The housing arm has appointed law firm Hunton Andrews Kurth to investigate the allegations about the Tinker Air Force Base in Oklahoma, which it has managed since 2008 when it won a 50-year, $410m private finance initiative contract to manage almost 2,500 family homes for three US air force bases.
Ms Warren is demanding answers from the air force and Balfour, as well as four other developers in the sector, following accusations that the companies have provided substandard housing.
She is also attempting to push a bill through Congress that would improve complaints processes for residents.
The demands for the inquiry followed testimonies from military families at a Senate armed services hearing in February, in which they described black mould, leaky roofs, rats, faulty wiring and other substandard living conditions in their privatised housing.
An investigation by Reuters subsequently alleged that Balfour falsified maintenance records to help it secure incentive fees at the Tinker Air Force Base.
Balfour Beatty said: “We take the allegations in relation to Tinker Air Force Base very seriously as they would contravene our company-wide code of conduct.
“The allegations made do not reflect the culture or the work ethic of over 1,200 employees across Balfour Beatty communities who are dedicated to maintaining the highest standards of conduct and service at all the military facilities for which we are proud to be responsible.”
The fees from the Tinker Air Force Base represented 0.2 per cent of Balfour Beatty’s $33m income from its US military housing business in 2018.
The company also employs 26,000 people in the UK and is one of Britain’s biggest construction companies, with contracts on the planned HS2 high-speed railway line, and Hinkley Point C nuclear power plant as well as having operations in the US and Hong Kong.
In May, Balfour Beatty won a £1.3bn contract to rebuild roads in Texas alongside an American rival Fluor Corporation.
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Leo Quinn took over as chief executive in 2015 following a string of profit warnings and a takeover approach by rival Carillion, the UK outsourcer that collapsed last year.
Government contractors in the UK have been hit by a series of allegations over botched contracts. Serco, one of the UK’s biggest outsourcing companies, agreed a fine with the Serious Fraud Office after a judge found it guilty of “deliberate fraud” of taxpayers earlier this month on a deal providing electronic monitoring for offenders.
Its rival, global security company G4S, is still waiting for a verdict from the SFO relating to the same contract. Meanwhile, there are still several outstanding investigations into Carillion, the construction and support services contractor that collapsed last year.
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