Variable pricing, and not privatization, may be the tool that helps military grocery stores operate without government subsidies, Rep. Joe Heck (R-Nev.), chairman of the House Armed Services’ Military Personnel Subcommittee, said Wednesday during a hearing on possible changes to the commissary system.
“It’s what every grocery chain does across the country,” said Heck, reported Stars and Stripes. Variable pricing would allow commissaries to adjust product pricing depending on the region where they are sold. The stores now are required to sell items at cost, plus a 5 percent surcharge that is used primarily for construction and renovation of stores.
The hearing comes as both the Pentagon and lawmakers are looking for ways to trim the taxpayer subsidy that funds the Defense Commissary Agency. The fiscal 2016 defense authorization bill requires DOD to submit a plan by March 1 to operate the commissaries without federal dollars by FY 2018, while maintaining the customer benefit — an average savings for military families of about 30 percent over off-base groceries.
Last year DOD proposed slashing the Defense Commissary Agency’s budget by $322 million in FY 2016 — out of a total allocation of $1.4 billion — and $1 billion in FY 2017, but lawmakers restored much of that funding for the current year. The Pentagon’s proposed cuts would have been accommodated by reducing days of operation and operating hours, laying off staff and closing some stores.
But Heck wants to modernize store operations without reducing the benefit.
“[DOD] is looking to squeeze the budget wherever they can. That’s not our approach,” Heck told Military Times in an interview Tuesday. “We’re looking to make the system better through modernization and long-term sustainability.”
If the improvements “result in savings, great. But that’s not my driving force,” he said.
At Wednesday’s hearing, advocates for military personnel expressed skepticism about variable pricing —along with the sale of private label products at commissaries — and warned the changes could drive military families away.
Changes in pricing regionally could be perceived as a threat by military families, said Brooke Goldberg, deputy director for government relations for the Military Officers Association of America.
“They rely on that consistency, so when you change things you risk them leaving and not coming back,” Goldberg said.