Congress, DoD Step Toward Expanding Access to Commissaries, Exchanges

Defense Department officials have told Congress they conditionally support opening on-base shopping to disabled veterans, Purple Heart recipients and caregivers of severely injured veterans -- changes to current law that would add at least a few hundred thousand weekly shoppers to commissaries and exchanges nationwide.

The initiative to allow more veterans access to military stores, which is gaining political stream, is found in the House-passed version of the fiscal 2019 defense authorization. Proponents argue it would reward with shopper discounts deserving veterans who live near military bases and also strengthen a beleaguered military resale system.

Commissaries in particular are seen as in trouble after 50 consecutive months of declining sales and pressure mounting to reduce the $1.3 billion annual appropriation needed to sustain current grocery discounts on base.

At the direction of Congress, the department completed a study last December on the feasibility of expanding access to limited base shopping to veterans with VA disability ratings of 30 percent or higher and also to Purple Heart recipients. The expanded shopping benefit eyed is described as “limited” because it would exclude on-base purchases of alcohol and tobacco products and of military uniform items. 

The study concluded it is feasible to open base stores to these veterans if Congress also granted authority to assess these “secondary” patrons an additional five percent user fee at commissaries to offset higher operating costs tied to the move.

But the study found no need to apply, as Congress suggested, a 30-percent rating threshold on shopping privileges.  Base stores could be opened to any veteran with a disability rating from 0 to 90 percent, the department concluded.  Veterans rated 100-percent disabled already can shop on base.

To gain access to bases, these secondary groups of shoppers could use their Department of Veterans Affairs-issued Veterans Health Identification Card (VHIC), which identifies the holder as having a service-connected disability, the report said. The Defense Department’s electronic physical access control system, to be completed by September 2019, will accept the VHIC to enable streamlined access to bases and shopper discounts.

The department said it previously opposed extending shopping privileges to more large patron groups but circumstances have changed, the study explained. It cited the military’s shift to a blended retirement system, “significant changes in the commercial grocery and retail industries” and the need to cut appropriated fund support “for the Defense resale ecosystem.” 

The department now “recognizes that a large influx of new patrons is necessary to continue efficiently providing commissary and exchange benefits into the future. Similar to the [new] retirement option, offering lifetime commissary and exchange benefits to veterans will help attract younger generations to military service.”

The department even will consider opening bases to all honorably-discharged veterans: if expansion to disabled vets show further expansion would help the department; if planned consolidation of exchanges and commissaries would create capacity to handle more shoppers; if secure, cost-effective credentialing is doable for all veterans, and if base security and stores can handle an even greater influx of shoppers.

Armed with the department study, Rep. Daniel Lipinski (D-Ill.) re-introduced a bill last April, the Purple Heart and Disabled Veterans Equal Access Act of 2018, that would allow access to base stores and other morale, welfare, and recreation facilities to any veteran with service-connected disabilities, Purple Heart and Medal of Honor recipients, former prisoners of war and veteran caregivers. Through a floor amendment that language was made part of the House-version of the fiscal 2019 defense authorization bill (HR 5515).

In late June, Stephanie Barna, special assistant to the undersecretary of defense for personnel and readiness, told a meeting of the American Logistics Association that the department supports the House-passed provision if Congress allows a five percent user fee on these “secondary” groups of store patrons, as called for in the department’s study.

Lipinski, in a phone interview, said that’s acceptable to him

The Senate’s defense bill is silent on allowing more veterans to shop on base.  With a House-Senate conference committee now formed to negotiate away differences in separate versions of the bill, Lipinski wrote a June 21 letter to the armed services committees’ chairmen and ranking members urging acceptance of the House language to award base access and shopping discounts to these groups. 

“It is our duty as a nation to not only say we appreciate their service but also to enact policies demonstrating that gratitude. We should all agree that these veterans have done more than enough to earn access to these facilities,” Lipinski wrote. “But not only would this provision make the lives of our veterans easier, it would also strengthen the commissary and exchange system by improving operational efficiency as well.”

Lipinski advised that his initiative is backed by “numerous veteran service organizations including the American Legion, AMVETS, Association of the U.S. Navy, Disabled American Veterans, Military Order of the Purple Heart, Veterans of Foreign Wars, and the Wounded Warrior Project.”

What about military associations, which have a different constituency than do veterans’ groups, I asked the congressman.

“We’ve gotten some mixed feedback from The Military Coalition,” he said, referring to a league of 34 military associations and veteran groups.  “There are some concerns about bringing more people [into base stores]. But my view is…there has been such drop off” in commissary sales that to keep them open “they have to have more patrons.”

Despite some expressions of concern, Lipinski said he doesn’t know of any military association that opposes his proposed expansion of on-base shoppers. Indeed, a check of some prominent ones -- National Military Family Association, Military Officers Association of American and The Retired Enlisted Association – verified their support.  

Lipinski said he is confident that base security and stores can adjust to handle a new wave of shoppers, most of them disabled veterans who reside near base. The study estimated that up to three million veterans not already eligible to shop on base have disability ratings of 0 to 90 percent.  Only 184,000 of them, however, reside close enough to a military base to shop there routinely.

 The department estimates that 80 percent of newly-eligible patrons would seek an identification card to be able to shop on base, increasing military costs modestly. The argument that more shoppers will mean more profits, however, doesn’t apply yet to commissaries, which still rely on that annual appropriation to provide grocery items at significant cost savings to patrons.

“Although the Defense Commissary Agency is implementing best business practices, such as variable pricing and introducing private label items to realize a margin, it is required to retain the same overall average customer savings percentage,” a spokesman said.

The goal is for commissary profits gradually to reduce the need for taxpayer support. For now, however, commissaries aren’t a for-profit business.

Sales could rise by opening stores to honorably-discharged veterans but so would “costs to sell items to the new patrons,” the spokesman said. And the higher costs are “not expected to be offset by the incremental [profit] margin gained from those sales, nor would that margin reduce the current level of appropriated funding as it was intended.”

That’s why Congress shouldn’t expand access to base grocery stores unless it also authorizes a five percent user fee for the “new and secondary” shoppers in addition to the five percent already charged all shoppers at checkout to support store modernization.

Exchanges, on the other hand, already generate profits which are used to fund on-base morale, welfare and recreational activities. Allowing disabled veterans to shop on base should increase exchange profits by $45 million annually, the department report said.

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Tom Philpott has been breaking news for and about military people since 1977. After service in the Coast Guard, and 17 years as a reporter and senior editor with Army Times Publishing Company, Tom launched "Military Update," his syndicated weekly news column, in 1994. "Military Update" features timely news and analysis on issues affecting active duty members, reservists, retirees and their families. Tom's freelance articles have appeared in numerous magazines including The New Yorker, Reader's Digest and Washingtonian.

Tom Philpott's critically-acclaimed book, Glory Denied, on the extraordinary ordeal and heroism of Col. Floyd "Jim" Thompson, the longest-held prisoner of war in American history, is available in hardcover and paperback on Amazon.