next to hearing on the condition and mistreatment of military families and privatized military how thank. this fall is a month long

investigation into alleged abuses by private contracts on and around military bases. this is two and a half hours. >> the permanent subcommittee on investigations will come to order. thank you all for your attendance, thanks to the public for tuning into these proceedings. ranking member johnson, thank

you for all of your work as our staff and we have collaborated on this investigation focused on the mistreatment of military families. privatized housing on u.s. military installations. in the mid 90s, the department of defense commenced the privatization of military housing, it was envisioned this initiative would lead to better outcomes from the military families. safer, more reliable living conditions. healthy homes, affordable housing affordable to families living on an around u.s. military installations. for years, however, this program has been plagued by problems. and when i visited for 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 experience, living

in privatized housing managed by golf -- and the stories i heard shocked me. i heard stories about maintenance requests that were ignored. maintenance requests that were never followed up on, not just routine maintenance but may needs that impacted the health and safety of our service members and their families living in their homes. those families at four orville, they asked me to take action. using my authority as the chair of the permanent subcommittee on investigations, working closely on a bipartisan way with my colleagues, ranking member johnson and his past capacity chairing the homeland security committee has seen related matters. we embarked on an eight month intensive investigation looking into these allegations of mistreatment of military families. at u.s. installations. we focused on, for gordon and

georgia, and shepard air force base in texas. the results of this investigation are alarming, are disturbing, reveal injustice, imposed on service members and their families. reveal grave risks to health and safety of service members and their families. reveal neglect, 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 bell for bt pled guilty to a scheme to defraud the united states in 2013 and 2019.

today, we are going to hear from service members who have joined us to share their personal family stories. of living in ball for housing -- who will share on what they've learned and advocating for the families who have lived across the united states -- and ask questions of senior executives at bat for bt. and demand answers. again i want to emphasize this has been part -- right member johnson has been a great partner in this effort. i think my staff and his staff are the tireless work reviewing tens of thousands of pages of records, and witnesses. i think our witnesses for joining us today, the service

members who will introduce our opening statements, we have come to share their stories, we have displayed the bravery courage and dedication that we know and expect from those who served in the armed forces. and are doing a great public service by joining us today and sharing their stories. with that, i will yield to ranking member johnson. >> i'd like to thank our members for their service. i would appreciate the cooperation you and i have. it's bipartisan, i like you using the term nonpartisan. i think what allows for that kind of non partisan cooperation is, i will keep my opening statement short, i will enter my written statement, and entered in the record. let me just read one paragraph from it this is i think the goal we all share. service members represent the finest among us.

we agree on that. their families make many sacrifices, service of this great nation. when stationed in u.s. military installations, these men and women, to expect living conditions that will not damage the health and safety of themselves, and their families. i think it's stated pretty simply. that's why we are able to, i think to a really good job of digging into this. going through all those documents. again i appreciate all the work, i think in the end, looking for adhering to testimony, and asking questions. the question that kept going through my mind, throughout this investigation, going through our report, is, the statements, fool me once, shame on you. fool me twice, shame on me. so, you have a settlement, 65 million dollar. and then two years later, it seems like it's pretty much going on as it was, prior to

find 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 just plagued military housing, military does not want a deal with housing. contracts outside. and then you don't set up the controls, contractors do the type of job that we all expect. again i appreciate the cooperation. >> then you ranking member johnson. we will call our first panel of witnesses, for this morning hearing. i'll introduce the witnesses, and then you will stand to be sworn. samuel cho, is with the u.s. army. he lived in battle for housing, and an army base in georgia. where he was assigned to the 202nd -- when he was posted to south korea with a first signal brigade. he has three children. and it comes from a family that has been devoted to national service. his father served in the 82nd

airborne division. his uncle was a special forces and ranger qualified battalion deputy commander. and his aunt and navy nurse practitioner. thank you your family, for this extraordinary service. i would note he is testifying in his personal capacity, and not testifying in any official capacity, representing any views of the u.s. army. >> technical sergeant -- has lived on base at the shepard air force base in texas about four provided housing with his wife and three children. he deployed three times in support of operation and has been with the u.s. air force since 2009. like captain show and tourists, also testified in his own capacity. noisy representing the views of the u.s. army, or any military service. miss rachel christian, is founder and chief legislative

-- or a fha. national organization representing military families that was founded in 2019. thank you miss christian. and john -- is a military spouse, that has lived on base housing, in georgia. and in maryland. and has become an advocate, for other families struggling with housing issues, on u.s. military stations, particular for gordon, in georgia. on behalf of the subcommittee, we deeply appreciate your presence. we look forward to your testimony. i would ask you have to stand and raise your right hand and be sworn in and remind you that this testimony will be under oath. do you swear the testimony, you will -- it will be the truth, the whole truth, and nothing but the truth, so help you god? thank you. please be seated let the record reflect that the witness answered in the affirmative.

we'll be using a timing system today, all of your written testimony will be printed in the record in its entirety. we asked that you limit your oral testimony, to five minutes. captain show, we'll begin with you. you are welcome to deliver your opening statement. >> good morning chairman. and the members of the committee. it's my professional personal honor -- attitude to service members and our families from georgia, as well as some communities throughout the united states army. this housing community is provided by balfour beatty. the personal experience that my family and i, i will be the crux of my testimony today. a brief history about myself, i am a soldier. i used to be intelligence analyst. i have 12 years of service, before my military service, i worked as a banker for jpmorgan, and wells fargo.

i have a family, wife, and three children. my son the family is 14 years old. i call him my pride. i have my daughter, who is a subject of today's testimony. she is my heart, and i also have my son lucia, he is 11 months old. i call him my joy. to my family and my service, i find my wife to be -- the crux of my testimony today, is due to the fact that my daughter experience mistreatment, that she was subject to when we were at 1498 in georgia, circus 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, with my father and my mother before my military service. i didn't recall ever seeing any conditions that we have lived under while we were --

my wife and i have found that, my daughters experience's life altering. and that it will haunt her as well as us for the rest of our lives. she's diagnosed with -- to the point where it's potentially fatal. unfortunately the base of her condition, was founded upon, when she was exposed to, while she was out -- which is mouth -- my daughter, pride to her condition, was very exuberant and a vibrant young lady. very social, very amicable. willing to talk to anyone, stranger, family member, friend, whoever it may be due to a condition, she is reticent and engaging with anyone outside of her immediate circle. the literal scars of experience hunter. and played 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, all we -- the most factual personal testimony that we can hear today. i am very proud that i can stand here, and see here before the subcommittee, and 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 had experienced. while he resided at -- through the home that was managed by balfour beatty. it is my desire to ensure that everyone in the committee is fully aware of the circumstances to the timeline, to include key individuals, to include folks who are employed by them. as well as certain members of the -- on it is my desire to bring

that to light as conclusively as possible, so that way and executive decision can be made, they can positively impact the families moving forward. >> thank you captain for your testimony. sergeant, we will now hear from you. >> chairman -- >> you will need to activate your microphone. >> members of the subcommittee, my name is sergeant torres, thank you for the opportunity for me to testify today. i have served in the air force for 13 years, we moved into our home on august of 2020, at shepard air force base in 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 is likely a threat. the first major work order we reported was on march 4th, 2021,

with our water heater. during the repair, a balfour beatty technician forgot to isolate the water and gets fouled. this caused the entire house to fill up with gas, and water filled up in our mechanical room and hallway. -- afterwards the maintenance supervisor assured us that it was not possible formal to grow in the area, and not to worry. this was the first time we believed that the history did not reflect the true state of repairs in our home. for example, the technician noted that he had -- one actually -- issues with the work order of continued while living in the home. work orders would be open and close before completion frequently. i work warner will be attempted to be repaired. when we report the issue is unresolved, a new ticket will be opened. the maintenance database that looks as if to 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 reported it to the government housing office, and resident advocate. when our issues were still not being resolved, we contacted the armed forces, housing advocates, and with their involvement, we located more moisture and mold issues, in our mechanical room. i then reported it, forwarded my issues to my command and congressional representative. on june 11th, email balfour beatty to request a mold test. they did not acknowledge the extent of mold, or the request for a mold test. -- we sent the tests to a lab, where it was confirmed that mold was present. balfour beatty dismissed our concerns, and we were told that a large spot of mold in a mechanical room wall was just a burned mark. eventually on june 24th, a

license mold investor, ecosystem environmental, inspected the mold. it was not that they -- then work order was put into a system. four weeks after we reported our concerns. they reported data in july 2nd, mold visible throughout the home, moisture levels were found -- including the bathroom and kitchen. they recommended that all impacted walls be repaired, balfour beatty then hired another environmental company, 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 four weeks later, we found many issues unrepaired. there was even visible mold underneath the mechanical room and in the kitchen. ferc was completed with band-aid fixes, or ignored altogether. we immediately reported the

remaining issues via the residential portal. the work order remarked, web entered. it was later change to the category, carpentry. cabin interest and it, and the issues in the mechanical room where ignorance. the last quarter were closed as completed, never indicating that mold was president. shortly after moving back in my family and i began to experience the same medical problems we had previously. on january 10th, 2022 we discovered mold growing on the wall in the kitchen. a bell technician indicated to me that there might be a flat leak in the foundation but betty never provided a work order for that. we were displaced this time for 12 weeks. these displacements caused a great amount of distress as you can imagine having a two, five, an eight year old with us. i was also passed over a supervisory role due to my family's housing situation. i believe that if the general upkeep of my home had been taken seriously, as indicated in the first environmental report, our displacement

could've been prevented. while hesitant to tell my family story of how alphabet he has treated us, i will remain hopeful that congress can address how military families continue to be treated. animal's family should not be forced to live in fear of their own homes. thank you, and a special thank you to the arm for thing having administration. >> thank you sergeant torres. miss christian, in your opening remarks please. >> chairman, ranking member johnson, and members of the sum committee. thank you for the opportunity to testify before you today. and allowing the on forces having advocate to share the stories of thousands of military families that have been impacted by systemic failure of the military housing privatization initiative. my name is rachel christian and, i'm one of the members of the armed forces housing advocates. it was a non profit administration created out of necessity to help families living in providence housing throughout the nation. since 2021, we have helped

15,000 families resigning in military families. personally i have been advocating for military families and 10,018. we take a graft routes a military housing across the united states. in the past year, i have seen environmental have that such a mold, lad, asbestos and raw sewage being improperly handed by untrained staff. work orders being close prior v -- by bell for beady employees. after tried to silence them from seeking further on safe conditions in their home. i have seen denied enclosure of simply due to balfour beatty not wanting to complete the necessary maintenance and repairs. a large tree limbs fell on the car which just moments prior held an infant inside. that request to remove the dying tree in the yard was denied by balfour beatty in the months prior to the incident. the most morally egregious

behavior i've seen while assisting military families resigning in balfour beatty homes it was the way that individuals with disabilities are treated, and their civil rights consistently violated. disables military families are being faced with excessive red tape when asking for excessive -- for documentation in personal formation as well as the length of time to get a request approved violates the law. it is inexcusable that a military spouse should need to be based by her husband because balfour beatty refuses to provide proper accommodations for her disability in her bathroom. her husband as a service member should not be in constant fear of leaving for training and deployment because he feels unsure if his wife will be safe in their home. the safety inside of a balfour beatty in home is questionable at best. i've seen concerns of military figures been repeatedly discouraged. a child was tested for high

lead in their blood, after certified testing was completed and showed higher than exit will levels of lead bait hate inside of the home. still balfour beatty denied the lead based paint in the home was responsible and refused to abate or encapsulate the lead based paint. that houma still available for unsuspecting families to move into today. these conditions are not only harming our military families, but also costing military treatment if acidity's and other for millions of dollars in medical care. it could be avoided if the homes were properly maintained. these issues that i've cited are only a small portion of the -- they are not unique to one insulation or location. they are mirrored from one city to the number. balfour beatty often claims that the problems we see a regional, with a few bad actors. we strongly disagree with this notion. when corporate leadership is directing the action of local employees, the issues are inherently systemic. a little over three years ago i sat in this very building listening to the senate armed service committee listening to

the deplorable condition of military housing, including those run by balfour beatty. how many more cases of negligence, fraud, and civil rights violation must be presented in this building before it properly held accountable and banned from receiving further government contracts as well is removed from the current partnership with the department of defense. balfour beatty it's already admitted to defrauding the government. but it is not just the government suffering in this case, it is service members and their families. they are the ones being forgotten, pushed aside, and being made sick by a company that continues to choose profits over people. when the service members are deployed by the very companies that promised to depict them, our troops in operationally ready. no service member should have to choose between costly -- and purchasing groceries. no service member should be leaving sleep on deployment mooring that their family is sick or injured in their home. no service member and their family should be homeless while serving this great country. it is time that service members

and their countries are all treated with the dignity in family that they reserve. 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 service members and the safety of their families. >> thank you miss christian. miss warner we will now hear your opening statements please. chairman ossoff, ranking member johnson, members of the subcommittee. thank you for the invitation to participate in this. i name in jana wanner, i've been a proud army spouse for his past 12 years. my husband is a private first class b has been in the army 15 years. we have two children, one with special needs, who is enrolled in the two children exceptional program. our family moved often, like

many military family. we are currently at our fifth military station and fourth gordon for the second time. during our first tour of fourth gordon, we arrive from gordon and not have time to look for officer had thing. after the waiting in a hotel for two weeks, we were offered at home who had a active leak from the refrigerator, cigarette butts scattered on the stare, as well as johnson roaches on the floor. when questioned about -- the balfour beatty member said that roaches are normal in georgia and the contractors must of accidentally left the cigarettes behind. over the next three months we had freaky work orders to fix the lead mold issues in an air conditioned that did not work properly and at one point declared a fire hazard. after five months of living in these conditions, we move to a home outside of the installation. i began my advocacy four years ago while station in maryland. after our own experiences as a family with the lack of proper accommodations for especially child, and mold issues in our

home, i decided to speak about these conditions and military families are listening. after retaining to fort ord and for the second time in 2019, i began hearing from military families living on the inflation with various having concerns. my self and others joined a group for fort gordon families with having issues. on average each month we hold dozens of families to deal with mismanagement of installations. dealing with leaks, mold, and well as lack of transparency as far as having weight let's. these are a few of the things we constantly hear about from other families. work orders for maintenance requests go unaddressed or ignored for monthly time. more specifically, one resident had a work order out since december 2021 requesting repairs to their master bedroom ceiling with water damage. the ceiling appears to be caving in from the damage. maintenance has not address their concerns and putting the work order in. several other residents have reported other incidences

revolving around water damage. limited damage with work orders that have been left open with no timeline for the repairs. one resident requested a move in checklist document pre-existing damages. that there is no form to initial those documents. they are than told to email the housing office with these damages, they will be kept on their file. however after several fruit they were told that their documentation was never received. 88 accommodation requests or other accommodations are also been ignored or denied. there are currently no standard proof requirements for accommodation needs. how far has been inconsistent with their requests than they have for a reasonable accommodation. some families that made reasonable requests for accommodation in promising a one level home and then finding out what they were offered was not and when that will. home of our families have requested 88 homes due to medical needs, only to be placed on a several month long wait lift for a developer not leaving the home available for

need based families fear and valleys -- and a lack of clarity on how to report or common presentation to families when they discuss their fears. residents have recently discussed what is sometimes disguised as abuse that prevents them from speaking up further. from families you have never lived in military families before, the process to dispute even more confusing in unclear. without a beloved ray or the dispute content we are well intention. more work is still needed. thorough inspections that are not based on cosmetic expression of the home, but also ensuring that families with special needs not have extra layers of red tape to have access to ada or reasonable accommodations. military families take sacrifices every day, a good home should not be one of them. thank you senator for the opportunity to testify. and addressing the health and safety of military families. >> thank you ms. wanna for your opening remarks. i will now recognize myself to begin questions of our first panel. captain choe sergeant soares i

want to thank you again in particular for joining us and four year service to the country. you were recently deployed with your country and can't pump freeze, south korea. you had just flown 7000 miles on a 17 hour flight to testify here today. can you take a minute to explain to the subcommittee while you felt it was so important to be here? if you wouldn't mind making sure your microphone is close enough to capture your remarks. >> thank you chairman, this question is easy, my daughter. no one else would be good for my daughter. no matter how many times i spoke up for my daughter while we reside on post in oregon, dozens of interactions whether it was via work orders or in person, whether it was submitting concerns va concern, or primary point of contact due to the facility manager there, it was all ignored. the reason why i am here in front of everyone is because my

daughter is still under the same health condition as she initially contracted due to the home itself. we were informed that this is a potential lifelong condition. this is also a potentially fatal condition, if she is exposed to the right circumstances of black mold and mildew, which proliferated in the home we reside in while we are in base into. the timeline that we resided was from august 2019 up to february 2021. my daughter, her skin -- once used fool in supple is now reptilian in nature. there are numerous times she wakes up in the middle of the night, hands covered in blood, her scratching was sweeping in her bedsheets are also covered in her own blood. how can you explain to an eight year old child while she has to endure something like this? if it was something that my wife and i could control, by

all means we would take responsibility. we will do the very best as parents to make sure that she's not under the same conditions going forward. the condition that she resides in were due to outside factors beyond our control, primarily championed by balfour beatty who provide direct oversight to the homes in landlords across numerous military installations across this nation. it is very important that i'm here today regardless of however many times it takes to fly from one part of the world to the other so i can provide the accurate truth of what we endured. my daughter's condition, she has to have a very powerful and potent in jackson, which retails between three to $5,000 for injection. starting from july, 2021 -- excuse me up until february of this year, she received injections twice a month. i broach the concern that if my military can service a concluded prior to retirement, what would happen to my daughter? that means we would be

potentially paying over 70 $200,000 for out of pocket banks and for injections that she had to receive due to circumstances she was exposed to outside of her control and our control at the base, ran by. chairman, i do not know how to convey to you anymore strongly how much this has impacted her. her sense of self, worth, who she is, and has firmly changed. again i mentioned she was a very vibrant and socially young lady, now she is withdrawn, reticent, he has sought out counseling services to her school. she had sought out military counseling services, as well. to include a chaplain and previous organization prior to my department -- it goes without saying that this is something that is always on her mind. there are times where normally, most parents would ask you child, how is your day today?

what happened at school? what was your homework? do you need anything sign for your teachers? my first question is, how is your skin today? how are you feeling? how is your cheek, are you bleeding? show me your rashes. she resembles a burn victim at her worst. at her worst, abs and flows because her condition will subside and then flare-up, periodically, every month or two month despite any injection that we provide her. any ointment, topical treatment that we prescribe, or prescribed or over-the-counter. captain cho, had your daughter ever had rashes like that? the symptoms of this severe dermatitis that she developed prior to moving into year balfour beatty at fort gordon. >> she exhibited her rashes only after residing at fort gordon. >> with your permission i would ask that slide 32 would be

presented to the subcommittee, which show some of the symptoms. you can take that down now, i want to ask you captain, you went to see analogy specialist on post a number of times in the early month of these without being in your daughter. what we've lived by these medical professionals? >> the medical professional at the time who treated her throughout pretty much the majority of the condition, he and for my wife and i that at first he tried to determine which factors were in play? if she was exposed -- the only two other allergens that she has, a mild allergy to cats and dogs, we responded white promptly because we did not own any pets, our neighbors don't own any pets. nine wife and i do not interact with any pets due to that. it was shortly after that where after conducting a series of skin test and blood test she determined that she has in analogy, or condition,

dermatitis atopic dermatitis. but to such an extent where it is severe. we were extended alarmingly that it was potentially fatal. >> captain choe you've been raised this issue with balfour beatty, they came in february 2020. i understand they told you that they did not find mold in the home. was at the end of your friends concerned of mold? or did you continue to raise the concern with mold with balfour beatty in the months to followed? >> i firmly brought my concerns to in balfour beatty one form or another, whether telephone or in person, email correspondent, from the very beginning from the very beginning up until my departure of february 2021. >> let me ask you during this period in the middle 2021, you were reporting to balfour beatty on the urgency of your request, you were observing this mold it be remediated. were you doing that mostly in person, or over the phone? >> i'm sorry chairman, could you ask the question one more

time? >> were you making those requests principally in person or by phone? >> we primarily provided a work order via the portal that was provided to residents. once we were notified of the condition from the physician. we -- were told the time it was inconclusive, it was negative. we continue to press the point of mold. we were told to contact the manager of the balfour beatty organization there at fort gordon, directly. ours actually handed her business cards. going forward, i would need to communicate with her directly, or with her staff. i attempted to numerous times. >> let me just understand, you were specifically instructed by balfour beatty personnel that you should, moving forward, raise these concerns directly, verbally or by phone, rather than via the online portal? >> that is correctly. >> so balfour beatty told you deceased using the online portal and said place those

requests for help directly in person or by phone? >> yes, that is correct. not just a supervisor, it was the manager of the balfour beatty community, ethel gordon herself. >> thank you, we will dig more into your story. i will yield in a moment to the ranking member but before i do i just want to ask you to turn, casten choe -- to exhibit two. this is an email that you sent to miss paula cook that balfour beatty months and months later, after, as i understand, your request for assistance with mold in your home and have been ignored for months. you have been extracted by about four personnel rather than using the online portal, to place those requests verbally or by phone. at the advice of your doctor you had then thought to break

your least, balfour beatty try to prevent you to break release. you had to your change of command. after engaging in chain of command, while living for months in a home with mold and your daughters health which have really impacted, you finally were able to get out of that home. >> yes, that is correct. >> we will get into how balfour beatty nevertheless proceed you for collection. i want to just ask you to read the final few sentences on the second page of this email. >> beginning with, i am just a soldier. do you see that, captain choe? the middle of the final paragraph of this email? >> i am just a soldier, husband,

and father, attempting to reconcile while this has taken place. my family and i were not aware that we are at the mercy of executive decision made at balfour beatty four detriment and my daughter's health. you, miss koch, along with representatives have accomplished you little,. >> thank you captain shiloh, sergeant torres we will engage with you for the second round question. at this time i yield to ranking member johnson. >> thank you mister chairman. i've got one of my first questions answered. is your doctor improving it all, it doesn't sound like she is, at all? >> no, senator, she is not. i want to explore, i think a number of you mentioned retaliation, that would be retaliation by your command, right? i want to understand the finger-pointing, the shifting responsibility in terms of what else transpired he.

captain cho, your daughter was treated by military doctors? >> he was treated initially on posed by military doctors, and then he was referred off post as well. he oftentimes went back and forth between the two. >> do the military doctors, did they find a cause to her skin condition? today they say, this is typical of a rash brought about by mold? >> only at the initial period. after her two initial points, the epidemiologist made the determination that it had to be something that is triggering her conditions physically. if she is only going to school in home, it has to be something other at the school or home. >> did the doctor or anybody in the medical clinic try and follow-up to see what the conditions were in the home? that might have been giving rise to her skin condition? >> yes, certainly did. he followed up with myself and i'm we correspondent. we had mensch communication,

email, dozens of times to try to pinpoint the cause of her condition. he surmised at the beginning, he did not want influence me indirectly or directly, that it was the home itself. >> that he then advocate for you to the base commander? >> no, he did not. i had to go through outside channels to have the garrison command eventually become involved. >> what was the response of garrison command? >> quite frankly, i was told by the kerosene commander, and the garrison sergeant major, but they thought that this was not founded. that my daughter's condition was not predicated upon being exposed to the mold at the home itself. which i was quite upset about. >> so, they just dismissed any connection between how going into dollars condition? >> 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 least at the time, that is correct. >> so the new your only channel of addressing this was to then go to balfour beatty? you are pretty well left on your own to deal with the situation? you've got no help from your base commander, garrison commander, anyone in the military chain of command? >> the base commander i believed was not aware but only garrison command. i use the colonel lines of effort to try to mitigate this between the position and he providing memorandums of statement to my daughter's condition is. as well as garrison command. i found that carson command failed me, i found that the physician was only tied because he can only do some months. he is not a person of influence, he can only provide facts and his funding to whoever reviews that information.

i use my direct chain of command, which they internally determined was this was not warranted. they influence the change that was necessary for us to ultimately break or at least and leave the home itself. >> so in the end you did get help from your chain of command, at least in terms of getting out of that household? >> after much effort, yes. >> did someone else move into that house after you? >> immediately after. >> sergeant torres, i think you are understanding my lot of torrent -- i think can you call it a one around? what type of run around and you experience? you mentioned retaliation, can you be more specific in terms of what happened as you tried to get your issues addressed? again, from your testimony i can see that your family experience experienced a wide range of symptoms. >> get the microphone as quickly as possible, i'm a little hard of hearing.

. >> i told balfour beatty about all of our issues. when we are trying to get all addressed and we were not getting anywhere, we contacted government housing offices. even through contacting them and the resident advocate on the base, we were still not getting the help that we needed who venture the -- >> backup please, if you could describe government hounding. >> we notified them, the government housing office. >> i was gonna say, is that in the military of command? >> the military chain of command, -- >> they report up to? >> they report up to the base commander. if there are any issues, we can address the housing office and they advocate or help us out. they contact housing of in balfour beatty terms of issues in the home. can we get these issues addressed? even when contacting them, you

have to constantly emailed them. we had to request them to show up to the inspection because if they did not they were gonna show up. we were trying to prove that we do have issues in our home. can you please show up? we were getting nowhere, we had to resort from requesting an advocate out an army based, an arm or a way to get any help. their client has done more help to us in our family from a completely other base at the army post. the advocate in the government housing office in my bag, he came -- when we were being dislocated, my commander notified me that i was being desiccated, i hadn't heard that. he was trying to get information because he wasn't in on any the information. it was actually the government housing office was actually supposed to be telling the base commander about our issues. he didn't know nothing about

our issues. >> is it fair to say that the government housing advocate did not advocate for you? >> no,. he >> pretty much blew off your concerns? >> correct, he said the 1500 individuals like captain joe and sergeant torres, can you kind of summarize what you've seen, or do you have any particular examples? is this particular, or is it just usually around and a bunch finger-pointing and nothing gets done? >> absolutely, you see this everywhere that you go when you are trying to get assistance. to get any even minor request, you know, completed in your home these are cases of systemic issues in their home. even something as simple as, i need the toilet recock because it's gonna start leaking, you are not going to be able to get somebody to come out to your hull to fix that in a timely

manner. if you do try to seek assistance from the government housing office they will tell you, flat out, that they have no power to force balfour beatty or any of the other housing companies to act in your home. there's scope is limited. when they go up to the installation level to see jack or to 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 shouldn't even be having to go through to get simple fixes in their home >> i'm overtime. the phrase you just used, agencies, or within the chain of command, should have the power, according to members of the military they have no power. that's kind of a key part right there. is that true?

they do not have the power, why not? why hasn't the military not empower them to make this right? chairman? >> thank you member johnson. you're recognized for seven minutes. >> thank you so much. i had an opportunity, to personally welcome and great witnesses a few -- minutes ago. we have a relative number of hearing comedians, i can be in and out here today but welcome. little background -- i've been serving in the u.s. senate for -- and living in military housing around the world. to represent the air force space, and i've been a senator for 21 years, and a governor. i love that base. in fact my community -- the abilene trophy, i don't know if anyone's ever heard a babbling trophy before.

it's an award made to communities at air force every year around the country, communities have gone the extra mile to make sure that the men and women of the air force, and that community, are welcome, and loved. and we take really good care of them. i don't know if there's any america, -- i don't know any air force airlift base that has won the commander-in-chief award, more than the space. we have c-17s, and we also i think most people know, the place for our fallen heroes to return to our country abroad, and 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 a base housing. where families can stay in. and others in the air force. and, it was okay. but not great. same situation around the country. a lot of base housing government on government housing. it was pretty good. some of it was not very good. i think it was during the reagan administration, i may be wrong on the timing. one of our administrations decided that, we ought to try something different. find out what works, and do more of that. and we can provide better housing for our families. the idea came up with a sort of public private partnership, where private sector would be built, and largely the base housing and partnership with local commands. it would be a good idea. and a lot of basis, it works

fine. and some bases including dover, not too well. we started hearing three or four years ago families on our base, that some of the problems with mold, and leakage, that kind of thing, we are of concern. and the families wanted something to be done about it. the companies had the contract for housing, they were not responsive to those concerns. we were put closely with the commanding officer of the base, i was on the base to make sure that they the families receive the kind of treatment they deserved. and we pursued this with the committee of jurisdiction, two years ago, the committee passed legislation admire, john any urgings of many folk around the country, to better ensure this

model of base housing for families. and that it was improved. and, the constitution which was adopted believe it or not five miles from the air force space, first adopted, ratified its stride -- and order we the people in united states, to provide a more perfect union, and everything we do, we can do better. the expectation and the change in law with the national defense act, is we gotta do this better. we have to do this better. this hearing is a good opportunity to begin some oversight on the work. i think a good one that we are starting. that we started two years ago. that is a preface. i want to jump to a question or two if i can. captain.

in your view, with the reforms adapted by congress, due to the defense conference -- were you happy with the difference that we tried to make, for military families? >> no. >> tell us more. >> i'd like to be precise. >> tell us more. >> for my family, we have a 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 balfour beatty is acutely aware that my daughter has health condition predicated on this. and no response. certain times, we were told that we are lying about this. inclusively, no. >> let me ask, i want to get your rank right.

same question. we spent a lot of time trying to get to the root of these problems, and try to fix it. one thing he did is, basically said that commanding officers of the base, you have a responsibility here to do something, to fix this problem. let's take charge and that is what has happened in my base. please, go ahead. >> even with all of our issues, it seems that like even with base commander, and wing commander, they did not really have the power to, we requested to move to a different section. and even then, they could not get, did not have enough power to really move us to a different section all because, i did not have the risk required for that. i even said i wouldn't cough up the difference in terms of -- out of my own pocket, just so we don't have to live in the area where mold was. where it was known to be in in

a certain area of base housing. >> okay. same question. in terms of the changes that you are expecting, 20 legislation -- >> i was really hopeful those pieces of legislation came down, our team was really excited. to see the implementation of them. but it is not working. we had ten page leases, that are now 110-page leases, that military families are having to read. because they were trying to create a universal leave. that would simplify, things that really, it exacerbated the problem. as well as, the formal due process, it is 48 steps for air force service members. you can 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

say, we need a habitable home. because the tenants need to guarantee that they have a habitable home, the companies will ask us our definition of habitability. so we have such a broad language in that. especially with industry standard being -- you are expecting industry standard. but that is not across the board. the oversight feature for the commander i would love to say that i have seen that go well. that is where we see the most retaliation, because now, those insulation commanders. they are not all that accurate. but there are some, who see this as a number. that they are trying to not wreck up on their installation for complaints because it is. going directly through their leadership, and it's going to reflect poorly on them. i have witnessed installation commanders giving misinformation to disable families about what their 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, they should just stay quiet. >> i'm out of time. i'm going to ask you to answer the same question for the record, chair, i think it's important, that the question for me, and the issue here is why having the -- reforms been adopted two years ago, worked the better? i would like to make it better. there is work to be done here. i think this subcommittee can provide very important oversight. and work in conjunction with the service committee to get a better result for a family. last thing i would say, a huge number of jobs have been created in the last year or two. one of the questions i was asked, is to go to the base with the commanders, and how do

they need to do recruitments. one of the keys on retention any recruitments is, how happy is your family? and how happy was your family before they -- this is a recruitment and retention issue as well. thank you. >> thank you senator. you're recognized for seven minutes. >> thank you very much mister chair, and ranking member mr. johnson, i want to thank the witnesses for being here for your service and for your for your willingness to 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 the conduct may have a my constituents. new hampshire is home to portsmouth naval shipyard. the shipyards private military housing is also managed by balfour beatty. miss christian, miss warner you talked about this a little bit now with senator carper how widespread is the misconduct by

balfour beatty and other housing contracts? >> 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 in issue with wore quarter closure prior to completion, any kind of mistreatment of military families. >> thank you miss wanner. >> i agree, it is widespread all over every base managed by balfour beatty. work orders will remain open for months at a time. accommodations are not properly addressed for special needs families, disabled families. >> thank you, i'm going to follow up on that last point in just a minute. i appreciate the testimony just now to senator carper on why things have not gotten better since 2021 ada division we. we'll follow up with you on that as well. i want to go dr. torres, to a

different issue. your bad experience happened just last year. more than a year after the passage of private military housing reform in the fiscal year 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 he said that balfour beatty miss classified your work address to address mold in your home to another type of request, such as carpentry. to your knowledge, did the work order system maintain any information about your original classification as a repair request as a mold request instead of a carpentry request? >> no, when we originally looked at the report it would be classified as one thing the one that was in their. and then maybe a day or a couple of weeks later the title would be changed in terms of my background, i am a heating and

check mission. i am working on work orders all the time. i am able to track and look at this kind of stuff. i know that if a customer puts in a request for a work order, the title should not be changed, and it should not be clothes before completion. you always have to verify did you fix it? is it actually fixed? if not, you are going to have to reopen it. if it is closed, and you open the same work order, this is how it is done in the air force. we reopen the same work order. not close it and reopen a new one. >> i want to confirm here, you are saying 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. >> changing the title, even the day, the date would be open and they would close it. any remarks, all that stuff we have screenshots of a reports

it being one thing and then the date and everything being changed on another. things would not match up. even to this day the work orders are still being changed. i even -- text messages the work order is being closed out even though we've been displaced for 12 weeks. it's saying that the work order is still closed the week before. >> i want to follow up both on what he said and what you said about following up work orders. you had said that the work orders frequently would be closed before the work was completed satisfactorily addressed. or that work orders will be closed after superficial closing -- 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 that you have been adequately we addressed? did you feel pressured to close those work quarters at all? >> no, we did not have any control on whether the work order was closed or if we could

reopen it or not. all they would tell us it was, open a new work order. >> that is deeply troubling, that is really concerning. work orders are there to help residents get their problem fixed, as you pointed out in your own experience as a technician. if a president does not believe the work order was rather addressed it should be able to be kept open until it is properly addressed. miss wanner and then miss christian i want to turn back to you on the issue of families with disabilities. and both of your written testimony you highlighted the struggling for military families with disability experiencing 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 domination. what's, if any information does balfour beatty give two potential resident about this process to request legally

protected information from military families with disabilities before they decide to live at a balfour beatty president? are you aware of any standardized process for requesting accommodations? i will start with you, wanner? >> apparently there are no standards that balfour beatty reports to the family. they will ask for excessive things like full-blown medical records. there are no standard forms that the medical provider can sign to say the family has a need for ada accommodation or special need request. there is a medical waiver that can move the families up on the waitlist if they're waiting for and ada home or a one level home, but they are discouraged from using that waiver. >> how are they discouraged? >> so, i can tell you personally in my family is going to that process right now. the regional manager assured us that if we sign that waiver, every military family that has been waiting on a house in that neighborhood, if we move ahead of them they would come after

us. >> wow. miss christian, anything to add? >> i would just like to add that we, as annualization, 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 with the federal law is. even when providing medical documentation from position stating that there is a disability, what is the accommodation requests are, those are still denied. local levels, wherein requesting more information, which is a violation of their civil rights. >> 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 long-standing 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. to make sure that one of our contractors follow law. thank you. >> thank you senator hassan, i will leave myself seven minutes additionally other members may be en route to this panel. take us back to 2020, you have been in -- battle or request not through the via online system but firmly on the phone, correct? >> that is correct. >> and you are making those requests of balfour beatty in the summer of 2020, year daughter's health condition continues to worsen, what response do you get? >> no response. >> no response! am i correct that your doctor or physician shortly there advise you that you need to leave the home. >> that is correct. >> so you had been instructed by you balfour beatty should place these requests were

believed in via the online were quota system, you have done so repeatedly. your daughter is sick he has seen mold in the home you're getting no response, your doctor tells you you need to move out of the home. you approach balfour beatty to break the lease, what happens then? >> if i was given the opportunity to break our leads, or at least at the very minimum provide by another home to preside and while they can mitigate the conditions of the current home we were asked. we were categorically denied both of those choices. bow for stated quite clearly that we would have to continue to honor the least that was in place and that time. >> he repeatedly reported moulton got no response, you doctor has told you need to move the home for the sake of your daughter's health, she has now a severe dermatological condition. you asked balfour beatty how to get out of the home and they tell you think you can? >> yes, i had to make something called an ice comment. throughout the d.o.d. is considered a very serious comment system or feedback

system where we can provide feedback regarding certain services rather good or ill. in this case it was certainly not positive feedback out provided. i was contacted by a supervisor, teddy trip, the gentleman's name who told me that basically we would have to change the home, and there was no other homes available. there were essentially no other options available. i responded in kind by saying, when i was told personally, very specifically, by the manager at the base, february of 2020 when our home had the initial test for mold conducted, she handed me her business cards and encourage me to contractor verbally or come by the office to correct or i adhere to that as strictly as i could but in the interim we, we submitted work orders and whenever a condition would come over to takeover of a faucet, a broken camera dortmund, have the case may be, we told them there is mold in upstairs, there's mold in a room, in a dotted room, there is also mode in the bathroom as well as the

kitchen. we were told everything ill-timed, the mold to be addressed by the management the management would be in contact with them. and never took place at any point time. >> you made these requests repeatedly would technicians who are sent to the home, as you instructed to by balfour personnel. you told your doctor you need to leave the home, your approach balfour and you try to leave the, home they try to prevent you from leaving the home, and accuse you of lying? >> that is correct. even the day before we officially moved out, my family already relocated to another home. and february of, january of 2021, i was at the -- day before there was a couple things that -- i made sure that eight balfour technician came out. that generally came out, he fix the issues that were there. it was a broken light bulb or 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 black and paint chips, that the mold had a proliferated there. i stated very clearly, this is the mold we had been complaining to you about four months on end. i asked that you notified your manager, tom rodriguez, to have this addressed as soon as possible. following that, my family and i, myself and my chain of command, we all had a discussion with balfour, on how we could come to a compromise. there is no compromise. we were seeking to have our move funded by balfour, if not them, at least -- both denied our move. well i am dealing with balfour representatives, as well as the garrison representatives, and the garrison command team, to include the housing manager at the time, my wife is seven months pregnant, and is moving things on her own because none

of these orders will pay for our outpost move. i am not lacking as far as financials. at the same time, it's the principle behind it. if our home is a source of my daughter's condition, and we have been told distinctly that we need to move a post, we will move of post by all means. but the principle behind it is, balfour should provide some sort of support, or the garrison. >> after great effort, engaging the garrison command, making repeated requests, you managed to get out of the home. you sent an email, reporting experience. did you receive an apology in response to that email? >> i've never received an apology from balfour beatty or any representative. >> did you receive a collection notice? they threatened to send a collection agency to you? >> to add insult to injury, yes. >> when you challenge that were you [inaudible] >> yes. i challenge that by saying, it's being purposely sent to me,

stating the charges that were notated on the question itself. if this was an internal air, it should've been -- >> thank you. senator arrived, with one minute arrived. so tours, i want to speak on one specific aspect of your case. your wife suffers from respiratory condition. correct? >> yes. >> and, you have repeatedly asked ball four to remediate the mold in your home. you're initially told, there is no issue. finally, you place urgent request, they sent an inspection company to inspect the home. correct? >> correct. >> the inspection company finds that there is 175 square feet area and your home, that need to be remediated, or replaced. correct? >> correct. >> at the same time, has hired another company -- this mold inspection report saying that there's no --

they go ahead and remediate the mold. here is the point that i think is important. i will ask that my team, i prepare to show, slide for. you placed these work orders upon returning to your home. and you reported mold. correct? >> that is correct. those are your work orders. he described mold on the floor, the bathroom, and under the mac room. that is correct? >> correct. >> i will ask that slide five be depicted. here at the bottom. we have the internal data from balfour system, which they used to maintain work orders. the classified you request as carpentry. so you've placed two work orders from all of in the home back. those are filed internally as carpentry. you can close the slide. i will ask you miss christian,

when you look at their? >> 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 seven-year maintenance history, or when any of the information is provided for the next ten, it it is not going to be correct. also, it's way easier to close out a carpentry request, that it is to provide a full scale remediation. >> we'll get into that more with full force representative later. thank you miss christian. i'll yield seven minutes to senator lankford. >> thanks for being here. i have a good feeling, none of you really want to be here. and that we 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 folk. through this process. really do appreciate that. i want to ask your question,

it's been asked before, i want to follow up on it. it is, when the command leaders were taken out of the equation, they lost an advocate. the plan was, to be other advocates that were there, but those advocates were not able to articulate that. why? why were they not able to articulate issues, and get results? >> this varies from branch of service, the type of advocate you have in the installation. but i will say, none of them that we have come into contact with, which is a majority of the military installations of the country, have training in housing. so, they are not equipped to understand what an inspection should look like. for example, i'll give you, north carolina. there are certifications for home inspection. but the person who is supposed to be your advocates, is going to walk through your home, and tell you whether or not something is awry in your home. i've seen them miss mold, lead

chipping, they walk through it a lot of the time with the housing company themselves, they lean on in this case, they lean on balfour beatty assistance, to understand what is actually going on in their home, because they are not trained. >> what's solution for that? are you suggesting states would imitation? some sort of federal certification? >> absolutely. and history standards. they need to follow state law. someone who would be providing the same type of inspection, at a another facility, they need to be trained in understanding the state law, the fire code, anything that you would need if you were to inspect omits elation. >> would you put that person under the authority of your commanders at that point? to be able to have, again, somebody that they answer to, or that they work for? >> personally i would hope that, we have a true third-party outside of the partnership.

because this is not a contractor, either partnerships between the branch of service and the housing company, so if you do report directly to them, they have an incentive to have their partnership functioning. they do not want that to fall, so it needs to be a true third party outside of that. so, balfour beatty and must be the large defer based one of the largest in the country, and then eldest air force base. it was put into a grouping of multiple different entities, tumble was one of them. kendall in that mix, obviously getting abbreviated in a hurricane there will be lots of new construction nintendo, because of that. there will be a lot of construction throughout altus. altus is suffering the consequences of a hurricane literally on the other side of the country, due to the grouping there in.

the local first that i hear from individuals on base, when we hear from leadership, they are very pleased with the turnaround that balfour beatty has had in 2018, all of the mold all the issues was nonresponsive. at altus we continue to be able to get banded fixes for things that should be replaced. they are actually just constant band-aid fixes, and now it will work for a few months and then i will be calling you again. it is too big issues that are here. one is trying to be able to balance out where there is a hurricane in one area, every other base actually gets punished because of that. all the focus will be on something else. how do you deal with the issue of band-aid fixes that actually make repairs so this isn't just a nuisance for the family? do we have ideas on either of those? >> if you don't provide a band-aid fix and you provide the correct fix the first time! then you will not incur the cost of continually go out to try to band-aid fix the

problem. >> i get that, totally, who becomes the advocate to actually make sure it is not a band-aid fix. it is something that actually gets repaired or replaced rather than just a patch on it. someone has to be in that chain of command, obviously, somewhere there has to be accountability for the residents to be able to say, i know that is not gonna work. everyone else knows -- but they say i fix it and they wrote it up and turn it in. >> i believe that was in the intent of having the government housing office in the installation. to do that. but the residents absolutely need an oversight tool that they can report directly to, outside of the installation. outside of these employees. >> okay, i want to spend a little time with us i want to be able to ask you this as well. let me quickly just go through your time, sir sergeant. thank you by the way i may go ahead and ask you this. you have lived in other places that were not under balfour

beatty, what was it like comparatively? >> it was actually well we never had any issues when we are stationed to other places. never once had any issues, especially where they know my background, they know what i do, they have always put a work order in and they would be there right away. come out and fix it, never had any issues. my family never had any problems. i can be at work, i was deployed twice, three times actually, i never had to be worried. i'm an instructor. every time we put a work order in i would have to be at the house because my wife is scared to, you know, they would blow her off because -- they don't want to talk to the spouse. they just want to talk to the military person if i see something wrong they can go ahead and tell my leadership and then i will get in trouble for it. it shouldn't be that way. my wife is a stay at home mom. she should be able to call the work order in.

they help her out as much as they can, not from me having to be there because my wife is scared of being there with the technician. >> yeah, i totally get that. they should be respectful of that. she is a resident of the house as well, correct? >> correct. >> why should it matter which resident the house is calling in the work order? same issue, you lived another issues not with balfour beatty as the primary caretaker of the home. can you compare the two? >> my family, my father in particular, quite clearly if you have the opportunity of off poster on post, a waste who's off post. i had asked him for, when i was younger, up through a military commands and he gave me very sound reasoning. unfortunately, this is the only time that we lived on post and it will be the very last time i live on an insulation. it shouldn't be that way. >> it is one of the issues that we face at altus air force base. it is older housing that needs to be redone, completely.

now we are on the bottom of the list because tyndall is gonna end up with all new. they are going to say that gets all new, altus in the other three bases that are in that group will continue to be get older and older. it is not what our folks need on that particular base. thank you all for being, here we thank you appreciate your service to the country. >> remember johnson. >> mister chairman, i think part of the problem here is the housing that these contracting companies takeover is extremely old, correct? is a, >> no, i do not believe that is the case. there are some that are older, they have different issues. lead, as best as, 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. no matter what, if you fix the leak it will not cause a problem. if you remediated correctly the

first time. no matter if they are new homes or old homes, failed maintenance is failed maintenance. it is going to continue to occur. >> i don't want to put words in his mouth but, his air force base he believes the base commanders take charge of this and it's doing a pretty good job. it's never perfect but, are there some bases, are there some housing units that are in better shape than others? you don't have complaints or are there some real problem areas? >> there are larger problem areas, there are also installations that are having a better time with certain things. i can find you and 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 wouldn't say that anybody is doing it a better way that i would bring to you. i would love to say that. i would say, model everything

after this installation! our organization would not have to exist. we are 100% volunteer run organization that is handling a massive, massive, amount of clientele! >> you gave two examples of what the supposed fix from the andy a of a couple years ago. it took leases from ten pages, to 100. it took 48 step resolution process? >> correct. >> any other bureaucratic fixes like that? >> there are a ton! those are two really great examples that you can visually see. but just the process through which you need to request any type of this instance has become so lengthy that most families are given up and their homes continue to do here. >> some been counter-on this committee, i want to ask a couple of been counter questions. i have not gotten the overall extent of. this to my knowledge but i saw it looked like balfour beatty paid roughly around $34 million paid annually for its having

monument. is that accurate? >> i have no idea of any of those numbers. i would love to know if they are! [laughs] no, that is not something accessible to me. >> you wouldn't be able to tell me the total a government contract amount for managing this housing? >> no, i will tell you we have tried to get a lot of that information through the freedom information act request but it is claimed as proprietary. we get a lot of blacked out documents. >> i've run into the same problem when i tried to do the didn't oversight. i feel your pain on that. you did mention, this is common -- its profits over people. do you know what's the profitability level is? >> i do not know where the profitability level is. but, i will tell you it has to be good enough. they keep coming back to the senate to hear it. they have not tried to get away with anything else. >> well, i will obviously be exploring that with the folks here from balfour beatty, one of the reasons i asked the

question is if my information is correct and balfour beatty getting about $30 million a year they paid six 5 million dollar fine, i cannot crash my hand and say, why be in that business? how many other contractors like balfour beatty are there? >> 14 housing. >> generally we have 80 20 rule. 80% of the work is done by about 20% of the top five or so? >> yes, there is balfour beatty, liberty military housing, -- for some reason i can't figure the others. >> does your group find any difference in terms of the level of management with any of those companies? are there some companies that are just heads entails above the others? >> now, if you took balfour beatty out of any of the statements or anyone at this table row, you could interchange them with any of the other companies, i will say 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! >> so if i am a base commander and i have the power to use the free market system and say, you are not performing. i'm going to fire you and hire somebody else! it doesn't seem like there is anyone to hire to do a better job. >> i don't agree with that, necessarily. i think the fact that there is not ability is the reason this is occurring. >> right, but again there is not that ability, correct? that is the point i'm trying to make. and trying to drill down on what is the root cause of this. why is this continuing? again, in a free market, there should be -- and i come from the free market system. i campaign against excellence. excellence means, really high quality, really high customer service, at the best possible price. that is the free market guaranteed. something has broken down here, okay? my guess is bureaucratic fixes, that just simply don't work. bureaucratic mindset, it's not one problem we are gonna pass this bill, we are going to turn

it over here -- can walk away. the bureaucracy creates fixes like, 100-page lease. a 48 step resolution process, finger-pointing of the big run around and nothing gets fixed. i am trying to hone in on what is the root cause here, how can it actually be fixed. my guess, i would be looking for a free market solution in the private sphere. you have got to have something to replace it. that is why i'm talking about profitability. is there enough incentive for good companies to come in here and do the top job that we would all expect? again, i recognize you can't really answer that question. >> i would hope that there is! i would also wonder, like you are saying, you are competing in a market off the insulation, in a market where i am paying rent to you and if you are not doing a good job, you don't receive my rent. that is not the case for these

housing companies. that is still, three years ago, they requested for service members to not be able to have that allotted. that is a big oversight -- >> it also sounds like their relationships between people on the base, members of the military, and people working for these companies. is that a common problem? >> absolutely! that is an absolute problem! 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. >> i have no doubt that the armed services committee tried to fix this a couple years ago. i think the result of our investigation, the result of this hearing was, it didn't work! we had better figure out something better to do. anyway, i appreciate your testimony. miss chairmen. >> 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. it particular, and want to command these two extraordinary active duty service members one of them who flew from south korea at the other from texas, to join us. getting on the record your experience. the gratitude, this panel is dismissed and we will now prepare to hear from the second panel. thank you. thank you.

we will now call our second panel of witnesses for this morning's hearing. mr. richard taylor is the president of -- renovations and construction at balfour beatty investments communities, with overall -- military housing management activities, including preventative maintenance, repairs, and quality assurance. he has worked for the firm and his predecessors for 19 years. he worked in the industry nearly three decades. he also previously served in

the u.s. navy for more than 12 years. mrs. paulo koch just transition to vice president for -- responsible for leaving the company's new culture shaping initiatives. up until last week, she served as vice president of community management. -- army portfolio of military housing property and she has been with the company since 2007. mrs. koch is also a u.s. navy veteran. i appreciate both of you for joining us today. we look forward to your testimony. it's a custom of this subcommittee to swear in all witnesses. at this time i would ask you to please stand and raise your right hand. do you swear the testimony you will give before the subcommittee will be the truth of, the whole truth, and nothing but the truth, so help you god? let the flick that the witnesses answered in the affirmative. we will be using a timing system today. mrs. cook and mr. taylor, you

joint testimony -- will be printed in the record in its entirety. i understand mr. taylor will provide oral testimony on behalf of both witnesses. mr. taylor, let me read your remarks of five minutes. you may proceed. >> thank you for the opportunity to provide -- [inaudible] well-being of the service members and families across the 55 military installation reserve, including -- shepard air force space. >> would you just ensure your microphone is active. thank you. would you mind beginning at the beginning? thank you. >> ranking member johnson, members of the subcommittee, thank you for the opportunity to provide an update on the commitments of balfour -- across the 55 military installations we serve

including -- and shepherd air force base. i'm accompanied by paula cook, who leads the on going transformation of our -- bbc we considered an honor and privilege to serve those who serve our country. both paula and i are navy veterans ourselves. we have a special appreciation for a military housing -- in 2019, i made a commitment as the congressional testimony to two -- monetary repairs and -- deprive ties the health and safety of residents and prepare homes for residents before they move into one of our homes. i'm proud to say 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. -- and we see the construction of more than 15,000 new military homes and the very innovation of more than 14,000 legacy homes. since the start of the -- have developed projects

investing in total of 5.6 billion dollars to improve on base. -- we acting joint partnership and are required to coordinate with all of our d.o.d. partners on all aspects of the leasing, maintenance, renovation and development of our housing. our primary focus is providing residents with -- and maintenance support. we look to support these efforts by maintaining robust open communications with our residents. our resident portals allow the residents to do the work -- household maintenance, -- in addition, our new national call centers staffed 24/7 to initiate a work order, schedule maintenance, and provide updates. i want to emphasize we are committed to maintaining accurate work order data. we do not -- work order information. both -- have multiple checkpoints with new rabbit presidents before and after movement to identify

questions regarding the home. we supplement this personal outreach with our own resident surveys. the surveys are conducted by independent parties, -- after moving 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. nevertheless, we remain resolute in that pursuit. in 2021, we received just over 40,000 survey responses, resulting in an average surface order a four point 53 out of five. for the period of january 1st of 2021 through last week, the average work orders -- was four point 62. with over a third of our military housing consisting of aging units constructed by the military, we will never have homes that present zero maintenance issues. on average, we received more than 280,000 resident generated recorders annually. like with any residential housing property, there will always be challenging's faced.

appliances will break, utility plumbing and electrical systems will fail, severe weather will cause damage, issues will arise, customer service complaints will surface. i 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, -- through the pandemic. however, our obligation is to respond with manned repairs and service in timely and as effective manner as possible. -- voluntarily implemented in -- support of our residents. we reached the new d.o.d. for -- the bill of rights. we instituted a formal dispute resolution process, and we now provide seven-year maintenance for our homes. in addition, enhanced d.o.d. monitoring of housing has created another check and balance to ensure that housing is safe, fixed through government housing inspections

before any housing maybe offered. -- our residents are happy with our home and the service we provide. regardless, we are never satisfied with a small number of residents report dissatisfaction. we remain dedicated to work with the residents, our military housing advocacy groups, and the d.o.d. to address housing challenges. -- how we may further improve our performance and enhance the quality of life for our residents. again, we appreciate the opportunity to continue serving our nations military and to testify regarding our commitment to those efforts. >> thank, you mr. taylor and mrs. cook. i understand mr. taylor is offering those whole remarks on both of your behalf's. i will begin at with my questions. in the course of this investigation, my and ranking member johnson's team's, we have reviewed tens of thousands of pages of records, interviewed dozens of witnesses, most of that investigation

focused on 2019, 2020, 2021. the period principally after balfour his guilty plea. -- which forms of misconduct and mismanagement maybe persisting following that resolution -- before we get into that, mr. taylor, i want to make sure that we are clear on the facts related to that department of justice matter. it is the case, is it not, my time is limited, i wanna make sure we cover this concisely as we can, that from 2013 to 2019, your company engaged in a scheme to defraud the united states. correct? >> the record indicates -- >> is that correct that you engaged in a scheme to defraud the united states? >> yes, sir. >> from 2013 to 2019, your company engaged in a scheme to defraud the united states. i suppose the first question is, why should accompany convicted

of major criminal fraud then engaged in a scheme to defraud the united states remain in a position of trust responsible for the safe housing of the heroes, service members and their families, on installations across the country? >> i would like to put that into context. as you indicated senator, the period in which the behavior took place was from 2013 to 2019. when we were awarded to the allegations of improper behavior among some of our employees, we immediately cooperated along with the doj investigators, engaged our own third-party legal firm and forensic accountants to understand the root cause. we provided all that information in collaboration with the doj -- the investigation was ongoing. we did it quick. we did analysis to understand with the root causes were.

we did not wait for the outcome of that investigation and the settlement that was reached in may of last year, to act upon the things we identified were shortcomings within our own business. we took quick action. >> forgive me, my time is limited. we will get into the actions that you have taken and whether or not those actions had an effect. let's talk about what's constituted this six-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? >> it did. >> am i correct this scheme to defraud the united states included light lying to the armed service -- yes or no? >> lying, use a line. we put forward -- >> this is paragraph 24 of the statement effects, balfour beatty made false representations to all three service branches. >> we put forward false

incentive piece submissions that did not reflect the performance metrics at that certain location. >> 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 prevent to the military superior performance to what was happening in reality in order to secure interest payments? >> that's a fair statement. yes, sir. >> is it your position mr. taylor that despite engaging in this six-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? >> yes, i do. >> that is your position. >> for a moment, miss cook, we will return to some of the latest events, mr. taylor. i want to ask you miss koch about your experience in your position. i want to begin by asking you

to review for the subcommittee correspondence you received from service members who are 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, miss cook, turn to tap ten. you will see at the bottom, cook, customer comments. this is an email you received from a tenant in your housing. the email is dated september of 2020. would you please read the beginning of customer comments and on to the next page. it's not a long email.

>> okay. yes. i recently retired after 21 years of combine service. this is by far the worst housing i have ever lived in. we had mold in our house under the floor's, the walls, behind our cabinets, and in the bed. originally, -- in the closet. what -- the protest and the sewer line collapsed and we had to move. they gave me one week to vacate the house that was not for it for occupancy so they could work on it. i was forced to move from one house to another. physically disabled -- in the six months we remain there, they did no work on the house. the company's unprofessional and it should be removed from the installation. they have no clue what it means to run a safe and organized

military housing community. and the installation leadership needs to do a walk through of healthy -- every resident. i know of several people that have multiple issues with their homes. nothing seems to be getting accomplished. since i am no longer the military, i do not -- retaliation from the houston office. if i had to do it all over again, i would not live on base. i would've found a home that was better suited for my family. customer has requested a response from management. >> thank you miss cook. this is one of many emails you received that we reviewed here. here are some quotes from others. -- you're in stains were found in three of the four bedrooms. bathroom -- mold was growing on carpet. we risked health issues from a 19 month old baby. death trap of the house i. have a pregnant wife was high-risk, and i have to live with this. exposed mold on my ceiling. we continuously get little to

no response. water leaks in the kitchen like cover. nothing has been done. that's one, two, three, four, five, six, seven, eight, nine, ten, 11 emails received all after the period that you -- i want to ask you, mr. taylor, your company engaged in major criminal fraud. why should we believe you are sure inches? we heard from -- sergeant torres, they have both told us their horror stories. we heard from advocates who have described these issues as systemic an ongoing. we went through 12 or 13 emails, miss cook received. my office interview dozens of others who reported significant issues with the work orders being classified ongoing concerns about contamination, ceilings falling in. why should we deceive, mr. taylor, that -- is fixing this? >> first off, senator. i reject the suggestion that it's a systemic failure.

you cited in the case you just write, 12 emails, 11 emails, -- were coming in the process of 280,000 on average emails annually. things go wrong. we don't always get it right the first time. we are not perfect. we've never testified that we are a perfect organization that gets it right 100 percent the first time. it's important for us is that we understand where our shortcomings are. then we take action to correct those deficiencies -- >> mr. taylor, my time is limited. my question is very specific. why should we believe your assurances when your company engaged in a six-year-long scheme to defraud the united states? why should we believe you're assurances? that's my question. take a look at the actions we've taken subsequent to that period in time -- >> we shared that information with your staff during interviewed. some of that information. we've shared that information, we've been very transparent with the services, service branches. we've been transparent with the

staffers on the journey we have been on to transform our business. the results we are seeing are demonstrating that we are taking this very seriously and we are taking very proactive steps to ensure we do not repeat the mistakes of the individuals in our firm that worked here at the time that there -- >> 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 my -- johnson. >> thank you mister chairman. mr. taylor, i just want to find out a little bit more about balfour. you are division of balfour -- >> that's correct. >> headquartered out of london? >> that's correct. more than eight billion pound business? >> i believe -- >> how big a division is yours? >> in terms of that volume of business? our business -- we are part of an investment division. the value that is promulgated

by the company's is largely around our construction and services business. the investment business does not comprise part of that revenue, if you will. revenue is looked at different ways in the construction related business than it is in our investments business, to include our military housing. >> are you associated with the construction part of your division? -- management. >> balfour beatty investments is a division of balfour beatty plc. balfour beatty communities is a subsidiary of balfour beatty investments. it's a third chair organization within the structure, if you will, that exists to provide housing to our service members and their families. we do other apartment type communities housing across the country, under that batter of balfour beatty communities. >> mr. christian, talked about

this is profit over people, pure and simple. do you have a response to that? >> i absolutely have a response that. i think that is unfair characterization. we work tirelessly. we've got 1400 employees that work -- about a third of whom like mrs. cook and myself, retirees, we employ a number of spaces that used to live with us. we have -- every day with a singular commitment, to provide for the health and safety of our military residents. i think that's an unfair characterization. again, i will go back -- and were people make mistakes? yes, they make mistakes. there is human error in every business. the suggestion that the ever rate is indicative of wide spread broken business is totally unfair. >> in my brief materials i saw something like $30 million a year generated from this division. to me that seems woefully low.

is that an accurate number? is there a different number? >> the deal was struck when we closed on the project, that $30 million roughly is above the average of the last three years for the receipt of the problem pretty management fees across -- 43 how -- that equates to about $700 per unit per year on a pretax basis. the cost of running the business -- >> that is just a small division of your -- small percentage of your division? that is your division? >> that is the most significant revenue stream. >> you pay 65 million dollar fine, that wipes out more than two years of revenue. the 30 million dollar a year division -- 1400 people? >> about 1400, yes sir. >> do you subcontract out to contractors? >> we do. >> what percentage do you

perform with those white 1400 people -- this 1400 people working about 43,000 units. >> there's a lot of third-party support. it varies jurisdiction only. we're in a market where there is limited availability of third-party vendors, then we will have a heavier staff and we would. generally speaking, we could have anywhere from 10 to 12 vendors on a third-party service agreement with the performance of our work. >> your vendors -- if they don't perform, do you terminate their contracts and hire others? >> absolutely. >> how often do you do that? >> sir, we have the standard termination in the contract, you can find it in the contract arrangement. >> you manage 43,000 housing units. how what's the total inventory of housing in the military? do you know? >> i think it's about 300,000.

maybe a little less. 280,000. >> you are more than 10%? >> yes, sir. >> are you the largest manager of housing units? but are there people that are larger? >> i believe there's one provider that manages more units than we do. >> okay. how do you explain the term -- the testimony you heard from captain choe, sergeant torres, miss lana? i >> think it's their perception of what transpired. we have got a different perception. i think -- >> can you give us a different perspective, for example, with captain's daughter? >> as a father of a son and daughter myself, i have substantial empathy for the

choe family. i know that's hard to deal with any child. i've a hard time drawing a conclusion that's been drawn on the first panel that there is a direct correlation between the condition of the home and his daughter's mental condition. >> that's a legitimate point to make. sometimes it's very difficult to prove causation on things. but do you deny the fact that the issues of mold warrants to be addressed over a roughly long period of time? >> i do deny that, yes sir. in advance of this, having known that captain choe was going to testify, i wasn't involved in the details, but i took time to understand a bit more about his situation because i wanted to be responsible to the subcommittee. in the time that the choe family lived with us, they submitted 28 work orders. 22 of which were online.

captain choe acknowledged that he used that predominantly to let us know that work was being requested. one of the mold work orders that was put in in late february of 2020 was inspected twice by our staff. it was jointly inspected by our military housing partner. they found no evidence of mold at that time. subsequent to that, there were 11 additional mold work orders that were put in on line by captain choe, clearly indicating his intent to continue to notify through the online portal, to notify us of those issues. importantly for me, i think it's a clear demonstration that captain rachel christian choe has acted through the court a portal -- which doesn't give the -- any open work orders and with

the status is of those work orders are. my perspective, having heard what i heard a little bit ago -- if you didn't think we were responding to the work orders, by engaging in the resident portal, it could've 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 doctors letter that suggested that the home might be the cause of her skin conditions, or the school, to my knowledge, that doctor never visited the home personally to view the condition of the home. to my knowledge, that report was written, that letter was written in late june of 2020. it was provided to our site team in october of that year,

with a four month delay. when i look at the fact of the matter, i think there are holes. i think it's hard for me to reconcile my mind that the home was actually the cause of the condition when the findings we had in responding to the work request didn't indicate the same. >> mister chairman, would you give me time to see mrs. cook's response that? same question, miss cook. -- >> explanation on the mold -- >> in terms of the situation with captain choe and his daughter. you listened to testimony. do you refute it? >> it's 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 that. our team is trained, as well as our housing office is trained. i do feel that if there was a health safety issue, we would have removed that family immediately so we could remediate. there was no signs of -- i cannot see that. i do feel we did follow all the bpas and -- guidelines as well as all our homes. >> thank you, chairman. >> thank you. senator scott. >> thank you chairman. thank you ranking member. thank you for being here. i was governor of florida. i served in the navy. at that, time there was no public housing, any housing for us. we've got to do whatever we can

to provide our men and women in the best facilities, the best care we can. i want to follow up with what's senator johnson was talking about. i want to ask specific -- by the way, when i was governor and a basic manner meetings every four months, tried to solve, find problems. it's a federal issue. i never dealt with that. again, the senate -- i've been up on the hill for three years. a lot of people complain. i want to go through one specific one. i have received reports of unacceptable housing conditions at the naval air station kate key west, i don't know if you are familiar with this? it's a 60 park annex. it's mostly units requiring significant improvement so that personnel and families could have saved housing. but do you know what efforts have been made to ensure that our service members in key west are living in -- what are your plans to improve -- something you are familiar with her not? >> i am. as a matter of fact, it was two

weeks ago i was at key west, with our team on that site. you are well aware, key west has the majority -- legacy housing. we constructed 111 new units during the initial development period. that project as part of an 11 phase multi site project called the navy southeast project. we've invested heavily in renovation of 60 in particular. we've done kitchen improvements, a lot of significant changes in their. we haven't been able to touch them all because of financial constraints, i can tell you. we've had issues with ac. debt sweating because of the conduct -- conditions in those homes. lack of quality installation because of the time those units were constructed -- renovation plan. the navy southeast project in particular is financially stressed. the increases haven't

materialized over the time period they were expected. insurance and utility rates have far outpaced rates of inflation. i'll give you an example. for all the navy southeast project, this year, after we set our budgets, i think it was a net margin this year -- it might have been april. the utility that manages or provides the utilities for key west and all the navy southeast told us there will be a 30% increase in utility costs this year. we -- for three. those are the sorts of things, the source of challenges don't get talked about enough in this type of form. those are the real challenges that we ought to be engaging in. again, i will go back, do we make mistakes occasionally? yes. if we want to look at for a long term health and reliability of this program, the concerns and needs of interests of our service -- we ought to have the

conversation about the financial liability -- >> can we go through -- similar to johnson's question, how long have you been at the company? >> 22 years, sir. >> did you do the contract? did you enter into the contract? >> i lead the business development team that pursued that project. >> for the economics, how does it work? are you getting paid a fever home? are you getting paid -- did you pay for all of the existing housing and then you are responsible for? how does it work? >> in this case, the navy project, very similar to the army project. the private partners in this case, i will talk about our company. we made an equity contribution with an equity investment in the project project -- for most project, i don't recall specifically for navy -- generally between one and 5%. maybe always wanted less equity in the projects than the other branches. the navy would make an invest

-- financial investment that they took out of the appropriations. when we would do is underwrite the potential revenue from the basic allowance for housing that we received from the project. we would then take that revenue, -- top line revenue, and then projected operating expenses, get to a net operating income line, then go to the financial market based on that net operating income, we could raise -- in most -- cases hundreds of millions of dollars that would be deployed during that initial development here to do, renovations, all those sorts of things. that's out you basically borrow against future revenue? >> correct. >> so the assumption when you got into the contract, how were the assumptions wrong? >> the basic allowance for housing again -- a the ph is reset annually.

it's the posed to be in cost increases of the -- i got it. more importantly, six or 7% >> i get it, i have 24 months. my apartment comes to 2:50. >> the has been highly unpredictable we initially underwrote two to 3% increase. if you look at it across the entirety of the d.o.d. spectrum. it looks more like an ike g chart. >> your expectation when you got the contract was two plus percent increase a year. that didn't happen? >> no it did not. >> you lost money, navy southeast, have you lost money on that project? we have not lost money, but the -- we get paid management fees as a percentage of income. so if income doesn't go up, our fees don't go up. >> how do you make money, just on the management fees? >> management fees for the

property management. we also get a return on that equity investment i talked about that we made in terms of finance. that is at the very bottom of the cash flow. >> you have management fee over here. you have another company that was set up that took the risk on the construction. was that the way it was set up? the company made an equity investment in the project to help fund that initial development. that return on that equity, just like any investor like a real estate project would get -- you would get after all the bills are paid, mortgage paid, then -- >> [inaudible] if they only wanted one or one and a half percent equity than it would change significantly. you why would the navy want that? >> because we can tap into private sector capital -- >> the market rates were so low, you could get an independent number within the federal budget. >> so then, what happened? did anybody change the deal? they made assumptions,

assumptions were wrong, that the department sense change the deal ever? >> now. >> okay so it was just the assumptions were wrong and they made money? has the equity side where they bought the property and were responsible for fixing it up, was that a money loser? >> for our company? >> no, it is not a loser. but again, if revenues don't go at the pace that you expect to, you are falling short of what you expected -- >> you are not making the return. >> you are still in a losing position. >> management fees aren't just the problem and seems like when you have this question, management fee per unit seems pretty low. i have no deal like that, but it seems low. >> relative to private sector companies do? it is low. >> yeah. but you bid, you're responsible. >> we got into this business because, you know, i've served

in the navy myself. this business is attractive to me, it always has been. the reason i worked has tirelessly as i personally do is because i believe in the constructs. i believe it is a heck of a lot better way to provide housing for our service members and their family, what we are capable of doing without the uniform. light years difference! >> what would you do, in hindsight? what's should either you or the government have done differently to make sure there is less of a risk that you have rogue employees doing their own thing? >> in our case have better internal controls. >> is there anything the government should have done differently? >> well i think the you know, there were certain engagement from former military partners along the way. the 2020 nba is really helped stoke the fire there. i can tell you we are working closely with our military powers and we have ever worked.

i think that, you know, that is when the program ultimately needed. >> you don't think we caused a problem in the structure, you think about the lack of oversight? >> yes. i think that's fair. >> thank you, senator scott. mr. taylor, i want to return to the question of whether, indeed, balfour beatty has improved its practices since 2019. again the period since 20 13 to 19 was the period where the country even acknowledged in in a scheme to defraud the united states. you made notes in your opening remarks of satisfaction surveys that you have undertaken. is that in your view an indicator of improve performance? what does that signify in your

opinion. >> that is just one tp that we play close attention to. it leads directly from our residents and through an independent third party. anytime, also are invited to participate when they move into their new home, or their home once they take a document the, they are provided this survey. anytime they fill out a work order. it is an indicator. it is not the end of that it is a pretty good indicator. we track that and show how trans overtime. as they see how things change. investigating why our scores dropped. what is it about this that we need to be paying attention to to correct? >> the reason i am skeptical about the satisfaction scores as an indication that you have improve your performance, this is something that you and your team also raised interviews before this hearing with the subcommittee staff. if we can have a look please,

at slide 16. here we have your prepared testimony today, on the left. we have your predecessor in this roles prepared testimony from february of 2019 on the right testifying before the senate now just to make sure we have these gates correct i want us to just 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? >> february 2019, yes, that was still part of the period. >> here we have your predecessor touting satisfaction scores in sworn testimony before the senate during a period when the company is engaged in a fraud scheme, falsifying, destroying work orders, lying to the armed

services. the company is touting the satisfaction scores. on the left here we have, once again, from your written testimony today the satisfaction scores as an indicator of your companies improvement in performance. 1 to 5 or very good outstanding these may not be apples to apples comparison but it gets back to the core question. can we close aside? , why should the senate believe that a company that for six years defrauded the government -- i have got to say, i am shocked mr. taylor that you deny these issues are systemic. there are clearly system, in fact you're performance as a

company as inflation in my state is notorious. local media has reported on it for years and years and years! every time i visit and installation and visit personnel, without me even prompting them to we have conducted entire discussions with enlisted personnel to figure out what's going on. that why we embarked on an eight month long investigation, to understand what's happening. i'm just not sure that you understand what is happening. did your senior executives know that for six years the company was engaging in fraud? >> no. >> would you know now if your company was continuing to engage in fraud? >> yes. >> you would? i would like to explore just whether or not your management team have situational awareness to understand what is happening inside your own firm. if we could please turn the tab

13. while you do that mr. taylor if you can please tell the subcommittee who is mr. thomas rodriguez, how is he related to you and the organization? excuse me, to have 12. forgive me. while you turn to 10:12, who is thomas rodriguez? >> former employee, in the former facility manager at fort corden. >> for gordon, in georgia? >> prior to that he was a maintenance supervisor -- >> and stand, thank you. here we have an email from mr. rodriguez. as the facility manager at fort gordon and i correct that not your direct subordinate but you're subordinate >> he is in my chain of command, yes sir. >> this email is from february, 2021. this is two years after the conclusion of the period during which balfour beatty the acknowledge scheme to defraud the united states. two years later!

here is an email from mr. rodriguez, you are subordinate -- i'm not sure you receive this email, mr. taylor. you did miss cookies, it was forwarded to you. mr. rodriguez says that the state of the facility department at fort gordon's quote, total chaos. he says, quote, words could not scribe the total chaos! and quote. he further states that the facility department in fort gordon has been lying to the army about the condition of the facility department at fort gordon. he says, quote, this is not acting honestly or respecting our third parties, meaning the army treating them with integrity and professionalism, and quote. miss koch, you receive this email in february of 2021, is that correct?

>> yes, i did. >> when action did you take when you receive this email reporting that there was total chaos in the facilities department of fort gordon. and again this is from the head of the facilities for for gordon. they were being dishonest with the army. what actions did you take? >> i do not totally recall without the records but i do believe that i dispose this too, but my chain of command -- >> did you follow up after forwarding it to see what happened? >> i believe we had -- because it was regarding the fm building, it was regarding a facility building. >> so you followed up? >> mr. taylor were you aware of the theme at the time. >> i was not. >> you are not aware. you understand the skepticism? let's just, again, set the stage here. it is been two years since the

and of a six year period when the company was engaged in a company to defraud the united states. this moment, february 2021 you are under department of justice investigation for being dishonest with the military. for fabricating and destroying work orders. you know you are under investigation, you know your in hot water. you're subordinate reports that the facilities department at fort gordon is in total chaos! and with respect to the condition of the facilities department and it promises, there is a lack of integrity with the army. you are not aware of this, mr. taylor you say that the senior executives of balfour beatty did not know that there was fraud ongoing for six years but that you would know if there was fraud ongoing right now. how sure are you, mr. taylor,

that you would know that misconduct don't continue to this day? are you sure? >> i think your interpretation of this email, as you described, it does not align with the question that you are asking. >> okay, let me restate the question then, just for clarity. here we have your subordinate reporting that when he took over the facilities department for gordon, it was in a state of total chaos. and the facilities department have been dishonest with the army, correct? >> we've got a document here. that's what it says. it says when i arrived on site, words cannot describe the total chaos that was the facilities department at fort gordon. you are not aware of this report, correct? >> i was not aware. >> my time is expired. thank you -- ranking member johnson. >> can you step through after the settlement a couple years ago, what's his big actions you

take to correct the deficiencies in your process? specifically. what did you do? >> yes, senator. there were many. 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 -- we were sharing those remediation tests with our military partners. -- staffers, particular program. that were number of things. i follow up with a more fulsome response. i want to share with you some things we did. if you look at one of the root causes for the falsification of work orders dated, was a system that we used, the database that we used -- a product called the ari. at the time, there was too much opportunity for those using the system to manipulate data. we worked with that provider -- >> by the way, the bonus plans

so manipulating that it was to their individual benefit? in other words, you had your 1400 employees, he had managers -- did they get bonuses based on what their performance was off the army system? >> the statistics, there was a portion of their bonus that came out in the investigation that their compensation was tied to performance. that's correct. >> is that still the case? >> it is not the case. all their bonuses at state level are tied to customer satisfaction. where it's ought to be. >> is there any way for them to dr. customer satisfaction surveys? >> there is not. it's connected by third parties. we don't conduct any ourself. that system had a lot of opportunity for manipulation of data. we worked with a provider to ensure local site teams have no ability to change the data. we also engaged a third party call center that takes 100 percent of our calls.

you've got an independent third party to stop -- the timing of the receipts, the date of the receipts of that work request, so that is not our staff that are in putting that information. if there is a recognized error in those work orders, and i heard some of this in the previous testimony, local sightings cannot make those adjustments. that has to be a document justified, 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 those transparency in agreement with what -- >> do you know if you're being investigated for by the department of justice now? >> nothing that i'm aware of. >> are you aware there is a department of justice investigation? >> ongoing currently? i am not. >> nor was i. miss cook, how do you explain from -- the email from mr. rodriguez where he was talking about

facilities and chaos. what was in chaos, do you know? >> i believe, if i, may senator -- i get thousands of emails in my email box every day. all of us to. i definitely received it. i do know that tom went down there to help. we had lost the previous facility manager. i took it as his first observation of the -- being on the ground. he sent it to his supervisor that could help him pull it together. in an action plan of how we are going to pull them to get -- >> the initial email when he gets down there he goes, this is a mess. this is in chaos. i'm going to fix it for you. is that how you interpreted it? >> that's how i remember it. like i said, i get thousands of emails. i would have to go back and

review that. i do feel that tom -- since i came on the ground, he was reporting of what he has seen. >> mister chair, i want to go back and try to understand this business model. think -- tell me if i've got this right. the actual construction phase of this, where you put in a very small percentage in terms of equity, and you leverage it up, you're able to do that because it's housing for the military. nobody is afraid they won't get paid back. you literally build a billion dollars of housing and you are only investing 10 million maybe, ten to 15 million? >> every one of our projects, the equity contribution from the company was between one and 5%. it varied. >> it could be ten to 15 million. >> it could, yes. >> then your entire revenue

streams is only $30 million a year. >> our property management fees on average over the last three years. >> that is your revenue stream. was there some revenue stream from the construction part of this? are you making money on the construction? >> in the initial development period when we were building up the housing, we had a third party and then a related third party that was our builder. >> you construct a billion dollars, -- you may be getting 10% from that. you make money on the extra construction of housing. that's done. >> a builder would. but balfour beatty as the developer, we earn development fees for the build on those. >> you make money. ongoing, it's that $30 million, 1400 employees, with costs going up and down. -- i would not invest in this business. i guess i appreciate the fact you've got a commitment and

want to provide good housing for our service members. unless i'm missing something here, seems like a pretty risky business. >> it's not the only revenue source. that's the property management center. i want to make sure that we are clear. the way the projects are constructed, the majority of the -- leftover after all the bills are paid, on average, about 90% of that goes to a project reinvestment account. that's there for long-standing -- sufficient to take care of the housing over the balance of these year agreements. those reinvestment accounts are deployed income -- when our military service partners are in agreement with the plans and 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. that was always envisioned in

the construct of the deal. i talked about the equity investment we made. 90% of that excess cash -- goes to the reinvestment account. on average, 10% comes to us on a return on that equity investment. we invest in the project as well. >> the reason i'm trying to delve into finances here -- you're not making money on this, such a slim margin. despite not much incentive for you to improve things. if you're making a fair return, a business that's attractive to you and others -- >> i don't agree with the statement that it doesn't incentivize us to do the job and improve things. everybody is well aware, our property management fees, $30 million, is made up of a base management fee and an incentive competitive -- component. it's the issue that got us in the challenges with the doj. that incentive component, if we do our job well, there is opportunity for us to earn more money for the business.

we're not a non for profit business. were businesslike any other provider -- >> to close this out, in your mind, i think you testified that the solution here is better internal controls on part of you and your competitors in this face. >> absolutely. >> and you think that internal controls -- you can satisfy -- other witnesses? >> we're seeing evidence of it already. 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 happening on every one of these installations. it's in a better place, a heck of a lot of a better place than it was three years ago. >> you have an independent company doing your service. is there any other independent auditing on your performance? >> all our financials are indeed -- >> financially, yeah.

in terms of performance. >> the performance? there's annual surveys that the service branches engage. you saw the example on this green on the right-hand side, the result of sea else course at the service branch is engaged. we have satisfaction for those -- the work we perform there. >> this will be my last question. i am disturbed about potential retaliation. we heard that from all the witnesses. i have seen that. since i became the senator, i came from the private sector, i'm shocked at how much retaliation there is within government. within the military. are you aware of that? it sounds like based on testimony, retaliation certainly participated in by

members of balfour staff in accommodation with the folks of the military. >> i'm not aware of our staff retaliating against military -- because they expressed displeasure with our service. >> thank you mister chairman. >> thank you ranking member johnson. to close out, i think it's worth recapping what you are getting into ranking member doesn't, in terms of structure of revenue. just for clarity, with our final few moments here. mr. taylor, describe one more time how this incentive structure operates, please. >> if you look at the cash flow for any project, as part of the operating expenses, there is typically a base management fee. it's usually on the order of 2% of revenues. after the debt service is paid, after we put away money for a capital replacement, we will qualify for incentive management fees.

there's a slight difference, a lot of similarities between each branch of services negotiated the performance metrics within those. all of whom have undergone revamping in the last three years. those incentive fees, for example, the incentive payments that you will receive from that joint fund established with the service will be correlated with your performance and among the metrics that performance will be the timely and successful closure of work orders, correct? >> the timely response to emergency and urgent, the timely completion of routine services. >> if there's an issue such as mold, which poses a health hazard, that's classified differently with a different expectation of successful or timely response, then, for example, a routine issue -- correct? >> that's correct. when >> we see sergeant tauruses work order when he stated in the description that

the 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, this classification a request for a mediation of mold which should be more timely acted on as something like carpentry will cause you to be paid more in incentives by artificially inflating your performance measures, correct? if >> the volume of that activity rose to the level we did not meet the threshold, that's a correct statement. >> -- >> it assumes that we didn't identify the error and put in place -- correct the error. >> but again, to achieve the incentive fees -- to be totally transparent, it doesn't 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. >> thank you for that clarification. i want to thank the members who attended this hearing today. i want to thank all the witnesses in both panels for their testimony and for appearing today before the subcommittee. we will continue to seek remedies for the issues discussed on military personnel, stateside and abroad, sacrifices continually in the service of this nation, as to 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 for providing that housing. this hearing record will remain open for 15 days for any additional comments or questions by any subcommittee members. with that, this hearing is adjourned.

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