June 27, 2019

Warren Demands Answers Following Reports that Military Housing Contractor Balfour Beatty Falsified Maintenance Logs to Boost Income

Balfour Received Millions in Incentive Fees While Military Families Lived in Unsafe and Unsanitary Homes

Air Force Unit Tasked with Oversight Reportedly Blocked Attempts to Hold Contractor Accountable

Sen. Warren's Legislation Would Impose Greater Transparency and Accountability for Private Military Housing Contractors

Letter to Balfour Beatty | Letter to Air Force Asst. Secretary | Letter to Air Force IG 

Washington, DC - United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Armed Services Committee (SASC) and the Military Personnel Subcommittee, sent letters to Balfour Beatty Communities, a private military housing developer, and Assistant Secretary of the Air Force John W. Henderson, requesting information about reports that Balfour has submitted falsified maintenance records to the Air Force in order to receive millions in performance incentive fees - while the Air Force failed to conduct its oversight responsibilities and while military families were living in the company's unsafe and unsanitary housing. The senator also wrote separately to Inspector General (IG) of the Air Force Lt. General Sami D. Said urging him to investigate the allegations.

After media reports late last year revealed that private military housing companies were failing to provide quality housing to our military personnel and their families, Senator Warren sent letters to Balfour and four other large private military housing providers requesting specific information about how the companies were operating and managing housing on military bases. In response to these letters and in a SASC hearing, Balfour insisted that "delivering an exceptional living experience for service members and their families" was their top priority.

However, according to a recent Reuters investigative report, at least one Balfour installation "kept two sets of maintenance books" in order to deceive the Air Force about how quickly it was responding to maintenance requests and regularly "backdated repair requests, filed paperwork claiming false exemptions from response-time requirements, or closed out unfinished maintenance requests." Balfour reportedly employed these deceptive practices to mislead the Air Force into awarding the company performance incentive fees, which depend on how quickly the company responds to emergency, urgent, and routine work orders for military residents and their families. These falsified documents allegedly went uncorrected and unchallenged for years because the Air Force Civil Engineering Center (AFCEC) - the unit tasked with overseeing and evaluating the Air Force's privatized housing - blocked attempts to hold Balfour accountable and "sided" with the company.

In her letters, Senator Warren raised concerns about whether the Air Force is effectively using its oversight authorities, and about whether Balfour's profits-around $33 million in annual net profits through its military housing projects, and "up to $2 million in incentive fees" at one base since 2008- were earned in whole or in part through a pattern of fraudulent reporting. The letters ask Balfour executives and Air Force leadership a series of questions about their role in the misleading recordkeeping and reporting practices in local military housing offices.

"It is especially frustrating to discover now that your company 'systematically falsified' maintenance logs, leaving families in unsafe conditions, instead of providing the 'quality homes' that you guaranteed Congress and the public you were providing - and to learn that your company earned millions of dollars in bonuses as a result of these falsehoods," the senator wrote in her letter to Balfour.

"The new allegations about the shameful conduct of local housing offices, and the Air Force's failure to police that conduct, provide a clear explanation for why thousands of military families are forced to live in unsafe or unsanitary military housing," wrote the senator in her letter to the Air Force.

In a separate letter, Senator Warren requested that the Air Force IG open an investigation into the allegations.

The senator requested responses to her letters by July 9, 2019.

The Senate is expected to pass this week the Fiscal Year 2020 National Defense Authorization Act (NDAA), which contains a number of provisions from the Military Housing Oversight and Service Member Protection Act, a comprehensive bill that Senator Warren and Representative Deb Haaland (D-N.M.) led their colleagues in introducing in April 2019 to address a series of disturbing reports revealing unsafe and unsanitary conditions in privatized, on-base housing for military personnel and their families. The bill's provisions included in the FY2020 NDAA are:

  • The establishment of a public complaint database accessible by all tenants and the requirement that housing providers address all such complaints.
  • The annual publication of financial details of each housing contract and that housing providers publish an annual financial statement in the Federal Register.
  • The requirement that DOD publish an annual report on all privatized housing units that includes all requests by tenants to withhold their Basic Allowance for Housing that were denied by the services.

At a SASC hearing on this issue in February 2019, Senator Warren demanded information on profits and incentive payments from private companies providing substandard housing to military families and questioned DOD officials about the lack of oversight of privatized military housing.