• WASHINGTON

With the whirlwind of activity happening here on Capitol Hill, the American Logistics Association’s (ALA) April 17 webinar could not have come at a better time.

With so much taking place in the commercial and government sectors having major implications on military resale, ALA President/Chief Executive Officer (CEO) Steve Rossetti had plenty to say to attendees at the virtual meeting.

Here are some highlights of the issues that he addressed during the 45-minute presentation, which was sponsored by Tyson Foods.

OPENING REMARKS

“This is a continuing series on the fast-moving developments with the new administration, and with the intensity and velocity of these developments, we feel that it is advisable to provide regular updates to our membership and government partners on our perspectives on what is going on, what some of the challenges, threats and the issues are … and there are a lot of them,” Rossetti noted.

“We so much appreciate the support of our industry members,” he continued. “I just want to make a point about our industry members and ALA. ALA members are industry people who work to advance the cause of this system, and they have direct skin in the game.

“They support a wide range of advocacy programs, communication programs, and I just want to thank the ALA members for their support and dedication, and I hope that our government partners recognize that these members, and their contributions to their association, makes a big difference here and makes a big difference going forward.”

THE ISSUES

“You are all seeing what is happening with the Trump Administration,” Rossetti said. “We reported the last time the intensity and velocity of what is taking place is unprecedented.

“We are working to keep ahead on all of it, and we are doing pretty well. Considering everything that is going on across government, you do have a pretty seasoned team of folks here at the association that can work these issues.

“Collectively, we probably have over 150 years of experience about how the ‘plumbing’ of government works, and how policies are developed, and I just want you to know that we are on top of it, we are keeping ahead of it, and we are working through our communications process and our advocacy programs to influence it.”

Rossetti said that the association receives much input from members on ideas and “arguments that need to be made going forward into this battle,” but ALA “is on top of it.”

Rossetti said that during the last ALA governmental webinar earlier this year, what was taking place in government at that time was asked with a simple question: “Was it cuts, was it dismantlement, was it reorganization?” he stated. “We found that it was all of the above.”

The ALA president said that all these weeks later, “We want to affirm that it is still ‘all of the above.’”

RESHAPING GOVERNMENT

He told attendees, “If you look across government, you’ve been reading a lot about the Department of Government Efficiency (DOGE), and what Elon Musk has been doing with his team to reshape government … you will see Musk wearing a T-shirt with the message ‘Tech Support’ on it, and that pretty much captures what DOGE is doing.

“It is ‘Tech Support’ to a much more massive government overhaul that is being orchestrated and engineered by Director Russell Vought at the Office of Management and Budget and his team, and also all of the cabinet secretaries … you see it at the West Wing meetings with the president, they are all reporting on efforts to reshape their operations and reduce spending, reduce staff.

“This is a government-wide effort, and we have never seen anything like this before. We are seeing entire organizations, entire agencies getting reshaped and dismantled. We are seeing some central organizations like the digital service, which has morphed into DOGE … we are seeing the Government Services Administration (GSA) as being an instrument for bringing about a lot of change.

“All of us need to appreciate what all the touch points are for what is taking place.”

DEREGULATION

Rossetti said that another important change that is taking place, “and it is associated with the DOGE effort, the government reshaping effort,” is deregulation.

“When you have cuts in personnel, when you have cuts in regulations, they go hand in hand,” he told attendees. “As you dismantle the regulatory environment in Washington, that affects workflow, that affects jobs.

“What you are seeing is across-the-board is a major overhaul of regulations. In fact, when we look at the federal acquisition regulation, a few weeks ago, the president directed a review of that regulation and all acquisition processes in the department. He gave them 60 days to come back and tell him how they are going to take the tens of thousands of pages of acquisition regulations processes within the department and distill it into a more manageable framework.”

The ALA president added that on this regulatory environment, Sen. Roger Wicker (R-Miss.), the chairman of the Senate Armed Services Committee (SASC), has introduced a floor draft, “and what that basically is is a Congressional effort to overhaul federal acquisition and government regulations.

“We are tracking that very closely. We may see a lot of the deregulation and regulatory changes being manifested in the Defense Authorization Act.”

Rossetti noted that along those lines, “ALA has been doing a lot of work on regulations. We have developed a compliance platform that we will be rolling out to industry shortly to not only keep ahead of regulations that are being implemented, but also to keep ahead of regulations that are being dismantled.

“It is a tool that is going to be very helpful as we go forward for you to keep up to speed on how the regulatory environment is changing.”

BUDGET PROCESS

“That is also a very dynamic and fluid environment,” Rossetti said.

“The Biden Administration … they didn’t know that they were going to lose, so they had prepared a budget. If Vice President Harris would have won, they would have had their budget packed and up to the Hill probably in the February time frame.

“They didn’t win, Trump won, and so the Trump people are reshaping the budget. It is going to have a massive effect. Already, we are seeing in terms of budgetary processes is that the O&B and the agencies are using a variety of tools to reshape not only the fiscal year 2026 budget — we are operating in fiscal year 2025 — they are using a series of measures to include impoundment, which means you are not spending what has been appropriated.

“They have a rescission package … presenting multiple rescission packages up at the Hill … they are going to the Hill and saying, ‘We don’t want to spend this money, we want it to be either reprogrammed or killed altogether.’

“Just the other day, there was a rescission package that went up to the State Department, it was about $9 billion to the State Department and other related agencies. There is one in the works, about $40 billion, and it may go up dealing with Health and Human Services. I would imagine that the Defense Department is working on reshaping and rescissions and there may be a rescission package that goes up and they may just include that in their fiscal year 2026 budget mission.”

Rossetti believes that “this is all going to be very key” in this process.

“The budget reflects priorities, and we are going to get a pretty good window when the budget is submitted as to where the priorities lie, appropriations for our programs, policies including privatization, so on and so forth. And that will all be manifested in the president’s budget.

“If it is delayed, I think that one way to look at this is that we are operating under a continuing resolution this year. In fact, the continuing resolution is for a full year, and what that means is that the Department of Defense, Homeland Security, Veterans Affairs, they are all funded at the prior year levels.

“It is conceivable that even if the budget goes up and we start moving on it, we could have another continuing resolution that would start to take place after the fiscal year ends on Oct. 1. If they don’t act on that continuing resolution, it would also default back to the fiscal year 2024 levels, or two-year-old funding levels.”

The ALA president said that he is hopeful that there is a breakout of the continuing resolution mode, “because that is short defense funding. The president has committed with some of his Hill allies to work toward a $1-trillion defense budget — right now, we are at about $860-or-$870 billion in defense — and they are talking at about $1 trillion, but we don’t know what shape that is going to take.

“I would say that if you look at what’s happening, we may see reshaping of a lot of the defense management, to include the Joint Chiefs of Staff and combatant commands. We don’t know, but we are getting vibes that combatant commands might be effected, I mean those commands that affect stationing of forces in overseas areas, so we are tracking that very closely because that is very near and dear to your planning, where troops are stationed, what troop levels are going to be, and what you might expect for the supply chain for resale.

“I think that there will be a massive reshaping of weapons purchasing and procurement. There was a notification or memo that went out the other day that they want to take a look at every acquisition program for equipment, and they are looking to scrap programs that are delayed or looking to do major surgery on the existing weapons platform.”

Rossetti said that one thing that “is very interesting” this year, “and what we haven’t seen before,” is related to budget requests.

“What happens is that the agencies send over their budget requests to the White House, and the White House comes back with a ‘pass back,’ or passing back their comments on what the agencies are considering,” he explained. “The pass backs from the White House are unprecedented in terms of depth and severity of cuts. So this pass-back process — for example, with DoD, they send their budget over and then they will come back and say ‘we want you to do this or that,’ and then they get into a negotiation, and then the budget is put together.

“As soon as we get a peak into what the budget is, some of the priorities are that we are going to push it out to you.”

He said that another thing that is impacting the process is the cash package.

“One way to look at the cash package is that this is certainly one of the president’s priorities, it is one of the top priorities of Republican leadership, both the House and Senate. They need to get that package through, not only for reshaping priorities but there are also tax programs that expire if they don’t execute a tax package.

“And why that is important for our programs there are bill payers associated with that tax package and cuts to federal spending. I think the tariff issue is related to that. Right now in the current tax package that is being tossed around the hill right now, there is a big bill payer on tariff receipts, and I think that is one of the reasons you are seeing so much activity on tariffs.”

NOMINATIONS, CONFIRMATIONS

Rossetti noted that related to Congress, “You are going to see a lot of activity as soon as the budget takes place. Most of the hearings are on activity in overviews of defense programs, and since they don’t have the budget, they are not having budget hearings. A lot of the activity is over at the Senate Armed Services Committee, where the are running through all of the confirmations of the new defense leadership.”

Rossetti noted that the new deputy secretary of defense, Steve Feinberg, was confirmed, as has been Gen. Dan Caine as chairman of the Joint Chiefs of Staff.

He added that there are several “sub-cabinet people that are either in the works or getting confirmed.”

One is Anthony Tata, who will be nominated for the under secretary of defense for personnel and readiness, which has oversight over military resale programs.

Sean O’Keefe, a staffer on the Senate Armed Services Committee who works personnel issues, has been nominated for the deputy secretary for personnel and readiness. “He has a broad depth of experience and he will be moving into that slot as soon as his confirmation process is over,” Rossetti said, adding, “There haven’t been any other nominations that have an effect on personnel and readiness, but we are expecting that other nominations will be coming forward here very quickly.

“We will be tracking those hearings, because those hearings give us a peak on not only what the nominees’ priorities are, but where the Congressional priorities lie.”

PRIVATIZATION

Rossetti noted that he, personally, has been involved in the concept of privatization for many years, with the administration and with Congress.

“There are efforts on Capitol Hill to look at privatizing our operations related to the commissaries,” he told attendees. “Last week, Deputy Secretary of Defense Feinberg issued a broad-based memo on the reorganization and reshaping of the Department of Defense, and in that memo he said that they want to prioritize privatization of retail operations on military bases, and that set off several alarms.

“Privatization has been a mantra of the Republican Party and some of the conservative think tanks for years. They basically believe that the private sector, for many operations, just can do it better than the government, and cheaper than the government can do it.

“They are taking a look now across the board at operations that, in an unprecedented way, they feel warrant a different look when it comes to privatization. They are looking at off-budget things to privatize, what they call ‘government-sponsored enterprises’ — things like Fannie Mae and Freddie Mac. They are taking a look at the postal service, Amtrak, some of these government corporations including the Federal Finance Bank and FDIC. They are looking at how they can just off-load that to the private sector and see if it could be managed better.”

The ALA president noted that there is a major effort that it is “a tool of the administration to bring about a lot of change.

“There is a major effort at GSA to sell assets, and that is a form of privatization … they just unload federal buildings and federal assets to the private sector, sell them off … they have been looking at privatizing the weather service and other assets of the federal government.

“We have been doing a lot of thinking about what the think tanks think about privatization and reorganization, especially as it affects us, and we are using that information to start to tailor our arguments going forward on how this privatization wave should be shaped from our perspective.”

He told attendees, ”Our position, our perspective is that the current system is the best system. When I worked over on the Hill, on the Armed Services Committee, there were some very smart Congressmen … a whole range of people who were in the business of shaping the current resale system.

“These gentlemen were wise, they cared about the troops, and they fashioned a system that really took the best of government and the best of the private sector and put it together to serve the best people in the world. This system is very carefully structured and balanced to make sure that we have the optimal effect for people.”

Rossetti asked, “Why would the secretary of defense put $600 million in tax-free savings to our troops … why would he just throw that away? Right now, they enjoy that benefit, it doesn’t cost the department anything, it is a gift to the department because of the tax-free status, and that is just one example on why Congress so carefully deliberated on the current structure for this system.

“If you look at the commissary program, Director John Hall and his team have done magnificent work on making the benefit more relevant and better for our patrons, whether it is on improved category management, on improvements in transformation of supply chain, information technology improvements, workforce improvements, Director Hall has moved smartly to bring about a lot of positive change … and actually has increased the proposition that the commissary contributes much more than it consumes in terms of compensation for our military people.”

Another aspect of commissaries that Rossetti believes “will be key going forward in the privatization debate” is the concept of food security.

A document was sent out to Congress late in 2024, one that was requested by the Appropriations Committee, that addressed this concept.

“In that document, it said the commissary system, and the exchange system, was instrumental in guaranteeing food security for our folks,” he stated.

“This industry is not unfamiliar with the challenges of making sure that the pipeline is secure, especially to overseas and remote areas, for our military,” he explained. “We have gone t through it with the port strikes, border and export restrictions, the pandemic.

“And also in this report, they talked about other crises that could take place where people’s food security had to be guaranteed, for example, nuclear or biological contamination events.

“We are constructing our case against privatization, not only to defend the commissaries, but because Secretary Feinberg had mentioned that it might impact the exchange operation.”

When speaking about privatization, Rossetti said there are four basic arguments:

1) Mission Support: “These operations have a direct bearing on supporting the direct war fighting capabilities of the department.”

2) Food Security: “Not only making sure that the pipeline is secure to get products to our folks, but also to make sure that they enjoy affordable products when they want them in a secure environment.

3) “Wonder of Nature”: Congress carefully crafted this system to do what is best for the nation and for military people, and here, we have a system that actually takes troop pay and recycles it back to the troops for their own benefit. It is a ‘wonder of nature,’ it is something that I think if the Department of Defense didn’t have it they would want to invent it.

“So if this is a system that you already have, why would you want to get rid of it?”

4) Delivery: “This system delivers much more than it consumes.”

Rossetti said, “You don’t have to peel back the privatization ‘onion’ too far before you start crying. When you start peeling this argument back, and you start to see that it would be a tragedy for the nation to have this take place without very careful deliberation, it is carefully calibrated and dedicated environment, and when you disrupt it, it has reverberations that you can’t even imagine — we can imagine it for them and we will.

“We have immunities in this system that we need to protect, because it works for the troops, and it is not just an argument for not privatizing overseas operations — what is critical is that you need a robust, stable stateside platform to support the far-flung operations.

“Also, as we all know because we are industry, privatization has already taken place where it makes sense. All of the ALA member companies are involved in this system, and bring private sector expertise and capabilities to the system. So we have a very carefully balanced industry and federal partnership that works for the troops.”

Rossetti said that ALA “will build these arguments, flesh them out,” make sure that they get to the right people, and we are going to make our views known … we are going to be on top of this privatization emphasis that is currently taking place at the administration, and we are going to be working with all of our member companies to deal with it.

“If I would look at how privatization might stack up in the whole debate, commissaries and perhaps Marine Corps lodges are under the microscope, and then with the memo, we are waiting to see whether or not they will be examining the exchange operations, and we will also push back against that as well.

“Perhaps the best peak is when the budget is submitted, and we will be keying in on that, but we also have our feelers out in all of the agencies to get the best intel on when this might take place. We will report it to you as soon as we get it.”

TARIFFS

“We are tracking tariffs very closely,” Rossetti told attendees. “There are a lot of reasons that we care about tariffs.

“China is a big issue. We had issues with China products being sold on military bases, and this whole trade war that is currently taking place with China, with both the Trump tariffs and the retaliation by the Chinese, and that is going to have an effect on that debate going forward.

“We have already seen some legislation being introduced to kill any programs on base that are owned by Chinese companies … the tariffs are going to hike prices across the board, and that will affect our military people and underscores the argument for this system, because this system saves military patrons money, and they are going to need these savings as consumer prices might escalate both in the general marketplace and on base.”

The ALA president said there is another issue related to tariffs to be aware of.

“We have a lot of dealings with the Western Pacific and the European Union on trade barriers and export barriers, and as the tariff debate heats up, it could have an effect on how foreign nations view U.S. imports, so we are tracking that very closely because we certainly don’t want any restrictions to upset this apple cart.”

And Rossetti said commercial retail is looking at the imposition of tariffs in an interesting way.

“When the tariffs were implemented, the only retailer where stuff went up was Walmart, and the CEO of Walmart said that it was a great opportunity for them to hitch their value proposition.

“That translates over to us too, hitch this value proposition as this tariff situation plays out.

COMMUNICATIONS

With all that is happening in government that can have an impact on this industry, Rossetti said that letting members know about this activity is extremely important.

“We are going to be pushing out information about regulations, not only in our space,” Rossetti stated. “If you look at how the government is being reshaped, there are major cuts and reorganizations taking place in agencies that will affect food and beverages operations and also corporate operations to include the Food and Drug Administration, the Federal Trade Commission and other entities that regulate this environment.

“We are tracking that, and we are going to let you know what is taking place, and our communication products are going to ramp up so that we can tell you about how that regulatory environment is changing.

“The compliance platform that we have developed will help you keep abreast with, and stay ahead of, these compliance and regulatory issues.

With the government environment the regulatory environment, and the commercial products environment, “We are going to keep you up to speed.”

OTHER TOPICS

Other topics briefly covered during the webinar included:

MINIMUM WAGE IMPLEMENTATION

“We took major action on that,” Rossetti noted. “We have gone to the White House Domestic Policy advisor, the White House National Economic Council, with correspondence and information to thank them for the president’s initiative to remove the minimum wage, which is costing contractors and federal agencies a lot of money.

“Now, it is up to the agencies — and this is what we pressed the administration to do — to follow through on all of those regulations beneath the president’s order that need to be nullified as well.

“We are going to have to get our resale entities and industry the flexibility to tailor wages to the local marketplace, and not pay California wages in Alabama.”

RANDOLPH-SHEPPARD ACT

This act, which provides sight-impaired workers with remunerative employment among other benefits, is another major action being looked at by the association.

“We are very concerned about the Department of Education action on the act,” Rossetti said. “We have sent letters to the Department of Education and to the administration expressing our views that there is over-reach taking place.

“There is a very careful balance between the blind vending community and the federal agencies, and we believe there is some over-reach taking place here that will affect that balance, and we need to just bring it back to where it was, and nullify that rule that was put out by the Department of Education.”

THE COURTS

Rossetti said that it is “a mixed bag” right now related to personnel cuts.

“Some federal judges that the cuts aren’t authorized; others say that they are,” he stated. “Generally, where it comes out is the courts have pretty much acceded to the administration on their prerogatives to manage the federal budget and the federal workforce.

“These rulings come out fast and furious, as fast as the judgments are made, so we are going to be reporting to you on these rulings as well, and we will be back and forth with the administration and Justice Department on all of this, because it will have an affect on our operations going forward and the way things are moving.”

CLOSING REMARKS

Rossetti closed out the meeting by stating, “I want to thank the ALA Board of Directors and the Exchange Council and the Commissary Council, and all of the committees of the organization that work so hard to uplift this entire industry. Stephanie Supplee, the chairman of the board, and the entire board, thank you for all of your efforts.

“And of course, the ALA staff … we have been working very hard to represent your interests, and have gone into overdrive to make sure that we keep ahead and keep up with all that is going on and effectuate change to the extent that we can for your benefit.

“And as I thank the staff, I also want to thank our federal partners for their partnership and I want to thank the members … we could not do this without member contributions and we so much appreciate your confidence, your support and all of it. Very much appreciated.”