Commissary System Unlikely to Achieve ‘Budget Neutrality,’ DOD Finds

Commissary System Unlikely to Achieve ‘Budget Neutrality,’ DOD Finds

There is no way to operate military grocery stores while preserving the commissary savings benefit for military families without a significant taxpayer subsidy, according to a Pentagon report submitted to Congress.

DOD concluded that it could eliminate only a small piece of the $1.4 billion annual subsidy provided by Congress to operate the commissary system. Congress requested the report to identify ways to achieve “budget neutrality” for the commissary and exchange systems by Oct. 1, 2018, without trimming commissary and exchange benefits, reported Military Times.

The department believes it could achieve only $300 million in annual savings beginning Oct. 1, 2018. The only way to completely eliminate the subsidy would be to increase prices by 27 percent, essentially eliminating the discount now enjoyed by military members and retirees.

Two initiatives that would produce some savings are the introduction of variable pricing and private label brands.

“The Department believes that, with some legislative relief, it will be possible to maintain current benefits and still achieve efficiencies that result in meaningful savings for the taxpayer,” the report noted.

Officials considered privatizing the commissary system and using discount saving agreements with local grocery stores. However, the report noted, “the department does not believe that either approach could replicate the range of benefits, level of savings, and geographic reach provided by the Defense commissary system and achieve budget neutrality.”

Nevertheless, DOD is continuing to look into the feasibility of privatizing some or all of the commissary system, according to the story. Last month, it issued a request for information from the private sector.

The defense authorization bill now being considered on the Senate floor calls for a pilot program to test privatization at up to five commissaries at major installations. A bipartisan contingent of senators, however, plans to offer an amendment to postpone the demonstration and, instead, require DOD to study the concept and submit a report.

Dan Cohen
Dan Cohen
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