Making Food Affordable for Military Families
For decades, the Defense Commissary Agency (DeCA) has struggled to meet the intent of providing good, discounted groceries to service members, their families, and veterans – an important military benefit.
Rather than taking a step forward to improve this benefit at reduced cost, the Pentagon has surrendered to those who profit from the current system and determined, without testing, that the taxpayer should continue footing an annual $1.5 billion bill for a noncompetitive service.
As the 2027 budget request to Congress was being released last week, the Under Secretary of War for Personnel and Readiness notified Congress of the evidence-free decision to disregard its own modernization directives.
Recognizing the unsustainable nature of the current DeCA model, policymakers repeatedly attempted to update it while reducing federal overhead and improving the commissary benefit. The most recent direction, an April 2025 memo from the Deputy Secretary of Defense is clear. It states that all non‑inherently governmental functions—including retail sales—should be prioritized for privatization.
Instead, earlier this year DeCA announced the Supply Chain Transformation Initiative, which proposes a two‑wholesaler national supply model. This model is being presented as progress. In reality, it appears more as a costly detour—one that delays true modernization, perpetuates a failed supplier/broker model under a different contract and undermines the very benefit it claims to protect.
The Department is expected to leverage commercial capabilities and align commissary operations with efficient, market‑based models while improving the benefit. Any future structure must be measured against these objectives. DeCA’s new model does not meet that test.
The two‑wholesaler national supply model represents a structural shift, but not one that aligns with modern retail practices—or with the Department’s stated fiscal and operational goals.
The new model removes the consumer product companies from paying the distributors directly for their services. Instead, as part of the contract that DeCA would require for any company that has a product on the commissary shelves, distribution costs, estimated at $200 million annually using previously reported sales, would be paid by DeCA, meaning by the taxpayer.
One of the two wholesale/distributors DeCA plans to use has reportedly already put forward a three percent surcharge against every manufacturer that ships to the commissaries, amounting to an estimated $100 million additional expense. As a result, the distributor would get paid twice – by DeCA and the manufacturer – compounding the already costly fees within the system, and driving up the costs for the customer, the taxpayer, or both.
The proposed plan would also make supply chains less efficient, as the forced national coverage could require wholesalers to span areas where they currently lack infrastructure, driving up transportation costs and weakening performance.
Such a consolidation could also increase disruption risk as any labor, cyber, or facility‑related problems would permeate through half the commissary system.
Finally, without new plans to focus on the shopping experience such as online shopping, grab and go offerings, and expanded private label programs, DeCA stores would fall further and further behind in delivering what customers really want, and what they can already get from civilian retailers.
These are not minor shortcomings. They are fundamental misalignments with modern retail operations. The core issue: How to transform the commissaries to be more like successful commercial grocery stores, is not being addressed.
Rather than embracing the directed modernization path, Pentagon leadership now declares it too risky without even trying it.
As DeCA’s new proposed model is likely to increase the burden on the taxpayer and increase prices for military families while doing nothing to improve the benefit, it directly conflicts with direction to prioritize privatization of non‑governmental functions.
A better path exists, and it looks like the modern grocery industry.
Last September, DeCA released a request for information (RFI) to the commercial grocery industry to “determine whether commercial grocery operators and investment firms are both interested in and capable of assuming commissary operations, with no government subsidy or with a materially reduced subsidy, while preserving the critical military benefit of a 23.7% average savings for authorized patrons.”
Consistent with its own privatization guidance, the RFI responses should be independently reviewed, ensuring that all potential pathways are evaluated, including a real test of the long-overdue pilot to place commissary operations under commercial grocery retailers operating within their existing regional distribution networks. Such a model could reduce the taxpayer burden while improving pricing for military families, modernizing operations, reducing federal overhead, and strengthening supply‑chain resilience.
Modernization is not achieved by repackaging old structures. Taxpayers deserve better stewardship of defense budget resources and devotion of those dollars to core military functions. Military families deserve a commissary system built for the future, not one that clings to the past. We should have the courage to at least test a way to meet both commitments under a commercial grocer model.
Elaine McCusker is a senior fellow at the American Enterprise Institute (AEI), where she focuses on defense strategy, budget, and innovation; the U.S. military; and national security.