ALA Public Policy Advocacy

ALA is a full partner in protecting benefitEducate major public policy makers on importance of

benefitIndustry has huge stake in resale viabilityAuthorizing and appropriations committees House and Senate

Challenges

Deficit Reduction CommissionDoD Overhead ReductionsOMB Budget GuidanceCongressional Budget Reviews

Defense FundingDefense requested $733B in Feb 2010Without wars--$18B higher than year before1.4 percent pay increase to $139 B$210,000 in O & M per troop compared to $95,000 in FY

2000Non-cash and deferred compensation consume 52 percent

of total compensationPersonnel costs up 46 percent from 2001, adjusted for

inflation and not including warsMore DoD civilians than Wal-Mart and USPS combined$2.7B to fund BRAC

Health care costs $51 billion or up 3.4 %Veterans funding up 14 percent House and Senate authorized $725BHAC and SAC reduced $7 to $8B TechAmerica report$545B 2013, $488B 2016Low real growth followed by decline Accelerated competition between O&S and R&D &

AcquisitionUK Defense Cuts10% MILPERS, 40% equipment, withdraw troops from

Germany, cut 25,000 civilians, scrap only carrier

Budget Timetable

April 22—House Budget ResolutionMay 19—HASC Reports Defense BillMay 28—House Passes Defense BillMay 28—SASC Reports Defense Bill July 1—Senate Budget ResolutionSeptember 16—Senate Appropriations Committee Reports

BillOctober 1—Continuing resolution passes to fund

Government until December 3 November 2—ElectionNovember 15—Lame duck session convenesNovember 22—Lame duck recess

November 29—Lame duck session reconvenesDefense Authorization, Extension of unemployment,

Physician pay hike for Medicare, Wage discrimination, Natural gas vehicles, food safety—and mouse through the snake or pig through the boa—Tax Cuts

Senate has approved 11 of 12 appropriations bills and could do Omnibus Appropriations Bill—Dems want it

Republicans don’t want it until new Congress convenesDecember 1—Deficit Reduction Commission reportsDecember 3—Continuing Resolution Expires—December 15—2012 Defense budget wrapRepublicans want new CR until next Congress—Dems

want Omnibus

Budget Timetable

January 3, 2011—New Congress convenesNow it gets complicatedPresident’s Budget submission traditionally 1 week before

SOTUSOTU Originally planned for January 26May be February 2 because final episode of “Lost” airs

January 26Statutory deadline to submit budget February 1They could delay budget release because no penalty for

latenessFebruary—Hearings begin on 2012 budgetApril—ALA Congressional and Public Policy Forum

MWR & Resale Budget HASC Personnel S/C Hearings postponed twice Issues—Exchange consolidation, SDT, MWR

approps, construction funding, competition for unofficial information services, credit card competition with banks, Guard and reserve support, Air Force food transformation, TIPRA, credit card interchange fees, ASER, operations at closure sites, disabled vet privileges, base access

HASC Bill—funds DeCA, SDT, MWR operationsDeCA designated to manage construction at joint

surcharge/NAF sites

2011 Administration cost-cutting initiativesEarmarks/line item vetoReduce reliance on contractorsTechnologyConsolidate data centers/cloud computingFY 2012 across the board non-security cutsReduce energy 30 percentDispose of unwanted real estateImprove payment accuracyDo not pay list (TIPRA implications)Gates Defense cut initiatives—eat what you killCivilian agency administrative reductions—eat what you kill

DoD Budget Review and Overhead Reductions

Assessments by Cost Assessment and Program Evaluation (CAPE)

2012-2017 – One percent real growthNeed 2-3 percent to maintain force structure, combat capabilityDBB says 40 % of DoD is overheadTake out $100 billion in overheadMore efficiency in $400 billion of goods and services purchased

each yearReaching out to industry to support cost reductionsWork with industry to bring down costs

$8 billion in 2012 ($2B per Service)$3 B then $4 B then $7 BAgencies $1 billion$2 B then $3 B then $7 BServices keep savingsPBD/budget wrap December 15

How are decisions/cuts manifested?Salami slicingMilitary Department cuts tumble down on

systemOutsourcingIncremental benefit reductionsNavy MILCON Freeze

Market-based resale has cost-cutting in its DNACost cutting is not new to resaleEfficiencies mean savings to patrons and increased

earnings Took out major costs:

DeCA 1991 Consolidation—hundreds of millionsCommercial distribution--$600 million back to DoD for

Stock FundsOngoing cost saving measures Normal trajectory would have taken it to over $2 billionLean and mean

Resale has constantly been in cost cutting or no growth mode

Other QoL areas realizing 30, 40, and often 100 & 200 percent increases

Talking about health care co-pays: We’ve always had co-pays—it’s called mark-ups and surcharge

Resale Benefit—Huge ROI to DoD$8 billion in savings at cash registerHundreds of millions in cost avoidance to DoD COLAs$600 million annually in improvements to DoD’s

physical plantNon-pay compensation30,000 family members employed adding $900 million

to their households20,000 family members employed by industry adding

another $600 million to household income$400 million in MWR contributions

Underpins of DoD’s overseas transportation system

$150,000 to $200,000 to train a troop and $1 million for pilots, doctors, specialists

70 percent increase in food stamp redemptionSunk costs – buying the car but not putting gas

in itSales imperative—increase share of AD who

use benefitDon’t buy the car and not put gas in it

Surveys show citizens losing faith in institutionsGSEs such as Fannie Mae and Freddie Mac failingDeCA is shining example of a Private Sector/public

sector partnership that worksTop of the heap in Federal AccountabilityPatron satisfaction at all time highs

Consistent with FLOTUS goalsSupport Military Quality of LifeSupport Health life style Support reducing child obesity

Ingrained in the OSD fabricNot inextricable without a major costAdapts for force structure

Brigade re-stationingBRAC

Traffic driver for ExchangesUnderpins transportation systemMaintains ties with installations

System’s Constitution is Title 10—our foundation -Sets out who can shop-Sets out pricing (cost plus 5)-Guidance on what can be soldDon’t tamper with the Constitution

What would the world look like if resale didn’t exist?Thousands of family members out of workHundreds of millions in increased COLAs and

military paySale of foreign products overseas—impact U.S.

manufacturing$5 billion patron surcharge investment wastedMilitary forced to make household tradeoffs MWR dividends evaporate

ALA PrioritiesSupport adequate budget levelsSupport shipment of American productsSupport funding for BRAC affected sitesSupport immunitiesAffordable, one-card accessSupport Guard and ReserveSupport familiar war zone offeringsExpand benefit to more vets

Repeal 3 % withholding or resale exemption1099 ACA requirementRegulation, i.e., (Executive pay reporting—(FAR)Cover Coast Guard and VA resale in beneficial

statutory changesReduce interchange feesLift restrictions on offerings to patronsCooperate not consolidate exchanges

ALA Congressional and Public Policy ForumSpring 2011House and SenateIssues based—2011 impact and 2012 Budget

DeliberationsHouse and Senate leadersAdministration officials

ALA & Resale

Protecting the Benefit