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Business Sense


J. D. Pendry


Before I left the Army, there was much discussion about the Army, or on a larger scale the Department of Defense (DoD), paring itself down until left only with core competencies required for war fighting.Some recent issues of closing commissaries, converting them to profit making Post Exchange type operations and closing of Continental United States (CONUS) Department of Defense Dependent Schools (DODDS) caused me to think of those discussions from my past life.


What does performing only core competencies mean exactly?Grocery stores, retail outlets, recreation facilities, child care centers, dependent schools, housing management, CONUS installation management which includes everything from personnel management, to logistics to taking care of the infrastructure, just to name a few, are not core war fighting competencies.Unless, that is, you consider the impact losing them might have on soldier performance or on retention.The objective is to turn these functions over to non-DoD entities to operate.For example, your commissary and Post Exchange might become a Wall-Mart Super Center, a Goldís Gym sign might be hanging over your fitness center, and the on post dependent school is given to the local public school district.By doing this, DoD reduces operating costs and soldiers move away from garrison jobs to war fighting ones.From a bottom line perspective, it makes good business sense to do it.So, why is it that most of us who have worn or are wearing uniforms donít like it?Let me tell you why.


You must look beyond the bottom-line perspective to understand the issue.When a business raises the price of its goods it usually does so to have more money for expansion, which includes facilities and production and more money to return to stockholders in the form of dividends.If the price rises, someone must bear the burden of the increase.Normally, thatís you and I Ė the consumer.DOD commissaries operate at a nonprofit cost basis.What that means is that you buy groceries in the commissary for what it costs DoD to bring them to you in the store.You pay a surcharge on the purchases you make and this covers the operating costs of the commissary.If a commissary does not do enough business to cover itís operating costs, it may be closed.*The average commissary shopper saves 30 percent on the cost of groceries.In monetary terms, this is about a $2,400 per year savings for a family of four.The ability to shop in a commissary is a valuable benefit for the military.**An E-4 with over two years of service would need a 13 percent raise in base pay to recover the lost benefit.


The discussion about commissaries has now moved to some form of consolidation with the Post Exchange system.My sources tell me that this action is contrary to the advice of the Commissary Advisory Board (CAB).The CAB is comprised of representatives of all services including all the senior enlisted advisors or their representatives.Their purpose is to advise the Defense Commissary Agency (DeCA) on how to best deliver the commissary benefit to meet the needs of the force.The Post Exchange system must make a profit and would have to if selling you groceries.The profit they must make would represent an increase in the amount of money families spend for groceries.This is still an erosion of a benefit and I donít think we want to see that door opened any wider.


Another subject that popped up on my radar screen is the DoD schools operated in the United States and its territories.The recent news is that DoD wants to give some of these schools to the local school districts to operate.From my perspective, this could be the beginning of the end.The Department of Defense Elementary and Secondary Schools (DDESS) operates 69 schools on 19 installations teaching about 33,000 students, which are dependents of US servicemen and women.Why should servicemen and women be concerned about the possibility of a local school district taking control of their on base schools.Letís look at it like this.On Fort Campbell, Kentucky, DDESS operates eight schools from preschool through the 12th grade.Whatís at Fort Campbell?Itís the 101st Air Assault Division that is now and has been continuously engaged in Iraq.Itís stressful for Mom and Dad to be deployed in a combat zone, but donít you reckon itís also stressful for the children.When these children are in an environment where their peers and teachers thoroughly understand their situation, donít you think it helps them cope?Not having to worry about your children is important.


ďMembers of the Maine National Guard, called up to prepare for an attack on Iraq, have asserted that their children are being harassed at school by teachers who oppose the war.Ē***


Thatís a big reason for wanting to keep these schools, but let me give you another.For all grades 3 through 11 and in all tested areas, DDESS students exceeded the national average in all grades and all subject areas (Reading, Language Arts, Mathematics, Science and Social Studies).In most subjects the national average was exceed by double digits as high as 25 points in reading for grade 11 for example. **** Knowing what most of us know about the status of our public school system, I believe we can agree that this is significant and not something any reasonable parent would want to give up.Itís a benefit.Itís not a tangible one like the commissary benefit is, but just as important.


There is a large list of these ďnonĒ core competencies that could be lost to bottom-line business decisions.I selected two.The military services, however, are not businesses. Their business is protecting America.The business minded, who ultimately make these decisions, need to return to their business education textbooks.Itís proven that when the business focuses too much on the bottom line and too little on the impact decisions have on the workforce, performance degrades.In some cases, the best decision to make is not the bottom-line one.Soldiers are not production workers.They understand when decisions cost them and their families and react accordingly.


I would suggest to all of you that now is a good time to take pen in hand (or email) and make your elected representatives know how you feel about the potential loss of important benefits such as commissaries and schools.



*From Defense Commissary Annual Report, 2002

**Based on January 2003 pay scale

*** By Robert Stacy McCain, THE WASHINGTON TIMES. February

††† 27, 2003

****Department of Defense Education Activity,†††††



Copyright ©, 2003, JD Pendry, All Rights Reserved