Senate Rejects Pilot Program to Privatize Military Commissary Stores

The U.S. Senate on Tuesday agreed to strike a legislative provision that would have created a pilot program to privatize some military commissary stores.

The upper chamber voted 70-28 in favor of an amendment from Sens. Jim Inhofe, a Republican from Oklahoma, and Barbara Mikulski, a Democrat from Maryland, to remove the privatization language from its version of the fiscal 2017 National Defense Authorization Act, or NDAA.

Before the vote, the senators pressed their colleagues to support the amendment to give the Defense Department more time to assess the effects and costs of the change. They cited a recent Pentagon report that concluded the program would hurt the purchasing power of military families and veterans.

"This report raises a red flag that privatizing a handful of commissaries, as the NDAA's current language would do, will hurt the purchasing power to achieve cost savings for military families and veterans," Inhofe said. "It will also impact the commissary and exchange workforce, which is made up, in large part, of military family members."

The study cautions lawmakers against making any changes until officials can give them a clearer picture of what privatization means. The NDAA had included a provision allowing for limited privatization of several stores.

Commissaries are required by law to sell goods at cost plus a 5-percent surcharge. Commissary operating costs are covered by an annual taxpayer subsidy of more than $1 billion.

According to the Pentagon report, the Defense Commissary Agency must operate stores where service members live, even if doing so isn't economically beneficial for the outlets. More than two-thirds of commissaries serve military populations living in locations that are not profitable for private-sector grocers.

The commissary system is also a factor in retention, according to the Pentagon, which found that the commissary benefit "encourages people to re-enlist, preserving a well-trained, dedicated military." That translates into savings in the cost of training or retraining the majority of the force every few years.

The limited privatization language included the defense bill was framed last year when some lawmakers sought to move five commissaries into the private sector on a two-year trial basis. The language has met resistance from military and veterans advocates.

Mikulski called commissaries the military's "most popular earned benefit." The Pentagon report already indicates that privatizing the system would be "penny wise and pound foolish," she said.

"It would mean increasing costs, reducing benefits and slashing jobs that veterans and military families rely on," Mikulski said.

The system of 240-plus commissaries across the U.S. and at American bases around the world is, of course, not the only government-funded system that some believe should be privatized. The other is the multi-billion-dollar Veterans Health Administration, with its network of hospitals and clinics across the U.S. and territories.

Scandals involving long wait times for care and manipulation of appointment systems, among other incidents, have prompted some to advocate allowing veterans the option of going to outside providers for care. Officials and others warn that would be the end of the coordinated care long provided by the Department of Veterans Affairs.

President Barack Obama, in remarks June 1 in Colorado Springs, Colorado, where he addressed graduates of the Air Force Academy, said "the notion of dismantling the VA system would be a mistake." A big part of the VA's problem has been getting people into the system, he said.

"Once they are in," he said, "they are extremely satisfied and the quality of care is very high."

-- Bryant Jordan can be reached at Bryant.jordan@military.com. Follow him on Twitter at@BryantJordan.