Defense Commissaries: Actions Needed to Clarify Priorities and Improve Program Management
Fast Facts
The Defense Commissary Agency operates 236 commissaries worldwide to provide reduced-price groceries as a benefit to eligible customers, including service members, their families, and veterans.
The agency strives to give customers a 23.7% discount, on average, over other stores. It also seeks to reduce its reliance on appropriations, which are about a billion dollars annually. It has not demonstrated that it met either of these competing objectives.
The agency does not accurately estimate the discount customers receive and lacks information needed to effectively reform its business practices. Our recommendations address these issues and more.
Commissary in Fort Lee, VA
Highlights
What GAO Found
The Defense Commissary Agency's (DeCA) mission is to provide low cost groceries to service members, their families, and other eligible customers. To meet its mission, DeCA aims to achieve a global customer savings rate; however, DeCA is unable to provide assurance that it is meeting its target savings rate. GAO found that the savings rate for customers within the continental United States (CONUS) is consistently lower than DeCA's target, and that DeCA only meets its global customer savings rate target by relying on the savings rate for commissaries outside of the continental United States (OCONUS). Further, as shown in the figure, DeCA's methodology for the OCONUS customer savings rate is unreliable, as it does not include required price comparisons based on actual price data. Without analysis to assess the accuracy of the OCONUS methodology, Congress and DOD decision makers do not have assurance that DeCA is meeting its savings target and that commissary customers are reliably receiving their intended benefit.
Overview of Defense Commissary Agency (DeCA) Customer Savings Rate
|
Location |
FY21 Rate |
Methodology |
|
Continental United States |
17.7% |
Reliable |
|
Outside the Continental United States |
42.5% |
Not Reliable |
Source: GAO analysis of DeCA data and methodology. | GAO-22-104728
DeCA strives to meet two primary objectives: (1) to be a benefit to service members by providing the target savings rate to its customers, and (2) to operate like a business to reduce its reliance on appropriations. GAO found that these objectives can be in tension because DeCA has not determined the tradeoffs necessary to achieve these competing targets, and as a result, has not achieved targets for either objective. Further, Congress has provided varying statutory direction that has led to uncertainty regarding expectations for DeCA—specifically as it relates to what type and level of benefit DeCA should ensure that it can provide. Until DeCA conducts an analysis to evaluate the risks and tradeoffs associated with achieving its defined objectives, it will continue to operate without a clear understanding of what outcomes it can reasonably achieve for its customers. Additionally, without clarity from Congress regarding the level of benefit that DeCA should provide, DeCA will be hindered in its ability to operate effectively.
DeCA's strategic plan lacks key business reform efforts and information necessary to implement and measure success. DeCA also lacks complete supporting documentation linking its performance goals to measurable indicators, milestones, or deliverables. DeCA's strategic plan includes information on its strategic goals, but does not include any information on its key business reform efforts, variable pricing and private label efforts, or certain performance information such as measures. Without complete information and fully developed measurable goals, DeCA cannot assess and accurately report on its progress toward successful implementation of its business reforms and whether it is achieving intended results.
Why GAO Did This Study
DeCA's sales of groceries and other goods have fallen over $1 billion in the past 6 years. Since 2016, DeCA has implemented reforms to improve the efficiency of its operations while continuing to provide savings to its customers. Providing savings to service members may be of particular concern in light of recent inflation in food prices. Senate Report 116-236 accompanying a bill for the National Defense Authorization Act for Fiscal Year 2021 included a provision for GAO to review DeCA's implementation of business reforms, and the effects of these reforms on DeCA's customer savings and appropriations.
GAO evaluated the extent to which (1) DeCA can provide assurance that it is meeting its target customer savings rate, and DeCA's (2) business model reflects clearly defined objectives and (3) strategic plan includes key business reform efforts and information to assess performance. GAO analyzed DeCA's customer savings rate methodology and compared results to its 23.7 percent target. GAO also compared data on margin, appropriations, and performance to DeCA's goals.
Recommendations
GAO is making three recommendations to DeCA to review its OCONUS customer savings rate methodology, conduct an analysis that identifies the savings rate and related benefits it can achieve at varying levels of appropriations, and improve its strategic plan. GAO is also making a matter for congressional consideration to clarify the benefits DeCA should seek to achieve. DOD concurred with all three recommendations.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should consider clarifying its direction to DeCA regarding the level of customer savings and related benefits it should seek to achieve and maintain as a benefit, using the tradeoff analysis provided by DeCA. (Matter for Consideration 1) | As of March 2024, this matter remains open. We will monitor steps taken in response to this matter. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense, in coordination with the Office of the Under Secretary of Defense for Personnel and Readiness, should ensure that DeCA conducts and documents an analysis of whether its OCONUS customer savings rate methodology provides comparable accuracy to a market-based price comparison and make any appropriate adjustments to its methodology based on this analysis. (Recommendation 1) |
DOD concurred with this recommendation. DOD submitted a corrective action plan that states that DeCA has established a working group to collect data and develop options in order to modernize the savings calculation methodology. As of June 2024, DeCA expects to complete analysis of its customer savings rate methodology and make any appropriate adjustments based on the analysis by October 2025. We will continue to monitor DeCA's efforts.
|
| Department of Defense | The Secretary of Defense, in coordination with the Office of the Under Secretary of Defense for Personnel and Readiness, should ensure that DeCA, once it has made any necessary adjustments to its OCONUS customer savings rate methodology, conducts an analysis of tradeoffs that specifically identifies the customer savings rate and related benefits, such as number, location, and operating hours of commissaries, that it can provide at varying levels of appropriation; and submits such analysis to the appropriate authorizing, appropriations, and oversight congressional committees. (Recommendation 2) |
DOD concurred with this recommendation. DOD provided a corrective action plan that states that DeCA has established a working group focused on updating its savings rate calculation methodology. It will then use the updated methodology in a model to determine the level of savings and service that it can provide at varying levels of appropriation. As of June 2024, DeCA expects to finalize its OCONUS customer savings rate methodology by October 2026 and will subsequently provide analysis on tradeoffs. We will continue to monitor DeCA's efforts.
|
| Department of Defense | The Secretary of Defense, in coordination with the Office of the Under Secretary of Defense for Personnel and Readiness, should ensure that DeCA updates its strategic plan or supporting documentation to include all business reforms; and identifies goals with associated performance measures, milestones, and deliverables for each key effort. (Recommendation 3) |
DOD concurred with this recommendation. DOD provided a corrective action plan that states that DeCA is now incorporating all business reforms into its strategic planning process and documenting the goals and performance measures for variable pricing, commissary store brands (private label), and other business reforms. DeCA will capture these goals, deliverables, measures, and outcomes in its ongoing strategic planning and implementation efforts. DeCA expects to adjust the Director's "Game Plan" and associated performance measures to support each key effort. Officials told us in June 2024 that they will provide relevant documentation by September 2024. We will continue to monitor DeCA's efforts.
|