Can Defense Commissaries be Fixed?

Why do military commissaries continue to limp along under an outdated management and buying model that is not good for its customers or for the taxpayers?

by Elaine McCusker

In submitting the 2025 defense budget, Pentagon leadership emphasized that the top line set by the Fiscal Responsibility Act imposes a real decrease to the financial trajectory needed to modernize the military, maintain readiness, and carry out the National Defense Strategy. Tough choices were required to stay under the cap, sacrificing future needs for near-term readiness.

In this context, the requested $120 million boost for the defense commissaries, government-run establishments that sell groceries to members of the armed services and their families, stands out. In fact, the Pentagon referenced this increase in its press release, where only a select few efforts are highlighted.

In reality, such a requested increase for a military benefit that is so far behind the times that it is just now bragging about a new home delivery pilot effort as an exciting addition to its services should have been hidden in the volumes of budget justification documents as a shameful waste of taxpayer dollars.

In touting the home delivery plan recently, the Defense Commissary Agency (DeCA) said it would enable them to “eventually deliver groceries from all commissaries in the continental United States to customers on and off base, in barracks or housing, and offices.”

This should already be a standard service as it has been from most grocery stores either on their own or through delivery services for years. No wonder DeCA sales remain low as those in the United States have plenty of affordable choices that provide better selection and better service with delivery fees that are lower than those DeCA is just now trying to achieve with its limited service area pilot.

Meanwhile, where the commissary is actually still relevant—outside the United States—supply chain problems are limiting selections and increasing costs. U.S. service members and their families should have affordable access to American-style goods while they are stationed in foreign and remote areas. That is the actual intent of the commissary benefit. Instead, reports indicate the shelves are bare in places like Camp Humphreys, South Korea, and costs are higher than they would be for commercial grocery stores. 

According to DeCA director John Hall, “Our suppliers deal with [the commissary agency] differently than they deal with commercial grocery chains. Their costs to supply DeCA are higher than their costs to supply commercial grocery chains because of the supply chain.”

The reason for this is simple. DeCA does not have direct control over its supply chain. Commissary goods are bought through multiple independent brokers who add their own fees to the cost of products they sell to the commissaries, which raises the costs of these goods. The broker markup can run as much as 30 to 40 percent more than the actual cost of the item. In addition, since the commissary volume is relatively small, they do not have the buying power to bring the volume discounts that the major supermarket chains get. 

Those costs must go somewhere. DeCA notes that: “The Commissary benefit can save shoppers over 25 cents on the dollar over other retailers’ prices every time they shop.” In order to keep costs low for commissary customers, the government subsidizes the commissaries with taxpayer funds. In 2023, DeCA received $1.4 billion in appropriations, an amount of money that could cover a 3 percent pay raise for enlisted service members. 

The question is why the commissaries continue to limp along under an outdated management and buying model that is not good for its customers or for the taxpayers. Why are they struggling to increase sales? If customers have other, better options in the commercial marketplace, that seems like a good thing. And one that further emphasizes that, though this particular benefit may still be relevant to a degree, the way it is run and provided certainly is not. We are paying higher costs for inferior performance.

The fix seems simple. If the department would move ahead with a recommended pilot program that proposes to test the commissary model against the commercial supermarkets in the United States, we could see an expensive drain on taxpayer dollars turn into a self-sustaining, modern, robust benefit as it was actually intended. Not only would the $120 million increase no longer be required, but the taxpayer would actually be saving more than $1 billion annually while providing a much better benefit to its service members, their families, and veterans.

So, why have we not done this? This question is tougher to answer. But we should get past the emotional attachment to the old way of doing business and insist on an explanation for why a long overdue new approach has not even been tried. We need every defense dollar to go toward modernizing our military and providing the force protection, capacity, and capability American security requires. U.S. veterans, service members, and their families deserve better than they are currently getting. So does the taxpayer.

Elaine McCusker is a senior fellow at the American Enterprise Institute think tank. She previously served as the Pentagon’s deputy undersecretary of defense (comptroller) as well as acting undersecretary of defense (comptroller).

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