September 10, 2019

Army Inspector General Releases Damning Report on Privatized Military Housing

Report Confirms Warren Investigation Findings: Private Military Housing Companies Fail to Meet Basic Housing Standards; Service Branch Leadership Does Not Provide Effective Oversight

Comprehensive Warren-Haaland Bill Fixes Housing Problems and Empowers Military Families

Army IG Report (PDF) | Warren Investigation (PDF) | Military Housing Oversight and Service Member Protection Act

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) and Representative Deb Haaland (D-N.M.) today issued statements following the release of a damning U.S. Army Inspector General (IG) report on the state of privatized military housing on Army installations. The report, which found widespread failures by the private housing companies to provide adequate housing and Department of Defense (DoD) failures to adequately oversee its Military Housing Privatization Initiative (MHPI), mirrors and supports the findings of Senator Warren's months-long investigation of the MHPI program and the private companies with contracts to provide on-base housing to military families.

"When I learned that many military families face poor on-base housing conditions because of greedy, big housing companies and the Pentagon's failed oversight of this program, I investigated, and then I introduced a bill to make it right," said Senator Warren. "The Army IG's review of the military housing program revealed many of the same systemic problems as my investigation. It makes it clear that we need to act quickly to pass my bill with Congresswoman Haaland to improve housing conditions for military families."

"Our  service members and their families deserve housing that is safe without having to worry about housing companies putting profits ahead of their well-being," said Congresswoman Deb Haaland. "This report confirms what I heard from military families soon after I was sworn in to Congress and it reaffirms my commitment to working with Kirtland Air Force Base to address challenges in Albuquerque and passing my military housing bill that will hold these companies to a standard that our military families deserve."

The Army IG report confirmed the following:

  • Maintenance and work order issues often go unaddressed as companies put profits over "life, health, and safety."
    • The Army IG report found that residents were dissatisfied with the management of private military housing. At nearly all locations, "residents expressed concerns with safety or environmental issues and some level of dissatisfaction with their privatized housing experience ... (and) perceived an emphasis on cost savings above quality work and resident satisfaction." Moreover, the IG found that "residents at all locations ... believed the property management company placed the interests of affiliate companies above life, health and safety."
    • Senator Warren's investigation similarly found that private housing providers signed decades-long agreements and are making large profits while taking minimal investment risks and receiving sizeable incentive fees even when they face substantial quality control challenges.
    • Congresswoman Haaland's listening session with military families in her district underlined the need for more oversight of housing companies contracting with the Department of Defense through a number of families raising concerns about mold, structural issues, untimely repairs, and rodent infestation.
    • Senator Warren's military housing legislation would allow residents to submit a request to withhold rent payments if the landlord has not met established maintenance guidelines or procedures, or if the housing unit is uninhabitable according to State and local law. The bill would instruct the DoD to publish an annual report on all privatized housing units that includes all requests by tenants to withhold their Basic Allowance for Housing due to poor housing conditions.
  • Contracts between the military services and private developers are deeply flawed.
    • The Army IG report found that the baseline business agreements between the Army and the private housing providers "favored (the) corporate companies," and "increased the risk of self-dealing by Managing members and their affiliate companies." Moreover, every Garrison Commander - the senior military representatives on the ground - indicated that "agreements (between the Army and the private housing providers) present unique challenges to the Army, and require review and revision." The IG also found that "base and incentive fees are not structured to provide ... companies with significant performance incentives."
    • Senator Warren's investigation similarly revealed that private military housing providers have set up a complicated web of subcontractors and subsidiaries that undermines accountability for substandard conditions in military housing and makes it difficult to track revenues, profits, and the flow of funds.
    • Congresswoman Haaland's meeting with Kirtland Air Force Base General confirmed that the base will be increasing coordination with Congressional offices and housing contractors to ensure military housing concerns are addressed.
    • Senator Warren's military housing legislation would require the DoD to weigh any history of a landlord providing substandard housing when determining whether to enter into or renew a contract with a private housing provider. It would also require the DoD to withhold funds from the private housing provider if the provider is found to be in material breach of the contract and doesn't correct it within 90 days, and prevent those providers from entering into new contracts. 
  • There is limited oversight of military housing providers.
    • The Army IG report found that at almost every installation - senior military personnel and private company managers "did not have detailed working knowledge of Army regulations and policy governing ... baseline business agreements for their specific location" and a majority of them "expressed that their installation had an ineffective oversight program."
    • Senator Warren's investigation similarly uncovered that private military housing providers failed to create accessible or centralized records and protocols to address complaints and reports of problems with military housing. This failure to create accessible or centralized records and protocols makes comprehensive assessment and oversight of private military housing providers' performance difficult and complicates efforts to improve housing quality.
    • Congresswoman Haaland's team attended town halls held by military base commanders that revealed deeply troubling issues with follow-up by military housing contractors and gaps in oversight.
    • Senator Warren's military housing legislation would require each base or installation to have a housing office staffed by employees of the military department, some of whom must be independent housing inspectors. The legislation also requires that the housing offices establish a regular inspection regime to ensure that all houses are safe, clean, and adequate and meet all Federal, State, and local laws and standards of habitability.

In 1996, Congress established MHPI, which allowed the DoD to partner with private sector developers who would own, operate, and maintain military family housing and, in return, would have access to federal direct loans, loan guarantees, and other incentives.

series of Reuters investigative reports first revealed that servicemembers and their families who live in on-base housing owned by MHPI developers are exposed to lead paint, vermin infestations, fecal and urine trails, bursting pipes, flooding, mold growth, collapsed ceilings, electric and fire hazards, and other substandard living conditions as a result of inadequate maintenance by military housing contractors Corvias Group, Balfour Beatty, Hunt Military Communities, Lincoln Military Housing, and Americas Lendlease Corporation. Senator Warren opened an investigation into this problem, held the housing company executives to account during Senate hearings, and gathered and released to the Chair and Ranking Member of the Senate Armed Service Committee information revealing multiple failures by these military housing companies, including incentive fees the companies continued to collect from the DoD despite lapses in quality, poor oversight by DoD, and more.

Senator Warren and Congresswoman Haaland's bill, the Military Housing Oversight and Service Member Protection Act, takes steps to fix systemic MHPI problems by: (1) granting the Secretary of Defense clear authority to ensure that privatized military housing providers are meeting the terms of their contracts; (2) giving military family tenants greater rights to ensure their homes are safe, clean and meet all appropriate standards of habitability and providing them with tools to learn about problems with housing providers before they sign a lease; (3) ensuring that military families who developed medical conditions as a result of unsafe housing receive appropriate compensation and medical care; and (4) providing greater transparency and accountability for the 50-year housing contracts each company signs with the DoD.