DoD Seeks Plan To Shut All U.S. Commissaries
By Karen Jowers
Staff writer
Defense officials have reportedly asked the Defense Commissary Agency to develop a plan to close all U.S. commissaries — about three-fourths of its stores, according to a resale community source familiar with details of a meeting with representatives of the Joint Staff and Pentagon comptroller’s office.
The source, who spoke on condition of anonymity, said the meeting was held within the last few weeks and was part of preparations for the fiscal 2015 DoD budget request that is due out on February.
That DeCA has been asked to prepare such a draft plan does not mean commissaries would close anytime soon. Even if such a plan was included in the defense budget request for fiscal 2015 — almost a year away — it would have to be approved by Congress, where many lawmakers would oppose it.
The Military Coalition, comprised of more than 30 military and veterans advocacy groups sharing a common agenda, also would fiercely oppose such a plan.
Still, the fact that defense officials want DeCA to draft a plan for how it potentially would carry out such a move is another sign of the heavy budget pressures weighing on the Pentagon as a result of sequestration.
The Defense Department had no direct comment on the commissary initiative. But Pentagon spokeswoman Joy Crabaugh said Defense Secretary Chuck Hagel “has made it clear on numerous occasions that all cost-cutting efforts need to be on the table” in order for DoD to meet the sequestration caps mandated under the 2011 Budget Control Act.”
“At this time, no final decisions have been made on the ... fiscal 2015 budget submission. Therefore, it would be inappropriate to discuss any specific budget decisions,” Crabaugh said.
DeCA has 178 commissaries in the U.S., including Alaska and Hawaii. Almost 70 stores operate overseas. Operating costs for the overseas stores account for 35 percent of DeCA’s budget and 16 percent of total worldwide sales.
Commissary officials negotiate lower prices for products based on volume. Closing all or most U.S. commissaries would lead to higher prices and a degraded benefit in remaining stores, Tom Gordy, Armed Forces Marketing Council president, said in written testimony to a panel of the House Armed Services Committee on Nov. 20.
The council represents over 330 manufacturers of products sold in commissaries, exchanges and other military venues.
The proposal to close U.S. stores was not discussed at the hearing, but in his written testimony Gordy said closing U.S. stores “would eliminate the benefit for millions of families, breaking a commitment that has been made to every service member.”
That such a proposal would come from within DoD is “very concerning,” said Steve Rossetti, director of government affairs for the American Logistics Association.
Commissaries are “one of the most valued benefits,” he said. “For what this costs the department, they get a huge return,” not only in terms of the benefit itself but in other factors such as jobs for military spouses. About 30 percent of DeCA employees are spouses.
DeCA receives nearly $1.4 billion in annual taxpayer subsidies. It has reduced its annual funding requirement by $700 million over the last 20 years, said DeCA Director Joseph Jeu.
Jeu said DeCA is constantly looking for ways to save money, but added that the agency has no more “low-hanging fruit” to cut.
But Rep. Joe Heck, R-Nev., an Army reservist, said other proposals under consideration include raising the commissary surcharge to 10 percent from the current 5 percent; raising prices by 2 percent to 3 percent to pay for shipping products to overseas stores; and creating an “enhanced” commissary that would sell other products at higher markups.
Any such changes would have a “great impact” on troops and families, Jeu told lawmakers.
Heck said that if such steps are necessary to maintain the benefit, DoD officials must consider them. “I encourage you to take that kind of perspective,” he told Jeu
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Combining Exchange Services Briefly Discussed - Again
By Karen Jowers
Staff writer
An issue that seems to surface with great regularity every couple of years bubbled up again on Wednesday: Does the military really need three separate and distinct exchange systems?
Rep. Joe Heck, R-Nev., an Army reservist, brought up the issue at a hearing of the House Armed Services Committee’s military personnel panel that focused on commissaries, exchanges and other morale, welfare and recreation-related activities.
“Why not have a ‘defense exchange’?” Heck mused.
For his part, retired Rear Adm. Robert Bianchi, chief executive officer of the Navy Exchange Service Command, said NEXCOM is involved in more than just retail, and is woven into the fabric of Navy leadership and mission readiness.
“Just as you wouldn’t necessarily [merge] Ford and GM together and get a better organization out of it ... this allows us to meet the needs of our service members while still maintaining operational efficiencies through cooperation without creating one mega-corporation.”
“To combine operations would actually cost us more than it does to operate our exchange and [MWR programs] today,” said William C. Dillon, director of the Marine Corps’ Semper Fit and Exchange Services.
On other exchange service issues, Rep. Susan Davis, D-Calif., the subcommittee’s ranking Democrat, questioned why a Dollar Tree store has been allowed to operate as an Army and Air Force Exchange Service concession in the AAFES Town Center at Fort Bliss, Texas.
Davis suggested that represents competition for exchanges as well as commissaries, and undermines those programs.
Thomas Shull, AAFES director, said real estate brokers fill store space in the town center, and he has only recently learned that the concessionaire’s operations may be in conflict with the Defense Commissary Agency and the military exchanges.
AAFES officials are now reviewing the merchandise assortment at that Dollar Tree, which may have more than 30 items that conflict with DeCA’s stock assortment, Shull said.
“We’re going to look at that Dollar Tree and evaluate whether we should have in the mix,” he said, adding that AAFES will not seek to establish that type of store in other locations.
