Summary: The Defense Commissary Agency runs about 3000 military commissaries. In addition to the revenue from store sales, the Agency also generates revenue by selling the data collected through its electronic scanners that register prices and goods sold. From January 1991 to March 1996, one firm had an exclusive rights contract for this data. In June 1995, the Agency solicited offers for a new five-year, exclusive rights scanner data contract. The winning firm, in addition to paying for the data, was to provide the Agency with expertise in implementing "category management," a system by which retailers manage product categories, such as pet foods or beauty products, as strategic business units and track consumer preferences. A protest of the award by the competing firms was ultimately dismissed by a federal court in May 1998. During the lengthy litigation period, the Agency entered into a nonexclusive license agreement with three companies, pursuant to a "spot bid sale," for the monthly use of the scanner data. This report (1) identifies the Agency's total revenue from selling scanner data and compares license revenues to amounts offered by firms responding to the June 1995 solicitation; (2) examines the Agency's implementation of category management as it relates to the requirements found in the 1995 solicitation; and (3) discusses the Agency's future plans for category management, scanner data sales, and potential development of an in-house market analysis capability.
