Support for Military
The American Articles of War of 1775 provided for sutlers, who followed an army and sold provisions to its soldiers. These itinerant merchants provided many of the services now found through the exchange service and were soon a necessary part of the service.
By 1821, the sutlers were returning part of their profit to the units they served. The Post Fund was created to account for this money, which was soon being used for various welfare projects. That same year, Congress first recognized welfare programs and regulated the provision for the needs of enlisted men through certain activities and nonappropriated funds.
After a while, the sutlers began charging unreasonable prices and interest rates for credit and providing poor service. In 1867, Congress authorized the establishment of Post Traders to replace the sutlers, but traders were not always available in remote locations.
Soldiers joined together to provide their own retail and social outlets known as Canteen Associations. By 1893, the canteens were so widespread and successful that Congress abolished the Post Traders.
Canteens became centers for command-sponsored social functions and were recognized as an important part of promoting pride and loyalty. Congress authorized the use of public buildings and public transportation not needed for other purposes for canteen activities.
By this time, rules governing NAF canteen funds had been published and the funds were used to provide exercise facilities, along with billiards and other games. At the same time, ration savings within a company became a part of the company fund, indirectly bringing about an appropriated fund contribution to a MWR NAF activity.
In 1895, the War Department established post exchanges and directed post commanders to establish one at every post where practicable. This MWR activity combined the features of a reading and recreation room, store and restaurant, all providing goods and services not supplied by the government.
In 1903, Congress provided APF for the construction, equipment and maintenance of suitable buildings for the Post Exchange, school, library, reading room, lunch room, amusement room and gym.
In 1904, Congress included $5,000 for athletic exercise and sports in the Navy budget. These funds established the precedent for federal funding for MWR programs.
In 1918, funds were appropriated for athletic activities. After World War I, the Army and Navy decided to regularly provide troop morale and entertainment programs. In June 1920, the Army established the Army Motion Picture Service and, in 1923, Congress appropriated funds for Army libraries and hostess (later Service Club) personnel.
In 1932, due to complaints from local civilian businesses about unfair competition, Congress conducted its first examination of Post Exchange operations. The War Department explained that post exchanges were the only means of providing troops with recreational funds.
Since Congress did not provide APFs for recreation, the NAFs represented a direct savings to the taxpayer and assistance to low-paid service members. To lessen the competitive advantage, the War Department prohibited the use of any APFs to pay expenses connected with the Post Exchange.
Appropriated Funds were not eliminated for other kinds of MWR activities. Except for specific exceptions overseas, that prohibition continues to this day.
In 1951, the President’s Committee on Religion and Welfare in the Armed Forces reported on the MWR program. In this review, free-time activities were divided into three categories: indispensable, essential and desirable. The committee recommended providing programs and funding based on priority.
Two years later, the Defense Department issued the first funding policy statement for MWR activities stating that APFs were intended to provide, operate and maintain adequate facilities, while NAFs supplemented the cost of MWR programs using the facilities.
NAF had to be used to pay MWR activity expenses for civilian employees, operating equipment, stock, supplies, utilities and maintenance of interior space and equipment.
In 1968, military club scandals resulted in two years of investigations by Congress. The probes found that a group of military personnel in the MWR business had gained control of the job assignments process and were placing corrupt cohorts in key military club management jobs.
With this network, the group was able to engage in illicit business activity. The acquisition of food and beverages for resale was filled with kickbacks, extortion, fraud, favoritism and graft, and the entertainment program was notorious for kickbacks, extortion and prostitution.
Once exposed, Congress focused its interest on control and oversight of military resale activities and funding of MWR programs. The military took significant steps to institutionalize a structure for control and oversight, which continues to evolve.
In 1970, the House Armed Services Committee Special Subcommittee on Exchanges and Commissaries recognized the need for adequate recreational and welfare facilities, but held the position that Congress was responsible for providing facilities.
Two years later, the subcommittee examined NAF activities and recommended that the DOD identify APF costs. In response, the DOD issued financial management policies for NAF and APF requiring annual reports on APF support furnished for military MWR activities.
As a result of the 1977 National Defense Appropriations Act, the Office of Management and Budget reviewed whether making the NAFs fully self-supporting and eliminating APF subsides could easily be done. That led to the creation of the DOD funding policy authorizing APF support by MWR category.
A January 1986 House MWR Panel Report on NAF construction criticized DOD regulations, which appeared to allow broad APF support for profit-generating activities. The panel opposed using APFs to operate profit-generating activities, except in remote and isolated areas.
In August 1987, the department reported to Congress on a review of program authorizations, organization and staffing, and funding policies for programs.
The funding policy grouped MWR into four categories and stated that APF should support mission-essential activities and profit-generating activities should support the needs of MWR activities that didn’t generate a profit.
Through the fiscal year 1988 NDAA, Congress retained the prerogative to review and evaluate the level of APF support under the new policy.
The fiscal 1989 NDAA reduced the number of categories to three to promote a businesslike operation. APF was authorized for remote and isolated business activities. Congress directed reallocation of APF to mission-sustaining MWR programs and family support areas.
In November 1991, the HASC questioned the use of NAFs to support essential activities. Congress criticized the unfair difference among the services in APF per capita support to mission-essential MWR activities and held the DOD responsible for not properly supporting MWR.
The fiscal 1993 NDAA systematically arranged congressional concerns about MWR support. The statute required that the Office of the Secretary of Defense establish oversight of NAFs and nonappropriated fund instrumentalities, define how NAFs could be used and establish penalties for the misuse.
Congress sought to ensure that service members benefit from NAF and that those benefits are fair and impartial across all services.
Since 1993, Congress has continued to pressure the DOD to provide the maximum amount of APF support to Category A (mission sustaining) and B (basic community support activities) MWR activities as practicable.
Major studies have resulted in recommendations for greater efficiency and consolidation where appropriate among the Category C activities (business).
Congress authorized supplemental APF support for MWR operations in Operation Desert Shield, Operation Desert Storm, Operation Iraqi Freedom, Operation Enduring Freedom, and in many other contingencies, confirming the long-standing policy that MWR activities are essential and should be supported by APFs.
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