ALA Public Policy Advocacy

1. ALA Public Policy Advocacy

2. ALA is a full partner in protecting benefit • Educate major public policy makers on importance of benefit • Industry has huge stake in resale viability • Authorizing and appropriations committees • House and Senate

3. Challenges • Deficit Reduction Commission • DoD Overhead Reductions • OMB Budget Guidance • Congressional Budget Reviews

4. Defense Funding • Defense requested $733B in Feb 2010 • Without wars--$18B higher than year before • 1.4 percent pay increase to $139 B • $210,000 in O & M per troop compared to $95,000 in FY 2000 • Non-cash and deferred compensation consume 52 percent of total compensation • Personnel costs up 46 percent from 2001, adjusted for inflation and not including wars • More DoD civilians than Wal-Mart and USPS combined • $2.7B to fund BRAC

5. Health care costs $51 billion or up 3.4 % • Veterans funding up 14 percent • House and Senate authorized $725B • HAC and SAC reduced $7 to $8B • TechAmerica report • $545B 2013, $488B 2016 • Low real growth followed by decline • Accelerated competition between O&S and R&D & Acquisition • UK Defense Cuts • 10% MILPERS, 40% equipment, withdraw troops from Germany, cut 25,000 civilians, scrap only carrier

6. Budget Timetable • April 22—House Budget Resolution • May 19—HASC Reports Defense Bill • May 28—House Passes Defense Bill • May 28—SASC Reports Defense Bill • July 1—Senate Budget Resolution • September 16—Senate Appropriations Committee Reports Bill • October 1—Continuing resolution passes to fund Government until December 3 • November 2—Election • November 15—Lame duck session convenes • November 22—Lame duck recess

7. November 29—Lame duck session reconvenes • Defense 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 convenes • December 1—Deficit Reduction Commission reports • December 3—Continuing Resolution Expires— • December 15—2012 Defense budget wrap • Republicans want new CR until next Congress—Dems want Omnibus

8. Budget Timetable • January 3, 2011—New Congress convenes • Now it gets complicated • President’s Budget submission traditionally 1 week before SOTU • SOTU Originally planned for January 26 • May be February 2 because final episode of “Lost” airs January 26 • Statutory deadline to submit budget February 1 • They could delay budget release because no penalty for lateness • February—Hearings begin on 2012 budget • April—ALA Congressional and Public Policy Forum

9. 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 operations • DeCA designated to manage construction at joint surcharge/NAF sites

10. 2011 Administration cost-cutting initiatives • Earmarks/line item veto • Reduce reliance on contractors • Technology • Consolidate data centers/cloud computing • FY 2012 across the board non-security cuts • Reduce energy 30 percent • Dispose of unwanted real estate • Improve payment accuracy • Do not pay list (TIPRA implications) • Gates Defense cut initiatives—eat what you kill • Civilian agency administrative reductions—eat what you kill

11. DoD Budget Review and Overhead Reductions • Assessments by Cost Assessment and Program Evaluation (CAPE) • 2012-2017 – One percent real growth • Need 2-3 percent to maintain force structure, combat capability • DBB says 40 % of DoD is overhead • Take out $100 billion in overhead • More efficiency in $400 billion of goods and services purchased each year • Reaching out to industry to support cost reductions • Work with industry to bring down costs

12. $8 billion in 2012 ($2B per Service) • $3 B then $4 B then $7 B • Agencies $1 billion • $2 B then $3 B then $7 B • Services keep savings • PBD/budget wrap December 15

13. How are decisions/cuts manifested? • Salami slicing • Military Department cuts tumble down on system • Outsourcing • Incremental benefit reductions • Navy MILCON Freeze

14. Market-based resale has cost-cutting in its DNA • Cost cutting is not new to resale • Efficiencies mean savings to patrons and increased earnings • Took out major costs: • DeCA 1991 Consolidation—hundreds of millions • Commercial distribution--$600 million back to DoD for Stock Funds • Ongoing cost saving measures • Normal trajectory would have taken it to over $2 billion • Lean and mean

15. 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

16. Resale Benefit—Huge ROI to DoD • $8 billion in savings at cash register • Hundreds of millions in cost avoidance to DoD COLAs • $600 million annually in improvements to DoD’s physical plant • Non-pay compensation • 30,000 family members employed adding $900 million to their households • 20,000 family members employed by industry adding another $600 million to household income • $400 million in MWR contributions

17. 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 redemption • Sunk costs – buying the car but not putting gas in it • Sales imperative—increase share of AD who use benefit • Don’t buy the car and not put gas in it

18. Surveys show citizens losing faith in institutions • GSEs such as Fannie Mae and Freddie Mac failing • DeCA is shining example of a Private Sector/public sector partnership that works • Top of the heap in Federal Accountability • Patron satisfaction at all time highs

19. Consistent with FLOTUS goals • Support Military Quality of Life • Support Health life style • Support reducing child obesity

20. Ingrained in the OSD fabric • Not inextricable without a major cost • Adapts for force structure • Brigade re-stationing • BRAC • Traffic driver for Exchanges • Underpins transportation system • Maintains ties with installations

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

22. What would the world look like if resale didn’t exist? • Thousands of family members out of work • Hundreds of millions in increased COLAs and military pay • Sale of foreign products overseas—impact U.S. manufacturing • $5 billion patron surcharge investment wasted • Military forced to make household tradeoffs • MWR dividends evaporate

23. ALA Priorities • Support adequate budget levels • Support shipment of American products • Support funding for BRAC affected sites • Support immunities • Affordable, one-card access • Support Guard and Reserve • Support familiar war zone offerings • Expand benefit to more vets

24. Repeal 3 % withholding or resale exemption • 1099 ACA requirement • Regulation, i.e., (Executive pay reporting—(FAR) • Cover Coast Guard and VA resale in beneficial statutory changes • Reduce interchange fees • Lift restrictions on offerings to patrons • Cooperate not consolidate exchanges

25. ALA Congressional and Public Policy Forum • Spring 2011 • House and Senate • Issues based—2011 impact and 2012 Budget Deliberations • House and Senate leaders • Administration officials

26. ALA & Resale Protecting the Benefit