The U.S. government was paying $48 million annually to ship $25 million worth of produce to the Pacific. Under this business model, DeCA now saves about $38 million in transportation costs each year.

Before November 2015, the contract required the supplier to ship product to the designated port of embarkation (PoE) on the U.S. West Coast. The U.S. government assumed ownership of the product at the point of embarkation along with the costs to ship the product across the ocean to its final destination. This Pacific business model was unique in that at all other commissary locations, including those in Europe, fresh fruits and vegetable (FF&V) products are acquired free on board (FOB) destination, which means all provider costs are incorporated into the cost of the end product.

Under the business model put in place Nov. 1, 2015, in South Korea, Japan and Guam, the contractor is responsible for the produce and for delivering it to the individual commissaries, rather than to a U.S. port, where the government would assume ownership of the product and then have to ship the produce to the stores. This plan doesn't limit contractors to supplying only locally acquired produce. It does, however, encourage them to acquire as much of the produce as possible locally. This is not new; DeCA has been successfully using this business model in Europe since 2007.

The contracts to support Puerto Rico, Alaska and Hawaii, though remotely located, use the very same business model. All products are acquired FOB Destination, which incorporates all FF&V provider costs into the cost of the end product. The end result is high quality and fresh products for our patrons comparable to current commissary prices.

We closely monitor our suppliers to ensure our customers receive the freshest, highest-quality produce at the lowest practical price.

Due in part to recurring problems with produce quality and pricing under contracts awarded in November 2015, DeCA changed the sources of supply in 2017. The new contracted source for South Korea is a firm which has offices in Seoul. Their contract started in April 2017, and we have already seen improvements in produce quality. The new contracted source for Japan/ Okinawa is a firm whose home office is on mainland Japan. Their contract started in September 2017, and DeCA is expecting an expansion of the offering of locally sourced products from both contractors.

DeCA continues to work closely with the suppliers. In January/February 2018, DeCA sent Headquarters representatives to both South Korea and Japan/Okinawa to observe and discuss produce operations with both the supplier and DeCA’s field team. These representatives included the agency director, the produce category manager, and a contracting representative. Their findings and observations resulted in more concentrated efforts focused on improving product availability, quality and pricing.

DeCA is sending an oversight team back to South Korea and Japan/Okinawa by March 31, 2018, to collaborate with the contractor to 1) institute operational changes to achieve more favorable pricing for our patrons, 2) provide additional training and merchandising support to the commissaries, and 3) meet with patrons to gain a first-hand perspective of their perceptions. The agency director will be closely monitoring this program on a regular basis.

The new contract stipulates that the fresh fruits and vegetables must meet or exceed U.S. Standards for Produce Grade #1 USDA Fresh Market Vegetable and Fruit Standards. All produce is inspected by the U.S. Army Veterinary Corps Medical Food Inspectors. This includes products sourced locally and products sourced from the U.S. and shipped to our stores in the Pacific.

Produce available to our patrons will come from local, stateside and other countries, and the mix will fluctuate depending on availability, seasonality, quality and price.

DeCA is committed to providing its patrons the best produce possible at a price that maximizes their savings. The commercial grocery industry as a whole favors acquiring locally grown products due to the tendency for these products to be fresher than those procured and shipped from distant locations. Prior to the solicitation of a new contract, DeCA employees noticed that some of the produce available in local markets throughout Northeast Asia was fresher and less expensive than the produce offered in our stores. However, recognizing the seasonality of many fresh fruit and vegetable products, the DeCA business model ensures that the responsibility for the product remains with the fresh fruits and vegetables provider - regardless of its origin. This encourages the provider to ensure that the product remains fresh and suitable for resale all the way to the back dock of the store - which is a commercial standard.

Prices for some fresh fruits and vegetables can fluctuate weekly depending on weather conditions, gaps in growing regions, and supply and demand. Take berries, for example, during the summer months berries are plentiful from growers in the United States. However, during the fall and winter months, berries must be secured from countries such as New Zealand, where the cost to ship increases exponentially.

Despite price fluctuations, DeCA’s produce suppliers are required to maintain an average percentage of patron savings for a group of high volume core items as compared to common items found in local commercial retailers.

The supplier is responsible to provide average patron savings for the core items of approximately 40 percent in Guam and 34 percent for South Korea and 30 percent for Japan/Okinawa. Examples of core items include: apples, bananas, red and green grapes, grapefruit, potatoes, tomatoes, and carrots. We closely monitor our suppliers to ensure our customers receive the freshest, highest-quality produce at the lowest practical price.

We are not as competitive with “farmers markets” pricing where quantities and assortments are sporadic, and the off-post establishments are not subject to the same health inspections as the DeCA sources.

While all produce on post may not be lower than the produce off post, we have verified that we are providing significant savings on the core items, and we are typically even saving patrons money on certain “non-core” items when compared to comparable stores outside the gate.

The previous contract required the contractor to ship product to the designated port of embarkation (PoE) on the U.S. West Coast. The U.S. government assumed ownership of the product at the point of embarkation along with the costs to ship the product across the ocean to its final destination. This Pacific business model was unique in that at all other commissary locations, including those in Europe, fresh fruits and vegetable (FF&V) products are acquired free on board (FOB) destination, which means all provider costs are incorporated into the cost of the end product.