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PRESIDENT'S MESSAGE

The world as we know it … today:
House and Senate negotiations on the Fiscal Year 2016 National Defense Authorization Act are continuing. It was the objective of the Chairmen of the House and Senate Armed Services Committees to complete the conference prior to the long Congressional recess that starts this week. Now, negotiators will have to complete action after the recess, in September at the earliest. We do not know at this time if the two bodies have agreed to any issues on commissary operations. The House of Representatives supported full funding for commissary operations. The Senate cut $322 million and included changes to law that would allow the Pentagon to reduce appropriations for commissaries and increase prices to patrons in order to pay operating costs that have always been paid with appropriations. Also, despite an amendment that struck a provision mandating implementation of privatization and instead directed a review of privatization prior to any implementation, the Senate Armed Services Committee nevertheless retained this provision that would allow this implementation to proceed and this implementation is an issue in the House/Senate conference. ALA will update members as developments and negotiation outcomes are known.

While the Authorizing bills set policy, the Appropriations Committees set funding levels. Although both the Senate and House appropriation bills fully funded the commissary program by adding back a $322 million cut by the Pentagon, these bills are held up in the overall budget negotiations on overall National funding levels for both defense and domestic programs. The appropriations bills are not expected to proceed until the negotiations on the overall funding levels are completed. This may result in short-term funding measures that fund the Government beyond October 1, 2015. It is possible that all spending bills ultimately could be rolled up into a massive spending bill, called an Omnibus spending bill. We don't expect these negotiations or failure to achieve an agreement will result in a Government shutdown, but this can't be completely ruled out at this time.

Meanwhile, in the Executive Branch, several reports and studies are culminating that will have a bearing on the future of the military resale system by providing information and recommendations to policy makers in both the Congress and Executive Branches.

The Boston Consulting Group is nearing completion of a report due to the Congress by September 1. The report was the result of a requirement contained in the fiscal year 2015 National Defense Authorization Act (Section 634) that asked DoD to examine several facets of commissary operations. The Secretary of Defense, in turn, contracted with a consultant—the Boston Consulting Group (BCG)—to look at opportunities to reduce appropriations for DeCA while minimizing the patron benefit. DoD also asked the consultant to evaluate reforms to DeCA's business practices.

BCG noted that the current model—selling products at cost plus 5 percent constrains DeCA by forcing it to incur a net loss on each transaction. It found that the more DeCA sells, the more it loses and the greater the requirement for appropriations. It also found that the only way for DeCA to reduce costs was to curtail operations such as reducing operating hours. BCG also said that the model "prevent DeCA from having a clear pricing strategy to compete with private grocers" and attract patrons. They found that instead of the 30 percent savings target, prices are only 15-20 percent lower in U.S. operations. It also cited may regulatory restrictions that impede optimal performance including operating remote small and remote stores and limits on what DeCA can sell.

BCG cited several hundred millions in savings that could be achieved by reducing costs of goods sold, curtailing capital expenditures, local sourcing and introducing private label. They also cited a number of labor changes (converting employees to NAF and adjusting the labor mix that would generate savings. BCG found that increasing prices even five percent would reduce patronage at both commissaries and at exchanges.

The consultant also recommended migrating toward consolidating commissaries and exchanges and outlined a timetable and path to do so.

At the same time, DoD is required to submit a report to Congress on its opinion on the resale findings of the Military Compensation and Retirement Modernization Commission report that was issued earlier this year. Preliminary and yet to be confirmed reports say that DoD will report to Congress that:
  • With some legislative relief, existing benefits can be maintained and efficiencies achieved.

  • Set up a single board to replace the current Cooperative Efforts Board'a Defense Resale Business Organization Board--to optimize the system and reengineer certain functions. The board would have authority to develop cross-cutting initiatives and other actions to reduce the commissary system's reliance on appropriations and create new business opportunities for the commissaries and exchanges.

  • Not consolidate commissaries and exchanges as recommended by the Commission (at this time) or at least until the development of a solid business plan.
The Pentagon report is expected to say that there are many risks and barriers to limit full consolidation including technology interfaces, personnel changes, credit market reactions to consolidation, different pricing and merchandising strategies and differences between the structures that oversee the operations.

The Pentagon's report is also expected to repeal the "sell at cost" provisions of Title 10 that govern commissary pricing and adapt prices to regional norms. It is also expected to seek legislative relief from existing law that requires strict separation of commissaries and exchange systems.

The report is also expected to say that the current resale system is a complex system of complementary programs and that commissaries and exchanges provide critical wartime and contingency support outside of their mail activities.

ALA will be publishing more details on these reports and the reaction from policy-makers in both the Executive and Legislative branches. Also, as more details come available, ALA will use its collective industry expertise to analyze the findings and make recommendations to policy-makers.

All of these legislative and program developments will be a major subject at the ALA's Hawaii Meeting August 17-19 and at the Annual Convention in Washington D.C. in October.


Patrick B. Nixon
President, American Logistics Association




WASHINGTON UPDATE


Senate confirms Dunford as next Joint Chiefs Chairman
Military Times
The Senate has confirmed Marine Gen. Joseph Dunford Jr. as the next chairman of the Joint Chiefs of Staff after a brief dispute between Pentagon leaders and the chamber's leading critic of military sexual assault policy.
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House approves DOD money shift to cover health care system shortfall
Stars and Stripes via Military.com
A House panel said that the Department of Defense can shift $886 million to the military health care system, a first step toward ensuring it does not run out of money this month for costly prescription drugs and outside treatment for troops, families and retirees.
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Don't close US bases overseas
Brookings
In a New York Times op-ed July 27, American University Professor David Vine argued that the Department of Defense maintains a vast array of overseas bases that waste money, attract terrorist strikes and militarize American foreign policy.
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DOD: Money for outside health care could run out
Stars and Stripes
The Department of Defense has warned Congress that its health care system could run out of money to cover outside treatment for troops and dependents.
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Conservative congressman seeks to remove John Boehner from speaker's chair
The Associated Press via Time
A conservative Republican who was disciplined earlier this year by House Speaker John Boehner is pushing a largely symbolic effort to strip the Ohio Republican of his position.
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Pentagon gets ready to award big contract for electronic medical records
The Washington Post
The Pentagon is poised within days to award one of the most coveted health technology contracts in history — the first phase of a deal that could ultimately be worth more than $10.5 billon over the 18-year life of the contract.
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MARK YOUR CALENDAR

Specific information on upcoming ALA events is posted regularly on the ALA website. To learn more about each event, please click the following links:

Date Event
Oct. 26-28 68th Annual Convention


COALITION UPDATE


Visit your elected officials during August recess
Air Force Sergeants Association
Congress is about to go into its month-long August recess. The fact that the FY 2016 NDAA will probably not be passed by Congress before that recess is both bad and good. "Bad" because many hoped to get a finished bill up to the President before the end of the fiscal year. "Good" because it will give our members opportunities to speak directly to their elected officials during the August recess. When you speak to them, let them know where you, as a voter, stand on issues such as the January 2016 military pay raise; the proposal to reduce the value of BAH even further and to severely cut it for military couples; and the call to slash commissary funding.
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Visit your legislators in August
Military Officers Association of America
During the month of August, most elected officials return to their home districts to meet with constituents. This is a great opportunity for you as a MOAA member to visit your elected officials' offices and advise them of your and MOAA's concerns on important matters. To assist you in preparing for these meetings, we've developed fact sheets and talking points on three key issues. The first issue: Reject Military Pay and Benefits Cuts addresses cuts to commissary funding.
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Empty promises mean empty wallets for military families
National Military Family Association
Our United States all-voluntary military is still looking for men and women ready to serve and protect! Congress offers a competitive compensation package for your sacrifice, like a "marriage penalty" BAH cut for dual-military families, increased commissary prices, and capped pay raises below your private sector counterparts. Sound enticing? Find out what else your country's leaders think your military family deserves for your selfless call-to-serve, and how NMFA is fighting to stand against these injustices.
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House passes cost of living adjustment for veterans' benefits
The Hill
The House approved legislation that would increase rates of benefit compensation for veterans with disabilities caused by their military service. "Many disabled veterans and their families depend on Veterans Affairs benefits to pay for their housing, their food and other necessities. Therefore, it is absolutely essential that VA benefits keep pace with the rate of inflation so that our nation's heroes are able to make ends meet," said House Veterans Affairs Committee Chairman Jeff Miller.
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What's in the emergency bill to help fund Department of Veterans Affairs?
The Associated Press via Army Times
A three-month highway spending bill scheduled for a vote Wednesday in the House includes nearly $3.4 billion to fill a budget hole that the Department of Veterans Affairs claims would force it to close hospitals and clinics nationwide. Lawmakers from both parties said the spending was needed even as they complained about the VA's failure to anticipate the problem.
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Department of Defense issues final Military Lending Act rule
Department of Defense News
After nearly three years of study, the Department of Defense issued the final Military Lending Act rule. The MLA better protects our service men and women from predatory credit practices by expanding financial protections provided to service members, and helping ensure military families receive the consumer protections they deserve. These actions build on the president's announcement during a speech to the Veterans of Foreign Wars.
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COMMISSARY ANNOUNCEMENTS

Commissary Web Posts

The following commissary items were posted to the ALA Website between 10 AM, July 23, 2015 and 10 AM, July 30, 2015:

PROMOTIONS:
- Fall Club Pack, Far East & Alaska Quantities.
- Cookies/Crackers/Fruitcakes, Update #1.
- Candy Seasonal Package, Update #1.
- Fall Club Pack, Update #1.
- Non-Food Seasonal Package, Update #1.
- Ham Seasonal Package, Update #1.
- Chill/Freeze/Pre-Packaged Meat, Update #1.
- Winter Cocoa/Cider/Miscellaneous, Update #1.
- DP #19, Far East Promotion & Shipper/Pallet/OTB quantities.
- Gift Packs Seasonal Package, Update #1.
- Christmas International, Update #1.
- Holiday Dry Grocery, Update #1.
- Football Madness (Super Bowl), Update #1.
- Case Lot Sale (September) Store Sale Dates.


NOTICES TO TRADE (NTT)
None Received.

MISCELLANEOUS:
- Adds/Changes/Deletes for Week 15-30.
- DeCA June 2015 Sales Data.
- CRV Values as of July 26, 2015.
- Guard/Reserve CONUS On-Site Sale Schedule as of July 24, 2015.




FEDERAL BUSINESS OPPORTUNITIES


Armored car services
FedBizOpps.gov
Federal Business Opportunities — 07/28/15 06:32 —
Added: Jul 28, 2015, 6:10 a.m., Armored Car Services, Malmstrom AFB Commissary. The Period of Performance will be for a base period of Dec. 1, 2015.

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Shelf stocking, custodial and RSHA at the Peterson AFB Commissary
FedBizOpps.gov
Federal Business Opportunities — 07/27/15 13:45 —
Shelf stocking, custodial and RSHA at the Peterson AFB Commissary Solicitation Number: HDEC08-15-R-0021 Notice Type: Modification/Amendment Please.

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Looking for more federal business opportunities? Search here.


COMMISSARY NEWS


Bottled water market forecasted to grow
Beverage Industry Magazine
As summer temperatures steadily rise, so does the outlook for the bottled water market. Many beverage industry analysts and marketers anticipate that bottled water will soon become the dominant nonalcohol beverage.
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Campbell upgrades profit outlook, says it will scale back artificial ingredients
The Wall Street Journal
Campbell Soup Co. said cost cuts are yielding better profits and that it plans to remove artificial ingredients from products and to come out with more organic foods, as it contends with what it called a seismic shift in what Americans eat.
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Amazon reportedly plans to open physical grocery stores in Silicon Valley, California
The Verge
Amazon might soon have a brick-and-mortar presence in your community. The online retailer is planning to test a new service that lets you pick up fresh groceries and other items from a physical location, reports the Silicon Valley Business Journal.
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Nestle USA putting a fresh spin on frozen
Food Business News
The performance of the Lean Cuisine brand has been a problem for Nestle USA in recent years. Product lines focused on weight management have fallen out of favor with consumers, who today associate healthy eating with such attributes as high-protein, organic and gluten-free.
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Survey: US consumers are pretty clueless about gluten
Food-Navigator USA
While celiacs — by necessity — are pretty clued up about gluten, most Americans are less well-informed, with a sizable number erroneously believing rice and potatoes contain gluten, according to a new survey.
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Olive oil prices up 10 percent due to drought and disease
Food Navigator
The price of olive oil has risen 10 percent this year as European supplies continue to be affected by the Xylella fastidiosa disease in Italy and a drought in Spain.
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Proposed added sugar label seen confusing consumers
Food Business News
The percentage of consumers unable to correctly identify how much sugar is in a packaged food product will quintuple with a proposed update to the Food and Drug Administration Nutrition Facts Panel.
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Ice cream transcends dessert status
CSP Magazine
Most ice cream lovers need little excuse to enjoy their frozen dessert of choice regardless of time of year or occasion; 90 percent of U.S. households purchasing ice cream and frozen dessert products, according to market research publisher Packaged Facts in the report Ice Cream and Frozen Desserts in the U.S.: Opportunities in Retail & Foodservice.
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Food companies outgun health advocates in debate on diets
Bloomberg via Chicago Tribune
The battle to define what Americans should eat is pitting nutritionists against deep-pocketed groups that are spending almost 14 times more cash on lobbying in Washington. Coca Cola , food-industry and farm groups concerned about the recommendation of a government panel to cut sugar and meat consumption accounted for 85 percent of the comments on the issue from April to June, with health and environmental groups making up the rest, federal records show.
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Dr. Pepper spills diet strategy
Food Business News
Diet has become a four-letter word for the beverage industry, as consumers increasingly avoid artificially sweetened soft drinks in favor of alternatives perceived as natural.
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EXCHANGE NEWS


Department of Defense's oldest and largest exchange service marks 120 years of service and support
The Exchange
Long before there was an organized retail system specifically charged with supporting America's military, there were sutlers — bands of peddlers who followed the Army and sold provisions. After the Civil War, Congress found the sutler system to be an ineffective means of serving Soldiers. On July 25, 1895, the Department of War intervened and issued General Order Number 46 directing post commanders to establish an exchange at every post practicable. As the Army and Air Force Exchange Service and its predecessors mark their 120th anniversary July 25, the organization's mission remains basically the same: Go where soldiers, airmen and their families go to improve their quality of life.
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INDUSTRY NEWS


National Retail Federation revises down 2015 US retail sales forecast
CNBC
VideoBrief The Nation Retail Federation revised down its forecast for 2015 retail sales and said it expects back-to-school revenues to fall from last year. The industry association anticipates retail sales growth of 3.5 percent this year, down from an earlier estimate of 4.1 percent. It cited "unexpectedly slow growth" during the first half of the year due to factors including treacherous winter weather and the West Coast port shutdown.
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E-book: 'The Retailers Guide to Competing With Amazon'
Medallia
You don't have to be in the book business to have felt the pain. From supply chains down to customer expectations, Amazon has affected nearly every part of how retailers do business and serve their customers.
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RadioShack, creditors move closer to bankruptcy settlement
The Wall Street Journal
A lawyer for the former RadioShack Corp. said the company has made significant progress toward wrapping up its bankruptcy case, but a handful of potential roadblocks remain.
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Wal-Mart squares off against Target in a new way
CNBC
They're already duking it out over food and low prices, but Wal-Mart wants to make it known that it's now coming after Target in yet another category. The world's largest retailer said that over the past two years it has been quietly increasing its offerings in the baby category — a pillar of Target's turnaround.
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Why gender neutral clothing could finally catch on
Fortune
The deconstruction of gender binaries and a move towards androgyny is taking root in fashion, and in particular, retail. Clothing retail's audience distinction has created a literal manifestation of gender binaries, separating stores into "men's" and "women's."
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Expectations of stronger job growth should light a fire under retail sales for the rest of the year
NRF
Many say the only constant in life is change, and nothing could be truer for the retail industry. When it comes to retail sales, which depend on a multitude of factors but mostly the confidence and ability of consumers to spend — both on necessities and discretionary purchases — retailers know change is guaranteed.
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Wal-Mart is ending overnight hours at some stores
Bloomberg
VideoBrief Wal-Mart Stores Inc. will start closing some of its 24-hour supercenters for at least a few hours each night, aiming to use the time to better stock shelves and organize stores for the peak shopping rush. The move will affect about 40 stores, including those in Philadelphia, New Jersey and Maryland, said spokesman Brian Nick.
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Stores like Bass Pro Shops and Restoration Hardware add restaurants and bars
Tampa Bay Times
How about a glass of wine to celebrate the $11,230 purchase of a Parisian burnham leather recliner from Restoration Hardware? At the new Restoration Hardware store opening in International Plaza this fall, shoppers won't have to go farther than the three-story retailer's rooftop garden bar for some wine and hors d'oeuvres.
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Laundry list of lists
NRF
There are certain times of the year when it seems as though everyone is publishing a list of some sort. We publish our Top 100 Retailers this month, and next month readers can look forward to our exclusive Hot 100.
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How the Apple store took over the world
The Washington Post
VideoBrief "Sorry, Steve: Here's Why Apple Stores Won't Work,” proclaimed a headline in BusinessWeek in May 2001. Published the day after Apple opened its first retail store in Tyson's Corner, Virginia, the opinion piece argued that Apple's focus on a few products and a "perfectionist attention to aesthetics" would limit the company's appeal.
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A look back at milestones in recent Internet history
NRF
As written by Fiona Swerdlow, "From 2004-2006, when I led the e-commerce division for Tommy Hilfiger, my team and I were charged with turning a marketing site into a full-service e-commerce business. One of the first things we did was join Shop.org and access the State of Retailing Online — an invaluable resource for the team as we developed our budget, prioritized our development needs and functionality and benchmarked costs to create the business."
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TRENDING ARTICLES
Missed last week's issue? See which articles your colleagues read most.

    No explanation on flags not lowered to half-staff for Tennessee shootings (Stars and Stripes)
Miscellaneous operating supplies, paper bags for CONUS, Puerto Rico, Alaska, Hawaii and the Pacific Theater (FedBizOps.giv)
Texas food companies score Wal-Mart shelf space (Austin Business Journal)
Americans will know less about GMO products with new food label law (International Business Times)

Don't be left behind. Click here to see what else you missed.


C-STORE NEWS


QT finds sweet spot with next generation
CSPnet.com
Among the plethora of technology, financial and real estate businesses on Fortune's inaugural list of the 100 Best Workplaces for Millennials, QuikTrip stands alone as a representative of the convenience-store industry.
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Wawa bid to sell beer in Pennsylvania delayed
CSPnet.com
Remodel plans include additional seating and store segmentation.
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7-Eleven OK opening larger c-stores
CSPnet.com
Independent convenience-store chain 7-Eleven Stores of Oklahoma is rolling out new, larger stores. The first of the new locations opened in mid-July in Oklahoma City.
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RaceWay tightening up network
CSPnet.com
In an effort to trim sites that "are no longer a fit," RaceWay is selling 30 c-stores with gas in Tennessee, Alabama, Florida, South Carolina, Georgia, Texas, Arkansas and Mississippi.
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Hershey, Mondelez, Kraft Heinz 'merge' ... s'more or less
CSPnet.com
Rivals unite to promote a summertime snack.
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1st TargetExpress in Washington, DC, region opens
CSPnet.com
The College Park, Maryland, store is smaller even than typical format.
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MWR NEWS


Stand-to! ACS 50th birthday
U.S. Army MWR
Army Community Service is an Army-wide community, social service program that provides services that assist soldiers, family members and Department of the Army civilians maintain readiness, develop self-reliance, resiliency and stability. U.S. Army Installation Management Command provides these services through a network of programs that support goals related to recruitment, retention, morale and operational readiness of the force.
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Off the Hill calendar July 23
The Los Alamos Monitor
The Veteran's Administration Growers Market will operate from 10 a.m. to 1 p.m. every Wednesday between Building 1 and the Recreation Hall (Bldg. 2) at the Raymond G. Murphy VA Medical Center, 1501 San Pedro Drive SE, in Albuquerque, New Mexico. The market will feature fresh apples, beans, chile peppers, squash, tomatoes, pickles, honey and other natural treats. The market is expected to operate until mid-October and is sponsored by the Veterans Canteen Service.
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