 Fisher Corey, Deputy Assistant Secretary of Defense for Housing of the Department of Defense, and Ms. Elizabeth Field, Director of Defense Capabilities and Management for the Government Accountability Office. This panel will give us a background on the Military Housing Privatization Initiative, the partnerships between the providers and the government, and the now implemented Tenant Bill of Rights. They will also provide details on their ongoing actions to remedy the inadequate oversight of the program and their long-term plans to make permanent positive changes to the program. We'll begin with Ms. Corey and then move to Ms. Field. Ms. Corey, your full written testimony will be included in the record. You're recognized for three minutes to summarize your opening statement. Thank you. Madam Chair Wasserman Schultz, Ranking Member Carter, and distinguished members of the subcommittee. I am honored to appear before you to discuss the Military Housing Privatization Initiative. I would like to begin by acknowledging the subcommittee's support of the department's efforts to improve the quality of life for military members and their families and your efforts to enhance the MHPI program. With this committee's support, the department is resourced to provide safe, quality, well-maintained housing where military members and their families will want and choose to live. The military departments have used the available funding to increase their oversight by hiring more than 600 additional housing personnel to provide enhanced quality assurance, customer care services, and advocacy for residents. Under the overall leadership and direction of the Assistant Secretary of Defense for Energy, Installations, and Environment, the DOD official designated as the department's Chief Housing Officer, the department has significantly enhanced the MHPI program and our oversight of the private sector companies that own, operate, and maintain privatized housing projects. Since the February 16, 2021 MHPI hearing before the subcommittee, the department has remained focused on five key MHPI program oversight areas, senior leader engagement to collaborate internally and with MHPI companies on housing issues and necessary corrective actions, rebuilding trust with the military families and their military members and their families, accountability at all levels within DOD and by MHPI companies to perform our oversight as originally intended at the outset of housing privatization, transparency, and more frequent communication with MHPI tenants, and ensuring the long-term financial viability of the MHPI projects and the MHPI program. Central tour enhanced oversight, the department issued a revised MHPI tenant bill of rights on August 1, 2021, and that now includes all 18 rights specified in section 2890 of Title X, United States Code. Based on our work with the MHPI companies that own and operate privatized housing projects, they have voluntarily implemented these 18 rights at all but five of the nearly 200 installations with privatized housing. While the department continues to pursue agreements with the MHPI companies at the five remaining installations, nearly 96% of the military families who reside in privatized housing have access to all 18 rights. Our progress implementing the tenant bill of rights represents a foundational step in DOD's ongoing efforts to improve the MHPI program and to rebuild trust and ensure a positive living experience for military members and their families. In addition to issuing the revised tenant bill of rights, we've taken a number of other actions to improve our oversight, to include implementing department-wide quarterly programmatic reviews of the performance of the MHPI portfolio and the individual projects, establishing a new DOD uniform housing standard and inspection requirements, and working with the private sector MHPI companies to accelerate project investment, to renovate or construct new housing units MHPI projects were feasible to improve the condition of existing privatized housing. Our priority going forward is to focus on implementing MHPI reforms intended to improve the safety, quality, and habitability of privatized housing while continuing our enhanced oversight of the MHPI program and projects. These reforms include establishing enhanced standards for the private MHPI companies that own, operate, and maintain privatized housing projects through increased monitoring of the individual MHPI project performance and ensuring the long-term financial viability of the MHPI projects and program. The Department of Defense is committed to working closely with the subcommittee and the committee staff to ensure our military members and their families who choose to reside in MHPI housing have safe quality homes and a positive living experience. Thank you for the opportunity to testify on this very important topic and for your continued support of the priorities of the department to improve the quality of life for our military members and their family members who are called to sacrifice so much for us. Thank you. Thank you, Ms. Curry. Ms. Field, your full written testimony will be included in the record and you'll recognize for three minutes to summarize your opening statement. Madam Chair, Judge Carter, and members and staff of the subcommittee, thank you for inviting me to testify on GAO's work assessing the Defense Department's privatized military family housing program. This morning's hearing comes in the wake of announcements from the Justice Department regarding allegations of fraud by two of the private companies with the largest housing portfolios in the program. In one case, the company pled guilty to major fraud and is to pay over $65 million in civil and criminal fines and restitution. In the other case, the company agreed to a $500,000 settlement to resolve allegations of fraud with no admission of fault. While different, both cases involved the performance incentive fee or PIF, which under the program the companies receive if they meet certain criteria. In our March 2020 report, we identified significant weaknesses related to DoD's use of the PIF, including that the metrics and the underlying indicators used to determine whether it would be awarded were not closely tied to reliable measures of resident satisfaction. Instead, they emphasized things like responding quickly to work order requests, regardless of whether the underlying problem had been fixed. Moreover, we found that the data in the systems used to track work orders were neither accurate nor reliable. We made a number of recommendations to address these problems, including that the military services review the PIF's metrics and indicators to ensure they provide an accurate reflection of the condition and quality of the home. I am pleased to report that DoD has taken steps to implement this recommendation, including proposing significant revisions to the PIF. However, while many of the private companies have agreed to these revisions, not all have. This demonstrates one of the fundamental challenges inherent in DoD's military family housing program. As is the case for all government contracts, the military cannot unilaterally make changes to the project's legal agreements. But in this case, many of these agreements are in place for 50 years. We will undoubtedly have a robust discussion this morning about the limits of the government's power within this public-private partnership and why DoD has remained committed to the program despite those limits. I look forward to that discussion. But I would also like to note three areas in which the department can continue to strengthen the privatized family housing program without limitation. First, DoD can do more to report timely and transparent information on resident satisfaction with their privatized homes. Second, the department can strengthen its process for setting the basic allowance for housing, a key source of revenue for privatized housing projects. Third, DoD can do more to validate work order data. We look forward to seeing the department fully implement these recommendations in the near future. Thank you, and I look forward to your questions. Thank you so much. Ms. Corey, my opening question is, did you watch the first panel? Yes, I did. Okay, I know your testimony was prepared in advance, but I'm wondering if you noticed how discordant your opening statement was with what we heard from the first panel. I mean, for me, it doesn't feel like there has been any change at all in the three years since we had this oversight hearing with the same three panels. How has the layer of oversight, and in our previous hearing we were told by Mr. Cramer that progress had been made to address the understaffing of offices charged with oversight of the housing program, DoD clearly told us that they dropped the ball, that they had left the oversight to the privatized military housing companies. But when it comes to that oversight, there were still vacancies when we last asked. Have those offices now been fully staffed? How many positions are in these offices? And do you think that the oversight that has been installed that was not active or there before has done anything to improve the situation? Because the first panel really gave us with the impression that things are exactly as they were before. Well, I'm always concerned when I hear residents raise issues about the experience they've had with housing. So I certainly will go back and look more into the situations that they've raised. In terms of what the department's done, we have now the military departments have hired more than 600 additional housing personnel. Some of those are quality assurance and inspection related. Some are customer service and resident care. And so we have done that. But can I, you know what, can you mention that? I want you to address some of the specific concerns. And that's why I wanted the resident panel to be first. Some of the specific current concerns they raise, where you have, you know, non-expert, untrained individuals who don't know the state laws, that don't know, you know, how to guide a resident through the myriad of problem, the myriad of issues that they have to deal with when they're reporting a particularly a serious, you know, a serious problem with their home that's sickening their family. So I mean, just putting a body in place isn't enough. So how are you addressing the need for expertise to be able to help a resident and really be an advocate for them to get their problem solved? So for the housing staff, and it all levels throughout the department, there has been a significant increase in training. Obviously, some staff are new and they're still being trained. And there are probably locations, as was mentioned, where maybe the on-base housing staff don't understand fully that the state and local requirements to apply to privatized housing projects, these are privately owned projects. The housing is privately owned and just operated on our installations. And so we have, we have work to do in terms of training and we'll keep focusing on that. But we have implemented a number of measures that should be showing improvement for not just the responsiveness to residents, but making sure the homes are in better condition when they receive them in. For example, we have implemented inspection requirements that each house before it can be reoccupied by the next family goes to a government inspection by qualified personnel to ensure that it meets life health safety requirements and is habitable. And it is holding up occupancy in locations where maybe the landlord did not completely meet every, every, every requirement that they had to check another box. But we have done things like that. We've improved our commander, installation commanders, understanding their role and responsibilities in terms of the oversight at the installation level and having a stronger voice and incentives and other measures to hold the project companies accountable. But they're, they're, you know, we, the tenant bill of rights has been in place since August. And we know that there are places that there have been hiccups along the way as the housing offices are learning how to follow the new policies and processes. And we are committed to working through that and making this program the best that it can be. And we think that we can do a great job providing housing to the residents through privatization. Certainly doesn't seem like anywhere near enough progress has been made. And I'm not sure that the structure that you put in places is, is working or enough. Ms. Field, can, can you answer the same question essentially in response to what Ms. Corey said? Do you think that the steps that, that, that the services that DOD has taken to put in place, you know, oversight that has enough expertise and has this, and a system of responsiveness to advocate for these, these tenants is working effectively? Well, it's, it's a great question. And I have to say that, unfortunately, I continue to, to hear from residents by email or phone that they're having continued problems as well. We have an ongoing audit right now trying to assess whether these new steps are having their intended effect. That audit is not yet completed. But I will note two things. One is that in the most recent report that the department provided to Congress, I believe it was just released last week, showing some information on resident satisfaction. Well, it could have been more transparent. It, it showed the scores going down. So that's, that's one indication that is a little bit troubling, albeit as somewhat outdated because it's, it's FY19 data, although it's the most recent data we could get. The other point I would make is that there are so many recommendations actually requirements from prior national defense authorization acts that the department has that the department has not yet fully implemented. And so that might be part of what's going on here as well, is that the department is still in the process of, of taking those required steps. Okay, I'm going to just take an extra minute or so because I, we have a shorter group of members that want to answer questions on this panel and that'll save maybe my second round. Ms, if that's okay. Ms. Corey, over the past few years, we've seen a plethora of really troubling press reports about all of the housing partners. But as I mentioned in my opening statement, two particular providers have faced high profile legal woes due to incentive fee fraud and whistleblower violations. I'd like you to explain exactly what that means and how it happened. And in light of such egregious breaches and trust, why can't the department simply terminate the partnerships? And what other options does the department have in terms of providing consequences to the providers short of terminating the partnerships? Because, you know, in the real world, if that kind of egregious outrageous violations of the public trust would take place, they would lose their ability to continue to have the contract and continue to serve. So how did that happen? How did the department miss this fraud? And what else can be done to ensure such fraud and corruption doesn't happen again? Well, that's an important question. We know that between 2013 and 2019, Balfour Beatty communities had employees that basically falsified information so that the company would meet objectives for its performance of maintenance and therefore meet requirements that would give performance incentives that it had not earned. So specifically, the employees altered or manipulated data in the property management system and falsified that data such that that would fraudulently induce the services to pay performance incentives that they hadn't earned, meaning that actually the project companies themselves, but the incentives were approved by the services. BBC's corporate culture at the time and its internal controls weren't adequate to deter and detect that. And frankly, the government at the time had also cut back our staff, and so we weren't really staffed well to provide the oversight that we should have, and we have acknowledged that. The actual situation that happened with BBC was first identified by the Air Force. So the Air Force was who identified it and then reported it to the Air Force Office of Special Investigations and then it was referred to the Department of Justice. And so once that was referred, we were aware of it and we were tracking that with the information that we could get from the Department of Justice. So we knew the investigation was ongoing for two years, but we didn't know until they had two employees that actually pled guilty in the summer timeframe of 2021 and then the Department of Justice let the Department of Air Force know in roughly mid-December that there was a pending plea agreement and that was announced in right before Christmas of 2021. We were also aware of, in that same rough timeframe in early January, we learned that there was the whistleblower case that involved military communities. That was a civil settlement, civil situation, and was related to a whistleblower case. So it was sealed by the court. So we really did not know about that until about a week prior. The Air Force was, I think, did learn something about it, but we didn't know details until it was announced in the press release. So these situations are obviously concerning, but we feel that Balfour Beatty, for example, in their plea agreement, they not only acknowledged and fully cooperated during the investigation, but they also agreed to pay restitution. They had criminal fines and fees that were assessed against them, civil penalties assessed against them, and then have agreed to a very complex and thorough corporate compliance adjustment to improve their processes, policies, and procedures to deter and defect or detect any kind of fraud against the government and also they have to hire an independent corporate compliance monitor for three years to watch what they're doing. And so for the department, one of the things that we look at is, well, how did they respond? And recognizing this involved allegations with a small number of employees from 2019 and before, BBC had immediately, once they learned of these issues, had taken action to start to change its own internal processes and management, and we watched them as they were very transparent with us on that. And the Air Force, as our lead department on this, given that the situation started at the Air Force office, the Air Force has felt satisfied with that and is working with BBC to implement additional internal controls and performance improvement plans and requirements to ensure that they are doing the right thing and that they will not be in a situation where they would fraudulently be claiming anything regarding work orders in the future. But in terms of the question about why are we so committed, why wouldn't we replace BBC or a project company that would do this? And part of that is because of the structure of the program, but I can talk more about that, but the big overarching thing is that we're very committed to the success of this program. We have the potential that we could terminate a deal or terminate a relationship with one of these project companies, but that we don't feel is the right thing to do. We watched in these cases how these project companies have responded, how BBC and Hunt, which they didn't plead guilty to something, but how they responded in terms of the whistleblower case. And we recognize that these are projects that the project company owns the housing and for us to go through the process of trying to terminate the deal would be a very expensive and impactful thing that might not actually be as beneficial to the residents as it might seem, whereas we feel we can work with these companies and they are working in good faith. We see their reactions at least and how they respond to this and the corporate compliance and things that they've agreed to, that we have confidence that we can continue to work forward with them. So I can talk more about the actual deal structures if you want to understand that, but some of that gets rather technical for the amount of time available for the question. To simplify it, a company like BBC has made a cost of doing business decision and so they know that they can withstand the penalties and layers of oversight and the cost added to their response and getting caught for defrauding the government and their contractual arrangement and the fact that they own the housing and that these arrangements are so complex where they basically can act with impunity and not really ever be held accountable and prevented from doing something like this again because it's so difficult to unravel the complicated arrangement that has been made to establish the privatized military housing program. So that's really a terrible situation for the government to be in and I just don't understand how accountability is even possible or preventing it from happening again is even possible and that's what's disturbing to me. Okay, I apologize to my colleagues for taking so long. Judge, you're recognized for five minutes and however long you want to go after that. Thank you, Madam Chairman. Ms. Corey, how many people work for you? My total team, if fully staffed, is 15, including contractor support. Fifty or fifteen? One-five, including contractor support. Okay, and you do oversight. I went through all the border between Israel and the free and some place else. I was told that there's a human observatory that says about five stores. What do they do? They observe. Well, when we had to tell you to do oversight, it seems to me we should be saying not only look for the problem, but for $200 million, fix the problem. That's death. I don't understand that. I just don't, we were pouring once again money and saying money will solve the problem. And 15 employees are under staffed and we got $200 million in the program in the last few years. Something's wrong. So the, my staff is not funded out of the O&M budget that is supporting the military departments for the 600 additional staff that they have, plus their prior staff. So my budget's very small. It is funded through the family housing military, the military construction budget is under the family housing improvement funded. So the family housing improvement fund for fiscal year 93, the request is a little over $6 million in support from my office. That does not fund salaries. So that is for contract support. Okay. O&M, GOA, this field, you handle suing on their behalf, right? I'm sorry, do you mind if I do the question? You're agency for our lawsuits on behalf of these issues. No, to clarify, we have not filed lawsuits against the companies. Those are cases outside of the GAO system. We are the legislative oversight agency for Congress. And so those lawsuits were brought by members of the public, whether they were service members or others, members of employees of the companies. So where do the criminal fines go? Do you know? That is a good question. And Ms. Corey might actually know where all of the fines go. I believe some of them go back to the reinvestment account for the privatized housing projects. But Ms. Corey might have more details on that than I do. Yes, I can answer that now if you want. The Department of Justice required BBC to pay over $65 million in fines and restitution. And that included $18.89 million in criminal restitution paid to Air Force privatized housing projects and to their restoration accounts, their long-term sustainment accounts to be spent as the Air Force determines. The Air Force decided which projects received the funds and how they will be spent. The total real damages to the department was a little under $13 million. So again, $65 million in fines and restitution. And then separately, BBC entered the False Claims Act settlement to resolve its civil liability for $35.2 million. And the amounts paid there are credited against the amounts BBC owes towards its criminal plea. BBC has already, you know, it's fully paid its restitution amounts to the Air Force. The rest of that money goes to the Treasury. Goes to the Treasury. It goes to the Treasury. Okay. My question is, I was looking at what weeks should we provide the last two appropriation cycles, 2021, $200 million, $141 million, $20 million, $60 million, $21 million for the services to increase their ability to provide oversight. The problem I have with the word oversight is that means to somebody looking for problems. I'm looking for the people who solve problems. Who would they be? The Air Force, the Army, the Navy, are they supposed to take this money, solve the problem, or just look at the problem? Because we're all looking at the problem. But when you say that it is to fix the gas leak, you're not solved. And that's troubling for me. Can you comment for me, the one of you? Elizabeth, well, I mean, it's a really important point about oversight, that it's not just about understanding what happened, but how to fix it. And I think, you know, that's why we have made over, I believe, 30 recommendations to the Department of Defense to strengthen privatized housing. Many of them have been implemented, but not all of them have. And we really focus our attention on recommendation implementation, because that's where the problems get fixed. I think the bottom line here is that the department did not get into this problem overnight. And so it's not going to get out of this problem overnight. If I may, then as well, that money right now is not just paying for staff, but is paying for inspections, for example. So we have implemented a new DOD housing standard that requires an inspection of every home. We also have inspections, as I mentioned earlier, at each change of occupancy for the government team to go and inspect and ensure that that home meets the life health safety and other requirements. And the department also just in the last couple of months issued policy on managing environmental health hazards to make sure that our government team understands what the standards are, what they're supposed to be looking at, and whether something is an issue or not, including the oversight that needs to be provided to the privatized housing company. So that applies to both government-owned housing and our privatized housing. But we've done a lot of things at the field to increase our oversight and ensure that we are doing better at monitoring the work orders and so forth. And then at the secretariat level, and at my level, we've implemented quarterly programmatic reviews where we're looking at data on all of these different things, various metrics to assess not only how the projects are performing, but the health of those projects from a financial standpoint and working with the military departments to determine if there's a need for some kind of corrective action or some kind of a restructure. Over. Okay, if then all those people are looking at the problem, I assume the housing owners are supposed to be fixing the problems, correct? So some of those folks are helping to fix the problem and that they are resident care advocates and they are the voice and the liaison between the resident who has an issue and the project company. We are aware, I mean, it's not, it's been a challenging past year and a half for all the landlords, not just our privatized housing landlords, but all landlords trying to find qualified maintenance personnel with COVID with, you know, the competition in the job market right now. And we do know there are locations where the the private company has gone out and contracted with a provider to ensure they had maintenance personnel. So the issues that were raised on the first panel as to whether that makes too cozy of a relationship or whether that that contractor isn't necessarily working in the best interest of the resident, that's something we need to go back and look at. And I appreciate that they highlighted that. But we have put in place a lot of additional oversight and based on inspections that we've done, for example, at Fort Belvoir, the Army did a pilot study and inspected 90% of the nearly 2000 homes at Fort Belvoir. We did not, they did not find a systemic issue with the quality of the housing, the vast majority was in good or excellent condition. And the issues that they found something were things that would normally be caught in just routine maintenance and at the turnover of the homes. We have had situations this past year with COVID where residents have not wanted to report issues or have someone in their home doing maintenance because of their concerns about the health situation right now. So that this has been a complicated time for our project companies to try to address and improve their performance and also for us in working with residents given the impact that COVID has had on interaction face to face and being in the homes. Over. Well, we're still, we've got to get an approach with the next problem. You've got a problem, plumbing problem, you send the plumber. You've got an electrician problem, you send the electrician. And if they're not doing that, we're not taking care of our people. That's real simple. We seem to have various numbers of catch 22 years in this issue. We all read that book back in the 60s about the army. But seriously, somebody's got to get down to doing the work and somebody's got to punish for not doing the work. Just that simple. So the, if I may, the military departments do make decisions about how much of the incentive fees for property management, for example, that the project companies earn, the installation commanders have that first voice of saying and monitoring what's really going on. And an issue of not having qualified personnel do the work, that's important. That's something to be considered. And there are projects where those incentives have been totally withheld and where projects have been put on performance and improvement plans. And so there, there are means by which the services are, are taking action to hold the project companies accountable. And I, you know, again, take very seriously the concerns raised today, but out of the 205,000 or so family housing units, there are many of those, the vast majority of those that are very well maintained. And we think our, the residents are getting a very positive experience, but we certainly can do better. Thank you, Judge Carter. I just think that each of us should take the responsibility to think about our role in addressing this issue as if we and our families lived in privatized military housing. And, and I won't ask you, Ms. Curry, whether you would want your family to live in privatized military housing, but from what I've heard, I wouldn't want mine. And that's unacceptable. We should have a quality of military housing, no matter where it is in the country or the world, that we would have our company would be comfortable living in ourselves and having our own family members live in it. And that is certainly not the case right now. And the urgency to address this issue needs to be handled through the lens of would, what if it was your family? And it isn't. It just isn't. Okay. Thank you. Thank you, Judge Carter. Next up is Mr. Case. Thank you, Madam Chair. And thank you, Ms. Curry, you're in a tough spot here today. And I don't doubt your year and your team's commitment to doing the right things here. I am trying to listen between the lines to your testimony and to your answers. And, and frankly, I'm just trying to reconcile it with what I heard in the first panel. And I'm kind of back to the same questions I had for that panel, which is are, are the, are the concerns isolated or systemic still, are they, are they focused on, on specific providers versus all providers? Are they specific to geographic areas or to older housing on, on base? How do you, how do you answer me on that? I, I, I, I listened to you and you, you, you, you said that you would go back and look at these very, very specific, you know, concerns that were raised by the people in the first panel and as you should. But I didn't sense that you felt that, that the concern was broader than that. You mentioned metrics and, and, and a sub question would be what metrics are you basing your conclusions on? Why don't I just get you to respond to that? And then I got one more after that. Okay, sure. So, you know, it is a very large program. This is equivalent to the largest or second largest portfolio of rental properties under, if you consider the program as a whole, of one big program in the, in the country. And, and so when we, when we look at what's going on, there are locations that have more problems than others. And there's a variety of reasons for that. Sometimes it's because, and I'll remind you that the housing that these landlords now own the projects they inherited, we conveyed to them the existing housing that had a $20 billion maintenance backlog. Many of those units were historic units. Some of those units are, you know, they were units who cannot replace depending on what the state historic preservation office requirements are. And they pose challenges when you start putting air conditioning and more modern systems in there. And we over time, you know, the project companies have learned that sometimes the two don't mix a historic home and air conditioning, there's a way to do it. But you have to have to step back and realize the building envelope is such that if you don't have the right ventilation, you could have mold. But we, we have what I do with the military departments is actually have them provide an array of data on each project. And then I'm looking at that I'm looking at with my team, not just occupancy, but occupancy by military families, how many units are offline for maintenance because the units that have the most severe problems are either offline because they have scheduled maintenance because they were already planning to replace the homes or maybe they're offline because they're trying to remediate mold or an issue that's been identified in the last little while. So we watched that and, and, and other measures of resident satisfaction, work order satisfaction, residents now actually have to sign off on the work order to say whether or not it was completed in them to what satisfaction they had with that experience. So it's not nearly as easy for the project companies to manipulate that data and claim that that work order was completed when it was not. And again, the resident has a voice about the quality of the work and can raise that concern. They also have, you know, other ways that they can raise concerns to the resident, to their, not just their property manager, but through the government housing office and then the dispute process and so on. But in terms of our oversight, that's one of the things we're doing. The other thing I mentioned was that we have recently issued the uniform DOD housing standard and the inspection requirement that goes along with that. And that's from section 3051 of the FY20 NDAA. And the Army leaned forward and did a pilot inspection for us at Fort Belvoir. And so we have data there. Fort Belvoir has had a lot of press coverage. There have been residents that have raised a lot of concerns there. Army, the Army was able to inspect about 90% of the homes. The other 10% the residents didn't agree for them to have access. But the majority of the homes came back and good and excellent. And so we're looking at that and saying, okay, it's, it's, there's a subset maybe of the homes, but it's not all of the homes. Okay. Well, I think we would all concede that. But what is a majority? A majority can be 51% or 90 somewhat percent. And either way, you're, you're, you're, there's still, I mean, people just stood in front of Congress at great risk to themselves and to their careers to tell us that they don't think it's going okay. And, and how widespread do you think that is? That's my question. And are we on the right track? Because I'm hearing you say, in all honesty, that, that, or at least I'm interpreting it, that you think we're roughly on the right track. And, and that doesn't reconcile at least with the first panel. And so then the question is, well, what do we do about that? So that, that's the reason for the question. How widespread do you think the problems still are? And do you have a solution to it? Because it, it, and you say in your testimony that we're going to need time and so did GAO, and we get that. You don't turn this on a dime, but is it, is it the necessary level of, of focus, solution, expedition? Do you have the resources from Congress to pull this off? But those are the, some of the questions that I had. So the funding request for FY23 includes the funds that the military departments need to continue providing the oversight that they've committed to at the levels that they should. And, and does support the inspections. Those won't all be completed in one year, but it's faced as they complete their inspections, these one time very, very thorough inspections. They're still doing change of maintenance inspections and other kinds of inspections that are required, but Section 3051 had a very specific requirement. But if we say roughly there are 200,000 homes, we, you know, if I gave you a ballpark, I think the problem is 1 to 2% of the homes have an issue. And so that, you know, when you talk 200,000 homes, that's still a lot of homes, a lot of families from the standpoint of a portfolio of homes. If you were a private sector landlord and you were looking at your homes and me and my individual home, occasionally we have problems. It could be that you have a mouse infestation. It could be I recently had a leak in a basement plumbing. You know, things, things happen. And then how does that landlord respond and fix that problem? So I don't expect that 100% of the homes are going to be in perfect condition all the time. I do expect that those landlords take appropriate action, that they're maintaining them like they should. And that when something is brought to their attention, that they then address it and they do it right. We do need the help of the residents, just like the ones who spoke here, we do need residents to submit work orders. And so we do find that there are locations where the resident has first posted their problem on YouTube. And when the housing office looks, there's actually not been a work order submitted to it. That's probably rare. It's probably a minority, but I would just footstomp. We do need the resident's help to flag the issues. And if they see something that looks like it might be causing a problem to let the landlord know early on and let the housing office, government housing office team know early on, but we need to hold them accountable and we need to expect as close to perfection as we can get. But I don't think we're going to ever solve this 100% of the time. And I don't think we're going to keep 100% of the residents, you know, fully satisfied all the time. We just have to strive for that as our goal. Okay. Well, my time is up. But thank you. Thank you for expanding on that. Appreciate it. Thank you. Thank you, Mr. Case. Mr. Valdane. Thank you, Madam Chair. I appreciate again this panel. This has been very important. So you, the chair brought up an earlier issue about staffing. That's one that I was obviously very concerned with as well. And I'm glad that she made the point she did. And I just wanted to make sure that you know that not just the chairwoman, but all of us are really focused on making sure that the staff is there and properly trained. My office has an ongoing case with an enlisted family at NAS LaMoure, who lives in base housing managed by Liberty Military House. This family's house has been, has had repeated major leaks and mold, which has caused them to be displaced for days to weeks at a time for repairs. This has happened several times in the last two years. I think it's important because you talked a lot about the resolution just now with Mr. Case's questions that there are work orders that they're signing off on but this specific case has been going on for two years. They're very unhappy. They've obviously been reaching out to us. And as I mentioned with the earlier panel, we do go and we always recommend that the constituent goes through the chain of command to try to address these, to make sure that those processes are working for them to come to us and to ask us for help. That's because obviously they're not working. Things aren't happening. They're not being done the way they're supposed to be doing. And this family is in jeopardy. We've been asking for help on different fronts. They've been responsive, but we've got to do more. So can you speak as to what metrics, if any, use to ensure that unsafe housing doesn't simply just receive temporary repairs over and over again, leaving service members facing the same problem they did in the first place? Thank you for that question. So for that level of review, I rely on my military department counterparts. They each have their own programs to be monitoring the actual work. I'll use the Army as an example again where I know they actually had their third-party inspections that they hired separate from any of the other ones you've heard about where they went in and actually reviewed the work at installations to see were they only doing a cosmetic repair or addressing the underlying problem. And when they found that if there was an issue where they hadn't actually addressed the underlying problem, they flagged it and raised it as a concern to hold that project company accountable. So I have confidence that that type of review is happening and that the military departments and the installation teams better understand at the installation level their responsibility for holding the project companies and their property management accountable. And that's part of the reason that we sometimes have where they withhold incentives and put the projects on a performance improvement plan. So I would hope that your confidence is shaken a little bit right now because this is obviously an issue that hasn't been resolved. They continue to do small cosmetic fixes. And again, the people that are living in these houses aren't the top of the food chain. They're not the ones making the top dollar. They don't have the resources to be able to to just move into another house, pay things out of their own pocket. They're truly struggling and doing the best they can. And all we're asking is to make sure that houses are repaired in a timely manner and repaired in a way that this isn't coming up time after time after time and that they don't feel they need to come back to us. I mean, we have no problem working with them. But if members of Congress have to step in in every single situation and resolve these types of issues, that means that there's a lot of people within the different departments that just aren't doing their jobs. And maybe the things that you're hearing from some of your folks that work under you isn't accurate. So I will take back this information and we'll look into the situation at that particular installation. I'll just say that, you know, across the portfolio, there are thousands and thousands of work orders entered every day. And so I'm disappointed to hear about any concerns where a work order hasn't been handled appropriately. But I will stand by my assessment that it's a very, very small percentage of the time. When an issue like this gets raised to me and I occasionally have people reach out directly to me that have a concern, I go directly to my counterpart to ensure that the military department leadership is aware and that they work to address the concern with that particular project company. All right. Then just one quick question on the complaint database. Ms. Currie, when you anticipate the department run complaint database to be operational, what metrics will the database collect? And do you need any additional funding for this database project? So the complaint database is very complex and will be very expensive for the department to implement. I'll just be honest. I have met personally with the Consumer Finance Protection Bureau. Senator Warren suggested we should meet with them to learn about their complaint database as a model. And they do have a wonderful database, but they have a very big budget for that. And they have a large staff to do that because you have to worry about privacy act issues and profanity that could be on there. But more so, monitoring if there's a complaint or a request for service, they are getting that to the military department in the right installation for work and then tracking that. Right now, I will admit we are primarily focused on the other reforms that we can do that will be impactful to the residents quickly recognizing that we already have a number of ways that they can raise concerns and complaints, not just the dispute resolution process that's identified to the tenant bill of rights, but for those five installations that aren't abiding by that, they do have a dispute resolution process defined in their lease. They can still go to the government housing office that everybody can still go to the IG if they really feel unhappy or the courts. I just need to just push a little bit more on the one specific part of that question. What metrics will the database collect? That's one that I really think is important. So at this point, I don't know that I've thought through the detailed metrics, but I'm sure we would be tracking how many concerns are raised at a given installation, the type of concern that is raised, the responsiveness, whether it was resolved to the satisfaction of the military department and then also to the satisfaction of the member, but that's something we're going to have to work through in terms of the details. Again, I am concerned about it causing confusion to residents about where to file a complaint or how to raise a concern when we already have processes and methods in place. All right. Well, thank you, Madam Chair. I yield back. Thank you, Mr. Valadeo. Okay. Next up is Mr. Rutherford. Are you ready for your five minutes of questions? I think he stepped away. So if not, then Mr. Gonzalez, you'll recognize for your five minutes of questions. Thank you, Madam Chair, and I'll get right into it. I have many questions. The first question is for Secretary Corey. Two of the companies represented on the third panel, Hunt Military Communities and Belford Bady communities have either been found guilty of fraud or settled out of court for alleged fraud within the last three years. Since the conviction and settlement, DOD has expanded its partnership with these companies to provide privatized military housing. DOD continues to partner with these companies that clearly put profits over service members and their family. Earlier, you said it was too expensive to terminate these partnerships with these companies. Can you please, Secretary, can you please give me an example of what does it take in order to terminate? What would these companies have to do in order to cause enough damage in order for you to consider terminating their contracts? So termination for cause is different than termination for convenience. I assume you're talking about termination for cause. I'm not an attorney, so I'm going to have to defer the real detailed response to that for the record. I would just say that the housing is owned by these private sector entities, but their third party financiers, their lenders and bondholders do have a role in play. So if we were to try to remove the project company, there would be a process that we'd have to go through with the lender and bondholder as well. And it is a very complicated process. It's not that it can't happen, but again, we are not focused on that as we feel that's an extreme measure in cases where we feel that we are comfortable moving ahead and holding these project companies accountable. We're watching how they respond, and we will be monitoring their performance and how they inter-work order data and anything else that would be indicative of a problem in terms of them having potential future fraud. Next question. Secretary, I retired as a master chief, and as a master chief, it was my duty to take care of my sailors in all forms of fashion. Oftentimes, that would require oversight from me. And there's a difference between somebody else doing an inspection, and when the master chief showed up to do an inspection, and I'm sure it's the same in any organization. The question I have is, I would love to host you at Laughlin Air Force Base to do a joint walkthrough where we have Congress and the department come together. You mentioned a few of your different areas. Senior leadership engagement falls right in line with that. I would love for us to talk to families directly to the trust of building families, the transparency piece. Would you commit to doing either hosting in Laughlin Air Force Base or Laughlin Air Force Base in San Antonio? Absolutely. I would love to join you there, and I would do that for any member that has a concern about the housing at their local installations. Fantastic. I'm sure there's many members on this committee that would also be interested in that. My next question is, you mentioned lawsuits earlier, and it seemed as if you were finding out after the fact. My question is, do we know how many pending lawsuits they are, and if so, what installations are impacted? So DOD is aware of one current investigation involving one project company at one installation. I can't share that installation name right now. We don't have further information from DOJ about that ongoing investigation, but we can provide more information as we become aware of it. I'll let you know that actually just Monday this week, the Department of the Air Force received an anonymous complaint regarding a separate company at a separate installation. So that has already been referred to the Air Force Office of Special Investigations, and we will be happy to provide an update on that after we learn more. But we don't always know about investigations if they're conducted by DOJ or they are under court seal. So that's been the complication for us trying to provide more information in the past. Okay. Next question is for Director Fields. DOD currently only has 14 privatized military providers. Are there barriers to entry for other companies to compete with these providers? Thank you for that question. So my understanding is that when the projects were first set up, they were competed like a normal contract would be, even though these are not federal acquisition regulation-based contracts. As I mentioned in my opening statement, these are 50-year agreements, and so those are in place for many more decades to come. I think the interesting question is, what is the Department going to do if it wants to open new privatized housing projects? And that's not outside the realm of possibility with the Space Force having been stood up. We've had a lot of conversations with Ms. Corey and her colleagues about how they would think about structuring these arrangements moving forward. So far, we have heard that they wouldn't necessarily do anything different in terms of arranging, making arrangements with the companies and negotiating their contracts. But I think some clarity on that point would be helpful. Okay, great. I have other questions, but I'm out of time, so I yield back to Madam Chair. Thank you, Mr. Gonzalez. Next up is Ms. Lee. You're recognized for five minutes for your questions. Thank you so much. Thanks to the panelists for being here. I represent Las Vegas, Nevada. We have Creech and Nellis Air Force Base, and I'm actually happy to report that having just visited those bases that they're privatized housing, we're not hearing some of the stories like we heard earlier today, but so I want to direct some, I guess, higher-level questions to you. In your testimony, Ms. Corey, you stated that the importance of rebuilding the trust in the military housing privatization initiative, and I share that interest there. Can you expand on your efforts of what you're doing actively to engage military families about their concerns and also reinforcing the Bill of Rights? Sure, that's a great question. So I would say each of the military departments and the services have done a lot to try to increase their engagement with the families, and of course, again, COVID's made it a little more challenging for one-on-one engagement in person town halls, but there have been a number of web-based town halls and meetings where they can have an opportunity to talk to the families at large. But each of the military services have implemented a plain language briefing, which is one of the things required by the Tenant Bill of Rights, but the resident government team has somebody meet with each family when they are entering their lease and then to touch base with them again at usually 30, 60, and 90 days after lease signing to answer any questions, make sure they understand if there was a lead-based paint issue in the home that it's been remediated and the family needs to be aware of that, so they understand that and have a chance to ask questions. And again, they've also, the military departments have identified resident advocates that are at every insulation, except in a few cases where it's a very small site with very few homes and they might be sharing an advocate, but another site and then that person might be kind of part time between two locations. But we are trying very hard to make sure that they have a voice and a way to get help and ask questions. The Army and the Air Force also still have 800 numbers that residents can call if they have questions and that's separate from the property management for the actual projects themselves, which also operate 24-7 call centers and do have in-person maintenance and housing management leasing specialists there, but just focusing on the government side. For myself, I do go visit sites. I do meet with families when I go visit. Most recently, I was at Fort Mead and I took the opportunity to step away from the government team and go meet a little more on the side with a spouse and hear what her thoughts were and what was going on there and any suggestions she had. And so that was very informative and I will continue to do that and again welcome the opportunity to go out with any of the members to their installations. Great. Thank you. Just one other question. We've been hearing about long wait times for military families in some housing locations. What is the department doing to respond to those needs? So my counteroffice, the undersecretary defense personnel and readiness they have is you're probably where extended the temporary lodging allowances at some locations and then through the October through December of last year gave temporary increases and housing allowances at some locations where there was truly an issue with finding affordable available housing with all of the rental price increases at the locations where we know there are issues. We are looking at ways to either work with the local community on trying to provide additional housing. I'll remind everybody that the department relies on off base housing first 70% or so of our members are housed off base in the US. But in terms of on base, we do a housing requirements assessment usually every three to five years. That's looking at the longer term. I don't know whether what's happening right now with COVID if that's going to be a long term impact or not on housing availability. But that is the means by which we identify if there is a longer term need that we need to address through milk on or maybe additional housing at the installation. Many of the locations that are right now, the military departments have been working with the project companies to see if there's a way that the project can accelerate investment in units. And if there are units offline to accelerate repairs, replacement, mold remediation, whatever it is to make those homes available again for families. And that's one of the things I'm tracking in my quarterly programmatic reviews over. Great. Thank you. And I'm finished. I'll yield back, Madam Chair. Thank you. Okay, great. Thank you so much, Ms. Lee. I don't see Mr. Rutherford officially back because that's not him in that screen. Okay. I think that we have gone through our list of members. But before we conclude this panel, I want to read a summary of the situation of how privatized military housing works and how complex and tied in knots the government is to try to extricate themselves and use the ultimate accountability, which is terminating contract. So in general, contracts are for 50 years each. The land is government-owned and leased to the provider for that 50-year time span. The provider builds and owns the houses placed on that land. Ownership of the buildings that were previously built and owned by the government are transferred to the provider. In order to fund these housing projects, the providers rely on lenders accruing a significant amount of debt. According to DOD, if the government were to break or modify these contracts under one of the terminations clauses, it would a, require the government to buy all of the buildings on said land, and b, would not automatically terminate the partnership but instead replace the privatized housing company with the lenders, essentially making the lenders the partners of the government. Those lenders are obviously not property management entities. If the government wanted to terminate the contract and buy out the housing creditors, it would cost more than $40 billion upfront. That does not include creating a management office at DOD and hiring thousands of personnel to perform management and support duties. Additionally, that $40 billion does not include legal fees and paying the bondholders the agreed upon premiums, which they get regardless of termination of contract. I mean, it goes on. But as you can see, we are really, the government has, as good an idea as this may have seemed to be at the time, this is a real mess that no entity should want to find themselves in, where there is very little of ability, in my view, to hold these privatized military housing companies accountable because they have us back into a corner with almost no ability to hold them accountable, terminate their contract. They know it and they're multi-billion dollar companies who can afford to make cost of doing business decisions. This is a fine mess we find ourselves in. I am determined for us to help make sure that everyone responsible for taking care of these residents who are serving our country is putting their nose to the grindstone to make sure that any element of accountability that we can add and any consequences, both carrots and sticks is absolutely critical. Judge, do you have anything else to add before we conclude this panel? I just wanted to read that description of the complexity of this because I was stunned when I learned how complex it was and how difficult it was for us to get ourselves out of this situation if we got to the point where we wanted to. Thank you. I think we all need to know that. Yeah. You're welcome. Okay. Well, we certainly thank you both for your service and appreciate the difficulty of the challenge in front of you. Ms. Field, thank you for your assistance in helping us with the accountability piece of this and the job and you and your colleagues do every day and Ms. Corey, we've got a lot of work to do here and I trust that you're committed to it but we're going to need to continue to engage very closely so that we can get these problems addressed. With that, we will pause briefly to transfer over to the next panel. I thank the witnesses.