Military Update: Big-screen TV sales, year-round reserve shopping sought
March 16, 2003
A House panel with oversight responsibility for military stores might decide to extend year-round commissary shopping privileges to reservists and National Guardsmen to recognize their expanded role in the nation's defense. Drilling reservists now are allowed only 24 shopping days a year.
Representatives of service associations and of companies who manufacture and supply products to base stores testified March 12 and "made a strong case" for year-round commissary shopping for reserves, said Rep. John McHugh, R-N.Y., chairman of the Total Forces Subcommittee of the House Armed Services Committee.
Advocates for store patrons and store suppliers also joined to:
Call for an end to restrictions on the sale of certain products in exchanges such as large-screen televisions, furniture and expensive jewelry.Criticize the Bush administration for continuing to look at privatizing stores, which opponents say will dilute patron savings.Challenge recent General Accounting Office recommendations to add private-label products to commissary shelves as a way to hold down costs.Oppose a cost-saving initiative from Defense to shift to variable pricing in commissaries. All items now are fixed at 5 percent above cost.McHugh said the full committee's decision to reorganize and change the name of his panel from Military Personnel to Total Force was "very appropriate" as tens of thousands of reservists and Guardsmen mobilize for the war on terrorism and possible war with Iraq.
"Because the security of our nation relies so directly on reserve components, you can be sure this subcommittee will examine reserve support and benefit programs very closely," McHugh said.
Representatives for two umbrella groups of service associations — The Military Coalition and National Military and Veterans Alliance — testified along with representatives of suppliers, the Armed Forces Marketing Council and the American Logistics Association. All agreed Congress should expand the commissary benefit not only to drilling reservists but to "gray area" retirees — reservists with enough years to retire but have to wait until age 60 for retired pay and full benefits.
During a hearing break, McHugh said he would wait to hear testimony from Defense leaders and the director of the Defense Commissary Agency director April 2 before deciding whether to support full commissary privileges for reservists, a benefit valued at $2,400 a year for a family of four living near base. Past concerns about giving reservists year-round shopping privileges focused on preserving the benefit from the wrath of civilian grocers. But U.S. reliance on reserves has gone up dramatically, McHugh suggested.
Panel colleague Marty Meehan, D-Mass., agreed.
"With significantly increased deployment of the reserve component, I sense the need to relook at the use of military resale activities by reserve components," said Meehan. He also wants to remove a ban on base exchanges selling televisions larger than 36 inches.
"Working families all over America have these wide-screen television sets. And men and women in the military, and their families, ought to have the same opportunity," said Meehan.
Lloyd Johnson, with the Armed Forces Marketing Council, said restrictions on exchange sales no longer protect "mom-and-pop" stores, "already a dying breed" due to large retailers. But restrictions on large screen TVs, for example, hurt military consumers in two ways. Shoppers pay a higher price not only for product but for using commercial credit cards or consumer loans. Base exchanges offer Star Card loans at 9 percent, less than half the commercial rate.
McHugh defended base stores and recreational activities as "the adhesive that bonds the military community." Those who attack them in search of savings "don't understand the very unique and very important military culture," he said.
Still, "the rumor mill is awash with proposals to restructure, privatize and somehow cut these programs." Too much is at stake, McHugh said, "to allow decisions on these programs to be driven solely by fiscal and financial calculation."
Joe Barnes, national executive secretary for the Fleet Reserve Association, represented The Military Coalition on this issue at the hearing. He noted that Defense officials have proposed giving commissary shopping privileges to the 40 percent of store employees not already eligible. Doing so, while denying year-round shopping to reservists, would be hard to defend, Barnes warned.
In February 2002, Defense Secretary Donald Rumsfeld said he still was considering privatizing commissaries, that is, turning some over to commercial retailers. Meanwhile, his staff is studying value pricing and private labels. Boyd Raines, chairman of the American Logistics Association, said those initiatives only will raise patron costs and degrade the benefit.
Retired Maj. Gen. Richard Murray, president of the National Association for Uniformed Services, said base stores can't be transferred to the private sector "without destroying the purpose for which they have been established, or the value they provide to our troops."
Murray, who commanded the Army and Air Force Exchange Service about 20 years ago, said a large grocer could operate more efficiently about 20 percent of commissaries, the big stateside stores. But it would want to close the other 80 percent, he said, or charge DOD more to operate these small commissaries "then we are spending now to operate all commissaries."
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