Defense officials have reportedly asked the Defense Commissary Agency to develop a plan to close all U.S. commissaries - about three-fourths of its stores, according to a resale community source familiar with details of a meeting with representatives of the Joint Staff and Pentagon comptroller's office.
The source, who spoke on condition of anonymity, said the meeting was held within the last few weeks and was part of preparations for the fiscal 2015 DoD budget request that is due out on February.
That DeCA has been asked to prepare such a draft plan does not mean commissaries would close anytime soon. Even if such a plan was included in the defense budget request for fiscal 2015 - almost a year away - it would have to be approved by Congress, where many lawmakers would oppose it.
The Military Coalition, comprised of more than 30 military and veterans advocacy groups sharing a common agenda, also would fiercely oppose such a plan.
Still, the fact that defense officials want DeCA to draft a plan for how it potentially would carry out such a move is another sign of the heavy budget pressures weighing on the Pentagon as a result of sequestration.
The Defense Department had no direct comment on the commissary initiative. But Pentagon spokeswoman Joy Crabaugh said Defense Secretary Chuck Hagel "has made it clear on numerous occasions that all cost-cutting efforts need to be on the table" in order for DoD to meet the sequestration caps mandated under the 2011 Budget Control Act."
"At this time, no final decisions have been made on the ... fiscal 2015 budget submission. Therefore, it would be inappropriate to discuss any specific budget decisions," Crabaugh said.
DeCA has 178 commissaries in the U.S., including Alaska and Hawaii. Almost 70 stores operate overseas. Operating costs for the overseas stores account for 35 percent of DeCA's budget and 16 percent of total worldwide sales.
Commissary officials negotiate lower prices for products based on volume. Closing all or most U.S. commissaries would lead to higher prices and a degraded benefit in remaining stores, Tom Gordy, Armed Forces Marketing Council president, said in written testimony to a panel of the House Armed Services Committee on Nov. 20.
The council represents over 330 manufacturers of products sold in commissaries, exchanges and other military venues.
The proposal to close U.S. stores was not discussed at the hearing, but in his written testimony Gordy said closing U.S. stores "would eliminate the benefit for millions of families, breaking a commitment that has been made to every service member."
That such a proposal would come from within DoD is "very concerning," said Steve Rossetti, director of government affairs for the American Logistics Association.
Commissaries are "one of the most valued benefits," he said. "For what this costs the department, they get a huge return," not only in terms of the benefit itself but in other factors such as jobs for military spouses. About 30 percent of DeCA employees are spouses.
DeCA receives nearly $1.4 billion in annual taxpayer subsidies. It has reduced its annual funding requirement by $700 million over the last 20 years, said DeCA Director Joseph Jeu.
Jeu said DeCA is constantly looking for ways to save money, but added that the agency has no more "low-hanging fruit" to cut.
But Rep. Joe Heck, R-Nev., an Army reservist, said other proposals under consideration include raising the commissary surcharge to 10 percent from the current 5 percent; raising prices by 2 percent to 3 percent to pay for shipping products to overseas stores; and creating an "enhanced" commissary that would sell other products at higher markups.
Any such changes would have a "great impact" on troops and families, Jeu told lawmakers.
Heck said that if such steps are necessary to maintain the benefit, DoD officials must consider them. "I encourage you to take that kind of perspective," he told Jeu.