Special Report: Air Force landlord
falsified records to boost income, records show
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[June 18, 2019]
By M.B. Pell
TINKER AIR FORCE BASE, Oklahoma (Reuters) -
When Paige and Nick Ippolito moved to a row house on this air base in
2015, the floors in the kitchen, living room and hallway were warped.
They told the base’s landlord, Balfour Beatty Communities, but “nothing
was done,” a company maintenance report shows.
Nick, a Navy petty officer second class stationed at Tinker, worried
their baby daughter might lose a finger in the jagged flooring. After a
water leak further broke up the floor, a company technician noted in a
maintenance log that the eight-month-old “may become sick from chewing
on pieces” breaking away from the flooring.
The floor tiles and adhesive contained asbestos, a carcinogen, an
internal company maintenance report shows.
The official Balfour Beatty maintenance logs available to the Air Force
indicate the company promptly addressed the problems. The leak, for
instance, was fixed in 20 minutes, the records purport to show. In fact,
the logs were faked. The family said that repair took over a week. The
Ippolitos endured the other hazards for months.
“You think your family is safe, and then you find out your kid is eating
asbestos flooring. It makes me sick,” Nick Ippolito said. “It seems like
they’re just out for the dollar.”
Balfour Beatty, among the U.S. military’s largest housing providers,
systematically falsified its Tinker Air Force Base maintenance logs for
years, Reuters found through a review of company records, Air Force
reports and interviews with former workers. The fake entries made the
company appear responsive to tenant complaints and unsafe conditions,
helping it secure millions in “performance incentive fees” for good
service that it otherwise often would not have qualified for. The
efforts left families in harm’s way and persuaded Air Force brass to
ignore warnings of trouble raised by military base employees.
For years, Balfour Beatty kept two sets of maintenance books at Tinker,
Reuters, working in partnership with CBS News, found. A falsified set of
official electronic records was shown to the Air Force, listing quick
response times. A handwritten set of accurate records was also kept by
the company in order to track what was really happening. These records,
never disclosed to the military but examined in part by Reuters, show
that weeks routinely elapsed before hazards were remedied.
Robert Whittington, Balfour Beatty’s manager at Tinker from 2014 until
July 2017, told Reuters he doctored work-order information in the
electronic maintenance logs at the direction of his superiors and
pressured staff to close out unfinished work orders, so that late
responses would not count against the company.
Whittington said he knew falsifying records left families in peril. A
retired Air Force veteran, he said he was disgusted by his actions, and,
after wrestling with his conscience and refusing further orders to alter
“It’s like they’re operating a bank robbery at a corporate level,”
Whittington said. “I got to the point where I was waking up in the
morning and wondering, ‘Well, how many people am I going to have to
screw over today?’ ”
Whittington’s claims are supported by numerous internal memos to Balfour
Beatty employees instructing them on how to engage in the deception.
Reuters documented at least 65 instances in 2016 and 2017 in which
Balfour Beatty employees backdated repair requests, filed paperwork
claiming false exemptions from response-time requirements, or closed out
unfinished maintenance requests.
Such problems were well known to some Air Force housing employees
stationed at Tinker. For years, they told the Air Force of questionable
record keeping and slum-like living conditions. Yet their attempts to
hold Balfour Beatty accountable were blocked by the Air Force Civil
Engineering Center, or AFCEC, a unit based in San Antonio, Texas, that
is tasked with monitoring private landlords.
At least 18 times since 2015, Tinker-based Air Force housing officials
warned that Balfour Beatty maintenance logs contained false information
making it appear the company promptly responded to service requests, Air
Force reports show. “We do not feel that emergency, urgent and routine
work orders are accurately recorded,” said one periodic report on
Balfour Beatty’s performance.
Quarter after quarter, the Air Force engineering center downplayed these
concerns, giving the company high service marks and advising Tinker
officials to drop their complaints. “It doesn’t matter if they were in
compliance or not, they would still get paid,” a local housing official
at Tinker wrote in a February 2018 email.
At the heart of the failure to hold the Tinker landlord accountable was
a conflict within the Air Force. On one side was the on-site Air Force
housing office, whose prime mission was assisting residents and
conducting daily oversight of Balfour Beatty. On the other was AFCEC,
responsible for developing and managing all of the Air Force’s
privatized housing projects. While AFCEC, too, has an oversight role, it
is also responsible for ensuring smooth long-term relations with the
landlords with whom it does business. Over the years, AFCEC repeatedly
sided with its partner, Balfour Beatty.
Presented with the evidence Reuters found of years of false reporting,
slow repairs and hazardous conditions at its homes, Balfour Beatty said
the company learned in 2016 that one employee at Tinker had acted
“improperly,” without providing specifics. It described this as an
isolated incident and said it worked with the Air Force to strengthen
its maintenance system. The company did not comment on instances of
false record-keeping, the internal memos and other irregularities
Reuters documented before and after 2016 at Tinker and other bases.
Balfour Beatty said it has cooperated fully with inquiries by the Air
Force and other government agencies into its business. “As an
organization, BBC has not and does not condone the falsification of
records in any way,” the company said in a statement.
In December, Reuters reported widespread instances of shoddy
construction and safety hazards in new housing units private companies,
including Balfour Beatty, built on U.S. bases. Since that report, the
Air Force says, it has been withholding fees from the company at Tinker,
pending a review of the matter.
In response to the new findings about the company, John Henderson, the
Air Force assistant secretary for installations, said in March he had
“real issues” with Balfour Beatty’s performance at Tinker. But he said
he did not believe housing companies purposefully changed maintenance
records to win incentive fees.
In June, after being shown further details of Reuters’ reporting, he
said he will await the outcome of ongoing investigations to determine
what happened. He said there were “discrepancies in the maintenance
records” and that “allegations of fraud” involving Tinker and at least
two other company bases were referred to the Air Force Office of Special
Investigations and the Federal Bureau of Investigation in 2017.
“We trust our private sector partners to act in good faith,” Henderson
said. “When this doesn’t happen, we must hold those responsible
accountable for achieving better outcomes to ensure that we continue to
be worthy of earning the trust of our Airmen and our Nation.”
The Air Force Office of Special Investigations does not discuss
investigations, said Linda Card, chief of public affairs for the agency.
But she added: “Conversations are still taking place” with the U.S.
Department of Justice “about what avenues (criminal or civil) – if any –
can be pursued against Balfour Beatty.”
Regardless of that inquiry’s outcome, the Air Force plans to boost
transparency by creating an automated maintenance-request process
allowing residents to view the status of a work order, Henderson said.
It also plans to revamp the incentive fee system, with details still
being worked out. He defended the work of the Air Force’s engineering
center, saying it had taken the allegations against Balfour Beatty
seriously and performed an on-site review of the company’s work at
The news of accounting irregularities by a major contractor comes as
U.S. lawmakers are overhauling the Pentagon’s family housing program.
The defense spending bill for 2020 proposed by the Senate Armed Services
Committee includes measures to prevent fraudulent work orders, committee
staff told Reuters, in part due to concern that millions in fees have
been paid based on falsified maintenance records.
“Our military families deserve high-quality housing throughout their
service, and that includes ethical and fair treatment by housing
providers,” said Oklahoma Republican Jim Inhofe, the committee chair.
Beginning in 1996, the military launched the largest-ever corporate
takeover of U.S. federal housing, shifting ownership of more than
200,000 family housing units on bases to private real estate developers
and property managers under 50-year contracts.
These lucrative contracts include bonuses, or incentive fees, that
private landlords can earn by meeting performance goals set with the
military. To receive the fees, real estate companies must meet quarterly
and annual goals, such as responding to resident maintenance requests
within a specified time. The fees are payable each quarter, and are
generally worth up to 2% of the total rent payments from service
families living on base.
Balfour Beatty Communities, located in Malvern, Pennsylvania, runs the
military housing unit of Balfour Beatty plc, a London-based
infrastructure company with annual revenue of $10.7 billion. The company
earns $33 million in annual profit on its military housing operations,
Balfour Beatty Communities President Chris Williams told Congress in
February. The incentive fees alone on those operations are worth about
$800 million over the life of the 50-year contracts it holds for 43,000
homes on 55 Air Force, Navy and Army bases across the country, Reuters
Balfour Beatty took over housing operations at Tinker in 2008. Since
then, Reuters estimates, it has earned up to $2 million in incentive
Signs of irregular reporting have surfaced at other Balfour Beatty
bases. In 2016, Air Force housing officials stationed at California’s
Travis Air Force Base alleged company employees were using a second set
of maintenance logs, an Air Force statement confirmed. In 2017, the
housing officials found the company was closing out maintenance requests
before they were finished and classifying records incorrectly, the
base’s quarterly housing performance records show. That same year,
housing officials at Fairchild Air Force base in Washington State said
Balfour Beatty submitted inaccurate maintenance data in its application
to receive incentive fees.
The Air Force could not substantiate the allegations at Travis and
Fairchild. But it stopped paying incentive fees to Balfour Beatty at the
two bases late last year, pending a review, and referred the incidents
to Air Force investigators and the FBI.
Still, the Air Force has never clawed back incentive fees paid to
Balfour Beatty, an Air Force spokesperson said. Nor has AFCEC audited
the maintenance records of any other base managed by the company.
BIG LEAKS, TWO SETS OF BOOKS
At Tinker, Reuters last year found half of the nearly 400 new homes
built by Balfour Beatty suffered from gushing leaks, raw sewage backups,
rotten wood and severe mold.
Starting in late 2015, Balfour Beatty was overrun with maintenance
requests in both old and new homes. Roofs leaked, plastic water lines
burst and heating and air conditioning failed, former manager
Whittington said. Yet that same year, the company recorded just 23 late
work orders out of 6,000 jobs, internal work order data show.
In early 2016, Whittington said, executives cut the base’s maintenance
staff from six to five, as corporate headquarters in London demanded
larger profits from their military housing projects. That left about 132
homes for each worker to cover, he said. Still, Balfour Beatty told the
Air Force it was responding promptly to maintenance requests.
Some Air Force housing personnel at Tinker considered the number of late
responses suspiciously low, and the incentive fees the company was
winning oddly high, Air Force emails show. “It's funny that all
properties are always 100%” handled on time, one Air Force housing
employee noted in a 2016 email to colleagues.
[to top of second column]
Derek Rouse points to an incomplete repair on the back of his home
at Tinker Air Force Base, Oklahoma, U.S. May 1, 2019. Picture taken
May 1, 2019. REUTERS/Nick Oxford
Then, in July 2016, during a casual conversation, the Tinker housing
personnel noticed a hand-written maintenance schedule on the desk of
a Balfour Beatty work-order clerk named Tina Brown.
Brown was responsible for taking maintenance requests over the phone
and scheduling technicians to resolve them. Since her first day, she
told Reuters, she maintained an unofficial, hand-written set of
maintenance logs in addition to the official computerized records
shared with the Air Force.
The hand-written books allowed Brown and other employees to
accomplish two ends, according to Brown and other people familiar
with the operation. They could accurately track the work so they
could eventually complete it, but do so without triggering the clock
that started ticking once a work order was entered in the official
electronic system. Facilities manager Tim Heath instructed her to
enter work orders in this fashion, according to Brown and
Whittington. Heath did not return calls and text messages seeking
The requests were often logged into the official system by Brown the
day they were completed, not the day they were called in. By doing
so, the workers ensured that Balfour Beatty was appearing to meet
the response-time goals set in its Air Force contract: 30 minutes to
begin an emergency request, four hours for an urgent one and 24
hours for a routine matter. The ruse also allowed the company to
meet job completion goals: 24 hours for an emergency and two
business days for both urgent and routine items.
An example from 2016 shows how the set-up worked. A page from
Brown’s unofficial handwritten records includes a work request from
a family with a broken stove, dated July 7, 2016. The official
electronic maintenance log, captured in a screenshot from Brown’s
work station, shows the family’s request was not entered until July
12, 2016 – the day before the work was done. If the request had been
accurately logged, it would have failed the incentive requirements.
After finding Brown’s shadow set of books, Air Force housing
officials at Tinker interviewed residents in the summer of 2016 and
confirmed that Balfour Beatty was not entering requests when
residents called them in. “These findings are very disheartening,”
one official wrote in a July 2016 email to colleagues.
Balfour Beatty later addressed the accusation in an application for
an incentive fee payment. It told the Air Force it had discovered
“discrepancies in the data entry process at Tinker” and quickly
acted to ensure it didn’t recur, according to the fee request it
About two weeks earlier, Balfour Beatty had fired Brown. As she was
escorted out of the office, according to people who witnessed the
scene, she shouted to co-workers that she had been axed for keeping
a fake set of books at the direction of her boss, Heath.
“They threw me to the wolves,” Brown said. She filed a wrongful
termination suit against the company that is still pending.
In its statement, Balfour Beatty did not name Brown, but said a
single employee acted inappropriately.
Internal Balfour Beatty documents show the company issued broad
instructions to employees to alter the books.
That was the message in a 2013 directive about work orders emailed
to Balfour Beatty employees. “You will modify and ‘correct’ these
work orders so that they comply with the Response Time of 30 minutes
– 1 hours, and a Completion Goal of 24 working hours for Emergency
work orders,” the memo states.
Another 2016 internal memo shared via emailed instructs clerks to
place maintenance requests in a red folder if “workload excessive
and can’t schedule right away.”
Whittington said Tinker never had enough maintenance staff to tend
to the base’s 660 homes. All the while, Whittington said, corporate
staff from Phoenix pushed him to close out maintenance requests so
the company could obtain incentive fees.
“Work orders were closed when they weren’t actually completed,”
Whittington said. “Again, that plays into the incentive bonus.”
Whittington said he pressured his staff to “fudge the numbers.” In
an email dated September 1, 2016, he directed two employees to close
119 resident maintenance requests in four hours. “The objective is
to get ALL open Work orders closed today!” he wrote.
Whittington said he was directed by his regional manager, Rebecka
Bailey, and vice president Raul Martinez. Bailey is no longer with
the company; both she and Martinez declined to comment.
All those years, families lived with a range of hazards – raw sewage
backups, vermin infestations and exposure to asbestos.
In the McNarney Manor neighborhood of Tinker, all but a handful of
the 262 homes have flooring material containing asbestos,
Whittington and two other former employees said. Balfour Beatty
covered that material with floating floors or carpeting for
aesthetic purposes and to seal away the asbestos tiling, a common
and effective abatement strategy.
Much of the new flooring was cheap and poorly installed, however,
according to Balfour Beatty work order records. From 2012 to
February 2019, McNarney residents called in at least 350 maintenance
requests complaining about flooring, including buckling, warping
and, according to one work order, “black stuff coming thru
In the Ippolitos’ case, Balfour Beatty’s maintenance records show
the company moved the family into the home knowing the flooring was
in “bad” condition, as one log put it, and that a risk of asbestos
The company should have hired a specialist to safely remove the
asbestos or seal it off properly, said Nick Ippolito, who worked for
12 years as a residential construction supervisor before joining the
Navy. “But I guess that took too much money for them,” he said. In
2018, the couple left the Navy.
Balfour Beatty declined to discuss the cases of specific families.
It said it was not aware of widespread flooring problems in the
THE 'EXCEPTION' POLICY
After Tina Brown was fired in mid-2016, Whittington said, company
executives directed Balfour Beatty employees at Tinker to stop
keeping a second set of hand-written maintenance logs.
The number of late work orders skyrocketed, from eight during the
first half of 2016 to 377 during the second half, according to a
Reuters analysis of Tinker work order data. The company completed
12% of its maintenance calls late, which would have been too many to
receive its full incentive fees. The company didn’t report these
numbers to the Air Force, however.
Instead, in its application for incentive fees for the third quarter
of 2016, Balfour Beatty again reported stellar figures, saying it
completed between 96% and 98% of maintenance calls on time. The
company sought 100% of the incentive fees for which it was eligible
that quarter, $41,536.
Air Force housing officials at Tinker expressed disbelief. “We have
had many complaints from residents from each category stating work
orders were not completed within specified timeframe,” the Tinker
housing office wrote to another outside contractor, recommending
against incentives that quarter.
They were right to be suspicious, said Whittington. After Brown’s
firing, he said, regional manager Bailey directed him to make sure
the maintenance numbers met the incentive fee goals by massaging the
records. The company began taking advantage of a technicality known
as the “work order exception policy” to keep winning incentive fees,
according to Whittington and documents.
Under the Pentagon’s housing contracts, 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 residents requesting a repair
slot after the mandated response deadline.
Whittington said he combed through late maintenance requests and
edited the records to include exceptions to the response time
“Shamefully, I complied,” Whittington said.
The next spring, April 17, 2017, eight residents called in
maintenance requests and, the official records say, all eight
requested the work be done later than required, on April 20,
according to an email exchange with the Tinker housing office.
Without those exceptions, all eight jobs would have been late,
counting against Balfour’s incentive goals.
As recently as last year, Balfour Beatty was still relying on
exceptions. Tinker had about 1,850 late work orders in 2018; more
than 1,100 fell under a time policy exception, the records show.
The company says it did often use exceptions at Tinker starting in
2016. In 2018, Balfour Beatty says, it and the Air Force implemented
a new process for recording work orders, including the use of
The Air Force Civil Engineering Command, or AFCEC, said it is
working with Balfour Beatty to correct “challenges.”
Melody Marsh, AFCEC’s regional manager, has defended the company. In
May 2017, a resident invited a Tinker housing official into her home
to witness a persistent leak. Marsh scolded the official for
entering the home without a Balfour Beatty representative. “This
isn't showing a partnering approach,” she wrote.
In August 2017, after Tinker’s housing office provided AFCEC with
evidence that Balfour Beatty was claiming fake exceptions, Tinker
staffers urged a curtailing of fees. Marsh overruled the
“AFCEC does not agree that your response validates a decrease in the
award incentive,” Marsh wrote.
Marsh did not reply to a request for comment.
The warnings continued. In December 2017, AFCEC agreed to cut a
small portion – 3.8% – of Balfour Beatty’s incentive fees for the
second and third quarters of 2017.
Last November, the Tinker housing office asked Marsh and the Air
Force engineering center to investigate Balfour Beatty, predicting
dire consequences if action was not taken. “With continued
inadequate maintenance, our property will not withstand a 50 year
lifecycle,” it wrote.
Marsh declined, replying in correspondence that investigations were
“ineffective and extremely unproductive.”
Some Tinker families continue battling the landlord. In May,
neighbors gathered on Mundell Street to discuss those struggles with
a Reuters reporter.
Derek Rouse, a Navy flight engineer, said he and wife Jennifer have
asked Balfour Beatty for years to stop rainwater from penetrating
their home. In April, Balfour Beatty marked a work order from the
Rouses as finished on time, claiming to have fixed the couple’s back
door by installing new weather stripping. The reporter examined the
door. New weather stripping had not been installed.
“I get done flying at 4 a.m., and at 6 am I get a phone call from my
wife saying the house is leaking again,” Derek said. “I put my life
on the line, and I shouldn’t have to deal with this."
(Additional reporting by Joshua Schneyer and Deborah Nelson. Editing
by Ronnie Greene)
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