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Preserving Progress Through Partnership
Prepared remarks of Edwin Dorn, undersecretary of defense for personnel and readiness, the American Logistics Association Annual Convention, Orlando, Fla. , Thursday, October 19, 1995

Thanks for inviting me to back to speak at your convention this year. I guess it means that Dick Murray [association president] thinks that I did a good job last year -- or maybe it means he wants me to keep doing it until I get it right!

I'm glad I could be here to celebrate the American Logistics Association's 75th anniversary. I'd like to take a minute to thank Dick for his outstanding work as ALA's president. Your presidency marks the 75th year in which the military community has worked successfully with our nation's resale industry. I would like to welcome Mr. Donald Ledwig as the incoming ALA president. I would also like to welcome Neil Larson as the new chairman. On behalf of the Department of Defense, I wish you both the best in your new leadership positions.

It's important for you, the members of ALA, to know what we've done in the Pentagon since I talked to you at last year's convention. Last year, I talked to you about preserving the benefits. I told you the Clinton administration would provide a quality of life for our service members and their families that is second to none. I told you we would preserve a package of benefits -- including commissaries, exchanges, MWR [morale, welfare and recreation] facilities, child care and health care -- that keeps faith with the military. I'm glad to report to you a year later that we've done that. We've done that by putting people first.

And that is why you are such an important audience: You help us put military people first by providing quality goods and services through our commissaries, exchanges and MWR facilities. I would like to thank all of the ALA members here who have contributed to the success of our commissaries, exchanges and MWR services. Clearly, we couldn't have done it without your help. But in a time of fierce competition for resources and shrinking budgets, we need to work together to find better ways of doing business.

That's why your convention theme, "Progress through Partnership," is right on target. The last few years have been a time of great change for the military and the resale community. By working together, we know we can make progress through partnership and reach our common goals.

In the spirit of that theme, I'd like to talk to you about three things today: First, I'd like to explain Secretary [of Defense William J.] Perry's rationale for making quality of life a priority. Second, I will talk about some of our quality of life initiatives. Third, I will address some of the challenges we can expect to face over the next year, and how ALA and the Department of Defense can work together to confront these challenges and achieve our common goals.

Our primary goal at Department of Defense is to maintain the readiness of our forces. Secretary Perry recognized that treating people fairly is a core element to recruiting and retaining high quality people, and is essential to maintaining readiness. That's why last December Secretary Perry announced his quality of life initiative. His initiative is designed to give our service members the kind of services and support they deserve, the kind of services and support they have earned through their service to the nation.

Over the next five years, we have proposed to Congress to spend $2.7 billion to raise compensation, improve housing and strengthen community and family support programs. If approved, beginning this fiscal year, we're increasing funds for:

 

  • Cost of living allowances for service members living in high-cost areas;
  • Improved and more affordable off-base housing; and
  • Improved morale, welfare and recreation facilities.
We have a robust and comprehensive quality of life package important for maintaining readiness. What does this mean in real dollars for a service member's budget? Let's look at the proposed increase in the Basic Allowance for Quarters, as an example.

The BAQ, as we call it, would defray the costs of off-base housing for military members. Congressional intent has always been for soldiers living on the local economy to absorb up to 15 percent of their housing costs with the remainder offset by allowances. In reality, however, members have had to defray an average of 20 percent of those costs, absorbing the cost of housing out of their own pockets.

By increasing BAQ this year, Secretary Perry's plan hopes to bring the share of housing costs back in line for more than 700,000 members and their families. As a result of this proposed initiative, an individual would receive an additional amount somewhere between $40 and $167 per month.

So the BAQ increase may add a few dollars a month to a service member's disposable income, to their purchasing power at commissaries and exchanges. Men and women don't join the military to get rich; but they don't take a vow of poverty, either. We must fight to protect and, where possible, enhance a package of pay and allowances commensurate with the sacrifices our service members and their families make in service to our country.

We know that these things will help keep morale high. And when morale is high and people don't have to worry about their families, they can concentrate on their jobs as service members. These issues are not only a matter of basic fairness to the people who defend our country; it is a matter ensuring the readiness of our forces.

Secretary Perry's initiative also set up a process that will allow us to make positive changes. First, his initiative established the quality of life task force, which is headed by former Secretary of the Army Jack Marsh. The task force, comprised of outside experts, has taken the lead in reviewing our quality of life policies and programs, and coincidentally, is scheduled to make recommendations to Secretary Perry today. We will have for you shortly a full list of the status of those recommendations.

My colleague, Carolyn Becraft, who is a key member of the DoD's Quality of Life Executive Committee, has helped to move forward several initiatives that do not need the consent of Congress. For example, Carolyn is helping to expand the space-available privilege of traveling on military airplanes for family members who need assistance traveling within overseas areas, for a family emergency or to locate housing.

Secretary Perry has made a personal commitment to quality of life, and he has full support from the service secretaries and the Joint Chiefs. Through the Marsh panel and DoD's executive committee, we have in place a process for bringing positive change.

I mentioned Secretary Perry's quality of life rationale. Let me give you a few more examples of the exciting initiatives we have in the pipeline.

At last year's convention, I told you that housing was an area that was showing signs of neglect. I told you that many of our barracks that were built decades ago are in terrible shape. I told you that some of our family housing also has been neglected for years. We're taking steps to turn that around.

Our service members and their families need quality and affordable housing. That's why Secretary Perry, through his quality of life initiative, increased funding for military housing and allowances by $365 million. That's the largest portion of the FY [fiscal year] 96 plus-up! These funds will pay for the building of new units supported by public-private partnerships and will make improvements to living conditions in older units.

These improvements will bring a welcome change. Last month, I visited the housing facilities at Lakenheath Air Base outside of London. Again, I heard how important quality and affordable housing is to our service members. A local commander put it well: This facility is like the sailors' living room or den. And we all know how much we enjoy relaxing at home. This facility and others like it offer service members a comfortable atmosphere in which to put aside job-related stress and rejuvenate themselves. And I can't say it enough: Their morale is the key to readiness.

A second area where we're improving is the commissary system. At last year's convention, I also told you that the commissaries and exchanges are two of our most important nonpay benefits. And as you know, they are really big business, too. In 1993, sales at defense commissaries totaled $5.6 billion. Sales at exchanges totaled $9.7 billion.

Secretary Perry has vowed to protect these important benefits. We know that the savings available to service members at commissaries will help us attract recruits in the future. The savings are truly significant: The average family saves about 25 percent on all commissary purchases. Service members can save a few hundred dollars or more than $1,500 every year, depending on the size of their families. Clearly, this benefit stretches the troops' dollars.

And when service members are deployed overseas, they have the peace of mind of knowing they can go to the commissary or the exchange and buy familiar products. So this is more than just a money-saving benefit; it is a way of life for our service members. As I told you last year, we are determined to preserve the commissary and exchange benefits.

The commissary system was included in several cost reduction reviews in the last year; and clearly, we need to continue to find efficiencies in our commissary and exchange operations. Many in Congress and elsewhere have proposed the privatization of commissaries.

I would like to comment on one idea that has been floated around Washington by budget hawks: the privatization of the commissary system. Secretary Perry's position is clear: He will not accept any plan which erodes the commissary benefit for service members and military families.

Where does that leave privatization? Well, you in the resale business know it is hard to see how privatization can work and still maintain the benefit. We run 300 commissaries. The profit of 20 commissaries support the operation of many others that don't make a profit.

I have little doubt that I can get Safeway or Kmart to run one of our largest commissaries, Fort Belvoir, [Va.,] for instance. But I am not so sure I can get Safeway or Kmart to run the commissary in Stavanger, Norway, and charge no more than 5 percent over cost. Have any of you ever visited the commissary in Stavanger, Norway? I was there last month. It's no supermall.

There are others who have proposed the consolidation of DeCA and the Army and Air Force Exchange Service. Most recently, the General Accounting Office reported that DoD could save over $300 million through such a plan.

Under the leadership of Carolyn Becraft, we will be evaluating the numbers and assumptions underlying the GAO report. If there is money to be saved, we are all for saving it. However, we are firm in our commitment to preserving this benefit. We are firm in our belief that any change to the system should not affect the distribution of funds to our MWR programs.

Of course, we are looking for cost savings throughout our system. In the spirit of partnership, our commissaries and exchanges are working together on a series of cooperative ventures. For example:

 

  • The Marine Corps is using the AAFES deferred payment plan program.
  • DeCA and the exchanges are also planning cooperative construction efforts at several sites.

 

These ventures are meant to help us create a better resale system for all our users. But we need to continue to make improvements to the commissary and exchange systems. And we're making progress! The Defense Commissary Agency is maturing as an organization. Exchange services are striving to be more competitive; some have added medical clinics and dentists. MWR continues to be more business-like and profitable.

And we appreciate your help in providing quality products in a timely fashion at the lowest possible overhead cost. Your support has made it easier for us to protect this benefit.

I've talked about Secretary Perry's rationale for making quality of life a priority and the process -- the Marsh panel and executive committee -- that will help us do it. And I've talked about some of our quality of life initiatives. Now, I'd like to turn to some of the challenges we can expect to face ahead and the ways that ALA can help us.

The 1994 elections produced a majority party more or less equally divided between defense hawks and deficit hawks, so a lot of things are harder now than they had been. We have to remain ever more vigilant about surprises from the Hill, particularly on personnel matters.

The recent debate on military retirement benefits is an object case. As part of the Congress-wide effort to craft a deficit-reducing budget-reconciliation bill, the House National Security Committee voted in September to cut the pensions of thousands of retiring military personnel.

For over 50 years, Americans who joined our military have known that they are making a bargain with America: In return for their service to our country, we will stand by them. The young men and women who serve today give us some of the best years of their lives. And one of the things we tell them is that the longer they serve, the more our country will owe them when their service is done.

Amazingly, there are those in Congress who thought that in order to balance the budget it's all right to break our commitment to more than 800,000 men and women who've already served for at least 15 years. Now, when these people joined the military, they were told that their retirement pay would be based on the salary they were earning the day they retired. But in the name of balancing the budget, some in Congress proposed scaling back military retirement pay in a way that would mean cuts of as much as $200 a month per service member!

What did that vote do? That vote sent a signal to service members -- even junior service members whose pay would not have been affected -- that America was willing to break faith with our commitment to the military. I think everyone agrees that we need to balance the budget. My point is that we need to be careful how we do it. Our senior military and civilian leaders worked hard, and turned this around. We will not break faith with the troops.

Another challenge we face is bringing stability to the force structure in the wake of a period of major restructuring. The downsizing was a huge challenge. The good news is: We're 80 [percent] - 90 percent complete! We emerged from the downsizing with a force that's ready to fight and highly trained.

We emerged with an enlisted force that's even higher quality: They are better educated, more mature and better equipped to face the challenge of military service. But we've moved from the Cold War to a fitful peace. Now the challenge is to manage a relatively stable, but extraordinarily busy, force.

Let me say a word about that. This administration has made very careful judgments about how and when we engage our forces. We take this very seriously. Still, our troops are busy, so we need to pay close attention to quality of life.

Because we are well into downsizing our forces, we now know better what our infrastructure will look like; we know roughly where our commissaries, exchanges and MWR facilities will be located. As the market becomes more stable, you will be in a better position to market your products in the most cost-effective way. Stability will bring savings -- savings that all our patrons will realize. More importantly, our service members will continue to see the kind of predictable and quality services they have come to expect.

We need your help to confront both of these challenges. We need your help in making sure the American public and its representatives in Congress understand the importance of quality of life for the military and understand how proud they can be of these men and women in service. We need your help in making sure they know how much the men and women of our military deserve these benefits. And we need your help in showing that our partnership is the most economical way of providing those benefits.

We greatly value and appreciate ALA's efforts to ensure that our service members have access to the quality goods and services they have come to expect. Because it's a matter of fairness to our service members, and it's a matter of national security to the American people.

That's why you are such an important audience. At the Department of Defense, we don't have all the answers. But together, we can work to find creative solutions. With your help we can make progress through partnership.

We're going to work hard to protect all our pay and nonpay benefits. Because quality of life is a high priority for the department's civilian and military leaders. Secretary Perry is committed, and the service secretaries, the chiefs and the chairman of the Joint Chiefs share his commitment.

At the beginning of my remarks, I explained Secretary Perry's rationale for investing in quality of life programs: It is an important way of maintaining readiness. But Secretary Perry was also making a commitment to putting people first.

This administration made a conscious decision in 1993 to put people first to marshal the talents of America's large and diverse population and to treat people fairly. As President Clinton has said, we don't have people to waste in this country.

At the Department of Defense, we don't have a single person to waste. We need to make sure that all of our people are treated fairly and are productive. We need to make sure that our service members have the training and equipment they need to do their jobs.

But more importantly, we need to make sure that our service members have the peace of mind of knowing that their families are taken care of when they are on duty, whether they are 10 minutes down the road or 10,000 miles from home. Because at the end of the day, when a Marine comes in from the storm and takes shelter under a tent to eat his MRE [meals, ready-to-eat], he needs to know that his family has quality housing without a leaking roof or failing heat. He needs to know that they can make it until the next paycheck. That Marine or soldier or sailor or airman needs to know in his heart that this nation will keep its promises to him and his family. Commissaries, exchanges and MWR facilities are a daily reminder of that promise.

Our partnership is the most effective way for us to show our service men and women, and their families, our commitment; the most effective way to show the American people the value we place on our service men; the most effective way to demonstrate our pride in their service and sacrifice. Let's all work together to keep the faith with the men and women who serve our nation.

Thank you.

Published for internal information use by the American Forces Information Service, a field activity of the Office of the Assistant to the Secretary of Defense (Public Affairs), Washington, D.C. Parenthetical entries are speaker/author notes; bracketed entries are editorial notes. This material is in the public domain and may be reprinted without permission. Defense Issues is available on the Internet via the World Wide Web at http://www.defenselink.mil/speeches/index.html