Plan to merge service exchanges studied
ARLINGTON, Va. — The Pentagon is looking at consolidating the Army and Air Force Exchange Service, the Navy Exchange and the Marine Corps Exchange, and has named its point man for the project.
Deputy Defense Secretary Paul Wolfowitz charged Principal Deputy Undersecretary of Defense for Personnel and Readiness Charles Abell on Friday with determining “the most efficient and cost effective way to organize and operate the exchanges as a single entity,” according to a DOD news release.
Abell signaled the Pentagon’s intent to consolidate the three exchange services during an April 2 hearing before the Total Force Subcommittee of the House Armed Services Committee.
The consolidation plan already has some critics, including Michael Downs, director of Personnel and Family Readiness Division of the Marine Corps, who told members of the subcommittee on April 2 “the exchange systems aren’t broken.”
Rep. Ed Schrock, R-Va., echoed Downs’ sentiments, saying he was concerned that consolidation would be the first step in trying to privatize the exchange services. And privatizing the services “means they’ll go away, [because] in the private world, they have to be able to be profitable,” Schrock said during the hearing.
But defense officials said they are only trying to make the exchanges more efficient and cost-effective to run, “yielding a benefit that is not only preserved but enhanced,” according to the release.
Joyce Raezer, director of government relations for the National Military Family Association in Alexandria, Va., said that her organization is not dismissing the consolidation initiative out of hand, but plans to keep a careful eye on the process.
“We’re very, very wary,” Raezer said in a Monday telephone interview. “We applaud any drive to increase efficiency … but are [Pentagon officials] going to listen to their customers” while developing the plans?
Of particular concern, Raezer said, is the way any consolidated trinity of exchanges would distribute revenue back to the morale, welfare, and recreation programs that the services currently fund with their store monies.
“Most of the [Pentagon] discussions have been about store operations, not what happens to the revenue,” Raezer said. “How will it be equitably distributed” under consolidation?
Because base exchanges, and the MWR programs they fund, are so important to military members, families and retirees, advocates for these groups want Pentagon officials to consult with them right from the beginning of the consolidation process, Raezer said.
“It’s better that [Pentagon officials] ask for beneficiary input now in identifying the minefields, rather than waiting until [they’re] done,” she said. “We’re the customers.”
But before such a merger can go forward, Congress will have to change a 1999 law that bars consolidation or privatization of the exchanges.
Abell told House members that consolidation would take at least five years, including two years to study the issue, a year to hold congressional hearings and change the law, and then two or three years to complete the consolidation.