1. ALA Public Policy Advocacy

2. ALA is a full partner in protecting benefit
Association definition: An organization of people with a common purpose
Do what each of us can’t do individually
All have day jobs—dealing with business issues like bosses, clients, competitors
Representing common interest items
Educate major public policy makers on importance of benefit
Industry has huge stake in resale viability
House and Senate Authorizing, appropriations, budget, Government oversight committees

3. Challenges Deficit Reduction Initiatives Legislation
DoD Overhead Reductions
OMB Budget Guidance
Congressional Budget Reviews
3% withholding

4. Defense Funding Resale and MWR funding is $3 billion per year
Commissaries--$1.3B, Exchanges $250M
$210,000 in O & M per troop compared to $95,000 in FY 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
Health care costs $51 billion or up 3.4 %
Veterans funding up 14 percent

5. 5-year funding base $3 Trillion—Overhead reductions $178 Billion--$78B DoD, $100 B Services—Cut in rate of growth
FY 2012 request:
End strength reduction in 2012 budget--27,000 Army, 15,000 to 20,000 Marine Corps—Four years ago, Army had increased 65,000 and Marines 27,000…still net increase from four years ago of 45,000
1.6 percent pay raise
$8.3 B for family support

6. National Budget Deliberations
Debt Ceiling deadline – August
Government being funded with bridges including Federal pensions
Disagreement over cuts versus taxes
Different plans—Ryan, Gang of 6 (now 5), Erskine/Simpson DR, Obama $4T 12 years
Vice President leading deliberations

7. Defense Budget Timetable
February 14—President submitted $671 B Defense Budget—includes $118B in war funding
$571B in 2013, $586B in 2014, $598B in 2015 and $611 B in 2016—not counting wars
Services pledged $100 B in savings over five years
HASC Mark-up complete—floor action pending
Appropriations apportionment
SASC projected to move in June
Appropriations customarily in September/October
NDAA conference July-October
June 14—ALA Congressional and Public Policy Forum

8. Gates efficiency initiatives
Guidance just out to find $70-$100B in cuts in addition for $178 billion already identified.
March 14 Gates memo:
$13 B 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

9. 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

10. Gates Efficiency Initiatives
Freeze civilian personnel--$13B
Pay freeze--$12B
Defense Health--$8B
Defense Agencies reduced overhead--$11B
Reduce support contracts--$6B
Reduce studies--$1B
Economic adjustments, i.e., inflation--$14B
End strength reduction--$6B

11. Gates efficiency initiatives
Army--$29.5B
Better business practices--$10.3B
Reduce contractors--$3.5B
Logistics, support processes, training--$5.3
Streamline installation command--$1B
Weapons terminations--$11B
Military Construction--$1.5B
Recruiting support--$1.3B

12. Gates efficiency initiatives
Navy/Marines--$35B
Reduce ashore manpower, reassign to fleet/air, eliminate duplication--$4.7B
Disestablish Carrier strike group staff, fleet HQ--$1.2B
Personnel practices, force shaping, housing, advertising--$1.4B
Streamline maintenance, flying hours, pre-po--$4.2B
Better business practices--$14.1B
Terminate weapons programs--$5.5B

13. Gates efficiency initiatives
Air Force--$33.3B
Reorganizations/installation support--$1B
Manpower savings--$3.1B—Hiring 4,000 instead of 21,500
Better business practices—management, logistics, facilities, processes--$21B
IT reductions--$1.3B
Logistics installation efficiencies--$3B
Weapons program terminations--$3.7B
Reduce lower priority programs—MAJCOM support-----other low priority programs $4.8B
SOCOM--$2.3B

14. Appropriations Apportionment
$121 billion in cuts Federal wide for FY 2012
$8.9 billion in defense outlay reductions
DoD will receive $530 billion for 2012
$17 billion less than 2011
$8.9 billion less than President’s request
In past, would make up in supplemental requests
Flexibility door closes for restoration as supplementals are more closely monitored.

15. 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-$50 M -- Sec 645

16. 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

17. 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

18. 3% Withholding
Beginning January 2012, 3 percent withheld on all federal payments to contractors…scores $7B.
Brown/Vitter Amendment (SA 212) to SBIR Reauthorization—repeals requirement…rescinds $39B in appropriations discretionary funds
IRS rule implementing law delays implementation to payments made after December 21, 2012 and exempts payments made under contracts existing on December

19. CBO Budget Option Included with Deficit Reduction Commission Report
Comments sought by OMB on proposal
Components
Exchanges have more flexibility in procurement and personnel 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.

20. CBO Budget Option Components
Grocery allowance phased in to coincide with consolidation. At 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.

21. 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.

22. 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

23. 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 %
Accountable stewards
DeCA $1 billion in annual efficiencies since 1991
Exchanges inherently efficient, direct mission support
Cost cutting in DNA
Single, affordable base access cards

24. 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

25. 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

26. 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

27. Consistent with FLOTUS goals
Support Military Quality of Life
Support healthy life style
Support reducing child obesity

28. 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

29. ALA Priorities
Patron awareness—Power of viral internet—sales increases—benefit value—get non-shoppers in
Create affinity group
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

30. ALA 2011Congressional and Public Policy Forum
June 14 – Rayburn Building
Critical industry supports
House and Senate
Issues based
2012 impact and 2013 Budget Deliberations, TIPRA, Congressional action on budget, Executive Branch initiatives
House and Senate leader perspectives
Administration perspective

31. Protecting the Benefit
ALA & Resale
Protecting the Benefit