((a)) ** .—** As provided in , commissary stores are intended to be similar to commercial grocery stores and may sell merchandise similar to that sold in commercial grocery stores.
((b)) ** .—** Merchandise sold in, at, or by commissary stores may include items in the following categories:
((1)) Meat, poultry, seafood, and fresh-water fish.
((2)) Nonalcoholic beverages.
((3)) Produce.
((4)) Grocery food, whether stored chilled, frozen, or at room temperature.
((5)) Dairy products.
((6)) Bakery and delicatessen items.
((7)) Nonfood grocery items.
((8)) Tobacco products.
((9)) Health and beauty aids.
((10)) Magazines and periodicals.
((c)) ** .—**
((1)) The Secretary of Defense may authorize the sale in, at, or by commissary stores of merchandise not covered by a category specified in subsection (b). The Secretary shall notify Congress of all merchandise authorized for sale pursuant to this paragraph, as well as the removal of any such authorization.
((2)) Notwithstanding paragraph (1), the Department of Defense military resale system shall continue to maintain the exclusive right to operate convenience stores, shopettes, and troop stores, including such stores established to support contingency operations.
((3))
((A)) A military exchange shall be the vendor for the sale of tobacco products in commissary stores and may be the vendor for such merchandise as may be authorized for sale in commissary stores under paragraph (1). Except as provided in subparagraph (B), subsections (d) and (e) shall not apply to the pricing of such an item when a military exchange serves as the vendor of the item. Commissary store and exchange prices shall be comparable for such an item.
((B)) When a military exchange is the vendor of tobacco products or other merchandise authorized for sale in a commissary store under paragraph (1), any revenue above the cost of procuring the merchandise shall be allocated as if the revenue were a uniform sales price surcharge described in subsection (d).
((d)) ** .—** The Secretary of Defense shall apply a uniform surcharge equal to five percent on the sales prices established under subsection (e) for each item of merchandise sold in, at, or by commissary stores.
((e)) ** .—**
((1)) The Secretary of Defense shall establish the sales price of each item of merchandise sold in, at, or by commissary stores at the level that will recoup the actual product cost of the item.
((2)) Any change in the pricing policies for merchandise sold in, at, or by commissary stores shall not take effect until the Secretary of Defense submits written notice of the proposed change to Congress and a period of 90 days of continuous session of Congress expires following the date on which notice was received. For purposes of this paragraph, the continuity of a session of Congress is broken only by an adjournment of the Congress sine die, and the days on which either House is not in session because of an adjournment or recess of more than three days to a day certain are excluded in a computation of such 90-day period.
((3)) The sales price of merchandise and services sold in, at, or by commissary stores shall be adjusted to cover the following:
((A)) The cost of first destination commercial transportation of the merchandise in the United States to the place of sale.
((B)) The actual or estimated cost of shrinkage, spoilage, and pilferage of merchandise under the control of commissary stores.
((f)) ** .—** The Secretary of Defense may use the exception provided in for the procurement of any commercial product (including brand-name and generic items) for resale in, at, or by commissary stores.
((g)) ** .—**
((1)) Notwithstanding the general requirement that merchandise sold in, at, or by commissary stores be commissary store inventory, the Secretary of Defense may authorize the sale of tobacco products as noncommissary store inventory. Except as provided in paragraph (2), subsections (d) and (e) shall not apply to the pricing of such merchandise items.
((2)) When tobacco products are authorized for sale in a commissary store as noncommissary store inventory, any revenue above the cost of procuring the tobacco products shall be allocated as if the revenue were a uniform sales price surcharge described in subsection (d).
((h)) ** .—**
((1))
((A)) The Secretary of Defense may use the proceeds from the surcharges imposed under subsection (d) only—
((i)) to acquire (including acquisition by lease), construct, convert, expand, improve, repair, maintain, and equip the physical infrastructure of commissary stores and central product processing facilities of the defense commissary system; and
((ii)) to cover environmental evaluation and construction costs related to activities described in clause (i), including costs for surveys, administration, overhead, planning, and design.
((B)) In subparagraph (A), the term “physical infrastructure” includes real property, utilities, and equipment (installed and free standing and including computer equipment), necessary to provide a complete and usable commissary store or central product processing facility.
((2))
((A)) The Secretary of Defense may authorize a nonappropriated fund instrumentality of the United States to enter into a contract for construction of a shopping mall or similar facility for a commissary store and one or more nonappropriated fund instrumentality activities. The Secretary may use the proceeds of surcharges under subsection (d) to reimburse the nonappropriated fund instrumentality for the portion of the cost of the contract that is attributable to construction of the commissary store or to pay the contractor directly for that portion of such cost.
((B)) In subparagraph (A), the term “construction”, with respect to a facility, includes acquisition, conversion, expansion, installation, or other improvement of the facility.
((3))
((A)) The Secretary of Defense may use the proceeds derived from surcharges imposed under subsection (d) in connection with sales of commissary merchandise through initiatives described in subparagraph (B) to offset the cost of such initiatives.
((B)) Subparagraph (A) applies with respect to initiatives, utilizing temporary and mobile equipment, intended to provide members of reserve components, retired members, and other persons eligible for commissary benefits, but without reasonable access to commissary stores, improved access to commissary merchandise.
((4)) The Secretary of Defense, with the approval of the Director of the Office of Management and Budget, may obligate anticipated proceeds from the surcharges under subsection (d) for any use specified in paragraph (1), (2), or (3), without regard to fiscal year limitations, if the Secretary determines that such obligation is necessary to carry out any use of such adjustments or surcharges specified in such paragraph.
((5)) Revenues received by the Secretary of Defense from the following sources or activities of commissary store facilities shall be available for the purposes set forth in paragraphs (1), (2), and (3):
((A)) Sale of recyclable materials.
((B)) Sale of excess and surplus property.
((C)) License fees.
((D)) Royalties.
((E)) Fees paid by sources of products in order to obtain favorable display of the products for resale, known as business related management fees.
((F)) Amounts made available for any purpose set forth in paragraph (1) pursuant to an agreement with a host nation.
((G)) Amounts appropriated for repair or reconstruction of a commissary store in response to a disaster or emergency.
((6)) Revenues made available under paragraph (5) for the purposes set forth in paragraphs (1), (2), and (3) may be supplemented with additional funds derived from—
((A)) improved management practices implemented pursuant to sections 2481(c)(3), 2485(b), and 2487(c) of this title; and
((B)) the variable pricing program implemented pursuant to subsection (i).
((i)) ** .—**
((1)) Notwithstanding subsection (e), and subject to subsection (k), the Secretary of Defense may establish a variable pricing program pursuant to which prices may be established in response to market conditions and customer demand, in accordance with the requirements of this subsection. Notwithstanding the amount of the uniform surcharge assessed in subsection (d), the Secretary may provide for an alternative surcharge of not more than five percent of sales proceeds under the variable pricing program to be made available for the purposes specified in subsection (h).
((2)) Subject to subsection (k), before establishing a variable pricing program under this subsection, the Secretary shall establish the following:
((A)) Specific, measurable benchmarks for success in the provision of high quality grocery merchandise, discount savings to patrons, and levels of customer satisfaction while achieving savings for the Department of Defense.
((B)) A baseline of overall savings to patrons achieved by commissary stores prior to the initiation of the variable pricing program, based on a comparison of prices charged by those stores on a regional basis with prices charged by relevant local competitors for a representative market basket of goods.
((3)) The Secretary shall ensure that the defense commissary system implements the variable pricing program by conducting price comparisons using the methodology established for paragraph (2)(B) and adjusting pricing as necessary to ensure that pricing in the variable pricing program achieves overall savings to patrons that are consistent with the baseline savings established for the relevant region pursuant to such paragraph.
((j)) ** .—**
((1)) Subject to subsection (k), if the Secretary of Defense determines that the variable pricing program has met the benchmarks for success established pursuant to paragraph (2)(A) of subsection (i) and the savings requirements established pursuant to paragraph (3) of such subsection over a period of at least six months, the Secretary may convert the defense commissary system to a nonappropriated fund entity or instrumentality, with operating expenses financed in whole or in part by receipts from the sale of products and the sale of services. Upon such conversion, appropriated funds shall be transferred to the defense commissary system only in accordance with paragraph (2) or . The requirements of shall not apply to the defense commissary system operating as a nonappropriated fund entity or instrumentality.
((2)) If the Secretary determines that the defense commissary system operating as a nonappropriated fund entity or instrumentality is likely to incur a loss in any fiscal year as a result of compliance with the savings requirement established in subsection (i), the Secretary shall authorize a transfer of appropriated funds available for such purpose to the commissary system in an amount sufficient to offset the anticipated loss. Any funds so transferred shall be considered to be nonappropriated funds for such purpose.
((3))
((A)) The Secretary may identify positions of employees in the defense commissary system who are paid with appropriated funds whose status may be converted to the status of an employee of a nonappropriated fund entity or instrumentality.
((B)) The status and conversion of employees in a position identified by the Secretary under subparagraph (A) shall be addressed as provided in for employees in morale, welfare, and recreation programs, including with respect to requiring the consent of such employee to be so converted.
((C)) No individual who is an employee of the defense commissary system as of the date of the enactment of this subsection shall suffer any loss of or decrease in pay as a result of a conversion made under this paragraph.
((k)) ** .—**
((1)) With respect to each action described in paragraph (2), the Secretary of Defense may not carry out such action until—
((A)) the Secretary provides to the congressional defense committees a briefing on such action, including a justification for such action; and
((B)) a period of 30 days has elapsed following such briefing.
((2)) The actions described in this paragraph are the following:
((A)) Establishing the representative market basket of goods pursuant to subsection (i)(2)(B).
((B)) Establishing the variable pricing program under subsection (i)(1).
((C)) Converting the defense commissary system to a nonappropriated fund entity or instrumentality under subsection (j)(1).