In the wake of new allegations that a privatized housing company falsified maintenance records in order to get incentive bonuses, the Air Force has referred the matter to the Air Force Office of Special Investigations.
“We are concerned by this new information provided to the Air Force about Balfour Beatty Communities’ practices involving Lackland Air Force Base,” said John Henderson, Assistant Secretary of the Air Force for Installations, Environment and Energy, in a statement provided to Military Times Friday.
As they have done with similar previous reports, he said, they referred the reports for investigation.
Henderson said the Air Force will continue to hold privatized housing companies accountable for providing safe, quality housing for airmen and their families.
“There is no room on the Air Force team for anyone who does not share our core values of integrity, service, and excellence,” Henderson stated.
According to their report, two former employees at the Balfour Beatty housing community at Lackland Air Force Base, Texas told reporters they felt pressure to change records to make it appear the company completed maintenance work that consistently met required goals, so the company could receive bonuses from the Air Force in the form of incentive fees. One was the manager of the project from 2013 to 2016.
“We take the allegation that work orders were handled inappropriately very seriously," a spokeswoman for Balfour Beatty Communities said in a statement to Military Times.
When the issues were first brought up months ago, Balfour Beatty instructed Hunton Andrews Kurth LLP, their outside counsel, to conduct an investigation into the allegations, according to the spokeswoman. A forensic accounting firm is conducting an independent audit of incentive fee payments across all the Air Force bases Balfour Beatty manages, she said.
Two senators weighed in on the issue, urging an investigation. "We urge the Air Force and appropriate federal law enforcement agencies to investigate this fully so we can truly understand what is going on and how pervasive this problem is,” said Sens. Jim Inhofe, R-Okla., and Jack Reed, D-R.I., in a Nov. 20 statement, in a response to the report.
“If the Air Force substantiates allegations that Balfour Beatty perpetrated widespread, illegal fraud, the Air Force must take every action appropriate to hold Balfour Beatty accountable and recoup every last dollar stolen from the taxpayers,” the senators said, in the statement.
The senators noted this is the third time allegations have been raised that Balfour Beatty has used fraudulent work order practices at Air Force installations, and described it as “completely unacceptable and disturbing.” Similar allegations have been raised at Tinker Air Force Base, Okla., and at Malmstrom Air Force Base, Mont.
This comes at a time when Balfour Beatty is dealing with extensive problems in some of their military housing, including mold, poor construction, leaks and other issues.
In September, the Air Force issued a stern warning to Balfour Beatty, which operates two-thirds of its privatized housing, that unless there is “prompt and substantial improvement” in the company’s performance, service officials will start formal action against the company. The company must submit a comprehensive improvement plan by the end of the year.
In his Friday statement, Henderson reiterated the warning in that letter, noting, “Unless we see prompt and substantial improvement in BBC’s performance, we intend to initiate formal action under the dispute provisions of the project documents where serious performance failures have not been resolved.”
“We’re waiting,” the senators wrote. “If Balfour Beatty isn’t able to clean up its act and do right by our service members and their families, we’ll find someone who is.”
In addition to 21 Air Force projects, Balfour Beatty Communities owns and manages another 34 projects on Army and Navy installations in the U.S. Balfour Beatty is also conducting a comprehensive review of work order practices at their Army and Navy bases, according to the spokeswoman.
Over the last year, military families have voiced their concerns in media reports and in congressional testimony about persistent problems in their houses on military bases, such as mold, water leaks, chipping lead based paint, and pest infestation — and their frustration in trying to get their privatized housing companies to fix the problems. They also voiced concerns that their military leadership didn’t intervene in the issues.
Defense and service officials have acknowledged that they abdicated their responsibilities for oversight of the housing, and have begun to take steps to address the problems.
In particular, Henderson noted the Air Force is pursuing 51 separate actions “to standardize our policies, improve oversight of privatized housing, increase communications with all stakeholders, empower our residents, and further integrate leadership into privatized housing management.”