Review of Prices Paid by Military Commissaries on Brand Name Vendor Supply Bulletin Contracts

GAO was asked to assist in auditing annual indefinite quantity contracts negotiated by the Defense Personnel Support Center for military commissaries. The commissaries use these contracts to purchase grocery items from vendors at prices that are supposed to be as advantageous as those offered to commercial customers. GAO was asked to determine whether the vendors were complying with a price reduction clause which states that, when a vendor reduces prices to commercial customers, the commissaries should receive the same reduction.

In auditing six vendors to determine if commissaries were obtaining prices comparable to commercial customers, GAO found price discrepancies at four of these vendors where commissaries paid more for grocery items than other customers. GAO also found that the vendors made allowances which were financially beneficial to the commissaries that are not available to commercial customers. The price discrepancies which GAO found were not necessarily indications of vendor noncompliance with the price warranty provisions in brand name vendor supply bulletin contracts. GAO found that, while the Defense Personnel Support Center is responsible for contracting with brand name vendors, it does not negotiate or verify prices or terms and conditions submitted by vendors for publication. Some price discrepancies were caused by vendors developing uniform prices for their products; others were due to vendors not offering commissaries the same discounts offered to commercial customers during the same time period, but the vendors feel that commissaries receive lower prices over time. Commissaries also receive special allowances which either reduce the price of products being purchased or reduce commissary operating costs. Commissaries do not receive some discounts which commercial customers receive such as some discounts for picking up and distributing products or for advertising a vendor's product.