Lawmakers are hoping to put the brakes on a Defense Department initiative moving toward privatizing retail programs on military bases, such as commissaries, exchanges and other retail outlets.
They’ve asked for a report on DOD’s plans by March 31, 2026, as part of the House draft on the annual defense authorization bill today. Lawmakers want details on plans for maintaining the current benefits for service members and their families.
“The committee is concerned that privatization of retail programs could result in disruptions to benefits and productivity without providing substantial improvements,” stated the amendment adopted by the House Armed Services Committee. So they direct the Secretary of Defense to submit the report to the House and Senate armed services committees on the plans and processes being used for evaluating whether to privatize the retail programs.
The provision will have to survive negotiations over the next few months before the final compromise bill is settled.
Lawmakers are responding to an April 7 memo from Deputy Secretary of Defense Steve Feinberg on restructuring the DOD civilian workforce, which stated, “All functions that are not inherently governmental (e.g. retail sales and recreation) should be prioritized for privatization.”
Other information lawmakers would require include the feasibility of privatizing retail programs at remote and overseas locations. Critics of privatization have said that while private entities might be willing to operate large stores in the U.S. such as those at Fort Belvoir, Va., and San Diego, it would be less financially viable to operate stores overseas and in remote areas.
Lawmakers want details on the anticipated benefits of privatization, to include savings and operational efficiencies; an analysis of key challenges associated with privatization; effects on current appropriated-fund employees of the programs; and effects on contractors supporting the retail programs, such as those supplying groceries sold in commissaries and the items sold in military exchanges.
They’re also asking for an assessment of the disruption to the benefits and workflow of retail programs during transition.
Various groups within and outside the Defense Department have proposed commissary privatization over the past several decades, eyeing the billion-plus dollars of taxpayer money used to operate the stores, but those proposals have been rejected as advocates defended the benefit.
Defense officials kept commissaries open during the COVID-19 pandemic, deeming them “mission essential.”
By law, commissaries must provide an average overall savings of 23.7% compared to civilian grocery stores. To provide the savings, the stores rely on the annual appropriation of more than $1.4 billion in taxpayer dollars for the costs of operations, including employee salaries. In 2022, then-Defense Secretary Lloyd Austin directed DOD to fully fund commissaries in order to cut costs at the register in an effort to help families with the rising costs of food.
On the other hand, military exchanges don’t use taxpayer dollars for their operations. They provide department-store goods at varying discounts. They also operate gas stations, convenience stores and liquor stores. Eateries ranging from Burger King to Panera Bread also have agreements with the exchanges to operate on many military bases. Military exchanges are also tasked with operating the school meal programs for school-age children at DOD schools on overseas military bases.
Deputy editor Leo Shane III contributed to this report.
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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