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Commissary agency spends nearly $4 million on cost-cutting studies

The Defense Commissary Agency is spending more than $3.7 million on studies looking at ways to cut money from its budget.

Boston Consulting Group was contracted by Defense Department officials to conduct the studies — one of which is done, the other in progress. The money has come from the commissary budget.

Lawmakers mandated the initial study, which began in January 2015 and cost $2.3 million, on various cost-cutting ideas. That was in response to the Defense Department's proposals over the last two years to cut the commissary budget by about $1 billion, which would force prices to increase in commissaries. The commissary budget is about $1.4 billion a year, spent to operate more than 240 commissaries worldwide.

Defense officials have also contracted with Boston Consulting Group to develop a methodology for comparing commissary prices with civilian prices to determine baseline savings figures, also required by law. That contract is valued at $1.44 million, and according to the DoD, the money is also coming from the Defense Commissary Agency's budget.

"We do understand these studies were congressionally mandated. We're willing to concede it might be worthwhile to look at ways to be more efficient," said Eileen Huck, deputy government relations director at the National Military Family Association.

"At the same time, these studies do cost money. It's regrettable that the Defense Commissary Agency is having to spend money on something that has no value to shoppers," she said.

"What else could they have done with that money to improve the benefit for military families?"

Leading the efforts to find savings in the operations of commissary and exchange systems is DoD's deputy chief management officer Peter Levine. He is the senior adviser to the secretary of defense on business transformation and leads DoD's efforts to streamline business processes.

In the 2016 National Defense Authorization Act, lawmakers required DoD to come up with a plan to operate commissaries without taxpayer dollars — yet still provide the same savings benefit. That plan would have to be approved before DoD could go forward. Meanwhile, DoD must come up with what the baseline actually is.

Defense Commissary Agency officials have said the savings benefit for customers is on average more than 30 percent, based on the agency's own research.

In its first study completed last year, Boston Consulting Group recommended considering variable pricing and commissary private-label products as a way to reduce taxpayer costs,and consolidating the three military exchange systems as well as part of the commissary agency's functions.

Levine has said publicly that defense officials have determined that a consolidation is not necessary.

The law also gave DoD the authority to test various ideas for reducing the taxpayer dollars required. It's expected that DoD's pilot programs will test ideas such as variable pricing, rather than selling groceries at cost as is now the current law; or testing commissary private-label products.

Karen Jowers covers military families, quality of life and consumer issues for Military Times. She can be reached at kjowers@militarytimes.com.

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