“What’s happened here is criminal.”

Despite more than one trillion dollars in real annual defense funding, the Pentagon has failed to provide safe housing for thousands of its service members. Problems like leaking ceilings, mold, lead, electrical hazards, bad plumbing and cracked foundations plague the one-fourth of American service members who live in the military’s privatized housing program.

A series of Reuters reports into the military’s private housing program prompted multiple investigations by Congress and the Department of Defense into the opaque financial arrangement between the Pentagon and private contractors.

Government and Resident Reaction

Sen. Elizabeth Warren (D-Mass.), a member of the Senate Armed Services Committee, led an investigation that detailed how private companies charged with providing military housing “set up a complicated web of subcontracts and subsidiaries that undermines accountability for substandard conditions.”

“The documented failures of private housing companies to meet basic standards is unacceptable, hurts families and damages morale,” Senator Warren wrote in the report summarizing the investigation’s findings.

A survey of nearly 15,000 military families found a 55% dissatisfaction rate in the private housing program. One resident in Hawaii explained, ’Rats would die in our attic, and they’d only come remove them once maggots were falling from the ceiling.”

Other families suffered lead exposure, as explained by a military spouse in South Carolina: “After being denied several times, I ordered my own lead check test kit. When I tested the door and window, it came back positive. Later, I decided to have my six-month-old daughter’s blood tested due to fears of lead exposure. She did indeed have lead exposure.”

“Only after threatening a lawsuit and going public did they end up covering my deductible from renter’s insurance,” claimed a service member who said strong electrical currents nearly led to a house fire.

The Military Family Advisory Network, a non-profit dedicated to service families, found many families are afraid to come forward about their living conditions due to fear of retaliation from housing companies. One military spouse claimed a housing company’s community manager, “threatened to call the service member’s commander if they continued to ‘complain.’”

In her letter, Sen. Warren proposed legislative action to impose unannounced site inspections and harsh penalties for negligence. Sen. Richard Blumenthal (D-Conn.) took an even stronger position, calling for a Justice Department investigation into the housing scandal during a Senate Armed Services Committee hearing. “What’s happened here is criminal,” Blumenthal said, drawing applause from the crowd.

Military Housing Background

The U.S. Military Housing Privatization Initiative began in 1996 when the military formed partnerships with private real estate firms to improve housing conditions of service members. With 206,000 military homes now under private management, the initiative represents the biggest corporate takeover of federal housing in American history.

About one-fourth of service members now live in these privatized homes, with their monthly housing stipends sent directly to private landlords. While the Pentagon has not disclosed its specific financial arrangements with developers and property managers, Sen. Warren and Reuters have uncovered alarming details regarding their opaque transactions.

More Reaction

“Incentive fees were included in the housing contracts…to give the private housing companies an extra financial incentive to provide quality living conditions and financially sound properties. However, it appears that even when they fail to do so, the companies still receive significant incentive payments,” Sen. Warren wrote in her report.

In the Reuters investigative report, based on thousands of proprietary documents, it exposed the Pentagon’s arrangement with one of its largest private developers, Corvias. Real estate developer John Picerne, who has personally given at least $500,000 in political contributions, owns Corvias. Picerne’s companies have spent $2.8 million on lobbying.

“To grow his business, the scion of a wealthy Rhode Island real estate family has cultivated ties with military brass and politicians. Corvias has spent millions on lobbying, and Picerne has enlisted the help of his state’s powerful Democratic senator, Jack Reed, an Army veteran and ranking member of the Senate Armed Services Committee.

“The profits have helped afford Picerne, 56, a yacht, private jet travel and mansions renovated by celebrity decorator Martyn Lawrence Bullard, known for his work with the Kardashian family and fashion designer Tommy Hilfiger,” the Reuters investigation said.

Reuter’s estimates Corvias stood to make $254 million in the first decade of the projects alone. Picerne’s company only financed around 3% of the projects’ development costs, with the remainder funded by government-backed loans paid for by service members’ housing stipends. Sen. Warren’s report corroborated this finding, noting, “Private housing providers are making large profits while taking minimal investment risks.”

Sen. Martha McSally (R.-Ariz.), a former Air Force pilot, described the findings as “disgusting.” “They left you hanging,” said the Arizona senator in a hearing. “They put you in harm’s way.”