CONSOLIDATION AND REORGANIZATION OF LEGISLATIVE PROVISIONS REGARDING DEFENSE COMMISSARY SYSTEM AND EXCHANGES AND OTHER MORALE, WELFARE, AND RECREATION ACTIVITIES.

SEC. 651. CONSOLIDATION AND REORGANIZATION OF LEGISLATIVE PROVISIONS REGARDING DEFENSE COMMISSARY SYSTEM AND EXCHANGES AND OTHER MORALE, WELFARE, AND RECREATION ACTIVITIES.(a) Provisions Related to Commissary Stores.—Chapter 147 of title 10, United States Code, is amended—(1) by striking the table of sections at the beginning of the chapter and sections 2481, 2483, 2485, and 2487;(2) by redesignating sections 2482, 2484, and 2486 as sections 2485, 2483 and 2484, respectively;(3) by inserting after the chapter heading the following: “Subchapter Sec. “I. Defense Commissary and Exchange Systems 2481118 STAT. 1965 “II. Relationship, Continuation, and Common Policies of Defense Commissary and Exchange Systems 2487 “III. Morale, Welfare, and Recreation Programs and Nonappropriated Fund Instrumentalities 2491 “SUBCHAPTER I—DEFENSE COMMISSARY AND EXCHANGE SYSTEMS “Sec. “2481. Defense commissary and exchange systems: existence and purpose “2482. Commissary stores: criteria for establishment or closure; store size. “2483. Commissary stores: use of appropriated funds to cover operating expenses. “2484. Commissary stores: merchandise that may be sold; uniform surcharges and pricing. “2485. Commissary stores: operation. “§ 2481. Defense commissary and exchange systems: existence and purpose“(a) Separate Systems.—The Secretary of Defense shall operate, in the manner provided by this chapter and other provisions of law, a world-wide system of commissary stores and a separate world-wide system of exchange stores. The stores of each system may sell, at reduced prices, food and other merchandise to members of the uniformed services on active duty, members of the uniformed services entitled to retired pay, dependents of such members, and persons authorized to use the system under chapter 54 of this title.“(b) Purpose of Systems.—The defense commissary system and the exchange system are intended to enhance the quality of life of members of the uniformed services, retired members, and dependents of such members, and to support military readiness, recruitment, and retention.“(c) Oversight.—(1) The Secretary of Defense shall designate a senior official of the Department of Defense to oversee the operation of both the defense commissary system and the exchange system.“(2) The Secretary of Defense shall establish an executive governing body to provide advice to the senior official designated under paragraph (1) regarding the operation of the defense commissary and exchange systems and to ensure the complementary operation of the systems.“(d) Reduced Prices Defined.—In this section, the term ‘reduced prices’ means prices for food and other merchandise determined using the price setting process specified in section 2484 of this title. “§ 2482. Commissary stores: criteria for establishment or closure; store size“(a) Primary Consideration for Establishment.—The needs of members of the armed forces on active duty and the needs of dependents of such members shall be the primary consideration whenever the Secretary of Defense—“(1) assesses the need to establish a commissary store; and“(2) selects the actual location for the store.“(b) Store Size.—In determining the size of a commissary store, the Secretary of Defense shall take into consideration the number of all authorized patrons of the defense commissary system who are likely to use the store.118 STAT. 1966“(c) Closure Considerations.—(1) Whenever assessing whether to close a commissary store, the effect of the closure on the quality of life of members and dependents referred to in subsection (a) who use the store and on the welfare and security of the military community in which the commissary is located shall be a primary consideration.“(2) Whenever assessing whether to close a commissary store, the Secretary of Defense shall also consider the effect of the closure on the quality of life of members of the reserve components of the armed forces.“(d) Congressional Notification.—(1) The closure of a commissary store shall not take effect until the end of the 90-day period beginning on the date on which the Secretary of Defense submits to Congress written notice of the reasons supporting the closure. The written notice shall include an assessment of the impact closure will have on the quality of life for military patrons and the welfare and security of the military community in which the commissary is located.“(2) Paragraph (1) shall not apply in the case of the closure of a commissary store as part of the closure of a military installation under a base closure law.” ;(4) by inserting sections 2483 and 2484, as redesignated by paragraph (2), after section 2482, as added by paragraph (3);(5) in section 2484, as redesignated by paragraph (2)—(A) by striking subsections (a), (b), (c), and (g);(B) by redesignating subsections (d), (e), and (f) as subsections (e), (f), and (g), respectively;(C) by inserting before subsection (f), as so redesignated, the following new subsections:“(a) In General.—As provided in section 2481(a) of this title, commissary stores are intended to be similar to commercial grocery stores and may sell merchandise similar to that sold in commercial grocery stores.“(b) Authorized Commissary Merchandise Categories.—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) Inclusion of Other Merchandise Items.—(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 118 STAT. 1967 right to operate convenience stores, shopettes, and troop stores, including such stores established to support contingency operations.“(3) 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). 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.“(d) Uniform Sales Price Surcharge.—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.”;(D) in subsection (e), as so redesignated, by striking “(consistent with this section and section 2685 of this title)” in paragraph (1); (E) in subsection (g), as so redesignated, by striking “Subsections (c) and (d)” and inserting “Subsections (d) and (e)”; and(F) by adding at the end the following new subsection:“(h) Use of Surcharge for Construction, Repair, Improvement, and Maintenance.—(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) 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) or (2), 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.“(4) Revenues received by the Secretary of Defense from the following sources or activities of commissary store facilities shall 118 STAT. 1968 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.”;(6) by inserting section 2485, as redesignated by paragraph (2), after section 2484, as amended by paragraph (5); and(7) in section 2485, as redesignated by paragraph (2)—(A) in subsection (b)(2), by striking “section 2484” and inserting “section 2483”;(B) in subsection (c)(2), by adding at the end the following new sentences: “The chairman of the governing board shall be a commissioned officer or member of the senior executive service who has demonstrated experience or knowledge relevant to the management of the defense commissary system. In selecting other members of the governing board, the Secretary shall give priority to persons with experience related to logistics, military personnel, military entitlements or other experiences of value of management of commissaries.”; and(C) by adding at the end the following new subsections:“(d) Assignment of Active Duty Members.—(1) Except as provided in paragraph (2), members of the armed forces on active duty may not be assigned to the operation of a commissary store.“(2)(A) The Secretary of Defense may assign an officer on the active-duty list to serve as the Director of the Defense Commissary Agency.“(B) Not more than 18 members (in addition to the officer referred to in subparagraph (A)) of the armed forces on active duty may be assigned to the Defense Commissary Agency. Members who may be assigned under this subparagraph to regional headquarters of the agency shall be limited to enlisted members assigned to duty as advisers in the regional headquarters responsible for overseas commissaries and to veterinary specialists.“(e) Reimbursement for Use of Commissary Facilities by Military Departments.—(1) The Secretary of a military department shall pay the Defense Commissary Agency the amount determined under paragraph (2) for any use of a commissary facility by the military department for a purpose other than commissary sales or operations in support of commissary sales.“(2) The amount payable under paragraph (1) for use of a commissary facility by a military department shall be equal to the share of depreciation of the facility that is attributable to that use, as determined under regulations prescribed by the Secretary of Defense.“(3) The Director of the Defense Commissary Agency shall credit amounts paid under paragraph (1) for use of a facility to an appropriate account to which proceeds of a surcharge applied under section 2484(d) of this title are credited.“(4) This subsection applies with respect to a commissary facility that is acquired, constructed, converted, expanded, installed, or otherwise improved (in whole or in part) with the proceeds of a surcharge applied under section 2484(d) of this title.118 STAT. 1969“(f) Donation of Unusable Food.—(1) The Secretary of Defense may donate food described in paragraph (2) to any of the following entities:“(A) A charitable nonprofit food bank that is designated by the Secretary of Defense or the Secretary of Health and Human Services as authorized to receive such donations.“(B) A State or local agency that is designated by the Secretary of Defense or the Secretary of Health and Human Services as authorized to receive such donations.“(C) A chapter or other local unit of a recognized national veterans organization that provides services to persons without adequate shelter and is designated by the Secretary of Veterans Affairs as authorized to receive such donations.“(D) A not-for-profit organization that provides care for homeless veterans and is designated by the Secretary of Veterans Affairs as authorized to receive such donations.“(2) Food that may be donated under this subsection is commissary store food, mess food, meals ready-to-eat (MREs), rations known as humanitarian daily rations (HDRs), and other food available to the Secretary of Defense that—“(A) is certified as edible by appropriate food inspection technicians;“(B) would otherwise be destroyed as unusable; and“(C) in the case of commissary store food, is unmarketable and unsaleable.“(3) In the case of commissary store food, a donation under this subsection shall take place at the site of the commissary store that is donating the food. “(4) This subsection does not authorize any service (including transportation) to be provided in connection with a donation under this subsection.“(g) Collection of Dishonored Checks.—(1) The Secretary of Defense may impose a charge for the collection of a check accepted at a commissary store that is not honored by the financial institution on which the check is drawn. The imposition and amounts of charges shall be consistent with practices of commercial grocery stores regarding dishonored checks.“(2)(A) The following persons are liable to the United States for the amount of a check referred to in paragraph (1) that is returned unpaid to the United States, together with any charge imposed under that paragraph:“(i) The person who presented the check.“(ii) Any person whose status and relationship to the person who presented the check provide the basis for that person’s eligibility to make purchases at a commissary store.“(B) Any amount for which a person is liable under subparagraph (A) may be collected by deducting and withholding such amount from any amounts payable to that person by the United States.“(3) Amounts collected as charges imposed under paragraph (1) shall be credited to the commissary trust revolving fund.“(4) Appropriated funds may be used to pay any costs incurred in the collection of checks and charges referred to in paragraph (1). An appropriation account charged a cost under the preceding sentence shall be reimbursed the amount of that cost out of funds in the commissary trust revolving fund.118 STAT. 1970“(5) In this subsection, the term ‘commissary trust revolving fund’ means the trust revolving fund maintained by the Department of Defense for surcharge collections and proceeds of sales of commissary stores.“(h) Release of Certain Commercially Valuable Information to Public.—(1) The Secretary of Defense may limit the release to the public of any information described in paragraph (2) if the Secretary determines that it is in the best interest of the Department of Defense to limit the release of such information. If the Secretary determines to limit the release of any such information, the Secretary may provide for limited release of such information in accordance with paragraph (3).“(2) Paragraph (1) applies to the following:“(A) Information contained in the computerized business systems of commissary stores or the Defense Commissary Agency that is collected through or in connection with the use of electronic scanners in commissary stores, including the following information:“(i) Data relating to sales of goods or services.“(ii) Demographic information on customers.“(iii) Any other information pertaining to commissary transactions and operations.“(B) Business programs, systems, and applications (including software) relating to commissary operations that were developed with funding derived from commissary surcharges.“(3)(A) The Secretary of Defense may, using competitive procedures, enter into a contract to sell information described in paragraph (2).“(B) The Secretary of Defense may release, without charge, information on an item sold in commissary stores to the manufacturer or producer of that item or an agent of the manufacturer or producer.“(C) The Secretary of Defense shall establish performance benchmarks and shall submit information on customer satisfaction and performance data to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives.“(D) The Secretary of Defense may, by contract entered into with a business, grant to the business a license to use business programs referred to in paragraph (2)(B), including software used in or comprising any such program. The fee charged for the license shall be based on the costs of similar programs developed and marketed by businesses in the private sector, determined by means of surveys.“(E) Each contract entered into under this paragraph shall specify the amount to be paid for information released or a license granted under the contract, as the case may be.“(4) Information described in paragraph (2) may not be released, under paragraph (3) or otherwise, in a form that identifies any customer or that provides information making it possible to identify any customer.“(5) Amounts received by the Secretary under this section shall be credited to funds derived from commissary surcharges applied under section 2484(e) of this title, shall be merged with those funds, and shall be available for the same purposes as the funds with which merged.”.118 STAT. 1971(b) Relation Between Defense Commissary and Exchange Systems.—Chapter 147 of title 10, United States Code, is further amended—(1) by inserting after section 2485, as amended by subsection (a)(7), the following:“SUBCHAPTER II—RELATIONSHIP, CONTINUATION, AND COMMON POLICIES OF DEFENSE COMMISSARY AND EXCHANGE SYSTEMS “Sec. “2487. Relationship between defense commissary system and exchange stores system. “2488. Combined exchange and commissary stores. “2489. Overseas commissary and exchange stores: access and purchase restrictions. “§ 2487. Relationship between defense commissary system and exchange stores system“(a) Separate Operation of Systems.—(1) Except as provided in paragraph (2), the defense commissary system and the exchange stores system shall be operated as separate systems of the Department of Defense.“(2) Paragraph (1) does not apply to the following:“(A) Combined exchange and commissary stores operated under the authority provided by section 2489 of this title.“(B) NEXMART stores of the Navy Exchange Service Command established before October 1, 2003.“(b) Consolidation or Other Organizational Changes of Defense Retail Systems.—(1) The operation and administration of the defense retail systems may not be consolidated or otherwise merged unless the consolidation or merger is specifically authorized by an Act of Congress.“(2) In this subsection, the term ‘defense retail systems’ means the defense commissary system and exchange stores system and other revenue-generating facilities operated by nonappropriated fund instrumentalities of the Department of Defense for the morale, welfare, and recreation of members of the armed forces.” ; (2) by redesignating sections 2488, 2489, 2489a as sections 2495, 2495a, and 2495b, respectively; and(3) by redesignating sections 2490a and 2492 as sections 2488 and 2489, respectively, and inserting such sections after section 2487, as added by paragraph (1).(c) MWR Programs and Nonappropriated Fund Instrumentalities.—Chapter 147 of title 10, United States Code, is further amended—(1) by inserting after section 2489, as redesignated and moved by subsection (b)(3), the following:“SUBCHAPTER III—MORALE, WELFARE, AND RECREATION PROGRAMS AND NONAPPROPRIATED FUND INSTRUMENTALITIES “Sec. “2491. Uniform funding and management of morale, welfare, and recreation programs. “2491a. Department of Defense golf courses: limitation on use of appropriated funds. “2491b. Use of appropriated funds for operation of Armed Forces Recreation Center, Europe: limitation. “2491c. Retention of morale, welfare, and recreation funds by military installations: limitation.118 STAT. 1972 “2492. Nonappropriated fund instrumentalities: contracts with other agencies and instrumentalities to provide and obtain goods and services. “2493. Fisher Houses: administration as nonappropriated fund instrumentality. “2494. Nonappropriated fund instrumentalities: furnishing utility services for morale, welfare, and recreation purposes. “2495. Nonappropriated fund instrumentalities: purchase of alcoholic beverages. “2495a. Overseas package stores: treatment of United States wines. “2495b. Sale or rental of sexually explicit material prohibited.”; (2) by redesignating section 2494 as section 2491 and inserting such section after the table of sections at the beginning of subchapter III, as added by paragraph (1); (3) by redesignating section 2482a as section 2492 and inserting such section before section 2493;(4) by inserting after section 2493 the following new section:“§ 2494. Nonappropriated fund instrumentalities: furnishing utility services for morale, welfare, and recreation purposes “Appropriations for the Department of Defense may be used to provide utility services for—“(1) buildings on military installations authorized by regulation to be used for morale, welfare, and recreation purposes; and“(2) other morale, welfare, and recreation activities for members of the armed forces.” ; and(5) by inserting sections 2495, 2495a, and 2495b, as redesignated by subsection (b)(2), after section 2494, as added by paragraph (4).(d) Inclusion of Other Title 10 Provisions.—Sections 2246, 2247, and 2219 of title 10, United States Code, are—(1) transferred to chapter 147 of such title;(2) inserted after section 2491, as redesignated and moved by subsection (c)(2); and(3) redesignated as sections 2491a, 2491b, and 2491c, respectively.(e) Conforming Amendments.—(1) Section 977 of title 10, United States Code, is repealed.(2) Section 2868 of such title is amended by striking “for—” and all that follows through the period at the end and inserting “for buildings constructed at private cost, as authorized by law.”.(3) Section 367 of the Strom Thurmond National Defense Authorization Act for Fiscal Year 1999 (Public Law 105–261; 112 Stat. 1987; 10 U.S.C. 2482 note) is repealed.(f) Clerical Amendments.—(1) The table of sections at the beginning of chapter 49 of title 10, United States Code, is amended by striking the item relating to section 977.(2) The table of sections at the beginning of chapter 131 of such title is amended by striking the item relating to section 2219.(3) The table of sections at the beginning of subchapter I of chapter 134 of such title is amended by striking the items relating to sections 2246 and 2247.(g) Test Program of Sale of Certain Items in Commissary Stores.—(1) The Secretary of Defense may conduct a test program involving the sale of telephone cards, film, and one-time use cameras in not less than 10 commissary stores for a period selected by the Secretary, but not less than six months.(2) Within 90 days after the completion of the first year of the test program or within 90 days after the completion of the test program, whichever occurs first, the Secretary shall submit 118 STAT. 1973 to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives a report containing the results of the test program. The report shall include an analysis of the impact of the sale of such items on the exchange dividend and such recommendations as the Secretary considers appropriate regarding legislative changes necessary to expand the sale of such items in commissary stores.(h) Comptroller General Study.—(1) The Comptroller General shall conduct a study evaluating the impact that the expansion of the categories of merchandise authorized for sale in commissary stores has on the exchange dividend. The Comptroller General shall determine the amounts derived from exchange sales and allocated as exchange dividends during the five-year period ending on September 30, 2004, and the morale, welfare, and recreation programs supported using such dividends.(2) The Secretary shall submit the results of the study to the Committee on Armed Services of the Senate and the Committee on Armed Services of the House of Representatives not later than March 31, 2006.