Dive Brief:

• Sixteen Democratic senators and Bernie Sanders (I-Vt.) have sent a letter to Secretary of Defense Lloyd J. Austin III asking how the Department of Justice’s recent settlement with Malvern, Pennsylvania-based Balfour Beatty Communities (BBC) will affect the management of military properties and how the Department of Defense will ensure quality housing for military families.
• The senators are asking DOD to address how the settlement will affect BBC’s contracts at 55 military installations, what mechanisms are in place to ensure there isn’t fraudulent behavior from the company in the future and whether contracts will be renegotiated with military housing providers to include more oversight. 
• Competition and availability of housing were also addressed in the letter. The senators asked DOD if it would increase competition by allowing multiple companies to operate on individual bases and what other steps it would take to improve the availability and quality of on-base housing. 

Dive Insight:

BBC, the U.S subsidiary of Balfour Beatty and one of the country’s largest providers of privatized military housing, pleaded guilty last month to one count of fraud and agreed to pay more than $65 million in fines and restitution. 

The fraud scheme, which ran from 2013 to 2019, caused military families to suffer as they waited through "lengthy and unnecessary delays in the resolution of maintenance issues," according to the Department of Justice. 

BBC employees closed work orders before maintenance had been completed, and destroyed and falsified resident comment cards to inflate satisfaction metrics at communities in which it operated, according to the DOJ. By producing these false reports, the company was able to induce the military to pay bonus fees the company had not earned. Overall, the scheme cost the federal government $18.7 million, according to court documents.

These types of alleged issues have not been limited to Balfour Beatty. In January, the military housing division of El Paso, Texas-based developer and property manager Hunt Companies agreed to pay $500,000 to resolve allegations of fraud at Dover Air Force Base in Delaware, according to the Department of Justice. The settlement resolved the allegations and closed the case against the company with no admission of guilt from Hunt.

The DOJ said that Hunt Military Communities submitted false information to the Air Force between January 2013 and June 2019 in order to receive higher performance incentive payouts from the government. 

Sarah Kline, founder and director of community outreach at Armed Forces Housing Advocates, an organization that aims to help military families living in substandard conditions, says her organization has found a number of issues at bases where housing providers did not provide proper maintenance, including improperly functioning heating and air conditioning systems, lead chipping paint, pest infestations, systemic leaks, groundwater issues, a gas leak and unsafe playgrounds at military installations.

"We fully believe that the MHPI [military housing privatization initiative] effort is not working and needs to be completely revamped," Kline said. "And the companies need to be held accountable so that the military families have justice for everything that they've been through."