Defense Commissary Agency--Request for Advance

B-262047 Feb 26, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Which permits the use of other than competitive procedures when "the agency's need is for a brand-name commercial item for authorized resale. Where the USO Always Home items have been and are being sold commercially albeit under other brand names. Commissaries are operated in facilities and under standards similar to those of commercial supermarkets. With the exception that commissary items are sold at the lowest practical price. 10 U.S.C. Marine Corps were consolidated into DeCA. Items for which there is no demonstrated or anticipated customer preference for specific brands (e.g. Fresh meat or eggs) and brand-name commercial items for which there is a demonstrated or anticipated customer preference (e.g. View Decision Matter of: Defense Commissary Agency--Request for Advance Decision File: B-262047 Date: February 26, 1996 The Defense Commissary Agency may noncompetitively procure items bearing the USO Always Home brand-name for resale in military commissary stores under the provision of the Competition in Contracting Act of 1984, which permits the use of other than competitive procedures when "the agency's need is for a brand-name commercial item for authorized resale," 10 U.S.C. Sec. 2305(c)(5) (1994), where the USO Always Home items have been and are being sold commercially albeit under other brand names. Attorneys DECISION The Defense Commissary Agency (DeCA) requests an advance decision as to whether it may use other than competitive procedures to procure USO Always Home items for resale in military commissary stores. As discussed below, we conclude that DeCA may use other than competitive procedures to procure such items. The Department of Defense (DOD) operates commissary stores on many of its installations for the economic benefit of military personnel, their families, and selected other individuals. Commissaries stock and sell various grocery food products (e.g., baby foods, canned goods, and soft drinks), nonfood products (e.g., household supplies), and meat and fresh produce. In essence, commissaries are operated in facilities and under standards similar to those of commercial supermarkets, with the exception that commissary items are sold at the lowest practical price. 10 U.S.C. Sec. 2486 (1994). Commissaries sell items at the cost of the item to the commissary plus a standard surcharge to recover certain commissary operating costs. Id. The commissary stores operated by the Army, Navy, Air Force, and Marine Corps were consolidated into DeCA, a DOD agency, on October 1, 1991. 32 C.F.R. Sec. 383a.4 (1995). DeCA procures items for resale in the commissaries with funds from the Defense Business Operations Fund (DBOF), a "working capital" fund maintained in the United States Treasury, and reimburses the fund using the proceeds from sales to commissary patrons. 10 U.S.C. Secs. 2208 and 2486. The items DeCA procures for the commissaries essentially fall into two categories--items for which there is no demonstrated or anticipated customer preference for specific brands (e.g., fresh meat or eggs) and brand-name commercial items for which there is a demonstrated or anticipated customer preference (e.g., Tide laundry detergent or Bayer aspirin). DeCA procures items falling into the first category--items for which there is no demonstrated or anticipated customer preference for specific brands--in accordance with the competition provisions of the Competition in Contracting Act of 1984 (CICA), 10 U.S.C. Sec. 2304(a)(1), which require agencies in the procurement of property or services to obtain full and open competition through the use of competitive procedures. That is, for items for which there is no demonstrated customer preference, such as "fresh chilled beef," the agency issues solicitations under which responsible firms compete for award in accordance with the terms of the solicitation. Brand-name commercial items for which there is a demonstrated customer preference are procured under 10 U.S.C. Sec. 2304(c)(5), a CICA provision which authorizes the use of other than competitive procedures when "the agency's need is for a brand-name commercial item for authorized resale." As explained by DeCA, it determines what brand-name commercial items have sufficient demonstrated or anticipated customer preference that they should be acquired under this exception, giving due consideration to available shelf space, product quality, and price. The agency and its suppliers negotiate basic ordering agreements or blanket purchase agreements, which set forth the terms and conditions applicable to the orders for the desired brand-name commercial items when such orders are placed. The United Service Organizations (USO), a private non-profit corporation charged to "serve the religious, spiritual, social, welfare, educational, and entertainment needs of the men and women in the Armed Forces," 36 U.S.C. Secs. 1301 et seq.