The Air Force won’t issue more than $4 million in management incentive payments to military housing provider Balfour Beatty Communities, LLC, until a series of actions are taken in response to a news report suggesting the company deceptively filled out maintenance records.
The Air Force’s assistant secretary for installations John Henderson said in a statement withholding the incentive fees is effective immediately and applies to all of the company’s private housing projects at 21 Air Force bases.
The company, which oversees more than 15,000 homes, came under scrutiny after Reuters and CBS published a report on June 18 detailing that Balfour Beatty kept two logs of maintenance records at Tinker Air Force Base in Oklahoma.
Although an electronic record showed requests were handled in a timely fashion, a handwritten log keeping track of when tasks were actually completed shows the requests took much longer. As a result, some military families living in Balfour Beatty housing were exposed to conditions such as sewage spills and severe mold.
Additionally, Balfour Beatty now faces similar allegations of tampering with maintenance records at Mountain Home Air Force Base in Idaho.
“The Air Force takes these allegations very seriously and is taking immediate action to ensure housing management controls are in place at Mountain Home and other locations managed by BBC,” Henderson said in a statement. “In addition, the Air Force has communicated the gravity of the situation to BBC leadership and notified the Air Force Office of Special Investigations.”
According to Henderson, the Air Force will not consider issuing any of the withheld payments until the company provides an independent review of its maintenance and work order process within 90 days. The company must also identify how it will “address deficiencies and ensure its maintenance and work order process meet Air Force requirements.”
Along with the 15,500 homes it manages at Air Force bases, Balfour Beatty’s portfolio includes 18,900 Army and 8,600 Navy homes, according to Reuters.
The Navy and Marine Corps will examine the maintenance work order systems of all of their private landlords in coming weeks, a Navy spokesperson told Reuters. “Should this examination or other reports indicate matters of concern, we will take appropriate and timely action.”
Reuters was the first to report that the Air Force was suspending management incentive payments for Balfour Beatty, and says the fees comprise approximately $4.3 million, or 13 percent, of its annual military housing net income.
Balfour Beatty told Reuters the allegations “are being taken seriously and are in the process of being investigated” and said a single employee was the culprit responsible for the misconduct at Tinker. The company also said Hunton Andrew Kurth LLP was commissioned with investigating the matter.
Separately, the Air Force Office of Special Investigations and the FBI are probing accusations of fraud at Tinker and two other bases with housing managed by Balfour Beatty, the Air Force told Reuters. The Office of Special Investigation has also been notified about allegations at Mountain Home.
Military housing has been privatized more than 20 years after the Military Housing Privatization Initiative was approved by Congress in 1996. The measure was intended to counter lousy housing conditions on base and provide affordable housing options, following a Pentagon report to Congress that cautioned federal housing conditions could jeopardize the military.