Comments on the Army's Proposed Transfer of Military Clothing Sales Stores

GAO was requested to concur in the Army's proposed transfer of military clothing sales stores (MCSS) to the Army and Air Force Exchange Service (AAFES). The military departments operate MCSS on military installations and sell issue standard uniforms and accessories to officers and enlisted personnel. MCSS operating costs are paid with departmental operation and maintenance funds, and the standard items sold by the stores are procured from the Defense Personnel Support Center with stock funds. In September 1972, AAFES established a study group to determine the feasibility and desirability of AAFES assuming the responsibility for operation and supervision of the Army and Air Force MCSS. The study group found that such an operation was feasible and recommended that a test operation be conducted by the Army and Air Force. In 1973, test operations were approved by the Army and Air Force. The results of the test operations showed a potential for substantial savings in money and manpower spaces. For these reasons, the Air Force closed the separate military clothing sales stores and paid the exchange to sell the military clothing through these stores. However, the Army delayed making a decision on the matter until 1975 when it concluded that there was no economic justification or operational benefit to be gained by selling military clothing through the AAFES. But, in view of the Air Force's savings, Congress saw no reason why the same savings could not be achieved by the Army by transferring the Army's clothing sales stores to AAFES. GAO held that in these circumstances, Congress mandated an agencywide transfer of the entire military clothing sales function to AAFES. Thus, GAO does not view such a transfer as involving the procurement of services from AAFES, but rather as a congressionally directed reassignment of the operational responsibility for military clothing sales from the Army to AAFES. Additionally, the use of funds to defray the AAFES operating costs is a subsidy similar to various others presently provided throughout the military services. Consequently, GAO has no basis to object to the proposed transfer.