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Study To Determine Best Way To Merge Exchanges

By Staff Sgt. Alicia K. Borlik, USA
American Forces Press Service

WASHINGTON, Dec. 3, 1997 – The newest study into consolidating military exchanges will be the last, said Buster Tate, Navy's director of force support and family programs.

One thing the separate service exchange commanders agree on is doing what's best for the customer. "Any proposed integration should result in equivalent or better pricing and selection for the customer," said Rear Adm. Paul O. Soderberg, Navy Exchange System commander.

Although Air Force Maj. Gen. A. D. Bunger, Army and Air Force Exchange Service commander, doesn't seek consolidation, he said, "We will do what is in the best interest of our customer."

The Marine Corps has been an active participant in the exchange integration study process, said Michael F. Tharrington, Marine Corps morale, welfare and recreation support activity director. "We are very focused on Marines in this process and the importance of the exchange benefit to their quality of life."

Another common thread is the need to close the integration debate. "We are looking for a decision that will end the ongoing study processes and a clear path that all services within DoD can accept and work with," Bunger said.

Tate agreed, and that's why they are "going out of our way to make this the last time this issue is studied," he emphasized.

Navy took the administrative lead in exchange integration and released a request for proposal Nov. 7 to hire a qualified contractor to do the study. Contract bids are due back Dec. 22.

The contractor must study every operational aspect of the Army and Air Force Exchange, Marine Corps Exchange and Navy exchanges. Various organizations, from the Office of the Secretary of Defense to the General Accounting Office, conducted studies over the past 28 years, the most recent just a year ago. All met the same fate due to lack of details, Tate said.

The service secretaries, after perusing the 1996 study, requested permission to do a more thorough review using a qualified retail acquisition company. Fred Pang, assistant defense secretary for force management policy, granted the necessary permission.

Tate said the winning bidder will be the company that offers the best technical approach and methodology, and has the best corporate experience in equivalent acquisitions or mergers.

"We have created an exchange integration oversight council that is made up of assistant secretaries from each service responsible for manpower, vice chiefs of each service and senior enlisted personnel of each service," Tate said.

The complicated part of any merger is coordinating the services' philosophies and agendas into one, Tate said. To accomplish this, the Navy adopted a slow, deliberate route.

"We've had to go well beyond the normal acquisition process in order to brief everybody up and down the chain and get everybody's comments," Tate said. "Just the development of the [request for proposal] was a significant undertaking by getting representatives from each of the exchange services and logistics chiefs. They all had to buy into every single word."

The study will take about a year, Tate said. The exchange commanders said they look forward to the forthcoming study as a nuts-and-bolts look at the exchange systems.

"This is a viable approach, and we await the awarding of the contract and the comprehensive examination of the exchange business," Bunger said. Each exchange service described its operations in detail to prospective contractors during a presolicitation conference in October.

On the surface, Tate said, merging three systems into one would save money. It's not that easy.

"You have three people doing procurement, three people doing personnel, automation, and so the idea is if you put these together, you can throw two away and have one," Tate said. But you also have to combine automation: The Navy and the Army and Air Force exchanges both recently upgraded their separate, different systems.

"In computer lingo, they don't talk," Tate said.

These systems control inventory, point of sales information, accounting packages, distribution and such, he said. A significant part of the study is to look at the systems and choose a course --perhaps pick one or scrap them all and start anew. The decision will drive the other recommendations, Tate said.

"We're starting with a clean sheet of paper," he said. There is no predetermined outcome, so all talk is really just speculation, Tate added.

One thing is certain, according to the Navy's Soderberg: "The study should provide the most efficient and cost effective way to organize and operate the various functions of our exchanges and preserve the valuable non-pay benefits for our authorized patrons."

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