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Defense Commissary Agency Update - Operations, Funding, and Initiatives

This update from the Defense Commissary Agency (DeCA) Director highlights the scope of operations, funding reductions, capital investments, internal controls, customer initiatives, sales growth, produce procurement, BRAC impacts, and cooperative ventures.

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Defense Commissary Agency Update - Operations, Funding, and Initiatives

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  1. The Defense Commissary Agency Director's Update February 28, 2007 ALA Briefing Mr. Patrick B. Nixon Director & CEO

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

  3. Funding Reductions • 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. Capital Investment Summary Facilities & Improvements Equipment Information Technology** Total FY 2006 $122M $25M $90M $237M FY 2007 $260M* $21M $80M $361M 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

  5. Internal Controls • 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 DeCA Leading the Way on Internal Controls in DoD

  6. Customer Initiatives • 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 Sales Continue to Increase

  7. Supporting the Families • 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. Produce Procurement • Program coordinated with Industry and DSC-P • Contracts awarded for all CONUS locations, plus Alaska, Hawaii, Puerto Rico, and Cuba • Solicitations to follow for coverage in Pacific and European locations • Initiative slowed by protests • DSC-P support will continue until conversion completed • Results extremely positive • Improved quality • Increased savings • Increased organics Double Digit Produce Sales Growth

  9. BRAC - Store Level • 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. BRAC - Above Store Level • BRAC legislation approves a building addition to DeCA HQ, Fort Lee • Project contract award 1st 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. OIGPBS/BRAC Facility Impacts • 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 Lack of appropriated fund support has forced DeCA to reprioritize short, intermediate and long range major construction programs to accommodate unfunded requirements

  12. Cooperative Ventures • 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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