U.S. military intensifies scrutiny on housing, issues ultimatum on health hazards

NEW YORK (Reuters) - Three branches of the U.S. military have increased scrutiny of housing landlord Balfour Beatty Communities, with the Air Force demanding the company address health hazards and the Army and Navy announcing new inquiries of its maintenance practices.

FILE PHOTO: Derek Rouse points to an incomplete repair on the back of his home at Tinker Air Force Base, Oklahoma, U.S. May 1, 2019. REUTERS/Nick Oxford/File Photo

The Air Force’s concerns were issued with an ultimatum: Balfour Beatty has 90 days to submit a plan to resolve “concerns with serious life, health, and safety issues” in housing at all 21 Air Force bases where it operates, John Henderson, the Air Force assistant secretary for installations, wrote Balfour Beatty Communities President Christopher Williams this week.

If the company fails to make “prompt and substantial improvements” at all bases, and in particular at Tinker Air Force Base in Oklahoma, the Air Force will begin a formal dispute process that could result in serious financial penalties and, in the extreme, termination of its operating agreement with Balfour Beatty.

“Balfour Beatty Communities is redoubling its efforts to improve maintenance outcomes at Tinker,” a company spokesman said in a statement on Wednesday.

The Air Force’s press for action follows Reuters reports identifying construction and maintenance issues at Tinker. In June, Reuters, working in partnership with CBS News, documented how Balfour Beatty falsified maintenance records to help it win millions of dollars in military incentive fees.

Special Report: here

Balfour Beatty, a unit of British infrastructure conglomerate Balfour Beatty PLC BALF.L, had blamed any problems on a sole employee and contended the issue was not widespread. But records examined by Reuters show Air Force personnel at Tinker had questioned the accuracy of the company's maintenance logs time and again.

Meantime, some Tinker families were exposed to asbestos, sewage, vermin and mold.

New hazards at the base surfaced as recently as this week.

“These failures are unacceptable and have seriously eroded confidence by senior Air Force leadership in BBC’s ability to provide military families with safe, quality housing,” Henderson said.

After the Reuters reports, the Navy initiated an audit of the maintenance practices of several of its housing partners, including Balfour Beatty, to see if incentive fees were inappropriately paid, Commander Pamela Rawe, a spokeswoman for Navy Installations Command. The landlords will not receive any incentive fees until the audit is complete.

The Army Inspector General also opened an investigation of Balfour Beatty, an Army spokesman said.

After reviewing the incentive fee system for all of its housing partners earlier this year, the Army docked more than 50% of Balfour Beatty’s bonuses at bases including West Point in New York, Fort Eustis-Fort Story in Virginia and Fort Detrick-Walter Reed in Maryland. Other housing landlords also had fees withheld.

The Air Force had already suspended all incentive fees to Balfour Beatty and referred allegations of fraud at four bases to the Air Force Office of Special Investigations and the Federal Bureau of Investigation.

The new safety concerns at Tinker included a fire in a row home at Tinker in July. The Air Force said it discovered fire code violations involving 77 duplexes built by Balfour Beatty.

Balfour Beatty is investigating why firewalls were not fully installed and is correcting the problem at its own expense, a company spokesman said.

The Air Force also announced this week that residents of 20 homes at Tinker may have been exposed to asbestos when flooring was replaced.

In a statement to residents, Balfour Beatty blamed a flooring contractor. The contractor, J-Mar Flooring and Carpet Cleaning, does not work with asbestos, and did not know its employees were working with asbestos-containing material, said Justin Lowe, an attorney representing J-Mar.

U.S. Senator Jim Inhofe, chair of the Senate Armed Services Committee and an Oklahoma Republican, said he was deeply troubled by the Tinker housing conditions and questioned why it took the Air Force so long to act.

“These problems need to be fixed now and forever,” Inhofe said in a statement. “If the current set of housing contractors won’t do it, the Air Force and the other services need to find someone who will.”

Reporting by M.B. Pell; editing by Grant McCool