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Home   About   Membership   Meetings   Government Affairs   Members Only Sept. 17, 2010
 
Executive Briefing
 
 

American Logistics Association
63rd Annual Convention

October 19-21, 2010
Hyatt Regency, Bellevue, WA
Click HERE for details!

President's Message

Military resale on the firing line:
In recent weeks there has been an increasing regularity to the attacks on the military resale system as a way to refocus the mission of DoD and reduce funding requirements. This most recent venture comes from the "Center for Strategic and Budgetary Assessments". In testimony delivered before the House of Representatives on 20 July, the following proposal was offered:

Refocusing on the core business of defense

The second area of savings to explore is reducing, eliminating, or transferring programs and activities that are not part of the core business of defense. DoD's mission is "to provide the military forces needed to deter war and to protect the security of our country." Yet many programs and activities funded within the DoD budget, including some items that have long been part of the defense budget, stray far from that mission. Three areas in particular that should be examined are the military exchanges, commissaries, and DoD primary and secondary schools in the United States. DoD funds and operates three separate military exchanges (the Army and Air Force Exchange, the Navy Exchange, and the Marine Corps Exchange) which are essentially retail stores offering a wide array of consumer goods and services, similar to a Wal-Mart or Target but located on a military installation. The first exchanges were established more than a century ago to provide troops and their families with an affordable retail outlet in locations where little else existed. However, with the increasing availability, accessibility, and competitiveness of low-cost, private-sector retail chains both within the United States and around the world, there is no longer a compelling justification for maintaining DoD's network of exchanges. The Sustainable Defense Task Force's recommendation, which follows a budget option outlined by the CBO last year, is to consolidate the three exchanges into one organization and require it to pay all of its operating costs from sales revenue for a projected savings of $200 million annually. DoD should also consider simply eliminating the exchanges or selling them to a private operator since operating a chain of retail stores is far outside the core business of defense.

DoD also funds and operates a chain of grocery stores, known as commissaries, which sell food and other household goods at or below market prices. These stores date back to 1825 when Army posts began allowing officers to purchase items at-cost for personal use from commissary department storehouses. The use of these stores expanded over time with the intention of providing on-base retail options for Service members and their families. However, times have changed over nearly two centuries, and the availability of a wide array of modern, private-sector grocery store chains — even at locations once considered remote posts on the frontier — has negated the need for DoD-operated commissaries. Currently, the commissary system operates with an annual subsidy of $1.3 billion from the defense budget. As with the exchanges, DoD should consider eliminating the commissaries or selling them to a private operator. A portion of the savings from the annual subsidy could be used to increase the subsistence allowance by $300 per year, which the CBO estimates would fully compensate for the savings the average military family would lose from closing the commissaries. The resulting savings for DoD would total some $900 million annually.

The source recommendation referenced here, and grasped by the Sustainable Defense Task Force, is the Congressional Budget Office budget options published in August 2009. The CBO traditionally issues a compendium of budget options every two years. In this published Volume 2 of the report the recommendations are specific and detailed:

Section 050-18: Consolidate and Encourage Efficiencies in Military Exchanges

Section 050-19: Consolidate the Department of Defense Retail Activities and Provide a Grocery Allowance to Service Members

Similar recommendations are to be found in the Defense Business Board recommendations published July 22, 2010: "Reducing Overhead and Improving Business Operations," specifically from chart 28 of the presentation. In spite of assertions to the contrary, there are substantial gains yet to be made by making them (Defense Agencies and Field Operating Activities) more cost-effective through business processes, consolidations of overhead functions, elimination, privatization, devolving, and merging.

More on these recommendations can be found at:

Panel: DoD should cut 111,000 civilian jobs

Read the Full Story
Federal Times, John T. Bennett
An influential Pentagon advisory board will recommend that Defense Department Secretary Robert Gates slash the civilian work force by more than 111,000 people and drastically pare the military's combatant command structure as ways to save billions of dollars.

This information is particularly troubling when the position below hits the street from a senior DoD advisor:

Ticking time bomb in DoD says retired general

Earlier this year, retired Marine Corps Maj. Gen. Arnold Punaro chaired a panel that helped pave the way for a series of cost-cutting measures at the Pentagon, including efforts to cut overhead and dependence on outside contractors. Now he's taking aim at something more sacrosanct: Compensation for service members, military retirees and their families.

In a speech this morning at the Center for Strategic and International Studies, Punaro said the Department of Defense had become wedded to "GM-style fringe benefits" such as taxpayer-subsidized grocery chains and low out-of-pocket healthcare costs, but added there was a longstanding reluctance to tackle the issue head-on.

"There's been a real reluctance not only to debate these trends, but to even talk about them publicly," Punaro said. "So there needs to first be a recognition of just how much these costs are — and then the nation's leaders in the Pentagon and Congress need to determine if they are going to put their hands on the helm, or if they are just going to put it on autopilot."

While Punaro said he was speaking in a personal capacity, his remarks are likely to resonate through the Washington and the military community. One audience member joked before asking a question that he "felt a couple of lightning bolts hit the room."

Punaro described long-term personnel costs as part of a "ticking time bomb" for national security that included rising deficits and ballooning overhead costs in the Department of Defense. According to Punaro, the "fully loaded" annual cost for a mid-career service member on active duty, including benefits and other costs, has more than tripled over the past decade, from around $80,000 at the beginning of the administration of George W. Bush to nearly $250,000 a year today.

If current trends continue, Punaro said, "The Obama administration will spend more on defense in a single four-year term since World War II."

Punaro is a member of the Defense Business Board, an independent federal advisory body, and was appointed by Secretary of Defense Robert Gates to lead a task force charged with reducing overhead spending in the Pentagon. The board recently issued a report that recommended the Pentagon trim bloated staffs, eliminate redundant layers of management and get a grip on contractor headcounts. One of its chief recommendations — elimination of Joint Forces Command, a headquarters organization based in Norfolk, Va. — was backed by Secretary of Defense Robert Gates.

And Punaro, who is also chief executive of a strategy firm, ended with a provocative soundbite. "The Defense Department should be about putting bayonets in the heart of a terrorist, or in the heart of a North Korean," he said. "It shouldn't be about waving a commissary card. That's why we have a Department of Defense."

The point is:
As outrageous as these comments are especially considering we are apparently now at war with North Korea or at least sticking bayonets in people, the real danger is that this is a key advisor to the Secretary of Defense and I am sure this position has made its way to the inner circle — never take anything for granted!

Your ALA staff is working aggressively to educate key DoD and Congressional decision makers about the importance of these key resale and MWR benefits. This is one of the key missions of your association and we are active and engaged!

These important benefits are proven and valued:
Some sectors are calling for outsourcing or reducing commissary benefits or for military personnel. It's a bad idea.

  • Don't increase food prices for military people at a time when food stamp usage is up 70 percent. Privatization would place thousands more on food stamps.
  • Cost of living allowances and military pay, particularly overseas, would have to be increased to offset the increased household costs. Retirees would be left out in the cold.
  • Commissary patrons are already strapped with a five-percent co-pay—it's called the surcharge. Don't increase that co-pay to 100 percent of costs.
  • If the privilege were taken away, commissary patrons would need to be paid back for the nearly $5 billion that they have spent upgrading commissary facilities and systems.
  • Military family support has been a hallmark of the First Lady, the Obama Administration, and the National Security Council. Commissaries are a cornerstone of these support programs.
  • The loss of this benefit would break a long-lasting covenant between military personnel and their families and the Government. The American people have a reciprocal commitment to military people for their sacrifice and service.
  • Exchange sales would suffer and exchange-generated funding to support on-base community services such as child care and youth centers would decline.
  • 10,000 military family members would lose their jobs.
  • Commissary funding has remained constant but benefits have been improving. It's the number one-ranked benefit but its cost has remained steady while programs such as medical care, housing, and family support have doubled and tripled over the past five years.
  • Consolidation of separate Service commissary systems in 1991 saved hundreds of millions in overhead. Use of commercial distributors saved $600 million in taxpayer-financed inventory costs at patron expense.
  • Eliminate waste in Defense before attacking core benefits.
  • Cost trajectory would have taken DeCA's cost to over $2 billion. DeCA efficiencies since 1991 have reduced this cost 50 percent.
  • The commissary system is one of the only Government agencies that a clean audit and is at the top of the list for accountable Government organizations.
  • DeCA is an example of a public/private partnership that works even when other government enterprises are failing.
  • It is illegal to privatize commissaries.
  • There is a 9 to one return to the taxpayer on dollars invested in military resale.
  • Reducing benefits is false economy because we lose good people. It costs $150,000 to $250,000 every time a military member leaves the service. For doctors and pilots, it costs $1 million.

Bill introduced to consolidate exchanges:
On the radar screen and in our sights is HR 5784 introduced on July 20 to consolidate military exchanges among other purported cost saving measures to wit:
SEC. 3. CONSOLIDATION OF ADMINISTRATION OF DEFENSE EXCHANGE STORES SYSTEM.
Section 2487 of title 10, United States Code, is amended by adding at the end the following new subsection: `(c) Consolidation of Administration of Defense Exchange Stores System —
`(1) CONSOLIDATION REQUIRED — Not later than January 1, 2012, the Secretary of Defense shall consolidate the Army and Air Force Exchange Service, the Navy Exchange Command, and the Marine Corps exchange system into a single organization for the administration of the defense exchange stores system.
`(2) PROHIBITION ON USE OF APPROPRIATED FUNDS — Upon the consolidation of the defense exchange stores system under paragraph (1), appropriated funds may not be used to support the operation of exchange stores.’.

It goes without saying that ALA is opposed to this proposal and has communicated its position to the House Armed Services Committee.

TIPRA (3 percent Withhold) If it can not be repealed at this point — Delay it!
While we work diligently to achieve the full repeal of the 3 percent withhold legislation, we are also seeking relief in the form of a delay in implementation. A segment of the letter sent to every member of Congress follows: The Government Withholding Relief Coalition and its 109 member associations strongly urge you to include a two-year delay of the 3 percent tax withholding law in a legislative vehicle moving through Congress this September if repeal is unattainable this year. The Coalition will continue to vigorously advocate for repeal of this misguided law; however, a delay is urgently needed now to prevent any additional wasteful expenditure of funds and manpower by governments and companies in order to prepare for the looming implementation deadline of January 2012.


Patrick B. Nixon
President, ALA





Washington Update


Defense cuts may slow area economy
The Washington Post    Share    Share on FacebookTwitterShare on LinkedinE-mail article
After surging in size and profits during the post-9/11 era, the defense industry in metropolitan Washington is bracing for a major contraction and significant layoffs that economists said could produce a drag on the regional economy for years. Already, there have been signs that announced cuts in national defense programs are having an impact. Those losses are just the beginning of what many expect to be a much broader set of reductions at local companies. More

Virginia to fight Defense moves
The Washington Post    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Gov. Robert F. McDonnell and members of Virginia's congressional delegation vowed recently to fight Defense Secretary Robert M. Gates's decisions to shutter the Joint Forces Command, a military installation in Hampton Roads, and to slash the Pentagon's military contracting budget by 10 percent a year for the next three years. At the first meeting of McDonnell's statewide military commission, members focused on Gates's Aug. 9 decisions, which McDonnell said could cost Virginia thousands of jobs and have a devastating impact on the economy. More

House might adjourn for elections earlier than planned
Congress Daily via Government Executive    Share    Share on FacebookTwitterShare on LinkedinE-mail
article
House Democrats are considering cutting the upcoming session from four weeks to three. Adjourning at the end of September would give House members more than a month before the Nov. 2 elections to focus on the final stretch of their campaigns. Such a move is "being considered," said the aide. He added there is "no decision yet," and that the official adjournment date remains Oct. 8. Polls show House Democrats are facing a tough climate and could lose their majority. More

Service chief won't support more joint bases
Military Times    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Joint basing is a failure that has not produced the cost savings the Defense Department expected, the Air Force's top officer said. Chief of Staff Gen. Norton Schwartz said he will not support future joint bases and questioned whether the 12 joint bases recommended by the 2005 Base Closure and Realignment Commission should be split apart. "The bottom line is there are some significant issues with joint bases, and over time you will see no more, that's for sure. The question is whether we will see less," Schwartz told a crowd of airmen after being asked if he supported the effort to consolidate military bases. More

Republican Congressman talks government shutdown
The Caucus via The New York Times    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Washington saw a bit of a mid-90s flashback recently. Representative Lynn Westmoreland, a Georgia Republican, reportedly indicated at a gathering of social conservatives that a government shutdown could be in the offing if the G.O.P. takes back the House in this year's midterm elections — and asked the activists to stand with the party if the government did come to a halt. More

Commissary News


New and reformulated packaged goods give parents healthier lunchbox options
Supermarket News    Share    Share on FacebookTwitterShare on LinkedinE-mail article
In one of the largest school districts on Long Island, New York, students in the second to fifth grades can't bring in cupcakes, cookies or any other type of food for birthday celebrations. The district also sends home a suggested list of healthy foods to send in for snack time. Efforts like these have significantly changed the way schoolchildren eat, and trickled down into what's inside the school lunchbox. Indeed, the days of most parents sending their kids to school every day with cupcakes, cookies and salty snacks are long gone. More

Foodbites: Grocer's action a huge step forward
The Monterey County Herald    Share    Share on FacebookTwitterShare on LinkedinE-mail article
The Monterey Bay Aquarium's Seafood Watch program continues to make rippled splashes in its quest to promote sustainability and ensure the health of our fisheries. Partnering with Blue Ocean Institute, the aquarium has helped Whole Foods Market launch the first-ever, in-store, color-coded sustainability rating program for wild-caught seafood. As the first national grocer to provide customers a comprehensive rating system — with green, yellow and red tags — Whole Foods has now become the leader in retail sustainability education. More

German discount grocer Aldi opening Northeast DC location
The Washington Post    Share    Share on FacebookTwitterShare on LinkedinE-mail article
A new slice of competition has come to the D.C grocery market. Discount retailer Aldi plans to open a new store directly across from the Safeway on 17th Street NE, which long has had the neighborhood to itself. The next nearest food store is almost two miles away. The no-frills, Germany-based retailer broke ground last week on its first location in the District, adding to its roster of 21 stores in Maryland and 11 in Virginia. "Another grocery store in the area will help create better prices for residents," said D.C. Council member Harry Thomas Jr. Aldi "will be like a neighborhood-based Costco's. And we can use that here." More

Refiners seek to rename high fructose corn syrup to sweeten its image
The Guardian    Share    Share on FacebookTwitterShare on LinkedinE-mail article
It has been dubbed "the devil's candy" by critics. A ubiquitous sweetening ingredient known in the US as high fructose corn syrup could get a branding makeover under a plan by food companies to make it sound more appetizing. Alarmed about a growing stigma surrounding the substance, the U.S. Corn Refiners Association is attempting a rebranding. The organization has asked the Food and Drug Administration for permission to change the name of the ingredient to the simpler sounding "corn sugar". More

Big Y moves part of strategy to grow chain
The Republican    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Big Y Foods Inc. is getting bigger on the eve of its 75th anniversary. Recently, Big Y announced that it had purchased seven Connecticut supermarkets from the faltering A&P chain. The news followed announcements that construction will soon begin on new Big Y locations in Franklin and Milford in eastern Massachusetts and just off Massachusetts Turnpike Exit 2 in Lee. "Our plan is to grow by one or two stores a year," said Charles D'Amour, president and chief operating officer of Big Y Foods Inc. "A few years ago we put the brakes on because of the economy. But this was a great opportunity for us." More

Peapod unveils mobile app
The Boston Globe    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Peapod, the online grocery delivery service, announced the availability of PeapodMobile, a free app that enables customers to compile shopping lists on their smartphones. Founded in 1989, Peapod started out as an option for consumers who wanted to use their personal computers to do their grocery shopping online and schedule deliveries to their homes. According to Peapod, its new mobile app offers customers another layer of convenience. Customers can use the app to add items to their virtual shopping carts over the course of a day or two, press a button to place the order and set up a delivery. More

Commissary Announcements


Visit to Richmond, Va. Fisher House
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Jim Weiskopf from Fisher House Foundation is hosting a visit and tour of the 21-suite Fisher House at the Hunter Holmes McGuire VA Medical Center at 8:30 a.m. on Wednesday, Oct. 13, 2010. The tour is open to any DeCA employees or industry partners. DeCA employees should contact Marye Carr at ext. 52781 to sign up (DeCA is providing transportation for its attendees). Industry partners should contact Jim Weiskopf at (202) 607-1067 to confirm attendance and for a map with directions. Visit should last approximately one hour and will include breakfast.

Thanks,
James D. Weiskopf
Vice President

Fisher House Foundation, Inc.
13125 Willow Edge Court B
Clifton, Va. 20124-1080

E-Mail: JWeiskopf@fisherhouse.org


Commissary Web Posts

The following commissary items were posted to the ALA Website as of 10 a.m., September 16 2010:

PROMOTIONS
  • DP #18, Update #2.
  • Holiday Ham, Update #1.
  • DP #23, Worldwide Promotion package. Last promotion package for 2010.
  • Fall (Holiday) Club Pack November Quantities for CONUS.
  • Halloween, Update #6.

NOTICES TO TRADE
  • 10-149, Laundry Detergents.
  • 10-150, Frozen Prepared Meals Category Review.
  • 10-151, Cancellation of Category Review Bleaches/Prewash/Fabric Softener

MISCELLANEOUS
  • Adds/Changes/Deletes, Weeks 10-36 and 10-37.
  • Guard & Reserve On-Site Sale Schedule updates.


Exchange News


Fresh & Easy promotes reusable bags over plastic, paper
San Gabriel Valley Tribune    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Never has "paper or plastic?" been such a daunting question for Californians. A vote earlier this month by state lawmakers that rejected a statewide ban on plastic grocery bags has fueled debate over whether grocery stores should be allowed to provide the bags, which can be environmental hazards. Fresh & Easy, California's leading environmentally friendly grocery chain, announced recently that it is giving away more canvas bags to help promote reusable bags as a leading alternative. More

Toys 'R Us rolls out FAO pop-up stores, exclusive items
CNBC-TV    Share    Share on FacebookTwitterShare on LinkedinE-mail article
Toys 'R Us is taking an interesting approach for at least one slice of its business that boils down to this: you can't compete on price if you don't have the item. Sure, the retailer will have plenty of the hot must-have holiday toys, but it is also expanding the number of exclusive toys it will be selling, and it finally began to expand the reach of the FAO Schwarz business, so some folks won't have to travel to New York to dance on the big piano keyboard. The iconic FAO Schwarz brand has long been known for its unique, high-end toys — not to mention the scene in "Big," — and that is expected to continue. More

Natural gas stations in Western Pennsylvania's future
Pittsburgh Tribune Review    Share    Share on FacebookTwitterShare on LinkedinE-mail article
With help from the state, two companies are working on opening the first public natural gas refueling station in Western Pennsylvania. Now they just need customers. The state Department of Environmental Protection awarded Equitable Gas a $700,000 grant to build a public natural gas refueling station by the end of March at a yet-to-be-determined location in the Strip District. The grants aim to stimulate interest in natural gas vehicles, which officials say put out fewer emissions than gasoline-powered vehicles and are cheaper to fill up. More

Study: Retail CFOs anticipate ongoing economic stagnation
Chain Store Age    Share    Share on FacebookTwitterShare on LinkedinE-mail article
According to a study released recently by accounting and consulting firm BDO USA, LLP, 82 percent of CFOs at leading U.S. retailers anticipate a continuation of stagnant economic conditions as opposed to a double dip or an ongoing turnaround. The Retail Compass Survey of CFOs found that the majority of retail CFOs cite an ongoing economic turnaround as most dependent upon lower unemployment or consistent improvement in consumer confidence and spending. More

New ad targets McDonald's
The Wall Street Journal    Share    Share on FacebookTwitterShare on LinkedinE-mail article
McDonald's Corp. is the target of a new television commercial set to air in Washington, D.C., that blames the burger giant for heart disease. In the commercial, produced by the nonprofit Physicians Committee for Responsible Medicine, a woman weeps over a dead man lying in a morgue. In his hand is a hamburger. At the end, the golden arches appear over his feet, followed by the words, "I was lovin' it," a play on McDonald's longtime ad slogan, "I'm lovin' it." A voiceover says, "High cholesterol, high blood pressure, heart attacks. Tonight, make it vegetarian." More

Exchange Announcements


Eye on the week ahead
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Reports on U.S. retail sales, business inventories, and industrial production will suggest the status of the stateside recovery, while inflation data is expected to show little increase in consumer prices.

Key data releases: Treasury budget (Sept. 13) retail sales (Sept. 14); industrial production (Sept. 15); wholesale inflation, international capital (TIC) flows (Sept. 16); consumer inflation, consumer sentiment (Sept. 17).



New exchange experience begins at Tinker
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History is in the making at Tinker AFB as yesterday's BX becomes today's "Exchange" with a new look and an improved shopping experience.

The layout of the facility is a dramatic, new approach to the exchange benefit as the store is divided into three major merchandise worlds — Home, Life and Style. The customer service section has been moved to the front of the store to offer expert service immediately upon entry. Additionally, compelling shops and destinations have been created to fit the active lifestyle of military shoppers.

The evolution of the brand does not stop at the store, however. The rebranding from AAFES to the Exchange has been a holistic approach that will create a new paradigm and consistent corporate message. This message will be evident in tabloids, catalogs, exclusive brand packaging on the shelves as well as revisions to the website that will be coming online over the next few months.

The renovation began on June 1 and just 116 days later the transformation is complete with fresh new colors, textures and graphics to create a facility that is custom-designed for military shoppers' lifestyles and one that is expected to be replicated at Air Force and Army installations worldwide.

"A lot of hard work went in to get this completed in such a compressed timeframe," said the Tinker Exchange's General Manager Mike Patmon. "While the 24-hour schedule moved the process along quickly, our shoppers deserve credit for their patience during the renovation. I think once they see this store they’ll realize that any inconvenience they might have experienced was well worth it."

The logo's new tag line, "You save, we give back," emphasizes the Exchange's competitive prices and support to Air Force Services and Army Morale Welfare and Recreation programs. As part of its dual mission, roughly two-thirds of Exchange earnings are returned to quality of life programs such as youth services, Armed Forces Recreation Centers, arts and crafts, aquatic centers, post functions and golf courses.

"We are proud to make the Exchange relevant again and give our men and women in uniform a great place to shop and meet," said Patmon. "This ambitious new store concept takes the best of what's out there in the big box stores, malls and on Main Street and puts it all in one place — one store that is custom-designed for our shopper's military lifestyles."

Washington Update

Gary Sinise band to play 3 free concerts
AirForceTimes    Share    Share on FacebookTwitterShare on LinkedinE-mail article
The Air Force says members of the military in Alaska will have the chance to attend a concert by a performer more known for his acting than his music. Actor Gary Sinise and the Lt. Dan Band will perform three free, private USO concerts for troops and their families as part of a USO tour sponsored by TriWest Healthcare Alliance. More

DoD names new commander of Lewis-McChord
AirForceTimes    Share    Share on FacebookTwitterShare on LinkedinE-mail article
The Department of Defense has named a new commanding general for I Corps and Joint Base Lewis-McChord. Secretary of Defense Robert M. Gates announced Monday that President Obama nominated Army Maj. Gen. Curtis M. Scaparrotti for promotion to lieutenant general. The News Tribune reports Scaparrotti has been assigned to run Army operations at the joint Army-Air Force base south of Tacoma. More

New and coming-soon recreational, tactical gear
AirForceTimes    Share    Share on FacebookTwitterShare on LinkedinE-mail article
GearScout spent the summer alternating between Red Bull and airplane scotch as we traveled the U.S. to build our compendium of new and coming-soon gear. All of it will end up on the GearScout blog over time, but we decided to give you a peek at our favorite new recreational and tactical gear after canvassing industry shows such as Outdoor Retailer and the ADS Warrior Expo. More
 


Grunt Apparel, Inc.

Grunt Apparel specializes in original military inspired designs in silk screen & embroidery at low prices. Licensed by all military branches.
More info


Hubert Company


Stimulate Holiday sales and create a festive atmosphere with Bountiful Thanksgiving kits and fall prop and décor. More


Tyson Foods, Inc.

Tyson Foods is dedicated to bringing you quality, service, and support you need to drive sales. More

 

Executive Briefing
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