Modernizing Military Compensation: The Commissary Benefit and Evaluating the Need for Reform

The commissary benefit is a traditional part of the military compensation package. The benefit provides service members, retirees, and their families’ access to military installation grocery stores known as commissaries which sell brand name food items at-cost–typically a 30 percent savings to the patron compared to private sector grocers—with the addition of a nominal surcharge. Commissaries are operated by the Defense Commissary Agency (DeCA), which currently receives $1.3 billion in annual congressional appropriations, nearly $300 million more than a decade earlier. The steady rise in cost has encouraged some policy makers to consider reform to manage overall military personnel costs.

BENS found the increased cost of the program has largely been attributed to inflation. Numbers from the Department of Defense (DoD) in fact show that the cost of the commissary system has steadily decreased or flattened since the inception of DeCA in 1990 if cost is evaluated through constant dollars. The oft-cited rise in costs can therefore be misleading absent this perspective.

Additionally, BENS found the benefit appears to have strong value. The commissary benefit makes up two percent of an active duty officer’s and four percent for active duty enlisted’s compensation while costing less than one percent of the military compensation budget. DeCA estimates military families are receiving $3 billion in annual savings for DoD’s $1.3 billion dollar investment – more than a 2:1 return on investment. Meanwhile, informal survey results from the Army Times and the Center for Strategic and Budgetary Assessments indicate service members from all ranks and age groups value the benefit more than it costs to provide.

There are a number of reforms various groups have proposed for reducing the commissary’s annual appropriations. They range from allowing commissaries to close and encouraging private sector grocers to offer unique discounts to military families, to increasing the surcharge customers pay to cover commissary maintenance. Each proposal has various advantages and shortcomings, and BENS outlines considerations for several of the more prominent recommendations. BENS believes metrics and valid business cases should drive change and recommends policy makers gather and consider more information before making changes to the commissary benefit. While the rise in the commissary benefits’ actual cost is not trivial, the benefit does show a positive return. More formal surveys of service members and retirees can better highlight the value of the benefit to individuals and further determine the benefit’s return on investment. Key metrics, like return on investment, should drive the impetus of change.