The US Militarys Department Store - The Military Exchanges: Should They Be Replaced By Commercial Retailers?

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Michael P. Hughes


Department of Defense, Military Retail, Military Exchange, Military Morale, Welfare, and Recreation


The mission of the military exchange program is to (1) provide quality merchandise to military members and their families worldwide at competitive prices, and (2) generate income to support military morale, welfare, and recreation (MWR) programs. In overseas locations the military exchanges provide military members and their families with familiar competitively-priced, top-quality American products and services, priced in US dollars. The military exchanges are agencies of the US Department of Defense (DOD). The exchanges are tax free stores. This tax advantage, in concert with the exchanges competitive pricing, helps make the products and services offered affordable for military members on their all-too-often meager salaries. Profits from the military exchanges are channeled to MWR programs benefiting military personnel and their families worldwide. However, could and should military exchange functions be contracted to commercial businesses that are actually in the business of retail? The purpose of DOD is national defense, not retail sales and the related logistics. While the original need for establishing a military-operated exchange program was valid many years ago when the commercial sector was not capable supporting worldwide military operations and operating locations, is that still the case? Could a negotiated contract with a major commercial retailer provide service members and their families with better products, at better prices, and with better service, all at reduced cost to the US government, hence reduced cost the US taxpayers?


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