Preserving the Vital Resale Supply Chain

Preserving the vital resale supply chain

By Steve Rossetti, ALA Director of Government Affairs

Defense changes policy on protective gear

DoD has issued new guidance on the use of protective masks.  All DoD personnel, family members and civilian employees and contractors, are required to wear masks when they are within 6 feet of another person.  Masks can include either provided masks or cloth face coverings.  The DoD Policy is here.

DeCA has issued implementing guidance on face masks.  This guidance is here.   And, the Navy Exchange Command guidance is here.

ALA is raising the face mask issue with the Department of Defense and is seeking to identify sources of professional grade personal protective equipment, including masks to industry personnel in the supply chain and in the stores. Protective gear is in short supply as National priorities are to get it to health care workers. Currently, this gear must be paid for by individual companies but ALA is trying to get a common source available at the store level so that both industry and Government workers have professional –grade protective gear available.  Until this time, workers must fashion their own face protection from cloth.

Distributors are notifying truck drivers of the new policy which may require drivers to not only wear the protective masks, but lower the masks when clearing security upon entering the bases.

DoD working group, ALA pandemic communications group, ALA supply chain strengthening efforts 

ALA is participating in a Department of Defense working group that is examining pandemic issues, including fast tracking acquisition, use of personal protective equipment up and down the supply chain, and working with manufacturers to get more product to the system via the Defense Production Act and its associated Defense Priorities and Allocations Systems Program.

ALA established a Coronavirus communications working group on February 28 and is pushing information to resale entities on developments in both the government and commercial retail and grocery world.

ALA has been working with suppliers up and down the grocery supply chain to determine chokepoints and areas of fragility in the supply chain and relaying this information to the Department of Defense in order to remedy problems.

Senator Kaine urges Defense to move on securing the exchange and commissary supply chain

In an April 2 letter, Senator Tim Kaine, ranking Member on the Senate Armed Services Readiness and Management Support Subcommittee, wrote to the Secretary of Defense to let Congress know what authorities and supplemental funding is needed to secure the consumer products supply chain.

Kaine commended DoD for efforts to reimburse the exchange and commissaries for added costs associated with the pandemic.  He also urged support for added costs placed on the industry side of the supply chain including labor and added costs at distribution centers that he said amounted to an additional $10 million a month, saying that these costs are over and above normal operations and are needed to ensure the smooth flow of products to military families.

Noting the difficult conditions in the stores, he urged DoD to recognize industry workers and cited commercial chains that were providing additional pay and personal protective gear for their employees.  He also urged the Department to consider “utilizing aspects of the Defense Production Act or associated authority of the Defense Priorities and Allocations System (DPAS) to ensure distribution centers have adequate product allocations from manufacturers to fill consumer demand at the military stores.”

Mission essential exchange operations need support as losses escalate

Major impact on exchange programs may require appropriated fund backstop

The Department of Defense is examining the impact of the pandemic on the nonappropriated fund programs of the DoD and is considering underwriting the program with appropriations.

Already the one-time impact is north of $100 million with recurring monthly costs higher yet.  If there’s one thing we’ve learned from this pandemic, it’s that bad news doesn’t get better with age.  Just like in the private sector, food is selling, grocery stores are operating but retail is getting hit…and hit hard.  Associated with the carnage that is occurring outside the gate as large and small retailers shut down, the exchanges are doing all they can to cope and survive the pandemic.  The impact on exchanges is exacerbated by the global nature of the exchange business and the demand that they continue to operate when stores outside the gate would scale back or close.

And, for military families, the exchanges are often the only source of life sustaining consumables and services.

The exchanges normally operate without appropriations from Congress.  That’s why they are called nonappropriated fund activities.  DoD is considering what and how much to reimburse the exchanges from appropriated funds to assist in mitigating the impact.

And there’s a cascading effect.  MWR programs that the exchanges underwrite have their own set of problems with closures of programs at the base level and the Armed Forces Recreation Centers shuttered.

We’ll be reaching out to policy makers throughout the legislative and executive branches of Government to recognize that the vital food chain for our military needs to be shored-up and that the exchange programs be supported to preserve their vital capabilities to take care of our military both during the pandemic and the reconstitution that will take place after this pandemic is conquered.

Along with shoring up the vital grocery chain, ALA is urging action to include establishment of a major appropriated fund reserve to support and backstop severe financial impact being experienced by exchanges.  Providing emergency appropriations to underwrite exchanges is not unprecedented.  Current DoD policy allows emergency finding.

Pandemic impact mirrors what is taking place outside the gates.  And, the Administration and the Congress have moved to backfill employees and businesses.  We don’t want the exchanges to fall through the cracks.  And these are some big cracks.

Exchanges are seeing major sales declines and their workforce and operations are paid with sales.  Yet, exchanges can’t close as most commanders depend on them to sustain their military operations.   The exchanges are struggling to adapt, closing concessions and scaling back food operations to take-out only.   Some retail outlets are closing and scaling back hours.  Base access policies are changing, limiting sales from off-base patrons.

And, sales declines reverberate across all exchange operations, with financial impact on logistics, real estate, financial, credit, and information technology.  Also, there are major costs due to the need to keep the workforce on board to man on-going operations.

Exchanges have operated for years sustaining mission essential programs for the Department of Defense, often using dollars generated from the troops to underwrite the Defense mission.  As the pandemic impacts exchange operations, it is time for the American people to reciprocate with funding to support these programs so that they can continue to support the Defense mission after the pandemic has passed.

VCS and CGX heavily impacted

The Veterans Canteen Service is unique in that it operates in hospitals.  VCS retail has been heavily impacted and management reports they can’t close down operations because of the vital VA hospital mission and the need for VCS to operate food service for patients and staff.

The Coast Guard Exchange has been heavily impacted as it copes with store closures, limitations on base access and limitations placed on patronage by base commanders.    The impacts on workers are growing as the pandemic stretches on.  Management reports that they are working to keep employees on despite major reductions in hours and sales.

Pandemic commissary closures, need for more manufacturer allocations, and Federal funding to underwrite added industry costs

DeCA employees are getting paid and the commissary program is intact…something that we never have and shouldn’t take for granted.  Just over the weekend we are aware of a commissary closure caused by virus exposures in Osan AFB and exchange and commissary closures at Whitman AFB in Missouri.  ALA is advocating for funding to shore-up the supply chain, including come non-traditional Federal funding to shore-up the supply chain at commercial distribution hubs to include payments for extra employees and equipment expenses not reimbursed, additional hazard pay for some workers, and personal protective gear.   ALA and DeCA are urging major manufacturers to come forward with additional product allocations for the military because of the long-lead times for shipment and the isolation of military families.  This builds on the March 20, “One Family, One Mission” message signed by all Defense exchange systems and DeCA.  Right now, distributors are getting less than 50 percent of what they need to ship to stores.

Speaker of the House gives a peek into Stimulus 4 and even Stimulus 5

The current stimulus bills provide $11 or $12 billion to the DoD and ALA is urging a portion of that funding be provided to relieve the strain on commissary and exchange operations and the supply chain that supports them.

In addition to asking the DoD to support resale programs with existing funding, ALA is planning to support relief in upcoming Stimulus packages that are in early stages of development in the Congress.

Most of the pandemic relief legislation originates in the House of Representatives and Speaker of the House Nancy Pelosi has called for another pandemic stimulus package in addition to the $2 trillion package that just passed Congress.

She backed away from House Democrats’ plan to include hundreds of billions of dollars in infrastructure funding in Congress’ next coronavirus relief bill, instead calling for a simpler package that further extends unemployment insurance and small business support.  She called for more rounds of employment support.

“Right now, we need a fourth bipartisan bill. And I think the bill could be very much like the bill we just passed,” she added, including more unemployment benefits and extension of relief measures for business.

Republicans are lukewarm to another stimulus bill so quickly after the last one, but the fast moving pandemic and the severe damage to economy could cause a shift in Republican attitudes.

Pelosi suggested such a relief package could move quickly through Congress. Both chambers plan to return to Washington on April 20.  “We don’t need a long time to figure out what we need to do next,” she said. “We know. And we have a model.”

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