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Editorial Comment — May 2016

The Grand Plan …

So the Pentagon and the Defense Commissary Agency have come up with a plan (mostly courtesy of the Boston Consulting Group) that supposedly will dramatically reduce the cost of commissary operations by implementing variable pricing and selling private label products … and now they want industry to jump through hoops to help put this plan into action. But if national brand product lines are being removed from shelves and replaced by DeCA house brands, the obvious question is, “Why the hell should they?!”

To begin with, the plan seems doomed to fail (or cost taxpayers more than they already pay), since commissary agency staff have only very limited experience, if any, with variable pricing on grocery products and managing a private label program — and because the direction of its current transformation is moving DeCA into almost direct competition with national and international grocery giants.

Our guess is that BCG or another third-party contractor is initially going to have to manage the critical complexities of variable/alternative pricing for DeCA (at even greater taxpayer cost) and help create a framework for the agency to take that function over at some point.

Of course, it’s possible that the reason DoD wants industry’s support in all this is so it can be blamed if (when) the plan goes belly up … and so there is something else on the shelves to keep the commissary store brand products company. Ironic that many years ago, commissaries’ roots were largely in generic number-10 cans of no-name government-issue “spec” products — and now, after shifting to brand names for half a century, they return in part to government-agency-branded items, immersing government into the grocery business as it seeks to shed the responsibilities of its benefit business.

In any case, DoD and DeCA will expect all the same perks, promotions and privileges from the food processing and marketing industry, and its supply chain, as it has enjoyed in the past. But indications are surfacing that when industry’s participation in shelf space and category assortments is decimated, so are promotional dollars. Those are usually decided upon by corporate decision-makers far above the military rep level where the traditional DeCA-industry relationship has thrived for many decades.

The exchange systems are also getting a raw deal. They should not be expected to help fund commissary earnings shortfalls with their very limited MWR and recapitalization dollars if DeCA’s variable pricing and private label programs fail. But that is what both the House and the Senate seem poised to authorize, and it is not fair to the exchanges, to their store improvement programs or to the military patrons who use MWR facilities and programs. This is what we have become conditioned to expect from a Congress that has such a low number of members who have participated in military service.

And if by chance the commissary variable pricing and private label programs were to succeed, would DoD encourage DeCA to share its earnings with the exchanges?

These kinds of changes are going to hugely impact exchanges; and their customer traffic, earnings and recapitalization will suffer.

But what did anyone expect? This is typical of how DoD has directed DeCA to operate over the last several years ... and in DeCA’s position — taking orders directly from the Pentagon hierarchy — there’s not much they can do to help themselves short of resigning in dismay or saluting the flag and saying, “Yes, sir! Yes, ma’am! How high should I jump?”

In the 2016 and 2017 authorization bills, the congressional armed services committees are failing servicemembers and their families by rubber-stamping some of the Pentagon’s military resale proposals and providing only skimpy oversight. It seems DoD certainly, and maybe a few in DeCA as well, have forgotten who and what commissaries were set up for in the first place — as a method of stretching the military family’s paycheck, not for funding Defense Department programs or bureaucracy.

Speaking of DoD positions in light of cutting appropriations — how much has the Pentagon cut from its civilian bloat over the last decade? Military personnel keep taking cuts to their ranks, and are stretched too thin, physically and mentally, not to mention the current focus on reducing benefits. In the words of Air Force Secretary Deborah James, “We have been downsizing for years and our people are very stressed … this simply needs to stop!”

Meanwhile, numerous commissary complaints continue to show up on social media: equipment malfunctions, out of stocks, rotten produce … even coupon abuse at some locations (can’t point the finger at industry about that!).

If DeCA doesn’t have enough qualified help and workers in the stores to handle the current system, what’s going to happen when variable pricing and private label systems kick in and products need to be stocked? What will it all cost the taxpayers, and the military family patrons, to hire the help and implement these new programs? Has DeCA come up with the actual market basket savings that accurately reflect what savings are currently — across the full gamut of products and promotions — to compare with the aftermath of the new programs’ implementation and future results?

And don’t forget who is going to be impacted: Certainly not Congress … or at least not until the next election. Not the leaders at the Pentagon, or at DeCA.

No, none of them. Only commissary store personnel, military servicemembers and their families.

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