Transcript ALA Public Policy Advocacy

ALA is a Full Partner in Protecting Benefit
 Association definition: An organization of
people with a common purpose
 Do collectively what we can’t do individually
 All have day jobs—dealing with business
issues like bosses, clients, competitors
 Representing common interest items
 Work with Agencies, HASC, SASC, HAC, SAC,
SFC, GRO, HSGAC, W & M and others
National Budget Deliberations
 Disagreement over cuts versus taxes
 Different plans—Ryan, Gang of 6,
Erskine/Simpson DR, Obama $4T 12 years—
included CBO Budget Option for military resale
 Coburn Proposal--$9 Trillion over 10 years—
included CBO Budget Option for military resale
 Senate Veterans Committee Proposal
 Budget Control Act of 2011
Defense Budget Timetable
 February 14—President submitted $671B Defense Budget—
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includes $118B in war funding
$571B in 2013, $586B in 2014, $598B in 2015 and $611 B in
2016—not counting wars
Services pledged $100B in savings over five years
Appropriations apportionment
FY 2012 Appropriations Bills
NDAA conference on-going
Budget Control Act of 2011—August 2, 2011
Budget Control Act Super-Committee deliberations on-going
Gates Efficiency Initiatives
 Guidance just out to find $70-$100B in cuts in addition of
$178B already identified
 March 14 Gates memo:
 $13B in cuts from OSD, combatant commands and Defense
agencies
 DeCA—organizational restructuring, $6M savings, eliminate
outreach and marketing, health and nutrition program,
annual commissary assessment, eliminate administrative
positions
 Convert commander AAFES and NEXCOM to SES
Gates Efficiency Initiatives
 $8 billion in 2012 ($2B per Service)
 $3 B then $4 B then $7 B
 Agencies $1 billion
 $2 B then $3 B then $7 B
 Services keep savings
 New guidance for 2013—more cuts, efficiencies and savings
 Will force transformation/innovation
Appropriations Apportionment
 $121B in cuts Federal wide for FY 2012
 DoD will receive $17B less than 2011
 $8.9B less than President’s request
 SASC, HAC, SAC, HASC all cutting Defense requests
 In past, would make up in supplemental requests
 Flexibility door closes for restoration as supplementals are
more closely monitored
Budget Control Act of 2011
 FY 2011 Continuing Resolution Fight/Resolution
 Near-term—Gates Cuts
 Budget Control Act of 2011
 2012: DoD $525 B—$5B below 2011, $25 B less than
requested
 Beyond 2013: Caps on overall discretionary spending—$350B
to DoD over 10 years in line with $400B Obama cuts by 2023
 Next round: Doomsday Machine—$54.7 billion in Defense cuts
each year beginning in 2013 through 2021
Budget Control Act of 2011
 Caps discretionary spending through 2021
 Require vote on balanced budget amendment
 Establish procedure to increase debt limit by $400 B
 Establish procedures to allow increase in two steps for cumulative increase
between $2.1 and $2.4 Trillion
 Create “Super Committee” or Congressional Joint Select Committee on Deficit
Reduction
 Senate—Baucus, Kerry, Portman, Murry, Toomey, Kyl
 House—Camp, Beccerra, Clyburn, Hensarling, Upton, Van Hollen
 Committee must achieve by Nov. 23 $1.8 Trillion in savings over 10 years —
must pass Dec. 23.
 If deadlines not met—and President does not sign a bill to cut spending by
$1.2 T by Jan. 15, 2012, Trigger pulled—but not enforced until January 2013
Budget Control Act of 2011
 Half of $1.2T from Security (050)
 Exempts health care, retirement, wars with option to exempt military pay
 Ax falls on O&M, Procurement, R&D—O&M outlay rich
 Committee could come in under $1.2T—deduct passed legislation from the
$1.2T
 Consequences January 2013 (after election)
 Trigger worst case—$99B cuts in 2013, $970B over 10 years
 July 29, 2013 DoD budget proposals were submitted
 Cuts already hitting some sectors—Air Force, Army, Navy base operations
reductions—i.e. 6500 IMCOM positions cut in 2012
Budget Control Act—Defense
 Can’t touch wars
 DoD already building budget for $400 B in reductions--will have to adjust
for new reductions
 Worst case, DoD another $600 Billion over 10 years
 Appropriators already resetting their allocations
 DoD already readjusting budget
 Debt ceiling deal forces appropriators to reset their allocations to Defense
 DoD had planned on $400 B in reductions on top of Gates reductions of
$172 billion —now must plan for another $400 Billion to $1 Trillion over 10
years
FY 2012 NDAA
 Funds DeCA, Exchange, and MWR request
 Report on extending commissary and exchange benefits to
Federal employees overseas—reimbursed
 3% withholding—exempt resale and MWR
 Treasury has capability to certify compliance
 Judicious use of IRS capability to determine tax status can be used to exempt
DeCA, Exchanges and MWR without loss of revenue to government
 Exchanges may access Federal Financing Bank. Saves $30-$50M
— Sec 645
FY 2012 NDAA
 Expanded contracting authority for NAF—Sec 642
 May enter into single or multi-year contracts
 Private sector, other DoD or Federal agencies
 To provide or obtain goods and services beneficial to military
community and effective management of NAFIs
 Authorize NAFIs to participate in partnerships with private sector
to provide services on military bases
NDAA Provision —
”Enhanced” Commissary Stores
 Can sell alcoholic beverages and tobacco and other items
determined by the SecDef
 Eliminates pricing restriction of Title 10 for these new items.
 SecDef determines pricing but not more than 10 percent below
outside retail.
 Net can be used to offset costs.
 Cannot operate after December 2013
 New budget item to working capital fund and adds $2 million
CBO Budget Option
 Included with Deficit Reduction Commission Report
 Comments sought by OMB on proposal
 Components
 Exchanges have more flexibility in procurement and personnel
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practices than DeCA
Consolidate Exchanges and DeCA
Eliminate duplicative administration
Convert commissary employees to NAF
Consolidate over 5 years
At year 6 budget authority lowered by $2 billion/year
Return 1/3 of the $2 billion to Active Duty with grocery allowance
CBO Budget Option Components
 Grocery allowance phased in to coincide with consolidation at
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each base
Net annual savings by 2016 would be $1 billion
Save $8 billion in outlays over next decade
Charge 7 percent more for groceries
Would cost active duty, retired and reserve $1.4 billion
annually
Active duty would pay $400 more per year offset by grocery
allowance
CBO Budget Option Components
 Families benefit from longer store hours, one-stop shopping,
access to private label currently not authorized in DeCA
 Greater certainty in benefit not subject to appropriations.
 $400 grocery allowance targeted to specific pay grades with
larger allowances to junior enlisted
 Consolidated system better able to compete with off-base
enterprises
 Retirees would pay $325 more per year on groceries
Exchange Consolidation
 Proposed by H.R. 649—Welch/Doggett
 Consolidate by January 1, 2013
 No appropriations used thereafter
 Referred to HASC
 Title 10 currently prohibits
 Sitting in committee
S 277—Senate Veterans Affairs Bill
 Passed full Senate Veterans Affairs Committee
 Eliminates all Title 10 prohibitions to CBO option
 Eliminates key Title 10 protections—pricing, stock
assortments, consolidation restrictions
 Single system by 2013
 Self sustaining by 2016
 CBO estimates 20 percent savings from efficiencies, rest from
increased prices in combined system—7 percent price increase
 Saves $2.5 B from 2013-2016
S 277 Co-Sponsors
 Burr—NC
 Blumenthal—CN
 Graham—SC
 Grassley—IA
 Hagan—NC
 Harkin—IA
 Isakson—GA
 Johanns—NE
 Leahy—VT
 Nelson—FL
O&M Defense Commissary Agency & Exchanges—
HASC Report 9/11
 “Appropriated funds for commissaries and exchanges reduced in
FY 13 and eliminated in FY 14”
 “Grocery savings for families are decimated (30% reduced to 15%
or even zero)”
 “Option—elimination of exchanges in favor of self-sustaining
enhanced commissaries exclusively selling high profit exchange
goods”
 “Exchanges on life support except where they can still make a
profit selling limited range of goods and overseas where they will
required some appropriated fund support—exchange support of
MWR stops”
ALA Assault on S 277 & CBO Cut
 Increase grocery prices while increased food stamps
 Guts key part of White House military family effort
 Throw 50,000 family members and Vets out of work
 Take away benefit while fighting two wars
 Take away billions invested by shareholders
 Force military overseas to shop off base
 Gut funding for critical military community programs
 Kill key public/private partnership program
 Kill programs rating highest on federal accountability
ALA Testimony
 To HASC Personnel Subcommittee--February 10, 2011:
 Defend funding for full benefit
 5:1 ROI—savings, COLAs, infrastructure improvements, family
employment, Industry in-kind support, transportation efficiencies,
retention value
 Cost constant—other programs increased 100-200%
 Accountable stewards
 DeCA $1 billion in annual efficiencies since 1991—Efficiencies
continue—DeCA August 5, 2011 announcement
 Exchanges inherently efficient, direct mission support
 Cost cutting in DNA
 Single, affordable base access cards
Congressional Support Gathering
 ALA, Marketing Council, COMID, Military Coalition
 Appropriations Committees Chairmen Stated Support
 67 Members signed letter to Sec. Panetta “…commissaries and exchanges
should remain insulated from radical restructuring.”
 Letter to Defense Business Board by Wilson/Davis
 Wilson/Davis Op-ed August 14—Washington Times:
 “…the purpose, power and efficiency of the commissary and exchange systems
must not be overlooked.” “…the need to care for military families is a top
priority for Congress.” “(discontinuing) these programs would increase costs to
military families, cause higher unemployment for families, and would end one
of the government’s most efficient programs.”
69 Members of Congress to
Secretary of Defense Panetta 7/21
 “Look past the rhetoric by budget-minded advocates and
understand the immense value and cultural necessity of the
military resale systems.”
 “Few programs can match the power of military commissaries
and exchanges to rally and solidify the security and strength of
the military community.”
 “Are among the most highly prized benefits.”
 “Consider the purpose, power and efficiency of commissary
and exchange activities.”
 “Should be insulated from radical restructuring.”
HASC Committee Report 9/22
 “Breaking faith with the military.”
 “Cuts of this magnitude require a fundamental cultural
shift in the commitment to DoD school systems,
military commissaries and exchanges, and other
morale, welfare and recreation programs, significantly
reducing support of military families and retirees.
Family readiness will be degraded.”
HASC to Defense Business Board
 “We are aware that the Defense Business Board has been examining
commissary and exchange programs in recent months (and) …inclined to
recommend the current military resale systems be dismantled and the
benefit reduced or eliminated.”
 “Military resale stores … contribute directly to the welfare of the military
communities that sustain the combat readiness of our deployed forces.”
 “These programs are highly efficient and effective in delivering this
important benefit and we strongly believe it would be a tragic waste of a
treasured benefit if they were to be discarded.”
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Economic Case
 Resale has constantly been in cost cutting or no
growth mode
 Other QoL areas realizing 30, 40, and often 100 & 200
percent increases
 Talking about health care co-pays: We’ve always had
co-pays—it’s called mark-ups and surcharge
Resale Benefit—Huge ROI to DoD
 $8 billion in savings at cash register
 Hundreds of millions in cost avoidance to DoD COLAs
 $600 million annually in improvements to DoD’s physical plant
 Non-pay compensation
 30,000 family members employed adding $900 million to their
households
 20,000 family members employed by industry adding another
$600 million to household income
 $400 million in MWR contributions
Ingrained in the OSD Fabric
 Not inextricable without a major cost
 Adapts for force structure
 Brigade re-stationing
 BRAC
 Underpins transportation system
 Maintains ties with installations
 Supports deployed forces
Economic Case
 Underpins DoD’s overseas transportation system
 $150,000 to $200,000 to train a troop and $1 million
for pilots, doctors, specialists
 70 percent increase in food stamp redemption
 Sunk costs – buying the car but not putting gas in it
 Sales imperative—increase share of AD who use
benefit
 Don’t buy the car and not put gas in it
Equity
 Patrons are shareholders
 They have equity in the system
 Management runs the system but patrons own it
 Have invested billion in capital through surcharge and
mark-ups and have capitalized at nearly $50 billion
 Contribute $600 million each year
 Have taken capital loss at closed and realigned bases
 Can’t take what’s not yours
DeCA is Efficient Agency
 Savings from consolidation
 Savings from distribution
 August 5, 2011 announcement
 Director Jeu:
“…we will become more efficient, streamlined, and strategically organized”.
“DeCA has emerged from growing pains of consolidating four systems. We
are living testimony for DoD on how an agency can save taxpayer funds by
eliminating redundant command structures and business systems, reduce
the number of people to manage and work the stores, and still focus on
delivering a world-class benefit in the balance.”
Wilson/Davis Op-Ed—8/15
 “The commissary system delivers a remarkable $2.08 return
benefit for every dollar expended...”
 “…one of the federal government’s most cost-effective
operations…”
 “Few programs can match the power of the military resale
systems to rally and solidify the strength of the military
community, the bedrock of military readiness.”
 “Defense officials must weigh the immense value and cost
savings of the military resale systems against fleeting political
rhetoric.”
Consistent with FLOTUS Goals
 Support Military Quality of Life
 Support healthy life style
 Support reducing child obesity
 ALA taking initiative with exchanges and commissaries
to put resale in front of FLOTUS
 Presentation of all resale positives
 Cooperative effort of industry and
exchanges/commissaries
Consistent with and
Supports Joining Forces Goals
 Military family quality of life
 Healthy life style
 Spouse and family employment
 Engine for commerce and jobs for the U.S. economy
Galvanizing Industry Support
 250 of the major consumer packaged goods
companies in the United States.
 Includes Procter & Gamble, Kraft Foods, General Mills,
Unilever, Ocean Spray, Coca Cola, Anheuser Busch,
Kimberly Clark, Gillette, small business
 Already supports USO, Fisher House, Wounded
Warriors and other causes
Military Community Contributions
 $4 billion in savings at the cash register for daily household
needs. Largely comprised of name brand, recognizable
products with those three key words--"Made in America".
 $10B contribution to military families over the last 10 years
 Servicemen and women are shareholders. Troops have
contributed nearly $15 billion of dollars in building the system
over the past ten years.
 Forms the social core of the military community.
 Diversity, EEO, Industries for the Blind
Industry/Resale Synergy with Joining Forces
 Large industry and military community support system
specifically established to take care of the military member
and family, responsive and ability to quickly adapt.
 Leveraging the resale infrastructure and all associated vendors
to focus support to family members and programs.
 Leverage a holistic community in a more focused way that is at
the very heart of the intent of Joining Forces
Strong Force in the Economy
 Strong force in our National economy and with the military
 Member companies contribute nearly $1.2 trillion to the economy
and generate millions of jobs
 System builds nearly $600 million in facilities each year generating
thousands of construction jobs in the private sector
 Support for large manufacturing jobs and a large number of small
businesses that are vital to the future growth of our economy
 Military market -- $18 billion sales and produce 30,000 jobs for
American industry
 100,000 jobs for military family members—billions in additional
household income
 Comprehensive approach to supporting military families,
crossing traditional agency boundaries affording a coordinated
approach. Our industry partnerships can expand the capacity
and quality of support by channeling philanthropic and cause
marketing support while strategically expanding the
communication about existing support infrastructure already in
place on base.
Other Support Programs
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School feeding program OCONUS
Facilities at home
Facilities downrange
Welcome Home Events
Personal Shopping for wounded warriors
Community engagement – contests/prizes
You Made the Grade – rewarding military kids
Social Media – Helping friends/family connect
Smooth Move – Assisting with PCS transfers
Military Star proprietary credit card – lower interest rate
www.shopmyexchange.com Website
Help Our Troops Call Home
Gifts from the Home front
Next Steps—White House
 Continuing strategy sessions to define objectives and develop
programs
 Orlando ALA Convention—Announce Major Cooperative Effort—
Industry Support
 Joining Forces umbrella branding of major ALA & Resale initiatives
including:
 Events
 Sweepstakes
 Competitions
 Cause Promotions and Sales
 Living well and family member employment
3% Withholding
 Beginning January 2013, 3 percent withheld on all federal
payments to contractors…scores $7B
 Bills in House and Senate to repeal—260 House sponsors, 21
 IRS rule implementing law delays implementation to payments
made after December 21, 2012 and exempts payments made
under contracts existing on December 31 2012
 ALA seeking exemption for resale—language included in Fiscal
Year 2012 NDAA—opens window for Treasury dialogue to
exempt resale
3% Withholding
 HASC Language:
 “…one of the most important benefits military families receive is
the savings provided by DeCA, exchanges and other NAFI’s.”
 “…IRS has ability to certify that the limited number of
manufacturers that customarily contract with nonappropriated
fund instrumentalities are not delinquent in their taxes.”
 “…judicious use of the IRS capability to determine tax status of
manufacturers…can be used to exempt DeCA (and exchanges).
Base Access
 Rapidgate being implemented at many installations
 FiXs cards issued but not able to be read at all bases—acceptance sporadic
 OMB Memo 11-11 mandates electronic reading of compliant cards
 DoD guidance due out by end of year for HSPD-12 compliant cards
 Mandates
 Installations procure an electronic Physical Access Control System (PACS),
where appropriate, that provides the capability to rapidly and
electronically authenticate credentials and an individual’s authorization to
enter an installation
 PACS must support a “DoD-wide and federally interoperable” access
control capability
Base Access
 HSPD-12 Demo II planned at four Service sites & VIP locations
 San Diego SPAWAR Lab (Army)
 Eglin Site C-3 (Air Force)
 Washington Navy Yard (Navy)
 Charleston (Marine Corps)
 Plus VIP demonstration via VTC in Washington DC area
Notional Enterprise Services Architecture
NCIC
TWIC
Biometric Red
Force
TSDB
Biometric Blue
Force
Others
Federal Bridge
DoD LP DB
DEERS
Interoperability Layer Service
Visitor/Registration
Centers
• Screening
• Vetting
• ID Proofing
Army
Navy
Air Force
Marines
DoD
Agencies &
Field
Activities
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Base Access
 Navy CNIC—August 14:
 “ We were told by Navy staff at the Secretary’s level that the
actions at Little River on requiring dependents (who have
legitimate DoD IDs) working in commissaries/exchange facilities
to get a Rapidgate credential are “illegal and against DoD policy”.
 “If a dependent is working on a base where he lives, that too is
not an issue.”
ALA Priorities
 Patron awareness—Power of viral internet—sales increases—benefit value—get
non-shoppers in
 Create affinity group –saveourbenefit.com
 Raise visibility with First Lady programs
 Don’t lobby each other—have meaningful outreach
 Support adequate budget levels
 Support shipment of American products
 Support funding for BRAC affected sites
 Support immunities
 Affordable, one-card access
 Support Guard and Reserve
 Support familiar war zone offerings
 Expand benefit to more vets
ALA 2012 Congressional and Public Policy Forum
 Spring 2012 – Rayburn Building
 Critical industry supports
 House and Senate
 Issues based
 2013 impact and 2014 Budget Deliberations, TIPRA,
Congressional action on budget, Executive Branch initiatives
 House and Senate leader perspectives
 Administration perspective