OPINION | It’s past time to unleash the defense commissaries

Elaine McCusker 

Published: July 26, 2023

A store worker fronts merchandise on shelves at the Yuma Proving Ground Commissary in June 2023.
A store worker fronts merchandise on shelves at the Yuma Proving Ground Commissary in June 2023. (Army)

Should the federal government save at least $1 billion annually in taxpayer money while delivering better service, more choices and lower costs to active and retired U.S. military members and their families?

How could the answer to this question be anything other than “yes?”

So, why have we not done it?

The Department of Defense operates 236 commissaries — defense-speak for grocery stores — in 13 countries and 2 U.S. territories. These grocery stores have a long tradition, dating back to 1825 where they started on Army bases so Army officers could make purchases for their personal use while paying at-cost prices. The stated purpose, eligibility and management of the commissaries has evolved over the last 198 years and is now managed by the Defense Commissary Agency, or DeCA. The next evolutionary iteration is long overdue.

As with many historical programs set up to provide convenience and support to military families located in austere locations, the commissaries are now seen more as an earned benefit. That is fine. If the commissaries are to be considered a part of the overall military compensation package, they should be as good as they can be in delivering service and cost savings to patrons while maintaining budget-neutral operations for the taxpayer.

But according to numerous reviews, studies, and assessments over the last decade, the commissaries are not currently meeting any of these three objectives.

First, delivery of services. According to a recent General Accountability Office, or GAO, study DeCA’s sales of groceries and other goods have fallen over $1 billion in the past 6 years. Service members and their families have many, better choices and are signaling with their shopping habits that they prefer the convenience, selection, service and products available in commercial grocery stores that are more readily available than ever.

As Senate Armed Services Committee Chairman Reed noted at a 2021 Defense Writers Group event, “outside the gate of every base I’ve been to lately, there’s either a Costco or a Walmart, so there is some appeal to the military audience.”

Second, cost savings to patrons. The same GAO study noted that DeCA claims to deliver an average discount of 23.7% over other stores, but needs roughly a billion dollars in annual federal funding to do that.

And it is not even certain that estimated average savings of is accurate. The House Defense Appropriations Committee expressed concern that DeCA has not implemented GAO recommendations to calculate customer savings more accurately.

Third, the commissaries are hardly self-sustaining. DeCA finances the operating costs of commissaries, areas, and headquarters activities primarily with a direct appropriation managed through a working capital fund. DeCA’s reliance on this appropriation has increased from $1.15 billion in 2021 to $1.45 billion in the 2024 request. A 26% increase is not exactly a self-sufficient path.

In summary, defense commissary sales are down. Choices and services are limited, prompting patrons to go elsewhere. And costs are up.

Change is overdue. Granted, change can be scary. And we don’t want to incur even more additional costs or risk diminished benefits to service members their families and retirees.

There is a solution. Unleash the commissaries from government control, use the free market, and leverage the supply chains, distribution networks, and management expertise of successful, national commercial grocery stores. We should not hesitate to test this solution through an immediate pilot program in the U.S.

One such pilot, proposed by the MARC Group, could be conducted to compare the commissary benefit provided by DeCA to a top-10 commercial alternative supermarket at no cost to the taxpayer. It would take place at a military base with equal-sized commissaries within miles of each other, such as Fort Liberty in North Carolina.

The pilot would include an empirical test designed to provide real data to determine if a supermarket chain can operate base grocery stores more efficiently and deliver greater savings, quality and selection.

The supermarket chains available for participation in the pilot currently operate 7,500 stores with over $80 billion in sales. For comparison, DeCA operates 177 stores in the U.S. with $4 billion in sales. Key services and attributes such as employment opportunities for families, on-site free childcare, and store hours would be included. Data collection would include customer satisfaction and be overseen by a top-ranked accounting firm.

The recent debate on the budget deal along with comments and priorities during markup of the fiscal year 2024 defense funding and policy bills make clear Congressional interest in finding savings while providing full quality of life support to the military.

The Defense Department should immediately use existing authorities to conduct a pilot to unleash the commissaries from government control and provide better service to eligible patrons at no cost to the taxpayer.

Elaine McCusker is a senior fellow at the American Enterprise Institute. She is a former acting undersecretary of defense (comptroller).

Source: MilitaryTimes

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