They say armed forces families are being “badly let down” by the Government and its contractor providing them with poor homes which do not meet basic requirements.
The cross-party Public Accounts Committee (PAC) said forces families are often left for too long without basic requirements such as heating, hot water or cooking facilities.
It blames both the Ministry of Defence (MoD) and contractor CarillionAmey, whose performance it describes as “totally unacceptable”.
And the group of MPs warn that frustration with the failure to carry out small-scale repairs on the homes “may be driving some highly-trained personnel to leave the military, wasting the investment made in them”.
Ministers are now considering whether to terminate the contract with CarillionAmey - a deliberation welcomed by the PAC - after Defence Secretary Michael Fallon intervened in February to describe the condition of the homes as “unacceptable”.
The committee has recommended that the MoD must set out how it will better consult with families when setting policy and agreeing such contracts that will impact on their lives.
CarillionAmey or any new contractor must “meet or exceed” its obligations for the lifetime of the contract and future contractors should be subject to an effective penalty and incentive regime, the MPs said.
They called on the MoD to inform the committee of how it decides to proceed with the CarillionAmey contract and give evidence on performance to support its decision.
PAC chair Meg Hillier said: “Forces families are suffering because of poor service under a contract agreed on terms that were wrong-headed from the start.
“Responsibility for this lies with both CarillionAmey and the Government. The MoD seriously misjudged CarillionAmey’s capacity to deliver a service which CarillionAmey accepts it was not equipped to deliver.
“It is completely unacceptable that families should have to move into dirty houses with broken appliances, or be left to care for children in homes without hot water or heating.
“Reports of improvements in recent months are still to be verified and will be of little comfort to those who have borne the brunt of long-standing failure.
“We are now at a crossroads and the Government has a decision to make. Either it works with CarillionAmey to improve and sustain standards, or it takes steps to ensure a new contractor delivers the service required.
“On behalf of service families and the wider public we will expect to see evidence to support whichever path it chooses.”
All regular Armed Forces personnel are entitled to subsidised accommodation and those meeting certain criteria related to marital status and how many children they have are entitled to service family accommodation.
The Armed Forces Covenant contains a Government commitment that service personnel and their families are to be provided with good quality accommodation, in the right location, at a reasonable price.
Page 2: 00:01
Defence Minister Mark Lancaster highlighted the action already taken by the Government and said it would take further steps if CarillionAmey did not improve its service.
He said: “The service our personnel and their families were getting from CarillionAmey was simply not good enough. They deserve much better, which is why we took swift action once the problems became apparent.
“CarillionAmey rightly apologised and developed an aggressive plan of improvements. Progress is being made, but we will absolutely not hesitate to take further action if they don’t deliver for our personnel and their families.”