Why a fraudulent business remains one of the military’s biggest owners


The Justice Department’s announcement last week that a private military housing company guilty of “widespread fraud” would be fined $ 65 million has only further angered some military personnel who believe the government should completely stop entering into contracts with the company.

The company, Balfour Beatty Communities LLC, tampered with its performance data and destroyed resident comment cards so it could pocket a performance incentive fee from the military, air force, and the United States. Marine, according to at the Ministry of Justice. Balfour Beatty Communities operates military housing communities at 21 Air Force, 18 Navy and 16 Army bases across the country.

Instead of performing maintenance on family members’ homes, Balfour Beatty employees let toxic mold, insect infestations, water leaks, broken pipes and other problems spread in these homes, leading to health problems like migraines, asthma and even burns from the rupture. hot water pipes.

“Instead of quickly fixing US military housing, the BBC lied about the repairs to pocket millions of dollars in performance bonuses,” said Deputy Attorney General Lisa Monaco, the second-most senior ministry official. Justice. “This pervasive fraud was a consequence of the BBC’s broken corporate culture, which prioritized profit over the well-being of service members.”

Balfour Beatty Communities pleaded guilty to major fraud against the United States and was ordered to pay over $ 33.6 million in criminal fines and over $ 31.8 million in restitution to the United States military, to serve three years of probation and engage an independent compliance monitor for a period of three years. However, onlookers said that was not enough to make up for the harm the company had done to members of the service and their families.

“It’s a fucking joke, right, there’s no way the DoD will allow a company that has pleaded guilty to defrauding its troops across the country to continue doing business.” with his troops, right? ” wrote a commentator react to news on the unofficial Air Force subreddit.

“They should see the contract revoked and be banned from our bases,” another wrote on Twitter. “There is no incentive to treat [service members] well or maintain the houses.

“The management of this company should be in jail,” said another Twitter user.

The homes are shown on December 4, 2020 in the South Post Family Housing Zone in Fort McCoy, Wis. (U.S. Army Photo by Scott T. Sturkol, Office of Public Affairs, Fort McCoy, Wisconsin)

Balfour Beatty communities did not respond to Task & Purpose questions sent on Monday. But in A declaration Last week, the company said it was “committed to the highest standards of ethical conduct” and that “the wrongdoing that has taken place is totally contrary to the way the company expects its employees to do. they behave ”.

However, last week’s headlines were just the latest in a string of stories documenting the company’s poor record in maintaining military homes. A lawsuit has alleged case after case of “squalid conditions”, such as plumbing problems, insect and rodent infestations, asbestos and mold, which the housing provider did not does much to fix it.

A family involved in the lawsuit alleged they developed asthma and migraines after moving into their home maintained by Balfour Beatty at Sheppard Air Force Base. James Banner, the father of the family, had such severe migraines that he was eventually discharged from the military, according to the lawsuit. Another family from Fort Bliss said a hot water pipe broke in their children’s room in the middle of the night, “burning them with [scalding] hot water, ”the lawsuit said.

With that kind of record, one would think the Defense Department would have severed ties with Balfour Beatty a long time ago. After all, individual servicemen are routinely fired for much less serious offenses, such as allegedly trying to turn an AK-47 into a plaque, or for trying to stop a COVID-19 outbreak, or just for old drawings of penis.

Despite mismanaging Army homes and paying millions of dollars while doing so, Balfour Beatty will retain his post for the foreseeable future. In fact, most contracts between the company and the military bases will last another 40 or 50 years or sometimes longer, said Sarah Lynne Kline, co-founder and director of community outreach for Armed Forces Housing Advocates, a goal-oriented organization. nonprofit to help military families affected by substandard housing issues. That’s because military housing is such a financially risky business that in order to get loans, companies have to have longer contracts, Kline said.

Even though the military wanted to cancel these contracts, the government’s goal for at least a quarter of a century has been to privatize military housing as much as possible. In 1996, Congress lifted the Military Housing Privatization Initiative, which aimed to encourage private companies to provide housing “faster and more efficiently than traditional military construction processes would allow,” the Assistant Secretary of Defense’s Office for Sustainment wrote on his website.

“The DoD’s long-standing policy is to rely on the private sector first for its housing, providing housing allowances to its military, where about 63 percent of military families live,” the office continued. .

Believe it or not, at the time, MHPI was supposed to address the “poor condition of DoD-owned housing” and “a shortage of quality affordable private housing.” However, 25 years later, the quality of military housing still leaves much to be desired, as does government oversight of the contractors providing it. The Defense Ministry does not seem interested in changing the situation, Kline said.

“The DoD did not want to manage the housing when MHPI was created because the priorities of the DoD and the branches were concentrated elsewhere,” she said. “It looks like the DoD would approve a few billion dollars earlier for the purchase of planes, which is just an estimate of what it might cost to turn the homes over to the DoD and dissolve MHPI.”

Why a company guilty of
The leaders of Fort Carson, including Colonel Nate Springer, right, commander of the US Army garrison at Fort Carson; and Clint Reiss, left, Housing Manager, Directorate of Public Works, hosted a quarterly town hall on housing at the McMahon Auditorium on November 10, 2021. (Photo by Scott Prater)

It’s not like the military can’t cancel its half-century contracts with companies like Balfour Beatty Communities, Kline explained. For example, the military services could send cure notice, where a contract can be terminated if the contractor does not resolve a breach of contract within a specified period. The branches could buy out the rest of the contracts as well, but neither the military nor Congress has taken this step yet.

“The US government can sue these people and seize the funds, but they didn’t,” Kline said.

Part of the problem is that even if the military dissolved its contracts with Balfour Beatty Communities, it would need another private company to take its place. But these companies aren’t necessarily much better than Balfour. There are 14 other private companies involved in MHPI, and they all have “their own financial, legal and stability issues and could not resume their contracts,” Kline said.

“We looked for a privatized housing model and a company that does it well and to date we have not been able to find one,” Kline added.

At this point, the MHPI just doesn’t have enough oversight to prevent private businesses from abusing their tenants, Kline said, and the evidence appears to be in the pudding. In addition to the Justice Department’s statement last week, there are or have been lawsuits against private military housing companies in Tinkering, Laughlin, Good boy, Keesler, and MacDill air force bases; Army forts hood, Belvoir, Meade and Bragg; Marine Corps Lejeune Camps and Pendleton; Naval base San Diego, Naval support activity Hampton Roads, and the common bases San Antonio and Lewis-McChord, Kline said.

Not all of these lawsuits involve the Balfour Beatty communities. However, given the company’s vast portfolio in the military and the extent of the problems families faced there, the $ 65 million charge is a ‘drop in the bucket’ and a slap on the wrist, Kline said.

“Is it disgusting to know that some of these employees of privatized companies have caused disease to families and the loss of their homes, and they are just paying a fine?” ” she said. “This is another example of white collar crime. “

In August, the Defense Ministry issued a finalized Renters Bill of Rights for Military Members and Their Families Living in Private Military Housing. The invoice is supposed to validate the right to live in healthy and functional housing; obtain maintenance information from a landlord before signing a lease; report violations to the chain of command without fear of retaliation and other necessities.

Fifteen of the 18 rights in the current bill were implemented as of February 2020. However, Kline said she had so far not seen the bill breach the issues facing the military and their military personnel. families are facing. “Since the Tenants Bill of Rights was implemented, we’ve seen the same level of fraud just implemented differently,” she said. Federal information network.

“Preparation begins with a safe home,” she told Task & Purpose. “MHPI programs have created a national security problem where service members are unable to focus on their operational readiness and jobs, and instead suffer substandard living conditions with their families.”

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