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Congress ponders exchange merger

By Staff Sgt. C. Todd Lopez

WASHINGTON (April 03, 2003) -- Department of Defense leaders met with the House Armed Services Committee subcommittee on total force April 2 to discuss the future of the department's three exchange services.

Of specific interest was a potential merger of the Army and Air Force Exchange Service, the Navy Exchange and the Marine Corps Exchange. Recently, DOD officials considered consolidating the three organizations as a potential cost-cutting measure.

Lt. Gen. Michael E. Zettler, Air Force deputy chief of staff for installations and logistics, who also serves as the chairman of DOD's Commissary Operating Board, said reducing operational costs is always an important topic for programs that cater to the morale and welfare of military people and their families. In the case of exchange services, there appears to be opportunities to do just that.

"We don't need three distribution systems, or three information technology systems," he said. "I think there is an opportunity to continue the benefit for our soldiers, sailors, airmen and Marines, and reduce the cost."

According to Zettler, the importance of the benefits provided by exchange services cannot be overstated. First, they provide goods to servicemembers worldwide in places that commercial businesses often cannot go. Second, money from the non-profit exchange services is fed back into local morale, welfare and recreation funds in the form of dividends.

But financial projections for all three exchanges predict a reduction in those dividends, he said. And the cost savings generated by consolidating the three exchanges may be one way to get those dividends back on track.

"It may not be the only way, and it will be a difficult way," he said. "But it is one way to do that."

Army Maj. Gen. Kathryn G. Frost, AAFES commander, believes the consolidation of the three exchanges will succeed, but will require all three services to work together toward a common goal.

"I know consolidation can work," Frost said. "Whether or not it will work depends on how we plan and implement it. It has to be a very collaborative effort, and we have to work together to make that happen."

Charles S. Abell, principal deputy undersecretary of defense for personnel and readiness, stressed that there are no immediate plans to make any changes to the way the exchange services operate. Instead, DOD officials will develop a plan over the next 24 months and will then present that plan to Congress for approval, he said.

Regardless of whatever decision is made, the goal will remain the same.

"That bottom line has to be translated back into dividends that come back to the services in the form of MWR," Zettler said. "The bottom line is to take care of the troops."