In the ongoing battle to retain commissary benefits, privatization is one option being considered. The hope is that privatization will eliminate the $1.5 billion DeCA budgetary shortfall.
Several large retail companies were asked to provide insight on what such a program might look like. Though the names of those solicited was not revealed, it’s hard to imagine that retailers like Walmart and Target weren’t in the mix.
But is privatization of the commissaries really the answer? Let’s break down this proposal.
Would Prices Go Up?
Many might be surprised to learn that most grocers operate at a profit margin significantly less than the 5% surcharge currently charged by commissaries. And that profit margin includes the cost of facility maintenance, labor, and taxes, plus shipping and distribution. Combined with the national distribution capabilities, massive buying power, and private label options of companies like Walmart, it’s unlikely that the overall cost of most items at a privately managed commissary would go up. We might pay more for some items, but less for others.
However, commissary pricing is almost always less expensive for high-ticket items like dairy and meat.
Would a major retailer be willing to reduce an already skinny profit margin to ensure prices on these items stayed the same?
What about taxes? There is currently no tax at the commissary. Would the same be true for a privately managed facility?
And let’s not forget about our OCONUS commissaries. Is a large retailer in a position to manage these overseas locations?
Are there any restrictions on a private company conducting business in foreign country? Would those restrictions potentially add to the cost of items sold there?
And would a private company be willing to eat losses to ensure service members and their families still have access to the products they need at the prices they can afford? Or would those costs, in turn, cause an increase in pricing at OCONUS locations?
Would Jobs Be Lost?
Approximately 60% of DeCA’s 18,00 employees are veterans, dependents and spouses. Any potential for the loss of jobs is reason enough to give careful consideration to any kind of management transition.
That being said, retailers like Walmart have employment programs for military spouses and veterans.
Is it realistic to assume that some employees would be allowed to keep their jobs? Probably, but the big question is would they be kept at the same rate of pay and offered the same benefits?
And how many current DeCA positions would be eliminated due to duplication within a current private provider’s business structure? Positions like purchasing, logistics, accounting, human resources and others could be in jeopardy.
Will Privatization Create Competition with AAFES?
In a recent report presented to Congress, the success of the AAFES Exchange program relies heavily on a close relationship with commissaries.
But with private retailers, even those typically seen as grocery-only, offering up everything from holiday décor to furniture, would privatization create a conflict of interest? Would those retailers be willing to eliminate those items? If not, would the loss in potential sales at exchanges throw a currently self-supported business model into ruin?
Is Privatization a Viable Option?
With so many questions left unanswered and the unlikely willingness of a major retailer to accept the rules that restrict profit for commissaries, privatization hardly seems like the answer to DoD’s budgetary woes.
But in truth, any push to eliminate or change the program feels likes overkill. While the $1.5 billion budget deficit looks like a large sum, it is less than 1% of the total defense budget.
According to a recent nonpartisan report, every single taxpayer dollar spent equates to nearly double the return in value of benefit given to service members and their families.
Is there any other benefit program that can boast such a claim? And what about a plan B? Should implemented privatization fail to support a pricing structure that provides the same level of value, will additional taxpayer dollars then be called upon to increase service member pay to bridge the gap?
Ultimately, it comes down to this: Are the risks of privatizing the commissary worth the potential loss of such a widely used program? Is it worth the loss or erosion of yet another benefit promised to a community who already sacrifices so much in service to their country?
I am totally against the privatization of our commissaries. When my husband joined the Air Force in 1974, he was promised many benefits if he stayed in 20 years or longer. These benefits were an incentive to compensate for low military pay, being put in harm’s way during wars and the inconveniences of constant moving and uprooting of their lives and the lives of their families. My husband gave this country 27 years. In the 16 years since he has retired, we have watched those promised benefits slip away. Free health care for life – gone, retirement benefits tampered with, loss of services on base. Now Congress wants to take away our commissaries. Where will it end? I would like to see Congress give up some of it’s benefits in exchange for leaving our military benefits alone!
I totally agree…let those on Capitol Hill who are allowed to exempt themselves from the rules they mandate for We the People give up some.of their benefits.
I don’t believe “privatization” works well for anyone other than the private entity.
The congress and military leaders has used both active duty members and their spouses/families up. Soldiers have died, given up limbs and suffered mentally from their dedication to the United States. Spouses are left with the scars and damage done to our love ones. Our children are denied A functional parent.
The only good part left was the benefits, and now they are taking that piece by piece ( even privatized housing stinks-A lot of money for old housing). No one Believes inhonoring agreements or soldiers sacrifices anymore. I say keep their damn hands Off our commissaries!!!!!!
We’ve already seen the military try to privatize other things such as employees and infrastructure. The result has been reduced confidence in the resulting product and much higher costs. Isn’t it obvious that privatization is not an improvement.
The commissary and PX system was never intended to provide scholarships, make a profit, or allow anyone but military to shop there. It is not intended to provide jobs or benefits to anyone except professional full time employees. In spite being its own worst enemy, it should not be privatized. We can always change it, but once it is privatized, the for profit company will milk the military personnel for all the profit it can squeeze out of them.
Think about it for a minute, they want to turn over the commissary and PX to someone whose only interest is the bottom line. If you don’t like the PX and commissary now, think of what it would be like to have to buy sub standard food from China because its cheaper. This idea is beyond awful.
Privatization has proved time and time again to cost the government more in the long run.
The people who gain with this is the company providing the services, which are almost always lacking
when compared to what the government provided. I too have seen my “promised” benefits being
eroded since I retired 35 years ago.
There is a Tax on the groceries bought at the commissary-it is called a “sur charge”. Too many uncaring civilian appointees and generals making decisions that badly affect enlisted and retirees
I also do not want to privatize the commissary. It will be another benefit we lose after spending 20+yrs in the military. I feel sure it will just become another Walmart that this country doesn’t need.
The slow erosion of benefits. Next we will all be on Obamacare. LOL Now that is something to look forward to. Privatization of commissaries, Hell No. The only problem I find with the commissaries is the attitude of most employees. But as the old saying goes, “I work for the government and you can’t fire me”.
I rarely find shopping at the Commissary a big savings. Even their Case Lot sales have been disappointing. There is a huge convenience of the Commissary when you live on base/post but with stores like Winn Dixie offering BOGO free and cost saving stores like Aldi’s or a local store that charges 10% over cost, it makes it hard to make the trip to the Commissary when living off base. Especially when I have to add in $2-$5…maybe $10 tip to a bagger depending on the size of my shopping trip.
In all honesty, the wages at my local Commissary are much more than the local economy. I think some of the workers would balk at lower wages a Private company would probably offer. I am not saying they are undeserving, but when a local supermarket or Target is offering $8.50/hr and the Commissary is over $13/hr one can see that there are ways for money to be conserved.
I too am disgusted by entitlements being taken away like free healthcare. I am saddened by Privatized Housing that bends rules so that the squeaky wheel gets the grease instead of the olden days of Rank has its privileges! Yes, housing was smaller and older than the new big homes Privatization has brought families, but in most cases it is not run any better than when it was government housing. With that being said, the same thing could happen to our Commissaries. It could start out great and then things go downhill.
Maybe the Commissaries should adopt shopping carts like Aldis has. Put in a quarter to use it and get it back when you return it. People will generally hand you a quarter if they see you going back and they need a cart. It would keep the carts from sitting out in the elements and prolong their life. The food cost shouldn’t be an across the board thing where an item is $1 no matter if you shop in Alaska, Hawaii, Alabama or Georgia. Some places that $1 item may be 50 cents regularly at a local market. Why shop at the Commissary when you pay more? I have heard there are some stores being tested for different prices. How about consolidating stores? In my opinion there is no need to have 2 or more commissaries within 15 miles of each other. That is double, triple the employees. Some Commissaries have multiple self check out lanes, I know there is a need for assistance and self checkout is too much for some, but if the Commissary can open at 6am and stay open until 8 pm because of limited Cashiers….to me that is a bonus! Spouse comes home…I have a pot luck tomorrow….there is still time to make a commissary run or child comes home and needs something for class same thing.
I know I have gone off subject a bunch. I don’t think Privatizing the Commissary is the answer. Rethinking how everyday business operations are run/handled and to look for ways to improve productivity and performance could be the answer.
I am a retiree spouse who has also retired from working at one of the largest chain grocery store. Let me address your concerns one at a time. Employee wages–most of the employees at my store are Union. You have to belong to the Union to work there even in right-to-work states. Depending on where you are stationed, the pay scale is not less but more than commissary workers. Union negotiations are for raises, medical, and misc. items like paid holidays, hours you can work, ages of the employees. All this is added to the bottom line for the investors, of which I am one.
Baggers–They are paid employees. They sometimes make more than minimum wage. This is added to the bottom line of the profit sheet. Cost- added onto the bottom line of profit sheet. No more tippings per Federal Laws on wages. And fewer to carry out your groceries. You have to practically beg to get them to do carry-outs.
Specials–yes outside stores can have them. But the difference is made up on other items of which most consumers are not watching. Have you noticed bigger boxes of food but less food in the boxes? And a higher price on these bigger boxes!
All these and too many more add to the bottom line. And YOU, the consumer have to pay for them. To add to the profit, because these stores are all about the profits for the owners and the stock holders, of which many active and retired employees are like my self.
Next time you are in a private grocery store, look around the site and check out the prices of your regular purchases and take them to the commissary to compare. You might just change your view about going private.
Now to the employees themselves–fewer employees in every department. When it gets busy, call people from other departments to fill in the vacancy, leaving those departments short-handed.
Cashiers–more self-checkout lanes. Be prepared for this. It is in more stores than you think.
.
I like the commissary just the way it is. We shop as often as we we can.
Wait until Hillary is President and you will see soooo much more disappear unless her fingers are in the money part for her own good. My husband gave over 20 years and I never thought I would see the prices flipping so much on the upper side and WHY???? Let Obama or the next President have to shop and have the same amount of money given to them a month and have to spread it throughout the entire month. BUT, the government has the money to pay for SEX CHANGES WHILE YOU’RE ACTICE MILITARY????? Give me a break, our Country has or is going to hell in a hand basket and all the work and time our Military has in the pass and to the present given to make our Country free and now, High School football players, High School, are able to kneel during the National Anthem. Their butts and football coach, principle and whoever should be detention, where do they get off by showing such disrespect to not only our Country, but our Military who fought for their freedom. Then the government picks on our Commissaries? One sex change could pay a lot of overhead to the commissaries to them the heck alone.
I totally agree with your comment 100%.,
Amen!!!
The fact that the military is voting for Trump is all I need to know. Apparently the military doesn’t have much intelligence and it is a scary thought they are responsible for our protection. Close the BX and commissaries and they can spend their time at Walmart where they will fit right in.
Just saying, if that is your opinion of our Great Military, my opinion of you is that you are a low life and you should seriously to go to another country, buster. No one has the right to talk about our military and I wish I was in front of you to really tell you what I think of you. I know your mother should be proud of what she raised. So, mister, if you don’t like our military get the heck out of our country, no get the hell out and I will buy you a one way ticket…. You certainly should be proud of yourself. I’m sure more then proud of our men and woman serving our country so people such as you can talk and hear the wind going through your ears…….
I hope that those in charge will look for other ways of cost savings instead of privatizing our commissaries. I for one think it will be a huge mistake and not solve , but create , problems.
I must agree that privatizing the PX/Commissary systems would result in costs for the military rising and perhaps substandard foods, etc for the military. I’m for finding better ways to deal with problems that have arisen or may arise than having the system go private. What are the problems that are present? Has anyone addressed them? Let the people that shop here and depend on the PX/Commissary have a say in solving the problems. We do have brains and can give viable suggestions if we know the problems!
My husband spent 22 years in the military. When he enlisted it was under a contract. Each time he reenlisted it was a contract. He retired in 1975 under the same contract. As far as I am concerned a contract is a contract. If they want to change it then enlist and reenlist under a different contract and see who wants to give at least 20 years if not more under a contract where you get nothing but the short end of the stick and possibly give you life for nothing in return.
With so many companies expressing interest I think that means they believe they’ll see a big profit someday into the future. They may be promising big things right at first to get to be the one picking up the commissaries, but I believe soon after those promises will go by the way side and they’ll be just as expensive on all things as their regular civilian based stores in short order. A year in they’ll say they can’t afford to not have the government help them out or the government allow them to up the prices to stay in within a profit margin they can really afford. I wouldn’t doubt Walmart would get the deal to start off with, but then a year or two into the whole thing find them rising prices to the point it would be the same going to a civilian store.
I am totally against the privatization of commissaries!!! Privatization will be the death of the “benefit”. I disagree that there aren’t that many savings to be had at the commissary. Anyone that says that is not a good shopper. It is true that, thanks to the Obama administration, everything has gone up in price and the savings have gotten to be less. I find that if I follow the specials on items and stock up when they are on sale, it is a huge savings for us. It’s time for someone besides military folks to suffer some cuts.
Absolutely not! Everything that has been privatized has ended us being a disadvantage sooner or later. I agree, Congress should consider giving up some of their benefits