Commissary officials have taken the first step toward the potential privatization of the military grocery stores, seeking input from the commercial grocery industry on whether they could take over the operation of 178 commissaries across the continental United States, Alaska, Hawaii and Puerto Rico.
The Defense Commissary Agency released an official Request for Information, or RFI, on sam.gov, the federal government’s contracting site, on Friday. It’s a preliminary step before a Request for Proposals could possibly be issued.
“The purpose of this RFI is to determine whether commercial grocery operators and investment firms are both interested in and capable of assuming commissary operations, with no government subsidy or with a materially reduced subsidy, while preserving the critical military benefit of a 23.7% average savings for authorized patrons,” commissary officials stated in an announcement Friday.
Commissary stores receive more than $1.4 billion annually in taxpayer dollars to cover operational costs, including salaries and other costs, which enables the stores to provide the commissary benefit at a savings to patrons.
The request is the result of the Defense Department’s April 7 memorandum, which directs all functions that are not inherently governmental to be prioritized for privatization. It specifically cites retail sales and recreation as examples.
Military advocates have historically opposed proposals to privatize commissaries, voicing skepticism about the ability of a private entity to operate commissaries profitably and still deliver the benefit to military families.
The commissary’s average savings of 23.7%, compared to local commercial grocery stores, is required by law. The RFI also includes another possible option for grocers: offering the 23.7% discount to eligible military patrons at their existing commercial grocery locations, which would mean it would not be necessary to keep all or a portion of existing commissaries.
But there’s a $2.4 billion caveat, according to the RFI. The Defense Department is also asking industry whether it can address the existing unfunded facilities maintenance backlog for commissaries through a $2.4 billion one-time infrastructure investment of about $500 million per year for up to five years, along with covering annual maintenance costs of around $250 million.
If DOD decides to privatize commissaries, the buildings and infrastructure may be offered to the operating commercial entity rent-free, according to the RFI, and in as-is condition, subject to the terms of the privatization agreement.
Industry should assume there will be no government subsidy, the RFI notes, but if a subsidy is required, industry should provide a general estimate of the amount of money needed, according to the RFI.
Industry should also assume operations will be conducted in accordance with all applicable laws and regulations, the RFI notes. The privatizing entity will be required to provide access to commissary food in any defense threat level that may require operations or delivery on a federal facility. DOD deemed commissaries’ mission essential during the COVID-19 pandemic.
The store locations will remain the same, and the requirements for military installation access will remain unchanged.
The deadline for responses to the RFI is Oct. 21.
Karen has covered military families, quality of life and consumer issues for Military Times for more than 30 years, and is co-author of a chapter on media coverage of military families in the book “A Battle Plan for Supporting Military Families.” She previously worked for newspapers in Guam, Norfolk, Jacksonville, Fla., and Athens, Ga.
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