House Armed Services Subcommittee on Military Personnel Hearing
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Thank you, Chairman Wilson and Ranking Member Davis, for your strong support of quality of life programs for military members and their families. Your leadership and emphasis have kept the focus on the programs that help keep our military strong and resilient. Today more than perhaps ever before, the members of our military community need to count on the resolve and commitment you have so consistently displayed over the years for the programs they hold most dear.
I would like to highlight some major recent achievements within the
MILITARY COMMUNITY AND FAMILY POLICY
Our Service members never hesitate to answer the nation's call, whether in combat or here at home. The challenges of military service place members and their families under significant strain. Morale, welfare, and recreation (MWR) programs are critical to their wellness and resiliency. Participation in recreation, fitness, sports, cultural arts and other leisure activities leads to improved personal health and well-being, and helps build strong military families and healthy communities. Active living is known to reduce stress, loneliness, obesity, and depression and builds positive self-esteem and esprit de corps critical to a healthy military environment.
Deployment Support
Over the past year, and as the result of your support, we continued robust programming for deployed service members and their families. Military spouses indicated that being able to communicate with their service member is one of the most important factors impacting their ability to cope with deployments. The 426 free MWR Internet Cafes and 150 portable morale satellite units in the
Military Service MWR Programs
In addition to these impressive accomplishments, the
Child, Youth, and Family Programs
We continue to make great strides in our child development and youth programs. Over 97 percent of our eligible DoD Child Development Centers are nationally accredited, compared to 8-10 percent in the general population. We standardized overarching criteria for child development program inspections that will be implemented during the 2014 inspection cycle. In order to support quality child care for
Our Family Advocacy staff developed a five-year Strategic Plan for Prevention of Child Abuse and Neglect and Domestic Abuse to target prevention efforts to evidence-based programs relevant to military families. We included our federal partners (the
We completed the pilot phase of the Military and Family Readiness Program accreditation, a national objective, independent and reliable validation of military and family support program performance. Accreditation involves a detailed review of the military and family support program administrative management and service delivery functions against national standards of promising practice. Military and family support programs at all six pilot installations have been accredited by the
More than 50,000 military spouses have now found jobs with more than 200 Military Spouse Employment Program partners through our spouse employment program. We also launched the Spouse Ambassador Network with 11 military support organizations that will leverage their established community networks to broaden knowledge about military spouse employment resources. The network will connect our partners and local businesses, community organizations, and local Chambers of Commerce to educate, empower, and mentor military spouses. Finally, our new Spouse Education and Career Opportunities website for military spouses, MySECO, provides a comprehensive online forum with access to essential information and resources, leading career counseling tools, and assessments at no cost; the ability to develop a personal profile allowing spouses to capture and track their personal information and progress as they advance their education or career; and a military spouse scholarship database.
These are just a few examples of the innovative and effective quality of life programs that we and our Service partners provide to promote readiness, resilience, and unit cohesion.
CHANGING TIMES
The Subcommittee's invitation focused this hearing on the impact of the reduced budget environment on military resale, which consists of the commissaries and the military exchanges. The
My colleagues from the
Each of our organizations does a remarkable job of meeting the needs of the military community, a mission that becomes even more challenging in a highly-competitive marketplace, a recovering economy, and an uncertain budget. Our MWR and Resale professionals are highly dedicated to the mission, and focused on the consistent delivery of world-class service. However, we're seeing indications that things are not the way they used to be--not necessarily better or worse, but at least different. Taken by themselves, any one of these may not be all that significant. However, we do need to pay attention to these indicators and monitor for what they might portend for the future, so that we do not get caught unprepared. Here are some of the factors that have caught our attention.
Customer Satisfaction
The Department has been using the independent American Customer Satisfaction Index (ACSI) survey to measure commissary and exchange customer satisfaction since 2002. The annual ACSI is a system-wide tool for strategic benchmarking and competitive comparisons with the related industry sectors. The ACSI uses exactly the same survey instruments for commissaries and the exchanges as it uses for the private sector companies in their respective industries. We track the results using a balanced scorecard approach. The Department's goal is to meet or exceed the industry average of customer satisfaction.
DeCA improved its 2012 overall ACSI customer satisfaction score by a point from a year ago and is now a significant five points above the supermarket industry average. Only six percent of DeCA's customers indicated they complained about their experience in the past year, a significant six point decrease from 2011 and below the industry average of eight percent. DeCA's perceived overall quality significantly exceeded customers' expectations. DeCA's customer loyalty score also improved in 2012 and now meets the industry average.
Since 2002, the
The other two exchange systems, the
Building on its experience with the ACSI in the resale community, the Department began to use similar methodology to assess customer satisfaction with MWR programs in 2009. The overall Department-wide customer satisfaction index score did not change from 2009 to 2011, but there were changes in the individual Service customer satisfaction index scores. Both the
The 2009 survey results suggested that MWR has a critical impact on readiness: if MWR satisfaction increases, readiness increases. The readiness score increased by three points in 2011. In addition to readiness, the survey measured the impact of MWR satisfaction on retention and unit cohesion. The survey also showed that unit participation in MWR programs has a positive effect on program satisfaction, MWR satisfaction, readiness, unit cohesion, and retention. In very practical terms, the Customer Satisfaction Index can be an important tool to rebalance resources within MWR programs for better alignment with our most critical challenges and priorities. We are currently preparing the next update to the
Appropriated Fund Support to MWR Category A and B Programs
The continued vitality of the MWR program depends on sound management, meeting command and customer needs, a predictable stream of nonappropriated fund (NAF) revenue, and solid appropriated fund (APF) support of Category A and B activities.
The good news is that APF provided a total of
By
Similarly, in Category B activities (child and youth development programs, outdoor recreation, crafts and automotive skills, and small bowling centers), APF should provide a minimum of 65 percent of the total expense. The Department as a whole dropped eight percentage points and slipped just below the requirement in FY 2012. The
The Services attributed most of the decrease in funding to competing priorities within installation services and management, and took actions to mitigate the impact including adjusting hours of operation, adjusting personnel requirements, and reducing programs. They prioritized and funded the most critical services, and looked for opportunities for partnering and other methods of delivering programs and services where APF support was no longer available or sufficient. To sustain delivery of programs to meet customer demand, the Military Services also boosted the use of NAFs; this increased the burden on Service members and families, and could affect the future recapitalization of revenue-generating MWR activities. This is not a sustainable APF/NAF funding model and, if future funding decreases, MWR programs for our Service members and their families will continue to erode.
NAF Financial Performance
The exchange services have not been immune to the recent economic challenges facing the entire retail industry or from the global competition and reduced margins driven by large-scale retailers. Despite those pressures, combined exchange revenues have increased each year and are up 8 percent since 2009. However, earnings and MWR dividend performance have been mixed. Earnings have been steadily down since 2009 and are now 38 percent below that level. MWR dividends rebounded from the drop in 2011 but are still 10 percent below the 2009 level. For their current fiscal year, exchange forecasts now project revenue down nearly 5 percent, earnings up more than 40 percent, and dividends up almost 2 percent. Although the direct impact of sequestration on the exchange services has been minor so far, they have started to see some negative effects of reduced APF base operating support for the sustainment of their existing facilities. There are also persistent concerns about attempts to eliminate APF support for overseas utilities and second-destination transportation costs to ship merchandise for those stationed overseas. We will continue to monitor these indicators and work closely with the exchange services as we navigate the uncertainty of the current budget environment and the pressures from the retail industry.
Similarly, MWR revenue tended to be slightly up in their FY 2012, although
When one activity suffers a reduction in APF support, the "domino effect" often spreads the disruption into other activities. One prime example is the APF funding that supports some caregiver positions in the child development centers. When that funding stream is disrupted by an APF reduction or hiring freeze, the base is left with only two alternatives. One option is to shut down child care rooms and reduce capacity; for every caregiver position that is unfilled, up to twelve children will no longer receive child care. However, child care is such a high priority that bases are often reluctant to take that step. The only other option is to keep the child care rooms open by diverting NAF resources from other programs. Those other programs, in turn, have to compensate for the reduction in their NAF resources by cutting back hours or services, increasing prices, deferring needed improvements, or in some cases closing completely. Thus the impact of APF shortfalls, whether due to furlough, sequestration, or other budget issues, spreads throughout the entire MWR enterprise and affects a much wider variety of programs and services.
In a related matter, the
Construction and Facilities
The FY 2014 program that we just submitted is the smallest in recent memory, with a total of 23 projects (down from 38 last year) at a cost of
We share the concerns expressed by the Subcommittee in recent years over the declining rate of recapitalizing NAF facilities. Our community currently estimates a
* Will we really need to replace everything we currently have? Many of our programs occupy legacy facilities that were built many years ago to accommodate much larger military populations. The patron base back then tended to live on or close to the installation, which truly served as the hub for the military community. The patrons of that day also had different interests than the people we serve today. In addition, on-base facilities and programs may no longer be the best way to serve today's military community, at least two-thirds of whom now live off base. The "build-it-and-they-will-come" philosophy may have worked adequately years ago, but is not consistent with the current dispersion of our patrons. We may be better off in the future sizing our facilities to accommodate those who live on base--for whom the base is the community--and find more economical ways to link our off-base members and families with local providers of the services they need.
* If we do elect to build a new facility, do we have the right standards? We tend to build our facilities to last 30 or more years; many commercial facilities are typically built to recover their investment in much shorter periods, and then be replaced with something more contemporary at that time. We certainly appreciate the need for anti-terrorism and force protection measures, but occasionally hear that our designs are held to the same protective standards regardless of whether the facility will be located in the central part of the protected base enclave or adjacent to the perimeter fence.
We do not yet have the answers, but believe questions like these will provide a more productive approach to meeting the needs of the community in the future. Meanwhile, we will continue the current emphasis on extending the useful life of current facilities and, where new facilities are required, pursuing multi-purpose multi-use projects as well as public-private ventures.
STRATEGIC TRANSFORMATION INITIATIVES
Over the past several years, it has become increasingly apparent that we would require more than a minor adjustment to meet the future needs of our community. As a result, we embarked on a number of strategic initiatives that don't just tinker around the edges but fundamentally transform the landscape.
On
First, a cross-functional
Then, during one of our normal annual reviews with the Services, it became apparent that all of the Services were doing essentially the same things and faced many of the same challenges, independently coming up with similar solutions. One of the Services voiced a need for more than
Finally, in a high-level discussion of the Department's direction to maintain funding for family programs, one senior leader suggested further review to determine whether the Services had taken significant reductions with adverse impacts in this area. Instead of another narrowly-focused funding review of specific programs, we got approval for a broader and more comprehensive review of common services and overhead provided to all MWR and family programs, and the
The Task Force consisted of 16 general officer and Senior Executive Service civilians whose mission was to review the total cost and methods of providing common services for military member and family support programs
The Task Force charter contained five objectives:
* Maintain the
* Improve effectiveness, efficiency, and economy in the delivery of programs within the purview of the
* Drive down both the APF and the NAF unit cost of providing programs and services to military members and their families.
* Through shared services or similar models for common support, enable greater economies of scale than the individual military departments can achieve independently.
* Retain a portion of the initial savings to cover transition costs and offset program shortfalls.
To achieve these objectives, the
After receiving baseline briefings from the Services on their operations above installation level, the
The next 4 months were a period of rather intense study. The Task Force launched a different topic each week with Service briefings that covered the management of that week's study area, the services typically provided above installation level, appropriate measures of size and scope, staff and resources, any unique elements, and challenges and opportunities. After those baseline briefings, leading functional experts from each Service gathered for an intense week-long study effort, modeled after Lean Six Sigma rapid improvement events and led by master black belt facilitators from the
The Task Force report is still being written, but a number of common themes emerged from the study team briefings. Please note that these conclusions are preliminary and only reflect the positions of the functional experts on the study groups. However, those conclusions did come up with some frequency and are worthy of consideration.
First, there was nearly universal agreement that there is significant room for improvement in cooperation and collaboration. The Services frequently used different providers for essentially the same services. When they used the same provider, it was more by chance than design and typically involved separate solicitations, contracts and possibly pricing. It looked like most functions involved four separate Service offices doing essentially the same thing for people with similar needs spread over the same geographic area. Almost universally, functional areas that did not already have an established collaboration forum recognized the need for one; several of them began to meet regularly almost immediately.
Second, many of the recommendations could have already been implemented by the functional community, without the need for any higher-level involvement or approval. For example, the study group on NAF procurement noted how much simpler life would be--for themselves and for their vendors--if they all used the same standard contract clauses. The current contract clauses were established within each Service's functional community and presumably could be changed by them without any involvement by the
Third, the study groups recognized that success did not necessarily require 100 percent participation. For example, it would be difficult for the
We are currently compiling the final report of the
Another area of transformation began in
The Department's review was broken into three major working groups. My organization chaired the working group on quality of life (QoL) programs supporting military members, retirees, and their families. Since we also chaired the
Many complex challenges are involved in selecting QoL programs to be offered, not the least of which is the sheer number and diversity of potential offerings. In addition, the expansive target demographic profile includes single Service members in a wide age group, members with dependents and young families, and a robust retiree population. Compounding the challenge is the geographic dispersion of active duty Service members, 68 percent of whom now live off the installation, as well as reservists and
Healthy Base Initiative
The Healthy Base Initiative grew from the National Prevention Strategy that the President released in 2010 to promote good health for all Americans. In 1997, the
We are partnering with the Department's Health Affairs community to sponsor the transformative Healthy Base Initiative, a demonstration project to create an environment which encourages sustainable healthy lifestyles; its initial focus is on reducing obesity and tobacco use. Existing health and wellness initiatives as well as promising new practices are being measured for their efficacy at 14 locations across the Department and the
Multi-disciplinary teams have completed baseline assessments at each pilot location focusing on the environment and population health, with several major findings. Food is a major challenge, as few healthy options exist on base. Military dining facilities continue to face challenges with customer satisfaction, cost, and participation; many have significantly cut back their hours of operation or closed completely. The only other choice at most installations is fast food. Junior military personnel who live on base and have no transportation are often out of luck, since the dormitories are typically not designed for cooking. On the other hand, the assessment teams found that active living, fitness, and child and youth programs at the pilot installations are very well operated and promote health and wellness. On-base schools provide health-focused programs for the children, though opportunities exist to improve food and wellness policy implementation. Health and wellness programs are well done, especially when embedded in the units. The physical environments of the pilot locations vary widely in terms of promoting active living.
The Healthy Base Initiative team is currently working on implementation and measurement plans, with the goal of beginning a rolling implementation this month. In addition to population health and operational measures, financial metrics will be included. Opportunities clearly exist to increase the efficiency of programs provided, as well as realigning funding where it has the most positive impact.
As a popular spin-off benefit from this initiative, several bases have established farmers markets through DeCA, MWR or private entities, increasing the access to fresh locally-grown fruits and vegetables. Initial results have been positive, and we expect more farmers markets across the Department as the different concepts mature.
Air Force Food Transformation Initiative
As mentioned above, our Healthy Base Initiative assessments indicated that on-base food service operations, both military essential feeding and NAF concepts, need considerable attention across the Department to provide healthy options that are convenient to the needs of our customers, at an appropriate cost. The
CONCLUSION
As you well know, these are trying times for our military community. Our people face the same challenges as the rest of the nation: an economy that is slowly recovering from recession, homes that aren't worth what many occupants still owe on them, and a job market that offers few opportunities, especially for spouses and teens. On top of those pressures, our people face the additional burdens associated with their military service: over a decade of engagement in hostile operations overseas, frequent deployments, many for extended periods of time, uprooting the family for a move to a different location for the needs of the Service, and the continued uncertainty about the budget and funding levels. Our civilian members have not been spared, but feel the stress in other ways: furloughs that cut into the family paycheck, hiring freezes, and elimination of pay raises and awards. Keep in mind that sequestration has only been in effect for half a year. Without some relief, the Department faces nine more years of steeper funding cuts and ever more unprecedented fiscal uncertainty. At the very time of our people's greatest need, these funding cutbacks pose great risks to the programs and services on which our military members and their families depend.
I look forward to working with this Subcommittee to meet the needs of our military community, and thank you for your continued support. I welcome your questions.
Read this original document at: http://docs.house.gov/meetings/AS/AS02/20131120/101508/HHRG-113-AS02-Wstate-WilliamsR-20131120.pdf
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