Presidents Message/Washington Update 9/11/20

Government shutdown?  We’re about three weeks away from October 1, the beginning of the government’s fiscal year and the start of what’s become an annual ritual…a threatened shutdown of the government. 

Any shutdown has a major effect on commissaires (which have most of their expenses paid by appropriations) and a lesser effect on exchanges (because they are largely funded though patron proceeds).   And, a shutdown would be particularly disastrous for commissary operations and suppliers which are already coping with major convulsions due to pandemic-forced base access restrictions. 

Bottom line up front: the most likely outcome (80 percent in my estimation) is a “continuing resolution” or CR, that is, a bridge from one funding bill to another and continued uninterrupted operation of the stores.  Regular appropriations bills are very unlikely because of the hyper partisanship, supercharged by the upcoming election.  And, no one really wants to add to the Nation’s pandemic misery by throwing another 850,000 or so Federal workers out of work. 

Under a CR, commissaries would be funded at the FY 2020 (October 1, 2019-October 1, 2020) levels that are more than adequate to sustain operations, especially since commissaries got a $34 million funding boost in the first pandemic relief bill (CARES I). 

Treasury Secretary Steven Mnuchin and Speaker of the House Nancy Pelosi have agreed to work on a CR and Mnuchin said that the CR would carry the funding beyond the election.  If this is the case, Congress would return for a “lame duck” session to either extend the duration of the CR or pass regular appropriations bills.  (Senator Jim Inhofe told ALA that he didn’t expect the policy bill or the Defense Authorization Act to be considered until after the election.).  Anyway, it appears that both sides want a “clean” CR that would not have any provisions other than funding the government. 

 Why not give it a 100 percent chance of not shutting down? Well, this is Washington after all, and you never know what kind of last-minute item will be tossed into the game that would derail a CR. 

Don’t confuse the CR with another pandemic stimulus bill that is being debated right now.  And, most insiders are saying that it would be mutual suicide to try and hang the CR on any pandemic relief bill.  But then again, this is Washington and it has been a long hot summer.  ALA is working to get funding in the next stimulus bill to offset extraordinary supply chain costs associated with the pandemic and provide funding relief for hard-hit non-appropriated fund Government programs to include DoD and VCS.

 So, if there is a small possibility that the Government could shut down.  What does this mean? 

A government shut down occurs when funding expires for the government that was provided in previous bills passed by Congress and Congress fails to pass appropriations for the coming year or even a temporary funding measure to bridge from one appropriation to another. 

 Since the enactment of the US government’s current budget and appropriations process in 1976, there have been a total of 22 funding gaps in the federal budget, ten of which have led to federal employees being furloughed.

There have been three shutdowns in recent years:

 The 2013 shutdown

 The worst for the commissary program was in 2013 when the entire government shutdown for 13 days.  ALA went to bat for industry and lobbied the Administration and the DoD to keep commissaries open.  This resulted in commissaries only being closed for only seven of the 13 days, but still enough to cause considerable disruption in commissary operations.  In an October 1, 2013 letter to then Deputy Secretary of Defense Ash Carter, ALA and the Armed Forces Marketing Council said:

 “Industry will work to divert product to minimize this impact, but options are extremely limited due to the abrupt nature of the supply chain disruption, especially as we cannot ascertain the duration of the shutdown.

 “This is uncharted territory for commissaries.  Past shutdowns have allowed these stores to remain open and we expected that this would be the case until we were provided a Notice to Trade that said otherwise.  We urge you to reconsider the decision to close stateside stores altogether.  At the very least, commissary operations should be allowed to continue until such time as we are able to work with the Defense Commissary Agency to mitigate the matter and reduce liability and costs across the entire supply chain.

 “We believe that there will be immediate pressure on in-store inventory and the working capital funds as products begin to spoil and reach their expiration dates.  Further, the precipitous disruption of the supply chain on manufacturers, distributors and brokers who form the supply chain for the commissaries will trigger a number of difficult issues as ownership of inventory in the pipeline raises a host of logistical, administrative and legal matters as products expire with costs estimated in the hundreds of millions of dollars.”

The effort to reopen the stores was aided by another law passed during the heat of the shutdown the “Pay our Military” Act that appropriated funding to pay military personnel in the event of a shutdown and was interpreted by Government lawyers to allow all civilian Defense personnel to return to work as well, on the basis that they “contribute to the morale, well-being, capabilities and readiness of service members.” 

The January 2018 shutdown 

Another shutdown in January of 2018 had minimal effect because of the short (3 day) duration and practically by the time the stores actually shut down, they opened back up. 

 The December 22, 2018 to January 5, 2019 shutdown

 The longest shutdown (35 days) over the border wall but appropriations for the DoD had already passed, so DoD and the commissary program dodged the bullet. 

 Stabilizing for the future

Because these shutdowns are white-knuckle for commissaries and the supporting industry, ALA has been working to provide some stability.  We worked with our friends in Congress, including Congressman Rob Wittman R-Va.) and Congresswoman Elaine Luria (D-Va.)and got language in the House version of this year’s Defense policy bill (The Fiscal Year 2021 National Defense Authorization Act) to examine creative ways to use bridge financing to keep operations going even in the worst case government shutdown scenario.  The language also calls for an assessment on the well-being of patrons who lost access to their stores.  Here’s the language: 

Operation of Commissaries during Period of Expiration of Appropriations

The Committee recognizes that military commissaries provide a reliable source of high-quality food and subsistence for military personnel and their families. The committee further recognizes that disruptions of these operations due to Federal shutdowns prompted by the expiration of appropriations may deprive families of this vital subsistence source at the very time that it is most needed. As substantiated by recent surveys, some military men and women rely upon food stamps, and, as food insecurity was cited as an in- creasing concern by the Committee in the Fiscal Year 2020 National Defense Authorization Bill, it is critically important that the commissaries remain open during government shutdowns. Further, the committee recognizes that due to the perishable nature of products sold, there are major logistical and administrative matters that arise when retail operations at the end of the supply chain precipitously cease to include disruption of logistical synergy between major stateside locations and operations at remote and overseas areas.

Due to the unique nature of these operations, the Committee believes that the Department of Defense should consider including these operations as excepted programs during the period of expiration of appropriations. Additionally, the Committee directs the Secretary of Defense to provide a report to the House Committee on Armed Services by March 15, 2021, that would examine the feasibility of commissaries being provided excepted status. This report should include the advisability and feasibility of continued operations using excess balances in working capital funds to finance continued operations. The report should also examine the feasibility and advisability of using commissary surcharge trust funds or non-appropriated funds generated from implementation of business practices and procedures and validity of commitments to re-plenish or reimburse these sources immediately upon restoration of appropriations by Congress. The report should also examine the financial impact on military men and women and their families losing this benefit during any Federal shutdown.

And, in another bi-partisan show of support in the Senate’s version of the NDAA, supported by Senator Tim Kaine (D-Va.) and Chairman Jim Inhofe (R-Okla.) language was included supportive (but less prescriptive) on keeping commissaries open during government shutdowns.  The language is notable because it specifically calls for commissaries to be “excepted” programs (in other words open) during shutdowns.  Here’s that language: 

“Operation of commissaries during government shutdowns

Military commissaries provide a reliable source of high-quality food and subsistence for military service members and their families. During government shutdowns prompted by an expiration of congressional appropriations, commissary closures deprive families of this vital subsistence source. Due to the critical importance of commissaries to military families, the committee believes that the Department of Defense should designate commissary operations as excepted programs during government shutdowns.”

Commissaries, the shutdown and the pandemic

And, the commissary program got added insulation from shutdown effects on an ALA-supported emphasis on commissary pandemic operations when on March 25, 2020 Vee Penrod, Acting Assistant Secretary of Defense and DeCA Director issued a letter saying that commissaries were “mission essential” during the pandemic.  In her memo to the DoD in including the Joint Chiefs of Staff, Penrod said: “Providing for the care and feeding of our military members and families is a critical requirement that must be accomplished at all health protection levels.”  In support of the Department’s response to the COVID-19 pandemic, I am designating all DoD commissaries and operational support facilities as mission critical services and all Defense Commissary Agency (DeCA) store and operational support facility employees as mission critical except when otherwise determined by the installation commander…”  The Secretaries of the Military Departments and geographic combatant commanders should be prepared to support sustainment of commissary operations with assets, if necessary, to maintain critical operations.  In addition, installation commanders should ensure continued installation access for resupply trucks and commissary-related support services.”  The authority excluded non-mission contract services and personnel such as delis, bakeries, sushi stations, flower shops. And seafood stations.

Of course, we’ll keep you posted…

Best regards,

Stephen Rossetti

President

 

 

Pentagon News/Military News:

Defense authorization bill delayed until after election
(Defense News) A bipartisan compromise and vote on the 2021 defense policy bill isn’t likely before the Nov. 3 elections, but it should come “quickly” thereafter, the House Armed Services Committee’s top Republican said Wednesday.
   

 2. Respect for troops, military sacrifice becomes an election friction point
(Military Times) The presidential campaigns aren’t just debating military policy now. They’re debating basic respect for the military.
 

 Esper defends Trump amid fallen troops firestorm
(The Hill) Defense Secretary Mark Esper said Friday that President Trump respects U.S. service members amid growing furor over a report that said Trump disparaged fallen U.S. troops as “losers” and “suckers.”
 

 John Bolton denies claim Trump disparaged fallen American soldiers in France: ‘Simply false’
(Fox News) Former national security adviser John Bolton disputed the main thesis of The Atlantic’s recent report alleging that President Trump disparaged fallen American soldiers in France, calling the claim “simply false” in an appearance on “The Story” Monday.
 

 Trump came to Dover after my wife was killed fighting ISIS. He absolutely respects our service.
(NBC News) I’d never met a president before Donald Trump. His empathy and thoughtfulness on one of the worst days of my life won my gratitude.
 

These 5 military hospitals will support COVID-19 vaccine trials
(Military.com) Five Defense Department medical facilities have been named to participate in research for the newest COVID-19 vaccine candidate to enter Phase III clinical trials.
 

 3. Wearing masks could become part of troops’ standard operating procedure
(Military Times) Wearing masks, wiping down work spaces and quarantine periods have presented a fringe benefit to military operations, most notably in the basic training environment. Fewer troops are coming down with communicable diseases, which take them out of the fight for days or even weeks.
   

 2. More than a million troops to get temporary pay hike with payroll tax deferral — but there’s a catch
(Military Times) More than a million military members earning $8,666.66 or less per month will see their paychecks increase by 6.2 percent of their basic pay beginning with the mid-September paycheck — but get ready for the bite out of your paycheck when you have to pay it back starting in January.
   

 

Coronavirus Regulations: A State-By-State Week In Review 

Labor Day’s influence on COVID-19 pandemic measures was apparent this week in places like New York, which ushered in new public health protections for workers and a coronavirus tracker for university students.

Read full article »

 

INDUSTRY NEWS

Walmart Pressures Suppliers on Delivery Times

Move comes as retailer offers quicker shipments to consumers

 

Report: Amazon joining with Kohl’s on grocery

Amazon is set to open a supermarket inside a Kohl’s store in La Verne, Calif., using about 37,000 of the total 88,000 square feet inside the building and expanding a relationship that started in 2019 when the retailer began accepting Amazon returns. Although no opening date has been set for the new grocer, reports say it would likely use Amazon’s Fresh banner and make Amazon the second grocer, after ALDI, to forge a similar space-sharing deal with Kohl’s.

Full Story: Progressive Grocer (9/4) 

 

RESALE NEWS:

The ALA Commissary Council invites you to a WebEx Virtual Event.

This event requires registration (free!). After you register, you’ll receive a confirmation email message with instructions on how to join the event.

 Industry Joint Business Planning Sessions

WHEN:  Tuesday, September 22, 2020 – Thursday, September 24, 2020    **TIMES IN SCHEDULE BELOW**

HOST: ALA Commissary Council Member Stephanie Supplee, stephanie.supplee@cpfd.com 

Industry Joint Business Planning Sessions is part of a series of virtual events hosted by the ALA Commissary Council.

We will begin with a kick-off session featuring guest speaker Tracie Russ, Director of Sales from the Defense Commissary Agency. Following the kick-off there are seven individual sessions with DeCA Category Managers where we will focus on Joint Business Plans from a category perspective.  Please be prepared to discuss, we will have time for open dialogue during this session.  

Attached to this invite is the JBP template with an example, please complete your company specific plan and return to your category manager by September 15th. Any questions regarding the template itself should be directed to Mike Bender, bender.ma.1@pg.com.

Participants must register for each individual session, please use the links below to register now! (NOTE CHANGES TO SESSION TIME)

Date

Time

Topic

Categories

Registration Link

Sept. 22

1100-1230

Kick-off Session w/ Tracie Russ

 

REGISTER JPBS

Sept. 22

1400-1530

JBP1 w/ Barbara Merriweather

RTE Cereal, Soup, Coffee, Spices

REGISTER JBP1

Sept. 23

1100-1230

JBP2 w/ Rena Dial

Paper, Laundry, Household, Pet Food

REGISTER JBP2

Sept. 23

1300-1430

JBP3 w/ Jessica Stables

Cheese, Yogurt, Refrigerated Juice, Frozen Prepared Meals

REGISTER JBP3

Sept. 23

1500-1630

JBP4 w/ Darrell Clary

Bacon, Sausage/Lunchmeat, Juice, Water

REGISTER JBP4

Sept. 24

1100-1230

JBP5 w/ Iveena Henderson

CSD, Snacks, Cookies/Crackers, Candy

REGISTER JBP5

Sept. 24

1300-1430

JBP6 w/ Bridget Bennett

Specialty Produce, Cut Fruit & Veg, Salad Mix

REGISTER JBP6

Sept. 24

1500-1630

JBP7 w/ LaRue Smith

Oral Care, Shaving, Diapers & Training Pants, Body Wash & Soaps

REGISTER JBP7

 

New commissary agency director aims to increase patronage, especially among younger service members

https://commissaries.com/our-agency/newsroom/news-releases/new-commissary-agency-director-aims-increase-patronage-especially

Digital Garrison App Strengthens Army Communities

Mil Money: Has the commissary beer and wine test gone stale?

of the Defense Commissary Agency who is leaving that position after 33 months. He’s continuing in his position as CEO of the

Why Mondays can be a drag in the military

to all other grocery stores. Commissaries were my turf, where I belonged. After 27 years as a military spouse, I …

Read NEX policies under COVID pandemic

The Navy Exchange Guam is seeing an upward trend in positive COVID cases, while we did not receive any numbers as to how many …

NEX online store turns six, continues to evolve to support customers

VIRGINIA BEACH, Va. – On Aug. 27, the Navy Exchange Service Command’s (NEXCOM) website, myNavyExchange.com, turns six years old. …

 Mark your Calendar

Date                                               Event                                              More Information

September 22, 2020                Industry Joint Business Planning Sessions is part of a series of virtual events hosted by the ALA Commissary Council. Web-EX event. Participants must register for each individual session, please use the links below to register now!                                                                                              11:00- 1st Session

Pending Coordination                 NEX-MCX Virtual Update                           TBD

Pending Coordination                  AAFES-Industry Virtual Work Shop’s         TBD

October 19-20, 2020                   ALA National (Virtual) Convention           Virtual Event

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