Defense officials should think about consolidating commissaries and exchanges into a single defense resale system, according to the report from the Military Compensation and Retirement Modernization Commission released Thursday.
After a two-year study, the commission publicly unveiled 15 major recommendations that would change a variety of military benefits.
"Commissary and exchange benefits are valued by many service members, retirees and their families, and should be maintained," the commission recommended.
Read the report: Military Compensation and Retirement Modernization Commission
"Let's stop for a minute and celebrate that the commission found that the basic commissary premise of selling at cost plus 5 percent is viable," said Joyce Raezer, executive director of the National Military Family Association.
A consolidated resale organization would better sustain that benefit while over time reducing reliance on taxpayer dollars, commissioners said.
The commission recommends some cost-saving measures related to the consolidation, but they are far less than what defense officials have proposed. DoD has proposed cutting $1 billion in annual costs from the current $1.4 billion budget within a couple of years, but the commission's estimates would start saving in fiscal 2017 — $78 million — until it reaches $515 million in annual savings by fiscal 2021.
Food would continue to be sold at cost in commissaries, but to reduce the need for taxpayer dollars, the stores would start making a profit on other items — new items like beer and wine, convenience items such as greeting cards, school supplies and cosmetics, and store brand products.
The commission recognized that there would have to be some changes in laws and policies to allow these and other changes.
Costs of transporting items overseas — now funded by taxpayer dollars, so that customers overseas pay the same for products in their stores as they would stateside — would be covered out of nonappropriated funds.
Customers also might pay a 5 percent surcharge for similar items in the exchanges. "Conversely, allow the use of exchange profits to cover commissary costs currently covered by the surcharge," the report suggests
The stores would also consolidate their logistics networks, consolidate their staffs and convert commissary staff from appropriated-fund employees (taxpayer-funded) to nonappropriated fund employees — funded by profits from sales, for example. They would consolidate retail space where multiple exchanges and commissaries are operated within close proximity.
Under the proposal, stores initially would maintain their own branding — such as the Navy Exchange — and directors would be appointed for each of the exchange systems within the consolidated agency. But over time, the branding and organizational structure could be modified.
That consolidation would include the exchanges, but not the organizations currently managed by the exchanges. Part of the military services' morale, welfare and recreation programs still would be funded from the organization's profits.
But family advocates would like more details about how a consolidation would work, Raezer said. When she briefed the commission's recommendations to military spouses on her organization's staff, she said, the two primary questions raised were: "How do you work out what's sold at what price?" and "How do you sort out how much money goes to morale, welfare and recreation?"
The commission's report said that in its survey, town halls and other public forums, commissary and exchange benefits frequently received strong support, "with a primary focus on commissary discounts, yet some service members did challenge the value of the commissary and exchange benefits.
"Typically they were skeptical of the claimed savings and the quality of nonbranded products such as produce.
"Even among skeptics, however, there was consistent acknowledgment of the additional benefit offered overseas, and in remote and isolated locations, where commercial alternatives are either not available or not comparable."
Based on the commission's survey, the most important aspects of the commissary benefit were discounts and convenience.