Defense Infrastructure
DOD Used Available Guidance in Its Decision to Discontinue Commissary Operations at NAS Brunswick, but Criteria Needs Clarification Gao ID: GAO-11-266R April 20, 2011The Department of Defense (DOD) plans to cease commissary operations at Naval Air Station (NAS) Brunswick, Maine because of a 2005 base realignment and closure recommendation to close the installation and transfer the assigned active-duty personnel and equipment to NAS Jacksonville, Florida. DOD plans to close NAS Brunswick and its commissary by September 15, 2011. As of January 2009, NAS Brunswick commissary--located approximately 6 miles northwest of the air station in the town of Topsham--had more than 19,000 authorized patrons. About 10,000 authorized patrons are expected to remain after the installation closes. Representatives from communities surrounding Brunswick and certain elected state officials expressed concern that the commissary's closure will limit shopping options and purchase prices will rise for reservists, military retirees, and dependents and the relatively small number of active-duty personnel remaining in the region after the installation closes. Commissaries are intended to enhance the quality of life of active-duty personnel, military retirees, and their dependents, and support military readiness, recruitment, and retention goals. Commissaries are not expected to be self-supporting, and provide a noncash benefit for active-duty personnel by offering food and related household and health and beauty items that are similar to merchandise sold in commercial grocery stores. This merchandise is typically offered for sale at substantially reduced prices (including exemption from any sales taxes) when compared to retail prices at commercial grocery stores. DOD estimates that a family of four can save about $4,400 annually (or approximately 30 percent) by shopping at a commissary instead of a commercial grocery store. As directed by Senate Appropriations Report 111-40, the Under Secretary of Defense (Personnel and Readiness) submitted a report to Congress on March 30, 2010, which evaluated the economic feasibility of continuing commissary operations in the Brunswick area following the closure of NAS Brunswick. Per congressional request, we evaluated the extent to which DOD considered applicable guidance in deciding to discontinue commissary operations at NAS Brunswick upon the closure of the installation by September 2011.
The Navy considered the governing DOD instruction for continuing commissary operations at NAS Brunswick after the installation closes. The Navy concluded that the NAS Brunswick commissary met some elements of the general criteria, but did not meet the economic criteria, based on its interpretation of the DOD instruction. Under the general criteria, the Navy considered the mission and personnel factors and concluded that there will be an active-duty mission and at least 100 active-duty armed service personnel within a 20-mile radius of NAS Brunswick upon its closure. Additionally, regarding the geographic factor under the general criteria, the Navy determined that the nearest commissary to NAS Brunswick satisfied the distance and time criteria stipulated in the instruction. However, in considering the economic criteria, the Navy determined that continuing commissary operations would not be fiscally responsible because of projected one-time equipment replacement costs and annual recurring costs, along with a declining population of authorized patrons. Some of the general and economic criteria in the DOD instruction are not clear and are open to interpretation on when to establish or continue a commissary versus when to discontinue commissary operations. The DOD instruction for commissary operations states that the primary consideration in assessing the need for a commissary store and selecting the location of the store--including whether to operate commissaries on closed installations--is the effect on active-duty personnel and their dependents. However, the instruction does not specify how this effect should be measured and used as decision criteria. Additionally, the instruction states that "as a general rule, commissary operations are discontinued when an installation is completely closed and no active-duty or reserve component personnel remain on the installation," which will be the case when NAS Brunswick closes. However, it is unclear what conditions would warrant an exception to the general rule and how the general rule relates to the other criteria. According to Navy officials, they have not continued commissary operations at any domestic Navy installation closed under the base realignment and closure process. At the same time, however, the instruction gives flexibility to continue commissary operations based on other criteria. For example, the instruction states that DOD may continue to provide commissary support to active-duty personnel at or "in the immediate vicinity" of a closed installation when a "significant" active-duty or reserve population remain; however, "significant" and "the immediate vicinity" are not defined, giving the services and the Defense Commissary Agency Board of Directors discretion in recommending whether to continue or discontinue a commissary. Elsewhere, the instruction directs the Defense Commissary Agency to verify that a commissary's operation is "economically supportable" by preparing a business case analysis, but it does not define "economically supportable" thus giving the board of directors (which ultimately makes a recommendation based on the Defense Commissary Agency's analysis) additional discretion in making its recommendations. According to federal best practices, policies and procedures should exist and should be updated when needed to ensure that an agency's planning and implementation activities are carried out as intended. Without clear guidance, there is an increased likelihood of discontinue commissary operations. To help facilitate consistent decision making affecting DOD's commissary program, we are recommending that DOD revise and clarify its guidance by defining key terms and certain analytical procedures. DOD concurred with all of our recommendations and stated that the revisions and clarifications required to address each of the recommendations will be incorporated into the next version of the DOD instruction on commissary operations.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Brian J. Lepore Team: Government Accountability Office: Defense Capabilities and Management Phone: (202) 512-4523GAO-11-266R, Defense Infrastructure: DOD Used Available Guidance in Its Decision to Discontinue Commissary Operations at NAS Brunswick, but Criteria Needs Clarification
This is the accessible text file for GAO report number GAO-11-266R
entitled 'Defense Infrastructure: DOD Used Available Guidance in Its
Decision to Discontinue Commissary Operations at NAS Brunswick, but
Criteria Needs Clarification' which was released on May 11, 2011.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as
part of a longer term project to improve GAO products' accessibility.
Every attempt has been made to maintain the structural and data
integrity of the original printed product. Accessibility features,
such as text descriptions of tables, consecutively numbered footnotes
placed at the end of the file, and the text of agency comment letters,
are provided but may not exactly duplicate the presentation or format
of the printed version. The portable document format (PDF) file is an
exact electronic replica of the printed version. We welcome your
feedback. Please E-mail your comments regarding the contents or
accessibility features of this document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
GAO-11-266R:
United States Government Accountability Office:
Washington, DC 20548:
April 20, 2011:
The Honorable Susan Collins:
United States Senate:
The Honorable Olympia Snowe:
United States Senate:
Subject: Defense Infrastructure: DOD Used Available Guidance in Its
Decision to Discontinue Commissary Operations at NAS Brunswick, but
Criteria Needs Clarification:
The Department of Defense (DOD) plans to cease commissary operations
at Naval Air Station (NAS) Brunswick, Maine because of a 2005 base
realignment and closure recommendation to close the installation and
transfer the assigned active-duty personnel and equipment to NAS
Jacksonville, Florida. DOD plans to close NAS Brunswick and its
commissary by September 15, 2011. As of January 2009, NAS Brunswick
commissary--located approximately 6 miles northwest of the air station
in the town of Topsham--had more than 19,000 authorized patrons. About
10,000 authorized patrons are expected to remain after the
installation closes. Representatives from communities surrounding
Brunswick and certain elected state officials expressed concern that
the commissary's closure will limit shopping options and purchase
prices will rise for reservists, military retirees, and dependents and
the relatively small number of active-duty personnel remaining in the
region after the installation closes.
Commissaries are intended to enhance the quality of life of active-
duty personnel, military retirees, and their dependents, and support
military readiness, recruitment, and retention goals. Commissaries are
not expected to be self-supporting, and provide a noncash benefit for
active-duty personnel by offering food and related household and
health and beauty items that are similar to merchandise sold in
commercial grocery stores. This merchandise is typically offered for
sale at substantially reduced prices (including exemption from any
sales taxes) when compared to retail prices at commercial grocery
stores. DOD estimates that a family of four can save about $4,400
annually (or approximately 30 percent) by shopping at a commissary
instead of a commercial grocery store.
As directed by Senate Appropriations Report 111-40, the Under
Secretary of Defense (Personnel and Readiness) submitted a report to
Congress on March 30, 2010, which evaluated the economic feasibility
of continuing commissary operations in the Brunswick area following
the closure of NAS Brunswick. As you requested, we evaluated the
extent to which DOD considered applicable guidance in deciding to
discontinue commissary operations at NAS Brunswick upon the closure of
the installation by September 2011.
To determine the extent to which DOD's decision considered its
established guidance, we reviewed the DOD guidance for commissary
operations, along with the Navy's study on continuing commissary
operations at NAS Brunswick after the installation closes. We also
reviewed the Defense Commissary Agency's actual and projected sales,
surcharge revenues, and operating costs for fiscal year 2007 through
fiscal year 2012 for the NAS Brunswick commissary. We met with
officials from the Office of the Under Secretary of Defense (Personnel
and Readiness), the Defense Commissary Agency, and the Department of
the Navy. We also visited NAS Brunswick and met with installation
officials responsible for managing the commissary, along with
officials from the Marine Corps and Maine Army National Guard, which
will have active-duty personnel remaining in the Brunswick area after
NAS Brunswick closes. In addition, we met with representatives from
the communities of Brunswick and Topsham, Maine, and the Midcoast
Regional Redevelopment Authority to discuss their involvement in
seeking to keep the NAS Brunswick commissary open. We also assessed
the data that the Navy used in recommending to discontinue commissary
operations at NAS Brunswick. To assess the reliability of the
personnel, distance/time, and economic financial data and projections,
we examined the information sources and relevant documentation that
were used to calculate these data, and talked with knowledgeable
agency officials about their quality control procedures documentation.
Based on our examination and discussions with agency officials, we
determined that the data were sufficiently reliable for the purposes
of this report.
We conducted this performance audit from October 2010 through April
2011 in accordance with generally accepted government auditing
standards. These standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives.
Summary:
The Navy considered the governing DOD instruction[Footnote 1] for
continuing commissary operations at NAS Brunswick after the
installation closes. The Navy concluded that the NAS Brunswick
commissary met some elements of the general criteria,[Footnote 2] but
did not meet the economic criteria, based on its interpretation of the
DOD instruction. Under the general criteria, the Navy considered the
mission and personnel factors and concluded that there will be an
active-duty mission and at least 100 active-duty armed service
personnel within a 20-mile radius of NAS Brunswick upon its closure.
Additionally, regarding the geographic factor under the general
criteria, the Navy determined that the nearest commissary to NAS
Brunswick satisfied the distance and time criteria stipulated in the
instruction. However, in considering the economic criteria, the Navy
determined that continuing commissary operations would not be fiscally
responsible because of projected one-time equipment replacement costs
and annual recurring costs, along with a declining population of
authorized patrons.
Some of the general and economic criteria in the DOD instruction are
not clear and are open to interpretation on when to establish or
continue a commissary versus when to discontinue commissary
operations. The DOD instruction for commissary operations states that
the primary consideration in assessing the need for a commissary store
and selecting the location of the store--including whether to operate
commissaries on closed installations--is the effect on active-duty
personnel and their dependents. However, the instruction does not
specify how this effect should be measured and used as decision
criteria. Additionally, the instruction states that "as a general
rule, commissary operations are discontinued when an installation is
completely closed and no active-duty or reserve component personnel
remain on the installation," which will be the case when NAS Brunswick
closes. However, it is unclear what conditions would warrant an
exception to the general rule and how the general rule relates to the
other criteria. According to Navy officials, they have not continued
commissary operations at any domestic Navy installation closed under
the base realignment and closure process[Footnote 3]. At the same
time, however, the instruction gives flexibility to continue
commissary operations based on other criteria. For example, the
instruction states that DOD may continue to provide commissary support
to active-duty personnel at or "in the immediate vicinity" of a closed
installation when a "significant" active-duty or reserve population
remain; however, "significant" and "the immediate vicinity" are not
defined, giving the services and the Defense Commissary Agency Board
of Directors discretion in recommending whether to continue or
discontinue a commissary. Elsewhere, the instruction directs the
Defense Commissary Agency to verify that a commissary's operation is
"economically supportable" by preparing a business case analysis, but
it does not define "economically supportable" thus giving the board of
directors (which ultimately makes a recommendation based on the
Defense Commissary Agency's analysis) additional discretion in making
its recommendations. According to federal best practices, policies and
procedures should exist and should be updated when needed to ensure
that an agency's planning and implementation activities are carried
out as intended.[Footnote 4] Without clear guidance, there is an
increased likelihood of inconsistent recommendations and decisions
about whether to establish, continue, or discontinue commissary
operations.
To help facilitate consistent decision making affecting DOD's
commissary program, we are recommending that DOD revise and clarify
its guidance by defining key terms and certain analytical procedures.
DOD concurred with all of our recommendations and stated that the
revisions and clarifications required to address each of the
recommendations will be incorporated into the next version of the DOD
instruction on commissary operations.
Background:
Commissary Operations Are Funded by Appropriations:
Commissary operations are centrally managed within DOD by the Defense
Commissary Agency. The Defense Commissary Agency operates a worldwide
chain of nearly 250 commissaries for almost 12 million authorized
patrons including active-duty members of the Army, Air Force, Navy,
Marine Corps, and Coast Guard, as well as reserve personnel, retired
military personnel, and their dependents. Each military service enters
into support and servicing agreements with the Defense Commissary
Agency to provide facilities, physical security, maintenance,
logistics, and administrative support as required for effective
operation of the military commissary program.
Commissary operating costs (excluding recapitalization of store-
related infrastructure) are paid by funds transferred from the
military services' annual appropriations on a prorated basis based on
their active duty and reserve component personnel levels to the
Defense Commissary Agency. The Defense Commissary Agency reported
receiving approximately $1.3 billion in military service appropriation
transfers during fiscal year 2010 to finance the operating costs of
commissaries. By law, commissaries sell items at cost plus a 5 percent
surcharge, which is used to pay for the recapitalization of store-
related infrastructure,[Footnote 5] including replacement, expansion,
and improvement of existing commissaries and central product
processing facilities; maintenance and repair; and store-related
information technology.
Commissary Operations Roles and Responsibilities:
The Defense Commissary Agency is under the authority, direction,
control, and overall supervision of the Under Secretary of Defense
(Personnel and Readiness). The Principal Deputy Under Secretary of
Defense (Personnel and Readiness) serves as the primary point of
contact for all commissary matters within DOD. The director of the
Defense Commissary Agency is responsible for the day-to-day operations
of the commissary program, and reports to the Defense Commissary
Agency Board of Directors, which is comprised of representatives from
each of the military departments and services. The board of directors
is the commissary system's governing body and, among other things,
evaluates military department recommendations on whether to establish,
continue, or discontinue commissary operations at specific locations.
Under most circumstances, the board of directors forwards its
evaluation and recommendations to the Principal Deputy Under Secretary
of Defense (Personnel and Readiness) for approval.[Footnote 6] The
Under Secretary of Defense (Personnel and Readiness) is required to
notify Congress at least 90 days before a commissary's closure and to
include an assessment of the impact the closure will have on the
quality of life for the military patrons and the welfare and security
of the local military community. The notification requirement does not
apply to commissaries closing as part of implementing a base
realignment and closure recommendation.
DOD Has a Policy to Combine Commissary-Exchange Stores in Certain
Situations, but None Are Operating in the United States:
A combined commissary and exchange store combines elements of both
under the management of the exchange store.[Footnote 7] According to
the DOD instruction for commissary operations, a combined store will
be considered in cases where an independent commissary is not
economically feasible and supportable due to base closure, military
force structure changes, or where nearby stores produce overlapping or
redundant delivery of the commissary benefit. In a combined store,
edible commissary merchandise (e.g., meat, produce, dairy, and
nonalcoholic beverages) continues to be sold at cost plus a 5 percent
surcharge, and other merchandise continues to be sold at regular
exchange prices--prices greater than cost to produce a profit.
According to the DOD instruction, the combined store must be
economically viable and not negatively impact morale, welfare, and
recreation dividends after authorized funding is provided. A combined
store will generate less profit than an independent exchange store
because the commissary grocery items sold at cost do not contribute to
profit. Combined stores may receive appropriated funds to defray
operating expenses up to 25 percent of the appropriations used in the
last full year of the independent commissary's operation.[Footnote 8]
The appropriations provided, as well as the profits generated, are
used to cover operating expenses. Any loss under this model that is
not covered by appropriations is borne by the exchange program.
By law, the number of combined stores in the United States shall not
exceed 10 at any given time.[Footnote 9] As of April 2011, there were
no combined stores operating in the United States.[Footnote 10]
According to DOD and Navy officials, the combined store model has not
proven to be economically viable.
DOD Used Available Guidance in Its Decision to Discontinue Commissary
Operations at NAS Brunswick, but Criteria Are Not Always Clear and Are
Open to Interpretation:
The Navy considered the governing DOD instruction in determining
whether to continue commissary operations at NAS Brunswick after the
installation closes. The Navy concluded that the NAS Brunswick
commissary met some elements of the general criteria, but did not meet
the economic criteria, based on its interpretation of the DOD
instruction. After considering the mission and personnel factors of
the general criteria, the Navy concluded that there will be an active-
duty mission and at least 100 active-duty armed service personnel not
on the installation, but within a 20-mile radius of NAS Brunswick upon
its closure. Additionally, regarding the geographic factor of the
general criteria, the Navy determined that the nearest commissary to
NAS Brunswick satisfied the distance and time thresholds stipulated in
the instruction. In considering economic criteria, the Navy analyzed
three options for continuing commissary operations and concluded that
none of them was fiscally responsible. Thus, the Navy recommended to
the Defense Commissary Agency Board of Directors that commissary
operations at NAS Brunswick be discontinued after the installation
closes.
Some Mission and Personnel Criteria for Commissaries Are Unclear and
Can Result in Inconsistent Implementation of DOD Guidance:
The Navy determined that NAS Brunswick met the mission and personnel
factors under the general criteria; however, we found that some of the
criteria are unclear and can result in inconsistent implementation of
the DOD guidance. In deciding whether to discontinue commissary
operations at NAS Brunswick, the Navy considered the following general
criteria in the DOD instruction pertaining to mission and personnel:
* The presence of an active-duty mission.
* The effect on active-duty personnel and their dependents.
* The presence of at least 100 active-duty personnel assigned to the
installation or stationed on and within a 20-mile radius of a closed
installation.
In accordance with the instruction, Navy officials told us that they
gave primary consideration to the effect on active-duty personnel and
their dependents when assessing whether to discontinue commissary
operations at NAS Brunswick. However, the instruction does not specify
how this effect should be measured and used as decision criteria. The
Navy determined that there will be no active-duty mission and active-
duty personnel stationed on the installation itself, but that there
will be an active-duty mission and at least 100 active-duty armed
service personnel within a 20-mile radius of NAS Brunswick upon its
closure. Nevertheless, the Navy applied the 100 active-duty personnel
threshold only to permanently assigned Navy active-duty personnel and
projected only 16 personnel would remain after the installation is
closed. Moreover, according to DOD's instruction, "as a general rule,
commissary operations are discontinued when an installation is
completely closed and no active-duty or reserve component personnel
remain on the installation." However, it is unclear what conditions
would constitute an exception to the general rule, and how the general
rule relates to the other criteria. Navy officials told us that there
currently are no commissary operations at any domestic Navy
installations which were closed under the base realignment and closure
process.
The instruction also gives DOD the flexibility to continue commissary
operations based on other considerations relevant to the mission and
personnel factors. Specifically, the instruction states that DOD may
continue to provide commissary support to active-duty personnel at or
"in the immediate vicinity" of a closed installation when a
"significant" population of active-duty or reserve personnel remain.
However, the DOD instruction does not define "significant" and "the
immediate vicinity." The Navy reported that NAS Brunswick will no
longer have an active-duty mission after September 2011. However, the
Navy's Supervisor of Shipbuilding, Conversion and Repair in Bath,
Maine is 7 miles away and will continue to have an active-duty
mission. According to Navy officials, about 150 to 200 active-duty
Navy personnel are assigned to this shipbuilding facility at any given
time, but only 16 are permanently assigned active-duty personnel. The
remaining 134 to184 active-duty personnel are precommissioning unit
personnel temporarily assigned for 4 to 18 months to the Navy
shipbuilding facility in Bath, Maine, who prepare the newly
constructed or renovated ships and eventually sail the ships to their
homeports. According to Navy officials, these personnel are not
accompanied by their family members and most are on temporary-duty
orders. DOD personnel on such orders receive per diem while assigned
to the Navy shipbuilding facility and consequently may obtain their
meals using their travel-authorized meals allowance. Thus, according
to Navy officials, the Navy concluded that the remaining 134 to 184
personnel do not need the commissary benefit. The DOD instruction is
not clear about whether to include personnel temporarily assigned to
an area when assessing the criterion that there are at least 100
active-duty personnel remaining within a 20-mile radius of a closed
installation.
Another section of the DOD instruction states that the supporting
Military Department should validate and document that at least 100
active-duty personnel shall be assigned to the installation or
stationed within a 20-mile radius, when considering whether to
continue commissary operations on a closed installation. As previously
stated, the Navy, in its analysis, acknowledged that there will be at
least 100 active-duty personnel within a 20-mile radius of NAS
Brunswick after the installation closes, and projected that 304
temporary and permanent active-duty armed service personnel will
remain in the area. However, as shown in table 1, only 170 of the 304
personnel are permanently assigned and most are not Navy active-duty
personnel.
Table 1: Number of Permanently Assigned Active-duty Personnel
Projected to Remain Within a 20-mile Radius of NAS Brunswick after the
Installation Closes in September 2011:
Armed service: U.S. Army;
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 26.
Armed service: U.S. Air Force;
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 3.
Armed service: U.S. Navy;
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 16[A].
Armed service: U.S. Marine Corps;
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 26.
Armed service: U.S. Coast Guard;
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 25.
Armed service: Maine National Guard (activated);
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 74.
Armed service: Total;
Permanently assigned active-duty personnel within 20-mile radius of
NAS Brunswick: 170.
Source: Navy's Evaluation for Continuing Commissary Operations at NAS
Brunswick, July 2009.
[A] These active-duty personnel will be assigned to the Supervisor of
Shipbuilding, Conversion and Repair in Bath, Maine, which is about 7
miles from NAS Brunswick.
[End of table]
According to Navy officials, the criterion of "at least 100 active-
duty armed service personnel shall be assigned to the installation or
shall be stationed on and within a 20-mile radius of a closed
installation" was applied to permanently assigned, active-duty Navy
personnel, and not to active-duty personnel from other military
services or the Coast Guard. Specifically, according to Navy
officials, only 16 permanently assigned active-duty Navy personnel
will remain within 20 miles of NAS Brunswick. Hence, according to Navy
officials, after the closure of NAS Brunswick, the Navy will no longer
meet the criterion of 100 active-duty personnel within 20 miles of a
closed installation. However, DOD's instruction does not specify
whether the minimum of 100 active-duty personnel within a 20-mile
radius must be of the service that hosted the commissary or whether
all service personnel must be considered in this decision. According
to federal best practices, policies and procedures should exist and
should be updated when needed to ensure that an agency's planning and
implementation activities are carried out as intended.[Footnote 11]
Without clear criteria, the potential exists for inconsistent
implementation of the guidance. Consequently, based on the guidance as
it is currently written, a military service has broad discretion in
recommending a commissary closure or a continuation decision.
In its analysis, the Navy projected that about 10,000 authorized
commissary patrons would be within 20 miles of NAS Brunswick after its
closure, including about 304 temporary and permanent active-duty armed
service personnel, 8,500 retirees and their dependents, 150 Marine
Corps reservists, and 1,000 Army reservists. Navy officials stated
that while they validated and documented the number of authorized
patrons expected to remain in the area after NAS Brunswick closes, its
recommendation to discontinue commissary operations when an
installation is completely closed and no active-duty or reserve
component personnel remain on the installation--which will be the case
when NAS Brunswick closes--is consistent with the instruction's
general rule.[Footnote 12] However, it is unclear how the military
services are supposed to use the reservists and retiree data in its
decisions to establish, continue, or discontinue commissary
operations. Navy and DOD officials told us that the other military
services were consulted through the Defense Commissary Agency Board of
Directors to determine their interest in continuing the commissary
operations at NAS Brunswick, and that none expressed interest.
The Navy Considered DOD's Geographic Criteria for Keeping the
Commissary Open, but the Relevance Is Unclear for Decisions to
Discontinue Commissary Operations:
The Navy considered DOD's geographic criteria for commissaries in its
analysis, and determined that it met this factor under the general
criteria because the nearest commissary at Portsmouth Naval Shipyard
in Kittery, Maine is at least 20 miles or a 30 minute one-way drive.
However, the relevance of the minimum required distance and travel
time for discontinuing commissary operations at NAS Brunswick is
unclear. The instruction states "while there may be some variance
depending on population density, civilian shopping alternatives, and
security of the military community in which the commissary is located;
there should be at least 20 miles or 30 minutes one-way driving time
to the nearest commissary." DOD officials told us that these values
were based on Defense Commissary Agency assumptions about the distance
and time that authorized patrons would most likely travel to shop at a
commissary--no more than 20 miles or 30 minutes each way.
The Navy calculated the distance and driving time between NAS
Brunswick and the nearest commissary at the Portsmouth Naval Shipyard
in Kittery, Maine, which is 89 miles or about 90 minutes one-way
driving time, easily satisfying the distance/time criteria of 20 miles
or 30 minutes one-way driving time.[Footnote 13] The Navy also
identified several civilian shopping alternatives, including grocery
stores and drug stores, within 2 miles of NAS Brunswick. According to
Navy and Defense Commissary Agency officials the distance and travel
time criteria are intended to create separation between commissaries
and avoid clustering commissaries within close proximity of one
another. However, it is unclear how a criterion intended to avoid
establishing too many commissaries in one location is relevant to
decisions to discontinue commissary operations. Without clear
geographic criteria, the services may come to inconsistent conclusions
in recommending the location of commissaries.
Table 2 describes our analysis of the general criteria in the DOD
instruction governing commissary operations, including the Navy's
interpretation of the criteria as it applies to NAS Brunswick.
Table 2: GAO's Analysis of the General Criteria in DOD's Commissary
Instruction:
Criteria in DOD Instruction 1330.17: The effect on active-duty
personnel and their dependents shall be given primary consideration
when assessing the need for a commissary and selecting its location;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
Navy officials stated they gave primary consideration to active-duty
personnel and their dependents when assessing whether to discontinue
commissary operations at NAS Brunswick;
GAO analysis of DOD criteria: It is unclear how effect should be
measured and used as decision criteria.
Criteria in DOD Instruction 1330.17: The military installation or
location shall have either a full time active-duty mission, or active-
duty armed service personnel who remain on a former installation and
within a 20-mile radius of the installation;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
The Navy determined that there will be no active-duty mission and
active-duty personnel stationed on the installation itself, but that
there will be an active-duty mission and at least 100 active-duty
armed service personnel within a 20-mile radius of NAS Brunswick upon
its closure. However, Navy officials stated that the 100 active-duty
personnel threshold was applied to permanently assigned, active-duty
Navy personnel, and not to temporarily assigned personnel, or active-
duty armed service personnel from other military services or the Coast
Guard;
GAO analysis of DOD criteria: It is clear that there will be an active-
duty mission within a 20-mile radius of NAS Brunswick; however, it is
unclear whether the active-duty armed service personnel should include
active-duty personnel from all military services and temporarily
assigned personnel.
Criteria in DOD Instruction 1330.17: At least 100 active-duty
personnel shall be assigned to the installation; or shall be stationed
on and within a 20-mile radius of a closed installation;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
According to Navy officials, the 100 active-duty personnel threshold
was applied to permanently assigned, active-duty Navy personnel
stationed within a 20-mile radius of the installation, and projected
only 16 personnel will remain after it closes;
GAO analysis of DOD criteria: It is unclear whether the 100 active-
duty threshold should be applied to active-duty personnel from all
military services and temporarily assigned personnel.
Criteria in DOD Instruction 1330.17: As a general rule, commissary
operations are discontinued when an installation is completely closed
and no active-duty or reserve component personnel remain on the
installation;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
Navy officials stated they have not continued commissary operations at
any domestic Navy installation closed under the base realignment and
closure process except NAS Barbers Point, Hawaii, which was continued
in response to a later base realignment and closure recommendation;
GAO analysis of DOD criteria: It is unclear what conditions would
warrant an exception to the general rule, and how the general rule
relates to the other criteria.
Criteria in DOD Instruction 1330.17: Validate and document the number
of families stationed on the installation and the number of patrons,
to include reservists and retirees, who expect to use the commissary;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
The Navy projected that approximately 10,000 authorized commissary
patrons will be within a 20-mile radius of NAS Brunswick when it
closes, including 8,505 retirees and their dependents, about 1,150
reservists, and 304 active-duty personnel. The number of family
members for the active-duty and reservists was unknown, and therefore
was not factored into the Navy's projection;
GAO analysis of DOD criteria: It is unclear how the reservist and
retiree data should be considered in decisions to establish, continue,
or discontinue commissaries.
Criteria in DOD Instruction 1330.17: DOD may continue to provide
commissary support to active-duty personnel at or in the immediate
vicinity of a closed installation when a significant active-duty or
reserve component population remains;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
The Navy determined that no active-duty personnel will be stationed on
NAS Brunswick upon its closure, less than 100 permanently assigned
Navy active-duty personnel will be stationed within a 20-mile radius,
and projected that about 10,000 authorized commissary patrons,
including about 1,150 reservists, will remain in the area;
GAO analysis of DOD criteria: The terms "significant" and "in the
immediate vicinity" are not defined.
Criteria in DOD Instruction 1330.17: While there may be some variance
depending on population density, civilian shopping alternatives, and
security of the military community in which the commissary is located,
there should be at least 20 miles or 30 minutes one-way travel time to
the next nearest commissary;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
The Navy determined that the nearest commissary to NAS Brunswick is 89
miles and 90 minutes one-way drive, satisfying the distance/time
criteria;
GAO analysis of DOD criteria: The next nearest commissary is more than
20 miles or 30 minutes one-way drive from NAS Brunswick; however, it
is unclear how this criterion applies to decisions to close
commissaries.
Source: GAO analysis of DOD information.
[End of table]
DOD Concluded that NAS Brunswick's Commissary Will Not Be Economically
Supportable After the Installation Closes:
The Navy considered DOD's economic criteria for commissaries in its
analysis, and concluded that continuing operations of the NAS
Brunswick commissary would not be economically supportable. However,
the instruction does not define "economically supportable," thereby
increasing the likelihood of inconsistent decisions about whether to
establish, continue, or discontinue commissaries. This is significant
because commissaries are not expected to be (and are not) self-
supporting, but rather are designed to provide a noncash benefit for
active-duty personnel and their dependents.
In evaluating the future of the NAS Brunswick commissary, the Defense
Commissary Agency prepared a business case analysis to verify whether
commissary operations are economically supportable, as directed by the
instruction. As part of the business case analysis for the NAS
Brunswick commissary, the Navy and the Defense Commissary Agency
considered two of three options based on the following factors: annual
cost of goods,[Footnote 14] total operating costs (as offset by
appropriated funds), surcharge revenues, future requirements in the
geographic area, and a 15-year market assessment of influences that
may affect the number of authorized patrons.[Footnote 15] The Navy
also considered a third option for continuing commissary operations at
NAS Brunswick.
Three Options Were Part of DOD's Analysis of Economic Supportability:
To determine if continuing commissary operations at NAS Brunswick
after the installation closes were economically supportable, the Navy,
with assistance from the Defense Commissary Agency, evaluated three
options. Option 1 was for the commissary to remain at its current
location, option 2 was for the commissary to relocate to a larger
building currently occupied by the Navy exchange store on NAS
Brunswick,[Footnote 16] and option 3 was to create a combined
commissary and exchange store. All three options are discussed below.
Option 1: Remain in the Current Commissary:
The Navy, with assistance from the Defense Commissary Agency,
evaluated the option of continuing operations of the NAS Brunswick
commissary at its current location in Topsham, Maine, and determined
that it was not economically supportable. Under this option, the Navy
would transfer ownership of the facility and land to the local reuse
authority when the installation closes and the local reuse authority
would lease the space--based on the average rental rates for
commercial retail space in the Brunswick area--back to the Navy to
continue its commissary operations. The Defense Commissary Agency
estimated that this option would cost nearly $3.7 million more in its
first year than for current operations. The bulk of the $3.7 million
increase would be from the one-time expense of $3.1 million to upgrade
the store's refrigeration system, which has not been replaced since
1999 and was due for an upgrade or replacement. Also, there would be
additional annual recurring costs of about $608,000 related to leasing
space ($506,000); and building maintenance, roofing, refrigeration
system, and heating and air-conditioning systems ($102,000). Moreover,
in addition to the $3.7 million increase, retail sales are projected
to drop about 12 percent (from about $9.2 million to about $8.1
million), and surcharge revenue is expected to decrease by 12 percent
(from $460,000 to $406,000) for fiscal years 2010 and 2012,
respectively. During the same time, the number of authorized patrons
is projected to decrease by nearly 48 percent to approximately 10,000
authorized patrons, the majority of whom will be military retirees.
For the same time period, the Navy also projected about a 3 percent
increase in operating costs (from about $2.1 million to about $2.2
million) and a corresponding 3 percent increase in appropriated funds
(from about $2.1 million to about $2.2 million) to cover operating
costs.[Footnote 17] According to Navy and Defense Commissary Agency
officials, the one-time and recurring costs to continue commissary
operations at NAS Brunswick after the installation closes would be
paid--depending on the specific costs--by the Navy, all of the
military services, or with funds from the surcharge revenue account.
Option 2: Relocate Commissary to Existing Exchange Store Facility:
The Navy, with assistance from the Defense Commissary Agency,
determined that relocating the commissary from its current location to
the larger exchange store facility[Footnote 18] at NAS Brunswick was
not economically supportable. Like option 1, the Navy would transfer
ownership of the facility and land to the local reuse authority when
the installation closes and the local reuse authority would lease the
space--based on the average rental rates for commercial retail space
in the Brunswick area--back to the Navy to continue its commissary
operations. The Defense Commissary Agency estimated that this option
would cost about $6.7 million more in its first year than current
operations. The bulk of the $6.7 million increase would be from the
one-time expense of $6 million to add a refrigeration system
(including processing areas, storage coolers, and freezers) since the
exchange facility currently does not have such equipment and the
commissary's current refrigeration system would not be used because it
was due for an upgrade or replacement. Also, there would be additional
annual recurring costs of about $764,000 related to leasing space
($629,000) and building maintenance, roofing, refrigeration system,
and heating and air-conditioning systems ($136,000).[Footnote 19]
Moreover, in addition to the $6.7 million, retail sales are projected
to drop about 12 percent (from about $9.2 million to about $8.1
million), and surcharge revenue is expected to decrease by 12 percent
(from $460,000 to $406,000) for fiscal years 2010 and 2012,
respectively. During the same time, the number of authorized patrons
is projected to decrease by nearly 48 percent to approximately 10,000
authorized patrons, the majority of whom will be military retirees.
For the same time period, the Navy also projected about a 3 percent
increase in operating costs (from about $2.1 million to about $2.2
million) and a corresponding 3 percent increase in appropriated funds
(from about $2.1 million to about $2.2 million) to cover operating
costs.[Footnote 20] According to Navy and Defense Commissary Agency
officials, the one-time and recurring costs to continue commissary
operations at NAS Brunswick after the installation closes would be
paid--depending on the specific costs--by the Navy, all of the
military services, or with funds from the surcharge revenue account.
Option 3: Combined Commissary and Exchange Store Operations:
The DOD instruction states that a combined commissary and exchange
store will be considered in cases where an independent commissary is
not economically supportable due to, among other things, an
installation's closure. The instruction provides specific guidance for
assessing a combined store's operations. For example, the DOD
instruction states that a combined store must be economically viable
and not negatively impact morale, welfare, and recreation dividends
after authorized funding is provided. Specifically, the instruction
states that a combined store that has a financial loss in 2
consecutive years or 2 out of 3 years shall close. Furthermore, the
instruction states that the cost for the combined grocery store
operations must yield at least a 10 percent annual savings compared to
the operating costs of an independent commissary. The Navy evaluated
the combined store option at NAS Brunswick and determined that it was
not economically viable because it would result in a net loss of about
$2.4 million after its first year of operation (with a projected
source of funds of about $13.5 million and a projected use of funds of
about $15.9 million). Some of the key assumptions in the analysis were
a leasing cost of about $629,000, general and overhead expenses of
about $2.2 million, personnel expenses of about $1.4 million, and a
partial offset of about $618,000 in appropriated funds.[Footnote 21]
The DOD instruction also requires that the combined store complement
the local reuse authority plan and have written support from the local
governments immediately surrounding the closed installation. The Navy
considered the local reuse authority's plan that assessed the
redevelopment of NAS Brunswick after closure. Navy and local
government officials stated that the plan includes a mixed land use
area that allows the development of a retail facility that could house
an independent commissary or a combined store, but acknowledged that
the plan does not include funding that would defray the commissary's
or combined store's operating costs. However, as described in the DOD
instruction, the city managers for the local governments of Brunswick
and Topsham submitted written support for keeping commissary
operations in the Brunswick area.
Table 3 describes our analysis of the economic and combined commissary
and exchange store criteria in the DOD instruction governing
commissary operations, including the Navy's interpretation of the
criteria for NAS Brunswick.
Table 3: GAO's Analysis of the Economic and Combined Store Criteria in
DOD's Commissary Instruction:
Criteria in DOD Instruction 1330.17: A business case analysis shall be
prepared to verify that the commissary operation is economically
supportable;
Navy's interpretation of DOD criteria for NAS Brunswick commissary:
The Navy evaluated a business case analysis for two options: (1)
continuing the commissary at its current location, (2) relocating the
commissary to the existing exchange facility at the installation. For
these two options, the Navy determined that continuing operations at
NAS Brunswick would not be fiscally responsible because of the loss of
an active-duty mission on the installation, a sharp decline in the
population of authorized patrons, and projected one-time equipment
replacement and recurring costs for each option totaling $3.7 and $6.7
million, respectively, more in its first year than for current
operations;
GAO analysis of DOD criteria: The instruction provides a number of
factors that should be included in the analysis, but the term
"economically supportable" is not defined.
Criteria in DOD Instruction 1330.17: A combined commissary and
exchange will be considered in cases where an independent commissary
is not economically feasible and supportable due to base closure,
military force structure changes, or where nearby stores produce
overlapping or redundant delivery of the commissary benefit. Among
other things, a combined store operation with a loss of two
consecutive years or with a loss of two out of three years shall close;
Navy's interpretation of DOD criteria for NAS Brunswick commissary: As
a third option, the Navy evaluated establishing a combined commissary
and exchange store. The Navy determined that a combined store would
not be economically viable because it would result in a net loss of
about $2.4 million after its first year of operation;
GAO analysis of DOD criteria: This criterion is clear because the DOD
instruction provides specific circumstances for when a combined store
should be considered and gives specific guidance for assessing the
economic viability of a combined store's operations.
Source: GAO analysis of DOD information.
[End of table]
Conclusions:
The commissary program is an integral element of the military pay and
benefits package for active-duty personnel. DOD's decision to
discontinue commissary operations at NAS Brunswick was based on
criteria that are not always clear and are open to interpretation.
Specifically, the DOD instruction on commissary operations does not
establish clear criteria for when to establish or continue a
commissary versus when to discontinue a commissary. Additionally, the
instruction does not clearly explain how the effect on active-duty
personnel and their dependents should be measured and how it should be
used as decision criteria when assessing whether to establish,
continue, or discontinue a commissary. Also, the instruction does not
explain what conditions would warrant an exception to the general rule
to discontinue commissary operations when an installation closes and
how the general rule relates to the other criteria. Furthermore, the
instruction does not clearly define several key terms--such as
"significant," "in the immediate vicinity," and "economically
supportable"--that the military services and Defense Commissary Agency
Board of Directors must consider as they recommend whether to
establish, continue, or discontinue a commissary. Moreover, the
instruction is not clear on whether the criterion of at least 100
active-duty service members at an installation is specific to one
service or all military services in a geographic area and includes
temporarily assigned personnel, and whether the minimum distance and
travel time criteria are relevant to the decision to discontinue
commissary operations. As a result, the military services and the
Defense Commissary Agency Board of Directors may apply the same
guidance differently and therefore incur a risk of making inconsistent
recommendations and decisions on when to establish, continue, or
discontinue commissaries. Our recommendations focus on enhancing
clarity and consistency in the DOD guidance governing commissaries.
Recommendations for Executive Action:
To facilitate consistent decision making for commissary operations, we
recommend that the Secretary of Defense direct the Under Secretary of
Defense (Personnel and Readiness) to revise its commissary guidance
for the services. In revising the guidance, at a minimum, DOD should
consider the following six recommendations:
* Clarify which guidance--if any--applies only to discontinuing
commissary operations, and which guidance--if any--applies only to
establishing or continuing commissary operations.
* Describe how effect on active-duty personnel and their dependents
should be measured and used as decision criteria when assessing
whether to establish, continue, or discontinue commissary operations.
* Describe what conditions would warrant an exception to the general
rule to discontinue commissary operations when an installation closes
and how the general rule relates to the other criteria.
* Define or clarify key terms, such as "significant," "in the
immediate vicinity," and "economically supportable."
* Specify whether the minimum of 100 active-duty personnel criterion
is a service-specific or DOD-wide requirement and whether temporarily
assigned active-duty personnel should be included.
* Explain the relevance of the distance and time measures to the
nearest commissary in making decisions on whether to discontinue
commissary operations.
Agency Comments and Our Evaluation:
In written comments to a draft of this report, DOD concurred with all
six of our recommendations and provided a plan of action for
implementing each of the recommendations. Specifically, DOD stated
that the revisions and clarifications required to address each of the
recommendations will be included in the next version of the DOD
Instruction 1330.17, Armed Services Commissary Operations; however,
DOD did not specify a time frame for issuing the next version. Once
the revisions are incorporated into the commissary guidance, we
believe there will be less likelihood of making inconsistent
recommendations and decisions on when to establish, continue, or
discontinue commissaries. DOD also provided technical comments, which
we incorporated as appropriate. DOD's comments are reprinted in
enclosure I of this report.
As agreed, unless you publicly announce the contents of this report
earlier, we plan no further distribution until 30 days from the report
date. At that time, we will send copies of this report to the
appropriate congressional requesters and committees. We will also send
copies to the Secretary of Defense; the Secretary of the Navy; the
Director of the Defense Commissary Agency; and the Director, Office of
Management and Budget. The report will be available at no charge on
GAO's Web site at [hyperlink, http://www.gao.gov]. If you or your
staff have any questions on this report, please contact me at (202)
512-4523 or leporeb@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made significant contributions to
this report are listed in enclosure II.
Signed by:
Brian J. Lepore:
Director, Defense Capabilities and Management:
[End of section]
Enclosure I: Comments from the Department of Defense:
Under Secretary Of Defense:
Personnel and Readiness:
4000 Defense Pentagon:
Washington, D.C. 20301-4000:
April 11, 2011:
Mr. Brian J. Lepore:
Director, Defense Capabilities and Management:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Mr. Lepore:
This is the Department of Defense (DoD) response to the GAO Draft
Report, GAO-11-266R, "Defense Infrastructure: DoD Used Available
Guidance in Its Decision to Discontinue Commissary Operations at NAS
Brunswick, but Criteria Needs Clarification," dated March 4,
2011 (GAO Code 351547). DoD concurs with the report and provides the
enclosed comments.
Thank you for the opportunity to comment.
Sincerely,
Signed by:
Clifford L. Stanley:
Enclosure: As stated:
[End of letter]
GAO Draft Report Dated March 4, 2011:
GAO-11-266R (GAO CODE 351547)
"Defense Infrastructure: DoD Used Available Guidance in Its Decision
to Discontinue Commissary Operations at NAS Brunswick, but Criteria
Needs Clarification"
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
revise its commissary guidance for the services by clarifying which
guidance-if any-applies only to discontinuing commissary operations,
and which guidance-if any-applies only to establishing or continuing
commissary operations.
DoD Response: Concur. The policy for establishing and disestablishing
commissary operations will be clarified in the next revision of the
DoD Instruction 1330.17, "Armed Services Commissary Operations."
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
revise its commissary guidance for the services by describing how the
effect on active-duty personnel and their dependents should be
measured and used as decision criteria when assessing whether to
establish, continue, or discontinue commissary operations.
DoD Response: Concur. Criteria to measure the effect on active duty
personnel and their dependents will be included in the next revision
on the DoD Instruction 1330.17, "Armed Services Commissary Operations."
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
revise its commissary guidance for the services by describing what
conditions would warrant an exception to the general rule to
discontinue commissary operations when an installation closes and how
the general rule relates to the other criteria.
DoD Response: Concur. The procedure and criteria under which
commissary operations may continue after an installation closes will
be clarified in the next revision of the DoD Instruction 1330.17,
"Armed Services Commissary Operations."
Recommendation 4: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
revise its commissary guidance for the services by defining or
clarifying key terms. such as "significant," "in the immediate
vicinity." and "economically supportable."
DoD Response: Concur. Any key terms included in the next revision to DoD
Instruction 1330.17, "Armed Services Commissary Operations," will be
clearly defined.
Recommendation 5: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
revise its commissary guidance for the services by specifying whether
the minimum of 100 active-duty personnel criterion is a service-
specific or DOD-wide requirement and whether temporarily assigned
active-duty personnel should be included.
DoD Response: Concur. The minimum DoD-wide active-duty personnel
criterion, and as to whether temporarily assigned personnel should be
included, will be addressed in the next revision of the DoD
Instruction 1330.17, "Armed Services Commissary Operations."
Recommendation 6: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense for Personnel and Readiness to
revise its commissary guidance for the services by explaining the
relevance of the distance and time measures to the nearest commissary
in making decisions on whether to discontinue commissary operations.
DoD Response: Concur. DoD will review and validate the relevance of
these criterions in the next revision of the DoD Instruction 1330.17,
"Armed Services Commissary Operations."
[End of enclosure]
Enclosure II: GAO Contacts and Acknowledgments:
GAO Contact:
Brian J. Lepore, Director, (202) 512-4523 or leporeb@gao.gov.
Acknowledgments:
In addition to the contact listed above, key contributors to this
report include Marc J. Schwartz, Assistant Director; Jacqueline S.
McColl; Charles W. Perdue; Richard S. Powelson; Hia Quach; and Michael
Willems.
[End of enclosure]
Footnotes:
[1] Department of Defense Instruction 1330.17, Armed Services
Commissary Operations (Oct. 8, 2008). The DOD instruction has two
categories of criteria for evaluating the establishment, continuance,
and discontinuance of commissaries: general criteria and economic
criteria. Unless indicated otherwise, the term "DOD instruction"
refers to DOD Instruction 1330.17.
[2] The general criteria include active-duty mission, personnel, and
geographic factors.
[3] Navy officials stated there has been one instance in which the
Navy kept a commissary open temporarily after a base closed through
the base realignment and closure process--Barbers Point, Hawaii. The
1993 Defense Base Closure and Realignment Commission recommended that
the Naval Air Station at Barbers Point be closed, but that family
housing at Barbers Point be retained for multiservice use. However,
the 1995 Defense Base Closure and Realignment Commission amended the
1993 Commission's recommendation to require certain family housing
support facilities at Barbers Point (including the commissary
facility) to remain open as well. Section 2843 of the John Warner
National Defense Authorization Act for Fiscal Year 2007 provided the
Secretary of the Navy authority to dispose of certain real estate at
the former Naval Air Station Barbers Point, including the facilities
housing the commissary. Pub. L. No. 109-364 (2006). The Navy conveyed
the facilities to a private developer, and discontinued commissary
operations at Barbers Point in May 2010.
[4] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[5] 10 U.S.C. § 2484.
[6] This approval process was followed for the decision to discontinue
commissary operations at NAS Brunswick.
[7] Exchange stores are nonappropriated fund entities, operating as
profit and loss enterprises. Exchange stores price their merchandise
above their cost to pay operating expenses and to generate a profit
that pays dividends to the military services' morale, welfare, and
recreation programs. Exchange stores sell items typically found in
commercial department and discount stores (e.g., clothing, shoes, and
vending machine items). The Navy Exchange Service Command oversees
more than 1,200 worldwide exchange stores and service operations such
as gas stations, food outlets, and barber and beauty salons, and
provides authorized patrons with an average savings of 22 percent (not
including sales tax) when compared to commercial retail prices.
[8] 10 U.S.C. § 2488(e)(2).
[9] 10 U.S.C. § 2488(b)(1).
[10] According to DOD officials, four combined stores have been
established in the continental United States in response to a base
realignment and closure decision to close the host installation: a
Navy combined store in Orlando, Florida that was operated by the Navy
Exchange Service Command; and three combined stores operated by the
Army and Air Force Exchange Service Command at Fort McClellan,
Alabama; Naval Air Station Fort Worth, Joint Reserve Center, Carswell
Field, Texas; and Homestead Air Reserve Base, Florida. All four
combined stores have subsequently closed.
[11] GAO, Standards for Internal Control in the Federal Government,
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]
(Washington, D.C.: November 1999).
[12] The number of family members for the active-duty and reservists
was unknown, and therefore not factored into the 10,000 estimate the
Navy used in its evaluation.
[13] Other commissaries identified by the Navy are at Bangor Air
National Guard Base, Maine, which is approximately 110 miles or a 2
hour one-way drive from NAS Brunswick; and at Hanscom Air Force Base,
Massachusetts, which is approximately 139 miles or a 2.5 hour one-way
drive from NAS Brunswick.
[14] The cost of goods includes the invoice cost of the items plus an
additional 1 percent for theft, spoilage, or damage to goods, known as
"shrinkage." DOD refers to the cost of goods as retail sales.
[15] Influences considered in a 15-year market assessment include: (1)
changes in the military community (such as changes in installation
mission, active-duty presence, or family housing); (2) changes in
adjacent civilian communities (such as the number of commercially
available groceries); and (3) changes in adjacent communities
affecting the number of authorized patrons expected to use the
commissary.
[16] The Navy exchange store on NAS Brunswick is scheduled to close by
September 15, 2011, when the installation is closed.
[17] For fiscal year 2010, actual total value of appropriated funds
was $2.3 million to cover commissary operating costs. However, for
reporting purposes we used projected figures because actual data were
not available for all data elements.
[18] The exchange store facility has 52,381 gross square feet compared
to the current commissary facility, which has 33,724 gross square feet.
[19] Totals do not add due to rounding.
[20] For fiscal year 2010, actual total value of appropriated funds
was $2.3 million to cover commissary operating costs. However, for
reporting purposes we used projected figures because actual data were
not available for all data elements.
[21] In accordance with 10 U.S.C. § 2488(e)(2), the appropriated funds
provided for a combined store can not exceed 25 percent of the amount
provided during the last full year that the Defense Commissary Agency
operated the commissary.
[End of section]
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site [hyperlink, http://www.gao.gov]. Each
weekday, GAO posts newly released reports, testimony, and
correspondence on its Web site. To have GAO e-mail you a list of newly
posted products every afternoon, go to [hyperlink, http://www.gao.gov]
and select "E-mail Updates."
Order by Phone:
The price of each GAO publication reflects GAO‘s actual cost of
production and distribution and depends on the number of pages in the
publication and whether the publication is printed in color or black and
white. Pricing and ordering information is posted on GAO‘s Web site,
[hyperlink, http://www.gao.gov/ordering.htm].
Place orders by calling (202) 512-6000, toll free (866) 801-7077, or
TDD (202) 512-2537.
Orders may be paid for using American Express, Discover Card,
MasterCard, Visa, check, or money order. Call for additional
information.
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
