Sweeping changes in the commissary system may be coming sooner than expected\u00a0\u2014\u00a0including how groceries are priced \u2014 under draft legislation that would bypass the need for pilot programs.<\/p>\n\n\n\n
Commissaries would be allowed to increase their profit margin so officials can reduce the amount of taxpayer dollars used to operate stores.\u00a0The\u00a0current-year budget for operating commissary stores worldwide is $1.4 billion. By\u00a0law, commissaries sell grocery items “at cost,” with no profit. A 5 percent surcharge is used to pay for construction and renovation of stores.<\/p>\n\n\n\n
The\u00a0draft bill\u00a0released\u00a0Tuesday\u00a0would change that, allowing\u00a0the Defense Department to use variable pricing and develop private label products, moving away from selling groceries at cost.\u00a0DoD officials are figuring out a detailed\u00a0baseline of savings under the current system \u2014 how much commissary shoppers save vs. shopping outside the gates, estimated around 30 percent overall.<\/p>\n\n\n\n
It’s not yet\u00a0known what the expected level of savings would be under the reformed commissary system, but\u00a0DoD documents laying out the plan say\u00a0the savings for customers would be “reasonably consistent” with the level of savings under the current system.<\/p>\n\n\n\n
The draft bill released Tuesday is an early step in the legislative process, from the House Armed Services personnel subcommittee,\u00a0that will result in the 2017 National Defense Authorization Act once both houses of Congress have addressed it.<\/p>\n\n\n\n
House staff members <\/span>said the biggest piece of this reform is to maintain the commissary benefit for service members\u00a0and that <\/span>safeguards are built into the legislation to protect the commissary benefit and that the changes are “not irreversible” under the proposal.<\/p>\n\n\n\n “It’s not irreversible,” a staff member said of the draft legislation.\u00a0<\/span>DoD would be required to submit reports at least quarterly on the progress, and as lawmakers monitor the changes, if there are problems, DoD will have the authority to infuse more taxpayer dollars into the commissary system to make sure the benefit is maintained for service members.<\/p>\n\n\n\n “The one going-in argument is that we will maintain the benefit for our service members,” the staff member said.<\/p>\n\n\n\n DoD and lawmakers have realized they will not be able to completely get rid of all taxpayer funding for commissaries,\u00a0because some funding is needed to provide a savings benefit.<\/p>\n\n\n\n Under\u00a0variable pricing, also called “flexible” or “alternative” pricing, commissary officials would determine the prices “in response to market conditions and customer demand,” according to the Defense Department’s legislative proposal laying out these reforms.\u00a0The current pricing system, selling all items at cost, “constrains sales margins and limits potential savings benefits across disparate geographic markets,” officials stated. Under a private label program, the commissary agency would develop its own store brands of certain items, similar to items found in commercial stores that are generally cheaper than name brands.<\/p>\n\n\n\n\n\n Sometime this summer, <\/span>Defense officials will start testing those two concepts \u2014\u00a0variable pricing\u00a0and private label products \u2014 sometime this summer, said DoD spokesman Air Force Major Ben. Sakrisson.\u00a0Information was not available about how the tests will be conducted, or where. The tests were authorized in the 2016 National Defense Authorization Act.<\/p>\n\n\n\n But this draft legislation gives DoD authority to move ahead without so-called pilot programs.<\/p>\n\n\n\n “We’re not calling it a pilot program, but there are enough escape valves that if it doesn’t work, we’ll go right back to appropriated funds,” a House staff member said.<\/p>\n\n\n\n