Balfour Beatty Communities faces new scrutiny for military housing as parent company wins DOD contract

Dive Brief:

  • A Senate subcommittee has uncovered alleged ongoing mistreatment of military families and “mismanagement” by Malvern, Pennsylvania-based Balfour Beatty Communities, a U.S subsidiary of U.K.-based contractor Balfour Beatty that specializes in multifamily, student and military housing, according to a report released in late April.
  • After an eight-month investigation into BBC, the Permanent Subcommittee on Investigations alleged numerous instances between November 2019 and February 2022 where BBC’s executives and managers failed to properly respond to both repair requests and environmental hazardssuch as mold in homes at the Fort Gordon Army Base in Georgia and Sheppard Air Force Base in Texas.
  • Two weeks before the subcommittee report was released, the Department of Defense awarded parent company Balfour Beatty an almost-$700 million contract for the design and construction of a campus building and a 1.2 million-square-foot parking structure at Fort Meade in Maryland. Balfour Beatty is expected to complete the work by April 2026. Multifamily Dive reached out to the DOD for comments about the selection process for this contract but didn’t receive answers to questions.

Dive Insight:

BBC operates more than 43,000 on-base homes at 55 Army, Navy and Air Force bases in 26 states housing approximately 150,000 residents, according to the Senate subcommittee. Among the alleged issues in the report were:

  • Failure to properly remediate mold growth, which subjected medically vulnerable spouses and children of U.S. service members at Fort Gordon to mold exposure deemed by their physicians to pose significant health risks.
  • A child living in a BBC-managed community at Fort Gordon who suffered from severe atopic dermatitis, a condition that her physician believed was likely caused by untreated mold growth in the home.
  • Fort Gordon families that moved into homes that had broken floor tiles held together by packing tape, clogged HVAC vents, carpets filled with pet hair, rusting pipes and broken appliances.
  • Water leaks that went unrepaired at Fort Gordon, which led to, in severe cases, “collapsed and punctured ceilings, warped walls, doorframes and flooring, and damage to service members’ belongings and appliances.”

After the report, BBC issued a statement shared with Multifamily Dive that indicated it was disappointed that the subcommittee report did not acknowledge the steps that it took to address the “small number of complaints that were discussed.”

“The report, which was released before the hearing, includes multiple inaccuracies and mischaracterizations, which the company tried to correct before it was issued and will address again following the hearing,” said a company spokesperson in the statement. “While we continually seek to improve, as an operator of 43,000 residences we are inevitably going to have to deal with challenges.” 

Additionally, the company said it remains focused on its residents’ safety, health and wellbeing and on providing quality homes and “prompt and effective customer service and maintenance support.”

A history of issues

In December, BBC pleaded guilty to one count of fraud and agreed to pay more than $65 million in fines and restitution in the fraud scheme, which ran from 2013 to 2019, according to the Department of Justice.

BBC employees closed work orders before maintenance had been completed, and destroyed and falsified resident comment cards to inflate resident satisfaction metrics at communities in which it operated, according to the DOJ. By producing these false reports, the company was able to induce the military to pay bonus fees the company had not earned. Overall, the scheme cost the federal government $18.7 million, according to court documents.

The fraud scheme caused military families to suffer as they waited through lengthy and unnecessary delays in the resolution of maintenance issues, according to the DOJ.

As part of the ruling, U.S. District Judge Emmet G. Sullivan ordered BBC to pay over $33.6 million in criminal fines and over $31.8 million in restitution to the U.S. military and serve three years of probation. It will continue to operate military housing but engage an independent compliance monitor for three years. The company also entered into a False Claims Act settlement with the government to resolve its civil liability for $35.2 million.  

The subcommittee’s recent report evaluated conditions after 2019 and after the company agreed to fix these problems.

Sarah Kline, founder and director of community outreach at Armed Forces Housing Advocates, an organization that aims to help military families living in substandard conditions, has toured multiple BBC homes and told Multifamily Dive in an earlier interview that she found lead paint chips, pest infestations, leaks, groundwater issues and even a gas leak.

But Kline also sees issues with maintenance and repair beyond Balfour Beatty Communities. 

“We have searched and we have not been able to find a Military Housing Privatization Initiative community that military families aren’t living in sub-par housing,” she said. “There may be one or two homes within most communities, but there are problems within all of those projects.”

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