The Bush administration’s plans to merge the three military exchange systems to cap commissary shopper savings at an average of 30 percent and to test "variable pricing" as a way to reduce commissary taxpayer support drew sharp criticism during a House hearing on Wednesday.
Rep. John McHugh, R-N.Y., cited "some evidence" that Defense Department leaders view base stores — as well as morale, welfare and recreational programs — "as a drain on the budget and perhaps not worth their overall costs."
Another Republican, Ed Schrock of Virginia, said administration initiatives on base stores "reflect the single-minded pursuit" of lowering government spending.
The criticism was leveled during a hearing of the total force subcommittee of the House Armed Services Committee. Complaints were echoed by representatives of shoppers, product suppliers and, surprisingly, by exchange and commissary system commanders.
Taking the heat was Charles Abell, principal under secretary of defense for personnel and readiness. He assured the subcommittee that the department views base stores as "crucial to quality of life of our military members."
Deputy Secretary of Defense Paul Wolfowitz in May directed Abell to form a task force to lead a merger of the Army and Air Force Exchange Service with the Navy Exchange Service and the Marine Corps exchange system.
Ten months later, driving toward that goal through the task force and its rigid set of deadlines, two of three exchange system commanders still believe consolidation is probably a bad idea.
"I still have to be convinced," said Rear Adm. William Maguire, commander of the Navy Exchange Service Command. He was set to retire Monday, but still hadn’t seen "a very sound business case to justify exchange consolidation."
Retired Brig. Gen. Michael Downs, director of the Personnel and Family Readiness Division at the Marine Corps headquarters, said the services aren’t being allowed enough time to integrate systems thoughtfully.
Still, Abell wants to send a merger plan to Congress by early 2005.
"If we’re forced to meet deadlines, we’re going to forfeit quality," Downs warned. "It sort of flames the notion among some of our staff that the process is a check-in-block activity and that exchange leaders and those working on the process are being used as cover, and the ‘to-be’ organizational plan already exists."
The services rely on profits from exchange sales to support base morale and recreational activities such as bowling alleys, libraries and gyms. But how will profits, or "dividends," be distributed after an exchange system merger?
Downs said every draft plan he has seen shows the Marine Corps’ share falling from 10 percent to 30 percent. "That’s devastating," he said.
Air Force Major Gen. Kathryn Frost, commander of the Army and Air Force Exchange Service, was less critical of the Unified Exchange Task Force and its deadlines.
"I have not heard from my people yet that they feel any arbitrary drive toward a target date," she said.
But even Frost found "tremendous risk" in the scale of the merger, which must be addressed, she said.
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