• Mr. Steven J. Muehler

Steve Muehler's Plan to Consolidate all Military Commissaries & Exchanges

Updated: Apr 23

Shutting down all U.S. military commissaries is the only way for the system to operate without any cost to taxpayers, according to a 2016 Defense Department report -- a move officials have long said they don't want to do.

"We have concluded that budget neutrality could not be reached through store closures unless the commissary system is shut down completely," states the report on cost savings at the Defense Commissary Agency.

What the agency and the exchanges can do without impacting the military's Morale, Welfare and Recreation funds or customer service is reduce their reliance on federal funding by about $2 billion over five years, or about $300 million per year (starting in 2019), the report states.

This could happen by raising the prices on some products while working with manufacturers to the lower the price of others -- programs that are already in the works. But savings through those measures falls $1.5 billion short of the desired cut in 2019 alone, the report notes, and requires Congress to make permanent the price changes previously allowed as a test measure.

Lawmakers have sought for several years to eliminate the commissary system's reliance on $1.4 billion in annual funding from Congress.

Because goods at the commissary are currently, by law, sold at cost plus a 5 percent surcharge, there is no sales revenue in the system to cover operation costs. Income from the surcharge covers the cost of buildings and infrastructure maintenance, while the annual government funding pays for other overhead including employee salaries and the cost of shipping food and goods worldwide.

Lawmakers for years have proposed a variety of cost slashing plans including eliminating the taxpayer subsidy, raising prices at commissaries to cover operation costs, combining the commissary and exchange systems and privatizing commissaries through contracts with civilian grocers.

Under my Administration, we would immediately start the process of consolidating the Defense Commissary Agency, the Army and Air Force Exchange Service, the Navy Exchange and the Marine Corps Exchange into one organization.

A single consolidated organization will ultimately offer the greatest potential to achieve the economies and efficiencies that are necessary to ensure that the commissary and exchange benefits survive and decrease the amount of taxpayer dollars going to commissaries. This consolidation will shore up the commissary system, which has seen a decline in sales.

Steve Muehler is the Founder & Managing Member of the Private Placement Markets:

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