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Military housing contracts questioned

Georgia senator among the skeptics

POSTED: December 14, 2007 5:02 a.m.

WASHINGTON -- Two U.S. senators want the Pentagon to tighten its oversight of private housing construction on military bases, citing delays at four Air Force projects that could keep thousands of military families out of new homes for years.

Sens. Saxby Chambliss, R-Ga., and Mark Pryor, D-Ark., said they plan to introduce legislation next month aimed at holding contractors more accountable for the kind of problems that have plagued bases in their states and in Florida and Massachusetts.

"We are simply not in a position to provide quality housing," Chambliss said Wednesday in a conference call with reporters after visiting Moody Air Force Base near Valdosta, Ga. "That's simply wrong and it should never have happened."

Carabetta Enterprises of Meriden, Conn., is behind the stalled projects — at Hanscom Air Force Base in Massachusetts, Patrick Air Force Base in Florida and Little Rock Air Force Base in Arkansas, and Georgia's Moody. The company partnered with Shaw Group Inc., a large development firm based in Baton Rouge, La., for most of the work.

The companies were awarded contracts to build and renovate thousands of houses. But after repeated delays and cost overruns, only a fraction of the units have been completed. The Air Force says the contracts are in default and is trying to find another developer to finish the projects.

The Senate already has passed legislation calling for an investigation into the contracts.

The senators' new bill — still being drafted — would require more oversight, with a primary goal of forcing large development firms like Carabetta to take responsibility for problems, even when they establish independent subsidiaries for individual developments. All four of the Air Force developments in question, for example, are owned by separate limited liability corporations set up by the parent companies.

Thomas Swain, a managing director for American Eagle Communities, a Carabetta-Shaw partnership managing all of the projects except Moody, said the projects ran into a variety of challenges.

The Florida base, for example, was hit by a series of hurricanes, he said, and builders found environmental problems at the Massachusetts site.

The central problem, however, was that that the Air Force overestimated the housing demand, he said.

"We basically were told that we should plan on having a certain number of occupants, which generate a certain amount of cash," he said. "We relied on the Air Force's housing analysis."

Ultimately, he said, the bondholders financing the projects cut off the cash flow, halting progress.

Chambliss, who just returned from a trip to Iraq, said Wednesday night that in the past six months conditions have "drastically improved," The Valdosta Daily Times reported.

But at Moody's Magnolia Grove housing project, he said the overall status of family housing is not good.

"We have thousands of men and women serving our country coming to Moody,and today Magnolia Grove looks like a ghost town," he said.

Swain, a former Army general brought in recently to try to stabilize the projects, acknowledged that the companies evaluated the developments independently and could have offered a higher bid or declined to bid if they did not deem the developments profitable. The companies challenged the numbers, he said, but ultimately thought they could make the projects work.

He said the parent companies have lent the projects millions of dollars to try to get them back on track.

Pryor and Chambliss agreed that the Air Force mismanaged the projects and failed to step in as problems arose. But they said the contractors are ultimately responsible and have simply walked away from their failures.

The lawmakers said local subcontractors are owed millions of dollars for work that already has been done. With the projects in limbo, they called on the Air Force to pay the contractors.

"It's just a matter of a big contractor not fulfilling its obligations," Pryor said. "We don't want to micromanage, but we do want to put the right framework in place so this doesn't happen again."

 

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