Improving DOD’s Commissaries

Posted on October 31, 2017
DOD operates 238 commissaries (supermarkets) worldwide to provide groceries and household goods at reduced prices to military personnel, retirees, and their dependents. Since commissaries are not expected to entirely support themselves, Congress has funded these operations to the tune of about $1.4 billion annually since 2010. Today’s WatchBlog explores how DOD can more efficiently manage its commissaries—and potentially reduce their operating costs. Cost of doing business

DOD uses federal funds to help cover commissary operating costs, such as the salaries and wages of commissary employees. For example, in fiscal year 2015, the Defense Commissary Agency spent most of its funds on labor costs.

Figure 1: DeCA’s Allocation of $1.3 Billion in Appropriated Funds for Commissary Operations for Fiscal Year 2015

(Excerpted from GAO-17-80)

DOD and Congress expressed interest in reducing the funding spent on commissaries, and adopting commercial grocery store practices could help. Managing operations DOD could improve the efficiency (and reduce the operating costs) of its commissaries by incorporating best practices that commercial grocery stores use. However, we found that DOD has yet to incorporate these practices into its commissary operations. For example, DOD doesn’t determine which products to sell in its commissaries based on their contribution to total store sales—a practice that could possibly increase profits and cut costs. It also hasn’t conducted cost-benefit analyses to determine whether the use of contractors or in-house staff is more cost-effective for stocking items and conducting custodial services. Finally, DOD hasn’t developed a plan to end the need for federal funds (as it is required to do). Instead, the agency proposed an estimated cost-savings target of $2 billion over 5 years (fiscal years 2017 through 2021). However, it did not provide details on how it would achieve this target. Next steps We made two recommendations to improve operational efficiencies and reduce costs at DOD’s commissaries, as well as a recommendation about its estimated cost-savings target. To find out more, check out our full reports.