DOD Looks To Trim Defense Commissary Agency Budget

By Kara Murphy, contributing writer, Integrated Solutions For Retailers

Cuts as deep as $1 billion under consideration, American Legion says

The Department of Defense (DOD) is looking to save money, and the Defense Commissary Agency (DeCA) might find itself in the clearance aisle.The DOD is looking at a scenario in which $1 billion could be cut from U.S. military grocery stores over the next three years. That means that all but a handful of the 250 stores would close. The stores, open only to service members, charge an average  of 30.5 percent less than prices at commercial supermarkets, club stores, drug stores, dollar stores, and discount department stores. Authorized customers purchase items at cost plus only a 5percent surcharge.

“Commissaries are extremely important to young military families who are just trying to make ends meet,” said Daniel M. Dellinger, the national commander of the 2.4 million-member American Legion.

The chairman of the Joint Chiefs of Staff insisted there are no plans to close the commissaries, though Army Gen. Martin E. Dempsey acknowledged that the department is looking for all possible places to save costs. Senior DOD officials have asked the DeCA to offer a range of scenarios for future operations. One of those scenarios includes operating on reduced or no taxpayer subsidies. In 2013 DeCA received $1.5 billion in subsidies.

Pricing and efficiency are key to one grocer’s bottom line.

We haven't made any decisions," Dempsey said. "We've got to drive toward greater efficiencies, and this is just one of the potential areas."

While the Bipartisan Budget Act, signed by President Barack Obama in January, alleviated some of the sequester pressure on the DOD through fiscal 2015, the Budget Reduction Act of 2011 is still law. That means that unless Congress changes the law, deep spending cuts will be an issue again in fiscal 2016.

A $1 billion cut would leave 24 stores operating with $400 million still in operation, mostly overseas and in rural areas in the United States.

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