Transcript ALA Public Policy Advocacy

ALA is a full partner in protecting
benefit
 Educate major public policy makers on importance of
benefit
 Industry has huge stake in resale viability
 Authorizing and appropriations committees
 House and Senate
Challenges
 Deficit Reduction Commission
 DoD Overhead Reductions
 OMB Budget Guidance
 Congressional Budget Reviews
Defense Funding
 Defense requested $733B in Feb 2010
 Without wars--$18B higher than year before
 1.4 percent pay increase to $139 B
 $210,000 in O & M per troop compared to $95,000 in FY
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2000
Non-cash and deferred compensation consume 52 percent
of total compensation
Personnel costs up 46 percent from 2001, adjusted for
inflation and not including wars
More DoD civilians than Wal-Mart and USPS combined
$2.7B to fund BRAC
 Health care costs $51 billion or up 3.4 %
 Veterans funding up 14 percent
 House and Senate authorized $725B
 HAC and SAC reduced $7 to $8B
 TechAmerica report
 $545B 2013, $488B 2016
 Low real growth followed by decline
 Accelerated competition between O&S and R&D &
Acquisition
 UK Defense Cuts
 10% MILPERS, 40% equipment, withdraw troops from
Germany, cut 25,000 civilians, scrap only carrier
Budget Timetable
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April 22—House Budget Resolution
May 19—HASC Reports Defense Bill
May 28—House Passes Defense Bill
May 28—SASC Reports Defense Bill
July 1—Senate Budget Resolution
September 16—Senate Appropriations Committee Reports
Bill
October 1—Continuing resolution passes to fund
Government until December 3
November 2—Election
November 15—Lame duck session convenes
November 22—Lame duck recess
 November 29—Lame duck session reconvenes
 Defense Authorization, Extension of unemployment,
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Physician pay hike for Medicare, Wage discrimination,
Natural gas vehicles, food safety—and mouse through the
snake or pig through the boa—Tax Cuts
Senate has approved 11 of 12 appropriations bills and
could do Omnibus Appropriations Bill—Dems want it
Republicans don’t want it until new Congress convenes
December 1—Deficit Reduction Commission reports
December 3—Continuing Resolution Expires—
December 15—2012 Defense budget wrap
Republicans want new CR until next Congress—Dems
want Omnibus
Budget Timetable
 January 3, 2011—New Congress convenes
 Now it gets complicated
 President’s Budget submission traditionally 1 week before
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SOTU
SOTU Originally planned for January 26
May be February 2 because final episode of “Lost” airs
January 26
Statutory deadline to submit budget February 1
They could delay budget release because no penalty for
lateness
February—Hearings begin on 2012 budget
April—ALA Congressional and Public Policy Forum
MWR & Resale Budget
 HASC Personnel S/C Hearings postponed twice
 Issues—Exchange consolidation, SDT, MWR
approps, construction funding, competition for
unofficial information services, credit card
competition with banks, Guard and reserve support,
Air Force food transformation, TIPRA, credit card
interchange fees, ASER, operations at closure sites,
disabled vet privileges, base access
 HASC Bill—funds DeCA, SDT, MWR operations
 DeCA designated to manage construction at joint
surcharge/NAF sites
2011 Administration cost-cutting
initiatives
 Earmarks/line item veto
 Reduce reliance on contractors
 Technology
 Consolidate data centers/cloud computing
 FY 2012 across the board non-security cuts
 Reduce energy 30 percent
 Dispose of unwanted real estate
 Improve payment accuracy
 Do not pay list (TIPRA implications)
 Gates Defense cut initiatives—eat what you kill
 Civilian agency administrative reductions—eat what you kill
DoD Budget Review and Overhead
Reductions
 Assessments by Cost Assessment and Program Evaluation
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(CAPE)
2012-2017 – One percent real growth
Need 2-3 percent to maintain force structure, combat capability
DBB says 40 % of DoD is overhead
Take out $100 billion in overhead
More efficiency in $400 billion of goods and services
purchased each year
Reaching out to industry to support cost reductions
Work with industry to bring down costs
 $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
 PBD/budget wrap December 15
How are decisions/cuts manifested?
 Salami slicing
 Military Department cuts tumble down on
system
 Outsourcing
 Incremental benefit reductions
 Navy MILCON Freeze
Market-based resale has costcutting in its DNA
 Cost cutting is not new to resale
 Efficiencies mean savings to patrons and increased
earnings
 Took out major costs:
 DeCA 1991 Consolidation—hundreds of millions
 Commercial distribution--$600 million back to DoD for
Stock Funds
 Ongoing cost saving measures
 Normal trajectory would have taken it to over $2 billion
 Lean and mean
 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
 Underpins of 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
 Surveys show citizens losing faith in institutions
 GSEs such as Fannie Mae and Freddie Mac failing
 DeCA is shining example of a Private Sector/public
sector partnership that works
 Top of the heap in Federal Accountability
 Patron satisfaction at all time highs
Consistent with FLOTUS goals
 Support Military Quality of Life
 Support Health life style
 Support reducing child obesity
Ingrained in the OSD fabric
 Not inextricable without a major cost
 Adapts for force structure
 Brigade re-stationing
 BRAC
 Traffic driver for Exchanges
 Underpins transportation system
 Maintains ties with installations
System’s Constitution is Title 10—
our foundation
 -Sets out who can shop
 -Sets out pricing (cost plus 5)
 -Guidance on what can be sold
 Don’t tamper with the Constitution
What would the world look like if
resale didn’t exist?
 Thousands of family members out of work
 Hundreds of millions in increased COLAs and
military pay
 Sale of foreign products overseas—impact U.S.
manufacturing
 $5 billion patron surcharge investment wasted
 Military forced to make household tradeoffs
 MWR dividends evaporate
ALA Priorities
 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
 Repeal 3 % withholding or resale exemption
 1099 ACA requirement
 Regulation, i.e., (Executive pay reporting—(FAR)
 Cover Coast Guard and VA resale in beneficial
statutory changes
 Reduce interchange fees
 Lift restrictions on offerings to patrons
 Cooperate not consolidate exchanges
ALA Congressional and Public
Policy Forum
 Spring 2011
 House and Senate
 Issues based—2011 impact and 2012 Budget
Deliberations
 House and Senate leaders
 Administration officials
ALA & Resale
Protecting the Benefit