National Defense:

Policy and Criteria Used to Assess Potential Commissary Store Closures

GAO-05-470R: Published: Apr 26, 2005. Publicly Released: Apr 26, 2005.

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As part of its pay and benefits package for service members, the Department of Defense (DOD) operates supermarket-type stores called commissaries to provide service members and their families with groceries and authorized household supplies at the lowest practical price. The Defense Commissary Agency (DeCA), DOD's designated agency for managing commissary stores, operates 273 commissary stores in the United States and abroad. To ensure efficient operation of the commissary stores, all commissary stores are assessed annually to determine whether there should be any operational changes or possible store closures. The Office of the Under Secretary of Defense (Personnel and Readiness), which has oversight responsibility for DeCA operations, can either endorse or change the results of the assessments or direct additional actions. In August 2003, the Office of the Under Secretary of Defense (Personnel and Readiness) proposed that the military services consider the closure of 14 commissary stores not previously under consideration for closure. Subsequently, various members of Congress raised questions about these proposed actions, including whether DOD's policy and criteria for deciding whether to close commissary stores adequately considered the impact on quality of life of service members and their dependents. Congress, in enacting the fiscal year 2005 defense authorization act, included a provision mandating that quality of life be a primary consideration in the closure decision-making process. In response to a mandate in the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005, we examined DeCA's policies and process for analyzing commissary stores for potential closure. Our objectives were to review (1) the policy and criteria used to analyze potential commissary store closures, determining whether these policies and criteria are consistent with the policies on preserving quality of life for the armed forces, and (2) any studies or assessments conducted to close commissary stores.

Based on a recent legislative requirement, the Office of the Secretary of Defense issued new policy guidance in March 2005 to reinforce and ensure that quality of life will be a primary consideration in all future assessments of commissary operations. No assessments have been conducted under the revised guidance. Annual assessments of commissary stores' performance have been conducted in recent years to determine whether operational changes were needed or whether potential store closures should be considered. Consistent with the criteria in effect at that time, each assessment considered both quality of life and business factors. After reviewing DeCA's fiscal year 2002 annual assessment in August 2003, the Office of the Principal Deputy Under Secretary of Defense (Personnel and Readiness) proposed that DeCA consider closing 14 commissary stores primarily because financial goals were not met or because too few active-duty personnel were present. This decision was apparently inconsistent with DOD policy requiring that quality of life and business factors be considered in the aggregate. Significant concerns were expressed by the military services and members of Congress over the closure of the 14 stores. DOD subsequently decided to keep the 14 stores open, 6 because of their improved financial performance and 8 because of quality of life concerns and other factors. DeCA headquarters did not recommend any store closures in the 2004 assessment process, the results of which are currently being reviewed within the Office of the Under Secretary of Defense (Personnel and Readiness).

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