WASHINGTON – U.S. Sen. Jim Inhofe (R-Okla.), senior member of the Senate Armed Services Committee, and Sen. Barbara Mikulski (D-Md.) today praised the Department of Defense (DOD) for completing its report on the defense commissary system, as requested in the National Defense Authorization Act (NDAA) for fiscal year 2016, and urged for Senate adoption of amendment #4204 to prevent commissary privatization until the effects and costs can be fully assessed and evaluated by the Department of Defense (DOD) and Congress.
“The Defense Department has clearly demonstrated that it would be ill-advised of Congress to move forward at this time on mandating privatization of commissaries, the most popular benefit among service members and their families,” said Inhofe. “This report raises a red flag that privatizing a handful of commissaries, as the NDAA’s current language would do, will hurt the purchasing power to achieve cost savings for military families and veterans. It will also impact the commissary and exchange workforce, which is made up, in large part, of military family members. The DOD has privatized small components of the system already where it makes sense, and the department is still collecting information from industry in order to do its due diligence to protect the cost savings and access to this popular benefit before moving forward on significant change. With 80 percent of our active duty personnel using the commissary, and with military families and veterans achieving roughly 30 percent savings in their household purchases, Congress needs to pause and let DOD finish its efforts at studying and reforming this benefit.”
“I’m fighting to protect our commissaries because service members and their families deserve the benefits they’ve earned and a government on their side,” said Mikulski. “Commissaries are the military's most popular earned benefit. As this Defense Department report shows, privatizing commissaries would be penny wise and pound foolish. It would mean increasing costs, reducing benefits and slashing jobs that veterans and military families rely on. With this bipartisan amendment, we will keep commissary doors open to provide low-cost, healthy food to our service members and their families until we’re certain there’s a better alternative.”
The report titled “Plan to Obtain Budget Neutrality for Commissary and Exchange System” acknowledges that: “privatization would not be able to replicate the range of benefits, level of savings and geographic reach provided by DeCA while achieving budget neutrality.” The mandated Government Accountability Office (GAO) review of this plan is underway.
The report also highlights that DOD is still assessing the privatization of all or portion(s) of the commissary system. The DOD has held initial conversations with interested business entities, which is leading to more thorough market analysis. As part of this analysis, the DOD sent a formal Request for Information last month that will break down the commissary system by organization, function, and region.
Key highlights taken from the report:
- “Defense Commissary Agency (DeCA) provides products at prices estimated to be, on average, approximately 30 percent below local commercial grocers, measured globally.”
- “Commissaries remain an important non-pay benefit for today’s military, contributing to the financial health and readiness of many military families.”
- “DeCA is required to operate where the service members are, even when it would not be economically beneficial from a commercial standpoint.”
- “More than two-thirds of the commissaries serve military populations living in locations that are not profitable for private sector grocers; these commissaries are made possible by the appropriated fund subsidy and by operating efficiencies and volumes of large stateside stores.”
- “Over 40 percent of commissary's appropriated budget provides service in overseas and remote locations.”
- “DeCA provides a benefit to service members in the form of savings, proximity, and consistency that the commercial grocery sector, which must operate for profit, might find it difficult to sustain.”
- “Commissary benefit encourages people to reenlist, preserving a well-trained, dedicated military; ensuring training investments are well-spent; and saving the expense of retraining the majority of the force every few years; savings, proximity, and consistency of the commissaries also encourage spouses, whose opinions may be a deciding factor in reenlistment decisions.”
- “If only some of the commissary stores were privatized, the savings at remaining stores would decrease due to DeCA’s reduced buying power and a substantial appropriated fund subsidy would still be required to service remote and overseas areas – this change would cause a 20 percent increase in price of goods to commissary patrons and increase operating costs by 5 percent.”
- “While four companies agreed to preliminary discussions, one of the four declined further discussion after the initial contact; however, the other three affirmed their interest in pursuing the matter in greater depth – continued dialogue with these companies and others is necessary to fully assess how and what to privatize, the earnestness of the companies, and the likelihood of delivering 30 percent savings in an industry that routinely averages 25-28 percent gross margins.”
Inhofe-Mikulski amendment #4204 to the NDAA has 36 cosponsors at the time of this release and the support of 41 outside organizations.