Stop Price Gouging the Military Act

Floor Speech

BREAK IN TRANSCRIPT

Mr. GARAMENDI. Madam Speaker, today I introduce the ``Stop Price Gouging The Military Act.'' I thank U.S. Senator Elizabeth Warren (D- MA) for sponsoring the companion legislation in the United States Senate.

Our ``Stop Price Gouging The Military Act'' would prevent defense contractors from overcharging the Department of Defense on equipment parts, closing loopholes in regulations that affect taxpayers, American service members, and businesses that fairly support military readiness. As chair of the Armed Services Subcommittee on Readiness, I know how much it costs to keep our military ready and this bill would ensure that prices for equipment parts are fair and defense contractors are rewarded for quality performance.

The Truthful Cost or Pricing Data Act requires contractors to provide accurate cost and pricing data to the government. However, current broad definitions for ``commercial items'' prevent military contracting officers from accurately assessing fair prices. While prices for these ``commercial items'' should already be reasonable because of assumed competition in the commercial market, these parts are often only sold to the Department of Defense or are drastically changed from their original commercial counterpart. Some defense contractors can then overcharge the Defense Department because there are no market checks on the price, and they are not required to provide accurate data to military contracting officials.

The Defense Department also pays companies before work is completed, and money is rarely recouped if the contractor is behind schedule or work quality is poor. With this model, there is no way to incentivize performance.

This legislation would strengthen competition requirements by amending government acquisition laws to only waive requirements to provide cost or pricing information when there is price competition. It would also restore market dynamics to the commercial item definition by closing loopholes for when a good or service has been modified from what is sold on a commercial market, create a pilot program to tie payments to performance, and require annual disclosure of changes in costs of goods sold, gross margins, and pricing strategies.

Madam Speaker, I encourage all Members to cosponsor my ``Stop Price Gouging The Military Act'' and support our service members, provide accountability to the taxpayer, and reward quality business that support military readiness. The legislation I introduce today would ensure just that.

BREAK IN TRANSCRIPT

Source