Editorial Comment — July 2019
GAO, A Few Questions
…
These past few years have not been very good for any element of military resale -- for the patrons, the exchange services, the commissary agency, and perhaps worst of all, for the industry that supplies and services them. For some, these times have proven to be a real hardship.
Like the rest of the military establishment, the resale community has had its up and downs: wars, troop drawdowns, government shutdowns, hurricanes, earthquakes, now and then a new store opening, along with many base and store closures … but, just as for well more than a century now, it was always able to rally, dust itself off and move forward, supporting the mission.
Then just as the Defense Commissary Agency (DeCA) spent a quarter of a billion dollars (to start with) to put into play an Enterprise Business Solution (EBS) it wasn’t really quite ready for … an idea that had been lying dormant for many years, that the commissary system should be self-supporting, sprang into new life with the words “budget neutral.”
It was determined that that was impossible, but FYDP budget reductions leading in that direction remained. DeCA had already embarked on a program, based on a plan developed by the Boston Consulting Group (BCG), to reduce costs and “transform” the agency. The Government Accountability Office (GAO) reviewed the program and did not reject it.
Then, giving almost six months’ notice, the agency director retired ... and apparently no one in DeCA was qualified to take over that position. Now, over two years have gone by, and at press time, the agency still does not have a full-time director.
In the summer of 2017, the Pentagon announced
plans to reduce the cost of business programs, including
“early wins” by consolidating the military exchange
systems. Somewhere along the way, the commissary
system was added to the mix; and a task force was
set up to come up, once more with the help of BCG,
with a blueprint.
Congress has asked GAO to review and assess that
blueprint and resale reform efforts in general, and
groundwork is already being laid to do so. We would like
to suggest a few questions for the GAO investigation:
1. Two years ago, GAO suggested that customer
demand should be the basis for DeCA to stock an
item. Please dig out the 2015 survey showing how
many patrons, beyond the vice chairman of the Joint
Chiefs of Staff, actually asked for DeCA to have its
own private label ... ascertain when the survey was
conducted, how many patrons were surveyed and what
percentage responded.
2. Review all the BCG contracts related to DeCA’s “transformation” to establish a total cost figure to compare with an estimate of value received.
3. Please review commissary sales from May 2017 to date, evaluated with a comparable previous period, to determine revenues from private label products in the past two years vs. revenues lost from brand name items removed to provide shelf space for the private labels.
4. The process of category performance improvement (CPI) impacted promotional dollars offered to commissaries significantly. We suggest that GAO confirm this with a sample of suppliers involved, and provide an opinion regarding its effect upon commissary sales — which have declined, compared year over year, for 55 consecutive months — and store patronage.
5. It might be helpful to revisit the question of cost-benefit analyses in two areas, shelf-stocking and distribution, brought up in the earlier GAO review. They directly impact sales, and DeCA continues to have problems in both areas.
6. As for the current business case analysis (BCA) of resale consolidation ... during more than a year since this project began, it has taken many months of the resale services’ time and funds, plus the costs of the Community Services Task Force and the Reform Management Group, as well as hefty consultant fees for BCG again. How much has this cost?
7. Thoroughly review all the concerns and detailed analyses expressed in and accompanying the military services’ provisional concurrences in the resale consolidation BCA, and offer an opinion as to whether, as some have suggested, that the current resale system could save just as much, quicker and more economically, by cooperating as separate entities instead of being consolidated.