Special Report: Ex-workers say U.S. military landlord falsified records
to get bonuses
Send a link to a friend
[November 20, 2019]
By M.B. Pell
SAN ANTONIO, Texas (Reuters) - A U.K.
company that provides housing to U.S. military families came under
official investigation earlier this year, after Reuters disclosed it had
faked maintenance records to pocket performance bonuses at an Oklahoma
Air Force base.
At the time, Balfour Beatty Communities said it strove to correctly
report its maintenance work. It blamed any problems on a sole former
employee at the Oklahoma base.
Now, Reuters has found that Balfour Beatty employees systematically
doctored records in a similar scheme at a Texas base.
In June, Reuters, working in partnership with CBS News, documented how
Balfour Beatty Communities kept two sets of records at Oklahoma’s Tinker
Air Force Base. The accurate records, not shared with the military but
seen in part by Reuters, showed tardiness in making repairs at homes
plagued by asbestos, leaks and mold. The other set – filed with the Air
Force – was altered to show near-perfect performance in making repairs,
helping the company earn millions in fees for a job well done.
Balfour Beatty has been pursuing a similar practice at the Lackland Air
Force Base in San Antonio, Texas. With bosses pressing them to meet
repair goals, two former Balfour Beatty employees said they were
involved in forging records to make it appear their employer completed
maintenance work on time at the Texas base, even as work lagged or was
never finished.
Stacy Nelson, Balfour’s Lackland manager from 2013 to 2016, said she
felt pressure to manipulate records to make it appear the company
consistently hit maintenance goals. She said she went along with the
effort because, diagnosed with multiple sclerosis, she needed to keep
her job and benefits.
“You either make these numbers match so we can get the incentive fees,
or you may not have a job tomorrow,” Nelson said, characterizing the
pressure she felt she was under. “We fudged the numbers, and even now
it’s not easy to say that. I hate to admit it.”
Another former worker, Teresa Anderson, who created maintenance records,
said she doctored the completion dates and times. Balfour Beatty fired
both employees, though for reasons unrelated to falsifying records.
Internal company emails and maintenance reports confirm their accounts
of being pressured to hit goals. In one case in 2015, reports showed the
company completed 69% of repairs on time. After a Balfour Beatty manager
called for higher scores, the pair changed the rate to above 95%,
records show, triggering the bonus.
Lackland and Tinker aren’t the only bases where Balfour Beatty faces
accusations of falsifying its maintenance reports. In Montana, a former
manager said her staff regularly doctored records at Malmstrom Air Force
Base.
In all, five former Balfour Beatty employees, working at three different
bases, have told Reuters they filed false maintenance reports to help
the company pocket millions in bonuses.
In a statement, Balfour Beatty said it is working to improve the quality
of service at all its bases. “We know we have to continue to demonstrate
progress in order to rebuild confidence in our service, and we are
determined to do so,” the statement said.
The company did not directly respond to specific questions about the
falsification of maintenance and work-order records documented by
Reuters in Texas and elsewhere.
Since the initial Reuters-CBS report from Oklahoma, Balfour Beatty says
it has started an investigation into the fraud allegations, led by its
outside counsel Hunton Andrews Kurth LLP. It has also sought an
independent audit of the incentive fees approved by the Air Force.
Auditor PricewaterhouseCoopers and law firm Hunton Andrews declined
comment.
The Federal Bureau of Investigation and the Air Force Office of Special
Investigations are pursuing fraud investigations at Tinker and two other
Air Force bases where the company serves as landlord, said John
Henderson, the Air Force assistant secretary for installations. They are
Travis in California and Fairchild in Washington state. OSI is
investigating additional allegations at Mountain Home in Idaho.
Henderson said he is “concerned” about the latest Reuters findings at
Lackland and has referred the matter to the Office of Special
Investigations.
The Army is also investigating “allegations” against Balfour Beatty,
said Lieutenant Colonel Crystal Boring. In August, Boring said the
service’s Inspector General was examining the company; more recently,
she said the IG is not involved in the probe, but that she could not
name the investigating authority or discuss the broader inquiry because
it is ongoing.
A series of Reuters reports in 2018 exposed slum-like conditions in
family housing at many U.S. military bases, sparking action by Congress
to crack down on the private landlords who run the facilities. In
Washington, the Senate Armed Services Committee is working to upgrade
military housing through the defense funding bill or standalone
legislation, said committee chair Jim Inhofe. Balfour Beatty must fix
substandard housing and, should any inquiries find wrongdoing, return
any ill-gotten bonus payments, the Oklahoma Republican said.
“If Balfour Beatty proves they aren’t up to the challenge, we’ll find
someone who is — someone who is committed to doing right by our service
members and their families,” the senator said.
PERSISTENT LEAKS, DISAPPEARING PROBLEMS
Service families continue to report squalid conditions in their homes on
military bases.
In June, Roxanne Roellchen, her active-duty husband and five children
moved into a Lackland house with a leaking roof, mold and bugs. She said
she found scorpions hiding among boxes and roaches crawling on the
feeding tube of her son, 5, who requires treatment because he’s not
growing. “Every day we were in that house, we were risking his health,”
she said.
Balfour Beatty said it promptly and effectively addressed the family’s
concerns and apologized for the inconvenience. The family said it took
four weeks for the landlord to find them new lodging. The company, they
added, did not submit work orders to remedy the mold and insects; while
they waited, the company placed the family in a hotel and then temporary
base housing, which also had roaches.
At the Texas base, Balfour Beatty has a history of maintenance problems.
On any given day in 2015 and 2016, it routinely had hundreds of
unfinished maintenance requests open, records show.
Persistent leaks plagued residents and workers alike. Staff logs
documented the woes: “roof leak thru vent in son’s room,” “kitchen light
fixture leaks when it rains” and “water pouring thru smoke detectors.”
Other times, homes sat vacant for months or years, magnets for rodents,
reports show. The company said it has demolished some homes and is
targeting others in “due course.”
When Balfour Beatty filed maintenance reports to the Air Force, any
open, late and unfinished jobs most always disappeared from the records.
Quarter after quarter, the Air Force bestowed performance bonuses and,
many times, praise on the company.
Balfour Beatty Communities, a unit of British infrastructure
conglomerate Balfour Beatty plc <BALF.L>, is among the U.S. military’s
largest housing providers. The company runs housing at 21 Air Force
bases as well as 34 Army and Navy bases.
It and other private real estate firms run 98% of military base housing
in the United States. Many can earn “performance incentive fees” by
meeting quarterly and annual goals, such as quickly responding to
resident repair requests. The fees, based on reports submitted by the
landlord, are a major source of income, generally worth about 2% of the
total rent payments from base service families. At Lackland, the rate is
2.25%, records show.
There, from 2009 through 2018, Balfour Beatty received up to $3 million
in management incentive fees. The Air Force department in charge of base
housing oversight gave the company high grades in reports, applauding
its “openness of honest communication.”
In reality, Balfour Beatty was cooking the books, Reuters found in a
review of company records and emails, and through interviews with former
staffers.
Every quarter, company leaders pressed on-base staff to hit the quotas
so Balfour could collect incentive fees. Often, management demanded
staff take whatever steps necessary to obtain the bonuses, including
using loopholes to improve the numbers.
Former manager Nelson said she relayed pressure from above to her own
staff. Email correspondence document some of the exchanges. “It's not
only my ass on the line because of these WO's [work orders], but my boss
AND her boss!!!” Nelson wrote to Anderson and other staff in May 2016.
“Close the ones that need to be closed - TODAY! I don't care what it
takes.”
Five months later, she was fired. The company said it dismissed Nelson
for poor performance and that, since her departure, one metric of
success, occupancy numbers, has improved from 89% to 98%. Yet records
show the occupancy rate actually ranged from 95-97% under Nelson’s watch
in early 2016.
Nelson said she tried to balance the need to make her bosses happy by
securing the incentive fees, and residents happy by making fixes. She
said she lacked the manpower or budget to fully do either.
“I was devastated when I was fired,” she said. “I thought everything I
was doing was right; yes I was falsifying documents, but I was telling
them, ‘You need to fix this.’ ”
FROM 'MAGICAL' TO WOEFUL
A former Marine, Nelson took her first job with Balfour Beatty in 2011
at Vandenberg Air Force Base in California. She found Vandenberg housing
in good condition, and said Balfour Beatty provided resources to keep it
that way. “It was magical,” she said.
In 2013, a Balfour Beatty vice president asked her to take on Lackland,
one of the company’s problem bases. She quickly saw a much different
picture in Texas. She found unpaid bills, she said, some more than a
year old. Local contractors were wary of working for the company, she
said. Employees weren’t always qualified to do the work they were
assigned, like replacing toxic freon in air conditioners.
[to top of second column]
|
Abandoned houses are seen in the Medina Annex at Joint Base San
Antonio - Lackland in San Antonio, Texas, U.S. November 8, 2019.
REUTERS/Callaghan O'Hare
Balfour Beatty struggled to convince families to live on base,
Nelson told a friend in an email. One in 10 of the 900 homes on base
often sat empty, internal occupancy-rate reports say.
“My intention was to fix it,” Nelson said, leading to long days.
The quest to hit maintenance goals never eased. Lackland had eight
to nine maintenance technicians, one for every 100 homes. By 2016,
each tech was responsible for finishing 15 work orders a day;
reports showed as many as 466 open work orders on a given day.
The number of maintenance workers per home is standard for the
industry, but the number of open work orders was high, Balfour
Beatty said in a statement. Another company base, the Fort Carson
Army base in Colorado, had similar rates of open work orders in
2016, internal company records show.
In December 2014, after facing heat from a regional manager asking
about unclosed repair requests, Nelson wrote an email to staff: “ARE
YA’LL TRYING TO GET ME FIRED?!!!”
Company emails and reports from the first quarter of 2015 show how
the records were massaged.
In March 2015, Balfour Beatty was far from hitting its Lackland
goals, finishing only 69% of routine work orders on time, according
to an internal company maintenance report obtained by Reuters. To
pocket the full bonus, it needed to respond to and complete 95% of
requests on-time.
Rick Cunefare, a Balfour Beatty area manager, emailed Nelson and
others shortly after the close of the quarter. He wanted better
numbers.
“We need to get this completed and ensure response and completion
scores are over 95%,” Cunefare told Nelson and the managers at four
other Air Force bases, including Vandenberg and three bases now
under investigation by the FBI – Tinker, Travis and Fairchild.
Cunefare, who is no longer with Balfour Beatty, declined to comment.
Nelson said she knew changing the scores was wrong but was desperate
to keep her job and medical benefits. She had just been diagnosed
with multiple sclerosis, a potentially disabling disease of the
brain and spinal cord for which she was prescribed injections three
times a week and routine assessment by neurologists. Her non-verbal,
autistic son required costly therapies.
“I had my son’s health to take care of and my own health to take
care of,” she said.
Less than two hours after receiving her instructions from Cunefare,
Nelson emailed Anderson, the work order clerk, instructing her to
change the maintenance records.
“I know you’re really busy, but I’m getting pressure about the
Quarterly Maintenance Report and all the results being over 95%,”
Nelson wrote. “Will you please take another look at it and make
adjustments to ensure we are at 95% response/completion times in all
categories.”
After receiving the email, Anderson dived back into the data and
changed the completion dates and times to make sure 95% were on
time, Anderson told Reuters.
A report submitted by Balfour Beatty to the Air Force states 95.9%
of maintenance requests were completed on time during the first
quarter of 2015. The Air Force paid the full potential bonus of
about $75,000 for the quarter.
The story was similar in other quarters. Earlier, in January 2015,
Nelson asked Anderson to change fourth quarter 2014 records,
writing, “They need to be 95% or higher.” Later, in June 2015, she
told Anderson, “Completion times in April need to be adjusted.”
Nelson was not the first base manager at Lackland to fudge reports,
said Anderson, the work order administrator from 2012 until she was
let go in October 2016. Anderson said she falsified records every
quarter, either under the direction of the community manager or the
facility manager, who could not be reached for comment.
Balfour Beatty said it dismissed Anderson for poor performance.
Anderson said the company never told her that, telling her instead
she was let go for failing to pay rent on the home she was living in
at the base. When Reuters first asked the company about the
dismissal, it said it was performance and rent-related; later, it
changed its response, citing only performance issues.
PUSH FROM THE TOP
Across the company, say former managers, the pressure to meet
maintenance goals started with Balfour Beatty’s corporate leadership
and worked its way down.
Jennifer Benski was Balfour Beatty’s community manager at Malmstrom
Air Force Base in Montana from 2011 until 2017. She said regional
managers and executives scrutinized maintenance data used to
determine bonus payouts: the number of open maintenance requests,
the number of late requests and other details. She said her staff
regularly closed out maintenance requests as complete before they
were finished.
“There’s a lot of pressure from upper management to meet those
goals, and I guess you could say it doesn’t matter how they’re met,”
Benski said.
For the managers of Balfour Beatty’s 21 Air Force bases and two of
the company’s Army bases, the pressure often flowed from the
company’s Phoenix regional office.
In June 2015, the administrator in charge of quarterly reports in
Phoenix emailed instructions to base managers on how to get “a
better completion %” on the reports used by the Air Force to award
incentive fees. The instructions suggested base managers make use of
so-called exceptions.
When a maintenance request cannot be completed on time because of
extenuating circumstances, landlords can file an “exception” so the
work order doesn’t count against them. Examples include having to
order special parts, jobs requiring multiple stages of labor, or
cases in which residents requested a repair slot after a deadline.
In June, Reuters and CBS reported that a regional manager, Rebecka
Bailey, directed the former manager at Tinker Air Force Base in
Oklahoma to use exceptions to help the company meet its goals in
late 2016 and early 2017. Following the report, the Air Force
suspended all incentive fees to Balfour Beatty pending the outcome
of an independent audit. Bailey, who declined an interview request
in May, did not respond to a request for comment for this story.
The Phoenix regional office also told local managers to expect a
quarterly report highlighting maintenance numbers they needed to
“clean up.”
In October 2015, the Phoenix office sent Nelson one such report,
highlighting the response-time metrics that fell short of meeting
incentive fee goals. She was asked to “start reviewing/working” them
and provide “explanations to increase % complete.”
When base managers hit their goals, the company applauded. “Thank
you – well done! All above 95%!!” the Phoenix office wrote Nelson in
October 2015.
Work order clerk Anderson said no one at Balfour Beatty or the Air
Force inquired to see how the numbers always worked out. “They never
questioned me on it,” she said.
WARNING SIGNS
The Air Force had been warned of problems with Balfour Beatty’s
maintenance documents.
In a 2012 report, the auditing firm JLL, working for the Air Force
Civil Engineering Command, said the Lackland housing office had
“difficulty validating … the maintenance data submitted by BBC for
its quarterly Performance Incentive Fee.” Balfour Beatty staff had
entered incorrect or incomplete data, the auditor told AFCEC, which
oversees Air Force landlords.
The Air Force continued to pay Balfour Beatty bonuses. From 2012
through 2013, the company received at least a portion of its
incentive fees each quarter, the Air Force said. From the fourth
quarter of 2013 through 2018, Balfour Beatty received 100% of the
bonus fees.
Had the Air Force conducted a relatively simple analysis, it could
have spotted how Balfour Beatty was backdating maintenance records,
said several former company employees familiar with the maintenance
data system. That system allows users to identify when completion
times and dates are edited, along with identifying who changed them.
Instead, JLL and AFCEC were generally positive, praising Balfour
Beatty for its work order system and its cooperation with the Air
Force, site visit reports from 2012, 2013 and 2016 show. JLL
declined comment.
All the while, Nelson said she found herself lying to service
families to cover up problems. “I cried in front of residents
because they showed me the mold,” she said, “and I couldn’t believe
I was in charge of the plight they were going through.”
(Reporting by M.B. Pell. Additional reporting by Joshua Schneyer in
New York. Editing by Ronnie Greene)
[© 2019 Thomson Reuters. All rights
reserved.]
Copyright 2019 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |