[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

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

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

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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
48-491 PDF                  WASHINGTON : 2023                    
          
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        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.
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    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\
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    \1\ The prepared statement of Senator Johnson appears in the 
Appendix on page 53.
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    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.
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    \1\ The prepared statement of Captain Choe appears in the Appendix 
on page 54.
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    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.
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    \1\ The prepared statement of Sergeant Torres appears in the 
Appendix on page 65
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    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.
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    \1\ The prepared statement of Ms. Wanner appears in the Appendix on 
page 100.
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    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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