December 03, 2019
U.S. Sen. Jim Inhofe (R-Okla.), chairman of the Senate Armed Services Committee, questioned witnesses this morning at a SASC hearing on reports of ongoing substandard conditions in privatized military housing.
Witnesses included: Elizabeth A. Field, Director, Defense Capabilities and Management, Government Accountability Office; Ryan D. McCarthy, Secretary of the Army; Thomas B. Modly, Acting Secretary of the Navy; Barbara M. Barrett, Secretary of the Air Force; General James C. McConville, Chief of Staff of the Army; Admiral Michael M. Gilday, Chief of Naval Operations; General David H. Berger, Commandant of the Marine Corps; and General David L. Goldfein, Chief of Staff of the Air Force.
Inhofe: We have more than a dozen contractors out there providing military housing to our services, and some are better than others. There’s one that’s kind of notorious at one end of the spectrum, and that’s Balfour Beatty and I’m very familiar with that because that’s where this whole thing started. In my opening statement I mentioned Tinker Air Force Base but they also represent Lackland, Malmstrom, Travis, and Fairchild, and it might be a little unfair since you are the newest one, Secretary Barrett, to give you the first question. If you have a repeater like this and misconduct like this, why is it that they are still there? What do we have to do? How do you pull a plug? How do you get that done? Are there contract obstacles out there? We want to get things done, and you’re the newest one out there – what do you think?
Barrett: Senator, that’s what we’re looking at. Before I was confirmed, the Air Force was taking action on exactly that concern. That company received a letter of concern from the Air Force expressing that the Air Force has lost confidence in their ability to perform under their contract. That letter was issued in September. Since that time, they have not been receiving performance incentive fees. Since that time, all of their contracts – they have the contract on many bases – all of their performance fees have been withheld. So they are under financial penalty right now. In addition to that, it has been requested that they submit an action plan for what they will be doing That plan is due by the end of the year, and there will be metrics and accountability from that plan or the Air Force will be initiating the elements accessible to us under the dispute resolution procedures, which could lead to anything up to a default on their lease.
Inhofe: I guess the short version is you are doing everything you can do, that you inherited at all the facilities that you are able to, changes you are able to make currently. To each of the service secretaries, I’d like to mention: I keep hearing that they’re talking about – these companies said they would be open to reopening these agreements to ensure transparency, accountability and performance. They never talk anything about what the cost would be. So I would ask any secretary who would like to respond to the question: Behind closed doors, are companies actually willing to reopen these agreements or are we just getting lip service from contractors trying to dig their way out of a bad situation? If they are open to reopening the agreements, have any of them talked about what the cost would be involved to do such a thing? Any of the Secretaries.
McCarthy: Mr. Chairman, in our most recent discussions with the RCI partners, there was a discussion about the restructuring of the debt of their companies. The economics in most cases for the projects are under 1996 interest rates, so seven, eight, nine percent for these projects, which by changing the scoring model at OMB, we can provide an opportunity for them to go to capital markets and increase the capital for reinvestment. What we need to do, what we’ve instructed in the Army is for General Gus Perna to come back with an analysis of just how substantial of a project this would entail and then would have to negotiate that, but the sense I have from the most recent discussion in September is there was definitely energy to do that.
Inhofe: Any other secretaries?
Barrett: We absolutely would continue reopening, renegotiating the contracts. It’s much more efficient to work under that contract now if they will correct their behaviors, but if not, we will.
Inhofe: And much cheaper than trying to start all over again, I would suggest too.
We’ve gotten some positive results. I know we hear more about the negative results, but I know in the case of Tinker Colonel Filcek took command of the 72nd Air Wing, and things have really started to improve. And one of the things he did – and I was down there and I heard from other people saying that he actually went to town hall meetings. We’re talking about those that are in charge in the chain of command going to town hall meetings and meet with people and really get emotionally involved in them. I’d like to at least point out that some good things are happening, and we want to learn from those experiences.