January 31, 2019
Defense Primer: Military Commissaries and Exchanges
The Department of Defense (DOD) offers certain quality-
Table 1. Breakdown of Commissaries vs. Exchanges
of-life benefits to military members, their families, and

retirees. The general purpose of these benefits is to attract,
Commissaries
Exchanges
retain, and support morale and readiness for military
Funding
Appropriated Funds Sales of goods, non-
servicemembers. One of these benefits is world-wide access
(APF)
appropriated (NAF)
to grocery and retail stores – called commissaries and
exchanges – typically located on military installations.
Management
DeCA Board of
Board of Directors
Commissaries provide subsidized groceries and household
Directors
for each Service
goods to eligible patrons. Exchanges sell goods for profit,
exchange system
similar to a department or specialty store, but use the some
Products
Grocery and
Clothing, shoes,
of these profits to fund various Morale, Welfare and
household goods
furniture, alcohol,
Recreation (MWR) activities (See Table 1.).
cigarettes, jewelry,
Organization and Management
uniforms,
Defense Commissaries
computers, etc.
The modern commissary system began in 1867. Each of the
Online Sales
Limited*
Yes**
services operated its own commissaries and exchanges until
and Delivery
1991 when the commissary system was consolidated under
Sources: “About DeCA” and “FAQs” at
the Defense Commissary Agency (DeCA). Currently,
https://www.commissaries.com/; and “Exchange Quick Facts,” at
DeCA operates 237 stores worldwide including 178
https://www.aafes.com/about-exchange/exchange-quick-facts/.
stateside, with the remainder in 13 countries and 2 U.S.
territories. In addition, DeCA Operations include five joint
Notes: *Since 2013, DeCA has a pilot program offering online
Commissary and Exchange operations (NEXMARTS)
ordering with curbside pickup, known as Click2Go, at three
located overseas, nine distribution centers, and a meat
locations: Fort Lee, Virginia, Offutt Air Force Base, Nebraska, and
processing plant located in Germany.
Travis Air Force Base, California. Future locations are expected,
however, it is unknown whether DeCA will offer delivery of online
As a defense agency, DeCA reports to the Office of the
orders. **Online delivery excludes cigarettes, alcohol, and military
Secretary of Defense and has a board of directors composed
uniforms.
of members from each of the military services. DeCA
provides subsidized groceries and household goods at cost
Authorized Patrons
plus a 5% surcharge. This surcharge is used to fund new
Authorized patrons of military commissaries and exchanges
commissary construction, and store-level refurbishment,
include active duty, Guard and Reserve members, military
maintenance, and equipment.
retirees, Medal of Honor recipients, 100 percent disabled
veterans, and authorized family members. DOD regulations
Military Exchanges
also allow limited access to overseas commissaries to DOD
DOD maintains an exchange system that includes the Army
and non-DOD federal civilian employees and contractors.
and Air Force Exchange System (AAFES), the Navy
Exchange (NEX), and the Marine Corps Exchange (MCX).
Since November 11, 2017, DOD has allowed limited online
Each service has its own board of directors to align
exchange shopping privileges to all honorably discharged
operations and services. These exchanges provide military
veterans. Purchases of uniforms, alcohol and tobacco
installations with goods and services similar to department
products are excluded. Veterans may verify eligibility at
stores and are often located near commissaries.
https://www.shopmyexchange.com/veterans
Additionally, some exchanges operate gas stations, mini-
marts, food courts, barber and beauty shops, and liquor
The John S. McCain National Defense Authorization
stores, some of which are operated by outside or contract
Act for FY2019 (P.L. 115-232) includes a provision
vendors.
that is to extend eligibility for commissary and morale,
welfare, and recreation (MWR) privileges to certain
According to AAFES, “20% to 30% of its foot traffic,
veterans and veterans' caregivers by January 1, 2020,
representing $1 billion in sales, is attributable to proximity
subject to regulations prescribed by DOD.
to commissaries.” DOD regulates what items may be sold at
commissaries and exchanges to comply with statutory
requirements (10 U.S.C. §2483) and to avoid direct
competition with one another.
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Defense Primer: Military Commissaries and Exchanges
Funding
advocate for maintaining the current system. They are
Commissaries: Appropriated Funds
concerned that changes could dilute the perceived or actual
DeCA is an appropriated fund activity (APF). Congress
benefit for eligible patrons (particularly military retirees
funds commissary operations with an annual appropriation
who may be on a fixed income), could harm recruitment
to the DeCA Working Capital Fund (WCF). According to
and retention, and could reduce the revenues generated for
DeCA’s FY2017 Annual Financial Report, its operation
MWR activities. Advocates for the commissary and
costs were $1.3 billion. By law (10 U.S.C §2483),
exchange systems also note that they provide job
appropriated funds may be used to cover employee salaries
opportunities for military spouses and other dependents.
and wages, utilities, communications, operating supplies
Those who have proposed a reduction or cancellation of the
and services, food shipment to overseas destinations, and
commissary subsidy argue that the current benefit is not
other management, equipment, and/or information
efficient or equitably distributed among eligible patrons and
technology costs.
that running a chain of grocery stores is not a core function
of DOD. Some military personnel are assigned to locations
Table 2. DeCA Appropriations FY2014-FY2019
without convenient access to a commissary. In particular,
Fiscal Year
Amount in Billions
military retirees and Reservists may be less likely to live in
close proximity to an installation with commissary services.
FY2014
$1.3
Further, with the expansion of discount grocery stores and
FY2015
$1.3
grocery delivery services, the commissary benefit may not
be as attractive as it once was. One alternate proposal is for
FY2016
$1.3
DOD use the savings generated from a reduction in the
FY2017
$1.4
subsidy towards an annual “grocery allowance” for active
FY2018
$1.4
duty military families that could be better targeted to
FY2019
$1.3
specific pay grades with higher need (i.e., junior enlisted).
Proponents for consolidation contend that merging all
Source: Overview - FY2019 Defense Budget, Figure 5.1 Pay and
systems into a single Defense Resale Activity could save
Benefits Funding (Commissary Subsidy), on p. 5-3 at
money by streamlining functions such as accounting,
https://comptroller.defense.gov/Budget-Materials/Budget2019/; and
administration and support; allowing for greater flexibility
earlier Budgets at https://comptroller.defense.gov/Budget-Materials/.
of products sold; and aligning incentives for commissaries
and exchanges.
Exchanges: Non-Appropriated Funds
Unlike commissaries, exchanges sell merchandise for profit
Section 627 of the FY2019 NDAA requires DOD to study
similar to retail or department stores. In 2018, AAFES
the feasibility of consolidating commissaries and exchanges
reported that it generated over $8.6 billion in annual
into a single defense resale system. Section 627 requires
revenue and earnings of $376 million. These earnings are
DOD to submit the report by January 1, 2019.
used to cover operating expenses, maintain facilities, and,
additionally, fund MWR programs and services such as
Relevant Statute
leisure travel, fitness centers, Child Development Centers,
Title 10, U.S. Code Chapter 54
youth programs, outdoor recreation, and movie theaters.
Title 10, U.S. Code, Chapter 147
Commissary and Exchange Reform

Proposals
CRS Products
Over the past few years, Congress has been concerned with
improving the Defense Commissary Agency (DeCA)
CRS Report R45343, FY2019 National Defense Authorization
system. Recent reform efforts by the Congress generally
Act: Selected Military Personnel Issues (and prior-year reports),
have sought to explore ways to reduce DeCA’s reliance on
section on “Defense Commissary System.”
appropriated funds without reducing patrons’ commissary

benefits and/or revenues generated by military exchanges.
Some of the past proposals from military commissions,
Other Resources
think tanks, or legislative agencies have included one or
DODI 1330.17, DOD Commissary Program
more of the following:
DODI 1330.21, Armed Services Exchange Regulation
 Reducing or cancelling the commissary subsidy;

DODI 1015.10, Authorized Patronage of Military MWR Programs
Consolidating the commissary and three exchange
systems into one entity, to be called the Defense Resale
Government Accountability Office, DOD Needs to Improve
Activity (DeRA);
Business Processes to Ensure Patron Benefits and Achieve
 Expanding commissary and exchange eligibility to
Operational Efficiencies, GAO-17-80: Mar 23, 2017.
additional veteran groups; and/or,
 Charging user fees for certain categories of patrons (e.g.,
DOD civilian employees).
Kristy N. Kamarck, Analyst in Military Manpower
Military, retiree, and veteran service groups have generally
Barbara Salazar Torreon, Senior Research Librarian
opposed any reduction to the commissary subsidy and
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Defense Primer: Military Commissaries and Exchanges



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