May 13, 2013
DeCA reviews 33 percent budget cut
RICHMOND, Va.— Commissary officials are conducting at least three short-fuse cost-cutting reviews, each of which could significantly reduce access to the benefit by either shutting down some stores or shortening their hours.
*A directive from the Pentagon comptroller requires the Defense Commissary Agency and others to look at cutting its $1.4 billion annual budget by up to 33 percent, while focusing operations on supporting troops stationed overseas. That would cut deeply into operating funds from stateside stores.
This directive also requires commissary officials to come up with a separate, short-term plan to save5 percent of overall costs, and was due in early May.
*DeCA, like all Defense Department agencies, must review its headquarters staffing under an initiative dubbed the Strategic Choice and Management Review.
*Commissaries will be studied by the Compensation Commission, mandated by Congress to review the value of all military pay and benefits programs. Although the commission has not yet been appointed, defense officials have been preparing data in advance.
Most worrying to military advocates is the requirement to develop a plan to cut up to 33 percent of the commissary budget. This review is due in early July, according to DeCA Director Joseph Jeu, who spoke at a conference here April 24.
Jeu said he considers this an “opportunity” for DeCA to be involved in shaping any changes in how the commissaries will operate. He noted that cuts made since the agency was created in 1992 have whittled the budget by $700 million a year.
“I don’t think there are too many agencies that can say they reduced their budget costs by 50 percent,” when inflation is taken into account, Jeu said. Without these cuts, the DeCA budget would have been on a trajectory to be more than $2 billion. The cuts have been achieved in part by reducing DeCA staff by 2,500 people over the years.
Salaries make up about 70 percent of the commissary’s operating budget; the next biggest line item is the cost of transporting groceries overseas, required by law to be paid by taxpayers. As such, shaving another 33 percent from DeCA’s operating budget would translate into closing stores and cutting hours, said Pat Nixon, a former Marine who is also a former DeCA director.
“That fundamentally changes the availability of the benefit,” said Nixon, now president of the American Logistics Association, a trade group whose members sell products and services to commissaries and exchanges.
Overseas troops and families are significantly more likely to use commissaries. About 13 percent of the active-duty force is stationed overseas, not counting Hawaii and Alaska, but they accounted for 24 percent of overall customer sales from October through February.
That means they’re about twice as likely to use the stores than those in the U.S., even before accounting for retirees, who overwhelmingly use stateside stores.
Nixon said the working group will come up with multiple scenarios to save the 33 percent, and is considering one in which some stores would close in metropolitan areas with multiple commissaries.
That could still have an impact on patrons. In the Hampton Roads, Va., area, for example, a family in Chesapeake, Va., has a 3-mile drive to the commissary at Portsmouth Naval Shipyard; about 12 miles to stores at Norfolk Naval Station and Naval Amphibious Base Little Creek; 16 miles to Oceana Naval Air Station; and 21 miles to Langley Air Force Base.
In looking at ways to trim DeCA costs, officials should consider the impact of DoD’s current review of overseas bases, said Rene Campos of the Military Officers Association of America. She noted that DeCA could see future savings if DoD reduces its overseas footprint and some stores are not needed.
“There are so many things going on, we’re concerned something’s going to be missed or misinterpreted without input from beneficiaries,” Campos said. “If dollars are driving the decision, chances are the beneficiaries are not going to be on the best side of that bottom line.”
Deeper changes — such as anything affecting the current 5 percent surcharge on goods, or taxpayer funding of employees’salaries or overseas transportation costs — would require changes in law, Nixon said.
Hiring freeze squeezes commissaries
RICHMOND, Va. — The Pentagon hiring freeze is affecting commissary operations, and things could get worse before they get better.
“I’ve got stores out there operating at 60 to 70 percent of manpower,” said Keith Hagenbuch, executive director of store operations for the Defense Commissary Agency. “We’re struggling just to keep the store operating.”
Speaking to a conference of the American Logistics Association on April 24 here, less than an hour’s drive from DeCA headquarters in Fort Lee, Va., Hagenbuch described some of the impact, including the cancellation of the annual May case lot sales. DeCA spends about $900,000 to run two case lot sales worldwide each year, he said.
“That’s an expense we couldn’t afford, not with what’s going right now. It’s either get rid of people, or [cancel] a case lot sale. We had to make some tough choices. That doesn’t prevent you from going to that store, if they have the manpower, and coming up with some sort of deal, maybe a sidewalk sale, where industry pays for the tent.”
DeCA imposed a civilian hiring freeze Feb. 4, in line with the Defense Department-wide freeze.
Commissary officials have asked DoD to allow some exceptions to the hiring freeze, said DeCA Director Joseph Jeu, and he is waiting for an answer.
The number of open positions will likely increase, since the heavy summer permanent change-of-station season has started, and some military spouses who are commissary employees will be leaving their jobs.
DeCA will continue to allow internal hires, so military spouses already employed by the commissary who leave because of PCS moves may be able to work at another commissary, if there are openings for which they are qualified.