Commissary agency continues streamlining despite privatization threat

The Defense Commissary Agency (DeCA) is moving forward with a restructuring plan, despite a Bush administration proposal to outsource management of the military's grocery stores. DeCA runs the military's worldwide grocery store system, which includes 283 stores and more than 17,300 employees. In fiscal 2000, the agency had annual sales of $5 billion and operating costs of $1 billion. In what an agency spokesman called an "ongoing effort to infuse better business practices across the organization," six commissaries were targeted for closure earlier this year. Management offices at Fort Meade, Md., and Maxwell Air Force Base in Montgomery, Ala., were closed to consolidate much of DeCA's Eastern Region operations at regional headquarters in Virginia Beach, Va. Employees were reassigned and offered early retirement and other separation incentives. "It was part of the cost reduction and performance improvement management emphasis that has gone on here for the past year and a half," DeCA spokesman Tim Ford said. Another cost-saving measure under review by DeCA includes transferring management of 25 of its Eastern Region commissaries to its Midwest Region headquarters in San Antonio, Texas. "We're on target to reduce our costs, we've increased savings to customers to 29.2 percent, and our sales have increased, which is a good indication we are doing a good job of reaching out to our patron base," Ford said. The General Accounting Office is critical of the reorganization plan, saying there was no documented analysis supporting the proposal to shift management of the Eastern Region commissaries to the Midwest Region. In its report, "Defense Infrastructure: Commissary Reorganization Should Produce Savings but Opportunities May Exist for More" (GAO-01-473), GAO also found that DeCA did not compare its consolidation plan to alternative plans, making it unclear whether consolidating the Eastern Region's operations at Virginia Beach was the best way to increase efficiency. GAO pointed out that the consolidation could result in the loss of personnel with operational expertise. Some DeCA employees told GovExec.com they are skeptical of the effect the current and proposed changes may have on their jobs. "This is the third reorganization," one employee said. "If you're trying to streamline and cut unit costs, what good does it do to transfer stores from one region to another? Lives have been disrupted." Defense Secretary Donald Rumsfeld recently told Congress that contracting out commissary services would save the Pentagon money. "I think we ought to consider contracting out commissaries, housing, some mess halls and other services--it's already being done to some extent--that are not core military competencies and that can be performed more efficiently in the private sector," Rumsfield testified on June 28. Rumsfeld has proposed a pilot program with the Army and Marine Corps to contract out certain commissaries. David S. Chu, undersecretary of Defense for personnel and readiness, addressed the issue of commisary privatization in his testimony before the House Subcommittee on Military Personnel last week, but said only that Rumsfeld had asked him to consider it. "Military members and their families consider their commissary privilege to be one of their top two non-cash benefits, second only to health care," Chu told committee members. "Let me state clearly that this is a proposal to improve how the benefit is delivered with the objective being to obtain the same benefit at reduced cost to the Defense Department."