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Senate report suggests military housing company’s fraud continues

The company, Balfour Beatty, pleaded guilty to fraud in December for falsifying repair records

Paula Cook and Richard C. Taylor, executives at Balfour Beatty Communities, look on as Army Capt. Samuel Choe testifies about health problems his daughter developed while living in a Balfour Beatty home.
Paula Cook and Richard C. Taylor, executives at Balfour Beatty Communities, look on as Army Capt. Samuel Choe testifies about health problems his daughter developed while living in a Balfour Beatty home. (Tom Williams/CQ Roll Call)

Senators from both parties asked Tuesday whether a top U.S. military housing contractor that pleaded guilty last year to defrauding the government should keep its job, amid signs the company may be continuing to allow military families to reside in shoddy, even dangerous homes.

The company, Balfour Beatty Communities LLC, pleaded guilty in federal district court in Washington in December to defrauding the armed forces by falsifying housing repair records from 2013 to 2019 in order to receive higher performance awards. The company paid $65 million in fines and restitution.

According to the plea agreement between Balfour Beatty and the Justice Department, the company doctored data in a work order database so as to appear to be promptly and effectively handling repair requests at military homes while, in reality, problems such as mold and rodents had continued to fester. Top executives were not convicted, though two lower-ranking company officials were.

A bipartisan report made public Tuesday by the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations suggests Balfour Beatty has been engaged since 2019 in similar and “ongoing mistreatment” of military families. The panel’s probe covered homes at Fort Gordon, an Army base in Georgia, and Sheppard Air Force Base in Texas. 

At a hearing of the subcommittee on Tuesday, senators heard stories from military personnel who lived at those bases and who were unable to get the company to remove what the residents said was dangerous mold in their homes. 

Sheets covered in blood

Army Capt. Samuel Choe, for one, testified that his young daughter developed a potentially fatal dermatitis only after living in a Balfour Beatty home at Fort Gordon that he said was plagued by mold.

He described his daughter as resembling a burn victim when the dermatitis would flare up, and he said sometimes her sheets would be covered with blood from her scratching. 

Choe said he had no support for months from the Army or from Balfour Beatty in his effort to get out of the lease and leave the house. 

“It will haunt her as well as us for the rest of our lives,” Choe said.

Rachel Christian, founder and chief legislative officer of Armed Forces Housing Advocates, said the problem of unresponsive housing companies is systemic across the military, not just at Balfour Beatty homes. A legislative overhaul of the military services’ housing oversight procedures in the fiscal 2020 National Defense Authorization Act, including a requirement for a Tenants Bill of Rights, “is not working,” she said.

Richard Taylor, president of the Balfour Beatty division that oversees military housing, said the company has improved its internal controls since the 2013-2019 period of the Justice Department investigation. 

“We are not perfect,” he said. “We have taken this very seriously.”

But Georgia Democrat Jon Ossoff, the panel’s chairman, asked: “Why should a company convicted of major criminal fraud that engaged in a scheme to defraud the United States remain in a position of trust, responsible for the safe housing of heroes, the servicemembers and their families, on installations across the country?”

New Hampshire Democrat Maggie Hassan said Balfour Beatty manages the homes for sailors and their families at the Portsmouth Naval Shipyard in her state. 

“I am deeply concerned by the testimony we have heard today and the impact that similar misconduct may have on my constituents,” Hassan said. 

And Ron Johnson of Wisconsin, the subcommittee’s top Republican, said: “I would fire these people, but there has to be something to replace them.”

The fiscal 2020 defense law that aimed to protect tenants “didn’t work,” Johnson said. “We better figure out something better to do.”

‘Jeopardized health and safety’

U.S. military family on-base housing — which the armed services formerly owned and maintained — was privatized starting in 1996, with the goal of improving housing by outsourcing it to companies that specialize in such work. 

Each of 14 housing companies has separate arrangements with local bases. The companies lease the land from the government for 50 years, and then the companies, not the Defense Department, own and operate the homes, according to testimony last month by Elizabeth Field, the Government Accountability Office’s director of defense capabilities and management.

As such, the Pentagon’s leverage over the housing companies is not as great as it is with traditional contractors, Field suggested at a House Appropriations Military Construction-Veterans Affairs Subcommittee hearing.

According to the Senate panel’s new report, the product of a bipartisan eight-month investigation, Balfour Beatty “failed to properly respond to both repairs and environmental hazards such as mold” at some of the company’s 1,700 homes at Fort Gordon and Sheppard Air Force Base.

“Balfour’s failures in these instances exposed military service members and their families living on these bases to hazards that jeopardized their health and safety,” the report said.

“Despite the company’s pledge to improve its housing services, Balfour continued to provide deficient services to military families at Fort Gordon,” the report said. And the company “failed to ensure the accuracy of its work order data” at the base, “even while under investigation for the same failures at other bases.”

‘Inaccurate or incomplete’ records

Balfour Beatty is one of the largest of the companies that operate on-base housing for U.S. military personnel and their families. The company runs 43,000 residences for 150,000 U.S. military family members in 26 states, the subcommittee report said.

A Reuters investigation in 2019 revealed the allegations of not only substandard upkeep of the company’s homes but also that the company had maintained two separate maintenance records: an accurate one listing leaks, asbestos and the like — and a falsified one for the Pentagon.

Those reports led to multiple investigations culminating in the December 2021 conviction of Balfour Beatty based on its actions through 2019.

But the subcommittee report documents “multiple instances” since 2019 of work order data that was “inaccurate or incomplete.” 

Air Force Tech. Sgt. Jack Fe Torres, for example, testified Tuesday that his complaints about mold in his home at Sheppard Air Force Base were referred to as “painting” in the company’s written reports on the work. 

A former Balfour Beatty employee told Senate investigators that two successive Balfour Beatty facilities managers at Fort Gordon routinely told maintenance personnel to urge residents not to file requests for repair work online, where they would be part of a formal record, but instead to convey them verbally — and the requests were then ignored in some cases.

The report concluded pointedly that Paula Cook, a vice president at Balfour, “was aware of work order data discrepancies and data integrity concerns in 2020 and 2021, but she did not ensure that the issues were properly investigated or that appropriate corrective actions were taken.”

Asked Tuesday about one internal company email about problems at Fort Gordon, Cook said that she forwarded it to her colleagues.

Taylor, the company president, said he was not aware between 2013 and 2019 of the fraud that was happening at the time, but he said he was now.

Ossoff asked why the Senate should believe that statement “from a company that for six years defrauded the government.”

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