    [Senate Hearing 117-561]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-561

                        MISTREATMENT OF MILITARY FAMILIES
                               IN PRIVATIZED HOUSING

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

                                    HEARING

                                   BEFORE THE

                    PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                                     OF THE

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   ----------

                                 APRIL 26, 2022

                                   ----------

            Available via the World Wide Web: http://www.govinfo.gov

                           Printed for the use of the
            Committee on Homeland Security and Governmental Affairs

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                        U.S. GOVERNMENT PUBLISHING OFFICE
    48-491 PDF                  WASHINGTON : 2023

    -----------------------------------------------------------------------------------

            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                       GARY C. PETERS, Michigan, Chairman
    THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
    MAGGIE HASSAN, New Hampshire         RON JOHNSON, Wisconsin
    KYRSTEN SINEMA, Arizona              RAND PAUL, Kentucky
    JACKY ROSEN, Nevada                  JAMES LANKFORD, Oklahoma
    ALEX PADILLA, California             MITT ROMNEY, Utah
    JON OSSOFF, Georgia                  RICK SCOTT, Florida
                                         JOSH HAWLEY, Missouri

                       David M. Weinberg, Staff Director
                        Zachary I. Schram, Chief Counsel
                    Pamela Thiessen, Minority Staff Director
        Andrew Dockham, Minority Chief Counsel and Deputy Staff Director
                         Laura W. Kilbride, Chief Clerk
                         Thomas J. Spino, Hearing Clerk

                    PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

                         JON OSSOFF, Georgia, Chairman
    THOMAS R. CARPER, Delaware           RON JOHNSON, Wisconsin
    MAGGIE HASSAN, New Hampshire         RAND PAUL, Kentucky
    ALEX PADILLA, California             JAMES LANKFORD, Oklahoma
                                         RICK SCOTT, Florida

                      Douglas S. Pasternak, Staff Director
                     Brian Downey, Minority Staff Director
                 Scott Wittman, Minority Deputy Staff Director
                          Kate Kielceski, Chief Clerk

                               C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Ossoff...............................................     1
        Senator Johnson..............................................     2
        Senator Carper...............................................    17
        Senator Hassan...............................................    20
        Senator Lankford.............................................    26
        Senator Scott................................................    40
    Prepared statements:
        Senator Ossoff...............................................    51
        Senator Johnson..............................................    53

                                   WITNESSES
                            Tuesday, April 26, 2022

    Captain Samuel Choe, United States Army, Former Resident in
      Balfour Beatty Housing, Fort Gordon Army Base..................     4
    Technical Sergeant Jack Fe Torres, United States Air Force,
      Current Resident in Balfour Beatty Housing, Sheppard Air Force
      Base...........................................................     5
    Rachel Christian, Founder and Chief Legislative Officer, Armed
      Forces Housing Advocates.......................................     7
    Jana Wanner, Military Spouse.....................................     9
    Richard C. Taylor, President, Facility Operations, Renovation and
      Construction, Balfour Beatty Communities.......................    32
    Paula Cook, Vice President, Transformation, Balfour Beatty
      Communities....................................................    32

                         Alphabetical List of Witnesses

    Choe, Captain Samuel:
        Testimony....................................................     4
        Prepared statement...........................................    54
    Christian, Rachel:
        Testimony....................................................     7
        Prepared statement...........................................    70
    Cook, Paula:
        Testimony....................................................    32
        Joint Prepared statement.....................................   103
    Torres, Technical Sergeant Jack Fe:
        Testimony....................................................     5
        Prepared statement...........................................    65
    Taylor, Richard C.:
        Testimony....................................................    32
        Joint Prepared statement.....................................   103
    Wanner, Jana:
        Testimony....................................................     9
        Prepared statement...........................................   100

                                    APPENDIX

    Staff Report.....................................................   142
    Invasive mold chart..............................................   193
    Balfour Beatty Communities Military Housing chart................   194
    Sergeant Torres Online Mold Request..............................   195
    Picture of Captain Choe's Daughter Rashes........................   196
    Resident Survey..................................................   197
    Balfour Beatty Communities Rebuttal..............................   198
    ICE Comment Email................................................   222
    Rodriguez Total Chaos Email......................................   224

    Responses to post-hearing questions for the Record:
        Captain Choe.................................................   225
        Technical Sergeant Torres....................................   227
        Ms. Christian................................................   232
        Ms. Wanner...................................................   238
        Mr. Taylor and Ms. Cook......................................   242

            MISTREATMENT OF MILITARY FAMILIES IN PRIVATIZED HOUSING

                                  ----------

                            TUESDAY, APRIL 26, 2022

                                       U.S. Senate,
                  Permanent Subcommittee on Investigations,
                        of the Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Subcommittee met, pursuant to notice, at 10:02 a.m., in
    room 342, Dirksen Senate Office Building, Hon. Jon Ossoff,
    Chairman of the Subcommittee, presiding.
        Present: Senators Ossoff, Carper, Hassan, Padilla, Johnson,
    Lankford, and Scott.

                 OPENING STATEMENT OF SENATOR OSSOFF\1\

        Senator Ossoff. The Permanent Subcommittee on
    Investigations will come to order.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator Ossoff appears in the
    Appendix on page 51.
    ---------------------------------------------------------------------------
        Thank you all for your attendance. Thanks to the public for
    tuning in to these proceedings.
        Ranking Member Johnson, thank you for all of your work as
    our staffs and we have collaborated on this investigation
    focused on the mistreatment of military families in privatized
    housing on U.S. Military installations.
        In the mid-1990s, when the Department of Defense (DOD)
    commenced the privatization of military housing, it was
    envisioned that this initiative would lead to better outcomes
    for military families, safer, more reliable living conditions,
    healthy homes, and affordable housing available to families
    living on and around U.S. Military installations. For years,
    however, this program has been plagued by problems.
        When I visited Fort Gordon in the first few months of my
    term in the Senate, I asked the command if I could sit down
    with families on post to hear about their experiences living in
    privatized housing managed by Balfour Beatty Communities (BBC)
    at Fort Gordon, and the stories that I heard shocked me. I
    heard stories about maintenance requests that were ignored,
    maintenance requests that were never followed up on, and not
    just routine maintenance but maintenance that impacted the
    health and safety of our servicemembers and their families
    living in their homes. Those families at Fort Gordon, they
    asked me to take action.
        Using my authority as the Chair of the Permanent
    Subcommittee on Investigations (PSI) and working closely in a
    bipartisan way with my colleague, Ranking Member Johnson, who
    in his past capacity chairing the Homeland Security and
    Governmental Affairs Committee (HSGAC) has led substantive
    oversight investigations of related matters, we embarked upon
    an 8-month, intensive investigation looking into these
    allegations of mistreatment of military families at U.S.
    installations.
        We focused on Fort Gordon in Georgia and Sheppard Air Force
    Base (AFB) in Texas, and the results of this investigation are
    alarming and disturbing, reveal injustice imposed on
    servicemembers and their families, reveal grave risks to the
    health and safety of servicemembers and their families, reveal
    neglect by Balfour Beatty, which is responsible for housing
    tens of thousands of military families, and reveal not just
    neglect--and, in my view, misconduct and abuse--but neglect,
    misconduct, and abuse that persisted even after Balfour Beatty
    pled guilty to a scheme to defraud the United States between
    2013 and 2019.
        Today, we are going to hear from servicemembers who have
    joined us to share their personal families' stories of living
    in Balfour Beatty housing. We will hear from advocates,
    military spouses, who will share what they have learned from
    their personal experiences advocating for the families who live
    on post and live on installations across the United States. We
    will ask tough questions of senior executives at Balfour Beatty
    and demand answers and accountability.
        Again, I want to emphasize this has been a bipartisan
    effort from start to finish. Ranking Member Johnson has been a
    great partner in this effort. I thank my staff and his staff
    for their tireless work, reviewing tens of thousands of pages
    of records and interviewing dozens of witnesses.
        I thank our witnesses for joining us today, in particular,
    the servicemembers who I will introduce after our opening
    statements, who have come to share their stories, who have
    displayed the bravery, courage, and dedication that we know and
    expect from those who serve in the Armed Forces, and who are
    doing a great public service by joining us today and sharing
    their stories.
        With that, I will yield to Ranking Member Johnson.

                  OPENING STATEMENT OF SENATOR JOHNSON

        Senator Johnson. Thank you, Mr. Chairman. I also want to
    thank the members of the military for their service and our
    witnesses for their testimony today.
        I really appreciated the cooperation you and I had, our
    staffs as well. It is true; it is bipartisan. I always like
    using the term ``nonpartisan,'' and I think what allows for
    that kind of nonpartisan cooperation is when you focus on
    things we all agree on.
        I will keep my opening statement short. I will enter my
    written statement, ask that it be entered in the record.\1\
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator Johnson appears in the
    Appendix on page 53.
    ---------------------------------------------------------------------------
        Let me just read one paragraph from it because this is, I
    think, the goal we all share.
        Servicemembers represent the finest among us. I do not
    think there is any dispute. We agree on that.
        They and their families make many sacrifices in service to
    this great nation. When stationed in U.S. Military
    installations, these men and women should expect to live in
    conditions that will not damage the health and safety of
    themselves and their family.
        I think that states it pretty simply, and that is why we
    were able to, I think, do a really good job digging into this,
    going through all those documents. Again, I appreciate all the
    work on the staff.
        I think in the end--and I am looking forward to hearing the
    testimony and asking questions--the question that kept going
    through my mind throughout this investigation, going through
    our report, is the statement, ``Fool me once, shame on you.
    Fool me twice, shame on me.'' You have a settlement, $65
    million penalties and fines, and then 2 years later it seems
    like it is pretty much going on as it was prior to the fine
    being imposed.
        I am wondering, what is the military doing about this? How
    can we get this under control? This seems to be a problem that
    has plagued military housing. The military does not want to
    deal with housing, so they contract it out, and then you do not
    set up the controls so the contractors do the type of job that
    we all expect.
        I appreciate the cooperation and look forward to the
    hearing.
        Senator Ossoff. Thank you, Ranking Member Johnson. We will
    now call our first panel of witnesses for this morning's
    hearing. I will introduce the witnesses, and then you will
    stand to be sworn in.
        Captain Samuel Choe is with the U.S. Army and lived in
    Balfour housing at the Fort Gordon Army Base in Georgia, where
    he was assigned to the 202nd Military Intelligence Battalion
    from August 2019 until last month, when he was posted to South
    Korea with the 1st Signal Brigade. Captain Choe and his wife
    have three children, and he comes from a family that has been
    devoted to national service. His father served in the 82nd
    Airborne Division, his uncle is a Special Forces and Ranger
    qualified battalion deputy commander, and his aunt is a Navy
    nurse practitioner.
        Thank you, Captain Choe, to you and your family for this
    extraordinary service.
        I would note Captain Choe is testifying today in his
    personal capacity and is not testifying in any official
    capacity nor is he representing the views of the U.S. Army or
    any military service.
        Technical Sergeant Jack Fe Torres is with the 366th
    Training Squadron of the U.S. Air Force (USAF) and has lived on
    base at the Sheppard Air Force Base in Texas in Balfour-
    provided housing since August 2020 with his wife and 3
    children. He deployed three times in support of Operation
    Enduring Freedom and has been with the U.S. Air Force since
    2009.
        Like Captain Choe, Sergeant Torres is also testifying today
    in his personal capacity and is not testifying in any official
    capacity nor is he representing the views of the U.S. Air Force
    or any military service.
        Ms. Rachel Christian is founder and Chief Legislative
    Officer of Armed Forces Housing Advocates (AFHA), a national
    organization representing military families that was founded in
    2019.
        Thank you, Ms. Christian.
        Ms. Jana Wanner is a military spouse who has lived in on-
    base housing at Fort Gordon in Georgia and at Fort Meade in
    Maryland and has become an advocate for other families
    struggling with housing issues on U.S. Military installations,
    particularly at Fort Gordon in Georgia.
        On behalf of the Subcommittee and the Senate, we deeply
    appreciate your presence today and look forward to your
    testimony.
        I would ask you now to stand and raise your right hands to
    be sworn in and remind you that this testimony will be under
    oath. Do you swear the testimony you will give before this
    Subcommittee will be the truth, the whole truth, and nothing
    but the truth, so help you, God?
        Captain Choe. I do.
        Sergeant Torres. I do.
        Ms. Christian. I do.
        Ms. Wanner. I do.
        Senator Ossoff. Thank you. Please be seated. Let the record
    reflect that the witnesses answered in the affirmative.
        We will be using a timing system today. All of your written
    testimony will be printed in the record in its entirety. We ask
    that you limit your oral testimony to 5 minutes.
        Captain Choe, we will begin with you. You are now welcome
    to deliver your opening statement.

    TESTIMONY OF CAPTAIN SAMUEL CHOE,\1\ UNITED STATES ARMY, FORMER
       RESIDENT IN BALFOUR BEATTY HOUSING, FORT GORDON ARMY BASE

        Captain Choe. Good morning, Chairman Ossoff, Ranking Member
    Johnson, and Members of the Subcommittee. It is my professional
    and personal honor to participate in this proceeding regarding
    the deficiencies in privatized housing provided to
    servicemembers and our families at Fort Gordon, Georgia, as
    well as other communities throughout the United States Army,
    and this housing community is provided by Balfour Beatty
    Communities. Also, the personal experience that my family and I
    have had while residing on Balfour Beatty will be the crux of
    my testimony for today.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Captain Choe appears in the Appendix
    on page 54.
    ---------------------------------------------------------------------------
        A brief history about myself. I am a prior enlisted
    soldier. I used to be an intelligence analyst prior to my
    commissioning as an officer. I currently have 12 years of
    service. Before my military service, I worked as a banker for
    JPMorgan and for Wells Fargo as well.
        As Senator Ossoff mentioned, I have a family, my wife and
    three children. My son, Nathaniel, he is 14 years old. I call
    him my pride. I have my daughter, Cherylin, who is the subject
    of today's testimony. She is my heart. Then I also have my son,
    Luka. He is 11 months old, and I call him my joy. Through my
    family and my service, I find my life to be rather full and
    fulfilling.
        But the crux of my testimony today is due to the fact of my
    daughter, Cherylin, in particular, the mistreatment and the
    negligence that she was subject to while we resided at 149A
    Cypress Circle at Fort Gordon, Georgia, circa August 2019 up
    until February 2021.
        Prior to that, my family and I had never resided on any
    military installation. I had resided on a military installation
    through my father and my mother before my military service, but
    I do not recall ever seeing the type of conditions that we
    lived under while we were at Fort Gordon.
        My wife and I have found that my daughter's experience is
    life-altering and that it will haunt her as well as us for the
    rest of our lives. She is diagnosed with a condition called
    severe atopic dermatitis to the point where it is potentially
    fatal. Unfortunately, the base of her condition was founded
    upon what she was exposed to while we resided on post at Fort
    Gordon in a home which is managed by Balfour Beatty.
        My daughter, prior to her condition, was a very exuberant
    and bright and vibrant young lady, very social, very amicable,
    willing to talk to anyone, stranger, family member, friend,
    whoever it may be. Now, due to her condition, she is reticent
    in engaging with anyone outside of her immediate circle. The
    literal scars of her experience haunt her and plague her to
    this day.
        My wife and I have found that this is something that
    unfortunately will resonate with us for the rest of our lives,
    and all we seek is to provide the most factual, personal
    testimony that we can here today. I am very proud that I can
    state here, before the Subcommittee and to everyone present
    that I represent my daughter and my family because I am the
    only person that can suffer for her. I am the only person that
    can truly show the world the narrative of what we experienced
    while we resided at Fort Gordon through the home that was
    managed by Balfour Beatty.
        It is my desire to ensure that everyone on the Subcommittee
    is fully aware of the circumstances, to include a timeline, to
    include key individuals, to include the locations, to include
    folks who are employed by Balfour Beatty as well as certain
    members of the garrison at Fort Gordon as well. There is
    negligence across the board here, and it is my desire to bring
    that to light as conclusively as possible so that way an
    executive decision can be made that will positively impact
    families going forward. Unfortunately, my daughter will still
    have her condition endure.
        Thank you for your time, Senator.
        Senator Ossoff. Thank you, Captain Choe, for your
    testimony.
        Technical Sergeant Torres, we will now hear from you.

       TESTIMONY OF TECHNICAL SERGEANT JACK FE TORRES,\1\ UNITED
     STATES AIR FORCE, CURRENT RESIDENT IN BALFOUR BEATTY HOUSING,
                        SHEPPARD AIR FORCE BASE

        Sergeant Torres. Chairman Ossoff, Ranking Member Johnson,
    and Members of the Subcommittee, my name is Technical Sergeant
    Jack Fe Torres, and I thank you for the opportunity to testify
    today.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Sergeant Torres appears in the
    Appendix on page 65
    ---------------------------------------------------------------------------
        I have served in the Air Force for 13 years, and we moved
    into our home in August 2020 at Sheppard Air Force Base, Texas.
    After moving in, my wife and children started experiencing a
    wide variety of medical symptoms after realizing we felt better
    outside of our home and realized that mold was likely a threat.
        The first major work order we reported was on March 4,
    2021, for our water heater. During the repair, a Balfour Beatty
    technician forgot to isolate the water and gas valves. This
    caused the entire house to smell of gas, and water began
    rushing out into our mechanical room and hallway. I vacuumed as
    much water from the carpets as I could and put a personal fan
    in the area. Afterwards, the maintenance supervisor assured us
    that it was not possible for mold to grow in the area and not
    to worry.
        This was the first time we believed that our work order
    history did not reflect the true state of repairs within our
    home. For example, the technician noted that he had placed a
    fan and picked it up when actually I had placed a personal fan.
        Issues with the work orders have continued while living in
    the home. Work orders would be opened and closed before
    completion, frequently. Or, worse, a work order will be
    attempted to be repaired, and when we report the issue is
    unresolved a new ticket will be opened. The maintenance
    database then looks as if two different issues arose when in
    reality a superficial fix occurred and a new work order was
    created.
        On May 27th, we discovered waterlogged trim and placed a
    work order. Our issues were not resolved, and we then reported
    it to the Government Housing Office and resident advocate. When
    our issues were still not resolved, we contacted the Armed
    Forces Housing Advocates, and with their involvement we located
    more moisture and mold issues in and under our mechanical room.
    I then reported our issues to my command and local
    congressional representative.
        On June 11th, we e-mailed Balfour Beatty to request a
    professional mold test. Balfour Beatty did not promptly
    acknowledge the extent of mold or arrange for a professional
    mold test. At that point, we were frustrated with the delays
    and took it upon ourselves to send tape-lift tests to a lab
    where it was confirmed that mold was present.
        Balfour Beatty dismissed our concerns. At one point, we
    were told that a large spot of mold in our mechanical room wall
    was just a burn mark.
        Eventually, on June 24th, a licensed mold assessor,
    EcoSystems Environmental, inspected our home. It was not until
    this day that an environmental work order was put in the
    system, 4 weeks after we originally reported our concerns.
    Their report, dated July 2nd, cited visible growth throughout
    the home; elevated moisture levels were found in more than 175
    square feet of our walls, including the bathroom and kitchen.
    They recommended that all impacted walls be repaired.
        Balfour Beatty then hired another environmental company,
    Exponent, to review this report, and on July 9th, they issued a
    new report that did not require all repairs of the first report
    to be made and simply stated that some issues could wait for a
    change of occupancy.
        On August 4th, we were displaced for the first time. We
    hoped our problems would be resolved, but after moving back in
    4 weeks later we found many issues unrepaired. There was even
    visible mold underneath the mechanical room and in the kitchen.
    Work was completed with Band-Aid fixes or ignored altogether.
        We immediately reported the remaining issues via the
    residential portal, and the work orders were marked ``web
    entered.'' It was later changed to the category ``carpentry.''
    New caulk was placed, cabinets were sanded, and the issues in
    the mechanical room were ignored. The work orders were closed
    as ``completed,'' never indicating that mold was still present.
        Shortly after moving back in, my family and I began to
    experience the same medical problems we had previously. On
    January 10, 2022, we discovered mold growing on our wall in our
    kitchen. A Balfour Beatty technician indicated to me that there
    may be a slab leak in our foundation, but Balfour Beatty has
    never provided us a complete scope of work.
        We were displaced again, this time for 12 weeks. These
    displacements caused my family great amounts of stress, as you
    can imagine, having a two-, five-, and 8-year-old without their
    comforts of home. I was also passed over for a supervisory role
    due to my family's housing situation. I believe if the general
    upkeep of my home had been taken seriously by Balfour Beatty,
    as was indicated in the first environmental report, our
    displacements could have been prevented.
        While hesitant to tell my family's story of how Balfour
    Beatty has treated us, I remain hopeful that Congress will
    seriously address what military families around the country
    continue to experience. Our military families should not be
    forced to live in fear of their own homes.
        Thank you and a special thank you to the Armed Forces
    Housing Advocates.
        Senator Ossoff. Thank you, Sergeant Torres.
        Ms. Christian, your opening remarks, please.

    TESTIMONY OF RACHEL CHRISTIAN,\1\ FOUNDER AND CHIEF LEGISLATIVE
                OFFICER, ARMED FORCES HOUSING ADVOCATES

        Ms. Christian. Chairman Ossoff, Ranking Member Johnson, and
    Members of the Subcommittee, thank you for the opportunity to
    testify before you today and for allowing the Armed Forces
    Housing Advocates to share the stories of thousands of military
    families that have impacted by the systemic failures of the
    Military Housing Privatization Initiative (MHPI).
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Christian appears in the Appendix
    on page 70.
    ---------------------------------------------------------------------------
        My name is Rachel Christian, and I am one of the founders
    of the Armed Forces Housing Advocates. AFHA is a nonprofit
    organization that was formed out of necessity to provide direct
    advocacy services to military families living in privatized
    housing across the Nation. Since May 2021, we have assisted
    over 1,500 families residing in military housing. Personally, I
    have been advocating for families since 2018. AFHA takes a
    grassroots approach to advocacy. This gives us a unique view of
    the current process and procedures in military housing across
    the United States.
        In the past year, I have seen environmental hazards such as
    mold, lead, asbestos, and raw sewage being improperly handled
    by untrained staff and work orders being closed prior to
    completion by Balfour Beatty employees. I have witnessed
    servicemembers in tears due to the fear of losing their careers
    after Balfour Beatty attempted to use their commands to silence
    them from speaking further about unsafe conditions in their
    homes. I have seen denied maintenance requests and closures of
    work orders simply due to Balfour Beatty not wanting to foot
    the cost of completing necessary maintenance and repairs.
        At Whiteman Air Force Base, a large tree limb fell on a
    car, which just moments prior held an infant inside. The
    request to remove the dying tree from the yard was denied by
    Balfour Beatty in the months prior to the incident.
        The most morally egregious behavior I have seen while
    assisting military families residing in Balfour Beatty homes is
    the way in which individuals with disabilities are treated and
    their civil rights consistently violated. Disabled military
    families are being faced with excessive red tape when
    requesting reasonable accommodations and modifications to their
    homes. The excessive requests for documentation and personal
    information, as well as the length of time it takes to get a
    request approved, violates the law.
        It is inexcusable that a military spouse should need to be
    bathed by her husband because Balfour Beatty refuses to provide
    proper accommodations for her disability in her bathroom. Her
    husband, as the servicemember, should not be in constant fear
    of leaving for training or deployment because he is unsure his
    wife will be safe in their home.
        The safety inside of a Balfour Beatty home is questionable
    at best. I have seen sick and injured military families that
    have been dismissed repeatedly when bringing forth their
    concerns that their homes have made them sick.
        A child at Fort Bliss tested high for lead in their blood.
    After certified testing was completed, it showed higher than
    allowable levels of lead-based paint dust in the home. Yet
    still, Balfour Beatty denied that the lead-based paint in the
    home was responsible and refused to abate or encapsulate the
    lead-based paint. That home is still available for unsuspecting
    families to move into today.
        These medical conditions are not only harming our military
    families but are also costing military treatment facilities and
    Tricare millions of dollars in medical care, which could be
    avoided if the homes were properly maintained.
        The issues I have cited are only a small portion of the
    problems, and they are not unique to one installation or
    location. They are mirrored from one to the other.
        Balfour Beatty often claims that the problems we see are
    regional, with a few bad actors, but we strongly disagree with
    this notion. When corporate leadership is directing the actions
    of local employees, the issues are inherently systemic.
        A little over 3 years ago, I sat in this very building,
    listening to the Senate Armed Services Committee discuss the
    deplorable conditions in military housing, including those run
    by Balfour Beatty. How many more cases of negligence, fraud,
    and civil rights violations must we present in this building
    before Balfour Beatty is properly held accountable and banned
    from receiving further government contracts as well as removed
    from their current partnership with the Department of Defense?
        Balfour Beatty has already admitted to defrauding the
    government, but it is not just the government that has suffered
    in this case. It is the servicemembers, and it is their
    families. They are the ones being forgotten, pushed aside, and
    made sick by a company that continues to choose profits over
    people. When our servicemembers are exploited by the very
    companies that promise to protect them, our troops are not
    operationally ready.
        No servicemember should have to choose between a costly
    reasonable accommodation for their family member or purchasing
    groceries. No servicemember should be losing sleep on
    deployment, worried that their family is sick or injured in
    their home. No servicemember or their family should be homeless
    while serving this great country. It is time that our
    servicemembers and their families are all treated with the
    dignity and respect they deserve.
        The military community lost their faith in Balfour Beatty
    due to their continued disregard for the health and safety of
    the families residing in their homes. We believe that ending
    the partnership with Balfour Beatty is the only way to ensure
    the readiness of our servicemembers and the safety of their
    families.
        Thank you.
        Senator Ossoff. Thank you, Ms. Christian.
        Ms. Wanner, we will now hear your opening statement,
    please.

              TESTIMONY OF JANA WANNER,\1\ MILITARY SPOUSE

        Ms. Wanner. Chairman Ossoff, Ranking Member Johnson,
    Members of the Subcommittee, thank you for the invitation to
    participate in today's hearing.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Ms. Wanner appears in the Appendix on
    page 100.
    ---------------------------------------------------------------------------
        My name is Jana Wanner. I have been a proud Army spouse for
    the past 12 years. My husband is a Sergeant First Class, and he
    has been in the Army for 15 years. We have two children, one
    with special needs who is enrolled in the Department's
    Exceptional Family Member Program.
        Like most military families, our family has moved often. We
    are currently at our fifth duty station but at Fort Gordon for
    a second time. During our first tour at Fort Gordon, in 2013,
    we arrived from Germany and did not have enough time to look
    for off-post housing. After waiting in a hotel for over 2
    weeks, we were offered a home that had an active leak from the
    refrigerator, cigarette butts scattered on the stairs, as well
    as dirt and roaches on the kitchen floor. When questioned about
    the condition of the home, the Balfour staff member stated that
    roaches are normal in Georgia and that the contractors must
    have accidentally left their used cigarette butts behind.
        Over the next few months, we had frequent work orders to
    include leaks, mold issues, an air conditioner that did not
    work properly, and at one point it was declared a fire hazard.
    After 5 months of living in these conditions, we moved to a
    home outside of the installation.
        I began my advocacy 4 years ago while stationed in
    Maryland. After our own experiences as a family with the lack
    of appropriate accommodations for a special needs child and
    mold issues in our home, I decided to speak about the
    conditions military families are living in.
        After returning to Fort Gordon for the second time, in
    2019, I started hearing from military families living on the
    installation with various housing concerns. Myself, Mrs.
    Webster, and Mrs. Dykes created a private Facebook group that
    is specifically for Fort Gordon families with housing issues.
    On average each month, we help dozens of families with the
    ongoing problems of Balfour's mismanagement of the homes on the
    installation. Lack of prompt response to repairs, such as
    leaks, mold, as well as lack of transparency about the waitlist
    for on-post housing, sewage leaks, pest issues, these are just
    a few of the things that we frequently hear about from
    families.
        Work orders for maintenance requests go unaddressed or
    ignored for months at a time in some cases. More specifically,
    one resident has had work orders open since December 2021,
    requesting repairs to their master bedroom ceiling with water
    damage. The ceiling appears to be caving in from the damage,
    but maintenance has not addressed their concerns since putting
    the work orders in.
        Several other residents have reported similar experiences
    with leaks causing water damage, with limited communication
    from maintenance about repairs and work orders that have been
    left open with no timeline given for the repairs.
        When residents have requested a move-in checklist to
    document preexisting damages, housing staff has stated that
    there is no official form to document those damages. Residents
    are then told to send an e-mail to the housing office with
    photos and descriptions of the damages and they will be kept on
    their file. However, after several residents have reached out
    to confirm their e-mails were on file to prepare for a move-out
    inspection, they were told that their documentation was never
    received.
        Americans with Disabilities Act (ADA) accommodations
    requests or other reasonable accommodation requests have also
    been ignored or denied. There are currently no standard proof
    requirements for accommodation needs. Balfour is inconsistent
    with the information that they request to prove the need for
    reasonable accommodations. Some families have made reasonable
    request for accommodations and were promised one-level homes
    only to arrive to find out what they were offered was not a
    one-level home. Other families have requested ADA homes due to
    the medical need only to be placed on a several months' long
    waitlist due to Balfour not leaving the homes available for
    need-based families.
        The fear of retaliation by Balfour and a lack of clarity on
    how to report are common reasons that have prevented families
    from reporting their issues. Residents have frequently
    discussed what is sometimes described as verbally abusive staff
    that deters them from speaking up any further.
        For families that have never lived in military housing
    before, the process to dispute is even more confusing and
    unclear. The Tenant Bill of Rights and the dispute process were
    well intentioned, but more oversight is still needed, such as
    more thorough inspections that are not just based on cosmetic
    appearance of the homes but also ensuring that families with
    special needs do not have extra layers of red tape to have
    access to ADA homes or reasonable accommodations.
        Military families make sacrifices every day. A safe home
    should not be one of them.
        Thank you, Senators, for the opportunity to testify and for
    addressing the health and safety of military families.
        Senator Ossoff. Thank you, Ms. Wanner, for your opening
    remarks.
        I will now recognize myself to begin the questions for our
    first panel.
        Captain Choe and Sergeant Torres, I want to thank you again
    in particular for joining us and for your service to the
    country.
        Captain Choe, you recently deployed with your family to
    Camp Humphreys in South Korea, and you flew 7,000 miles on a
    17-hour flight to testify here today. Can you take a moment and
    explain to the Subcommittee why you felt it was so important to
    be here and if you would not mind making sure your microphone
    is close enough to capture your remarks? Thank you, Captain
    Choe.
        Captain Choe. Thank you, Chairman. It is quite simple. My
    daughter. No one else can speak up for my daughter. No matter
    how many times I spoke up for my daughter while we resided on
    post at Fort Gordon, especially notifying Balfour Beatty
    throughout dozens of interactions, whether it was via work
    orders or whether it was in person, whether it was submitting
    concerns via telephone with their primary point of contact
    through their facilities manager there, it was all for naught.
        The reason why I am here before everyone is because my
    daughter is still under the same health conditions that she
    initially contracted due to the home itself and we were
    informed this is a potential lifelong condition and this is
    also a potentially fatal condition if she is exposed to the
    right circumstances of black mold and mildew, which
    proliferated the home that we resided in while we were at Fort
    Gordon during our time there.
        The timeline that we resided there was from August 2019 up
    until February 2021. My daughter, her skin, once youthful and
    supple, is now reptilian in nature to where there were numerous
    times she would wake up in the night, hands covered in blood
    from her scratching while sleeping, and her bedsheets were also
    covered in her own blood. How do you explain to an 8-year old
    child why she should endure something like that?
        If it was something that my wife and I could control, by
    all means, we would take responsibility and do the very best
    that we could as her parents to ensure that she is not under
    those same conditions going forward. But, the conditions that
    we resided in is due to outside factors beyond our control,
    primarily championed by Balfour Beatty, who provides direct
    oversight to the homes at Fort Gordon and across numerous
    military installations throughout the DOD.
        It is very important that I am here today, regardless of
    however much time it takes me to fly from one part of the world
    to another, so that way I can provide the accurate truth of
    what we endured.
        My daughter's condition is to the extent where she has
    received a very powerful and potent injection called DUPIXENT,
    which retails for between three and five thousand dollars per
    injection. Starting from July 2021 up until February of this
    year, she received injections twice a month. I broached concern
    that if my military service were to be concluded prior to a
    retirement, then what would happen to my daughter? That means
    we would be potentially paying over $70 to $100,000 dollars in
    out-of-pocket expenses for an injection that she should receive
    due to the circumstances that she was exposed to outside of her
    control and our control at Balfour Beatty or at Fort Gordon
    through Balfour Beatty.
        Chairman, I do not know how to convey to you anymore
    strongly how much that this has impacted her. Her sense of
    self, her sense of worth, of who she is has forever been
    changed. Again, I mentioned that she was a very vibrant and
    social young lady and now she is withdrawn, reticent. She has
    sought counseling services through her school. She has sought
    military counseling services as well, to include the chaplain
    at my previous organization prior to my departure from Fort
    Gordon. It goes without saying that this is something that is
    always on her mind.
        There is times where normally most parents would ask their
    child, how was your day today? What happened at school? What
    did you learn? What was your homework? Do you have anything to
    give to us where we can sign to give back to your teachers?
        My first question is: How is your skin today? How do you
    feel today? Are you itchy? Are you bleeding? Show me your
    rashes.
        She resembles a burn victim at her worst, and her worst
    ebbs and flows because her condition will subside and then
    flare up periodically, every month or 2 months, despite any
    injection that we provide, despite any ointment, topical
    treatment that we provide her, prescribed or over-the-counter.
        Senator Ossoff. Captain Choe, had your daughter ever had
    rashes like that, the symptoms of the severe dermatitis that
    she has developed, prior to moving into your Balfour home at
    Fort Gordon?
        Captain Choe. She exhibited her rashes only after residing
    on post at Fort Gordon.
        Senator Ossoff. With your permission, I am going to ask
    that slide 32\1\ be depicted to the Subcommittee, which shows
    some of these symptoms.
    ---------------------------------------------------------------------------
        \1\ Picture of Captain Choe's daughter rashes appear in the
    Appendix on page 196.
    ---------------------------------------------------------------------------
        You can take that down now.
        I want to ask you, Captain Choe, you went to see an allergy
    specialist on post a number of times in the early months of
    these symptoms developing in your daughter. What were you
    advised by medical professionals?
        Captain Choe. The medical professional at the time, who
    treated her throughout pretty much the majority of her
    condition, he informed my wife and I that at first he tried to
    determine if certain factors were in play, if she was exposed
    to the only two other allergens that she has, which is a mild
    allergy to cats and dogs. We responded quite promptly, no,
    because we do not own any pets, our neighbors do not own any
    pets, and my daughter does not interact with any pets due to
    that.
        It was shortly afterwards where after conducting a series
    of skin tests and blood tests that he determined that she has
    the allergy, or the condition, for atopic dermatitis but to
    such an extent where it is severe and, we were informed
    alarmingly, that it was potentially fatal.
        Senator Ossoff. Captain Choe, you then raised this issue
    with Balfour. They came in February 2020. I understand they
    told you that they did not find mold in the home. Was that the
    end of your family's concern with mold, or did you continue to
    raise the concern about mold in your home with Balfour in the
    months that followed?
        Captain Choe. I fervently brought my concerns to Balfour
    Beatty in one form or another, be it communication telephone or
    in-person or through e-mail correspondence, from the very
    beginning up unto my departure from that home in February 2021.
        Senator Ossoff. Let me ask you, during this period in the
    middle of 2020, when you were reporting to Balfour the urgency
    of your requests that mold you were observing in your home be
    remediated, were you doing that mostly in person or by the
    phone?
        Captain Choe. My apologies, Chairman. Can you ask the
    question one more time?
        Senator Ossoff. Were you making those reports and requests
    to Balfour principally in person and by the phone?
        Captain Choe. We primarily provided our work orders via the
    portal that was provided to residents at Fort Gordon. Once we
    were notified by my daughter's physician of her condition, we
    submitted a work order for mold. A test was conducted. We were
    told at the time it was inconclusive, that it was negative. But
    we continued to press the point, and we were told to contact
    the manager of the Balfour Beatty organization there at Fort
    Gordon directly. I was actually handed her business card and
    that going forward I needed to communicate with her directly or
    with her staff, to which I attempted to numerous times.
        Senator Ossoff. Let me make sure I understand, Captain
    Choe. Were you specifically instructed by Balfour personnel
    that you should, moving forward, raise these concerns directly,
    verbally or by phone, rather than via the online portal?
        Captain Choe. That is correct.
        Senator Ossoff. Balfour personnel told you to cease using
    the online portal and instead to place those requests for help
    directly in person or by phone?
        Captain Choe. Yes, that is correct. Not just a supervisor,
    it was the manager of the Balfour Beatty Communities at Fort
    Gordon herself.
        Senator Ossoff. Thank you. We are going to dig more into
    your story and Sergeant Torres's story in a moment. I am going
    to yield in a moment to the Ranking Member. Before I do, I just
    want to ask you to turn, Captain Choe, to Exhibit 2.
        This is an e-mail that you sent to Ms. Paula Cook at
    Balfour.
        Captain Choe. Yes.
        Senator Ossoff. Months and months later, after, as I
    understand it, your requests for assistance with mold in your
    home had been ignored for months. You had been instructed by
    Balfour personnel, rather than using the online portal, to
    place those requests verbally or by phone.
        You, at the advice of your doctor, had then sought to break
    your lease. Balfour had sought to prevent you from breaking
    your lease. You had to engage your chain of command.
        Captain Choe. Yes, that is correct.
        Senator Ossoff. Eventually, after engaging your chain of
    command--and again, this is while living for months in a home
    where there was mold and your daughter's health was severely
    impacted--you finally were able to get out of that home.
        Captain Choe. Yes, that is correct.
        Senator Ossoff. We are going to get into how Balfour
    nevertheless then pursued you for collection, but I want to ask
    you to read the final few sentences on the second page of this
    e-mail, beginning with ``I am just a soldier.'' Do you see
    that, Captain Choe, in the middle of the final paragraph of
    this e-mail?
        Captain Choe. I am a soldier, husband, and father
    attempting to reconcile why this had to take place. My family
    and I were not aware that we were at the mercy of executive
    decisions made at Balfour Beatty that were detrimental to my
    daughter's health. You, Ms. Cook, along with your
    representatives, could have accomplished much more yet, thus
    far, have chosen not to.
        Senator Ossoff. Thank you, Captain Choe.
        Sergeant Torres, we will engage with you in the second
    round of questioning.
        At this time, I yield to Ranking Member Johnson.
        Senator Johnson. Thank you, Mr. Chairman.
        I think one of my first questions has been answered. Is
    your daughter improving at all? It does not sound like she is
    at all.
        Captain Choe. No, Senator, she is not.
        Senator Johnson. I want to explore something because I
    think a number of you mentioned retaliation. That would be
    retaliation by your command, right?
        Captain Choe. [Nods head affirmatively.]
        Senator Johnson. I want to understand the finger pointing,
    the shifting responsibility, in terms of what has transpired
    here.
        Captain Choe, your daughter was treated by military
    doctors?
        Captain Choe. She was treated initially on post by military
    doctors, and then she was referred off post as well, and she
    oftentimes went back and forth between the two.
        Senator Johnson. Did the military doctors assign a cause to
    her skin condition? Did they say this is typical of a rash
    brought about by mold?
        Captain Choe. Only at the initial period. After her two
    initial appointments, the epidemiologist made the determination
    that it has to be something that is triggering her condition
    specifically and if she is only going to school and home that
    it has to be something either at the home or the school itself.
        Senator Johnson. Did the doctor or anybody in the medical
    clinic try to follow up to see what the conditions were in the
    home that might have been giving rise to her skin condition?
        Captain Choe. Yes, he certainly did. He definitely followed
    up with me. We corresponded via phone communication, as well as
    e-mail, dozens of times to try and pinpoint the cause of her
    condition, which he surmised at the beginning, but he did not
    want to influence me indirectly or directly that it was the
    home itself.
        Senator Johnson. Did he then advocate for you to the base
    commander?
        Captain Choe. No, he did not. I had to go through outside
    channels to have the garrison command eventually become
    involved.
        Senator Johnson. What was the response from the garrison
    command?
        Captain Choe. Quite frankly, I was told by the garrison
    commander and the garrison sergeant major that they thought
    that this was not founded and that my daughter's condition was
    not predicated upon being exposed to mold at the home itself,
    which I was quite upset about.
        Senator Johnson. They just dismissed any connection between
    housing and your daughter's condition.
        Captain Choe. This was after several months of waiting for
    the garrison command team to make an executive decision to fund
    our move off post or at least give us the opportunity to break
    our lease at that time. That is correct.
        Senator Johnson. Then your only channel of addressing this
    was then to go to Balfour? You were pretty well left on your
    own to deal with your situation? You got no help from your base
    commander or your garrison commander or anybody in the military
    chain of command?
        Captain Choe. The base commander himself, I do not believe,
    was aware of my family.
        Senator Johnson. OK.
        Captain Choe. It would be the garrison command. But I used
    concurrent lines of effort to try and mitigate this between the
    physicians and him providing memorandums to state that my
    daughter's condition is what it is, as well as my chain of
    command, as well as the garrison command. I found that the
    garrison command failed me.
        I found that the physician was only tied because he could
    only do so much. He is not a person of influence. He can only
    provide facts and his findings to whoever reviews that
    information.
        I had to use my direct chain of command, which they, in
    turn, actually determined that this was warranted, and they
    influenced the change that was necessary for us to ultimately
    break our lease and leave the home itself.
        Senator Johnson. In the end, you did get help from your
    chain of command in terms of at least getting out of that
    housing.
        Captain Choe. After much effort, yes.
        Senator Johnson. Did somebody else move into that house
    after you then?
        Captain Choe. Immediately after.
        Senator Johnson. Sergeant Torres, I think you are kind of
    understanding my line of questioning here. Can you kind of
    relay your experience in terms of, I will call it, a runaround?
    What type of runaround did you experience?
        You mentioned retaliation. Can you be more specific in
    terms of kind of what happened as you tried to get your issues
    addressed? I see from your testimony your family experienced a
    wide range of symptoms.
        Sergeant Torres. Yes. I informed Balfour Beatty about all
    of our issues. When we were trying to get it all addressed and
    we were not getting anywhere we contacted the Government
    Housing Office. Even with contacting them and the resident
    advocate on the base, as we were still not getting the help
    that we needed, eventually, we----
        Senator Johnson. Just back up. Describe the Government
    Housing.
        Sergeant Torres. We notified them, the Government Housing
    Office.
        Senator Johnson. Now is that in the military chain of
    command?
        Sergeant Torres. Yes, sir.
        Senator Johnson. OK.
        Sergeant Torres. In the military chain of command.
        Senator Johnson. Did they report up to?
        Sergeant Torres. They report up to the base and wing
    commander. If there are any issues, we reach out to the
    Government Housing Office, and they advocate or help us out.
    They will contact the housing Balfour Beatty, in terms of,
    there are issues in the homes and, can we get these issues
    addressed.
        Even with contacting them, we had to constantly e-mail
    them. We had to request them to show up to the inspections
    because if we did not they were not going to show up. We were
    trying to prove we do have issues in our home. Can you please
    show up?
        Then we were getting nowhere. We had to actually resort to
    requesting for an advocate at an army base, an hour away to get
    any help. Sara Klein had done more help for our family at a
    completely different base, on an Army post, than the advocate
    in the Government Housing Office on my base. It even came to
    the point where when we were being dislocated my commander
    notified me that I was being dislocated. He was trying to get
    information because he was not in on any of the information.
    The Government Housing Office was supposed to be telling the
    wing commander and the base commander about our issues and he
    did not know about our issues.
        Senator Johnson. Is it fair to say that the Government
    Housing Office advocate did not do much advocating for you?
        Sergeant Torres. No, they did not do any.
        Senator Johnson. They pretty well just blew off your
    concerns.
        Sergeant Torres. Correct.
        Senator Johnson. Ms. Christian, you obviously have dealt
    with, you said, 1,500 individuals like Captain Choe and
    Sergeant Torres. Can you summarize what you are seeing, or do
    you have some particular examples? Is this very typical that
    there is a big runaround, there is a bunch of finger pointing,
    and nothing ever gets done?
        Ms. Christian. Absolutely. You will see this everywhere
    that you go when you are trying to get assistance, to get any
    even minor request, completed in your home. These are cases of
    systemic issues in their home. But even something as simple as,
    I need the toilet recaulked because it is going to start
    leaking. You are not going to be able to get somebody to come
    out to your home to fix that in a timely manner. If you do try
    and seek assistance from the Government Housing Office, they
    will tell you flat out that they have no power to force Balfour
    or any of the other housing companies to act in your home and
    that their scope is limited.
        Then when they go up to the installation level, to go see a
    Judge Advocate General (JAG) or go see an advocate on the legal
    side, a lot of our families are being told, maybe you should
    get a lawyer from the base legal offices, which is not
    something that we need military families concerned about trying
    to understand or a process that they should have to go through
    to get simple fixes in their homes.
        Senator Johnson. I am over time. I think the phrase you
    just used, the agencies or within the chain of command that
    should have the power are telling members of the military they
    have no power.
        Ms. Christian. Correct.
        Senator Johnson. I think that is kind of a key part right
    there. Is that true, and if they do not have the power, why
    not? Why hasn't the military empowered them to make this right?
        Thank you, Mr. Chairman.
        Senator Ossoff. Thank you, Ranking Member Johnson.
        Senator Carper, you are recognized for 7 minutes.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. Thanks so much. I had an opportunity to
    personally welcome and greet our witnesses a few minutes ago.
    We also have a number of hearing committees and subcommittees.
    We are doing other hearings, so I am going to be in and out of
    here today, but thank you and welcome.
        A little bit of background: Retired Navy captain and
    Vietnam veteran, last Vietnam veteran serving in the U.S.
    Senate. I have been privileged to live in military housing in
    places around the world in the past and to represent Dover Air
    Force Base as a Congressman for 10 years, as a Senator for 21
    years, and as a Governor for 8 years. I love that base. In
    fact, our community loves the Dover Air Force Base.
        There is something called the Abilene Trophy. I do not know
    if anyone has ever heard of the Abilene Trophy before, but it
    is an award that is made to a community on an Air Force base
    every year around the country, where the community has gone the
    extra mile to make sure that the men and women of the Air Force
    in that community are welcome, beloved, and we take really good
    care of them. I do not think there is any community in America
    that has won the Abilene Trophy more than Dover. This is
    something that is part of our Deoxyribonucleic acid (DNA).
        I might also add I do not know that any airlift base, Air
    Force airlift base around the world, has won the Commander in
    Chief Award more than the Dover Air Force Base. Not only do we
    have this huge air craft, C-5s and C-17s, but we also have the
    place where--I think most people know of Dover in this country
    as the place where the remains of our fallen heroes are
    returned to this country from abroad and are reunited with
    their families. We care a lot about the folks who live there.
        I remember a time when I was earlier in my time in public
    service, when we had base housing that families could stay in
    and others in the Air Force, and it was OK but not great and
    the same situation around the country. A lot of base housing,
    government housing, some of it was pretty good; some of it was
    not very good.
        I think it was during maybe the Reagan Administration. I
    might be wrong on the timing there, but one of our
    administrations decided that we ought to try something
    different--I like to say, find out what works, do more of
    that--and see if we could provide better housing for our
    families. The idea came up with sort of a public-private
    partnership where the private sector would build and run
    largely the base housing in partnership with the local
    commands. A good idea.
        In a lot of bases, it has worked just fine; in some bases,
    including Dover, not so well. We started hearing, 3 or 4 years
    ago from families on our base that some of the problems with
    mold and leakage and that kind of thing were of concern and the
    families wanted something to be done about it. The company that
    had the contract for housing in the Dover Air Force Base was
    not responsive to those concerns, and we worked very closely
    with the commanding officer of the base, the wing commander,
    and others on the base, to make sure that our families received
    the kind of treatment they deserve.
        We also pursued this with the committee of jurisdiction,
    that is, the Armed Services Committee. About 2 years ago, the
    Armed Services Committee passed legislation at my urging and
    the urgings of a lot of folks who have bases around the country
    to better ensure that this model of providing base housing for
    families, that it was improved.
        The preamble of the Constitution, which was adopted,
    believe it or not, five miles from the Dover Air Force Base,
    first adopted and ratified five miles from the Air Force base,
    starts off with these words: ``We, the people of the United
    States, in order to provide a more perfect union.'' A more
    perfect union. The idea is everything we do we can do better.
        The expectation of those who have supported a change in law
    embodied in the National Defense Authorization Act (NDAA), was
    that we got to do this better.
        I think, Mr. Chairman, and to our Ranking Member, this
    hearing is a good opportunity to begin some oversight on the
    work, I think good work, that was done in a bipartisan way 2
    years ago.
        With that as a preface, I want to jump to a question or two
    if I can and for each of the witnesses, please. I will start
    with the Captain. Captain, in your view were the reforms
    adopted by Congress through the Defense Authorization Act 2
    years ago, were they satisfactory? Have they made the kind of
    difference we hoped for, for military families?
        Captain Choe. No.
        Senator Carper. Tell us more. I like to be precise and
    succinct, but tell us more.
        Captain Choe. For my family, if we have black mold in our
    bathroom behind the walls, on the ceiling, on the shower
    curtains, in the children's bedroom, and we have used every
    avenue of communication to state that this is a concern that is
    ongoing, and if Balfour Beatty is acutely aware that my
    daughter has a serious health condition predicated from this,
    but yet no response, and in certain times we were told that we
    were lying about this, conclusively, no.
        Senator Carper. No. I want to get your rank right. Just go
    ahead and tell me.
        Sergeant Torres. Technical Sergeant.
        Senator Carper. Yes, tech?
        Sergeant Torres. Technical Sergeant.
        Senator Carper. Yes, go ahead, same question. We spent a
    lot of time. The committee of jurisdiction spent a whole lot of
    time trying to get to the root cause of this problem and said
    let us try to fix it. One of the things they did is they
    basically said to the commanding officers of the base, like on
    our base the wing commander, you have a responsibility here to
    do something to fix this problem. Let us take charge. That is
    what has happened on my base, Dover.
        Please go ahead.
        Sergeant Torres. Yes, even with all our issues, it seemed
    like even with the base commander and wing commander involved,
    they still did not have really the power. We requested to move
    to a different section, and even then, they did not have enough
    power to really move us to a different section because I did
    not have the rank required for that section.
        I even asked, I will cough up the difference in terms of
    basic allowance for housing (BAH) out of my own pocket just so
    we do not have to live in the area where mold was known to be,
    in a certain area of base housing.
        Senator Carper. OK. Ms. Christian, the same question. In
    terms of the changes that we had hoped for and expected from
    the 2020 legislation, any differences?
        Ms. Christian. Yes, I was really hopeful when the Tenants'
    Bill of Rights and those pieces of legislation came down. Our
    team was really excited to see the implementation of them, but
    it is not working. We had 10-page leases that are now 110-page
    leases that military families have to read because they were
    trying to create a universal lease that would simplify things,
    but really it exacerbated the problem, as well as the formal
    dispute process is 48 steps for Air Force servicemembers.
        You have to take 48 steps to do the formal dispute process,
    which is unacceptable. The families that we are seeing that are
    trying to use the dispute process or trying to even say we need
    a habitable home because the Tenants' Bill of Rights guarantees
    a habitable home, the housing companies will come back and ask
    us our definition of habitability. We have such broad language
    in that, especially with industry standard being listed. You
    are expecting industry standard, but that is not across the
    board.
        The oversight feature for the commanders, I would love to
    say that I have seen that go well, but that is where we see the
    most retaliation because now those installation commanders--now
    they are not all bad actors in that, but there are some who see
    this as a number that they are trying to not rack up on their
    installation for complaints because it is going directly to
    their leadership and it is going to reflect poorly on them. I
    have witnessed installation commanders giving misinformation to
    disabled families about what the Fair Housing Act means. They
    are not people who should be giving that type of information
    and trying to sway an individual, one way or another, to just
    stay quiet.
        Senator Carper. Ms. Wanner, I am out of time, so I am going
    to ask you to answer the same question for the record in the
    weeks to come.
        Mr. Chairman, I think this is an important hearing. I think
    the question for me and the issue here is, why haven't the
    reforms that were adopted 2 years ago worked better? I like to
    say, if it is not perfect, make it better. There is work to be
    done here, and I think the Subcommittee can provide very
    important oversight and work in conjunction with the
    authorizing committee, Armed Services Committee, to get a
    better result for our families. That is what we want.
        Last thing I would say, with a real strong economy, a huge
    number of jobs have been created in the last year or two. One
    of the questions I always ask when I go to the base to meet
    with the wing commanders and so forth, I ask the question, how
    are they doing in retention and recruitment; I always ask. One
    of the keys on retention and recruitment is how happy is the
    family, including how happy is your family with where they are
    living and the living conditions that they face every day. This
    is a recruitment and retention issue as well.
        Thank you.
        Senator Ossoff. Thank you, Senator Carper.
        Senator Hassan, you are recognized for 7 minutes.

                  OPENING STATEMENT OF SENATOR HASSAN

        Senator Hassan. Thank you very much, Mr. Chair and Ranking
    Member Johnson, for this hearing.
        I want to thank the witnesses for being here, for your
    service, and for your willingness to speak out about such a
    critical issue for so many of our servicemen and women and
    their families.
        I am deeply concerned by the testimony we have heard today
    and the impact that similar conduct may have on my
    constituents. New Hampshire is home to Portsmouth Naval
    Shipyard, and the shipyard's nearby private military housing is
    also managed by Balfour Beatty.
        Ms. Christian and Ms. Wanner, you have talked about this a
    little bit just now with Senator Carper, but how widespread is
    the misconduct by Balfour Beatty and other private housing
    contractors?
        Ms. Christian. You will see it at every installation you go
    to. 55 Balfour Beatty installations, I cannot come up with one
    where I have not seen an issue with work order closures prior
    to completion or any type of mistreatment of military families.
        Senator Hassan. Thank you.
        Ms. Wanner.
        Ms. Wanner. I agree it is widespread all over every base
    that is managed by Balfour Beatty. Work orders will remain open
    for months at a time, and ADA accommodations are not properly
    addressed for special needs families, disabled families.
        Senator Hassan. Thank you. I am going to follow up on that
    last point in just a minute, and I appreciated the testimony
    just now to Senator Carper about why things have not gotten
    significantly better since the 2020 NDAA provisions and will
    follow up with you on that as well.
        I want to go, Sergeant Torres, to a different issue. Your
    bad experience happened just last year, more than a year after
    the passage of private military housing reforms in the fiscal
    year (FY) 2020 National Defense Authorization Act. I want to
    dig into your experience to better understand what additional
    actions Congress may need to take.
        In your testimony, you said that Balfour Beatty
    misclassified your work request to address mold in your home as
    another type of repair such as carpentry. To your knowledge,
    did the work order system retain any information about your
    original classification of the repair request as a mold request
    instead of a carpentry request?
        Sergeant Torres. No. Originally, when we would look at the
    report, it would be classified as one thing in there. Then
    maybe, a day or a couple weeks later the title would be
    changed.
        In terms of my background, I am an heating, ventilation,
    and air conditioning (HVAC) technician. I am working on work
    orders all the time, and I am able to track, and look at this
    kind of thing. I know for a fact that if a customer puts in a
    request for a work order the title should not be changed and it
    should not be closed before completion.
        Senator Hassan. Right.
        Sergeant Torres. You always have to verify, did we fix it?
    Is it actually fixed? If not, then you have to reopen. If it is
    closed, then you reopen the same work order. At least this is
    how it is done in the Air Force. We reopen the same work order,
    not close it and open a new one.
        Senator Hassan. Right. I want to confirm here; you are
    saying that no matter what you put in your initial work
    request, in your experience, Balfour Beatty was able to change
    the final record, classify the request as they preferred, and
    say whatever they wanted in the request record.
        Sergeant Torres. Yes, by changing the title, even the date,
    the date it was open, date it was closed, all, any remarks. We
    have screenshots of report histories of it being one thing and
    then the dates and everything be changed on another, and it
    would never match up.
        Senator Hassan. OK.
        Sergeant Torres. Even to this day, the work orders are
    still being changed, and I even receive text messages that say
    the work order is being closed out. Even though we have been
    displaced for 12 weeks----
        Senator Hassan. Right.
        Sergeant Torres. It is saying that the work order was still
    closed out weeks before.
        Senator Hassan. I want to follow up on both what you just
    said and what you said about closing out the work orders. You
    have said that the work orders would frequently be closed
    before the work was complete or satisfactorily addressed or
    that work orders would be closed after superficial fixes were
    complete but without addressing the root problem, resulting in
    additional work orders later on.
        Did Balfour Beatty ever give you the option to keep work
    orders open when you did not believe the issue had been
    adequately addressed? If yes, were you pressured to close those
    work orders at all?
        Sergeant Torres. No, we did not have any control over if
    the work order was closed or we can reopen it.
        Senator Hassan. Right.
        Sergeant Torres. That was pretty much all they would tell
    us--just open a new work order.
        Senator Hassan. OK. That is really deeply troubling. It is
    really concerning. Work orders are there to help residents get
    their problems fixed, as you pointed out in your own experience
    as a technician, and if a resident does not believe the work
    order was adequately addressed, they should be able to keep the
    work order open until it has been completely addressed.
        Ms. Wanner and then Ms. Christian, I want to turn back to
    you on the issue of families with disabilities. In both of your
    written testimonies, you highlighted the struggles that
    military families with disabilities experienced when trying to
    request legally protected accommodations from Balfour Beatty.
    This includes requiring excessive documentation to prove the
    disability, making it extremely frustrating at best to request
    accommodations.
        What, if any, information does Balfour Beatty give to
    potential residents about the process to request legally
    protected accommodations for military family members with
    disabilities before they decide to live at a Balfour Beatty
    residence? Are you aware of any standardized process for
    requesting accommodations? I will start with you, Ms. Wanner.
        Ms. Wanner. Currently, there are no standards that Balfour
    offers to families. They report to us often that they will ask
    for excessive things such as full-blown medical records.
        Senator Hassan. Right.
        Ms. Wanner. There is not even a standard form that the
    medical provider can sign to state that the family has the need
    for ADA accommodations or special needs requests.
        There is a medical waiver that can move the families up on
    the waitlist if they are waiting for an ADA home or just a one
    level home, but they are discouraged from using that waiver.
        Senator Hassan. OK. How are they discouraged?
        Ms. Wanner. I can tell you personally----
        Senator Hassan. Yes.
        Ms. Wanner [continuing]. Our family is going through that
    process right now, and the regional manager assured us that if
    we sign that waiver that every military family that has been
    waiting on a house in that neighborhood, if we moved ahead of
    them, they would come after us.
        Senator Hassan. Wow. Ms. Christian, anything to add?
        Ms. Christian. I would like to add that we, as an
    organization, follow what the Fair Housing Act says and how
    families should provide medical documentation. There is no real
    way for them to do so, so we follow what Federal law is. Even
    when providing medical documentation from physicians, stating
    that there is a disability, what their accommodations requests
    are, those are still denied by local levels and request more
    information, which is just a violation of their civil rights.
        Senator Hassan. Right. It is really disturbing that a
    contractor for the United States Military that is supposed to
    be there to serve the men and women who serve all of us and
    keep us safe, and their families, is not complying with
    longstanding Federal law. There are plenty of examples of how
    to meet the accommodation needs of families with disabilities.
    This is not new. This is often quite straightforward. I would
    look forward to continuing to work with all of you to ensure
    that we make significant progress here and that one of our
    contractors follows the law of the land.
        Thank you.
        Senator Ossoff. Thank you, Senator Hassan.
        I am going to yield myself an additional 7 minutes. Other
    Senators may be en route to ask questions of this panel.
        Captain Choe, I want to return to your story for a moment.
    Take us back to the summer of 2020. As you testified earlier,
    you had been instructed by Balfour personnel that you should
    submit your requests for mold remediation not via the online
    work order system but verbally or by the phone, correct?
        Captain Choe. That is correct.
        Senator Ossoff. As you were making those requests of
    Balfour personnel throughout the summer of 2020 and your
    daughter's health continues to worsen, what response do you
    get?
        Captain Choe. No response.
        Senator Ossoff. No response. Am I correct that your
    daughter's physician shortly thereafter advised you, you needed
    to leave the home?
        Captain Choe. That is correct.
        Senator Ossoff. So you had been instructed by Balfour staff
    that you should place these requests verbally rather than via
    the online work order system. You have done so repeatedly. Your
    daughter is sick. You have seen mold in the home. You are
    getting no response. Your doctor tells you, you need to move
    out of the home, so you approach Balfour to break the lease.
    What happens then?
        Captain Choe. I asked Balfour if I would be given the
    opportunity to break our lease or at least, at the very
    minimum, be provided another room to reside in while they can
    at least mitigate the conditions of the current home that we
    were at. We were categorically denied both of those choices,
    and Balfour stated quite clearly that we would have to continue
    to honor the lease that was in place at that time.
        Senator Ossoff. You have repeatedly reported mold and
    gotten no response. Your doctor has told you that you need to
    leave the home for the sake of your daughter's health. She now
    has a severe dermatological condition. You ask Balfour how to
    get out of the home. They tell you, you cannot.
        Captain Choe. Yes. It culminated with submitting something
    called an Interactive Customer Evaluation (ICE) comment, which
    throughout the DOD is considered a very serious comment system
    or feedback system where we can provide feedback regarding
    certain services, whether good or ill, and in this case it was
    definitely not positive feedback I provided.
        I was contacted by a supervisor at Balfour, Fort Gordon--
    Teddy Trip was the gentleman's name--who told me that basically
    we would have to continue to reside in the home and that there
    were no other homes available and that there were essentially
    no other options available.
        I responded in kind by saying, when I was told personally
    and very specifically by the Fort Gordon manager at the time,
    Samantha Dayer, February 2020, when our home had the initial
    test for mold conducted, she handed me her business card and
    encouraged me to contact her verbally or coming by the office
    to seek her out. I adhered to that as strictly as I could, but
    in the interim, we, my wife and I, submitted work orders.
        Whenever a technician would come over to take care of a
    leaky faucet, a broken cabinet door, whatever the case may be,
    we told them: There is mold in our upstairs. There is mold in
    our room, in our daughter's room. There is also mold in the
    bathroom as well at present.
        We were told every single time that that mold would be
    addressed by the management and that the management would be in
    contact with us as some point in time. That never took place at
    any point in time.
        Senator Ossoff. You raised these requests repeatedly with
    technicians who were sent to the home and by the phone with the
    office, as you were instructed to by Balfour personnel. You get
    no response. You are told by your doctor you need to leave the
    home. You approach Balfour to say you need to leave the home.
    They try to prevent you from leaving the home, and they also
    accuse you of lying?
        Captain Choe. That is correct. Even the day before we
    officially moved out--my family had already relocated to an off
    post home, but in January 2021, I was at the move-out
    inspection, but the day before there was a couple things that
    still needed to be addressed that had not been. I made sure
    that a Balfour technician came out. That gentleman came out. He
    fixed the issues that were there. It was like a broken
    lightbulb and something else.
        I ripped up the bathroom lining of the bathroom that our
    family had used. I even purposely chipped away at the paint in
    the wall and showed the blackened paint chips that the mold had
    proliferated then, and I stated very specifically, this is the
    mold that we have been complaining to you folks about for
    months on end. I ask that you notify your facilities manager,
    Tom Rodriguez, to have this addressed as soon as possible.
        Following that, myself and my chain of command, we all had
    a discussion with Balfour Beatty as far as how can we come to a
    compromise. There is no compromise. Essentially, we need to get
    out of the home. We were seeking, ``we'' being my family and I,
    to either have our move funded by Balfour Beatty and, if not
    them, at least the Fort Gordon garrison. Both channels denied
    our request to fund our move, which at that point we had to
    move off post.
        While I am dealing with the Balfour Beatty representatives,
    as well as the garrison representatives, to include the
    garrison command team, to include the housing manager at that
    time, Jenna Holman, my wife is 7 months pregnant and is moving
    things on her own because none of these organizations will pay
    for our off-post move.
        I am not lacking as far as financials, but at the same time
    it is the principle behind it. If our home is the source of my
    daughter's condition and we have been told succinctly that we
    need to move off post, well, that means we will move off post,
    but the principle behind this is Balfour Beatty should at least
    have provided some type of support or the garrison should have
    provided support.
        Senator Ossoff. Finally, with great effort engaging the
    garrison command, making repeated requests, you managed to get
    out of the home. You send an e-mail to Paula Cook, documenting
    your experience. You read a portion from that.
        Captain Choe. Yes.
        Senator Ossoff. Did you receive an apology from Ms. Cook in
    response to that e-mail?
        Captain Choe. I have never received an apology from Balfour
    Beatty or any of their representatives at any point in time.
        Senator Ossoff. In fact, did you receive a collection
    notice?
        Captain Choe. That is correct.
        Senator Ossoff. Did they threaten to send a collection
    agency against you?
        Captain Choe. To add insult to injury, yes.
        Senator Ossoff. When you challenged that, were you informed
    that it had been a mistake?
        Captain Choe. Yes. Which I challenged that reasoning by
    saying, well, there is considerable thought behind a collection
    notice being purposely sent to me, stating the charges that
    were notated on the collection itself. If this was an internal
    error, that should have been caught prior to distribution to my
    home.
        Senator Ossoff. Thank you, Captain Choe.
        Senator Lankford has arrived.
        With just one minute remaining, Sergeant Torres, I want to
    make sure we dig in on one specific aspect of your case. Your
    wife suffers from a respiratory condition, correct?
        Sergeant Torres. Yes.
        Senator Ossoff. You repeatedly asked Balfour to remediate
    the mold in your home. You were initially told there is no
    issue. Finally, you place urgent requests. They send an
    inspection company to inspect the home. Correct?
        Sergeant Torres. Correct.
        Senator Ossoff. The inspection company finds that there is
    175 square feet of area in your home that needs to be
    remediated or replaced, correct?
        Sergeant Torres. Correct.
        Senator Ossoff. But at the same time, Balfour has hired a
    third-party company called Exponent that never looked at the
    home, and they attach Exponent's report to this mold inspection
    report, telling you it is actually no big deal and remediating
    that mold is premature. Is that correct?
        Sergeant Torres. Correct.
        Senator Ossoff. But they go ahead and they remediate the
    mold. Here is the point that I think is important, and I am
    going to ask that my team prepare to show slide 4.
        You placed these work orders upon returning to your home,
    and you reported mold, correct?
        Sergeant Torres. That is correct.
        Senator Ossoff. Those are your work orders. You describe
    mold on the floor, behind hall bathroom, and mold under the
    mechanical room. Is that correct?
        Sergeant Torres. That is correct.
        Senator Ossoff. All right. Now I am going to ask that slide
    5 be depicted.
        Here at the bottom, we have the internal data from
    Balfour's Yardi system, which they use to maintain the work
    orders, and they have classified your requests as
    ``carpentry.'' You placed two work orders for mold in the home.
    Those are filed internally as ``carpentry.''
        You can close the slide.
        I want to ask you, Ms. Christian, what are we looking at
    there?
        Ms. Christian. What you are looking at is what you will see
    across the board at all of the Balfour Beatty installations.
    They are taking what is a hazard in a home and making it a
    simplified request so that when the 7-year maintenance history
    or when any of the information is provided to the next tenant
    it is not going to be correct. Also, it is way easier to close
    out a carpentry request than it is to provide a full-scale mold
    remediation.
        Senator Ossoff. We will get into that more with Balfour's
    representatives later. Thank you, Ms. Christian.
        I now yield 7 minutes to Senator Lankford.

                 OPENING STATEMENT OF SENATOR LANKFORD

        Senator Lankford. Thank you. Thanks for being here. I have
    a good feeling that none of you really want to be here, to have
    to walk through all of this and the frustration of it. Thanks
    for being here and for speaking out and for representing the
    voice of a lot of other folks going through this process. I
    really do appreciate that.
        Ms. Christian, I want to ask you a question that has been
    asked before on this, and I want to be able to do some follow-
    up on it. When command leadership was taken out of the
    equation, they lost an advocate. The plan was there would be
    other advocates that are there, but it is our understanding
    those advocates are not able to articulate that. Why? Why
    aren't they able to articulate the issues and get results?
        Ms. Christian. This varies from branch of service, the type
    of advocate you have in the installation and across the board,
    but I will say that none of them that we have come into contact
    with, which is a majority of the military installations in the
    country, have training in housing. They are not equipped to
    understand what an inspection should look like.
        For example, I will give you North Carolina. There are
    certifications for home inspection. But the person who is
    supposed to be your advocate is going to walk through your home
    and tell you whether or not something is awry in your home, and
    I have seen them miss gas leaks. I have seen them miss mold. I
    have seen them miss lead chipping. They walk through a lot of
    the times with the housing company themselves, and they lean
    on--in this case, they lean on Balfour Beatty's assistance to
    understand what is actually going on in the home because they
    are not trained.
        Senator Lankford. OK. What is the solution to that? Are you
    suggesting some sort of State certification before they can do
    that, or some sort of Federal certification?
        Ms. Christian. Absolutely, industry standards. They need to
    follow State laws, so someone who would be providing the same
    type of inspection at another facility off of the installation.
    They need to be trained in understanding the State law, the
    fire codes, anything that you would need if you were to inspect
    a home off the installation.
        Senator Lankford. Would you put that person under the
    authority of your commanders at that point to be able to have,
    again, where you have somebody that they answer to for it, or
    who do they work for?
        Ms. Christian. Personally, I would hope that we would have
    a true third party outside of the partnership because this is
    not just a contractor. These are partnerships between the
    branch of service and the housing companies. If you do report
    directly to them, they have an incentive to have their
    partnership functioning. They do not want that to fall. It
    needs to be a true third party outside of that.
        Senator Lankford. OK. Balfour in my State, Tinker Air Force
    Base, the largest of the sustainment facilities in the country,
    and then Altus Air Force Base. Altus was put into a grouping of
    multiple different entities, which Tyndall was one of those.
    With Tyndall being in that mix and, obviously, Tyndall getting
    obliterated in a hurricane, all the focus seems to be going
    there, and there will be lots of new construction at Tyndall.
    But because of that, in their grouping of four, now they are
    not going to get the attention from Balfour at Altus. Altus is
    suffering the consequences of a hurricane on the other side,
    literally, of the country because of the grouping that they are
    in.
        The local folks, of what I hear when I talk to individuals
    on base or when we talk to leadership on it, they are very
    pleased with the turnaround that Balfour has had the last
    couple of years because in 2018 Balfour at Tinker Air Force
    Base had all the mold, all the issues, and were nonresponsive.
    At Altus, we still continue to be able to get Band-Aid fixes
    for things that should be replaced or actually just constant
    Band-Aid fixes where they know that is going to work for a few
    months and I am going to be calling you again.
        It is two big issues here. One is trying to be able to
    balance out how when there is a hurricane in one area and every
    other base actually gets punished because all their focus is
    going to be somewhere else, or how do you deal with the issue
    of Band-Aid fixes and instead actually get those issued
    repaired so this is not a nuisance for those families. Do you
    have ideas on either of those?
        Ms. Christian. If you do not provide a Band-Aid fix and you
    provide the correct fix the first time, then you are not
    incurring the costs of continually going out and trying to Band
    Aid fix these problems.
        Senator Lankford. No, I get that totally. Who becomes the
    advocate to actually make sure it is not a Band-Aid fix, that
    this is actually something that gets repaired or replaced
    rather than just a patch on it? Somebody has to be in that
    chain of command, obviously, or somewhere there has to be
    accountability for the resident to be able to say: I know that
    is not going to work. Everybody else knows that is not going to
    work. But, they are saying I fixed it and wrote it up and
    turned it in.
        Ms. Christian. I believe that was the intent of having the
    Government Housing Office on the installations, to do that, but
    the residents absolutely need an oversight tool that they can
    report directly to outside of the installation and outside of
    those employees.
        Senator Lankford. OK. I am running out of time on this, and
    I want to be able to honor time. Mr. Torres, I want to be able
    to ask you this as well. Excuse me, let me call you by your
    title, Technical Sergeant.
        Sergeant Torres. Yes, sir.
        Senator Lankford. Thanks, by the way. Let me go ahead and
    ask you this, have you lived in other places that were not
    under Balfour?
        Sergeant Torres. Correct.
        Senator Lankford. What was it like? Compare it.
        Sergeant Torres. Actually, we never had any issues. I have
    been stationed two other places, and never once had any issues,
    especially where they know my background. They know what I do.
    We put a work order in. We will be there right away. They come
    out, fix it, never had any issues. My family never had any
    problems. I can be at work, I have deployed twice, three times,
    and I have never had to be worried.
        I am an instructor, and every time we put a work order in I
    had to be at the house because my wife is scared that they are
    going to blow her off because they do not want to talk to the
    spouse. They want to talk to the military person because if I
    say something wrong they can go ahead and tell my leadership
    and then I get in trouble for it when it should not be that
    way. My wife is a stay-at-home mom. She should be able to call
    a work order in and they help her out as much as they can, not
    me having to be there because my wife is scared of being there
    with a technician.
        Senator Lankford. Yes, I totally get that. They should be
    respectful of that. By the way, she is a resident at the house
    as well, correct?
        Sergeant Torres. Correct.
        Senator Lankford. Yes. Why would it matter which resident
    of the house is actually calling that in?
        Captain Choe, same issue. You have lived in other places,
    not with Balfour as the caretaker for the home. Can you compare
    the two?
        Captain Choe. My family, my father in particular, has told
    me quite clearly, if you have the opportunity and have a choice
    to reside on post or off post, always choose off post. I had
    asked that before when I was younger up until my military
    service commenced, and he gave me very sound reasoning.
    Unfortunately, this is the only time that we lived on post at
    an installation, and this will be the very last time that we on
    post at any installation.
        Senator Lankford. Yes. It should not be that way. One of
    the issues that we face at Altus Air Force Base is that it is
    older housing that needs to be redone completely but now we are
    on the bottom of the list because Tyndall is going to end up
    with all new housing. They are going to say that is going to
    get all new, and Altus and the other three bases that are in
    that group are going to be older, and older, and older, which
    does not meet what our folks need actually on that particular
    base.
        Thank you all for being here very much and for your service
    to the country.
        Senator Ossoff. Thank you, Senator Lankford.
        Ranking Member Johnson.
        Senator Johnson. Thank you, Mr. Chairman. I think part of
    the problem here is the housing that these contracting
    companies have taken over is extremely old, correct, Ms.
    Christian, or not?
        Ms. Christian. No, I do not believe that is the case. There
    are some that are older, and they have different issues like
    lead and asbestos. But you can look at brand new homes, and
    they are going to have the same systemic issues that other
    homes have, especially with the way that they are constructed.
    There is going to be leaks coming in. But no matter what, if
    you fix a leak, it will not cause problems if you remediate it
    correctly the first time. No matter if they are new homes or
    old homes, failed maintenance is failed maintenance, and it is
    going to continue to occur.
        Senator Johnson. Sounds like Senator Carper, I do not want
    to put words in his mouth, but apparently at Dover Air Force
    Base, he believes the base commander has taken charge of this
    and is doing a pretty good job. It is never perfect.
        Are there some bases, are there some housing units, that
    are in better shape than others, where you do not have the kind
    of complaints? Are there some real problem areas?
        Ms. Christian. There are definitely larger problem areas,
    and there are also installations that are having a better time
    with certain things like I can find you an installation that
    has better mold than others. You are still going to find mold
    there, even in the desert. You are going to see it across the
    board.
        I would not say that anybody is doing it a better way that
    I can bring to you; I would love to. I would love to say model
    everything after this installation because then our
    organization would not have to exist. We are a 100 percent
    volunteer-run organization that is handling a massive amount of
    clientele.
        Senator Johnson. You gave two examples of what the supposed
    fix in the NDAA from a couple of years resulted in and took
    leases from 10 pages to 100 and took it to a 48-step resolution
    process.
        Ms. Christian. Correct.
        Senator Johnson. Any other bureaucratic fixes like that?
        Ms. Christian. There is a ton. Those are two really great
    examples that you can visually see, but the process in which
    you need to request any type of assistance is so lengthy that
    most families are giving up and their homes are going to
    continue to deteriorate.
        Senator Johnson. I am the bean counter on this Committee,
    so I want to ask a couple of bean counter questions because I
    have not got the overall extent of this. To my knowledge it
    looks like Balfour Beatty is paid roughly around $30 million a
    year for its housing management. Is that accurate?
        Ms. Christian. I have no idea of any of those numbers. I
    would love to know what they are, but, no, that is not
    something accessible to me.
        Senator Johnson. OK. You would not be able to tell me what
    is the total government contract amounts for managing this
    housing?
        Ms. Christian. No. I will tell you that we have tried to
    get a lot of that information through Freedom of Information
    Act requests, but it is claimed as proprietary. We get a lot of
    blacked-out documents.
        Senator Johnson. I run into the same problem when I try and
    do legitimate oversight, so I feel your pain on that.
        You did mention--and this was a comment--that this is
    profits over people. Do you know what the profitability level
    is?
        Ms. Christian. I do not know what the profitability is, but
    I will tell you that it has to be good enough because they keep
    coming back to the Senate to hear it and they have not tried to
    get away with anything else.
        Senator Johnson. OK. I will obviously be exploring that
    with the folks here from Balfour. One of the reasons I ask the
    question is if my information is correct and Balfour is getting
    about $30 million a year and they paid a $65 million fine, I
    kind of scratch my head and go, why even be in that business?
        How many other contractors like Balfour are there?
        Ms. Christian. There are 14 housing.
        Senator Johnson. Fourteen. Generally, you have an 80/20
    rule; 80 percent of the work is done by about 20 percent. Are
    there a top five or so?
        Ms. Christian. Yes. There is Balfour Beatty, Liberty
    Military Housing, Corvias, Hunt, and for some reason I cannot
    think of another.
        Senator Johnson. Does your group find any difference in
    terms of the level of management of any of those companies? Are
    there some companies that are just heads and tails above the
    others?
        Ms. Christian. No. If you took Balfour Beatty out of any of
    the statements that anybody at this table wrote, you can
    interchange them with any of the other companies. I will say
    that the smaller companies who have not gotten the attention
    that the other ones have are absolutely horrific for residents
    to live in; they are the worst.
        Senator Johnson. If I am a base commander and I had the
    power to use the free market system and say, ``You are not
    performing. I am going to fire you. I am going to hire somebody
    else,'' it does not seem like there is anybody else to hire
    that would do a better job.
        Ms. Christian. I do not agree with that necessarily. I
    think that the fact that there is not that ability is the
    reason that this is occurring.
        Senator Johnson. Oh, I understand. But again, right now
    there is not that ability, correct? That is the point I am
    trying to make. I am trying to drill down on what is the root
    cause of this, why does this continue.
        In a free market, there should be--and I come from the free
    market system. I competed against excellence, and excellence
    means really high quality, high levels of customer service at
    the best possible price. That is what a free market guarantees.
        Something is broken down here. My guess is bureaucratic
    fixes that just simply do not work, the bureaucratic mindset.
    ``It is not my problem.'' We are going to pass this bill, and
    we are going to say we are going to turn it over here, and kind
    of walk away. The bureaucracy creates fixes like a 100-page
    lease, a 40-step resolution process, finger pointing, the big
    runaround, and nothing gets fixed.
        I am trying to hone in on what is the root cause here and
    how can it actually be fixed. My guess is I would be looking
    for a free market solution, and I would fire these people. But
    you have to have somebody to replace it, and that is one of the
    reasons I am talking about profitability. Is there enough
    incentive for good companies to come in here and do the kind of
    job that we would all expect?
        Again, I recognize you cannot really answer that question.
        Ms. Christian. I would hope that there is, but I would like
    to say that like you are saying, you are competing in a market
    off the installation. You are competing in a market where I am
    paying rent to you and if you are not doing a good job you do
    not receive my rent.
        That is not the case for these housing companies. That was
    something that 3 years ago they requested was for
    servicemembers to not be able to just have that allotted, and
    that is a big oversight lack.
        Senator Johnson. It also sounds like there is relationships
    between people on the base, members of the military, and people
    working for these companies. Is that a common problem?
        Ms. Christian. Absolutely. That is an absolute problem
    because if you are going to someone and you have a personal
    relationship with them they are not going to want to get them
    in trouble.
        Senator Johnson. I have no doubt that Armed Services
    Committee tried to fix this a couple years ago. I think the
    result of our investigation, the result of this hearing, is
    that it did not work. We better figure out something better to
    do. I appreciate your testimony.
        Mr. Chairman.
        Senator Ossoff. Thank you, Ranking Member Johnson.
        This concludes the testimony from our first panel. I want
    to thank you all so sincerely for your presence, for sharing
    your experiences and information with us. In particular, I want
    to commend these two extraordinary active duty servicemembers,
    one of whom flew from South Korea, one from Texas, to join us
    and get on the record your experiences.
        With gratitude, this panel is dismissed, and we will now
    prepare to hear from our second panel. Thank you.
        We now call our second panel of witnesses for this
    morning's hearing.
        Mr. Richard Taylor is the President of Facility Operations,
    Renovation, and Construction at Balfour Beatty Communities,
    with overall responsibility for Balfour's military housing
    facility management activities, including preventative
    maintenance, repairs, and quality assurance. He has worked for
    the firm and its predecessors for 19 years and worked in the
    industry for nearly 3 decades. He also previously served in the
    U.S. Navy for more than 12 years.
        Ms. Paula Cook just transitioned to Vice President for
    Transformation at Balfour, responsible for leading the
    company's ``new culture-shaping initiatives.'' Up until last
    week, she served as Vice President of Community Management, in
    charge of Balfour's Army portfolio of military housing
    properties, and she has been with the company since 2007. Ms.
    Cook is also a U.S. Navy veteran.
        I appreciate both of you for joining us today. We look
    forward to your testimony.
        It is the custom of this Subcommittee to swear in all
    witnesses, so at this time I would ask you to please stand and
    raise your right hand. Do you swear the testimony you will give
    before this Subcommittee will be the truth, the whole truth,
    and nothing but the truth, so help you, God?
        Mr. Taylor. I do.
        Ms. Cook. Yes, I do.
        Senator Ossoff. Let the record reflect that the witnesses
    answered in the affirmative.
        We will be using a timing system today. Ms. Cook and Mr.
    Taylor, you have submitted joint written testimony, and it will
    be printed in the record in its entirety. I understand that Mr.
    Taylor will provide oral testimony on behalf of both witnesses.
        Mr. Taylor, please kindly limit your remarks to five
    minutes. You may proceed.

        TESTIMONY OF RICHARD C. TAYLOR,\1\ PRESIDENT, FACILITY
       OPERATIONS, RENOVATION, AND CONSTRUCTION, BALFOUR BEATTY
        COMMUNITIES; ACCOMPANIED BY PAULA COOK, VICE PRESIDENT,
               TRANSFORMATION, BALFOUR BEATTY COMMUNITIES

        Mr. Taylor. Chairman Ossoff, Ranking Member Johnson,
    Members of the Subcommittee, thank you for the opportunity to
    provide an update on the commitment of Balfour Beatty
    Communities to support the safety, health, and well-being of
    the servicemembers and their families across the 55 military
    installations we serve, including Fort Gordon, Fort Stewart,
    and Sheppard Air Force Base. I am accompanied by Paula Cook,
    who leads the ongoing transformation efforts for our Community
    Management operations.
    ---------------------------------------------------------------------------
        \1\ The joint prepared statement for Mr. Taylor and Ms. Cook
    appears in the Appendix on page 103.
    ---------------------------------------------------------------------------
        At BBC, we consider it an honor and a privilege to serve
    those who serve our country. In fact, both Paula and I are Navy
    veterans ourselves. Therefore, we have a special appreciation
    for our military housing roles at Balfour Beatty.
        In 2019, I made a commitment in congressional testimony to
    improve BBC's ability to monitor repairs and respond to
    problems, to prioritize the health and safety of residents, and
    to prepare homes for residents before they move into one of our
    homes. I am proud to say that we have made enormous strides
    since I made that commitment.
        Today, we are responsible for housing operations
    encompassing more than 43,000 homes and approximately 150,000
    residents. We have partnered with the DOD to oversee the
    construction of more than 15,000 new military homes and the
    renovation of more than 14,000 legacy homes. Since the start of
    the MHPI, BBC and our service branch partners have developed
    project investments totaling approximately $5.6 billion to
    improve on-base housing. Through our military housing
    agreements, we act in joint partnership and are required to
    coordinate with all of our DOD partners on all aspects of the
    leasing, maintenance, renovation, and development of our
    housing.
        Our primary focus is providing our residents with safe,
    quality homes supported by prompt and effective customer
    service and maintenance support. We look to support these
    efforts by maintaining robust, open communications with our
    residents. Our resident portals allow the residents to view
    their work order history as well as access community policies,
    household maintenance and safety tips. In addition, our new
    national call center is staffed and available 24-7 to initiate
    a work order, schedule maintenance, and provide updates.
        I want to emphasize that we are committed to maintaining
    accurate work order data. We do not tolerate anyone at BBC
    falsifying work order information.
        Both BBC and the government's local military housing
    offices have multiple checkpoints with new residents before,
    during, and after move-in to identify issues or questions
    regarding the home. We supplement this personal outreach with
    our own resident surveys. These surveys are conducted by an
    independent third party and are sent to residents after move-in
    and after responding to a work order. Like with any customer
    service business, we recognize that unfortunately we will never
    be able to make every resident happy, but nevertheless, we
    remain resolute in that pursuit.
        In 2021, we received just over 40,000 survey responses,
    resulting in an average service score of 4.53 out of 5. For the
    period January 1, 2021 through last week, the average work
    order score at Fort Gordon in particular was 4.62.
        With over a third of our military housing stock consisting
    of aging units constructed by the military, we will never have
    homes that present zero maintenance issues. On average, we
    receive and process more than 280,000 resident-generated work
    orders annually. Like with any residential housing property,
    there will always be challenges to face. Appliances will break.
    Utility, plumbing, and electrical systems will fail. Severe
    weather will cause damage. Pest issues will arise, and customer
    service complaints will surface.
        I also want to emphasize that our teams have faced
    tremendous challenges since the pandemic hit in 2020. We are
    not alone in experiencing supply chain challenges, home access
    issues, and staffing issues due to the pandemic. However, our
    obligation is to respond and manage repairs and service in as
    timely and effective a manner as possible.
        We embraced and voluntarily implemented the following
    measures in support of our residents. We agreed to a new DOD
    sponsored universal lease, which includes the Tenant Bill of
    Rights. We instituted a formal dispute resolution process, and
    we now provide 7-year maintenance histories for our homes. In
    addition, enhanced DOD monitoring of housing has created
    another check and balance to ensure our housing is safe for
    occupancy, such as through Government Housing inspections
    before any home may be offered.
        Our performance metrics indicate the overwhelming majority
    of our residents are happy with their home and the service we
    provide. Regardless, we are never satisfied where even small
    numbers of our residents report dissatisfaction. We remain
    dedicated to working with the residents, our military, the
    military housing advocacy groups, and the DOD to address
    housing challenges. We look forward to learning from the
    Subcommittee how we may further improve our performance and
    enhance the quality of life for our residents.
        Again, we appreciate the opportunity to continue to serve
    our nation's military and to testify regarding our commitment
    to those efforts. Thank you.
        Senator Ossoff. Thank you, Mr. Taylor and Ms. Cook. Ms.
    Cook, I understand Mr. Taylor is offering those oral remarks on
    both of your behalves. I will begin now with my questions.
        In the course of this investigation, my and Ranking Member
    Johnson's teams, have reviewed tens of thousands of pages of
    records and interviewed dozens of witnesses. Most of that
    investigation focused on 2019, 2020, 2021, or the period
    principally after Balfour's guilty plea.
        I want to understand which forms of misconduct or
    mismanagement may be persisting following that resolution of
    the Department of Justice (DOJ). But before we get into that,
    Mr. Taylor I want to make sure we are clear on the facts
    related to that Department of Justice matter. It is the case,
    is it not--and my time is limited, so I want to make sure that
    we cover this as concisely as we can--that from 2013 to 2019
    your company engaged in a scheme to defraud the United States,
    correct?
        Mr. Taylor. The record indicates--or, the settlement
    agreement acknowledges that.
        Senator Ossoff. Is that correct, that you engaged in a
    scheme to defraud the United States?
        Mr. Taylor. Senator, the settlement agreement acknowledges
    that, yes, sir.
        Senator Ossoff. OK. From 2013 to 2019, your company engaged
    in a scheme to defraud the United States.
        I suppose the first question is: Why should a company
    convicted of major criminal fraud, that engaged in a scheme to
    defraud the United States, remain in a position of trust,
    responsible for the safe housing of the hero servicemembers and
    their families on installations across the country?
        Mr. Taylor. I would like to answer that by putting it a
    little bit into context. As you indicated, Senator, the period
    in which the behavior took place was from the period 2013 to
    2019. When we were alerted to the allegations that there was
    improper behavior amongst some of our employees, we immediately
    cooperated along the way with DOJ investigators. We engaged our
    own third-party legal firm and forensic accountants, to
    understand the root causes. We provided all of that information
    in collaboration with the DOJ as that investigation was
    ongoing. We did an analysis to understand what the root causes
    were.
        We did not wait for the outcome of that investigation and
    the settlement that was reached in late last year to act upon
    the things that we identified were shortcomings within our own
    business, so we took quick action to----
        Senator Ossoff. Mr. Taylor, forgive me, but my time is
    limited. We are going to get into the actions that you have
    taken and whether or not those actions have had good effect.
        Let us talk about what constituted this 6-year scheme to
    defraud the United States to which Balfour pled guilty. Am I
    correct that this scheme to defraud the United States included
    the falsification and destruction of work order records, yes or
    no?
        Mr. Taylor. It did.
        Senator Ossoff. Am I correct that this scheme to defraud
    the United States included lying to the Armed Services, yes or
    no?
        Mr. Taylor. Lying? Not--you say, lying. We put forward----
        Senator Ossoff. I am sorry, I have here paragraph 24 of a
    statement of facts: Balfour Beatty made false representations
    to all three service branches.
        Mr. Taylor. We put forward false incentive fee submissions
    that did not reflect the performance metrics at certain
    locations.
        Senator Ossoff. Am I correct that this scheme to defraud
    the United States, which included the falsification and
    destruction of maintenance records, also included prematurely
    closing work orders in order to present to the military
    superior performance to what was happening in reality in order
    to secure incentive payments?
        Mr. Taylor. That is a fair statement, yes, sir.
        Senator Ossoff. It is your position, Mr. Taylor, that
    despite engaging in this 6-year scheme to defraud the United
    States, major criminal fraud, that your company should remain
    in a position of trust, housing America's military families,
    yes or no?
        Mr. Taylor. Yes. Yes, I do.
        Senator Ossoff. That is your position, OK.
        I want for a moment, and we will return to some of the
    latest events, Mr. Taylor but ask you, Ms. Cook, about your
    experience in your position. I want to begin by asking you to
    review for the Subcommittee correspondence that you received
    from servicemembers who were housed at Fort Gordon after the
    period during which Balfour was engaged in a scheme to defraud
    the United States, the period during which Balfour assured the
    Department of Justice, the Department of Defense, and the U.S.
    Congress that it was improving its practices.
        If you would, Ms. Cook, please turn to tab 10.
        You will see at the bottom, Ms. Cook, ``Customer
    Comments.'' This is an e-mail that you received from a tenant
    in your housing. The e-mail is dated September 2020. Would you
    please read, beginning with ``Customer Comments,'' and on to
    the next page? It is not a long e-mail.
        Ms. Cook. Yes. ``I recently retired after 21 years of
    combined service. This is by far the worst housing I have ever
    lived in. We had mold in our house under the vinyl floors, in
    the walls, behind our cabinets, and in the vents. Our roof
    leaked, and the sheetrock fell in the closet. I was in the
    Medical Evaluation Board (MEB) process and the sewer line
    collapsed, and we had to move. They gave me 1 week to vacate a
    house that was not fit for occupancy so they could work on it.
    I was forced to move from one house to another while physically
    disabled. Then in the 6 months that we remained there, they did
    no work on the house.
        The company is unprofessional and should be removed from
    the installation. They have no clue what it means to run a safe
    and organized military housing community. The installation
    leadership needs to do a walkthrough of housing and talk to
    every resident. I know of several people that have multiple
    issues with their homes and nothing seems to be getting
    accomplished.
        Since I am no longer in the military, I do not fear
    retaliation from the housing office. If I had to do it all over
    again, I would not live on base and would have found a home
    that was better suited for my family.
        Customer has requested a response from management.''
        Senator Ossoff. Thank you, Ms. Cook. This is one of many e-
    mails that you received that we reviewed.
        Here are some quotes from others: Urine stains were found
    in three of the four bedrooms.
        Bathroom floorboards were forming bubbles with water in
    them.
        Mold was growing on carpet.
        We risk health issues for my 19-month-old baby.
        Death trap of a house.
        I have a pregnant wife who is high-risk, and I have to live
    with this.
        Exposed mold on my ceiling.
        We continuously get provided little to no response.
        Water leaks in the kitchen light cover.
        Nothing has been done.
        That is 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 e-mails that you
    received, all after the period during which Balfour was engaged
    in a scheme to defraud the United States.
        I want to ask you, Mr. Taylor, given that your company
    engaged in major criminal fraud, why should we believe your
    assurances?
        We have heard from Captain Choe. We have heard from
    Sergeant Torres. They have both told us their horror stories.
    We have heard from advocates who have described these issues as
    systemic and ongoing. We just went through 12 or 13 e-mails Ms.
    Cook received. My office interviewed dozens of others who
    reported significant issues with work orders being
    misclassified, ongoing concerns about contamination, ceilings
    falling in. Why should we believe, Mr. Taylor, that a company
    that engaged in major fraud against the United States is fixing
    this?
        Mr. Taylor. First off, Senator, I reject the suggestion
    that it is a systemic failure. You cited, in the case that you
    just read, 12 e-mails, 11 e-mails. As I shared with you, we are
    a company that processes 280,000, on average, e-mails annually.
        Things go wrong. We do not always get it right the first
    time. We are not perfect. We have never testified that we are a
    perfect organization that gets it right 100 percent the first
    time.
        What is important for us is that we understand where our
    shortcomings are and we take action to correct those
    deficiencies.
        Senator Ossoff. Mr. Taylor, my time is limited. My question
    is very specific. It is, why should we believe your assurances
    when your company engaged in a 6-year-long scheme to defraud
    the United States? Why should we believe your assurances? That
    is my question.
        Mr. Taylor. Take a look at the actions that we have taken
    subsequent to that period in time. We have shared that
    information with your staff during interviews, some of that
    information. We have shared that information. We have been very
    transparent with the services, service branches, the Office of
    the Secretary of Defense (OSD). We have been transparent with
    the House Armed Services Committee (HASC) and the Senate Armed
    Services Committee (SASC) staffers on the journey that we have
    been on to transform our business.
        The results we are seeing demonstrate that we have taken
    this very seriously and we are taking proactive steps to ensure
    that we do not repeat the mistakes of the individuals in our
    firm that worked here at the time that those----
        Senator Ossoff. Thank you, Mr. Taylor. We will get into
    some of those specific steps you have taken in a moment.
        My time is expired. I yield to Ranking Member Johnson.
        Senator Johnson. Thank you, Mr. Chairman.
        Mr. Taylor, I want to find out a little bit more about
    Balfour. Your division of Balfour Beatty, PLC, correct?
        Mr. Taylor. That is correct.
        Senator Johnson. Headquartered out of London?
        Mr. Taylor. That is correct.
        Senator Johnson. A little more than an 8 billion pound
    business?
        Mr. Taylor. I believe that is true.
        Senator Johnson. How big a division is yours?
        Mr. Taylor. In terms of that volume of business? Our
    business is--we are part of an investments division. The value
    that is promulgated by the company is largely around our
    construction and services business. The investments business
    does not comprise part of that revenue, if you will. Revenue is
    looked at differently in the construction-related business than
    it is in our investments business, to include our military
    housing, which is a subsidiary.
        Senator Johnson. Are you associated with the construction
    part of your division----
        Mr. Taylor. We are----
        Senator Johnson [continuing]. Or simply the facility
    management?
        Mr. Taylor. There is Balfour Beatty Investments, which is a
    division of Balfour Beatty, PLC. Balfour Beatty Communities is
    a subsidiary of Balfour Beatty Investments. It is a third-tier
    organization within the structure, if you will, that exists to
    provide housing to our servicemembers and their families, and
    we do other apartment-type communities and student housing
    around the country under that banner of Balfour Beatty
    Communities.
        Senator Johnson. Ms. Christian talked about that this is
    profit over people, pure and simple. Do you have a response to
    that?
        Mr. Taylor. I absolutely have a response to that. I think
    that that is unfair characterization. We work tirelessly. We
    have approximately 1,400 employees that work, about a third of
    whom, by the way, are like Ms. Cook and myself, former
    military, retirees. We employ a number of spouses that also
    choose to live with us. We have folks who get up every day with
    a singular commitment, to provide for the health and safety of
    our military residents. I think that that is unfair
    characterization.
        Again, I will go back to: Do our people make mistakes? Yes,
    they make mistakes. There is human error in every business, but
    to suggest that the error rate is indicative of widespread
    broken business is totally unfair.
        Senator Johnson. In my briefing materials, I saw something
    like $30 million a year generated for this division. To me,
    that seems woefully low. Is that an accurate number, or is
    there a different number?
        Mr. Taylor. It is the deal that we struck when we closed on
    the projects. That $30 million, roughly, is about the average
    over the last 3 years for the receipt of the property
    management fees across our 55 military installations, 43,000
    housing units. To put it into context, that equates to about
    $700 per unit per year on a pre-tax basis, and it does not net
    off the cost of running the business.
        Senator Johnson. But that is a small percentage of your
    division, correct?
        Mr. Taylor. No, sir. That is----
        Senator Johnson. That is your division.
        Mr. Taylor. That is the most significant revenue stream for
    our military housing----
        Senator Johnson. $30 million. When you pay a $65 million
    fine, that wipes out more than 2 years' worth of revenue, not
    just profit, but revenue.
        That $30 million a year division, that employs 1,400
    people?
        Mr. Taylor. Approximately 1,400, yes, sir.
        Senator Johnson. Do you also subcontract out to
    contractors?
        Mr. Taylor. We do.
        Senator Johnson. What percent do you perform with those
    1,400 people? That is 1,400 people looking at about 43,000
    units.
        Mr. Taylor. Yes, sir. Yes, there is a lot of third-party
    support, and it varies jurisdictionally. If we are in a market
    where there is limited availability of third-party vendors,
    then we will have a heavier staff than we would, but generally
    speaking, we could have anywhere from 10 to 12 vendors on a
    third-party service agreement that assist us with the
    performance of our work.
        Senator Johnson. Do you evaluate your vendors? If they do
    not perform, do you terminate their contracts and hire others?
        Mr. Taylor. Absolutely.
        Senator Johnson. How often do you do that?
        Mr. Taylor. We have the standard termination clauses that
    are in contracts that you find in any contracting arrangement.
        Senator Johnson. Again, you manage 43,000 housing units.
    What is the total inventory of housing units for the military?
    Do you know?
        Mr. Taylor. I think it is about 300,000. Might be a
    little--280,000. OSD can give you that.
        Senator Johnson. So you are more than 10 percent.
        Mr. Taylor. Yes, sir.
        Senator Johnson. Are you the largest manager of housing
    units, or are there other people that are as big or larger?
        Mr. Taylor. I believe there is one provider that manages
    more units than we do.
        Senator Johnson. OK. How do you explain the testimony you
    heard from Captain Choe, Sergeant Torres, and Ms. Wanner?
        Mr. Taylor. I think it is their perception of what
    transpired. I think that we have a different perception. I
    think that----
        Senator Johnson. Can you give us a different perspective,
    for example, with Captain Choe's daughter?
        Mr. Taylor. First, as a father of a son and daughter
    myself, I have empathy, substantial empathy for the Choe
    family. I know that is hard to deal with any child. I have a
    hard time drawing the conclusion that has been drawn on the
    first panel that there is a direct correlation between the
    condition of the home and his daughter's medical condition.
        Senator Johnson. OK. I guess that is a legitimate point to
    make, sometimes very difficult to prove causation on things.
    But do you deny the fact that the issues of mold just were not
    addressed over a relatively long period of time?
        Mr. Taylor. I do deny that, yes, sir. In advance of this,
    having known that Captain Choe was going to testify, again, I
    was not involved in the details, but I took time to kind of
    understand a bit more about the situation because I wanted to
    be responsive to the Subcommittee.
        In the time that the Choe family lived with us, they
    submitted 28 work orders, 22 of which were online, and Captain
    Choe acknowledged that, he used that predominantly to let us
    know that work was being requested. The one mold work order
    that was put in late February 2020 was inspected twice by our
    staff, was jointly inspected by our military housing partner,
    and found no evidence of mold at that time. Subsequent to that,
    there were 11 additional work orders that were put in online by
    Captain Choe, clearly indicating, his intent to continue to
    notify us through the online portal, to notify us of those
    issues.
        Importantly for me, I think it is, a clear demonstration
    that Captain Choe had access to the portal, which also does not
    give him just the ability to input work orders, but it gives
    you--you can see any open work orders and what the status is of
    those work orders.
        I guess my perspective, having heard what I heard a little
    bit ago, is if he did not think that we were responding to the
    work orders by engaging in the resident portal it should have
    been clear that no work order was being looked at in our
    system. To my knowledge, we have not been notified of that.
        To my knowledge, we have never seen any photographic
    evidence of any mold existing with the home.
        To my knowledge, the medical doctor's letter that suggest
    that the home might be the cause of her skin conditions and/or
    the school, to my knowledge, that doctor never visited the home
    personally to view the condition in the home. To my knowledge,
    that report was written--that letter was written in late June
    2020 and was provided to our site team in October of that year,
    about a 4-month delay.
        When I kind of look at the fact pattern, I think that there
    is just holes, and so I think that, it is hard for me to
    reconcile in my mind that the home was actually the cause of
    the condition when the findings that we had in responding to
    the work requests did not indicate the same.
        Senator Johnson. Mr. Chairman, would you give me time to
    see how Ms. Cook responds to that?
        Same question, Ms. Cook. Do you have any explanation?
        Ms. Cook. Could you repeat that? Explanation on the mold?
    Is that what you are----
        Senator Johnson. In terms of the situation with Captain
    Choe and his daughter.
        Ms. Cook. Yes.
        Senator Johnson. You listened to their testimony. Do you
    refute it?
        Ms. Cook. It is heartbreaking. I am a grandmother. I am a
    mother. I care deeply about our residents, as all of our team
    does. I will say that we did go inspect the home. I personally
    did not, but our team is trained, as well as our garrison
    housing office is trained. I do feel that if there was a life-
    health-safety issue that we would have immediately removed that
    family so that we could remediate. There was no signs of life-
    health-safety.
        If it is behind the walls I cannot see that, no, sir, but I
    do feel that we did follow all U.S. Environmental Protection
    Agency (EPA) and the U.S. Centers for Disease Control and
    Prevention (CDC) guidelines in that home as well as all of our
    homes.
        Senator Johnson. OK. Thank you, Mr. Chairman.
        Senator Ossoff. Thank you.
        Senator Scott.

                   OPENING STATEMENT OF SENATOR SCOTT

        Senator Scott. Thank you, Chairman. Thank you, Ranking
    Member. Thank you for being here.
        I was Governor of Florida, and I served in the Navy. At
    that time, there was not any housing for us. But I think it is
    well acknowledged we have to do whatever we can to provide our
    men and women the best facilities, the best care we can.
        I want to sort of follow up what Senator Johnson was
    talking about, but first, I want to ask something specific. By
    the way, when I was Governor, I did base commander meetings
    about every 4 months and tried to find their problems. Because
    it was a Federal issue, I never dealt with that, but since I
    have been in the Senate--I have been up here a little over 3
    years--a lot of people have complained. I want to go through
    one specific one.
        I have received reports of unacceptable housing conditions
    at the naval air station in Key West. I do not know if you are
    familiar with this. It is the Sigsbee Park Annex. It says most
    of the units require significant improvement so that enlisted
    personnel and their families can have safe housing. Do you know
    what efforts have been made to ensure that our servicemembers
    in Key West are living in acceptable housing conditions and
    what your plans are to improve them? Is that something you are
    familiar with or not?
        Mr. Taylor. I am, Senator. As a matter of fact, I think it
    was approximately 2 weeks ago I was at Key West, visiting with
    our team on that site. I think you are well aware, Key West
    has--the overwhelming majority of what we have there is legacy
    housing. We constructed 111 new units during the initial
    development period. That project is part of an 11-base, multi-
    site project called the Navy Southeast Project.
        We have invested heavily in renovation of Sigsbee in
    particular. We have done bump-outs. We have done kitchen
    improvements. We have done a lot of significant changes in
    there. We have not been able to touch them all because of the
    financial constraints, I can tell you.
        We have had some issues with HVAC, duct sweating just
    because of the conditions in those homes. We have had some
    issues with lack of quality insulation because of the time in
    which those units were constructed, and they are being
    addressed through this renovation plan.
        The Navy Southeast Project in particular is financially
    stressed. The BAH increases have not materialized over the time
    period that were expected. Insurance and utility rates have far
    outpaced rates of inflation.
        I will give you an example. For all of the Navy Southeast
    Project, this year after we set our budgets, I think it was in
    March of this year, or it might have been April. The local
    utility, or the utility that manages or provides the utilities
    for Key West and all the Navy Southeast, told us that there is
    going to be a 30 percent increase in the utility costs this
    year when we budgeted for 3 percent.
        Those are the sorts of challenges that I think do not get
    talked about enough in this type of forum because those are the
    real challenges that we ought to be engaging in.
        Again, I will go back. Do we make mistakes occasionally?
    Yes. But if we want to look out for the long-term health and
    viability of this program that can serve the needs and
    interests of our servicemembers and their families, we ought to
    be having the conversation about the financial viability of the
    projects.
        Senator Scott. Can we go through--and this is similar to
    Senator Johnson's question. How long have you been at the
    company?
        Mr. Taylor. Twenty-two years, sir.
        Senator Scott. OK. Did you do the contract? Did you enter
    into the contract?
        Mr. Taylor. I led the business development team that
    pursued that project.
        Senator Scott. What are the economics? How does it work?
    Are you getting paid a fee per home? Are you getting paid--did
    you pay for all of the existing housing, and then you are
    responsible for it? How does it work?
        Mr. Taylor. Yes, so in this case, with the Navy projects,
    very similar to the Army projects, the private partners--in
    this case, I will talk about our company. We made an equity
    contribution, an equity investment in the project. Equity
    investments typically for most projects--I do not recall
    specifically for Navy Southeast--generally, are between 1 and 5
    percent. The Navy always wanted less equity in the projects
    than the other branches.
        The Navy would make a financial investment that they took
    out of the near appropriations, and then what we would do is we
    would underwrite the potential revenue from the Basic Allowance
    for Housing that we receive throughout the project. We would
    then take that revenue, BAH's topline revenue, net out
    projected operating expenses, get to a net operating income
    line. We would then to go the financial markets, and based upon
    the net operating income we could raise in most cases hundreds
    of millions of dollars that would be deployed during that
    initial development period to do replacement housing,
    renovations, all of those sorts of things. That is how the
    project----
        Senator Scott. You basically borrowed against future
    revenues.
        Mr. Taylor. Correct.
        Senator Scott. OK. The assumptions when you got into the
    contract, how have those assumptions been wrong?
        Mr. Taylor. The Basic Allowance for Housing, again, is the
    only source of revenue for these projects. BAH is reset
    annually. It is supposed to be indicative of the cost increases
    in the local market because the BAH is not just specifically
    for the MHPI.
        Senator Scott. No, I got it.
        Mr. Taylor. More importantly, there are 70 percent of folks
    that are living off----
        Senator Scott. Yes, I bet it was. I got $124 a month. My
    apartment cost $250.
        Mr. Taylor. BAH has been highly unpredictable. We
    originally underwrote 2 to 3 percent annual increase. If you
    look at BAH across the entirety of the DOD spectrum, it looks
    more like an electrocardiogram (EKG) chart.
        Senator Scott. OK. Your expectation when you bid for the
    contract is to 2 to 2-plus percent a year. That did not happen.
        Mr. Taylor. That did not happen.
        Senator Scott. That is No. 1, OK. Have you lost money on--
    let us take whichever project, Navy Southeast. Have you lost
    money on that project?
        Mr. Taylor. We have not lost money. It is just that we get
    paid management fees as a percentage of income. If income does
    not go up, our fees do not go up.
        Senator Scott. How do you make money? Just on the
    management fees?
        Mr. Taylor. Management fees and for the property
    management. We also get a return on the equity investment I
    talked about that we made at the front end, and that is at the
    very bottom of the cash-flow.
        Senator Scott. That is separate. You have a management fee
    over here, and you have another company that was set up that
    took the risk on the construction. Is that the way it is set
    up?
        Mr. Taylor. The company made an equity investment in the
    project to help fund that initial development period work. The
    return on that equity, just like any investor in a real estate
    project, would get--you get--after all of the bills are paid,
    the mortgage is paid, then the way the----
        Senator Scott. It is leveraged to the hilt. If they only
    wanted 1 to 1.5 percent equity, then it is complete leverage,
    right?
        Mr. Taylor. Significantly, yes.
        Senator Scott. Why did the Navy want that?
        Mr. Taylor. Because we could tap into private sector
    capital and then----
        Senator Scott. But then the markets were--market-level
    interest rates were so low.
        Mr. Taylor. It did not encumber the Federal budget.
        Senator Scott. Then what happened? Did anybody change the
    deal? They made assumptions. Their assumptions were wrong. Did
    the Department of Defense change the deal ever?
        Mr. Taylor. No.
        Senator Scott. It is just that the assumptions were wrong.
    Have they made--is it OK if I just finish?
        Have they made money? Has the equity side, where they
    bought the property and responsible for the fixing it up, has
    that been a money loser?
        Mr. Taylor. For our company?
        Senator Scott. Yes.
        Mr. Taylor. No, it is not a loser, but again, if revenues
    do not grow at the pace that you expected you are falling short
    of what you expected.
        Senator Scott. The equity holders make the return.
        Mr. Taylor. It is still in a losing position.
        Senator Scott. All right. The management fee is not the
    problem other than it seems like when Senator Johnson asked you
    a question the management fee per unit seems pretty low. I have
    never done a deal like that, but that seems low.
        Mr. Taylor. Relative to what private sector companies do,
    it is low.
        Senator Scott. Yes. But you bid it, so you are responsible.
        Mr. Taylor. We got into this business because of, I served
    in the Navy myself. This business is attractive to me and
    always has been, and the reason that I work as tirelessly as I
    personally do is because I believe in the construct. I believe
    that it is a heck of a lot better way to provide housing to our
    servicemembers and families than what we were capable of doing
    when I was in uniform. Light-years difference.
        Senator Scott. What would you do in hindsight? What should
    either you or the government have done differently to make sure
    there is less of a risk that you have rogue employees that do
    the wrong thing?
        Mr. Taylor. In our case, had better internal controls.
        Senator Scott. Is there anything the government should have
    done differently?
        Mr. Taylor. I think that there was certainly engagement
    from our military partners along the way. The fiscal year 2020
    NDAA really helped stoke the fire there, and I can tell you
    that we are working more closely with our military partners
    than we have ever worked. I think that is what the program
    ultimately needed.
        Senator Scott. You do not think the structure of the entity
    caused the problem. You think it was a lack of oversight.
        Mr. Taylor. Yes, I think that is fair.
        Senator Scott. Thanks.
        Senator Ossoff. Thank you, Senator Scott.
        Mr. Taylor, I want to return to the question of whether
    indeed Balfour has reformed and improved its practices since
    2019. Again, the period of 2013 to 2019 is the period during
    which the company was, as you have acknowledged, engaged in a
    scheme to defraud the United States. You made note in your
    opening remarks of satisfaction surveys that you have
    undertaken. Is that in your view an indicator of improved
    performance, or what does that signify in your opinion?
        Mr. Taylor. It is just one KPI that we pay close attention
    to because it is direct feedback that comes from our residents
    through an independent third party. As I said, all
    servicemembers are invited to participate when they move into
    their new home or their home. Once they take occupancy, they
    are invited to participate in the survey anytime we are in
    their home to provide response to a work order.
        It is an indicator. It is not the end-all, be-all, but it
    is a pretty good indicator, and we track that and see how it
    trends over time so that we can take action where we see things
    are trending in the wrong direction to investigate, why are our
    scores dropping, what is about that we need to be paying
    attention to, to correct.
        Senator Ossoff. Yes. I am skeptical of the satisfaction
    scores as an indication that you have improved your
    performance--and this is something that you and your team also
    raised in interviews before this hearing with the Subcommittee
    staff. If we could have a look, please, at slide 16.
        Here we have your prepared testimony today at left. We have
    your predecessor in this role's prepared testimony from
    February 2019 at right, testifying before the Senate.\1\ Now
    just to make sure we have these dates correct, I want us to
    clarify that February 2019, when your predecessor made these
    comments to the Senate, that was still during the period when
    the company was engaged in a scheme to defraud the United
    States. Is that correct?
    ---------------------------------------------------------------------------
        \1\ The Resident Survey appears in the Appendix on page 197.
    ---------------------------------------------------------------------------
        Mr. Taylor. February 2019, that was still----
        Senator Ossoff. Yes?
        Mr. Taylor [continuing]. Part of the period, yes.
        Senator Ossoff. OK. Here we have your predecessor touting
    the satisfaction scores in sworn testimony before the Senate
    during a period when the company is engaged in a fraud scheme,
    falsifying and destroying work orders, lying to the Armed
    Services, and the company is touting its satisfaction scores.
    Then at left here, we have, from your written statements today,
    the satisfaction scores as an indicator of your company's
    improvement in performance.
        Now 1 to 5, or very good to outstanding, these may not be
    apples to apples comparisons, but it gets back to the core
    question--we can close the slide--which is, why should the
    Senate believe a company that for 6 years defrauded the
    government? I have to say I am shocked, Mr. Taylor, that you
    deny these issues are systemic. They are clearly systemic.
        In fact, your performance as a company at installations in
    my State is notorious. Local media have reported on it for
    years and years and years. Every time I visit an installation,
    enlisted personnel raise it without me even prompting them to.
    We have convened entire discussions with enlisted personnel to
    figure out what is going on. That is why we embarked upon an 8-
    month long investigation to understand what is happening.
        I am just not sure that you understand what is happening
    within your own organization. Did your senior executives know
    that for 6 years the company was engaging in fraud?
        Mr. Taylor. No.
        Senator Ossoff. Would you know now if your company was
    continuing to engage in fraud?
        Mr. Taylor. Yes.
        Senator Ossoff. You would. I would like to explore whether
    or not your management team has the situational awareness to
    understand what is happening inside your own firm, if we could
    please turn to tab 13.
        While you do that, Mr. Taylor, if you could please tell the
    Subcommittee who is Mr. Thomas Rodriguez and how was he related
    to you in the organization?
        Excuse me, tab 12. Forgive me.
        While you turn to tab 12, please, Mr. Taylor, who is Thomas
    Rodriguez?
        Mr. Taylor. He is a former employee and former facility
    manager at Fort Gordon.
        Senator Ossoff. OK. He was the facility manager at Fort
    Gordon in Georgia.
        Mr. Taylor. Prior to that, he was a maintenance supervisor
    at Fort Stewart.
        Senator Ossoff. Understood. Thank you. Here we have an e-
    mail from Mr. Rodriguez. As the facility manager at Fort
    Gordon, am I correct that perhaps not your direct subordinate,
    but he is your subordinate, correct?
        Mr. Taylor. He is in my chain of command, yes, sir.
        Senator Ossoff. That is right. This e-mail is from February
    2021. This is 2 years after the conclusion of the period during
    which Balfour was engaged in this acknowledged scheme to
    defraud the United States. Two years later, here is an e-mail
    from Mr. Rodriguez, your subordinate.
        I am not sure you received this e-mail, Mr. Taylor, but you
    did, Ms. Cook--it was forwarded to you--in which Mr. Rodriguez
    says that the state of the facilities department at Fort Gordon
    is ``total chaos.'' He says, quote, ``Words could not describe
    the total chaos.''
        He further states that the facilities department at Fort
    Gordon has been lying to the Army about the condition of the
    facilities department at Fort Gordon. He says, ``This is not
    acting honestly or respecting our third parties,'' meaning the
    Army, ``and treating them with integrity and professionalism.''
        Ms. Cook, you received this e-mail in February 2021. Is
    that correct?
        Ms. Cook. Yes, I did.
        Senator Ossoff. What action did you take when you received
    this e-mail reporting that there was total chaos in the
    facilities department at Fort Gordon and again, this is from
    the head of the facilities department at Fort Gordon--and that
    the facilities department was being dishonest with the Army?
    What action did you take?
        Ms. Cook. I do not totally recall without reviewing the
    records, but I do believe I did forward this up my chain of
    command.
        Senator Ossoff. OK. Did you follow up after forwarding it
    to see what action was taken?
        Ms. Cook. I believe we had a couple--because it was
    regarding the FM buildings. It was regarding the facility
    building, and I do believe----
        Senator Ossoff. So you followed up.
        Mr. Taylor, were you aware of this e-mail at the time?
        Mr. Taylor. I was not.
        Senator Ossoff. You were not aware, so you understand the
    skepticism.
        Let us just set the stage here. It has been 2 years since
    the end of a 6-year period when the company is engaged in a
    scheme to defraud the United States. At this very moment,
    February 2021, you are under Department of Justice
    investigation for being dishonest with the military and for
    fabricating and destroying work orders. You know you are under
    investigation. You know you are in hot water. Your subordinate
    reports that the facilities department at Fort Gordon is in
    total chaos and that with respect to the condition of the
    facility department and its premises there is a lack of
    integrity with the Army, and you were not aware of this, Mr.
    Taylor.
        You say that the senior executives at Balfour did not know
    that there was fraud ongoing for 6 years but that you would
    know if there was fraud ongoing now. How sure are you, Mr.
    Taylor, that you would know if that misconduct continued to
    this day? Are you sure?
        Mr. Taylor. I think that your interpretation of this e-
    mail, what you just described, does not align with the question
    that you are asking me.
        Senator Ossoff. OK. Let me restate the question then for
    clarity. Here we have your subordinate reporting that when he
    took over the facilities department at Fort Gordon it was in a
    State of total chaos and that the facilities department has
    been dishonest with the Army, correct?
        Mr. Taylor. Where does it say that?
        Senator Ossoff. We have the document here. That is what it
    says. It says, ``when I arrived onsite . . . words could not
    describe the total chaos that was the facilities department''
    at Fort Gordon. You were not aware of this report, correct?
        Mr. Taylor. I was not aware of this e-mail.
        Senator Ossoff. OK. My time is expired. Ranking Member
    Johnson.
        Senator Johnson. Can you step through, after the settlement
    a couple years ago, what specific actions did you take to
    correct the deficiencies in your process, specifically? What
    did you do?
        Mr. Taylor. Yes, Senator, there were many, and as we were
    working through them I will share that we were sharing that--
    those remediation plans with the DOJ investigators as they were
    conducting their plan. We were sharing those remediation steps
    with our military partners. We were sharing that with HASC and
    SASC staffers that have oversight of this particular program.
        But there were a number of things, and I would follow up
    with a more fulsome response, but I will just share with you
    some of the things that we did. If you look at one of the root
    causes for the falsification of work order data was the system
    that we used, the database that we used is a product called
    Yardi. At the time, there was too much opportunity for those
    individuals that used this system to manipulate data. So we
    worked with that provider----
        Senator Johnson. By the way, were they on bonus plans so
    that manipulating data was to their individual benefit? In
    other words, in your 1,400 employees, you had managers. Did
    they get bonuses based on what their performance was off the
    Yardi system?
        Mr. Taylor. The statistics, there was a portion of their
    bonus--that came out in the investigation, that their
    compensation was tied to performance. That is correct.
        Senator Johnson. Is that still the case?
        Mr. Taylor. It is not the case.
        Senator Johnson. OK.
        Mr. Taylor. All of their bonus at the site level is tied to
    customer satisfaction, where it ought to be.
        Senator Johnson. Is there any way for them to doctor the
    customer satisfaction surveys?
        Mr. Taylor. There is not. It is all conducted by third
    parties. We do not conduct any surveys ourselves.
        Senator Johnson. OK.
        Mr. Taylor. That system had a lot of opportunity for
    manipulation of data. We worked with the provider to ensure
    that local site teams have no ability to change the data.
        We also engaged a third-party call center now that takes
    100 percent of our calls, and so you have an independent third
    party that is documenting the timing of the receipt, the date
    of the receipt of that work request, so that it is not our
    staff that are inputting that information.
        If there is a recognized error in those work orders--and I
    heard some of this in the previous testimony--local site teams
    cannot make those adjustments. That has to be documented and
    justified, and it has to be approved up to a vice president
    level. If we make that change, we are transparent with our
    military partners the reason why we made the change to ensure
    that there is transparency and agreement with making that
    change.
        Senator Johnson. Do you know what you are being
    investigated for by the Department of Justice right now?
        Mr. Taylor. Nothing that I am aware of.
        Senator Johnson. Are you aware there is a Department of
    Justice investigation?
        Mr. Taylor. Ongoing currently?
        Senator Johnson. Yes.
        Mr. Taylor. I am not.
        Senator Johnson. OK. Nor was I.
        Ms. Cook, how do you explain the e-mail from Mr. Rodriguez
    when he is talking about facilities in chaos? What was in
    chaos? Do you know?
        Ms. Cook. I believe--and if I may, Senator, I get thousands
    of e-mails in my e-mail box every day, just as all of us do. So
    you know, I definitely received it, but I do know that Tom went
    down there to help. We had lost a previous facility manager. I
    took it as his first observation of being on the ground, and he
    sent it to his supervisors that could help him pull it together
    in an action plan of how we are going to pull this to get----
        Senator Johnson. So this is an initial e-mail when he gets
    down there and goes, ``Man, this is a mess. This is in chaos,
    and I am going to fix it for you.'' I mean, is that how you
    kind of interpreted it?
        Ms. Cook. That is kind of how I remember it. Like I said, I
    get thousands of e-mails, so I would have to go back and review
    that, sir.
        Senator Johnson. OK.
        Ms. Cook. But I do feel that Tom just had come on the
    ground and he was reporting what he was seeing.
        Senator Johnson. OK. Mr. Taylor, I want to go back, and I
    want to try and understand this business model. Tell me if I
    have this right. There is the actual construction phase of
    this, where you put in a very small percentage in terms of
    equity and you leverage it up. You are able to do that because
    it is housing for the military, so nobody is afraid that they
    are not going to get paid back. You can literally build a
    billion dollars of housing and you are only investing, what,
    $10 million maybe, 10.5, 10 to 15 million?
        Mr. Taylor. On that, I think every one of our projects the
    equity contribution from the company was between 1 and 5
    percent, so it varied.
        Senator Johnson. So again, it could be 10 to 15 million.
        Mr. Taylor. It could, yes.
        Senator Johnson. But again, then your entire revenue
    stream, you are telling me, is $30 million a year.
        Mr. Taylor. Our property management fees on average over
    the last 3 years.
        Senator Johnson. That is your revenue stream, or is there
    some revenue stream from the construction part of this? I mean,
    are you making money on the construction?
        Mr. Taylor. In the initial development period, when we were
    building out the housing, we had a third party and then a
    related third party that was our builder.
        Senator Johnson. Let us say you construct a billion dollars
    and you act as a GC and you may be getting 10 percent for that.
    You make money on the actual construction of the housing unit,
    and then that is done.
        Mr. Taylor. A builder would have, but Balfour Beatty, as
    the developer, we earn development fees for the buildout.
        Senator Johnson. OK. You make money there, but then ongoing
    it is literally that $30 million, with 1,400 employees, with
    costs going up and down. The reason I am digging into this, I
    would not invest in this business. Listen, I guess I appreciate
    the fact that you have a commitment and you want to provide
    good housing for our servicemembers, but unless I am missing
    something here it just seems like a pretty risky business.
        Mr. Taylor. It is not the only revenue source. That is the
    property management fees, Senator. I just want to make sure
    that we are clear.
        The way that the projects are constructed, the majority of
    the cash that is left over after all the bills are paid, on
    average, about 90 percent of that goes to a project
    reinvestment account. That is there for long-term sustainment.
    It was always envisioned to be sufficient to take care of the
    housing over the balance of these 50-year agreements.
        Those reinvestment account funds are deployed in when our
    military service partners are in agreement with what the plans
    for how we deploy those funds to make further improvements down
    the road. When that happens, again, we will earn development
    fees on that work. We will engage contractors to perform that
    work. There is still opportunity for revenue or fees, but that
    was always envisioned in the construct of the deals.
        I talked about the equity investment that we made. Ninety
    percent of that excess cash-flow at the bottom of the waterfall
    goes to the reinvestment account. On average, about 10 percent
    of that comes to us as a return on that equity investment
    because we invested in the project as well.
        Senator Johnson. OK. The reason I am trying to delve into
    the finances here is if a company like yours is not making
    money on this or making such a slim margin there is probably
    not much incentive for you to improve things. But if you are
    making a fair return, it is still a business that is attractive
    to you and others.
        Mr. Taylor. I do not agree with the statement that it does
    not incentivize us to do a good job and improve things frankly
    because everybody is well aware our property management fees,
    that $30 million, is made up of a base management fee and then
    an incentive component. That incentive component was the issue
    that got us into the challenges with DOJ, but that incentive
    component, if we do our job well, there is opportunity for us
    to earn more money for the business. We are not a not-for-
    profit. We are a business just like every other provider, to
    try to be profitable.
        Senator Johnson. To close this out, in your mind, I think I
    heard you testify that the solution here is better internal
    controls on the part of you and probably your competitors in
    this space.
        Mr. Taylor. Absolutely.
        Senator Johnson. You think with better internal controls
    you can satisfy Ms. Christian and our other witnesses?
        Mr. Taylor. We are seeing evidence of it already, that the
    level of control and oversight that we have within our own
    organization, the level of oversight that we see from our
    military partners, there is a lot more control over the
    activities that are happening on every one of these
    installations. It is in a better place, a heck of a lot better
    place today than it was 3 years ago.
        Senator Johnson. You have an independent company doing your
    surveys. Is there any other independent auditing of your
    performance?
        Mr. Taylor. All of our financials are independently
    audited.
        Senator Johnson. Financial, but I am talking about in terms
    of your performance.
        Mr. Taylor. The performance? There are annual CEL surveys
    that the service branches engage. You saw the example that was
    on the screen, on the right-hand side of the screen, was the
    result of CEL scores that the service branches engaged. Then we
    have SatisFacts for those, for the work we perform there.
        Senator Johnson. This will be my last question because I am
    disturbed about the potential retaliation, and we heard that
    from, I think, all the witnesses, and I have seen that since I
    came to the Senate. Coming from the private sector, I am
    actually shocked at how much retaliation there is within
    government. And this would be within the military. Are you
    aware of that?
        It sounds like, based on testimony, it is retaliation
    certainly participated in by members of Balfour staff in
    combination with some of the folks in the military.
        Mr. Taylor. I am not aware of our staff retaliating against
    residents because they have expressed displeasure with our
    service.
        Senator Johnson. OK. Thank you, Mr. Chairman.
        Senator Ossoff. Thank you, Ranking Member Johnson. To close
    out, I think it is worth recapping what you were getting into,
    Ranking Member Johnson, in terms of the structure of revenues.
        For clarity with our final few moments here, Mr. Taylor,
    describe one more time how this incentive fee structure
    operates, please?
        Mr. Taylor. If you look at the cash-flow waterfall for any
    project, as part of the operating expenses, there is typically
    a base management fee. It is usually on the order of 2 percent
    of revenues. After debt service is paid, after we put away
    money for capital repairs and replacement, we will qualify for
    incentive management fees.
        There is a slight difference with a lot of similarity
    between the way that each branch of service has negotiated the
    performance metrics within those. All of them have undergone a
    revamping in the last 3 years.
        Senator Ossoff. If I might, those incentive fees, for
    example, the incentive payments that you will receive from that
    joint fund you have established with the Service, will be
    correlated with your performance and among the metrics of
    performance will be the timely and successful closure of work
    orders, correct?
        Mr. Taylor. The timely response to emergency and urgency,
    the timely completion of routine service.
        Senator Ossoff. Right. If there is an issue such as mold,
    which poses a health hazard, then that is classified
    differently with a different expectation of successful or
    timely response than, for example, a routine carpentry issue.
    Is that correct?
        Mr. Taylor. That is correct.
        Senator Ossoff. When we see Sergeant Torres's work order,
    where he clearly stated in the description that it is mold, and
    then we see that it was classified as carpentry, that kind of
    thing could impact your incentive fees, correct, if the
    company--and this is, I believe, what was going on during the
    period of the scheme to defraud the United States.
    Misclassification of a request for remediation of mold, which
    should be more timely acted on as something like carpentry,
    will cause you to be paid more in incentive fees by
    artificially inflating your performance metrics, correct?
        Mr. Taylor. If the volume of that activity rose to the
    level that we would not meet the threshold, that is a correct
    statement, and it assumes that we did not identify the error
    and put in place a correct--correct the error.
        But again, to achieve the incentive fees, just to be
    totally transparent, it does not mean 100 percent success to
    qualify. There are graduated levels depending on that. One or
    two work orders in and of itself being an error would not
    potentially impact whatsoever our incentive fees.
        Senator Ossoff. Thank you, Mr. Taylor. Thanks for that
    clarification.
        I want to thank the members who attended this hearing
    today. I want to thank all of the witnesses on both panels for
    their testimony and for appearing today before the
    Subcommittee.
        We will continue to seek remedies for the issues discussed
    today. Our military personnel, stateside and abroad, sacrifice
    continually in service to this Nation, as do their families.
    They deserve the very best. It is of utmost importance that
    they be provided with safe housing, that there be
    accountability within the Department and by those companies
    responsible for providing that housing.
        This hearing record will remain open for 15 days for any
    additional comments or questions by any of the Subcommittee
    members.
        With that, this hearing is adjourned.
        [Whereupon, at 12:33 p.m., the Subcommittee was adjourned.]

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