1. Defense Commissary Agency Keith C. Hagenbuch Executive Director, Store Operations

2. Non-pay Compensation Benefit that Improves Quality of Life for Uniformed Service Members Mission Deliver a vital benefit of the military pay system that sells grocery items at cost while enhancing quality of life and readiness Vision Understand our customers and deliver a 21 st century commissary benefit Our Mission and Vision 2

3. Commissary Board of Directors Commissary Board of Directors Policy Field Operating Activities Field Operating Activities DeCA HEADQUARTERS DeCA HEADQUARTERS Fort Lee, VA Operations Oversight Operations Oversight USD/P&R DeCA ‘s Oversight 3

4. DeCA Board of Directors  Provides advice regarding the prudent operation of the commissary system and assists in the overall supervision of DeCA  Serves as Military Services’ representation on all commissary matters  Recommends policy changes  Determines the level of customer service to be provided in balance with available resources  Promotes knowledge and understanding of the commissary benefit within the military community  Monitors DeCA’s performance  Reviews and recommends approval of: – Commissary establishments, continuations and closures – Capital investment programs – Annual budget – Strategic and performance plans – Annual report 4

5.  Three Service Logistics/Installations Deputy Chiefs and one Personnel Deputy Chief (Air Force)  Three Personnel/Manpower Deputy Assistant Secretaries  Four Service Senior Enlisted Advisors  Chair rotated among Service Senior Uniformed Officers; Committee Chairs on same rotation schedule  DeCA Washington Office serves as executive secretary  DeCA Director provides information, advises and recommends 5 DeCA Board of Directors

6.  Represents Board in advising USD(P&R) on commissary policies and operations and on delivery of the benefit  Recommends selection of DeCA Director  Supervises and rates DeCA Director  Recommends next Chair to USD(P&R)  Designates Board Executive Secretary  Convenes and conducts meetings 6 DeCA Board of Directors Chair

7. Previous Organizational Chart * Denotes SES position **DeCA General Counsel is part of the Defense Legal Services Agency *CHIEF OPERATING OFFICER/ DEPUTY DIRECTOR *CHIEF OPERATING OFFICER/ DEPUTY DIRECTOR *DIRECTOR DeCA WEST (MCCLELLAN, CA) *DIRECTOR DeCA WEST (MCCLELLAN, CA) ZONES (12) ZONES (12) STORES ( 111) STORES ( 111) *DIRECTOR DeCA EUROPE (KAPAUN AS, GE) *DIRECTOR DeCA EUROPE (KAPAUN AS, GE) ZONES (4) ZONES (4) STORES (40) STORES (40) *DIRECTOR DeCA EAST (FORT LEE, VA) *DIRECTOR DeCA EAST (FORT LEE, VA) ZONES (11) ZONES (11) STORES (96) STORES (96) HEADQUARTERS SUPPORT OFFICE HEADQUARTERS SUPPORT OFFICE *DIRECTOR/ CHIEF EXECUTIVE OFFICER *DIRECTOR/ CHIEF EXECUTIVE OFFICER *CHIEF OF STAFF OFFICE OF GENERAL COUNSEL** OFFICE OF GENERAL COUNSEL** INFORMATION TECHNOLOGY DIRECTORATE INFORMATION TECHNOLOGY DIRECTORATE RESOURCE MANAGEMENT DIRECTORATE RESOURCE MANAGEMENT DIRECTORATE HUMAN RESOURCES DIRECTORATE HUMAN RESOURCES DIRECTORATE PERFORMANCE & POLICY DIRECTORATE PERFORMANCE & POLICY DIRECTORATE CORPORATE PLANNING DIRECTORATE CORPORATE PLANNING DIRECTORATE CORPORATE COMMUNICATIONS DIRECTORATE CORPORATE COMMUNICATIONS DIRECTORATE SALES DIRECTORATE SALES DIRECTORATE PUBLIC HEALTH & SAFETY DIRECTORATE PUBLIC HEALTH & SAFETY DIRECTORATE OFFICE OF INSPECTOR GENERAL OFFICE OF INSPECTOR GENERAL OFFICE OF INTERNAL AUDIT OFFICE OF INTERNAL AUDIT DeCA WASHINGTON OFFICE DeCA WASHINGTON OFFICE CSM/SEA CONTRACTING DIRECTORATE CONTRACTING DIRECTORATE EEO DIRECTORATE EEO DIRECTORATE WORKFORCE DEVELOPMENT DIRECTORATE WORKFORCE DEVELOPMENT DIRECTORATE Defense Commissary Agency 7

8.  Secretary Gates’ memorandums directed initiatives to –Reduce duplication, overhead, and excess –Instill a culture of savings and cost accountability across DoD  Restructured to a flatter, more corporate structure –Reduced overhead and supervision –Eliminated areas of functional overlap –Integrates decision-making and increases agility in execution DeCA Reorganization 8

9. Director / Chief Executive Officer Deputy / Chief Operating Officer Executive Director Store Operations Executive Director Sales, Marketing & Policy Executive Director Logistics and Engineering Executive Director Business Enterprise Requirements and Strategic Integration Resource Management Human Resources Information Technology Engineering Logistics Sales Store Support Health & Safety General Counsel Washington Office CONUS and OCONUS Stores Senior Enlisted Advisor Inspector General/Security Acquisition Management Operations & Policy Resale Contracting EEO Executive Services Division Internal Audit Corporate Planning CDC and CMPP Corporate Communications Green blocks - assets located at Ft Lee & geographically dispersed Yellow blocks - ALL assets geographically dispersed Blue blocks - ALL assets at Fort Lee Defense Commissary Agency 9

10.  Command requested review/revision of organization  Driving forces behind review: – Focus on performance and results – Restructure to balance loss of 4 th Group SES – Realign resources to achieve Vision & strategies  Future capabilities key factor in achieving the Vision – business systems – e-commerce – social media = engaging our customers – format changes – streamlined, less expensive processes –Reduce duplication, overhead, and excess –Instill a culture of savings and cost accountability across DoD  Restructured to a flatter, more corporate structure –Reduced overhead and supervision –Eliminated areas of functional overlap –Integrates decision-making and increases agility in execution Organizational Refinement 10

11. Director / Chief Executive Officer Deputy / Chief Operating Officer Executive Director Store Operations Executive Director Sales, Marketing & Policy Program Management Resource Management Human Resources Information Technology Engineering Logistics Sales Health & Safety General Counsel Washington Office Store Support CONUS and OCONUS Stores Senior Enlisted Advisor Inspector General Acquisition Management Operations & Policy Resale Contracting EEO Blue blocks - ALL assets at Fort Lee Yellow blocks - ALL assets geographically dispersed Green blocks - assets located at Ft Lee & geographically dispersed Strategic Planning CDC and CMPP Chief Performance Officer (PAO, CPI and ESD) Business Development Executive Director Infrastructure Support E-Commerce Shopper Insights Equip/Property Acct & Environmental Business Requirements Cell Organizational Realignment 11

12. Zones – 6 Stores – 49 Zones – 6 Stores – 49 Zones – 4 Stores – 40 Zones – 4 Stores – 40 McClellan, CA Kapaun AS, GE Pacific Area East Area Store Operations Support Store Operations Support Executive Director Store Operations Executive Director Store Operations Europe Area Fort Lee, VA Central Area West Area Zones – 5 Stores – 47 Zones – 5 Stores – 47 Zones – 4 Stores – 43 Zones – 4 Stores – 43 Zones – 7 Stores – 68 Zones – 7 Stores – 68 Store Operations Group 12

13. New Store Openings 13 Fort Campbell, KY – June 13 Fort Carson, CO – May 9K-16, ROK – May 17

14. DeCA Profile  DeCA sells groceries at cost plus 5% surcharge  Savings over 30% vs. commercial stores DeCA-wide – Family of Four can save over $4,500 annually – Family of Three can save over $3,500 annually – A Couple can save over $2,800 annually – Singles can save over $1,500 annually 48.5%  Savings over 48.5% vs. commercial stores in Hawaii 14

15. 15 By the numbers: 248 Commissaries 13 Countries 2 Territories 17,000 + Employees $5.96 Billion annual sales 32% Average savings Ranked 18 th in Grocery Retail* Your Commissary … It’s Worth the Trip! *Progressive Grocer’s Super 50 for 2011 Defense Commissary Agency 15

16. 134 small stores (54%) in remote or overseas locations deliver only 20% of sales 16 (6%) of the largest stores generate 20% of total sales 16 (6%) of the largest stores generate 20% of total sales Data based on FY 2012 Sales thru June 2012 for 248 Open Commissaries 22 16 30 46 134 We Go Where the Troops Are! 16

17. *Savings from BRAC & OCONUS CFE are not included in above Efficiencies FY1992 – FY2016: $702M Inflation FY1992 – FY2010: $759M Baseline had no efficiencies been achieved Actual Costs w/Reductions Cost (FY 1992 Constant $) Commissary Operational Efficiencies FY 1992-2016 17

18. June 25, 2012 Military Related Employment As of 03-31-2012*  Military Spouses – 4095 or 26.94%  Dependents – 1818 or 11.96%  Sponsors: - Retirees – 1695 or 11.15% - Guard and Reserve – 287 or 1.89%  Other Veterans – 1847 or 12.15%  *Population – DeCA U.S. Civilian Employees - 15198 64.09% 18

19.  DeCA is committed to: –Pollution Prevention –Compliance with Legal and Other Requirements –Continual Improvement –Environmental Leadership  Awards –2010 Federal Electronics Challenge Bronze Level Award –2010 Federal Energy and Water Management Award DeCA’s Environmental Policy 19

20.  FY 2011 Clean Audit Opinion for the tenth straight year  Internal Controls over Financial Reporting – DeCA declared “Gold Standard” throughout DOD for FY 2011 Statement of Assurance for Internal Controls  For every dollar of taxpayer funds invested in the commissary benefit, authorized shoppers received $2.08 in savings Great Stewards of Taxpayer Dollars! Fiscal Accountability & Internal Controls 20

21.  American Customer Satisfaction Index (ACSI) – ACSI Supermarket Industry Average: 76 – DeCA’s ACSI: 81  Commissary Customer Service Survey (CCSS) – Patron Satisfaction – 4.72 (out of 5.0) Customer Service at All Time High! Customer Service 21

22. Commissary Customer Service Survey 22

23. Survey QuestionsFY 2011FY 2010FY 2009 Q1 Low Prices/Overall Savings 4.72 4.70 Q2 Well Stocked, Full Shelves 4.664.644.59 Q3 Convenient Hours 4.774.754.73 Q4 Entrance/Sales Area/Restroom Cleanliness 4.744.734.70 Q5 Produce Quality/Selection 4.664.654.62 Q6 Meat Quality/Selection 4.784.764.73 Q7 Deli Quality/Selection 4.704.684.65 Q8 Bakery Quality/Selection 4.674.644.61 Q9 Other Food Items (dry, frozen & dairy selection) 4.764.754.72 Q10 Store Layout and Time Required to Shop 4.724.754.72 Q11 Checkout Waiting Time 4.704.714.68 Q12 Attractive Displays/Store Décor 4.724.734.70 Q13 Courteous, Friendly and Helpful Employees 4.85 4.83 Q14 Overall Satisfaction (How did we do?) 4.834.824.80 Commissary Customer Service Survey 23

24.  Feds Feed Families  Scholarships for Military Children  Commissary Levels of Standardized Service  Throw Down Merchandising  Comparison Boards - Meat and produce focus Agency Initiatives 24

25.  Background - DeCA is participating with DoD in the OPM sponsored 2012 Feds Feed Families Campaign from 1 Jun to 31 Aug - Children and families across the US are in great need of donated food due to food bank stocks being depleted by the economic downturn and natural disasters  DeCA Participation - 180 Commissaries in 46 states and one territory (Puerto Rico) are collecting donations on their installations -DeCA Total : As of 31 Jul 12 - 137,000 - DoD Goal: 1.5M lbs - Total DoD Donations: As of 31 Jul 12 – 576,000 Feds Feed Families 25

26.  Program is funded by donations made by DeCA business partners  Fisher House Foundation, Inc. administers the program  Program is in its 12th year –Total Recipients: 6,742 –Total Scholarship Grants Awarded: $10,321,000 Academic Year# of Recipients Total Scholarship Grants Awarded 2009-10625$937,500 2010-11645$967,500 2011-12670$1,005,000 2012-13670$1,005,000 Scholarships for Military Children 26

27. 27 “CLASS”  A decision process that enables uniform delivery of services provided by all stores within available funds -Ensures authorized patrons receive equitable, predictable, and consistent levels of service at all Commissaries worldwide  Focuses resources that drive the quality, consistency and predictability of programs and services -‘Right Level of Service at the Right Cost” -Equitable funding to all commissaries Commissary Levels of Authorized Standard Services (CLASS)

28. 28 “CLASS”  Customers will know what level of service to expect at every commissary they visit  Employees will know what level of service they are expected to provide  Management will know funding is adequate to provide those services  Leadership will know what level of service all stores are providing Commissary Levels of Authorized Standard Services (CLASS)

29. CLASS Update  CLASS will be deployed to all 248 Commissaries  Joint effort SO, HR, IT and RM  Deployment -Began April 23, 2012 in Zone 28 -60 store operations and store personnel trained to deploy  Completed deployments -As of Aug 17 – 87 stores -Currently 6 teams on-site in 6 zones  Projected Completion Date -June 2013 29

30. Throw Down Merchandising  Replaces all former Merchandising contests -No more scrapbooks  Placement based solely on percentage of growth/lift versus last year on targeted commodities  2012/2013 contest targets Perimeter or Perishable growth/lift  Zone Managers are contestants -One winning zone manager for each category: Produce, Meat and Grocery Chill/Frozen -One overall winner for greatest growth in all categories 30

31. Comparison Boards 31

32. $ Billion! 5.96 FY 2011 Agency Sales 32

33. DeCA Sales Comparison FY 2011 vs. FY 2010 AreaSales% Change Central $1.25B 2.22% East $1.55B 2.41% Europe $0.52B 2.35% Pacific $0.94B 2.73% West $1.70B 0.75% DeCA Overall $5.96B 1.94% 33

34. DeCA Sales Comparison FYTD 2012 (thru June 2012) AreaSales% Change Central $964.07M2.97% East $1,188.80M2.93% Europe $404.69M4.23% Pacific $725.81M3.61% West $1,305.69M2.89% DeCA Overall $4,589.05M3.15% 34

35. Customer Transactions FY 2011 vs. FY 2010 AreaTransactions% Change Central18.97M0.94% East21.99M1.48% Europe11.75M3.69% Pacific15.99M1.86% West27.45M0.57% DeCA Overall96.16M1.44% 35

36. Customer Transactions FYTD 2012 (thru June 2012) AreaTransactions% Change Central 14.37M1.22% East 16.79M2.47% Europe 9.10M3.47% Pacific 12.14M1.75% West 20.99M2.49% DeCA Overall 73.39M2.23% 36

37. DeCA Percent of Sales by Areas FYTD 2012 (thru June 2012) 37

38.  248 Commissary Facilities –14.9 million gross square feet – 6.7 million square feet of sales area – Average age is 25.6 years  12 Central Distribution Center Facilities –Korea, Guam, Japan, Germany –1.7 million gross square feet Facility Inventory 38

39. Pacific Area Profile 39

40. DeCA Pacific Sales Comparison FYTD 2012 (thru June 2012) ZoneSales% Change NORTHWEST / ALASKA$243.26M0.09% HAWAII$192.45M5.24% JAPAN$159.68M5.96% KOREA$130.42M5.29% PACIFIC AREA Overall $725.81M 3.61% 40

41. Pacific Area Customer Transactions FYTD 2012 (thru June 2012) ZoneTransactions% Change NORTHWEST / ALASKA3,731,352- 1.58% HAWAII2,983,4732.63% JAPAN3,236,8104.27% KOREA2,188,1512.81% PACIFIC AREA Overall 12,139,7861.75% 41

42. Guard and Reserve FY 12 Pacific Area  On-site sales events 6  Patrons served 4,428  Sales $866,808 Location/IslandEvent Dates HawaiiOctober 7-9, 2011 American SamoaNovember 1-3, 2011 KauaiNovember 10-12, 2011 HawaiiMarch 9-11, 2012 KauaiMay 31 - June 3, 2012 MauiJune 15-17, 2012 42

43. Containers Departing Oakland, California 43

44. 20,203 DeCA Overall CY 2011 Total Containers Shipped 44

45. 9,833 Total Containers Shipped to Pacific Theater - CY 2011 45

46. Containers by Port CY 2011 Total Shipped to Pacific Theater CY 2011 Total Shipped to Pacific Theater PortTotal Containers Northwest953 Oakland7,807 Southwest1,073 Total9,833 46

47. Pacific Area Projects Pacific Area Projects Approved Construction Projects StoreTypeProjected Completion Date Anchorage AreaArchitectural/Refrigeration UpgradeSpring 2013 Approved Design Projects StoreType% Design Camp Humphreys CDCNew CDC (ROK funded) Charrette complete Camp HumphreysNew Store (ROK funded) 10% IwakuniNew Store (GOJ funded) 10% Iwakuni CDCArchitectural/Structural Repairs Advertised SagamiharaArchitectural/Refrigeration Upgrade 100% Schofield BarracksArchitectural/Refrigeration Upgrade 100% Guam CDCArchitectural/Refrigeration Upgrade 95% New/Expanded Stores Opening in CY 2012/2013 StoreTypeProjected Opening K-16New StoreOpened May 2012 ChinhaeNew StoreFall 2013 47

48. Best Commissary Award Winners.  Fort Bliss, Texas  Director's Award Best Superstore  Malmstrom AFB, Montana  Bill Nichols Award Best Large Commissary  Osan AB, South Korea  Dan Daniel Award Best Large Commissary Overseas – 2 nd Consectutive Year!  Camp Casey, South Korea  L. Mendel Rivers Award Best Small Commissary Overseas – 2 nd Consecutive Year  Camp Merrill, Georgia  Richard M. Paget Award Best Small Commissary 48

49. Camp Merrill, Georgia Richard M. Paget Award Best Small Store 49

50. Camp Casey, South Korea L. Mendal Rivers Award Best Small Store Overseas 50

51. 51 Osan AB, South Korea Dan Daniel Award Best Large Store Overseas

52. Malmstrom AFB, Montana Bill Nichols Award Best Large Store 52

53. Fort Bliss, Texas Director’s Award Best Superstore 53

54. 54

55. Keith C. Hagenbuch Executive Director  E-mail address: keith.hagenbuch@deca.mil  Commercial phone: (804) 734-8000 ext 48513  DSN 687-8513 James J. Hudson Jr. Principal Deputy Director  E-mail address: jay.hudson@deca.mil  Commercial phone: (804) 734-8000 ext 48513  DSN 687-8513 DeCA Store Operations Senior Leadership 55

56. David C. Carey, Jr. Pacific Area Director  E-mail address: david.carey@deca.mil  Commercial phone: (916) 569-4978  DSN 839-4978 Martin J. Jackson Pacific Area Deputy Director  E-mail address: martin.jackson@deca.mil  Commercial phone: (916) 569-4697  DSN 839-4697 DeCA Store Operations Senior Leadership – Pacific Area 56

57. Charles B. McMinn, Jr. Hawaii Zone Manager  E-mail address: charles.mcminn@deca.mil  Commercial phone: (808) 448-4669  DSN 448-4669 Victoria M. Best-Rush Alaska and Washington Zone Manager  E-mail address: victoria.best-rush@deca.mil  Commercial phone: (253) 982-6697  DSN 382-6697 Pacific Area Zone Managers 57

58. Bruce E. Graf Japan (Okinawa) Zone Manager  E-mail address: bruce.graf@deca.mil  Commercial phone: 011-81-98-961-1786  DSN 634-1786 Wayne S. Walk Korea & Guam Zone Manager  E-mail address: wayne.walk@deca.mil  Commercial phone: 011-82-2-7916-7136  DSN 736-7136 Pacific Area Zone Managers 58

59. Questions