In both 2020 and 2021, the National Defense Authorization Act discusses combining the military commissary and exchange system. In August of 2019, Deputy Secretary of Defense David L. Norquist wrote a memorandum recommending the consolidation of the Defense Commissary Agency (DECA), the Army and Air Force Exchange Service (AAFES), the Navy Exchange Service Command (NEX) and the Marine Corps Exchange (MCX). The movement to consolidate was financially motivated. A 2018 study determined that “the benefits of consolidating the defense resale entities far outweigh the costs.” A Government Accountability Office (GAO) review reached a different conclusion.
Currently, the exchange system uses its profit to support on base programming. Overseas, the exchanges operate movie theaters, food outlets and provide school lunches. Across the world, the exchange profits are put back into programming that support the military members and their families on the bases. When the consolidation was first introduced, the concern was raised if these programs would be continued to be supported.
The military commissary provides tax-free grocery shopping to military families on items that are at lower costs than off-base stores. While the prices differ across the country, the commissary is a constant no matter what military base around the world the military family moves to.
Current Deputy Secretary of Defense Kathleen Hicks has rescinded the memorandum requesting consolidation and advised the Department of Defense (DOD) “to cease all efforts to consolidate the Defense resale entities.” A reported from the DOD in later 2021 stated that the consolidation was no longer feasible. The initial 2018 study stated that consolidation would save $700 million to $1.3 billion over a period of five years. New analysis in 2021 determined that consolidation would require $1.5 billion in costs.
While cost-savings is the reason for cancelling the consolidation, other concerns were raised by the National Military Family Association and Military Officers Association of America. The two organizations noted concerns that programming supported by the exchange would end if the consolidation would occur. In addition, the cost would be passed onto customer. There are already increased costs of items in some locations overseas due to the cost of shipping items overseas. Adding an extra cost to them could be significant for military families.
Current law prohibits consolidation of the commissaries and exchanges and with the move away from consolidation, the same services are to continue.
John Klein says
You mention tax free exchanges, but that does not apply to exchange gas stations. Apparently this is due to a provision of USC ( don’t remember the number). So the question is how can USC be changed? Cheaters could be banned from all bases.
I’m sure the exposure of total gas taxes will prevent this from even being discussed.
Ed McCoy says
This article states that commissaries are tax free. However, although they are tax free, the 4 or 5% surcharge is just about the same. This surcharge has still never been adequately explained to me, and that is fine. We rarely use commissaries because we have found that local grocery stores provide the same products at much lower prices, especially if you shop the sales.
Archie Hickerson says
Yes, after the 5% surcharge in many cases the prices come very close to the same if you are buying at your local city markets. I will continue going to the nearest commissary and BX/PX just because I like going onto our military installations, I feel at home.
Commissaries are required to sell their products for the price they paid for them, plus a five percent surcharge that helps pay operating costs. That surcharge covers most of the commissary workers, like cashiers and stockers. An exception is the baggers, who work for tips.
Harry Hill says
It seems obvious the hidden reason opposing this consolidation, more than one of the 4 exchange services will be reduced in operation or eliminated altogether. I e., why do we need 4 separate services, all with headquarters, distribution systems, etc. This means the reduction of facilities, equipment, warehousing, transportation, staff, and employees.
The reduced budget and financial savings to taxpayers are of no concern to the government/military. A well-documented fact is each agency’s rush at the end of each fiscal year to FULLY spend the current budget which impacts the next year’s budget.
This is the SAD fact with all government, and military departments to FULLY spend the current budget rather than SAVE and reduce expenditures. Heaven forbid that should be the goal.
Feed the poor in your own country and states.
Catharine Bevona says
During the past few years I am able to shop for more food items on the shopmyexchange.com website than in the past. During the past they only sold specialty gourmet foods. Lately, I have been able to get meat, fresh fruit and vegetables and that has made my food shopping much easier.