00:25:02,353 documents referenced publicly and cited 573 00:25:02,353 --> 00:25:04,440 repeatedly in the Jedi Jedi report 574 00:25:04,440 --> 00:25:07,830 without extensive redactions And as 575 00:25:07,840 --> 00:25:10,007 members of this committee , especially 576 00:25:10,007 --> 00:25:12,007 in our oversight capacity , we must 577 00:25:12,007 --> 00:25:14,118 review the actual evidence underlying 578 00:25:14,118 --> 00:25:17,730 the conclusions in the Jedi report . It 579 00:25:17,730 --> 00:25:19,786 is critical that Congress have trust 580 00:25:19,786 --> 00:25:21,952 and confidence in the integrity of the 581 00:25:21,952 --> 00:25:24,063 procurement process and the office of 582 00:25:24,063 --> 00:25:26,174 the Inspector general and I intend to 583 00:25:26,174 --> 00:25:28,452 do everything to see that this happens . 584 00:25:28,452 --> 00:25:30,760 MS hole , will you commit that the I . 585 00:25:30,760 --> 00:25:34,080 G . Will meet with me and any any other 586 00:25:34,080 --> 00:25:38,040 member of this committee . But while 587 00:25:38,040 --> 00:25:40,240 I did not personally uh work on the 588 00:25:40,240 --> 00:25:42,470 Jedi product that you mentioned , I 589 00:25:42,470 --> 00:25:44,748 will certainly take that question back . 590 00:25:45,140 --> 00:25:47,000 Thank you . Um would very much 591 00:25:47,000 --> 00:25:49,000 appreciate it . And Madam Chair . I 592 00:25:49,000 --> 00:25:51,111 hope that this committee will proceed 593 00:25:51,111 --> 00:25:53,333 with an investigation on this important 594 00:25:53,333 --> 00:25:55,333 matter . Um Thank you so much and I 595 00:25:55,333 --> 00:25:58,210 yield back this little lady 596 00:25:58,220 --> 00:26:01,910 uh back and um 597 00:26:01,920 --> 00:26:04,370 before I close I'd like to offer the 598 00:26:04,370 --> 00:26:06,426 ranking member of the opportunity to 599 00:26:06,740 --> 00:26:09,080 give a closing remarks if he would so 600 00:26:09,080 --> 00:26:11,480 wish up Mr Comer . You are now 601 00:26:11,490 --> 00:26:14,300 recognized . Well thank you Madam Chair , 602 00:26:14,300 --> 00:26:17,240 I'll be very brief . Uh We've got a lot 603 00:26:17,240 --> 00:26:19,296 of problems in America . We've got a 604 00:26:19,296 --> 00:26:21,180 lot of problems with reckless 605 00:26:21,180 --> 00:26:25,140 unnecessary spending . If if we want to 606 00:26:25,150 --> 00:26:27,670 focus on the Department of Defense now 607 00:26:27,680 --> 00:26:31,130 and look at a big ticket item of 608 00:26:31,130 --> 00:26:33,640 waste . We should be holding hearings 609 00:26:33,640 --> 00:26:36,470 on exactly how much military equipment 610 00:26:36,480 --> 00:26:39,730 was left behind in the debacle 611 00:26:39,740 --> 00:26:42,230 withdrawal that president biden 612 00:26:42,240 --> 00:26:44,351 orchestrated in Afghanistan . This is 613 00:26:44,351 --> 00:26:46,573 something that I get asked every day in 614 00:26:46,573 --> 00:26:48,351 my congressional district . And 615 00:26:48,351 --> 00:26:50,296 unfortunately we we don't know the 616 00:26:50,296 --> 00:26:52,462 answer . And I think that's you know , 617 00:26:52,462 --> 00:26:54,684 you're talking billions and billions of 618 00:26:54,684 --> 00:26:56,684 dollars , that's what we need to be 619 00:26:56,684 --> 00:26:58,907 focused on . So what we've learned from 620 00:26:58,907 --> 00:27:00,907 this committee hearing today , same 621 00:27:00,907 --> 00:27:03,129 thing we learned two or three years ago 622 00:27:03,129 --> 00:27:05,184 when we had this this same hearing , 623 00:27:05,184 --> 00:27:07,407 the Department of Defense needs to do a 624 00:27:07,407 --> 00:27:10,170 better job in uh establishing an 625 00:27:10,170 --> 00:27:12,990 inventory and uh in 626 00:27:13,000 --> 00:27:16,770 establishing how they purchase parts . 627 00:27:17,240 --> 00:27:19,407 We've heard that in in other committee 628 00:27:19,407 --> 00:27:22,030 hearings as well . So uh I would like 629 00:27:22,030 --> 00:27:24,550 to see some type of plan moving forward 630 00:27:24,550 --> 00:27:26,383 from the Department of Defense . 631 00:27:26,383 --> 00:27:28,840 There's no question , there's a lot of 632 00:27:28,840 --> 00:27:32,130 wasteful spending at the pentagon . Uh 633 00:27:32,130 --> 00:27:34,400 and uh it's our duty on the oversight 634 00:27:34,400 --> 00:27:37,090 committee to try to reduce waste fraud 635 00:27:37,100 --> 00:27:39,700 uh an abuse in in the federal 636 00:27:39,700 --> 00:27:41,700 government . But I don't think this 637 00:27:41,700 --> 00:27:43,811 committee hearing picking on this one 638 00:27:43,811 --> 00:27:45,978 private sector company . Uh You know , 639 00:27:45,978 --> 00:27:48,110 the They try to build this , I think 640 00:27:48,110 --> 00:27:50,166 the members on your side of the Alps 641 00:27:50,166 --> 00:27:52,166 Madam Chair trying to build this is 642 00:27:52,166 --> 00:27:53,999 this is a government contracting 643 00:27:53,999 --> 00:27:56,600 company , 6% of their sales goes to the 644 00:27:56,600 --> 00:27:59,560 federal government Uh and the the other 645 00:27:59,560 --> 00:28:03,480 94 Our commercial and they said they 646 00:28:03,480 --> 00:28:06,970 sell their parts the government at 25% 647 00:28:06,970 --> 00:28:09,430 discount to what they sell it in the 648 00:28:09,430 --> 00:28:11,597 commercial market to to the commercial 649 00:28:11,597 --> 00:28:13,763 airlines and and companies like that . 650 00:28:13,763 --> 00:28:17,000 So yeah I think we can spend our time 651 00:28:17,010 --> 00:28:19,330 better looking at the bigger ticket 652 00:28:19,330 --> 00:28:21,560 items and trying to bring the pentagon 653 00:28:21,570 --> 00:28:23,737 in the Department of Defense officials 654 00:28:23,737 --> 00:28:26,500 in to see if there's a better way if we 655 00:28:26,500 --> 00:28:29,180 can help uh facilitate that a better 656 00:28:29,180 --> 00:28:31,260 way to do business at the department 657 00:28:31,260 --> 00:28:34,030 events again madam Chair thank you and 658 00:28:34,030 --> 00:28:37,720 I yield back gentlemen for his 659 00:28:37,720 --> 00:28:39,942 testimony and for co chairing this with 660 00:28:39,942 --> 00:28:42,130 me and I would now like to thank our 661 00:28:42,130 --> 00:28:44,200 witnesses for testifying today . Mr 662 00:28:44,200 --> 00:28:46,770 Howdy . Mr Stein thank you for agreeing 663 00:28:46,770 --> 00:28:49,780 to testify Mr Tartaglia and Miss Hall , 664 00:28:49,780 --> 00:28:51,669 thank you for your service to our 665 00:28:51,669 --> 00:28:54,240 country . MS Hall I'd like to thank you 666 00:28:54,240 --> 00:28:56,351 in particular for your continued work 667 00:28:56,540 --> 00:28:59,320 to hold trans dime accountable and root 668 00:28:59,320 --> 00:29:01,153 out waste fraud and abuse in the 669 00:29:01,153 --> 00:29:03,920 Department of Defense we heard today 670 00:29:03,920 --> 00:29:06,410 that Trans Time is fleecing taxpayers 671 00:29:06,420 --> 00:29:09,670 by refusing to provide cost data which 672 00:29:09,670 --> 00:29:13,440 forces contracting officers to accept 673 00:29:13,450 --> 00:29:16,150 trans trans times prices in order to 674 00:29:16,150 --> 00:29:18,690 secure the parts are military 675 00:29:18,700 --> 00:29:21,760 desperately needs Trans Times debate 676 00:29:22,140 --> 00:29:25,700 Over the 15% benchmark is a deflection 677 00:29:25,710 --> 00:29:28,600 tactic . Trans time in some cases 678 00:29:28,600 --> 00:29:32,340 received over 1000% profit So whether 679 00:29:32,340 --> 00:29:35,770 the benchmark is 1520 or even 50 680 00:29:36,340 --> 00:29:39,220 trans dime received outrageously 681 00:29:39,470 --> 00:29:43,230 excessive profits in regards to the I . 682 00:29:43,230 --> 00:29:45,270 G . S exclusion of tax and interest 683 00:29:45,640 --> 00:29:47,900 they did so in accordance with federal 684 00:29:48,050 --> 00:29:50,840 cost principles the I . G . Report 685 00:29:50,850 --> 00:29:52,960 explains that Trans Time is highly 686 00:29:52,960 --> 00:29:55,510 leveraged , leading to high interest 687 00:29:55,510 --> 00:29:59,030 payments on debt . Americans should not 688 00:29:59,040 --> 00:30:01,320 have to be footing the bill for for 689 00:30:01,320 --> 00:30:04,050 Trans Times acquisition strategy . 690 00:30:05,040 --> 00:30:08,630 Mr Howley and Mr Stein also discussed 691 00:30:08,630 --> 00:30:10,574 giving the Department of Defense a 692 00:30:10,574 --> 00:30:12,660 discount from the price it sells to 693 00:30:12,660 --> 00:30:16,390 commercial airlines regardless of 694 00:30:16,390 --> 00:30:18,612 whether the Defense Department received 695 00:30:18,612 --> 00:30:21,120 its discount , it does not change the 696 00:30:21,120 --> 00:30:24,890 fact That the inflated prices still 697 00:30:24,890 --> 00:30:28,050 resulted in excess profits of over 698 00:30:28,050 --> 00:30:30,960 1000% . In multiple 699 00:30:31,440 --> 00:30:34,220 instances , I strongly urge my 700 00:30:34,220 --> 00:30:36,331 colleagues on both sides of the aisle 701 00:30:36,331 --> 00:30:38,442 to support reforms that would empower 702 00:30:38,442 --> 00:30:40,460 contracting officers and require 703 00:30:40,460 --> 00:30:42,930 companies like Trans Time to provide 704 00:30:42,940 --> 00:30:46,740 cost information when it is necessary 705 00:30:46,910 --> 00:30:50,390 to determine the proposed that that the 706 00:30:50,400 --> 00:30:53,050 proposed prices are unfair and 707 00:30:53,050 --> 00:30:56,650 unreasonable . Mr Howley and mr Stein , 708 00:30:56,650 --> 00:30:59,270 we've heard from many committee members . 709 00:30:59,840 --> 00:31:02,720 We expect Prince Time to pay back the 710 00:31:02,720 --> 00:31:05,460 outrageous excess profits . 711 00:31:06,240 --> 00:31:10,190 All too 20 $.8 712 00:31:10,190 --> 00:31:14,110 million should be repaid it received 713 00:31:14,120 --> 00:31:16,176 this money at the expense of our war 714 00:31:16,176 --> 00:31:19,320 fighters and american taxpayers . We 715 00:31:19,320 --> 00:31:22,750 expect you to repay this money to the 716 00:31:22,750 --> 00:31:26,360 taxpayers . Now in 717 00:31:26,360 --> 00:31:28,950 closing , I want to thank our panelists 718 00:31:28,950 --> 00:31:31,061 for their remarks , all of them and I 719 00:31:31,061 --> 00:31:32,950 want to commend my colleagues for 720 00:31:32,950 --> 00:31:34,728 participating in this important 721 00:31:34,728 --> 00:31:37,060 conversation Before we adjourn , I'd 722 00:31:37,060 --> 00:31:39,990 like to ask unanimous consent to submit 723 00:31:40,150 --> 00:31:42,620 into the record a statement from the 724 00:31:42,620 --> 00:31:46,140 project on government oversight without 725 00:31:46,140 --> 00:31:49,080 objection . So ordered with that 726 00:31:49,090 --> 00:31:51,257 without objection . While members will 727 00:31:51,257 --> 00:31:53,479 have five legislative days within which 728 00:31:53,479 --> 00:31:55,534 to submit extraneous material and to 729 00:31:55,534 --> 00:31:57,757 submit additional written questions for 730 00:31:57,757 --> 00:31:59,979 the witnesses to the chair , which will 731 00:31:59,979 --> 00:32:02,201 be forwarded to the witnesses for their 732 00:32:02,201 --> 00:32:04,450 response , I ask our witnesses to 733 00:32:04,460 --> 00:32:06,760 please respond as promptly as they are 734 00:32:06,770 --> 00:32:09,960 able , and with that , this meeting is 735 00:32:09,960 --> 00:32:11,460 adjourned .