Military Times

Commissary cost-cutting report due soon

A report is due in early July that could affect the future of commissaries and exchanges, examining a wide range of ideas for saving money, many of which involve raising prices.

The study includes a survey of those eligible to use commissaries and exchanges. A survey was emailed in May to some customers, sources said, but information was not available on how many customers received that survey.

Boston Consulting Group, which has been contracted by the Defense Department to conduct the study, did not comment on the survey or any other aspect of the study. Spokeswoman Alexandra Corriveau said the company does not comment on its work with organizations "as a matter of policy."

Defense officials referred all questions about the the study to Boston Consulting Group.

The study, mandated by the 2015 National Defense Authorization Act, is due to Congress by Sept. 1.

Defense officials contracted Boston Consulting Group to examine a number of proposals to reduce the amount of taxpayer dollars, about $1.4 billion a year, spent on operating the 242 commissaries worldwide.

Those cost-cutting ideas range from DoD's proposal to raise prices on groceries to cover the cost of operating commissaries, to the Military Compensation and Retirement Modernization Commission's recommendation to consolidate commissaries and exchanges.

Boston Consulting Group describes itself as a global management consulting firm and "the world's leading advisor on business strategy."

The study is being overseen by DoD's office of the assistant secretary of defense for readiness and force management, which is part of the Office of the Under Secretary of Defense for Personnel and Readiness.

At a public meeting April 30, Joseph Jeu, director of the Defense Commissary Agency, said a report is due to the Defense Department by early July.

According to the statement of work for the contract, researchers are examining:

1. Using variable pricing to pay for operating commissaries.

2. A program to offer more private label products in commissaries.

3. Eliminating or reducing the money spent to pay for shipping groceries overseas.

4. Converting the commissary to a nonappropriated fund activity, similar to the systems under which the exchanges operate.

5. Consolidating all or part of the commissary system with the exchange systems, for a lower combined operating cost.

Researchers are analyzing the feasibility of making money from price increases and changes in stock assortment. Currently commissaries don't make money; they sell items at cost, by law, plus a 5 percent surcharge that pays for construction.

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