oversight

Defense Infrastructure: Personnel Reductions Have Not Hampered Most Commissaries' Store Operations and Customer Service

Published by the Government Accountability Office on 2003-03-06.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

             United States General Accounting Office

GAO          Report to the Senate and House
             Committees on Armed Services and
             Subcommittees on Defense, Senate and
             House Committees on Appropriations

March 2003
             DEFENSE
             INFRASTRUCTURE
             Personnel Reductions
             Have Not Hampered
             Most Commissaries’
             Store Operations and
             Customer Service




GAO-03-417
                                               March 2003


                                               DEFENSE INFRASTRUCTURE

                                               Personnel Reductions Have Not
Highlights of GAO-03-417, a report to          Hampered Most Commissaries’ Store
Senate and House Committees on Armed
Services and Subcommittees on Defense,         Operations and Customer Service
Senate and House Committees on
Appropriations




In response to concerns about the              The Defense Commissary Agency’s commissary operations and
impact of proposed cuts in the                 customer services have been maintained at the same level, and in some
Defense Commissary Agency’s                    cases improved, despite the recent reductions in workforce. As of
workforce, the House Armed                     December 31, 2002, the agency had completed most of its 3,047 planned
Services Committee placed in its               personnel reductions in full-time positions. It accomplished this primarily
report on the Bob Stump National
Defense Authorization Act for
                                               by achieving efficiencies or eliminating vacant positions in the stores. Only
Fiscal Year 2003 a requirement                 122 employees have been separated and 341 retired as a result of the
that we evaluate the effect of the             personnel cutbacks.
personnel reductions. Specifically,
we assessed (1) the status of                  A major focus of DeCA’s personnel reductions, as outlined in its strategic
personnel reductions and how they              plan, was to reshape the workforce and develop a more efficient
have affected store operations and             organization. We found that commissaries are making greater use of
customer service, and (2) whether              part-time employees because of the reductions. This has allowed some
the agency uses a reliable                     stores to increase their operating hours to better meet customer needs. It
methodology to measure customer                has also given store managers more flexibility in meeting workload
satisfaction with its commissaries.            fluctuations. However, DeCA’s strategic plan does not include specific goals
                                               for achieving a certain full-time/part-time workforce mix in stores. As a
                                               result, the planned percentage of part-time positions varies widely by store.
We are recommending that the                   A recent customer satisfaction survey showed that commissary patrons
Under Secretary of Defense                     expressed high satisfaction with their overall shopping experience, as well
(Personnel and Readiness) require              as with such key indicators as time waiting in line and convenient hours.
the Director of the Defense                    However, the managers of the smaller commissaries reported concerns over
Commissary Agency to: (1) update               balancing workload and maintaining store operations.
the agency’s strategic plan to
include goals that identify the                We found that the Commissary Customer Satisfaction Survey methodology
percentage of the store workforce              is reasonable. However, some improvements in the analysis of survey data
that is expected to be full- and               could ensure that the findings are more complete and consistent. Such
part-time, (2) reassess management
                                               changes could include adjusting survey results for the volume of sales at
staffing for small stores, (3) adjust
customer survey results on the                 individual stores or for the number of shoppers who refuse to fill out the
basis of a store’s sales volume,               questionnaire. Furthermore, the current survey does not collect information
(4) collect data on customers who              on the number of, and reasons why, potential customers do not shop at their
refuse to fill out survey forms, and           local commissaries.
(5) examine potential survey
methods to periodically determine
how many potential customers do                Planned Personnel Reductions by Organizational Level
not shop at commissaries and the
                                                                                                  Reductions in full-time positions
reasons why not. The Department
                                                                               Fiscal year 2000
of Defense agreed with four of our
                                                   Organization                        baseline          Planned       Actual 12/31/02
five recommendations. It disagreed
                                                   Headquartersa                            911               187                  116
with the recommendation to
identify goals for the projected                   Regional offices                         590               170                  170
workforce mix.                                     Stores                                16,565             2,690                2,316
                                                   Total                                 18,066             3,047                2,602
www.gao.gov/cgi-bin/getrpt?GAO-03-417
                                               Source: DeCA.
To view the full report, including the scope   a
                                               Includes field operating activities.
and methodology, click on the link above.
For more information, contact Barry Holman
at (202) 512-8412 or holmanb@gao.gov.
Contents


Letter                                                                                                   1
              Results in Brief                                                                          2
              Background                                                                                3
              Personnel Reductions Have Not Hampered Most Commissaries’
                Store Operations or Customer Satisfaction                                                4
              Customer Satisfaction Survey Methodology Is Reasonable, but
                Analysis Could Be Improved                                                              10
              Conclusions                                                                               11
              Recommendations for Executive Action                                                      12
              Agency Comments and Our Evaluation                                                        12
              Scope and Methodology                                                                     13

Appendix I    Commissary Customer Service Survey Questionnaire                                          16



Appendix II   Comments from the Department of Defense                                                   17



Tables
              Table 1: Planned Personnel Reductions by Organizational Level                             5
              Table 2: Planned Personnel Reductions at Store Level, by Method                           6
              Table 3: Range of Percentages of Part-time Positions Planned by
                       Stores, by Region and by Store Band at the End of
                       Fiscal Year 2003                                                                 8
              Table 4: Customer Satisfaction Scores on Recent Surveys, for
                       Product and Service Categories                                                   9




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              Page i                                                GAO-03-417 Defense Infrastructure
United States General Accounting Office
Washington, DC 20548




                                   March 6, 2003

                                   Congressional Requesters

                                   In January 2001, the Defense Commissary Agency (DeCA), which operates
                                   276 stores in the United States and abroad for military personnel and
                                   retirees, issued a strategic plan that outlined initiatives to reduce its unit
                                   operating costs by 7 percent by fiscal year 2004. A major focus of the unit
                                   cost reduction objective was to reshape the workforce by reducing
                                   full-time positions and developing a more efficient organization. This plan
                                   called for the elimination of over 3,000 full-time positions—about 2,700
                                   in stores through efficiencies, closures, and contracting out some
                                   functions and about 350 through efficiencies in the regional offices and
                                   headquarters.1 The agency expects these actions to save about $82 million
                                   without any loss of service to its customers.2 As a result of these savings,
                                   DeCA reduced its fiscal year 2003 budget request.

                                   In response to a requirement in the Committee on Armed Services House
                                   of Representatives’ report accompanying the Bob Stump National Defense
                                   Authorization Act for Fiscal Year 2003, we reviewed DeCA’s plan to reduce
                                   personnel.3 Our objectives were to assess (1) the status of personnel
                                   reductions and their effect on store operations and customer service, and
                                   (2) whether the agency uses a reasonable methodology to measure
                                   customer satisfaction.




                                   1
                                       The elimination is of full-time equivalent positions.
                                   2
                                    The reduction plan, which also includes savings through non-manpower reductions
                                   such as utility and transportation costs, is to reduce DeCA’s appropriation by a total of
                                   $137 million in fiscal year 2003 and reduce annual operating costs through the out years.
                                   3
                                       H. Rep. No. 107-436.



                                   Page 1                                                      GAO-03-417 Defense Infrastructure
                   DeCA’s store operations and customer service have been maintained
Results in Brief   and in some cases improved despite the personnel reductions. As of
                   December 31, 2002, DeCA had eliminated 2,602, or 85 percent, of the
                   planned 3,047 full-time positions, mostly at the stores by implementing
                   new staffing standards or eliminating vacant positions; very few of these
                   employees have been separated from the agency by a reduction in force.
                   We found that greater use of part-time employees, as a result of the
                   reductions, has provided store directors with flexibility to meet workload
                   fluctuations and enabled some stores to increase their operating hours to
                   meet customer needs. However, DeCA’s strategic plan, which addresses its
                   force downsizing and reshaping initiatives, does not include specific goals
                   for achieving a certain full-time/part-time workforce mix in stores. As a
                   result, the planned percentage of part-time positions varies widely by
                   individual store and region. The November 2002 Commissary Customer
                   Service Survey showed scores stayed the same or increased slightly
                   compared to the past two surveys for overall high customer satisfaction,
                   and for such key indicators as time waiting in line and convenient hours.
                   However, managers of some small stores are having difficulty balancing
                   their workloads as a result of the reductions in management positions.
                   DeCA officials are aware of but have not yet identified a plan to address
                   the small store management issue.

                   DeCA’s Commissary Customer Service Survey methodology is a
                   reasonable approach to collect customer feedback. It adheres to standard
                   questionnaire design standards and seeks to survey shoppers in an
                   unbiased manner. However, some improvements in the analysis of the
                   survey data could be made to ensure that results are more precise and
                   consistent. For example, the agency does not explicitly adjust survey
                   results for actual store sales volumes or document the number of shoppers
                   who refuse to complete the survey questionnaire. Because these factors
                   are not considered, overall survey results could be distorted to some
                   degree. Furthermore, the current survey does not collect information on
                   the number of and reasons why, potential customers do not shop at
                   a commissary.

                   We are making recommendations to the Under Secretary of Defense
                   (Personnel and Readiness) to help DeCA achieve its strategic objective of
                   reshaping the workforce as well as improve its customer satisfaction
                   survey process. In comments on a draft of this report, the Department of
                   Defense agreed with four of our five recommendations. It disagreed with
                   our recommendation that the Under Secretary direct the Director, Defense
                   Commissary Agency, to update its strategic plan to include goals that



                   Page 2                                      GAO-03-417 Defense Infrastructure
             identify the percent of store workforce that is expected to be full-
             and part-time.


             DeCA, headquartered at Fort Lee, Virginia, is the Department of Defense’s
Background   designated agency for managing commissaries on a worldwide basis. A
             Commissary Operating Board, which is comprised of representatives
             from each of the military services, has day-to-day operational oversight
             responsibilities for DeCA. The Under Secretary of Defense (Personnel
             and Readiness) exercises overall supervision of the commissary system.
             DeCA operates four regional offices that oversee the management of its
             commissaries. Commissaries are located in 46 states and 14 foreign
             countries. As of November 7, 2002, the agency had 276 stores and more
             than 16,000 employees under its purview. Its annual sales in fiscal year
             2002 amounted to about $5 billion.

             In meeting its mission of providing groceries at a savings to the customer,
             in the most efficient and effective manner possible, DeCA strives to
             provide the lowest cost possible, charging patrons only for the cost of
             goods plus a 5-percent surcharge.4 DeCA receives about $1 billion in direct
             appropriations from Congress for its annual operating costs. These funds
             pay for employees’ salaries, transportation, some above-store-level
             information technology, and other expenses. DeCA also operates a resale
             stock fund for the purchase and sale of products. To the extent that
             savings in operating costs occur, they reduce the need for appropriated
             funds. The savings in store operating costs do not have an effect on the
             cost of merchandise sold to customers.

             In January 2001, DeCA issued its current strategic plan. This plan included
             objectives to reduce unit operating costs and reshape the workforce while
             maintaining or improving customer service and satisfaction. A major focus
             of the unit cost reduction objective was to reduce positions as well as
             streamline operations and develop a more efficient organization. To
             reshape the workforce, DeCA planned to determine the appropriate mix
             of skills and expertise and the appropriate level of part-time employees
             to carry out the reductions to reach a more efficient organization.




             4
              The funds generated by the surcharge are used to maintain and repair existing stores and
             construct new facilities.




             Page 3                                               GAO-03-417 Defense Infrastructure
                        DeCA conducts a biannual Commissary Customer Service Survey to
                        assess customer views of products and services. 5 A team appointed by
                        each store director administers the survey. Customers are systematically
                        selected while waiting in checkout lines. A predetermined number of
                        questionnaires are collected during three periods (morning, midday, and
                        evening) each day for 10 consecutive days during May and November each
                        year. The survey questions are multiple choice with space available for
                        written comments. See appendix I for a copy of the questionnaire. The
                        completed forms are mailed to DeCA headquarters for analysis, and
                        customer service scores are calculated for DeCA overall and for each
                        region and store.


                        Despite the workforce reductions, store operations and customer service
Personnel Reductions    have been maintained at the same level, and in some cases improved.
Have Not Hampered       DeCA has used various measures to eliminate 2,602 full-time positions, or
                        85 percent of the planned reductions as of December 31, 2002; very few
Most Commissaries’      employees have been separated from the agency. While downsizing and
Store Operations or     reshaping were occurring, regional officials stated that they encouraged
                        store directors to use part-time positions to maintain store operations.
Customer Satisfaction   DeCA officials stated the use of part-time employees has enabled store
                        directors to better manage workload fluctuations, expand hours of
                        operation, and thereby improve customer service. However, because
                        DeCA’s strategic plan does not include specific goals for achieving a
                        certain full-time/part-time workforce mix in stores, the planned percentage
                        of part-time positions varies widely by individual store and region. Despite
                        personnel reductions, scores for the customer satisfaction surveys
                        completed since DeCA began the personnel reductions show the same or
                        slightly increasing levels of customer satisfaction with the stores.
                        Notwithstanding the improvements, managers of small stores report
                        having difficulty balancing store operations and duties, as a result of the
                        reductions in the number of management positions.6




                        5
                            Prior to 2002, the survey was conducted once a year rather than twice annually.
                        6
                         DeCA categorizes its stores into six bands based on average monthly sales volume
                        and days of operation. Small stores are those with average monthly sales of less
                        than $1 million. Medium and large store categories have sales ranges from $1 million to
                        $2 million and $2 million and higher, respectively. A few medium stores have sales less
                        than $1 million.




                        Page 4                                                   GAO-03-417 Defense Infrastructure
Savings Achieved Through   DeCA is using workforce reductions as the primary means to achieve its
Personnel Reductions       goal of reducing operating costs by fiscal year 2004. As table 1 shows,
                           DeCA plans to reduce its workforce by 3,047 full-time positions, a
                           decrease of 17 percent from its fiscal year 2000 staff. Of these positions,
                           the largest number (2,690) will come from reductions at the store level
                           while 187 will come from headquarters and 170 from regional offices.

                           Table 1: Planned Personnel Reductions by Organizational Level

                                                                              Reductions in full-time positions
                                                           Fiscal year 2000
                               Organization                        baseline          Planned       Actual 12/31/02
                                             a
                               Headquarters                             911               187                  116
                               Regional offices                         590               170                  170
                               Stores                                16,565             2,690                2,316
                               Total                                 18,066             3,047                2,602
                           Source: DeCA.
                           a
                           Includes field operating activities.


                           As of December 31, 2002, DeCA had completed all of its workforce
                           reductions at the regional offices and 62 percent of its planned
                           headquarters’ reductions. It accomplished this by eliminating 137 vacant
                           positions (114 in headquarters and 23 in the regional offices). It reduced its
                           regional staff by another 147 positions through organizational changes and
                           other efficiencies, including closing two area offices in one region.

                           By the same date, DeCA had completed most of its planned workforce
                           reductions at the store level, eliminating 2,316, or 86 percent of the
                           2,690 positions that it had targeted. As table 2 indicates, most of the
                           planned store-level reductions (51 percent) are being achieved by
                           implementing efficiency measures within stores. Efficiencies are being
                           derived by implementing new staffing standards for each department
                           within a store based on sales volume and other measures. The remaining
                           reductions are accomplished by other methods, including eliminating
                           vacant positions, closing stores, and contracting out some functions.




                           Page 5                                                GAO-03-417 Defense Infrastructure
    Table 2: Planned Personnel Reductions at Store Level, by Method

        Method                                                        Number             Percent
        Achieve efficiencies through new staffing standards             1,374                 51
        Eliminate vacant positions                                        812                 30
        Close stores                                                      361                 13
        Contract out                                                      143                  5
                                                                                                a
        Total                                                           2,690                99
    Source: DeCA.
    a
    Percentages do not add to 100 due to rounding.


    A breakdown of completed and planned workforce reductions at the store
    level are as follows:

•   1,113 positions were eliminated by implementing the new store staffing
    standards based on sales volume. The remaining 261 efficiency reductions
    are planned in fiscal year 2003.
•   812 vacant positions were eliminated. A DeCA official stated that vacant
    positions existed because stores had historically been funded at only
    90 percent of their required staffing. The elimination of these positions
    resulted in no personnel losses and produced no savings.
•   304 positions were eliminated as a result of 15 store closings. Closings can
    stem from Base Realignment and Closure recommendations or Under
    Secretary of Defense (Personnel and Readiness) approval of DeCA’s
    recommendations from internal assessments. An additional 49 positions
    will be eliminated at two stores scheduled to close in fiscal year 2003.7
•   87 positions were eliminated by contracting out such store functions as
    receiving, handling, and stocking. An additional 30 positions at various
    stores will be eliminated in this way in fiscal year 2003. The remaining
    26 planned reductions were canceled to provide positions for a new
    computer-aided ordering function.

    Although DeCA had eliminated most of the planned 2,690 positions from
    its stores by the end of 2002, only 122 store employees were separated
    from the agency by a reduction in force and an additional 341 employees
    retired. Other employees were reassigned or moved to lower graded
    positions through the reduction process.




    7
        Stores at Rhein Main and Bad Aibling, both in Germany, are scheduled to close.




    Page 6                                                    GAO-03-417 Defense Infrastructure
Stores Plan Greater           As part of the effort to reshape the workforce, all stores have begun to,
Reliance on Part-time         or plan to, increase the use of part-time positions to manage workloads
Positions but Lack Specific   and meet the needs of customers. However, since DeCA’s strategic plan
                              does not include specific goals for achieving a certain full-time/part-time
Goals for Workforce Mix       workforce mix in stores, the planned percentage of part-time positions
                              varies widely by individual store and region.

                              The available data shows that the number of part-time positions in stores
                              has increased since the personnel reduction plan went into effect. For
                              example, the number of part-time employees rose by 8 percent in stores in
                              the Midwest region between April 2001 and October 2002. Store directors
                              told us that using part-time employees improved their ability to manage
                              fluctuations in store workloads more effectively. For example, a store
                              director said that part-time employees were used during weekends and
                              holidays to save money. Another store director pointed out that part-time
                              employees are available to work if there is work to do in a department or
                              cover a peak shopping period, but they can be sent home if the work is
                              completed. In addition, some store directors told us that a greater use
                              of part-time workers has allowed them to increase their store operating
                              hours. We found that 30 stores have increased their hours of operation by
                              relying more heavily on part-time employees. For example, one store with
                              a part-time workforce of nearly 60 percent increased its operating hours
                              by 6 hours a week.

                              In addition, current individual store plans call for a growth in the number
                              of part-time positions in stores as of the end of fiscal year 2003. The
                              Eastern and Midwest regions estimate that about 56 percent of their store
                              positions will be part-time, and the Western Pacific region estimates
                              46 percent of its store positions will be part-time. Table 3 shows the range
                              in the percentage of part-time positions that stores within each sales band
                              plan to employ.




                              Page 7                                        GAO-03-417 Defense Infrastructure
Table 3: Range of Percentages of Part-time Positions Planned by Stores, by Regiona
                  b
and by Store Band at the End of Fiscal Year 2003

                                        Eastern              Midwest            Western Pacific
    Store band                           region               region                    region
    1                                    25-100                 7-67                     14-45
    2                                     28-71                45-68                     47-57
    3                                     41-56                24-61                      7-67
    4                                     27-72                34-71                     21-65
    5                                     34-76                42-78                     24-64
    6                                     40-70                50-67                     23-66
    Average part-time
    positions in region                        53                   56                          46
Source: DeCA.
a
The European Region was not included in the scope of work.
b
 Stores are categorized into six bands according to their average monthly sales volume and days of
operation.


As table 3 shows, the planned percentage of part-time positions varies
widely by individual store and region. For example, one Eastern region
store expects to convert all of its store positions to part time while another
store in the Western Pacific region plans to have only 7 percent of its
workforce as part time. While some stores are close to the 75 to 80 percent
industry average for part-time positions in commercial grocery stores,
the overall regional average of part-time positions indicates that there
are opportunities to achieve more efficiencies through greater use of
part-time positions.

Store directors have the flexibility of changing the mix of full-time and
part-time positions in their stores. Some store directors told us they used
part-time positions primarily to meet their budget goals. One store director
said that part-time positions were created to meet the store’s budget and
that there were no plans to increase part-time positions in the store once
the needed reductions were made. However, nearly all of the store
directors we interviewed said that they could operate their stores with
more part-time positions rather than full-time positions. As indicated
earlier, they recognized that part-time positions provide flexibility to
manage workload fluctuations more effectively. A regional director said
that agencywide goals for part-time workers need to be incorporated into
the strategic plan to optimize agency efforts to reshape the workforce.




Page 8                                                      GAO-03-417 Defense Infrastructure
Customer Satisfaction          According to recent surveys, customer satisfaction with commissary
Remains High Despite           stores has shown a modest, but steady, improvement between
Workforce Reductions           October 2001 and November 2002, the period when personnel reductions
                               were being made. These improvements were registered in the overall
                               score, ranging from 4.33 to 4.39, as well as in specific products and service
                               categories. Table 4 includes results for 6 of the 14 questions, as well as the
                               overall score.

                                                                            a
                               Table 4: Customer Satisfaction Scores on Recent Surveys, for Product and
                               Service Categories

                                                                                    October               May         November
                                   Category                                            2001               2002            2002
                                   Produce quality/selection                           4.22               4.26             4.27
                                   Meat quality/selection                              4.30               4.35             4.37
                                   Checkout waiting time                               4.34               4.39             4.39
                                   Convenient hours                                    4.33               4.36             4.38
                                   Courteous, friendly and helpful
                                   employees                                             4.64              4.64              4.66
                                   Overall satisfaction                                  4.49              4.52              4.53
                                   Overall score                                         4.33              4.38              4.39
                               Source: DeCA.

                               Note: DeCA also collects data on bakery and deli operations, which are both operated by contractors.
                               a
                               Scores are based upon a scale of 1 (very poor) to 5 (very good).


                               These scores reflect continuing satisfaction including those likely to
                               be most immediately affected by changes in personnel levels such as
                               checkout waiting time.


Reductions in Management       As part of the effort to reshape the workforce, many directors of small
Positions at Small Stores Is   stores (bands 1 and 2) told us they had to eliminate one managerial
Causing Some Concerns          position. Small stores that have less than $60,000 in average monthly sales
                               were required to reduce the number of managers to one manager. Small
                               stores with $60,000 to $500,000 in average monthly sales had to reduce
                               their number to two managers. The managers of 15 of the 28 band 1 stores
                               told us that they are having difficulties balancing store operations with
                               their own managerial and administrative duties along with doing the
                               work of absent employees. Some store directors said they typically




                               Page 9                                                     GAO-03-417 Defense Infrastructure
                        have to work more than 40 hours a week to perform all these duties.8
                        Eighty-seven percent of these 15 band 1 stores are open more than
                        40 hours a week. Because DeCA policy requires that a manager be present
                        in the store when it is open for customers, when the second manager or
                        an employee is absent, the on-duty manager has to carry his/her own
                        workload and administrative functions, as well as the load of the absent
                        manager or employee, typically working over the usual 40-hour work
                        week. DeCA headquarters officials have recognized the concerns raised by
                        managers in small stores and the need to balance their overall workload
                        but have not yet developed a plan for doing so.


                        Overall, DeCA’s customer satisfaction survey methodology is a
Customer Satisfaction   reasonable approach to obtain customer feedback. It adheres to standard
Survey Methodology      questionnaire design principles, and attempts to select shoppers in an
                        unbiased fashion. However, some improvements in the analysis of survey
Is Reasonable, but      data could be made to provide more precise and complete customer
Analysis Could          information. For example, it could adjust survey results for actual sales
                        volumes, or report and possibly adjust for shoppers who refuse to
Be Improved             complete the survey questionnaire. Because these factors are not
                        considered, overall survey results could be distorted to some degree.
                        Furthermore, the current survey does not collect information on the
                        number of service members who do not shop at a commissary and reasons
                        why they do not.

Weighting Survey        DeCA’s current methodology appropriately attempts to obtain more survey
Responses by            responses from stores with higher sales volumes than stores with smaller
Current Sales Volume    sales volumes. DeCA places commissaries into three groups according to
                        sales volume. They do this so that survey responses of customers in
Categories May Give     greater sales volume stores receive more emphasis than those in lower
Incomplete Results      volume stores. For example, stores in the largest sales volume group are
                        required to collect 150 responses, stores in the next largest sales group
                        collect 100 responses, and those in the lowest sales volume group collect
                        50 responses. However, sales volume can vary significantly among the
                        stores in the same group as well as between groups. A more precise
                        methodology would entail weighting survey responses by the relative sales
                        volume of individual stores. This approach could help DeCA avoid




                        8
                         The management staffing standards show store management structure based on sales
                        volume. Managers of small stores typically manage from 3 to 40 employees.




                        Page 10                                            GAO-03-417 Defense Infrastructure
                         potential over- or underreporting of survey results, and evaluate changes
                         in survey results that may be impacted by changes in sales volume.


Number of                DeCA does not document the number of customers who refuse to
Non-respondents Needs    participate in the customer satisfaction survey. DeCA officials told us
to Be Recorded           that most customers selected to participate in the survey willingly
                         respond, but they acknowledge that documenting the number of
                         non-respondents would enhance survey reporting. Survey literature
                         indicates that even nominally low levels of non-responses can influence
                         the interpretation of survey results. There may be a particular sub-group
                         of customers that does not respond to the questionnaire and that would
                         not be reflected in DeCA results. By not adjusting for non-response,
                         DeCA is assuming that respondents have similar satisfaction scores as
                         non-respondents. Also, by collecting data on non-respondents, the agency
                         may be able to determine if the results omit customer subgroups whose
                         opinions may be important. For example, some dependents of service
                         personnel may not feel comfortable participating in the survey because of
                         language barriers.


Assessing Why Eligible   DeCA does not conduct systematic assessments of the number and types
Shoppers Do Not Shop     of personnel who do not shop at commissaries. The customer satisfaction
at Commissaries          survey is conducted in the stores, and thus reflects the views of those who
                         shop at the commissaries. They do not capture the views of those who do
                         not shop there. Although DeCA’s strategic plan addresses the need to
                         attract more military personnel to use the commissary, DeCA officials do
                         not know to what extent eligible customers are not shopping at a
                         commissary and the reasons why not.


                         Realignment of the workforce, through greater use of part-time employees,
Conclusions              has enabled many stores to increase their operating hours and maintain
                         or improve customer service. However, DeCA’s strategic plan does not
                         include specific goals for the full-time/part-time workforce mix. As a
                         result, the extent of part-time employees varied among the stores and is
                         significantly less than current industry practice. Opportunities to achieve
                         even more efficiencies may exist through greater use of part-time
                         positions. In addition, small store directors have concerns about balancing
                         their workload and maintaining store operations. Although DeCA’s
                         customer satisfaction survey questionnaire is reasonable, survey results
                         could be subject to some under- or over- stated because the current
                         methodology does not explicitly weight stores’ results by sales volume and


                         Page 11                                      GAO-03-417 Defense Infrastructure
                         does not collect data on non-responding customers. Finally, DeCA
                         does not know how many eligible service members do not shop at a
                         commissary and the reasons they do not.


                         We recommend that the Under Secretary of Defense (Personnel and
Recommendations for      Readiness), in consultation with the Chairman, Commissary Operating
Executive Action         Board, require the Director, Defense Commissary Agency, to

                     •   update the strategic plan to include goals that identify the percent of
                         the store workforce that is expected to be full- and part-time to
                         achieve further efficiencies from reshaping the workforce;
                     •   reassess the management reductions at small stores to ensure managers
                         can balance their workload and maintain store operations;
                     •   adjust the customer survey results on the basis of sales volume and
                         customer expenditure data;
                     •   document the number of survey non-respondents and their reasons for not
                         completing the questionnaire; and
                     •   examine potential methods and analyses to periodically determine how
                         many and why eligible personnel do not shop at commissaries, to identify
                         ways to improve service and increase the number of potential customers
                         using the commissary benefit.


                         In commenting on a draft of this report, the Under Secretary of
Agency Comments          Defense (Personnel and Readiness) concurred with four of our five
and Our Evaluation       recommendations and outlined actions to be taken to address the four
                         recommendations the department concurred with. He disagreed with our
                         recommendation that the Defense Commissary Agency update its strategic
                         plan to include goals that identify the percent of the store workforce that
                         is expected to be full- and part-time, expressing the view that staff in
                         Washington should not prescribe the full-part-time mix for stores. The
                         intent of our recommendation was not for the Under Secretary to
                         prescribe the workforce mix for stores but rather have the Defense
                         Commissary Agency include agencywide goals on the projected workforce
                         mix in its strategic plan to help achieve the goal of reshaping the
                         workforce. Rather than being arbitrary or prescriptive, such goals, if based
                         on considered research or best practices, could provide an important term
                         of reference to guide staffing decisions at the local level to optimize
                         organizational performance and cost effectiveness. We continue to believe
                         the recommendation is an appropriate one for the Defense Commissary
                         Agency to implement. The department’s comments are reprinted in
                         appendix II.



                         Page 12                                      GAO-03-417 Defense Infrastructure
              We performed our work at DeCA headquarters located at Fort Lee,
Scope and     Virginia, and DeCA’s three regional offices in the continental United States
Methodology   (the Eastern Regional Office in Virginia Beach, Virginia; the Midwest
              Regional Office in San Antonio, Texas; and the Western Pacific Regional
              Office in Sacramento, California). Due to travel costs and time constraints,
              we did not do any work at the European Regional Office in Germany;
              however, the total number of reductions shown for DeCA does include
              positions in the European Region.

              To determine the status of DeCA’s personnel reduction plan, we
              obtained data from DeCA headquarters and each regional office on the
              number of reductions planned by region by store as well as made as of
              December 31, 2002. We also analyzed reduction-in-force data to determine
              the actual or estimated impact on store employees. We also reviewed
              DeCA’s strategic plan to document DeCA’s plans for reducing unit
              operating costs and reshaping the workforce. We did not validate the cost
              savings reported by DeCA.

              To determine how store operations and customer service have been
              affected by the personnel reductions, we interviewed officials at DeCA
              headquarters and the three regional offices in the United States. We
              also interviewed store directors at eight stores that were near the
              Eastern and Midwest regional offices. In addition, we also conducted
              telephone interviews with either the store directors or managers for
              38 band 1 and 2 stores in the continental United States (defined as
              having average monthly sales volume of less than $1 million), resulting in
              interviews of all 41 band 1 and 2 stores in the continental United States.
              We also determined the planned use of part-time positions by each store in
              the three regional offices visited. Finally, we also reviewed and discussed
              the Commissary Customer Service Survey results for the surveys
              conducted in October 2001 and May and November 2002, to identify
              changes in the satisfaction scores as the personnel reductions were
              being implemented.

              To determine if the DeCA customer satisfaction survey methodology is
              reasonable, we reviewed DeCA’s questionnaire and methodology and
              contrasted these to standard questionnaire design and statistical sampling
              procedures used in industry and government research. We also
              interviewed DeCA officials responsible for administering the survey
              regarding their analysis of survey results. We also observed the survey
              being conducted at the Fort Myer store in Virginia in November 2003.




              Page 13                                      GAO-03-417 Defense Infrastructure
We conducted our review from July 2002 through January 2003 in
accordance with generally accepted government auditing standards.


We are sending copies of this report to the Secretary of Defense; the
Under Secretary of Defense (Personnel and Readiness); the Chairman,
Commissary Operating Board; Director, Defense Commissary Agency; and
the Director, Office of Management and Budget. In addition, the report will
be available at no charge on GAO’s Web site at www.gao.gov and to others
upon request.

Please contact me at (202) 512-8412 if you or your staff have any
questions concerning this report. Major contributors to this report
were Michael Kennedy, Leslie Gregor, Betsy Morris, Curtis Groves,
and Nancy Benco.




Barry W. Holman
Director, Defense Capabilities
 and Management




Page 14                                     GAO-03-417 Defense Infrastructure
List of Congressional Committees

The Honorable John Warner
Chairman
The Honorable Carl Levin
Ranking Minority Member
Committee on Armed Services
United States Senate

The Honorable Ted Stevens
Chairman
The Honorable Daniel K. Inouye
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
United States Senate

The Honorable Duncan Hunter
Chairman
The Honorable Ike Skelton
Ranking Minority Member
Committee on Armed Services
House of Representatives

The Honorable Jerry Lewis
Chairman
The Honorable John P. Murtha
Ranking Minority Member
Subcommittee on Defense
Committee on Appropriations
House of Representatives




Page 15                            GAO-03-417 Defense Infrastructure
             Appendix I: Commissary Customer Service
Appendix I: Commissary Customer Service
             Survey Questionnaire



Survey Questionnaire




             Page 16                                   GAO-03-417 Defense Infrastructure
             Appendix II: Comments from the Department
Appendix II: Comments from the
             of Defense



Department of Defense




             Page 17                                     GAO-03-417 Defense Infrastructure
Appendix II: Comments from the Department
of Defense




Page 18                                     GAO-03-417 Defense Infrastructure
           Appendix II: Comments from the Department
           of Defense




(350243)
           Page 19                                     GAO-03-417 Defense Infrastructure
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