{"id":25411,"date":"2018-05-30T23:22:00","date_gmt":"2018-05-30T23:22:00","guid":{"rendered":"https:\/\/one.sightlinemg.com\/navytimes\/uncategorized\/2018\/05\/30\/is-it-worth-it-to-merge-commissaries-and-exchanges-dod-is-getting-serious-about-finding-out\/"},"modified":"2026-08-08T02:38:47","modified_gmt":"2026-08-08T02:38:47","slug":"is-it-worth-it-to-merge-commissaries-and-exchanges-dod-is-getting-serious-about-finding-out","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/navytimes\/management\/pay-benefits\/2018\/05\/30\/is-it-worth-it-to-merge-commissaries-and-exchanges-dod-is-getting-serious-about-finding-out\/","title":{"rendered":"Is it worth it to merge commissaries and exchanges? DoD is getting serious about finding out"},"content":{"rendered":"\n

Deputy Secretary of Defense Patrick Shanahan has signed off on the first official step toward consolidating the military commissaries and exchanges<\/a> into one system.<\/p>\n\n\n\n

A task force will be formed by July 1 \u201cto perform financial due diligence, a business case analysis, and begin planning for the consolidation <\/a>of the defense resale enterprise,\u201d stated the memorandum, signed May 29.<\/p>\n\n\n\n

Shanahan stated he had considered the views and responses of the military departments on consolidating the Defense Commissary Agency<\/a>, the Army and Air Force Exchange Service, the Navy Exchange and the Marine Corps Exchange into one organization, as recommended by DoD\u2019s Reform Management Group.<\/p>\n\n\n\n

He agrees \u201ca single consolidated organization offers the greatest potential to achieve the economies and efficiencies\u201d that are necessary to ensure that the commissary and exchange benefits survive, states the memo.<\/p>\n\n\n\n

Officials want to decrease the amount of taxpayer dollars going to commissaries \u2014 currently about $1.3 billion a year \u2014 and contend the consolidation could shore up the commissary system, which has seen a decline in sales.<\/p>\n\n\n\n

Background documents say changes need to be made to allow the commissary system to adapt more quickly to resale grocery trends. The documents state a guiding principle would be to maintain savings levels at commissaries and exchanges.<\/p>\n\n\n\n

But some military advocates have questioned the plan, including how much it would cost to consolidate the four entities, and what DoD would do with any boost to its bottom line.<\/p>\n\n\n\n

Shanahan acknowledged that laws would have to be changed in order to consolidate the commissary and exchange systems, and stated DoD \u201cwill pursue such authority as soon as practicable.\u201d<\/p>\n\n\n\n

DoD has already been drafting legislation to that end.<\/p>\n\n\n\n

The task force will complete its financial due diligence and business case analysis by Oct. 31, and will begin planning for consolidation, to include considering keeping some \u201cservice-unique identities\u201d at the front end of resale activities \u2014 which are those activities visible to the customer.<\/p>\n\n\n\n

If the DoD chief management officer approves the business case for consolidation, then the task force will finish the integration planning by Jan. 31, 2019, and the consolidation will begin based on existing authority under law, according to the memo.<\/p>\n\n\n\n

If the chief management officer doesn\u2019t approve the business case for consolidation, the task force will be disbanded immediately and the reform initiative will be closed, the memorandum states.<\/p>\n\n\n\n

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In this May 24, 2017, photo, members of the military and civilians with shopping privileges walk among stores at the Exchange, at Offutt Air Force Base, Neb. (Nati Harnik\/AP)<\/figcaption><\/figure>\n\n\n\n

Lawmakers, however, have inserted a provision in the House version of the 2019 defense authorization bill that would require congressional input into the decision.<\/p>\n\n\n\n

It requires DoD to submit a report to the congressional defense committees no later than Jan. 1, 2019, with, among other things, a financial assessment, a business case analysis, and \u201corganizational, operational, and business model integration plans\u201d for consolidating the resale systems.<\/p>\n\n\n\n

\u201cCongress has an obligation to accomplish this deliberately with the Department of Defense and military services to ensure this is a consultative and inclusive process of reform, while eliminating waste and unnecessary costs,\u201d said Rep. Don Bacon, R-Neb., in an earlier statement to Military Times. \u201cI look forward to working with the Department to certify that this possible consolidation is done the right way and these benefits are maintained.\u201d<\/p>\n\n\n\n

Lawmakers are \u201creally concerned that the benefits be preserved,\u201d a congressional aide previously told Military Times. It\u2019s become evident that DoD has already been working on consolidation, and the fear is that DoD \u201chas already worked out the answer to the equation,\u201d the aide said.<\/p>\n\n\n\t