Military grocery stores would introduce variable pricing and private label products in an effort to slash the federal subsidy supporting commissaries, under the portion of the fiscal 2017 defense authorization bill marked up by the House Armed Services’ Military Personnel Subcommittee on Wednesday.
The two changes are intended to increase commissaries’ profit margin, but the legislation aims to protect the commissary benefit for military families, which has been estimated at providing shoppers up to a 30 percent savings.
DOD already had been planning on testing these new options this summer, as it had been authorized in last year’s defense policy bill, reported Military Times. The legislation advancing in the House this year would allow the department to implement the changes across the commissary system beyond the confines of a pilot program.
The Pentagon is hoping to save a total of $1 billion over the next five years as a result of the new policies, with a goal of saving $512 million in taxpayer dollars in FY 2021, according to the story. The FY 2016 budget for worldwide commissary operations is $1.4 billion.
Currently, commissaries are required to sell groceries at cost plus a 5 percent surcharge to cover construction and renovation of stores. Under variable pricing, commissary officials would determine prices based on market conditions and customer demand. A private label program would allow the stores to develop their own brands of items, similar to those found in commercial stores.