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E&C Commissary News

Editorial Comment —August 2011

When Is a Benefit Not a Benefit?


In today's economy, legislators can't be blamed for wanting to find budgetary savings and solutions to problems wherever they encounter them. That's part of their job. However, with most of the benefit's low-hanging fruit having been picked long ago, some have been grasping from the top of a very dangerously unstable ladder at what amounts to a few small, high-hanging pieces of fruit of imagined savings.

So, when the Senate Veterans Affairs Committee (SVAC) approved a bill (S. 277) that seeks to enhance vital medical care support to those affected veterans and other family members stationed aboard MCB Camp Lejeune, N.C., between 1957 and 1987, there was much to applaud, since little progress has been made to bring health care to veterans and their families sickened as a result of contaminants at the installation. But when quality-of-life advocates scrutinized a revision to the bill by committee ranking member Sen. Richard Burr (R-N.C.) specifying how it would be funded — by eliminating appropriated funding for commissaries and consolidating re-sale systems — there was a great deal to be alarmed about. Many others from the military community, including veterans' groups, felt the same way, and have stood up unanimously and vociferously in defense of resale benefits that are threatened with extinction by this amendment.

Even though this legislation in its current form does not pass muster, it needs to be emphasized that it is no coincidence that commissaries are able to provide patrons the 31.5 percent savings they do. This savings doesn't happen by accident; it happens by design, and is achieved in many ways through an efficient and well-managed agency that has garnered just about every commendation and accolade that can be bestowed on a government agency. In addition, suppliers have put in place dedicated military business units that provide service, savings and support workers who go above and beyond — in particular in times of national and international emergency.

Withdrawing the appropriated fund support that is key to sustaining commissaries as a non-pay benefit has potentially catastrophic ramifications for military servicemembers, their families, patrons on a fixed income, and many others — and in turn, retention and readiness.

Because the amendment seeks to eventually bring the Defense Commissary Agency (DeCA) and exchange entities into one single for-profit system by 2015, it will also impact commissary support contractors whose workers come from the ranks of the National Institute for the Blind (NIB), the National Industries for the Severely Handi-capped (NISH), and a multitude of small business set-asides. Why is this? Because commissaries and exchanges have fundamentally different business models, legal foundations, and provide different types of non-pay benefits.

It would be nice if those clamoring to eliminate commissary funding remembered that the last study performed on variable pricing in the commissary systems demonstrated that this concept would not work; and that a commissary system that operates on a for-profit basis can no longer deliver the savings worthy of the benefit. It would also be helpful if those who believe merging exchanges will yield any real savings remembered that the Unified Exchange Task Force (UETF) failed to prove that such a consolidation was even a remotely cost-effective concept.

It would be nice if everybody remembered these things — but that's not the way the world works.

The concept of merging the military exchange systems has been proposed on numerous occasions over the last 40 years. It seems simple enough on the surface, but every time it has been studied in laborious and expensive detail, it has ultimately been rejected. Most recently, after millions of dollars — if memory serves correctly, $17 million — and years spent on studies, the UETF presented its “Modified Business Case Analysis” (MBCA), and in the end, it met basically the same fate as the other studies. It would cost far more to merge the systems than to keep them separate.

If anything worthwhile came of the UETF's work, it was a reaffirmation of the value of continuing cooperative efforts that were already underway. The exchange systems, DeCA, and morale, welfare and recreation (MWR) operations have extended these initiatives much further in recent years, working together with other installation and government partners — where it makes business sense.

But make no mistake, military resale is a benefit business. Sometimes that means it does not make any business sense at all, for example, for the Navy Exchange Service Command (NEXCOM) to pursue the same customer strategy as another exchange system, let alone DeCA. And to do so would also cost them far more in money and customer loyalty than it gains in imagined efficiencies. Retailers work in a world where highly targeted customer offerings, value and customer loyalty mean everything — anything that throws these formulas out of sync with the patron spells trouble.

Eliminating appropriated funding and making commissaries a for-profit enterprise, and merging exchange systems is just such a home-wrecker; it is tantamount to cutting down the tree that supports quality of life.

As much as we'd like to see legislation to help sickened veterans and their families move ahead, it cannot be done on the backs of active-duty service-members, Guard, reserves, their families, retirees and other eligible patrons who have earned their commissary and exchange benefits in defense of our nation.

Robillard's Legacy

As you read this, Navy Exchange Service Command (NEXCOM) Commander Rear Adm. Glenn C. Robillard, SC, USN, will have been promoted from rear admiral (select) to rear admiral lower half, in recognition of a job exceedingly well done. He will also have handed over the helm of NEXCOM to acting commander Capt. Christopher S. Bower, SC, USN, and moved on to his new role as deputy chief of staff for Logistics, Fleet Supply and Ordnance, N4, U.S. Pacific Fleet, Pearl Harbor, Hawaii.

Robillard told E and C News last year that re-sponsible stewardship, growing the benefit, and building for the future were the areas he hoped to intensify while NEXCOM commander.

His deep enthusiasm and strategic focus charted a clear course that not only made attaining these objectives possible, but also allowed his capable staff the leeway they needed to make even greater enhancements, such as the recent top-to-bottom reorganization of the General Merchandise Group (GMG).

He may have been NEXCOM commander for only a relatively short time, but there's no doubt he succeeded in reaching, if not exceeding, these goals, and we wish him fair winds and following seas on his next challenge. Bravo Zulu!

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