1. 1 Mr. Patrick B. Nixon Director & CEO February 14, 2007

2. 2   DeCA Regional offices Commissaries Country locations Central distribution centers (CDC) Central Meat Processing Plant   DeCA Regional offices Commissaries Country locations Central distribution centers (CDC) Central Meat Processing Plant FY 2005 FY 2006 3 3 4 4 268 263 14 13 1 1 1 1 10   DeCA workforce Military End strength   Family members   Local nationals   CIV FTEs executed   DeCA workforce Military End strength   Family members   Local nationals   CIV FTEs executed FY 2005 FY 2006 10 5 5 17,817 18,023 38% 2,094 2,119 14,904 15,058

3. 3   FY 2007 $5.5M reduction per OSD for efficiencies $25.5M reduction per OSD for Defense-wide offset $4.4M COB approved reductions $17.1M foreign currency fluctuation   FY 2008 - FY 2013 BRAC, overseas restationing, reengineering, and other cost savings initiatives are reflected in the current budget   FY 2007 $5.5M reduction per OSD for efficiencies $25.5M reduction per OSD for Defense-wide offset $4.4M COB approved reductions $17.1M foreign currency fluctuation   FY 2008 - FY 2013 BRAC, overseas restationing, reengineering, and other cost savings initiatives are reflected in the current budget

4. 4 Facilities & Improvements Equipment Information Technology** Total Facilities & Improvements Equipment Information Technology** Total FY 2006 $122M $25M $90M $237M FY 2006 $122M $25M $90M $237M FY 2007 $260M * $21M $80M $361M FY 2007 $260M * $21M $80M $361M FY 2008 $205M $24M $50M $279M FY 2008 $205M $24M $50M $279M * 4 major construction projects rolled over into FY 2007 ** Commissary Advanced Resale Transaction System (CARTS) begins deployment in February 2007 – completion date 2008 * 4 major construction projects rolled over into FY 2007 ** Commissary Advanced Resale Transaction System (CARTS) begins deployment in February 2007 – completion date 2008

5. 5   Revised OMB Circular A-123, Appendix A requires agencies to report on the effectiveness of their internal controls over financial reporting   Accomplishments Highest score in DoD on the FY 2006 Annual Statement of Assurance Scorecard OSD(C) referring DoD Components to DeCA as the model for implementation   Internal Control efforts contributed significantly to the fifth consecutive “clean” audit opinion on financial statement   Revised OMB Circular A-123, Appendix A requires agencies to report on the effectiveness of their internal controls over financial reporting   Accomplishments Highest score in DoD on the FY 2006 Annual Statement of Assurance Scorecard OSD(C) referring DoD Components to DeCA as the model for implementation   Internal Control efforts contributed significantly to the fifth consecutive “clean” audit opinion on financial statement

6. 6   Increasing the value of the benefit without increasing the cost Implemented Health & Wellness   Dietitian onboard to promote Health and Wellness initiatives Expanded Natural & Organic food Expanded Virtual Commissary   Improved product availability Assumed produce procurement mission   Increasing the value of the benefit without increasing the cost Implemented Health & Wellness   Dietitian onboard to promote Health and Wellness initiatives Expanded Natural & Organic food Expanded Virtual Commissary   Improved product availability Assumed produce procurement mission

7. 7   Commissary gift certificates Nearly $11M gift certificates purchased to date   More than $200K donated by Industry, military, and general public to charities assisting military families including Operation Homefront, USO, Air Force Aid Society and Fisher House Foundation   Scholarships for Military Children Nearly 3,000 students assisted More than $5M since 2001 Increased public donations seen in FY 2006 FY 2007 scholarships close February 21, 2007 Pre-deployment and welcome back activities for troops Commissaries/vendors actively participate locally   Commissary gift certificates Nearly $11M gift certificates purchased to date   More than $200K donated by Industry, military, and general public to charities assisting military families including Operation Homefront, USO, Air Force Aid Society and Fisher House Foundation   Scholarships for Military Children Nearly 3,000 students assisted More than $5M since 2001 Increased public donations seen in FY 2006 FY 2007 scholarships close February 21, 2007 Pre-deployment and welcome back activities for troops Commissaries/vendors actively participate locally

8. 8   Program coordinated with Industry and DSC-P   Contracts awarded for all CONUS locations, plus Alaska, Hawaii, Puerto Rico, and Cuba NE protest has delayed performance by contractor   Solicitations to follow for coverage in Pacific and European locations   DSC-P support will continue until conversion completed Results extremely positive   Improved quality   Increased savings   Increased organics   Program coordinated with Industry and DSC-P   Contracts awarded for all CONUS locations, plus Alaska, Hawaii, Puerto Rico, and Cuba NE protest has delayed performance by contractor   Solicitations to follow for coverage in Pacific and European locations   DSC-P support will continue until conversion completed Results extremely positive   Improved quality   Increased savings   Increased organics

9. 9   Impact of closing locations: (BRAC 2005) Commissaries affected: 6 Stores   Fort Monmouth, NJ   Fort McPherson, GA   Fort Gillem, GA   CE Kelly Support Center, PA   NSCS Athens, GA   NAS Brunswick, ME FY 2006 Sales: $65.5M FY 2006 Surcharge: $3.3M Depreciated value of assets: $9.1M Employee authorizations: 195   Impact of closing locations: (BRAC 2005) Commissaries affected: 6 Stores   Fort Monmouth, NJ   Fort McPherson, GA   Fort Gillem, GA   CE Kelly Support Center, PA   NSCS Athens, GA   NAS Brunswick, ME FY 2006 Sales: $65.5M FY 2006 Surcharge: $3.3M Depreciated value of assets: $9.1M Employee authorizations: 195

10. 10   BRAC legislation approves a building addition to DeCA HQ, Fort Lee Project contract award 1 st qtr FY 2008 Eliminates leased facilities Complies with DoD’s Force Protection Standards   Transfer DeCA’s Human Resources Operations Division (HROD) to DLA in FY 2008-2009 Dependent on conversion date to NSPS Challenges   Business processes   Funding   BRAC legislation approves a building addition to DeCA HQ, Fort Lee Project contract award 1 st qtr FY 2008 Eliminates leased facilities Complies with DoD’s Force Protection Standards   Transfer DeCA’s Human Resources Operations Division (HROD) to DLA in FY 2008-2009 Dependent on conversion date to NSPS Challenges   Business processes   Funding

11. 11   Overseas Integrated Global Presence Basing Strategy (OIGPBS) Gaining Location 6 locations impacted: Ramstein, Spangdahlem, Ansbach, Wiesbaden, Vilseck, Vicenza Total cost $92.9M   Base Realignment and Closure (BRAC) Gaining Location 10 locations impacted: Ft Bliss, Ft Riley, China Lake, Ft Benning, Ft Carson, Ft Lee, NS Norfolk, Ft Sam Houston, Moody AFB, Ft Belvoir Total cost $178.9M   Overseas Integrated Global Presence Basing Strategy (OIGPBS) Gaining Location 6 locations impacted: Ramstein, Spangdahlem, Ansbach, Wiesbaden, Vilseck, Vicenza Total cost $92.9M   Base Realignment and Closure (BRAC) Gaining Location 10 locations impacted: Ft Bliss, Ft Riley, China Lake, Ft Benning, Ft Carson, Ft Lee, NS Norfolk, Ft Sam Houston, Moody AFB, Ft Belvoir Total cost $178.9M Facility Impacts

12. 12   If you want to complicate your life… Don’t read or follow the Collective Bargaining Agreement Don’t call the Labor Specialist (Chateara Seymour) for advice when faced with a labor issue Don’t invite the union to participate in formal discussions with bargaining unit employees Don’t return the Union reps phone calls—keep them in the dark and close off all lines of communication   If you want to complicate your life… Don’t read or follow the Collective Bargaining Agreement Don’t call the Labor Specialist (Chateara Seymour) for advice when faced with a labor issue Don’t invite the union to participate in formal discussions with bargaining unit employees Don’t return the Union reps phone calls—keep them in the dark and close off all lines of communication

13. 13   Past efforts focused on combining processes Most successful – Joint construction program & implementation of open architecture/IT standards. Most problematic – differing APF vs. NAF rules   Current efforts focused on exploring opportunities that could strengthen the military resale system Many would require OSD approval or Congressional notification/action   Key charters Joint sales events Brand named concessions within commissaries (e.g., Starbucks) Selling exchange items in commissaries Shared contracting opportunities Universal gift card Sharing distribution systems Use of on-line mediums, catalog, and direct mailing to communicate benefit information and advertise promotional events   Homestead   Past efforts focused on combining processes Most successful – Joint construction program & implementation of open architecture/IT standards. Most problematic – differing APF vs. NAF rules   Current efforts focused on exploring opportunities that could strengthen the military resale system Many would require OSD approval or Congressional notification/action   Key charters Joint sales events Brand named concessions within commissaries (e.g., Starbucks) Selling exchange items in commissaries Shared contracting opportunities Universal gift card Sharing distribution systems Use of on-line mediums, catalog, and direct mailing to communicate benefit information and advertise promotional events   Homestead

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