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Defense Commissaries: Additional Small Business Opportunities Should Be Explored

GAO-03-160 Published: Dec 12, 2002. Publicly Released: Jan 13, 2003.
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Some grocery supermarket companies have been charging food product manufacturers "slotting fees" to place products in stores and have involved large product manufacturers in making decisions about what products to sell. These practices have raised concerns about anticompetitive behavior and may be adversely affecting small businesses. GAO was asked (1) if the Defense Commissary Agency is using these practices in managing military commissaries; (2) what proportion of products sold by commissaries are produced by small businesses; and (3) if small businesses face barriers in selling products through commissaries and how opportunities for small business could be improved.

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Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense Because of the potential limitation on small businesses opportunity, the Secretary of Defense should consult with the Administrator, U.S. Small Business Administration, on the provision of law restricting the Defense Commissary Agency's consideration of products that have not yet achieved regional distribution, and together inform Congress if small business opportunity could be improved by removing or modifying the provision.
Closed – Not Implemented
Agency does not plan further action.
Department of Defense In addition, to evaluate the potential to better serve commissary customers, the Secretary of Defense should perform a study to examine the benefits, costs, and implementation issues associated with the sale of private label products through commissaries, and act on study results, as appropriate.
Closed – Implemented
The Defense Commissary Agency hired a contractor to study options for selling private label products as recommended by GAO. The agency's contractor recommended against expanding private label sales in commissaries; it found that the net benefits were marginal considering the risks that would be involved.

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