Report Recommends Combining Exchange, Commissary Systems


The commissary and exchange should be combined into a single agency that would sell some products at cost and others at a profit, a panel commissioned by lawmakers recommended.

"The commissary and exchange benefits are valued by many service members, retirees, and their families, and should be maintained," according to a report released Thursday by the Military Compensation and Retirement Modernization Committee.

"A consolidated resale organization, with combined resources, increased operational flexibility, and better alignment of incentives and policies, would improve the viability and stability of these systems," the panel said in the report.

Currently, the exchange is operated by a trio of private companies across the services. The system receives some tax-payer funding, which primarily pays for shipping costs to overseas and rural locations, and sells goods at a profit. That income is then turned around to help fund Morale, Welfare and Recreation (MWR) programs.

The Defense Commissary Agency (DeCA), on the other hand, receives $1.3 billion in tax-payer funding to pay for employees, shipping and store operations. The agency sells grocery items at cost plus a 5 percent surcharge, which covers the cost of construction and building and technology upkeep.

Under the proposed plan, the exchange systems and DeCA would combine into one system. Grocery items would still be sold at cost, but stores would be permitted to sell at a profit other items currently carried by exchanges. The system would still receive tax-payer funding and some income would still be filtered to MWR programs.

One of the biggest changes that may be felt as a result of the recommendations would be to commissary employees. Currently those workers are government employees, with pay amounts dictated by Congress and government-funded retirement and healthcare. The report, however, recommends moving those more than 12,000 workers to "non-appropriated funds" employee status.

The commission's report was ordered by Congress in 2012 and released Wednesday. Commission members and their staff held town hall listening sessions, surveyed service members, accepted comment submissions, and attended a Spouse Summit while conducting research for their recommendations.

-- Amy Bushatz can be reached at

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