Administration Criticizes Senate Bill for Pursuing Privatization of Commissaries

The White House this week said it opposes provisions in the Senate’s draft of the fiscal 2016 defense authorization bill that would test the feasibility of privatizing military grocery stores.

The bill, S. 1376, calls for the Defense Department to develop a plan to privatize the Defense Commissary Agency, wholly or in part. It also directs the Governmental Accountability Office (GAO) to assess the potential costs and benefits of privatizing the entire network of commissaries and determining whether any barriers exist to privatizing the commissary system. Following the GAO study, DOD would be required to privatize at least five commissaries under a two-year pilot program to evaluate the feasibility of its privatization plan.

The White House, though, is critical of the Senate proposal.

“The administration has concerns with commissary privatization and the willingness of private sector entities to participate in such a project,” the Office of Management and Budget said in its response to the legislation ahead of this week’s debate on the Senate floor.

OMB said it favored waiting for an independent study already under way to determine whether privatization is feasible before making any policy changes.

The administration isn’t the only critic of the moves toward commissary privatization called for in the Senate version of the authorization bill. Sen. Jim Inhofe (R-Okla.) is expected to introduce an amendment on the chamber floor reversing them, reports Military Times.

Groups representing military families and veterans have expressed opposition to the proposal, saying it would cut into the discounts offered to military shoppers.

The Military Compensation and Retirement Modernization Commission considered the option of privatizing commissaries, but decided not to recommend going forward in its final report issued in January.

“Since the commission recommends maintaining the current commissary benefit, privatization was not found to be a viable recommendation,” Bob Daigle, executive director of the commission, told the Times.

“The commission’s analysis indicated that this is probably not a feasible business model for private grocers,” Daigle said. “Unless subsidized by the government, grocery prices would have to rise to cover operating costs, which would reduce or eliminate the financial benefit to service members.”

Instead, the commission recommended consolidating DOD’s three exchange services with the Defense Commissary Agency into a single Defense Resale Activity to generate savings by combining many of the back-end office and support functions such as logistics and staffing.


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