Direct US DoD Sales

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58%

Average Global Commercial Sales *

35.5%

Average Global Defense Sales *

6.5%

Average Direct to DoD Sales *

* Average of FY19-FY23 Revenue

TransDigm engaged a third-party firm, Fairmont Consulting Group, to compile and analyze direct U.S. Department of Defense (DoD) sales data as reported publicly by the U.S. Government through the Federal Procurement Data System via USASpending.gov and ACCURIS Haystack Gold. Fairmont provided the following analysis:
Fairmont Group 0c
Fairmont analyzed contract sales data from FY2019 to FY2023 and found that direct sales to the DoD account for approximately 6.5% of TransDigm’s revenue.
Fairmont Group 2c
Global Commercial Sales includes sales supporting commercial civilian air travel. Global Defense Sales consists of sales to support global military end use, including sales by global locations to allied nations.

1.3%

Average Annual Revenue from DoD Sales Not Subject to TINA, Competition, or Commercial Market Data*

* Average of FY19-FY23 Revenue

The analysis found that the majority of TransDigm's direct DoD sales revenue is negotiated based on certified cost analysis (a/k/a TINA), competition amongst multiple bidders (non-TransDigm companies), or determination of commerciality by the DoD.
Only a de minimis amount of TransDigm’s average annual revenue (approximately $70M) comes from contracts below the TINA threshold that are not negotiated through competition or commercial market analysis. This represents 1.3% of TransDigm’s average annual sales.
This group of contracts is typically low-quantity, low-value POs for spot buys, usually through the Defense Logistics Agency (DLA), and represent the types of contracts that have been the subject of prior DoD audits. Although these contracts are a very small part of TransDigm’s sales and often fall below the DoD’s micro-purchase threshold, TransDigm businesses are trained to provide cost or pricing data such as examples of invoices to other customers or cost data as required.
Fairmont Group 2e
Prior DoD Audits have focused on TransDigm sales to the DLA which are typically through low-quantity, low-value purchase orders. Procurements from TransDigm represent a miniscule amount of annual spend by the DLA.
Fairmont Group 3c
DLA procurements are typically spot buys with over 80% of the parts procured fewer than once per year.
Fairmont Group 4c
Nearly all POs issued by the DLA to TransDigm companies are below $250k based on low quantity.
Fairmont Group 5c
PARTNERING WITH THE DoD
Over the past several years, TransDigm has actively engaged with the DoD to improve communication, training, and responsiveness between our businesses and the DoD customers. This engagement is crucial for proper assessment of the products and ensuring efficient procurements.

Establishing Better Communication

TransDigm and the DoD established a Working Group consisting of senior TransDigm and DoD representatives to provide a forum for sharing best practices and current issues. This allows the DoD to communicate and reinforce current priorities, and TransDigm to communicate issues impacting its business and 8,000+ US employees, and offer solutions to improve the efficiency of the procurement process, including procurement of spare parts.

Responsiveness & Training

TransDigm continues to partner with DoD buying commands to ensure timely responsiveness to urgent requests. DoD customers have expressed appreciation for TransDigm’s proactive engagement. Additionally, TransDigm has an internal training program for its businesses, the majority of which are commercial businesses that also have defense products, to ensure we continue to comply with all government-specific procurement requirements.

Proactively Providing Data

DoD sales not subject to certified cost data (TINA), Competition, or Commercial Market pricing data account for only 1.3% of TransDigm’s total annual sales. This small amount of sales includes spot buy purchase orders below the DoD’s $10K Micro-Purchase Threshold. Nevertheless, TransDigm’s businesses proactively provide cost or pricing data for these small transactions to support a more informed acquisition.

Challenges

Commercial aerospace customers typically provide reliable forecasts and buy products on regular intervals. However, for maintenance spare parts, the DLA typically engages in spot buys, procuring only a few parts as-needed, sometimes going years without purchasing a particular part. Nevertheless, TransDigm businesses maintain the capability to manufacture spare parts as requested to ensure prompt delivery and quality to the government. We continue to work with the DoD and the DLA to address how these products can be procured more efficiently.

Fairmont’s report was provided subject to their standard terms and conditions, including the following:

The Client, identified on the cover page of this document, is receiving this report on the understanding and agreement that:

  • We prepared this report on the basis of third party sources that we deem reliable.  We do not warrant the accuracy of that information or assume responsibility for the accuracy of conclusions in this report.  We will not have any liability to the Client or any third party resulting from its use of our analysis or any errors or omissions in this report.
  • This report was completed as of the date noted on the cover page based on market conditions, assumptions developed, and availability of data at that time.  We do not undertake any obligation to revise this report, update our analysis, or advise the Client of any changes in circumstances arising after the date of this report that, if known, may have impacted our conclusions.
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