[Senate Hearing 116-643]
[From the U.S. Government Publishing Office]
S. Hrg. 116-643
THE GOVERNMENT ACCOUNTABILITY OFFICE ON PRIVATIZED HOUSING FINDINGS TO
INCLUDE RESPONSES FROM THE MILITARY SERVICES ON ONGOING REPORTS OF
SUBSTANDARD HOUSING CONDITIONS AND SERVICES
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
DECEMBER 3, 2019
__________
Printed for the use of the Committee on Armed Services
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
54-864 PDF WASHINGTON : 2024
COMMITTEE ON ARMED SERVICES
JAMES M. INHOFE, Oklahoma, Chairman
ROGER F. WICKER, Mississippi JACK REED, Rhode Island
DEB FISCHER, Nebraska JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa MAZIE K. HIRONO, Hawaii
THOM TILLIS, North Carolina TIM KAINE, Virginia
DAN SULLIVAN, Alaska ANGUS S. KING, Jr., Maine
DAVID PERDUE, Georgia MARTIN HEINRICH, New Mexico
KEVIN CRAMER, North Dakota ELIZABETH WARREN, Massachusetts
MARTHA McSALLY, Arizona GARY C. PETERS, Michigan
RICK SCOTT, Florida JOE MANCHIN III, West Virginia
MARSHA BLACKBURN, Tennessee TAMMY DUCKWORTH, Illinois
JOSH HAWLEY, Missouri DOUG JONES, Alabama
John Bonsell, Staff Director
Elizabeth L. King, Minority Staff Director
(ii)
C O N T E N T S
__________
December 3, 2019
Page
The Government Accountability Office on Privatized Housing 1
Findings to Include Responses From the Military Services on
Ongoing Reports of Substandard Housing Conditions and Services.
Members Statements
Statement of Senator James M. Inhofe............................. 1
Statement of Senator Jack Reed................................... 3
Witness Statements
Field, Elizabeth A. Director, Defense and Management, Government 4
Accountability Office.
McCarthy, Hon. Ryan D., Secretary of the Army; Accompanied by 30
General James C. McConville, USA, Chief of Staff of the Army.
Modly, Hon. Thomas B., Acting Secretary of the Navy; Accompanied 32
by Admiral Michael M. Gilday, USN, Chief of Naval Operations
and General David H. Berger, USMC, Commandant of the Marine
Corps.
Barrett, Hon. Barbara M., Secretary of the Air Force; Accompanied 36
by General David L. Goldfein, USAF, Chief of Staff of the Air
Force.
Questions for the Record......................................... 75
(iii)
THE GOVERNMENT ACCOUNTABILITY OFFICE ON PRIVATIZED HOUSING FINDINGS TO
INCLUDE RESPONSES FROM THE MILITARY SERVICES ON ONGOING REPORTS OF
SUBSTANDARD HOUSING CONDITIONS AND SERVICES
----------
TUESDAY, DECEMBER 3, 2019
United States Senate,
Committee on Armed Services,
Washington, DC.
The Committee met, pursuant to notice, at 9:31 a.m. in room
SD-G50, Dirksen Senate Office Building, Senator James M. Inhofe
(Chairman) presiding.
Committee Members present: Senators Inhofe, Wicker,
Fischer, Cotton, Ernst, Tillis, Sullivan, Perdue, McSally,
Scott, Blackburn, Hawley, Reed, Shaheen, Blumenthal, Hirono,
Kaine, King, Heinrich, Peters, Manchin, Duckworth, and Jones.
OPENING STATEMENT OF SENATOR JAMES M. INHOFE
Chairman Inhofe. The Committee meets today to receive
testimony from the Government Accountability Office (GAO), the
Service S]ecretaries, the Service Chiefs on the current
condition of privatized military housing.
Almost a year ago, I first heard from military families
about the dismal conditions they faced. Frankly, if confession
is good for the soul, Janna Driver called this to my attention
from Tinker Air Force Base. I thought this was something that
was just unique to Tinker Air Force Base, and then I thought
no. It is elsewhere in Oklahoma. But then it is also all the
way around the country, and so that was the background of how
this all started.
We have come to learn that it is a problem nationwide. It
is a national crisis of proportions we have not seen since the
scandal at Walter Reed about a decade ago.
Members of this Committee, our staff, and myself--we have
all traveled and seen these problems firsthand.
This is the third hearing this Committee has had on this
issue, and I am sure it is not going to be the last. We hoped
that since our first two hearings in February and March we
would see marked differences by now and be able to use this
hearing. In fact, it was set up to discuss the progress that
has been made. Well, it is set up to look at the progress, but
the progress has not been what we wanted.
We continue to hear regularly from the families across the
country about questionable practices, poor workmanship, and
frankly, in some places about housing contractors just not
caring about the families they are supposed to be serving.
Additionally, as reported in the press, some of these
contractors are now under investigation for defrauding the
Federal Government. I am really worried. What else can come out
of the woodwork on this? What other problems are out there that
we do not know?
To our witnesses from the Department, I have to ask, when
is enough enough?
I have to make one comment, though. Of the eight witnesses
that are here, with one exception, they all kind of walked into
this blind because this is a new issue that you were not
familiar with. So when I am critical and say some things that
are critical, I am not looking at you personally but as the
Department and who was representing it before you arrived here.
Regardless of any potential criminal wrongdoing, we are still
receiving complaints on a daily basis showing that you are
still failing to fix the problem.
The time for talk is over. If these companies cannot get
the job done, you owe it to the military families to find a
company who will. I say this because this housing problem is
really a readiness problem. We do not think of it as being a
readiness problem.
I had an experience talking about this. We actually had two
airmen who had to come back from the UAE [United Arab Emirates]
to handle this problem that should have been handled by the
military in their absence.
So this is a very important element. These hearings are not
to be an indictment on the privatization of the housing system
as a whole because in some cases it has worked and worked very
well. It is meant to be an indictment on the bad actors that we
know are out there. To those who lead our men and women in
uniform, I ask what are we going to do about it, since almost a
year later we are still hearing about the same problems.
As I mentioned earlier, this will not be the last hearing.
I am putting our witnesses on notice that we will have another
hearing early next year to discuss implementation of our
housing reform efforts, and the contractors will be back to
answer the hard questions.
I had some things I was going to say about Ms. Field, but I
think I will go ahead and not use her time. But I think that
the GAO has done a great job, and I want to make sure everyone
hears from them.
To remediate these and dozens of other problems, we have
more than 30 housing-related legislative provisions in the NDAA
[National Defense Authorization Act] this year. Thirty
provisions. That is another reason that the NDAA is important.
We have been unable to get--we did a good job in the Senate.
They did not do that good of a job in the House, and we do have
those problems that we will be addressing. We cannot afford to
ignore this readiness problem.
Issues like military housing are why it is so crucial we
continue to pass the NDAA every year. The NDAA supports the
bipartisan national security of this country, and it should not
be held hostage by issues outside this Committee's
jurisdiction.
Unfortunately, because of issues that are not in the Senate
Armed Services Committee's jurisdiction, this year's NDAA is
not resolved, which means only leadership can clear up this
logjam that is out there. Otherwise, the likelihood is greater
now than it was that we would have a skinny bill. We are out of
time, and I did not mean to deviate from the subject of this
Committee hearing, but I think it is very important that we
bring this up as a critical thing that is taking place right
now.
I hope that we can move past these issues so that we can
remain focused on the promises we made to those who serve our
country and get an NDAA signed into law. That should be our
priority, and it is.
With that, I would like to recognize the military families
who have traveled here today to seek answers from you. They are
in the back of the room. I want all families that have an
interest or who have been affected to stand up right now. All
right. Let us give them a round of applause.
[Applause.]
Chairman Inhofe. To our Department of Defense (DOD)
witnesses, as I have said before, these are the people whose
trust you are going to have to regain.
Senator Reed?
STATEMENT OF SENATOR JACK REED
Senator Reed. Well, thank you very much, Mr. Chairman.
I would like to begin by again thanking the vast number of
military families who have spoken out about the inadequate
conditions of their privatized housing. I especially want to
recognize the military families who have traveled here today
for this hearing, as the chairman has done.
Today we welcome Ms. Elizabeth Field from the GAO and the
senior civilian and uniformed leadership of the military
services. Ms. Field, I especially want to thank you and your
team for your dedicated work thus far.
The GAO's findings thus far confirm the alarming trends we
have heard from many military families. For example, the GAO
found that the often quoted 87 percent satisfaction rate is,
quote, misleading and unreliable, and that the records for
resident requests for work orders and service calls are
questionable.
This Committee continues to receive complaints directly
from military families. While the services have made strides
since last February, many unacceptable problems with housing
remain. I am still not convinced these private companies are
doing everything in their power and investing as much as they
can to improve the quality of homes for our military.
I also have several questions that I ask be entered into
the record that were requested directly by military families on
the many issues with military treatment facilities and
diagnosing medical problems caused by inadequate housing
conditions.
Senator Reed. While the conference process is still
underway for the Fiscal Year 2020 NDAA, I remain confident that
we will reach an agreement on legislation that will represent
the most significant reform of privatized housing since its
inception in 1996. We all still have a lot of work to do on
addressing the systemic problems that have been discovered with
privatized housing, and I thank the chairman for convening this
important and timely hearing.
Lastly, I want to take this opportunity, with the civilian
and military leadership of each of the services present, to
express my deep concern about the President's recent
interference in war crimes cases involving members of the U.S.
military. These comments follow my remarks on the floor of the
Senate on November 21.
The President has the power to pardon, but he has a
responsibility to use that power wisely, not recklessly. Good
order and discipline are critical and time-honored traits of
the United States military, not only to enable military
readiness and effectiveness, but also to ensure military men
and women remain firmly tethered to our nation's moral and
ethical principles in the most demanding wartime environments.
Some have claimed that these cases were distractions and
that the President's intervention has somehow improved the
morale of the military. On the contrary, President Trump's
disregard for our military justice system risks undermining the
confidence of our servicemembers in the rule of law and their
chain of command, especially those who were courageous enough
to bring allegations of war crimes to light and testify against
their teammates. When we do not hold our military personnel to
appropriate standards of conduct, it also makes it more likely
that they will face similar abuses on the battlefield and less
likely that we will be able to hold our enemies accountable.
There is no one with more credibility on these issues than
former Senator John McCain who stated: ``This is a moral
debate. It is about who we are. I don't mourn the loss of any
terrorist's life. What I do mourn is what we lose when by
official policy or official neglect we confuse or encourage
those who fight this war for us to forget that best sense of
ourselves. Through the violence, chaos, and heartache of war,
through deprivation and cruelty and loss, we are always
Americans, and different, stronger and better than those who
would destroy us.''
This is the standard we should demand from our military men
and women, and I believe the President's interference in these
cases has done them a serious disservice.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you, Senator Reed.
Each of the Military Departments have submitted a statement
for the record, which will be made a part of the record. I
would ask each of our Military Departments through the
secretaries to limit your remarks to 5 minutes. We have a full
panel today. We have a lot of members who have a lot of
questions.
So before we turn to the departments, I would ask Ms.
Elizabeth Field, Director of Defense Capabilities and
Management at GAO, to provide her statement, which I know
includes new findings that will be made public for the first
time today. Ms. Field?
STATEMENT OF ELIZABETH A. FIELD, DIRECTOR, DEFENSE AND
MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE
Ms. Field. Thank you, Chairman Inhofe, Ranking Member Reed,
Senators, and staff of the Committee. It is an honor to be here
today to discuss GAO's ongoing work assessing the Military
Housing Privatization Initiative, or MHPI.
Almost as soon as reports began surfacing last year of
problems with military privatized housing, servicemembers and
their families began reaching out to us at GAO to share their
stories. We heard from military families who reported mold
throughout their homes, rodent infestations, and other serious
problems like gas and carbon monoxide leaks, and repeated
sewage leaks.
While these are just some examples of the complaints we
received, they are indicative of the types of concerns we heard
from military families living in privatized housing at
installations across the country.
What we wanted to find out, when we began receiving these
complaints, was how commonly held they were. Defense Department
officials have primarily pointed to two metrics to help answer
that question.
First, they cite the results of the Department's annual
customer satisfaction survey. According to DOD's most recent
report, ``Evaluating the MHPI Program,'' tenant satisfaction
has remained at 87 percent and is, quote, a critical indicator
of overall program success. However, as Senator Reed noted, we
have determined that for many reasons, ranging from how the
survey question was asked to how the results were compiled and
calculated, this 87 percent figure is not in any way reliable.
Second, the Department points to high occupancy rates. In
the same report from May of this year, DOD stated that the fact
that occupancy rates remain greater than 93 percent program-
wide demonstrates--and I am going to quote again--a high level
of servicemember satisfaction and overall success in providing
suitable and desirable housing. However, through our site
visits to 10 installations where we conducted 15 focus groups
with families, we learned that family members often choose to
live in privatized housing for reasons that have nothing to do
with the housing itself, reasons such as living in close
proximity to medical and education services for children with
special needs or a concern that off-base housing is neither
affordable nor safe.
As part of our ongoing review, we sought a different way to
determine the extent of the problems we were hearing about. We
collected and analyzed over 8 million work order records from
all 14 private partners and all 79 projects. Our hope was that
we could use these data to determine the prevalence of certain
hazards, to see patterns over time and in different locations,
and possibly to assess the timeliness of maintenance conducted
on the homes. Unfortunately, we found that because the data in
these records are not captured reliably or consistently, they
cannot be used to do so.
Among other problems, we found anomalies in the data
provided by all 14 private partners such as duplicate work
orders and work orders with completion dates prior to when they
were submitted.
The problems I detail are significant not just because they
tell us that DOD's statement that the program has been
successful overall may not be fully accurate, but because the
Department has been using these metrics to reward and
incentivize the private partners. I want to acknowledge that
the Service Secretaries, along with officials from the Office
of the Secretary of Defense (OSD), have taken steps to address
these and other problems, from working to renegotiate the
performance incentive fee structure to strengthening oversight
on the ground to increasing staffing levels in military offices
that had seen their resources cut.
I also want to acknowledge the many factors that make this
a deeply complex problem, including the Department's inability
to unilaterally make certain changes to the legal agreements
with the partners. Through our ongoing review, we know that the
Department's efforts are headed in the right direction, but it
will take sustained attention, likely over a number of years,
to work through the many complications of this long-term
public-private partnership and to fully meet the Department's
goal of providing safe and clean housing for all servicemembers
and their families.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Field follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Inhofe. Thank you, Ms. Field.
What we are going to do is--we have a lot of participation
today. We are going to have 7-minute rounds. Senator Reed and I
agreed that we were going to ask our members to stay on
subject. There will be a temptation I think in this environment
to get into other areas, but housing is it today. So that will
be what we will attempt to do.
Let us go ahead with our opening statements. We will start
with Secretary McCarthy.
STATEMENT OF HON. RYAN D. McCARTHY, SECRETARY OF THE ARMY;
ACCOMPANIED BY GENERAL JAMES C. MCCONVILLE, USA, CHIEF OF STAFF
OF THE ARMY
Secretary McCarthy. Thank you, Mr. Chairman.
Chairman Inhofe, Ranking Member Reed, and distinguished
members of the Committee, thank you for this opportunity to
provide an update on actions taken by the Army since the
intensive focus on housing operations and oversight that began
in February 2019.
I would like to reiterate the Army's serious commitment to
providing safe, quality, and affordable housing to our
soldiers, civil servants, and their families. It is our
responsibility to provide housing, not simply to code but also
to quality.
We must fix the current housing crisis using a house- to-
house approach. We must also fix the governance model and
address underlying issues to ensure systemic change.
Over the last 10 months, we identified our governance
flaws, initiated commander-driven town halls, and created 24-
hour help lines to hear feedback directly from the families
affected. We have empowered the chain of command as part of the
solution, created transparency of the work order process, and
ultimately sought to regain the trust of the men and women in
our ranks and their families.
We directed housing as our top quality of life priority and
are aligning resources against it. As a demonstration of our
commitment to this issue, we assigned housing operations to the
four-star commander of Army Materiel Command (AMC), General Gus
Perna, who has the delegated authority to withhold incentive
fees.
We developed new incentive fee metrics measuring work order
response times, work order repair quality, and resident
satisfaction that will allow us to withhold fees for
substandard performance. A tri-service resident bill of rights
is being finalized to give residents an active voice and
avenues for recourse.
We are also equally concerned and committed to improving
barracks and Army-owned housing. In the last 2 fiscal years,
the Army has invested $1.1 billion in barracks sustainment. For
fiscal year 2020, projects for new barracks will total $790
million in R&M [repair and maintenance] and MILCON [military
construction].
While the Army has worked hard over the past 10 months to
make significant strides in the way we manage privatized
housing, there is much more work to be done.
The immediate focus is to fix current housing issues that
can be addressed by effective follow-through on work orders and
improved management. We owe it to the 45 percent of our force
who live on post.
In addition, we need to rapidly address the needs of
families who have been temporarily displaced. Across Army
installations, there is a need for standard operating
procedures, transparency, and accountability of claims.
This must include standardizing rent reimbursement, food
cards, and remediation or replacement of household items. Since
February, the Army has tracked the displacement of 2,265
families. Currently 182 families are still in temporary
housing, while privatized companies are addressing issues in
their homes. To displaced families, days can feel like weeks,
and weeks can feel like months. These are not simply numbers.
These are lives.
Currently, we have over 86,000 privatized homes, with one-
third of houses in good condition, one-third in fair condition,
requiring minor refurbishing, and one-third in poor condition
needing to be rebuilt.
Right now, General Perna is working on an overall analysis
of the Army's privatized housing requirements, and in the
spring, we plan to present the findings to the key committees
of jurisdiction.
In closing, the Army is resolved in our commitment to
provide safe, quality, and affordable housing to our soldiers
and their families. But much more work remains. We need
congressional help in two areas. First, we need the NDAA
approved to enact items such as the resident bill of rights.
Second, we need a final fiscal year 2020 appropriations bill to
continue immediate housing improvements.
Thank you and I look forward to your questions.
[The prepared statement of Mr. McCarthy and General
McConville follows:]
Joint Prepared Statement by The Honorable Ryan D. McCarthy and General
James C. McConville
Chairman Inhofe, Ranking Member Reed, and distinguished members of
the Committee. Thank you for this opportunity to provide an update on
actions taken by the Army since the intensive focus on Housing
Operations and Oversight that began in February 2019.
I would like to reiterate the Army's serious commitment to
providing safe, quality, and affordable housing to our soldiers, civil
servants, and their families. It is our responsibility to provide
housing, not simply to code but also to quality.
We must fix the current housing crisis using a house-to-house
approach. We must also fix the governance model and address underlying
issues to ensure systemic change.
Over the last ten months, we identified our governance flaws,
initiated commander driven town halls and created 24-hour help lines to
hear feedback directly from the families affected. We have empowered
the chain of command as part of the solution, created transparency of
the work order process, and ultimately, sought to regain the trust of
the men and women in our ranks and their families.
We directed housing as our top Quality of Life priority and are
aligning resources against it. As a demonstration of our commitment to
this issue, we assigned housing operations to the 4-star commander of
the Army Materiel Command, General Gus Perna, who has the delegated
authority to withhold incentive fees.
We developed new incentive fee metrics measuring work order
response times, work order repair quality, and resident satisfaction
that will allow us to withhold fees for substandard performance. A tri-
service Resident Bill of Rights is being finalized to give residents an
active voice and avenues for recourse.
We are also equally concerned and committed to improving barracks
and Army-owned housing. In the last two fiscal years, the Army has
invested $1.1 billion in barracks sustainment. For fiscal year 2020,
projects for new barracks will total $790 million in R&M and MILCON.
While the Army has worked hard over the past ten months to make
significant strides in the way we manage privatized housing, there is
much more work to be done.
The immediate focus is to fix current housing issues that can be
addressed by effective follow-through on work orders and improved
management. We owe it to the forty-five percent of our force who live
on post.
In addition, we need to rapidly address the needs of families who
have been temporarily displaced. Across Army installations, there is a
need for standard operating procedures, transparency, and
accountability of claims.
This must include standardizing rent reimbursement, food cards, and
remediation or replacement of household items. Since February, the Army
tracked the displacement of two thousand, one hundred and fifty-five
families. Currently, one hundred and ninety-eight families are still in
temporary housing while privatized companies are addressing issues in
their homes. These aren't simply numbers; these are lives.
Currently, we have over eighty-six thousand privatized homes; with
one third of the houses in good condition; one third in fair condition,
requiring minor refurbishing; and one third in poor condition needing
to be rebuilt.
Right now, General Perna is working on an overall analysis of the
Army's privatized housing requirements. In the spring, we plan to
present the findings to the key committees of jurisdiction.
In closing, the Army is resolved in our commitment to providing
safe, quality, and affordable housing to our soldiers and their
families. But much more work remains.
call to action
We need Congressional help in two areas. First, we need the NDAA
approved to enact items such as the Resident Bill of Rights. Second, we
need a final fiscal year 2020 appropriations bill to continue immediate
housing improvements. Thank you and I look forward to answering your
questions.
Chairman Inhofe. Thank you, Mr. Secretary.
My staff has reminded me that we will stay on our schedule.
Next we will be hearing from Acting Secretary Modly, then
Secretary Barrett. Try to stay within your 5 minutes.
STATEMENT OF HON. THOMAS B. MODLY, ACTING SECRETARY OF THE
NAVY; ACCOMPANIED BY ADMIRAL MICHAEL M. GILDAY, USN, CHIEF OF
NAVAL OPERATIONS AND GENERAL DAVID H. BERGER, USMC, COMMANDANT
OF THE MARINE CORPS
Secretary Modly. Chairman Inhofe, Ranking Member Reed,
distinguished Members of the Committee, thank you for your
continued attention to this very critical issue.
For the Navy and Marine Corps team, our people are our most
precious resource, and we will always prioritize their safety
and their well-being, particularly of our sailors and marines,
but also their families who serve alongside them. There is an
empty chair at the Thanksgiving table for many of our Navy and
Marine Corps families because a father, a mother, a wife, or a
husband was deployed overseas. These families served with pride
and distinction. On top of the considerable demands of military
service, no military family should ever have to contend with
chronic maintenance issues or concerns such as mold and pests
in their homes. Trust and confidence are the bedrock of
effective command, and the sailors and marines in our care must
be confident their leadership will advocate tirelessly on their
behalf. This is commander's business. The three of us are
actively engaged on this issue and have been since the
beginning, and we are committed to empowering leaders
throughout the chain of command to assess, monitor, and
remediate issues of concern.
Since the Department of the Navy last addressed this
Committee, we have diligently pursued three distinct lines of
effort: one, active and engaged leadership; two, reinforcing
the Department of Navy's oversight of our PPV [Public Private
Venture] partners; and three, improving partnerships with
privatized housing owners to most importantly restore trust
with those families that reside in those housing units.
Our written testimony provides more details on these
efforts. So we will close with this. While we have made steady
progress over the past 6 months, we are not completely
satisfied, and we will not rest in our determination to make
this right for our sailors and marines and their families.
We appreciate the Committee's continued resolve on this
matter and the Committee's efforts to secure the resources we
need in this effort by ensuring final passage of the National
Defense Authorization Act (NDAA) and the fiscal year 2020
appropriations.
Thank you and we look forward to your questions.
[The prepared statement of Secretary Modly, General Berger,
and Admiral Gilday follows:]
Joint Prepared Statement by The Honorable Thomas B. Modly, General
David H. Berger, and Admiral Michael M. Gilday
Chairman Inhofe, Ranking Member Reed, distinguished Members of the
Committee, thank you for your continued attention to this critical
issue. For the Navy/Marine Corps Team, our people will always be our
greatest resource, and we prioritize the safety and well-being of our
sailors, marines and their families. Trust and confidence are the
bedrock of effective command, and the sailors and marines in our care
must be confident their leadership will advocate tirelessly on their
behalf. On top of the considerable demands of service, no military
family should ever have to contend with chronic maintenance issues or
concerns such as mold and pests in their on-base housing. This is
commander's business, and we are committed to empowering our leaders to
assess, monitor, and remediate issues of concern.
Since the Department of the Navy (DON) last addressed this
Committee, we have diligently pursued three distinct lines of effort--
reestablishing active and engaged leadership on this issue, reinforcing
DON oversight, and improving partnerships with privatized housing
owners to help restore resident trust. While we have made steady
progress over the past six months, we can never rest in our
determination to provide safe, secure, and comfortable housing for all
sailors, marines, and sea service families.
We also appreciate the Committee's resolute concern on this matter.
We would be remiss if we neglected mentioning the importance of the
timely passage of the National Defense Authorization Act (NDAA) for
fiscal year 2020 and the adverse impact of a potential lengthy
Continuing Resolution. Our ability to maintain momentum relies on
critical resources dependent on the enactment of the NDAA and fiscal
year 2020 appropriations. Continuing Resolutions have a direct negative
impact on our ability to address shortfalls and improve the
responsiveness and enforcement of our partnerships.
active & engaged leadership
In March, we stated that our primary focus was to engage our
leaders as active participants in the privatized housing program. We
cannot outsource this responsibility. Since that time, Navy and Marine
Corps leaders achieved 100 percent contact with all sailors and marines
to inquire about on-base housing concerns and offer a home visit. Every
Navy and Marine Corps installation also held town halls with residents,
and each installation now offers a combination of quarterly or monthly
meetings to provide residents with information and access to
installation and partner representatives.
Additionally, we have implemented structured training for all
leaders to help them better understand the DON privatized housing
program, specific housing conditions, and local procedures available to
assist their sailors and marines. However, their responsibility does
not end there. We have tracked performance metrics and begun to spot
trends and help identify areas of concern before they escalate. Active
leadership is a pre-requisite to rectifying housing concerns.
DON leadership also interacts weekly with the other military
departments. We also maintain regular contact with our Public-Private
Venture (PPV) partners at the CEO level to improve partnerships,
enhance oversight initiatives, strengthen communications, and seek
resolution for our servicemembers and their families. Navy and Marine
Corps leadership also participated in two quarterly Tri-Service working
groups chaired and attended by the Service Secretaries, and three
Military Housing Privatization Initiative (MHPI) partnering sessions
sponsored by the
Office of the Secretary of Defense (OSD) and an OSD-sponsored
workshop with our partners focused on National Historic Preservation
Act compliance to efficiently manage resources.
We also note that we are equally committed to improving housing for
all sailors and marines in on-base and government-owned housing, not
just those in PPV facilities under MHPI. Residents of unaccompanied
housing and government-owned or government-leased family housing
overseas also received command contact and Resident Satisfaction
Surveys. Our Housing Offices will continue to track the completion of
all maintenance work orders and safety concerns, regardless of whether
those issues are in PPV housing, barracks, or government-owned or
leased housing overseas.
All residents now have the ability to submit and track the status
of their service requests via a mobile application provided by their
PPV Partners. Key features of the app are the ability to take photos of
maintenance issues and to receive up-to-the-minute updates on service
status. Residents are also able to complete satisfaction surveys on the
quality of repairs through the app.
To better track work order data and measure performance against
benchmarks in real time, we developed a PPV Performance Dashboard Suite
displaying family housing performance information for each echelon--
from the installation and regional level to the enterprise level, as
well as in alignment with project-specific requirements. DON Leadership
now has access to view data with the ability to drill down to the
individual housing unit via an Electronic Data Warehouse (EDW), updated
manually on a bi-weekly basis. Installation and Region Housing Offices
can now pull work order data directly from partner maintenance systems
in order to perform monthly review of electronic maintenance records,
monitor performance by neighborhood, and to conduct spot-checks with
residents to confirm work is complete. By the end of January, 2020, we
will transition to an automated process to allow leadership to view
integrated Navy and Marine Corps data, refreshed on a daily basis.
reinforce department of navy oversight
The Navy and Marine Corps significantly improved project oversight
over the last six months. DON Military Housing Privatization Initiative
(MHPI) partners are now assessing standardized metrics related to work
order timeliness and quality, a primary area of concern highlighted by
our residents. We are also re-evaluating Housing Condition Assessments
and Program Review processes, updating policies, procedures, roles and
responsibilities, and implementing lessons learned on an ongoing basis.
We've revised the PPV Project Performance Incentive Fee Structure
in order to anticipate implementation at the end of the calendar year,
consistent with OSD policy issued in October 2019. To ensure the
incentive fee structure incorporates the voices of our sailors,
marines, and their families, resident satisfaction will be weighted
within the metric upon which the amount awarded is assessed. Resident
satisfaction will be determined by resident move-in and out surveys and
resident work order surveys, in addition to the annual resident
satisfaction survey.
We are also focusing significant attention on the long-term
financial health of our individual PPV transactions to ensure the
sustainment of quality housing over the life cycle of the partnership.
We are acutely aware that the actions being taken today by the partners
to address immediate resident concerns will have a long-term impact on
the ability of project revenue to support future investments in the
homes. The DON has dedicated an audit team to provide a fiscal
assessment of the accounts needed to repair and modernize the
inventory. Our goal with this audit review is to ensure our partners
will continue to be able to meet their commitments to sustain modern,
safe, attractive housing for our residents.
The DON continues to work with the Naval Audit Service, the Office
of the Department of Defense Inspector General, and the Government
Accountability Office to review PPV project performance and processes.
In the wake of the fraud allegations brought to light at Tinker Air
Force Base, Oklahoma, we are proactively assessing if and how Navy and
Marine Corps projects are affected. On November 6, 2019, the Naval
Audit Service completed a formal audit of maintenance records and
provided twelve recommendations, all of which are being implemented.
In addition, we issued ``Letters of Concern'' to all of our
partners requesting validation of all of their maintenance records and
processes and have asked partners to report all anomalies or findings
of interest. We directed Departmental Region and Installation Housing
teams to conduct monthly reviews of electronic maintenance records and
random spot-checks with families to confirm response and completion
times reported by partners. We are also conducting historical reviews
on partner maintenance data systems for anomalies that would indicate
fraudulent data entry, such as unreasonably common service dates.
Furthermore, we conducted an independent review of PPV partner
portfolios to evaluate housing maintenance records and their
relationships to incentive fees, a summary of which was provided to the
Office of the Assistant Secretary of Defense for Sustainment on
September 16, 2019. We continue to provide information and updates to
the Government Accountability Office to inform their report on
Privatized Military Housing expected in February 2020. We anticipate
that their recommendations will help us further improve our oversight
efforts.
restore resident trust
The DON is committed to restoring the trust of residents. One of
the best tangible demonstrations is by increasing the number of
advocates. We are hiring additional staff for housing offices
administrative support, home inspections, and maintenance to increase
responsiveness and performance. We appreciate the Committee's support
to fund an additional 183 personnel in Navy Housing offices and 114 in
Marine Corps housing offices by including authorizations in the NDAA
for fiscal year 2020.
Recognizing this issue is not limited to the DON, we have reached
out across the Joint Force to aggressively pursue solutions that
benefit every American who wears the uniform today while providing the
best value possible to the American taxpayer. We have worked
extensively on the Air Force-led effort that produced a standard
Resident Bill of Rights and a Resident Responsibilities document. The
DON has led the tri-Department effort that developed a list of Common
Lease provisions for all Services and their PPV partners. It includes a
list of specific resident responsibilities consistent with similar
documents in the commercial sector to underscore common expectations
for care of the home.
We expect to finalize Common Lease provisions soon after release of
the NDAA to ensure consistency with congressional direction. We have
also taken point on development of a formal Dispute Resolution Process.
This is an extremely important initiative to get right, as it will be a
tool the Services and their partners can use to resolve conflicts and
give residents the assurance that their voices are being heard and
issues are being independently adjudicated.
While this process is in development, we are renewing efforts to
strengthen our existing informal issue resolution processes and ensure
Housing Office engagement in resolving resident concerns. When families
have a maintenance or service-related issue, they are directed to first
contact the PPV Property Management Office. The housing service center
and installation commanding officer will advocate for servicemembers
and families that are not satisfied with property manager results.
Region Legal Service Offices and the Marine Corps Legal Support
Sections are also available to provide free legal advice and
consultation to military tenants and their families living in PPV
housing.
While we have made significant progress, there is still work to be
done. We are conducting Out-of-Cycle Resident Satisfaction Surveys
across the Navy and Marine Corps, and we look forward to sharing the
results. We are also monitoring the steps that our PPV partners are
taking to regain trust. From Corrective Actions Plans to address
premature work order closeouts or lack of follow-up, to realistically
capturing the current condition of home offerings versus a model home,
this forms the foundation of an honest and transparent relationship
with residents.
We are enhancing partnerships with several military and veteran
service organizations including the National Military Family
Association, the Military Officers Association of America, the Fleet
Reserve Association, Blue Star Families and the Military Family
Advisory Network. These partnerships are focused on addressing
communication difficulties, quality of maintenance work performed,
government advocacy for residents, and environmental health concerns.
In order to equip our residents with the knowledge and information
they need to ensure the upkeep of their homes, partners are now
regularly including information in their monthly newsletters regarding
changing of filters, what to expect when the heat comes on, etc.
Additionally, our housing websites have resident related information
including; but not limited to Resident Energy Conservation Program, the
3 step process and the Exceptional Family Member Program. Additional
information is expected to be added over the next year.
Commander, Navy Installations Command (CNIC) is revising training
to reflect new guidance and lessons learned over the past several
months. By March 30, 2020, CNIC will roll-out a revised Navy Privatized
Housing Course, Housing Referral Training, and Issue Resolution and
Dispute Resolution Training (pending NDAA passage). The Marine Corps
Order (MCO) on housing is being revised and has incorporated a chapter
to address health and safety concerns. We have also engaged with the
Office of the Secretary of Defense on the development on the Bill of
Rights, Resident Responsibilities, Universal Lease and Disputes
Resolution policy. The Navy Bureau of Medicine and Surgery (BUMED) has
also promulgated fact sheets on mold and mold sampling and directed
health providers to be sensitive to housing-related health concerns and
to participate in keeping residents informed.
moving forward
While we can never be satisfied as long as quality, safety, and
health issues persist among any of our housing solutions, we are
confident in the significant progress made on near-term efforts to
advocate for servicemembers and their families, increase awareness of
the problem resolution process, and increase involvement of the DON
government housing team. The revelations over the past nine months
resulted in more rigorous awareness and oversight by the Department to
protect our personnel. We must maintain momentum by continuing to open
the lines of communication and improve collaboration between residents,
Service leadership, and our PPV partners.
Our PPV partners are demonstrating a commitment to restore resident
trust, implement improved maintenance and quality assurance, and track
metrics at higher levels. We continue to work with those partners to
ensure issues are being addressed in a timely manner. This involves
ensuring all levels of the partner organizations, down to neighborhood
managers and repair technicians, are equally committed to providing
outstanding customer service, quality workmanship, and accountability.
We are particularly concerned with continued accounts of service
discrepancies, particularly during the move-in process, that place a
burden on the residents to resolve. We are aware that hiring a skilled
workforce can be difficult in this competitive economy, and we remain
committed to working with partners to resolve issues.
The men and women who wear our uniform rightfully expect quality
workmanship in their homes and the quick resolution of problems
directly impacting their families. Both they and our partner employees
want to be treated with courtesy and professionalism. We encourage our
residents to work with the partners collaboratively to address concerns
with the services being offered to maintain homes. At every level of
command, we are committed to ongoing improvement in our leadership,
responsiveness, and oversight efforts when it comes to advocating for
our sailors, marines, and families.
We appreciate the work of this Committee on this critical issue and
your active involvement, oversight, and advocacy on behalf of our
warriors. Thank you once again, and we look forward to your questions.
Chairman Inhofe. Thank you.
Secretary Barrett?
STATEMENT OF HON. BARBARA M. BARRETT, SECRETARY OF THE AIR
FORCE; ACCOMPANIED BY GENERAL DAVID L. GOLDFEIN, USAF, CHIEF OF
STAFF OF THE AIR FORCE
Secretary Barrett. Chairman Inhofe, Ranking Member Reed,
Members of the Committee, thank you for inviting us to discuss
housing today.
The Service Secretaries and Service Chiefs work together on
this issue. We share ideas of how to improve housing because
our soldiers, sailors, airmen, and marines who live on military
facilities deserve safe, secure quarters. We are jointly
committed to resolving housing issues, and we thank you for
your continued attention to this matter of mutual concern.
Issues with privatized housing on some installations
revealed instances of faulty construction, sub-par maintenance,
and late-to-need responsiveness. While many bases have
effective privatized housing, others have suffered with project
owners who have simply failed. Some project owners have
reportedly disregarded maintenance requests, misrepresented
timelines, performed partial repairs, and failed to correct the
root causes of problems.
The Air Force owns part of the responsibility as well. We
cut too many personnel who provided oversight of the projects
and failed to fully empower the chain of command to own and fix
these issues. As a result, housing problems have distracted
from the Air Force mission. They have disrupted our airmen and
dislocated their families. This is unacceptable. So we are
taking steps necessary to hold our project owners accountable
for improved performance.
During my confirmation hearing before this Committee, we
discussed some of these issues. Subsequently, my first stop on
my first trip as Secretary was to survey base housing. In my
first 5 weeks as Secretary, I have examined privatized housing
in Wyoming, Oklahoma, Texas, and Mississippi to observe
problems and process firsthand.
Since my predecessor, Secretary Heather Wilson, and General
Goldfein testified on this subject 9 months ago, the Department
of the Air Force has fixed many housing issues and made
progress toward fixing others. They completed an important
Inspector General (IG) investigation, the results of which have
been shared with this Committee. Dozens of recommendations from
the IG and from Air Force itself and from families themselves
have been fully and partially implemented.
Process improvements fall into five broad categories. We
are empowering the residents. We are integrating leadership and
accountability into all levels of housing. Residents, project
owners, and the military chain of command are now communicating
directly and candidly. Housing now has local and central
scrutiny and oversight. Finally, Air Force policies for housing
management have been updated and standardized.
Under the leadership of Air Force Assistant Secretary John
Henderson and tenacious base commanders, we are establishing
resident councils to solicit direct feedback. We are placing
new resident advocates at each of our military housing offices
to connect residents with resources and to help resolve
disputes, and additional personnel will help us achieve 100
percent pre-move-in inspections while enhancing oversight.
We have also worked with project owners to fix root causes
of recurring mold at the bases with the most severe challenges.
Some housing issues invite concern about possible
misconduct, including allegations that some project owners
manipulated maintenance data to increase their incentive
awards. These allegations have been referred to the Air Force
Office of Special Investigations (AFOSI) which, in coordination
with the FBI [Federal Bureau of Investigation], will determine
whether to press criminal charges.
Senator Wicker, last week when you and I visited Keesler
Air Force Base in Mississippi, we met Air Force families who
had been displaced from their privatized homes as many as four
times in recent years. As these families prepared for
Thanksgiving, they wondered whether they should decorate a
Christmas tree in their temporary homes or rely upon the latest
promise that they would return to their permanent homes in time
for their holiday. Family disruptions and health challenges are
profoundly personal and impactful to these families and
therefore to us.
We owe it to Air Force families to get this right. With
your continued support, we will.
I look forward to your questions.
[The prepared statement of Secretary Barrett and General
Goldfein follows:]
Joint Prepared Statement by Secretary Barbara M. Barrett and General
David L. Goldfein
introduction
Taking care of our airmen and their families is an operational
imperative for the Air Force. Our ability to provide safe and habitable
housing for airmen is a key part of their quality of life,
strengthening our efforts to recruit and retain the people we need to
lead the most powerful Air, Space, and Cyber Force on the planet. This
is commanders' business, and we have taken on this challenge to make
meaningful, enduring changes to our privatized military housing
program. We want to thank the members of this Committee for your
leadership in supporting our airmen and their families.
background
The Air Force provides 71,200 family housing units worldwide for
use by our airmen, other servicemembers, and their families. In 1996,
Congress passed the Military Housing Privatization Initiative, giving
the Services the authority to enter into agreements with the private
sector to secure housing for members of the Armed Forces and their
families. Since then, across the United States, the Air Force has
privatized 53,327 homes, capitalizing on private sector funding and
expertise to update and modernize family housing on our bases. Most of
our projects were highly successful. In the first 16 years, the Air
Force completed 32 projects that privatized housing at 63
installations. We invested $619 million in Air Force-scored costs to
obtain $8.3 billion in total privatized project development. Project
owners renovated 12,595 homes and constructed an additional 22,613
homes. Of the 32 projects, 29 are now complete (47,332 homes) and three
are still in development (5,905 homes).
We are now 22 years into this program. Concerns expressed by our
airmen and their families, combined with the results of our commander-
led 100 percent review of the Air Force's housing inventory, have
clearly identified challenges and the need to improve. For the first
several years, we focused on project closure and construction. Over the
last few years, our focus has been on oversight of the longterm project
health and sustainment of these projects. Airmen generally give high
marks for their privatized housing accommodations. A 2018 independent
third-party survey rated overall privatized housing resident
satisfaction at 81.7 out of 100, which is characterized as ``Very
Good.'' This is more than 15 points higher than when the government
owned and operated housing. We need to improve.
resident concerns
Some privatized housing project owners have not met expectations.
Our airmen and their families want to know their rights, want a voice
in the process, and want to know that they have an advocate when issues
arise. Our airmen want the ability to raise concerns without the fear
of reprisal and have any problems corrected promptly by skilled and
professional maintenance staff. Our airmen want more proactive
engagement from the chain of command, more support from our military
housing offices, increased visibility on the status of their work
requests, simplified move-in and move-out procedures, and standardized
dispute resolution processes.
We are committed to rebuilding the trust between our residents, the
housing management teams, and Air Force leadership in order to improve
the overall experience for our airmen and families who choose to live
in privatized military housing. The Air Force has taken several actions
to achieve these objectives which are summarized throughout the rest of
this statement.
wing commander health and safety
As reported in the April 4, 2019 hearing with the House Armed
Services Committee, Air Force leadership reached out personally to our
military families, conducting a 100 percent review of the health and
safety conditions in our military housing. After that review, we
started an aggressive program to correct the identified deficiencies.
The data reported through October 1, 2019 included responses from
56,689 military residents of government-owned, government-controlled,
and privatized housing out of a total of 57,553 military residents. Of
those, 45,284 responses were from privatized housing residents.
Overall, 14.3 percent of military residents who were contacted
expressed a life, health, or safety concern with their homes. The
percentage was lower in government-owned and leased homes, where 7.8
percent of military residents expressed concerns vice 15.9 percent for
privatized housing. Common resident concerns included mold and
moisture, lead-based paint, insects, and rodents.
During the review, Air Force leaders were invited to visit 11,534
homes. We found 3,164 had mold and moisture issues (3,155 have been
resolved, with 9 still being worked), 473 had chipped or flaking paint
(all have been resolved), and 1,637 had evidence of vermin (all have
been resolved).
In addition to the resolution of over 99 percent of these
identified issues, we have changed our policies and procedures across
the portfolio, implementing new systems to better identify, then
quickly resolve, future issues.
air force inspector general review
The Air Force Inspector General conducted a thorough review of the
Military Housing Privatization Program to identify best practices and
make recommendations for improvement.
Published April 9, 2019, the Inspector General's report identified
35 recommended improvement areas, all of which the Air Force
incorporated into our Military Housing Privatization Initiative
Improvement program.
military housing privatization initiative improvement program
In April 2019, the Air Force initiated a Military Housing
Privatization Initiative Improvement Program along five lines of
effort: empower residents, integrate leadership into all levels of
privatized housing, improve communications, improve local and
centralized oversight by both the government and privatization Project
Owners, and standardize Air Force policies for privatized housing
management and oversight. These initiatives, which include the 35
Inspector General recommendations plus 16 additional recommendations
brought to us by our families, have led to a 51-item action plan
tracked weekly by Air Force leadership.
empower residents
The Air Force has collaborated with advocacy groups, this
Committee, the other Services, and the 10 project owners to develop a
Military Residents' Bill of Rights and Tenant Responsibilities. These
serve as contracts between the project owners and the residents,
designed to provide a common agreement of rights, responsibilities, and
options available when residents don't receive the quality homes and
maintenance support they deserve.
As previously reported, we also established a toll free Air Force
Housing Call Center in March 2019. The call center transitioned to 24/7
operations in May 2019. As of October 17, 2019, the call center has
received 49 calls and the Air Force has resolved all but 10 issues,
which are currently being addressed.
Leadership at all levels has worked with our project owners to
ensure residents can submit work orders electronically and can view the
status of their work order requests. As of October 1, 2019, residents
at 53 of 63 installations can submit work orders electronically. By the
end of the year, eight more installations will have this capability.
Residents at 29 of our 63 installations can already view the current
status of their work order requests on-line in real time. By year's
end, that number will grow to 60 installations. We are working closely
with the project owners at the remaining three installations to provide
the same capabilities.
Perhaps most significantly, we are working toward resourcing
Resident Advocate positions at each of our Military Housing Offices to
assist our military residents. These advocates will connect families
and project owners to help resolve all types of issues, including
solutions to Exceptional Family Member Program needs. Ultimately, this
will enhance the resiliency of our airmen and families, making them
more mission effective.
integrate leadership
The former Secretary of the Air Force and the current Chief of
Staff of the Air Force issued a letter to all commanders in April 2019,
reemphasizing the commander responsibilities within the privatized
housing program. This letter clarified expectations of Installation
Commanders, the Air Force Civil Engineering Center, and Project Owners,
stressing their role in the health and safety of our members. Leaders
in each of these agencies understand their responsibilities in the
oversight of these projects and are empowered to resolve issues at
their level, while leveraging senior Department leaders when fiscal or
policy disputes arise.
The Air Force has been negotiating with our project owners and
other Services to revise the performance incentive fee structure to
provide a greater voice to Installation Commanders. We are devising
metrics to clearly communicate expectations, ensuring transparency and
full accountability between all parties.
improve communications
The Air Force is revising the annual resident satisfaction survey,
asking pointed questions and presenting the results and data in a
manner to help identify actionable issues that may be masked by the
volume of data.
Government Housing Officers are now required to have clearly
identified private areas for conversations between the residents and
military housing offices or resident advocates to improve
communications outside of the privatized partner spaces.
The Air Force is implementing Wing-led Resident Councils. Under
this arrangement, residents have the opportunity to express concerns
directly to the Wing Commanders and project owner leadership.
improve oversight
We are actively pursuing 149 additional positions to augment our
Military Housing Offices, seeking to improve and expand oversight and
quality assurance of the privatized housing portfolio.
These positions will target 100 percent tenant and military housing
office participation in the pre-move-in inspection of units prior to
leasing, conduct oversight and validation that the Project Owners
satisfactorily resolve 100 percent of all health and safety work order
requests, and review and audit 30 percent of urgent work order requests
to ensure proper completion.
standardize policies
In June 2019 the Air Force established a reporting system and
issued guidance to capture and collect airmen's housing-related medical
concerns. This policy ensures these concerns are documented, the
affected residents are referred to medical providers, and specific
concerns that may require housing modifications are worked toward
mutual resolution.
The Air Force is also revising our housing policies to empower
residents. We are emplacing proper signage to clearly distinguish the
government-run Military Housing Office staff from the Project Owner
housing staff and designating private areas for confidential Military
Housing Office consults with residents. We are establishing Resident
Councils to allow residents to share experiences with and elevate
concerns to installation leadership. Additionally, we are adding 61
Resident Advocates to serve as liaisons for residents to mediate
concerns with the Project Owner, ensure resident representative
participation at Management Review Committee meetings, and link
residents with available installation resources such as legal and
medical support.
maintenance data integrity
The Air Force has discovered maintenance data anomalies affecting
six Air Force bases. The Air Force directed these Project Owners with
data integrity issues to conduct an independent third-party audit of
their maintenance programs, assess their higher level oversight and
quality control, identify specific actions the Project Owners will take
to remedy any deficiencies, ensure their maintenance and work order
processes are accomplished in accordance with all Air Force
requirements, and make required adjustments to current and past
performance incentive fee payments. Additionally, the Air Force is
currently withholding Property Management Performance Incentive Fee
payments to projects with validated maintenance order discrepancies and
will make adjustments, as appropriate, to future payments upon analysis
of that data.
In all instances where the Air Force suspects there may have been
Project Owner fraud, or any other action that may be illegal, we
immediately notify the AF Office of Special Investigations (AFOSI) and
the Department of Justice. The Air Force takes all allegations of fraud
seriously. There is no room on the Air Force team for anyone who does
not share our core values of integrity, service, and excellence.
significant quality and performance challenges: tinker, keesler, and
macdill air force bases
Mold is a challenge in persistent high-humidity climates. Even the
best facility designs cannot entirely eliminate mold. Residents living
in areas prone to mold growth are provided a mold addendum to their
tenant leases, recommending specific measures to prevent mold growth.
Facility design, construction, and maintenance are also key to
controlling mold. We have identified three installations where facility
design, construction, or materials proved causal to mold growth: Tinker
Air Force Base, OK; Keesler Air Force Base, MS; and MacDill Air Force
Base, FL.
At Tinker Air Force Base, Balfour Beatty Communities experienced
significant problems with mold. These problems were largely the result
of manufacturing defects in the new water lines installed in 398 homes
and the buildup of moisture in the mechanical rooms of roughly 200
homes. To fix these problems, the Air Force approved $6.1 million in
project funds to replace the defective water lines. Those repairs were
completed in May 2019. To remedy the problem with the mechanical rooms,
the Air Force Civil Engineer Center placed an Air Force Resident
Construction Manager with mold remediation training and experience at
Tinker to provide oversight of an Air Force-directed corrective action
plan.
Balfour Beatty Communities has treated mold growth in the
mechanical rooms and hired a third-party engineering firm to determine
the causes of mold and recommend corrective actions.
An Air Force investigation of a fire in a duplex unit at Tinker
earlier this year resulted in the discovery of a fire code violation in
the construction of the unit's firewall. As a result, the Air Force
Civil Engineer Center required Balfour Beatty Communities to inspect
all of its duplex units at Tinker Air Force Base with the Air Force
Civil Engineer Center Resident Construction Manager oversight.
This inspection identified the need for some level of repair to the
firewalls of all of these duplex units. These repairs are scheduled to
be completed later this month.
In September 2019, an oversight visit by the local Military Housing
Office at Tinker also found a flooring subcontractor hired by Balfour
Beatty Communities was disturbing and removing asbestos-containing
materials without employing the proper protocols. Balfour Beatty
Communities immediately halted the work and performed the required air
sampling and cleanup work of these 20 units. Fortunately, no residents
were exposed to harmful asbestos.
Because of the extent and severity of the problems with Balfour
Beatty Communities, particularly at Tinker Air Force Base, the Air
Force has required Balfour Beatty Communities to submit a comprehensive
improvement plan with milestones and schedules, to remedy all of its
construction, maintenance, repair, management, and oversight
performance deficiencies for Air Force approval by the end of this
calendar year. We notified Balfour Beatty Communities that unless we
see prompt and substantial improvements to these serious performance
failures, the Air Force will initiate formal action under the dispute
provisions of the project documents.
At Keesler Air Force Base, which is a part of the Southern Group
housing privatization project, inspections revealed poor workmanship in
both the air conditioning systems and the building envelope, causing
mold growth in homes constructed by the Air Force after Hurricane
Katrina. In 2015, the Air Force required the Project Owner, Hunt
Military Communities, to commit to a $6.4 million Moisture Remediation
Plan. Hunt Military Communities has made progress in remedying the
causes of mold at Keesler, however, the Air Force is not satisfied with
disruption the repair work causes to residents. The Air Force Civil
Engineer Center is currently working with Hunt Military Communities to
revise its Moisture Remediation Plan.
At MacDill Air Force Base, Clark Realty has experienced systemic
moisture issues due to breaches or a lack of vapor barriers in 241
housing units constructed by the Air Force prior to privatization.
Since 2017, Clark Realty has treated the mold and completed $4.7
million in repair projects to correct the underlying causes of systemic
moisture issues in 294 homes. An additional 68 homes are scheduled for
repair, with work to be completed in 2022 at a cost of $6.8 million.
The project expenditures on mold remediation at these three
installation has exceeded $24 million to date. At all three
installations, military families who experienced problems with mold
have been relocated, where warranted, to temporary quarters at no
expense while remediation work was accomplished.
In addition to those three locations, the Air Force contracted
moisture and mold inspections at Joint Base San Antonio--Randolph, TX,
Eglin Air Force Base, FL, and Travis Air Force Base, CA to address
resident concerns. The Air Force shared all these reports with the
project owners, employing remediation actions where appropriate. Some
of these actions are ongoing, and we are committed to ensuring Project
Owners fix these problems in a timely and successful manner.
While these corrective actions chart the path forward toward
remedying a myriad of challenges in privatized military housing, they
have not always been accomplished as quickly as we expected, and there
have been instances where the project owners' responses lacked an
appropriate sense of urgency, diligence, stewardship, and management
oversight. Air Force leadership is engaged and taking necessary actions
to hold project owners accountable for these deficiencies.
Additionally, the Air Force has placed additional personnel at these
three installations to assist in in the work to improve the quality of
housing provided to our military families.
conclusion
The Air Force is committed to providing safe and habitable housing
to our airmen, other servicemembers, and their families. While we have
made significant progress over the past year to improve military
housing, we frankly have a long way to go as we still have some
privatized housing project owners who are not meeting expectations. In
those instances where we let our families down, we are wholly committed
to earning back their trust. Our leaders are fully engaged, and we are
taking on these challenges as operational imperatives. We look forward
to working with you as we implement the full range of our Military
Housing Privatization Initiative Improvement Program.
Chairman Inhofe. Thank you, Secretary Barrett.
We are going to have 5-minute rounds.
We have more than a dozen contractors out there providing
military housing to our services, and some are better than
others. There is one that is kind of notorious at one end of
the spectrum, and that is Balfour Beatty. I am very familiar
with that because that is where this whole thing started. In my
opening statement, I mentioned Tinker Air Force Base. But they
also are representing Lackland, Mahlstrom, Travis, and
Fairchild. It might be a little unfair since you are the newest
one, Secretary Barrett, to give you the first question.
If you have a repeater like this and conduct like this, why
is it that they are still there? What do we have to do? How do
you pull a plug? How do you get that done? Are there contract
obstacles out there? We want to get things done, and you are
the newest one out there. What do you think?
Secretary Barrett. Senator, that is what we are looking at.
Before I was confirmed, the Air Force was taking action on
exactly that concern. That company received a letter of concern
from the Air Force expressing that the Air Force has lost
confidence in their ability to perform under their contract.
That letter was issued in September. Since that time, they have
not been receiving performance incentive fees. Since that time,
all of their contract--they have the contract on many bases.
All of their performance fees have been withheld. So they are
under financial penalty right now.
In addition to that, it has been requested that they submit
an action plan for what they will be doing. That plan is due by
the end of the year, and there will be metrics and
accountability from that plan or the Air Force will be
initiating the elements accessible to us under the dispute
resolution procedures, which could lead to anything up to a
default on their lease.
Chairman Inhofe. I guess the short version is you are doing
everything that you can do that you inherited all the
facilities that you are able to--changes you are able to make
currently.
To each of the secretaries, I keep hearing that they are
talking about these companies said that they would be open to
reopening these agreements to ensure transparency,
accountability, and performance. They never talk anything about
what the cost would be. So I would ask any secretary who would
like to respond to the question. Behind closed doors, are
companies actually willing to reopen these agreements, or are
they just giving you lip service to contractors trying to dig
their way out of a bad situation? If they are open to reopening
the agreements, have any of them talked about what the cost
would be involved to do such a thing? Any of the secretaries.
Secretary McCarthy. Mr. Chairman, in our most recent
discussions with the RCI [Residential Communities Initiative]
partners, there was a discussion about the restructuring of the
debt of their companies. The economics, in most cases, for the
projects are under 1996 interest rates, so 7, 8, 9 percent for
these projects, which by changing the scoring model at OMB
[Office of Management and Budget], we can provide an
opportunity for them to go to capital markets and increase the
capital for reinvestment.
What we have instructed in the Army is for General Gus
Perna to come back with an analysis of just how substantial of
a project this would entail, and then we would have to
negotiate that. But the sense that I had from the most recent
discussion in September was there was definitely energy to do
that.
Chairman Inhofe. Any other secretaries?
Secretary Barrett. We absolutely would consider reopening
the contracts, renegotiating the contracts. It is much more
efficient to work under that contract now if they will correct
their behaviors, but if not, we will----
Chairman Inhofe. Much cheaper than trying to start all over
again I would suggest too.
Secretary Barrett. Exactly.
Chairman Inhofe. We have gotten some positive results. I
know we hear more about the negative results, but I know in the
case of Tinker, Colonel Filcek took command of the 72nd Air
Wing, and things really started to improve. One of the things
he did--and I was down there and I heard from other people
saying that he actually went to town hall meetings. We are
talking about those that are in charge in the chain of command
going to town hall meetings and meet with people. He would
really get emotionally involved in them. So I would like to at
least point out that some good things are happening, and we
want to learn from those experiences.
Senator Reed?
Senator Reed. Well, thank you very much, Mr. Chairman.
Let me once again commend Ms. Field and the GAO for their
excellent work. You have made the point that many of the
statistics that are used particularly for the performance
incentive fee structure are erroneous, misleading, not
appropriate, which begs the question which Secretary Barrett
has already responded to. I will address it first to the Army
and the Navy.
Have you withheld performance fees just in general because
of the inaccurate data or specifically because of problems you
have encountered? Secretary McCarthy or General McConville.
Secretary McCarthy. Most recently what we did, Senator, was
I had to go back and look at the incentive award fees to ensure
that the metrics were such that we had incentivized the
appropriate behavior by the contractor in this case. So what
General Perna has done is he has revised them. We did get
inputs from the GAO and others, but he has revised those. Those
will go live here in a couple weeks. But there are specific
instances for installations in Fort Benning and I think one
other location most recently where we held back substantially.
I think Joint Base Lewis-McChord withheld substantial fees back
from the contractors in this case because of poor performance
and work order response time, as well as quality.
Chief, do you want to add anything?
General McConville. Senator, I would just add that as the
Secretary said, the average incentive fee right now is 77
percent, but we are taking a much harder look at that. So they
are not getting 100 percent. We have had some posts that have
got 100 percent, but as low as 11 percent, and we see that
making a difference in performance of the contractors in
executing their mission.
Senator Reed. Mr. Secretary?
Secretary Modly. Senator, we in the Navy have not paid out
an incentive fee this year. We are looking at those very, very
carefully to understand whether or not they have earned them,
and we are going through that analysis. But, going forward, we
have also done what the Army has done in terms of changing the
way that we are calculating the incentive fee to much more
heavily weighted towards resident feedback and their
perceptions, to include health and safety issues, which were
not part of the incentive fee structure before.
Senator Reed. Thank you.
Secretary Barrett, do you have anything to add?
Secretary Barrett. The Air Force has been looking at
restructuring the fees, including a lot more input from the
base commanders so that their performance on the base is
calculated into the structure.
Senator Reed. Let me return again directing questions to
each of the services.
These contractual agreements you find now somewhat
constraining in terms of getting the proper performance. What
is the biggest contractual obstacle that you see, Secretary
McCarthy, and is there any way we can provide assistance to you
to get that modified?
Secretary McCarthy. Senator, when the bill of rights is
published, I think that dispute resolution is one in particular
that we need to put in place as quickly as possible. It is why
in many cases that the only mechanism that families have to get
results is legal action. So the sooner we can have a dispute
resolution in place, it would help improve matters
dramatically.
Senator Reed. So if there was a meeting of minds between
the companies and the services on dispute resolution to benefit
the quality of life of soldiers, sailors, airmen, and marines,
that would be a positive step.
Secretary McCarthy. Yes, sir.
Senator Reed. Thank you.
Mr. Secretary?
Secretary Modly. Yes, Senator. I agree with Secretary
McCarthy on this one, but I also would say that one of the
other challenges that we have is until now we did not have
great visibility into the data. Most of the maintenance data
was captured in two different types of IT [information
technology] systems, without getting into the mundane aspects
of that. But they were not capturing data in the same ways, and
so what we are trying to do is to standardize that so that we
can get visibility into that a lot quicker. So we understand if
a contractor is not performing properly, we can take action on
that a lot more immediately.
I also agree with Secretary McCarthy on this issue of the
tenant bill of rights. I think once we standardize that, I
think that is really going to help our ability to resolve
disputes more quickly.
Senator Reed. You can rationalize the data without any
contractual changes? You can do that within the current
context?
Secretary Modly. Yes, sir. We believe we can do that. We
need the partners to enter the data in a way that makes sense
to us so that we can compare it across the entire population of
homes that we have managed.
Senator Reed. Secretary Barrett, your comments please.
Secretary Barrett. I do not know of any contractual changes
that Congress can help us implement, but we will take a look
and if that is the case, we would be happy to provide those for
the record.
Senator Reed. Thank you very much.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you, Senator Reed.
Senator Wicker?
Senator Wicker. Ms. Field, who performed this satisfaction
survey?
Ms. Field. The annual satisfaction survey that I referred
to in my opening remarks was conducted by an independent third
party group named CEL. I should say we found nothing wrong with
how CEL conducted the survey. It is more the questions that
were asked and how the results were collected and analyzed and
presented to you.
Senator Wicker. Okay. Who makes that determination?
Ms. Field. Well, there are multiple levels in which there
were problems with this.
Senator Wicker. So CEL did not devise the questions. They
just simply asked what they were told to ask.
Ms. Field. My understanding is that the services
coordinated with CEL to develop the questions. Specifically
they asked how much do you agree or disagree. I would recommend
this community to others, which is different than the question
that was presented to you.
Senator Wicker. Well, I think we should all agree we got
bad information, inaccurate information, and we ought to
completely rethink how we ask that question so we can find out
what the troops are really thinking there. So thank you for
that.
Secretary Barrett, thank you for coming to Mississippi and
visiting with our servicemembers there at Keesler. Senator
Hyde-Smith was there with me. Congressman Palazzo's staff was
very involved also.
Let me give a shout out to Colonel Heather Blackwell, the
wing commander there at Keesler, as well as her senior enlisted
leadership. I think this particular group of leaders
represents, frankly, a mindset change to be very customer-
oriented and to be empathetic with the troops and the folks
that are trying to make it work in these houses.
Frankly, I would contrast that with some of the previous
leadership we had at Keesler where one particular person told a
member of my staff that by raising these questions, he was
simply making matters worse. I was absolutely delighted to see
that there is none of that left at the leadership at Keesler
anymore, and there is very much a mindset of knowing what the
problem is and that it must be solved for folks that have
stepped forward.
You have dedicated an assistant secretary to work almost
exclusively with this problem. Is that right, Secretary
Barrett?
Secretary Barrett. Well, Senator, that assistant secretary
has a lot of other duties as well, but he is really spending a
great deal of his time on exactly this topic and really is
devoted to it. John Henderson.
Senator Wicker. That is John Henderson, and he is sitting
behind you. So I want to thank him too, and it does occur to me
he is spending a lot of time on this.
We have an unusual situation at Keesler in that Katrina
hit, and almost all of our 1,188 housing units had to be
replaced in one fell swoop.
It took me a while, but yesterday I finally found out this
information. Of the 1,188 residences there, 1,084 actually have
experienced moisture and mold. Now, we are told this was a
mistake with the installation of the air conditioning units and
particularly the air conditioning ducts. I would like for you
to tell us on the record how many air conditioning companies
were involved in this?
[The information referred to follows:]
Secretary Barrett. The Air Force does not have records for
the number or names of the air conditioning subcontractors used
during the original pre-privatization construction in 2007,
2008 and 2009.
Were all of them involved in these homes that have had the
moisture problems?
[The information referred to follows:]
Secretary Barrett. The Air Force does not have records for
the number or names of the air conditioning subcontractors used
during the original pre-privatization construction in 2007,
2008 and 2009.
Why the multiple instances?
[The information referred to follows:]
Secretary Barrett. Most of the moisture and mold was
associated with improperly insulated ducts in the attics
resulting in duct sweating. Duct repairs in one section often
caused increased air flows and resultant duct sweating in a new
location. The improperly insulated ducts were not in all the
homes, and were not readily visible. We believe a new
maintenance approach will cause fewer mold issues, thereby
minimizing future family relocations.
You mentioned a family that had had to leave their
residence four times, and the problem still has not been
solved. Why is it that the remediation is often not getting
done?
[The information referred to follows:]
Secretary Barrett. Most of the moisture and mold was
associated with improperly insulated ducts in the attics
resulting in duct sweating. Duct repairs in one section often
caused increased air flows and resultant duct sweating in a new
location. The improperly insulated ducts were not in all the
homes, and were not readily visible. We believe a new
maintenance approach will cause fewer mold issues, thereby
minimizing future family relocations.
Why are they typically told you are going to be out of the
house 2 weeks and typically that turns into 4 and 6 and 8
weeks?
[The information referred to follows:]
Secretary Barrett. Because dozens of homes were undergoing
simultaneous remediation and many homes required unanticipated
work, schedules changed. The project owner's numerous customer
service representatives did not share schedule information. The
project owner is now expediting remediation and has a plan for
more effective communication to dislocated families.
Are there any houses that are ever repaired in 2 weeks? I
would like to know that.
[The information referred to follows:]
Secretary Barrett. Very few.
How often does it, in fact, take 2 weeks?
[The information referred to follows:]
Secretary Barrett. In very few instances.
Why is it that neighbors tell these people that their units
that have been vacated often go days without workmen being
there? Of course, they are out for longer and no work is being
done. That cannot be a good use of the time.
[The information referred to follows:]
Secretary Barrett. The large number of units under
simultaneous remediation created schedule conflicts and workman
shortages. In November, the project owner added Quality
Assurance Managers to assist with scheduling to reduce
displacement times. The project owner is expediting remediation
and has a plan to more effectively communicate with dislocated
families.
Many of our troops are asked to move out to hotels because
there is not adequate housing for them to be in. One troop said
he had to be out by 11:00 a.m., got all his belongings in his
vehicle to comply with the 11:00 a.m. checkout, and then mid-
afternoon, as he sat in his car, he was told it will be another
2 weeks. You have to move back in. This is called being jerked
around by the system.
Then one other question. I am over my time, but these need
to be answered on the record. In many instances like Biloxi,
Mississippi, the homeowners insurance is so high that the basic
allowance for housing (BAH) is not adequate. Now, when I was in
the Air Force on Active Duty, I was happy to go off base, use
my BAH, and live well.Do we need to change the statute to
account for higher homeowners insurance with BAH?
[The information referred to follows:]
Secretary Barrett. Homeowner's insurance is not a component
of BAH and is an out-of-pocket expense to all military
personnel, whether living on base or off base. If homeowner's
insurance was a component of BAH, the Air Force could mandate
that project owners provide insurance for their residents.
However, for off base airmen, unless mandated that airmen
purchase homeowner's insurance, it may not protect residents
from unforeseen losses as intended.
Thank you, Mr. Chairman, for that indulgence.
Chairman Inhofe. Thank you.
Senator Blumenthal?
Senator Blumenthal. Thanks, Mr. Chairman, and thanks to you
and the ranking member for having this hearing to follow up on
our last hearing in March. Most of you were not here for that
hearing. I recognize the progress that has been made since then
has been encouraging but extremely limited. I want to thank the
military families who are here today, but also the countless
military families who have continued to contact us directly
and, as well, to advocate for better housing.
I want to highlight, as a matter of fact, one area where we
have received complaints, and I would like to know of all the
complaints that you have received about retaliation. This issue
is one that is most troubling to me, retaliation for legitimate
complaints ranging from servicemembers being prevented from
attending certain training with their unit or military spouses
being disinvited from participating in spouse support groups.
We have heard stories about housing company representatives
circling homes of military families in cars making verbal
threats or moving work orders to the back of the queue for
families who are asking for desperately needed maintenance.
These reports are absolutely outrageous, and I would like to
know in writing of all the complaints received by the services.
My time does not allow me to go into them here.
[The information referred to follows:]
Secretary McCarthy. Since February 2019, 11 potential cases
of retaliation or reprisal by military officials or MHPI
Company employees against Servicemembers and Family members for
raising housing complaints have been reported to the Department
of the Army Inspector General. After conducting thorough
inquiries of the 11 potential cases, 2 were founded, 4 were
unfounded, and 5 complaints were withdrawn by the complainant.
In the two founded cases, the MHPI company employee was
reprimanded for their behavior. There were no founded cases
concerning military officials. We have thorough systems in
place to address any reports of retaliation or reprisal.
Secretary Modly did not respond in time for printing. When
received, answer will be retained in Committee files.
Secretary Barrett. Nine airmen have reported retaliation or
fear of retaliation. Each of these instances was referred to
the Air Force Inspector General for review and appropriate
action.
General Berger. The Marine Corps is not aware of any
complaints from residents regarding retaliation by PPV entities
for submitting work orders for required housing maintenance.
These military families report to us conditions that have
been chronic, repeated, recurring, endemic to their living. No
doubt loss of incentive fees will spur some improvements, but
incentive fees and even the bill of rights--and I have been a
strong advocate for a bill of rights--in my view lack the
impact that rightful criminal prosecution would have. I note
that in none of the statements presented here this morning has
there been any mention of an actual referral for criminal
prosecution. I am deeply disappointed that there has been no
such referral.
Secretary Barrett, I thank you for mentioning that in all
actions where fraud is suspected, you, quote, immediately
notified the Air Force Office of Special Investigations and the
Department of Justice (DOJ). There has been a recent report by
Reuters released last month that Balfour Beatty Communities
(BBC) faked maintenance records to pocket performance bonuses
at several Air Force bases nationwide. These same reports have
been in the misrepresentations and outright lies to every one
of the services, and I would like to know from each of the
services whether you have referred any cases for criminal
prosecution beginning with Secretary McCarthy.
Secretary McCarthy. Not at this time, Senator.
Senator Blumenthal. Secretary Modly?
Secretary Modly. Senator, we have not done that yet, but I
would like to say that a couple months ago I made a decision as
the under to put a dedicated audit function within the
Assistant Secretary for EI&E [Energy Installations and
Environment] solely focused on PPV to go out and investigate
and to determine whether or not there is any such activity as
you mentioned so that if there is such an instance of that, we
have the ability to have data, to have evidence, and then turn
that over for prosecution if necessary.
Senator Blumenthal. Secretary Barrett?
Secretary Barrett. As I indicated, we have investigations
going on by the Office of Special Investigations of the Air
Force, and where fraud has been alleged, those facts have been
presented to the FBI and they will be determining whether or
not to go forward with pressing criminal charges.
Senator Blumenthal. Have there been any referrals for
prosecution as yet?
Secretary Barrett. Not yet. The investigation is underway.
Senator Blumenthal. I really want to urge you--and I did it
in the March hearing as well. It is not a new concern on my
part, and in fact, in the NDAA there is language in the Senate-
passed version of the NDAA to encourage these investigations
which I helped to write. I have also written to each of the
Service Secretaries urging that fraudulent activity be referred
to the Department of Justice, and I would like a report within
a reasonable amount of time from each of you as to what the
status of any investigations are within your departments. Thank
you for your attention.
[The information referred to follows:]
Secretary McCarthy. Our criminal investigators are working
with Department of Justice attorneys and FBI agents to examine
several housing contractors alleged to have engaged in
fraudulent activity. The investigations are ongoing and no
fraudulent activity has been proven at this time. In order to
protect the integrity of the investigative process, we defer to
the Department of Justice regarding the status of the
investigations.
Secretary Modly. ``To date, although the Department of the
Navy (DON) has uncovered maintenance timeliness and quality
concerns, the DON is not aware of any fraud allegations against
any of its Public Private Venture (PPV) partners in connection
with Navy or Marine Corps privatized housing. The DON continues
to work with the Naval Audit Service, the Office of the
Department of Defense Inspector General, and the Government
Accountability Office to review PPV project performance and
processes. In the wake of the fraud allegations brought to
light at Tinker Air Force Base, Oklahoma, we continue to
proactively assess if and how Navy and Marine Corps projects
are affected. On 6 November 2019, the Naval Audit Service
completed a formal audit of maintenance records and provided
twelve recommendations, all of which are being implemented. In
addition, we issued ``Letters of Concern'' to all of our
partners requesting validation of all of their maintenance
records and processes and have asked partners to report all
anomalies or findings of interest. We directed Departmental
Region and Installation Housing teams to conduct monthly
reviews of electronic maintenance records and random spot-
checks with families to confirm response and completion times
reported by partners. We are also conducting historical reviews
on partner maintenance data systems for anomalies that would
indicate fraudulent data entry, such as unreasonably common
service dates. Furthermore, we conducted an independent review
of PPV partner portfolios to evaluate housing maintenance
records and their relationships to incentive fees, a summary of
which was provided to the Office of the Assistant Secretary of
Defense for Sustainment on 16 September 2019. We continue to
provide information and updates to the Government
Accountability Office to inform their report on Privatized
Military Housing expected in February 2020. We anticipate that
their recommendations will help us further improve our
oversight efforts.''
General Berger. The Marine Corps is not aware of any
fraudulent activity cases in its PPV portfolio that have been
referred to the Department of Justice for investigation.
Secretary Barrett. Nine Airmen have reported retaliation or
fear of retaliation. Each of these instances was referred to
the Air Force Inspector General for review and appropriate
action.
Just in closing, let me say I know that every one of you
wants the best possible housing for the men and women under
your command. I have no doubt about your commitment, but I
think we need to use every tool, every possible resource to
make sure that these private contractors get the message that
there is a new era for military housing.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you, Senator Blumenthal.
Senator Ernst?
Senator Ernst. Thank you, Mr. Chair.
I would like to say thank you to the witnesses today and
for your commitment, but even more importantly, I want to say
thank you to the spouses, the family members, that are here
today. In the 1990s, I was a young Army wife, newly married
into the Rangers and had a husband that deployed frequently. So
I can only imagine the situation that all of our family members
went through, whether you are juggling family, children, child
care, school, a civilian job, whatever it was that you had, in
addition to that you had housing issues that you had to address
because maybe your spouses were elsewhere doing what the United
States Federal Government told them to do. So thank you to all
of you. I do understand those challenges and we have to make a
change. So thank you for being here.
We have talked a lot about this high level of
investigations and involvement of our secretaries and so forth.
But what I would like to hear from the Commandant and to our
chiefs is what are we doing to educate those young commanders.
The health and welfare of their troops - - that is up to them.
So while we do have other special offices that are involved,
what are we doing to educate that chain of command and how they
can get engaged with their troops in making sure that housing
is appropriate? Secretary Barrett, if we could start with you.
Secretary Barrett. We are, in fact, working on training for
the commanders of the bases and the squadron commanders on the
housing issue and on medical issues so that there is a better
understanding. That will be passed on to each of the members of
the military.
Senator Ernst. General Goldfein, did you have any more to
add?
General Goldfein. Yes, ma'am. So after this issue came up,
I hosted a conference with all of our wing commanders in the
United States Air Force. That is Active, Guard, Reserve,
civilian leaders, 278 strong. What I shared with them was that
there are certain things that we have to do as leaders that are
nothing short of sacred duty, and one of those is ensuring that
every airmen that deploys into harm's way is properly
organized, trained, equipped, and when they come home, we have
taken care of their families while they are gone. You cannot
delegate that. That is command team business. So in every
echelon of command now, we have training not only on their
responsibilities but also on the tools they have available and,
to get to Senator Blumenthal's point, to make sure that we have
all the tools available and we are pushing decision authority
down to where they can make the most difference.
Senator Ernst. Absolutely. Thank you.
Commandant?
General Berger. I think your point, ma?am, about the two
chains of command is really important. Both have a key role, as
you pointed out. The installation--this is what they do every
day and they focus on it, but I would say accurate prior to
this spring they were not educated on how to interface with
their PPV partners and what laborers they had when they were
not performing.
On the unit chain of command, which is what General
Goldfein focused on, we did not look the other way, but I am
not sure that all of our commanders--in fact, I am pretty
confident most did not understand--they understand their role
in leading their troops in everything they do or fail to do but
not when their housing situation is not working right. What are
they supposed to do? Now that is part of our commander scores.
You could argue it should have been beforehand. Now it is.
So on both chains of command, I think your point about
education has to be there, but it cannot be one time. It cannot
be in 2019 only. It is just something we have to sustain.
Senator Ernst. Thank you, Commandant.
Admiral?
Admiral Gilday. Yes, ma'am. So thinking about the core
issue here, really the root cause of what drove us to where we
are right now, I think a big part of that was mindset. The
Commandant kind of got at this with the fact that we dismissed
responsibility for those things that we are accountable for, as
General Goldfein said.
The other thing that went hand in glove with that was the
fact that we never codified roles, responsibilities, including
oversight for commanders, and so like the Marine Corps, we now
have formalized courses for all of our commanders, executive
officers, and senior enlisted. But even more importantly right
now, recognizing that most of the progress that we made to date
is grounded on good leadership, enabling commanders at every
level and their senior enlisted to understand what the
processes are, what the right levers are to pull so that when a
sailor and his family has an issue, we can respond immediately
and not put it on the back burner.
Senator Ernst. General, if you have anything to add
briefly, please.
General McConville. Yes, Senator. We may have outsourced
housing to private contractors, but we have not outsourced
responsibility. Our commanders at the lowest level, every
leader is responsible and accountable for their soldiers. They
understand that, and they are back into fixing this problem
set.
Senator Ernst. Thank you.
Again, to our families, I want to thank you for your
resiliency and your intestinal fortitude. I truly appreciate
it. Thank you.
Chairman Inhofe. Thank you.
Senator Kaine?
Senator Kaine. Thank you, Mr. Chair.
Thanks to our witnesses.
I want to thank the military families who have been so
important in this effort.
To Secretary McCarthy, thank you. Yesterday Secretary
McCarthy asked me to accompany him to Fort Belvoir, and we saw
two houses there that had really serious problems. Fort Belvoir
has 15 communities in it. Some of the houses were built in the
1940s and 1950s, and some are 10 years old. We visited two
communities that were new communities. In one house, we saw a
family who were repeatedly told that they did not have a mold
problem. The husband has some carpentry skills and he could
remove some molding around a shower and find that, no, indeed
there was mold, and so he was being told that there was not a
problem when there was. Even after the mold problem was
discovered by him, he could not get a response until he said
the place is so unsafe, we need to move out, and then the
housing company jumped into action maybe because there was
going to be a financial consequence if they moved out.
A second family was having their home repaired. The spouse
noticed that they were not bringing any new insulation into the
home. They were supposed to clear out a mold situation and put
in new insulation. They told her they had done it. She noticed
that no new insulation had been brought into the home, and she
said open the wall, I think you are lying to me. The wall was
opened up and the old insulation that was dirty had been put
back in and it was already soaking wet because not only had
they not put in new insulation, they had not fixed the water
problem behind the wall. This is 6 months after we had this
hearing.
Secretary McCarthy was not happy with this when he heard
these stories, nor was the garrison commander.
I think we have identified two main problems. The military
chain of command abdicated responsibility for this when the
contracts were entered into. I can understand it, especially
given the OPSTEMPO of warfighting in the last 15 or 20 years.
There were priorities that maybe assumed front of mind and
other priorities that did not get attention that they deserve
and that they need to now get.
But secondly, these housing companies--they had a double
standard, and the double standard was they all operate in the
private sphere and they lease to private tenants and they have
to compete hard to make sure that they have high occupancy
rates because if they treat their private tenants badly, they
will go elsewhere.
But they treat military tenants like they are captives,
like it is a captive audience. People who move from across the
country to a place where they do not know anyone, where they do
not know anything about the rental market, where they are
trying to find new schools and get accustomed to everything
else--there is a natural tendency to want to live on base. The
occupancy rates will be high because of that tendency. So these
companies who would compete hard and try to produce a high
quality product in another business unit of the identical
company treat these folks as if they are captives and that they
do not have to treat them in the same way that they would treat
private tenants. I find that outrageous.
I want to ask you, Ms. Field, a question about your
testimony because I find a couple things about it pretty
shocking.
The 87 percent satisfaction. That is in a report that
Congress demands, and so it is a report to Congress, and I feel
misled, and I am trying to determine whether I am accidentally
misled or intentionally misled. If you read Ms. Field's
testimony, pages 12 and 13, you understand her conclusion that
the data is unreliable.
OSD gave an instruction to the military departments that in
the annual satisfaction survey they were supposed to ask this
question: would you recommend privatized housing? It was yes,
no, or I do not know. That was the OSD instruction to the
departments.
Instead, the departments on the survey--they did not ask
that question. They asked this question: how much do you agree
or disagree with the following statement? I would recommend
this community to others. I would recommend this community to
others. A reasonable person reading that question would not
think it was a question about housing. What does that mean? My
neighborhood? Fort Belvoir? Fairfax County? Northern Virginia?
If people had a problem with housing, it might factor into
their answer. But the fact that the answer to that question is
87 percent tells us precisely nothing about what people think
about their housing.
if I understand your report correctly, the military
departments did not ask the question that the OSD told them to
ask.
Now, I understand from a footnote that in 2019 finally they
are going to ask the question that they should have asked all
along: are you satisfied with the condition of your unit? That
is the question that you need to ask to have an answer that you
can count on.
But the answer to the question of would you recommend this
community to others tells us exactly nothing about housing. So
I definitely feel misled by this 87 percent number, and I do
not know whether to feel intentionally misled or accidentally
misled.
I am going to conclude. Secretary McCarthy, you have raised
a really important point that we may need to grapple with as a
committee. If the companies, because of the dates they entered
into these contracts and their bond arrangements, structured
the finances around a 7 or 8 percent interest rate and right
now, if they could refinance and refinance to a much lower rate
and free up capital that could be used to capitalize
improvements in military housing, we should be doing what we
can in a fiscally responsible manner to allow the refinancing
of these contracts with the expectation that some of the money
that is freed up with the refinancing could be plowed back into
houses. Many of us have probably refinanced our own houses
during times of low interest rates, and we have been able to do
what the military and what these housing providers should be
able to do. I hope we might explore as a committee if there is
a fiscally sound way where we could allow these companies to
refinance and then use those monies to perform improvements.
Thank you, Mr. Chair.
Chairman Inhofe. Thank you.
Senator Scott?
Senator Scott. I want to thank each of you for being here
and worrying about the housing for our families.
Ms. Field, you said in your testimony that there were
changes, that if we could make those changes, that it would
have a big impact. Is there legislation that we can pass right
now that would force changes that would positively impact
housing for these families?
Ms. Field. Senator, I think the most important thing that
this Committee can do is to keep the pressure on both the
services, as well as the partners. A lot of the things that are
in, for example, the bill of rights are things that could be
done right now. They do not necessarily need to be
legislatively mandated.
We at GAO have been looking at MHPI almost from its
inception, and we have found problems throughout. It is really
that pressure that you can exert that will probably be most
impactful.
Senator Scott. So there is no legislation that you need--
that the services need right now that would change the housing.
Ms. Field. I do not want to state that categorically, but I
would say that some of the things that probably would be most
helpful are not things that can be legislatively mandated
because they have to do with the legal agreements between the
services and the private partners.
Senator Scott. But we can pass legislation that requires
the private companies to change. Right?
Ms. Field. I believe that that would still require
negotiation with the partners because of the existing standing
legal agreements, many of which are 50-year agreements.
Senator Scott. For all the secretaries, what is the
limitation on issuing the resident bill of rights today? Is
there any limitation?
Secretary McCarthy. Senator, there are a couple issues
related to the NDAA language that we have that are different
than the department's position. Specifically I will cite two
examples. With the dispute resolution, we need to hire an
outside firm to be a third-party mediator where there is a
difference of opinion between us and the Committee on how to
best bring a third-party entity into the fold. Another one
would be on whether or not the Army could have on-post quality
assurance folks to inspect the RCI partners? homes through
legal liabilities associated with that because we do not own
the assets. We are working through that with the Committee, but
we could step out but we want to do it in concert with the
Congress and have the support of the Congress, sir.
Secretary Modly. Senator Scott, just let me add to that
that the Service Secretaries have all agreed on the tenant bill
of rights that we have negotiated with the PPV partners, and we
are ready to go into signing. We are just being deferential to
the Committee and what they are trying to put in legislation to
make sure that we are in sync on that.
Secretary Barrett. Senator, that is exactly the same with
the Air Force. We are ready to go, and could have issued it
earlier, but do not want to issue something today that then
lies in contrast with what the NDAA might----
Senator Scott. Why do we not just do it and if the
Committee ever gets it done, then change it?
Secretary Barrett. We could, but I think for our troops,
our airmen would rather have a consistency of what that bill of
rights entails.
Senator Scott. So the dollars that have been held back on
performance, can you take those dollars and mitigate the
problem? Are you allowed to do that? Like in a private
contract, if somebody violates the contract, I can go spend the
dollars and eventually get the money back. Do you have the
ability to do that under existing contracts? So if you want to
take the dollars--any dollars, but take for sure the
performance dollars and say I have got 15 homes that need mold
repair. I will go ahead and take the money and spend it. Can
you do that?
Secretary Modly. Senator, I will have to get the answer for
that specifically. I am not familiar enough with the
negotiations with the PPV partners say. But when the fees are
not paid out, they stay within the service. So I have to look
and see exactly what our legal rights are in terms of what we
can do with that, and I do not know the answer to that. But we
will get the answer for you, Senator.
Secretary Barrett. I am not sure of the contract language
on whether that is held in escrow or withheld but not available
to the Air Force. In the Air Force's instance, we have,
however, spent $25 million in remediation that may be brought
against the contractor.
[The information referred to follows:]
Secretary Barrett. Funds for performance incentive fee
payments that have been denied fall through the cash flow
waterfall. The majority of these funds end up in the
reinvestment account where they are used to sustain and
renovate the homes.
Secretary McCarthy. Senator, it is my understanding the
funding is held in escrow, but I do not think it can be
converted for other projects.
[The information referred to follows:]
Secretary McCarthy. Yes. On average, at least 85 percent of
all unawarded privatized housing company incentive fees are
deposited in the housing company's reinvestment account. Funds
in a privatized housing company's reinvestment account can be
used, with Army consent, to pay for improvements or repairs to
the company's housing.
Secretary Modly. Incentive fees are paid out of project
revenue, not additional payments from the Department of the
Navy (DON). Unearned incentive fees stay within the project.
The vast majority (98.3 percent) of unearned fees continue
through the revenue distribution (cash flow waterfall) of the
limited liability company and are retained in sustainment
reserve accounts for the recapitalization and sustainment of
housing over the long term. The DON approves the annual budget
for each Public Private Venture project, including allocation
of project dollars to sustainment, such as mold remediation
efforts.
Senator Scott. Will you find out when you get back and just
let me know if you can spend the dollars? Because why would you
not spend those dollars if you can do it and take it away from
the money you had to pay the companies?
Have any companies said to you all that because of their
finances, they do not have the financial wherewithal to make
the changes?
Secretary McCarthy. Yes, sir. I mean, the last discussion,
we specifically addressed how do we increase the ceiling on
capital for investment because as I mentioned in my opening
statement, a third of our housing is going to require
recapitalization. So we need substantially more funding. If you
have economics from the mid-1990s, there is like 8-9 percent on
the bonds.
Senator Scott. So they are never going to fix this. If they
do not have the capital to do it and they cannot get the
capital to do it----
Secretary McCarthy. General McConville and I sent a letter
to the director of the Office of Management and Budget to
change the scoring criteria on projects so that they could go
back to the capital markets, get lower interest rates, which
they have very much a desire to do that obviously from a
business perspective, but to be able to increase the capital so
it can be much more aggressive on investment projects.
Senator Scott. Thank you, Mr. Chairman.
Chairman Inhofe. Yes. Senator Scott, let me just interject
here that we have had the bill of rights language on the
defense authorization bill. Our problem is we have been bogged
down mostly because of the House on the defense authorization
bill. Now, we are dealing with an absolute deadline now, and of
course, that language is in there.
It was our thinking at that time to not encourage the bill
of rights to be put together until we had a chance to do that
in the NDAA.
Senator Scott. That makes sense. You sure would think,
though, that they could take the money that has been held on
performance and go spend it to go fix the problem that these
companies are responsible for.
Chairman Inhofe. That makes sense. Thank you.
Senator Heinrich?
Senator Heinrich. Thank you, Chairman.
I want to start by saying that I share Senator Kaine's
frustration with the data that we have been given and frankly
how that data has been characterized. We need to understand, as
Ms. Field points out, exactly what the situation is, and the
way questions have been asked has really obscured that.
I want to ask each of you, one, are you currently--as
Service Secretaries, asking the question that OSD suggested
that you ask, would you recommend privatized housing? In
addition, are you asking the question that was also referenced
in the GAO report, are you satisfied with the condition of your
housing unit?
Secretary McCarthy. Yes, Senator. We are making the changes
to the customer survey.
Senator Heinrich. is that current or is that in process?
Secretary McCarthy. I believe it is in process, sir.
Secretary Modly. Senator, we are looking at that as well to
ensure that the surveys are asking the right questions in terms
of what has happened in the past. In terms of how we followed
the guidance of OSD, I do not have information about that.
I will say that we did an out-of-cycle survey immediately
after this situation came to the forefront last year, and we
discovered that we actually had much lower rates than we had
thought before. So I think we are looking at this and we want
to make sure--and this is my point that I made earlier about
data and understanding what the data is telling us and making
sure we are asking the right questions and measuring these PPV
partners properly.
Senator Heinrich. Well, I will say that I think that Ms.
Field and the GAO were able to get to the heart of a lot of
data very quickly and to implement other tools like focus
groups to understand the nature of this problem. All of us up
here need to be able to have reliable, consistent data.
So for the remaining two secretaries, I would also ask are
you asking those two questions today or when will you be asking
those two questions?
Secretary Barrett. Senator, we are asking the questions as
directed by the Secretary in the form that is the requested
form.
One of the key issues on the data is that we really are
challenged when we do not disaggregate the data. When you put
it all together, it looks like 87 percent sounds like a really
good number. It is 90-plus percent on many bases, but it is
much, much lower, and that is where we really need to focus our
attention. But when we aggregate the data, it is harder to find
the real answers and the real problems.
Senator Heinrich. Secretary McCarthy, you mentioned the
need to fix the model. I think those were your words. But we
also heard a third of housing is in poor condition. So it
forces me to ask the question, was privatizing our military
housing a mistake? To put that another way, do we at least need
to take a step back and analyze whether this model is actually
working for our men and women in uniform.
Secretary McCarthy. Senator, if we had not privatized, we
would not have been able to bring the investment capital to
bear to have the current housing portfolio even the shape that
it is in. $13 billion worth of investment has been put in place
since 1996. We would not have had those funds, for example.
I think that the challenge is over a 50-year relationship,
you have to adjust over time. The flexibility of the contract,
the manner in which to restructure debt when economic
conditions are better, you have to present these opportunities.
So that is where the challenge is.
Senator Heinrich. Do we have the tools and the knowledge
built into your services to actually implement those contracts,
to hold people to account? Because those things happen every
day in private real estate business. But that is not an
expertise that is necessarily something that I think the
services have spent a lot of time thinking about. If we are not
doing that, we certainly owe it to the men and women who live
in these homes to get that right.
Secretary McCarthy. A great question, Senator. It really
hits home to the point Secretary Modly mentioned before, our
ability to analyze the depreciating assets, when to make the
right investments, are we capturing the appropriate data to
know the health of these homes. The oversight, the quality
assurance requires substantially more resources, but also to
your point, the right skill sets associated to manage that. In
many cases, we need to improve across the board in all those
areas.
Secretary Modly. Senator, I think it was absolutely the
right decision at the time to go in this direction, and as
Secretary McCarthy said, we would not have been able to
recapitalize these homes at the time that we did it.
That does not mean that it has worked out great, and I
would say that it is not horrible performance, but I just think
it is very uneven performance. From personal experience, I have
a son-in-law and a daughter who are on Active Duty, and they
have lived in privatized housing and it was fantastic. I have
gone and visited several different bases, and some of it is
fantastic and some it is not.
the problem we have right now is really understanding the
differences because we do not have good access and visibility
into what is actually going on on a unit-by-unit basis. So when
you accumulate data and it says 87 percent, well, what about
the people that are not happy and how are we finding out about
that, and not just finding out about it every----
Senator Heinrich. But how are we fixing it?
Secretary Modly. Right. But, sir, we are also finding out
about it a year after, sometimes a year after it has happened.
We need to be much more in a real-time monitoring of this
problem, and that is what we are trying to do. We certainly
have the tools to do it. Data is being captured. It is just not
standardized. Once we have that and we have real-time
information, we can act a lot more appropriately and a lot more
quickly. We certainly have the tools to do that given some of
the tools that exist because of the revolution of technology
that we have seen. So we can address this.
I think the model needs tweaking, and as Secretary McCarthy
said, there may be some structural challenges with the debt
that we need to look at as well, but this is a problem where,
when you outsource something, I think there was a cultural
shift where people felt that it was not their problem anymore.
But it is always going to be our problem to worry about the
health and well-being of our military families, and we just
have to reinforce those messages and I am sure we will.
Chairman Inhofe. Senator McSally?
Senator McSally. Thank you, Mr. Chairman.
I also want to recognize our military families that are
here today. It is hard enough to serve in the military. It is
hard enough to be a spouse of someone who serves in the
military. But you add onto it the challenges that we are
talking about here today and the types of stories that we have
heard for what families have had to put up with, and as someone
who served myself, this pisses me off. You know, again, what
you endure is hard enough.
This is a leadership issue. I appreciate our service
leaders being here today and your commitment to address this
issue.
This is also a leadership issue by these companies. You
know, in America, we just came past Veterans Day. We are very
patriotic. We want to say thank you for your service and all
you do. Yet, climate and culture in these companies starts at
the top too. The culture that they have from the top all the
way down, whether they are going to be customer service-
oriented, whether they are going to be responsive 24/7 to the
needs of those families, whether they are going to do whatever
they can to make sure that they are addressing the health and
welfare of these families, that is a climate issue. So maybe
some of the CEOs need to move into some military housing over
the holidays. What do you guys think about that?
[Applause.]
Senator McSally. See how they feel about trying to figure
out where they are going to put up their Christmas tree or
where they are going to be serving Christmas dinner.
Ms. Field, thank you for all your work on this. I see there
are basically 14 companies that have been involved in
privatized military housing. Are any of them not acting like
slumlords at this point? Are any of them doing a good job? Any
of them?
Ms. Field. Senator, I would not want to characterize any
individual company as good across the board or bad across the
board. I would say that at almost every installation we
visited, we found that the military housing officials on the
ground were extremely frustrated with the private partner
personnel on the ground, were getting the cooperation or
support they needed. There were some exceptions to that, which
I would be happy to talk about. But I think it is fair to say,
as we have discussed earlier, whether the tenants are satisfied
at an 87 percent rate or not, there is clearly a problem here.
Senator McSally. One thing I read in some of the testimony
is that sometimes families were confused when they went to the
office as to who was the advocate for them that is paid by the
taxpayer and who is actually a representative of the slumlord.
Maybe they could wear their own T-shirts that say 'slumlord? on
them. I am not trying to be facetious here, but actually
identify themselves as whether they are with the company or
whether they are with the housing office. There has to be some
sort of distinguishing factor. I would encourage our Service
Chiefs just to ask them to do that. They need to know who is
who, and that they are not talking to the contractor when they
are making a complaint.
General Goldfein, did you want to just say something about
that?
General Goldfein. Ma'am, I would just offer that there is a
trifecta approach to this. There is the command team. There is
the housing management officer and the office, and then there
is the privatized owner. All three of those have to be engaged,
and where we have good engagement by those three and ownership
and responsiveness, it is working. Where one of those is not
there, it does not work.
Senator McSally. Just the family member, though, needs to
know if they are coming in to vent their frustration whether
they are talking to somebody who is representing the company
versus somebody who is supposed to be their advocate. You guys
agree? I am trying to get audience engagement here.
But one other factor is we specifically put language in, as
you are trying to hire more individuals in the housing offices
and to be advocates, is to prioritize military spouses for
those positions. I do not think you need NDAA language for
that. Is that something that each of the services are looking
to do? Because they are at depression level unemployment as
well. This is something we have been working on this Committee
as well related to military spouse employment. But pretty
quickly I bet you would have a number of military spouses who
would love to serve in that role. I would like to hear from
each of the services whether that is a priority.
Secretary McCarthy. Secretary Esper prioritized that early
on in his tenure to give the opportunities for military spouses
to have preference for hiring opportunities on the
installation.
Senator McSally. Are there positions that are open that are
unfilled right now, though, that could quickly be filled with
military spouses? Any of the other services want to jump in?
Secretary Modly. Senator, we have added 300 additional
positions, and this is one of the problems that we discovered
in our discovery this last year was that, to your point, we did
not feel like we had enough advocates out there, and so we are
adding 300. We are in the process of hiring them. We are also
waiting on the appropriations bill to pass so that we can fund
those positions. But prioritizing military spouses for those
jobs is something that we are going to do.
Senator McSally. Great, thanks.
Secretary Barrett?
Secretary Barrett. We have also established 219 new
positions for residents advocates, and those would be great
jobs for military spouses.
Senator McSally. Thanks. I am almost out of time, but I
want to just make sure everybody understands that the NDAA is
being held up for political games. The defense appropriations
bill is being held up for political reasons that have nothing
to do with our troops. I just want to make sure everybody
understands that without a NDAA and without the defense
appropriations bill, the level that we have agreed to or that
we have been fighting for--this is going to hurt fixing some of
these issues that military families are dealing with in
military housing. Can I get a yes from everybody? Thank you.
So let us get everybody on both sides of the aisle to vote
those out and get them done this week. Thank you.
I yield back.
Chairman Inhofe. Thank you.
Senator Hirono?
Senator Hirono. Thank you, Mr. Chairman.
I thank all the secretaries and the chiefs and the families
and advocates who are here. This is a continuing addressing of
a concern that is going to be ongoing, and as you noted, we
have to be vigilant not just today, tomorrow but going forward.
So, Ms. Field, you said that the Department cannot make
unilateral changes to these long-term contracts to address some
of these issues that have been brought forth. Can you give me
an example of a limitation in a contract that would make it
really difficult for the Department of Defense to unilaterally
make a change or require a change?
Ms. Field. Sure, Senator. Most of the agreements, although
not all, do have a performance incentive fee built into the
agreement. What we have determined through our work is that a
number of the metrics that underlie those performance incentive
fees are not good ways to measure the condition or the quality
of the home. So they are looking at things like rewarding the
partner for occupancy rate, which again has nothing to do
necessarily with the condition of the home, or with things like
timeliness in reporting.
Our understanding is that to change those underlying
metrics, as written in the agreements, the partners will have
to agree with the services to make those changes.
Senator Hirono. There is no underlying metric for
habitability of units?
Ms. Field. I cannot say uniformly across all of the
agreements because they are all different, but when we looked
at them, we found that they were overwhelmingly more focused on
the financial health of the project and the partner as opposed
to the quality or condition of the home and holding the partner
accountable for that.
Senator Hirono. For the secretaries or the chiefs, are any
of your agreements relating to habitability of the units--is
there anything that allows you to negotiate regarding
habitability in any of your contracts? Anybody can answer.
Secretary McCarthy. Senator, the metrics--the incentive
award fees reference--they are not uniform across all of the
installations, first off.
Second, with respect to habitability, the question you
asked, I do not know if on any of the installations if we have
that today. But as I mentioned in my opening statement, we are
changing the incentive award structure and starting that on
January 1.
Senator Hirono. So you are able to change the incentive
structure by focusing on habitability even if somehow there is
not reference to that in your long-term contract?
Secretary McCarthy. We have gone back to the partners and
we are changing the incentive award fees. We had to go back to
the partners and do that.
Senator Hirono. Are your partners cooperating with changing
the metrics?
Secretary McCarthy. That has been in negotiation, but that
is how we are initiating it on January 1.
Senator Hirono. What about the other Service Secretaries?
What are you doing? Obviously, we are here because of the non-
habitability of some of these units. It is a huge issue. Are
you imposing habitability as a factor in your incentive
payments?
Secretary Modly. Senator, yes. We are going through that
process just as Secretary McCarthy said. We have restructured
our incentive fee and what we are measuring for an incentive
fee, and prior to this, we did not have that sort of health and
habitability thing as a factor that we looked at, but now we
will. Our partners have worked with us on this, and they are
accepting that.
Secretary Barrett. We are in the process of restructuring
our incentive fees, and that will include elements of the
commanders? overview or observation. Habitability would be
probably one of the elements that they would put. In addition,
100 percent of our units have had a health and safety review
prior to people moving in, and so that habitability would be
another word for the health and safety of that----
Senator Hirono. Yes. I am using the word ``habitability''
to cover the broad range of issues of concern to all of us.
There was a mention made--I think it was Secretary Modly--
that the data is inputted in such a way that it is really not
terribly helpful in terms of what is actually going on. What
are you all doing to make sure that there is--for one thing,
should all of the contracts, these housing contracts, not be
the same in terms of the terms of the contract across the
services? Ms. Field, can you answer yes or no on that one?
Ms. Field. Because they were entered into at different
times and by different services, they created them with
different terms and different levels of accountability built
into them.
Senator Hirono. That is a problem. But okay, be that as it
may.
What about the data, the insufficiency of the data? Do the
rest of you besides Secretary Modly agree that that is an
issue? Anybody?
Secretary McCarthy. Of course, Senator. We have addressed
that at the quarterly discussions, and that process is starting
to improve.
Secretary Barrett. We do agree that the data is an issue
and disaggregating it, working to improve the quality of the
data, is one of the key things that we are looking at.
Senator Hirono. May I ask just one follow-up question with
Secretary McCarthy?
So the condition of the housing that you went to see with
Senator Kaine--very clearly, that if they are putting back
molding that should never have been put back, that sounds like
fraud to me. So you had testified that you did not refer any
matter for prosecution. Is this the kind of thing that you are
considering sending on for prosecution?
Secretary McCarthy. Senator, after what I saw yesterday, I
was very concerned, and it is something that I addressed
specifically with General Perna and we are going to take a very
hard look at that. Yes, ma'am.
Senator Hirono. Please do so, and that goes for all the
services.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you.
Senator Perdue?
Senator Perdue. Thank you, Mr. Chairman.
I want to thank the chairman and the ranking member for the
participation today. I have been here 5 years. I have never
seen a panel of military leadership that we have today. I think
that sends a message to the families but also says how serious
this problem is. So I want to thank everybody for being here.
I have a question for the panel and your staffs that are
here.
If you have ever lived in base housing anytime in your
career, would you raise your hand please? All right. There is
the issue. So these people understand. I grew up in base
housing. I understand what it means to be dislocated. This is
unacceptable what is happening right now.
But I want everybody in this hearing to understand the
hypocrisy that you have heard this morning. We are pointing
fingers at contractors. Yes, there is culpability there and it
needs to be dealt with. There are leadership issues maybe
within the DOD. It needs to be dealt with. But the one thing we
are not talking about is responsibility we have right here in
Congress.
This is the third month. This is the end of the first
quarter of our fiscal year. We have not funded our men and
women in uniform. Period. We can talk about a continuing
resolution (CR) all we want to, but we have sent a message to
Putin and Xi and everybody else in the world that the political
games here are more important than our men and women in
uniform. That is unacceptable, and it directly affects housing
capability.
The U.S. Army did a study recently, Secretary McCarthy,
that you guys said that specifically right now 4,400 new units
are being held up from construction because of this continuing
resolution. By the way, this is like the 10th--out of 11 years,
this is the 10th year that the first quarter has been spent
under a continuing resolution where no contracts can be let, no
follow-up can be made, no accountability can be accomplished.
My question is, are these numbers right? I think there are
269 other maintenance housing units for something like $69
million, which I do not understand those numbers. That is
$250,000 a unit. So somewhere offline I want to get at these
numbers because it does not make any sense.
But would you give us an update as to the impact that
continuing resolutions have on this specific issue of getting
this problem fixed?
Secretary McCarthy. Specifically on military construction
for barracks projects, Senator, we have about $239 million held
up: Fort Sill, $73 million; Joint Base Langley Eustis, $55
million; Jackson, $54 million. So barracks is being impacted
across the force. The family housing projects overseas----
Senator Perdue. Look, if I could interrupt you. I am sorry
to interrupt. We can do this all day. I do not want to give you
guys a pass, but I want full accountability here. We bear the
brunt of this at the very get-go here. Had we funded this prior
to September, the continuity of the programs that you guys have
already started could be continuing right now. I just want the
people who have been affected to understand that the fix cannot
be accomplished as long as these political games are being
played right now, and that is the point I want to make.
So can you give us the other impact that may be caused by
this insidious practice that we have here? One hundred eighty-
seven times since the Budget Act was put in place in 1974. This
is our 187th continuing resolution that this Congress has used,
and it devastates you guys and it hurts these families. So can
you give us a little more detail around that?
Secretary McCarthy. A $1.1 billion request specifically on
housing restoration and modernization is being held up right
now.
Senator Perdue. What does that mean?
Secretary McCarthy. We cannot start the projects. We can
initiate the projects. We do not have the funding.
Senator Perdue. So the projects that are already underway--
does it affect any of those?
Secretary McCarthy. In some cases, yes, sir.
Senator Perdue. So all projects that are being directed
toward this problem are being affected right now during this 3-
month period. Is that correct?
Secretary McCarthy. Any new projects and then existing ones
are being funded at the previous levels. So the buying power is
reduced. Yes, sir.
Senator Perdue. Thank you.
General McConville, I visited Benning. It is one of our
great heritage sites in the country really. It happens to be in
my home State of Georgia. I have got red clay under these nails
like you do I am sure from your time in that part of our State.
I just met with General Brito down there, and he is doing a
fabulous job. You have a different problem in Columbus. You
have these historic homes, and of course, they have lead. They
probably had asbestos before and all that, and some of this has
been dealt with in the past. Give us an update on how that lead
problem is being dealt with.
By the way, you know, we deploy a significant percentage of
our men and women in uniform today, from Air Force, Marines--we
have a significant percentage across more than 100 countries
right now today. So most of the people who are on these bases
have a spouse overseas.
Can you help us understand the progress being made there
and the displacement that we have incurred there and what we
can expect?
General McConville. Yes, I can, Senator.
First of all, on the historical homes, we have taken the
philosophy that old is not historical. What I mean by that is,
you know, we have homes. We have to replace them or restore
them to the level they were at. It may be a house that is 100
years old that a captain lived in. We have a whole bunch of
these type homes, somewhere from 50 to 100 years old. We do not
want to have to go back and restore them with the original
materials and those type things that are sometimes required. So
we are working our way through that right now. We think we have
a way ahead so we are not going to have to go back and get
original materials. We can actually modernize some of these
homes so they are not living in old homes.
I grew up in an old home, 100 years old, but it is old. It
is not historic, and what we need to do for these homes is
modernize them so they are what we need for the families.
As you know, we are going through the homes right now. Lead
is a huge issue. We are very, very concerned with our families.
We are going back and getting these homes and remediating the
homes, but it just takes time. I think we are working about
eight to nine homes a week, and it is going to take us some
time. It is going to take us 2 to 3 years with these homes to
get them to the level that we want them to be.
Senator Perdue. Would you get your staff to keep us updated
each month about the progress of that project specifically?
Because I think that is a bellwether for the rest of all of the
bases out there.
General McConville. It is, Senator, and we will.
Senator Perdue. Thank you.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you.
Senator Jones?
Senator Jones. Mr. Chairman, with the chair's permission, I
am going to yield a couple minutes to Senator Manchin who has
got to leave for a committee hearing.
Senator Manchin. Thank you so much, Mr. Chairman.
I thank all of you.
This is to the secretaries and Ms. Field to you. Just
listening to everybody and the concerns we have, there is not a
person up here--and I am sure you all feel the same way--who is
not concerned. Servicemembers should have better quality of
life and their families, and they should not be in this
jeopardy.
A homeowners association is something I am familiar with,
and a homeowners association works this way. You are the
developer. You are the developer. Any of you all are the
developers, and basically when you have the covenants and turn
it over after a period of time to the homeowners, then we have
a responsibility to basically evaluate are you doing your job
or not. Have you lived up to your part of the bargain when it
was turned over? We have the right to bring civil actions
against you.
Why can we not do the same here? Every member of the
service and their family that moves into one of the homes
basically would be part of a homeowners association. That
association develops their own board, and they are able to
bring a civil suit if they have not performed. That is the best
way to do it, much better than the military and everybody else.
We will spend millions and millions of dollars for the people
on the front line that could tell you immediately. If you are
the contractor that is awarded basically one of these exclusive
contracts for 50 years, then you have a responsibility. If that
is the responsibility and you have not lived up to it, let them
go to civil court, not through the military court. Let me them
go directly to the civil court. You will never have this
problem. This will eliminate and remedy this immediately.
We can put this right into the bill of rights. Mr.
Chairman, we could do this as we are going right now, and it
will basically take care of, I think, a remedy of how you can
cure this quickly, and they will step up to the plate. They do
not want these civil lawsuits brought against them.
That is my input. Thank you, Mr. Chairman.
Chairman Inhofe. Thank you.
Senator Jones?
Senator Jones. Mr. Chairman, thank you. Thank you, Mr.
Chairman. Thank you, Senator Manchin.
Two comments before I ask a couple of questions.
Number one, I agree with Senator Perdue completely about
the CR and about where we are in the politics in the NDAA and
appropriations. I just do not want there to be any impression
of anybody in this room that the politics that are being played
is only one side of the aisle. That is a process that is
ongoing, and there is too much politics being played not only
in Congress but with the administration as well. We need to get
it done. I completely agree with him in needing to get it done.
The second thing I would like to comment on is I am hearing
a lot in these hearings where these companies are being
referred to as our partners. They are not our partners. They
provide a service. We pay them for their service. They are not
a partner where there is a give and take and issues like that.
They are providing a service to these people and their military
and their families. We should be demanding and make sure that
we are demanding that they deliver the excellent services that
we are paying them for and that we do not consider them a
partner like I would my spouse or a law partner. They are
providing services.
Now, just with the time remaining, I would like to ask each
of the secretaries. Secretary McCarthy, you have mentioned
General Perna. I am a big fan of General Perna. So I commend
you for getting him engaged in this because he can get it done.
When we had the companies here, one of the things I asked
them if they would agree to withhold incentive fees, and I
think you mentioned in your testimony that General Perna is
working on that. Have any incentive fees been withheld yet, or
is that still part of the process that is ongoing?
Secretary McCarthy. Yes, sir. We have withheld fees at Fort
Benning and Joint Base Lewis-McChord, and we will be doing it
at others here in the very near future.
Senator Jones. So you already got a process in place for
that?
Secretary McCarthy. Yes. It is being formalized on the 1st
of January, but some of these instances were pretty extreme and
we have done that here just in the last couple months.
Senator Jones. How about the Navy?
Secretary Modly. Senator, we have not given an award for
the incentive fee this year. We are evaluating all those
individually to determine what they earn.
Senator Jones. Is there a process in place to withhold
incentive fees that you have got in place now?
Secretary Modly. There is.
Senator Jones. All right. Thank you.
How about the Air Force?
Secretary Barrett. Senator, we are withholding all fees
from one contractor on the basis of misperformance or
performance problems on some of their bases. The other
contractors--we are observing their performance and they are
aware of the contract withholding--the process, the fact that
we are withholding fees on others.
Senator Jones. All right. Well, thank you all three. I
think that is a good step.
I will say, Secretary Barrett, I am still hearing of
issues. I visited the Maxwell Air Force Base, and there are
particular issues with historic properties and I get that. But
I am still hearing from constituents down there who are having
serious problems. So please take a look. Thank you.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you.
Senator Tillis?
Senator Tillis. Thank you, Mr. Chairman.
Thank you all for being here and a special thanks to the
military families who are in attendance.
Back in March when we had the last hearing, I did not have
a very happy discussion because we had a revelation come up
about these nondisclosure agreements (NDAs) that the housing
providers were requiring the tenants to sign onto before they
would settle anything that seemed to be a legitimate tenant
complaint. At that time, I asked everybody to go back and make
sure over the next 30 days to have all of those NDAs rescinded,
and if there was any private property housing provider that
thought they had a great case to call me up and come to my
office and explain to me why they should have these
nondisclosure agreements. I had nobody come to my office.
I thought that I was assured that these had been rescinded,
but this week I got an email and another nondisclosure
agreement from Monterrey Bay where the practice continued at
least up until August. Secretary McCarthy, we will have a
discussion about this because it is in your lane.
But look, Ms. Field, I think when you were responding to
Senator Kaine's question about the satisfaction surveys, if you
have a nondisclosure agreement that says you cannot speak even
about the existence of the agreement and you cannot speak
disparagingly about the housing provider, then how does the
answer to that question go?
Ms. Field. That is a great question.
Senator Tillis. Right, which is why these damn things have
to be eliminated.
[Applause.]
Senator Tillis. Now, I want to ask you all right now, can I
get your assurance that you can go through your chain of
command and go to your housing providers and say this ends
immediately? If you think you have a legitimate reason for
having one, contact me. I would love to hear the basis for
that. I do not think there can be one, and I want your
assurance that we are going to move forward with this. This is
a part of the problem.
Look, I have tried to be balanced every time I come in
here. If you look at it when these contracts started getting
initiated back in 1996, you were moving. You were conveying
property that was owned by the government to a private housing
provider. They were to fix some of them, the old units, maybe
up-fit them. They were to build new units, and they had to make
a financial decision that ultimately resulted in an investment
that the private sector investors invested in. Great. Hopefully
they made a good decision.
Now, it may have been that in some cases they simply did
not know what they were buying. You know, everybody that flips
a house, sometimes you buy something and it worked out well,
and sometimes it did not work out so well. There may be a
rational basis to go back to some of these housing providers
and say, look, we may have sold you a bill of goods and we have
some responsibility for trying to smooth out the economic
consequences of that decision.
In other cases, they built houses that are the subject of
the problem. We owe them not a dime to fix that. That is on
them.
So my question to you all is, when is enough enough? When
do we finally look at these contracting vendors, consistent
with what Senator Inhofe opened up with, and say you know it is
time just to recognize that you are in breach of contract? We
got to go a different way. Or your business practices are to a
point where we have got to go to a court of law and settle
this. When is enough enough? Secretary McCarthy?
Secretary McCarthy. We might be there right now, sir.
Senator Tillis. Secretary Modly?
Secretary Modly. Senator, I think that in certain cases we
may be there. In other cases, I think there is a pretty heavy
responsibility on the Navy and Navy leadership over the last
couple years in terms of not paying attention to it.
Senator Tillis. Secretary Barrett?
Secretary Barrett. Senator, enough is enough. We have had
enough. On some of these properties, they have worn out the
patience of the Air Force. In other instances, they are doing a
great job and we are happy.
Senator Tillis. I agree. I do not want to go too far over
time, but I want to be fair. I do not want to, all of a sudden,
let our passions sweep up private housing providers that seem
to be doing a good job, trending in the right direction. But we
probably need to make an example out of a couple of them and
just draw the line and move forward, and in the other cases, go
back and figure out--I think you are right. If we do not look
at recapitalization--I am not one who thinks that we should
take this back over and go to the old ways because it was not
working, and then Senator Perdue's point is well taken. Then
all of a sudden you guys have to rely on us to give you
resources, and how has that worked out for you?
So I think it makes more sense to provide some certainty by
having these contracts in place, but we have to look at
recapitalization. We have to go back and rationalize what
should be a consistent model, to Senator Hirono's point. I know
that these contracts were negotiated over time and there were
differences. Some of them we are learning from the past
contracts. But at some point, we have got to go back and reopen
this and aggressively pursue it.
I am going to leave you with this. I do not know what other
members have done, but I have had town halls at Camp Lejeune. I
have had town halls at Fort Bragg. I have had multiple
sessions. I have literally met with hundreds of military
families down on those two bases, and things are improving
there. But I had at least one military spouse drive up from
Fort Benning, and she said we were here when you all started
really shining a light down at Fort Bragg. But now I am at
Benning and it is not so good. It sounds like it is improving.
But I would encourage all of my colleagues in the Senate
and in the House to go on base and cast light on these folks.
It makes a difference. We are making progress, but we are not
making it nearly as quickly as we should. I really do believe
it is time to draw a line with some of these vendors and some
of these contracts and say enough is enough.
Thank you, Mr. Chair.
Chairman Inhofe. Thank you.
Senator King?
Senator King. Thank you, Mr. Chairman.
Ms. Field----
[Applause.]
Senator King. I do not want to step on your recognition,
Senator Tillis, which is appropriate.
Ms. Field, I want to get to the sort of basic question. Are
these contracts adequate or inadequate? Is the problem the
contracts or the enforcement of the contracts?
Ms. Field. I think it is both, Senator. In many cases, the
contracts were not written in such a way that the services
could truly hold the partners accountable for everything they
should be holding them accountable for.
Senator King. Let me stop you there, though. I want to
follow up on Senator Hirono's question. I cannot believe that
the fundamental nature of the contract does not require that
the contractor--and by the way, I agree with Senator Jones--
these are not partners. They are contractors. Banish that word,
will you? Quit referring to them as partners. They are
contractors. I cannot believe the basic requirement of that
contract was not safe and healthy, habitable units. What were
we buying?
Ms. Field. The companies--pardon me--are required under all
of the projects to comply with all federal, State, and local
environmental health and safety codes. So that is a requirement
that is in all of the contracts.
To your second point, I think part of what we have found
through our ongoing review is that the services at many of the
installations have not done everything they could to perform
oversight to make sure that that was happening.
When it comes to things like incentives to really get the
companies to pay attention, that is where there are problems in
the contracts.
Senator King. But I do not think they should be paid even
the basic rent if they are not renting safe and habitable
units. Forget about incentives.
[Applause.]
Ms. Field. The services do have the option of rescinding
these contracts, and that is an option available to them.
Senator King. My experience in this kind of work is that
implementation is as important as vision. My sense is there are
differences in the contracts, but clearly, as you say, there
are basic provisions that they have to be safe and healthy.
They have to meet codes. I believe, not having seen the
contracts myself, but I believe that this is really mostly an
implementation problem. Then my question is, who is in charge?
Is it the base commander? Is it a base housing officer? Is it
the Secretary of the Navy? Is it the Secretary of Defense?
There has got to be somebody who can be held accountable here
in what looks like endemic non-enforcement.
Ms. Field. If I may, it is the Service Secretaries that
signed the agreements with the companies. I would say that the
Service Secretaries are ultimately responsible.
Senator King. Ultimately responsible means not so
responsible. I want somebody that can be fired.
Ms. Field. I think that would have to be done on a case-by-
case basis.
But I do want to point out two examples of where there was
a break in leadership. At Camp Lejeune, for example, and at
Tinker Air Force Base, we learned from the military housing
offices that they had recommended to senior leadership, to
NAVFAC [Naval Facilities Engineering Command] and to AFCEC [Air
Force Civil Engineer Center], to withhold either part or all of
the performance incentive for years and had never gotten
support for that. So that is an example of where there was a
break in leadership.
Senator King. Was that the base command or was it regional
command? I think part of something you all should do--the
secretaries--is assign somebody who is in charge of this and
hold them accountable. I do not know whether it can be one
person at each base or it can be somebody in the Department or
in the Army or the Air Force, the Navy. We have this diverse,
diffuse responsibility, and therefore nobody really is held
responsible.
Secretary McCarthy, you have talked about the bill of
rights. Can that be imported into these agreements without
permission, if you will, or negotiation with the contractors?
Is that something that can just be stuck into the agreements?
Secretary McCarthy. We had to work through the language
with the companies in question, Senator.
With respect to your earlier comment, it is the chain of
command on the installation. Those installation commanders in
the Army's case had not been empowered.
Senator King. Would that not be the logical place? It seems
to me the base commander would be the logical place to lodge
this responsibility.
Secretary McCarthy. The senior commanders are now back part
of the process, and they rate the garrison commander who
manages the housing relations----
Senator King. Is that true in the other departments? I am
getting a yes. Let the record show affirmative nods.
Secretary Barrett. Yes.
Senator King. A final question, sort of a detailed question
on this refinancing. I do not understand why they need our
permission to refinance. I mean, people refinance all the time.
If interest rates have gone down, they can go in, raise more
capital. What is the holdup there?
Secretary McCarthy. So in the contract, they have to have a
scoring criteria for the projects, and that is managed by the
Office of Management and Budget. What we referenced earlier is
we would like to rescind the Raines memorandum from the 1990s
so that we can adjust the scoring criteria so that they can go
back to the capital markets to raise the capital.
Senator King. So this is something that is within the
control of the government. We can fix that. Does it take an act
of Congress?
Secretary McCarthy. No, Senator. We are working with the
Office of Management and Budget on that.
Senator King. Would you please let us know if that gets
bogged down? Because that would be one way to get a lot of new
capital into these projects.
Secretary McCarthy. Yes, sir, I will.
Senator King. Please.
Thank you all very much.
I would like for the record statements from the secretaries
about where you are lodging the responsibility for the
enforcement of these contracts, the name of the person, the
position, and what the arrangements are to be sure that the
enforcement takes place. You can have the best contract in the
world. If it is not enforced and implemented properly, people
are going to suffer for it, and that is exactly what has
happened in this case. Thank you.
[The information referred to follows:]
Secretary Barrett. The Secretary of the Air Force has
overall responsibility for the enforcement of the program,
delegated down to the Assistant Secretary for Installations,
Environment and Energy, then to the Deputy Assistant Secretary
(Installations) and finally to the Air Force Civil Engineering
Center (AFCEC). The AFCEC Program Manager and Military Housing
Office exercise oversight responsibility at the project level.
The Installation Commander then has responsibility for day-to-
day oversight at the base level and we are adding personnel at
each installation to increase oversight.
Secretary McCarthy. The administration of the MHPI within
the Army is divided into three categories: 1) the Ground Lease,
which is administered by the Director of Real Estate, United
States Army Corps of Engineers; 2) oversight of MHPI Company
Partnership Agreements is by the Deputy Assistant Secretary of
the Army (Installations, Housing, and Partnerships); and 3)
oversight of the implementation of MHPI Company Property
Management Agreements is by the Commanding General, Army
Materiel Command. The staffs of the responsible officials are
engaged daily in monitoring privatized housing company
performance and compliance with the applicable legal
requirements.
Secretary Modly. ``Senator King, as the Acting Secretary of
the Navy, I am responsible for the formulation, implementation,
and enforcement of policies and programs for the Navy and
Marine Corps, to include privatized military housing. With that
said, it takes a large team of dedicated civil servants to
provide oversight for the Public Private Venture housing
program and I have entrusted them to carry out my guidance
towards continuous improvement in the program for our sailors,
marines, and their families.''
Thank you, Mr. Chairman.
Chairman Inhofe. Do any of you feel that is an unreasonable
expectation? Okay. We recorded the nods.
Senator King. Affirmative nods.
Chairman Inhofe. Yes.
Senator Hawley?
Senator Hawley. Thank you, Mr. Chairman.
I want to start by also thanking the military families who
are here, first of all, for your service to this country. Thank
you for the sacrifices that you have made. Your servicemembers,
your family members, thank you for doing what you have done to
defend this country. Thank you for being here today. Thank you
for making the trek and for showing up and for advocating.
I just want to say that what you have been through, after
the service that you have rendered to this country, is
absolutely outrageous and it is absolutely unacceptable. It
would not be acceptable for anybody to be treated like this in
this way. But for you as servicemembers and families who are
sacrificing day in and day out for this country, to have been
through what you have been through is really a breach of faith
in what this country owes to you. So thank you for being here.
I am sorry for what you have been through, and you have my
commitment that my office and I will do everything we can to
see that this does not continue. So thank you for being here.
Let me ask a few questions specifically about Fort Leonard
Wood and Whiteman Air Force Base in my home State of Missouri.
I want to start by saying that many military families in
Missouri are worried that base housing on those installations
may still be at risk. I want to thank the base leadership at
both of those installations for doing their part to ensure that
our servicemembers are getting high quality on base housing.
But let me ask about some of the concerns that military
families in the State have expressed to me. In particular,
military families in Missouri have raised concerns to me that
as Balfour Beatty and other companies shift their attention to
fix problems in other States, that those companies might take
their eyes off the ball in Missouri and let things slip.
So, Secretary McCarthy, Secretary Barrett, let me ask you
in particular. What are your services doing to ensure that Fort
Leonard Wood and Whiteman, respectively, will not be short-
changed as these companies reallocate resources to address
these glaring deficiencies elsewhere. Go ahead, Secretary
Barrett. We will start with you.
Secretary Barrett. Well, Balfour Beatty has had very poor
performance in some settings, but very fine performance in
others.
The base commander having responsibility and authority over
the housing topic will mean that there will be careful
attention given to the local base by the local leadership. So
distractions at other bases will not be a distraction from
performance at Whiteman.
Senator Hawley. Thank you.
Secretary McCarthy?
Secretary McCarthy. We are watching it very closely,
Senator, and we will ensure that there is no change with the
performance, if anything to improve it.
Senator Hawley. Thank you.
Let me ask both of you again. Secretary McCarthy, we will
start with you maybe this time. Families in my State have also
raised concerns about insufficient tenants? rights for
servicemembers who live off base. With that in mind, I want to
ask you what the Army is doing to ensure that military families
have access to high quality off-base housing in Missouri and
elsewhere. Can you address that?
Secretary McCarthy. Specifically to Missouri, I would have
to get back to you on that, sir. But in other instances like
yesterday at Fort Belvoir, with respect to Fort Benning and
Bragg and others that I visited over the last 90 days, 100
days, they work very hard with the local communities to get
additional opportunities for off-post housing. So we are doing
this in all of our installations, and I will get back to you
specifically on what we are doing at Fort Leonard Wood, sir.
Senator Hawley. Thank you. I would appreciate that.
Secretary Barrett, can I ask you the same question as
regards Whiteman?
Secretary Barrett. Off-base housing is covered--there is an
allowance that members get. Maybe the chief would have further
detail on that.
General Goldfein. Yes, sir. As you know, we do routine
housing allowance surveys, and we also go out and look at the
basic allowance for housing.
The Service Secretaries all signed a memo to governors last
year. It was a really important memo that said as we are
looking at your bases, there are two issues that are top shelf
for our families, and that is, number one, reciprocity of
licensure for spouses so as they move around the country they
can continue to work, and the second is the quality of their
schools. That letter has had a fairly significant impact, and I
want to thank this Committee for all the work that has been
done because it has definitely improved the quality of life for
our spouses.
Senator Hawley. Thank you.
In my time remaining let me just, Ms. Field, ask you. At
the current rate of decline of the housing inventory, I am
wondering if you think the MHPI program is financially viable
and will survive the full 50-year term.
Ms. Field. The Department has determined that the MHPI
portfolio across the board is healthy. We issued a report last
year where we found that while the services had good mechanisms
in place to assess the financial strength of the projects in
the near term, they do not in the long term. So I think your
concern is well founded.
Quite frankly, though, what concerns me more is that there
are more mechanisms in place for the services to assess the
financial health of the projects and hold the partners
accountable for financial health than there are for assessing
and holding the partners accountable for the quality of the
housing.
Senator Hawley. Thank you for that. That is a very, very
important point and something I think that we have absolutely
got to rectify.
Thank you, Mr. Chairman.
Chairman Inhofe. Thank you.
Senator Duckworth?
Senator Duckworth. I just do not buy this argument that the
chain of command cannot really be held accountable in the past
because we have not empowered them to enforce these contracts
because by nature of being in command or especially being a
garrison commander, you are responsible. I mean, if you had
troops in barracks where they come to complain that the ceiling
is collapsing and hurting these soldiers and that garrison
commander did nothing about it, you would hold him accountable.
If you had a tank gunnery range, an aerial gunnery range, or
outdoor gunnery range that was constantly hurting the troops
who were operating that range and that range was not up to
standard, that garrison commander would be held responsible for
whether or not he--whatever contractor that was running that
range for you and keeping it safe for our troops to use. So I
do not understand why not a single garrison commander to my
knowledge has yet been fired over a failure to maintain these
standards.
[Applause.]
Senator Duckworth. Period. Okay, that is the past. Let us
look forward.
I would like to ask each of the Service Chiefs, is
maintaining the highest quality of housing for your troops and
their family members a line item on every person's evaluation
report, all the way up the chain from garrison commanders up to
and including yourself right now?
Secretary McCarthy. Senator, it is not.
Secretary Modly. It is at the flag level. We are looking at
doing that down at the O-6 level and below.
Senator Duckworth. So not so far.
General Berger. No.
Senator Duckworth. How many years has it been? Why is it
not? Sorry, General.
General Goldfein. No.
Senator Duckworth. Well, I would like to recommend that it
be on there for every single garrison commander and all the way
up to and including the Service Chiefs because until you are
being evaluated on it, you can just walk away. I have looked. I
cannot find a single person who has been fired over this.
Ms. Field, you look like you want to say something.
Ms. Field. I do. Thank you.
With all due respect to Secretary McCarthy, because I know
this was not a decision that you made, I think it is important
to point out that in 2013 the Army issued clear instruction to
installation commanders and garrison commanders not to perform
inspections of homes for the life, health, and safety of those
servicemembers. That has since been reversed, but to me I can
see how commanders during that time period would have been
confused about what it was that they were and were not supposed
to do because they were getting an instruction that told them
not to perform inspections.
Senator Duckworth. Well, I think that is a good point, and
since that has been reversed, that is good, but that is not
enough. I think it should be on their OERs [Officer Evaluation
Reports] that they will be evaluated on this, period, for every
single person up the chain.
I want to touch on one other topic which is the family
members who live in this housing--there is no safe level of
lead especially for children to be exposed to. None.
[Applause.]
Senator Duckworth. Are we doing anything to track the
children who have lived--the family members who have lived in
these housing units? Are we keeping and maintaining a database
so that we may track their health over the course of their
lifetime so that they can themselves receive benefits and/or
health care over the course of their lifetime? Because we know
that children cannot be exposed to any level of lead safely. So
what are we doing to protect the children and the family
members in general who have lived in all of these housing
units? Secretary McCarthy?
Secretary McCarthy. Senator, we have the Army health
registry. When the family members come forward and put that
into the database, we can capture that data and then track each
of these cases.
Senator Duckworth. Does that come as part of the briefing
for every single family member who moves into housing, that you
should come forward?
I feel like you should know and be able to track and have
records of every single family member who has lived in every
single one of these units in order to track them. I do not see
why we are putting the responsibility on the family members.
They have got enough on their plates. The services should be
doing this, and we have those records.
[Applause.]
Senator Duckworth. Certainly the contractors do--right--
because we are paying them for it. So they know who lived in
these housing units. Why are we not maintaining this? Have we
done this for any of the services--a database?
Chairman Inhofe. You are out of time.
Secretary Modly. We are capturing that----
Senator Duckworth. I am so sorry. Go ahead.
Secretary Modly. Senator, we are capturing that information
in the individual health record for members and their families.
The challenge we have is if they go out and they go outside of
the military health system for their health care, we do not
have an ability to get that. So we are looking at developing a
database to do that.
Senator Duckworth. I am not talking about on the health
care side. I am talking about you know who has lived in every
single one of these housing units. You can go back into the
housing records, not into the medical records, but into the
housing records and make a list of every single person. We know
every single person who has been stationed at Fort Bliss, at
Fort Bragg, at wherever. Why do we not have a list of every
single person that has lived in these units? We have them. Do
not put it on the family members and on the medical side to
wait until the health condition happens. Do it on the front end
so that everybody can--later on some child comes up and has a
problem, they can say, hey, I was at Fort Bragg. They are in
the system without them having to come forward.
Secretary Modly. We will do that.
Senator Duckworth. I am out of time. I yield back.
Chairman Inhofe. Thank you, Senator Duckworth.
Anything further? Any other member? Any other comment?
[No response.]
Chairman Inhofe. All right. First of all, as I mentioned in
my opening statement, we will have another housing hearing as
early as possible next year. At a minimum, we need the
companies back, maybe even some of the new ones that seem to be
part of this problem, and the services so that you can let us
know and we can reflect on, if we ever get our NDAA passed, the
language, and we are out of time, so that is a serious problem.
First, I do want to thank all the--it is a very large
number of people who went to a lot of inconvenience to be here.
You have been heard and you have heard us, and so I appreciate
very much your being here.
The record will stay open until close of business
Wednesday, December 4, for any additional questions.
Now, what I would ask of our witnesses respond no later
than Friday, December 20. Do I have your commitment to respond
to the Committee's additional questions by that time? All of
you nod.
Secretary McCarthy. Yes, Senator.
Secretary Modly. Yes.
Secretary Barrett. Yes, sir.
Chairman Inhofe. That is good. I appreciate it very much. I
appreciate your testimony, and I thank you very much.
We are adjourned.
[Whereupon, at 11:34 a.m., the Committee adjourned.]
[Questions for the record with answers supplied follow:]
Questions Submitted by Senator Roger F. Wicker
keesler air force base housing
1. Senator Wicker. Secretary Barrett, how many different air
conditioning contractors were used during construction of base housing
units at Keesler Air Force Base?
Secretary Barrett. The Air Force does not have records for the
number or names of the air conditioning subcontractors used during the
original pre-privatization construction in 2007, 2008 and 2009.
2. Senator Wicker. Secretary Barrett, has the Air Force identified
the reason(s) why repair work on homes at Keesler Air Force Base proved
to be unsuccessful in eliminating mold and moisture issues?
Secretary Barrett. Yes. Most of the moisture and mold was
associated with improperly insulated ducts in the attics resulting in
duct sweating. Duct repairs in one section often caused increased air
flows and resultant duct sweating in a new location. The improperly
insulated ducts were not in all the homes, and were not readily
visible. We believe a new maintenance approach will cause fewer mold
issues, thereby minimize future family relocations.
3. Senator Wicker. Secretary Barrett, why do some home repairs take
four, six, or eight weeks to complete when families are told they will
only take two weeks?
Secretary Barrett. Because dozens of homes were undergoing
simultaneous remediation and many homes required unanticipated work,
schedules changed. The project owner's numerous customer service
representatives did not share schedule information. The project owner
is now expediting remediation and has a plan for more effective
communication to dislocated families.
4. Senator Wicker. Secretary Barrett, are any repairs actually
completed in two weeks?
Secretary Barrett. Some are actually completed in two weeks, but
most are not due to the extensive additional work required. In these
cases, it is imperative that we take the time necessary to fully
remediate.
5. Senator Wicker. Secretary Barrett, why are residents at Keesler
Air Force Base telling their neighbors that units that have been
vacated often go days without workmen being present?
Secretary Barrett. The large number of units under simultaneous
remediation created schedule conflicts and workman shortages. In
November, the project owner added Quality Assurance Managers to assist
with scheduling to reduce displacement times. The project owner is
expediting remediation and has a plan to more effectively communicate
with dislocated families.
__________
Questions Submitted by Senator Thom Tillis
alternative construction techniques
6. Senator Tillis. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, as the projects within your services' purview begin
to rebuild or replace homes that poor condition, what consideration
have your departments given to leveraging new technologies, such as
cross-laminate timber, mass timber, or timber-frame construction that
could provide enduring environmental, aesthetic and health benefits to
military families while also reducing construction time and labor
costs?
Secretary McCarthy. The Army collaborates with MHPI project
companies during project development to ensure new construction
technologies are considered and applied, especially those with direct
impacts on the quality of life for families. The Army evaluates new
construction technologies on a regular basis and coordinates with Navy
and Air Force for appropriate design and construction implementation
for our owned inventory. The use of Cross Laminated Timber (CLT), mass
timber, and timber-frame construction techniques are evaluated on a
project-by-project basis. The DOD developed a Designer's CLT guide for
these technologies, which are typically used for larger, multi-family
complexes such as transient lodging. For example, Privatized Army
Lodging (PAL) built CLT hotels at Redstone Arsenal, Fort Drum, and
Joint-Base Lewis McChord. Currently, PAL has two additional CLT hotels
under construction at Fort Jackson.
Secretary Modly. The Department of the Navy (DON) works with the
managing member to define the requirements and scope for new
construction as well as any renovation work. It is in the interest of
the DON and the managing member to continuously innovate and use
materials that sustain the inventory over the long-term. Currently,
projects are incorporating anti-fungal paint in water sensitive areas,
composite decking for deck replacements, and improved bathroom
ventilation fans.
Secretary Barrett. The Air Force encourages the use of new
technologies.
use of non-disclosure agreements
7. Senator Tillis. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, non-disclosure agreements (NDAs) have been used by
private housing providers to intimidate tenants and suppress reporting
of their unsatisfactory performance. NDAs have been used in
``settlements'' for merely hundreds of dollars, or a half month's rent,
but also in conjunction with otherwise fair and just settlements. Under
what circumstances should NDAs be an acceptable component of a
settlement agreement between military families and privatized housing
providers, and what constraints or restrictions should be placed on
their scope?
Secretary McCarthy. Dispute settlement agreements containing non-
disparagement and non-disclosure clauses are frequently used in
industry to avoid or minimize the cost of protracted civil litigation,
and are appropriate where the payer sees value in preserving the
confidentiality of the settlement terms for a number of reasons. Army
issued guidance to privatized housing partners in March 2019 which
states that non-disclosure clauses are only to be used as part of
agreements to settle a dispute with a tenant in which litigation was
either threatened or was ongoing, and are never to be required for a
tenant to receive maintenance or other services, or to limit a
servicemember's ability to used privatized housing in the future. Non-
disclosure clauses in settlement agreements should not be written in a
manner that prohibits or discourages the reporting of substandard
housing conditions to the Army or any other entity that may have
regulatory or oversight jurisdiction over the housing company. Non-
disclosure agreements will not be used as a requirement to obtain
services.
Secretary Modly. Per written Department of the Navy (DON) guidance,
non-disclosure agreements (NDA)/confidentiality agreements are not used
during the regular course of business, to include move-in/move-out,
routine maintenance, and service call response. They may be used to
settle a significant or contentious dispute that results in monetary
payment to the resident or where the privatized housing provider waives
damages owed by the resident. The DON informed its partners in writing
in June 2019 that it should be notified when an NDA or a similar type
of document (e.g. confidentiality agreement and/or a release of claims
agreement) is used to settle a dispute. In November 2019, the DON
issued formal guidance on the use of NDAs/confidentially agreements, to
include expected notifications to the DON.
Secretary Barrett. In addition to the restrictions from the fiscal
year 2020 NDAA on NDAs, the Air Force prohibits NDAs when a military
member chooses to lease a home of lesser grade or as a pre-condition
for maintenance work. If an Airman or military retiree is asked to
enter into an NDA, their Staff Judge Advocate is available to provide
legal assistance.
unit chain-of-command involvement
8. Senator Tillis. General McConville, General Berger, Admiral
Gilday, and General Goldfein, what directives have been issued to unit
commanders regarding their involvement in base housing?
General McConville. The SA, CSA, and SMA issued a tri-signed letter
that charged senior commanders to actively monitor the condition of
housing (family and unaccompanied housing, whether Army-owned, Army-
leased or privatized) for health, safety, and environmental issues of
concern. The letter empowered commanders and noncommissioned officers
throughout the chain of command to routinely visit housing units and
check on living conditions with appropriate notice and the consent of
servicemembers and their families. Where life, health, and safety
issues exist in privatized housing, it requires senior commanders to
work with MHPI project companies and their property management service
providers to immediately remediate the condition and/or to relocate
residents to temporary quarters. It also directed senior commanders to
personally conduct town halls, in collaboration with the MHPI company
representatives, to give families a forum to voice housing concerns.
Senior commanders were directed, and have completed, visits to all
installation housing to assess the scale and scope of housing issues
and to report their assessment up through the chain of command.
Senior commanders also were directed to expedite housing inspector
hiring efforts and to increase the frequency of ``post-maintenance work
order'' quality inspections to ensure maintenance was completed to
standard and met resident expectations. Commanders are inspecting 100
percent of homes between tenant changes of occupancy.
Finally, senior commanders were directed to make sure all actions
taken to ensure the health and safety of our soldiers and family
members are documented. Our commanders and leaders continue to inspect
100 percent of all life, health, and safety work orders and a 10
percent sample of routine work orders. Temporarily relocated housing
residents should return to their permanent residence only after the
senior commander deems that appropriate corrective actions are in
place.
General Berger. The Marine Corps has issued refined Command
Guidance to Installation Commanders advising of the need to support our
marines, sailors and their families by ensuring that residents receive
quality housing at our installations and affirming our commitment to
their well-being. In support of this, Installations Commanders have
been directed to: 1) conduct regular meetings with housing personnel,
the PPV partners and Business Agreements managers to review housing
issues including health and safety concerns, housing trends and
resident satisfaction concerns, 2) promote annual resident satisfaction
surveys to maximize resident participation, 3) validate PPV provided
metrics by conducting spot checks on work orders, move ins/move outs,
4) promote use of the mobile maintenance app, 5) conduct resident
advisory boards quarterly, 6) review PPV budgets, 7) conduct regular
site assessments, and 8) provide input on incentive fees. All of these
actions are intended to ensure that Installation Commanders are
actively engaged with our residents and knowledgeable of their housing
concerns.
Separately, Marine Corps Order 11000.22 Ch 1, Marine Corps Bachelor
and Family Housing Management, will be updated upon the completion of
negotiations pertaining to the Bill of Rights, resident
responsibilities, universal lease, incentive fee structure, disputes
process, roles and responsibilities of Commanders, and guidance for
health and safety.
Admiral Gilday. Navy leadership released a Naval Administrative
Message on February 23, 2019, directing division officers to personally
ask every sailor in their unit if their living quarters were
satisfactory, and to raise any identified issues to the chain of
command. Sailors were also asked if they wanted a housing visit so
leaders in their command could visually inspect any problems the sailor
and their family are experiencing. Ensuring the wellbeing of our
sailors and their families remains one of my top priorities and I
expect chain of command involvement at the deckplate level to resolve
any housing-related concerns through existing processes.
General Goldfein. On 1 April 19, the Secretary of the Air Force,
the Chief of Staff of the Air Force, and the Chief Master Sergeant of
the Air Force issued a letter reiterating and clarifying commanders'
responsibilities to ensure the safety and welfare of airmen. The Air
Force issued guidance to commanders related to moisture and mold in
privatized homes, tenant access to legal assistance for housing issues,
establishment of Resident Councils, and their role in management review
committees. Wing commanders are now briefed on their roles and
responsibilities in privatized housing.
9. Senator Tillis. General McConville, General Berger, Admiral
Gilday, and General Goldfein, what cultural, legal, or other obstacles
are limiting the unit chain-of-command from getting involved in
military housing issues at the lowest levels?
General McConville. Throughout the process of privatizing its
housing, the Army never ceded any of its authority and responsibility
for ensuring the protection of life, health, and safety on its
installations. Over time, however, the failure to properly communicate
that precept throughout the Army chain of command resulted in a widely
held and mistaken belief that the Army lacked authority to ensure that
soldiers and families lived in safe and habitable MHPI housing. The
Army has aggressively attacked this misperception at multiple levels to
ensure commanders, officers, and NCOs at every level understand that it
remains their personal responsibility as Army leaders to assist and
advocate for soldiers who are encountering housing habitability issues.
General Berger. Based on current contractual obligations,
Commanders do not have the ability to withhold incentive fees or to
direct Partners to address issues that would otherwise affect the
safety and health of our Military Families. Business agreements must be
negotiated to address the following: 1) the disputes resolution
process, 2) the revised incentive fee structure, and 3) the universal
lease. There is also a need to clearly define Service and Commander
roles and responsibilities without impacting PPV partner
responsibilities outlined in the business agreements (potential legal
implications).
Admiral Gilday. I am aware of no cultural, legal, or other
obstacles which exist that limit the chain of command involvement in
military housing issues impacting our sailors. I expect the chain of
command to be proactively engaged and to notify me of any difficulties
they encounter.
General Goldfein. No hurdles preclude unit chain-of-command
involvement. During the initial phase of the projects, installation
commanders were told that privatized housing involved business
agreements, not command contracts, so modifications required higher-
level review. We did not adequately explain their enduring
responsibility to care for airmen and families in privatized housing.
We have since made meaningful changes to the privatized housing program
to empower commanders, including training, establishing Resident
Councils, and increasing their input in assessing the performance
incentive fee.
leverage in negotiations
10. Senator Tillis. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, do your services and departments have adequate
leverage or authority to negotiate effectively with privatized housing
providers to ensure that those providers satisfactorily fulfill their
obligations?
Secretary McCarthy. While the MHPI project companies are the direct
managers of the program at each installation, the Army's concurrence is
required for annual budget approval, use of Reinvestment Account funds,
and other major decisions. The Army also has authority over the MHPI
project companies as the ``landlord'' via the Ground Lease, which
delineates the regulatory requirements for occupying land and
facilities on each installation. Through financial oversight and ground
lease administration, the Army's ability to affect direction and
decisions within the MHPI companies is adequate to ensure that the
Army's needs are met.
Secretary Modly. The Department of the Navy believes it has
adequate and appropriate leverage and authority to negotiate
effectively with providers to ensure they fulfill their obligations.
Secretary Barrett. The Air Force has adequate leverage and
authority to negotiate with project owners. We place underperforming
project owners on corrective action plans, require performance
improvement plans, withhold performance incentive fees, require
independent audits of work orders, and if appropriate, initiate formal
action under the dispute provisions of the project documents.
contract termination for under-performing private contractors
11. Senator Tillis. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what consideration has been given to terminating
contracts with housing providers who fail to meet expectations, what
steps, if any, have been taken to begin termination proceedings for any
of these projects, and what additional authorities or resources would
be required to do so?
Secretary McCarthy. The MHPI legal documents provide the Army with
the necessary authorities to address issues associated with substandard
MHPI performance. The Army continuously evaluates the performance of
MHPI service provider companies (e.g., property managers) and refers
substandard service issues to the attention of the MHPI project company
(i.e., managing member company) for action. If the Army fails to see
sufficient efforts to correct substandard performance, the Army will
request that the MHPI managing member company terminate the MHPI
service provider company in question. If the MHPI managing member
company fails to take appropriate action against a substandard MHPI
service provider company, the Army can take action to replace the MHPI
managing member company and the MHPI service provider company in
question.
The Army has not encountered a situation where a deficient MHPI
service provider company has failed to make commercially reasonable
efforts to resolve their performance deficiencies as they have the
right to do under the terms of their service contract.
Secretary Modly. The Department of the Navy (DON) does not require
additional authorities or resources to effectively negotiate with
providers. No projects are currently under consideration for
termination of the property manager or Managing Member. The DON
continues to assess Public Private Venture provider performance and
will enforce all of its rights under its agreements, including
implementing the right to terminate where warranted.
Secretary Barrett. The Air Force placed underperforming project
owners on corrective action plans, required performance improvement
plans, withheld performance incentive fees, required independent audits
of work orders, and if appropriate, could initiate formal action under
the dispute provisions of the project documents. Allegations that may
be criminal in nature are referred to the Air Force Office of Special
Investigations (AFOSI). For the sake of providing healthy and safe
homes for airmen and their families, we want project owners to comply
with the terms and conditions of our ground leases and for the projects
to be successful.
bolstering government housing office capacity
12. Senator Tillis. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, how do you plan to strengthen the capacity and
effectiveness of government housing offices to advocate for tenants and
hold private contractors accountable, and what additional resources do
those plans require?
Secretary McCarthy. The Army hired an additional 114 housing
professionals to provide oversight and resident advocacy for the MHPI
and support for soldiers and families living in privatized housing.
IMCOM HQ will complete a manpower study in fiscal year 2020 to validate
the new staffing requirements due to additional responsibilities at
each installation housing office.
The Army established 24/7 housing hotlines at all installations to
support residents. Housing management specialists respond to queries
and concerns coming from owned/privatized family housing as well as
from barracks residents. The Army is working to establish a formal
housing management specialist certification program, which will improve
staff effectiveness across the housing portfolio. The Army also
implemented new inspection standards and oversight tasks to hold MHPI
companies accountable.
Secretary Modly. The Department is hiring additional staff for
housing offices' administrative support, home inspections, and
maintenance to increase responsiveness and performance. We appreciate
the Committee's support to fund an additional 183 personnel in Navy
housing offices and an additional 114 personnel in Marine Corps housing
offices by including authorizations in the Fiscal Year 2020 National
Defense Authorization Act. Our ability to maintain momentum relies on
critical resources dependent on the enactment of fiscal year 2020
appropriations. We are also re-evaluating Housing Condition Assessments
and Program Review processes, updating policies, procedures, roles and
responsibilities, and implementing lessons learned on an ongoing basis.
Secretary Barrett. We are nearly doubling our housing manpower by
adding 218 housing positions, to include a new Resident Advocate
position at each base. These positions will improve oversight and
quality assurance of the housing portfolio, enabling Military Housing
Offices to achieve 100 percent participation in pre-leasing
inspections, validate completion of all health and safety work order
requests, and audit 30 percent of urgent work order requests.
Additionally, we expanded the toll-free 1-800 line to 24/7, 365 days a
year and established Resident Councils for airmen to raise concerns. As
part of the tenant's Bill of Rights, we will establish a dispute
resolution process with a significant commander role.
13. Senator Tillis. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what steps have been taken to ensure that government
housing representatives are clearly distinct in appearance, role and
responsibility from representatives of private contractors?
Secretary McCarthy. While government housing representatives do not
wear distinctive uniforms, they do have clearly defined roles and
responsibilities that are separate and distinct from MHPI
representatives.
Government housing professionals now receive specific training on
MHPI operations and oversight. Permanent change of station orders
direct soldiers and their families to government housing offices, where
trained housing staff provide information on all leased housing options
(on post and off post) at their next duty station. Our uniformed
Garrison Commanders, along with the unit chains of command, have taken
ownership of ensuring all installation tenants have the best housing
and are continuously engaging and educating installation populations.
In addition, new signage has been installed outside each government
housing office to clarify that it is staffed by government personnel
and is separate from the housing office managed by the MHPI project.
Secretary Modly. The Department is ensuring government personnel
working in installation housing offices have nametags, signage, and, in
some cases, apparel that clearly indicate they are government personnel
and not associated with the Public Private Venture property manager.
Secretary Barrett. We revised Air Force policies to direct that
signage clearly distinguishes Military Housing Offices from Privatized
Housing Offices. As of 1 Feb 20, 54 of 63 locations have distinctive
signage or are not collocated, and 62 of 63 have a private counseling
area. Additionally, our senior leaders check to ensure this policy is
being implemented during visits to our bases.
__________
Questions Submitted by Senator Dan Sullivan
performance incentive payments
14. Senator Sullivan. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, while there are certainly systemic problems with
privatized housing that need to be addressed, there are some privatized
housing projects--such as those in Alaska--that are maybe doing better
than others. How can we realign aspects of the program like performance
incentive payments to incentivize better performance from those
companies falling short while enabling companies that are doing well to
continue to do so?
Secretary McCarthy. The Army negotiated for one common set of
Incentive Performance Management Plan (IPMP) metrics for all of its
seven MHPI managing member companies starting on January 1, 2020. The
revised metrics contain significant revisions. For instance, 75 percent
of the Property Management Company's score will now be generated by
resident satisfaction, work order quality, and responsiveness with the
remainder based on garrison commander discretion (10 percent) as well
as the property manager meeting financial reporting (5 percent) and
financial performance (10 percent) requirements.
Secretary Modly. The Department of the Navy (DON) will be
implementing the revised Office of the Secretary of Defense incentive
fee structure to standardize property management incentive fees across
the portfolio. Oversight of performance will be enabled by metrics,
increased staffing, and elevated approval levels for incentive fee
payments. Navy housing personnel now have unfettered access to the
partner's maintenance systems to perform quality assurance checks,
trend analysis, and to look for anomalies. In addition, the Navy
recently deployed its own Public Private Venture (PPV) Electronic Data
Warehouse and PPV Dashboards focusing installation oversight on command
reportable items and metrics that better measure resident satisfaction.
Using this new system, installation and region Housing Offices are now
able to pull work order data directly from partner maintenance systems
in order to perform monthly review of electronic maintenance records,
monitor performance by installation/neighborhood, and to conduct random
spot-checks with residents to confirm work is complete. The Marine
Corps is working with the Navy to leverage their contract in order to
provide identical reports for the Marine Corps leadership.
Secretary Barrett. The Air Force developed a performance incentive
fee framework that incentivizes project owners to achieve high customer
and commander satisfaction by delivering timely and quality
workmanship.
15. Senator Sullivan. Ms. Field, while there are certainly systemic
problems with privatized housing that need to be addressed, there are
some privatized housing projects--such as those in Alaska--that are
maybe doing better than others. How would the Government Accountability
Office recommend realigning aspects of the program like performance
incentive payments to incentivize better performance from those
companies falling short while enabling companies that are doing well to
continue to do so?
Ms. Field.In our recently issued report, \1\ we stated that most of
the privatized housing projects' business agreements include the option
for the private partners to receive annual or quarterly performance
incentive fees based on achieving the performance metrics established
in each individual project's business agreement. \2\ These fees are
intended to incentivize private partner performance and can be withheld
in part or in total if the private partner fails to meet the
established metrics. Further, these fees are project-specific and are
commonly measured through four key metrics--resident satisfaction,
maintenance management, project safety, and financial management. The
weight each performance metric and underlying indicator carries toward
the incentive fee varies by project, so incentive fees for some
projects may be heavily dependent on financial performance, while
others may be more heavily weighted toward resident satisfaction. To
determine how well the private partners are performing under these
metrics, military housing office officials rely on a range of
indicators established in the project business agreements. However, we
found that the indicators underlying the metrics designed to focus on
resident satisfaction and on the quality of the maintenance conducted
on housing units may not provide meaningful information or reflect the
actual condition of the housing units.
---------------------------------------------------------------------------
\1\ GAO, MILITARY HOUSING: DOD Needs to Strengthen Oversight and
Clarify Its Role in the Management of Privatized Housing, GAO-20-281
(Washington, D.C.: Mar. 26, 2020).
\2\ Most, but not all, of the private partners are eligible to
receive performance incentive fees based on achieving the performance
metrics established in each individual project's business agreement. We
have determined that 5 of the 79 privatized housing projects, as of the
end of fiscal year 2017, did not have an established incentive fee
plan. The projects are Fort Carson, Colorado; Hill Air Force Base,
Utah; Dyess Air Force Base, Texas; Robins I Air Force Base, Georgia;
and Robins II Air Force Base, Georgia.
OSD and military department officials have also recognized that the
current indicators for measuring performance do not consistently focus
on or prioritize the private partners' performance and have begun to
take steps to address identified shortfalls. In October 2019, the
Office of the Secretary of Defense (OSD), in collaboration with the
military departments and private partners, issued new guidance
standardizing the performance incentive fee framework across the
military departments. The new guidance provides a framework for
standardizing the minimum and maximum percentages of the fee that each
metric can account for, allowing for some flexibility in the weight
each metric will carry for an individual project. However, at the time
of our report these officials indicated that they had not yet
reevaluated the specific indicators used to determine whether a private
partner has met a specific metric, resulting in a lack of assurance
that the information the military departments are using to award these
incentives reflects the actual condition of the housing. Thus, we
recommended that each military department take steps, in collaboration
with their Military Housing Privatization Initiative (MHPI) project
partners, to review the indicators underlying the MHPI housing project
performance metrics to ensure they provide an accurate reflection of
the condition and quality of the homes, and thus are appropriately
rewarding private partner performance. Each military department
concurred with this recommendation, and outlined actions being taken to
improve oversight of private partner performance. Implementing this
recommendation will ensure that the indicators driving these metrics
accurately reflect private partners' performance in maintaining the
condition and quality of privatized homes and better position DOD to
hold private partners accountable in a more meaningful way. Moving
forward, we will closely monitor the Department of Defense's (DOD)
implementation of our recommendation.
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__________
Questions Submitted by Senator Martha McSally
mechanisms for terminating a housing project contract
16. Senator McSally. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, since these problems with the privatized housing
program came to light, it seems that the 14 housing contractors have
been able to drag their feet on correcting these problems because they
are not afraid of having their contracts terminated. What legal
mechanisms exist in their leasing contracts allow for your service
branch to terminate the contract with a certain privatized housing
contractor (if any)?
Secretary McCarthy. As a part owner of the companies that own the
privatized military housing, the Army can require the MHPI managing
member companies to require deficient MHPI service providers to either
cure the defects in their performance or have their contracts with the
MHPI managing member company terminated. The Army is also the ground
lessor for the MHPI companies that own and operate housing located on
Army installations. If a MHPI company fails to satisfy its obligation
to operate habitable housing, the Army can terminate the MHPI company's
ground lease and reacquire ownership of all of the housing located
within the leasehold. The Army's right to terminate a MHPI company's
ground lease, however, is subject to the rights of both the MHPI
company, and the MHPI company's lenders, to cure the conditions that
would lead the Army to claim that the MHPI company is in default.
Secretary Modly. The governing agreements for Department of the
Navy (DON) privatization projects provide several mechanisms for the
DON to address instances of unacceptable performance or, when
necessary, default. 1. Removal of Property Manager: In the event of
unacceptable performance by a property manager, governing project
agreements give the DON the right to direct the company to terminate
the property management agreement and replace the property manager
without terminating the LLC agreements or removing the managing member.
2. Issue Cure Notice to Managing Member: In cases where the managing
member has defaulted on its obligations, the DON can issue a written
cure notice. According to project operating agreements, default events
include the violation of any provision of the agreement. The cure
notice serves to set the timeline to remedy or cure such violation. 3.
Default Managing Member: The DON has the right to default the managing
member of the LLC. A replacement managing member would assume all
rights and obligations of the managing member and the existing LLC
entity construct would continue to own and operate the housing.
Alternatively, the DON may cause the project or the managing member's
interest to be sold to a third party in accordance with the terms of
the agreements. Either remedy must be coordinated with the bondholder.
4. Terminate the Project: In an extreme case, where the DON is unable
to replace the managing member, the ground lease may be terminated and
the project entity itself may be dissolved and liquidated. The
bondholders would require debt repayment for which the government could
be potentially liable. The DON would be responsible for ownership and
operation of the housing project. In the event of Government re-
acquisition, resident leases would be terminated and payment of BAH to
military members ceased in accordance with 37 U.S.C. Section 403. Per
fiscal law (10 U.S.C. Section 2821), sufficient appropriated resources
would be required to sustain the housing for military families.
Although the circumstances did not reach the event of a default, in
2007 the DON caused the managing member's interest in the LLC to be
sold to a third party in the Navy's Pacific Northwest project. That
third party stepped in and assumed ownership and operation of the
housing without disruption to the residents.
Secretary Barrett. When project owners underperform, the Air Force
puts them on corrective action plans, requires performance improvement
plans, withholds performance incentive fees, requires independent
audits of work orders, and if appropriate, would initiate formal action
and exercise our contractual rights to demand failures be cured. A
failure to cure may result in default and have serious financial and
operational consequences for a housing project. Once an event of
default exists, the private lender controls project cash flow. The Air
Force would then ensure the project owner meets its obligation to
provide safe and habitable homes while the parties determine a path
forward. If no agreement is reached, an event of default can lead to
termination of the property management agreement and/or the ground
lease.
17. Senator McSally. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, if a service branch were to end a privatized housing
contract, what would happen the next day?
Secretary McCarthy. If the Army terminated a MHPI company's ground
lease for a default that had not been cured, the Army would become the
owner of all of the housing within the leasehold with immediate
responsibility to oversee, operate, and maintain the housing. Leading
up to a default termination, the Army, at minimum, would need to
consider the fair market value of the project, funding to repay private
debt and prepayment penalties as applicable, any outstanding balance of
any government direct loans, and other relevant costs to include
litigation costs.
Secretary Modly. In the event of a default, there are two
scenarios. 1. Department of the Navy (DON) could cause the default and
replacement of the managing member without terminating and liquidating
the overall privatization project business entity. Under this scenario,
the new managing member assumes all the obligations under the terms of
the governing project agreements. Other than any transitional
administrative requirements associated with the transfer of ownership,
the effects on sailors, marines, and their families would be
negligible. 2. In an extreme case, where the DON is unable to replace
the managing member, the ground lease could be terminated and the
project entity itself could be liquidated. The bondholders would
require debt repayment for which the government could be potentially
liable. The DON would be responsible for ownership and operation of
housing project. In the event of Government re-acquisition, resident
leases would be terminated and payments of the Basic Allowance for
Housing to military members would cease in accordance with 37 U.S.C.
Section 403. Per fiscal law (10 U.S.C. Section 2821), sufficient
appropriated resources would be required to sustain the housing for
military families. Residents may see changes in the service and
maintenance levels and property management policies.
Secretary Barrett. The lengthy process to end a privatized housing
ground lease is governed by the dispute resolution language found in
the transactional documents within each agreement. In previous
instances when our business relationships with project owners have
ended, these projects were bought out by other companies. While in the
dispute resolution or buy-out process, there could be a degradation of
service to our residents. Upon an event of default, private lenders
have rights pursuant to the intercreditor agreements executed at
closing. Private lenders have six months to cure the events of default,
working with the Air Force and project owners to develop a mutually
acceptable path forward. Private lenders may pursue any of the
following: seek a state or federal court order requiring the project
owner to perform certain obligations under the project documents; take
possession of the project and assume full responsibility for its
completion and/or operation; seek the appointment of a receiver in
state or federal court to take possession of the project; terminate
management agreements and require the project owner to hire another; or
seek reimbursement from the project owner for all costs incurred for
repairs and maintenance.
18. Senator McSally. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what immediate impact would that have on the
tenants, the housing project, and the service branch?
Secretary McCarthy. By law, the Army can only use funds
appropriated for operating and maintaining Army Family Housing. The
amount of funding currently appropriated for Army use is only adequate
for the Army's current inventory of government owned and operated
family housing. As a result, if the Army terminated a MHPI company's
ground lease agreement without previously being appropriated
supplemental Army Family Housing operational and maintenance funding,
then Army would potentially lack the necessary resources to operate and
maintain the family housing it reacquires upon the termination of the
MHPI company's leasehold. Termination of the lease would also result in
the completion of the MHPI project company's obligations consistent
with the terms of the company's operating agreement.
Secretary Modly. In the event of the replacement of one managing
member with another, without the dissolution or liquidation of the
overall business entity, the impacts on tenants should be negligible.
Those impacts would include changes related to the transition of
ownership (e.g., revisions to leases, changes in personnel, contact
numbers, etc.). Because the governing project's agreements would remain
in effect, there would be no immediate impact on the housing project
and the entity's obligations and requirements would remain the same.
The rents paid by military residents would not change. There would be
no significant impact to the Department of the Navy or to sailors,
marines, and their families. In the event of the termination of the
ground lease and the dissolution and liquidation of privatized housing
business entity and the Governmental assumption of ownership of the
housing, the immediate impact on residents would be the termination of
their Basic Allowance for Housing in accordance with 37 U.S.C. Section
403. Per fiscal law (10 U.S.C. Section 2821), sufficient appropriated
resources would be required to sustain the housing for military
families. The longer-term impact would be the need for this new
resource requirement to compete for Navy and Marine Corps financial and
personnel resources. Residents may see changes in the service and
maintenance levels and property management policies.
Secretary Barrett. Once an event of default exists, the private
lender controls project cash flow. This would adversely impact the
quality of housing by limiting the funds available for maintenance.
19. Senator McSally. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what next steps would that service need to take to
replace that contractor/partner?
Secretary McCarthy. In the Army's privatized housing transactions,
the replacement for a MHPI service provider company is selected by the
MHPI managing member company, subject to the approval of the Army and
the MHPI managing member company's lender/bondholders.
Secretary Modly. The governing agreements for Department of the
Navy (DON) privatization projects provide several mechanisms for the
DON to address instances of unacceptable performance or, when
necessary, default. The language of the business agreements provides
the framework and steps DON would take to address unacceptable
performance. The available steps include: 1. Removal of Property
Manager: In the event of unacceptable performance by a property
manager, governing project agreements give the DON the right to direct
the company to terminate the property management agreement and replace
the property manager without terminating the LLC agreements or removing
the Managing Member. 2. Issue Cure Notice to Managing Member: In cases
where the Managing Member has defaulted on its obligations, the DON can
issue a written cure notice. According to project operating agreements,
default events include the violation of any provision of the agreement.
The cure notice serves to set the timeline to remedy or cure such
violation. 3. Default Managing Member: The DON has the right to default
the Managing Member of the LLC. A replacement Managing Member would
assume all rights and obligations of the Managing Member and the
existing LLC entity construct would continue to own and operate the
housing. Alternatively, the DON may cause the project or the Managing
Member's interest to be sold to a third party in accordance with the
terms of the agreements. Either remedy must be coordinated with the
bondholder. 4. Terminate the Project: In an extreme case, where the DON
is unable to replace the Managing Member, the ground lease may be
terminated and the project entity itself may be dissolved and
liquidated. The bondholders would require debt repayment for which the
government could be potentially liable. The DON would be responsible
for ownership and operation of the housing project. In the event of
Government re-acquisition, resident leases would be terminated and
payment of Basic Allowance for Housing (BAH) to military members ceased
in accordance with 37 U.S.C. Section 403. Per fiscal law (10 U.S.C.
Section 2821), sufficient appropriated resources would be required to
sustain the housing for military families. Although the circumstances
did not reach the event of a default, in 2007 the DON caused the
Managing Member's interest in the LLC to be sold to a third party in
the Navy's Pacific Northwest project. That third party stepped in and
assumed ownership and operation of the housing without disruption to
the residents.
Secretary Barrett. The replacement of a project owner would trigger
private lenders rights pursuant to the intercreditor agreements
executed at closing, require mutual agreement between the Air Force,
project owner and private lender on a way forward, and may lead to
termination of the project documents and operation of the project by
the Air Force until a new contract/partner is identified.
__________
Questions Submitted by Senator Josh Hawley
off-base housing
20. Senator Hawley. Secretary McCarthy, my constituents have raised
concerns about insufficient tenants' rights for servicemembers living
off base. What is the Army doing to ensure military families have
access to high-quality off-base housing?
Secretary McCarthy. Seventy percent of our soldiers and families
reside off our installations. Garrison commanders, deputy garrison
commanders, and Army housing employees have the skillsets to
communicate soldier, family, and civilian housing requirements to
``off-post'' housing communities. Housing managers are proficient in
developing working relationships with property and real estate managers
as their properties are evaluated for inclusion in the Housing Office's
referral networks. Army regulations establish clear housing standards
which are shared with the local community. Housing managers are
sensitive to any allegations of discrimination, poor business
practices, and, in coordination with the legal resources available on
the installation, are able to determine when to initiate sanctions
against property managers and landlords who discriminate or attempt to
violate the Servicemembers Civil Relief Act. Army housing career
employees receive training in conducting the annual Basic Allowance for
Housing survey, which requires inspections, visits, and a keen
awareness of safe, affordable, and adequate rental housing inventory
available in local communities. Many of our Army housing offices,
through rental partnership programs, have coordinated with local
communities to provide rental options at highly competitive rates with
reduced deposit requirements. We will continue to work with local
communities to ensure the best housing options are available for
servicemembers and their families.
21. Senator Hawley. Secretary McCarthy, how are you thinking about
strengthening those protections going forward?
Secretary McCarthy. We believe the current laws and local municipal
policies are adequate to protect our servicemembers. As a part of our
current manpower study, we identified the requirement for an increase
in the staffing of Army Housing offices. By properly staffing these
offices, we can provide needed advocacy to support and strengthen our
servicemembers and our families, to include providing information and
support regarding housing options in local communities.
__________
Questions Submitted by Senator Jack Reed
military treatment facilities and families
22. Senator Reed. Secretary McCarthy, General McConville, Secretary
Modly, Admiral Gilday, General Berger, Secretary Barrett, and General
Goldfein, what are each of the military services doing to ensure that
those responsible for writing military health policies are issuing
directives that aid providers in recognizing, diagnosing and treating
the various forms of environmental illness associated with sick
buildings?
Secretary McCarthy and General McConville. Army healthcare
providers screen patients for risk of exposure to environmental health
hazards, such as lead and mold. Testing is completed during every well-
child check from birth to age 6 and also for children who are at high
risk. If an elevated blood lead level is identified, a housing
assessment and an investigation is completed to identify the source of
lead exposure. All elevated blood lead levels are reported to the state
and local public health departments, and to the DOD system of record
for reportable illnesses.
If a patient reports health concerns associated with mold exposure,
the provider completes a questionnaire with the patient to determine
indoor mold exposure levels. If responses to the questionnaire
indicates high exposure, healthcare providers document the exposure in
the medical record, request case management, and complete a housing
assessment to evaluate the environmental conditions. The results of the
housing assessment are stored in the DOD's system of record.
Additionally, the Army developed a comprehensive checklist to determine
the environmental health and safety of homes. It addresses lead, mold,
asbestos, and radon and a wide range of safety considerations, such as
smoke alarms, egress, height of window ledges, and function of HVAC
equipment. The checklist is based on the recommendations from the
National Center for Health Homes and aligns with the Environmental
Protection Agency, the Centers for Disease Control, and Housing and
Urban Development, as well as Unified Facilities Criteria standards.
This checklist will be used to evaluate the health and safety of homes
between occupancy per the Residential Communities Initiative Portfolio
and Asset Management Handbook and will be included in relevant Army
policy, such as AR 420-1 (Facilities Management).
Secretary Modly and Admiral Gilday. and General Berger. A draft
Directive-Type Memorandum (DTM), ``Managing Health and Safety Risks in
Housing,'' from the Under Secretary of Defense for Personnel and
Readiness (USD P&R) is being formally coordinated with the military
Departments. Specifically, the draft DTM:
Directs the military Departments on the appropriate and
consistent management of housing safety and health hazards reported by
residents.
Directs the Assistant Secretary of Defense for Health
Affairs to create consistent clinical response guidelines associated
with a resident's report of health concerns from military housing to
their primary health care provider. In addition, the Navy has issued
policy and clinical guidelines as follows.
Memorandum from Chief, Bureau of Medicine and Surgery
(BUMED): ``Health Hazards from Environmental Exposures in Military
Housing'' (March 18, 2019)
Navy and Marine Corps Public Health Center (NMCPHC):
``Guide for Clinicians Caring for Patients with Mold-Related
Complaints'' (April 1, 2019)
Secretary Barrett and General Goldfein. The Air Force utilizes
well-established surveillance, prevention, and control of disease
processes to include mold, a major complaint associated with sick
buildings. The Air Force Medical Service updated guidance to medical
commanders and physicians in May 2019 for evaluation of mold exposure.
The updated guidance included an evidence-based ``Guide for Clinicians
Caring for Patients with Mold-related Complaints''. Subject matter
experts at the Environmental, Safety, and Occupational Health Service
Center at the USAF School of Aerospace Medicine at Wright-Patterson Air
Force Base, Ohio, are also available to assist providers.
23. Senator Reed. Secretary McCarthy, General McConville, Secretary
Modly, Admiral Gilday, General Berger, Secretary Barrett, and General
Goldfein, who is ultimately responsible to ensure that military
providers are appropriately educated and trained and are subsequently
able to perform the proper diagnostic workup on patients with signs and
symptoms indicative of environmental illness resultant from exposures
in negligently built and maintained military housing?
Secretary McCarthy and General McConville. The Surgeon General is
ultimately responsible for ensuring providers are appropriately
educated, trained, and capable of performing proper diagnostic workup
on patients. The Surgeon General accomplishes this through regulation
and Joint Commission accreditation standards to ensure each provider
has appropriate credentials, training, and clinical competency to
provide care in their respective field.
Secretary Modly. Per a March 18, 2019 memorandum from Chief, Bureau
of Medicine and Surgery (BUMED), titled ``Health Hazards from
Environmental Exposures in Military Housing,'' Navy Medicine regions
must ensure clinicians are educated on this topic for evaluating
patients. This would be delegated to the medical treatment facility
(MTF) command level. The memorandum provides educational resources for
this purpose, as well as the ability for MTF providers to consult with
their MTF public health experts (e.g., Occupational and Environmental
Medicine, Preventive Medicine, and Industrial Hygiene) who can liaise
with the Navy Housing Service Centers to further investigate
environmental conditions of a home on a case-by-case basis. In
addition, the Navy and Marine Corps Public Health Center (NMCPHC)
developed a ``Guide for Clinicians Caring for Patients with Mold-
Related Complaints'' dated April 1, 2019. Links for additional
educational resources are found on the NMCPHC website. Navy Medicine
regularly reviews provider competence and performance, which is subject
to both supervisor evaluation and peer review of the medical records.
This includes checking competence in addressing environmental-related
medical concerns. Providers evaluate and treat patients with concerns
about environmental exposures and illness based on symptoms and
history, which guide the physical exam, evaluation, tests, other
studies, diagnosis, and treatment. Of note, there are often confounding
factors in the home with respect to environmental exposures and disease
causation. Symptoms potentially related to housing environmental
exposures such as mold are also triggered by numerous other common
exposures in the home (e.g., dust mites, pet dander, cockroaches, mice
droppings, pollen, second-hand smoke, scented candles, air fresheners,
plants, etc.). Some people are sensitive to environmental exposures
such as mold, which can exacerbate pre-existing health issues such as
allergies and asthma. Per the Centers for Disease Control and
Prevention, allergic response symptoms like those to pollen or animal
dander are the most common types of symptoms related to environmental
exposure to mold (e.g., nasal stuffiness, throat irritation, sneezing,
coughing or wheezing, eye irritation, or skin irritation). Chronic
respiratory complaints, such as allergies and asthma, are often multi-
factorial, and it is not possible to quantify the contribution of any
particular environmental irritant or allergen to such a disease
process.
Secretary Barrett. As the Secretary of the Air Force, I am
ultimately responsible for the training and education for all of our
airmen. The authorities to implement policies and ensure military
providers are appropriately educated and trained is delegated to the
Surgeon General. Military Treatment Facility Commanders are responsible
for granting provider privileges to practice medicine based on their
credentials, which routinely includes diagnostic workup on patients
with illness from exposure irrespective of the source.
General Berger. Per memorandum from Chief, BUMED, subject: ``Health
Hazards from Environmental Exposures in Military Housing,'' dated 18
Mar 2019, Navy Medicine regions must ensure clinicians are educated on
this topic for evaluating patients. This would be delegated to the
medical treatment facility (MTF) command level. The memorandum provides
educational resources for this purpose, as well as the ability for MTF
providers to consult with their MTF public health experts (e.g.,
Occupational and Environmental Medicine, Preventive Medicine, and
Industrial Hygiene) who can liaison with the Navy Housing Service
Centers to further investigate environmental conditions of a home on a
case by case basis. In addition, Navy and Marine Corps Public Health
Center (NMCPHC) developed a ``Guide for Clinicians Caring for Patients
with Mold-Related Complaints'' dated 1 Apr 2019. Links for additional
educational resources are found on the NMCPHC website.
Navy Medicine regularly reviews provider competence and performance
which is subject to both supervisor evaluation and peer review of the
medical records, and would include competence in addressing
environmental-related medical concerns.
Providers evaluate and treat patients with concerns about
environmental exposures and illness based on symptoms and history,
which guide the physical exam, evaluation, tests, other studies,
diagnosis, and treatment.
Of note, there are often confounding factors in the home with
respect to environmental exposures and disease causation. Symptoms
potentially related to housing environmental exposures such as mold are
also triggered by numerous other common exposures in the home (e.g.,
dust mites, pet dander, cockroaches, mice droppings, pollen, second
hand smoke, scented candles, air fresheners, plants, etc.). Some people
are sensitive to environmental exposures such as mold, which can
exacerbate pre-existing health issues such as allergies and asthma. Per
the Centers for Disease Control and Prevention, allergic response
symptoms like those to pollen or animal dander are the most common
types of symptoms related to environmental exposure to mold (e.g.,
nasal stuffiness, throat irritation, sneezing, coughing or wheezing,
eye irritation, or skin irritation). Chronic respiratory complaints,
such as allergies and asthma, are often multi-factorial, and it is not
possible to quantify the contribution of any particular environmental
irritant or allergen to such a disease process.
Admiral Gilday. Per a March 18, 2019 memorandum from Chief, Bureau
of Medicine and Surgery (BUMED), titled ``Health Hazards from
Environmental Exposures in Military Housing,'' Navy Medicine regions
must ensure clinicians are educated on this topic for evaluating
patients. This would be delegated to the medical treatment facility
(MTF) command level. The memorandum provides educational resources for
this purpose, as well as the ability for MTF providers to consult with
their MTF public health experts (e.g., Occupational and Environmental
Medicine, Preventive Medicine, and Industrial Hygiene) who can liaise
with the Navy Housing Service Centers to further investigate
environmental conditions of a home on a case-by-case basis. In
addition, the Navy and Marine Corps Public Health Center (NMCPHC)
developed a ``Guide for Clinicians Caring for Patients with Mold-
Related Complaints'' dated April 1, 2019. Links for additional
educational resources are found on the NMCPHC website. Navy Medicine
regularly reviews provider competence and performance, which is subject
to both supervisor evaluation and peer review of the medical records.
This includes checking competence in addressing environmental-related
medical concerns. Providers evaluate and treat patients with concerns
about environmental exposures and illness based on symptoms and
history, which guide the physical exam, evaluation, tests, other
studies, diagnosis, and treatment. Of note, there are often confounding
factors in the home with respect to environmental exposures and disease
causation. Symptoms potentially related to housing environmental
exposures such as mold are also triggered by numerous other common
exposures in the home (e.g., dust mites, pet dander, cockroaches, mice
droppings, pollen, second-hand smoke, scented candles, air fresheners,
plants, etc.). Some people are sensitive to environmental exposures
such as mold, which can exacerbate pre-existing health issues such as
allergies and asthma. Per the Centers for Disease Control and
Prevention, allergic response symptoms like those to pollen or animal
dander are the most common types of symptoms related to environmental
exposure to mold (e.g., nasal stuffiness, throat irritation, sneezing,
coughing or wheezing, eye irritation, or skin irritation). Chronic
respiratory complaints, such as allergies and asthma, are often multi-
factorial, and it is not possible to quantify the contribution of any
particular environmental irritant or allergen to such a disease
process.
General Goldfein. As the Secretary of the Air Force, I am
ultimately responsible for the training and education for all of our
airmen. The authorities to implement policies and ensure military
providers are appropriately educated and trained is delegated to the
Surgeon General. Military Treatment Facility Commanders are responsible
for granting provider privileges to practice medicine based on their
credentials, which routinely includes diagnostic workup on patients
with illness from exposure irrespective of the source.
24. Senator Reed. Secretary McCarthy, General McConville, Secretary
Modly, Admiral Gilday, General Berger, Secretary Barrett, and General
Goldfein, what is currently being done to ensure that military
providers are knowledgeable about the scientifically proven ability of
mold to cause debilitating cognitive and neurological injuries?
Secretary McCarthy and General McConville. The Army published new
policy in April 2019 to protect soldiers and families from potential
health impacts related to residential indoor environmental mold
exposure. It includes policy-reinforcing educational materials to
healthcare providers that provide: 1) guidance on mold-related hazards;
2) recommendations for testing and management of suspected illnesses
related to mold exposure; 3) information on how to document mold-
related illness in the patient's medical record; and 4) information on
how to educate patients on mold mitigation measures.
In addition to provider education, the Army is also developing
educational material for soldiers and families. This includes 1) facts
about mold; 2) strategies to prevent mold growth; and 3) recommended
actions when one suspects or has detected mold growth within their
home.
Secretary Modly, General Berger and Admiral Gilday. The Navy and
Marine Corps Public Health Center (NMCPHC) developed a ``Guide for
Clinicians Caring for Patients with Mold-Related Complaints,'' dated
April 1, 2019, explaining that mold exposure is sometimes associated
with adverse health effects, including infections, hypersensitivity
disorders, and toxic or irritant effects from mold by-products. The
National Academy of Sciences (NAS) conducted a comprehensive literature
review and analysis and found there was sufficient evidence to link
mold and other factors related to damp indoor environments with some
upper respiratory tract symptoms, coughing, wheezing, and asthma in
sensitized persons, people who already have respiratory problems, the
elderly, or the very young. However, NAS found there was not enough
evidence to make conclusions for many other health outcomes, including
rheumatologic and other inflammatory diseases, neurological symptoms,
cancer, and reproductive effects [per National Toxicology Program,
https://www.niehs.nih.gov/health/materials/mold--508.pdf].
Provider competence and knowledge of medicine in general includes
competence in addressing household mold-related medical concerns in the
general population. Navy medical providers dealing with especially
complex patient mold-related medical issues (e.g., patients with HIV,
those on immunosuppressant therapy or cancer chemotherapy, or patients
with poorly controlled diabetes mellitus) know to refer patients to the
appropriate specialist as necessary (e.g., Allergy/Immunology,
Infectious Disease, or Neurology as deemed appropriate).
There is no clear evidence for specific direct association of mold
exposure with debilitating cognitive and neurological injuries. Most
peer reviewed studies investigating neurologic disorders and fungal
exposure have described complaints in vague terms and did not define
specific neurologic deficits or use objective testing or findings to
confirm any neurologic dysfunction. ``Despite many reported subjective
complaints, there is no objective evidence for neurological compromise
caused by indoor mold exposure'' (Indoor Mold, Toxigenic Fungi, and
Stachybotrys chartarum: Infectious Disease Perspective, D. M. Kuhn and
M. A. Ghannoum, Clinical Microbiology Reviews, Jan. 2003, p. 159).
For individuals who have medical conditions exacerbated or related
to indoor environment triggers, controlling or eliminating the sources
of indoor/building mold and other indoor allergens, along with medical
treatment, should lead to improvement or resolution of symptoms.
Secretary Barrett and General Goldfein. Air Force providers utilize
the updated ``Guide for Clinicians Caring for Patients with Mold-
related Complaints'' which is published by the Air Force Medical
Support Agency and is based on information from a number of
authoritative sources to include the Institute of Medicine, the Center
for Disease Control, and the Environmental Protection Agency, among
others. This guide contains the latest information regarding the
possible effects of mold exposure. Military medical providers are
informed regarding health hazards associated with mold (and other
household exposures) through regularly scheduled Professional Staff
meetings guided by the Military Treatment Facility Chief of
Professional Services and career field updates provided by Career Field
Mangers/Consultants to the Air Force Surgeon General.
25. Senator Reed. Secretary McCarthy, General McConville, Secretary
Modly, Admiral Gilday, General Berger, Secretary Barrett, and General
Goldfein, there are reports that some military physicians are
acknowledging that they do not know how to treat illnesses brought on
by inadequate housing. There are reports that some referrals are being
denied by military treatment facility (MTF) commands, despite the fact
that Tricare is approving and agreeing to pay for the services. Are you
aware of any of such cases, and if so, why are the referrals being
denied?
Secretary McCarthy and General McConville. All patients with
potential mold-associated symptoms or health concerns are evaluated and
managed in accordance with safe and effective clinical protocols.
Testing for mold and other allergies may include a skin or blood test
to measure a patient's sensitivity to specific types of mold, and
treatments for mold allergies may include corticosteroids,
antihistamines, decongestants, or immunotherapy.
We are aware of requests for mycotoxin testing, a test to quantify
mold exposure, being denied. That particular test is not a TRICARE
covered benefit because urine mycotoxin tests are not approved by the
U.S. Food and Drug Administration and are not recommended by the
Centers for Disease Control and Prevention for diagnostic purposes.
Using non-validated tests could potentially lead to misdiagnoses and
perhaps even harmful medical interventions. The Army Office of The
Surgeon General has asked the Defense Health Agency to review mycotoxin
testing as a TRICARE covered benefit based on multiple requests for
this testing.
Secretary Modly, General Berger, and Admiral Gilday. We have no
knowledge of Commanders/Commanding Officers denying referrals.
Secretary Barrett and General Goldfein. We rely on our medical
providers to assess whether a referral is necessary. We are not aware
of the denial of any referrals to any environmental physicians once an
assessment has been made by the medical provider, nor are we ordering
Military Treatment Facility commanders to deny referrals. Care not
available at a Military Treatment Facility is referred to the
appropriate specialist, ideally within the military health system,
based on the diagnosis of the patient.
26. Senator Reed. Secretary McCarthy, General McConville, Secretary
Modly, Admiral Gilday, General Berger, Secretary Barrett, and General
Goldfein, what is being done to ensure that the cost of medically
necessary care, resultant from exposures to negligently built and
maintained housing, is subrogated to the privatized landlords and/or
their insurers?
Secretary McCarthy and General McConville. The existing Medical
Affirmative Claims (MAC) program would be the avenue by which the Army
would assert such a claim. The Army has not yet asserted a MAC against
a privatized landlord or its insurer for the cost of medical care
expended to treat an illness resulting from conditions in housing.
Establishing a causal nexus between the condition in housing (e.g., the
presence of lead, mold, or asbestos) and the resulting ailment would be
difficult as both sides would have experts that would differ on the
source of the illness. We will look to add additional paths forward
through the dispute resolution process.
Secretary Modly and Admiral Gilday. The Department of the Navy's
(DON) first priority is to ensure prompt and appropriate treatment of
all medical conditions of servicemembers and their family members.
Medical conditions for servicemembers and family members are documented
in each individual's medical treatment record. Navy Medicine has issued
policy to all medical treatment facilities (MTF) directing that
internal processes be developed that facilitate communication and
coordination between providers and public health personnel. We are also
working to ensure providers, servicemembers, and families understand
the proper procedures for reporting health concerns related to housing
discrepancies. If required health care services cannot be provided by
the Primary Care manager at the MTF, the TRICARE network is used to
ensure all required care is received and tracked. The DON is committed
to ensuring the readiness, health, and safety of our sailors, marines,
and their families. Currently, the DON is not considering legal action
to recover health care costs of servicemembers or family members from
the companies providing privatized housing.
General Berger. The DON's first priority is to ensure prompt and
appropriate treatment of all medical conditions of servicemembers and
their family members. Medical conditions for servicemembers and family
members are documented in each individual's medical treatment record.
Navy Medicine has issued policy to all MTFs directing that internal
processes be developed that facilitate communication and coordination
between providers and public health personnel. We are also working to
ensure providers, servicemembers, and families understand the proper
procedures for reporting health concerns related to housing
discrepancies. If required health care services cannot be provided by
the Primary Care manager at the Military Treatment Facility, the
TRICARE network is used to ensure all required care is received and
tracked. The DON is committed to ensuring the readiness, health and
safety of our sailors, marines and their families. Currently, the DON
is not considering legal action to recover health care costs of
servicemembers or family members from the companies providing
privatized housing.
Secretary Barrett. and General Goldfein. The Air Force has an
established process to recoup medical treatment costs for Active Duty,
dependent, or retiree privatized housing residents when those costs are
associated with negligence on the part of third parties such as project
owners or their property casualty insurers.
27. Senator Reed. Secretary McCarthy, General McConville, Secretary
Modly, Admiral Gilday, General Berger, Secretary Barrett, and General
Goldfein, will a military housing registry, similar to the lead
registry, be developed and implemented to track the health issues that
have arisen from exposures to mold, toxic water, asbestos, radon, and
soil contamination?
Secretary McCarthy and General McConville. All housing-related
health concerns and potential environmental health hazards in housing
may be reported to the Housing Environmental Health Response Registry.
The Housing Environmental Health Response Registry is available for
residents to: 1) report concerns about housing and related health
issues; 2) obtain additional information on housing environmental
health hazards; and 3) receive assistance in seeking medical care for
any housing-related illnesses or concerns. The goal of the Housing
Environmental Health Response Registry is to allow the military to link
housing, occupants, and potential health hazard data to: 1) understand
the health effects of potential environmental hazards in housing; 2)
assess future needs for health interventions and health education; and
3) inform individual occupants regarding potential exposure and adverse
health impacts.
As of November 30, 2019, 323 families have enrolled in the Housing
Environmental Health Response Registry. One hundred fifty-seven of the
323 families reported specific hazards in their homes, the majority of
which are mold and dampness. One hundred forty-six families requested
additional contact with a public health professional from the Army
Public Health Center, which is ongoing.
The Army Medical Command published Operations Order 20-10 (MEDCOM
Support to Garrison Quarterly Town Hall Engagements) which directs
medical, dental, and public health participation at Garrison town hall
engagements to address concerns about housing and to encourage and
assist with enrollment in the Housing Environmental Health Response
Registry to residents who have housing related health concerns.
Secretary Modly and Admiral Gilday. Similar to medical encounters
for lead exposure and all other medical encounters, visits and
potential treatments for conditions that are reported by the patient as
being housing-related are documented in their electronic health record
for tracking and follow-up by the attending provider. Additionally, the
Navy, Navy Installations Command (CNIC), and Public Private Venture
(PPV) partners maintain databases (i.e., Enterprise Military Housing
[eMH] and Yardi) that track the historical record of residents in every
home, including all maintenance and service calls that are
environmental (e.g., mold), health, and safety related. If deemed
medically necessary, a medical professional can obtain information from
CNIC to link patients and military housing history.
General Berger. The DON's first priority is to ensure prompt and
appropriate treatment of all medical conditions of servicemembers and
their family members. Medical conditions for servicemembers and family
members are documented in each individual's medical treatment record.
Navy Medicine has issued policy to all MTFs directing that internal
processes be developed that facilitate communication and coordination
between providers and public health personnel. We are also working to
ensure providers, servicemembers, and families understand the proper
procedures for reporting health concerns related to housing
discrepancies. If required health care services cannot be provided by
the Primary Care manager at the Military Treatment Facility, the
TRICARE network is used to ensure all required care is received and
tracked. The DON is committed to ensuring the readiness, health and
safety of our sailors, marines and their families. Currently, the DON
is not considering legal action to recover health care costs of
servicemembers or family members from the companies providing
privatized housing.
Secretary Barrett and General Goldfein. Any health related concern
that arises is referred to the Air Force Environmental, Safety, and
Occupational Health (ESOH) Service Center, who maintains a database.
__________
Questions Submitted by Senator Jeanne Shaheen
transition of military housing privatization initiative oversight
issues
28. Senator Shaheen. Secretary McCarthy, General McConville,
Secretary Modly, Admiral Gilday, General Berger, and Secretary Barrett,
in March, a hearing was held on these issues. Given nearly all of you
were not in your current positions in March, can you describe what the
handover was like on this issue as you transitioned into this job?
Secretary McCarthy and General McConville. General McConville and I
have been involved with the hearings since March as the Vice Chief and
Under Secretary, respectively, therefore our onboarding requirements on
this sensitive and highly visible issue were minimal. We have visited
many installations and maintained close contact with our staffs while
working through sensitive housing issues.
Secretary Modly. While I have only been serving as the Acting
Secretary of the Navy since November 25, 2019, I have been serving as
the Under Secretary of the Navy since December 4, 2017 and have been
greatly involved in the review and improvement of the Public Private
Venture housing program. I receive updates through the Chief of Naval
Operations and Commandant of the Marine Corps on a regular basis.
Secretary Barrett. Military Housing Privatization was one of the
first briefings during my transition into this position. I understood
that providing safe and habitable homes for airmen and their families
is an operational imperative where I need to direct my attention. My
first stop on my first trip included a visit to privatized housing
where I spoke to airmen at F.E. Warren Air Force Base in Wyoming. I
spoke with the Chief, Major Command commanders, many other Air Force
leaders, and visited privatized housing at Tinker, Randolph, Keesler,
and Air Force Bases abroad to assess the condition of the homes,
listened to residents' concerns, and received updates from wing
leadership on the way forward.
General Berger. A smart data pack was created for me which provided
pertinent documents such as the SECNAV/CMC testimonies, audits, PPV
housing initiatives, and MFAN reports that have been released regarding
this issue. Additionally, I have met with my senior leadership who
briefed me on the housing portfolio to ensure that I have a good
understanding of 1) key issues raised during the Congressional
testimonies in March, 2) actions that have been taken since that time,
and 3) additional actions that will be implemented in the near term to
regain resident trust and improve our oversight of the PPV housing
program. Further, specific to Camp Lejeune, North Carolina, I have had
the opportunity to visit and see firsthand the issues that our
residents have endured, and all work that has been completed post
Hurricane Florence. We value our residents and plan to be transparent
in our efforts to improve their quality of life in our housing
programs.
Admiral Gilday. Since becoming the Chief of Naval Operations, I
have received regular updates on the Navy's efforts to improve
privatized housing oversight from Vice Admiral Mary Jackson, Commander
of Navy Installations Command, and Rear Admiral John Korka, Commander
of Naval Facilities Engineering Command.
__________
Questions Submitted by Senator Richard Blumenthal
fraud
29. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, in your estimate, how extensive is this fraudulent
activity? In other words--how many housing companies have defrauded our
military families?
Secretary McCarthy. Our criminal investigators are working with
Department of Justice attorneys and FBI agents in examining allegations
of fraudulent activity regarding several MHPI companies. The
investigations are ongoing and no fraudulent activity has been proven
at this time. In order to protect the integrity of the investigative
process, we defer to the Department of Justice regarding the number of
companies under investigation.
Secretary Modly. To date, although the Department of the Navy (DON)
has uncovered maintenance timeliness and quality concerns, the DON is
not aware of any allegations of fraud against any of its Public Private
Venture (PPV) partners in connection with Navy or Marine Corps
privatized housing. The DON continues to work with the Naval Audit
Service, the Office of the Department of Defense Inspector General, and
the Government Accountability Office to review PPV project performance
and processes. In the wake of the fraud allegations brought to light at
Tinker Air Force Base, Oklahoma, we continue to proactively assess if
and how Navy and Marine Corps projects are affected. On November 6,
2019, the Naval Audit Service completed a formal audit of maintenance
records and provided twelve recommendations, all of which are being
implemented. In addition, we issued ``Letters of Concern'' to all of
our partners, requesting validation of all of their maintenance records
and processes and have asked partners to report all anomalies or
findings of interest. We directed Departmental Region and Installation
Housing teams to conduct monthly reviews of electronic maintenance
records and random spot-checks with families to confirm response and
completion times reported by partners. We are also conducting
historical reviews on partner maintenance data systems for anomalies
that would indicate fraudulent data entry, such as unreasonably common
service dates. Furthermore, we conducted an independent review of PPV
partner portfolios to evaluate housing maintenance records and their
relationships to incentive fees, a summary of which was provided to the
Office of the Assistant Secretary of Defense for Sustainment on
September 16, 2019. We continue to provide information and updates to
the Government Accountability Office to inform their report on
Privatized Military Housing expected in February 2020. We anticipate
that their recommendations will help us further improve our oversight
efforts.
Secretary Barrett. The Air Force discovered maintenance data
anomalies affecting three project owners. While findings of fraud have
not been substantiated, the Air Force directed these project owners to
conduct an independent audit of their maintenance programs, assess
oversight and quality control, identify specific actions to remedy
deficiencies, ensure maintenance and work order processes comply with
Air Force requirements, and make required adjustments to current and
past performance incentive fee payments. Allegations or concerns that
may be criminal in nature were referred to the Air Force Office of
Special Investigations (AFOSI).
30. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, if fraudulent activity is uncovered, what actions
will the deter future wrongdoing?
Secretary McCarthy. Any credible allegations of fraud will be
immediately referred to the appropriate investigative agencies.
Secretary Modly. The Department of the Navy will refer any
potential fraudulent activity by its Public Private Venture partners in
connection with Navy or Marine Corps housing to the Naval Criminal
Investigative Service or Acquisition Integrity Office, as appropriate,
for a determination of whether to refer such activities to the
Department of Justice.
Secretary Barrett. The Air Force directed the project owners with
data integrity issues to conduct an independent audit of their
maintenance programs. The Air Force is withholding performance
incentive fees from these projects and will make adjustments, as
appropriate, to future payments upon analysis of the data.
Allegations or concerns that may be criminal in nature were
referred to the Air Force Office of Special Investigations (AFOSI).
Upon completion of the AFOSI investigation, the Air Force could suspend
or debar any referred project owner from contracting with the
government.
31. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, how will the Pentagon punish negligent--and
potentially criminal--companies to ensure accountability and deter
future wrongdoing?
Secretary McCarthy. Negligent conduct by MHPI companies will be
addressed in various ways depending on the nature of the conduct. In
some circumstances, negligent conduct will result in a reduction or
elimination of incentive fees. Negligent conduct that persists and
remains uncured, can result in the Army compelling that a deficient
MHPI company be terminated. Allegations of criminal conduct will be
referred to the appropriate investigative authorities. Previously, the
MHPI property managing company for the Army's Forts Belvoir, Benning,
Irwin and Presidio of Monterey/Naval Post Graduate School, was
terminated because of fraudulent activity and was compelled to pay the
MHPI companies that own the housing at those installation over $100
million in costs and damages.
Secretary Modly. The Department of the Navy is not aware of any
fraud allegations against any of its Public Private Venture (PPV)
partners in connection with Navy or Marine Corps privatized housing.
The DON will refer any potential fraudulent activity by its PPV
partners in connection with Navy or Marine Corps housing to the Naval
Criminal Investigative Service or Acquisition Integrity Office, as
appropriate, for a determination of whether to refer such activities to
the Department of Justice.
Secretary Barrett. Allegations or concerns that may be criminal in
nature are referred to the Air Force Office of Special Investigations
(AFOSI). AFOSI is investigating allegations and closely coordinating
with the other military criminal investigative organizations (NCIS /
CID) and the Department of Justice as appropriate. Upon completion of
the AFOSI investigation, the Air Force could suspend or debar any
referred project owner from contracting with the government.
incentive fees
32. Senator Blumenthal. Secretary Barrett, the Reuters reporting on
Balfour Beatty's fraudulent activities at Tinker and other Air Force
bases indicates that the Air Force was aware that maintenance data
could not be validated but the Air Force continued to pay incentive
fees--essentially rewarding fraudulent activity. What are you doing now
to prevent these fees from going to actors actively defrauding our
military families?
Secretary Barrett. The Air Force directed project owners with data
integrity issues to conduct independent audits of their maintenance
programs, assess oversight and quality control, identify specific
actions to remedy deficiencies, ensure maintenance and work order
processes comply with Air Force requirements, and make required
adjustments to current and past incentive fee payments. Additionally,
the Air Force is withholding performance incentive fees from these
projects and will make adjustments, as appropriate, to future payments
upon analysis of that data.
33. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, your testimonies mention that each of the services
are revising the performance incentive fee structure to ensure that
private contractors are not being rewarded for bad performance. What
have you done to prevent the Military Housing Privatization Initiative
from being a cash cow for commercial real estate developers?
Secretary McCarthy. The Army, with agreement from the MHPI
companies, has redesigned its incentive performance management plan.
The measurement criteria have been changed to more closely match key
areas of focus for improvement. The overarching goal of the revised
incentive fee plan is to reward MHPI companies for meeting or exceeding
the improved performance goals.
In addition, the MHPI companies receive a base fee for services
provided as well as a return on their respective equity contributions.
These business terms were independently negotiated, by project, with
the ``return on equity contributed'' typically capped on average at 15
percent. In addition, fees paid by the MHPI project to its service
providers (e.g., property manager) are based on market rates for such
service fees, include some at-risk component via incentive fees, and
are capped at a percentage of either revenue or project cost. In
addition, equity returns are capped. In some cases, equity has been
returned to the project owner to reduce the cost to the MHPI project.
Secretary Modly. At the onset of the Military Housing Privatization
Initiative (MHPI) initiative, the Department of the Navy (DON)
conducted non-Federal Acquisitions Regulation competitive source
selection process for each of the now 15 distinct Public Private
Venture (PPV) partnerships. Open and fair competition ensured market
based fees and returns for property and asset management services.
Property Management Fees are paid out of project cash flow rather than
with Navy or Marine Corps funding. DON is re-evaluating the current
incentive fee structure and aligning it to the Office of the Secretary
of Defense/Tri-Services incentive fee structure. Across the DON PPV
Housing portfolio, 98.3 percent of all revenue is applied to
operations, management, maintenance, payment of debt service
(associated with debt taken out by the project company to construct
new/replacement homes and recapitalize existing homes upon
privatization), capital repairs and replacement, and sustainment or
recapitalization homes and associated infrastructure over the long-
term. While fees across the DON portfolio vary, a typical property
management fee is 2.8 percent base fee and 1.8 percent incentive as
percentage of total rent revenue. Fees and returns associated with DON
MHPI projects are considered reasonable and do not represent a windfall
(or ``cash cow'') for the DON's private partners.
Secretary Barrett. The Air Force is negotiating a revised
performance fee structure with project owners. The new structure
provides increased commander input, work order responsiveness elements,
and resident satisfaction. The Air Force leverages its approval
authority over the project annual budgets to ensure project owners
address non-compliance areas. Also, the Air Force scrutinizes
disbursement requests and other lockbox financial transactions to
ensure accuracy as confirmed by annual third-party audits.
34. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, is withholding incentive fees enough to ensure
accountability and deter future wrongdoing?
Secretary McCarthy. The Incentive Performance Management Plan is
just one component of the Army's effort to hold MHPI companies
accountable. Other components include ground lease inspections, quality
assurance inspections, and recurring financial audits. Each MHPI
project is governed by legal agreements that delineate MHPI company
requirements and obligations. The Army established an oversight process
that routinely reviews MHPI company operations for legal compliance.
The Army has also revised its process for reviewing and approving major
decision memorandums (MDMs), which the MHPI companies use to request
approval for such items as major housing renovations, neighborhood
improvements, and new construction. These MDMs are now vetted through
the garrison commander, the installation senior commander, and the AMC
commander prior to release to Headquarters, Department of the Army, for
further review and funding allocation.
Secretary Modly. Incentive fees are only one component of effective
oversight of the Public Private Venture (PPV) program. Oversight of
performance will be enabled by metrics, increased staffing, and
elevated approval levels for incentive fee payments. Navy housing
personnel now have unfettered access to the Partner's maintenance
systems to perform quality assurance checks, trend analysis and to look
for anomalies. In addition, the Navy recently deployed its own PPV
Electronic Data Warehouse and PPV Dashboards focusing installation
oversight on command reportable items and metrics that better measure
resident satisfaction. Using this new system, installation and region
Housing Offices are now able to pull work order data directly from
partner maintenance systems in order to perform monthly review of
electronic maintenance records, monitor performance by installation/
neighborhood, and to conduct random spot-checks with residents to
confirm work is complete. The Marine Corps is working with the Navy to
leverage their contract in order to provide identical reports for the
Marine Corps leadership. The DON does not have an explicit right to
withhold either base or incentive property management fees directly.
However, if the DON feels and can demonstrate that a property manager
is not performing per their property management contract, the DON could
demand that the managing member/asset manager step in and correct or
cure the situation. Alternatively, the DON could recommend to the
managing member/asset manager that they withhold a portion of the base
or incentive property management fee from the property manager until
the situation is corrected or cured. The DON also has the right to
cause the replacement of the property manager in the event of
unacceptable performance.
Secretary Barrett. Withholding performance incentive fees is not
the only tool to ensure accountability. The Air Force leverages budget
approval authority to ensure project owners fulfill their obligations.
Where we have experienced challenges, we put project owners on
corrective action plans and performance improvement plans and, if those
measures are unsuccessful, we will initiate formal action under the
dispute provision of the project documents. Additionally, we continue
to refer allegations that may be criminal in nature to the Air Force
Office of Special Investigations.
35. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what additional punitive measures are being taken?
Secretary McCarthy. The U.S. Army Criminal Investigation Division
has two ongoing investigations that are being conducted in coordination
with Defense Criminal Investigative Service (DCIS), the Air Force
Office of Special Investigations (OSI) and the Federal Bureau of
Investigations (FBI). Should the allegations prove founded, Army
leadership will refer the matters for appropriate action.
Secretary Modly. No additional punitive measures are being taken.
Secretary Barrett. In addition to withholding performance incentive
fees and requiring corrective actions plans, the Air Force directed
project owners with data integrity issues to conduct, at their own
expense, an independent audit of their maintenance programs. The Air
Force is currently withholding performance incentive fees to these
projects and will make adjustments, as appropriate, to performance
incentive fees upon analysis of that data. Allegations or concerns that
may be criminal in nature were referred to the Air Force Office of
Special Investigations (AFOSI). AFOSI is investigating allegations and
closely coordinating with the other military criminal investigative
organizations (NCIS / CID) and the Department of Justice as
appropriate. Upon completion of the AFOSI investigation, the Air Force
could suspend or debar any referred project owner from contracting with
the government.
36. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, the fox is in the henhouse given that these
incentive fees are based on performance metrics and prone to
manipulation by the housing companies. What steps have you taken to
take ownership of the data collection used to award incentive fees?
Secretary McCarthy. MHPI company data is auditable. The Army has
established multiple Army-owned processes (inspections, resident
surveys, and resident hotlines) to validate resident feedback and
assess MHPI Property Management performance. Garrison commanders have
access to both the MHPI data as well as the audit results and they can
verify actual MHPI performance when recommending incentive fee payment
rates. The Garrisons' Housing Support Offices have access to the MHPI
companies' work order database management systems and are able to
independently validate the maintenance scope and timelines associated
with work orders.
Secretary Modly. The Department of the Navy (DON) has developed a
Public Private Venture (PPV) Performance Dashboard Suite displaying
family housing performance information for the installation, regional,
and enterprise level, in alignment with project-specific requirements.
Region and Installation Housing teams now conduct monthly reviews of
electronic maintenance records and conduct random spot-checks with
families to confirm response and completion times reported by partners.
We are also conducting historical reviews on partner maintenance data
systems for anomalies that would indicate fraudulent data entry, such
as unreasonably common service dates. At the end of the calendar year
2019, the DON will revise the Incentive Fee Structure to ensure it
incorporates the voices of our sailors, marines, and their families.
Resident satisfaction will be the most heavily weighted factor; it will
be determined based on resident move-in and move-out surveys and
resident work order surveys, in addition to the annual resident
satisfaction survey.
Secretary Barrett. The Military Housing Office has access to
project owners' data to conduct quality assurance reviews in support of
incentive fee awards. The Air Force is increasing the use of automated
work order systems, use of electronic customer satisfaction surveys,
and changing the incentive fee structure to reduce data manipulation
issues.
37. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what problems have you identified in the incentive
fee process that you plan to reform to prevent future fraud?
Secretary McCarthy. The previous incentive fee process was not
standardized across all MHPI companies and in many cases was not based
on the appropriate metrics with regard to resident satisfaction. The
Army negotiated for a standard Incentive Performance Management Plan
(IPMP), with the same detailed performance metrics for all of its seven
MHPI project companies. Effective 1 January 2020, this new IPMP
contains significant revisions to the metrics, with increased focus on
resident satisfaction, work order quality, and responsiveness.
Furthermore, commanders are involved. Installation commanders,
either the Senior Commander or the Garrison Commander, review and
recommend any and all incentive fee awards; the AMC commanding general
is the approval authority for these awards.
Secretary Modly. The Naval Audit Service review at five locations
(Charleston, SC; Newport, RI; Oahu, HI; San Diego, CA; and New Orleans,
LA) with 16,211 Public Private Venture (PPV) homes did not show
significant issues with reported service call timeliness or with
customer satisfaction based on annual surveys in line with each
partners' business agreement. The Naval Audit Service identified
opportunities for the improvement of Navy oversight of the PPV military
family housing program, policy guidance, and the control environment.
Specifically, they found opportunities to improve oversight in the
areas of monitoring, documentation, staffing, standardization of
performance metrics (including timeliness and incentive fees),
training, and the use of more advanced data analytics to identify
emerging trends and systemic issues. DON is thoroughly reviewing
incentive fee processes to correct issues of a lack of documentation
and insufficient government oversight. Naval Facilities Engineering
Command has directed the PPV teams to look at how award fees are
calculated and documented on all PPV agreements and to determine which
projects warrant a similar thorough historical review and validation.
In addition, PPV staffs are moving towards a 100 percent review and
validation of award fee requests going forward vice the spot-checking
that had been done in the past. These actions will result in greater
oversight and chain of command involvement.
Secretary Barrett. Prior Air Force metrics for performance
incentive fees measured work order response and completion timeliness
that are quantitative and prone to data discrepancies. The Air Force is
increasing the use of automated work order systems, use of electronic
customer satisfaction surveys, and changing the incentive fee structure
to reduce data discrepancy issues. Additionally, the Military Housing
Office has access to project owners' data to conduct quality assurance
reviews in support of incentive fee awards.
38. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, in cases where tenants have reported problems with
the quality of their housing, what steps have you taken to address
these problems before paying performance incentive fees?
Secretary McCarthy. Leaders and commanders are fully engaged in
advocating for installation tenants. Garrison command teams work
proactively with both tenants and the MHPI companies to identify and
resolve housing quality issues. The garrison commander, command
sergeant major, director of public works, and garrison housing staff
routinely conduct inspections of homes when residents raise concerns
and have an aggressive response plan for any soldier and family who are
displaced due to conditions in a home. The revised IPMP metrics,
effective 1 January 2020, place increased emphasis on the quality and
condition of housing, work order quality and responsiveness, and
resident satisfaction.
Secretary Modly. Tenants are encouraged to report problems with the
quality of their housing that cannot be satisfactorily resolved with
the property manager and/or project company to the Department of the
Navy (DON) housing staff using either a two (Navy Installations
Command) or three (Marine Corps Installations Command) step process.
Reported problems will be tracked by DON housing staff, but there is no
direct linkage between addressing a specific case prior to paying
incentive fees. Under the revised incentive fee structure, resident
work order satisfaction and work order quality and responsiveness are
factored into the property management incentive fee.
Secretary Barrett. The Air Force is working with project owners to
increase automated work order submissions, tracking, and surveys, which
will inform the payment of incentive fees and providing the Military
Housing Office access to project owners' data to conduct quality
assurance reviews in support of incentive fee awards.
39. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, for the last performance incentive fee cycle, how
much did you pay in performance incentive fees to the private partners?
Secretary McCarthy. The MHPI companies were awarded $4,895,929.00
in incentive fees for second quarter calendar year 2019; $937,164.00
(19 percent) was withheld based on failure to meet required performance
metrics. Ten of the companies' incentive fee recommendations have not
yet been processed so the final figure for second quarter is expected
to change.
Secretary Modly. The last incentive fee cycle was for Calendar Year
(CY) 2017, which was paid by the managing member in CY2018. In 2018,
$22.5 million was paid. In 2019 all incentive fee packages submitted
for CY2018 are currently on hold.
Secretary Barrett. The Air Force awarded a total of $2,124,596 in
performance incentive fees across its 63-base portfolio for the second
quarter in calendar year 2019, out of an estimated $4,649,323 available
(46 percent).
40. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, how were these amounts calculated?
Secretary McCarthy. These amounts were calculated using current
incentive fee metrics as validated by the garrison commander. Revised
metrics that are better aligned with resident satisfaction will be
effective 1 January 2020.
Secretary Modly. The amounts were calculated consistent with the
established objective and subjective criteria contained in each of the
15 Department of the Navy (DON) Military Housing Privatization
Initiative business agreements. Managing Members will prepare an
incentive fee evaluation package for DON review and approval.
Secretary Barrett. With the exception of those projects or sites
where performance incentive fees are being withheld, the fees awarded
were calculated based on the performance fee plan for each project. The
Air Force is in the process of negotiating a revised performance fee
structure with project owners. The new structure includes increased
commander input, work order responsiveness elements, and resident
satisfaction and are less prone to data discrepancy issues.
41. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, since March 2019, have you withheld the performance
incentive fees from any projects, either entirely or in part?
Secretary McCarthy. Yes. Twenty-six garrisons submitted their
recommendations for incentive fees for second quarter calendar year
2019.
9 (31 percent) received 100 percent of the available
incentive fees ($1,870,465.00)
17 (59 percent) received <100 percent of the available
fees ($3,025,464.00).
10 garrison incentive fee recommendations have yet to be
finalized.
Secretary Modly. In calendar year 2019, the Department of the Navy
(DON) has not paid any incentive fees. Incentive fees are submitted in
arrears and several companies have submitted calendar year 2018
incentive fee requests. Payment of incentive fees is pending DON review
of the incentive fee process and a revised review and approval chain.
In the case of the Southeast DON project managed by Balfour Beatty, the
DON is using a government audit service to examine Balfour Beatty
records as they pertain to incentive fees.
Secretary Barrett. Yes.
42. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, if so, which projects?
Secretary McCarthy. United States Army Garrison (USAG) Alaska, USAG
Hawaii, Redstone Arsenal, White Sands Missile Range, Carlisle Barracks,
Picatinny Arsenal, West Point, Forts Campbell, Bliss, Knox, Stewart,
Leavenworth, Leonard Wood, Hamilton, Gordon, Jackson, Eustis/Story, and
Benning.
Secretary Modly. No incentive fees have been paid or withheld in
2019. Payment of incentive fees is pending DON review of the incentive
fee process and a revised review and approval chain.
Secretary Barrett. The Air Force is withholding all or a portion of
the performance incentive fee from 9 projects:
1. Continental (Edwards and Hurlburt AFBs)
2. ACC Group 3 (Dyess and Moody AFBs)
3. AETC Group 1 (Altus, Luke, Sheppard, and Tyndall AFBs)
4. AMC West (Fairchild, Tinker, and Travis AFBs)
5. Lackland AFB
6. Northern (Cavalier AFS, Cannon, Ellsworth, Grand Forks, Minot,
and Mountain Home AFBs)
7. Vandenberg AFB
8. Western (Beale, F.E. Warren, Malmstrom, and Whiteman AFBs)
9. BLB (Barksdale, Bolling, and Langley AFBs)
43. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what was the reason for the withholding and what
steps are being taken to rectify identified problems?
Secretary McCarthy. The primary reason for MHPI company incentive
fee withholding has been work order response times and completion times
that are outside of acceptable limits. Many MHPI companies have
responded to incentive fee deductions by hiring new maintenance staff
and improving maintenance procedures to address these deficiencies.
Secretary Modly. No incentive fees have been paid or withheld in
2019.
Secretary Barrett. The Air Force discovered maintenance data
anomalies and directed those project owners to conduct an independent
audit of their maintenance programs, assess oversight and quality
control, identify specific actions to remedy deficiencies, ensure
maintenance and work order processes are compliant with Air Force
requirements, and make required adjustments to current and past
performance incentive fee payments. Additionally, the Air Force is
withholding performance incentive fees on these projects and will make
adjustments, as appropriate, to future payments upon analysis of the
data. Allegations or concerns that may be criminal in nature were
referred to the Air Force Office of Special Investigations (AFOSI).
AFOSI is investigating Allegations and closely coordinating with the
other military criminal investigative organizations and the Department
of Justice as appropriate.
health care
44. Senator Blumenthal. Ms. Field, do you think that the Pentagon
should issue guidance to all commanders at MTFs to expedite referrals
to civilian providers?
Ms. Field. The scope of our audit work for our recently issued
report on hazards in privatized military housing (GAO-20-281), as well
as prior work we've completed specific to MHPI, did not include the
military health system referral process. While we have not reviewed the
referral process as it relates to privatized housing, in June 2019 we
examined the extent to which the referral management process
facilitates the coordination of primary and specialty care for TRICARE
Prime beneficiaries. \3\ We found that DOD's Defense Health Agency
(DHA) has limited information about the extent to which the referral
management process facilitates the coordination of primary and
specialty care for beneficiaries enrolled in TRICARE Prime--a managed
care option--because information about their specialty care referrals
is not always complete or accurate. As such, we recommended that the
Secretary of Defense direct DHA to ensure that military health system
referral management center staff are trained to process and accurately
document information in their electronic health record system about
specialty care referrals, including the receipt of reports from
civilian specialty care providers, the submission of referral results,
and the closure of referrals. Moving forward, we will closely monitor
DOD's implementation of our recommendation.
---------------------------------------------------------------------------
\3\ GAO, DOD HEALTH CARE: Improvements Needed for Tracking
Coordination of Specialty Care Referrals for TRICARE Prime
Beneficiaries, GAO-19-488, (Washington, D.C.: Jun. 12, 2019).
45. Senator Blumenthal. Ms. Field, what is the Department of
Defense doing to ensure that military health care providers are
appropriately educated and trained in treating signs and symptoms of
environmental illness, especially symptoms resultant from mold?
Ms. Field. The scope of our audit work for our recently issued
report on hazards in privatized military housing (GAO-20-281), as well
as prior work we've completed specific to MHPI, did not include
information specific to the military health system. As such, we have
not conducted the work necessary to answer this question.
While not specific to training or the ability to treat the
conditions, the Fiscal Year 2020 NDAA includes a provision directing
the Director of the Defense Health Agency to develop and publish
uniform processes and procedures to be used by medical providers in
military medical treatment facilities to make determinations regarding
whether environmental hazards within housing units serve as causative
factors for medical conditions being evaluated and treated in military
medical treatment facilities or through the TRICARE provider network.
46. Senator Blumenthal. Ms. Field, how would you recommend that
Congress and the Pentagon work together to ensure that the private
contractors are held responsible for the medical costs induced by poor
military housing conditions?
Ms. Field. The scope of our audit work for our recently issued
report on hazards in privatized military housing (GAO-20-281), as well
as prior work we've completed specific to MHPI, did not include
information specific to medical costs associated with privatized
housing or related health impacts. As such, we have not conducted the
work necessary to answer this question.
As you know, the Fiscal Year 2020 NDAA includes provisions for the
establishment of a process by which the DOD can seek reimbursement for
any costs incurred by DOD to provide medical evaluations and treatment
to tenants, if it has been determined that the tenant's medical
conditions were caused by unsafe and unsanitary conditions of the
housing unit. Therefore, if the private partners reimburse DOD for this
care, they have in essence paid for any resident's medical care related
to the unsafe and unsanitary condition of the home that was provided by
DOD. The Fiscal Year 2020 NDAA also directs private housing partners to
pay, under specific circumstances, reasonable relocation costs--
permanent or temporary--associated with the relocation of a tenant to
different housing due to health or environmental hazards.
47. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, have you formalized a process for sharing
information with VA about these conditions that are a direct result of
exposure to environmental hazards and toxic substances encountered
during military service? If not, will you commit to do so?
Secretary McCarthy, Secretary Modly, Secretary Barrett. All housing
related medical conditions are documented in a Servicemember's or
beneficiary's electronic health record in accordance with appropriate
diagnostic coding practices. Service Treatment Records for VA eligible
Servicemembers and beneficiaries are transferred from the military
service to the VA along standard transition practices. The DOD/VA
Deployment Health Working Group meets monthly and on an ad hoc basis to
discuss issues that relate to servicemembers and veterans.
Environmental exposures are frequent topics.
48. Senator Blumenthal. Ms. Field, what should we do to ensure that
family members who have experienced health problems due to housing
conditions are not burdened with long-term medical bills?
Ms. Field. The scope of our audit work for our recently issued
report on hazards in privatized military housing (GAO-20-281), as well
as prior work we've completed specific to MHPI, did not include
information specific to medical costs associated with privatized
housing or related health impacts. As such, we have not conducted the
work necessary to answer this question.
As you know, the Fiscal Year 2020 NDAA includes provisions for the
establishment of a process by which DOD can seek reimbursement for any
costs incurred by DOD to provide medical evaluations and treatment to
tenants if it has been determined that the tenant's medical conditions
were caused by unsafe and unsanitary conditions of the housing unit.
Therefore, if the private partners reimburse DOD for this care, they
have in essence paid for any resident's medical care related to the
unsafe and unsanitary condition of the home that was provided by DOD.
The statute also directs private housing partners to pay, under
specific circumstances, reasonable relocation costs--permanent or
temporary--associated with the relocation of a tenant to a different
housing due to health or environmental hazards.
retaliation
49. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, how are you working to prevent retaliation and
encourage military families to continue to report substandard housing
conditions?
Secretary McCarthy. I have directed that the Army use all available
avenues to communicate to both Army personnel and MHPI company
leadership that the Army has a zero tolerance policy to soldiers or
family members being retaliated against for reporting deficient housing
conditions. In addition, the Army is actively working to develop and
implement messaging strategies that encourage prompt reporting of
housing deficiencies by residents to minimize the likelihood that small
maintenance issues escalate into life, health, or safety issues.
The Army is implementing new performance metrics for payment of
MHPI property management incentive fees that stress the importance of
timely, quality responsiveness to residents' maintenance requests. My
expectation is that these new metrics will incentivize property
managers to noticeably improve the timeliness and quality of their
response to resident maintenance requests, thereby restoring residents'
confidence that reporting issues will result in their being properly
addressed. Over time I believe these actions will restore residents'
confidence that issues reported will be properly addressed, thereby
encouraging residents to report issues when they are first identified.
Secretary Modly. Our primary focus has been to engage our leaders
as active participants in the housing program. We cannot outsource this
responsibility. Since that time, Navy and Marine Corps leaders achieved
100 percent contact with all sailors and marines to inquire about
housing concerns and to offer a home visit. Every Navy and Marine Corps
installation also held town halls with residents, and each installation
now offers a combination of quarterly or monthly meetings to provide
residents with information and access to installation and partner
representatives. Additionally, we have implemented structured training
for all leaders addressing the check-in process to help them better
understand the housing program, specific housing conditions, and local
procedures available to assist their sailors and marines. By getting
leadership involved in the early stages and throughout the housing
process, we aim to make sailors and marines feel comfortable reporting
substandard housing conditions and to provide them multiple avenues to
do so.
Secretary Barrett. The Air Force does not tolerate retaliation. On
1 April 19, the Secretary of the Air Force, the Chief of Staff of the
Air Force, and the Chief Master Sergeant of the Air Force issued a
letter reiterating chain of command responsibilities to ensure the
safety and welfare of airmen. Separately, in a 23 April 19 letter, they
reinforced with airmen and their families that they should report
problems through the chain of command without fear of retaliation.
Finally, when airmen report retaliation or fear of reprisal, their
issues are referred to the Air Force Inspector General for further
investigation and action.
50. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what additional steps will you take to ensure that
no military family experiences retaliation from the chain of command or
a private housing company?
Secretary McCarthy. I have directed the Army to use all available
avenues to communicate to Army personnel that retaliating against
soldiers or family members who have reported deficient housing
conditions is forbidden. In addition, I have directed the Assistant
Secretary of the Army for Installations, Environment & Energy, to
ensure that the senior management of all companies that own and operate
privatized housing on Army installations are informed that the Army
will not tolerate any form of retaliation by their companies against
soldiers and family members as a result of their reporting deficient
housing conditions. All allegations of retaliation will be reported
immediately to the Army Inspector General for investigation. Verified
allegations of retaliation will be addressed immediately.
Secretary Modly. Trust and confidence are the bedrock of effective
command, and the sailors and marines in our care must be confident that
their leadership will advocate tirelessly on their behalf. Navy and
Marine Corps leaders achieved 100 percent contact with all sailors and
marines to inquire about housing concerns and offer a home visit. Every
Navy and Marine Corps installation also held town halls with residents
allowing them to voice all their concerns including retaliation
experiences. In addition, each installation now offers a combination of
quarterly or monthly meetings to provide residents with information and
access to installation and partner representatives. We are also
currently undergoing a large hiring process to provide additional
housing personnel and resident advocates to address residents'
concerns. Additionally, we have implemented structured training for all
leaders addressing the check-in process to help them better understand
the housing program, specific housing conditions, and local procedures
available to assist their sailors and marines. By involving the entire
chain of command, we aim to add layers of protection from retaliation
for all of our sailors and marines.
Secretary Barrett. We provided increased training to commanders on
their authorities in privatized housing and responsibility to support
airmen when issues arise. We are also diversifying the avenues
available for airmen to provide feedback by creating Resident Councils,
establishing Resident Advocate positions, and expanding the 1-800 line
to 24/7, 365 days a year.
51. Senator Blumenthal. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, will you commit to holding accountable any
commanders within your chains of command found to have engaged in
retaliatory behavior against military families?
Secretary McCarthy. Yes.
Secretary Modly. Yes, any commander who engages in retaliatory
behavior will be held accountable.
Secretary Barrett. Yes.
__________
Questions Submitted by Senator Tim Kaine
headquarters' reductions
52. Senator Kaine. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, to what extent have the headquarters reductions,
mandated by recent defense authorization bills, affected the ability of
each military department to retain housing support personnel to address
the current challenges with privatized housing?
Secretary McCarthy. The Department of the Army's Installations,
Energy, and Environment Secretariat and the G-9 housing sections' staff
reductions limited the ability to provide complete oversight of all
housing programs and resulted in the transfer of duties to non-
specialized housing entities, and an increase of the workload of the
remaining housing personnel, resulting in delays and incomplete work.
Secretary Modly. Budget reductions taken since Sequestration in
fiscal year 2013 resulted in across-the-board cuts to nearly every
installation operating account, including those that provide oversight
of privatized housing. Major Headquarters Activity (MHA) reductions
resulted in the direct elimination of one full-time employee at the
Department level that provided oversight for the privatized housing
program.
Secretary Barrett. We cut personnel too much and did not provide
the necessary privatized housing oversight. Some reductions were a
result of defense authorization cuts, but others were caused by process
streamlining and a decision to accept certain risks in the housing
portfolio.
53. Senator Kaine. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, how many housing support positions have been
eliminated since the reductions were mandated by headquarters cuts in
the recent defense authorization bills?
Secretary McCarthy. The Department of the Army's Installations,
Energy, and Environment Secretariat and the G-9 housing sections' staff
were reduced by 33 percent.
Secretary Modly. The Department eliminated one position at the
Department level, but did not eliminate any housing positions at the
Echelon II, Regional, or Installation levels due to Major Headquarters
Activity (MHA) reductions.
Secretary Barrett. The Air Force eliminated approximately 76
positions. Some reductions were a result of defense authorization cuts;
others were caused by process streamlining and a decision to accept
certain risks in the housing portfolio.
__________
Questions Submitted by Senator Elizabeth Warren
renters insurance
54. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, when servicemembers and their families move into on-
base privatized housing, they are strongly encouraged to purchase
renter's insurance but are not required to so. If a home is deemed
unlivable due to mold infestation, the privatized housing company will
relocate the family to a temporary home until the problem is fixed.
Yet, due to mold contamination, their household goods remain in the
house to be further contaminated. In most cases, families have to
replace the damaged goods. A servicemember can file for reimbursement
when household goods are damaged because of issues with their
government housing or their privatized housing and are encouraged to
request assistance from their installation's government housing office.
However, when base housing offices are contacted, they are often unable
to explain the process. Unfortunately, privatized renter's insurance
does not cover individual cases (e.g. cases involving mold, toxic
water, asbestos, radon, and soil contamination), and the family is
forced to pay out of pocket to replace their goods. In the majority of
cases that have been reported, families are paying upwards of $10,000
to replace their damaged goods. Are you aware that this has been an
issue, and what steps have you or your staff taken to address this
issue?
Secretary McCarthy. We are aware of issues raised by Army soldiers
and their families concerning contaminated household goods. Army
leadership at each installation is tracking all displaced residents and
issues which have been raised. The Army will continue to be directly
involved in the oversight of each MHPI company's engagement with
displaced residents.
The Army is working with all of the MHPI companies to develop a
consistent portfolio-wide policy, which details the minimum standards
and/or conditions within a housing unit that will require the
displacement of a resident if the minimum standards are not met. This
policy will also address minimum entitlements that a displaced resident
will be provided during the displacement time period. The policy will
be issued in the near future.
Secretary Modly. Yes, the Department of the Navy is aware of this
issue. Previous incidents of personal property damage required
resolution directly between the tenant and Public Private Venture (PPV)
partner, and to address this issue, we are strengthening our existing
informal issue resolution processes and ensuring installation housing
offices are engaged in resolving resident concerns. We are working to
develop a Disputes Resolution Process where residents and the PPV
partners will have the opportunity to make their case to an independent
3rd party. Region Legal Service Offices are also available to provide
free legal advice and consultation to military tenants and their
families living in PPV housing.
Secretary Barrett. We are aware that this has been an issue and
installation judge advocate offices are able to provide legal
assistance to service-members who have suffered property damage because
of the negligence of housing contractors. With the passing of the
Tenant Bill of Rights in the Fiscal Year 2020 NDAA, we are engaging in
further efforts to educate our airmen about the additional assistance
available to them from their chain of command and from all Wing support
agencies on these issues.
healthcare
55. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what is DOD doing to ensure that those responsible
for writing military health policies are issuing directives that aid
providers in recognizing, diagnosing, and treating the various forms of
environmental illness associated with contaminated housing buildings?
Secretary McCarthy. Army healthcare providers screen patients for
risk of exposure to environmental health hazards, such as lead and
mold. Testing is completed during every well-child check from birth to
age 6 and also for children who are at high risk. If an elevated blood
lead level is identified, a housing assessment and an investigation is
completed to identify the source of lead exposure. All elevated blood
lead levels are reported to the state and local public health
departments, and to the DOD system of record for reportable illnesses.
If a patient reports health concerns associated with mold exposure,
the provider completes a questionnaire with the patient to determine
indoor mold exposure levels. If responses to the questionnaire
indicates high exposure, healthcare providers document the exposure in
the medical record, request case management, and complete a housing
assessment to evaluate the environmental conditions. The results of the
housing assessment are stored in the DOD's system of record.
Additionally, the Army developed a comprehensive checklist to
determine the environmental health and safety of homes. It addresses
lead, mold, asbestos, and radon and a wide range of safety
considerations, such as smoke alarms, egress, height of window ledges,
and function of HVAC equipment. The checklist is based on the
recommendations from the National Center for Health Homes and aligns
with the Environmental Protection Agency, the Centers for Disease
Control, and Housing and Urban Development, as well as Unified
Facilities Criteria standards. This checklist will be used to evaluate
the health and safety of homes between occupancy per the Residential
Communities Initiative Portfolio and Asset Management Handbook and will
be included in relevant Army policy, such as AR 420-1 (Facilities
Management).
Secretary Modly. A draft Directive-Type Memorandum (DTM),
``Managing Health and Safety Risks in Housing,'' from the Under
Secretary of Defense for Personnel and Readiness (USD P&R) is being
formally coordinated with the Military Departments. Specifically, the
draft DTM:
Directs the Military Departments on the appropriate and
consistent management of housing safety and health hazards reported by
residents.
Directs the Assistant Secretary of Defense for Health
Affairs to create consistent clinical response guidelines associated
with a resident's report of health concerns from military housing to
their primary health care provider. In addition, the Navy has issued
policy and clinical guidelines as follows.
Memorandum from Chief, Bureau of Medicine and Surgery
(BUMED): ``Health Hazards from Environmental Exposures in Military
Housing'' (March 18, 2019)
Navy and Marine Corps Public Health Center (NMCPHC):
``Guide for Clinicians Caring for Patients with Mold-Related
Complaints'' (April 1, 2019).
Secretary Barrett. The Air Force follows well established Federal
and State guidelines for surveillance, prevention, and control of
various environmental concerns in buildings, including mold. The Air
Force Medical Service updated guidance to medical commanders and
physicians in May 2019 for evaluation of mold exposure. The updated
guidance included an evidence-based ``Guide for Clinicians Caring for
Patients with Mold-related Complaints''. Subject matter experts at the
Environmental, Safety, and Occupational Health Service Center at the
USAF School of Aerospace Medicine at Wright-Patterson Air Force Base,
Ohio, are also available to assist providers.
56. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, who is ultimately responsible to ensure that
military healthcare providers are appropriately educated and trained
and are subsequently able to perform the proper diagnostic work on
patients with signs and symptoms indicative of environmental illness
resultant from exposures in negligently built and maintained military
housing?
Secretary McCarthy. The Surgeon General is ultimately responsible
for ensuring providers are appropriately educated, trained, and capable
of performing proper diagnostic workup on patients. The Surgeon General
accomplishes this through regulation and Joint Commission accreditation
standards to ensure each provider has appropriate credentials,
training, and clinical competency to provide care in their respective
field.
Secretary Modly. Per a March 18, 2019 memorandum from Chief, Bureau
of Medicine and Surgery (BUMED), titled ``Health Hazards from
Environmental Exposures in Military Housing,'' Navy Medicine regions
must ensure clinicians are educated on this topic for evaluating
patients. This would be delegated to the medical treatment facility
(MTF) command level. The memorandum provides educational resources for
this purpose, as well as the ability for MTF providers to consult with
their MTF public health experts (e.g., Occupational and Environmental
Medicine, Preventive Medicine, and Industrial Hygiene) who can liaise
with the Navy Housing Service Centers to further investigate
environmental conditions of a home on a case-by-case basis. In
addition, the Navy and Marine Corps Public Health Center (NMCPHC)
developed a ``Guide for Clinicians Caring for Patients with Mold-
Related Complaints'' dated April 1, 2019. Links for additional
educational resources are found on the NMCPHC website. Navy Medicine
regularly reviews provider competence and performance, which is subject
to both supervisor evaluation and peer review of the medical records.
This includes checking competence in addressing environmental-related
medical concerns. Providers evaluate and treat patients with concerns
about environmental exposures and illness based on symptoms and
history, which guide the physical exam, evaluation, tests, other
studies, diagnosis, and treatment. Of note, there are often confounding
factors in the home with respect to environmental exposures and disease
causation. Symptoms potentially related to housing environmental
exposures such as mold are also triggered by numerous other common
exposures in the home (e.g., dust mites, pet dander, cockroaches, mice
droppings, pollen, second-hand smoke, scented candles, air fresheners,
plants, etc.). Some people are sensitive to environmental exposures
such as mold, which can exacerbate pre-existing health issues such as
allergies and asthma. Per the Centers for Disease Control and
Prevention, allergic response symptoms like those to pollen or animal
dander are the most common types of symptoms related to environmental
exposure to mold (e.g., nasal stuffiness, throat irritation, sneezing,
coughing or wheezing, eye irritation, or skin irritation). Chronic
respiratory complaints, such as allergies and asthma, are often multi-
factorial, and it is not possible to quantify the contribution of any
particular environmental irritant or allergen to such a disease
process.
Secretary Barrett. The Surgeon General is ultimately responsible to
ensure military providers are appropriately educated and trained.
Military Treatment Facility Commanders are responsible for granting
provider privileges to practice medicine based on their credentials,
which routinely includes diagnostic workup on patients with illness
from exposure irrespective of the source.
57. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, many military families have reported that the
military providers at their local MTF are unable to recognize,
diagnose, and treat the symptoms of illnesses caused by living in
contaminated housing. These families are then forced to seek diagnoses
and treatment from civilian providers. Are there plans to ensure that
military providers are knowledgeable about the scientifically proven
ability of mold and other contaminants found in buildings to cause
debilitating cognitive and neurological injuries?
Secretary McCarthy. The Army published new policy in April 2019 to
protect soldiers and families from potential health impacts related to
residential indoor environmental mold exposure. It includes policy-
reinforcing educational materials to healthcare providers that provide:
1) guidance on mold-related hazards; 2) recommendations for testing and
management of suspected illnesses related to mold exposure; 3)
information on how to document mold-related illness in the patient's
medical record; and 4) information on how to educate patients on mold
mitigation measures.
In addition to provider education, the Army is also developing
educational material for soldiers and families. This includes 1) facts
about mold; 2) strategies to prevent mold growth; and 3) recommended
actions when one suspects or has detected mold growth within their
home.
Secretary Modly. The Navy and Marine Corps Public Health Center
(NMCPHC) developed a ``Guide for Clinicians Caring for Patients with
Mold-Related Complaints,'' dated April 1, 2019, explaining that mold
exposure is sometimes associated with adverse health effects, including
infections, hypersensitivity disorders, and toxic or irritant effects
from mold by-products. The National Academy of Sciences (NAS) conducted
a comprehensive literature review and analysis and found there was
sufficient evidence to link mold and other factors related to damp
indoor environments with some upper respiratory tract symptoms,
coughing, wheezing, and asthma in sensitized persons, people who
already have respiratory problems, the elderly, or the very young.
However, NAS found there was not enough evidence to make conclusions
for many other health outcomes, including rheumatologic and other
inflammatory diseases, neurological symptoms, cancer, and reproductive
effects [per National Toxicology Program, https://www.niehs.nih.gov/
health/materials/mold--508.pdf]. Provider competence and knowledge of
medicine in general includes competence in addressing household mold-
related medical concerns in the general population. Navy medical
providers dealing with especially complex patient mold-related medical
issues (e.g., patients with HIV, those on immunosuppressant therapy or
cancer chemotherapy, or patients with poorly controlled diabetes
mellitus) know to refer patients to the appropriate specialist as
necessary (e.g., Allergy/Immunology, Infectious Disease, or Neurology,
as deemed appropriate). There is no clear evidence for specific direct
association of mold exposure with debilitating cognitive and
neurological injuries. Most peer reviewed studies investigating
neurologic disorders and fungal exposure have described complaints in
vague terms and did not define specific neurologic deficits or use
objective testing or findings to confirm any neurologic dysfunction.
``Despite many reported subjective complaints, there is no objective
evidence for neurological compromise caused by indoor mold exposure''
(Indoor Mold, Toxigenic Fungi, and Stachybotrys chartarum: Infectious
Disease Perspective, D. M. Kuhn and M. A. Ghannoum, CLINICAL
MICROBIOLOGY REVIEWS, Jan. 2003, p. 159). For individuals who have
medical conditions exacerbated by or related to indoor environment
triggers, controlling or eliminating the sources of indoor/building
mold and other indoor allergens, along with medical treatment, should
lead to improvement or resolution of symptoms.
Secretary Barrett. Air Force providers utilize the updated ``Guide
for Clinicians Caring for Patients with Mold-related Complaints'' which
contains the latest information regarding the debilitating cognitive
and neurological effects of mold.
58. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, some military physicians have acknowledged that they
do not know how to treat building related illnesses. They are writing
medically necessary referrals to mold-literate environmental
physicians, but these referrals are often denied by MTF commands,
despite the fact that Tricare is approving and agreeing to pay for the
services. Why are the referrals being denied?
Secretary McCarthy. All patients with potential mold-associated
symptoms or health concerns are evaluated and managed in accordance
with safe and effective clinical protocols. Testing for mold and other
allergies may include a skin or blood test to measure a patient's
sensitivity to specific types of mold, and treatments for mold
allergies may include corticosteroids, antihistamines, decongestants,
or immunotherapy.
We are aware of requests for mycotoxin testing, a test to quantify
mold exposure, being denied. That particular test is not a TRICARE
covered benefit because urine mycotoxin tests are not approved by the
U.S. Food and Drug Administration and are not recommended by the
Centers for Disease Control and Prevention for diagnostic purposes.
Using non-validated tests could potentially lead to misdiagnoses and
perhaps even harmful medical interventions. The Army Office of The
Surgeon General has asked the Defense Health Agency to review mycotoxin
testing as a TRICARE covered benefit based on multiple requests for
this testing.
Secretary Modly. We have no knowledge of Commanders/Commanding
Officers denying referrals.
Secretary Barrett. We are not ordering Military Treatment Facility
commanders to deny referrals, nor are we aware of any denial of
necessary referrals to mold-literate environmental physicians. Care not
available at a Military Treatment Facility is referred to the
appropriate specialist, ideally within the military health system,
based on the diagnosis of the patient.
59. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, who is ordering the commanders at the MTFs to deny
these referrals?
Secretary McCarthy. The Army Office of The Surgeon General is not
aware of MTF Commanders denying medically necessary referrals. Army
Medical Department healthcare providers assess patients in accordance
with prescribed clinical practice guidelines. Patients are referred to
specialized medical experts (e.g., board certified allergists and
immunologists) when deemed appropriate by the treating healthcare
provider.
Secretary Modly. We have no knowledge of Commanders/Commanding
Officers denying referrals.
Secretary Barrett. As mentioned in the previous response, we are
not ordering Military Treatment Facility commanders to deny referrals,
nor are we aware of any denial of necessary referrals to mold-literate
environmental physicians.
60. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, what is being done to ensure that the cost of
medically necessary care, resultant from exposures to negligently built
and maintained military housing, is subrogated to the privatized
housing landlords and/or their property casualty insurers?
Secretary McCarthy. The existing Medical Affirmative Claims (MAC)
program would be the avenue by which the Army would assert such a
claim. The Army has not yet asserted a MAC against a privatized
landlord or its insurer for the cost of medical care expended to treat
an illness resulting from conditions in housing. Establishing a causal
nexus between the condition in housing (e.g., the presence of lead,
mold, or asbestos) and the resulting ailment would be difficult as both
sides would have experts that would differ on the source of the
illness. We will look to add additional paths forward through the
dispute resolution process.
Secretary Modly. The Department of the Navy's (DON) first priority
is to ensure prompt and appropriate treatment of all medical conditions
of servicemembers and their family members. Medical conditions for
servicemembers and family members are documented in each individual's
medical treatment record. Navy Medicine has issued policy to all
medical treatment facilities (MTF) directing that internal processes be
developed that facilitate communication and coordination between
providers and public health personnel. We are also working to ensure
providers, servicemembers, and families understand the proper
procedures for reporting health concerns related to housing
discrepancies. If required health care services cannot be provided by
the Primary Care manager at the MTF, the TRICARE network is used to
ensure all required care is received and tracked. The DON is committed
to ensuring the readiness, health, and safety of our sailors, marines,
and their families. Currently, the DON is not considering legal action
to recover health care costs of servicemembers or family members from
the companies providing privatized housing.
Secretary Barrett. The Air Force has an established process to
recoup medical treatment costs for Active Duty, dependent, or retiree
privatized housing residents when those costs are associated with
negligence on the part of third parties such as project owners or their
property casualty insurers.
61. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, will a military housing registry, similar to the
lead registry, be developed and implemented to track the health issues
that have arisen from exposures to mold, toxic water, asbestos, radon,
and soil contamination?
Secretary McCarthy. All housing-related health concerns and
potential environmental health hazards in housing may be reported to
the Housing Environmental Health Response Registry.
The Housing Environmental Health Response Registry is available for
residents to: 1) report concerns about housing and related health
issues; 2) obtain additional information on housing environmental
health hazards; and 3) receive assistance in seeking medical care for
any housing-related illnesses or concerns. The goal of the Housing
Environmental Health Response Registry is to allow the military to link
housing, occupants, and potential health hazard data to: 1) understand
the health effects of potential environmental hazards in housing; 2)
assess future needs for health interventions and health education; and
3) inform individual occupants regarding potential exposure and adverse
health impacts.
As of November 30, 2019, 323 families have enrolled in the Housing
Environmental Health Response Registry. One hundred fifty-seven of the
323 families reported specific hazards in their homes, the majority of
which are mold and dampness. One hundred forty-six families requested
additional contact with a public health professional from the Army
Public Health Center, which is ongoing.
The Army Medical Command published Operations Order 20-10 (MEDCOM
Support to Garrison Quarterly Town Hall Engagements) which directs
medical, dental, and public health participation at Garrison town hall
engagements to address concerns about housing and to encourage and
assist with enrollment in the Housing Environmental Health Response
Registry to residents who have housing related health concerns.
Secretary Modly. Similar to medical encounters for lead exposure
and all other medical encounters, visits and potential treatments for
conditions that are reported by the patient as being housing-related
are documented in their electronic health record for tracking and
follow-up by the attending provider. Additionally, the Navy, Navy
Installations Command (CNIC), and Public Private Venture (PPV) partners
maintain databases (i.e., Enterprise Military Housing [eMH] and Yardi)
that track the historical record of residents in every home, including
all maintenance and service calls that are environmental (e.g., mold),
health, and safety related. If deemed medically necessary, a medical
professional can obtain information from CNIC to link patients and
military housing history.
Secretary Barrett. Any health related concern that arises is
referred to the Air Force Environmental, Safety, and Occupational
Health (ESOH) Service Center, which maintains a database.
incentive fees
62. Senator Warren. Secretary Barrett, there have been several
reports of providers at different Air Force installations falsifying
documents in order to capture incentive fees. Does the Air Force have a
plan to recoup that money?
Secretary Barrett. Yes. The Air Force directed project owners with
data integrity issues to conduct independent third-party audit of their
maintenance programs. The Air Force is withholding property management
performance incentive fees to projects with validated work-order
discrepancies and will recoup fees, as appropriate, upon analysis of
the data.
63. Senator Warren. Secretary Barrett, if so, when do you expect
the Air Force to get that money back?
Secretary Barrett. Once AFOSI analyzes the independent maintenance
program audits for these projects, the Air Force will determine what
fees should be returned to the projects.
retaliation
64. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, we continue to hear from military family members who
remain fearful of speaking out about the poor conditions of their on
base housing. How many instances of retaliation have been reported in
your respective military departments?
Secretary McCarthy. Since February 2019, 11 potential cases of
retaliation or reprisal by military officials or MHPI Company employees
against servicemembers and family members for raising housing
complaints have been reported to the Department of the Army Inspector
General. After conducting thorough inquiries of the 11 potential cases,
2 were founded, 4 were unfounded, and 5 complaints were withdrawn by
the complainant. In the two founded cases, the MHPI company employee
was reprimanded for their behavior. There were no founded cases
concerning military officials. We have thorough systems in place to
address any reports of retaliation or reprisal. All allegations of
retaliation will be reported immediately to the Army Inspector General
for investigation. Verified allegations of retaliation will be
addressed immediately.
Secretary Modly. The Marine Corps Inspector General reviewed all
fiscal year 2018 and fiscal year 2019 cases in its database for
incidents of reprisal or retaliation for speaking out about the poor
conditions of their on-base housing. While there were a couple
complaints about living conditions, there were no reported incidents of
reprisal or retaliation for speaking out about poor housing conditions.
The Naval Inspector General executed a search of their case management
database and identified four reported incidents of reprisal or
retaliation for speaking out about poor housing conditions.
Secretary Barrett. Nine airmen have reported retaliation or fear of
retaliation. Each of these instances was referred to the Air Force
Inspector General for review and appropriate action.
65. Senator Warren. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, will you commit that any reported and confirmed
instances of retaliation will not be tolerated and those officials who
engage in retaliation against the servicemember, including to his or
her family, will be punished accordingly?
Secretary McCarthy. Yes. Retaliation and reprisal are violations of
Army regulations and inconsistent with our values and the sacrifice of
soldiers and their families. Inspectors General thoroughly analyze all
complaints of retaliation and reprisal received through IG channels,
and report such occurrences to appropriate officials to ensure the
cases are inquired into and resolved in a timely and thorough manner.
We will not tolerate retaliation and reprisal against soldiers and
their families by our military members nor our MHPI companies.
Secretary Modly. Yes, retaliation is not tolerated in the
Department of the Navy. Officials who engage in retaliation against
servicemembers or their families will be disciplined as appropriate.
Secretary Barrett. Yes.
__________
Questions Submitted by Senator Joe Manchin III
reporting and tracking of medical history
66. Senator Manchin. Secretary McCarthy, Secretary, Modly, and
Secretary Barrett, the hearing made it clear that there were avenues to
self-report medical issues arising from unsafe or unsanitary housing
conditions, but due to the fact that self-reporting is considered
epidemiologically unreliable, I'm afraid this data will be useless to
servicemembers and their dependents when exploring redress in the
future for medical problems developed as a direct result of having to
live in housing with contaminants. Are there plans in any of the
services currently to pull from reliable data sources, such as official
occupancy records, and record that data not only in military databases,
but also in servicemembers and dependents medical records so that it is
readily accessible and usable for them in the future should medical
problems develop?
Secretary McCarthy. The Army is developing a Housing Environmental
Health Response Registry that will integrate two DOD systems of records
to link housing, occupants, and potential health hazard data. Phase 1
of the registry, the Rapid Response Registry, was established in mid-
April 2019. This 24 hours a day / 7 days a week hotline provides
housing residents with health information and access to healthcare and
housing resources. As of November 30, 323 families have enrolled in the
registry. Phase 2 is underway and consists of populating two DOD
databases (enterprise Military Housing (eMH) and the Defense
Occupational Environmental Health Readiness System (DOEHRS)) with Rapid
Response Registry enrollee data. Phase 3 allows for linking Rapid
Response Registry enrollees with housing assessment data to: 1)
understand health effects of housing hazards; 2) assess future health
interventions and health education; and 3) inform individuals of
potential exposures and adverse health impacts.
Secretary Modly. Responding to health and safety concerns of
military housing residents requires an integrated team approach by
staff from housing offices, facilities maintenance, safety, public
health, and health care providers. When residents report potential
health or safety hazards in Department of Defense (DOD)-owned housing
to the supporting housing office or facility manager, that information
is tracked in the DOD component's authoritative database for housing
management (i.e., Enterprise Military Housing [eMH]). The reported
issue and resolution are recorded in the database and can be referenced
in the future for historical information. When residents report
potential health or safety hazards in privatized family housing to the
privatized housing manager, that information is logged in the Public
Private Venture (PPV) partners' maintained database (i.e. Yardi).
Similar to the DOD database for housing management (eMH), the reported
issue and resolution are recorded in the PPV partner's database and can
be referenced in the future for historical information. When residents
report potential health or safety issues to their health care
providers, the providers evaluate the medical condition and record the
diagnosis in the electronic health record. This can provide reliable
and historical information on diagnoses. If deemed medically necessary,
a medical professional can obtain information from the DOD component's
housing offices to link patients and military housing history. Of note,
there are often confounding factors in the home with respect to
environmental exposures and disease causation. Nevertheless,
information in the electronic health record would be readily accessible
and useful in case future medical problems develop. Medical records
only contain information about historical housing occupancy as offered
by the patient to the provider, or the current address in the
demographic section of the electronic medical record. Due to Health
Insurance Portability and Accountability Act (HIPAA) and privacy
concerns, medical records do not interface with other non-medical
military and housing databases; it is important to maintain this
separation.
Secretary Barrett. Yes, there is an on-going Joint Service effort
to develop an application utilizing the Enterprise Military Housing
(eMH) database to collect and maintain health related items, to include
but not limited to lead, radon, mold, HVAC, other indoor air quality
issues, asbestos, and drinking water issues. The eMH database is the
DOD's authoritative data source for all military housing assets in DOD
real property databases.
management of business agreements
67. Senator Manchin. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, it seems that there is a lot of confusion
surrounding the business agreements due to differences in
implementation among the services. This is manifested in differing ways
survey questions are asked, how incentive payments are distributed, and
even conflict resolution through the chains of command. Has the
decision to allow the services to independently manage their own
business agreements caused some of the issues and would it benefit the
services to be working under a uniform set of policies and procedures
to enforce when dealing with private housing companies?
Secretary McCarthy. It would benefit the services to have a uniform
set of policies and procedures when it is feasibly possible. We
frequently participate in cross-service meetings to ensure lessons
learned are incorporated into our housing management and quality
assurance practices and that we are working under a similar set of
policies and procedures to enforce life, health, and safety when
dealing with MHPI companies.
The Army's MHPI program is defined as an institutional multi-family
company portfolio with commercial debt facilities and three partial
government loan guarantees. Agreement objectives and business terms are
essentially the same across the Army MHPI portfolio with only regional,
local, and company-specific arrangements as the primary
differentiation. Contract Cancellations
Secretary Modly. The Military Housing Privatization Initiative
legislation enabled the use of different tools to establish the Public
Private Venture programs. The Office of the Secretary of Defense/Tri-
Services initiatives on standard incentive fee structures, the Tenant
Bill of Rights, universal lease and dispute resolution will create a
standardized property management approach across the Department of
Defense. This will greatly enhance the resident experience for our
military families.
Secretary Barrett. The differences in implementation by the
respective services are not a significant contributor to the challenges
we face today. Each service has a different organizational structure
and culture driving different approaches. However, the services are
working together on areas of mutual interest and meet weekly with
counterpart Assistant Secretaries and the Office of the Secretary
Defense.
contract cancellations
68. Senator Manchin. Secretary McCarthy, Secretary Modly, and
Secretary Barrett, the evidence has continued to mount in both the
media reports and as a result of congressional hearings that there has
been some serious neglect and poor business practices surrounding the
safety and health of our servicemembers and their dependents living in
certain military housing projects. While it appears that the
departments are making incremental improvements, there are still
conditions that are unacceptable and new problems being reported. Are
there stipulations in the contracts or actions being taken by any of
the services towards cancellation of any contracts due to the egregious
nature of these lapses, and if so, how far along are the processes?
Secretary McCarthy. The Army has the authority to compel
termination of any property management service providers who fail to
provide habitable housing and do not take action to cure housing
deficiencies in a commercially reasonable period of time. While there
are still housing issues that have not been resolved, the Army believes
that all of the housing service providers are currently making
substantial progress in resolving the issues that remain. As a result,
there are currently no plans by the Army to compel termination of any
privatized military housing property manager contract.
Secretary Modly. The governing agreements for Department of the
Navy (DON) privatization projects provide several mechanisms for the
DON to address instances of unacceptable performance or, when
necessary, default. 1. Removal of Property Manager: In the event of
unacceptable performance by a property manager, governing project
agreements give the DON the right to direct the company to terminate
the property management agreement and replace the property manager
without terminating the LLC agreements or removing the Managing Member.
2. Issue Cure Notice to Managing Member: In cases where the Managing
Member has defaulted on its obligations, the DON can issue a written
cure notice. According to project operating agreements, default events
include the violation of any provision of the agreement. The cure
notice serves to set the timeline to remedy or cure such violation. 3.
Default Managing Member: The DON has the right to default the Managing
Member of the LLC. A replacement Managing Member would assume all
rights and obligations of the Managing Member and the existing LLC
entity construct would continue to own and operate the housing.
Alternatively, the DON may cause the project or the Managing Member's
interest to be sold to a third party in accordance with the terms of
the agreements. Either remedy must be coordinated with the bondholders.
4. Terminate the Project: In an extreme case, where the DON is unable
to replace the Managing Member, the ground lease could be terminated
for cause and the project entity itself may be dissolved and
liquidated. The bondholders would require debt repayment for which the
government could be potentially liable. The DON would be responsible
for ownership and operation of the housing project. In the event of
Government re-acquisition, resident leases would be terminated and
payment of Basic Allowance for Housing (BAH) to military members ceased
in accordance with 37 U.S.C. Section 403. Per fiscal law (10 U.S.C.
Section 2821), sufficient appropriated resources would be required to
sustain the housing for military families. Although the circumstances
did not reach the event of a default, in 2007 the DON caused the
Managing Member's interest in the LLC to be sold to a third party in
the Navy's Pacific Northwest project. That third party stepped in and
assumed ownership and operation of the housing without disruption to
the residents. The DON is continuing to work with the Managing Members
to ensure that, where deficiencies have been identified, corrective
steps are being taken. The language of the business agreements provides
the framework and the aforementioned steps DON would take to address
unacceptable performance. To date, no actions have been taken to
terminate any of the agreement
Secretary Barrett. The Air Force cannot unilaterally terminate
privatized housing agreements. Existing authorities allow the Air Force
to place underperforming project owners on corrective action plans,
require performance improvement plans, withhold performance incentive
fees, require independent audits, and if appropriate, initiate formal
action and exercise our contractual right to demand failures be cured.
A failure to cure may result in default and have serious financial and
operational consequences for a housing project. In the event of
default, the private lender controls project cash flow. The Air Force
would then ensure the project owner meets its obligation to provide
safe and habitable homes while the parties determine a path forward. If
no agreement is reached, an event of default can lead to termination of
the property management agreement and/or the ground lease. Currently,
we have one project owner on a performance improvement plan and two
project owners on corrective action plans.
tenant rights and homeowners associations
69. Senator Manchin. Ms. Field, the proposed tenant bill of rights
from the services and in the fiscal year 2020 National Defense
Authorization Act addresses significant gaps such as dispute resolution
through mediation and arbitration, withholding of basic allowance for
housing, and non-refundable fees. However, I am concerned that this
still leaves the tenants of military housing reliant on interactions
between the military chain of command and the private housing
companies, excluding their voices in many cases. Within the structure
of the current contracts, is there an avenue for and benefit to
allowing tenants to form a homeowners association type organization in
order to consolidate and address future grievances directly to private
housing companies, to include civil legal action?
Ms. Field. Although exploring the possibility of homeowners
associations was not within the scope of our audit work, we are not
aware of anything that would preclude the creation of such entities by
residents of privatized housing. It is not clear exactly what such an
association's rights would be in terms of negotiating either with the
private housing companies or the DOD or military departments, which is
something that would need to be explored, should DOD pursue this
option. It is worth noting that the right for individual tenants to
take civil legal action against the private companies does exist,
should less formal dispute resolution steps prove unsatisfying to a
tenant. Some such lawsuits have happened in the past and some are
ongoing at present. \4\
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\4\ For some examples of such lawsuits, see, Michael J. Daniels and
Barbara High-Daniels, et al., v. AETC II Privatized Housing, LLC, et
al. (U.S. District Court for the Western District of Texas, San Antonio
Division) (Case No. 5:19-cv-01280); Lenz, et al. v. The Michaels
Organization, LLC, et al. (U.S. District Court for the Middle District
of Florida, Tampa Division) (Civil Action No. 8:19-cv-2950-T-30AEP);
Barber, et al. v. Ohana Military Communities, LLC (U.S. District Court
for the District of Hawaii) (Civil No. 14-00217 HG-KSC); Addi, et al.
v. Corvias Management-Army, LLC, et al. (U.S. District Court for the
District of Maryland)(Case No. 1:2019cv03253, Filed Nov. 12, 2019)
[all]