Government
Senators Grill Balfour Beatty Communities Execs Over Military Housing
Richard Taylor, president of facility operations, renovations and construction for Balfour Beatty Communities, testifies before a U.S. Senate subcommittee April 26. Officials say an investigation showed problems with military housing managed by the company continued after a Justice Dept. investigation.
Photo by U.S. Senate Committee on Homeland Security & Governmental Affairs
A major private housing manager for the U.S. military has continued to make failures similar to the misconduct that led it to admit to committing fraud, according to a U.S. Senate subcommittee report.
Balfour Beatty Communities LLC pleaded guilty in December to defrauding the U.S. Air Force, Army and Navy after a Dept. of Justice investigation found the company schemed to obtain performance bonuses between 2013 and 2019 by misrepresenting maintenance records by lying about repairs and falsifying records.
A new report released by the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations identified what it called “ongoing management failures” in Balfour Beatty Communities continuing after the end of the scope of that DOJ investigation, and possibly even after the company pleaded guilty to the fraud charge.
Balfour Beatty Communities is a subsidiary of the UK-based contractor Balfour Beatty plc. Balfour’s US unit ranks at No. 16 on ENR’s 2021 Top 400 Contractors list. Balfour Beatty Communities owns and manages residential properties, including more than 43,000 homes across 55 U.S. military installations.
Senators listened to testimony from military service members and grilled a pair of Balfour Beatty Communities executives for nearly three hours April 26. Sen. Jon Ossoff, D-Ga., chair of the subcommittee, questioned during the hearing why the US government should continue to trust Balfour Beatty Communities after it admitted to the fraud scheme.
Several of those who testified described frustration in dealing with Balfour Beatty Communities even when trying to get help with serious problems in their Balfour-managed homes they said have caused health problems. Capt. Samuel Choe, an Army communications officer, testified that mold inside the Balfour home where he and his family lived at Fort Gordon in Georgia from 2019 to 2021 caused his daughter, now 10 years old, to develop a potentially fatal mold allergy and a severe form of eczema on her limbs, torso, neck and face.
“In the concentrated areas which pain her the most, [his daughter’s] skin has become darkened and reptilian,” Choe said. “At its worst, my vibrant and exuberant daughter resembles a burn victim.”
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Balfour Beatty Communities staff repeatedly ignored Choe’s requests or otherwise failed to address the mold issue for months, he said. Even after a doctor recommended the family move, the company refused to allow them to move into another on-base home or let them out of their lease until Choe reached up his chain of command for help, he added.
The subcommittee investigation found that Balfour staff at Fort Gordon frequently ignored or delayed responding to urgent requests to address conditions like mold and roof leaks.
A former Balfour employee at the base told subcommittee members how military families often contacted him multiple times each week because other employees were not responding properly to their repair requests, including those related to potentially serious health issues. As recently as February 2022, Balfour failed to promptly repair a water leak that was reported in October 2021, or to remediate mold that formed as a result of the leak, until a hole appeared in the family’s bathroom ceiling, according to the report.
Richard Taylor, president of facility operations, renovations and construction for Balfour Beatty Communities, testified that the company has made “enormous strides” in its ability to respond to problems since 2019. When the company learned of the criminal accusations it faced, it cooperated with DOJ investigators and began its own analysis to understand the root causes and took action to correct them, he said.
Ossoff highlighted quotes from about a dozen emails from Balfour residents complaining about service and the state of their homes. Taylor said the company processes an average of 208,000 emails annually, and said that the company’s satisfaction survey results from residents have shown positive results, even if the age of the homes—many at Fort Gordon, for example, are from the 1950s and ‘60s—means that issues will arise. There is no systematic failure, he said.
“What’s important for us is we understand where our shortcomings are and we address those deficiencies,” Taylor said.
Two former Balfour employees pleaded guilty to charges related to the fraud scheme last year, and no other employees have been charged.
But the company could run into trouble if it does not keep up with its promises to improve. As part of its plea deal with authorities, Balfour Beatty Communities agreed to serve three years of probation in addition to paying $65.4 million in fines and restitution.
While Balfour Beatty Communities is one of the largest private military housing managers, it is a relatively small piece of Balfour Beatty. The contractor’s US segment had more than $5 billion in revenue in 2020. But Taylor testified that the housing unit earned an average of just $30 million annually from military housing property management fees over the past three years.
"Moving forward, the Defense Dept. and all military housing providers must ensure that our service members live in safe, habitable environments," Sen. Ron Johnson, R-Wis., said. "In particular, the Defense Dept. and its Office of Inspector General need to actively oversee its housing contracts to ensure compliance."
