DoD seeks plan to shut all U.S. commissaries
By Karen Jowers
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.
According to DeCA, there are 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, but only about 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, said Tom Gordy, president of the Armed Forces Marketing Council, in written testimony presented to the House Armed Services Committee’s military personnel panel Wednesday.
The council represents over 330 manufacturers of products sold in commissaries, exchanges and other military morale, welfare and recreation venues.
The proposal to close all U.S. stores was not discussed at the hearing, but Gordy said in his written testimony that closing U.S. stores “would eliminate the benefit for millions of families, breaking a commitment that has been made to every service member.”
He noted in his testimony that the Joint Staff reportedly had asked DeCA in recent weeks to look at cutting its $1.4 billion annual budget by one-third to two-thirds.
The fact 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 th ebenefit itself but in other factors such as jobs for military spouses. About 30 percent of DeCA employees are spouses.
“It’s astonishing because DeCA is one of the few organizations in DoD that is cutting major costs and has been since 1991,” Rosetti said.
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. The taxpayer subsidy has changed little in recent years, even accounting for inflation.
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 on patrons 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 additional markups.
Any such changes would have a “great impact” on troops and families, Jeu told lawmakers.
But Heck noted that based on the agency’s calculations that commissaries save a family of four an average of $4,500 a year, raising the surcharge by 5 percent would lower savings only to $4,275.
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.■