Evaluation of directly subsidizing commercial supermarket discounts as an alternative to providing CONUS commissaries

Abstract

Congress over the years has debated the merits of having the Defense Commissary Agency (DeCA) operate commissaries. In 1997, the Congressional Budget Office (CBO) produced a study that evaluated the costs and benefits of retail activities, exchanges and commissaries, at military bases and recommended four alternatives for Department of Defense (DoD) to consider for improving operation of its retail activities. This thesis examines the feasibility of an additional alternative: to replace Continental United States (CONUS) commissaries by subsidizing commercial supermarkets for discounts provided to eligible service- members. To evaluate the feasibility of this alternative, the potential finding available was compared to the potential costs. The potential finding would come from the reduction in DeCA's annual appropriation resulting from eliminating CONUS commissaries. The potential costs include the cost of subsidization. Estimates of subsidization costs were based on data for grocery expenditures, range of family sizes, amount of discount offered to eligible service-members, and the portion of the discount subsidized by the government. The analysis reveals that the feasibility of this alternative depends significantly on the subsidy policies DoD may choose to adopt.