Commissary Cheap

Most of the veterans I follow on Twitter are pointing to this WaPo story on DOD’s failure to eliminate commissaries on bases as an example of the worst of DOD bureaucracy.

Three summers ago, Richard V. Spencer, a retired investment banker who serves on a Pentagon advisory board, proposed shutting down the commissary at Camp Lejeune and every other domestic military base, a step that would save taxpayers about $1 billion a year.

He called several large retailers to see if they would be willing to take over the markets. None were, but Wal-Mart, which has stores within 10 miles of most U.S. bases, proposed offering equivalent discounts to troops, their spouses and their retired brethren. He figured other national chains would follow suit.

When the Defense Department bureaucracy that runs the commissaries learned of Spencer’s plan, it sounded an alarm among allies in industry and in Congress. A trade group whose mission is to represent companies that sell goods in military stores fired off a letter to Defense Secretary Robert M. Gates, warning him it would be “ill-advised” to make major changes. Senators and representatives dispatched similar missives. So did veterans groups. As the correspondence stacked up in his inbox, Gates summoned Spencer and other members of the Defense Business Board.

“Richard, my fax machine is vomiting letters of complaint,” Spencer recalled Gates telling him. Worried that congressional anger would doom other Pentagon cost-cutting initiatives, Gates told Spencer to drop his commissary plan.

Maybe it is, but there are several things not being discussed.

First, the article points out that the commissary benefit is worth $4,400 a year to every military family. Most of those families are getting paid pretty low wages for a job that can kill you — $28,000 for a Corporal or Specialist with 4 years of experience. Is it any wonder that some in the military are defending this benefit?

Then there’s the shock that retired investment banker Richard Spencer (who probably hasn’t had to live on $28,000 a year for a very very long time, if ever) had when he discovered the commissary’s books can’t be audited.

What little that arrived stunned him. The agency’s antiquated financial systems, he learned, are not compliant with the federal government’s accounting standards.

That is a problem. But you know what? I’m far, far more concerned that NSA’s antiquated financial systems are also not compliant with the federal government’s accounting standards (apparently neither are a number of other intelligence community components), and not just because the dollars involved are far larger. I don’t have to worry about unaccounted Cheerios on a commissary shelf starting a new war or reading my email via some off the books program that evades Congressional scrutiny because its budget does.

Then there’s the assessment that retired investment banker Richard Spencer made that DOD isn’t very good at running supermarkets.

Its workforce was bloated compared with other retailers.


Spencer also discovered that the agency’s annual subsidy did not include other hidden costs. Commissaries don’t have to pay rent. Security services, when needed, are provided by military police.

It didn’t take Spencer long to come to a basic conclusion: “Running a chain of grocery stores is not a core competency of the Defense Department.”

He thought about proposing that a private company be hired to run the stores. But when he called up several large national retailers, including Wal-Mart, Costco and three grocery chains, he got the same response. “We don’t want this,” he recalled being told. Too many employees, they said, and they would be unable to lure non-military customers onto access-controlled bases.

He’s comparing commissaries, of course, with WalMart. Which has been getting a lot of press this year for its difficulties stocking shelves, in part because it has cut staff so thin that there aren’t enough people to get all the merchandise onto shelves.

Maybe, when consumers have the leverage to make demands, they prefer shopping in place with better service than WalMart? Maybe that, like better healthcare, is one of the reasons people will risk their life to join the military?

But here’s the funniest part of this story. The Administration is, as we speak, making a sustained argument that commissary employees are “sensitive” employees. It argued–really!–that because a commissary Assistant Manager knew how much Gatorade and sunglasses commissary customers were buying (potentially reflecting knowledge of upcoming deployments)–he should lose all Merit Board protection as a sensitive employee.

Now I, of course, thinks that’s a load of horse dung. Nevertheless, it is the horse dung the Executive is peddling. And so long as it is peddling that horse dung, it seems incumbent upon the Executive to keep this nice perk around.

It may be that the billion we’d save by shutting down commissaries would be a net savings once you adjust for the higher wages you’d have to pay lower-ranking service members in exchange. It may be the commissaries are hopelessly unwieldy.

But I’m very skeptical that this perk — and not the much bigger ticket waste — is the first thing that should be cut to save money.

9 replies
  1. OleHippieChick says:

    Shocked on my first visit to a BX on an AFB in Central Florida: Higher prices on clothing and personal items than on the outside and not just at Walmart. I don’t know what people see in these markets.
    The REAL crime in DoD is civilian employees living HIGH on the hog and lolling through their workdays not doing their jobs. They’re literally fat as hogs, too. And acting like ugly Americans is a favorite pastime. We need them why?

  2. earlofhuntingdon says:

    The rumors about Wal-Mart include that it is playing games with inventory, which it seems unable properly to shelve (or to keep its shelves and aisles clean), to appear financially healthier than it is.

    Is Mr. Spencer concerned with how well military commissaries are run, or with making sure private contractors replace them, switching as it were, Redwing or Danner boots for exotic dance shoes that cost triple the price?

    As for exhorting the government to apply basic accounting standards, let alone best practices, I agree that better targets for improvement would be the entire defense department and the myriad of agencies onto which it spins parts of its legitimate and black budgets so as to avoid a proper accounting of what it does, what it costs, and what we really get for it. I would throw in, just for laughs, a proper accounting and analysis of the billions spent annually by the DoD and agencies it controls on funding private and public universities.

  3. scribe says:

    FWIW. Years and years ago as a young lieutenant sitting across the table from my colonel in our mess hall, we were talking about accounting, running and inspecting mess halls and such. Not idle gossip but, rather, what I came to later call “classes between spoons of soup” – the kind of practical handing-down of knowledge not written in any book. A remark he made has stuck with me ever since: “… you do not want to mess with the Army Audit Agency [when they show up, bad trouble often follows]. … You know, the Army has stricter accounting standards for food than for nuclear weapons … you can’t eat a nuke.”

  4. Wapiti says:

    The Base Exchange (Navy/Marines) or the Army and Air Force Exchange Service is the department store on a post; the commissary is the grocery store. They are actually two different organizations. Both operate both stateside and overseas. Any plan for privatizing the commissaries in the US has to figure out how to run those overseas commissaries – do we want the employees overseas to be foreign nationals, or to be US citizens who never go to the states over their entire career?

    The bases often have large retiree populations nearby, and the retirees probably have more political clout than the young enlisted soldiers. They see the commissary as part of their earned benefits as well.

    There are also some bases in the US (like Fort Irwin, CA) that are not near major population centers. I could see how a retailer like Wal-Mart might not be interested in taking on the logistics of just one store in the middle of the desert there. (Sort of like how Fed-Ex is quite willing to have the Post Office cover remote locations.)

  5. joanneleon says:

    They always do this and it really pisses me off. When the Pentagon has to make cuts they start putting forward the cuts that will hurt the people who are serving, and their families.

    We know that the real waste, fraud and abuse is in those contracts, big and small. But that’s never what they put forward. It really, really pisses me off. We need some people like the ones we had in the 80’s exposing the waste in all the contracts that are out there.

    Let’s start with all the money rushing toward cyberterrorism and robotics and special ops.

  6. john francis lee says:

    The first thing that will be cut by any predatory bureaucracy is that which will hurt the public the most … to teach us a ‘lesson’ … we’ll be sorry is we try to exercise control over them !

  7. dakine01 says:

    I spent over 3 years of my 5 year, 9 month time in the USAF doing the accounting for base level commissaries in MI (Wurtsmith AFB) and Hawai’i (Hickam AFB). This including accounting for the food at the enlisted mess hall as well as the actual grocery store. And yes, it was a grocery store, contrary to Mr Spencer’s contention. MI it was a $500K per month operation while HI was a $2.5M per month. We had a mix of your standard grocery items and vendors such as Kraft, Best Foods, P&G, tobacco companies, and everything. As well, we had products that were shipped from government depots.

    The commissary fell under the “Stock Fund” accounting, same as Base Supply. It was not a profit making operation although there was a surcharge that covered supplies. Commissary employees were government workers although I don’t recall there being an excess of them.

    The Base Exchange (the department store) was a totally separate organization and the employees were NOT government workers

    This was in the late ’70s to early ’80s but bottomline is, Mr Spencer is pretty much full of shit

  8. Procopius says:

    @OleHippieChick: I’m retired from the Army, although my first hitch was in the Air Force, and I live in Thailand, so I haven’t seen a PX/BX for a very long time, but my memory is that you’re right, clothing prices are fairly high. In fact prices in the PX/BX are not particularly attractive, which is why we were so unhappy to see the Army do away with Military Clothing Sales Stores (wonderful quality control) and require everyone to buy their uniforms in the PX. However, this article is about Commissaries, and they only sell food, and their prices are, indeed, very low. They are loved by everybody who can get admission. It really would cause hardship on lower-ranking military families if they lost this privilege. The biggest savings for the customers are on sales tax (none) and excise tax on some luxury items (cigarettes, liquor).

  9. Procopius says:

    @joanneleon: Give Robert Gates credit, the man did try to do something about the worst of those dysfunctional programs. He did manage to get the F-22 program closed and he did manage to get the F-35 cut back, and in my opinion that was heroic work equal to Hercules cleaning the Augean Stable. Much, much more needs to be done, but look at the opposition he was facing.

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