[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                                  

                         [H.A.S.C. No. 116-51]

                          PRIVATIZED HOUSING:

                        ARE CONDITIONS IMPROVING

                       FOR OUR MILITARY FAMILIES?

                               __________

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON READINESS

                                 OF THE

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                            DECEMBER 5, 2019

                                     
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                              __________
                               

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
41-473                      WASHINGTON : 2021                     
          
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                      SUBCOMMITTEE ON READINESS

                  JOHN GARAMENDI, California, Chairman

TULSI GABBARD, Hawaii                DOUG LAMBORN, Colorado
ANDY KIM, New Jersey, Vice Chair     AUSTIN SCOTT, Georgia
KENDRA S. HORN, Oklahoma             JOE WILSON, South Carolina
CHRISSY HOULAHAN, Pennsylvania       ROB BISHOP, Utah
JASON CROW, Colorado                 MIKE ROGERS, Alabama
XOCHITL TORRES SMALL, New Mexico     MO BROOKS, Alabama
ELISSA SLOTKIN, Michigan             ELISE M. STEFANIK, New York
VERONICA ESCOBAR, Texas              JACK BERGMAN, Michigan
DEBRA A. HAALAND, New Mexico
               Jeanine Womble, Professional Staff Member
                 John Muller, Professional Staff Member
                           Sean Falvey, Clerk
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page

              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Garamendi, Hon. John, a Representative from California, Chairman, 
  Subcommittee on Readiness......................................     1
Lamborn, Hon. Doug, a Representative from Colorado, Ranking 
  Member, Subcommittee on Readiness..............................     3

                               WITNESSES

Bliss, Jarl, President, Lincoln Military Housing.................    10
Ehle, John, President, Hunt Military Communities, Hunt Companies, 
  Inc............................................................     6
Hickey, Denis, Chief Executive Officer, Lendlease Americas.......     7
Picerne, John G., Founder and Chief Executive Officer, Corvias 
  Group, LLC.....................................................     5
Taylor, Richard C., President, Facility Operations, Renovations 
  and Construction, Balfour Beatty Communities...................     9

                                APPENDIX

Prepared Statements:

    Bliss, Jarl..................................................    96
    Ehle, John...................................................    53
    Garamendi, Hon. John.........................................    33
    Hickey, Denis................................................    69
    Lamborn, Hon. Doug...........................................    35
    Picerne, John G..............................................    37
    Taylor, Richard C............................................    82

Documents Submitted for the Record:

    Representative Brown letter to COL Spragg....................   111
    Balfour Beatty, Attachment C, Temporary Relocation Policy....   113
    Lincoln Military Housing, Standard Procedures for Operations 
      and Maintenance of Asbestos and Lead Based Paint...........   116
    Lincoln Military Housing, Water Intrusion/Mold Operations and 
      Maintenance Management System..............................   168
    Corvias, Work Order Priority Schedule........................   185

Witness Responses to Questions Asked During the Hearing:

    Ms. Houlahan.................................................   189
    Ms. Stefanik.................................................   191

Questions Submitted by Members Post Hearing:

    Mr. Brown....................................................   212
    Ms. Haaland..................................................   208
    Ms. Houlahan.................................................   197
    Ms. Stefanik.................................................   205
    
.    
PRIVATIZED HOUSING: ARE CONDITIONS IMPROVING FOR OUR MILITARY FAMILIES?

                              ----------                              

                  House of Representatives,
                       Committee on Armed Services,
                                 Subcommittee on Readiness,
                        Washington, DC, Thursday, December 5, 2019.
    The subcommittee met, pursuant to call, at 1:00 p.m., in 
room 2118, Rayburn House Office Building, Hon. John Garamendi 
(chairman of the subcommittee) presiding.

OPENING STATEMENT OF HON. JOHN GARAMENDI, A REPRESENTATIVE FROM 
        CALIFORNIA, CHAIRMAN, SUBCOMMITTEE ON READINESS

    Mr. Garamendi. My colleague, Mr. Lamborn, is definitely 
tied up with voting that is going on in the Natural Resources 
Committee. He will be along shortly. Mr. Scott will stand in 
for him and we will pick up Mr. Lamborn. You can either----
    Mr. Scott. I will read his statement.
    Mr. Garamendi. You will read his statement. Very good.
    Before we get started, I request unanimous consent that a 
member of the full committee be allowed to join us, Mr. Brown 
who is behind me, and participate in the questions. And there 
is a formal way. I ask unanimous consent that a non-
subcommittee member be allowed to participate in today's 
hearing after all the subcommittee members have had an 
opportunity to ask questions. Is there an objection?
    There being none, the non-subcommittee member is recognized 
at the appropriate time for 5-minute question.
    Okay, with that the committee will come to order. Ladies 
and gentlemen, I call the committee to order, the Readiness 
Subcommittee, the Armed Services Committee.
    Since February of this year, this subcommittee has been 
conducting extensive oversight of the privatized military 
housing program. We first heard about the systemic failures in 
the privatized military family housing program from a panel of 
courageous military spouses who provided graphic and disturbing 
testimony about lead, mold exposure, rodent infestations, rude 
and dismissive house management, and ineffective oversight of 
the program by the services.
    Then we heard from the assistant military service 
secretaries on their efforts to address the failures of 
oversight that led to the privatized military housing crisis 
and the plans of the services to continue to make improvements. 
Today, we will hear from five of the private military housing 
partners for their perspective and, importantly, their plans 
for bringing family housing back to the level our military 
families deserve.
    I also want to make one thing clear. While we do not have 
all of the privatized military housing partners present today, 
that in no way means that those who are not here are off the 
hook. We are watching them. We expect them to do right by the 
military families that they provide services to. Our oversight 
of this issue will continue, and we are watching not only those 
five that are here, but those who are not.
    I have heard troubling reports about the Michaels 
Organization, Michaels Organization/Clark Realty Capital. I am 
particularly concerned by reports about the abusive use of 
nondisclosure agreements. For all of the housing partners, 
whether you are here today, I am putting all of you on notice 
that this committee will be watching, and we will not tolerate 
in any way the abusive and problems that we have seen. It is 
deeply troubling that I am still, after these months, getting 
reports that certain partners continue to show a blatant 
disregard for the seriousness of the issues facing our military 
families and, frankly, a lack of respect for our service 
members and their families. They deserve better. While it is 
clear that the private partners and military services have been 
working to improve conditions and processes since we first 
heard from the families in February, this committee and many of 
our members still hear from concerned military families who 
continue to struggle with getting quality resolution of the 
maintenance concerns and some of the unprofessional property 
management staff. There is work yet to be done and we will 
continue to follow up on these issues until they are resolved 
to the satisfaction of the military families and this 
committee.
    One of the themes that has permeated our discussions about 
privatized family housing is the issue of ineffective 
management particularly at the installation level. The symptoms 
of this problem have taken many forms including disrespectful 
customer service personnel, inexperienced maintenance teams 
performing low-quality maintenance, and negative consequences 
resulting from wrong contract performance incentives. We have 
heard about the Department of Defense initiatives to address 
these issues, but because day-to-day management is within the 
purview of the private partner, I am interested in hearing what 
you have to say about what you are doing to change the culture 
at the installation level.
    As military services have recommitted to their oversight 
role, they are working to improve their processes and refine 
the metrics that we use to measure the performance of each 
housing project. I am looking forward to hearing from our 
witnesses today about the degree to which they are cooperating 
with these initiatives and the steps that they are taking to 
ensure that the housing enterprise is as transparent as 
possible.
    Counterproductive practices such as closing maintenance 
work orders before the problems are resolved in order to 
artificially bolster closure statistics or asking tenants to 
sign nondisclosure agreements as a matter of routine when they 
move out of a unit are simply unacceptable.
    As we move into 2020, the focus now must be on action. Not 
only must corrective policies and processes be instituted 
across the enterprise, but you must develop mechanisms to 
ensure the sustainment of positive change and the sharing of 
best practices to ensure our families receive high-quality 
housing regardless of where they live. We ask our service 
members and their families to sacrifice enough in service to 
their country. We will not accept substandard housing as well. 
These families deserve better and this committee will demand 
that they get the best.
    [The prepared statement of Mr. Garamendi can be found in 
the Appendix on page 33.]
    Mr. Garamendi. Mr. Lamborn, thank you so much for joining 
us. I have explained that you were in a committee markup 
casting votes. I am sure that they were all to----
    [Audio malfunction in hearing room.]
    Mr. Garamendi. Mr. Lamborn, please.

STATEMENT OF HON. DOUG LAMBORN, A REPRESENTATIVE FROM COLORADO, 
           RANKING MEMBER, SUBCOMMITTEE ON READINESS

    Mr. Lamborn. You will be just as satisfied. And thank you 
for having this hearing. Thank you all for being here as 
witnesses. Thank you for everyone in the audience showing your 
concern.
    Today, we will hear testimony from five of the companies 
that make the privatized military family housing model work. As 
someone whose district has almost 48,000 military members, and 
like the chairman, I have also been deeply troubled by the lack 
of oversight of this program and our military families deserve 
better.
    Our committee has heard significant concerns about 
insufficient mold remediation and terrible customer service at 
numerous military installations, most recently at MacDill Air 
Force Base Florida and Fort Belvoir. We are not going to 
address them today, but there have also been allegations of 
fraud in a few extreme cases.
    Now, according to a survey released earlier this year by 
the Military Family Advisory Network, 63 percent of Fort Carson 
respondents who live in my district said their units needed 
better maintenance, repairs, or remediation. The committee has 
heard horror stories about mold, rat infestations, and what 
could generously be described as poor customer service.
    The Military Housing Privatization Initiative began as 
public/private ventures or P/PVs in 1996 as means to modernize 
family housing, improve efficiency, and grow reserve accounts 
for future investments. Oversight of the program is challenging 
because each military department manages their programs 
differently and the respective projects are governed by unique 
legal agreements. The Army has a total of 35 projects, the Navy 
and Marine Corps have 15, and the Air Force has 32.
    Oversight is further complicated for Army and Navy projects 
because they are partners with the developers in limited 
liability companies with both sides investing capital. My 
sincere hope is that the attention the military family housing 
has received over the last year has served as a wake-up call to 
both the military partners and to the housing partners. We need 
this model to work, but not at the expense of military 
families. Every dollar wasted through mismanagement or 
incompetence diminishes the long-term viability of the reserve 
accounts that are vital for future recapitalization.
    The House and Senate both passed significant bipartisan 
legislation in their defense bills this year and I look forward 
to enacting meaningful reform. First and foremost among these 
will be a tenant's bill of rights. The military departments 
have an inherent responsibility to provide oversight for these 
projects. A recent Air Force IG [Inspector General] report 
found ``a pervasive misperception that when housing was 
privatized it was effectively outsourced. Leaders at many 
levels did not actively engage as they might have on other 
issues, based upon misunderstanding of their authority.''
    We have heard from Army families that some installation 
commanders characterized the government as the weaker or 49 
percent partner in these housing agreements, implying that they 
have limited means to address shortcomings. Oversight is 
inherently governmental, and it is not optional. On some 
installations there is confusion regarding the identity of the 
installation housing office and the office of the housing 
partner or third-party management company. It should be crystal 
clear to a family whether they are speaking to someone 
representing the installation commander or to a representative 
of the housing partner.
    And we must simultaneously reform while preserving the 
financial footing of the privatized housing projects. A 2018 
GAO [Government Accountability Office] report highlighted and 
found that the military departments vary in the extent to which 
they use measure of future sustainment needs and funding to 
assess project sustainability. I am beginning to question the 
wisdom of the fiscal waterfall and why the recapitalization 
accounts are only paid after P/PV management partners and bond 
holders are paid. So, I look forward to hearing more from our 
witnesses about their perspectives on the program overall, the 
actions they have taken to address any health and safety 
concerns and to improve customer service. We would also 
appreciate their thoughts on improving the overall program 
going forward.
    Thank you, Mr. Chairman, and I yield back.
    [The prepared statement of Mr. Lamborn can be found in the 
Appendix on page 35.]
    Mr. Garamendi. Thank you, Mr. Lamborn. It has been good to 
work with you on this problem and I know that we will continue 
to do so.
    I would now like to welcome our witnesses: Mr. John 
Picerne, CEO [Chief Executive Officer] of Corvias Group, LLC; 
Mr. John Ehle, President of Hunt Military Communities; Mr. 
Denis Hickey, CEO of Lendlease Americas; Mr. Rick Taylor, 
President, Facility Operations, Renovations and Construction 
for Balfour Beatty Communities; and, Mr. Jarl Bliss, President 
of Lincoln Family Housing.
    Gentlemen, your formal testimony will be put into the 
hearing record. In the interest of time, which we are 
unfortunately limited today because votes will occur sometime 
after 2:00, perhaps hopefully as late as 2:30, I would ask you 
to limit your testimony and summarize to 3 minutes.
    So, let's start with Mr. Picerne. My apologies for the 
pronunciation.

   STATEMENT OF JOHN G. PICERNE, FOUNDER AND CHIEF EXECUTIVE 
                  OFFICER, CORVIAS GROUP, LLC

    Mr. Picerne. Perfect. Thank you, Mr. Chairman, Ranking 
Member Lamborn, and members of the committee. Thank you for the 
opportunity to appear before you today. My name is John Picerne 
and I am the founder and CEO of Corvias. I am here on behalf of 
950 dedicated team members who support our service members and 
their families. Many of our employees are veterans or spouses 
of Active Duty military members. These talented people are 
generally committed to supporting those who protect and defend 
our Nation. It is my honor to serve in this capacity.
    When I was first introduced to the massive challenge facing 
the Department of Defense with its struggling housing program, 
I was moved by how poorly we as a Nation were caring for our 
military personnel in what was the most personal way of all, 
their homes. The DOD [Department of Defense] was committed to 
creating a real long-term solution and with our experience I 
believed we were well suited to help.
    When I founded our company some 20 years ago, we set out to 
create something that could fix the housing challenges that 
were facing our military, and after 9/11 a very important job 
became a vocation. When I was last on the Hill in February, I 
said I was sorry in no uncertain terms. I apologized for the 
issues some of the residents were dealing with. I said we would 
do whatever it takes to do right by all of our residents. 
Today, I want to tell you a few of the things that we have done 
since I apologized nearly 10 months ago.
    Since early in 2019, we have been making changes in a 
concerted effort to get back to the gold standard. The gold 
standard of resident service will be known when we have 
deployed service members who are able to speak to their 
families about their daily lives, what is happening at school 
and not about problems they are experiencing within their 
housing. We will know that we have achieved the gold standard 
when our residents talk about Corvias and the things that they 
are doing at resident events, strong sense of community, and a 
team that has helped create a better living environment.
    With that goal in mind, we added neighborhood staff to work 
directly with families. We moved our resident service call 
centers back onto the installations so that our residents talk 
to somebody right down the street as opposed to a central call 
station. We launched the Corvias resident portal so that 
residents can use their smart phone or laptop to place service 
calls, track progress, and let us know if we have gotten the 
job done right. We established the role of resident advocate to 
work as an ombudsman for those families with more challenging 
issues. From the early days of the MHPI [Military Housing 
Privatization Initiative] program it was well understood that 
to give our service members the homes they deserved, the 
program needed to operate in a consistent state of development, 
construction, and financing.
    Solving the housing challenges has always been based on a 
regular investment in homes, building new homes while 
maintaining homes both new and old and investment in these 
homes is an investment in the service member. That is why we 
have injected new money into the program, $325 million of 
private capital in 2019 with another $150 million prepared for 
2020. We are also putting close to $200 million to work from 
our partnership reserves, $675 million all together at no cost 
to the government.
    These investments will be used to replace or completely 
upgrade some of the most challenging homes we maintain. More 
than 16,000 homes we brought up to higher energy standards, 
like new heating and air conditioning systems that give 
residents a better home experience while saving the program 
nearly $300 million over the course of the next 30 years. As 
someone who has been in the program for nearly 20 years, I can 
say from personal experience that the homes that we inherited 
were in terrible shape and in many cases uninhabitable.
    Through the MHPI program we were able to upgrade or replace 
thousands of older homes in the early years. However, to date, 
46 percent of our homes in our military portfolio were built 
before 1980 and some as old as 1870. As we look into the 
future, there is a lot to be encouraged about and some real 
challenges as well. The priority is to deliver gold standard 
resident service, service older homes that cost more each year 
to maintain, and drive constant investment in new homes and 
renovations.
    Corvias will continue to work tirelessly for our families. 
We will keep innovating, finding new answers to give service 
members the homes and residence experience they deserve. We are 
proud to serve our military women and men as we believe there 
is no higher calling in our industry. I thank you for this time 
and look forward to your questions and dialogue.
    [The prepared statement of Mr. Picerne can be found in the 
Appendix on page 37.]
    Mr. Garamendi. Thank you.
    Mr. Ehle.

 STATEMENT OF JOHN EHLE, PRESIDENT, HUNT MILITARY COMMUNITIES, 
                      HUNT COMPANIES, INC.

    Mr. Ehle. Chairman Garamendi, Ranking Member Lamborn, and 
distinguished members of the subcommittee, good afternoon. My 
name is John Ehle. I am president of Hunt Military Communities. 
Thank you for the opportunity to be here.
    At Hunt, we are entrusted to build quality communities for 
America's heroes. We take that responsibility very seriously. 
During the Senate hearing in February, it became obvious to us 
that there were families living in our homes whose voices were 
not being heard. We lost their trust, we are sorry, and we want 
to get it right. We have heard our residents loud and clear and 
we are singularly focused on rebuilding their trust in us and 
improving their living experience.
    Over the past year, we have been working diligently on that 
front. First, we recognize that quality homes and resident 
services depend on open and regular communication with our 
residents. We need to hear from all of our military families in 
order to address their issues. We have made a number of 
improvements to make it easier for our residents to communicate 
with us. In addition, we understand that maintenance is a 
critical part of providing quality homes, and earlier this 
year, it became clear to us that we had substantial room for 
improvement.
    While maintenance issues will inevitably arise, it is our 
goal to provide professional, transparent, and timely service. 
In the last year, we have enhanced maintenance processes, added 
key positions, and improved training. Finally, we are actively 
supporting reforms to ensure the long-term success of the MHPI 
program. We are by no means perfect and there have been times 
when our performance has fallen short of our residents' 
expectations.
    We are committed to taking the necessary actions to rebuild 
the trust between Hunt and our residents. We have made progress 
over the past year, but our work is far from done. Thank you 
for the opportunity to testify today. I look forward to hearing 
your thoughts and answering any questions.
    [The prepared statement of Mr. Ehle can be found in the 
Appendix on page 53.]
    Mr. Garamendi. Thank you.
    Mr. Hickey.

 STATEMENT OF DENIS HICKEY, CHIEF EXECUTIVE OFFICER, LENDLEASE 
                            AMERICAS

    Mr. Hickey. Chairman Garamendi, Ranking Member Lamborn, and 
distinguished members of the subcommittee, my name is Denis 
Hickey. I am chief executive of Lendlease Americas. Lendlease 
is a proud partner of the Department of Defense and----
    Mr. Garamendi. Pull the microphone up closer.
    Mr. Hickey. Sorry.
    Lendlease is a proud partner of the Department of Defense 
and we have the privilege of overseeing 40,000 homes that 
contain over 130,000 people who call Lendlease communities 
home.
    Mr. Chairman, the issues being discussed here today are 
critical for both Lendlease and for me personally. No family, 
much less a military family, should be subjected to living in 
substandard housing conditions and I reiterate our apology for 
any creation that we have caused in this instance.
    At Lendlease we are proud of the work we do to take care of 
our military families. However, we realize we have more work to 
do and we must continually improve. As an example, Lendlease 
processed over 400,000 service orders per year. Last month, we 
processed approximately 25,000 service orders across our homes. 
Pleasingly, 97 percent of these orders were successfully 
completed on time and function. We think this is a good result 
and we are proud of that. However, it does mean that 3 percent 
of those orders were not effectively processed on time and that 
is the big issue.
    So, Mr. Chairman, members of the committee, that 3 percent 
is my central focus. What can we do to get that number down? 
How can we take care of these families more quickly and more 
effectively than we currently are? On the road to improve our 
performance, we have recently taken the following steps.
    Firstly, we have significantly increased our focus on 
customer service. We have added new staff, new suppliers, new 
contractors, and have instituted new training modules to train 
our staff. For example, we have instituted a maintenance 
academy to train all of our maintenance people. Secondly, we 
have introduced new resident smart phone app. This contains a 
volume of information easily accessible to residents, including 
the ability for them to initiate and track service requests. 
The use of this app has doubled in the last 6 months across our 
communities.
    Thirdly, we have introduced new mold-inhibiting protocols. 
These include new mold painting techniques, enhanced filter 
protections, new ventilation systems, and other initiatives. 
Fourthly, we are continuing to invest in digital technology to 
improve all aspects of our business. This includes modules that 
improve customer service, greater data analytics, and the 
adoption of digital twin technology that better uses predictive 
maintenance technology across new homes being built.
    Finally, Mr. Chairman, I am particularly proud of the work 
that we have done in establishing the resident advisory boards 
in our communities. Our objective is to create an open and 
transparent environment where residents work collaboratively 
with us in order to create an active and engaged community. We 
looked to other sectors for inspiration and identified the 
school and PTA [Parent Teacher Association] model as the 
benchmark. We all know that when you see a strong PTA, you see 
a strong school.
    Similarly, our resident advisory boards are designed to 
allow residents to regularly engage with both Lendlease and the 
local command to work together to ensure housing issues and 
quality of life concerns are addressed and best practice is 
shared. Our goal is to have one neighborhood representative for 
every 400 homes and these representatives become members of the 
resident advisory board. In addition, Lendlease project 
director and garrison representative are members of this board.
    We believe this initiative is already having great impact 
and this is evidenced by the correspondence I received last 
night from the Safe Military Housing Initiative which was 
founded by some of those military spouses who appeared before 
the Senate committee earlier this year who asked me to read 
this statement on their behalf today.
    ``Lendlease and their team have embraced some of the 
toughest critics by sitting down and building a relationship 
with them. These relationships have benefited the project 
companies and the residents on a micro and macro level. 
Lendlease is leveraging their best staff to help build best 
practice and better serve our military families. By closing 
gaps and changing cultures at the local and corporate levels, 
Lendlease has been able to build relationships with their 
staff, government offices, project companies, family advocates 
and, most importantly, the residents to improve program work 
and its efficacy.''
    Mr. Chairman, we appreciate the work this committee has 
done to find sensible solutions to improve the quality of 
privatized military housing and we remain committed to being 
part of the solution. I look forward to your questions.
    [The prepared statement of Mr. Hickey can be found in the 
Appendix on page 69.]
    Mr. Garamendi. Thank you.
    Mr. Taylor.

STATEMENT OF RICHARD C. TAYLOR, PRESIDENT, FACILITY OPERATIONS, 
    RENOVATIONS AND CONSTRUCTION, BALFOUR BEATTY COMMUNITIES

    Mr. Taylor. Good afternoon, Chairman Garamendi, Ranking 
Member Lamborn, and distinguished members of the subcommittee. 
My name is Rick Taylor, president of Facility Operations, 
Renovations and Construction for Balfour Beatty Communities and 
I appreciate the opportunity to testify before you today.
    We take the responsibility of serving those who serve our 
country very seriously. We have heard your concerns and those 
of our residents loud and clear, and on behalf of Balfour 
Beatty Communities I would like to apologize for having fallen 
short of the high standards our military families deserve. We 
are working hard to regain the trust and confidence of our 
residents and our military partners. This has truly been a 
humbling experience. We have learned a lot and we realize we 
needed to transform many of the ways in which we do business in 
order to improve our residents' daily living experiences. That 
transformation is underway today and I would like to highlight 
just three of our transformation efforts with you now.
    First, we have reorganized. This includes my appointment as 
president for Facility Operations, Renovations and 
Construction. This means there is now a president in charge of 
and responsible for all military housing maintenance 
activities. The reorganization puts me at the table with our 
most senior leaders in the company to ensure the highest levels 
of oversight and the keen focus on maintenance issues and 
resident support services.
    As a former Navy Civil Engineer Corps officer, I am 
especially sensitive to the types of challenges and concerns 
and I am fully committed to providing solutions. Additionally, 
we are appointing a senior executive to the role of 
transformation director, another completely new position. This 
individual will be responsible for ensuring that an effective 
change management program is in place across our entire 
military housing portfolio.
    Second, we are transforming our approach to maintenance and 
customer service. We have delivered live, mandatory code of 
conduct training to our employees to underscore the importance 
of business integrity and ethics. We have also delivered 
enhanced customer service training to our employees to 
reemphasize our commitment to best practices and high 
standards. We recently appointed a new vice president of 
training and we have added 130 professionals to our military 
housing staff, and we are empowering our residents with more 
transparency and control over their work order requests. Third, 
we are improving our mandatory environmental training for all 
facilities management employees, have increased monitoring of 
all homes for life, health and safety, and particularly mold 
and moisture issues. We have supplemented our local teams with 
additional third-party specialists, teamed with a national HVAC 
[heating, ventilation, and air conditioning] servicing and 
maintenance company, and have hired regional environmental 
specialists to advise our local teams, monitor environmental 
processes and projects, and manage that communication with our 
residents.
    I also want to make myself clear on a particularly 
sensitive issue for us. Balfour Beatty Communities takes the 
issue of fraud very seriously, including the allegations that 
certain members of our staff handled work orders 
inappropriately. We are already cooperating with the Department 
of Justice with respect to its own civil investigation into 
these allegations. Simultaneously, we have instructed our 
external counsel, Hunton Andrews Kurth, to lead an 
investigation across our entire military housing portfolio. 
Hunton, in turn, has engaged PriceWaterhouseCoopers, a leading 
forensic accounting firm, to undertake an extensive review of 
the work order system used to support our submission to request 
incentive fees.
    To summarize, over the last 9 months, we have made efforts 
to transform and strengthen our management structure to 
increase staffing in a strategic, focused, and smart way to 
address our customers' concerns. Going forward, I remain 
encouraged and 100 percent committed to the success of the MHPI 
program.
    I want to thank Members of Congress and your staff for 
reforms you are undertaking in the fiscal year 2020 NDAA 
[National Defense Authorization Act]. We support many of the 
MHPI provisions offered in the House and Senate versions, 
reforms that I believe will strengthen the program. For 
example, we wholeheartedly support the creation of a resident 
bill of rights, a common lease, a uniform mold policy, a 
uniform resident displacement policy, and standardized 
incentive fee metrics.
    These are responsible and thoughtful reforms that will 
focus everybody, the Department of Defense, military providers, 
our residents, on standards and agreed-upon processes. The 
reforms will minimize ambiguity, enforce oversight, clarify 
responsibilities, and allow everybody's voice to be heard. I 
support these efforts and I believe the MHPI program will be 
improved because of them. Our customers deserve the very best 
and we are determined to deliver for them.
    Thank you for your time and I look forward to your 
questions.
    [The prepared statement of Mr. Taylor can be found in the 
Appendix on page 82.]
    Mr. Garamendi. Thank you.
    Mr. Bliss.

  STATEMENT OF JARL BLISS, PRESIDENT, LINCOLN MILITARY HOUSING

    Mr. Bliss. Chairman Garamendi, Ranking Member Lamborn, and 
members of the subcommittee, on behalf of Lincoln Military 
Housing, thank you for the opportunity to testify before your 
subcommittee today. My name is Jarl Bliss and I am the 
president of LMH. Our company welcomes this subcommittee's 
oversight of the Military Housing Privatization Initiative. We 
hope you share our view that despite recent setbacks, the MHPI 
is a valuable program that has improved the quality of military 
housing over the DOD-managed housing of the last century. We 
also welcome your oversight of LMH's ability to deliver the 
high-quality housing and property management services our 
Nation's heroes deserve.
    Over the past year, our company has listened carefully to 
the concerns some families have expressed about the quality of 
their LMH housing. More than 1,200 LMH employees, many of whom 
are veterans, military spouses, or have members serving in the 
military, wake up every day to serve our families with honor 
and integrity. But it is obvious that some of our families feel 
we have come up short. As the president of the organization, I 
apologize to our military families for the times that we have 
failed to live up to expectations.
    Beginning in 2017, working with military families and 
advocacy organizations, LMH undertook a holistic review of our 
policies and procedures to explore how we could improve. We 
identified, developed, and implemented several reforms to 
address two main goals. The first was to improve the quality of 
our homes and services. The second goal was to make reforms 
that establish a culture of trust, transparency, and dialogue 
with our residents. I am pleased that as I sit here today, many 
of those reforms have been implemented. Let me list a few of 
these for you.
    First, we have worked with a military family organization 
to identify and place advocates in over a dozen of our 
communities with more in the pipeline. These advocates seek to 
identify issues before they become problems and try to work 
with the families and Lincoln to resolve them. Second, our on-
the-ground property managers and personnel have set a goal of 
proactively knocking on residents' doors even when there is no 
work order pending, just to check in with the resident and ask 
if there are any issues with the home that we need to address. 
In addition to addressing issues with the home, this reform 
also helps reestablish a culture of trust and dialogue with the 
families.
    Third, we have been responsive to requests from residents 
for improved access to communications tools. We have 
significantly improved our mobile phone app that enables 
residents to submit and track work orders. We still maintain 
our call center in San Diego for those who prefer to call in 
work orders. And fourth, we have worked with our service branch 
partners to get public health and medical experts involved in 
cases involving environmental hazards more quickly, and Navy 
and Army have given us access to doctors and specialists who 
help both us and our families understand when a family should 
be moved while remediation is performed. These are just a few 
of the reforms we have undertaken. We are in the process of 
making further reforms, many of which we believe are consistent 
with several provisions in the HASC [House Armed Services 
Committee] and SASC [Senate Armed Services Committee] marks of 
the NDAA. As your subcommittees look at how LMH and other P/PVs 
are performing, I look forward to working with you and our DOD 
partners to explore new and creative ways to improve our 
military families' experience in our housing. We understand 
that the issues are not just about fixing drywall, but 
repairing a culture of trust with our residents, a culture that 
recognizes the dignity of their service to our Nation.
    I look forward to your questions and, more importantly, to 
working with you to address the concerns of military families.
    [The prepared statement of Mr. Bliss can be found in the 
Appendix on page 96.]
    Mr. Garamendi. For the committee members and our guests, we 
are scheduled votes probably about 15 minutes from now, so I am 
going to pass on my questions and turn to Mr. Lamborn and then 
take as many of our colleagues as possible.
    Mr. Lamborn.
    Mr. Lamborn. Thank you, Mr. Chairman, and for having this 
hearing. Thank you all for being here. My first question or 
two, I just want to go down the line and have a yes or no 
answer for the sake of time.
    From your perspective, do your companies have a 51 percent 
controlling position in the privatized military housing 
agreements?
    Sir, if you start and go down the----
    Mr. Picerne. The answer is no----
    Mr. Lamborn. Okay.
    Mr. Picerne [continuing]. Representative.
    Mr. Ehle. The answer varies from property to property.
    Mr. Lamborn. Okay.
    Mr. Ehle. So it is not as simple as yes or no.
    Mr. Lamborn. Okay.
    Mr. Hickey. Whilst the structure may look like that, it 
doesn't operate like that.
    Mr. Taylor. No, sir, we do not.
    Mr. Lamborn. Okay.
    Mr. Bliss. As Mr. Hickey said, the structure may say that, 
but the operating agreements don't call for that sort of 
control.
    Mr. Lamborn. Okay, thank you.
    And do you agree that the government and the military has a 
legitimate oversight responsibility for the P/PV initiatives?
    Mr. Picerne. Absolutely. Yes, sir.
    Mr. Ehle. Yes.
    Mr. Hickey. Yes.
    Mr. Taylor. Yes, sir.
    Mr. Bliss. Yes, sir.
    Mr. Lamborn. Okay, thank you. I am sure there are some 
great questions about specific remediation progress or lack of 
progress that you are making but let me jump into the financial 
side of things. Should Congress intercede and require that we 
restructure the waterfall agreements so that the result would 
be that reinvestment accounts have to fully paid up before 
everyone else gets paid?
    That is something that would be a radical departure, but it 
is the kind of reform that we may have to look at. Any thoughts 
on that that you would like to offer?
    Mr. Picerne. So, Representative, I think that as the 
program is currently structured, it was set up and is set up so 
that we can continue to advance investments and have continuous 
investments if allowed to do so. Working with our DOD partners 
and with support from Congress, I think we can get there 
without having to go through tremendously radical changes. I do 
believe though that an adjustment in the waterfall to make sure 
that investment is consistent would be of benefit.
    Mr. Lamborn. Okay, any other thoughts or comments? Thank 
you. Mr. Taylor.
    Mr. Taylor. Congressman, I think certainly it is worthwhile 
to consider, you know, everything should be on the table for 
consideration, but I would say that, you know, we have lending 
agreements that, you know, would have to be maintained such 
that debt services is paid where it is currently prescribed in 
the waterfall.
    So that being said, you know, if we didn't disrupt that 
then I think that we should certainly be having that 
conversation about figuring out a better way to ensure long-
term sustainability.
    Mr. Lamborn. Okay. Any last thoughts on that and then I 
will switch to another question.
    Mr. Hickey. No, I support--Congressman, I support that 
position. I think at the end of the day the objective is to 
make sure there is sufficient capital in the reserve account to 
undertake out-of-year development. There are a variety of 
solutions to do that. I think, you know, the interest of 
bondholders and debtholders need to be, you know, factored in 
mind and so therefore it would be a complex arrangement to 
undertake.
    Mr. Lamborn. Okay. And, lastly, for the sake of time, I 
will finish with this. Could someone comment on what we could 
do here in Congress to make your job easier so that the 
finances work better, so that the investments can be made to 
keep properties as high of quality condition as possible, so is 
there something, anything like with the scoring that OMB 
[Office of Management and Budget] calls for that we should 
reexamine?
    Mr. Picerne. So, Mr. Representative, I think that if we 
went back to the premise on the program, or the beginning of 
the program was based on what was known as the ``Raines Memo'' 
from OMB that was rescinded over time, so we start out with the 
right program and the right investment philosophy and the right 
investment thesis, but then change the game midstream.
    So, if we just went back to that original scoring 
methodology that would continue to allow us to add additional, 
which was always the premise, additional funding sources on a 
going forward basis. So, if we kind of went back to the 
original rules, I think we would be able to solve many of the 
investment challenges.
    Mr. Lamborn. Anyone else on that?
    Mr. Hickey. No, Congressman, I agree with that. I think the 
scoring process could be reviewed. I think at the end of the 
day, looking for additional sources of funding is proactive if 
we can do that, you know, across the structures. Also, I think 
the other issue that is around the BAH [basic allowance for 
housing] process and I think that process is set annually. And 
whether it goes up or down regarding, you know, where it sits 
within relative outside the base accommodation, I think 
probably the optics about how that is determined is something 
that is very vital because that is the revenue source of the 
bases in its entirety. So maybe some transparency around the 
optics of how the BAH is calculated would be beneficial.
    Mr. Lamborn. Okay. Okay, I want to thank you all.
    Oh, Mr. Bliss, did you want to finish?
    Mr. Bliss. Yes, sir. I just wanted to add, I also would say 
anything Congress could do to create flexibility on financing 
that we could use private sector tools without having scoring 
issues, I agree with Mr. Picerne on that.
    Mr. Lamborn. Okay, thank you for your input.
    Mr. Chairman, I yield back.
    Mr. Garamendi. I thank you, Mr. Lamborn.
    Presumably, votes will begin shortly. We are told that we 
are expected to be off the floor and back here around 2:30. So 
we will break and then, without objection, we will break and 
then return.
    Ms. Horn, you are next.
    Ms. Horn. Thank you, Mr. Chairman. And I want to thank this 
entire committee for the work that we have done on this 
incredibly critical issue, in a bipartisan way, and I think the 
beginning of the work that we have done in the NDAA for this 
year is critically important.
    But I want to dig in a little bit more to the issues that 
we are talking about and what this means for our military 
families, because the first time I heard about these issues was 
at a town hall in January and a mother showed up and brought 
pictures of the housing that they were living in, told me about 
the conditions and the health impacts that their families at 
Tinker Air Force Base which, Mr. Taylor, is a Balfour Beatty 
property.
    And I was angry and frustrated and hoping it was a limited 
problem, but sadly found out that it was not and this is why we 
are here today, because the issues that have already been laid 
out, the infestations, are rampant across Tinker and it is one 
of those things that is so outrageous to me that we are not 
taking care of our service members and their families in the 
way that they deserve, these people that are putting their 
lives on the line.
    And Balfour Beatty has responsibility for 55 different 
facilities across 26 states, 43,000 homes and 150,000 people. 
That is not an insignificant impact and I am incredibly 
disappointed that you have failed to live up to your 
responsibility for taking care of the people that are living in 
these houses. It is cheating our military families and our 
taxpayers, and I have seen it firsthand. My staff and the 
Secretary of the Air Force and others were just out at Tinker 
again, there are ongoing problems, and I wish that I could say 
that things were all better, but they are not. Because while 
things--while there has been some progress, it seems like every 
other week there is something else that is coming out, toxic 
mold, safety hazards, and just week before last, November 20th, 
yet another report that maintenance records were being 
falsified to get Balfour Beatty payments that they weren't 
entitled to. This is not an isolated incident because there are 
already 65 documented instances over 2016 and 2017 of falsified 
maintenance records.
    And according to this same November 20th report, employees 
of Balfour Beatty had systematically doctored records, not just 
at Tinker Air Force Base, but at two other bases. This is a 
systemic problem and one that we have to fix, and you have a 
lot of work to do to fix it. The image behind me is an image of 
one of the homes that was brought to me by the families living 
there at Tinker Air Force Base.
    So, Mr. Taylor, my question to you is, even if times have 
improved, is this someplace that you would want to live or 
allow your family to live?
    Mr. Taylor. Congresswoman, that picture is unacceptable, 
absolutely unacceptable.
    Ms. Horn. Thank you. I appreciate that. It is just, to me 
this is unconscionable, and we have to fix it and it is going 
to require a lot of effort. It is going to require getting down 
to the heart of the problem. Not just putting Band-Aids and 
painting over things and patching walls which may make it look 
good for a few moments, but it is basically like putting Band-
Aid on a gaping wound and that is what people have been living 
with in far too many places and we have to get to the heart of 
this issue.
    In fact, I just spoke to the Secretary of the Air Force 
earlier today and what we talked about was the need to get 
down--and this goes for everybody--we have got to get down to 
the heart of this issue. We have got to stop putting Band-Aids 
on gaping wounds. We have to identify and get down to the core 
of the issue.
    So my next question to you is, will you commit to making 
whatever investments are necessary to put in place long-term 
solutions, solutions of culture, solutions of reorganization, 
and if it needs to be tearing down properties and starting over 
to get to the heart of these issues so that we are doing right 
by our military members and their families?
    Mr. Taylor. Congresswoman, I alluded to it in my opening 
remarks. We have made significant changes in the way that we 
are conducting our business. Putting clear line of sight for 
the technical issues, these fall in that area, a clear line of 
sight all the way up to the top of the organization and that 
rests on my shoulders. And so, I am committed to and I shall be 
held accountable for the changes that we need to make.
    Ms. Horn. I will be holding you accountable to that. And 
since I only have a few seconds left, I also want to follow up 
with one final question. From the documents I have seen it 
appears that your company earns about $4.3 million in 
performance bonuses each year on these properties. Over these 
years that is tens of millions of dollars in performance 
bonuses that were paid out while documented evidence that 
Balfour Beatty--and it doesn't matter if it was an employee 
down the line--Balfour Beatty was falsifying maintenance 
records, tens of millions of dollars.
    What I want to know is that will you commit to taking every 
single penny at least of this money that was paid based on 
falsified maintenance records to invest that in fixing the 
problems at all of these housing units.
    Mr. Taylor. Congresswoman, as I mentioned, those 
allegations are quite shocking to us and we are undertaking a 
thorough review. I mentioned that we have invested with outside 
counsel to investigate that. The Department of Justice is 
undertaking an investigation into those very same issues. We 
have committed to providing the results of our findings to the 
DOJ. In the event that we are found to have falsified records, 
then we are absolutely committed to refunding any incentive 
fees received back to those projects. And, further, in the 
event that any of our individuals are found to be at fault, not 
complying with our code of conduct which we take extremely 
seriously, to the extent that we find that anybody has strayed 
from our code of conduct, we will take appropriate disciplinary 
action no matter where they sit in the organization.
    Ms. Horn. Mr. Taylor, I am over time. I just think that it 
is important for us to say we are going to continue to work on 
this. But the confidence that our communities have and that our 
service members have and their ability to trust their families 
to your care, collective care, has been seriously eroded and it 
is going to take a lot of work, transparency, and contrition to 
get to the root of this. Thank you.
    Mr. Garamendi. Thank you.
    Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman and Ranking Member 
Lamborn. In February, we had a roundtable with the spouses and 
military members affected by these housing issues, and I want 
to tell you that I found those spouses and those soldiers that 
were there, primarily spouses, to be extremely professional and 
credible.
    And I was a little taken back at a couple of things. One of 
the things that I was taken back at--it is our fault or the 
DOD's fault--I don't think our base commanders and I don't 
think the DOD took this issue serious enough in many cases. I 
think where we had good base commanders it was taken serious 
and then in other areas maybe poor base command allowed part of 
these things to happen.
    But the primary issue that got my attention was the 
complexity of the landlord/tenant contract written by lawyers 
of extremely large corporations that you represent that is then 
handed to a soldier who may be, quite honestly, just out of 
high school in many cases. And so when you hand these service 
members the contracts, there are provisions in these contracts 
and the mediation contracts that are intentionally designed to 
and have the impact of financial intimidation of our service 
members and their families that say that if they take you to 
mediation, if that is their only course of action where they 
can resolve the issue and they don't win, then they have to pay 
your legal fees.
    And so, my question is this, are these provisions still in 
your contracts? And we will just go down the line.
    Mr. Picerne. To the best of my knowledge, Congressman, we 
have been adapting the provisions to not have any forms of that 
type of language, languages of intimidation or languages that 
would provide remuneration back to us as a company if a suit 
was filed and/or filed forcefully.
    Mr. Scott. Let me move--Mr. Ehle, yes or no?
    Mr. Ehle. All of our lease forms are under review and in 
fact the industry is working on a common lease form that 
would----
    Mr. Scott. All right. That is not a yes or no, so I will 
assume that you still have the intimidation provisions.
    Mr. Hickey.
    Mr. Hickey. Congressman, to the best of my knowledge they 
don't exist in our contracts.
    Mr. Scott. Mr. Taylor.
    Mr. Taylor. I am not aware that they exist, but I can tell 
you that we have never pursued recovery of those fees from 
residents.
    Mr. Scott. Mr. Bliss.
    Mr. Bliss. They do still exist, but we are in the process 
of working with the services with their approval of removing 
those clauses.
    Mr. Scott. Okay, thank you. I think though when we have our 
landowners--I think when we have our soldiers' bill of rights, 
housing bill of rights, I think those provisions will be 
struck; that that is unacceptable to me to ask an 18-year-old 
soldier straight out of high school to sign a contract that 
makes him responsible for the legal fees of a multimillion-
dollar corporation.
    With that, Mr. Chairman, I would like to yield the 
remaining provisions to my colleague from North Carolina, Ms. 
Stefanik. I am sorry. New York.
    Ms. Stefanik. That is all right, Mr. Scott.
    Mr. Scott. You talk like you are from North Carolina.
    Ms. Stefanik. No, I talk like I am from New York Upstate.
    Gentlemen, thank you for being here today. Earlier this 
year, we heard from the services and military family members 
and it was really stunning to hear about the challenges that 
these military families have faced. I have the honor of 
representing Fort Drum, home of the 10th Mountain Division, the 
most deployed unit in the U.S. Army since 9/11, so these are 
families that have faced multiple, multiple deployments in 
Iraq, in Afghanistan, around the world, and it is extremely 
important to me that they not have the stress that their family 
members face at home because of housing issues. So, Mr. Hickey, 
as you know, Lendlease is the primary private partner for the 
Mountain Community Homes and the Timbers located at Fort Drum. 
And I want to ask you, for the record, because this gets to 
this feeling that people don't have a voice and they don't have 
an adequate response time when there are complaints, if a 
military tenant has a complaint or concern how can they 
absolutely count on Lendlease to address this concern in a 
timely, professional, and adequate manner? And, most recently, 
snow removal has come up in the north country. I know some of 
you don't face that, but that is a significant concern and came 
up at a town hall just recently.
    Mr. Hickey. Thank you, Congresswoman, for the question. You 
know, we operate in actually very clear protocols of responding 
to inquiries. We give residents multiple access points to of 
any concerns they can come straight to our project director. 
They can come through our customer service. They can come 
through our resident apps. We monitor all of the requests 
digitally, so it is all done through a system so it is not a 
manual process, and we can track anything that is not monitored 
or not assessed in time comes as an exception to us.
    And so, we have a management regime looking at the things 
that are not addressed in an appropriate manner. I think in 
addition, the residents advisory board that we have actually 
put in place, which we will be rolling out onto Fort Drum as 
well very soon, is the other forum for which residents can get 
voices and access in because we will have those community 
representatives on small areas and making sure that there are 
several opportunities for them to get heard and get opportunity 
to voice their concerns or ideas proactively or negatively.
    Ms. Stefanik. Thank you, yield back. I will do my round 
after.
    Mr. Garamendi. I thank--I will turn to Ms. Houlahan.
    Ms. Houlahan. Thank you, Chairman. And thank you, 
gentlemen, for joining us today. And just by way of background, 
I am third-generation military. My mom was a resident of 
military housing as was her six brothers and sisters. I was a 
resident of military housing as was my brother. I have four 
Active Duty cousins right now who serve. We represent the Army. 
We represent the Navy. We represent the Air Force.
    I also was an educator in a community that was very, very 
underserved in the population and lived in very--housing 
conditions that looked a lot like this. And as an educator and 
a person who lived in housing like this, I can say that I 
really worry for the children. You know, I worry for the 
children who are exposed to lead and who are exposed to mold, 
and I am worried that what I am hearing is that people are not 
using the word ``mold'' because it would create problems and 
they are creating, your organizations are creating kind of the 
opportunity to sort of hide things.
    And so the first thing that I would like to ask because of 
time, for the record, would you guys be able to submit your 
policies on lead and mold remediation and amelioration so that 
we can understand what they are and what kind of--what you do 
in terms of what timelines you expect to remediate those and 
also what you do to make sure that people are--you talked a lot 
about displacement. You know, what happens when they are 
displaced?
    [The information referred to can be found in the Appendix 
beginning on page 189.]
    Ms. Houlahan. And also, for the record again, what 
compensation do families have when their home goods are 
destroyed? Having had that experience as a child, I understand 
that. So that I would like to have for the record.
    [The information referred to can be found in the Appendix 
beginning on page 189.]
    Ms. Houlahan. The other thing I would like to understand, 
maybe individually, is in the case where there is a child who 
has been affected by this, who will permanently be disabled 
because of this, what responsibility do you all have and do you 
all plan for with your for-profit businesses to make sure that 
those children and those families are being taken care of or do 
you expect that the government will do that for you?
    Mr. Picerne. So, Representative, in our case we work 
directly with when an instance like this comes up, we work 
directly with the medical community on the installation with 
the garrison commander and we try to define where the--or 
divine where the problem really is. We have had instances 
where, although believe that it was the home causing it, it 
turned out that it was lead in the munitions plant that the 
soldier was actually working in.
    So, if in fact----
    Ms. Houlahan. Let's just assume that it is something that 
is identified as a housing issue that happened in the past, 
what is the process that you go through?
    Mr. Picerne. So, if we find out that it is determined that 
the home is in fact the cause of the illness, then we will 
support that child or its medical costs.
    Ms. Houlahan. And, Mr. Ehle, is that how you pronounce it, 
Ehle?
    Mr. Ehle. Yes, Ehle. Sorry.
    Ms. Houlahan. Ehle.
    Mr. Ehle. You know, if, you know, we are obviously 
supportive of the process of determination and through dispute 
resolution and so forth, if there is fault that is determined, 
you know, we will certainly work with whatever the 
determination is.
    Mr. Hickey. Thank you, Congresswoman. We will provide you 
with all our protocols.
    Ms. Houlahan. Thank you.
    Mr. Hickey. They are very clear. They are clearly outlined. 
We have a 24-hour response time. Just to let you know that if 
anything happens within that 24 hours once it is the residents 
feel uncomfortable, we will relocate them immediately and so 
forth.
    Ms. Houlahan. Right.
    Mr. Hickey. So, there is a whole clear regime around how we 
deal with mold and lead-based paint, which I am happy to share 
with you. You know, if in the instance that, yes, we are the 
cause of any medical condition then we would absolutely look 
to, you know, financially compensate through any structure that 
is appropriate.
    Ms. Houlahan. Thank you.
    Mr. Taylor. Congresswoman, I would agree with the other 
gentlemen. If we are found to be at fault, we are complicit, 
then----
    Ms. Houlahan. And you are planning for that, you know, 
because you guys have been at this for a couple, a few decades 
and there will be decades where the kids who are now presumably 
grown that may have those problems that can be attributed 
possibly back to that.
    Mr. Taylor. If attributed to our conduct, then yes, ma'am.
    Ms. Houlahan. Thank you.
    Mr. Bliss. Congresswoman, we will also provide you the 
protocols and whatnot.
    Ms. Houlahan. Thank you.
    Mr. Bliss. To answer your question about medical, again, if 
we are proved to be at fault to that then we work with the 
families and medical to figure out what is the best resolution 
to solve that issue.
    Ms. Houlahan. Thank you. And with the last kind of 45 
seconds of my time, I just would like to know--I have heard a 
lot of go down the line and say yes, yes, no, no, no. Having 
been a former entrepreneur and businesswoman myself, I think 
best practices are definitely something that you each are 
talking about individually.
    But do you have a group that you share your best practices 
across all of your different organizations so that each one of 
your standards is similar or the same and that you are sharing, 
somebody who said they have an app that people can use, or you 
said you have a roundtable, do you have a best practice 
roundtable?
    Mr. Picerne. Yes, Representative. We actually formed the 
Military Housing Association, MHA, specifically to do that. As 
an outcome of challenges we have had, we have realized that we 
do share individual best practices, but we didn't share them or 
weren't sharing them as an industry. So, we have started to do 
that on a much grander scale, and I think it is starting to 
provide some of the benefits that you will be seeing or have 
been seeing thus far.
    Ms. Houlahan. And I know I have run out of time and I want 
to give everybody else their time, so I would love to just hear 
if you guys could get together on that and get back to us. 
Thank you. I yield back.
    Mr. Garamendi. I thank you.
    Mr. Wilson.
    Mr. Wilson. Thank you, Mr. Chairman, and thank each of you 
for being here today. And, Mr. Taylor, I am really grateful for 
the leadership at Fort Jackson. Commander Brigadier General 
Milford Beagle has conducted a town hall with your company with 
Balfour Beatty. And to address the issues of housing, 
complaints were raised about the broken sidewalks, long lines 
for the completion of work orders, shoddy work repairs, and no-
shows by the maintenance staff. What have you done to correct 
these deficiencies? Is there a residency advisory board 
established and is there a project manager that you can report 
to on a 24-hour basis?
    Mr. Taylor. Thank you, Congressman. Yeah, I think 
universally across all of our portfolio we are getting better 
at forming resident groups that we can meet with and we do that 
in concert with our military partners at the individual 
installations as well. Town halls that are--we are starting to 
see an increase in the frequency of town halls that we 
participate again alongside our military partners. Those are 
great ways for us to get the information to understand what 
concerns our residents are facing.
    In terms of processes, changes that we are undertaking, as 
I indicated in my opening remarks, we certainly recognize that 
we could do better in many locations. And so, we have addressed 
that through a number of staffing level increases looking at 
the policies and procedures that we do have in place and where 
we saw that they were deficient we are addressing those. So, it 
is not as simple as one, you know, addressing one area to 
address, you know, a more broad problem, but we are taking on a 
number of different areas to improve. But a lot of that is 
through process, procedure, making sure that we have got 
appropriate staffing at the level.
    Mr. Wilson. Is there a hotline where a resident could 
report an issue?
    Mr. Taylor. Yes, sir. We have an 800 toll-free line that 
any resident, employees, anybody can call to let us know at the 
corporate level any issues that they are facing that aren't 
being addressed locally.
    Mr. Wilson. Thank you.
    And, Mr. Ehle, Joint Base Charleston is a Hunt Military 
Community; however, there is some confusion about the structure 
of your deal with the military. I understand there is a 50-year 
deal, the agreements are not contracts, and that you are 
considered a partner not a contractor. Can you explain this and 
how the system works?
    Mr. Ehle. All of the LLCs we have are 50-year ground 
leases, the land owned by the government. And the partnership 
element is that, you know, these are meant to be true public-
private partnerships. With the Air Force, which is what JBC 
[Joint Base Charleston] is, the Air Force is not a legal member 
of the LLC like the Navy or the Army are in their projects, but 
the Air Force does have an investment in the form of government 
direct loans, so they have a financial interest in the project 
and so there is a partnership. And, of course, none of these 
can succeed without having a really good functioning 
partnership, and a partnership is both cooperation, but also 
mutual accountability and it works very well with the Air 
Force.
    Mr. Wilson. Thank you. And I yield the balance of my time 
to Congresswoman Elise Stefanik.
    Ms. Stefanik. Thank you. Just to follow up, one of the 
aspects in the NDAA that we have focused on is the importance 
of a common tenant bill of rights. And I want to hear from each 
of you and I will start with you, Mr. Hickey, just because of 
the importance of your answer to my district. What rights are 
you proactively ensuring that are afforded to our military 
families who are leasing your properties and how do you measure 
that success?
    Mr. Hickey. Thank you, Congresswoman, for the question. We 
have all been working diligently with the services on a common 
bill of rights, so we have participated, we have put forward 
our suggestions, and so that is well-documented and I think 
that might be a solution, but putting in the ability for 
residents to receive a refund, for example, if they are in a 
situation where they are in a house that has not been 
maintained properly they can get refunded rent, putting in 
plain English version contracts a right to actually terminate 
contracts, you know, if there is something wrong with the 
house, giving more flexibility back to our residents is 
something that we have been focused on.
    Ms. Stefanik. Sure. And I know you have communicated that 
to the services. What about to the families? Have you solicited 
feedback from military families for suggestions for that tenant 
bill of rights?
    Mr. Hickey. Yes, we have. Yes. As I said before, we have 
been liaising with the Safe Military Housing Initiative. We 
have been liaising directly. We have been holding town halls, 
all of our, across all of our bases including Fort Drum, and 
getting that feedback and asking, you know, what they would 
like to see, so it has been a collaborative approach.
    Ms. Stefanik. Okay. And the rest, I will take the answer 
for the record because my time has expired.
    [The information referred to can be found in the Appendix 
beginning on page 191.]
    Mr. Garamendi. Thank you.
    Yes.
    Ms. Haaland. Thank you, Chairman.
    Mr. Garamendi. Ms. Haaland.
    Ms. Haaland. Thank you, Chairman. Thank you. And thank you 
all so much for coming. I appreciate you being here and taking 
the time to be with us today.
    My district is in New Mexico's First Congressional 
District. I have Kirtland Air Force Base and we have 365 days 
of sun per year and the climate is extremely dry and yet we 
have still had reports of mold there for whatever reason. It 
sounds kind of strange, but nonetheless that is one of the 
issues that my constituents have reported to me.
    I am a daughter of a 30-year career Marine so I grew up in 
military housing all along Southern California and in Virginia 
both and so I am, luckily I have nothing but good memories of 
those times unlike many of the families who, unfortunately, do 
not share that same--will not share the same memories that I 
do.
    So, I do hear some good things from my district. For 
example, I hear the new maintenance comment cards include 
information about the technicians coming into the homes as well 
as what work they are doing and that quality of the repair work 
has improved, their better communication and that is absolutely 
vital, and I am glad to hear that Hunt is taking these steps, 
also hear about the fall festival and other family activities 
and those are all good things. Unfortunately, substantial 
challenges remain. Families continue to receive inconsistent 
treatment and information from Hunt staff. So, my first 
question is for you, Mr. Ehle. Can you please share what steps 
your company has taken to improve and standardize customer 
service?
    Mr. Ehle. Yes, Representative. The lack of consistency is 
something that we are extremely focused on all across our 
portfolio and it is one of the reasons why we are focused on 
promoting standardization across not just our portfolio but the 
industry. So, we look at things like variances in response and 
completion standards, not just, you know, a property but across 
the portfolio and across the industry. We are very much in 
favor of doing that. In fact, we have already done that in our 
own portfolio is establishing a Hunt standard for a standard 
consistency, so our residents should start seeing that very 
shortly.
    You know, in terms of our environmental concerns, 
environmental concerns are on the rise. In the last couple of 
years we have seen mold in ways to the extent that we haven't 
seen in a long, long time, primarily caused by some extreme 
climatic conditions that haven't historically been seen, but I 
don't think that is going to change in the future.
    So, we are beefing up our environmental expertise on site 
and at the corporate level. We are beefing up our environmental 
training for our maintenance techs. We are adding maintenance 
techs. We are adding QA/QC [qualilty assurance/quality control] 
professionals to mainly ensure quality of work completion and 
we have made a great deal of progress in filling all those 
positions. And then, of course, the increased training across 
all of our people.
    Ms. Haaland. Thank you. Thank you.
    I would like to turn to the issue of mold and thank you for 
raising that yourself. It continues to be a major challenge and 
we have heard that from my colleagues. Many families want to 
have licensed and certified third-party experts conduct testing 
in their homes. Some have been told that Hunt and other housing 
companies won't accept these results or that third-party 
experts would not be permitted to enter the homes.
    Mr. Ehle, what is Hunt's policy regarding mold testing by 
licensed third-party experts?
    Mr. Ehle. We tend to follow the EPA [Environmental 
Protection Agency] guidelines related to testing and the EPA 
tends to advise against testing because they find it to be 
inconclusive. And examples from elsewhere in our portfolio is 
we have had tests on houses that don't readily apparently have 
mold that the tests come back high. On the other hand, we have 
been in houses where there is obvious mold all over a wall and 
the test comes back that there is no mold in the house. So, we 
have found that it is difficult to find a reliable test.
    Ms. Haaland. Would you allow families to seek a second 
opinion on the presence of mold in their homes by licensed, 
third-party experts?
    Mr. Ehle. We support anything that our residents choose to 
do pursue for evidentiary purposes. You know, again, we have 
found that testing is unreliable because it can go either way. 
It could be a false positive or a false negative.
    Ms. Haaland. Thank you. I would like to--how much time do I 
have?
    Chairman, I yield.
    Mr. Garamendi. Thank you.
    Ms. Stefanik.
    Ms. Stefanik. Thank you. One of the aspects of this crisis 
that I think is really important is prevention and mitigation. 
And at Fort Drum, we have a relatively young population of 
young soldiers, young military families, oftentimes this is the 
first time that they are responsible for their home that they 
are living in.
    How are you, Mr. Hickey, investing and sort of providing 
educational materials for those young family members and young 
service members to know to contact you before something gets to 
a crisis level that we have seen in some of these photos?
    Mr. Hickey. Yeah. Thank you, Congresswoman, for the 
question. Look, we actually share your same concern. Many 
times, they are 18-, 19-year-old people who have just moved out 
of home and they have to maintain a house and think about, you 
know, issues about avoiding damp, you know, conditions arising 
in a house and so forth. So, at every move and anytime someone 
moves into a residence, you know, it is a personal hand-over. 
We take a personal tour of the house with them. We explain some 
of the issues. We explain how things work in the property. We 
explain some of the maintenance obligations and how they go 
about looking for things that are problematic.
    We also do a 30-day and a 90-day check-in with them to make 
sure that, you know, how are things going, what are we doing, 
if they want any help in terms of looking after their home, and 
we also do a yearly inspection on all of the properties. So in 
all of those times, we seize the opportunity to help train them 
or help educate them or give them visibility as to what they 
can do better and we also tell them that the minute they have 
got a concern is to ring us right away and then we will come 
out and talk to them.
    So, there is a little bit education, we can do more of it 
and we would like to do more of it, but there is also training 
them to help themselves at the same time. So, you know, that is 
what we do, and we continue to invest in that.
    Ms. Stefanik. Thank you, yield back.
    Mr. Garamendi. Thank you.
    Mr. Brown.
    Mr. Brown. Thank you, Mr. Chairman, and I thank the 
committee, the subcommittee, for allowing me to participate in 
today's hearing. Let me just start by saying, look, I support 
the Military Housing Privatization Initiative. I support things 
like enhanced use lease on military installations. I support 
public-private partnerships. In Maryland we have done a lot of 
good things, from the Port of Baltimore, to the Purple Line, to 
travel plazas on interstate roads, but I support them only when 
we can ensure that we deliver quality, safety, reliable value 
products and services to the public, what the public demands 
and what they deserve. And in this case, when we are talking 
about privatizing military housing, the public is that very 
cherished public, our military families, and here we fell 
short, and my concern is this. I get that circumstances may 
have changed over the decade or so when we started the program 
to where we are today. I hear about the drawdown. I hear about 
the reductions in the BAH rates and how that put pressure on 
the ability to deliver quality. But what concerns me is that it 
took the courage of military spouses to come to Congress. The 
Pentagon didn't come to Congress and say we have a problem. You 
didn't come to Congress and say we have a problem. The 
framework, the model, the formulas that we based these 
agreements on years ago doesn't work because of a changed 
environment. Instead, military families got squeezed and it was 
military spouses who stepped up, and that is a shame on you. It 
is a shame on the Pentagon, and we have got to fix it.
    Mr. Picerne--did I get that right, Picerne? Close enough? 
Yeah. In February of 2019, earlier this year, at a SASC hearing 
you stated, we hire world-renowned specialists at no cost to 
the government to renew our mold and mildew procedures so that 
here too we are living up to the gold standard. Yet, today, you 
are now saying it is ``going to take some time to get back to 
the gold standard of communication and service that residents 
enjoyed in the early years of our MHPI partnerships.''
    Why have you--this is a question--why have you not been 
able to return to the gold standard that you promised to 
Congress and, more importantly, to our service members? Why has 
your position changed?
    Mr. Picerne. Mr. Congressman, our position has not changed. 
We endeavor to return to the gold standard. As I mentioned in 
my testimony, the gold standard really will be when a deployed 
soldier is able to call back, which is one of the tenets that 
we founded our business on, will call back from forward 
deployment and talk to his family or her family about what is 
happening in their lives and not deal with homeowner or home 
issues.
    We are getting closer and closer back to that standard. We 
are not there yet. I don't want to----
    Mr. Brown. Let me ask you this question.
    Mr. Picerne [continuing]. I also don't want to accept the 
fact that we got there because it is an ever----
    Mr. Brown. Thank you. And let me ask you this question. At 
Fort Meade, Maryland--and you had mentioned in your testimony 
today that town halls and greater communication with service 
members is a big part of it and their families. It is my 
understanding that at least one service member has been denied 
access to those town halls where those communications--are you 
familiar with that?
    Mr. Picerne. Congressman, I am not familiar with that.
    Mr. Brown. Okay. I would ask you, please, to familiarize 
yourself with that so that when we say that service members are 
in both formal and informal communications with you that that 
means all service members. Mr. Chairman, I would ask unanimous 
consent to enter into the record a letter that I have sent 
today to the installation commander at Fort Meade asking the 
garrison commander, Colonel Spragg, to really step up his 
oversight at Fort Meade, because I really believe that you guys 
are not even making forward progress as you had committed 
earlier this year. Without objection, Mr. Chairman, can we 
enter this into the record?
    Mr. Garamendi. Without objection, is my turn. There being 
no objection.
    Mr. Brown. Thank you.
    Mr. Garamendi. So, ordered.
    [The information referred to can be found in the Appendix 
on page 111.]
    Mr. Brown. Another question. Several of the service members 
that are stationed at Fort Meade have conveyed to me that they 
have experienced direct retaliation from your company in 
response to their attempts to resolve maintenance issues with 
their homes. These behaviors include obscene gestures, drive-by 
harassment, denying access to the resident response group, 
which I just mentioned, and a refusal to address maintenance 
issues until service member receives a PCS [permanent change of 
station].
    First of all, are you aware of that? If so, whether you are 
or are not, do you condone this behavior? And, finally, what 
actions are you going to take to ensure that harassment 
immediately ceases?
    Mr. Picerne. So, Congressman, we absolutely take any form 
of retaliation, retribution, or harassment seriously and do not 
condone that behavior. I am not aware of any specific cases 
where that has taken place. I will look into it immediately and 
I will report back to you once we have our findings.
    Mr. Brown. Well, I appreciate that because I mean these are 
serious allegations. And, look, when military families are 
stepping up and just protecting their own rights, they 
certainly do not warrant retaliatory measures. With that, Mr. 
Chairman, I yield back.
    Mr. Garamendi. Thank you, Mr. Brown.
    Ms. Escobar.
    Ms. Escobar. Thank you so much, Chairman. I am very 
grateful for this hearing. Thank you to our panelists. I 
appreciate your presence here. I want to also recognize and 
thank the military families who have expressed so much courage 
in the face of potential retaliation and after years of 
frustration and incredible difficulty. Thank you all so much 
for being here. I am very, very grateful for your strength and 
your courage.
    The roundtable that we had with military families--and I 
have had some of these conversations with you all personally, 
not everyone but with most of you. Those conversations at the 
roundtable were shocking, heartbreaking, difficult to hear and, 
to be honest, infuriating. And I am very grateful that there 
has been a spotlight placed on all of this and that there has 
been a demonstrated desire to preserve the private-public 
partnership but to improve it in order to sustain it and make 
sure that we continue it.
    Mr. Taylor, we had a conversation about all of this, but as 
I mentioned to you all in my office, what was particularly 
troubling on top of the many issues that families brought 
forward, issues that literally meant that people's lives were 
upended, that health was put at risk, children were put at risk 
through mold and through everything else, what was particularly 
troubling for me was the fraud allegations. And we talked about 
everything that you all are doing to not just remedy but to 
investigate and I appreciate the investigation. But I am going 
to ask you here in this hearing publicly the same thing that I 
asked you in my office and this is about accountability, 
because too often accountability is swept under the rug or as I 
mentioned to you, lower-level employees sometimes are fired, 
but the high-paid, high-level folks who should have known and 
who should have created a culture of accountability remain 
untouched.
    So I am going to ask you here in this hearing what I asked 
you privately, which is I would like to know the number of 
dismissals that have occurred as a result of the fraud 
allegations, any other disciplinary actions that have been 
taken, and how will leadership, how far up the chain will that 
accountability go, how will leadership be held accountable?
    And if you could answer all of those questions for me, I am 
not asking for names of folks. I am not asking for you to 
disclose anything that is in personnel files. This is important 
to understand in terms of accountability, for me, the general 
information, please.
    Mr. Taylor. Thank you, Congresswoman. And I do recall the 
conversation and it gave me an opportunity to go back and 
interrogate our information so that I would be prepared to 
respond. Before I give you the number, I will just say this and 
I will repeat a comment, a remark that I made earlier. We are 
all accountable. We are all accountable to provide the service 
that we are entrusted to provide. It doesn't matter where we 
sit in the organization.
    Since the allegations of fraud were levied earlier this 
year, you know, I went back and I asked our staff to look at 
how many folks that were on our staff were let go because they 
didn't comply with our policies, procedures, our code of 
conduct, because that is really at the heart of our 
organization. If we don't have staff members that are willing 
to follow those policies and procedures, that is an obvious 
weakness in any organization.
    And since the beginning of this year, we have found 17 
instances of where we have let people go because they were not 
complying with the standards that we have set for our 
employees. Where they sit in the organization, most of--from, 
without naming specific positions, there were managers that 
were let go. Those folks were at project sites, I grant you.
    I will tell you this, that, and again to reiterate a 
comment I made earlier, regardless of what the investigation 
reveals, if it identifies wrongdoing by any member of our 
staff, it doesn't matter if it is at the top of the 
organization, the middle of the organization, or wherever it 
sits, rest assured that we will take the appropriate action to 
make sure that those folks no longer are employed by our 
company.
    Ms. Escobar. Thank you. And I am just about out of time, 
but I will just say to all of you, it will be very important 
that the improvements that you have made that you report back 
to us. We need to know the number of calls, the number of 
people using the apps, et cetera, that we need to see within a 
time certain a reporting back, complete transparency, because 
that is the only way that we can hold you all accountable as 
well as hold ourselves accountable.
    Mr. Chairman, I yield back.
    Mr. Garamendi. Thank you, Ms. Escobar.
    Votes have been called, so I am just going to wrap it up 
with a couple of comments. I have noticed that the quality of 
questions from both sides here have asked most everything I 
would have asked, but I want to make a couple of comments. 
First of all, this hearing is one of a series. We will not let 
this issue go as long as, I am sure, the members of this 
committee are still Members of the House of Representatives we 
are going to stay on this. And, certainly, the committee will, 
certainly during my chairmanship and I am sure should that 
lapse and somebody else has it, it will carry on.
    So be aware, gentlemen. And for those who are not here that 
are part of this system, they too are going to be held 
accountable along the lines of the questions asked by the 
committee. Two things, or several things need to be noted. 
First of all, we knew right at the outset that part of the 
problem was that the base commanders did not take 
responsibility. That is changing. That needs to be addressed. 
The Pentagon is well aware of it from the previous Secretary 
all the way down the line and we will see to it that that 
accountability remains within the military and the base 
commanders.
    Secondly, there will be a bill of rights. It is in final or 
near-final form. We have not had a chance to review it. I am 
told the Pentagon is awaiting the passage of the NDAA and the 
final version of it, which may have some impact on the bill of 
rights itself. But it will be forthcoming, and it will in many 
ways deal with many of the issues that we have heard here 
today.
    Secondly, the question of the lease contracts themselves, 
we will push that all leases across the entire military reach 
the highest standard of any State lease, a homeowners' and 
tenants' laws and the highest standard, which I am told might 
be Massachusetts, but I claim California. We will see. If any 
of the members think that their tenant rights are better in 
North Carolina, well, bring it forward and we will see. But in 
any case, we will try to achieve consistent with the 
multiplicity of contracts that do exist between the military 
and the private housing providers. We will make sure that the 
lease contracts protect the tenants so that tenants will be in 
the first order.
    Secondly, many questions about metrics, how do we observe 
quality or lack thereof across the whole range of issues. Those 
metrics are under review and I would ask any member that has 
ideas about what should be in those metrics to bring it to us 
and we will drive that forward. Finally, with regard to the 
role of the tenants and the communities themselves, there are 
efforts underway on many of the bases, but I suspect not all, 
that there be formed within the homeowning, excuse me, the 
rental community or the renters' programs in which they can 
participate. The word ``PTA'' was used here. I am not sure that 
that is the best model, but it certainly speaks to the 
involvement of the families working together to assure that 
their issues are fully dealt with at the base level and, if 
necessary, here in Congress.
    So, I think that covers many of the issues. Mr. Lamborn, 
any further thoughts?
    Then this meeting is adjourned and before I adjourn, we are 
coming back, folks. We will do these hearings every 4 months or 
so, so we will be back in the early spring for a review of 
where we are, and we will ask the services as well as the 
owners of the privatized housing. We are adjourned.
    [Whereupon, at 2:27 p.m., the subcommittee was adjourned.]

    
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                            A P P E N D I X

                            December 5, 2019

     
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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            December 5, 2019

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                   DOCUMENTS SUBMITTED FOR THE RECORD

                            December 5, 2019

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              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                            December 5, 2019

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            RESPONSES TO QUESTIONS SUBMITTED BY MS. HOULAHAN

    Mr. Picerne. Over the last year, our property management group's 
policy toward displaced families has evolved and been standardized 
across our portfolio. Operations Directors at each installation have 
the authority to make reasonable adjustments to our policy as is 
determined to be appropriate upon consultation with our partners in the 
Army and Air Force. Under all circumstances, we provide residents with 
alternate housing, including either a fully furnished hospitality suite 
on post or a hotel on or off-post as available, as well as an allowance 
for food and personal items. If provided a hospitality suite on post, 
then we may reimburse the family's BAH on a prorated basis depending on 
how long they have been displaced. We only ask that families move into 
a hotel suite if a fully furnished on-post hospitality suite is 
unavailable, and if that is necessary, will reimburse them 100% of the 
daily BAH rate for all days they are displaced, as well as provide a 
per diem for food, additional expenses, and for pet lodging if 
necessary. We expect that this policy will continue to evolve, as we 
are working with the Services and other MHPI partners to standardize 
our policies pursuant to Congressional direction in the recently-passed 
National Defense Authorization Act for 2020. I have attached a copy of 
our property management company's current standard operating procedures 
with respect to lead-based paint and suspected mold. Please note that 
these policies are also subject to revision as we, along with other 
MHPI partners, continue to work with the Services to developed 
standards policies and procedures.   [See page 18.]
    [The documents referred to are retained in the committee files and 
can be viewed upon request.]
    Mr. Picerne. ``If a family's personal belongings are damaged or 
destroyed due to conditions in a home that our property management 
group has not properly addressed, we will work with them to ensure that 
they are compensated. We strongly encourage all of our residents to 
obtain renters insurance, which will typically cover costs to replace 
belongings damaged by weather, fire, and other common events. But, in 
instances when a renter does not have insurance, or where insurance 
does not cover damage, we will work with the resident to clean 
belongings that we can, and replace those that cannot be preserved.''   
[See page 18.]
    Mr. Ehle. First and foremost, our goal at Hunt Military Communities 
(``Hunt'') is to provide safe, healthy, and quality homes for military 
families. To that end, Hunt has reviewed its policies and procedures 
to, among other things, ensure close adherence to environmental 
management plans, including mold operations and maintenance plans. 
These plans address remediation of environment-related housing issues 
and ensure that such issues are being handled in a consistent manner 
with appropriate oversight from a corporate level. Hunt has also 
enhanced and reinforced the training requirements of its maintenance 
technicians for environmental conditions and, when necessary, deploys 
licensed and certified third-party environmental experts. Hunt has also 
added in-house environmental positions to augment support, oversight, 
and compliance related to addressing environmental matters when they 
arise in our homes.
    Hunt's operations and maintenance plans for lead-based paint, mold, 
and asbestos-containing material follow the published guidance of the 
U.S. Environmental Protection Agency (``EPA''), Centers for Disease 
Control and Prevention, and applicable state regulatory agencies. 
Prescriptive remediation/abatement procedures are performed in 
accordance with guidance documents and standards, such as the Institute 
of Inspection, Cleaning and Restoration Certification (``IICRC'') S500-
Standard and Reference Guide for Professional Water Damage Restoration, 
IICRC S520-Standard and Reference Guide for Professional Mold 
Remediation, the EPA National Emission Standards for Hazardous Air 
Pollutants, the Asbestos Hazard Emergency Response Act, and EPA's 
Renovation, Repair, and Painting Rule.
    Hunt believes it is important to educate its residents on health- 
and safety-related issues. Upon move-in, we affirmatively provide new 
residents with health and safety information regarding moisture and 
mold, lead-based paint, asbestos, radon, and/or pesticides. We have 
also redesigned for greater visibility and expanded the content of the 
Hunt Safety Zone, an online library of safety information for residents 
that is regularly updated with new or seasonally-specific information.
    As part of its mission to keep its homes in good condition, Hunt 
has an extensive inspection and preventative maintenance program at its 
properties to ensure the homes are meeting applicable standards. 
However, we recognize that there is no such thing as maintenance-free 
housing and that issues will inevitably arise that must be remedied. In 
these instances, we strive to address the situation in a professional, 
transparent, and timely manner, with a focus on resident safety.
    We classify resident-reported issues that pose an immediate danger 
to life, safety, or health as ``emergencies,'' and we strive to respond 
in one hour or less; other work orders are classified as ``urgent'' or 
``routine'' with priority-appropriate target response and completion 
times. If the nature of the repairs requires a resident to be out of 
their home during a repair for a night or more, we will secure 
temporary accommodations and may provide financial support to ensure 
that the resident is not paying out-of-pocket during this time, for 
example, by providing gift cards for meals or rent concessions. 
Recognizing that confusion has arisen as a result of inconsistent 
displacement accommodations, we are collaborating with the Services in 
their efforts to establish a uniform resident displacement policy. We 
fully support the adoption of such a policy across all Military Housing 
Privatization Initiative (``MHPI'') communities to establish 
consistency no matter where residents reside, and to avoid confusion 
and missed expectations.
    Hunt also supports a number of other industry-wide uniform 
initiatives to promote the safety and health of residents with respect 
to environmental conditions, and to provide for a more consistent 
living experience across the entire MHPI portfolio, including:
      A uniform approach to health and environmental 
inspections;
      A uniform moisture and mold program designed in 
conjunction with licensed and accredited specialists;
      Implementation of a radon testing program in conjunction 
with the DOD;
      Developing a process to identify, record, and resolve 
environmental health hazards that is consistent with EPA and DOD 
standards;
      Conducting annual training for employees on the 
identification and remediation of environmental hazards; and
      Creating standard operating procedures to inspect and 
remediate rodent waste in attic spaces.
  [See page 18.]
    Mr. Ehle. Compensation for families when their home goods are 
damaged or destroyed depends on the particular circumstances. When, and 
if, appropriate, Hunt may pay to clean or replace personal belongings.   
[See page 18.]
    Mr. Hickey. [No answer was available at the time of printing.]   
[See page 18.]
    Mr. Hickey. [No answer was available at the time of printing.]   
[See page 18.]
    Mr. Taylor. Balfour Beatty Communities' lead-based paint (LBP) 
management policy describes policy and procedure for work around and 
handling interior and exterior surfaces know to contain lead-based 
paint. The policy also outlines procedures for compliance with LBP 
disclosure and Renovation, Repair and Painting (PRP) regulations. A 
copy of our policy is provided as Attachment A.
    [The document referred to is retained in the committee files and 
can be viewed upon request.]
    We also maintain a mold management policy, which outlines our 
policy and procedure regarding mold-related work orders submitted by 
residents. A copy of this policy is provided as Attachment B.
    [The document referred to is retained in the committee files and 
can be viewed upon request.]
    In certain circumstances, a tenant may need to be temporarily 
relocated when repairs or maintenance are so significant that the 
rental unit is unable to be occupied while work is undertaken. We 
recognize the importance of having a comprehensive policy and a 
consistent approach that outlines clear guidelines for managing 
resident displacements across our military housing portfolio. A copy of 
our Temporary Relocation Policy is provided as Attachment C.
    [The document referred to can be found in the Appendix on page 
113.]
    While this information reflects BBC's Temporary Relocation Policy, 
we are actively working with the Department of Defense and Services to 
develop uniform displacement policies that ultimately may be applied 
across all Military Housing Privatization Initiative (MHPI) projects.   
[See page 18.]
    Mr. Taylor. To the extent Balfour Beatty Communities is determined 
to be at fault with respect to the damage or destruction of any 
personal resident property, we would seek to provide reasonable 
compensation to residents.   [See page 18.]
    Mr. Bliss. Attached is a copy of Lincoln Military Housing's Water 
Intrusion/Mold Operations and Maintenance Plan. Lincoln commissioned an 
independent third party mold expert to review this policy in 2019 and 
it was found to meet, and in most cases exceed, industry standards in 
every respect. Lincoln's Lead Based Paint Operations and Maintenance 
Plans are site specific, and a representative sample is attached here.
    [The documents referred to can be found in the Appendix beginning 
on page 116.]
    With regards to displacement, all of Lincoln's projects provide 
allowances for residents who have been displaced from their homes 
through no fault of the tenant, to include covering the costs of 
temporary lodging in every case, and per diem for incidentals and meals 
where appropriate. I am also pleased to report that Lincoln Military 
Housing, in collaboration with the other privatized military housing 
partners, has been working towards a standardized displacement policy 
to ensure consistency across each of our projects, and the industry, 
with regards to displacement allowances. This policy will be aligned 
with the requirements in the 2020 NDAA, subject to additional 
requirements in state and local law, and we expect it to be rolled out 
industry-wide in the next few months.   [See page 18.]
    Mr. Bliss. This is dependent on the cause of the damage. If the 
damage is the result of a failure of a system in the home (roof, 
appliance, etc) that is included in the lease, an incident report will 
be completed and the resident's items will be covered under our 
insurance policy. If the failure is a natural disaster or the result of 
an action attributed to the resident (i.e. house fire with a report 
indicating resident responsibility, flood from a storm, etc), the 
replacement cost would be the resident's responsibility, just as it is 
in the economy where 80% of service men and women live today. We have 
consistently worked with families and helped coordinate with those who 
have personally owned renter's insurance.   [See page 18.]
                                 ______
                                 
            RESPONSES TO QUESTIONS SUBMITTED BY MS. STEFANIK
    Mr. Picerne. We agree that empowering and enabling residents to 
raise any concerns that they may have is the best way to ensure that we 
are hearing their concerns, and meeting their needs. We have taken a 
variety of steps to better serve residents at each of the installations 
where we manage military family housing, including working with our 
Army and Air Force partners to establish resident focus groups, 
bringing back local call centers to help coordinate maintenance work 
directly with residents at each installation, establishing the Corvias 
Resident Portal to allow 24/7 online access to work order submission 
and status, and hiring resident Ombudsmen to work directly with 
residents to address their concerns. We will continue to work with our 
partners to ensure that all of our residents are afforded every 
opportunity to exercise their rights, and that we are providing the 
gold standard of service that our residents deserve.   [See page 21.]
    Mr. Ehle. Hunt has been a leading voice for ongoing industry-wide 
reform and standardization, and supports a number of initiatives to 
standardize and improve the MHPI program in partnership with the 
Services, including a uniform resident lease, a resident bill of 
rights, resident responsibilities, uniform dispute resolution 
guidelines, and a uniform resident displacement policy.
    Hunt recognizes and appreciates the unique challenges our military 
families face and Hunt is committed to ensuring our families are 
afforded an equal or better experience than residents may find in the 
conventional rental market. Each Hunt resident enters into a resident 
lease approved by our military partners that affords our military 
families detailed rights and obligations similar to those found in the 
conventional rental market, yet recognizing and addressing the unique 
circumstances of living on or in the vicinity of a military 
installation, including the military policies and procedures that 
govern the installation and its residents. For example, Hunt lease 
forms generally provide residents with a detailed description of, among 
other things, their monthly rent, the term of their lease, the 
utilities included in their monthly rent, move-in/moveout procedures, 
the circumstances under which a resident may terminate their lease 
early, conditions under which pets may occupy the housing unit, the 
delineation of maintenance and other responsibilities between Hunt and 
the resident, conditions under which Hunt may enter the housing unit, 
procedures for residents to submit maintenance requests, community 
amenities, conditions under which a resident may operate a business 
from their home, and the process for landlord-resident dispute 
resolution.
    With respect to our goal to provide safe, healthy, and quality 
homes for military families, we measure our success in a number of 
ways. For example, we look at whether military families are choosing to 
reside in Hunt homes rather than in other housing in the marketplace, 
as well as customer satisfaction via resident surveys. We have 
implemented an enhanced resident survey tool run by a third party, 
SatisFacts, to measure customer satisfaction at move-in, move-out, and 
after work order completion. It is a very quick 5-star survey that is 
automatically sent to the resident at the conclusion of each of these 
events to ask the resident about their satisfaction. The resident 
completes the survey, and the results go immediately to the site 
management team at the resident's property. If the response yields a 
score of less than 3.5 (in the SatisFacts scale, a 3 is ``Satisfied''), 
the Community Director at the property is to contact that resident the 
same day to ascertain where we fell short of expectations so we can 
better resolve the issue and make improvements going forward.   [See 
page 21.]
    Mr. Taylor. Balfour Beatty Communities believes that all military 
housing residents are entitled to:
      A well-maintained and comfortable home
      A clean, attractive community and well-maintained amenity 
spaces
      Responsive, knowledgeable and friendly customer service
      Convenient methods to communicate with our team, express 
concerns and provide feedback
      Treatment with integrity, respect and professionalism by 
our team at all times, including honest and straightforward 
communications
      Fair treatment within Fair Housing guidelines
    To continuously ensure our residents have the best possible living 
experience, we send out a comprehensive Resident Satisfaction Survey 
annually that is designed to gather your opinions, ideas and concerns 
regarding our community, service and staff. In addition, we issue 
quality check surveys after move-in and every completed work order to 
confirm our performance has met or exceeded your expectation and there 
are no outstanding issues or concerns.
    Any resident who is not satisfied with their living experience with 
us at any of our military housing communities is encouraged to reach 
out to our senior management team via our BB Cares Helpline. The BB 
Cares Helpline is a dedicated resident relations system providing 
residents with direct assistance from our corporate management team.
    We also are actively working with the Department of Defense and 
Services to develop a uniform bill of rights that will be incorporated 
into resident leases and applied across all Military Housing 
Privatization Initiative (MHPI) projects.   [See page 21.]
    Mr. Bliss. Lincoln Military Housing has recently, or previously, 
implemented the below provisions outlined in the NDAA/DOD proposed 
Tenant Bill of Rights.

Proposed Military Housing Privatization Initiative Tenant Bill of 
Rights

     1.  The right to reside in a housing unit and a community that 
meets applicable health and environmental standards.
     2.  The right to reside in a housing unit that has working 
fixtures, appliances, and utilities and to reside in a community with 
well-maintained common areas and amenity spaces.
     3.  The right to a written lease with clearly defined rental terms 
to establish tenancy in a housing unit, including any addendums and 
other regulations imposed by the Landlord regarding occupancy of the 
housing unit and use of common areas--LMH has been the lead on 
assisting Partners and the DOD with the appropriate language.
     4.  The right to have sufficient time and opportunity to prepare 
and be present for move-in and move-out inspections, including an 
opportunity to obtain and complete necessary paperwork.
     5.  The right to report inadequate housing standards or deficits 
in habitability of the housing unit to the Landlord, the chain of 
command, and housing management office without fear of reprisal or 
retaliation, including reprisal or retaliation in the following forms: 
(A) unlawful recovery of, or attempt to recover, possession of the 
housing unit; (B) unlawfully increasing the rent, decreasing services, 
or increasing the obligations of a Tenant; (C) interference with a 
Tenant's right to privacy; (D) harassment of a Tenant; (E) refusal to 
honor the terms of the lease; or (F) interference with the career of a 
Tenant.--While we can support this, we feel examples and more detailed 
definitions are required.
     6.  The right of access to a Military Tenant Advocate or a 
military legal assistance attorney, through the housing management 
office of the installation of the Department at which the housing unit 
is located to assist in the preparation of requests to initiate dispute 
resolution.
     7.  The right to receive property management services provided by 
a Landlord that meet or exceed industry standards and that are 
performed by professionally and appropriately trained, responsive and 
courteous customer service and maintenance staff.
     8.  The right to have multiple, convenient methods to communicate 
directly with the Landlord maintenance staff, and to receive 
consistently honest, accurate, straightforward, and responsive 
communications.
     9.  The right to have access to an electronic work order system 
through which a Tenant may request maintenance or repairs of a housing 
unit and track the progress of the work.
    10.  With respect to maintenance and repairs to a housing unit, the 
right to the following: (A) prompt and professional maintenance and 
repair; (B) to be informed of the required time frame for maintenance 
or repairs when a maintenance request is submitted; and (C) in the case 
of maintenance or repairs necessary to ensure habitability of a housing 
unit, to prompt relocation into suitable lodging or other housing at no 
cost to the Tenant until the maintenance or repairs are completed.  
    11.  The right to receive advice from military legal assistance on 
procedures involving mechanisms for resolving disputes with the 
property management company or property manager to include mediation, 
arbitration, and filing claims against a Landlord.
    12.  The right to have reasonable, advance notice of any entrance 
by a Landlord, installation housing staff, or chain of command into the 
housing unit, except in the case of an emergency or abandonment of the 
housing unit.
    13.  The right to not pay non-refundable fees or have application 
of rent credits arbitrarily held.
    14.  The right to expect common documents, forms, and processes for 
housing units will be the same for all installations of the Department, 
to the maximum extent applicable without violating local, State, and 
Federal regulations.   [See page 21.]

?

      
=======================================================================


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                            December 5, 2019

=======================================================================

      

                  QUESTIONS SUBMITTED BY MS. HOULAHAN

    Ms. Houlahan. It is our understanding the agreements made between 
the services and public private partner give majority ownership to the 
P3. We are aware that DOD cannot unilaterally change the deal 
agreements they have with private companies and every contractual 
change must be negotiated and agreed upon by the housing companies.
    What liberties are you afforded as the majority partner in the 
partnerships? What decisions are you allowed to make as a company that 
the services may not have say in?
    Do the services have a say in who is subcontracted out to do 
maintenance work/renovations? Can the services fire a subcontractor or 
property manager hired by the P3?
    If you had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, how would you handle the future of that relationship?
    Mr. Picerne. We work closely with our Army and Air Force partners 
with respect to all of the substantive operational decisions with 
respect to housing on each of the military installations we serve. Our 
partners are directly involved in ongoing budget decisions, have direct 
oversight over all major expenditures, and receive daily updates with 
respect to our work with residents. While our partners do not typically 
schedule maintenance, engage in direct leasing activity, or otherwise 
direct our employees' day-to-day activity, they do maintain regular 
operational oversight, and receive daily updates regarding our work. 
They have access to our maintenance and leasing systems, and regularly 
coordinate with us regarding work undertaken by contractors on behalf 
of the partnerships. The specific obligations of each Member may vary 
depending on the specific partnership at issue. These roles and 
responsibilities are spelled out in the Operating Agreement, Property 
Management Agreement, and other agreements applicable to each of the 
partnerships.
    A Service may, in accordance with the agreement between the Service 
and the private MHPI partner, request that a contract between the MHPI 
project company (P3) and a subcontractor or property manager be 
terminated, and in such case, in accordance with the private MHPI 
partner's agreement with the Service, it is required to terminate that 
subcontract or property management agreement.
    The Services may request that the Partnership terminate a 
relationship with a contractor or subcontractor and Partnership will do 
so. If we had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, we would investigate anything that was appropriate for us 
to investigate directly, and await the results of any investigations 
conducted by Congress or other authorities, and then, after considering 
all facts and circumstances, determine the appropriate response and 
actions we'd take regarding the future of that relationship.
    Ms. Houlahan. The GAO recently found several concerning data 
anomalies in the work order systems for MHPI projects, including 
duplicates, closed out work orders prior to submission date, and work 
orders open for over 18 months. Additionally, there have been recent 
reports that Balfour Beatty employees have intentionally rigged work 
orders so their company could receive incentive fees.
    Were any of you, as senior leaders in your companies, aware of 
intentional data rigging to receive incentive fees? How can you ensure 
this will not happen moving forward?
    GAO also found that measures for satisfaction and quality of 
housing used were invalid measures. What have your companies done to 
update these metrics to ensure health and safety are accurately 
measured?
    Mr. Picerne. I was not aware of any intentional attempts to 
increase incentive fees by prematurely closing work orders prior to 
public allegations of such behavior on the part of Balfour Beatty. 
Since hearing of these allegations, Corvias has taken proactive steps 
to work with our Air Force and Army partners to ensure that work orders 
are being addressed and closed appropriately.
    While our Army and Air Force partners develop and deliver the 
satisfaction surveys used to evaluate our performance, we will continue 
to work with them to accurately measure resident satisfaction. We rely 
heavily on this data to help us better serve our residents, and we 
share your concerns that this data may not accurately reflect 
resident's opinions due to the specific questions, format, or delivery 
methods adopted by our partners. For this reason, in addition to the 
annual resident satisfaction surveys, we ask residents to complete a 
survey after every work order, and watch those results closely to 
ensure that we are responding to their needs.
    Ms. Houlahan. It is our understanding the agreements made between 
the services and public private partner give majority ownership to the 
P3. We are aware that DOD cannot unilaterally change the deal 
agreements they have with private companies and every contractual 
change must be negotiated and agreed upon by the housing companies.
    What liberties are you afforded as the majority partner in the 
partnerships? What decisions are you allowed to make as a company that 
the services may not have say in?
    Do the services have a say in who is subcontracted out to do 
maintenance work/renovations? Can the services fire a subcontractor or 
property manager hired by the P3?
    If you had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, how would you handle the future of that relationship?
    Mr. Ehle. Hunt's MHPI partnership agreements with its military 
partners generally do not specify the percentage interests owned by 
each of the partners. Accordingly, Hunt is not characterized as the 
``majority partner.'' The military partner is entitled to a majority of 
the remaining cash flow proceeds (after the payment of operating 
expenses, debt service and reserves) and the military partner exercises 
major decision rights over project decisions. Hunt typically manages 
the dayto- day operations of the privatized military housing project, 
subject to rights and controls afforded to the military partner. In 
addition, consistent with its role as ``day-to-day'' manager of these 
projects, affiliates of Hunt are responsible for property management 
and asset management at most of its properties. At certain properties, 
where Hunt and other private parties own an interest in the 
partnership, management of the project is delegated to Hunt's partner 
or a third party.
    Hunt works collaboratively with its military partners, including on 
maintenance work and renovations. Full transparency is a hallmark of 
these partnerships. Our military partners have multiple controls in 
place to oversee and monitor Hunt's performance, and we encourage such 
engagement. Hunt is subject to various reporting and inspection 
requirements that occur on a weekly, monthly, quarterly, and annual 
basis. Our military partners have access to our maintenance software, 
Yardi, and can review work orders and survey responses. They are also 
able to inspect homes and follow up directly with residents. Each of 
our military partners has its own unique requirements for reporting and 
inspection.
    For example, Hunt is required to provide monthly reports to its 
military partners on the financial health of the project, including an 
analysis of the approved annual operating budget. On a quarterly or 
semi-annual basis, Hunt conducts a meeting with military leadership at 
the base, command, and housing levels, as well as with the military's 
independent consultants. These meetings are intended to maintain open 
and consistent communication between the partners by facilitating 
discussion of the financial health of the project, sustainment of the 
project, resident issues, military partnership issues, events, 
occupancy, and/or strategic initiatives. On an annual basis, Hunt 
submits to its military partners, for example, (a) audited financials 
on a per-project basis, (b) verifications to uphold insurance, 
environmental, and document compliance, and (c) environmental reports 
relating to lead-based paint or asbestos-containing materials.
    Hunt's military partners on the projects also have extensive major 
decision and other approval rights. For example, Hunt generally must 
obtain approval from its military partners prior to encumbering or 
financing a project, distributing cash flow from a project, entering 
into or amending material project documents, including existing 
financing documents and management, construction and/or consultant 
agreements, or amending resident lease forms and related materials. The 
military partners also must approve the annual operational and 
renovation budgets for each project. In addition, among other 
deliverables, Hunt is required to provide detailed information on a 
project's operations, capital repair and replacement activities, 
executive home budgets, and long-term out-year sustainment plans for 
review and approval by its military partners and their independent 
consultants.
    Hunt is also subject to financial or other penalties if it fails to 
perform under its contracts. Under the terms of our project agreements, 
a military partner may terminate our agreements in certain situations, 
including, without limitation, if we are in material default of our 
obligations. Alternatively, if we are not in material default of our 
agreements, but we have, nevertheless, failed to meet performance 
expectations, a military partner may withhold all, or a portion of, our 
incentive fees.
    Hunt sometimes engages third-party subcontractors or vendors to 
provide services such as painting, HVAC maintenance, lawn care, and 
snow removal. The Managing Member of a project owner and affiliated 
entities has the right to engage contractors or subcontractors, subject 
to certain controls. These controls include, but are not limited to, 
(a) bidding requirements and consent rights for contracts exceeding 
specified amounts, and (b) specific requirements for contracts with 
affiliates.
    If we had a subcontractor who was not meeting its contractual 
obligations or facing allegations of fraud, waste, or abuse, we would 
take action to address the issue, up to and including terminating our 
relationship with that subcontractor, if warranted.
    Ms. Houlahan. he GAO recently found several concerning data 
anomalies in the work order systems for MHPI projects, including 
duplicates, closed out work orders prior to submission date, and work 
orders open for over 18 months. Additionally, there have been recent 
reports that Balfour Beatty employees have intentionally rigged work 
orders so their company could receive incentive fees.
    Were any of you, as senior leaders in your companies, aware of 
intentional data rigging to receive incentive fees? How can you ensure 
this will not happen moving forward?
    GAO also found that measures for satisfaction and quality of 
housing used were invalid measures. What have your companies done to 
update these metrics to ensure health and safety are accurately 
measured?.
    Mr. Ehle. We are not aware of any Hunt properties that are engaged 
in practices of the type alleged elsewhere in terms of ``off the 
books'' maintenance logs and deliberate falsification in order to 
obtain unearned incentive fees. Falsifying work orders would be wholly 
unacceptable and against our code of conduct.
    Because the privatization of properties that comprise the MHPI 
program took place over a 15- to 20-year period, the standards for 
response and completion of resident-initiated service requests vary 
greatly among the Services and across properties for a particular 
Service. At any given property, the applicable standards may simply be 
unclear. Hunt supports ongoing efforts to engage with the DOD and the 
Services to develop and adopt uniform, clear, and workable standards 
for all Services, across the industry, and at all properties. In the 
meantime, Hunt has adopted a company-wide ``Hunt Standard'' for work 
order response and completion. We expect these efforts to promote 
consistent and improved maintenance practices and performance.
    We have implemented an enhanced resident survey tool run by a third 
party, SatisFacts, to measure customer satisfaction at move-in, move-
out, and after work order completion. It is a very quick 5-star survey 
that is automatically sent to the resident at the conclusion of each of 
these events to ask the resident about their satisfaction. The resident 
completes the survey, and the results go immediately to the site 
management team at the resident's property. If the response yields a 
score of less than 3.5 (in the SatisFacts scale, a 3 is ``Satisfied''), 
the Community Director at the property is to contact that resident the 
same day to ascertain where we fell short of expectations so we can 
better resolve the issue and make improvements going forward. These 
satisfaction surveys also help us assess the extent to which we are 
achieving our goal to provide safe, healthy, and quality homes for 
military families.
    Ms. Houlahan. It is our understanding the agreements made between 
the services and public private partner give majority ownership to the 
P3. We are aware that DOD cannot unilaterally change the deal 
agreements they have with private companies and every contractual 
change must be negotiated and agreed upon by the housing companies.
    What liberties are you afforded as the majority partner in the 
partnerships? What decisions are you allowed to make as a company that 
the services may not have say in?
    Do the services have a say in who is subcontracted out to do 
maintenance work/renovations? Can the services fire a subcontractor or 
property manager hired by the P3?
    If you had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, how would you handle the future of that relationship?
    Mr. Hickey. As a standard fee for service provider, the Project 
Companies are vested with the day-to-day operations of administering 
the projects, including but not limited to qualifying the companies 
under applicable federal or state laws, paying its debts, refinancing 
its debts, contracting for various professional services such as 
managers, accountants, attorneys, and consultants, purchasing 
insurance, paying the Project Company's operating expenses in 
accordance with lockbox agreements and commencing or responding to any 
litigation. However, the Project Companies do not have unfettered 
rights to operate the project without the express consent and direct 
approval of our military partner with respect to most material matters.
    Despite being the managing or sole member of the respective Project 
Companies, the Military Services retain integral governance oversight 
and control over a litany of major issues impacting each Project 
Company through contractual rights contained in the various project 
documents. This is evident by the fact that the Project Companies are 
subject to many government consent rights and other limitations on what 
they can do under the terms of the negotiated ground leases, the 
respective company and project operating agreements for the Military 
Services, and the master development and management agreements under 
the respective Air Force deals. For example, the Project Companies have 
to obtain the approval from the pertinent Military Service to incur 
indebtedness (beyond certain permitted daily operating expenses), to 
execute any construction, development management, asset management or 
property management and maintenance agreements, to terminate or replace 
the contractors under those respective arrangements, to alter funding 
levels of certain operating and development accounts and reserves, to 
make any expenditure that deviates from already approved project budget 
and business plan by certain thresholds, to award any incentive fees, 
to change the guaranteed scope of work, to change the unit online 
schedule, to make any expenditure from the replacement reserve 
subaccount, and to enter into any affiliated contracts (which in any 
event must be on prevailing market terms to prevent self-dealing). The 
foregoing list represents merely an abbreviated version of some of the 
salient areas where the Project Companies are constrained from acting 
unilaterally; however, there are many more areas of control exercised 
by our Military Service partners, which we have not included in 
response to this inquiry.
    We are similarly constrained by what we can do under our financing 
documents (i.e., the loan agreements and trust indentures) with our 
lenders who frequently have consent rights with the respect to the same 
or similar matters as those examples noted above.
    Do the services have a say in who is subcontracted out to do 
maintenance work/renovations? Can the services fire a subcontractor or 
property manager hired by the P3?
    As the Military Services are not the contractual counterparties, 
they do not have a direct contractual right to fire such a service 
provider. However, the Military Services did require they approve such 
service providers and their negotiated form contracts be subject to 
service approval at each project's inception. In addition, on a number 
of Lendlease's projects, the Property Manager can be removed based on 
unsatisfactory performance, which gives the Military Service, recourse 
when appropriate. For instance, the Navy expressly reserves the right 
to send (or direct the Project Company to send) notices of 
dissatisfaction with such performance. If multiple notices of 
dissatisfaction are sent within a specific period, the Navy can then 
direct the Project Company to terminate and replace the Property 
Manager or the individual acting as the Director of Property 
Management. In addition to the foregoing, management agreements 
typically have termination rights for, among other things, the failure 
of the manager to perform in accordance with its contractual 
obligations.
    Furthermore, the Military Services have the right to approve any 
new asset management, property management and/or maintenance agreement 
to the property as a whole, unless the agreement can be terminated on 
thirty (30) days' notice or less without cost.
    If you had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, how would you handle the future of that relationship?
    In addition to the notices of dissatisfaction and potential 
termination process described above found in the projects, the 
agreements also provide for various performance metrics and we 
regularly audit our projects and have quarterly meetings with senior 
leadership in property management to address issues or problems that 
need to be escalated and rectified.
    We take allegations of fraud, waste or abuse very seriously.
    Any such allegations levied against one of the Project Company's 
subcontractors would be immediately and thoroughly investigated and if 
the allegations were proven to be true, we would pursue our rights to 
terminate the relevant contract. All of our vendor agreements include 
termination for cause provisions, which include matters such as breach 
for fraud or illegal conduct. Lendlease does not tolerate such 
behavior.
    Ms. Houlahan. The GAO recently found several concerning data 
anomalies in the work order systems for MHPI projects, including 
duplicates, closed out work orders prior to submission date, and work 
orders open for over 18 months. Additionally, there have been recent 
reports that Balfour Beatty employees have intentionally rigged work 
orders so their company could receive incentive fees.
    Were any of you, as senior leaders in your companies, aware of 
intentional data rigging to receive incentive fees? How can you ensure 
this will not happen moving forward?
    GAO also found that measures for satisfaction and quality of 
housing used were invalid measures. What have your companies done to 
update these metrics to ensure health and safety are accurately 
measured?
    Mr. Hickey. No. We are not aware of intentional data rigging to 
receive incentive fees.
    Lendlease has very robust policies and procedures in place to 
ensure that data rigging does not occur. We regularly assess and review 
these policies and procedures. For instance, it is standard operating 
procedure that each of the project teams verify preliminary data by the 
property/community manager before final submission to the applicable 
Military Service for billing/credit. Also, as stated previously, we 
have quarterly meetings with senior leadership in property management 
to learn of any issues they have encountered and to keep abreast of any 
concerns. In addition, we may, from time to time, elect to cause the 
books and financial operations of the Property Manager to be audited by 
an independent auditor that we select.
    As part of our incentive fee submission process, the Director of 
Property Management and their team prepare quarterly or semi-annual 
incentive fee submissions in accordance with the guidance provided by 
the Military Service partner. The submission package is then reviewed 
and approved by the Lendlease Project Director prior to submission to 
the local DOD partner for review and approval. This review process 
imposes multiple layers of verification to identify any potential 
inaccuracies or issues prior to final DOD leadership submission.
    Army: Each Project Company must submit documentation of incentive 
performance with a recommendation of score to the local Residential 
Communities Initiative (RCI) partner who reviews and provides feedback. 
The local Garrison Commander approves the package locally prior to 
project owner submitting to IMCOM a formal request for payment with 
ultimate signoff at the IMCOM level. Funding approval is based on a 
review of performance against DOD established performance metrics that 
are part of Project Company contractual agreements.
    Air Force: Each Project Company must submit documentation of 
incentive performance with a recommendation of score to the local HMO 
partner who reviews and provides feedback. The local Wing Commander 
approves the package locally prior to project owner submitting to AFCEC 
a formal request for payment with ultimate signoff at the AFCEC level. 
Funding approval is based on a review of performance against DOD 
established performance metrics that are part of Project Company 
contractual agreements
    Navy: The Project Company must submit documentation of incentive 
performance with a recommendation of score to NAVFAC partner who 
reviews and provides feedback. Funding approval is based on a review of 
performance against DOD established performance metrics that are part 
of Project Company contractual agreements.
    Measures to Ensure Accuracy in Submissions
    We have reviewed our policies, procedures and reporting systems 
with the goal to ensure our project teams are properly executing 
company policy, particularly around the service order reporting 
process. Here are a few examples of how our systems are designed to 
maintain the integrity of Service Order reporting:
      All resident work orders are generated directly in Yardi 
through a call center or via our Military Cafe portal/app to ensure 
they are created real-time directly by the resident;
      All technicians use mobile devices to track all 
activities including their time, parts, notes and work status. Their 
time is validated against the HRIS system, which is also electronic, to 
ensure time is captured accurately; and
      Resident receives an email and survey request upon 
completion of work order, which is system-generated
    Additionally, we have added new monthly reviews and tools, 
including a new Business Intelligence Dashboard that is reported to 
senior Lendlease executives as part of a monthly business review. This 
provides transparency and visibility to the senior most levels of the 
organization around work order response and completion times.
    Isolated Incident Disclosed
      Reverting back to the question raised above in 35A, after 
learning of the alleged incentive fee manipulation by another private 
developer in the media, we further assessed all our projects and 
learned of only one isolated incident at a project in fiscal year 2009 
where a community manager duplicated callback cards.
      This former employee of our property manager was 
attempting to expedite her work by transcribing survey card responses 
contemporaneously and directly to the feedback tracking sheets, rather 
than performing the required follow-up phone calls to residents in 
accordance with the transaction documents. This issue was identified 
during review and preparation of the fee package with the Lendlease 
Project Director prior to submission. It was based upon the verbatim 
wording of resident comments appearing in both comment cards from 
residents and feedback sheets during said quarter. The feedback call 
sheets for the quarter in question were discarded and none of the 
inaccurate data was reported to the Air Force or claimed as 
justification for incentive fee or other compensation. Nevertheless, we 
disclosed this finding to the Senate.
      Our process for preparation of our incentive fees 
includes the Director of Property Management and their team preparing 
the quarterly or semi-annual submissions. It is then reviewed and 
approved by the Lendlease Project Director and approved prior to 
submission to the local DOD partner for review and approval. This 
review process is how the above isolated incident was identified.
      While this was an anomaly, we include it in the interests 
of full transparency and to demonstrate how stringent our checks and 
balances are.
    GAO also found that measures for satisfaction and quality of 
housing used were invalid measures. What have your companies done to 
update these metrics to ensure health and safety are accurately 
measured?
    Lendlease has developed several new exception reports that 
proactively identify data anomalies so they can be researched and 
corrected in a timely fashion. As the GAO report pointed out, even with 
the best IT systems and enterprise software, the human element provides 
opportunities for data entry mistakes (dates transcribed incorrectly 
and spotty mobile coverage areas that may produce syncing errors 
between the technicians' mobile tablets and the database of record), 
which necessitates data validation. These new tools look for anomalies 
such as:
      Labor Finish before Call Date
      Labor Finish with no Start Date/Time
      Labor Start before Call Date
      Labor Start with no Finish Date/Time
      Labor Start with Future Date
      WO Completed with Future Date
      Labor Finish before Labor Start
    Though Lendlease has independently developed this report, we have 
offered this improved protocol to the Yardi platform so it may be used 
by other developers.
    Additionally, Lendlease has enhanced internal key performance 
indicator dashboards and reporting tools with a broadened review and 
distribution program. Lendlease uses business intelligence platforms 
through a proprietary solution to synthesize data between multiple data 
sources to evaluate customer experience, service order performance and 
other key metrics. We internally monitor qualitative metrics for 
service order satisfaction based on indicators of excellent service 
including open work order aging, repeat work orders, service order 
response and completion time averages, and work order exceptions.
    Lendlease has also been working with our Military Service partners 
and the other developers towards the modification and standardization 
of performance incentive metrics in order to provide consistent 
measures to assess resident satisfaction and our performance. These 
metrics provide objective focus on service order response and 
completion, resident feedback, preventive maintenance and focus on 
business success factors from within the annual survey rather than 
subjective criteria.
    Ms. Houlahan. It is our understanding the agreements made between 
the services and public private partner give majority ownership to the 
P3. We are aware that DOD cannot unilaterally change the deal 
agreements they have with private companies and every contractual 
change must be negotiated and agreed upon by the housing companies.
    What liberties are you afforded as the majority partner in the 
partnerships? What decisions are you allowed to make as a company that 
the services may not have say in?
    Do the services have a say in who is subcontracted out to do 
maintenance work/renovations? Can the services fire a subcontractor or 
property manager hired by the P3?
    If you had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, how would you handle the future of that relationship?
    Mr. Taylor. BBC is not the majority owner of the project companies 
that operate the Military Housing Privatization Initiative (MHPI) 
projects from an economic or control perspective. Each project has a 
set of legal agreements that govern the rights of the project owners 
and what actions require government and/or third-party lender approvals 
to enter into subcontracts, make changes to lease forms or policies and 
procedures that govern operation of the properties, or cause amendments 
to any of the project agreements themselves. As a result of the 
complicated structure of the MHPI projects and different terms 
negotiated on a project by project basis, it is difficult to address 
these questions without providing a distinct response for each of BBC's 
21 projects. In an attempt to address these questions on a universal 
basis, however, we provide the following:
    Generally, BBC is the manager/managing member of each project 
company, which means it has the responsibility to perform the day-to-
day management of the project (i.e., the power to make and execute 
contracts and agreements on behalf of the company; and the obligation 
to maintain the books and records of the company, to ensure compliance 
with the project agreements (i.e., ground lease, construction or 
renovation agreements, property management agreement, lease agreements, 
financing/lender agreements), and to enforce contractual rights against 
contractors or third parties). In addition, for each project, there are 
agreements that identify certain material matters or major decisions 
that require the government's consent, such as: approving the project's 
budget; permitting additional capital contributions to the project 
company; selling any assets of the project; refinancing the project; 
approving, terminating or amending any major project agreement 
(including the property management agreement and development 
agreement); expending project funds for capital repairs or replacement 
in excess of certain amounts outside of the approved budget; consenting 
to changes in scope of work under material construction or renovation 
agreements; entering into material contracts; approving or authorizing 
disbursements from project accounts under the project trust indenture/
lockbox agreement other than pursuant to the terms of those agreements; 
approving of contracts with affiliates that are not otherwise on market 
terms; and approving of certain material contractors). Since BBC is not 
permitted to make major decisions without the government's consent, it 
is not deemed as controlling the projects. In addition, it should be 
noted that the project's third-party lenders have similar rights to 
consent to the above-referenced material matters relating to the 
projects.
    Generally, the Services (and third-party lenders) are required to 
approve of any major contracts for capital repairs and replacements 
that are not otherwise approved in the annual project budget or where 
funding is through the reinvestment account of the project. Contracts 
for routine maintenance work/renovations are not required to be 
consented to by the Services unless they contain non-market terms or 
fail to meet the standards as required under the project agreements -
which contain minimum requirements for contract terms and insurance and 
require contractors to comply with applicable law, among other things. 
Where a subcontractor fails to perform its services in compliance with 
law or materially breaches its contract, it is the obligation of the 
property manager/project owner to ensure that the project enforces its 
rights to take action against the subcontractor (including possible 
termination after any relevant cure periods). The third-party lenders 
to the projects also have ``step-in'' rights under the property 
management agreement that enable them to take control of the property 
management/renovation services where the existing property manager is 
deemed in default.
    To the extent a subcontractor is underperforming or being alleged 
to have committed fraud, waste, or abuse, BBC would seek to investigate 
the matter; and where substantiated, the project owner would seek to 
enforce all remedies available under the contract or law in light of 
the facts and circumstances (including, as applicable, notice of 
default, right to cure and/or termination), as well as report any 
criminal behavior to government authorities. BBC incorporates 
provisions in each of its project agreements with contractors that 
require them to comply with a code of conduct and acknowledge they 
shall not participate in any criminal act or anti-competitive behavior, 
including, but not limited to, bribery, fraud or cartels. We also 
expect that subcontractors will comply with their own obligations to 
respond to Congress in connection with any invitation or subpoena to 
testify.
    Ms. Houlahan. The GAO recently found several concerning data 
anomalies in the work order systems for MHPI projects, including 
duplicates, closed out work orders prior to submission date, and work 
orders open for over 18 months. Additionally, there have been recent 
reports that Balfour Beatty employees have intentionally rigged work 
orders so their company could receive incentive fees.
    Were any of you, as senior leaders in your companies, aware of 
intentional data rigging to receive incentive fees? How can you ensure 
this will not happen moving forward?
    GAO also found that measures for satisfaction and quality of 
housing used were invalid measures. What have your companies done to 
update these metrics to ensure health and safety are accurately 
measured?
    Mr. Taylor. We have engaged Hunton Andrews Kurth LLP (Hunton) to 
investigate allegations that work orders were handled inappropriately 
and the way in which work orders were processed. To assist them in 
their investigation, Hunton has appointed PricewaterhouseCoopers 
Advisory Services LLC to perform a forensic audit work plan under AICPA 
consulting standards relating to our submission of requests for 
incentive fee payments. When broad allegations about the inappropriate 
handling of work orders were made in June 2019, we proactively reached 
out to the Department of Justice (DoJ) to notify them of Hunton's 
review. The DoJ subsequently issued a Civil Investigative Demand and we 
have been cooperating with their investigation. If it is determined 
that we did not properly earn incentive fees paid to us, we will refund 
those amounts. If the investigation determines wrong-doing by any 
member for our staff, we will take appropriate action. As this 
investigation is still ongoing, it would be inappropriate for us to 
comment any further on the subject matter at this time.
    To ensure confidence in our management of the work order process 
going forward, we also have undertaken an extensive internal review of 
our work order processes. Based on this review, we already have 
implemented several important changes and improvements across our 
military housing portfolio, including providing a mobile device app for 
residents to enter, track and sign-off on work orders, and changes to 
our staffing and remediation processes to ensure we have appropriate 
resources and checks and balances in place regarding management of our 
military housing portfolio. The findings from the Hunton investigation 
will be used to inform further decisions about improvements once the 
work is complete, which is expected to take several more months.
    With regard to the GAO findings, we are committed to working with 
the Services to design measurements for satisfaction and quality of 
housing that are considered appropriate. To that point, we have been 
reviewing proposed changes from the Services to the incentive fee 
performance metrics that apply to our projects. At this time, we 
already have agreed with the Department of the Army to a new 2020 
incentive fee metric plan, and to take actions necessary to update our 
project agreements to reflect this new plan. We expect to negotiate 
similar updated plans with the Departments of the Air Force and the 
Navy as well.
    Ms. Houlahan. It is our understanding the agreements made between 
the services and public private partner give majority ownership to the 
P3. We are aware that DOD cannot unilaterally change the deal 
agreements they have with private companies and every contractual 
change must be negotiated and agreed upon by the housing companies.
    What liberties are you afforded as the majority partner in the 
partnerships? What decisions are you allowed to make as a company that 
the services may not have say in?
    Do the services have a say in who is subcontracted out to do 
maintenance work/renovations? Can the services fire a subcontractor or 
property manager hired by the P3?
    If you had a subcontractor who was underperforming or being alleged 
of fraud, waste, abuse or called to testify in front of Congress for 
these issues, how would you handle the future of that relationship?
    Mr. Bliss. The services do not have a say in who is subcontracted 
to do maintenance work or renovations, nor can they fire a 
subcontractor, as the property manger is solely responsible for the 
hiring and oversight of the subcontractor. Under the project documents, 
to which the services are a party, the partnership can fire the 
property manager. Upon discovery of the underperformance or alleged 
fraud, waste or abuse by a subcontractor, the subcontractor would be 
terminated. In the case of a subcontractor called to testify in front 
of Congress, that fact and the substance of their testimony would have 
no bearing on Lincoln Military Housing's relationship with that 
subcontractor.
    Ms. Houlahan. The GAO recently found several concerning data 
anomalies in the work order systems for MHPI projects, including 
duplicates, closed out work orders prior to submission date, and work 
orders open for over 18 months. Additionally, there have been recent 
reports that Balfour Beatty employees have intentionally rigged work 
orders so their company could receive incentive fees.
    Were any of you, as senior leaders in your companies, aware of 
intentional data rigging to receive incentive fees? How can you ensure 
this will not happen moving forward?
    GAO also found that measures for satisfaction and quality of 
housing used were invalid measures. What have your companies done to 
update these metrics to ensure health and safety are accurately 
measured?
    Mr. Bliss. Lincoln Military Housing takes very seriously our role 
in ensuring the integrity of the MHPI program and our senior leadership 
has no knowledge of employees intentionally manipulating work orders in 
an effort to receive incentive fees. In 2008, Lincoln Military Housing 
did independently identify one employee, a mid-level manager, who 
manipulated data to receive a personal bonus. That employee was 
terminated, and to ensure that Lincoln did not unfairly receive 
incentive fees as a result, Lincoln reported it to the Navy and waived 
our fee for that time period. We have additional controls in place to 
ensure that data on the local level cannot be manipulated, and our 
internal incentives are now even more aligned with resident 
satisfaction. In an effort to better assess resident satisfaction and 
work quality, we added a survey service, SatisFacts, in 2014 to 
supplement the annual survey referenced by the GAO. That survey 
provides additional opportunities for residents to provide feedback and 
reviews about the service they receive: at move-in, at each work order, 
and at move out. In addition, they have an opportunity so submit a 
service survey through our website anonymously.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MS. STEFANIK
    Ms. Stefanik. One of the common concerns among military families, 
regardless of the specific housing issue, is that family members felt 
they did not have a voice. I would like to hear from the private 
partner witnesses how your companies are empowering and enabling 
military families throughout the leasing and residency process. For 
example, this Committee emphasized the necessity for a common ``Tenant 
Bill of Right'' in our NDAA bill. What rights are you ensuring are 
afforded to military families leasing your properties, and how are your 
measuring your success?
    Mr. Picerne. We agree that empowering and enabling residents to 
raise any concerns that they may have is the best way to ensure that we 
are hearing their concerns, and meeting their needs. We have taken a 
variety of steps to better serve our residents, including working with 
our partners to establish resident focus groups, bringing back local 
call centers to help coordinate maintenance work directly with 
residents at each installation, establishing the Corvias Resident 
Portal to allow 24/7 online access to work order submission and status, 
and hiring resident Ombudsmen to work directly with residents to 
address their concerns. We will continue to work with all of our 
residents to ensure that they are afforded every opportunity to 
exercise their rights, and that we are providing the gold standard of 
service that our residents deserve.
    Ms. Stefanik. One of the common concerns among military families, 
regardless of the specific housing issue, is that family members felt 
they did not have a voice. I would like to hear from the private 
partner witnesses how your companies are empowering and enabling 
military families throughout the leasing and residency process. For 
example, this Committee emphasized the necessity for a common ``Tenant 
Bill of Right'' in our NDAA bill. What rights are you ensuring are 
afforded to military families leasing your properties, and how are your 
measuring your success?
    Mr. Ehle. Hunt Military Communities (``Hunt'') recognizes that 
quality homes and resident services depend on open and regular 
communications with residents. We want to hear from all of our 
residents in order to be made aware of issues so we can address them. 
We also need to make it as easy and comfortable as possible for our 
residents to communicate with us. To that end, we have made significant 
improvements to our resident communication processes throughout our 
portfolio over the last year, including:
      Work Order Mobile Application: We have launched the 
RENTCafe mobile app for the real-time submission and tracking of 
routine work orders and to access select historic work order data. The 
app also encourages convenient communication between on-site Hunt 
employees and residents by (i) facilitating direct calls or emails to 
on-site staff; (ii) providing community announcements at sign-in; (iii) 
announcing emergencies by the leasing office; and (iv) featuring 
community events on a calendar.
      Surveys: We have implemented an enhanced resident survey 
tool run by a third party, SatisFacts, to measure customer satisfaction 
at move-in, move-out, and after work order completion. It is a very 
quick 5-star survey that is automatically sent to the resident at the 
conclusion of each of these events to ask the resident about their 
satisfaction. The resident completes the survey, and the results go 
immediately to the site management team at the resident's property. If 
the response yields a score of less than 3.5 (in the SatisFacts scale, 
a 3 is ``Satisfied''), the Community Director at the property is to 
contact that resident the same day to ascertain where we fell short of 
expectations so we can better resolve the issue and make improvements 
going forward.
      Hunt Promise Helpline: This 24/7, toll-free hotline makes 
it easier for residents to voice concerns about issues they feel have 
not been resolved at the property level by facilitating direct contact 
between residents and Hunt Military Communities senior management.
      Social Media Coordinator: We now have a dedicated 
specialist to liaise with each Hunt community online to make sure 
issues are identified and addressed in a timely manner. 2 This 
initiative has improved our ability to monitor resident complaints and 
concerns made on social media and follow up accordingly.
      Resident Resolution Tracker: As part of our quality 
assurance efforts, if we learn that a resident is not completely 
satisfied after his or her work order has been completed, the resident 
is added to this tracker for follow up from our management team through 
issue resolution.
      Community Advisory Board (``CAB''): Residents serve as 
volunteer members of CABs and meet with the Hunt property leadership on 
a monthly basis to discuss what they see happening in their 
neighborhoods and offer to Hunt suggestions for improving processes and 
service. In addition, the CAB will be involved in identifying 
opportunities to deploy the resources and services offered by the Hunt 
Heart program. This program is designed to address the needs of our new 
residents, deployed spouses, recently returned spouses, those suffering 
a family crisis, and those who may be in need of information about or 
access to social services through military or civilian sources.
      Secret Shopping: We will be launching an independent 
third-party ``secret shopping'' service in January 2020 to engage with 
Hunt employees to assess customer service. Training plans will be based 
on the results obtained.
    Hunt has also been a leading voice for ongoing industry-wide reform 
and standardization, and supports a number of initiatives to 
standardize and improve the Military Housing Privatization Initiative 
(``MHPI'') program in partnership with the Services, including a 
uniform resident lease, a resident bill of rights, resident 
responsibilities, uniform dispute resolution guidelines, and a uniform 
resident displacement policy. Hunt recognizes and appreciates the 
unique challenges our military families face and Hunt is committed to 
ensuring our families are afforded an equal or better experience than 
residents may find in the conventional rental market.
    Each Hunt resident enters into a resident lease approved by our 
military partners that affords our military families detailed rights 
and obligations that are substantially similar to those in the 
conventional rental market, yet recognizes and addresses the unique 
circumstances of living on or in the vicinity of a military 
installation, including the military policies and procedures that 
govern the installation and its residents. For example, Hunt lease 
forms generally provide residents with a detailed description of, among 
other things, their monthly rent, the term of their lease, the 
utilities included in their monthly rent, the security deposit (if any) 
that may be required, move-in/move-out procedures, the circumstances 
under which a resident may terminate their lease early, conditions 
under which pets may occupy the housing unit, the delineation of 
maintenance and other responsibilities between Hunt and the resident, 
conditions under which Hunt may enter the housing unit, procedures for 
residents to submit maintenance requests, community amenities, 
conditions under which a resident may operate a business from their 
home, and the process for landlord-resident dispute resolution.
    With respect to our goal to provide safe, healthy, and quality 
homes for military families, we measure our success in a number of 
ways. For example, we look at whether military families are choosing to 
reside in Hunt homes rather than in other housing in the marketplace, 
as well as customer satisfaction via resident surveys, as discussed 
above.
    Ms. Stefanik. One of the common concerns among military families, 
regardless of the specific housing issue, is that family members felt 
they did not have a voice. I would like to hear from the private 
partner witnesses how your companies are empowering and enabling 
military families throughout the leasing and residency process. For 
example, this Committee emphasized the necessity for a common ``Tenant 
Bill of Right'' in our NDAA bill. What rights are you ensuring are 
afforded to military families leasing your properties, and how are your 
measuring your success?
    Mr. Taylor. Balfour Beatty Communities (BBC) property teams work 
diligently to deliver an exceptional living experience to every 
resident. We repeatedly reinforce to residents that we want to know if 
their expectations are not being met so that we have the opportunity to 
make things right. Residents are actively encouraged to first contact 
our local management team if they have any issues or concerns with 
their home so we can promptly deploy the necessary resources to assist. 
If they've contacted our local team and are not satisfied with the 
outcome, we encourage them to reach out to our senior leadership team 
via the BB Cares Helpline at 1-877-253-6988. The BB Cares Helpline is a 
dedicated resident relations system providing residents with direct 
assistance from our corporate office team. All calls are transcribed 
and sent real-time to the head of our Military Housing Division for 
immediate action. It is our commitment to residents that we will fully 
review all concerns to ensure our team is doing everything possible to 
deliver an exceptional living experience. If residents are still not 
satisfied with our response, we also ensure they are aware of how to 
directly contact their local military housing office. This three-step 
issue resolution process is posted on our Resident Portals and is 
actively communicated to residents at move-in and periodically 
throughout the year via email and social media. We actively participate 
in all Command-sponsored Housing Town Halls and work closely with 
Resident Councils at locations where they have been established. These 
outlets provide our teams with important opportunities to interact 
directly with residents, answer their questions and better understand 
their issues and concerns. After Town Hall events, we send all 
residents a summary of topics discussed to provide overall awareness 
and reinforce any BBC action plans going forward. As I mentioned in my 
written testimony, we have been working with the Department of Defense 
in crafting a Tenant Bill of Rights and are fully supportive of this 
initiative. We further empower our residents during the maintenance 
work order process. For each work order, our maintenance technician 
and/or subcontractor takes a photograph of the before and after work 
performed (where applicable). These photos are uploaded into our work 
order management system, which is accessible to both residents and our 
military housing partners for review. On all emergency/urgent work 
orders, our Quality Control Specialist also conducts a follow-up 
inspection to confirm the work was completed to our standards and 
contacts the resident to review and ensure satisfaction. Upon 
completion, residents are requested to `sign-off' on the work order to 
indicate their satisfaction. In situations where the resident is not 
satisfied, the work order remains open and we dispatch our Maintenance 
Supervisor and/or Facility Manager to review and continue to work the 
issue until the resident is satisfied; if validated by our managers as 
properly completed, we engage military housing office representatives 
to assist in resolving with the resident.
    Ms. Stefanik. One of the common concerns among military families, 
regardless of the specific housing issue, is that family members felt 
they did not have a voice. I would like to hear from the private 
partner witnesses how your companies are empowering and enabling 
military families throughout the leasing and residency process. For 
example, this Committee emphasized the necessity for a common ``Tenant 
Bill of Right'' in our NDAA bill. What rights are you ensuring are 
afforded to military families leasing your properties, and how are your 
measuring your success?
    Mr. Bliss. Lincoln Military Housing has a multi-faceted customer 
service and work-order request system, and has also created a separate, 
dedicated process to address resident concerns that gives tenants a 
clear voice in their military housing. Specifically, Lincoln Military 
Housing's work-order request system allows tenants to submit work 
orders by phone via a dedicated ``Lincoln At Your Service'' hotline, on 
the internet via the Lincoln Resident Portal, or via a smart device 
through the Lincoln Military Housing Resident App. For customer service 
issues extending beyond maintenance requests, the local District Office 
is always open to tenants during business hours, and the Lincoln At 
Your Service hotline is available to residents 24/7. Lincoln has also 
instituted a Three-Step Resolution process throughout our enterprise. 
Through this three-step process, residents are encouraged to first 
attempt to resolve the issue at the District Office or by calling 
Lincoln At Your Service. If the issue is still unresolved they are 
encouraged to contact the General Management Office or Regional 
Property Manager for their district, and if the issue still remains 
unresolved they are encouraged to contact the Government Family Housing 
Office, who will reach over to Lincoln. At resident move-in, this 
Three-Step Resolution process is shared, and the appropriate phone 
numbers are provided. We also provide a refrigerator magnet that is 
placed on their appliance before they receive keys. Because we know 
move-in is a busy time for families, we also send a reminder about the 
Three-Step Resolution process once a quarter and include an invitation 
to a ``Meet the Manager'' event where they can sit and talk with a 
District Manager one-on-one. As a final matter, residents always have 
the ability to communicate by phone via the Lincoln Leadership Line, 
which puts them in contact with Lincoln Military Housing's Senior 
Executive Team.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MS. HAALAND
    Ms. Haaland. Families from across the country have contacted my 
office with heartbreaking stories of being displaced from their homes 
while housing companies make much needed renovations to raise them to 
livable standards. While pleased that companies are finally acting to 
address these issues, this process has highlighted appalling 
inconsistencies in the treatment. What is your company's policy 
regarding per diem or other allowances for displaced families?
    Mr. Picerne. Over the last year, our policy toward displaced 
families has evolved and been standardized across our portfolio. Our 
Operations Directors at each installation have the authority to make 
reasonable adjustments to our policy as appropriate. Under all 
circumstances, we provide residents with alternate housing, including 
either a fully furnished hospitality suite on post or a hotel on or 
off-post as available, as well as an allowance for food and personal 
items. If provided a hospitality suite on post, then we may reimburse 
the family's BAH on a prorated basis depending on how long they have 
been displaced. We only ask that families move into a hotel suite if a 
fully furnished on-post hospitality suite is unavailable, and if that 
is necessary, will reimburse them 100% of the daily BAH rate for all 
days they are displaced, as well as provide a per diem for food, 
additional expenses, and for pet lodging if necessary. We expect that 
this policy will continue to evolve, as we are working with the 
Services and other MHPI partners to standardize our policies pursuant 
to Congressional direction in the recently-passed National Defense 
Authorization Act for 2020.
    Ms. Haaland. Generally, displaced tenants do not have to pay rent 
when they cannot live in their homes. Does your company collect the 
rent/BAH from families while they are displaced?
    Mr. Picerne. Over the last year, our policy toward displaced 
families has evolved and been standardized across our portfolio. Our 
Operations Directors at each installation have the authority to make 
reasonable adjustments to our policy as appropriate. Under all 
circumstances, we provide residents with alternate housing, including 
either a fully furnished hospitality suite on post or a hotel on or 
off-post as available, as well as an allowance for food and personal 
items. If provided a hospitality suite on post, then we may reimburse 
the family's BAH on a prorated basis depending on how long they have 
been displaced. We only ask that families move into a hotel suite if a 
fully furnished on-post hospitality suite is unavailable, and if that 
is necessary, will reimburse them 100% of the daily BAH rate for all 
days they are displaced, as well as a per diem for food, additional 
expenses, and for pet lodging if necessary. We expect that this policy 
will continue to evolve, as we are working with the Services and other 
MHPI partners to standardize our policies pursuant to Congressional 
direction in the recently-passed National Defense Authorization Act for 
2020.
    Ms. Haaland. Can you confirm today that a minimum of 5% of the 
homes at each installation where your company has a contract to manage 
housing is accessible to people with disabilities?
    Mr. Picerne. We are in compliance with our contractual obligations 
to ensure that a minimum of 5% of all homes we have built are either 
fully accessible or readily adaptable for special accessibility 
features.
    Ms. Haaland. Families from across the country have contacted my 
office with heartbreaking stories of being displaced from their homes 
while housing companies make much needed renovations to raise them to 
livable standards. While pleased that companies are finally acting to 
address these issues, this process has highlighted appalling 
inconsistencies in the treatment. What is your company's policy 
regarding per diem or other allowances for displaced families?
    Mr. Ehle. First and foremost, our goal is to provide safe, healthy, 
and quality homes for military families. However, we recognize that 
there is no such thing as maintenance-free housing and that issues will 
inevitably arise that must be remedied. In these instances, we strive 
to address the situation in a professional, transparent, and timely 
manner, with a focus on resident safety. If the nature of the repairs 
requires a resident to be out of their home during a repair for a night 
or more, we will secure temporary accommodations and may provide 
financial support to ensure that the resident is not paying out-of-
pocket during this time, for example, by providing gift cards for meals 
or rent concessions. Recognizing that confusion has arisen as a result 
of inconsistent displacement accommodations, we are collaborating with 
the Services in their efforts to establish a uniform resident 
displacement policy. We fully support the adoption of such a policy 
across all MHPI communities to establish consistency no matter where 
residents reside, and to avoid confusion and missed expectations.
    Ms. Haaland. Generally, displaced tenants do not have to pay rent 
when they cannot live in their homes. Does your company collect the 
rent/BAH from families while they are displaced?
    Mr. Ehle. The collection of BAH from families while they are 
displaced depends on the particular circumstances. For example, Hunt 
may continue to collect BAH when Hunt pays for alternate housing or 
provides a hospitality home that requires maintenance, furnishing, and 
utilities. Alternatively, if Hunt does not pay for or provide housing 
to a displaced family, Hunt may suspend the collection of BAH.
    Ms. Haaland. Can you confirm today that a minimum of 5% of the 
homes at each installation where your company has a contract to manage 
housing is accessible to people with disabilities?
    Mr. Ehle. Depending on the property, the standard is not 
necessarily that a minimum of 5% of all the homes at each installation 
be accessible to people with disabilities. For example, the standard 
may be that at least 5% of homes be accessible or readily adaptable to 
be accessible to those with disabilities. In addition, the 5% standard 
only applies to neighborhoods built or fully renovated after the 
effective date of the Americans with Disabilities Act (``ADA''), and we 
have legacy preprivatization neighborhoods in our portfolio that pre-
date the ADA. For these and other reasons, the percentage of homes at a 
given property that are accessible today to those with disabilities may 
vary across Hunt's portfolio.
    Ms. Haaland. Families from across the country have contacted my 
office with heartbreaking stories of being displaced from their homes 
while housing companies make much needed renovations to raise them to 
livable standards. While pleased that companies are finally acting to 
address these issues, this process has highlighted appalling 
inconsistencies in the treatment. What is your company's policy 
regarding per diem or other allowances for displaced families?
    Mr. Hickey. We have been working closely with the Army and the 
other private partners to develop a formal resident displacement 
policy. Once that policy is finalized, we intend to immediately apply 
that policy across our entire portfolio.
    Our current process for displaced families is applied consistently 
across our portfolio. Residents are entitled to the following 
reimbursements or benefits, depending on the length of displacement:
[GRAPHIC] [TIFF OMITTED] T1473.078

    .epsLength of displacement More than one day and fewer than 
fourteen days More than fourteen days Reimbursement for meals based on 
a set per diem for each location Lodging costs Reimbursement of 
incidentals of $5 per day Refund/waiver of rent from date of 
displacement* Other reimbursements Assessed on a case-by-case basis.
    If a resident repair exceeds thirty (30) days and an alternate 
home(s) is offered that meets the resident's bedroom and rank eligible 
requirements, but the resident refuses the alternative home(s), 
continued reimbursement of BAH may cease.
    Reimbursement of clothing and/or other household/personal items if 
they are found to have visible mold will be assessed on a case by case 
basis by the DPM and Project Director (in conjunction with any 
appropriate independent third-party subject matter experts).
    Based on input from an independent third party's recommendations, 
the Project Company retains responsibility for the reimbursement or 
cleaning/remedying, as applicable, of any contamination of personal 
belongings or furnishings with visible mold which is caused by the acts 
or omissions of the Project Company and/or project employees (including 
as it relates to service order response/resolution, preventive 
maintenance, etc.). Details and proper course of action to be 
determined by the DPM and Project Director in consultation with the 
independent third party.
      If relocation is required in order to properly clean the 
home and remedy any potential issues, the Project Company pays for the 
documented and substantiated expenses exclusive of Excluded Expenses. 
``Excluded Expenses'' include:
        Cable, phone and internet bills at primary residence;
        Purchase of clothing and other household/personal items 
that exceeds level of incidental reimbursement identified above;
        Accommodation at luxury hotels; and
        Kenneling costs for pets (unless temporary lodging 
arrangements do not allow for pets)
    Ms. Haaland. Generally, displaced tenants do not have to pay rent 
when they cannot live in their homes. Does your company collect the 
rent/BAH from families while they are displaced?
    Mr. Hickey. As noted above, if a family is displaced for more than 
fourteen (14) days, the rent/BAH is refunded or waived effective as of 
the date of initial displacement.
    Ms. Haaland. Can you confirm today that a minimum of 5% of the 
homes at each installation where your company has a contract to manage 
housing is accessible to people with disabilities?
    Mr. Hickey. Five (5%) of all new homes designed and constructed on 
Lendlease MHPI project sites are ``ADA Adaptable.'' An ``ADA 
Adaptable'' unit has all the accessible features that a fixed 
accessible unit has but allows some items to be omitted or concealed 
until converted so the dwelling units can look the same as others and 
be better matched to the specific and unique needs or preferences of 
the occupant.
    Ms. Haaland. Families from across the country have contacted my 
office with heartbreaking stories of being displaced from their homes 
while housing companies make much needed renovations to raise them to 
livable standards. While pleased that companies are finally acting to 
address these issues, this process has highlighted appalling 
inconsistencies in the treatment. What is your company's policy 
regarding per diem or other allowances for displaced families? 
[Question #17, for cross-reference.]
    Mr. Taylor. In certain circumstances, a tenant may need to be 
temporarily relocated where repairs or maintenance are so significant 
that the rental unit is unable to be occupied during such work. This 
could be due to anything from damage caused by extreme weather events 
to flooding from a broken water pipe or a toilet overflow. We recognize 
the importance of having a comprehensive policy that outlines clear and 
effective guidelines for managing resident displacements across our 
military housing portfolio. Our current policy, which was developed 
with input from military leaders and representatives from military 
family advocacy groups as well as to ensure compliance with applicable 
state landlord-tenant laws, provides the following guidelines for 
taking care of residents that are temporarily displaced from their home 
due to a maintenance/repair issue:
    1. The landlord will provide temporary accommodation in a fully-
furnished (including cable and internet service) `Patriot Home' at our 
cost, to the extent such a unit is available. Patriot Homes are housing 
units within the housing project community that are set aside 
specifically for the purpose of housing residents needing temporary 
accommodation. We also provide the family with a $300 weekly stipend.
    2. Where a Patriot Home is not available, the landlord will provide 
for accommodation in a local hotel/temporary lodging facility. If the 
family has approved animals living in the home and a pet-friendly 
hotel/temporary lodging facility is not available, the landlord will 
pay for reasonable costs to board the animals. Families staying in a 
hotel/temporary lodging facility are provided a $300 weekly stipend if 
the facility contains a kitchen, and a $100 per diem if the facility 
does not contain a kitchen.
    3. To the extent a resident elects not to utilize temporary housing 
provided by the landlord and instead opts to stay with family or 
friends (or another place of their choosing), the landlord will credit 
tenant's rent the daily rate for the days the tenant is unable to 
occupy the rental unit. Daily rent is calculated as 1/30 of the monthly 
rent value, or as otherwise stated in the lease agreement.
    4. If the repairs to the home are expected to take longer than 
thirty (30) days:
        a) the landlord will offer the resident a permanent transfer to 
        a comparable home (i.e., similar number of bedrooms/bathrooms) 
        where such home is readily available within the housing 
        community; and
        b) If the resident does not elect to transfer to another 
        available unit, or where the landlord does not have another 
        available unit, then the resident may elect to terminate the 
        lease agreement without penalty.
    In addition to BBC's current Temporary Relocation Policy, we also 
are continuing to work with the Branches of Service to develop uniform 
displacement policies that ultimately may be applied across all 
Military Housing Privatization Initiative (MHPI) projects.
    Ms. Haaland. Generally, displaced tenants do not have to pay rent 
when they cannot live in their homes. Does your company collect the 
rent/BAH from families while they are displaced?
    Mr. Taylor. Per landlord-tenant laws, landlords are required to 
provide a habitable dwelling in exchange for rent and are entitled to a 
reasonable timeframe to complete necessary repairs. Where the dwelling 
requires repairs that are significant enough to result in displacement 
of the resident, the landlord is entitled to collect rent/BAH to the 
extent it continues to provide a habitable dwelling and performs the 
repairs within a reasonable timeframe. As a result, BBC's Temporary 
Relocation Policy, as described in response to Question #17 [above], 
provides that the landlord will continue to provide the resident with a 
temporary Patriot Home/lodging while the resident is temporarily 
displaced from their assigned rental unit and the landlord continues to 
collect rent/BAH. In addition, BBC's policy also provides compensation 
to resident in the form of a monetary allotment; and where the repairs 
are expected to extend beyond 30 days, the resident may be offered a 
permanent relocation to another unit or the option to terminate the 
lease without penalty.
    Ms. Haaland. Can you confirm today that a minimum of 5% of the 
homes at each installation where your company has a contract to manage 
housing is accessible to people with disabilities?
    Mr. Taylor. In connection with BBC's Military Housing Privatization 
Initiative projects, the project owners (which, in the case of Army/
Navy projects, are joint ventures in which the Army/Navy is itself a 
member or partner), were both (i) conveyed existing housing previously 
owned by the government and (ii) required to construct an agreed number 
of homes in accordance with the project agreement terms. In accordance 
with the project agreement requirements as issued by the government, 5% 
of the new construction homes were built to Uniform Federal 
Accessibility Standards.
    In addition, we work closely with the Services to actively support 
the Exceptional Family Member Program (EFMP) and maintain a Fair 
Housing Policy that requires the grant of reasonable accommodations or 
modifications by residents with a related disability need.
    Ms. Haaland. Families from across the country have contacted my 
office with heartbreaking stories of being displaced from their homes 
while housing companies make much needed renovations to raise them to 
livable standards. While pleased that companies are finally acting to 
address these issues, this process has highlighted appalling 
inconsistencies in the treatment. What is your company's policy 
regarding per diem or other allowances for displaced families?
    Mr. Bliss. All Lincoln Military Housing projects provide allowances 
for residents who have been displaced from their homes through no fault 
of the tenant, to include covering the costs of temporary lodging in 
every case, and per diem for incidentals and meals where appropriate. I 
am also pleased to report that Lincoln Military Housing, in 
collaboration with the other privatized military housing partners, has 
been working towards a standardized displacement policy to ensure 
consistency across each of our projects, and the industry, with regards 
to displacement allowances. This policy will be aligned with the 
requirements in the 2020 NDAA, subject to additional requirements in 
state and local law, and we expect it to be rolled out industry-wide in 
mid-to-late January.
    Ms. Haaland. Generally, displaced tenants do not have to pay rent 
when they cannot live in their homes. Does your company collect the 
rent/BAH from families while they are displaced?
    Mr. Bliss. Lincoln Military Housing's policy with regards to the 
payment of rent by displaced residents is governed by state and local 
landlord-tenant law. As a general rule, the majority of jurisdictions 
in the United States allow a landlord to continue to collect rent 
during periods of temporary displacement through no fault of the 
tenant, though the landlord is generally required to cover the 
reasonable costs of temporary lodging during that displacement. As 
noted in answer 5 above, Lincoln Military Housing's policy is to cover 
the costs of temporary lodging while a resident is displaced from their 
home, subject to additional requirements in state and local law.
    Ms. Haaland. Can you confirm today that a minimum of 5% of the 
homes at each installation where your company has a contract to manage 
housing is accessible to people with disabilities?
    Mr. Bliss. A minimum of 5% of the homes at each installation that 
Lincoln Military Housing manages are accessible to people with 
disabilities, and all homes constructed by Lincoln Military Housing 
meet state and federal requirements under the Americans with 
Disabilities Act (ADA). Legacy neighborhoods built via military 
construction (MILCON) funding prior to privatization are generally not 
built to the 5% requirement, but the number of those homes do not bring 
the total ratio of ADA compliant homes at each installation below 5%. 
Further, Lincoln Military Housing complies with all ADA reasonable 
accommodation requests as necessary for homes that were not 
specifically built to meet accessible home standards.
                                 ______
                                 
                    QUESTIONS SUBMITTED BY MR. BROWN
    Mr. Brown. You stated in your written testimony that you report a 
92 percent satisfaction rating on work performed and 95 percent of work 
orders completed on time.
    How do you determine when work performed is ``complete'' and do the 
service members have the ability to concur with that disposition?
    What metrics do you use as a basis for satisfaction rating?
    How do you disposition a work order when a family is PCS'd to a new 
base? Is that work order logged as complete?
    How do you measure satisfaction for a work order that is still open 
when a family is PCS'd to a new base?
    What's the average duration for a work order that isn't 
accomplished in the first 24 hours?
    Mr. Picerne. Our maintenance teams consider a work order to be 
complete when the issue identified in the work order request has been 
successfully addressed. In those limited instances where an emergency 
work order has been submitted due to a health concern or potential 
structural damage to the home, the emergency work order is closed once 
the situation has been stabilized to eliminate the hazard, and a new 
work order is opened and coded for priority response based on any 
additional work necessary to fully address the resident's concerns. 
Attached, please find the work order priority schedule applied in these 
situations, which has been adopted in coordination with our partners in 
the Army and Air Force, and previously shared with the GAO in January, 
2019.
    [The document referred to can be found in the Appendix on page 
185.]
    Following closure of the work order, each resident is provided the 
opportunity to respond by completing a survey, which scores the overall 
response. If a family permanently moves from a home before a work order 
can be completed, then existing work orders are typically closed, 
allowing for completion of this survey. At that point, a new work order 
will also be entered for turnover of the unit, which involves a 
comprehensive inspection, and subsequent painting, flooring, or other 
activities necessary to make a home ready for a new family. The amount 
of time necessary to address a work order will vary substantially 
depending on the type of work and any supplies that may be required, 
particularly if a third party vendor must be engaged to complete work, 
if permission is required to conduct work (as is often the case in 
historic homes), or if parts or fixtures are not readily in stock to 
complete the work. We strive to complete all work within the timeframes 
outlined in the work order priority schedule, and typically do so 
consistently.
    Mr. Brown. In February 2019 at a SASC hearing, you stated that 
``But specifically to the family that moved to Fort Meade expecting to 
have their child brought into a single-family or single-story home, it 
is unacceptable. And my company will stand up and will help and support 
that family and every family going forward in trying to make these 
things better.'' Yet, just one month later, a service member at Fort 
Meade in the Exceptional Family Member Program who required a single-
story home was pressured by Corvias to accept a two-story home, to the 
detriment of the health and safety of their child.
    Why was this action allowed to occur?
    What actions have you taken following your testimony in February to 
ensure your company took action on your statement?
    Mr. Picerne. At Corvias, we take our responsibility under the 
Exceptional Family Member Program (EFMP) extremely seriously. This 
program provides a critical avenue for family members with exceptional 
needs to enhance their quality of life by making homes readily 
available, usable, and accessible to persons with disabilities. At the 
same time, we can only provide homes that are available at the time a 
request is made. As you may be aware, one former resident who has filed 
suit against Corvias and Meade Communities has made allegations 
regarding being pressured to accept a two-story home family home at 
Fort Meade. We disagree with the resident's characterization of these 
events, and intend to contest these allegations vigorously.
    Mr. Brown. You stated in response to a question from Rep. Houlahan 
that you work ``directly with the medical community on the 
installation, with the garrison commander, and we try to define where 
the problem really is.''
    Can you please expand upon this engagement you have with the 
medical community? Is this a formal or informal process? Please 
explain.
    Are you obtaining consent forms from service members and their 
families before speaking to military medical providers about their 
particular cases?
    If a medical provider recommends testing or mold remediation, are 
you following their guidance?
    Mr. Picerne. We work closely with our Army and Air Force partners, 
including installation health officials, to help them respond when 
residents express a health concern that may be related to their 
environment, but we do not request or share protected health 
information from or with medical professionals. For instance, when a 
resident reports an elevated blood lead level, we typically assist 
public health officials to gain access to inspect the resident's home 
and surroundings to identify potential causes, which often include 
common environmental factors like imported lead-painted toys, dishes, 
or other sources of lead. As an alternate example, following mold-
related home-inspections at Fort Meade, we partnered with the Kimbrough 
Ambulatory Care Center to ensure that a qualified medical professional 
was available during public forums scheduled for residents to ask any 
questions they may have had with respect to the findings of third-party 
inspection reports.
    To the extent that an individual resident's medical provider has 
requested specific types of testing or remediation, we have and will 
take that into account to the extent practicable, pursuant to the 
policies and procedures adopted in conjunction with our Service 
partners.
    Mr. Brown. You stated in response to a question from Rep. Houlahan 
on the health of children living on base that if its determined that 
the home is the house of a health issue ``we will support that child or 
its medical costs.''
    Are you confirming that you will financially support the treatment 
of a child who become sick living in a Corvias-run home on base?
    Who would determining that the child became sick from a Corvias-run 
home? Would you accept that conclusion from a military doctor, a 
civilian doctor, or both? What about from a mold test showing a high 
level of toxic mold in the home?
    Mr. Picerne. We understand and accept our responsibility to ensure 
that all of the homes that we provide to our residents are fit for 
occupancy. We appreciate Congress's effort to work with the Department 
of Defense to develop a standardized process for evaluation of 
potential medical claims from residents, and are working with our 
military partners to adopt practices that ensure the best interest of 
our residents, while recognizing our fiduciary obligations to our 
investors and government partners.
    Mr. Brown. How do you determine when work performed is ``complete'' 
and do the service members have the ability to concur with that 
disposition?
    What metrics do you use as a basis for satisfaction rating?
    How do you disposition a work order when a family is PCS'd to a new 
base? Is that work order logged as complete?
    How do you measure satisfaction for a work order that is still open 
when a family is PCS'd to a new base?
    What's the average duration for a work order that isn't 
accomplished in the first 24 hours?
    Mr. Ehle. Hunt considers a resident-initiated work order to be 
complete when all work required to address the issue is completely 
finished. In the case of Emergency or Urgent work orders, the Emergency 
or Urgent condition must be addressed and any follow-on work must be 
completely finished for the work order to be considered complete.
    We have implemented an enhanced resident survey tool run by a third 
party, SatisFacts, to measure customer satisfaction at move-in, move-
out, and after work order completion. It is a very quick 5-star survey 
that is automatically sent to the resident at the conclusion of each of 
these events to ask the resident about their satisfaction. The resident 
completes the survey, and the results go immediately to the site 
management team at the resident's property. If the response yields a 
score of less than 3.5 (in the SatisFacts scale, a 3 is ``Satisfied''), 
the Community Director at the property is to contact that resident the 
same day to ascertain where we fell short of expectations so we can 
better resolve the issue and make improvements going forward. If a 
resident receives a survey after work order completion and does not 
believe all of the work has been done, the survey response is one means 
by which the resident can communicate their disagreement.
    It is not Hunt policy for a resident family's move to a new base to 
impact the disposition of a work order. As noted above, Hunt considers 
a resident-initiated work order to be complete when all work required 
to address the issue is completely finished. The survey discussed above 
is automatically sent to the resident's email address upon work order 
completion, regardless of whether a resident has moved to a new base.
    In the regular course of business, Hunt does not generally 
calculate the average duration of work orders that are not completed in 
the first 24 hours. Each property generally has its own target times, 
as agreed-upon by our military partners, for work order response and 
completion (e.g., 1 hour to respond and 24 hours to complete for 
Emergency work orders). Hunt strives to meet those target times.
    Mr. Brown. How do you determine when work performed is ``complete'' 
and do the service members have the ability to concur with that 
disposition?
    What metrics do you use as a basis for satisfaction rating?
    How do you disposition a work order when a family is PCS'd to a new 
base? Is that work order logged as complete?
    How do you measure satisfaction for a work order that is still open 
when a family is PCS'd to a new base?
    What's the average duration for a work order that isn't 
accomplished in the first 24 hours?
    Mr. Hickey. Our process of initiating and closing work orders as 
```complete''' includes the following:
    A.  All resident work orders are generated directly in Yardi 
through a call center or via our Military Cafe portal/app to ensure 
they are created real-time directly by the resident.
    B.  All technicians use mobile devices to track all activities 
including their time, parts, notes and work status. Their time is 
validated against the HRIS system, which is also electronic, to ensure 
time is captured accurately.
    C.  The technician enters the status of a work order, including if 
the work is complete. If a resident is at home during completion of the 
work, the technician requests a resident signoff of the completion and 
satisfaction.
    D.  The resident receives an email and survey request upon 
completion of work order, which is system-generated after the 
technician enters the work order ``complete.''
    To summarize the above, Lendlease implemented the 360 Degree 
Service Order touchpoints program for enhanced service order quality:
[GRAPHIC] [TIFF OMITTED] T1473.079

    .epsThis process ensures residents have multiple opportunities 
during the service request process to ask questions, track progress, 
and sign off on service order completion and provide satisfaction 
feedback. Technicians record all labor, materials, work progress and 
completion directly on a mobile application, which drives these 
touchpoints for residents.
    Resident satisfaction with service orders is measured through both 
point of service and annual satisfaction surveys. The Insite survey by 
SatisFacts (a nationally recognized third-party survey firm) is 
generated and delivered to the resident vie e-mail or text (at the 
residents' selection) within 24 hours of service order completion. The 
survey results are immediately available to maintenance and project 
management. There are multiple questions on the survey that provide 
analysis and trends on maintenance management.
    Lendlease fared very well regarding the satisfaction ratings of its 
projects. To illustrate, for the 2019 portfolio average score on a 
scale of 1-5, Lendlease received:
      Service Request Experience = 4.48 (Army & Marines Corps 
consolidated score)
      Service Request Experience Survey (Air Force, reported 
separately due to the use of a different though similar survey question 
set) = 4.34
    The Annual CEL Resident Satisfaction surveys (from the Military 
Services) also measure work order satisfaction and provide higher 
response rates and broader feedback about resident satisfaction in that 
area.
    Additionally, we monitor internal qualitative metrics for service 
order satisfaction based on indicators of excellent service including 
open work order aging, repeat work orders, service order response and 
completion time averages, work order exceptions, and other similar 
metrics.
    If there are work orders generated but not completed prior to a 
family moving out of the home, those work orders are completed during 
the Change of Occupancy Maintenance (COM) unless they are part of a 
larger, planned project (e.g., gutter replacement, roof replacements, 
etc.). We are not aware of any other instances where work previously 
identified by a resident would not be completed prior to a resident 
moving out of a home. Any work orders that constitute normal wear and 
tear identified prior to the resident leaving would be completed on the 
COM and the resident would not be charged.
    Our policy is that work orders are not closed until all work is 
complete.
    Work completed during COM is not considered as part of the resident 
satisfaction survey. Residents would have an opportunity to provide 
feedback about their experience at the move out as another point of 
service survey is generated based on that activity.
    Our policy is that work orders are not closed until all work is 
complete.
    Work orders are generated when a resident calls the 24-hour 
maintenance line routing them to a local dispatch or call center, 
submits online via the web portal or mobile app., as well as in-person 
at a maintenance office, community center or employee.
    As work orders are generated, they are classified in the following 
categories:
      Emergency--Immediate danger to life, health or property.
      Urgent--Not an emergency, but if not corrected could 
become an emergency (e.g. toilet or sink(s) clogged, partial power 
outage)
      Routine--Failures or deficiencies that do not immediately 
endanger occupants or property (e.g. screen repair)
      Resident Scheduled--The resident is unable to accommodate 
the offered time a technician is available to respond to a routine work 
order and requests an appointment to occur at the resident's 
convenience.
    During the three-month period between September 1, 2019 through 
November 30, 2019, the following statistics demonstrate our 
responsiveness:
      74,802 total service orders were completed. This includes 
emergency, urgent, routine, emergency after-hours and urgent after-
hours. This does not include resident scheduled maintenance.
      32.0% (23,940) of the total service orders completed took 
longer than 24 hours to complete:
        For these calls, the average completion time was 3.48 
days.
        For these calls, 20,509 (85.7%) were routine service 
orders which include issues that do not immediately endanger occupants 
or property (e.g. screen repair) and which typically have a three (3) 
to thirty (30) day completion requirement.
    Mr. Brown. How do you determine when work performed is ``complete'' 
and do the service members have the ability to concur with that 
disposition?
    What metrics do you use as a basis for satisfaction rating?
    How do you disposition a work order when a family is PCS'd to a new 
base? Is that work order logged as complete?
    How do you measure satisfaction for a work order that is still open 
when a family is PCS'd to a new base?
    What's the average duration for a work order that isn't 
accomplished in the first 24 hours?
    Mr. Taylor. Currently, for each work order, a maintenance 
technician and/or third-party contractor takes a photograph of the 
before and after work performed. These photos are uploaded into our 
management system, allowing both residents and our military housing 
partners to access and review online via computer or mobile app. On all 
emergency/urgent work orders (and a sampling of all routine work 
orders), our Work Order Administrators conduct follow-up calls with 
residents to confirm the work was properly completed and that they are 
fully satisfied and have no further concerns. In addition, residents 
are requested to `sign-off' on the work order to indicate their 
satisfaction before the work order is officially deemed completed. In 
situations where the resident is not satisfied, the work order remains 
open and we dispatch a Maintenance Supervisor and/or Facility Manager 
to review and continue to work the issue until the resident is 
satisfied; and if the work is validated by our Maintenance Supervisor 
and/or Facility Manager as properly completed, we engage Military 
Housing Office representatives to resolve with the resident.
    If the work order involves a life/health/safety issue, the repair/
remediation work performed is inspected by one of our Quality Control 
Specialists to ensure that it meets all required standards. Our Quality 
Control Specialists also conduct spot checks on all other completed 
work orders to further ensure the work was performed properly.
    When a work order is closed in our system, the resident receives an 
automated, third-party survey (administered by SatisFacts Research, 
LLC) that includes a series of questions related to the quality of the 
work performed, level of customer service and overall resident 
satisfaction with the experience. Ratings in these areas are provided 
on a scale of 1 to 5, with 5 being highly satisfied. All survey results 
are reported real-time to both local and regional Balfour Beatty 
Communities management and the Military Housing Office. If a resident 
rates our service below 3.5 (average), our management team contacts the 
resident to better understand the concern and address any outstanding 
issues.
    Open work orders remain open until the work is properly completed, 
regardless of whether the family is still in the home or has PCS'd to a 
new base. In the event there are open work orders after a resident has 
vacated the home, the work will be completed during the ``Change of 
Occupancy'' process that occurs prior to a new resident moving in to 
the home. When the work is completed, the work order is closed in our 
system with a note documenting the reason there is no resident sign-
off.
    Prior to a new resident signing a lease, he/she accompanies a BBC 
team member to the home and jointly perform a move-in inspection. BBC 
goes through a comprehensive checklist and review of the home with the 
new resident to ensure the home is in good condition and ready for 
occupancy. After a new resident moves in, he/she receives an automated 
third-party satisfaction survey and the same follow-up process 
described above for work order surveys is followed here. On many of our 
sites, as an additional quality control measure, the Military Housing 
Office now also performs a home inspection prior to a new resident 
move-in and provides their sign-off that all outstanding work has been 
completed and the home is ready for move-in.
    Most of BBC's projects have defined response and completion 
timeframes associated with work order requests; and these timeframes 
are typically based on classification of the work order as emergency, 
urgent or routine. For example, a routine work order may require 
completion time of four (4) days, whereas an emergency work order may 
require completion within 24 hours (barring extenuating circumstances 
outside of the property manager's control). The majority of our work 
orders are successfully completed during the first visit. The average 
duration to complete more extensive work orders varies widely. In some 
instances, we cannot complete a work order because the resident has 
requested that the work be performed at a later date, the resident is 
not home and has not given us permission to enter when not present, or 
where the resident has given permission to enter but an unsecured pet. 
In other instances, work orders may require our team to order new 
equipment or parts that take time to special order or receive or 
require our team to engage and schedule a licensed, third-party 
contractors with a specific area of expertise. We consistently follow-
up with residents to keep them informed throughout the process and 
clearly document the circumstances in our work order system. We also 
provide a mobile device app to residents that allows them to track work 
orders.
    Mr. Brown. How do you determine when work performed is ``complete'' 
and do the service members have the ability to concur with that 
disposition?
    What metrics do you use as a basis for satisfaction rating?
    How do you disposition a work order when a family is PCS'd to a new 
base? Is that work order logged as complete?
    How do you measure satisfaction for a work order that is still open 
when a family is PCS'd to a new base?
    What's the average duration for a work order that isn't 
accomplished in the first 24 hours?
    Mr. Bliss. Once a work order is complete, Lincoln Military Housing 
will offer the resident the opportunity to sign-off on the completed 
work. If the resident is not available to sign, the work order is 
closed, though an immediate e-mail is sent to notify the resident that 
the work was completed and request their feedback via a survey 
(SatisFacts). The notice of work-order completion encourages the 
resident to contact Lincoln Military Housing if they are not satisfied 
with the work completed. The survey format has twelve questions to 
assess the level of satisfaction. Work orders opened by residents are 
generally completed within one business day. Even if the work order 
remains open after a resident's Permanent Change of Station move (PCS), 
Lincoln Military Housing will continue to keep the work order open 
until the work is complete. When a family moves out, they receive a 
satisfaction survey about their residency and the move-out process, 
though it is not related to any specific work order. Lincoln Military 
Housing has a multi-faceted work-order request system. Specifically, 
Lincoln Military Housing's work-order request system allows tenants to 
submit work orders by phone via a dedicated ``Lincoln At Your Service'' 
hotline, on the internet via the Lincoln Resident Portal, or via a 
smart device through the Lincoln Military Housing Resident App. As a 
result, the majority of work orders are completed within the first 24 
hours. For those that take longer, which may be for a specialized part, 
or a specific vendor or trade that may be needed, the average time to 
completion is 13 days.

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