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Editorial Comment — February 2015

The Devil in the Details…

A great deal of credit is due the Military Compensation and Retirement Modernization Commission (MCRMC), led by Chairman Alphonso Maldon Jr. The Commission took on an exceptionally complex, emotionally charged and wide-ranging subject, and produced a strong body of work in its allotted time, involving trips across the country and overseas to listen to servicemembers, families and retirees, taking input from sources too numerous to mention here. It presented its findings in an organized and well-explained report, handling questions with impressive fluency when called on by both House and Senate Armed Services Committees (HASC, SASC).

No matter what one thinks of its findings, there’s no question the Commission took the matter at hand seriously and examined it thoroughly, presenting recommendations worth thoughtful consideration, deep deliberation and debate.

But it is important to remember that the MCRMC’s draft legislative proposals are just that, a set of proposals — much like the White House’s almost simultaneously released defense budget is also only a set of proposals — that will have to go through a series of processes before they are permitted (or not, as the case may be) to influence legislation in Congress.

It seems that there is such an appetite for reform in this budget-constrained period, that one must pause and ask oneself, does this hunger to accept any reforms that get some kind of “modernizing” job done — while at the same time achieving so-called “efficiencies” and the holy grail of savings — mean that any proposal that does these things must be rubber-stamped, but with no really important details questioned down to their true second- or third-order consequences?

For some, it seems, it has almost become an unquestioned article of faith that full-on reform must be applied to every area the Commission touched, when perhaps a less intrusive point-by-point method might benefit the military patron and the government more.

Regarding exchanges and commissaries, a careful and detail-oriented team of specialists intimately familiar with the subject matter is needed, for when it comes to grocery and retail, details really do matter. Details make all the difference for military exchanges, AAFES and NEXCOM and MCX, just as they do for retailers like Walmart and JCPenney. Likewise for grocery businesses, details are important matters of distinction between companies such as Kroger, Whole Foods and Aldi, just as they are for a benefit that just happens to be a business, the Defense Commissary Agency (DeCA).

For exchanges, details also mean differences of many millions of dollars in revenues for recapitalization and MWR, and ultimately how much top-line money DoD has available to allocate to core on-base programs that are key to the all-volunteer force. Details in this segment of the MCRMC’s work will ultimately mean the difference between ensuring that the commissary is still “worth the trip,” or possibly undermining the entire resale and MWR system.

Rather than the be-all, end-all, all-or-nothing solution, the MCRMC’s recommendations should be a starting point for more detailed, thorough and well-thought-out discussion. What was mentioned in the SASC and HASC hearings immediately following release of the Commission report merely skimmed the surface as far as military resale is concerned; and it will be the responsibility of the personnel subcommittees of each chamber, and others, not to let the work of decades of finetuning military resale categories and business models fall by the wayside in a headlong rush to reform.

There are reasons, many reasons, why exchanges and commissaries have not been consolidated even after many previous studies. And although it is nearly 10 years since the last DoD-sponsored study failed to find a compelling business case scenario for exchange consolidation, that has been a decade of solid military resale cooperative efforts that have largely gone unrecognized.

It is disconcerting, a shame, that the zeal to de-fund benefits such as commissaries and second destination transportation (SDT) — for that is essentially what the Pentagon has been working toward — has begun to taint so much thinking surrounding these matters to such a degree that few now understand how resale has been part of the solution, rather than the opposite. Commissaries and exchanges, for their 0.25 percent of the Defense budget, have proven time and time again that they return a benefit to the military community that is far more than, as the Commission reported, “a benefit that servicemembers and families want to keep.”

Certainly that is gratifying to hear, but resale is much more than that; it is:

  1. consistently viable in spite of decades of ongoing “efficiencies;”
  2. the safest place for military families to shop in an unpredictable world;
  3. an important employer of service family members, wounded warriors, and many more veterans; and
  4. a business structure that returns between two and 10 times the value of the working capital invested in it.

This latter return on investment (ROI) has been studied by industry and military family and servicemember groups — but consistently ignored by the CBO, the Defense Business Board and the Center for Strategic and Budgetary Analysis. While there are always t’s to cross and i’s to be dotted in any in-depth study, military resale and resale industry expert testimonies should play a critical factor in the hearings of the personnel subcommittees before any decisions are made on what next steps are preferred.

Let’s not short-change the decades of refinements the resale organizations have put in place, and let’s definitely not short-change servicemembers, retirees and their families. At the end of the day, Congress must not allow any whipped-up frenzy to protect overhyped buzzwords like “holistic” and “integrated” to get in the way of the more important business of protecting the integrity of military patrons’ resale benefits.

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